Select Manager PS0505.018 PSP/SAI

EX-99 3 ps018pspsaiselectmgr.htm PS018/PSP/SAI-SELECT MGR Select Manager PS0505.018 PSP/SAI


                           OPPENHEIMER SELECT MANAGERS
                       Supplement dated May 7, 2003 to the
                         Prospectus dated March 28, 2003

The Prospectus is changed as follows:

1.    The following  paragraph is added to the end of the section  captioned "How
   the Fund is Managed" on Page 55:

At a recent meeting,  the Board of Trustees of the Funds  determined (i) that it
is in the best interest of the  shareholders of OSM - Mercury  Advisors  S&P
500 Index Fund that the OSM - Mercury Advisors S&P 500 Index Fund reorganize
into  Oppenheimer  Main Street Fund(R),  (ii) that it is in the best interest of
the  shareholders of OSM - Mercury Advisors Focus Growth Fund that OSM - Mercury
Advisors Focus Growth Fund reorganize into  Oppenheimer  Growth Fund, (iii) that
it is in the best interest of shareholders of OSM - QM Active Balanced Fund that
OSM - QM Active Balanced Fund reorganize into  Oppenheimer  Multiple  Strategies
Fund,  (iv) that it is in the best  interest of  shareholders  of OSM - Jennison
Growth Fund that OSM - Jennison Growth Fund reorganize into  Oppenheimer  Growth
Fund, (v) that it is in the best interest of the  shareholders  of OSM - Salomon
Brothers All Cap Fund that OSM - Salomon  Brothers All Cap Fund  reorganize into
Oppenheimer  Value Fund and (vi) that it is the best interest of shareholders of
OSM - Gartmore  Millennium Growth Fund II that OSM - Gartmore  Millennium Growth
Fund II reorganize into Oppenheimer MidCap Fund. The Board unanimously  approved
an  agreement  and  plan  of  reorganization  for  each  of the  reorganizations
described above to be entered into between each Oppenheimer  Select Manager fund
and  the  respective  acquiring  fund  (the   "reorganization   plan")  and  the
transactions  contemplated  thereby (the  "reorganization").  The Board  further
determined  that  the   reorganizations   should  be  submitted  to  the  Funds'
shareholders  for  approval,  and  recommended  that  shareholders  approve  the
reorganizations.  Shareholders  of record as of a date to be  determined  by the
Board will be entitled to vote on the  reorganization and will receive the proxy
statement describing the reorganizations.  The date for the shareholder meeting,
the record  date for such  meeting  and such  other  information  necessary  for
shareholders  to make a decision on the proposed merger will be set forth in the
proxy statement.

2.  Subject  to  approval  by the  Funds'  shareholders,  concurrently  with the
reorganization of OSM - Mercury Advisors S&P 500 Index Fund into Oppenheimer
Main Street Fund(R),  OSM - Mercury  Advisors Focus Growth Fund into Oppenheimer
Growth Fund, OSM - QM Active Balanced Fund into Oppenheimer  Multiple Strategies
Fund,  OSM - Jennison  Growth Fund into  Oppenheimer  Growth Fund, OSM - Salomon
Brothers All Cap Fund into Oppenheimer Value Fund and OSM - Gartmore  Millennium
Growth Fund II into Oppenheimer MidCap Fund, Oppenheimer Select Managers will no
longer exist.


May 7, 2003                                                   PS0505.018

Oppenheimer
Select Managers

Prospectus dated March 28, 2003

Mercury Advisors S&P 500 Index Fund
Mercury Advisors Focus Growth Fund
QM Active Balanced Fund
Jennison Growth Fund
Salomon Brothers All Cap Fund
Gartmore Millennium Growth Fund II

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

CONTENTS

ABOUT THE FUNDS

OSM - Mercury Advisors S&P 500 Index Fund OSM - Mercury Advisors
Focus Growth Fund OSM - QM Active Balanced Fund OSM - Jennison
Growth Fund OSM - Salomon Brothers All Cap Fund OSM - Gartmore
Millennium Growth Fund II About the Funds' Investments How the Funds
are Managed

ABOUT YOUR ACCOUNT

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

Special Investor Services
AccountLink
PhoneLink
OppenheimerFunds Internet Website
Retirement Plans

How to Sell Shares

By Wire
By Mail
By Telephone

How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
Master/Feeder Structure
Financial Highlights

ABOUT THE FUNDS

Oppenheimer Select Managers -
Mercury Advisors S&P 500 Index Fund

WHAT IS THE FUND'S INVESTMENT OBJECTIVE? The Fund seeks to match the performance
of the Standard & Poor's 500 Composite Stock Price Index (the "S&P 500")
as closely as possible before the deduction of Fund expenses.

WHAT DOES THE FUND MAINLY INVEST IN? The Fund is a non-diversified mutual fund
series of Oppenheimer Select Managers (referred to in this Prospectus as the
"Trust" or "OSM") that invests all of its assets in the Master S&P 500 Index
Series of the Quantitative Master Series Trust, a registered investment company
(the "Master Fund") that has the same goals as the Fund. All investments will be
made by the Master Fund. This structure is sometimes referred to as a
"master/feeder" structure. The Fund's investment results will correspond
directly to the investment results of the Master Fund. For simplicity, the term
"Fund" refers to the Fund and/or the Master Fund, unless otherwise identified.
For more information on the master/feeder structure, see "Master/Feeder
Structure" on page 74.

The Fund normally invests at least 80% of its net assets (plus borrowings
for investment purposes) in securities or other financial instruments in, or
correlated with, the S&P 500. The Fund may invest in all 500 stocks in the
S&P 500 in roughly the same proportions as their weightings in the S&P
500. The Fund may also invest in a strategically selected sample of the 500
stocks in the S&P 500 which has aggregate investment characteristics, such
as average market capitalization and industry weightings, similar to the S&P
500 as a whole, but which involves less transaction cost than would be incurred
by purchasing all 500 stocks. Fund Asset Management L.P., doing business as
Mercury Advisors, the investment adviser to the Master Fund (the "Adviser"), may
also purchase stocks not included in the S&P 500 when it believes that it
would be a cost effective way of approximating the S&P 500's performance to
do so. If the Adviser uses these techniques, the Fund may not track the S&P
500 as closely as it would if it were fully replicating the S&P 500. The
Fund may change the index it attempts to match if the Adviser believes a
different index would better enable the Fund to match the performance of the
market segment represented by the S&P 500 and, accordingly, the investment
objective of the Fund may be changed without shareholder approval.

The Fund may invest in illiquid securities, repurchase agreements, and may
engage in securities lending. The Fund will also invest in short term money
market instruments such as cash reserves to maintain liquidity. These
instruments may include obligations of the U.S. Government, its agencies, or
instrumentalities, highly rated bonds or comparable unrated bonds, commercial
paper, bank obligations and repurchase agreements and commingled short-term
liquidity funds. To the extent the Fund invests in short term money market
instruments, it will generally also invest in options, futures or other
derivatives in order to seek to maintain full exposure to the S&P 500. The
Fund will not invest in options, futures, other derivative instruments or short
term money market instruments in order to lessen the Fund's exposure to common
stocks as a defensive strategy, but will instead generally attempt to remain
fully invested at all times.

The Fund may invest in derivative instruments, and will normally invest a
substantial portion of its assets in options and futures contracts linked to the
performance of the S&P 500. Derivatives allow the Fund to increase or
decrease its exposure to the S&P 500 quickly and at less cost than buying or
selling stocks. The Fund will invest in options, futures and other derivative
instruments in order to gain market exposure quickly in the event of
subscriptions, to maintain liquidity in the event of redemptions and to keep
trading costs low. In connection with the use of derivative instruments, the
Fund may enter into short sales in order to adjust the weightings of particular
securities represented in a derivative to more accurately reflect the
securities' weightings in the target index.

How Does the Fund's Adviser Decide What Securities To Buy or Sell? The Adviser
provides the day-to-day portfolio management of the Fund's assets. The Master
Fund's portfolio manager is employed by the Adviser. The Adviser will not
attempt to buy or sell securities based on its economic, financial or market
analysis, but will instead employ a "passive" investment approach. This means
that the Adviser will attempt to invest in a portfolio of assets whose
performance is expected to match approximately the performance of the S&P 500
before deduction of Fund expenses. Except as otherwise provided in the
Prospectus, the Adviser will buy or sell securities only when it believes it is
necessary to do so in order to match the performance of the S&P 500. The
portfolio manager monitors individual issuers for changes in the factors above
and these changes may trigger a decision to sell a security.

Who is the Fund Designed For? The Fund is designed for investors who want to
invest in the securities of large U.S. companies contained in the S&P 500 and
are willing to accept the risk that the value of their investment may decline.
The Fund does not seek current income and the income from its investments will
likely be small. The Fund is not designed for investors needing current income
or preservation of capital. Shares of the Fund are available for purchase by
retirement plans only. The Fund is not a complete investment program.

Main Risks of Investing in the Fund

All investments have some degree of risk. The Fund's investments are subject to
changes in their value from a number of factors, some of which are described
below. The risks described below collectively form the risk profile of the Fund,
and can affect the value of the Fund's investments, its investment performance
and its prices per share. Particular investments and investment strategies also
have risks. These risks mean that you can lose money by investing in the Fund.
When you redeem your shares, they may be worth more or less than what you paid
for them. There is no assurance that the Fund or the Master Fund will achieve
its investment objective.

Selection Risk. The Fund is subject to selection risk, which is the risk that
the Fund's investments, which may not fully mirror the index, may underperform
the stock market or other funds with similar investment objectives and
investment strategies. The Fund will attempt to be fully invested at all times,
and will not hold a significant portion of its assets in cash. The Fund will
generally not attempt to hedge against adverse market movements. Therefore, the
Fund might go down in value more than other mutual funds in the event of a
general market decline. In addition, the Fund has operating and other expenses
while the S&P 500 does not. As a result, while the Fund will attempt to track
the S&P 500 as closely as possible, it will tend to underperform the S&P
500 to some degree over time.

Risks of Investing in Stocks. Because the Fund invests primarily in stocks, the
value of the Fund's portfolio will be affected by changes in the stock markets.
Market risk will affect the Fund's net asset value per share, which will
fluctuate as the values of the Fund's portfolio securities change. Prices of
individual stocks do not all move in the same direction uniformly or at the same
time. Different stock markets may also behave differently from each other.
Securities in the Fund's portfolio may not increase as much as the market as a
whole. Some securities may not be actively traded, and therefore, may not be
readily bought or sold. Although at times some of the Fund's investments may
appreciate in value rapidly, investors should not expect that most of the Fund's
investments will appreciate rapidly.

Risks of Derivative Investments. The Fund can use derivatives for the management
of cash balances as well as to increase or decrease its exposure to the S&P
500 quickly. In general terms, a derivative investment is an investment contract
whose value depends on (or is derived from) the value of an underlying asset,
interest rate or index. Options and futures are examples of derivatives the Fund
can use.

The Fund may use derivatives for anticipatory hedging. Anticipatory
hedging is a strategy in which the Fund uses a derivative to offset the risk
that securities in which the Fund intends to invest will increase in value
before the Fund has an opportunity to purchase the securities. The Fund will use
derivatives for anticipatory hedging in order to gain exposure efficiently to
its underlying indices or market segments in the event the Fund receives cash
inflows. Derivatives may not always be available or cost efficient. If the Fund
invests in derivatives, the investments may not be as effective as a hedge
against price movements.

If the issuer of the derivative does not pay the amount due, the Fund can
lose money on the investment. Also, the underlying security or investment on
which the derivative is based, and the derivative itself, may not perform the
way the portfolio manager expected it to perform. If that happens, the Fund's
share prices could fall, or its hedge might be unsuccessful. Some derivatives
may be illiquid, making it difficult to sell them quickly at an acceptable
price. The Fund has limits on the amount of particular types of derivatives it
can hold. Using derivatives can increase the volatility of the Fund's share
prices.

Risks of Short Sales. When the Fund makes a short sale, it must borrow the
security sold short and deliver it to the broker-dealer through which it made
the short sale as collateral for its obligation to deliver the security upon
conclusion of the sale. If the price of the security sold short increases
between the time of the short sale and the time the Fund replaces the borrowed
security, the Fund will incur a loss; conversely, if the price declines, the
Fund will realize a gain. Any gain will be decreased, and any loss increased, by
transaction costs. Although the Fund's gain is limited to the price at which it
sold the security short, its potential loss is theoretically unlimited. If the
Fund makes short sales of securities that increase in value, it may underperform
similar mutual funds that do not make short sales of securities they do not own.

Risks of Non-Diversification. The Fund is "non-diversified." That means that
compared to funds that are diversified, it can invest a greater portion of its
net assets in the securities of one issuer, such as the Master Fund. However,
the Master Fund invests, under normal circumstances, at least 80% of its assets
in securities or other financial instruments which are contained in or
correlated with securities in the S&P 500. Therefore, the portfolio
investments of the Master Fund may be diversified.

HOW RISKY IS THE FUND OVERALL? The Master Fund focuses its investments on the
stocks of large U.S. companies with the intent of replicating the S&P 500
before deduction of fees and expenses. The price of the Master Fund's shares can
go up and down substantially. The Master Fund does not use income-oriented
investments to help cushion the Master Fund's total return from changes in stock
prices. The Fund invests all of its assets in shares of the Master Fund and is
therefore non-diversified. It will therefore be vulnerable to the effects of
economic changes that affect shares of the Master Fund. These changes can affect
the value of the Fund's price per share. In the OppenheimerFunds spectrum, the
Fund is generally more aggressive than funds that invest in both stocks and
bonds, but may be less volatile than mid-cap stock funds.

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

The bar chart and table below show one measure of the risks of investing in the
Fund, by showing the Fund's performance (for its Class A shares) since the
Fund's inception and by showing how the average annual total returns of the
Fund's shares compare to those of a broad-based market index. Please remember
that the Fund is intended to be a long-term investment, and that performance
results are historical, and that past performance (particularly over a
short-term period) is not predictive of future results.

Annual Total Returns (Class A)
(as of 12/31 each year)

[See appendix to prospectus for data in bar chart showing the annual total
return]

Sales charges and taxes are not included in the calculations of return in this
bar chart, and if those charges and taxes were included, the returns may be less
than those shown.
During the period shown in the bar chart, the highest return (not annualized)
before taxes for a calendar quarter was 7.71% (4thQtr'02) and the lowest return
(not annualized) before taxes for a calendar quarter was -17.30% (3rdQtr'02).

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5 Years
Average Annual Total Returns (or life of
for the periods ended December 31, 2002 1 Year class, if less)

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Class A Shares (inception 2/16/01) -27.62% -21.15%

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S&P 500 Index (reflects no deduction for fees, -22.09% -15.80%1
expenses or taxes)

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Class B Shares (inception 2/16/01) -27.56% -20.91%

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Class C Shares (inception 2/16/01) -24.54% -19.23%

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Class N Shares (inception 3/1/01) -24.10% -17.12%

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Class Y Shares (inception 2/16/01) -23.06% -18.29%

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1From 2/28/01.
The Fund's average annual total returns include applicable sales charges: for
Class A, the current maximum initial sales charge of 5.75%; for Class B, the
contingent deferred sales charge of 5% (1-year) and 4% (life of class); and for
Class C and Class N, the 1% contingent deferred sales charge for the 1-year
period. There is no sales charge for Class Y. The returns measure the
performance of a hypothetical account and assume that all dividends and capital
gains distributions have been reinvested in additional shares. The performance
of the Fund's Class A shares is compared to the S&P 500 Index, an unmanaged
index of equity securities. The index performance includes reinvestment of
income but does not reflect transaction costs, expenses or taxes. The Fund's
investments may vary from those in the index.

Fees and Expenses of the Fund

The following tables are provided to help you understand the fees and expenses
you may pay if you buy and hold shares of the Fund. The Fund pays indirectly
through its investment in the Master Fund for management of its assets. The Fund
pays a variety of expenses directly for administration, distribution of its
shares and other services. Those expenses are subtracted from the Fund's assets
to calculate the Fund's net asset value per share. All shareholders therefore
pay those expenses indirectly. Shareholders pay other expenses directly, such as
sales charges and account transaction charges. The numbers below are based on
the Fund's expenses during its fiscal year ended December 31, 2002.

Shareholder Fees (charges paid directly from your investment):

Maximum Sales Charge (Load) on 5.75% None None None None
purchases (as % of offering price)

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Maximum Deferred Sales Charge (Load)
(as % of the lower of the original
offering None1 5%2 1%3 1%4 None
price or redemption proceeds)
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1. A contingent deferred sales charge may apply to redemptions of investments of
$500,000 or more of Class A shares. See "How to Buy Shares" for details.
2. Applies to redemptions in first year after purchase. The contingent deferred
sales charge declines to 1% in the sixth year and is eliminated after that.
3. Applies to shares redeemed within 12 months of purchase.
4. Applies to shares redeemed within 18 months of retirement plan's first
purchase of Class N shares.

Annual Fund Operating Expenses (deducted from Fund assets):
(% of average daily net assets)

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Class A Class B Class C Class N Class Y
Shares Shares Shares Shares Shares
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Management Fees 0.005% 0.005% 0.005% 0.005% 0.005%
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Distribution and/or Service 0.24% 1.00% 1.00% 0.50% N/A
(12b-1) Fees

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Other Expenses 1.79% 1.78% 1.70% 1.66% 46.32%

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Total Annual Operating Expenses 2.035% 2.785% 2.705% 2.165% 46.325%

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The management fee listed is the fee paid by the Master Fund and incurred
indirectly by this Fund. This Fund does not pay a management fee directly to the
Adviser. The Adviser has entered into a contractual arrangement with the Master
Fund to provide that the management fee for the Master Fund, when combined with
administrative fees of certain funds that invest in the Master Fund (other than
this Fund), will not exceed a specific amount. As a result of this contractual
arrangement, the Adviser currently receives management fees of 0.005%. This
arrangement has a one-year term and is renewable. Absent that contractual
arrangement, the management fee paid by the Master Fund to the Adviser would be
0.05%.

Expenses may vary in future years. "Other Expenses" include transfer agent fees,
custodial fees, administration fees paid to OppenheimerFunds, Inc., and
accounting and legal expenses that the Fund pays as well as the Fund's pro rata
share of the expenses of the Master Fund. The "Other Expenses" in the table are
based on, among other things, the fees the Fund would have paid if the transfer
agent had not waived a portion of its fee under a voluntary undertaking to the
Fund to limit these fees to 0.25% per annum for Class Y shares and 0.35% per
annum for all other classes. "Total Annual Operating Expenses" were reduced by a
voluntary expense assumption undertaking by the Manager. With that expense
assumption and the transfer agent waiver, "Total Annual Operating Expenses" were
1.085% for Class A, 1.835% for Class B, 1.805% for Class C, 1.295% for Class N
and 0.835% for Class Y. Effective November 1, 2002, the limit on transfer agent
fees for Class Y shares increased to 0.35% of average daily net assets per
fiscal year. Had that limit been in effect during the Fund's prior fiscal year,
the Class Y "Total Annual Operating Expenses" as percentage of average daily net
assets would have been .935%. Those voluntary undertakings may be revised or
terminated at any time.

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

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

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If shares are redeemed: 1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------
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Class A Shares $770 $1,176 $1,608 $2,803

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Class B Shares $782 $1,164 $1,672 $2,7711

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Class C Shares $374 $840 $1,432 $3,037

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Class N Shares $320 $678 $1,162 $2,498

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Class Y Shares $10,000 $0 $0 $10,000
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
If shares are not 1 Year 3 Years 5 Years 10 Years
redeemed:
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Class A Shares $770 $1,176 $1,608 $2,803

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Class B Shares $282 $864 $1,472 $2,7711

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Class C Shares $274 $840 $1,432 $3,037

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Class N Shares $220 $678 $1,162 $2,498

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Class Y Shares $10,000 $0 $0 $10,000
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In the first example, expenses include the initial sales charge for Class A and
the applicable Class B, Class C or Class N contingent deferred sales charges. In
the second example, the Class A expenses include the sales charge, but Class B,
Class C and Class N expenses do not include the contingent deferred sales
charges. There are no sales charges on Class Y shares.

1. Class B expenses for years 7 through 10 are based on Class A expenses,
because Class B shares automatically convert to Class A shares 72 months after
purchase.

Oppenheimer Select Managers -
Mercury Advisors Focus Growth Fund

What is the Fund's Investment Objective? The Fund seeks long-term capital
appreciation.

What Does the Fund Mainly Invest In? The Fund is a non-diversified aggressive
growth mutual fund that invests all of its assets in the Master Focus Twenty
Trust (the "Master Fund"), a mutual fund that has the same goals as the Fund.
All investments will be made by the Master Fund. This structure is sometimes
referred to as a "master/feeder" structure. The Fund's investment results will
correspond directly to the investment results of the Master Fund. For
simplicity, the term "Fund" refers to the Fund and/or the Master Fund, unless
otherwise identified. For more information on the master/feeder structure, see
"Master/Feeder Structure" on page 74.

The Fund generally invests at least 65% of its total assets in equity
securities. Normally, the Fund will invest in the common stock of approximately
20 to 30 companies that Fund Asset Management L.P., doing business as Mercury
Advisors, the investment adviser to the Master Fund (the "Adviser"), believes
have earnings growth and capital appreciation potential (also known as
"aggressive growth companies"). The Fund may invest in companies of any size but
currently emphasizes common stocks of companies with large stock market
capitalizations (greater than $5 billion). To a lesser extent, the Fund also may
invest in preferred stock, convertible securities, warrants and rights to
subscribe to common stock of those companies. The Fund may invest in excess of
35% of its total assets in cash or U.S. dollar denominated high quality
short-term debt instruments for temporary defensive purposes, to maintain
liquidity or when economic or market conditions are unfavorable for profitable
investing. The Master Fund may lend its portfolio securities and may invest
uninvested cash balances in affiliated money market funds. The Fund may also
invest in certain derivative securities. Derivatives are financial instruments
whose value is derived from another security, a commodity (such as gold or oil),
or an index such as the S&P 500 Index. The Fund may also make short
sales of securities.

How Does the Adviser Decide What Securities To Buy or Sell? The Adviser provides
the day-to-day portfolio management of the Fund's assets. The Adviser selects
securities of companies that it believes have strong earnings growth and capital
appreciation potential. The Adviser begins its investment process by creating a
universe of rapidly growing companies that possess certain growth
characteristics. That universe is continually updated. The Adviser then ranks
each company within its universe by using research models that focus on growth
characteristics such as positive earnings surprises, upward earnings estimate
revisions, and accelerating sales and earnings growth. Finally, using its own
fundamental research and bottom-up approach to investing, the Adviser evaluates
the quality of each company's earnings and tries to determine whether the
company can sustain or increase its current growth trend. The Adviser believes
that this disciplined investment process enables it to construct a portfolio of
investments with strong growth characteristics. The Adviser monitors individual
issuers for changes in the factors above and these changes may trigger a
decision to sell a security.

Who Is the Fund Designed For? The Fund is designed primarily for investors
seeking capital appreciation in their investment over the long term (at least 5
years). Those investors should be willing to assume the greater risks of
short-term share price fluctuations that are typical for funds seeking long-term
capital appreciation, and in particular for a non-diversified fund consisting of
relatively few aggressive growth companies. The Fund is designed for investors
who understand that the Fund's strategy of investing in relatively few companies
and industries may subject the Fund to sector risk and increased volatility. The
Fund does not seek current income and is not designed for investors needing
current income or preservation of capital. Because of its focus on long-term
capital appreciation, the Fund may be appropriate for a portion of a retirement
plan investment. The Fund is not a complete investment program.

Main Risks of Investing in the Fund

All investments have risks to some degree. The Fund's investments in stocks are
subject to changes in their value from a number of factors described below.
There is also the risk that poor security selection by the Adviser will cause
the Fund to underperform other funds having a similar objective.

The risks described below can affect the value of the Fund's investments,
its investment performance and its prices per share. Particular investments and
investment strategies also have risks. These risks mean that you can lose money
by investing in the Fund. When you redeem your shares, they may be worth more or
less than what you paid for them. There is no assurance that the Fund or the
Master Fund will achieve its investment objective.

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

Risks of Growth Stocks. Stocks of growth companies, particularly newer
companies, may offer opportunities for greater long-term capital appreciation
but may be more volatile than stocks of larger, more established companies. They
have greater risks if the company's earnings growth or stock price fails to
increase as expected.

SELECTION RISK. Selection risk is the risk that the securities that Fund
management selects will underperform the markets, the relevant indices or other
funds with similar investment objectives and investment strategies. If Fund
management's expectations regarding particular stocks are not met, the Fund may
not achieve its investment objective.

SECTOR RISK. To the extent that the Fund concentrates its investments in a
specific sector, there is the possibility that the investments within that
sector will decline in price due to industry-specific market or economic
developments.

Risks of Derivative Investments. The Fund can use derivatives for the management
of cash balances as well as to increase or decrease its exposure to risk
quickly. In general terms, a derivative investment is an investment contract
whose value depends on (or is derived from) the value of an underlying asset,
interest rate or index. Options and futures are examples of derivatives the Fund
can use.

If the issuer of the derivative does not pay the amount due, the Fund can
lose money on the investment. Also, the underlying security or investment on
which the derivative is based, and the derivative itself, may not perform the
way the portfolio manager expected it to perform. If that happens, the Fund's
share prices could fall, or its hedge might be unsuccessful. Some derivatives
may be illiquid, making it difficult to value them or sell them quickly at an
acceptable price. The Fund has limits on the amount of particular types of
derivatives it can hold. Using derivatives can increase the volatility of the
Fund's share prices.

Risks of Non-Diversification. The Fund is "non-diversified." That means that
compared to funds that are diversified, it can invest a greater portion of its
assets in the securities of one issuer. Having a higher percentage of its assets
invested in the securities of fewer issuers could result in greater fluctuations
of the Fund's share prices due to events affecting a particular issuer. If the
value of the Fund's investments goes down, you may lose money.

HOW RISKY IS THE FUND OVERALL? In the short term, the stock markets can be
volatile, and the price of the Fund's shares can go up and down substantially.
Growth stocks may be more volatile than other equity investments. The Master
Fund generally does not use income-oriented investments to help cushion its
total return from changes in stock prices. The Master Fund focuses its
investments in a limited number of issuers. By concentrating in a smaller number
of investments, the Master Fund's and the Fund's risk is increased because each
investment has a greater effect on the Master Fund's and the Fund's performance.
The Fund invests all of its assets in shares of the Master Fund and is therefore
non-diversified. It will therefore be vulnerable to the effects of market and
economic changes that affect the Master Fund. These changes can affect the value
of the Fund's price per share. Because of the Fund's volatile nature, when the
markets or specific market sectors decline, the Fund may underperform the market
averages. The Fund is also subject to the risk that the stocks that Fund
management selects will underperform the stock market, the relevant indices or
other funds with similar investment objectives and investment strategies. In the
OppenheimerFunds spectrum, the Fund is generally more aggressive than funds that
invest in both stocks and bonds or in investment grade debt securities.

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

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

The Fund's Past Performance

The bar chart and table below show one measure of the risks of investing in the
Fund, by showing the Fund (for its Class A shares) since the Fund's inception
and by showing how the average annual total returns of the Fund's shares, both
before and after taxes, compare to those of broad-based market indices. The
table compares the average annual total returns of the Fund's performance (for
its Class A shares) since the Fund's inception with those of the Standard &
Poor's (S&P) 500 Barra Growth Index, a broad measure of market value. The Fund
uses this index as its benchmark rather than the S&P 500 Index because the
S&P 500 Barra Growth Index better reflects the Fund's growth investing style.
The table also compares the Fund's performance to the NASDAQ Index. The
after-tax returns for the other classes of shares will vary.

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

Annual Total Returns (Class A)
(as of 12/31 each year)

[See appendix to prospectus for data in bar chart showing the annual total
return]

Sales charges and taxes are not included in the calculations of return in this
bar chart, and if those charges and taxes were included, the returns may be less
than those shown.
During the period shown in the bar chart, the highest return (not annualized)
before taxes for a calendar quarter was 2.19% (4thQtr'02) and the lowest return
(not annualized) before taxes for a calendar quarter was -20.56% (3rdQtr'02).

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

Average Annual Total Returns 1 Year 5 Years
(or life of
For the periods ended December 31, 2002 class, if less)

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

Class A Shares (inception 2/16/01)
Return Before Taxes -42.51% -55.45%
Return After Taxes on Distributions -42.51% -55.45%
Return After Taxes on Distributions and -25.89% -40.68%
Sale of Fund Shares

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

S&P 500 Barra Growth Index (reflects no -23.59% -15.48%1
deduction for fees, expenses or taxes)

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

NASDAQ Composite Index (reflects no deduction -31.53% -22.91%2
for fees, expenses or taxes)

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

Class B Shares (inception 2/16/01) -42.50% -55.32%

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

Class C Shares (inception 2/16/01) -40.08% -54.33%

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

Class N Shares (inception 3/1/01) -39.62% -49.92%

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

Class Y Shares (inception 2/16/01) -39.06% -53.91%

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

1From 2/28/01.
2From 2/28/01.
The Fund's average annual total returns include applicable sales charges: for
Class A, the current maximum initial sales charge of 5.75%; for Class B, the
contingent deferred sales charge of 5% (1-year) and 4% (life of class); and for
Class C and Class N the 1% contingent deferred sales charge for the 1-year
period. There is no sales charge for Class Y. The returns measure the
performance of a hypothetical account and assume that all dividends and capital
gains distributions have been reinvested in additional shares. The performance
of the Fund's Class A shares is compared to the S&P Barra Growth Index and
the NASDAQ Composite Index. The S&P 500 Barra Growth Index is a widely
recognized, unmanaged index of common stock prices. The NASDAQ Composite Index
is an unmanaged broad-based index comprised of common stocks. The index
performance includes reinvestment of income but does not reflect transaction
costs, expenses or taxes. The Fund will have investments that vary from those in
the indices.

Fees and Expenses of the Fund

Shareholder Fees (charges paid directly from your investment):

---------------------------------------------------------------------------------
Class Class B Class C Class N Class Y
A Shares Shares Shares Shares
Shares
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Maximum Sales Charge (Load) on
purchases 5.75% None None None None
(as % of offering price)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load)
(as % of the lower of the original None1 5%2 1%3 1%4 None
offering
price or redemption proceeds)
---------------------------------------------------------------------------------
1. A contingent deferred sales charge may apply to redemptions of investments of
$1 million or more ($500,000 for certain retirement plan accounts) of Class A
shares. See "How to Buy Shares" for details.
2. Applies to redemptions in first year after purchase. The contingent deferred
sales charge declines to 1% in the sixth year and is eliminated after that.
3. Applies to shares redeemed within 12 months of purchase.
4. Applies to shares redeemed within 18 months of retirement plan's first
purchase of Class N shares.

Annual Fund Operating Expenses (deducted from Fund assets):
(% of average daily net assets)

-------------------------------------------------------------------------------
Class A Class B Class C Class N Class Y
Shares Shares Shares Shares Shares
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Management Fees 0.60% 0.60% 0.60% 0.60% 0.60%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

Distribution and/or Service 0.24% 1.00% 1.00% 0.50% N/A
(12b-1) Fees

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

Other Expenses 2.52% 2.56% 2.53% 2.68% 88.54%

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

Total Annual Operating Expenses 3.36% 4.16% 4.13% 3.78% 89.14%

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

The management fee listed is the fee paid by the Master Fund and incurred
indirectly by this Fund. This Fund does not pay a management fee directly to the
Adviser. Expenses may vary in future years. "Other Expenses" include transfer
agent fees, custodial fees, administration fees paid to OppenheimerFunds, Inc.,
and accounting and legal expenses that the Fund pays as well as the Fund's pro
rata share of the expenses of the Master Fund. The "Other Expenses" in the table
are based on, among other things, the fees the Fund would have paid if the
transfer agent had not waived a portion of its fee under a voluntary undertaking
to the Fund to limit these fees to 0.25% per annum for Class Y shares and 0.35%
per annum for all other classes. "Total Annual Operating Expenses" were reduced
by a voluntary expense assumption undertaking by the Manager. With that expense
assumption and the transfer agent waiver, "Total Annual Operating Expenses" were
2.34% for Class A, 3.13% for Class B, 3.07% for Class C, 2.72% for Class N and
1.81% for Class Y. Effective November 1, 2002, the limit on transfer agent fees
for Class Y shares increased to 0.35% of average daily net assets per fiscal
year. Had that limit been in effect during the Fund's prior fiscal year, the
Class Y "Total Annual Operating Expenses" as percentage of average daily net
assets would have been 1.91%. Those voluntary undertakings may be revised or
terminated at any time.

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

If shares are redeemed:1 1 Year 3 Years 5 Years 10 Years

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

Class A Shares $894 $1,549 $2,225 $4,014

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

Class B Shares $918 $1,564 $2,324 $4,0202

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

Class C Shares $515 $1,255 $2,110 $4,314

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

Class N Shares $480 $1,155 $1,949 $4,019

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

Class Y Shares $5,170 $5,981 $6,003 $10,000

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

If shares are not 1 Year 3 Years 5 Years 10 Years
redeemed:1

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

Class A Shares $894 $1,549 $2,225 $4,014

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

Class B Shares $418 $1,264 $2,124 $4,0202

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

Class C Shares $415 $1,255 $2,110 $4,314

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

Class N Shares $380 $1,155 $1,949 $4,019

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

Class Y Shares $5,170 $5,981 $6,003 $10,000

--------------------------------------------------------------------------------
In the first example, expenses include the initial sales charge for Class A and
the applicable Class B, Class C or Class N contingent deferred sales charges. In
the second example, the Class A expenses include the sales charge, but Class B,
Class C and Class N expenses do not include the contingent deferred sales
charges. There are no sales charges on Class Y shares.

1. Includes expenses of both the Fund and the Master Fund. 2. Class B expenses
for years 7 through 10 are based on Class A expenses, because Class B shares
automatically convert to Class A shares 72 months after purchase.

Oppenheimer Select Managers - QM Active Balanced Fund

What is the Fund's Investment Objective? The Fund seeks income and long-term
growth of capital.

What Does the Fund Mainly Invest In? To seek income and long-term growth of
capital, the Fund invests mainly in a wide variety of equity securities, debt
securities and money market instruments. The Fund's investments will be actively
shifted among these asset classes in order to capitalize on valuation
opportunities and to maximize the Fund's total return. The Fund also invests in
other equity securities, such as non-convertible preferred stocks and securities
convertible into common stock.

Under normal market conditions, the Fund invests:
o 40% to 75% of its total assets in equity securities, including common
stocks and preferred stocks of issuers of every size - small, medium and
large capitalization.
o 25% to 60% of its total assets in investment-grade debt securities.
o 0% to 35% of its total assets in money market instruments.

The Fund can invest up to 35% of its total assets in foreign equity and
debt securities. Up to 30% of the Fund's assets may be used in investment
techniques involving leverage, such as dollar rolls, forward rolls and reverse
repurchase agreements. The portfolio manager also may use derivatives for
hedging or to improve the Fund's returns.

How Do The Portfolio Managers Decide What Securities To Buy or Sell? The Fund's
investment adviser, OppenheimerFunds, Inc. (the "Manager") has retained
Prudential Investment Management (the "Subadviser") to provide the day-to-day
portfolio management of the Fund's assets. The Fund's portfolio managers are
employed by the Subadviser. In selecting securities for the Fund, the Fund's
portfolio managers use a quantitative model. They manage the stock portion of
the Fund's portfolio using behavioral finance models to search for securities of
companies believed to be underpriced, while maintaining a risk profile like the
Standard & Poor's 500 Composite Stock Price Index.

The portfolio managers allocate the Fund's investments among equity and
debt securities after assessing the relative values of these different types of
investments under prevailing market conditions. The portfolio might hold stocks,
bonds and money market instruments in different proportions at different times.
While stocks and other equity securities are normally emphasized to seek growth
of capital, the portfolio managers might buy bonds and other fixed-income
securities, instead of stocks, when they think that:
o common stocks in general appear to be overvalued, o debt securities
offer meaningful capital growth opportunities
relative to common stocks, or
o it is desirable to maintain liquidity pending investment in equity
securities to seek capital growth opportunities.

The portfolio managers monitor individual issuers for changes in the
factors above and these changes may trigger a decision to sell a security.

WHO IS THE FUND DESIGNED FOR? The Fund is designed for investors seeking growth
of capital over the long term with the opportunity for some income. Those
investors should be willing to assume the risk of short-term share price
fluctuations that are typical for a fund emphasizing equity investments. Since
the Fund's income level will fluctuate, it is not designed for investors needing
an assured level of current income. Because of its primary focus on long-term
growth of capital, the Fund may be appropriate for moderately aggressive
investors. Shares of the Fund are available for purchase by retirement plans
only. The Fund is not a complete investment program.

Main Risks of Investing in the Fund

All investments have risks to some degree. The Fund's investments in stocks and
bonds are subject to changes in their value from a number of factors, as
described below. There is also the risk that poor security selection by the
portfolio manager will cause the Fund to underperform other funds having a
similar objective.

The risks described below collectively form the risk profile of the Fund,
and can affect the value of the Fund's investments, its investment performance
and its prices per share. Particular investments and investment strategies also
have risks. These risks mean that you can lose money by investing in the Fund.
When you redeem your shares, they may be worth more or less than what you paid
for them. There is no assurance that the Fund will achieve its investment
objective.

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

Other factors can affect a particular stock's price, such as poor earnings
reports by the issuer, loss of major customers, major litigation against the
issuer, or changes in government regulations affecting the issuer. The Fund
invests in securities of large companies and can also buy securities of small
and medium-capitalization companies, which may have more volatile stock prices
than large companies.

Industry Focus. At times the Fund may increase the relative emphasis of its
investments in stocks of companies in a single industry. Stocks of issuers in a
particular industry may be affected by changes in economic conditions, or by
changes in government regulations, availability of basic resources or supplies,
or other events that affect that industry more than others. To the extent that
the Fund increases the emphasis of its investments in a particular industry, its
share values may fluctuate in response to events affecting that industry.

Risks of Foreign Investing. The Fund can invest in foreign securities. The Fund
currently does not intend to invest more than 35% of its total assets in foreign
securities. It can buy securities of both foreign governments and companies.
While foreign securities may offer special investment opportunities, they are
subject to special risks that can reduce the Fund's share prices and returns.

The change in value of a foreign currency against the U.S. dollar will
affect the U.S. dollar value of securities denominated in that foreign currency.
Currency rate changes can also affect the distributions the Fund makes from the
income it receives from foreign securities. Foreign investing can result in
higher transaction and operating costs for the Fund. Foreign issuers are not
subject to the same accounting and disclosure requirements that U.S. companies
are subject to. The value of foreign investments may be affected by exchange
control regulations, currency devaluation, expropriation or nationalization of a
company's assets, foreign taxes, delays in settlement of transactions, changes
in governmental economic or monetary policy in the U.S. or abroad, or other
political and economic factors.

INTEREST RATE RISK. The values of debt securities, including U.S. government
securities, are subject to change when prevailing interest rates change. When
interest rates fall, the value of already-issued debt securities generally rise.
When interest rates rise, the values of already-issued debt securities generally
fall, and they may sell at a discount from their face amount. The magnitude of
these fluctuations will often be greater for longer-term debt securities. The
Fund's share prices can go up or down when interest rates change because of the
effect of the changes on the value of the Fund's investments in debt securities.

CREDIT RISK. Debt securities are subject to credit risk. Credit risk is the risk
that the issuer of a security might not make interest and principal payments on
the security as they become due. If the issuer fails to pay interest, the Fund's
income may be reduced and if the issuer fails to repay principal, the value of
that security and of the Fund's shares might fall. While the Fund's investments
in U.S. Government securities are subject to little credit risk, the Fund's
other investments in debt securities are subject to risks of default. A
downgrade in an issuer's credit rating or other adverse news about an issuer can
reduce a security's market value.

The Fund can invest up to 20% of its total assets in high yield, lower
grade debt obligations rated below BBB by Standard & Poor's Ratings Group or
Baa by Moody's Investors Service, Inc. or the equivalent rating by another major
rating service. These lower-rated obligations - also known as "junk bonds" -
have a higher risk of default and tend to be less liquid and more volatile than
higher-grade obligations. The Fund also may invest in obligations that are not
rated, but that the Subadviser believes are of comparable quality to these
obligations.

HOW RISKY IS THE FUND OVERALL? In the short term, the stock markets can be
volatile, and the price of the Fund's shares can go up and down substantially.
The Fund's income-oriented investments may help cushion the Fund's total return
from changes in stock prices, but fixed-income securities have their own risks
and normally are not the primary emphasis of the Fund. In the OppenheimerFunds
spectrum, the Fund is more conservative than aggressive growth stock funds, but
has greater risk than investment-grade bond funds.

The Fund's Past Performance

The bar chart and table below show one measure of the risks of investing in the
Fund, by showing the Fund's performance (for its Class A shares) since the
Fund's inception and by showing how the average annual total returns of the
Fund's shares compare to those of broad-based market indices. Please remember
that the Fund is intended to be a long-term investment, and that performance
results are historical, and that past performance (particularly over a
short-term period) is not predictive of future results.

Annual Total Returns (Class A)
(as of 12/31 each year)

[See appendix to prospectus for data in bar chart showing the annual total
return]

Sales charges and taxes are not included in the calculations of return in this
bar chart, and if those charges and taxes were included, the returns may be less
than those shown.
During the period shown in the bar chart, the highest return (not annualized)
before taxes for a calendar quarter was 5.21% (4thQtr'02) and the lowest return
(not annualized) before taxes for a calendar quarter was -11.11% (3rdQtr'02).

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

Average Annual Total Returns 1 Year 5 Years
for the periods ended December (or life of class, if
31, 2002 less)

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

Class A Shares (inception -17.47% -12.08%
2/16/01)

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

S&P 500 Index (reflects no
deduction for fees, expenses or
taxes) -22.09% -15.80%1

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

Lehman Brothers
Government/Credit Bond Index
(reflects no deduction for fees, 9.84% 8.76%1
expenses or taxes)

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

Class B Shares (inception -17.46% -11.93%
2/16/01)

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

Class C Shares (inception -14.01% -9.98%
2/16/01)

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

Class N Shares (inception 3/1/01) -13.49% -8.46%

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

Class Y Shares (inception -12.32% -9.09%
2/16/01)

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

1From 2/28/01.
The Fund's average annual total returns include applicable sales charges: for
Class A, the current maximum initial sales charge of 5.75%; for Class B, the
contingent deferred sales charge of 5% (1-year) and 4% (life of class); and for
Class C and Class N, the 1% contingent deferred sales charge for the 1-year
period. There is no sales charge for Class Y. The returns measure the
performance of a hypothetical account and assume that all dividends and capital
gains distributions have been reinvested in additional shares. The performance
of the Fund's Class A shares is compared to the S&P 500 Index and the Lehman
Brothers Government/Credit Bond Index. The S&P 500 Index is an unmanaged
index of equity securities and the Lehman Brothers Government/Credit Bond Index
is an unmanaged index of intermediate and long-term government and investment
grade corporate debt securities. The indices performance includes reinvestment
of income but does not reflect transaction costs, expenses or taxes. The Fund
will have investments that vary from those in the indices.

Fees and Expenses of the Fund

The following tables are meant to help you understand the fees and expenses you
may pay if you buy and hold shares of the Fund. The Fund pays a variety of
expenses directly for management of its assets, administration, distribution of
its shares and other services. Those expenses are subtracted from the Fund's
assets to calculate the Fund's net asset values per share. All shareholders
therefore pay those expenses indirectly. Shareholders pay other expenses
directly, such as sales charges and account transaction charges. The numbers
below are based on the Fund's expenses during its fiscal period ended November
30, 2002.

Shareholder Fees (charges paid directly from your investment):

1. A contingent deferred sales charge may apply to redemptions of investments of
$500,000 or more of Class A shares. See "How to Buy Shares" for details.
2. Applies to redemptions in first year after purchase. The contingent deferred
sales charge declines to 1% in the sixth year and is eliminated after that.
3. Applies to shares redeemed within 12 months of purchase.
4. Applies to shares redeemed within 18 months of retirement plan's first
purchase of Class N shares.

Annual Fund Operating Expenses (deducted from Fund assets):
(% of average daily net assets)

--------------------------------------------------------------------------------
Class A Class B Class C Class N Class Y
Shares Shares Shares Shares Shares
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Management Fees 0.95% 0.95% 0.95% 0.95% 0.95%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

Distribution and/or Service 0.01% 1.00% 1.00% 0.50% N/A
(12b-1) Fees

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

Other Expenses 0.55% 0.80% 0.72% 0.77% 87.08%

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

Total Annual Operating Expenses 1.51% 2.75% 2.67% 2.22% 88.03%

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

Expenses may vary in future years. "Other Expenses" include transfer agent fees,
custodial fees, and accounting and legal expenses that the Fund pays. "Other
Expenses" in the table are based on, among other things, the fees the Fund would
have paid if the transfer agent had not waived a portion of its fee under a
voluntary undertaking to the Fund to limit these fees to 0.25% per annum for
Class Y shares and 0.35% per annum for all other classes. "Total Annual
Operating Expenses" were reduced by a voluntary expense assumption undertaking
by the Manager. With that expense assumption and the transfer agent waiver,
"Total Annual Operating Expenses" were 1.41% for Class A, 2.64% for Class B,
2.56% for Class C, 2.12% for Class N and 1.54% for Class Y. Effective November
1, 2002, the limit on transfer agent fees for Class Y shares increased to 0.35%
of average daily net assets per fiscal year. Had that limit been in effect
during the Fund's prior fiscal year, the Class Y "Total Annual Operating
Expenses" as percentage of average daily net assets would have been 1.64%. Those
expense undertakings may be revised or terminated at any time.

Class A Shares $720 $1,025 $1,351 $2,273

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

Class B Shares $778 $1,153 $1,654 $2,5051

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

Class C Shares $370 $829 $1,415 $3,003

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

Class N Shares $325 $694 $1,190 $2,554

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

Class Y Shares $5,148 $6,170 $6,200 $10,000

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

Class A Shares $720 $1,025 $1,351 $2,273

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

Class B Shares $278 $853 $1,454 $2,5051

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

Class C Shares $270 $829 $1,415 $3,003

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

Class N Shares $225 $694 $1,190 $2,254

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

Class Y Shares $5,148 $6,170 $6,200 $10,000

1. Class B expenses for years 7 through 10 are based on Class A expenses,
because Class B shares automatically convert to Class A shares 72 months after
purchase.

Oppenheimer Select Managers - Jennison Growth Fund

What is the Fund's Investment Objective? The Fund seeks long-term growth of
capital.

What Does the Fund Mainly Invest In? Under normal market conditions, the Fund
invests at least 65% of its total assets in equity-related securities of
companies that exceed $1 billion in market capitalization and that the portfolio
managers believe have above-average growth prospects. These companies are
generally considered medium to large capitalization companies. They tend to have
a unique market niche, a strong new product profile or superior management.
Equity-related securities in which the Fund primarily invests are common stocks,
non-convertible preferred stocks and convertible securities. The Fund may also
invest in American Depository Receipts ("ADRs"), warrants and rights that can be
exercised to obtain stock, and real estate investment trusts.

The Fund can invest up to 20% of its total assets in foreign securities of
both foreign governments and companies. The Fund can invest in investment-grade
fixed-income securities, including mortgage-related securities, and U.S.
government obligations but does not generally do so. The Fund also may engage in
short sales and may use derivatives for hedging or to improve the Fund's
returns.

How Do the Portfolio Managers Decide What Securities To Buy or Sell? The Fund's
investment adviser, OppenheimerFunds, Inc. (the "Manager") has retained Jennison
Associates LLC (the "Subadviser" or "Jennison") to provide the day-to-day
portfolio management of the Fund's assets. The Fund's portfolio managers are
employed by the Subadviser. In selecting securities for the Fund, the Fund's
portfolio managers look to invest in large companies experiencing some or all of
the following:

o above-average revenue and earnings per share growth
o strong market position
o improving profitability and distinctive attributes such as unique
marketing ability
o strong research and development
o productive new product flow
o financial strength

Such companies generally trade at high prices relative to their current
earnings. The portfolio managers will consider selling or reducing a stock
position when, in the opinion of the portfolio managers, the stock has
experienced a fundamental disappointment in earnings; it has reached an
intermediate-term price objective and its outlook no longer seems sufficiently
promising; a relatively more attractive stock emerges; or the stock has
experienced adverse price movement. The portfolio managers monitor individual
issuers for changes in the factors above and these changes may trigger a
decision to sell a security.

Who Is the Fund Designed For? The Fund is designed for investors seeking
long-term growth of capital. Those investors should be willing to assume the
greater risks of share price fluctuations that are typical for a growth fund
focusing on stock investments. Since the Fund does not seek income and its
income from investments will likely be small, it is not designed for investors
needing current income. Because of its focus on long-term growth of capital, the
Fund may be appropriate for a portion of a retirement plan investment. This Fund
is not a complete investment program.

Main Risks of Investing in the Fund

All investments have risks to some degree. The Fund's investments in stocks are
subject to changes in their value from a number of factors described below.
There is also the risk that poor security selection by the Fund's portfolio
managers will cause the Fund to underperform other funds having a similar
objective.

The risks described below collectively form the risk profile of the Fund,
and can affect the value of the Fund's investments, its investment performance
and its prices per share. These risks mean that you can lose money by investing
in the Fund. When you redeem your shares, they may be worth more or less than
what you paid for them. There is no assurance that the Fund will achieve its
investment objective.

RISKS OF INVESTING IN STOCKS. Because the Fund invests primarily in common
stocks of U.S. companies, the value of the Fund's portfolio will be affected by
changes in the U.S. stock markets. Market risk will affect the Fund's net asset
values per share, which will fluctuate as the values of the Fund's portfolio
securities change. The prices of individual stocks do not all move in the same
direction uniformly or at the same time. Different stock markets may behave
differently from each other. Because the Fund can buy U.S. and foreign stocks
and ADRs, it could be affected by changes in domestic and foreign stock markets.

Risks of Foreign Investing. The Fund can invest in foreign securities and in the
securities of foreign issuers in the form of ADRs. It can buy securities of both
foreign governments and companies. While foreign securities may offer special
investment opportunities, they are subject to special risks that can reduce the
Fund's share prices and returns.

The change in value of a foreign currency against the U.S. dollar will
affect the U.S. dollar value of securities denominated in that foreign currency.
Currency rate changes can also affect the distributions the Fund makes from the
income it receives from foreign securities. Foreign investing can result in
higher transaction and operating costs for the Fund. Foreign issuers are not
subject to the same accounting and disclosure requirements that U.S. companies
are subject to. The value of foreign investments may be affected by exchange
control regulations, expropriation or nationalization of a company's assets,
foreign taxes, delays in settlement of transactions, changes in governmental
economic or monetary policy in the U.S. or abroad, or other political and
economic factors. ADRs may not necessarily be denominated in the same currency
as the securities into which they may be converted.

The Fund's Past Performance

Annual Total Returns (Class A)
(as of 12/31 each year)

[See appendix to prospectus for data in bar chart showing the annual total
return]

Sales charges and taxes are not included in the calculations of return in this
bar chart, and if those charges and taxes were included, the returns may be less
than those shown.
During the period shown in the bar chart, the highest return (not annualized)
before taxes for a calendar quarter was 2.76% (4thQtr'02) and the lowest return
(not annualized) before taxes for a calendar quarter was -16.89% (2ndQtr'02).

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

Average Annual Total Returns 1 Year 5 Years
(or life of
for the periods ended December 31, 2002 class, if less)

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

Class A Shares (inception 2/16/01)
Return Before Taxes -34.79% -26.54%
Return After Taxes on Distributions -34.79% -26.54%
Return After Taxes on Distributions and -21.19% -20.62%
Sale of Fund Shares

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

S&P 500 Index (reflects no deduction for fees, -22.09% -15.80%1
expenses or taxes)

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

Class B Shares (inception 2/16/01) -34.74% -26.42%

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

Class C Shares (inception 2/16/01) -31.99% -24.80%

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

Class N Shares (inception 3/1/01) -31.65% -22.59%

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

Class Y Shares (inception 2/16/01) -30.78% -24.12%

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

Fees and Expenses of the Fund

Shareholder Fees (charges paid directly from your investment):

---------------------------------------------------------------------------------
Class Class B Class C Class N Class Y
A Shares Shares Shares Shares
Shares
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Maximum Sales Charge (Load) on
purchases 5.75% None None None None
(as % of offering price)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load)
(as % of the lower of the original None1 5%2 1%3 1%4 None
offering
price or redemption proceeds)
---------------------------------------------------------------------------------
1. A contingent deferred sales charge may apply to redemptions of investments of
$1 million or more ($500,000 for certain retirement plan accounts) of Class A
shares. See "How to Buy Shares" for details.
2. Applies to redemptions in first
year after purchase. The contingent deferred sales charge declines to 1% in the
sixth year and is eliminated after that.
3. Applies to shares redeemed within 12 months of purchase.
4. Applies to shares redeemed within 18 months of retirement plan's first
purchase of Class N shares.

Annual Fund Operating Expenses (deducted from Fund assets):
(% of average daily net assets)

----------------------------------------------------------------------
Class Class Class Class Class Y
A B C N Shares
Shares Shares Shares Shares
----------------------------------------------------------------------
----------------------------------------------------------------------
Management Fees 0.95% 0.95% 0.95% 0.95% 0.95%
----------------------------------------------------------------------
----------------------------------------------------------------------

Distribution and/or Service 0.05% 1.00% 1.00% 0.50% N/A
(12b-1) Fees

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

Other Expenses 0.89% 1.13% 0.91% 1.11% 87.14%

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

Total Annual Operating 1.89% 3.08% 2.86% 2.56% 88.09%
Expenses

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

Expenses may vary in future years. "Other Expenses" include transfer agent fees,
custodial fees, and accounting and legal expenses that the Fund pays. "Other
Expenses" in the table are based on, among other things, the fees the Fund would
have paid if the transfer agent had not waived a portion of its fee under a
voluntary undertaking to the Fund to limit these fees to 0.25% per annum for
Class Y shares and 0.35% per annum for all other classes. "Total Annual
Operating Expenses" were reduced by a voluntary expense assumption undertaking
by the Manager. With that expense assumption and the transfer agent waiver,
"Total Annual Operating Expenses" were 1.39% for Class A, 2.51% for Class B,
2.31% for Class C, 2.01% for Class N and 1.43% for Class Y. Effective November
1, 2002, the limit on transfer agent fees for Class Y shares increased to 0.35%
of average daily net assets per fiscal year. Had that limit been in effect
during the Fund's prior fiscal year, the Class Y "Total Annual Operating
Expenses" as percentage of average daily net assets would have been 1.53%. Those
expense undertakings may be revised or terminated at any time.

Class A Shares $756 $1,135 $1,538 $2,659

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

Class B Shares $811 $1,251 $1,816 $2,8591

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

Class C Shares $389 $886 $1,509 $3,185

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

Class N Shares $359 $796 $1,360 $2,895

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

Class Y Shares $5,149 $6,167 $6,196 $10,000

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

Class A Shares $756 $1,135 $1,538 $2,659

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

Class B Shares $311 $951 $1,616 $2,8591

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

Class C Shares $289 $886 $1,509 $3,185

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

Class N Shares $259 $796 $1,360 $2,895

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

Class Y Shares $5,149 $6,167 $6,196 $10,000

1. Class B expenses for years 7 through 10 are based on Class A expenses,
because Class B shares automatically convert to Class A shares 72 months after
purchase.

Oppenheimer Select Managers - Salomon Brothers All Cap Fund

What is the Fund's Investment Objective? The Fund seeks capital appreciation.

What Does the Fund Mainly Invest In? The Fund is a non-diversified mutual fund
that invests mainly in common stocks and common stock equivalents such as
preferred stocks and securities convertible into common stocks, of companies
Salomon Brothers Asset Management Inc. (the "Subadviser") believes are
undervalued in the marketplace. While the Subadviser selects an investment
primarily for its capital appreciation potential, secondary consideration is
given to a company's dividend record and the potential for an improved dividend
return. The Fund generally invests in securities of large, well-known companies,
but may also invest a significant portion of its assets in securities of small
to medium-sized companies when the Subadviser believes smaller companies offer
more attractive value opportunities. The Fund may invest in non-dividend paying
common stocks.

The Fund may invest in investment grade fixed-income securities and may
invest up to 20% of its net assets in non-convertible debt securities rated
below investment grade or, if unrated, of equivalent quality as determined by
the Sub-adviser. Debt securities rated below investment grade are normally
referred to as "junk bonds". The Fund may invest without limit in convertible
debt securities of any quality. The Fund may also invest up to 20% of its total
assets in securities of foreign issuers.

How Do The Portfolio Managers Decide What Securities To Buy or Sell? The Fund's
investment adviser, OppenheimerFunds, Inc. (the "Manager") has retained the
Subadviser to provide the day-to-day portfolio management of the Fund's assets.
The Fund's portfolio managers are employed by the Subadviser. The Subadviser
employs a two-step stock selection process in its search for undervalued stocks
of temporarily out of favor companies. First, it uses proprietary models and
fundamental research to try to identify stocks that are underpriced in the
market relative to their fundamental value. Next, the Subadviser also emphasizes
companies in those sectors of the economy, which it believes are undervalued
relative to other sectors.

When evaluating an individual stock, the Subadviser looks for: o Low
market valuations measured by the Subadviser's valuation models, o Positive
changes in earnings prospects because of factors such as:
New, improved or unique products and services New or rapidly
expanding markets for the company's products New management Changes
in the economic, financial, regulatory or political environment
particularly affecting the company Effective research, product
development and marketing A business strategy not yet recognized by
the marketplace.

The portfolio managers monitor individual issuers for changes in the
factors above and these changes may trigger a decision to sell a security.

Who Is The Fund Designed For? The Fund is designed for investors seeking capital
appreciation over the long term. Those investors should be willing to assume the
risks of short-term share price fluctuations that are typical for a fund
focusing on stock investments. Since the Fund does not seek income and its
income from investments will likely be small, it is not designed for investors
needing current income. Because of its focus on long-term growth, the Fund may
be appropriate for a portion of a retirement plan investment. This Fund is not a
complete investment program.

Main Risks of Investing in the Fund

All investments have risks to some degree. The Fund's investments in stocks are
subject to changes in their value from a number of factors described below.
There is also the risk that poor security selection by the Fund's portfolio
managers will cause the Fund to underperform other funds having a similar
objective.

These risks collectively form the risk profile of the Fund, and can affect
the value of the Fund's investments, its investment performance and its prices
per share. These risks mean that you can lose money by investing in the Fund.
When you redeem your shares, they may be worth more or less than what you paid
for them. There is no assurance that the Fund will achieve its investment
objective.

Industry Focus. At times the Fund may increase the relative emphasis of its
investments in stocks of companies in a single industry. Stocks of issuers in a
particular industry may be affected by changes in economic conditions, changes
in government regulations, availability of basic resources or supplies, or other
events that affect that industry more than others. To the extent that the Fund
increases the relative emphasis of its investments in a particular industry, its
share values may fluctuate in response to events affecting that industry.

Risks of Foreign Investing. The Fund can invest in foreign securities. The Fund
currently does not intend to invest more than 20% of its net assets in foreign
securities. It can buy securities of both foreign governments and companies.
While foreign securities may offer special investment opportunities, they are
subject to special risks that can reduce the Fund's share prices and returns.

The change in value of a foreign currency against the U.S. dollar will
affect the U.S. dollar value of securities denominated in that foreign currency.
Currency rate changes can also affect the distributions the Fund makes from the
income it receives from foreign securities. Foreign investing can result in
higher transaction and operating costs for the Fund. Foreign issuers are not
subject to the same accounting and disclosure requirements that U.S. companies
are subject to. The value of foreign investments may be affected by exchange
control regulations, expropriation or nationalization of a company's assets,
foreign taxes, delays in settlement of transactions, changes in governmental
economic or monetary policy in the U.S. or abroad, or other political and
economic factors.

Risks of Investing in Debt Securities. Debt securities, such as bonds, involve
credit risk. This is the risk that the borrower will not make timely payments of
principal and interest. The degree of credit risk depends on the issuer's
financial condition and on the terms of the bonds. These securities are also
subject to interest rate risk. There is the risk that the value of the security
may fall when interest rates rise. In general, the market price of debt
securities with longer maturities will go up or down more in response to changes
in interest rates than the market price of shorter term securities.

The Fund's Past Performance

Annual Total Returns (Class A)
(as of 12/31 each year)

[See appendix to prospectus for data in bar chart showing the annual total
return]

Sales charges and taxes are not included in the calculations of return in this
bar chart, and if those charges and taxes were included, the returns may be less
than those shown.
During the period shown in the bar chart, the highest return (not annualized)
before taxes for a calendar quarter was 11.84% (4thQtr'02) and the lowest return
(not annualized) before taxes for a calendar quarter was -18.34% (3rdQtr'02).

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

Average Annual Total Returns 1 Year 5 Years
(or life of
for the periods ended December 31, 2002 class, if less)

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

Class A Shares (inception 2/16/01)
Return Before Taxes -26.57% -17.26%
Return After Taxes on Distributions -26.57% -17.41%
Return After Taxes on Distributions and -16.18% -13.63%
Sale of Fund Shares

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

Russell 3000 Index (reflects no deduction for -21.54% -15.19%1
fees, expenses or taxes)

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

Class B Shares (inception 2/16/01) -26.50% -17.11%

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

Class C Shares (inception 2/16/01) -23.52% -15.32%

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

Class N Shares (inception 3/1/01) -23.07% -14.45%

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

Class Y Shares (inception 2/16/01) -21.59% -14.25%

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

1From 2/28/01.
The Fund's average annual total returns include applicable sales charges: for
Class A, the current maximum initial sales charge of 5.75%; for Class B, the
contingent deferred sales charge of 5% (1-year) and 4% (life of class); and for
Class C and Class N, the 1% contingent deferred sales charge for the 1-year
period. There is no sales charge for Class Y. The returns measure the
performance of a hypothetical account and assume that all dividends and capital
gains distributions have been reinvested in additional shares. The performance
of the Fund's Class A shares is compared to the Russell 3000 Index, an unmanaged
index of large-capitalization U.S. companies. The index performance includes
reinvestment of income but does not reflect transaction costs, expenses or
taxes. The Fund will have investments that vary from those in the index.

Fees and Expenses of the Fund

Shareholder Fees (charges paid directly from your investment):

Annual Fund Operating Expenses (deducted from Fund assets):
(% of average daily net assets)

----------------------------------------------------------------------
Class Class Class Class Class Y
A B C N Shares
Shares Shares Shares Shares
----------------------------------------------------------------------
----------------------------------------------------------------------
Management Fees 1.10% 1.10% 1.10% 1.10% 1.10%
----------------------------------------------------------------------
----------------------------------------------------------------------

Distribution and/or Service 0.13 % 1.00% 1.00% 0.50% N/A
(12b-1) Fees

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

Other Expenses 0.62% 0.65% 0.62% 0.63% 86.49%

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

Total Annual Operating 1.85% 2.75% 2.72% 2.23% 87.59%
Expenses

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

Expenses may vary in future years. "Other Expenses" include transfer agent fees,
custodial fees, and accounting and legal expenses that the Fund paid. "Other
Expenses" in the table are based on, among other things, the fees the Fund would
have paid if the transfer agent had not waived a portion of its fee under a
voluntary undertaking to the Fund to limit these fees to 0.25% per annum for
Class Y shares and 0.35% per annum for all other classes. "Total Annual
Operating Expenses" were reduced by a voluntary expense assumption undertaking
by the Manager. With that expense assumption and the transfer agent waiver,
"Total Annual Operating Expenses" were 1.59% for Class A, 2.44% for Class B,
2.41% for Class C, 1.98% for Class N and 1.12% for Class Y. Effective November
1, 2002, the limit on transfer agent fees for Class Y shares increased to 0.35%
of average daily net assets per fiscal year. Had that limit been in effect
during the Fund's prior fiscal year, the Class Y "Total Annual Operating
Expenses" as percentage of average daily net assets would have been 1.22%. Those
expense undertakings may be revised or terminated at any time.

Class A Shares $752 $1,123 $1,518 $2,619

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

Class B Shares $778 $1,153 $1,654 $2,6661

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

Class C Shares $375 $844 $1,440 $3,051

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

Class N Shares $326 $697 $1,195 $2,565

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

Class Y Shares $5,142 $6,193 $6,225 $10,000

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

Class A Shares $752 $1,123 $1,518 $2,619

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

Class B Shares $278 $853 $1,454 $2,6661

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

Class C Shares $275 $844 $1,440 $3,051

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

Class N Shares $226 $697 $1,195 $2,565

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

Class Y Shares $5,142 $6,193 $6,225 $10,000

1. Class B expenses for years 7 through 10 are based on Class A expenses,
because Class B shares automatically convert to Class A shares 72 months after
purchase.

Oppenheimer Select Managers -
Gartmore Millennium Growth Fund II

What is the Fund's Investment Objective? The Fund seeks long-term capital
appreciation.

What Does the Fund Mainly Invest In? The Fund invests primarily in securities of
growth companies that are creating fundamental changes in the economy.
Typically, these companies are characterized by new or innovative products,
services or processes, with the potential to enhance earnings growth. Growth in
earnings may lead to an increase in the price of the stock. The Fund can invest
in companies of any size but primarily focuses on securities of small to mid
sized companies.

The Fund has the ability to have up to 20% of its total assets in short
positions.

How Does the Portfolio Manager Decide What Securities To Buy or Sell? The Fund's
investment adviser, OppenheimerFunds, Inc. (the "Manager") has retained Gartmore
Mutual Fund Capital Trust (the "Subadviser") to provide the day-to-day portfolio
management of the Fund's assets. The Fund's portfolio managers are employed by
the Subadviser. In analyzing specific companies for possible investment, the
Fund's portfolio managers ordinarily perform an assessment of companies focusing
on the following characteristics.:

o Global capacity.
o Market leadership.
o Brand and reputation.
o Management capability regarding innovation, execution and acquisition.

It generally will sell securities if the portfolio manager believes: o the
price of the security is overvalued o the company's earnings are consistently
lower than expected o more favorable opportunities are identified

The portfolio managers monitor individual issuers for changes in the
factors above and these changes may trigger a decision to sell a security.

Who is the Fund Designed For? The Fund is designed primarily for investors
seeking long-term capital appreciation. Those investors should be willing to
assume the greater risks of short-term share price fluctuations that are typical
for an aggressive growth fund. The Fund does not seek current income and the
income from its investments will likely be small. It is not designed for
investors needing current income or preservation of capital. Because of its
focus on long-term capital appreciation, the Fund may be appropriate for a
portion of a retirement plan investment. This Fund is not a complete investment
program.

Main Risks of Investing in the Fund

All investments have risks to some degree. The Fund's investments in stocks are
subject to changes in their value from a number of factors described below.
There is also the risk that poor security selection by the Fund's portfolio
manager will cause the Fund to underperform other funds having similar
objectives.

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

Industry and Sector Focus. At times the Fund may increase the relative emphasis
of its investments in a particular industry or sector. The prices of stocks of
issuers in a particular industry or sector may go up and down in response to
changes in economic conditions, government regulations, availability of basic
resources or supplies, or other events that affect that industry or sector more
than others. To the extent that the Fund increases the relative emphasis of its
investments in a particular industry or sector, its share values may fluctuate
in response to events affecting that industry or sector.

Risks of Foreign Investing. The Fund can invest without limit in foreign
securities. The Fund currently does not intend to invest more than 25% of its
net assets in foreign securities. It can buy securities of both foreign
governments and companies. While foreign securities may offer special investment
opportunities, they are subject to special risks that can reduce the Fund's
share prices and returns.

The change in value of a foreign currency against the U.S. dollar will
affect the U.S. dollar value of securities denominated in that foreign currency.
Currency rate changes can also affect the distributions the Fund makes from the
income it receives from foreign securities. Foreign investing can result in
higher transaction and operating costs for the Fund. Foreign issuers are not
subject to the same accounting and disclosure requirements that U.S. companies
are subject to. The value of foreign investments may be affected by exchange
control regulations, expropriation or nationalization of a company's assets,
foreign taxes, delays in settlement of transactions, changes in governmental
economic or monetary policy in the U.S. or abroad, or other political and
economic factors.

HOW RISKY IS THE FUND OVERALL? The Fund focuses its investments on equity
securities of growth companies for long-term capital appreciation, and in the
short term, they can be volatile. The price of the Fund's shares can go up and
down substantially. The Fund generally does not use income-oriented investments
to help cushion the Fund's total return from changes in stock prices, except for
defensive purposes. Foreign securities can be volatile, and the price of the
Fund's shares can go up and down because of events affecting foreign markets or
issuers. In the OppenheimerFunds spectrum, the Fund is an aggressive investment
vehicle, designed for investors willing to assume greater risks in the hope of
achieving greater gains. In the short-term the Fund may be less volatile than
small-cap and emerging markets stock funds, but it may be subject to greater
fluctuations in its share prices than funds that emphasize large capitalization
stocks, or funds that focus on both stocks and bonds.

The Fund's Past Performance

Annual Total Returns (Class A)
(as of 12/31 each year)

[See appendix to prospectus for data in bar chart showing the annual total
return]

Sales charges and taxes are not included in the calculations of return in this
bar chart, and if those charges and taxes were included, the returns may be less
than those shown.
During the period shown in the bar chart, the highest return (not annualized)
before taxes for a calendar quarter was 1.51% (4thQtr'02) and the lowest return
(not annualized) before taxes for a calendar quarter was -16.71% (2ndQtr'02).

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

Average Annual Total Returns 1 Year 5 Years
(or life of
for the periods ended December 31, 2002 class, if less)

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

Class A Shares (inception 2/16/01)
Return Before Taxes -33.51% -30.32%
Return After Taxes on Distributions -33.51% -30.32%
Return After Taxes on Distributions and -20.41% -23.42%
Sale of Fund Shares

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

Russell MidCap Growth Index (reflects no -27.41% -20.08%1
deduction for fees, expenses or taxes)

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

Class B Shares (inception 2/16/01) -33.63% -30.19%

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

Class C Shares (inception 2/16/01) -30.74% -28.65%

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

Class N Shares (inception 3/1/01) -30.36% -24.90%

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

Class Y Shares (inception 2/16/01) -29.37% -27.94%

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

1From 2/28/01.
The Fund's average annual total returns include applicable sales charges: for
Class A, the current maximum initial sales charge of 5.75%; for Class B, the
contingent deferred sales charge of 5% (1-year) and 4% (life of class); and for
Class C and Class N, the 1% contingent deferred sales charge for the 1-year
period. There is no sales charge for Class Y. The returns measure the
performance of a hypothetical account and assume that all dividends and capital
gains distributions have been reinvested in additional shares. The performance
of the Fund's Class A shares is compared to the Russell MidCap Growth Index, an
unmanaged index which measures the performance of those Russell Midcap companies
with higher price-to-book ratios and higher forecasted growth values. The index
performance includes reinvestment of income but does not reflect transaction
costs, expenses or taxes. The Fund will have investments that vary from those in
the index.

Fees and Expenses of the Fund

The following tables are provided to help you understand the fees and expenses
you may pay if you buy and hold shares of the Fund. The Fund pays a variety of
expenses directly for management of its assets, administration, distribution of
its shares and other services. Those expenses are subtracted from the Fund's
assets to calculate the Fund's net asset value per share. All shareholders
therefore pay those expenses indirectly. Shareholders pay other expenses
directly, such as sales charges and account transaction charges. The numbers
below are based on the Fund's expenses during its fiscal period ended November
30, 2002.

Shareholder Fees (charges paid directly from your investment):

Annual Fund Operating Expenses (deducted from Fund assets):
(% of average daily net assets)

-------------------------------------------------------------------------------
Class A Class B Class C Class N Class Y
Shares Shares Shares Shares Shares
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Management Fees 1.20% 1.20% 1.20% 1.20% 1.20%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

Distribution and/or Service 0.02% 1.00% 1.00% 0.50% N/A
(12b-1) Fees

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

Other Expenses 1.02% 1.46% 1.31% 1.44% 87.49%

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

Total Annual Operating Expenses 2.24% 3.66% 3.51% 3.14% 88.69%

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

Expenses may vary in future years. "Other Expenses" include agent fees,
custodial fees, and accounting and legal expenses that the Fund pays. "Other
Expenses" in the table are based on, among other things, the fees the Fund would
have paid if the transfer agent had not waived a portion of its fee under a
voluntary undertaking to the Fund to limit these fees to 0.25% per annum for
Class Y shares and 0.35% per annum for all other classes. "Total Annual
Operating Expenses" were reduced by a voluntary expense assumption undertaking
by the Manager. With that expense assumption and the transfer agent waiver,
"Total Annual Operating Expenses" were 1.73% for Class A, 2.77% for Class B,
2.79% for Class C, 2.28% for Class N and 1.62% for Class Y. Effective November
1, 2002, the limit on transfer agent fees for Class Y shares increased to 0.35%
of average daily net assets per fiscal year. Had that limit been in effect
during the Fund's prior fiscal year, the Class Y "Total Annual Operating
Expenses" as percentage of average daily net assets would have been 1.72%. Those
expense undertakings may be revised or terminated at any time.

Class A Shares $789 $1,235 $1,706 $3,002

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

Class B Shares $868 $1,420 $2,092 $3,3111

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

Class C Shares $454 $1,077 $1,822 $3,783

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

Class N Shares $417 $969 $1,645 $3,448

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

Class Y Shares $5,158 $6,136 $6,162 $10,000

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

Class A Shares $789 $1,235 $1,706 $3,002

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

Class B Shares $368 $1,120 $1,892 $3,3111

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

Class C Shares $354 $1,077 $1,822 $3,783

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

Class N Shares $317 $969 $1,645 $3,448

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

Class Y Shares $5,158 $6,136 $6,162 $10,000

1. Class B expenses for years 7 through 10 are based on Class A expenses,
because Class B shares automatically convert to Class A shares 72 months after
purchase.

About the Funds' Investments

THE FUNDS' PRINCIPAL INVESTMENT POLICIES. The allocation of each Fund's (except
the OSM - Mercury Advisors S&P 500 Index Fund) portfolio among different
investments will vary over time based on the portfolio manager's evaluation of
economic and market trends. Each Fund's portfolio might not always include all
of the different types of investments described below. The Statement of
Additional Information contains more detailed information about the Funds'
investment policies and risks.

The Adviser or the Subadvisers, as the case may be, may try to reduce risks
for each Fund (except the OSM - Mercury Advisors S&P 500 Index Fund) by
carefully researching securities before they are purchased. Each Fund other than
the OSM - Mercury Advisors Focus Growth Fund, the OSM - Mercury Advisors
S&P 500 Index Fund and the OSM - Salomon Brothers All Cap Fund is a
diversified fund and attempts to reduce its exposure to market risks by
diversifying its investments, that is, by not holding a substantial amount of
stock of any one company and by not investing too great a percentage of the
Fund's assets in any one company. Also, each Fund does not concentrate 25% or
more of its assets in investments in any one industry. However, in replicating
the weighting of a particular industry in the S&P 500, the OSM - Mercury
Advisors S&P 500 Index Fund may invest more than 25% of its total assets
in securities of issuers in that industry.

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

Stock Investments. The OSM - Mercury Advisors Focus Growth Fund, OSM - Jennison
Growth Fund, OSM - Gartmore Millennium Growth Fund II and the OSM -
Salomon Brothers All Cap Fund currently focus on more established U.S.
companies. Growth companies, for example, may be developing new products
or services, or they may be expanding into new markets for their products.
Newer growth companies tend to retain a large part of their earnings for
research, development or investment in capital assets. Therefore, they
often do not tend to emphasize paying dividends and may not pay any
dividends for some time. The portfolio managers for each of these Funds
look for stocks of growth companies for each Fund's portfolio that they
believe will increase in value over time.

The OSM - Mercury Advisors Focus Growth Fund and the OSM - Jennison Growth
Fund do not limit their investments to issuers in a particular market
capitalization range or ranges. However, the OSM - Mercury Advisors Focus
Growth Fund currently emphasizes common stocks of large-cap issuers and
the OSM - Jennison Growth Fund currently focuses on mid cap and large cap
issuers. The OSM - QM Active Balanced Fund, the OSM - Salomon Brothers All
Cap Fund, and the OSM - Gartmore Millennium Growth Fund II may invest in
the common stocks of companies of every size, small, medium and large
capitalization. "Market capitalization" refers to the total market value
of an issuer's common stock. The stock prices of large cap issuers tend to
be less volatile than the prices of midcap and small cap companies in the
short term, but these companies may not afford the same growth
opportunities as midcap and small cap companies.

Portfolio Turnover. A change in the securities held by each Fund is known as
"portfolio turnover." Each Fund, with the exception of the OSM - Mercury
Advisors S&P 500 Index Fund, may engage in short-term trading to
try to achieve its objective. Each Fund other than the OSM - Mercury Advisors
S&P 500 Index Fund might have a turnover rate in excess of 100%
annually, which may be considered high. Portfolio turnover affects
brokerage costs the Funds pay. Because the OSM - Mercury Advisors
S&P 500 Index Fund employs a passive investment approach, it is
anticipated that its portfolio turnover and trading costs will be lower
than "actively" managed funds. If a Fund realizes capital gains when it
sells its portfolio investments, it must generally pay those gains out to
the shareholders, increasing non-retirement plan or non-IRA or
non-education savings account shareholders' taxable distributions.

Cyclical Opportunities. Each Fund (other than the OSM - Mercury Advisors S&P
500 Index Fund) may also seek to take advantage of changes in the business
cycle by investing in companies that are sensitive to those changes if the
respective Adviser or Subadviser believes they have growth potential. For
example, when the economy is expanding, companies in the consumer durables
and technology sectors may benefit and offer long-term growth
opportunities. Other cyclical industries include insurance and forest
products, for example. Those Funds focus on seeking growth over the long
term, but may seek to take tactical advantage of short-term market
movements or events affecting particular issuers or industries.

Debt Securities. The OSM - QM Active Balanced Fund, the OSM - Jennison Growth
Fund and the OSM - Salomon Brothers All Cap Fund may invest in corporate
bond obligations, as well as government obligations and mortgage-related
securities. The weighted average maturity of the debt securities held by
the OSM - QM Active Balanced Fund will normally be between three and
thirty years. Debt securities are selected primarily for their income
possibilities and their relative emphasis in the portfolio may be greater
when the stock market is volatile. For example, when interest rates are
falling, or when the credit quality of a particular issuer is improving,
the portfolio manager might buy debt securities for their own appreciation
possibilities. The Funds have no limit on the range of maturities of the
debt securities they can buy.

The Subadvisers for the OSM - QM Active Balanced Fund, the OSM - Jennison
Growth Fund and the OSM - Salomon Brothers All Cap Fund do not rely solely
on ratings by rating organizations in selecting debt securities, but also
use their own judgment to evaluate particular issues as well as business
and economic factors affecting an issuer. The debt securities those Funds
buy may be rated by nationally-recognized rating organizations or they may
be unrated securities assigned a rating by the respective Sub-Adviser.

The investments in debt securities by the OSM - QM Active Balanced Fund
and the OSM - Salomon Brothers All Cap Fund, including convertible
securities, can be above or below investment grade in quality.
"Investment-grade" securities are those rated in the four highest rating
categories by Moody's Investors Service or other rating organizations, or,
if unrated, assigned a comparable rating by the respective Sub-Adviser. A
list of the ratings definitions of the principal ratings organizations is
in Appendix A to the Statement of Additional Information.

The OSM - Mercury Advisors Focus Growth Fund may invest in investment
grade, non-convertible debt securities and U.S. Government securities of
any maturity, although typically not to a significant degree.

Debt securities, such as bonds, involve credit risk. This is the risk that
the borrower will not make timely payments of principal and interest. The
degree of credit risk depends on the issuer's financial condition and on
the terms of the bonds. These securities are also subject to interest rate
risk. This is the risk that the value of the security may fall when
interest rates rise. In general, the market price of debt securities with
longer maturities will go up or down more in response to changes in
interest rates than the market price of shorter term debt securities.

CAN EACH FUND'S INVESTMENT OBJECTIVE AND POLICIES CHANGE? The Trust's Board of
Trustees can change non-fundamental investment policies for each Fund without
shareholder approval, although significant changes will be described in
supplements to this Prospectus. The OSM - Mercury Advisors S&P 500 Index
Fund's non-fundamental policy of investing at least 80% of its net assets (plus
borrowings for investment purposes) in securities or other financial instruments
in, or correlated with, the S&P 500 will not be changed by the Fund's
Trustees without first providing shareholders 60 days written notice.
Non-fundamental policies of the OSM - Mercury Advisors S&P 500 Index Fund
and the OSM - Mercury Advisors Focus Growth Fund can be changed by the Board of
Trustees of the Trust or the Board of Trustees of the Master Funds without
shareholder approval. Fundamental policies are those that cannot be changed
without the approval of a majority of each Fund's outstanding voting shares, as
defined in the Investment Company Act of 1940, as amended. With the exception of
the OSM - Mercury Advisors S&P 500 Index Fund and the OSM - Gartmore
Millennium Growth Fund II, each Fund's objective is a fundamental policy. The
OSM - Mercury Advisors S&P 500 Index Fund's objective is a non-fundamental
policy which may be changed at any time by the Board of Trustees of the Trust or
the Board of Trustees of the Master Fund without shareholder approval. The OSM -
Gartmore Millennium Growth Fund's objective is a non-fundamental policy which
may be changed at any time by the Trust's Board of Trustees without shareholder
approval. Other investment restrictions that are fundamental policies are listed
in the Statement of Additional Information. An investment policy or technique is
not fundamental unless this Prospectus or the Statement of Additional
Information says that it is.

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

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

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

Equity Securities. While the OSM - Mercury Advisors Focus Growth Fund, OSM -
Jennison Growth Fund, OSM - Salomon Brothers All Cap Fund and the OSM -
Gartmore Millennium Growth Fund II emphasize investments in common stocks,
those Funds can also buy preferred stocks, warrants and securities
convertible into common stock. The Adviser or Subadviser, as the case may
be, considers some convertible securities to be "equity equivalents"
because of the conversion feature and in that case their rating may have
less impact on the investment decision than in the case of other debt
securities. The OSM - QM Active Balanced Fund may also invest in
non-convertible preferred stocks and convertible securities, warrants and
rights. The OSM - Jennison Growth Fund can also invest in warrants and
rights that can be exercised to obtain stock.

Convertible Securities. Convertible securities are generally debt securities or
preferred stocks that may be converted into common stock. Convertible
securities typically pay current income as either interest (debt security
convertible) or dividends (preferred stocks). A convertible security's
value usually reflects both the stream of current income payments and the
value of the underlying common stock. The market value of a convertible
security performs like a regular debt security, that is, if market
interest rates rise, the value of a convertible security usually falls.
Since it is convertible into common stock, the convertible security also
has the same types of market and issuer risk as the underlying common
stock.

Warrants. A warrant gives the Fund the right to buy a quantity of stock. The
warrant specifies the amount of underlying stock, the purchase (or
"exercise") price, and the date the warrant expires. The Fund has no
obligation to exercise the warrant and buy the stock.

A warrant has value only if the Fund exercises it before it expires. If
the price of the underlying stock does not rise above the exercise price
before the warrant expires, the warrant generally expires without any
value and the Fund loses any amount it paid for the warrant. Thus,
investments in warrants may involve substantially more risk than
investments in common stock. Warrants may trade in the same markets as
their underlying stock, however, the price of the warrant does not
necessarily move with the price of the underlying stock.

Foreign Investing. The OSM - Jennison Growth Fund and the OSM - Salomon Brothers
All Cap Fund each can invest up to 20% of its total assets in foreign
securities including foreign equity securities of companies located in any
country, including developed countries and emerging markets. The OSM - QM
Active Balanced Fund may invest up to 15% of its total assets in foreign
equity securities and up to 20% of its total assets in debt securities of
foreign issuers. The OSM - Gartmore Millennium Growth Fund II may invest
without limit in foreign securities although it does not intend to invest
more than 25% of its net assets in foreign securities. The OSM - Mercury
Advisors Focus Growth Fund may invest without limit in the securities of
foreign companies in the form of ADRs. In addition, the OSM - Mercury
Advisors Focus Growth Fund may invest up to 10% of its total assets in
other forms of securities of foreign companies, including European
Depository Receipts ("EDRs") or other securities convertible into
securities of foreign companies. For purposes of these limits, the
respective Advisers or Subadvisers do not consider ADR's and other similar
receipts or shares to be foreign securities.

While foreign securities may offer special investment opportunities, they
also have special risks that can reduce a Fund's share prices and income.
The change in value of foreign currency against the U.S. dollar will
result in a change in the U.S. dollar value of securities denominated in
that foreign currency. Currency rate changes can also affect the
distributions a Fund makes from the income it receives from foreign
securities if foreign currency values change against the U.S. dollar.
Foreign investing can result in higher transaction and operating costs for
the Fund investing in them. Foreign issuers are not subject to the same
accounting and disclosure requirements that U.S. companies are subject to.
The value of foreign investments may be affected by exchange control
regulations, expropriation or nationalization of a company's assets,
foreign taxes, delays in settlement of transactions, changes in
governmental, economic or monetary policy in the U.S. or abroad, or other
political and economic factors. The risks of investing in foreign
securities are generally greater for investments in emerging markets.

Depository Receipts. The OSM - Mercury Advisors Focus Growth Fund, OSM - QM
Active Balanced Fund and OSM - Jennison Growth Fund may invest in
securities of foreign issuers in the form of Depository Receipts.
Depository Receipts involve the same risks as investing directly in
foreign securities. Those risks are discussed above under "Foreign
Investing." ADRs are receipts typically issued by an American bank or
trust company that show evidence of underlying securities issued by a
foreign corporation. EDRs evidence a similar ownership arrangement. The
OSM - Mercury Advisors Focus Growth Fund may also invest in unsponsored
Depository Receipts. The issuers of such unsponsored Depository Receipts
are not obligated to disclose material information in the United States.
Therefore, there may be less information available regarding such issuers
and there may not be a correlation between such information and the market
value of the Depository Receipts.

Illiquid and Restricted Securities. Investments may be illiquid because of the
absence of an active trading market. If a Fund buys illiquid securities it
may be unable to quickly resell them or may be able to sell them only at a
price below current value. A restricted security is one that has a
contractual restriction on its resale or which cannot be sold publicly
until it is registered under the Securities Act of 1933. Each Fund will
not invest more than 15% of its net assets in illiquid or restricted
securities. That percentage limitation is not a fundamental policy.
Certain restricted securities that are eligible for resale to qualified
institutional purchasers may not be subject to that limit. The respective
Adviser or Subadviser monitors holdings of illiquid securities on an
ongoing basis to determine whether to sell any holdings to maintain
adequate liquidity.

Rule 144A Securities. Rule 144A securities are restricted securities that can
be resold to qualified institutional buyers but not to the general public.
Rule 144A securities may have an active trading market, but carry the risk
that the active trading market may not continue.

Securities Lending. The Fund may lend securities with a value of up to 33-1/3%
of its total assets to financial institutions that provide cash or
securities issued or guaranteed by the U.S. government as collateral.
Securities lending involves the risk that the borrower may fail to return
the securities in a timely manner or at all. As a result, the Fund may
lose money and there may be a delay in recovering the loaned securities.
The Fund could also lose money if it does not recover the securities
and/or the value of the collateral falls, including the value of
investments made with cash collateral. These events could trigger adverse
tax consequences.

Repurchase Agreements; Purchase and Sale Contracts. Each Fund may enter into
certain types of repurchase agreements and each Fund other than OSM -
Mercury Advisors S&P 500 Index Fund may enter into purchase and sale
contracts. Under a repurchase agreement, the seller agrees to repurchase a
security (typically a security issued or guaranteed by the U.S.
Government) at a mutually agreed upon time and price. This insulates the
Fund from changes in the market value of the security during the period,
except for currency fluctuations. A purchase and sale contract is similar
to a repurchase agreement, but purchase and sale contracts provide that
the purchaser receives any interest on the security paid during the
period. If the seller fails to repurchase the security in either situation
and the market value declines, the Fund may lose money.

Short Sales. The OSM - Gartmore Millennium Growth Fund II and the OSM - Mercury
Advisors Focus Growth Fund may invest up to 20% and 5%, respectively, of
their total assets in short positions. The OSM - Mercury Advisors S&P 500
Index Fund and the OSM - Jennison Growth Fund may also invest in short
positions. The Fund may make short sales of securities, either as a hedge
against potential declines in value of a portfolio security or to realize
appreciation when a security that the Fund does not own declines in value.
When the Fund makes a short sale, it borrows the security sold short and
delivers it to the broker-dealer through which it made the short sale as
collateral for its obligation to deliver the security upon conclusion of
the sale. The Fund may have to pay a fee to borrow particular securities
and is often obligated to turn over any payments received on such borrowed
securities to the lender of the securities.

The Fund's obligations to replace the borrowed security will be secured by
collateral deposited with the broker-dealer, usually cash, U.S. Government
securities or other liquid securities similar to those borrowed. With
respect to uncovered short positions, the Fund will also be required to
deposit similar collateral with its custodian to the extent, if any,
necessary so that the value of both collateral deposits in the aggregate
is at all times equal to at least 100% of the current market value of the
security sold short. Depending on arrangements made with the broker-dealer
from which it borrowed the security, regarding payment over of any
payments received by the Fund on such security, the Fund may not receive
any payments (including interest) on its collateral deposited with such
broker-dealer.

The Fund will not make a short sale if, after giving effect to such sale,
the market value of all securities sold short exceeds 5% of the value of
its total assets.

The Fund may also make short sales "against the box" without being subject
to such limitations. In this type of short sale, at the time of the sale,
the Fund owns or has the immediate and unconditional right to acquire the
identical security at no additional cost.

Derivative Investments. Each Fund can invest in a number of different kinds of
"derivative" investments. Options, futures contracts, structured notes
such as indexed securities or inverse securities, CMOs and hedging
instruments are "derivative instruments" the Funds can use. In addition to
using derivatives for hedging, including anticipatory hedging for the OSM
- Mercury Advisors Focus Growth Fund and OSM - Mercury Advisors S&P 500
Index Fund, a Fund might use other derivative investments because they
offer the potential for increased income and principal value. The Funds
are not required to use derivative investments in seeking their objective.

Derivatives have risks. If the issuer of the derivative investment does
not pay the amount due, the Fund can lose money on the investment. The
underlying security or investment on which the derivative is based, and
the derivative itself, may not perform the way the Adviser or Subadviser
expected it to perform. As a result of these risks a Fund could realize
less principal or income from the investment than expected or its hedge
might be unsuccessful. If that happens, the Fund's share prices could
fall. Certain derivative investments held by a Fund may be illiquid.

Certain types of investments or trading strategies (such as borrowing
money to increase the amount of investment) may be subject to leverage
risk. This means a relatively small market movement may result in large
changes in the value of an investment. Certain investments or trading
strategies that involve leverage can result in losses that greatly exceed
the amount originally invested. Derivatives may be difficult or impossible
to sell at the time that the seller would like or at the price that the
seller believes the security is currently worth.

Hedging. Each Fund can buy and sell certain kinds of futures contracts, put and
call options. In addition, the OSM - Mercury Advisors Focus Growth Fund,
the OSM - Jennison Growth Fund, the OSM - QM Active Balanced Fund, the OSM
- Salomon Brothers All Cap Fund and the OSM - Gartmore Millennium Growth
Fund II may enter into forward contracts. The OSM - Mercury Advisors Focus
Growth Fund and the OSM - Salomon Brothers All Cap Fund may invest in
swaps. These are all referred to as "hedging instruments." The Funds do
not use hedging instruments for speculative purposes. Each Fund has limits
on the extent of its use of hedging and the types of hedging instruments
that it can use.

Some of these strategies could be used to hedge a Fund's portfolio against
price fluctuations. Other hedging strategies, such as buying futures and
call options, could increase a Fund's exposure to the securities market.
Forward contracts can be used to try to manage foreign currency risks on
the OSM - Jennison Growth Fund's and OSM - Mercury Advisors Focus Growth
Fund's foreign investments. Foreign currency options can be used to try to
protect against declines in the dollar value of foreign securities the OSM
- Jennison Growth Fund, the OSM - Gartmore Millennium Growth Fund II or
the OSM - Mercury Advisors Focus Growth Fund owns, or to protect against
an increase in the dollar cost of buying foreign securities.

There are also special risks in particular hedging strategies. Options
trading involves the payment of premiums and has special tax effects on a
Fund. If the Adviser or Sub-Adviser used a hedging instrument at the wrong
time or judged market conditions incorrectly, the hedge might fail and the
strategy could reduce the respective Fund's return. Each Fund could also
experience losses if the prices of its futures and options positions were
not correlated with its other investments or if it could not close out a
position because of an illiquid market.

Temporary Defensive and Interim Investments. In times of unstable or adverse
market or economic conditions, the OSM - Mercury Advisors Focus Growth
Fund, OSM - QM Active Balanced Fund, OSM - Jennison Growth Fund, OSM -
Salomon Brothers All Cap Fund, and the OSM - Gartmore Millennium Growth
Fund II can invest up to 100% of their assets in temporary defensive
investments that are inconsistent with the Funds' principal investment
strategies and the OSM - Mercury Advisors Focus Growth Fund can invest up
to 35% of its assets in temporary defensive investments that are
inconsistent with the Fund's principal investment strategies. Generally
they would be cash equivalents (such as commercial paper), money market
instruments, short-term debt securities, U.S. government securities,
repurchase agreements, or purchase and sales contracts. They could include
other investment grade debt securities. The Funds can also invest in such
short-term securities for cash management purposes. To the extent a Fund
invests in these securities, either defensively or for cash management
purposes, the Fund's positions may be inconsistent with its principal
investment strategies and the Fund might not achieve its investment
objective.

How the Funds Are Managed

OppenheimerFunds, Inc. supervises the investment program and handles the
day-to-day administrative business of the OSM - QM Active Balanced Fund, OSM -
Jennison Growth Fund, OSM - Salomon Brothers All Cap Fund and OSM - Gartmore
Millennium Growth Fund II. OppenheimerFunds, Inc. carries out its duties,
subject to the policies established by the Trust's Board of Trustees, under an
investment advisory agreement that states OppenheimerFunds, Inc.'s
responsibilities. The agreement sets the fees each Fund pays to
OppenheimerFunds, Inc. and describes the expenses that each Fund is responsible
to pay to conduct its business.

OppenheimerFunds, Inc. also selects, contracts with and compensates
sub-advisers to manage the investment and reinvestment of the assets of those
Funds of the Trust. OppenheimerFunds, Inc. does not manage any of the Funds'
portfolio assets. OppenheimerFunds, Inc. also (i) monitors the compliance of the
Adviser or Subadvisers with the investment objectives and related policies of
each Fund, (ii) reviews the performance of the Sub-advisers and (iii) reports
periodically on such performance to the Trustees of the Trust.

The Trust and OppenheimerFunds, Inc. have received an order from the
Securities and Exchange Commission to permit OppenheimerFunds, Inc. to appoint a
Subadviser or change the terms of a Subadvisory Agreement for a subadvised Fund
without first obtaining shareholder approval. That means the Trust will be able
to change subadvisers or the fees paid to subadvisers from time to time without
the expense and delays associated with obtaining shareholder approval of the
change.

OppenheimerFunds, Inc. has been an investment adviser since January 1960.
OppenheimerFunds, Inc. and its subsidiaries and controlled affiliates managed
assets of more than $120 billion in assets as of December 31, 2002, including
other Oppenheimer funds with more than 7 million shareholder accounts.
OppenheimerFunds, Inc. is located at 498 Seventh Avenue, 10th Floor, New York,
New York 10018.

OppenheimerFunds, Inc. has entered into an Administration Agreement with
the Trust on behalf of the OSM - Mercury Advisors S&P 500 Index Fund and the
OSM - Mercury Advisors Focus Growth Fund whereby OppenheimerFunds, Inc. will
maintain certain books and records on behalf of those Funds and prepare certain
reports. OppenheimerFunds, Inc. shall also be responsible for filing with the
Securities and Exchange Commission and any state securities regulators certain
disclosure documents. Under the Agreement, both Funds pay an Administration Fee
to OppenheimerFunds, Inc. of 0.50% of the average annual net assets of each such
Fund.

Fund Asset Management, L.P., doing business as Mercury Advisors (the
"Adviser"), has entered into a sub-administration agreement with
OppenheimerFunds, Inc. Under that agreement, the Adviser maintains certain books
and records and prepares certain reports on behalf of the OSM - Mercury Advisors
S&P 500 Index Fund and the OSM - Mercury Advisors Focus Growth Fund.

OppenheimerFunds, Inc. has also entered into an investment advisory
agreement similar to those described above, with the Trust on behalf of the OSM
- Mercury Advisors S&P 500 Index Fund and the OSM - Mercury Advisors Focus
Growth Fund. If the Board determines that the assets of the OSM - Mercury
Advisors S&P 500 Index Fund or the OSM - Mercury Advisors Focus Growth Fund
should not be invested exclusively in the applicable Master Fund, or if either
Fund's ability to invest in the applicable Master Fund is terminated, then
OppenheimerFunds, Inc. will assume the role of adviser to those Funds under that
investment advisory agreement. Under that agreement, the OSM - Mercury Advisors
S&P 500 Index Fund would pay to OppenheimerFunds, Inc. an advisory fee of
0.55% on an annual basis and the OSM - Mercury Advisors Focus Growth Fund would
pay an advisory fee of 1.10% on an annual basis. If OppenheimerFunds, Inc.
assumes the role of adviser for OSM - Mercury Advisors Focus Growth Fund or
OSM - Mercury Advisors S&P 500 Index Fund, the administration and
sub-administration arrangements with respect to the applicable Fund will be
terminated since administrative services would be provided through the
investment advisory agreements.

The Adviser supervises the investment program and handles the day-to-day
business of the Master S&P 500 Index Series of the Quantitative Master Series
Trust and the Master Focus Twenty Trust, the Master Funds in which the OSM -
Mercury Advisors S&P 500 Index Fund and the OSM - Mercury Advisors Focus
Growth Fund, respectively, invest. The Adviser carries out its duties, subject
to the policies established by the Board of Trustees of the applicable Master
Fund, under an investment advisory agreement with the Master Fund that states
the Adviser's responsibilities. Such agreement sets the fees the Master Fund
pays to the Adviser, and describes the expenses that the Master Fund is
responsible to pay to conduct its business. The Adviser has entered into a
contractual arrangement that provides that the management fee for the Master
S&P 500 Index Series, when combined with administrative fees of certain
funds that invest in the applicable Master Fund (excluding the OSM - Mercury
Advisors S&P 500 Index Fund), will not exceed the annual rate of 0.005% of
the average daily net assets of the Master Fund. Absent such contractual
arrangement, the management fee payable by the Master S&P 500 Index Series
would be at the annual rate of 0.05%. The Master Focus Twenty Trust pays the
Adviser a management fee at the annual rate of 0.60% of its average daily net
assets. The fees and expenses which each Master Fund pays, including the
management fee it pays to the Adviser, are passed directly through to the
relevant Fund in proportion to the number of shares of the Master Fund owned by
that Fund.

The Adviser was organized as an investment adviser in 1977 and offers
investment advisory services to more than 50 registered investment companies.
The Adviser and its advisory affiliates had approximately $439 billion in
investment company and other portfolio assets under management as of February
2003.

The OSM - Mercury Advisors S&P 500 Index Fund is managed by a team of
investment professionals who are employed by Mercury Advisors.

The portfolio manager for the OSM - Mercury Advisors Focus Growth Fund is
Michael S. Hahn. Mr. Hahn has been Portfolio Manager of the Master Fund and of
OSM - Mercury Advisors Focus Growth Fund since November 6, 2001 and has been a
portfolio manager of Merrill Lynch Investment Managers since 2000 and was
Associate Portfolio Manager of Merrill Lynch Investment Managers from 1999 to
2000. Mr. Hahn was a portfolio manager and analyst for the PBHG family of mutual
funds from 1996 to 1999.

Advisory Fees. Under each Fund's investment advisory agreement (other than OSM -
Mercury Advisors S&P 500 Index Fund and OSM - Mercury Advisors Focus
Growth Fund), each Fund pays OppenheimerFunds, Inc. (the "Manager") an
Advisory fee at an annual rate that declines on additional assets as the
Fund grows. The advisory fees are as follows:

Fund Advisory Fee

OSM - QM Active Balanced Fund 0.95% of the first
$300 million of average annual net assets of
the Fund and 0.90% of
average annual net assets in excess of
$300 million.

OSM - Jennison Growth Fund 0.95% of the first $300 million of average
annual net assets of the Fund and 0.90%
of average annual net assets in excess of
$300 million.

OSM - Salomon Brothers All Cap Fund 1.10% of the first $100 million of average
annual net assets of the Fund and 1.00% of
average annual net assets in excess of

$100 million.

OSM - Gartmore Millennium Growth 1.20% of the first $400 million of average
Fund II annual net assets of the Fund, 1.10% of the
next $400 million, and 1.00% of average
annual net assets in excess of $800 million.

The Subadvisers. The Manager has retained Jennison Associates LLC ("Jennison")
as the Subadviser to provide the day-to-day portfolio management of the
OSM - Jennison Growth Fund. Jennison is located at 466 Lexington Avenue,
New York, NY 10017. Jennison is a direct, wholly-owned subsidiary of
Prudential Investment Management, which is a direct, wholly-owned
subsidiary of Prudential Asset Management Holding Company, which is a
direct, wholly-owned subsidiary of Prudential Financial, Inc. Jennison has
served as an investment adviser since 1969 and has advised investment
companies since 1990. As of December 31, 2002, Jennison had approximately
$48 billion in assets under management. The Manager, not the Fund, pays
Jennison an annual fee based on the Fund's average annual net assets.

The OSM - Jennison Growth Fund's portfolio managers, Spiros "Sig" Segalas,
Kathleen McCarragher and Michael Del Balso, are employed by Jennison and
are the persons primarily responsible for the selection of the Fund's
portfolio securities.

Mr. Segalas has been in the investment business for over forty-two years
and has managed equity portfolios for investment companies since 1990. Mr.
Segalas is a founding member, Director, President and Chief Investment
Officer of Jennison. Mr. Segalas received his B.A. from Princeton
University.

Ms. McCarragher is a Director and Executive Vice President of Jennison.
Prior to joining Jennison in 1998 she was a Managing Director and Director
of Large Cap Growth Equities at Weiss, Peck & Greer L.L.C. Prior to
1992, Ms. McCarragher served as an analyst, portfolio manager and member
of the Investment Committee for State Street Research & Management
Company. She received her B.B.A. from the University of Wisconsin and her
M.B.A. from Harvard University.

Mr. Del Balso is a Director and Executive Vice President of Jennison,
where he has been part of the investment team since 1972. He received his
B.A. from Yale University and his M.B.A. from Columbia University.

The Manager has retained Prudential Investment Management as the
Subadviser to provide the day-to-day portfolio management of the OSM - QM
Active Balanced Fund. Prudential Investment Management is located at
Prudential Plaza, 751 Broad Street, Newark, NJ 07102. Prudential
Investment Management has served as an investment adviser to investment
companies since 1984, and as of December 31, 2002, had approximately $288
billion in assets under management. The Manager, not the Fund, pays
Prudential Investment Management an annual fee based on the Fund's average
annual net assets.

The portfolio managers for the QM Active Balanced Fund are Michael
Lenarcic and John Van Belle. They became the Fund's portfolio managers on
February 8, 2002. They are employed by Prudential Investment Management
and are the persons primarily responsible for the selection of the Fund's
securities. Mr. Lenarcic and Mr. Van Belle are Managing Directors of
Prudential Investments Quantitative Management, a unit of Prudential
Investment Management. Mr. Lenarcic is a member of Prudential Investment
Management's Balanced Portfolio Management Team. Mr. Van Belle is a member
of Prudential Investments International Asset Allocation Team.

The Manager has retained Salomon Brothers Asset Management Inc. ("Salomon
Brothers") as the Subadviser to provide the day-to-day portfolio
management of the OSM - Salomon Brothers All Cap Fund. Salomon Brothers is
located at 399 Park Avenue, New York , New York 10022. It is a
wholly-owned subsidiary of Salomon Smith Barney Holdings Inc., which in
turn is a wholly-owned subsidiary of Citigroup, Inc. Salomon Brothers has
served as an investment adviser to investment companies since 1987, and as
of December 31, 2002, Salomon Brothers and its affiliates managed
approximately $34.2 billion of assets. The Manager, not the Fund, pays
Salomon Brothers an annual fee based on the Fund's average annual net
assets.

The Fund is team managed by Salomon Brothers. The team has an average of
26 years of investment experience..

The Manager has retained Gartmore Mutual Fund Capital Trust ("GMFCT") as
the Subadviser to provide the day-to-day portfolio management of the OSM -
Gartmore Millennium Growth Fund II. GMFCT is located at 1200 River Road,
Conshohocken, PA 19428.

GMFCT has served as an investment adviser to investment companies since
1999, and as of December 31, 2002, GMFCT and its affiliates and
predecessors had approximately $30.3 billion in assets under management.
The Manager, not the Fund, pays GMFCT an annual fee based on the Fund's
average annual net assets.

The Fund's portfolio managers, Aaron Harris (since inception) and Nick
Ford (since October 1, 2001), are employed by GMFCT and are the persons
primarily responsible for the selection of the OSM - Gartmore Millennium
Growth Fund's portfolio securities. Mr. Harris joined GMFCT in April 2000.
Prior to joining GMFCT, Mr. Harris was a portfolio manager, managing
portions of several portfolios for Nicholas Applegate Capital Management.
Mr. Harris manages funds similar to the OSM - Gartmore Millennium Growth
Fund II and other global technology funds. Mr. Ford joined GMFCT in 1998,
serving as an investment manager on the U.S. equity team. Prior to joining
GMFCT, Mr. Ford served as the director of U.S. equities at Clerical
Medical Investment Group in London. From 1995 to 1996, Mr. Ford was a U.S.
equities fund manager for Sun Alliance Investment Management.

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

How to Buy Shares

HOW ARE SHARES PURCHASED? Shares of the OSM - Mercury Advisors S&P 500 Index
Fund and the OSM - QM Active Balanced Fund are offered for sale only to
retirement plans. Shares of the other Funds may be purchased by retirement plans
and non-retirement plan investors alike. A retirement plan can buy shares
several ways as described below. References in this Prospectus to "you" or
"your" apply to the retirement plan sponsor, or account owner in the case of an
IRA or 403(b) account. The Funds' Distributor, OppenheimerFunds Distributor,
Inc., may appoint certain servicing agents to accept purchase (and redemption)
orders. The Distributor, in its sole discretion, may reject any purchase order
for the Funds' shares.

Participants in a qualified retirement plan (e.g., 401(k), profit-sharing
plan or money purchase pension plan) should note that shares of the Funds are
purchased on their behalf by the plan's administrator in accordance with the
respective plan's provisions. Plan participants should contact their Plan
administrator to find out how to instruct the Plan to buy shares of the Funds
for their account. It is the responsibility of the Plan administrator or other
Plan service provider to forward purchase instructions to the Fund's
Distributor. In the case of qualified plans, the following explanation of how to
purchase Fund shares is intended for Plan administrators and Plan service
providers.

BuyingShares Through Your Dealer. You can buy shares through any dealer, broker
or financial institution that has a sales agreement with the Distributor.
Your dealer will place your order with the Distributor on your behalf.
BuyingShares Through the Distributor. Complete an OppenheimerFunds New Account
Application and return it with a check payable to "OppenheimerFunds
Distributor, Inc." Mail it to P.O. Box 5270, Denver, Colorado 80217. If
you don't list a dealer on the application, the Distributor will act as
your agent in buying the shares. However, we recommend that you discuss
your investment with a financial advisor before you make a purchase to be
sure that the Fund is appropriate for you.

o Paying by Federal Funds Wire. Shares purchased through the Distributor may
be paid for by Federal Funds wire. The minimum investment is $2,500.
Before sending a wire, call the Distributor's Wire Department at
1.800.225.5677 to notify the Distributor of the wire and to receive
further instructions.

o Buying Shares Through OppenheimerFunds AccountLink. With AccountLink,
you pay for shares by electronic funds transfers from your bank
account. Shares are purchased for your account by a transfer of money
from your bank account through the Automated Clearing House (ACH)
system. You can provide those instructions automatically, under an
Asset Builder Plan, described below, or by telephone instructions using
OppenheimerFunds PhoneLink, also described below. Please refer to
"AccountLink," below for more details.
o Buying Shares Through Asset Builder Plans. You may purchase shares of a
Fund automatically each month from your account at a bank or other
financial institution under an Asset Builder Plan with AccountLink.
Details are in the Asset Builder Application and the Statement of
Additional Information.

WHAT IS THE MINIMUM AMOUNT YOU MUST INVEST? In most cases, you can buy Fund
shares with a minimum initial investment of $1,000 and make additional
investments at any time with as little as $50. There are reduced minimums
available under the following special investment plans:
If you establish one of the many types of retirement plan accounts that
OppenheimerFunds offers, more fully described below under "Special
Investor Services," you can start your account with as little as $500.
o By using an Asset Builder Plan or Automatic Exchange Plan (details are in
the Statement of Additional Information), or government allotment plan,
you can make subsequent investments (after making the initial investment
of $500) for as little as $50. For any type of account established under
one of these plans prior to November 1, 2002, the minimum additional
investment will remain $25.

o The minimum investment requirement does not apply to reinvesting dividends
from a Fund or other Oppenheimer funds (a list of them appears in the
Statement of Additional Information, or you can ask your dealer or call
the Transfer Agent), or reinvesting distributions from unit investment
trusts that have made arrangements with the Distributor.

AT WHAT PRICE ARE SHARES SOLD? Shares are sold at their offering price which is
the net asset value per share plus any initial sales charge that applies. The
offering price that applies to a purchase order is based on the next calculation
of the net asset value per share that is made after the Distributor receives the
purchase order at its offices in Colorado, or after any agent appointed by the
Distributor receives the order.

Net Asset Value. Each Fund calculates the net asset value of each class of
shares as of the close of The New York Stock Exchange ("the Exchange"), on
each day the Exchange is open for trading (referred to in this Prospectus
as a "regular business day"). The Exchange normally closes at 4:00 P.M.,
Eastern time, but may close earlier on some days. All references to time
in this Prospectus mean "Eastern time."

The net asset value per share is determined by dividing the value of a
Fund's net assets attributable to a class by the number of shares of that
class that are outstanding. To determine net asset value, the Fund's Board
of Trustees has established procedures to value each Fund's securities, in
general, based on market value. The Board has adopted special procedures
for valuing illiquid and restricted securities and obligations for which
market values cannot be readily obtained. Because some foreign securities
trade in markets and on exchanges that operate on weekends and U.S.
holidays, the values of some of a Fund's foreign investments may change on
days when investors cannot buy or redeem Fund shares.

If, after the close of the principal market on which a security held by a
Fund is traded, and before the time the Fund's securities are priced that
day, an event occurs that the Manager or the Adviser deems likely to cause
a material change in the value of such security, the Fund's Board of
Trustees has authorized the Manager or the Adviser, as applicable, subject
to the Board's review, to ascertain a fair value for such security. A
security's valuation may differ depending on the method used for
determining value.

The Offering Price. To receive the offering price for a particular day, in
most cases the Distributor or its designated agent must receive your order
by the time the Exchange closes that day. If your order is received on a
day when the Exchange is closed or after it has closed, the order will
receive the next offering price that is determined after your order is
received.
Buying Through a Dealer. If you buy shares through a dealer, your dealer must
receive the order by the close of the Exchange and transmit it to the
Distributor so that it is received before the Distributor's close of
business on a regular business day (normally 5:00 P.M.) to receive that
day's offering price, unless your dealer has made alternative arrangements
with the Distributor. Otherwise, the order will receive the next offering
price that is determined.

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

Class A Shares. If you buy Class A shares, you pay an initial sales charge (on
investments up to $1 million for regular accounts or lesser amounts for
certain retirement plans). The amount of that sales charge will vary
depending on the amount you invest. The sales charge rates are listed in
"How Can You Buy Class A Shares?" below.
------------------------------------------------------------------------------

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

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

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

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

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

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

And for non-retirement plan investors who invest $1 million or more, in
most cases Class A shares will be the most advantageous choice, no matter
how long you intend to hold your shares. For that reason, the Distributor
normally will not accept purchase orders of $500,000 or more of Class B
shares or $1 million or more of Class C shares from a single investor.

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

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

Additionally, the dividends payable to Class B, Class C and Class N
shareholders will be reduced by the additional expenses borne by those
classes that are not borne by Class A or Class Y shares, such as the Class
B, Class C and Class N asset-based sales charge described below and in the
Statement of Additional Information. Share certificates are only available
for Class A shares. If you are considering using your shares as collateral
for a loan, that may be a factor to consider.

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

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

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

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

------------------------------------------------------------------------------
Amount of Purchase Front-End Sales Front-End Sales Concession As
Charge As a
Charge As a Percentage of
Percentage of Net Percentage of
Offering Price Amount Invested Offering Price
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Less than $25,000 5.75% 6.10% 4.75%
------------------------------------------------------------------------------
------------------------------------------------------------------------------
$25,000 or more but 5.50% 5.82% 4.75%
less than $50,000
------------------------------------------------------------------------------
------------------------------------------------------------------------------
$50,000 or more but 4.75% 4.99% 4.00%
less than $100,000
------------------------------------------------------------------------------
------------------------------------------------------------------------------
$100,000 or more but 3.75% 3.90% 3.00%
less than $250,000
------------------------------------------------------------------------------
------------------------------------------------------------------------------
$250,000 or more but 2.50% 2.56% 2.00%
less than $500,000
------------------------------------------------------------------------------
------------------------------------------------------------------------------
$500,000 or more but 2.00% 2.04% 1.60%
less than $1 million
------------------------------------------------------------------------------

Can You Reduce Class A Sales Charges? You may be eligible to buy Class A
shares at reduced sales charge rates under the Fund's "Right of
Accumulation" or a Letter of Intent, as described in "Reduced Sales
Charges" in the Statement of Additional Information.

Class A Contingent Deferred Sales Charge. There is no initial sales charge on
purchases of Class A shares of any one or more of the Oppenheimer funds
aggregating $1 million or more, or for certain purchases by particular
types of retirement plans that were permitted to purchase such shares
prior to March 1, 2001 ("grandfathered retirement accounts"). Retirement
plans are not permitted to make initial purchases of Class A shares
subject to a contingent deferred sales charge. The Distributor pays
dealers of record concessions in an amount equal to 1.0% of purchases of
$1 million or more other than by grandfathered retirement accounts. For
grandfathered retirement accounts, the concession is 0.75% of the first
$2.5 million of purchases plus 0.25% of purchases in excess of $2.5
million. In either case, the concession will not be paid on purchases of
shares by exchange or that were previously subject to a front-end sales
charge and dealer concession.

If you redeem any of those shares within an 18-month "holding period"
measured from the beginning of the calendar month of their purchase, a
contingent deferred sales charge (called the "Class A contingent deferred
sales charge") may be deducted from the redemption proceeds. That sales
charge will be equal to 1.0% of the lesser of:
o the aggregate net asset value of the redeemed shares at the time of
redemption (excluding shares purchased by reinvestment of dividends or
capital gain distributions) or
o the original net asset value of the redeemed shares.

The Class A contingent deferred sales charge will not exceed the aggregate
amount of the concessions the Distributor paid to your dealer on all
purchases of Class A shares of all Oppenheimer funds you made that were
subject to the Class A contingent deferred sales charge.

Purchases by Certain Retirement Plans. There is no initial sales charge on
purchases of Class A shares of any one or more Oppenheimer funds by
retirement plans that have $10 million or more in plan assets and that
have entered into a special agreement with the Distributor and by
retirement plans which are part of a retirement plan product or platform
offered by certain banks, broker-dealers, financial advisors, insurance
companies or recordkeepers which have entered into a special agreement
with the Distributor. The Distributor currently pays dealers of record
concessions in an amount equal to 0.25% of the purchase price of Class A
shares by those retirement plans from its own resources at the time of
sale, subject to certain exceptions as described in the Statement of
Additional Information. There is no contingent deferred sales charge upon
the redemption of such shares.

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

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

-------------------------------------------------------------------------------
Years Since Beginning of Month in Contingent Deferred Sales Charge on
Which Purchase Order was Accepted Redemptions in That Year
(As % of Amount Subject to Charge)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
0 - 1 5.0%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
1 - 2 4.0%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
2 - 3 3.0%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
3 - 4 3.0%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
4 - 5 2.0%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
5 - 6 1.0%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

More than 6 None

-------------------------------------------------------------------------------
In the table, a "year" is a 12-month period. In applying the contingent deferred
sales charge, all purchases are considered to have been made on the first
regular business day of the month in which the purchase was made.

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

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

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

A contingent deferred sales charge of 1.0% will be imposed upon the
redemption of Class N shares, if: o The group retirement plan is terminated or
Class N shares of all
Oppenheimer funds are terminated as an investment option of the plan and
Class N shares are redeemed within 18 months after the plan's first
purchase of Class N shares of any Oppenheimer fund, or
o With respect to an IRA or 403(b) plan, Class N shares are redeemed within
18 months of the plan's first purchase of Class N shares of any
Oppenheimer fund.

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

Who Can Buy Class Y Shares? Class Y shares are sold at net asset value per share
without a sales charge directly to institutional investors that have special
agreements with the Distributor for this purpose. They may include insurance
companies, registered investment companies and employee benefit plans.
Individual investors cannot buy Class Y shares directly.

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

DISTRIBUTION AND SERVICE (12b-1) PLANS.

Service Plan for Class A Shares. Each 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 quarterly 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 quarterly for providing personal service and
maintenance of accounts of their customers that hold Class A shares. With
respect to Class A shares subject to a Class A contingent deferred sales
charge purchased by grandfathered retirement accounts, the Distributor
pays the 0.25% service fee to dealers in advance for the first year after
the shares are sold by the dealer. During the first year the shares are
sold, the Distributor retains the service fee. After the shares have been
held for a year, the Distributor pays the service fee to dealers on a
quarterly basis.

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

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

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

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

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

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

Special Investor Services

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

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

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

PHONELINK. PhoneLink is the OppenheimerFunds automated telephone system that
enables shareholders to perform a number of account transactions automatically
using a touch-tone phone. PhoneLink may be used on already-established Fund
accounts after you obtain a Personal Identification Number (PIN), by calling the
PhoneLink number, 1.800.225.5677. Purchasing Shares. You may purchase shares in
amounts up to $100,000 by
phone, by calling 1.800.225.5677. You must have established AccountLink
privileges to link your bank account with a Fund to pay for these
purchases.

Exchanging Shares. With the OppenheimerFunds Exchange Privilege, described
below, you can exchange shares automatically by phone from your Fund
account to another OppenheimerFunds account you have already established
by calling the special PhoneLink number.
Selling Shares. You can redeem shares by telephone automatically by calling the
PhoneLink number and the applicable Fund will send the proceeds directly
to your AccountLink bank account. Please refer to "How to Sell Shares,"
below for details.

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

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

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

REINVESTMENT PRIVILEGE. If you redeem some or all of your Class A or Class B
shares of a Fund, you have up to six months to reinvest all or part of the
redemption proceeds in Class A shares of the Fund or other Oppenheimer funds
without paying a sales charge. This privilege applies only to Class A shares
that you purchased subject to an initial sales charge and to Class A or Class B
shares on which you paid a contingent deferred sales charge when you redeemed
them. This privilege does not apply to Class C, Class N or Class Y shares. You
must be sure to ask the Distributor for this privilege when you send your
payment.

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

How to Sell Shares

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

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

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

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

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

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

Use the following address for Send courier or express mail

requests by mail: requests to:
OppenheimerFunds Services OppenheimerFunds Services
P.O. Box 5270 10200 E. Girard Avenue, Building D
Denver, Colorado 80217 Denver, Colorado 80231

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

the account statement, or, if you have linked your Fund account to your bank
account on AccountLink, you may have the proceeds sent to that bank account.

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

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

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

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

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

A contingent deferred sales charge will be based on the lesser of the net
asset value of the redeemed shares at the time of redemption or the original net
asset value. A contingent deferred sales charge is not imposed on:
o the amount of your account value represented by an increase in net
asset value over the initial purchase price,
o shares purchased by the reinvestment of dividends or capital gains
distributions, or

o shares redeemed in the special circumstances described in Appendix C to
the Statement of Additional Information.
To determine whether a contingent deferred sales charge applies to a

redemption, the Fund redeems shares in the following order:
1. shares acquired by reinvestment of dividends and capital gains
distributions,
2. shares held for the holding period that applies to the class, and 3.
shares held the longest during the holding period.

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

How to Exchange Shares

Shares of each Fund may be exchanged for shares of certain Oppenheimer funds at
net asset value per share at the time of exchange, without sales charge. Shares
of each Fund can be purchased by exchange of shares of other Oppenheimer funds
on the same basis. To exchange shares, you must meet several conditions:
o Shares of the fund selected for exchange must be available for sale in
your state of residence.
o The prospectuses of both funds must offer the exchange privilege. o You
must hold the shares you buy when you establish your account for at
least seven days before you can exchange them. After the account is open
seven days, you can exchange shares every regular business day.
o You must meet the minimum purchase requirements for the fund whose shares
you purchase by exchange.

o Before exchanging into a fund, you must obtain and read its prospectus.
Shares of a particular class of each Fund may be exchanged only for

shares of the same class in the other Oppenheimer funds. For example, you can
exchange Class A shares of a Fund only for Class A shares of another fund. In
some cases, sales charges may be imposed on exchange transactions. For tax
purposes, exchanges of shares involve a sale of the shares of the fund you own
and a purchase of the shares of the other fund, which may result in a capital
gain or loss. Please refer to "How to Exchange Shares" in the Statement of
Additional Information for more details.

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

HOW DO you SUBMIT EXCHANGE REQUESTS? Exchanges may be requested in writing or
by telephone:

Written Exchange Requests. Submit an OppenheimerFunds Exchange Request form,
signed by all owners of the account. Send it to the Transfer Agent at the
address on the back cover. Exchanges of shares held under certificates
cannot be processed unless the Transfer Agent receives the certificates
with the request.

Telephone Exchange Requests. Telephone exchange requests may be made either by
calling a service representative or by using PhoneLink for automated
exchanges by calling 1.800.225.5677. Telephone exchanges may be made only
between accounts that are registered with the same name(s) and address.
Shares held under certificates may not be exchanged by telephone.

ARE THERE LIMITATIONS ON EXCHANGES? There are certain exchange policies you
should be aware of:
o Shares are redeemed from one fund and purchased from the other fund in

the exchange transaction on the same regular business day on which the
Transfer Agent receives an exchange request that conforms to the policies
described above. It must be received by the close of the Exchange that
day, which is normally 4:00 P.M. but may be earlier on some days.

o The interests of a Fund's long-term shareholders and its ability to
manage its investments may be adversely affected when its shares are
repeatedly bought and sold in response to short-term market
fluctuations--also known as "market timing." When large dollar amounts
are involved, a Fund may have difficulty implementing long-term
investment strategies, because it cannot predict how much cash it will
have to invest. Market timing also may force a Fund to sell portfolio
securities at disadvantageous times to raise the cash needed to buy a
market timer's Fund shares. These factors may hurt a Fund's performance
and its shareholders. When the Manager believes frequent trading would
have a disruptive effect on a Fund's ability to manage its investments,
the Manager and the Fund may reject purchase orders and exchanges into
the Fund by any person, group or account that the Manager believes to
be a market timer.
o Each Fund may amend, suspend or terminate the exchange privilege at any
time. Each Fund will provide you notice whenever it is required to do so
by applicable law, but it may impose changes at any time for emergency
purposes.
o If the Transfer Agent cannot exchange all the shares you request because
of a restriction cited above, only the shares eligible for exchange will
be exchanged.

Shareholder Account Rules and Policies

More information about each Fund's policies and procedures for buying, selling
and exchanging shares is contained in the Statement of Additional Information.

A $12 annual fee is assessed on any account valued at less than $500. The
fee is automatically deducted from accounts annually on or about the
second to last business day of September. See the Statement of Additional
Information, or visit the OppenheimerFunds website, to learn how you can
avoid this fee and for circumstances when this fee will not be assessed.

The offering of shares may be suspended during any period in which the
determination of net asset value is suspended, and the offering may be
suspended by the Board of Trustees at any time the Board believes it is in
a Fund's best interest to do so.
Telephone transaction privileges for purchases, redemptions or exchanges may be
modified, suspended or terminated by a Fund at any time. The Fund will
provide you notice whenever it is required to do so by applicable law. If
an account has more than one owner, the Fund and the Transfer Agent may
rely on the instructions of any one owner. Telephone privileges apply to
each owner of the account and the dealer representative of record for the
account unless the Transfer Agent receives cancellation instructions from
an owner of the account.
The Transfer Agent will record any telephone calls to verify data concerning
transactions and has adopted other procedures to confirm that telephone
instructions are genuine, by requiring callers to provide tax
identification numbers and other account data or by using PINs, and by
confirming such transactions in writing. The Transfer Agent and the Fund
will not be liable for losses or expenses arising out of telephone
instructions reasonably believed to be genuine.
Redemption or transfer requests will not be honored until the Transfer Agent
receives all required documents in proper form. From time to time, the
Transfer Agent in its discretion may waive certain of the requirements for
redemptions stated in this Prospectus.
Dealers that perform account transactions for their clients by participating in
NETWORKING through the National Securities Clearing Corporation are
responsible for obtaining their clients' permission to perform those
transactions, and are responsible to their clients who are shareholders of
a Fund if the dealer performs any transaction erroneously or improperly.
The redemption price for shares will vary from day to day because the value of
the securities in each Fund's portfolio fluctuates. The redemption price,
which is the net asset value per share, will normally differ for each
class of shares. The redemption value of your shares may be more or less
than their original cost.
Payment for redeemed shares ordinarily is made in cash. It is forwarded by
check, or through AccountLink or by Federal Funds wire (as elected by the
shareholder) within seven days after the Transfer Agent receives
redemption instructions in proper form. However, under unusual
circumstances determined by the Securities and Exchange Commission,
payment may be delayed or suspended. For accounts registered in the name
of a broker-dealer, payment will normally be forwarded within three
business days after redemption.

The Transfer Agent may delay processing any type of redemption payment as
described under "How to Sell Shares" for recently purchased shares, but
only until the purchase payment has cleared. That delay may be as much as
10 days from the date the shares were purchased. That delay may be avoided
if you purchase shares by Federal Funds wire or certified check, or
arrange with your bank to provide telephone or written assurance to the
Transfer Agent that your purchase payment has cleared.

Involuntary redemptions of small accounts may be made by each Fund if the
account value has fallen below $500 for reasons other than the fact that
the market value of shares has dropped. In some cases, involuntary
redemptions may be made to repay the Distributor for losses from the
cancellation of share purchase orders.
Sharesmay be "redeemed in kind" under unusual circumstances (such as a lack of
liquidity in the Fund's portfolio to meet redemptions). This means that
the redemption proceeds will be paid with liquid securities from a Fund's
portfolio.
"Backup withholding" of federal income tax may be applied against taxable
dividends, distributions and redemption proceeds (including exchanges) if
you fail to furnish a Fund your correct, certified Social Security or
Employer Identification Number when you sign your application, or if you
under-report your income to the Internal Revenue Service.
To avoid sending duplicate copies of materials to households, a Fund will
mail only one copy of each prospectus, annual and semi-annual report and
annual notice of a Fund's privacy policy to shareholders having the same
last name and address on the Fund's records. The consolidation of these
mailings, called householding, benefits the Funds through reduced mailing
expense.

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

Dividends, Capital Gains and Taxes

DIVIDENDS. Each Fund intends to declare dividends separately for each class of
shares from net investment income annually and to pay dividends to shareholders
in December on a date selected by the Board of Trustees. Dividends and
distributions paid on Class A, and Class Y shares will generally be higher than
dividends for Class B shares, Class C shares and Class N shares, which normally
have higher expenses than Class A shares and Class Y shares. Each Fund has no
fixed dividend rate and cannot guarantee that it will pay any dividends or
distributions.

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

WHAT CHOICES DO YOU HAVE FOR RECEIVING DISTRIBUTIONS? When you open your
account, specify on your application how you want to receive your dividends and
distributions. You have four options:
Reinvest All Distributions in the Fund. You can elect to reinvest all dividends
and capital gains distributions in additional shares of the Fund.

Reinvest Dividends or Capital Gains. You can elect to reinvest some
distributions (dividends, short-term capital gains or long-term capital
gains distributions) in the Fund while receiving the other types of
distributions by check or having them sent to your bank account through
AccountLink.

Receive All Distributions in Cash. You can elect to receive a check for all
dividends and capital gains distributions or have them sent to your bank
through AccountLink.
Reinvest Your Distributions in Another OppenheimerFunds Account. You can
reinvest all distributions in the same class of shares of another
OppenheimerFunds account you have established.

TAXES. For retirement plan participants using each Fund as an investment option
under their plan, dividends and capital gain distributions from each Fund
generally will not be subject to current federal personal income tax, but if
they are reinvested in the Fund under the plan, those dividends and
distributions will accumulate on a tax-deferred basis. In general, retirement
plans and, in particular, distributions from retirement plans, are governed by
complex federal and state tax rules. Plan participants should contact their Plan
administrator, refer to their plan's Summary Plan Description, and/or speak to a
professional tax adviser regarding the tax consequences of participating in the
Plan and making withdrawals from their Plan account.

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

If more than 50% of a Fund's assets are invested in foreign securities at
the end of any fiscal year, the Fund may elect under the Internal Revenue Code
to permit shareholders to take a credit or deduction on their federal income tax
returns for foreign taxes paid by that Fund.

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

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

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

MASTER/FEEDER STRUCTURE

Unlike many other mutual funds which directly buy and manage their own portfolio
securities, the OSM - Mercury Advisors S&P 500 Index Fund and the OSM -
Mercury Advisors Focus Growth Fund seek to achieve their investment objectives by
investing all of their assets in another registered investment company with the
same goals as the Fund. All investments are made by the respective Master Fund.
Investors in each Fund will acquire an indirect interest in the respective
Master Fund.

Other "feeder" funds may also invest in the Master Fund and all the feeder
funds bear the Master Fund's expenses in proportion to their assets. This
structure may enable the feeder funds to reduce costs through economies of
scale. A larger investment portfolio may also reduce certain transaction costs
to the extent that contributions to and redemptions from the Master Fund by
feeder funds may offset each other and produce a lower net cash flow. Each
feeder fund can set its own transaction minimums, fund specific expenses, and
other conditions.

Each Fund may withdraw from its respective Master Fund at any time for any
reason and may invest all of its assets in another pooled investment vehicle or
retain an investment adviser to manage the Fund's assets directly. The OSM -
Mercury Advisors S&P 500 Index Fund and the OSM - Mercury Advisors Focus
Growth Fund may change the Master Fund in which it will invest if the Trustees
believe such change would be in the best interests of Fund shareholders.

Smaller feeder funds may be harmed by the actions of larger feeder funds.
For example, a larger feeder fund could have more voting power than a Fund over
the operations of the Master Fund. Whenever the Master Fund holds a vote of its
feeder funds, the feeder funds, including the OSM - Mercury Advisors S&P 500
Index Fund and the OSM - Mercury Advisors Focus Growth Fund, will pass the vote
through to its own shareholders.

Financial Highlights

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

FINANCIAL HIGHLIGHTS

Class A Class B Class C
Year Ended Year Ended Year Ended
Nov. 30, Nov. 30, Nov. 30,
2002 2001 1 2002 2001 1 2002 2001 1
====================================================================================================================================
Per Share Operating Data

Net asset value, beginning of period $ 3.95 $10.00 $3.92 $10.00 $3.92 $10.00
------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.04) (.02) (.06) (.03) (.04) (.03)
Net realized and unrealized loss (1.39) (6.03) (1.37) (6.05) (1.39) (6.05)
-----------------------------------------------------------------------------
Total from investment operations (1.43) (6.05) (1.43) (6.08) (1.43) (6.08)
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 2.52 $ 3.95 $2.49 $ 3.92 $2.49 $ 3.92
=============================================================================

====================================================================================================================================
Total Return, at Net Asset Value 2 (36.20)% (60.50)% (36.48)% (60.80)% (36.48)% (60.80)%

====================================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $1,591 $1,048 $788 $667 $658 $300
------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $1,402 $ 444 $864 $305 $454 $114
------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (1.47)% (1.45)% (2.22)% (2.21)% (2.21)% (2.23)%
Expenses 2.76% 3.99% 3.56% 4.78% 3.53% 4.79%
Expenses, net of voluntary reimbursement of
expenses and/or waiver of transfer agent fees 1.74% 1.84% 2.53% 2.46% 2.47% 2.18%
------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 4 275.69% 137.66% 275.69% 137.66% 275.69% 137.66%

1. For the period from February 16, 2001 (inception of offering) to November 30,
2001. 2. Assumes an investment on the business day before the first day of the
fiscal period (or inception of offering), 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.
3. Annualized for periods of less than one full year.
4. Portfolio turnover rate is representative of the portfolio turnover rate of
the Master Focus Twenty Trust included elsewhere in this report.

See accompanying Notes to Financial Statements.

10 | OPPENHEIMER SELECT MANAGERS MERCURY ADVISORS FOCUS GROWTH FUND

CLASS N CLASS Y
YEAR ENDED YEAR ENDED
NOV. 30, NOV. 30,
2002 2001 1 2002 2001 2
========================================================================================================================
Per Share Operating Data

Net asset value, beginning of period $3.94 $8.28 $3.96 $10.00
------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.01) (.04) (.04) (.05)
Net realized and unrealized loss (1.41) (4.30) (1.39) (5.99)
--------------------------------------------------
Total from investment operations (1.42) (4.34) (1.43) (6.04)
------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $2.52 $3.94 $2.53 $ 3.96
==================================================

========================================================================================================================
Total Return, at Net Asset Value 3 (36.04)% (52.42)% (36.11)% (60.40)%

========================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $72 $1 $1 4 $1 4
------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $52 $1 $1 4 $1
------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 5
Net investment loss (1.70)% (1.06)% (0.40)% (0.63)%
Expenses 3.18% 4.01% 88.54% 503.44%
Expenses, net of voluntary reimbursement of
expenses and/or waiver of transfer agent fees 2.12% 3.07% 1.21% 2.83%
------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 6 275.69% 137.66% 275.69% 137.66%

1. For the period from March 1, 2001 (inception of offering) to November 30,
2001. 2. For the period from February 16, 2001 (inception of offering) to
November 30, 2001.
3. Assumes an investment on the business day before the first day of the fiscal
period (or inception of offering), 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.
4. Less than $1,000.
5. Annualized for periods of less than one full year.
6. Portfolio turnover rate is representative of the portfolio turnover rate of
the Master Focus Twenty Trust included elsewhere in this report.

See accompanying Notes to Financial Statements.

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

Class A Class B Class C
Year Ended Year Ended Year Ended
Nov. 30, Nov. 30, Nov. 30,
2002 2001 1 2002 2001 1 2002 2001 1
----------------------------------------------------------------------------------------------------------------------

Per Share Operating Data
Net asset value, beginning of period $ 9.44 $10.00 $ 9.37 $10.00 $ 9.38 $10.00
----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .09 .09 .07 .01 .05 .01
Net realized and unrealized loss (.88) (.65) (.92) (.64) (.90) (.63)
---------------------------------------------------------------
Total from investment operations (.79) (.56) (.85) (.63) (.85) (.62)
----------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.10) -- (.08) -- (.09) --
----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 8.55 $ 9.44 $ 8.44 $ 9.37 $ 8.44 $ 9.38
===============================================================

----------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 2 (8.49)% (5.60)% (9.11)% (6.30)% (9.12)% (6.20)%

----------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data

Net assets, end of period (in thousands) $4,898 $4,829 $ 455 $ 100 $ 521 $ 363
----------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $4,744 $4,739 $ 255 $ 32 $ 467 $ 68
----------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets: 3
Net investment income 1.08% 1.19% 0.28% 0.50% 0.29% 0.46%
Expenses 1.51% 1.53% 2.75% 2.44% 2.67% 2.43%
Expenses, net of voluntary reimbursement of expenses
and/or voluntary waiver of transfer agent fees 1.41% 1.51% 2.64% 2.17% 2.56% 2.04%
----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 73% 32% 73% 32% 73% 32%

See accompanying Notes to Financial Statements.

15 | OPPENHEIMER SELECT MANAGERS QM ACTIVE BALANCED FUND

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

Class N Class Y
Year Ended Year Ended
Nov. 30, Nov.
30, 2002 2001 1 2002
2001 2
---------------------------------------------------------------------------------------------------

Per Share Operating Data
Net asset value, beginning of period $ 9.41 $ 9.75 $ 9.46 $10.00
---------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .07 .04 .11 .11
Net realized and unrealized loss (.87) (.38) (.88) (.65)
Total from investment operations (.80) (.34) (.77) (.54)
---------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.09) -- (.12) --
---------------------------------------------------------------------------------------------------
Net asset value, end of period $ 8.52 $ 9.41 $ 8.57 $ 9.46
=========================================

---------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 3 (8.60)% (3.49)% (8.27)% (5.40)%

---------------------------------------------------------------------------------------------------
Ratios/Supplemental Data

Net assets, end of period (in thousands) $ 322 $ 38 $ 1 $ 1
---------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 147 $ 24 $ 1 $ 1
---------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 0.76% 0.84% 1.24% 1.39%
Expenses 2.22% 1.94% 88.03% 501.51%
Expenses, net of voluntary reimbursement of expenses
and/or voluntary waiver of transfer agent fees 2.12% 1.79% 1.54% 1.28%
---------------------------------------------------------------------------------------------------
Portfolio turnover rate 73% 32% 73% 32%

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS

CLASS A CLASS B CLASS C
Year Year Year
Ended Ended Ended
Nov. 30, Nov. 30, Nov. 30,
2002 2001 1 2002 2001 1 2002 2001 1
=================================================================================================

Per Share Operating Data
Net asset value, beginning of period $8.56 $10.00 $8.50 $10.00 $8.49 $10.00
-------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.04) (.03) (.02) (.06) (.06) (.02)
Net realized and unrealized loss (2.03) (1.41) (2.08) (1.44) (2.03) (1.49)
--------------------------------------------------------
Total from investment operations (2.07) (1.44) (2.10) (1.50) (2.09) (1.51)
-------------------------------------------------------------------------------------------------
Net asset value, end of period $6.49 $8.56 $6.40 $8.50 $6.40 $8.49
========================================================
=================================================================================================
Total Return, at Net Asset Value 2 (24.18)% (14.40)% (24.71)% (15.00)% (24.62)% (15.10)%

=================================================================================================
Ratios/Supplemental Data
Net assets, end of period
(in thousands) $4,981 $5,234 $1,296 $354 $2,194 $968
-------------------------------------------------------------------------------------------------
Average net assets (in thousands) $4,862 $4,683 $ 620 $221 $1,528 $232
-------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (0.59)% (0.50)% (1.29)% (1.37)% (1.32)% (1.31)%
Expenses 1.89% 1.44% 3.08% 2.45% 2.86% 2.46%
Expenses, net of voluntary reimbursement
of expenses and/or voluntary waiver of
transfer agent fees 1.39% 1.44% 2.51% 2.24% 2.31% 2.10%
-------------------------------------------------------------------------------------------------
Portfolio turnover rate 77% 56% 77% 56% 77% 56%

See accompanying Notes to Financial Statements.

17 | OPPENHEIMER SELECT MANAGERS JENNISON GROWTH FUND

FINANCIAL HIGHLIGHTS CONTINUED

CLASS N CLASS Y
Year Year
Ended Ended
Nov. 30, Nov. 30,
2002 2001 1 2002 2001 2
========================================================================================

Per Share Operating Data
Net asset value, beginning of period $ 8.52 $9.45 $ 8.57 $10.00
----------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.05) (.02) (.03) (.03)
Net realized and unrealized loss (2.02) (.91) (2.03) (1.40)
-------------------------------------
Total from investment operations (2.07) (.93) (2.06) (1.43)
----------------------------------------------------------------------------------------
Net asset value, end of period $6.45 $8.52 $6.51 $ 8.57
=====================================

========================================================================================
Total Return, at Net Asset Value 3 (24.30)% (9.84)% (24.04)% (14.30)%

========================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $1,313 $361 $1 $1
----------------------------------------------------------------------------------------
Average net assets (in thousands) $1,031 $122 $1 $1
----------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment loss (0.82)% (0.90)% (0.41)% (0.38)%
Expenses 2.56% 1.98% 88.09% 501.48%
Expenses, net of voluntary reimbursement
of expenses and/or voluntary waiver of
transfer agent fees 2.01% 1.71% 1.43% 1.25%
----------------------------------------------------------------------------------------
Portfolio turnover rate 77% 56% 77% 56%

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS

Class A Class B Class C
Year Year Year
Ended Ended Ended
Nov. 30, Nov. 30, Nov. 30,
2002 2001 1 2002 2001 1 2002 2001 1
-----------------------------------------------------------------------------------------------------

Per Share Operating Data
Net asset value, beginning of period $ 9.25 $10.00 $ 9.18 $10.00 $ 9.18 $10.00
-----------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.06) .08 (.07) .04 (.07) .03
Net realized and unrealized loss (1.05) (.83) (1.09) (.86) (1.09) (.85)
------------------------------------------------------
Total from investment operations (1.11) (.75) (1.16) (.82) (1.16) (.82)
-----------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.09) -- (.06) -- (.07) --
-----------------------------------------------------------------------------------------------------
Net asset value, end of period $8.05 $9.25 $7.96 $9.18 $7.95 $9.18
======================================================

-----------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 2 (12.17)% (7.50)% (12.75)% (8.20)% (12.78)% (8.20)%

-----------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $6,775 $8,717 $4,325 $2,071 $6,872 $3,729
-----------------------------------------------------------------------------------------------------
Average net assets (in thousands) $9,404 $6,384 $3,416 $1,075 $5,788 $1,427
-----------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income (loss) (0.52)% 1.57% (1.21)% 1.06% (1.21)% 1.17%
Expenses 1.85% 1.59% 2.75% 2.54% 2.72% 2.55%
Expenses, net of voluntary reimbursement
of expenses and/or voluntary waiver of
transfer agent fees 1.59% 1.59% 2.44% 2.39% 2.41% 2.38%
-----------------------------------------------------------------------------------------------------
Portfolio turnover rate 139% 55% 139% 55% 139% 55%

See accompanying Notes to Financial Statements.

18 | OPPENHEIMER SELECT MANAGERS SALOMON BROTHERS ALL CAP FUND

Class N Class Y
Year Year
Ended Ended
Nov. 30, Nov. 30,
2002 2001 1 2002 2001 2
---------------------------------------------------------------------------------------------------

Per Share Operating Data
Net asset value, beginning of period $ 9.21 $ 9.84 $ 9.26 $10.00
---------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .02 .03 .01 .12
Net realized and unrealized loss (1.14) (.66) (1.06) (.86)
-------------------------------------
Total from investment operations (1.12) (.63) (1.05) (.74)
---------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.09) -- (.11) --
---------------------------------------------------------------------------------------------------
Net asset value, end of period $8.00 $9.21 $8.10 $ 9.26
=====================================

---------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 3 (12.30)% (6.40)% (11.52)% (7.40)%

---------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $5,698 $660 $1 $1
---------------------------------------------------------------------------------------------------
Average net assets (in thousands) $3,055 $158 $1 $1
---------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income (loss) (0.66)% 2.08% 0.10% 1.52%
Expenses 2.23% 2.07% 87.59% 501.53%
Expenses, net of voluntary reimbursement of expenses
and/or voluntary waiver of transfer agent fees 1.98% 1.89% 1.12% 1.30%
---------------------------------------------------------------------------------------------------
Portfolio turnover rate 139% 55% 139% 55%

1. For the period from March 1, 2001 (inception of offering) to November 30,
2001. 2. For the period from February 16, 2001 (inception of offering) to
November 30, 2001.
3. Assumes an investment on the business day before the first day of the fiscal
period (or inception of offering), 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.
4. Annualized for periods of less than one full year. See accompanying Notes to
Financial Statements.

FINANCIAL HIGHLIGHTS

Per Share Operating Data
Net asset value, beginning of period $ 7.56 $10.00 $ 7.51 $10.00 $ 7.51 $10.00
------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.09) (.07) (.05) (.14) (.11) (.04)
Net realized and unrealized loss (1.70) (2.37) (1.77) (2.35) (1.71) (2.45)
-------------------------------------------------------------------------------
Total from investment operations (1.79) (2.44) (1.82) (2.49) (1.82) (2.49)
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.77 $ 7.56 $5.69 $ 7.51 $5.69 $ 7.51
===============================================================================

------------------------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 2 (23.68)% (24.40)% (24.23)% (24.90)% (24.23)% (24.90)%

------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $3,148 $4,046 $193 $ 95 $156 $114
------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $3,560 $4,255 $148 $118 $131 $ 40
------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (1.42)% (1.04)% (2.16)% (1.93)% (2.16)% (1.93)%
Expenses 2.24% 1.75% 3.66% 2.74% 3.51% 2.76%
Expenses, net of voluntary reimbursement of expenses
and/or voluntary waiver of transfer agent fees 1.73% 1.75% 2.77% 2.57% 2.79% 2.28%
------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 408% 370% 408% 370% 408% 370%

13 | OPPENHEIMER SELECT MANAGERS GARTMORE MILLENNIUM GROWTH FUND II

FINANCIAL HIGHLIGHTS Continued

Class N Class Y
Year Year
Ended Ended
Nov. 30, Nov. 30,
2002 2001 1 2002 2001 2
-----------------------------------------------------------------------------------------

Per Share Operating Data
Net asset value, beginning of period $ 7.53 $ 9.06 $ 7.57 $10.00
-----------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.10) (.03) (.08) (.05)
Net realized and unrealized loss (1.70) (1.50) (1.70) (2.38)
-------------------------------------
Total from investment operations (1.80) (1.53) (1.78) (2.43)
-----------------------------------------------------------------------------------------
Net asset value, end of period $5.73 $7.53 $5.79 $7.57
=====================================

-----------------------------------------------------------------------------------------
Total Return, at Net Asset Value 3 (23.90)% (16.89)% (23.51)% (24.30)%

-----------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $68 $31 $1 $1
-----------------------------------------------------------------------------------------
Average net assets (in thousands) $50 $ 9 $1 $1
Ratios to average net assets: 4
Net investment loss (1.67)% (1.53)% (0.80)% (0.63)%
Expenses 3.14% 2.27% 88.69% 501.80%
Expenses, net of voluntary reimbursement of expenses
and/or voluntary waiver of transfer agent fees 2.28% 1.74% 1.62% 1.45%
-----------------------------------------------------------------------------------------
Portfolio turnover rate 408% 370% 408% 370%

1. For the period from March 1, 2001 (inception of offering) to November 30,
2001. 2. For the period from February 16, 2001 (inception of offering) to
November 30, 2001.
3. Assumes an investment on the business day before the first day of the fiscal
period (or inception of offering), 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.
4. Annualized for periods of less than one full year. See accompanying Notes to
Financial Statements.

FINANCIAL HIGHLIGHTS

Class A Year Ended December 31 2002 2001 1
-------------------------------------------------------------------------------------------------------------------------
Per Share Operating Data

Net asset value, beginning of period $ 8.85 $10.00
-------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .03 .01
Net realized and unrealized loss (2.08) (1.16)
-----------------------------
Total from investment operations (2.05) (1.15)
-------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.03) --
-----------------------------
Net asset value, end of period $6.77 $8.85
=============================

-------------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 2 (23.21)% (11.50)%

-------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $6,334 $3,598
-------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $5,202 $1,397
-------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 0.62% 0.33%
Expenses 2.03% 1.87%
Expenses, net of voluntary reimbursement of expenses and/or
voluntary waiver of transfer agent fees 1.08% 0.99%
-------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 4 4.59% 3.21%

1. For the period from February 16, 2001 (inception of offering) to December 31,
2001. 2. Assumes an investment on the business day before the first day of the
fiscal period (or inception of offering), 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.
3. Annualized for periods of less than one full year.
4. Portfolio turnover rate is representative of the portfolio turnover rate of
the Master S&P 500 Index Fund included elsewhere in this report.

See accompanying Notes to Financial Statements.

16 | OPPENHEIMER SELECT MANAGERS MERCURY ADVISORS S&P 500(R) INDEX FUND

Class B Year Ended December 31 2002 2001 1

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

Per Share Operating Data
Net asset value, beginning of period $ 8.80 $10.00
----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss -- (.01)
Net realized and unrealized loss (2.09) (1.19)
-----------------------------
Total from investment operations (2.09) (1.20)
----------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- --
-----------------------------
Net asset value, end of period $6.71 $8.80
=============================

----------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 2 (23.75)% (12.00)%

----------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $4,184 $1,189
----------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $2,929 $ 468
----------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (0.10)% (0.40)%
Expenses 2.78% 2.65%
Expenses, net of voluntary reimbursement of expenses and/or
voluntary waiver of transfer agent fees 1.83% 1.68%
----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 4 4.59% 3.21%

See accompanying Notes to Financial Statements.

17 | OPPENHEIMER SELECT MANAGERS MERCURY ADVISORS S&P 500(R) INDEX FUND

FINANCIAL HIGHLIGHTS Continued

Class C Year Ended December 31 2002 2001 1
-------------------------------------------------------------------------------------------------------------------
Per Share Operating Data

Net asset value, beginning of period $ 8.79 $10.00
-------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss -- (.01)
Net realized and unrealized loss (2.09) (1.20)
---------------------------
Total from investment operations (2.09) (1.21)
-------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- --
---------------------------
Net asset value, end of period $6.70 $ 8.79
===========================

-------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 2 (23.78)% (12.10)%

-------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $4,952 $1,558
-------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $3,592 $ 500
-------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (0.10)% (0.39)%
Expenses 2.70% 2.64%
Expenses, net of voluntary reimbursement of expenses and/or
voluntary waiver of transfer agent fees 1.80% 1.76%
-------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 4 4.59% 3.21%

See accompanying Notes to Financial Statements.

18 | OPPENHEIMER SELECT MANAGERS MERCURY ADVISORS S&P 500(R) INDEX FUND

Class N Year Ended December 31 2002 2001 1
-------------------------------------------------------------------------------------------------------------------

Per Share Operating Data
Net asset value, beginning of period $ 8.82 $ 9.54
-------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .02 --
Net realized and unrealized loss (2.08) (.72)
-------------------------------
Total from investment operations (2.06) (.72)
-------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.02) --
-------------------------------
Net asset value, end of period $6.74 $8.82
===============================

-------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 2 (23.33)% (7.55)%

-------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $13,080 $5,014
-------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 9,977 $1,425
-------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 0.38% 0.07%
Expenses 2.16% 2.14%
Expenses, net of voluntary reimbursement of expenses and/or
voluntary waiver of transfer agent fees 1.29% 1.40%
-------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 4 4.59% 3.21%

1. For the period from March 1, 2001 (inception of offering) to December 31,
2001. 2. Assumes an investment on the business day before the first day of the
fiscal period (or inception of offering), 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.
3. Annualized for periods of less than one full year.
4. Portfolio turnover rate is representative of the portfolio turnover rate of
the Master S&P 500 Index Fund included elsewhere in this report.

See accompanying Notes to Financial Statements.

19 | OPPENHEIMER SELECT MANAGERS MERCURY ADVISORS S&P 500(R) INDEX FUND

FINANCIAL HIGHLIGHTS Continued

Class Y Year Ended December 31 2002 2001 1
----------------------------------------------------------------------------------------------------------------------

Per Share Operating Data
Net asset value, beginning of period $ 8.90 $10.00
----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .07 .04
Net realized and unrealized loss (2.12) (1.14)
------------------------------
Total from investment operations (2.05) (1.10)
----------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.02) --
------------------------------
Net asset value, end of period $6.83 $8.90
==============================

----------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 2 (23.06)% (11.00)%

----------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $1 $1
----------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $1 $1
----------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 0.80% 0.57%
Expenses 46.32% 384.04%
Expenses, net of voluntary reimbursement of expenses and/or
voluntary waiver of transfer agent fees 0.83% 0.62%
----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 4 4.59% 3.21%

See accompanying Notes to Financial Statements.

Appendix to Prospectus of
Oppenheimer Select Managers

Graphic Material included in the Prospectus of Oppenheimer Select Managers:
"Annual Total Return (Class A) (% as of 12/31 each year)":

A bar chart will be included in the Prospectus of Oppenheimer Select Managers
(OSM) for each of its 6 series depicting the annual total return of a
hypothetical investment in Class A shares of each Fund for the calendar year
ended 12/31/02, without deducting sales charges. Set forth below is the
relevant data point that will appear on the bar chart.

---------------------------------------------------------------------------------
OSM - OSM - OSM - OSM -
Mercury Mercury OSM - OSM - Salomon Gartmore
Advisors Advisors QM Active Jennison Brothers Millennium
Calendar S&P 500 Focus Balanced Growth All Cap Growth
Year Ended Index Fund Growth Fund Fund Fund Fund Fund II
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
12/31/02 -23.21% -39.01% -12.44% -30.81% -22.09% -29.45%
---------------------------------------------------------------------------------

INFORMATION AND SERVICES

For More Information on The Select Managers Funds
The following additional information about each Fund is available without charge
upon request:

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

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

How to Get More Information

You can request the Statement of Additional Information, the Annual and
Semi-Annual Reports, the notice explaining the Funds' privacy policy and other
information about each Fund or your account:

By Telephone: Call OppenheimerFunds Services toll-free:

1.800.CALL OPP (225.5677)

By Mail: Write to:
OppenheimerFunds Services
P.O. Box 5270 Denver, Colorado 80217-5270

On the Internet: You can send us a request by e-mail or
read or download documents on the
OppenheimerFunds website:
WWW.OPPENHEIMERFUNDS.COM

Information about each Fund including the Statement of Additional Information
can be reviewed and copied at the SEC's Public Reference Room in Washington,
D.C. Information on the operation of the Public Reference Room may be obtained
by calling the SEC at 1.202.942.8090. Reports and other information about each
Fund are available on the EDGAR database on the SEC's Internet website at
www.sec.gov. Copies may be obtained after payment of a duplicating fee by
electronic request at the SEC's e-mail address: publicinfo@sec.gov or by writing
to the SEC's Public Reference Section, Washington, D.C. 20549-0102.

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

The Trust's SEC File No.: 811-10153 The Funds' shares are distributed by:
PR0000.001.0303 (logo) OppenheimerFunds(R) Distributor, Inc.

Printed on recycled paper.

Oppenheimer Select Managers Mercury Advisors S&P 500 Index Fund Mercury
Advisors Focus Growth Fund QM Active Balanced Fund Jennison Growth Fund
Salomon Brothers All Cap Fund Gartmore Millennium Growth Fund II

6803 South Tucson Way, Centennial, Colorado 80112

1.800.525.7048

Statement of Additional Information dated March 28, 2003

This Statement of Additional Information is not a Prospectus. This
document contains additional information about the Funds and supplements
information in the Prospectus dated March 28, 2003. It should be read together
with the Prospectus. You can obtain the Prospectus by writing to the Funds'
Transfer Agent, OppenheimerFunds Services, at P.O. Box 5270, Denver, Colorado
80217, or by calling the Transfer Agent at the toll-free number shown above, or
by downloading it from the OppenheimerFunds Internet web site at
www.oppenheimerfunds.com.

Contents
Page
About the Funds
Additional Information About the Funds' Investment Policies and Risks.. 2
The Funds' Investment Policies..................................... 2
Other Investment Techniques and Strategies......................... 15
Investment Restrictions............................................ 34
How the Funds are Managed ............................................. 42
Organization and History........................................... 42
Trustees and Officers of the Trust................................. 44
The Manager........................................................ 56
Brokerage Policies of the Funds........................................ 64
Distribution and Service Plans......................................... 70
Performance of the Funds............................................... 75
About Your Account
How To Buy Shares...................................................... 80
How To Sell Shares..................................................... 91
How To Exchange Shares................................................. 96
Dividends, Capital Gains and Taxes..................................... 99
Additional Information About the Funds................................. 104

Financial Information About the Funds
Independent Auditors' Reports and Financial Statements................. 106

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

ABOUT THE FUNDS

Additional Information About the Funds' Investment Policies and Risks

The investment objective, the principal investment policies and the main
risks of each Fund are described in the Prospectus. This Statement of Additional
Information contains supplemental information about those policies and risks and
the types of securities that each Fund's investment Adviser or subadviser can
select for the Fund. Additional information is also provided about the
strategies that the Fund may use to try to achieve its objective.

The Funds' Investment Policies

Oppenheimer Select Managers - Mercury Advisors S&P 500 Index Fund

The Fund seeks to achieve its investment objective by investing all of its
assets in the Master S&P 500 Index Series of the Quantitative Master Series
Trust (the "Master Fund") which has the same investment objective as the Fund.
The Fund's investment experience and results will correspond directly to the
investment experience of the Master Fund in which it invests. Thus, all
investments are made at the level of the Master Fund. For simplicity, however,
with respect to investment objective, policies and restrictions, this Statement
of Additional Information, like the Prospectus, uses the term "Fund" to include
the Fund and the Master Fund in which the Fund invests. The following is a
description of the investment policies of the Fund.

The Fund's investment objective is not a fundamental policy and may be
changed by the Board of Trustees of the Fund with 60 days notice to shareholders
but , without shareholder approval. The Trustees may also change the target
index of the Fund if they consider that a different index would facilitate the
management of the Fund in a manner which better enables the Fund to seek to
mirror the total return of the market segment represented by the then existing
target index.

The investment objective of the Fund is to match the performance of the
Standard & Poor's 500 Composite Stock Price Index (the "S&P 500") as
closely as possible before the deduction of Fund expenses. There can be no
assurance that the investment objective of the Fund will be achieved.

In seeking to mirror the total return of the S&P 500, Fund Asset
Management, L.P., doing business as Mercury Advisors (the "Adviser") generally
will allocate the Master Fund's investments among common stocks in approximately
the same weightings as the S&P 500. In addition, the Adviser may use options
and futures contracts and other types of financial instruments relating to all
or a portion of the S&P 500. At times the Fund may not invest in all of the
common stocks in the S&P 500, or in the same weightings as in the S&P
500. At those times, the Fund chooses investments so that the market
capitalizations, industry weighting and other fundamental characteristics of the
stocks and derivative instruments chosen are similar to the S&P 500 as a
whole. The Fund may also engage in securities lending.

The S&P 500 is composed of the common stocks of 500 large
capitalization companies from various industrial sectors, most of which are
listed on the New York Stock Exchange (the "NYSE"). A company's stock market
capitalization is the total market value of its outstanding shares. The S&P
500 represents a significant portion of the market value of all common stocks
publicly traded in the United States.

About Indexing and Management of the Fund

About Indexing. The Fund is not managed according to traditional methods
of "active" investment management, which involve the buying and selling of
securities based upon economic, financial, and market analyses and investment
judgment. Instead, the Fund, utilizing essentially a "passive" or "indexing"
investment approach, seeks to replicate, before the Fund's expenses (which can
be expected to reduce the total return of a Fund), the total return of its
respective index.

Indexing and Managing the Fund. The Fund will be substantially invested in
securities in the S&P 500, and will invest at least 80% of its net assets
(plus any borrowings for investment purposes) at the time of investment in
equity securities or other financial instruments which are contained in or
correlated with securities in the S&P 500.

Because the Fund seeks to mirror the total return of the S&P 500,
generally the Adviser will not attempt to judge the merits of any particular
security as an investment but will seek only to mirror the total return of the
securities in the S&P 500. However, the Adviser may omit or remove a security
which is included in the S&P 500 from the Fund's portfolio if, following
objective criteria, the Adviser judges the security to be insufficiently liquid
or believes the merit of the investment has been substantially impaired by
extraordinary events or financial conditions.

The Adviser may acquire certain financial instruments based upon
individual securities or based upon or consisting of one or more baskets of
securities (which basket may be based upon the S&P 500). Certain of these
instruments may represent an indirect ownership interest in such securities or
baskets. Others may provide for the payment to the Fund or by the Fund of
amounts based upon the performance (positive, negative or both) of a particular
security or basket. The Adviser will select such instruments when it believes
that the use of the instrument will correlate substantially with the expected
total return of a target security or index. In connection with the use of such
instruments, the Adviser may enter into short sales in an effort to adjust the
weightings of particular securities represented in the basket to more accurately
reflect such securities' weightings in the S&P 500.

The Fund's ability to mirror the total return of the S&P 500 may be
affected by, among other things, transaction costs, administration and other
expenses incurred by the Fund, taxes, changes in either the composition of the
S&P 500 or the assets of the Fund, and the timing and amount of Fund
investors' contributions and withdrawals, if any. In addition, the Fund's total
return will be affected by incremental operating costs (e.g., transfer agency,
accounting) that will be borne by the Fund. Under normal circumstances, it is
anticipated that the Fund's total return over periods of one (1) year and longer
will, on a gross basis and before taking into account expenses (incurred at
either the Master Fund or the Fund level), be within ten (10) basis points (a
basis point is one one-hundredth of one percent (0.01%)) of the total return of
the S&P 500. There can be no assurance that this level of correlation will
be achieved. In the event that this correlation is not achieved over time, the
Trustees of the Fund will consider alternative strategies for the Fund.
Information regarding correlation of the Fund's performance to that of the
S&P 500 will be reflected in the Fund's annual report.

Other Investment Policies, Practices and Risk Factors

Cash Management. Generally, the Adviser will employ futures and options on
futures to provide liquidity necessary to meet anticipated redemptions or for
day-to-day operating purposes. However, if considered appropriate in the opinion
of the Adviser, a portion of the Fund's assets may be invested in certain types
of instruments with remaining maturities of three hundred ninety seven (397)
days or less for liquidity purposes. Such instruments would consist of: (i)
obligations of the U.S. Government, its agencies, instrumentalities, authorities
or political subdivisions ("U.S. Government Securities"); (ii) other
fixed-income securities rated Aa or higher by Moody's Investors Service Inc.
("Moody's) or AA or higher by Standard & Poor's Rating Service ("S&P")
or, if unrated, of comparable quality in the opinion of the Adviser; (iii)
commercial paper; (iv) bank obligations, including negotiable certificates of
deposit, time deposits and bankers' acceptances; and (v) repurchase agreements.
At the time the Fund invests in commercial paper, bank obligations or repurchase
agreements, the issuer or the issuer's parent must have outstanding debt rated
Aa or higher by Moody's or AA or higher by S&P or outstanding commercial
paper, bank obligations or other short-term obligations rated Prime-1 by Moody's
or A-1 by S&P; or, if no such ratings are available, the instrument must be
of comparable quality in the opinion of the Adviser.

Short Sales. In connection with the use of certain instruments based upon
or consisting of one or more baskets of securities, the Adviser may sell a
security the Fund does not own, or in an amount greater than the Fund owns
(i.e., make short sales). Such transactions will be used only in an effort to
adjust the weightings of particular securities represented in the basket to
reflect such securities' weightings in the target index.

Cash Flows; Expenses. The ability of the Fund to satisfy its investment
objective depends to some extent on the Adviser's ability to manage cash flow
(primarily from purchases and redemptions and distributions from the Fund's
investments). The Adviser will make investment changes to the Fund's portfolio
to accommodate cash flow while continuing to seek to replicate the total return
of the S&P 500. Investors should also be aware that the investment performance
of the S&P 500 is a hypothetical number which does not take into account
brokerage commissions and other transaction costs, custody and other costs of
investing, and any incremental operating costs (e.g., transfer agency,
accounting) that will be borne by the Fund. Finally, since the Fund seeks to
replicate the total return of the S&P 500, the Adviser generally will not
attempt to judge the merits of any particular security as an investment.

Additional Information Concerning the Index

S&P 500. "Standard & Poor's", "S&P", "S&P 500",
"Standard & Poor's 500", and "500" are trademarks of The McGraw-Hill
Companies, Inc. and have been licensed for use by the Fund. The OSM - Mercury
Advisors S&P 500 Index Fund and the Master Fund are not sponsored, endorsed,
sold or promoted by S&P, a division of The McGraw-Hill Companies, Inc.
S&P makes no representation regarding the advisability of investing in the
Fund. S&P makes no representation or warranty, express or implied, to the
owners of shares of the Fund or any member of the public regarding the
advisability of investing in securities generally or in the Fund particularly or
the ability of the S&P 500 to track general stock market performance.
S&P's only relationship to the Fund is the licensing of certain trademarks
and trade names of S&P and of the S&P 500 which is determined, composed
and calculated by S&P without regard to the Fund. S&P has no obligation
to take the needs of the Fund and the Master Fund or the owners of shares of the
Fund and the Master Fund into consideration in determining, composing or
calculating the S&P 500. S&P is not responsible for and has not
participated in the determination of the prices and amount of the Fund and the
Master Fund or the timing of the issuance of sale of shares of the Fund and the
Master Fund or in the determination or calculation of the equation by which the
Fund and the Master Fund is to be converted into cash. S&P has no obligation
or liability in connection with the administration, marketing or trading of the
Fund and the Master Fund.

S&P does not guarantee the accuracy and/or the completeness of the
S&P 500 Index or any data included therein, and S&P shall have no liability
for any errors, omissions, or interruptions therein. S&P makes no warranty,
express or implied, as to results to be obtained by the Fund, the Master Fund,
owners of shares of the Fund and the Master Fund, or any other person or entity
from the use of the S&P 500 or any data included therein. S&P makes no
express or implied warranties and expressly disclaims all warranties of
merchantability or fitness for a particular purpose or use with respect to the
S&P 500 or any data included therein. Without limiting any of the foregoing,
in no event shall S&P have any liability for any special, punitive, indirect,
or consequential damages (including lost profits), even if notified of the
possibility of such damages.

Portfolio Turnover

Although the Fund will use a passive indexing approach to investing, the
Fund may engage in a substantial number of portfolio transactions. The rate of
portfolio turnover will be a limiting factor when the Adviser considers whether
to purchase or sell securities for the Fund only to the extent that the Adviser
will consider the impact of transaction costs on the Fund's tracking error.
Changes in the securities comprising the S&P 500, will tend to increase the
Fund's portfolio turnover rate, as the Investment Adviser restructures the
Fund's holdings to reflect the changes in the S&P 500. The portfolio turnover
rate is, in summary, the percentage computed by dividing the lesser of the
Fund's purchases or sales of securities by the average net asset value of the
Fund. High portfolio turnover involves correspondingly greater brokerage
commissions for the Fund investing in equity securities and other transaction
costs which are borne directly by the Fund. A high portfolio turnover rate may
also result in the realization of taxable capital gains, including short-term
capital gains taxable at ordinary income rates.

Oppenheimer Select Managers - Mercury Advisors S&P 500 Index Fund Oppenheimer
Select Managers - Mercury Advisors Focus Growth Fund Oppenheimer Select Managers
- QM Active Balanced Fund Oppenheimer Select Managers - Jennison Growth Fund
Oppenheimer Select Managers - Salomon Brothers All Cap Fund Oppenheimer Select
Managers - Gartmore Millennium Growth Fund II

Policies. The composition of each Fund's portfolio and the techniques and
strategies that the respective Subadviser (Adviser in the case of the OSM -
Mercury Advisors S&P 500 Index Fund and the OSM - Mercury Advisors Focus Growth
Fund) may use in selecting portfolio securities will vary over time. The Funds
are not required to use all of the investment techniques and strategies
described below at all times in seeking their goals. The Funds may use some of
the special investment techniques and strategies at some times or not at all.

|X| Cyclical Opportunities. (All Funds except OSM - Mercury Advisors S&P
500 Index Fund). The Fund's Adviser or the Subadvisers might also seek to take
advantage of changes in the business cycle by investing in companies that are
sensitive to those changes if the Adviser or Subadviser believes they have
growth potential. For example, when the economy is expanding, companies in the
consumer durables and technology sectors might benefit and offer long-term
growth opportunities. Other cyclical industries include insurance, for example.
Each Fund focuses on seeking growth over the long term, but could seek to take
tactical advantage of short-term market movements or events affecting particular
issuers or industries.

|X| Investments in Equity Securities. (All Funds except OSM - Mercury
Advisors S&P 500 Index Fund). Each Fund focuses its investments in equity
securities, all but the OSM - QM Active Balanced Fund focusing its investments
in the equity securities of growth companies. The equity securities each Fund
may invest in include common stocks, preferred stocks, rights and warrants, and
securities convertible into common stock. The OSM - Mercury Advisors Focus
Growth Fund and the OSM - Jennison Growth Fund will invest primarily in the
common stocks of companies having a market capitalization that excess $1
billion. The OSM - QM Active Balanced Fund, the OSM - Salomon Brothers All Cap
Fund and the OSM - Gartmore Millennium Growth Fund II may invest in the stocks
of companies of every size - small, medium and large capitalization. The Funds
generally measure a company's market capitalization at the time of investment.
However, a Fund is not required to sell securities of an issuer it holds if the
issuer's capitalization exceeds the limits described above.

Each Fund can also invest a portion of its assets in securities of issuers
having a market capitalization different from the limits described above. At
times, in the Adviser's or Subadviser's view, the market may favor or disfavor
securities of issuers of a particular capitalization range. Therefore, although
the Fund may normally invest its assets in equity securities of a certain market
capitalization, the Fund may change the proportion of its equity investments in
securities of different capitalization ranges, based upon the Adviser's or
Subadviser's judgment of where the best market opportunities are to seek the
Fund's objective.

Growth companies might be providing new products or services that could
enable them to capture a dominant or important market position. They may have a
special area of expertise or the capability to take advantage of changes in
demographic factors in a more profitable way than larger, more established
companies.

Growth companies tend to retain a large part of their earnings for
research, development or investment in capital assets. Therefore, they do not
tend to emphasize paying dividends, and may not pay any dividends for some time.
They are selected for a Fund's portfolio because the Adviser or Subadviser for
the particular Fund believes the price of the stock will increase over the long
term.

|_| Over-the-Counter Securities. (All Funds except OSM - Mercury
Advisors S&P 500 Index Fund). Growth companies may offer greater opportunities
for capital appreciation than securities of large, more established companies.
However, securities of small-cap and mid-cap companies also involve greater
risks than securities of larger companies. Securities of small and medium
capitalization issuers may trade on securities exchanges or in the
over-the-counter market. The over-the-counter markets, both in the U.S. and
abroad, may have less liquidity than securities exchanges. That lack of
liquidity can affect the price a Fund is able to obtain when it wants to sell a
security, because if there are fewer buyers and less demand for a particular
security, the Fund might not be able to sell it at an acceptable price or might
have to reduce the price in order to dispose of the security.

In the U.S., the principal over-the-counter market is the NASDAQ Stock
Market, Inc., ("NASDAQ") which is regulated by the National Association of
Securities Dealers, Inc. It consists of an electronic quotation system for
certain securities, and a security must have at least two (2) market makers to
be included in NASDAQ. Other over-the-counter markets exist in the U.S., as well
as those abroad, wherever a dealer is willing to make a market in a particular
security.

|_| Convertible Securities. (All Funds except OSM - Mercury Advisors
S&P 500 Index Fund). Convertible securities are debt securities that are
convertible into an issuer's common stock. Convertible securities rank senior to
common stock in a corporation's capital structure and therefore are subject to
less risk than common stock in case of the issuer's bankruptcy or liquidation.
Synthetic convertible securities may be either (i) a debt security or preferred
stock that may be convertible only under certain contingent circumstances or
that may pay the holder a cash amount based on the value of shares of underlying
common stock partly or wholly in lieu of a conversion right (a "Cash-Settled
Convertible") or (ii) a combination of separate securities chosen by the Adviser
or Subadviser, as the case may be, in order to create the economic
characteristics of a convertible security, i.e., a fixed income security paired
with a security with equity conversion features, such as an option or warrant (a
"Manufactured Convertible").

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

While convertible securities are a form of debt security, in many
cases their conversion feature (allowing conversion into equity securities)
causes them to be regarded more as "equity equivalents." As a result, the rating
assigned to the security has less impact on an Adviser's or Subadviser's
investment decision with respect to convertible securities than in the case of
non-convertible fixed income securities. To determine whether convertible
securities should be regarded as "equity equivalents," the Adviser or
Subadvisers examine the following factors:
(1) whether, at the option of the investor, the convertible security
can be exchanged for a fixed number of shares of common stock of
the issuer,
(2) whether the issuer of the convertible securities has restated its
earnings per share of common stock on a fully diluted basis
(considering the effect of conversion of the convertible
securities), and
(3) the extent to which the convertible security may be a defensive
"equity substitute," providing the ability to participate in any
appreciation in the price of the issuer's common stock.

As indicated above, synthetic convertible securities may include
either Cash-Settled Convertibles or Manufactured Convertibles. Cash-Settled
Convertibles are instruments that are created by the issuer and have the
economic characteristics of traditional convertible securities but may not
actually permit conversion into the underlying equity securities in all
circumstances. As an example, a private company may issue a Cash-Settled
Convertible that is convertible into common stock only if the company
successfully completes a public offering of its common stock prior to maturity
and otherwise pays a cash amount to reflect any equity appreciation.
Manufactured Convertibles are created by the Adviser or Subadviser, as the case
may be, by combining separate securities that possess one of the two principal
characteristics of a convertible security, i.e., fixed income ("fixed income
component") or a right to acquire equity securities ("convertible component").
The fixed income component is achieved by investing in non-convertible fixed
income securities, such as non-convertible bonds, preferred stocks and money
market instruments. The convertibility component is achieved by investing in
call options, warrants, LEAPS, or other securities with equity conversion
features ("equity features") granting the holder the right to purchase a
specified quantity of the underlying stocks within a specified period of time at
a specified price or, in the case of a stock index option, the right to receive
a cash payment based on the value of the underlying stock index.

A Manufactured Convertible differs from traditional convertible
securities in several respects. Unlike a traditional convertible security, which
is a single security having a unitary market value, a Manufactured Convertible
is comprised of two or more separate securities, each with its own market value.
Therefore, the total "market value" of such a Manufactured Convertible is the
sum of the values of its fixed-income component and its convertibility
component.

More flexibility is possible in the creation of a Manufactured
Convertible than in the purchase of a traditional convertible security. Because
many corporations have not issued convertible securities, the Adviser or
Subadviser, as the case may be, may combine a fixed income instrument and an
equity feature with respect to the stock of the issuer of the fixed income
instrument to create a synthetic convertible security otherwise unavailable in
the market. The Adviser or Subadviser, as the case may be, may also combine a
fixed income instrument of an issuer with an equity feature with respect to the
stock of a different issuer when the Adviser or Subadviser, as the case may be,
believes such a Manufactured Convertible would better promote the Fund's
objective than alternative investments. For example, the Adviser or Subadviser,
as the case may be, may combine an equity feature with respect to an issuer's
stock with a fixed income security of a different issuer in the same industry to
diversify the Fund's credit exposure, or with a U.S. Treasury instrument to
create a Manufactured Convertible with a higher credit profile than a
traditional convertible security issued by that issuer. A Manufactured
Convertible also is a more flexible investment in that its two components may be
purchased separately and, upon purchasing the separate securities, "combined" to
create a Manufactured Convertible. For example, the Fund may purchase a warrant
for eventual inclusion in a Manufactured Convertible while postponing the
purchase of a suitable bond to pair with the warrant pending development of more
favorable market conditions.

The value of a Manufactured Convertible may respond differently to
certain market fluctuations than would a traditional convertible security with
similar characteristics. For example, in the event the Fund created a
Manufactured Convertible by combining a short-term U.S. Treasury instrument and
a call option on a stock, the Manufactured Convertible would likely outperform a
traditional convertible of similar maturity and which is convertible into that
stock during periods when Treasury instruments outperform corporate fixed income
securities and underperform during periods when corporate fixed-income
securities outperform Treasury instruments.

|_| Preferred Stock (All Funds except OSM - Mercury Advisors S&P 500
Index Fund). Preferred stock, unlike common stock, has a stated dividend rate
payable from the corporation's earnings. Preferred stock dividends may be
cumulative or non-cumulative. "Cumulative" dividend provisions require all or a
portion of prior unpaid dividends to be paid before dividends can be paid on the
issuer's
common stock. Preferred stock may be "participating" stock, which means that it
may be entitled to a dividend exceeding the stated dividend in certain cases.

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

|_| Credit Risk. (All Funds except OSM - Mercury Advisors S&P 500 Index
Fund). Convertible securities and debt securities are subject to credit risk.
Credit risk relates to the ability of the issuer of a debt security to make
interest or principal payments on the security as they become due. If the issuer
fails to pay interest, a Fund's income may be reduced and if the issuer fails to
repay principal, the value of that bond and of the Fund's shares may be reduced.
The Adviser or Subadvisers may rely to some extent on credit ratings by
nationally recognized ratings agencies in evaluating the credit risk of
securities selected for a Fund's portfolio. It may also use its own research and
analysis. Many factors affect an issuer's ability to make timely payments, and
the credit risks of a particular security may change over time. The OSM - QM
Active Balanced Fund and the OSM - Salomon Brothers All Cap Fund may invest in
higher-yielding lower-grade debt securities (that is, securities below
investment grade), which have special risks. Those are securities rated below
the four highest rating categories of S&P or Moody's or equivalent ratings of
other rating agencies or ratings assigned to a security by the Adviser or
Subadvisers. The QM Active Balanced Fund can invest up to 20% of its total
assets in lower-grade debt securities and the OSM - Salomon Brothers All Cap
Fund can invest up to 20% of its assets in non-convertible debt securities rated
below investment grade or, if unrated, of equivalent quality as determined by
the Subadviser.

|_| Special Risks of Lower-Grade Securities. "Lower-grade" debt securities
are those rated below "investment grade" which means they have a rating lower
than "Baa" by Moody's or lower than "BBB" by S&P or similar ratings by other
rating organizations. If they are unrated, and are determined by the Adviser or
Subadviser to be of comparable quality to debt securities rated below investment
grade, they are included in the limitation on the percentage of the Fund's
assets that can be invested in lower-grade securities.

Among the special credit risks of lower-grade securities is the greater risk
that the issuer may default on its obligation to pay interest or to repay
principal than in the case of investment grade securities. The issuer's low
creditworthiness may increase the potential for insolvency. An overall decline
in values in the high yield bond market is also more likely during a period of
general economic downturn. An economic downturn or an increase in interest rates
could severely disrupt the market for high yield bonds, adversely affecting the
values of outstanding bonds as well as the ability of issuers to pay interest or
repay principal. In the case of foreign high yield bonds, these risks are in
addition to the special risk of foreign investing discussed in the Prospectus
and in this Statement of Additional Information. To the extent they can be
converted into stock, convertible securities may be less subject to some of
these risks than non-convertible high yield bonds, since stock may be more
liquid and less affected by some of these risk factors.

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

|_| Interest Rate Risks. In addition to credit risks, convertible debt
securities in particular and debt securities in general are subject to changes
in value when prevailing interest rates change. When interest rates fall, the
values of outstanding debt securities generally rise, and the bonds may sell for
more than their face amount. When interest rates rise, the values of outstanding
debt securities generally decline, and the bonds may sell at a discount from
their face amount. The magnitude of these price changes is generally greater for
bonds with longer maturities. Therefore, when the average maturity of a Fund's
debt securities is longer, its share price may fluctuate more when interest
rates change.

|_| Rights and Warrants. (All Funds except OSM - Mercury Advisors S&P
500 Index Fund). Each Fund can invest in warrants or rights. Warrants basically
are options to purchase equity securities at specific prices valid for a specific
period of time. Their prices do not necessarily move parallel to the prices of
the underlying securities. Rights are similar to warrants, but normally have a
short duration and are distributed directly by the issuer to its shareholders.
Rights and warrants have no voting rights, receive no dividends and have no
rights with respect to the assets of the issuer.

|_| Investments in Debt Securities. (All Funds except OSM - Mercury
Advisors S&P 500 Index Fund). The Funds may invest in a variety of domestic
and foreign debt securities, including corporate bonds, debentures and other debt
securities, and foreign and U.S. government securities including
mortgage-related securities. The OSM - QM Active Balanced Fund will invest in
debt securities to seek investment income as part of its investment objectives.
Each Fund might invest in them also to seek capital growth or for liquidity or
defensive purposes. Although the OSM - QM Active Balanced Fund will invest at
least 25% of its total assets in investment grade debt securities, the Fund
currently emphasizes investments in equity securities. Foreign debt securities
are subject to the risks of foreign investing described below. In general,
domestic and foreign debt securities are also subject to credit risk and
interest rate risk.

? Mortgage-Related Securities (OSM - QM Active Balanced Fund, OSM -
Salomon Brothers All Cap Fund and OSM - Jennison Growth Fund only).
Mortgage-related securities are a form of derivative investment collateralized
by pools of commercial or residential mortgages. Pools of mortgage loans are
assembled as securities for sale to investors by government agencies or entities
or by private issuers. These securities include collateralized mortgage
obligations ("CMOs"), mortgage pass-through securities, stripped mortgage
pass-through securities, interests in real estate mortgage investment conduits
("REMICs") and other real estate-related securities.

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

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

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

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

If interest rates rise rapidly, prepayments may occur at a slower rate
than expected and the expected maturity of long-term or medium-term securities
could lengthen as a result. That would cause their value and the prices of the
Fund's shares to fluctuate more widely in response to changes in interest rates.

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

|_| Collateralized Mortgage Obligations. CMOs are multi-class bonds that
are backed by pools of mortgage loans or mortgage pass-through certificates.
They may be collateralized by:

(1) pass-through certificates issued or guaranteed by Ginnie Mae, Fannie
Mae, or Freddie Mac,
(2) unsecuritized mortgage loans insured by the Federal Housing
Administration or guaranteed by the Department of Veterans' Affairs,
(3) unsecuritized conventional mortgages, (4) other mortgage-related
securities, or (5) any combination of these.

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

|_| U.S. Government Securities (All Funds except OSM - Mercury Advisors
S&P 500 Index Fund). These are securities issued or guaranteed by the U.S.
Treasury or other U.S. government agencies or federally-chartered corporate
entities referred to as "instrumentalities." The obligations of U.S. government
agencies or instrumentalities in which the Funds may invest may or may not be
guaranteed or supported by the "full faith and credit" of the United States.
"Full faith and credit" means generally that the taxing power of the U.S.
government is pledged to the payment of interest and repayment of principal on a
security. If a security is not backed by the full faith and credit of the United
States, the owner of the security must look principally to the agency issuing
the obligation for repayment. The owner might be able to assert a claim against
the United States if the issuing agency or instrumentality does not meet its
commitment. The Funds will invest in securities of U.S. government agencies and
instrumentalities only if the Adviser or Subadviser is satisfied that the credit
risk with respect to such instrumentality is acceptable.

|_| U.S. Treasury Obligations. These include Treasury bills (which
have maturities of one year or less when issued), Treasury notes (which have
maturities of from one to ten (10) years when issued), and Treasury bonds
(maturities of more than ten (10) years when issued). Treasury securities are
backed by the full faith and credit of the United States as to timely payments
of interest and repayments of principal. They also can include U.S. Treasury
securities that have been "stripped" by a Federal Reserve Bank, and zero-coupon
U.S. Treasury securities.

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

|_| U.S. Government Mortgage-Related Securities (All Funds except
OSM - Mercury Advisors S&P 500 Index Fund). The Funds can invest in a variety
of mortgage-related securities that are issued by U.S. government agencies or
instrumentalities, some of which are described below. Mortgage-backed securities
are "pass-through" securities, meaning that principal and interest payments made
by the borrower on the underlying mortgages are passed through to the Fund. The
value of mortgage-backed securities, like that of traditional fixed-income
securities, typically increases when interest rates fall and decreases when
interest rates rise. However, mortgage-backed securities differ from traditional
fixed-income securities because of their potential for prepayment without
penalty. The price paid by a Fund for its mortgage-backed securities, the yield
the Fund expects to receive from such securities and the average life of the
securities are based on a number of factors, including the anticipated rate of
prepayment of the underlying mortgages. In a period of declining interest rates,
borrowers may prepay the underlying mortgages more quickly than anticipated,
thereby reducing the yield to maturity and the average life of the
mortgage-backed securities. Moreover, when a Fund reinvests the proceeds of a
prepayment in these circumstances, it will likely receive a rate of interest
that is lower than the rate on the security that was prepaid. To the extent that
a Fund purchases mortgage-backed securities at a premium, mortgage foreclosures
and principal prepayments may result in a loss to the extent of the premium
paid. If a Fund buys such securities at a discount, both scheduled payments of
principal and unscheduled prepayments will increase current and total returns
and will accelerate the recognition of income which, when distributed to
shareholders, will be taxable as ordinary income. In a period of rising interest
rates, prepayments of the underlying mortgages may occur at a slower than
expected rate, resulting in maturity extensions. This particular risk may
effectively change a security that was considered short or intermediate-term at
the time of purchase into a long-term security. Since long-term securities
generally fluctuate more widely in response to changes in interest rates than
shorter-term securities, maturity extension risk could increase the inherent
volatility of a Fund.

|_| Zero-Coupon U.S. Government Securities (All Funds except OSM - Mercury
Advisors S&P 500 Index Fund and OSM - Gartmore Millennium Growth Fund II).
The Funds may buy zero-coupon U.S. government securities. These will typically
be U.S. Treasury Notes and Bonds that have been stripped of their unmatured
interest coupons, the coupons themselves, or certificates representing interests
in those stripped debt obligations and coupons.

Zero-coupon securities do not make periodic interest payments and are sold
at a deep discount from their face value at maturity. The buyer recognizes a
rate of return determined by the gradual appreciation of the security, which is
redeemed at face value on a specified maturity date. This discount depends on
the time remaining until maturity, as well as prevailing interest rates, the
liquidity of the security and the credit quality of the issuer. The discount
typically decreases as the maturity date approaches.

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

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

|X| Money Market Instruments (All Funds except OSM - Mercury Advisors
S&P 500 Index Fund). The following is a brief description of the types of
money market securities the Funds (other than the OSM - Mercury Advisors S&P
500 Index Fund) can invest in. Those money market securities are high-quality,
short-term debt instruments that are issued by the U.S. government, corporations,
banks or other entities. They may have fixed, variable or floating interest
rates.

|_| U.S. Government Securities. These include obligations issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities.

|_| Bank Obligations. These include time deposits, certificates of
deposit and bankers' acceptances. Time deposits, other than overnight deposits,
may be subject to withdrawal penalties and, if so, they are deemed "illiquid"
investments.

The Funds can purchase bank obligations that are fully insured by the
Federal Deposit Insurance Corporation ("FDIC"). The FDIC insures the deposits of
member banks up to $100,000 per account. Insured bank obligations may have a
limited market and a particular investment of this type may be deemed "illiquid"
unless the Adviser or Subadviser, as the case may be, determines that a
readily-available market exists for that particular obligation, or unless the
obligation is payable at principal amount plus accrued interest on demand or
within seven (7) days after demand.

? |_| Commercial Paper. Each Fund can invest in commercial paper if it is rated
within the top two (2) rating categories of S&P and Moody's. If the paper is
not rated, it may be purchased if issued by a company having a credit rating of
at least "AA" by S&P or "Aa" by Moody's.

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

|_| Variable Amount Master Demand Notes. Master demand notes are
corporate obligations that permit the investment of fluctuating amounts by each
of the Funds except the OSM - Mercury Advisors S&P 500 Index Fund and the
OSM - Mercury Advisors Focus Growth Fund at varying rates of interest under
direct arrangements between the Funds, as lender, and the borrower. They permit
daily changes in the amounts borrowed. The Funds have the right to increase the
amount under the note at any time up to the full amount provided by the note
agreement, or to decrease the amount. The borrower may prepay up to the full
amount of the note without penalty. These notes may or may not be backed by
bank letters of credit.

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

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

|X| Portfolio Turnover. "Portfolio turnover" describes the rate at which a
Fund traded its portfolio securities during its last fiscal year. For example,
if a Fund sold all of its securities during the year, its portfolio turnover
rate would have been 100%. Each Fund's portfolio turnover rate will fluctuate
from year to year. Each of the Funds, except the OSM - Mercury Advisors S&P
500 Index Fund, may have a portfolio turnover rate of more than 100% annually.

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

The portfolio turnover of the Master Fund of OSM - Mercury Advisors Focus
Growth Fund increased to 275.69% for the fiscal year ended November 30, 2002,
from 137.66% for the period ended November 30, 2001. The portfolio turnover was
due in large part to the extraordinary volatility of the markets during the
year.

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

|X| Foreign Securities (All Funds except OSM - Mercury Advisors S&P
500 Index Fund). Each Fund can invest in foreign securities. "Foreign securities"
include equity and debt securities of companies organized under the laws of
countries other than the United States and debt securities of foreign
governments that are traded on foreign securities exchanges or in foreign
over-the-counter markets. Each Fund can purchase equity and debt securities
(which may be denominated in U.S. dollars or non-U.S. currencies) issued by
foreign corporations, or that are issued or guaranteed by certain supranational
entities (described below), or foreign governments or their agencies or
instrumentalities. These include securities issued by U.S. corporations
denominated in non-U.S. currencies. In normal market conditions the Funds do not
expect to hold significant amounts of foreign debt securities.

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

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

The OSM - Mercury Advisors Focus Growth Fund and the OSM - Jennison Growth
Fund may invest in the securities of foreign issuers in the form of ADRs,
European Depository Receipts ("EDRs") or other securities convertible into
securities of foreign issuers. These securities may not necessarily be
denominated in the same currency as the securities into which they may be
converted. ADRs are receipts typically issued by an American bank or trust
company which evidence ownership of underlying securities issued by a foreign
corporation. EDRs are receipts issued in Europe which evidence a similar
ownership arrangement. Generally, ADRs, which are issued in registered form, are
designed for use in the United States securities markets, and EDRs, which are
issued in bearer form, are designed for use in European securities markets. The
OSM - Mercury Advisors Focus Growth Fund may invest in unsponsored ADRs. The
issuers of unsponsored ADRs are not obligated to disclose material information
in the United States and, therefore, there may not be a correlation between such
information and the market value of such ADRs.

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

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

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

|_| Special Risks of Emerging Markets. Emerging and developing
markets abroad may also offer special opportunities for growth
investing but have greater risks than more developed foreign markets, such as
those in Europe, Canada, Australia, New Zealand and Japan. There may be even
less liquidity in their securities markets, and settlements of purchases and
sales of securities may be subject to additional delays. They are subject to
greater risks of limitations on the repatriation of income and profits because
of currency restrictions imposed by local governments. Those countries may also
be subject to the risk of greater political and economic instability, which can
greatly affect the volatility of prices of securities in those countries.

|X| Passive Foreign Investment Companies. Each Fund other than OSM -
Mercury Advisors S&P 500 Index Fund may purchase the securities of certain
foreign investment corporations called passive foreign investment companies
("PFICs"). Such entities have been the only or primary way to invest in certain
countries because some foreign countries limit, or prohibit, all direct foreign
investment in the securities of companies domiciled therein. However, the
governments of some countries have authorized the organization of investment
funds to permit indirect foreign investment in such securities. For tax
purposes, these funds also may be PFICs.

Each Fund is subject to certain percentage limitations under the 1940 Act
relating to the purchase of securities of investment companies, and,
consequently, the Funds may have to subject any of its investment in other
investment companies, including PFICs, to the limitation that no more than 10%
of the value of the Funds' total assets may be invested in such securities. In
addition to bearing their proportionate share of a fund's expenses (management
fees and operating expenses), shareholders will also indirectly bear similar
expenses of such entities. Like other foreign securities, interests in PFICs
also involve the risk of foreign securities, as described above.

|X| Investing in Small, Unseasoned Companies (All Funds except OSM -
Mercury Advisors S&P 500 Index Fund). Each Fund can invest in securities of
small, unseasoned companies. These are companies that have been in operation for
less than three (3) years, including the operations of any predecessors.
Securities of these companies may be subject to volatility in their prices. They
may have a limited trading market, which may adversely affect the Fund's ability
to dispose of them and can reduce the price a Fund might be able to obtain for
them. Other investors that own a security issued by a small, unseasoned issuer
for which there is limited liquidity might trade the security when a Fund is
attempting to dispose of its holdings of that security. In that case the Fund
might receive a lower price for its holdings than might otherwise be obtained.
These are more speculative securities and can increase the Funds' overall
portfolio risks.

|X| Real Estate Investment Trusts (All Funds). Each Fund may invest in
equity Real Estate Investment Trusts ("REITs"). REITs are entities which either
own properties or make construction or mortgage loans. Equity REITs may also
include operating or financing companies. Equity REITs own real estate directly
and the value of, and income earned by, the Fund depends upon the income of the
underlying properties and the rental income they earn. Equity REITs can also
realize capital gains by selling properties that have appreciated in value. The
value of securities issued by REITs are affected by tax and regulatory
requirements and by perceptions of management skill. They are also subject to
heavy cash flow dependency, defaults by borrowers or tenants, self-liquidation,
the possibility of failing to qualify for tax-free status under the Internal
Revenue Code, and failing to maintain exemption from the 1940 Act. Because REITs
normally pay on advisory fee and other expenses, a shareholder in these Funds
may be subject to duplicative fees and expenses.

|X| Firm Commitments and When-Issued Securities (All Funds). Each Fund may
purchase securities on a firm commitment basis, including when-issued
securities. Securities purchased on a firm commitment basis are purchased for
delivery beyond the normal settlement date at a stated price and yield. No
income accrues to the purchaser of a security on a firm commitment basis prior
to delivery. Such securities are recorded as an asset and are subject to changes
in value based upon changes in the general level of interest rates. Purchasing a
security on a firm commitment basis can involve a risk that the market price at
the time of delivery may be lower than the agreed upon purchase price, in which
case there could be an individual loss at the time of delivery. The Fund will
only make commitments to purchase securities on a firm commitment basis with the
intention of actually acquiring the securities, but may sell them before the
settlement date if it is deemed advisable. The Fund will identify on its books
liquid assets at least equal in value to the value of the Fund's purchase
commitments until the Fund pays for the investment.

|X| Repurchase Agreements and Purchase and Sale Contracts (All Funds).
Each Fund may invest in securities pursuant to repurchase agreements and each
Fund other than the OSM - Mercury Advisors S&P 500 Index Fund may invest in
purchase and sale contracts. Under a repurchase agreement or a purchase and sale
contract, the seller agrees, upon entering into the contract with the Fund, to
repurchase the security at a mutually agreed-upon time and price in a specified
currency, thereby determining the yield during the term of the agreement. This
results in a fixed rate of return insulated from market fluctuations during such
period although it may be affected by currency fluctuations. In the case of
repurchase agreements, the price at which the trades are conducted do not
reflect accrued interest on the underlying obligation; whereas, in the case of
purchase and sale contracts, the prices take into account accrued interest. Such
agreements usually cover short periods, such as under one week. Repurchase
agreements may be construed to be collateralized loans by the purchaser to the
seller secured by the securities transferred to the purchaser. In the case of a
repurchase agreement, as a purchaser, the Fund will require the seller to
provide additional collateral if the market value of the securities falls below
the repurchase price at any time during the term of the repurchase agreement;
the Fund does not have the right to seek additional collateral in the case of
purchase and sale contracts. In the event of default by the seller under a
repurchase agreement construed to be a collateralized loan, the underlying
securities are not owned by the Fund but only constitute collateral for the
seller's obligation to pay the repurchase price. Therefore, the Fund may suffer
time delays and incur costs or possible losses in connection with the
disposition of the collateral. Approved vendors include U.S. commercial banks,
U.S. branches of foreign banks, or broker-dealers that have been designated as
primary dealers in government securities. They must meet credit requirements set
by OppenheimerFunds, Inc. (the "Manager") (or in the case of OSM - Mercury
Advisors S&P 500 Index Fund and OSM - Mercury Advisors Focus Growth Fund,
credit requirements set by the Advisor) from time to time. A purchase and sale
contract differs from a repurchase agreement in that the contract arrangements
stipulate that the securities are owned by the Fund. In the event of a default
under such a repurchase agreement or under a purchase and sale contract, instead
of the contractual fixed rate, the rate of return to the Fund shall be dependent
upon intervening fluctuations of the market value of such securities and the
accrued interest on the securities. In such event, the Fund would have rights
against the seller for breach of contract with respect to any losses arising
from market fluctuations following the failure of the seller to perform. While
the substance of purchase and sale contracts is similar to repurchase agreements,
because of the different treatment with respect to accrued interest and additional
collateral, Fund management believes that purchase and sale contracts are not
repurchase agreements as such term is understood in the banking and brokerage
community. No Fund may invest more than 15% of its net assets in repurchase
agreements or purchase and sale contracts maturing in more than seven (7) days
together with all other illiquid investments.

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

|X| Illiquid and Restricted Securities (All Funds). Each Fund may purchase
illiquid or restricted securities. Under the policies and procedures established
by the Funds' Board of Trustees (or, in the case of OSM - Mercury Advisors S&P
500 Index Fund and OSM - Mercury Advisors Focus Growth Fund, the Board of
Trustees of the applicable Master Fund), the Adviser or Subadviser determines
the liquidity of certain of a Fund's investments. To enable a Fund to sell its
holdings of a restricted security not registered under the Securities Act of
1933, as amended (the "Securities Act") that Fund may have to cause those
securities to be registered. The expenses of registering restricted securities
may be negotiated by a Fund with the issuer at the time a Fund buys the
securities. When a Fund must arrange registration because a Fund wishes to sell
the security, a considerable period may elapse between the time the decision is
made to sell the security and the time the security is registered so that a Fund
could sell it. A Fund would bear the risks of any downward price fluctuation
during that period.

Each Fund can also acquire restricted securities through private
placements. Those securities have contractual restrictions on their public
resale. Those restrictions might limit the Funds' ability to dispose of the
securities and might lower the amount a Fund could realize upon the sale.

Each Fund has limitations that apply to purchases of restricted
securities, as stated in the Prospectus. Those percentage restrictions are not
fundamental policies and do not limit purchases of restricted securities that
are eligible for sale to qualified institutional purchasers under Rule 144A of
the Securities Act, if those securities have been determined to be liquid by the
Adviser or Subadviser under Board-approved guidelines (or, in the case of OSM -
Mercury Advisors S&P 500 Index Fund and OSM - Mercury Advisors Focus Growth
Fund, guidelines approved by the Board of Trustees of the applicable Master
Fund). Those guidelines take into account the trading activity for such
securities and the availability of reliable pricing information, among other
factors. If there is a lack of trading interest in a particular Rule 144A
security, each of a Fund's holdings of that security may be considered to be
illiquid. Illiquid securities include repurchase agreements maturing in more
than seven (7) days.

|X| 144A Securities (All Funds). Each Fund may purchase restricted
securities that can be offered and sold to "qualified institutional buyers"
under Rule 144A under the Securities Act. The Board of Trustees (or, in the case
of OSM - Mercury Advisors S&P 500 Index Fund and OSM - Mercury Advisors Focus
Growth Fund, the Board of Trustees of the applicable Master Fund) has determined
to treat as liquid Rule 144A securities in accordance with the policies and
procedures adopted by the relevant Fund's Board of Trustees. The Board of
Trustees has adopted guidelines and delegated to the Adviser or Subadviser, as
the case may be, the daily function of determining and monitoring liquidity of
restricted securities. The relevant Board of Trustees, however, will retain
sufficient oversight and be ultimately responsible for the determinations. Since
it is not possible to predict with assurance exactly how this market for
restricted securities sold and offered under Rule 144A will continue to develop,
the relevant Board of Trustees will carefully monitor investments in these
securities. This investment practice could have the effect of increasing the
level of illiquidity in a Fund to the extent that qualified institutional buyers
become for a time uninterested in purchasing these securities.

|X| Loans of Portfolio Securities (All Funds). To raise cash for liquidity
purposes, each Fund can lend its portfolio securities to brokers, dealers and
other types of financial institutions approved by the Funds' Board of Trustees.
These loans are limited to not more than 25% of the value of a Fund's total
assets (33 1/3% for the OSM - Mercury Advisors S&P 500 Index Fund and the OSM -
Mercury Advisors Focus Growth Fund). Each Fund except the OSM - Mercury Advisors
S&P 500 Index Fund and the OSM - Mercury Advisors Focus Growth Fund, currently
does not intend to engage in loans of securities, but if it does so, such loans
will not likely exceed 5% of each of the Fund's total assets.

There are some risks in connection with securities lending. A Fund might
experience a delay in receiving additional collateral to secure a loan, or a
delay in recovery of the loaned securities if the borrower defaults. A Fund must
receive collateral for a loan. Under current applicable regulatory requirements
(which are subject to change), on each business day the loan collateral must be
at least equal to the value of the loaned securities. It must consist of cash,
bank letters of credit, securities of the U.S. Government or its agencies or
instrumentalities, or other cash equivalents in which a Fund is permitted to
invest. To be acceptable as collateral, letters of credit must obligate a bank
to pay amounts demanded by a Fund if the demand meets the terms of the letter.
The terms of the letter of credit and the issuing bank both must be satisfactory
to the Fund.

When it lends securities, a Fund receives amounts equal to the dividends
or interest on loaned securities. It also receives one or more of (a) negotiated
loan fees, (b) interest on securities used as collateral, and (c) interest on
any short-term debt securities purchased with such loan collateral. Either type
of interest may be shared with the borrower. A Fund may also pay reasonable
finder's, lending agent, custodian and administrative fees in connection with
these loans. The terms of each Fund's loans must meet applicable tests under the
Internal Revenue Code and must permit each Fund to reacquire loaned securities
on five (5) days' notice or in time to vote on any important matter.

The Master Fund(s) have received an exemptive order from the Securities
and Exchange Commission (the "Commission") permitting them to lend portfolio
securities to Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill
Lynch") or its affiliates, and to retain an affiliate of the Master Funds as
lending agent. See "Brokerage Policies of the Funds," below.

|X| Short Sales (OSM - Gartmore Millennium Growth Fund II, OSM - Mercury
Advisors S&P 500 Index Fund and OSM - Mercury Advisors Focus Growth Fund).
Generally, to complete a short sale transaction, the Fund will borrow the
security to make delivery to the buyer. The Fund is then obligated to replace
the security borrowed. If the price of a security sold short goes up between the
time of the short sale and the time the Fund must deliver the security to the
lender, the Fund will incur a loss. The price at the time of replacement may be
more or less than the price at which the security was sold by the Fund. Until
the security is replaced, the Fund is required to pay to the lender any interest
which accrues during the period of the loan. To borrow the security, the Fund
may be required to pay a premium which would increase the cost of the security
sold. The proceeds of the short sale will be retained by the broker to the
extent necessary to meet margin requirements until the short position is closed
out. Until the Fund replaces the borrowed security, it will (a) segregated on
its books of liquid assets cash or liquid securities at such a level that the
amount deposited in the account plus the amount deposited with the broker as
collateral will equal the current market value of the security sold short or (b)
otherwise cover its short position.

|X| Borrowing for Leverage (All Funds). Each Fund has the ability to
borrow up to 33 1/3% of the value of its total assets from banks on an unsecured
basis to invest the borrowed funds in portfolio securities. This speculative
technique is known as "leverage." A Fund may borrow only from banks. Under
current regulatory requirements, borrowings can be made only to the extent that
the value of a Fund's assets, less its liabilities other than borrowings, is
equal to at least 300% of all borrowings (including the proposed borrowing). If
the value of a Fund's assets fails to meet this 300% asset coverage requirement,
a Fund will reduce its bank debt within three (3) days to meet the requirement.
To do so, a Fund might have to sell a portion of its investments at a
disadvantageous time.

A Fund will pay interest on these loans, and that interest expense will
raise the overall expenses of that Fund and reduce its returns. If it does
borrow, its expenses will be greater than comparable funds that do not borrow
for leverage. Additionally, a Fund's net asset value per share might fluctuate
more than that of funds that do not borrow. Currently, each Fund does not
contemplate using this technique, but if it does so, it will not likely do so to
a substantial degree.

|X| Interfund Borrowing and Lending Arrangements. Consistent with its
fundamental policies and pursuant to an exemptive order issued by the Securities
and Exchange Commission ("SEC"), each Fund other than the OSM - Mercury Advisors
S&P 500 Index Fund and the OSM - Mercury Advisors Focus Growth Fund may engage
in borrowing and lending activities with other funds in the OppenheimerFunds
complex. Borrowing money from affiliated funds may afford the Funds the
flexibility to use the most cost-effective alternative to satisfy its borrowing
requirements. Lending money to an affiliated fund may allow the Funds to obtain
a higher rate of return than it could from interest rates on alternative
short-term investments. Implementation of interfund lending will be accomplished
consistent with applicable regulatory requirements, including the provisions of
the SEC order.

o Interfund Borrowing. A Fund will not borrow from affiliated funds unless
the terms of the borrowing arrangement are at least as favorable as the terms a
Fund could otherwise negotiate with a third party. To assure that a Fund will
not be disadvantaged by borrowing from an affiliated fund, certain safeguards
may be implemented. Examples of these safeguards include the following:
o a Fund will not borrow money from affiliated funds unless the
interest rate is more favorable than available bank loan rates;
o a Fund's borrowing from affiliated funds must be consistent with its
investment objective and investment policies;
o the loan rates will be the average of the overnight repurchase
agreement rate available through the OppenheimerFunds joint
repurchase agreement account and a pre-established formula based on
quotations from independent banks to approximate the lowest interest
rate at which bank loans would be available to a Fund;
o if a Fund has outstanding borrowings from all sources greater than
10% of its total assets, then the Fund must secure each additional
outstanding interfund loan by segregating liquid assets of the Fund
as collateral;
o a Fund cannot borrow from an affiliated fund in excess of 125% of its
total redemptions for the preceding seven days;
o each interfund loan may be repaid on any day by a Fund; and
o the Trustees will be provided with a report of all interfund loans and
the Trustees will monitor all such borrowings to ensure that the
Fund's participation is appropriate.

There is a risk that a borrowing fund could have a loan called on one
day's notice. In that circumstance, a Fund might have to borrow from a bank at a
higher interest cost if money to lend were not available from another
Oppenheimer fund.

o Interfund Lending. To assure that a Fund will not be disadvantaged by making
loans to affiliated funds, certain safeguards will be implemented. Examples of
these safeguards include the following:

o a Fund will not lend money to affiliated funds unless the
interest rate on such loan is determined under the terms of the
exemptive order;
o a Fund may not make interfund loans in excess of 15% of its net assets;
o an interfund loan to any one affiliated fund shall not exceed 5% of a
Fund's net assets;
o an interfund loan may not be outstanding for more than seven days; o each
interfund loan may be called on one business day's notice; and o the Manager
will provide the Trustees reports on all interfund loans
demonstrating that a Fund's participation is appropriate and that
the loan is consistent with its investment objectives and
policies.

When a Fund lends assets to another affiliated fund, the Fund is subject
to the risk that the borrowing fund may fail to repay the loan.

Non-Diversification. The OSM - Salomon Brothers All Cap Fund, the OSM - Mercury
Advisors S&P 500 Index Fund and the OSM - Mercury Advisors Focus Growth Fund
are classified as "non-diversified" funds under the 1940 Act, which means that
each such Fund is not limited by the 1940 Act in the proportion of its assets that
may be invested in the obligations of a single issuer. Each Fund, however,
intends to comply with the diversification requirements imposed by the Internal
Revenue Code in order to continue to qualify as a regulated investment company.
To the extent those Funds invest a greater proportion of their assets in the
securities of a smaller number of issuers, those Funds may be more susceptible
to any single economic, political or regulatory occurrence than a more widely
diversified fund and may be subject to greater risk of loss with respect to its
portfolio.

|X| Derivatives (All Funds). Each Fund can invest in a variety of
derivative investments to seek income for liquidity needs or for bona fide
hedging purposes, including anticipatory hedging. Some derivative investments a
Fund can use are the hedging instruments described below in this Statement of
Additional Information. However, each Fund except for the OSM - QM Active
Balanced Fund and OSM - Salomon Brothers All Cap Fund does not use, and does not
currently contemplate using, derivatives or hedging instruments to a significant
degree and each Fund is not obligated to use them in seeking its objective.

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

|X| Investment in Other Investment Companies. Each Fund except the OSM -
Mercury Advisors S&P 500 Index Fund and the OSM - Mercury Advisors Focus Growth
Fund can invest up to 10% of its total assets in shares of other investment
companies. They can invest up to 5% of their total assets in any one investment
company, but cannot own more than 3% of the outstanding voting securities of
that investment company. These limitations do not apply to shares acquired in a
merger, consolidation, reorganization or acquisition. The OSM - Mercury Advisors
S&P 500 Index Fund and the OSM - Mercury Advisors Focus Growth Fund are feeder
funds that invest 100% of their assets in a corresponding Master Fund, which is
a registered investment company. The Master Funds can also invest their assets
in shares of investment companies when permitted by applicable law.

Investment in another investment company may involve the payment of
substantial premiums above the value of such investment company's portfolio
securities and is subject to limitations under the Investment Company Act of
1940 (the "Investment Company Act"). Each Fund does not intend to invest in
other investment companies unless the Adviser or Subadviser believes that the
potential benefits of the investment justify the payment of any premiums or
sales charges. As a shareholder in an investment company, a Fund would be
subject to its ratable share of that investment company's expenses, including
its advisory and administration fees. At the same time, that Fund would bear its
own management fees and other expenses.

|X| Hedging (All Funds). Although each Fund does not anticipate the
extensive use of hedging instruments, each Fund can use hedging instruments.
They are not required to do so in seeking their goal. To attempt to protect
against declines in the market value of a Fund's portfolio, to permit a Fund to
retain unrealized gains in the value of portfolio securities which have
appreciated, or to facilitate selling securities for investment reasons, each
Fund could:
|_| sell futures contracts,
|_| buy puts on such futures or on securities, or
|_| write covered calls on securities or futures. Covered calls can
also be used to seek income, but the Adviser or Subadviser does not
expect to engage extensively in that practice.

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

Each Fund's strategy of hedging with futures and options on futures will
be incidental to each Fund's activities in the underlying cash market. The
particular hedging instruments the Fund can use are described below. A Fund may
employ new hedging instruments and strategies when they are developed, if those
investment methods are consistent with each Fund's investment objective and are
permissible under applicable regulations governing each Fund. Each Fund will
utilize segregated accounts in connection with their purchase of hedging
instruments in appropriate cases.

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

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

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

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

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

|_| Put and Call Options. Each Fund can buy and sell certain kinds
of put options ("puts") and call options ("calls"). Each Fund can buy and sell
exchange-traded and over-the-counter put and call options, including options on
indices, securities, currencies, commodities and futures.

|_| Writing Covered Call Options. Each Fund can write (that is,
sell) covered calls. If a Fund sells a call option, it must be covered, other
than with respect to closing transactions. That means a Fund must own the
security subject to the call while the call is outstanding, or, for certain
types of calls, the call may be covered by segregating liquid assets to enable a
Fund to satisfy its obligations if the call is exercised.

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

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

With respect to the OSM - QM Active Balanced Fund, OSM - Jennison Growth
Fund, OSM - Salomon Brothers All Cap Fund and OSM - Gartmore Millennium Growth
Fund II, the Custodian, or a securities depository acting for the Custodian,
will act as the escrow agent for OSM - QM Active Balanced Fund, OSM - Jennison
Growth Fund, OSM - Salomon Brothers All Cap Fund and OSM - Gartmore Millennium
Growth Fund II, through the facilities of the Options Clearing Corporation
("OCC"), as to the investments on which each such Fund has written calls traded
on exchanges or as to other acceptable escrow securities. In that way, no margin
will be required for such transactions. OCC will release the securities on the
expiration of the option or when a Fund enters into a closing transaction.

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

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

|_| Writing Put Options. Each Fund can sell put options. A put
option on a security gives the purchaser the right to sell, and the writer the
obligation to buy, the underlying security at the exercise price during the
option period.

If a Fund sells a put option, it must be covered by segregated liquid
assets, other than with respect to closing transactions. The premium a Fund
receives from writing a put option represents a profit, as long as the price of
the underlying investment remains above the exercise price of the put. However,
a Fund also assumes the obligation during the option period to buy the
underlying investment from the buyer of the put at the exercise price, even if
the value of the investment falls below the exercise price. If a Fund writes a
put that expires unexercised, a Fund realizes a gain in the amount of the
premium less transaction costs. If the put is exercised, a Fund must fulfill its
obligation to purchase the underlying investment at the exercise price. That
price will usually exceed the market value of the investment at that time. In
that case, a Fund may incur a loss if it sells the underlying investment. That
loss will be equal to the sum of the sale price of the underlying investment and
the premium received minus the sum of the exercise price and any transaction
costs incurred.

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

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

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

|_| Purchasing Calls and Puts. Each Fund can purchase calls to
protect against the possibility that the Fund's portfolio will not participate
in an anticipated rise in the securities market. When the Fund buys a call
(other than in a closing purchase transaction), it pays a premium. The Fund then
has the right to buy the underlying investment from a seller of a corresponding
call on the same investment during the call period at a fixed exercise price. A
Fund benefits only if it sells the call at a profit or if, during the call
period, the market price of the underlying investment is above the sum of the
call price plus the transaction costs and the premium paid for the call and the
Fund exercises the call. If a Fund does not exercise the call or sell it
(whether or not at a profit), the call will become worthless at its expiration
date. In that case the Fund will have paid the premium but lost the right to
purchase the underlying investment.

Each Fund other than the OSM - Mercury Advisors S&P 500 Index Fund can
buy puts whether or not it holds the underlying investment in its portfolio. The
Mercury S&P 500 Index Fund can buy put options on securities held in its
portfolio or securities indices the performance of which is substantially
replicated by securities held in its portfolio. When a Fund purchases a put, it
pays a premium and, except as to puts on indices, has the right to sell the
underlying investment to a seller of a put on a corresponding investment during
the put period at a fixed exercise price.

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

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

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

|_| Buying and Selling Options on Foreign Currencies. Each Fund
except the OSM - Mercury Advisors S&P 500 Index Fund can buy and sell calls
and puts on foreign currencies. They include puts and calls that trade on a
securities or commodities exchange or in the over-the-counter markets or are
quoted by major recognized dealers in such options. A Fund could use these calls
and puts to try to protect against declines in the dollar value of foreign
securities and increases in the dollar cost of foreign securities a Fund wants
to acquire.

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

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

A Fund could write a call on a foreign currency to provide a hedge against
a decline in the U.S. dollar value of a security which it owns or has the right
to acquire and which is denominated in the currency underlying the option. That
decline might be one that occurs due to an expected adverse change in the
exchange rate. This is known as a "cross-hedging" strategy. In those
circumstances, the Fund covers the option by identifying in the books of the
Fund cash, U.S. government securities or other liquid, high grade debt
securities in an amount equal to the exercise price of the option.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Each Fund will cover its short positions in these cases by identifying to
its Custodian bank assets having a value equal to the aggregate amount of the
Fund's commitment under forward contracts. A Fund will not enter into forward
contracts or maintain a net exposure to such contracts if the consummation of
the contracts would obligate the Fund to deliver an amount of foreign currency
in excess of the value of the Fund's portfolio securities or other assets
denominated in that currency or another currency that is the subject of the
hedge.

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

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

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

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

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

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

Swap Transactions. Each Fund (other than the OSM - Mercury
Advisors S&P 500 Index Fund) can enter into interest rate swap agreements.
In an interest rate swap, the Fund and another party exchange their right to
receive or their obligation to pay interest on a security. For example, they
might swap the right to receive floating rate payments for fixed rate payments.
A Fund can enter into swaps only on securities that it owns. A Fund will not
enter into swaps with respect to more than 25% of its total assets. Also, a Fund
will segregate liquid assets (such as cash or U.S. government securities) to
cover any amounts it could owe under swaps that exceed the amounts it is
entitled to receive, and it will adjust that amount daily, as needed.

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

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

The OSM - Mercury Advisors S&P 500 Index Fund and the OSM - Salomon
Brothers All Cap Fund are authorized to enter into equity swap agreements, which
are OTC contracts in which one party agrees to make periodic payments based on
the change in market value of a specified equity security, basket of equity
securities or equity index in return for periodic payments based on a fixed or
variable interest rate or the change in market value of a different equity
security, basket of securities or equity index. Swap agreements may also be used
to obtain exposure to a security or market without owning or taking physical
custody of securities. The Fund will enter into an equity swap transaction only
if, immediately following the time the Fund enters into the transaction, the
aggregate notional principal amount of equity swap transactions to which the
Fund is a party would not exceed 5% of the Fund's net assets.

|_| Additional Risk Factors of OTC Transactions; Limitations on the Use of
OTC Derivatives. Certain Derivatives traded in OTC markets, including indexed
securities, swaps and OTC options, involve substantial liquidity risk. The
absence of liquidity may make it difficult or impossible for the Fund to sell
such instruments promptly at an acceptable price. The absence of liquidity may
also make it more difficult for the Fund to ascertain a market value for such
instruments. The Fund will therefore acquire illiquid OTC instruments (i) if the
agreement pursuant to which the instrument is purchased contains a formula price
at which the instrument may be terminated or sold, or (ii) for which the Adviser
or Subadviser anticipates the Fund can receive on each business day at least two
independent bids or offers, unless a quotation from only one dealer is
available, in which case that dealer's quotation may be used.

Because Derivatives traded in OTC markets are not guaranteed by an
exchange or clearing corporation and generally do not require payment of margin,
to the extent that the Fund has unrealized gains in such instruments or has
deposited collateral with its counterparty, the Fund is at risk that its
counterparty will become bankrupt or otherwise fail to honor its obligations.
The Fund will attempt to minimize the risk that a counterparty will become
bankrupt or otherwise fail to honor its obligations by engaging in transactions
in derivatives traded in OTC markets only with financial institutions which have
substantial capital or which have provided the Fund with a third party guaranty
or other credit enhancement.

|_| Regulatory Aspects of Hedging Instruments. When using futures and
options on futures, a Fund is required to operate within certain guidelines and
restrictions with respect to the use of futures as established by the
Commodities Futures Trading Commission (the "CFTC"). In particular, a Fund is
exempted from registration with the CFTC as a "commodity pool operator" if it
complies with the requirements of Rule 4.5 adopted by the CFTC. The Rule does
not limit the percentage of a Fund's assets that may be used for futures margin
and related options premiums for a bona fide hedging position. However, under
the Rule, a Fund must limit its aggregate initial futures margin and related
options premiums to not more than 5% of its net assets for hedging strategies
that are not considered bona fide hedging strategies under the Rule. Under the
Rule, a Fund must also use short futures and options on futures solely for bona
fide hedging purposes within the meaning and intent of the applicable provisions
of the Commodity Exchange Act.

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

Under the Investment Company Act, when a Fund purchases a future, it must
maintain cash or readily marketable short-term debt instruments in an amount
equal to the market value of the securities underlying the future, less the
margin deposit applicable to it.

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

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

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

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

|X| Temporary Defensive and Interim Investments. When market conditions
are unstable, or the Adviser or Subadviser believes it is otherwise appropriate
to reduce holdings in stocks, a Fund (except for the OSM - Mercury Advisors S&P
500 Index Fund) can invest in a variety of debt securities for defensive
purposes. A Fund can also purchase these securities for liquidity purposes to
meet cash needs due to the redemption of Fund shares, or to hold while waiting
to reinvest cash received from the sale of other portfolio securities. A Fund
can buy:

|_| high-quality, short-term money market instruments, including
those issued by the U. S. Treasury or other government agencies,
|_| commercial paper (short-term, unsecured, promissory notes of domestic
or foreign companies),
|_| short-term debt obligations of corporate issuers,
|_| certificates of deposit and bankers' acceptances of domestic and
foreign banks and savings and loan associations, and
|_| repurchase agreements and purchase and sale agreements.

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

Investment Restrictions

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

The investment objectives of the OSM - Mercury Advisors Focus Growth Fund,
OSM - Jennison Growth Fund, OSM - QM Active Balanced Fund and the OSM - Salomon
Brothers All Cap Fund are fundamental policies. The investment objectives of the
OSM - Mercury Advisors S&P 500 Index Fund and the OSM - Gartmore Millennium
Growth Fund II are non-fundamental policies. Other policies described in the
Prospectus or this Statement of Additional Information are "fundamental" only if
they are identified as such. The Funds' Board of Trustees can change
non-fundamental policies without shareholder approval. The Board of Trustees of
the Master Funds in which the OSM - Mercury Advisors S&P 500 Index Fund and
the OSM - Mercury Advisors Focus Growth Fund invest can change non-fundamental
policies of the respective Master Fund without shareholder approval. However,
significant changes to investment policies will be described in supplements or
updates to the Prospectus or this Statement of Additional Information, as
appropriate. Each Fund's most significant investment policies are described in
the Prospectus.

|X| Do the Funds Have Additional Fundamental Policies?

OSM - Mercury Advisors S&P 500 Index Fund - The following investment
restrictions are fundamental policies of OSM - Mercury Advisors S&P 500 Index
Fund. Provided that none of the following restrictions shall prevent the Fund
from investing all of its assets in shares of another registered investment
company with the same investment objective (in a master/feeder structure), the
Fund may not:

1. Make any investment inconsistent with the Fund's classification as a
non-diversified company under the Investment Company Act.

2. Invest more than 25% of its total assets, taken at market value, in the
securities of issuers in any particular industry (excluding the U.S.
Government and its agencies and instrumentalities); provided, that
in replicating the weighting of a particular industry in its target
index, the Fund may invest more than 25% of its total assets in
securities of issuers in that industry when the assets of companies
included in the target index that are in the industry represent more
than 25% of the total assets of all companies included in the index.

3. Make investments for the purpose of exercising control or management.

4. Purchase or sell real estate, except that, to the extent permitted by
law, the Fund may invest in securities directly or indirectly secured
by real estate or interests therein or issued by companies which invest
in real estate or interests therein.

5. Make loans to other persons, except that the acquisition of bonds,
debentures or other corporate debt securities and investment in
government obligations, commercial paper, pass-through instruments,
certificates of deposit, bankers' acceptances, repurchase agreements
or any similar instruments shall not be deemed to be the making of a
loan, and except further that the Fund may lend its portfolio
securities, provided that the lending of portfolio securities may be
made only in accordance with applicable law and the guidelines set
forth in the Fund's Registration Statement, as it may be amended
from time to time.

6. Issue senior securities to the extent such issuance would violate
applicable law.

7. Borrow money, except that (i) the Fund may borrow from banks (as
defined in the Investment Company Act) in amounts up to 33 1/3% of
its total assets (including the amount borrowed), (ii) the Fund may
borrow up to an additional 5% of its total assets for temporary
purposes, (iii) the Fund may obtain such short term credit as may be
necessary for the clearance of purchases and sales of portfolio
securities, and (iv) the Fund may purchase securities on margin to
the extent permitted by applicable law. The Fund may not pledge its
assets other than to secure such borrowings or, to the extent
permitted by the Fund's investment policies as set forth in its
Registration Statement, as it may be amended from time to time, in
connection with hedging transactions, short sales, when issued and
forward commitment transactions and similar investment strategies.

8. Underwrite securities of other issuers except insofar as the Fund
technically may be deemed an underwriter under the Securities Act in
selling portfolio securities.

9. Purchase or sell commodities or contracts on commodities, except to the
extent that the Fund may do so in accordance with applicable law and
the Fund's registration statement, as it may be amended from time to
time, and without registering as a commodity pool operator under the
Commodity Exchange Act.

With respect to the Fund's fundamental restriction on purchasing
securities on margin, the Fund is currently prohibited by law from purchasing
securities on margin and will not do so unless current law changes. In addition,
although the Fund is classified as a non-diversified fund under the Investment
Company Act and is not subject to the diversification requirements of the
Investment Company Act, the Fund is required to comply with certain requirements
under the Internal Revenue Code of 1986, as amended (the "Code"). These
requirements include limiting its investments so that at the close of each
quarter of the taxable year (i) not more than 25% of the market value of the
Fund's total assets are invested in the securities of a single issuer, or any
two (2) or more issuers which are controlled by the Fund and engaged in the
same, similar or related businesses, and (ii) with respect to 50% of the market
value of its total assets, not more than 5% of the market value of its total
assets are invested in securities of a single issuer, and the Fund does not own
more than 10% of the outstanding voting securities of a single issuer. The U.S.
Government, its agencies and instrumentalities and other regulated investment
companies are not included within the definition of "issuer" for purposes of the
diversification requirements of the Code.

The applicable Master Fund has adopted investment restrictions
substantially identical to the foregoing, which are fundamental policies of the
Master Fund and may not be changed without the approval of the holders of a
majority of the interests of the Master Fund.

In addition, the Fund has adopted non-fundamental restrictions that may be
changed by the Trustees without shareholder approval. Like the fundamental
restrictions, none of the non-fundamental restrictions, including but not
limited to restriction (a) below, shall prevent the Fund from investing all of
its assets in shares of another registered investment company with the same
investment objective (in a master/feeder structure). Under the non-fundamental
investment restrictions, the Fund may not:

(a) Change its investment policy to invest at least 80% of its net assets
(plus borrowings for investment purposes) in securities or other
financial instruments in, or correlated with, its target index without
providing shareholders with at least 60 days notice.

(b) Purchase securities of other investment companies, except to the extent
such purchases are permitted by applicable law. As a matter of
policy, however, the Fund will not purchase shares of any
registered open-end investment company or registered unit
investment trust, in reliance on Section 12(d)(1)(F) or (G) (the
"fund of funds" provisions) of the Investment Company Act, at any
time the Fund's shares are owned by another investment company that
is part of the same group of investment companies as the Fund.

(c) Invest in securities that cannot be readily resold because of legal or
contractual restrictions or that cannot otherwise be marketed,
redeemed or put to the issuer or a third party because of a lack of
an active trading market, if at the time of acquisition more than
15% of its net assets would be invested in such securities. This
restriction shall not apply to securities that mature within seven
(7) days or securities that the Trustees have otherwise determined
to be liquid pursuant to applicable law. Securities purchased in
accordance with Rule 144A under the Securities Act (which are
restricted securities that can be resold to qualified institutional
buyers, but not to the general public) and determined to be liquid
by the Trustees are not subject to the limitations set forth in
this investment restriction.

(d) Make any additional investments if the amount of its borrowings
exceeds 5% of its total assets. Borrowings do not include the use of
investment techniques that may be deemed to create leverage,
including, but not limited to, such techniques as dollar rolls,
when-issued securities, options and futures.

In addition to the non-fundamental investment restrictions listed above
notwithstanding fundamental restriction 9 listed above, as a non-fundamental
investment restriction the Fund will not change fundamental restriction 9
without first obtaining shareholder approval. If a percentage restriction on the
investment or use of assets set forth above is adhered to at the time a
transaction is effected, later changes in percentages resulting from changing
values will not be considered a violation (except for the Fund's policies on
borrowing and illiquid securities).

The Master Fund has adopted non-fundamental investment restrictions
substantially identical to the foregoing, which may be changed by the Trustees
of the Master Fund without shareholder approval.

The staff of the Commission has taken the position that purchased OTC
options and the assets used as cover for written OTC options are illiquid
securities. Therefore, the Fund and Master Fund have adopted an investment
policy pursuant to which neither the Fund nor the Master Fund will purchase or
sell OTC options (including OTC options on futures contracts) if, as a result of
such transaction, the sum of the market value of OTC options currently
outstanding which are held by the Fund or the Master Fund, the market value of
the underlying securities covered by OTC call options currently outstanding
which were sold by the Fund or the Master Fund and margin deposits on the Fund's
or the Master Fund's existing OTC options on futures contracts exceeds 15% of
the net assets of the Fund or the Master Fund taken at market value, together
with all other assets of such Fund or the Master Fund which are illiquid or are
not otherwise readily marketable. However, if the OTC option is sold by the Fund
or the Master Fund to a primary U.S. Government securities dealer recognized by
the Federal Reserve Bank of New York and if the Fund or the Master Fund has the
unconditional contractual right to repurchase such OTC option from the dealer at
a predetermined price, then the Fund or the Master Fund will treat as illiquid
such amount of the underlying securities as is equal to the repurchase price
less the amount by which the option is "in-the-money" (i.e., current market
value of the underlying securities minus the option's strike price). The
repurchase price with the primary dealers is typically a formula price which is
generally based on a multiple of the premium received for the option, plus the
amount by which the option is "in-the-money." This policy as to OTC options is
not a fundamental policy of the Fund or the Master Fund and may be amended by
the Trustees or the Directors without the approval of the shareholders. However,
the Trustees will not change or modify this policy prior to the change or
modification by the Commission staff of its position.

Rule 10f-3 under the Investment Company Act sets forth the conditions
under which the Master Fund may purchase from an underwriting syndicate in which
Merrill Lynch is a member. Otherwise, the Fund and the Master Fund are
prohibited from engaging in portfolio transactions with Merrill Lynch or its
affiliates acting as principal without an exemptive order. See "Portfolio
Transactions and Brokerage."

OSM - Mercury Advisors Focus Growth Fund - The following investment
restrictions are fundamental policies of OSM - Mercury Advisors Focus Growth
Fund. Unless otherwise provided, all references to the Fund's assets below are
in terms of current market value. Provided that none of the following
restrictions shall prevent the Fund from investing all of its assets in shares
of another registered investment company with the same investment objective (in
a master/feeder structure), the Fund may not:

1. Invest more than 25% of its total assets, taken at market value at the
time of each investment, in the securities of issuers in any particular
industry (excluding the U.S. Government and its agencies and
instrumentalities).

2. Make investments for the purpose of exercising control or management.
Investments by the Fund in wholly-owned investment entities created
under the laws of certain countries will not be deemed the making of
investments for the purpose of exercising control or management.

3. Purchase or sell real estate, except that, to the extent permitted by
applicable law, the Fund may invest in securities directly or
indirectly secured by real estate or interests therein or issued by
companies that invest in real estate or interests therein.

4. Make loans to other persons, except that the acquisition of bonds,
debentures or other corporate debt securities and investment in
governmental obligations, commercial paper, pass-through
instruments, certificates of deposit, bankers' acceptances,
repurchase agreements, purchase and sale contracts or any similar
instruments shall not be deemed to be the making of a loan, and
except further that the Fund may lend its portfolio securities,
provided that the lending of portfolio securities may be made only
in accordance with applicable law and the guidelines set forth in
the Fund's Prospectus and Statement of Additional Information, as
they may be amended from time to time.

5. Issue senior securities to the extent such issuance would violate
applicable law.

6. Borrow money, except that (i) the Fund may borrow from banks (as
defined in the Investment Company Act) in amounts up to 33 1/3% of
its total assets (including the amount borrowed), (ii) the Fund may
borrow up to an additional 5% of its total assets for temporary
purposes, (iii) the Fund may obtain such short-term credit as may be
necessary for the clearance of purchases and sales of portfolio
securities and (iv) the Fund may purchase securities on margin to
the extent permitted by applicable law. The Fund may not pledge its
assets other than to secure such borrowings or, to the extent
permitted by the Fund's investment policies as set forth in its
Prospectus and Statement of Additional Information, as they may be
amended from time to time, in connection with hedging transactions,
short sales, when-issued and forward commitment transactions and
similar investment strategies.

7. Underwrite securities of other issuers except insofar as the Fund
technically may be deemed an underwriter under the Securities Act of
1933 in selling portfolio securities.

8. Purchase or sell commodities or contracts on commodities, except to the
extent that the Fund may do so in accordance with applicable law and
the Fund's Prospectus and Statement of Additional Information, as they
may be amended from time to time, and without registering as a
commodity pool operator under the Commodity Exchange Act.

The applicable Master Fund in which the Fund invests has adopted
investment restrictions substantially identical to the foregoing, which are
fundamental policies of the Master Fund and may not be changed with respect to
the Master Fund without the approval of the holders of a majority of the
interests of the Master Fund.

In addition, the Fund has adopted non-fundamental restrictions that may be
changed by the Board of Trustees of the Fund without shareholder approval. Like
the fundamental restrictions, none of the non-fundamental restrictions,
including but not limited to restriction (1) below, shall prevent the Fund from
investing all of its assets in shares of another registered investment company
with the same investment objective (in a master/feeder structure). The
applicable Master Fund has adopted investment restrictions substantially
identical to the following, which are non-fundamental policies of the Master
Fund and may be changed by the Trustees of the Master Fund without shareholder
approval. Under the non-fundamental investment restrictions, the Fund may not:

1. Purchase securities of other investment companies, except to the extent
such purchases are permitted by applicable law. As a matter of
policy, however, the Fund will not purchase shares of any registered
open-end investment company or registered unit investment trust, in
reliance on Section 12(d)(1)(F) or (G) (the "fund of funds"
provisions) of the Investment Company Act, at any time its shares
are owned by another investment company that is part of the same
group of investment companies as the Fund.

2. Make short sales of securities or maintain a short position, except to
the extent permitted by applicable law.

3. Invest in securities that cannot be readily resold because of legal or
contractual restrictions or that cannot otherwise be marketed,
redeemed or put to the issuer or a third party, if at the time of
acquisition more than 15% of its net assets would be invested in
such securities. This restriction shall not apply to securities that
mature within seven (7) days or securities that the Trustees of the
Fund have otherwise determined to be liquid pursuant to applicable
law. Securities purchased in accordance with Rule 144A under the
Securities Act (which are restricted securities that can be resold
to qualified institutional buyers, but not to the general public)
and determined to be liquid by the Board of Trustees of the Fund are
not subject to the limitations set forth in this investment
restriction.

4. Notwithstanding fundamental investment restriction (6) above, borrow
money or pledge its assets, except that the Fund (a) may borrow from
a bank as a temporary measure for extraordinary or emergency
purposes or to meet redemption in amounts not exceeding 33 1/3%
(taken at market value) of its total assets and pledge its assets to
secure such borrowing, (b) may obtain such short-term credit as may
be necessary for the clearance of purchases and sales of portfolio
securities and (c) may purchase securities on margin to the extent
permitted by applicable law. However, at the present time,
applicable law prohibits the Fund from purchasing securities on
margin. The deposit or payment by the Fund of initial or variation
margin in connection with financial futures contracts or options
transactions is not considered to be the purchase of a security on
margin. The purchase of securities while a borrowing is outstanding
will have the effect of leveraging the Fund. Such leveraging or
borrowing increases the Fund's exposure to capital risk and borrowed
funds are subject to interest costs which will reduce net income.
The Fund will not purchase securities while borrowing exceeds 5% of
its total assets.

The staff of the Commission has taken the position that purchased OTC
options and the assets used as cover for written OTC options are illiquid
securities. Therefore, the Fund and the Master Fund have adopted an investment
policy pursuant to which neither the Fund nor the Master Fund will purchase or
sell OTC options (including OTC options on futures contracts) if, as a result of
such transaction, the sum of the market value of OTC options currently
outstanding that are held by the Fund or the Master Fund, the market value of
the underlying securities covered by OTC call options currently outstanding that
were sold by the Fund or the Master Fund and margin deposits on the Fund's or
the Master Fund's existing OTC options on financial futures contracts exceeds
15% of the net assets of the Fund or the Master Fund, taken at market value,
together with all other assets of the Fund or the Master Fund that are illiquid
or are not otherwise readily marketable. However, if the OTC option is sold by
the Fund or the Master Fund to a primary U.S. Government securities dealer
recognized by the Federal Reserve Bank of New York and if the Fund or the Master
Fund has the unconditional contractual right to repurchase such OTC option from
the dealer at a predetermined price, then the Fund or the Master Fund will treat
as illiquid such amount of the underlying securities as is equal to the
repurchase price less the amount by which the option is "in-the-money" (i.e.,
current market value of the underlying securities minus the option's strike
price). The repurchase price with the primary dealers is typically a formula
price that is generally based on a multiple of the premium received for the
option, plus the amount by which the option is "in-the-money." This policy as to
OTC options is not a fundamental policy of the Fund or the Master Fund and may
be amended by the Board of Trustees of the Fund or the Board of Trustees of the
Master Fund without the approval of the Fund's shareholders. However, the
Trustees will not change or modify this policy prior to the change or
modification by the Commission staff of its position.

In addition, as a non-fundamental policy that may be changed by the Board
of Trustees and to the extent required by the Commission or its staff, the Fund
will, for purposes of fundamental investment restrictions (1) and (2), treat
securities issued or guaranteed by the government of any one foreign country as
the obligations of a single issuer.

As another non-fundamental policy, the Fund will not invest in securities
that are (a) subject to material legal restrictions on repatriation of assets or
(b) cannot be readily resold because of legal or contractual restrictions or
which are not otherwise readily marketable, including repurchase agreements and
purchase and sales contracts maturing in more than seven (7) days, if, regarding
all such securities, more than 15% of its net assets, taken at market value
would be invested in such securities.

Because of the affiliation of Merrill Lynch with Mercury Advisors, the
Master Fund is prohibited from engaging in certain transactions involving
Merrill Lynch or its affiliates except for brokerage transactions permitted
under the Investment Company Act involving only usual and customary commissions
or transactions pursuant to an exemptive order under the Investment Company Act.
See "Portfolio Transactions and Brokerage." Without such an exemptive order the
Master Fund would be prohibited from engaging in portfolio transactions with
Merrill Lynch or any of its affiliates acting as principal. Rule 10f-3 under the
Investment Company Act sets forth the conditions under which the Master Fund may
purchase from an underwriting syndicate in which Merrill Lynch is a member.

OSM - QM Active Balanced Fund, OSM - Jennison Growth Fund, OSM - Salomon
Brothers All Cap Fund and OSM - Gartmore Millennium Growth Fund II - The
following investment restrictions are fundamental policies of the OSM - QM
Active Balanced Fund, OSM - Jennison Growth Fund, OSM - Salomon Brothers All Cap
Fund and the OSM - Gartmore Millennium Growth Fund II.

|_|The Fund cannot buy securities issued or guaranteed by any one issuer
if more than 5% of its total assets would be invested in securities of
that issuer or if it would then own more than 10% of that issuer's
voting securities. That restriction applies to 75% of the Fund's total
assets (50% of the OSM - Salomon Brothers All Cap Fund's total assets).
The limit does not apply to securities issued by the U.S. Government or
any of its agencies or instrumentalities or securities of other
investment companies.

|_|The Fund cannot invest in physical commodities or physical commodity
contracts. However, the Fund can buy and sell hedging instruments to
the extent specified in its Prospectus and this Statement of Additional
Information from time to time. The Fund can also buy and sell options,
futures, securities or other instruments backed by, or the investment
return from which, is linked to changes in the price of, physical
commodities.
|_| The Fund cannot make loans except (a) through lending of securities,
(b) through the purchase of debt instruments, loan participations or
similar evidences of indebtedness, (c) through an inter-fund lending
program with other affiliated funds, and (d) through repurchase
agreements.
|_| The Fund cannot borrow money in excess of 33 1/3% of the value of its
total assets. The Fund may borrow only from banks and/or affiliated
investment companies. With respect to this fundamental policy, the Fund
can borrow only if it maintains a 300% ratio of assets to borrowings at
all times in the manner set forth in the Investment Company Act.
|_| The Fund cannot concentrate investments. That means it cannot invest
25% or more of its total assets in companies in any one industry.
|_|The Fund cannot underwrite securities of other companies. A permitted
exception is in case it is deemed to be an underwriter under the
Securities Act of 1933 when reselling any securities held in its own
portfolio.
|_| The Fund cannot invest in real estate or in interests in real estate.
However, the Fund can purchase readily-marketable securities of
companies holding real estate or interests in real estate.
|_| The Fund cannot issue "senior securities." However, that restriction
does not prohibit the Fund from borrowing money subject to the
provisions set forth in this Statement of Additional Information, or
from entering into margin, collateral or escrow arrangements permitted
by its other investment policies.

|X| Do the Funds Have Any Restrictions That Are Not Fundamental? Each Fund
has a number of other investment restrictions that are not fundamental policies,
which means that they can be changed by vote of a majority of a Fund's Board of
Trustees without shareholder approval.

|_| A Fund cannot invest in companies for the purpose of acquiring control
or management of them.
|_| A Fund cannot pledge, mortgage or hypothecate any of its assets.
However, this does not prohibit the escrow arrangements contemplated by
writing covered call options or other collateral or margin arrangements
in connection with any of the hedging instruments permitted by any of
its other investment policies.

Unless the Prospectus or this Statement of Additional Information states
that a percentage restriction applies on an ongoing basis, it applies only at
the time the Fund makes an investment. A Fund need not sell securities to meet
the percentage limits if the value of the investment increases in proportion to
the size of the Fund.

For purposes of a Fund's policy not to concentrate its investments as
described above, a Fund has adopted the industry classifications set forth in
Appendix B to this Statement of Additional Information. That is not a
fundamental policy.

How the Funds are Managed

Organization and History. Oppenheimer Select Managers (the "Trust") is an
open-end management investment company with an unlimited number of authorized
shares of beneficial interest. The Trust was organized as a Massachusetts
business trust on November 10, 2000.

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

Each Fund currently has five classes of shares: Class A, Class B, Class C,
Class N and Class Y. All classes invest in the same investment portfolio. Only
retirement plans may purchase Class N shares. Only certain institutional
investors may elect to purchase Class Y shares. Each class of shares: o has its
own dividends and distributions, o pays certain expenses which may be different
for the different classes, o may have a different net asset value, o may have
separate voting rights on matters in which interests of one
class are different from interests of another class, and o votes as a
class on matters that affect that class alone.

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

Meetings of Shareholders. As a Massachusetts business trust, the Trust is
not required to hold, and does not plan to hold, regular annual meetings of
shareholders. The Trust will hold meetings when required to do so by the
Investment Company Act or other applicable law. It will also do so when a
shareholder meeting is called by the Trustees or upon proper request of the
shareholders.

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

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

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

Board of Trustees and Oversight Committees. The Trust and each series of the
Trust is governed by a Board of Trustees, which is responsible for protecting
the interests of shareholders under Massachusetts law. The Trustees meet
periodically throughout the year to oversee each Fund's activities, review its
performance, and review the actions of the Adviser and Subadvisers. Although the
Trust will not normally hold annual meetings of its shareholders, it may hold
shareholder meetings from time to time on important matters, and shareholders
have certain rights to call a meeting to remove a Trustee or to take other
action as described in the Trust's Declaration of Trust.

The Board of Trustees has an Audit Committee and a Review Committee. The
Audit Committee is comprised solely of Independent Trustees. The members of the
Audit Committee are Edward L. Cameron (Chairman), William L. Armstrong, George
C. Bowen and Robert J. Malone. The Audit Committee held 7 meetings during the
fiscal years ended November 30, 2002 and December 3, 2002. The Audit Committee
furnishes the Board with recommendations regarding the selection of the Trust's
independent auditors. Other main functions of the Audit Committee include, but
are not limited to: (i) reviewing the scope and results of audits and the audit
fees charged; (ii) reviewing reports from the Trust's independent auditors
regarding the Fund's internal accounting procedures and controls; and (iii)
establishing a separate line of communication between the Trust's independent
auditors and its independent Trustees.

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

To date, the Committee has been able to identify from its own resources an
ample number of qualified candidates. Nonetheless, shareholders may submit names
of individuals, accompanied by complete and properly supported resumes, for the
Audit Committee's consideration by mailing such information to the Committee in
care of the Trust. The Committee may consider such persons at such time as it
meets to consider possible nominees. The Committee, however, reserves sole
discretion to determine the candidates to present to the Board and/or
shareholders when it meets for the purpose considering potential nominees.

The members of the Review Committee are Jon S. Fossel (Chairman), Robert
G. Avis, Sam Freedman, Beverly Hamilton and F. William Marshall, Jr. The Review
Committee held 7 meetings during the fiscal years ended November 30, 2002 and
December 31, 2002. Among other functions, the Review Committee reviews reports
and makes recommendations to the Board concerning the fees paid to the Trust's
transfer agent and the services provided to each Fund by the transfer agent. The
Review Committee also reviews each Fund's investment performance and policies
and procedures adopted by the Trust to comply with Investment Company Act and
other applicable law.

Trustees and Officers of the Trust. Except for Mr. Murphy, each of the Trustees
is an "Independent Trustee," as defined in the Investment Company Act. Mr.
Murphy is an "Interested Trustee," because he is affiliated with the Manager by
virtue of his positions as an officer and director of the Manager, and as a
shareholder of its parent company. Mr. Murphy was elected as a Trustee of the
Trust with the understanding that in the event he ceases to be the chief
executive officer of the Manager, he will resign as a trustee of the Trust and
the other Board II Funds (defined below) for which he is a trustee or director.

The Trust's Trustees and officers and their positions held with the Trust
and length of service in such position(s) and their principal occupations and
business affiliations during the past five years are listed in the chart below.
The information for the Trustees also includes the dollar range of shares of the
Funds as well as the aggregate dollar range of shares beneficially owned in any
of the Oppenheimer funds overseen by the Trustees. All of the Trustees are also
trustees or directors of the following Oppenheimer funds (except for Ms.
Hamilton and Mr. Malone, who are not Trustees of Oppenheimer Senior Floating
Rate Fund and Mr. Murphy is not a Trustee or Managing General Partner of any of
the Centennial trusts) (referred to as "Board II Funds"):

Oppenheimer Cash Reserves Oppenheimer Select Managers

Oppenheimer Champion Income Fund Oppenheimer Senior Floating Rate Fund
Oppenheimer Capital Income Fund Oppenheimer Strategic Income Fund
Oppenheimer High Yield Fund Oppenheimer Total Return Fund, Inc.
Oppenheimer International Bond Fund Oppenheimer Variable Account Funds
Oppenheimer Integrity Funds Panorama Series Fund, Inc.
Oppenheimer Limited-Term Government Fund Centennial America Fund, L. P.
Oppenheimer Main Street Funds, Inc. Centennial California Tax Exempt Trust
Oppenheimer Main Street Opportunity
Fund Centennial Government Trust
Oppenheimer Main Street Small Cap Fund Centennial Money Market Trust
Oppenheimer Municipal Fund Centennial New York Tax Exempt Trust
Oppenheimer Real Asset Fund Centennial Tax Exempt Trust

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

Messrs. Murphy, Masterson, Molleur, Vottiero, Wixted and Zack, and Mses.
Bechtolt, Feld and Ives who are officers of the Trust, respectively hold the
same offices with one or more of the other Board II Funds as with the Trust. As
of March 11 2003, the Trustees and officers of the Trust, as a group, owned of
record or beneficially less than 1% of each class of shares of any Fund. The
foregoing statement does not reflect ownership of shares held of record by an
employee benefit plan for employees of the Manager, other than the shares
beneficially owned under that plan by the officers of the Trust listed above. In
addition, each Independent Trustee, and his family members, do not own
securities of either the Manager or Distributor of the Board II Funds or any
person directly or indirectly controlling, controlled by or under common control
with the Manager or Distributor.

Trustees and Officers of the Merrill Lynch Maser Funds. For information
about the Trustees and Officers of the Quantitative Master Series Trust (the
Master Fund in which the OSM - Mercury Advisors S&P 500 Index Fund invests
all of its assets) you should refer to the Registration Statement of the
Quantitative Master Series Trust (Investment Company Act File No. 811-7885). For
information about the Trustees and Officers of the Master Focus Twenty Trust
(the Master Fund in which the OSM - Mercury Advisors Focus Growth Fund invests
all of its assets) you should refer to the Registration Statement of the Mast
Focus Twenty Trust (Investment Company Act File No. 811-08735). You can review
each Trust's Registration Statement at the SEC's website at www.sec.gov.

Affiliated Transactions and Material Business Relationships. In 2001, Mr.
Swain surrendered for cancellation 60,000 options of Oppenheimer Acquisition
Company ("OAC") (the Manager's parent holding company) to MassMutual for a cash
payment of $2,700,600.

Mr. Swain has reported that he sold a residential property to Mr. Freedman
on October 23, 2001 for $1.2 million. An independent appraisal of the property
supported the sale price.

The address of each Trustee in the chart below is 6803 S. Tucson Way,
Centennial, CO 80112-3924. Each Trustee serves for an indefinite term, until his
or her resignation, retirement, death or removal.

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Independent Trustees

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

Name, Principal Occupation(s) During Past 5 Dollar Aggregate
Dollar
Range Of
Shares
Beneficially
Owned in
Years; Range of Any of the
Position(s) Held Other Trusteeships/Directorships Held by Shares Oppenheimer
with Fund, Trustee; BeneficiallFunds
Length of Service, Number of Portfolios in Fund Complex Owned in Overseen
Age Currently Overseen by Trustee each Fund by Trustee

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

As of December 31,
2002

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

James C. Swain, Formerly, Chief Executive Officer (until $0 Over
Chairman and August 27, 2002) of the Board II Funds, $100,000
Trustee since 2001 Vice Chairman (until January 2, 2002) of
Age: 69 the Manager and President and a director
(until 1997) of Centennial Asset Management Corporation (a
wholly-owned investment advisory subsidiary of the Manager).
Oversees 42 portfolios in the OppenheimerFunds complex.

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

William L. Chairman of the following private $0 $50,001-
Armstrong, mortgage banking companies: Cherry Creek $100,000
Trustee since 2001 Mortgage Company (since 1991),
Age: 66 Centennial State Mortgage Company (since
1994), The El Paso Mortgage Company
(since 1993), Transland Financial
Services, Inc. (since 1997); Chairman of
the following private companies: Great
Frontier Insurance (insurance agency)
(since 1995), Ambassador Media
Corporation and Broadway Ventures (since
1984); a director of the following
public companies: Helmerich & Payne,
Inc. (oil and gas drilling/production
company) (since 1992) and UNUMProvident
(insurance company) (since 1991). Mr.
Armstrong is also a Director/Trustee of
Campus Crusade for Christ and the
Bradley Foundation. Formerly a director
of the following: Storage Technology
Corporation (a publicly-held computer
equipment company) (1991-February 2003),
International Family Entertainment
(television channel) (1992-1997) and
Natec Resources, Inc. (air pollution
control equipment and services company)
(1991-1995), Frontier Real Estate, Inc.
(residential real estate brokerage)
(1994-1999), and Frontier Title (title
insurance agency) (1995-June 1999); a
U.S. Senator (January 1979-January
1991). Oversees 42 portfolios in the
OppenheimerFunds complex.

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

Robert G. Avis, Formerly, Director and President of A.G. $0 1-$10,000
Trustee since 2001 Edwards Capital, Inc. (General Partner
Age: 71 of private equity funds) (until February
2001); Chairman, President and Chief
Executive Officer of A.G. Edwards
Capital, Inc. (until March 2000); Vice
Chairman and Director of A.G. Edwards,
Inc. and Vice Chairman of A.G. Edwards &
Sons, Inc. (its brokerage company
subsidiary) (until March 1999); Chairman
of A.G. Edwards Trust Company and A.G.E.
Asset Management (investment advisor)
(until March 1999); and a Director
(until March 2000) of A.G. Edwards &
Sons and A.G. Edwards Trust Company.
Oversees 42 portfolios in the
OppenheimerFunds complex.

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

George C. Bowen, Formerly (until April 1999): Senior Vice $0 Over
Trustee since 2001 President (from September 1987) and $100,000
Age: 66 Treasurer (from March 1985) of the
Manager; Vice President (from June 1983) and Treasurer
(since March 1985) of OppenheimerFunds Distributor, Inc. (a
subsidiary of the Manager); Senior Vice President (since
February 1992), Treasurer (since July 1991) Assistant
Secretary and a director (since December 1991) of Centennial
Asset Management Corporation; Vice President (since October
1989) and Treasurer (since April 1986) of HarbourView Asset
Management Corporation (an investment advisory subsidiary of
the Manager); President, Treasurer and a director (June
1989-January 1990) of Centennial Capital Corporation (an
investment advisory subsidiary of the Manager); Vice
President and Treasurer (since August 1978) and Secretary
(since April 1981) of Shareholder Services, Inc. (a transfer
agent subsidiary of the Manager); Vice President, Treasurer
and Secretary (since November 1989) of Shareholder Financial
Services, Inc. (a transfer agent subsidiary of the Manager);
Assistant Treasurer (since March 1998) of Oppenheimer
Acquisition Corp. (the Manager's parent corporation);
Treasurer (since November 1989) of Oppenheimer Partnership
Holdings, Inc. (a holding company subsidiary of the
Manager); Vice President and Treasurer (since July 1996) of
Oppenheimer Real Asset Management, Inc. (an investment
advisory subsidiary of the Manager); Chief Executive Officer
and director (since March 1996) of MultiSource Services,
Inc. (a broker-dealer subsidiary of the Manager); Treasurer
(since October 1997) of OppenheimerFunds International Ltd.
and Oppenheimer Millennium Funds plc (offshore fund
management subsidiaries of the Manager). Oversees 42
portfolios in the OppenheimerFunds complex.

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

Edward L. Cameron, A member of The Life Guard of Mount $0 $50,001-
Trustee since 2001 Vernon, George Washington's home (since $100,000
Age: 64 June 2000). Formerly (March 2001 - May
2002) Director of Genetic ID, Inc. and its subsidiaries (a
privately held biotech company); a partner with
PricewaterhouseCoopers LLP (from 1974-1999) (an accounting
firm) and Chairman (from 1994-1998), Price Waterhouse LLP
Global Investment Management Industry Services Group.
Oversees 42 portfolios in the OppenheimerFunds complex.

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

Jon S. Fossel, Chairman and Director (since 1998) of $0 Over
Trustee since 2001 Rocky Mountain Elk Foundation (a $100,000
Age: 61 not-for-profit foundation); and a
director (since October 1999) of P.R.
Pharmaceuticals (a privately held
company) and UNUMProvident (an insurance
company) (since June 1, 2002). Formerly
Chairman and a director (until October
1996) and President and Chief Executive
Officer (until October 1995) of the
Manager; President, Chief Executive
Officer and a director of Oppenheimer
Acquisition Corp., Shareholders Services
Inc. and Shareholder Financials
Services, Inc. (until October 1995).
Oversees 42 portfolios in the
OppenheimerFunds complex.

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

Sam Freedman, Director of Colorado Uplift (a $0 Over
Trustee since 2001 non-profit charity) (since September $100,000
Age: 62 1984). Formerly (until October 1994) Mr.
Freedman held several positions in subsidiary or affiliated
companies of the Manager. Oversees 42 portfolios in the
OppenheimerFunds complex.

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

Beverly L. Trustee (since 1996) of MassMutual $0 $10,001-
Hamilton, Institutional Funds and of MML Series $50,000
Trustee since 2002 Investment Fund (open-end investment
Age: 56 companies); Director of MML Services
(since April 1987) and America Funds Emerging Markets Growth
Fund (since October 1991) (both are investment companies),
The California Endowment (a philanthropy organization)
(since April 2002), and Community Hospital of Monterey
Peninsula, (since February 2002); a trustee (since February
2000) of Monterey International Studies (an educational
organization), and an advisor to Unilever (Holland)'s
pension fund and to Credit Suisse First Boston's Sprout
venture capital unit. Mrs. Hamilton also is a member of the
investment committees of the Rockefeller Foundation, the
University of Michigan and Hartford Hospital. Formerly,
President (February 1991-April 2000) ARCO Investment
Management Company. Oversees 42 portfolios in the
OppenheimerFunds complex.

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

Robert J. Malone, Director (since 2001) of Jones $0 Over
Trustee since 2002 Knowledge, Inc. (a privately held $100,000
Age: 58 company), U.S. Exploration, Inc., (since
1997), Colorado UpLIFT (a non-profit
organization) (since 1986) and a trustee
of the Gallagher Family Foundation
(non-profit organization) (since 2000).
Formerly, Chairman of U.S. Bank (a
subsidiary of U.S. Bancorp and formerly
Colorado National Bank,) (July
1996-April 1, 1999) and a director of
Commercial Assets, Inc. (a REIT)
(1993-2000). Oversees 42 portfolios in
the OppenheimerFunds complex.

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

F. William Trustee (since 1996) of MassMutual $0 Over Marshall, Jr.,
Institutional Funds and of MML Series $100,000 Trustee since 2001 Investment
Fund (open-end investment Age: 60 companies); Trustee (since 1987),
Chairman of the Board (since 2003) and Chairman of the
investment committee (since 1994) for the Worcester Polytech
Institute; President and Treasurer (since January 1999) of
the SIS Fund (a private not for profit charitable fund);
Trustee (since 1995) of the Springfield Library and Museum
Association; Trustee (since 1996) of the Community Music
School of Springfield. Formerly, member of the investment
committee of the Community Foundation of Western
Massachusetts (1998 - 2003); Chairman (January 1999-July
1999) of SIS & Family Bank, F.S.B. (formerly SIS Bank);
President, Chief Executive Officer and Director (May
1993-December 1998) of SIS Bankcorp, Inc. and SIS Bank
(formerly Springfield Institution for Savings) and Executive
Vice President (January 1999-July 1999) of Peoples Heritage
Financial Group, Inc. Oversees 42 portfolios in the
OppenheimerFunds complex.

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

The address of Mr. Murphy in the chart below is 498 Seventh Avenue, New
York, NY 10018. Mr. Murphy serves for an indefinite term, until his
resignation, death or removal.

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

Interested Trustee and Officer

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

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

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

As of December 31,
2002

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

John V. Murphy, Chairman, Chief Executive Officer and $0 Over
President and director (since June 2001) and President $100,000
Trustee since 2001 (since September 2000) of the Manager;
Age: 53 President and a director or trustee of
other Oppenheimer funds; President and a director (since July
2001) of Oppenheimer Acquisition Corp. and of Oppenheimer
Partnership Holdings, Inc.; a director (since November 2001)
of OppenheimerFunds Distributor, Inc.; Chairman and a
director (since July 2001) of Shareholder Services, Inc. and
of Shareholder Financial Services, Inc.; President and a
director (since July 2001) of OppenheimerFunds Legacy Program
(a charitable trust program established by the Manager); a
director of the following investment advisory subsidiaries of
OppenheimerFunds, Inc.: OFI Institutional Asset Management,
Inc. and Centennial Asset Management Corporation (since
November 2001), HarbourView Asset Management Corporation and
OFI Private Investments, Inc. (since July 2001); President
(since November 1, 2001) and a director (since July 2001) of
Oppenheimer Real Asset Management, Inc.; a director (since
November 2001) of Trinity Investment Management Corp. and
Tremont Advisers, Inc. (investment advisory affiliates of the
Manager); Executive Vice President (since February 1997) of
Massachusetts Mutual Life Insurance Company (the Manager's
parent company); a director (since June 1995) of DLB
Acquisition Corporation (a holding company that owns shares
of David L. Babson & Company, Inc.); formerly, Chief
Operating Officer (September 2000-June 2001) of the Manager;
President and trustee (November 1999-November 2001) of MML
Series Investment Fund and MassMutual Institutional Funds
(open-end investment companies); a director (September
1999-August 2000) of C.M. Life Insurance Company; President,
Chief Executive Officer and director (September 1999-August
2000) of MML Bay State Life Insurance Company; a director
(June 1989-June 1998) of Emerald Isle Bancorp and Hibernia
Savings Bank (a wholly-owned subsidiary of Emerald Isle
Bancorp). Oversees 74 portfolios in the OppenheimerFunds
complex.

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

The address of the Officers in the chart below is as follows: for
Messrs. Molleur and Zack and Ms. Feld, 498 Seventh Avenue, New York, NY
10018, for Messrs. Masterson, Vottiero and Wixted and Mses. Bechtolt and
Ives, 6803 S. Tucson Way, Centennial, CO 80112-3924. Each Officer serves for
an annual term or until his or her earlier resignation, death or removal.

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

Officers of the Fund

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

Name, Principal Occupation(s) During Past 5 Years
Position(s) Held with
Fund,
Length of Service,
Age

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

Brian W. Wixted, Senior Vice President and Treasurer (since March 1999) of
Treasurer, Principal the Manager; Treasurer (since March 1999) of HarbourView
Financial and Asset Management Corporation, Shareholder Services, Inc.,
Accounting Officer Oppenheimer Real Asset Management Corporation, Shareholder
since 2001 Financial Services, Inc., Oppenheimer Partnership Holdings,
Age: 43 Inc., OFI Private Investments, Inc. (since March 2000),
OppenheimerFunds International Ltd. and Oppenheimer
Millennium Funds plc (since May 2000) and OFI
Institutional Asset Management, Inc. (since November
2000); Treasurer and Chief Financial Officer (since May
2000) of Oppenheimer Trust Company (a trust company
subsidiary of the Manager); Assistant Treasurer (since
March 1999) of Oppenheimer Acquisition Corp. and
OppenheimerFunds Legacy Program (since April 2000);
formerly Principal and Chief Operating Officer (March
1995-March 1999), Bankers Trust Company-Mutual Fund
Services Division. An officer of 90 portfolios in the
OppenheimerFunds complex.

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

Connie Bechtolt, Assistant Vice President of the Manager (since September
Assistant Treasurer 1998); formerly Manager/Fund Accounting (September
since 2002 1994-September 1998) of the Manager. An officer of 90
Age: 39 portfolios in the OppenheimerFunds complex.

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

Philip Vottiero, Vice President/Fund Accounting of the Manager (since March
Assistant Treasurer 2002; formerly Vice President/Corporate Accounting of the
since 2002 Manager (July 1999-March 2002) prior to which he was Chief
Age: 39 Financial Officer at Sovlink Corporation (April 1996-June
1999). An officer of 90 portfolios in the
OppenheimerFunds complex.

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

Robert G. Zack, Senior Vice President (since May 1985) and General Counsel
Vice President & (since February 2002) of the Manager; General Counsel and a
Secretary since 2001 director (since November 2001) of OppenheimerFunds
Age: 54 Distributor, Inc.; Senior Vice President and General
Counsel (since November 2001) of HarbourView Asset
Management Corporation; Vice President and a director
(since November 2000) of Oppenheimer Partnership
Holdings, Inc.; Senior Vice President, General Counsel
and a director (since November 2001) of Shareholder
Services, Inc., Shareholder Financial Services, Inc.,
OFI Private Investments, Inc., Oppenheimer Trust Company
and OFI Institutional Asset Management, Inc.; General
Counsel (since November 2001) of Centennial Asset
Management Corporation; a director (since November 2001)
of Oppenheimer Real Asset Management, Inc.; Assistant
Secretary and a director (since November 2001) of
OppenheimerFunds International Ltd.; Vice President
(since November 2001) of OppenheimerFunds Legacy
Program; Secretary (since November 2001) of Oppenheimer
Acquisition Corp.; formerly Acting General Counsel
(November 2001-February 2002) and Associate General
Counsel (May 1981-October 2001) of the Manager;
Assistant Secretary of Shareholder Services, Inc. (May
1985-November 2001), Shareholder Financial Services,
Inc. (November 1989-November 2001); OppenheimerFunds
International Ltd. And Oppenheimer Millennium Funds plc
(October 1997-November 2001). An officer of 90
portfolios in the OppenheimerFunds complex.

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

Katherine P. Feld, Vice President and Senior Counsel (since July 1999) of the
Assistant Secretary Manager; Vice President (since June 1990) of
since 2001 OppenheimerFunds Distributor, Inc.; Director, Vice
Age: 44 President and Assistant Secretary (since June 1999) of
Centennial Asset Management Corporation; Vice President
(since 1997) of Oppenheimer Real Asset Management, Inc.;
formerly Vice President and Associate Counsel of the
Manager (June 1990-July 1999). An officer of 90
portfolios in the OppenheimerFunds complex.

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

Kathleen T. Ives, Vice President and Assistant Counsel (since June 1998) of
Assistant Secretary the Manager; Vice President (since 1999) of
since 2001 OppenheimerFunds Distributor, Inc.; Vice President and
Age: 37 Assistant Secretary (since 1999) of Shareholder Services,
Inc.; Assistant Secretary (since December 2001) of
OppenheimerFunds Legacy Program and Shareholder Financial
Services, Inc.; formerly Assistant Vice President and
Assistant Counsel of the Manager (August 1997-June 1998);
Assistant Counsel of the Manager (August 1994-August 1997).
An officer of 90 portfolios in the OppenheimerFunds complex.

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

Philip T. Masterson, Vice President and Assistant Counsel of the Manager (since
Assistant Secretary July 1998); formerly, an associate with Davis, Graham, &
since 2002 Stubbs LLP (January 1997-June 1998). An officer of 90 Age: 39
portfolios in the OppenheimerFunds complex.

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

Denis R. Molleur, Vice President and Senior Counsel of the Manager (since
Assistant Secretary July 1999); formerly a Vice President and Associate Counsel
since 2001 of the Manager (September 1995-July 1999). An officer of 83
Age: 45 portfolios in the OppenheimerFunds complex.

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

|X| Remuneration of Trustees. The officers of the Trust and one Trustee,
Mr. Murphy, are affiliated with the Manager and receive no salary or fee from
the Funds. The remaining Trustees receive the compensation shown below. The
aggregate compensation from each Fund is for its fiscal year ending November 31,
2002 (December 31, 2002 for the OSM - Mercury Advisors S&P 500 Index Fund).
The compensation from all of the Board II funds includes the compensation from
the Funds and represents compensation received as a director, trustee, managing
general partner or member of a committee of the Board during the calendar year
2002.

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

Aggregate Compensation from Funds Total
Compensation
from
Funds and
Fund
Complex
Paid to
Trustees*

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

Name of Trustee Mercury Mercury Jennison
Advisor Advisors QM Salomon Gartmore
S&P Focus Active Brother Millennium
500 Growth Balanced All Growth
Index Fund2 Fund2 Growth Cap Fund2
Fund1 Fund2 Fund2

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

James C. Swain $726 $676 $663 $647 $691 $661 $177,996
Chairman of the Board

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

William Armstrong
Audit Committee $375 $350 $343 $335 $357 $342 $92,076
Member

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

Robert G. Avis
Review Committee $376 $350 $344 $335 $358 $342 $92,199
Member

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

George C. Bowen
Audit Committee $372 $346 $340 $331 $354 $338 $91,124
Member

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

Edward Cameron
Audit Committee $407 $379 $372 $363 $387 $370 $99,743
Chairman

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

John S. Fossel
Review Committee $386 $382 $375 $366 $391 $374 $100,723
Chairman

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

Sam Freedman
Review Committee $376 $350 $344 $335 $358 $342 $92,199
Member

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

Beverly Hamilton5
Review Committee $2386 $2216 $2176 $2126 $2266 $2166 $58,3267
Member

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

Robert J. Malone5
Audit Committee $2388 $2218 $2178 $2128 $2268 $2168 $58,326
Member

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

F. William Marshall
Review Committee $372 $346 $340 $331 $354 $338 $91,1249
Member

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

1. For the Fund's fiscal year ended December 31, 2002.
2. For the Fund's fiscal year ended November 30, 2002.
3. Effective July 1, 2002, C. Howard Kast and Robert M. Kirchner retired as
Trustees from the Board II Funds For the fiscal years shown in the table, Mr.
Kast received $946 and Mr. Kirchner received $867 aggregate compensation from
the Fund. For the calendar year ended December 31, 2002, Mr. Kast received
$41,451 and Mr. Kirchner received $38,001 total compensation from all of the
Oppenheimer funds for which they served as Trustees.
4. Aggregate Compensation From Fund includes fees and deferred compensation, if
any, for a Trustee.
5. Mrs. Hamilton and Mr. Malone were elected as Trustees of
the Board II Funds effective June 1, 2002. Compensation for Mrs. Hamilton and
Mr. Malone was paid by all the Board II Funds, with the exception of Oppenheimer
Senior Floating Rate Fund for which they currently do not serve as Trustees
(total of 42 Oppenheimer funds).
6. Includes $660 deferred under Deferred Compensation Plan described below.
7. Includes $55,333 compensation (of which 100% was deferred under a deferred
compensation plan) paid to Mrs. Hamilton for serving as a trustee by two
open-end investment companies (MassMutual Institutional Funds and MML Series
Investment Fund) the investment adviser for which is the indirect parent company
of the Fund's Manager. The Manager also serves as the Sub-Advisor to the
MassMutual International Equity Fund, a series of MassMutual Institutional
Funds.
8. Includes $1,130 deferred under Deferred Compensation Plan described below.
9. Includes $47,000 of compensation paid to Mr. Marshall for serving as a trustee
by two open-end investment companies (MassMutual Institutional Funds and MML
Series Investment Fund) the investment adviser for which is the indirect parent
company of the Fund's Manager. The Manager also serves as the Sub-Advisor to the
MassMutual International Equity Fund, a series of MassMutual Institutional
Funds.
* For purposes of this section only, "Fund Complex" includes the Oppenheimer
funds, MassMutual Institutional Funds and MML Series Investment Fund in
accordance with the instructions for Form N-1A. The Manager does not consider
MassMutual Institutional Funds and MML Series Investment Fund to be part of the
OppenheimerFunds "Fund Complex" as that term may be otherwise interpreted.

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

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

|X| Major Shareholders. As of March 11, 2003, the only persons who owned
of record or were known by the Funds to own beneficially 5% or more of any class
of the Funds' outstanding securities were:

OSM - Mercury Advisors S&P 500 Index Fund
RELIANCE TRUST CO CUST FBO PATHLORE , 401K PROF SHARING PLAN, PO BOX
48529, ATLANTA GA 30362-1529, which owned 69,200.816 Class A shares (6.72%
of the Class A shares then outstanding); RPSS TR, TRIM SYSTEMS LLC, 401K
PLAN, ATTN: HALLIE BURKE, 5700 PERIMETER DR STE A, DUBLIN OH 43017-3253,
which owned 65,410.310 Class A shares (6.35% of the Class A shares then
outstanding); RPSS TR, J KINGS FOOD SERVICE, PROFESSIONALS INC 401K PLAN,
ATTN: MELISSA SHULMAN. 700 FURROWS RD, HOLTSVILLE NY 11742-2001, which
owned 60,753.569 Class A shares (5.89% of the Class A shares then
outstanding); RELIANCE TRUST COMPANY TR, CORNELL COMPANIES INC, PO BOX
48529, ATLANTA GA 30362-1529, which owned 207,188.686 Class N shares
(10.21% of the Class N shares then outstanding); OPPENHEIMERFUNDS INC, C/O
RAY OLSON BLDG 2, 6803 S TUCSON WAY, CENTENNIAL CO 80112-3924, which owned
100.00 Class Y shares (81.16% of the Class Y shares then outstanding);
RPSS TR ROLLOVER IRA, FBO DOUGLAS J SCHOENFELD, 503 ALPINE LN, HOLMEN WI
54636-9143, which owned 23.201 Class Y shares (18.83% of the Class Y
shares then outstanding).

OSM - Mercury Advisors Focus Growth Fund
RPSS TR ROLLOVER IRA, FBO JOHN R HAYES, 7026 SAN ALTOS CIR, CITRUS HEIGHTS
CA 95621-4362, which owned 22,677.685 Class B shares (7.19% of the Class B
shares then outstanding); MARLENE CASTLE / DOUG CASTLE TR, EXCEL
FABRICATING INC, 2301 NEVADA AVE N, GOLDEN VALLEY MN 55427-3609, which
owned 17,252.852 Class C shares (6.59% of the Class Y shares then
outstanding); G CANINO T WALSH & J VAN SON TR, ISLAND RISK MANAGEMENT
ASSOC, 401K PLAN, 65 W HILLS RD, HUNTINGTN STA NY 11746-2305, which owned
10,849.813 Class N shares (34.52% of the Class N shares then outstanding);
RPSS TR ROLLOVER IRA, FBO SUZANNE M OSTRANDER, 34 GARROW AVE, PEQUANNOCK
NJ 07440-1603, which owned 4,119.850 Class N shares (13.10% of the Class N
shares than outstanding); RPSS TR ROLLOVER IRA, FBO MOUSTAFA O NASR, 25525
VIA PALADAR, VALENCIA CA 91355-3153, which owned 3,662.149 Class N shares
(11.65% of the Class N shares then outstanding); OPPENHEIMERFUNDS INC, C/O
RAY OLSON BLDG 2, 6803 S TUCSON WAY, CENTENNIAL CO 80112-3924, which owned
100.00 Class Y shares (100.00% of the Class Y shares then outstanding).

OSM - QM Active Balanced Fund
OPPENHEIMERFUNDS, DISTRIBUTOR INC, ATTN: RAY OLSON, 6803 S TUCSON WAY,
ENGLEWOOD CO 80112-3924, which owned 500,000.000 Class A shares (84.87% of
the Class A shares then outstanding); LAWRENCE T BLOCH, 365 W 28TH ST
#18H, NEW YORK NY 10001-7917, which owned 5,292.000 Class B shares (7.88%
of the Class B shares then outstanding); MLPF&S CUST FBO, KENNETH GOTTLIEB
IRA, FBO KENNETH GOTTLIEB, 7715 SOUTHAMPTON TER #E411, TAMARAC FL
33321-9110, which owned 4,721.000 Class B shares (7.03% of the Class B
shares then outstanding); RPSS CUST 403-B PLAN, ROME CITY SCHOOLS, FBO
ANTHONY J VINCI, 804 HICKORY ST, ROME NY 13440-2132, which owned 7,157.194
Class B shares (10.65% of the Class B shares then outstanding); RPSS TR
IRA, FBO GLENN R WHITNEY, PO BOX 27, MOUNTAINVILLE NY 10953-0027, which
owned 3,863.063 Class B shares (5.75%of the Class B shares then
outstanding); RPSS TR, GAZETTEN CONTRACTING INC, 401(K) PLAN, ATTN:
WILLIAM A CYNE, 58 W 40TH ST, NEW YORK NY 10018-2658, which owned
3,679.244 Class B shares (5.47% of the Class B shares then outstanding);
RPSS TR ROLLOVER IRA, FBO MARTIN C SCHNEIDER, 7860 MISSION CENTER CT STE
205, SAN DIEGO CA 92108-1331, which owned 6,476.275 Class C shares (8.79%
of the Class C shares then outstanding); RPSS TR ROLLOVER IRA, FBO SALLY
HENSLEY, 3812 MINERS LOOP, COEUR D ALENE ID 83815-9691, which owned
4,394.186 Class C shares (5.96% of the Class C shares then outstanding);
RPSS TR, MATHENY MOTOR TRUCK CO, 401(K) PLAN, ATTN MARNI KEPPLE, PO BOX
1304, PARKERSBURG WV 26102-1304, which owned 21,406.576 Class N shares
(39.00% of the Class N shares then outstanding); RPSS TR, BLACHFORD
INVESTMENTS INC, 401K PLAN, ATTN: DORI WITT, 1400 NUCLEAR DR, WEST CHICAGO
IL 60185-1636, which owned 20,939.496 Class N shares (38.14% of the Class
N shares then outstanding); RPSS TR ROLLOVER IRA, FBO KENNETH T HARTMAN,
614 HANOVER LN, IRVING TX 75062-8918, which owned 3,272.463 Class N shares
(5.96% of the Class N shares then outstanding); OPPENHEIMERFUNDS INC, C/O
RAY OLSON BLDG 2, 6803 S TUCSON WAY, CENTENNIAL CO 80112-3924, which owned
100.00 Class Y shares (100.00% of the Class Y shares then outstanding).

OSM - Jennison Growth Fund
OPPENHEIMERFUNDS, DISTRIBUTOR INC, ATTN: RAY OLSON, 803 S TUCSON WAY,
ENGLEWOOD CO 80112-3924, which owned 500,000.000 Class A shares (62.02% of
the Class A shares then outstanding); RPSS TR, GREYSTAR MANAGEMENT
SERVICES LP, 401K PLAN, ATTN TONY WHEELER, 3411 RICHMOND AVE STE 200,
HOUSTON TX 77046-3412, which owned 41,115.372Class N shares (16.27% of the
Class N shares then outstanding); RPSS TR, CAPITAL COMMUNICATIONS FEDERAL,
401(K) PLAN, ATTN NANCY DURIVAGE, 18 COMPUTER DR E, ALBANY NY 12205-1111,
which owned 34,817.417 Class N shares (13.78% of the Class N shares then
outstanding); ROLLIN M DICK TR, HAVERSTICK CONSULTING INC, 401K PLAN,
11405 N PENNSYLVANIA ST STE 210, CARMEL IN 46032-6905, which owned
31,919.001 Class N shares (12.63% of the Class N shares then outstanding);
RPSS TR, COSMETIC ESSENCE INC, 401(K) PLAN, ATTN: CAMILLE CALVONI, 2182
ROUTE 35, HOLMDEL NJ 07733-1125, which owned 27,676.000 Class N shares
(10.95% of the Class N shares then outstanding); RPSS TR, FIDELITY DEPOSIT
& DISCOUNT BAN, 401(K) PLAN, BLAKELY & DRINKER STS, DUNMORE PA 18512,
which owned 15,118.713 Class N shares (5.98% of the Class N shares then
outstanding); LYN H HAMMOND TR, PELHAM FAMILY PRACTICE 401K, 25 CREEKVIEW
CT, GREENVILLE SC 29615-4800, which owned 12,785.683 Class N shares (5.06%
of the Class N shares then outstanding); OPPENHEIMERFUNDS INC, C/O RAY
OLSON BLDG 2, 6803 S TUCSON WAY, CENTENNIAL CO 80112-3924, which owned
100.00 Class Y shares (100.00% of the Class Y shares then outstanding).

OSM - Salomon Brothers All Cap Fund
RPSS TR, UMG MANUFACTURING & LOGISTICS INC 401K, ATTN ANGELA M JONES, 700
S BATTLEGROUND AVE, GROVER NC 28073-9541, which owned 41,618.100 Class A
shares (5.74% of the Class A shares then outstanding); SHELIA LITTLETON ET
AL TR, LEGACY BANK OF TEXAS 401K, 5000 LEGACY DR, PLANO TX 75024-3100,
which owned 83,321.069 Class N shares (10.18% of the Class N shares then
outstanding); MCB TRUST SERVICES TTEE, LINDEN MOTOR FREIGHT CO INC, NON
UNION EMPLOYEE, 700 17TH ST STE 150, DENVER CO 80202-3507, which owned
75,784.126 Class N shares (9.26% of the Class N shares then outstanding);
WEBB, BECK & DAWSON TR, BECK,REDDEN & SECREST PSP, 1221 MCKINNEY ST STE
4500, HOUSTON TX 77010-2029, which owned 68,349.298 Class N shares (8.35%
of the Class N shares then outstanding); RPSS TR, DOBBS BROTHERS
MANAGEMENT SERVI, 401(K) PLAN, ATTN: JOYCE HOWELL, 5170 SANDERLIN AVE STE
102, MEMPHIS TN 38117-4359, which owned 47,431.106 Class N shares (5.79%
of the Class N shares then outstanding); OPPENHEIMERFUNDS INC, C/O RAY
OLSON BLDG 2, 6803 S TUCSON WAY, CENTENNIAL CO 80112-3924, which owned
100.00 Class Y shares (100.00% of the Class Y shares then outstanding);

OSM - Gartmore Millennium Growth Fund II
OPPENHEIMERFUNDS, DISTRIBUTOR INC, ATTN: RAY OLSON, 6803 S TUCSON WAY,
ENGLEWOOD CO 80112-3924, which owned 500,000.000 Class A shares (92.28% of
the Class A shares then outstanding); MARY S. GIRARDI - IRA, 397 WINDSOR
PLACE, OCEANSIDE NY 11572, which owned 6,685.620 Class B shares (16.43% of
the Class B shares then outstanding); JOHN GARRABRANT - IRA, 173 SHERIDAN
AVE, LONGWOOD FL 32750, which owned 6,173.718 Class B shares (15.17% of
the Class B shares then outstanding); RPSS TR, CLAIMS CONFERENCE 401K
PLAN, ATTN: CELESTE LEVY, 15 E 26TH ST STE 906, NEW YORK NY 10010-1533,
which owned 2,314.341 Class B shares (5.68% of the Class B shares then
outstanding); MARGARET HARWELL - IRA, 6712 NW 1st , MARGATE FL 33063, who
owned 2,252.747 Class B shares (5.53% of the Class B shares then
outstanding); MORGAN STANLEY DW INC CUST FOR MARY ELLEN MALLOY, PO BOX 250
CHURCH STREET STATION, NEW YORK NY 10008-0250, which owned 2,834.994 Class
C shares (10.68% of the Class C shares then outstanding); RPSS TR ROLLOVER
IRA, FBO PATRICK J BARNETT, 122 N PROVIDENCE RD, WALLINGFORD PA
19086-6135, which owned 1,826.445 Class C shares (6.88% of the Class C
shares then outstanding); RPSS CUST 403-B PLAN, LEVITTOWN SCHOOLS, FBO
LAURA A DAMURO, 181 STEWART AVE, GARDEN CITY NY 11530-2507, which owned
1,728.374 Class C shares (6.51% of the Class C shares then outstanding);
ROBERT H LYNCH JR TR, ARISTEIA CAPITAL LLC, ATTN: EDWARD P GOLDMAN, 381
5TH AVE FL 6, NEW YORK NY 10016-3322, which owned 1,524.927 Class C shares
(5.74% of the Class C shares then outstanding); RPSS TR IRA, FBO PAUL J
GIAMBALVO, 123 WALNUT ST, MIDDLESEX NJ 08846-1031, which owned 1,486.773
Class C shares (5.60% of the Class C shares then outstanding); RPSS TR
IRA, FBO MONICA V WOJTYNIAK, 14 TERRACE PL, HICKSVILLE NY 11801-4336,
which owned 1,428.890 Class C shares (5.38% of the Class C shares then
outstanding); ALFRED P DOUGHERTY - IRA, 445 COVETOWER DR APT 601, NAPLES
FL 34110, who owned 1,336.761 Class C shares (5.03% of the Class C shares
then outstanding); RPSS TR, FIDELITY DEPOSIT & DISCOUNT BAN, 401(K) PLAN,
BLAKELY & DRINKER STS, DUNMORE PA 18512, which owned 6,184.927 Class N
shares (47.45% of the Class N shares then outstanding); NGOC MINH PHAM TR,
NGOC MINH PHAM MD & SUONG MY, TUONG MD APC DEF BENEFIT PLAN, 2363 ULRIC ST
STE B, SAN DIEGO CA 92111-6447, which owned 4,055.946 Class N shares
(31.12% of the Class N shares then outstanding); JOHN VAN DE WIELE TR, VAN
DE WIELE ENGINEERING INC, 401K PSP, 2925 BRIARPARK DR STE 275, HOUSTON TX
77042-3725, which owned 2,097.265 Class N shares (16.09% of the Class N
shares then outstanding); OPPENHEIMERFUNDS INC, C/O RAY OLSON BLDG 2, 6803
S TUCSON WAY, CENTENNIAL CO 80112-3924, which owned 100.00 Class Y shares
(100.00% of the Class Y shares then outstanding).

The Manager. The Manager is wholly-owned by Oppenheimer Acquisition Corp., a
holding company controlled by Massachusetts Mutual Life Insurance Company.

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

Each Fund's Code of Ethics is an exhibit to the Funds' registration
statement filed with the Securities and Exchange Commission and can be reviewed
and copied at the SEC's Public Reference Room in Washington, D.C. You can obtain
information about the hours of operation of the Public Reference Room by calling
the SEC at 1-202-942-8090. The Code of Ethics can also be viewed as part of the
Fund's registration statement on the SEC's EDGAR database at the SEC's Internet
web site at http://www.sec.gov. Copies may be obtained, after paying a
duplicating fee, by electronic request at the following E-mail address:
publicinfo@sec.gov., or by writing to the SEC's Public Reference Section,
Washington, D.C. 20549-0102.

Management and Advisory Arrangements - OSM - Mercury Advisors S&P 500 Index
Fund and OSM - Mercury Advisors Focus Growth Fund

Management Services and Management Fee. The OSM - Mercury Advisors S&P
500 Index Fund and the OSM - Mercury Advisors Focus Growth Fund each invests all
of its assets in shares of a Master Fund. Accordingly, these Funds do not invest
directly in portfolio securities and do not require investment advisory
services. All portfolio management occurs at the level of the respective Master
Fund. Each Master Fund has entered into an investment management agreement with
Fund Asset Management, L.P., doing business as Mercury Advisors, as Adviser (the
"Management Agreement"). The Adviser receives monthly compensation at the annual
rate of 0.60% of the average daily net assets of the Master Fund in which the
OSM - Mercury Advisors Focus Growth Fund invests. The Adviser is entitled to
receive a monthly management fee at the annual contractual rate of 0.05% of the
average daily net assets of the Master Fund in which the OSM - Mercury Advisors
S&P 500 Index Fund invests. The Adviser has entered into a contractual
arrangement with this Master Fund to provide that the management fee for the
Master Fund, when combined with administration fees of certain funds that invest
in the Master Fund (other than OSM - Mercury Advisors S&P 500 Index Fund),
will not exceed a specific amount. As a result of this contractual arrangement,
the Adviser currently receives management fees of 0.005%. This arrangement has a
one-year term and is renewable.

Management Fee
Fund Paid to the Adviser

OSM - Mercury Advisors Focus Growth Fund
For the period ended 11/30/01 $4,617,970
For the fiscal year ended 11/30/02 $1,718,971

OSM - Mercury Advisors S&P 500 Index Fund
For the period ended 12/31/01 $91,454
For the fiscal year ended 12/31/02 $93,240

The Adviser has also entered into a subadvisory agreement (the
"Sub-Advisory Agreement") with Merrill Lynch Asset Management U.K. Limited
("MLAM U.K.") pursuant to which MLAM U.K. provides investment advisory
services to the Adviser with respect to the OSM - Mercury Advisors Focus
Growth Fund. The following entities may be considered "controlling persons"
of MLAM U.K.: Merrill Lynch Europe PLC (MLAM U.K.'s parent), a subsidiary of
Merrill Lynch International Holdings, Inc., a subsidiary of Merrill Lynch
International, Inc., a subsidiary of ML & Co. For the fiscal period ended
November 30, 2001 and for the fiscal year ended November 30, 2002, the
Adviser paid no fees to MLAM U.K. pursuant to the Sub-Advisory Agreement.

Payment of Master Fund Expenses. The Management Agreement obligates the
Adviser to provide investment advisory services and to pay, or cause an
affiliate to pay, for maintaining its staff and personnel and to provide office
space, facilities and necessary personnel for the Master Fund. The Adviser is
also obligated to pay, or cause an affiliate to pay, the fees of all officers
and Trustees of the Master Fund who are affiliated persons of the Adviser or any
affiliate. The Master Fund pays, or causes to be paid, all other expenses
incurred in the operation of the Master Fund (except to the extent paid by its
placement agent), including, among other things, taxes, expenses for legal and
auditing services, costs of printing proxies, shareholder reports, copies of the
Registration Statement, charges of the custodian, any sub-custodian and the
transfer agent, expenses of portfolio transactions, expenses of redemption of
shares, Commission fees, expenses of registering the shares under federal, state
or non-U.S. laws, fees and actual out-of-pocket expenses of Trustees who are not
affiliated persons of the Adviser or an affiliate of the Adviser, accounting and
pricing costs (including the daily calculation of net asset value), insurance,
interest, brokerage costs, litigation and other extraordinary or non-recurring
expenses, and other expenses properly payable by the Master Fund. The Master
Fund's placement agent will pay certain of the expenses of the Master Fund
incurred in connection with the offering of its shares of beneficial interest.
Certain accounting services are provided to the Master Fund by State Street Bank
& Trust Company ("State Street") pursuant to an agreement between State Street
and the Master Fund. The Master Fund pays a fee for these services. In addition,
the Master Fund will reimburse the Adviser for the cost of certain additional
accounting services.

Organization of the Adviser. Fund Asset Management, L.P. is a limited
partnership, the partners of which are Merrill Lynch & Co., Inc., a financial
services holding company and the parent of Merrill Lynch and Princeton
Services, Inc. Merrill Lynch & Co., Inc. and Princeton Services are
"controlling persons" of the Adviser as defined under the Investment Company
Act because of their ownership of its voting securities and their power to
exercise a controlling influence over its management or policies.

Duration and Termination. Unless earlier terminated as described below,
each Management Agreement will remain in effect for two (2) years from its
effective date. Thereafter, it will remain in effect from year to year if
approved annually (a) by the Board of Trustees of the Master Fund or by a
majority of the outstanding shares of the Master Fund and (b) by a majority of
the Trustees who are not parties to such contract or interested persons (as
defined in the Investment Company Act) of any such party. Each contract is not
assignable, automatically terminates in the event of its assignment, and may be
terminated without penalty on sixty (60) days' written notice at the option of
either party thereto or by the vote of the majority of the outstanding voting
securities of the appropriate Master Fund.

Investment Advisory Agreement with OppenheimerFunds, Inc. The OSM -
Mercury Advisors S&P 500 Index Fund and the OSM - Mercury Advisors Focus Growth
Fund have entered into an Investment Advisory Agreement with OppenheimerFunds,
Inc. Those Advisory Agreements are substantially similar to the Advisory
Agreements entered into with OppenheimerFunds, Inc. by the other series of the
Trust, as further described below. Those Agreements have been approved by the
Trust's Board of Trustees and OppenheimerFunds, Inc., as the sole shareholder of
each Fund, but will not become effective unless and until the Master-Feeder
Participation Agreement between OppenheimerFunds, Inc., OppenheimerFunds
Distributor, Inc., the Trust and FAM Distributors, Inc. is terminated. The fees
payable under those Advisory Agreements are discussed in the Prospectus.

At respective meetings of the Board of Trustees of the Trust, the Board of
Trustees of the Master Fund of the OSM - S&P 500 Index Fund and the Board of
Trustees of Master Fund of the OSM - Mercury Advisors Focus Growth Fund, held on
May 8, 2002 and March 13, 2002, respectively, each Board approved the
continuation of the applicable Master Fund's Management Agreement with the
Adviser for an additional year. In connection with its consideration of the
applicable Management Agreement, each Board reviewed information derived from a
number of sources and covering a range of issues. Each Board considered the
services provided to the Master Fund by the Adviser under the applicable
Management Agreement, as well as other services provided by the Adviser and its
affiliates under other agreements, including the Subadministration Agreement,
and the personnel who provided these services. In addition to investment
advisory services, the Adviser and its affiliates provide administrative
services, oversight of Master Fund accounting, assistance in meeting legal and
regulatory requirements, and other services necessary for the operation of the
Master Funds. Each Board also considered the Adviser's costs of providing
services, and the direct and indirect benefits to the Adviser from its
relationship with the applicable Master Fund. The benefits considered by each
Board included not only the Adviser's compensation for investment advisory
services and the Adviser's profitability under the applicable Management
Agreement, but also compensation paid to the Adviser or its affiliates for
other, non-advisory, services provided to the Master Fund and the Funds. Each
Board also considered the Adviser's access to research services from brokers to
which the Adviser may have allocated Master Fund brokerage in a "soft dollar"
arrangement. In connection with its consideration of the applicable Management
Agreement, each Board also compared the advisory fee rate, expense ratios and
historical performance of the Master Fund to those of comparable funds. Based in
part on this comparison, and taking into account the various services provided
to the applicable Master Fund and Fund by the Adviser and its affiliates, each
Board concluded that the management fee rate was reasonable. Each Board also
considered whether there should be changes in the advisory fee rate or structure
in order to enable the Master Fund to participate in any economies of scale that
the Adviser may experience as a result of growth in the applicable Master Fund's
assets.

Based on the information reviewed and the discussions, each Board
concluded that it was satisfied with the nature and quality of the services
provided by the Adviser to the Master Fund and that the management fee rate was
reasonable in relation to such services. The non-interested Trustees of each
Board were represented by independent counsel who assisted them in their
deliberations.

|X| The Investment Advisory Agreement - OSM - QM Active Balanced Fund, OSM
- Jennison Growth Fund, OSM - Salomon Brothers All Cap Fund and OSM - Gartmore
Millennium Growth Fund II. The Manager provides investment advisory and
management services to the OSM - QM Active Balanced Fund, OSM - Jennison Growth
Fund, OSM - Salomon Brothers All Cap Fund and OSM - Gartmore Millennium Growth
Fund II under investment advisory agreements between the Manager and the Trust
on behalf of each such Fund. The Manager handles those Funds' day-to-day
administrative business, and the agreements permit the Manager to enter into
Subadvisory agreements with other registered investment advisers to obtain
specialized services for the Funds, as long as the Funds are not obligated to
pay any additional fees for those services. The Manager has retained the
Subadvisers pursuant to separate subadvisory agreements, described below, under
which each Subadviser buys and sells portfolio securities for the respective
Fund. The portfolio manager of each of the Funds is employed by the Subadviser
and is the person who is principally responsible for the day-to-day management
of each of the Fund's portfolio, as described below.

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

Each of the Funds pays expenses not expressly assumed by the Manager under
the advisory agreement. Expenses for the Trust's QM Active Balanced Fund, OSM -
Jennison Growth Fund, OSM - Salomon Brothers All Cap Fund and OSM - Gartmore
Millennium Growth Fund II are allocated to those Funds in proportion to their
net assets, unless allocations of expenses can be made directly to a Fund. The
advisory agreements list examples of expenses paid by those Funds. The major
categories relate to calculation of each of the Fund's net asset values per
share, interest, taxes, brokerage commissions, fees to certain Trustees, legal
and audit expenses, custodian and transfer agent expenses, share issuance costs,
certain printing and registration costs and non-recurring expenses, including
litigation costs. The management fees paid by the Funds to the Manager are
calculated at the rates described in the Prospectus, which are applied to the
assets of the Funds as a whole. The fees are allocated to each class of shares
based upon the relative proportion of each of the Fund's net assets represented
by that class. The management fees paid by the Funds to the Manager during their
last two fiscal years are listed below.

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

Fund Management Fee Paid to
OppenheimerFunds, Inc.

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

For the For the
fiscal period fiscal
ended 11/30/01 year ended
11/30/02

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

QM Active Balanced Fund $36,322 $53,310

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

Jennison Growth Fund $39,198 $76,321

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

Salomon Brothers All Cap Fund $77,987 $238,043

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

Gartmore Millennium Growth Fund $41,736 $46,707

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

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

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

|X| Advisory Agreement Approvals - OSM - Mercury Advisors S&P 500 Index
Fund and OSM - Mercury Advisors Focus Growth Fund. The Trust and each Fund
commenced the public sale of its shares in February of 2001. As explained in the
Prospectus and in other parts of this Statement of Additional Information,
investment advisory and portfolio management services for the OSM - Mercury
Advisors S&P 500 Index Fund and OSM - Mercury Advisors Focus Growth Fund are
provided by the Advisor and the investment advisory fees for those services are
paid by each Master Fund to the Advisor. The OSM Mercury Advisers S&P 500 Index
Fund and OSM - Mercury Advisors Focus Growth Fund do not pay an investment
advisory fee other than its proportionate share of the amounts paid by the
Master Fund to the Advisor. The investment advisory agreements for these two
Funds are approved by the Board of Trustees of the respective Master Fund.

|X| Annual Approval of Investment Advisory Agreement - OSM - QM Active
Balanced Fund, OSM - Jennison Growth Fund, OSM - Salomon Brothers All Cap Fund
and OSM - Gartmore Millennium Growth Fund II. Each year, the Board of Trustees,
including a majority of the Independent Trustees, is required to approve the
renewal of the investment advisory agreement. The Investment Company Act
requires that the Board request and evaluate and the Manager provide such
information as may be reasonably necessary to evaluate the terms of the
investment advisory agreement. The Board employs an independent consultant to
prepare a report that provides such information as the Board requests for this
purpose.

The Board also receives information about the 12b-1 distribution fees each
Fund pays. These distribution fees are reviewed and approved at a different time
of the year.

The Board reviewed the foregoing information in arriving at its decision
to renew the investment advisory agreements. Among other factors, the Board
considered: o The nature, cost, and
quality of the
services provided to
the Fund and its
shareholders;
o The profitability of the
Fund to the Manager;
o The investment
performance of the
Fund in comparison to
regular market indices
o Economies of scale that
may be available to
the Fund from the
Manager;
o Fees paid by other
mutual funds for
similar services;
o The value and quality of
any other benefits or
services received by
the Fund from its
relationship with the
Manager, and
o The direct and indirect
benefits the Manager
received from its
relationship with the
Fund. These included
services provided by
the Distributor and
the Transfer Agent,
and brokerage and
soft dollar
arrangements
permissible under
Section 28(e) of the
Securities Exchange
Act.

The Board considered that the Manager must be able to pay and retain high
quality personnel at competitive rates to provide services to the Funds. The
Board also considered that maintaining the financial viability of the Manager is
important so that the Manager will be able to continue to provide quality
services to the Funds and its shareholders in adverse times. The Board also
considered the investment performance of other mutual funds advised by the
Manager. The Board is aware that there are alternatives to the use of the
Manager.

These matters were also considered by the Independent Trustees, meeting
separately from the full Board with experienced Counsel to the Independent
Trustees who assisted the Board in its deliberations. The Counsel to the
Independent Trustees is independent of the Manager within the meaning and intent
of the SEC Rules regarding the independence of counsel.

After careful deliberation, the Board of concluded that it was in the best
interest of shareholders to continue the investment advisory agreement for
another year. In arriving at a decision, the Board did not single out any one
factor or group of factors as being more important than other factors, but
considered all factors together. The Board judged the terms and conditions of
the investment advisory agreement, including the investment advisory fee, in
light of all of the surrounding circumstances.

|X| The Administration and Subadministration Agreements - OSM - Mercury
Advisors S&P 500 Index Fund and OSM - Mercury Advisors Focus Growth Fund. The
Trust, on behalf of the OSM - Mercury Advisors S&P 500 Index Fund and the OSM -
Mercury Advisors Focus Growth Fund, has entered into an Administration Agreement
with the Manager. The Agreement states that the Manager, at its own expense,
shall provide assistance in the supervision of all administrative and clerical
personnel as shall be required to provide effective corporate administration for
the Trust, including the compilation and maintenance of such records with
respect to the Trust's operations as may be reasonably required; the preparation
and filing of such reports as shall be required by the Securities and Exchange
Commission; composition of periodic reports with respect to its operation of
each Fund for the shareholders of the Fund; composition of proxy materials for
meetings of the Fund's shareholders and the composition of such registration
statements as may be required by federal securities laws and preparation of
required filings in each state for continuous public sale of the Fund; provide
the Trust and the Fund with adequate office space, facilities and equipment;
compensate all officers of the Trust and all Trustees of the Trust who are
affiliated persons of the Manager; and compensate any Subadministrator that the
Manager might retain.

The Trust assumes and pays or causes to be paid all other expenses of the
Trust, on behalf of the OSM - Mercury Advisors S&P 500 Index Fund and the OSM -
Mercury Advisors Focus Growth Fund under the Administration Agreement,
including, without limitation: (i) interest and taxes; (ii) insurance premiums
for fidelity and other coverage requisite to its operations; (iii) compensation
and expenses of its trustees other than those associated or affiliated with the
Manager; (iv) legal and audit expenses; (v) custodian and transfer agent fees
and expenses; (vi) expenses incident to the redemption of its shares; (vii)
expenses incident to the issuance of its shares against payment therefor by or
on behalf of the subscribers thereto; (viii) fees and expenses, other than as
described above, incident to the registration under federal and state securities
laws of shares of each Fund for public sale; (ix) expenses of printing and
mailing reports, prospectuses, notices and proxy materials to shareholders of
each Fund; (x) except as noted above, all other expenses incidental to holding
meetings of the Funds' shareholders; and (xi) such extraordinary non-recurring
expenses as may arise, including litigation, affecting a Fund and any legal
obligation which the Trust may have on behalf of a Fund to indemnify its
officers and trustees with respect thereto.

The Administration Agreement states that in the absence of willful
misfeasance, bad faith or gross negligence in the performance of its duties, or
reckless disregard of its obligations and duties under the Administration
Agreement, the Manager shall not be liable for any loss resulting from any error
of judgement or mistake of law or for any loss arising out of any act or
omission in the management and administration of the Trust and any Fund.

Each Fund pays the Manager an annual Administration fee of 0.50% of
average daily net assets. That fee is included in the "Annual Fund Operating
Expenses" table in the Prospectus under "Other Expenses." The Manager has
entered into a Subadministration Agreement with FAM whereby FAM will maintain
records of share purchases of the applicable Master Fund by each feeder fund,
maintain tax records relating to the Master Funds, maintaining, preparing or
providing records relating to the operation of the Master Funds that the Manager
may reasonably request in connection with reports to be made to the Board of
Trustees of the Trust, periodic information reporting regarding the Master Fund
to the Manager as the Manager may reasonably require in order to provide
information relating to the performance or holdings of the Mercury Advisors S&P
500 Index Fund or Mercury Advisors Focus Growth Fund, as applicable, fund to
shareholders of such fund, and preparation of reports relating to the Master
Fund that the Manager may reasonably request be made to third-party reporting
services.

In consideration for providing these services, the Manager pays FAM an
annual subadministration fee of 0.045% of average daily net assets of the S&P
500 Master Fund and 0.0% of the average daily net assets of the Focus Master
Fund.

The Subadvisory Agreement - OSM - QM Active Balanced Fund, OSM -
Jennison Growth Fund, OSM - Salomon Brothers All Cap Fund and OSM - Gartmore
Millennium Growth Fund II. Under the Subadvisory Agreement between the Manager
and each Subadviser, the Subadviser shall regularly provide investment advice
with respect to the applicable Fund and invest and reinvest cash, securities and
the property comprising the assets of the Fund. Under the Subadvisory Agreement,
the Subadviser agrees to provide reasonable assistance in the distribution and
marketing of the Fund.

Under the subadvisory agreement, the Manager pays the Subadviser an annual
fee in monthly installments, based on the average daily net assets of the Fund.
The fee paid to the Subadviser under the subadvisory agreement is paid by the
Manager, not by the Funds. The subadvisory fee paid by the Manager to each
Subadviser is as follows:

Subadvisory Fee
Fund Subadviser as % of average net assets

OSM - Jennison Growth Fund Jennison Associates LLC 0.45% of the first $300
million of average annual
net assets of the
Fund, and 0.40% of average
annual net assets in
excess of $300 million.

OSM - QM Active Prudential 0.45% of the first $300
Balanced Fund Investment million of average annual
net assets of the Fund,
and 0.40% of average
annual net assets in
excess of $300 million.

OSM - Salomon Brothers Salomon Brothers Asset 0.60% of the first
All Cap Fund Management Inc. $100 million of
average annual net
assets of the Fund, and
0.50% of average annual
net assets in excess
of $100 million.

OSM - Gartmore Millennium Gartmore Mutual 0.70% of the first $400
Growth Fund II Fund Capital Trust million of average annual
net assets of the Fund.
0.60% of the next $400
million, and 0.50% of
average annual net
assets in excess of
$800 million.

The Subadvisory Agreement states that in the absence of willful
misfeasance, bad faith, negligence or reckless disregard of its duties or
obligations, the Subadviser shall not be liable for any error of judgement or
mistake of law and shall not be subject to any expenses or liability to the
Manager, the Trust or the Fund or any of the Fund's shareholders in connection
with rendering services under the Subadvisory Agreement.

Brokerage Policies of the Funds

Transactions in Portfolio
Securities - OSM - Mercury
Advisors S&P 500 Index Fund and
Mercury Advisors Focus Growth
Fund

Because each Fund will invest exclusively in beneficial interests in a
Master Fund, it is expected that all transactions in portfolio securities will
be entered into by the Master Fund. Subject to policies established by the Board
of Trustees of the Master Fund, the Adviser is primarily responsible for the
execution of the Master Fund's portfolio transactions and the allocation of
brokerage. The Master Fund does not execute transactions through any particular
broker or dealer, but seeks to obtain the best net results for the Master Fund,
taking into account such factors as price (including the applicable brokerage
commissions or dealer spread), size of order, difficulty of execution and
operational facilities of the firm and the firm's risk and skill in positioning
blocks of securities. While the Adviser generally seeks reasonable trade
execution costs, the Master Fund does not necessarily pay the lowest spread or
commission available. Subject to applicable legal requirements, the Adviser may
select a broker based partly upon brokerage or research services provided to the
Adviser and its clients, including the Master Fund. In return for such services
the Adviser may pay a higher commission that other brokers would charge if the
Adviser determines in good faith that the commission is reasonable in relation
to the services provided.

Section 28(e) of the Securities Exchange Act of 1934 ("Section 28(e)")
permits an investment adviser, such as the Adviser, under certain circumstances,
to cause an account to pay a broker a commission for effecting a transaction
that exceeds the amount of commission another broker would have charged for
effecting the same transaction in recognition of the value of brokerage and
research services provided by that broker. Brokerage and research services
include (1) furnishing advice as to the value of securities, the advisability of
investing in, purchasing or selling securities, and the available of securities
or purchasers or sellers of securities; (2) furnishing analyses and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy, and the performance of accounts; and (3) effecting
securities transactions and performing functions incidental to securities
transactions (such as clearance, settlement, and custody). The Adviser believes
that access to independent investment research is beneficial to its investment
decision-making processes and, therefore, to the Master Fund and the Fund.

To the extent research services may be a factor in selecting brokers, such
services may be in written form or through direct contact with individuals and
may include information as to particular companies and securities as well as
market, economic, or institutional areas and information that assists in the
valuation of investments. Examples of research-oriented services for which the
Adviser might use Master Fund commissions include research reports and other
information on the economy, industries, groups of securities, individual
companies, statistical information, political developments, technical market
action, pricing and appraisal services, credit analysis, risk measurement
analysis, performance and other analysis. Except as noted immediately below,
research services furnished by brokers may be used in servicing some or all
client accounts and not all services may be used in connection with the account
that paid commissions to the broker providing such services. In some cases,
research information received from brokers by mutual fund management personnel
or personnel principally responsible for the Advisor's individually managed
portfolios is not necessarily shared by and between such personnel. Any
investment advisory or other fees paid by the Master Fund to the Adviser are not
reduced as a result of the Adviser's receipt of research services.

In some cases the Adviser may receive a service from a broker that has
both a "research" and a "non-research" use. When this occurs the Adviser makes a
good faith allocation under all the circumstances between the research and
non-research uses of the service. The percentage of the service that is used for
research purposes may be paid for with client commissions, while the Adviser
will use its own funds to pay for the percentage of the service that is used for
non-research purposes. In making this good faith allocation, the Adviser faces a
potential conflict of interest, but the Adviser believes that its allocation
procedures are reasonably designed to ensure that it appropriately allocates the
anticipated use of such services to their research and non-research uses.

From time to time, the Master Fund may purchase new issues of securities
in a fixed price offering. In these situations, the broker may be a member of
the selling group that will, in addition to selling securities, provide the
Adviser with research services. The NASD has adopted rules expressly permitting
these types of arrangements under certain circumstances. Generally, the broker
will provide research "credits" in these situations at a rate that is higher
than that which is available for typical secondary market transactions. These
arrangements may not fall within the safe harbor of Section 28(e).

In addition, consistent with the Conduct Rules of the NASD and policies
established by the Boards of Trustees of the Master Funds and subject to best
execution, the Adviser may consider sales of shares of feeder funds as a factor
in the selection of brokers and dealers to execute portfolio transactions for
the Master Fund, however, whether or not a particular broker or dealer sells
shares of a feeder fund neither fund neither qualifies nor disqualifies such
broker or dealer to execute transactions for the Master Fund.

The Master Fund anticipates that its brokerage transactions involving
securities of issuers domiciled in countries other than the United States
generally will be conducted primarily on the principal stock exchanges of such
countries. Brokerage commissions and other transaction costs on foreign stock
exchange transactions generally are higher than in the United States, although
the Master Fund will endeavor to achieve the best net results in effecting its
portfolio transactions. There generally is less governmental supervision and
regulation of foreign stock exchanges and brokers than in the United States.

Foreign equity securities may be held by the Master Fund in the form of
Depository Receipts, or other securities convertible into foreign equity
securities. Depository Receipts may be listed on stock exchanges or traded in
over-the-counter markets in the United States or Europe, as the case may be.
American Depository Receipts, like other securities traded in the United States,
will be subject to negotiated commission rates. Because the shares of each
feeder fund are redeemable on a daily basis in U.S. dollars, the Master Fund
intends to manage its portfolio so as to give reasonable assurance that it will
be able to obtain U.S. dollars to the extent necessary to meet anticipated
redemptions. Under present conditions, it is not believed that these
considerations will have significant effect on the Master Fund's portfolio
strategies.

Information about the brokerage commissions paid by the Master Fund of
OSM- Mercury Advisors Focus Growth Fund including commissions paid to Merrill
Lynch, is set forth in the following table:

Aggregate Brokerage Commissions Paid
Commissions Paid To Merrill Lynch

Fiscal period ended November
30, 2001 $1,695,995 $75,819

Fiscal year ended November 30,
2002 $2,421,919 $161,190

For the fiscal period ended November 30, 2002 the brokerage commissions
paid to Merrill Lynch represented 6.66% of the aggregate brokerage commissions
paid by the Master Fund and involved 6.92% of the Master Fund's dollar amount of
transactions involving payment of commissions.

Information about the brokerage commissions paid by the Master Fund of
OSM- Mercury Advisors S&P 500 Index Fund including commissions paid to Merrill
Lynch, is set forth in the following table:

Aggregate Brokerage Commissions Paid
Commissions Paid to Merrill Lynch

Fiscal period ended December
31, 2001 $90,754 $0

Fiscal year ended December 31,
2002 $165,899 $862

For the fiscal period ended December 31, 2002 the brokerage commissions
paid to Merrill Lynch represented 0.52% of the aggregate brokerage commissions
paid by the Trust and involved 0.29% of the Trust's dollar amount of
transactions involving payment of commissions.

Because of the affiliation of Merrill Lynch with Mercury Advisors, the
Master Funds are prohibited from engaging in certain transactions involving
Merrill Lynch, or its affiliates except for brokerage transactions permitted
under the Investment Company Act involving only usual and customary commissions
or transactions pursuant to an exemptive order under the Investment Company Act.
Each Master Fund may invest in certain securities traded in the OTC market and
intends to deal directly with the dealers who make a market in securities
involved, except in those circumstances in which better prices and execution are
available elsewhere. Under the Investment Company Act, persons affiliated with
the Master Fund and persons who are affiliated with such affiliated persons are
prohibited from dealing with the Master Fund as principal in the purchase and
sale of securities unless a permissive order allowing such transactions is
obtained from the Commission. Since transactions in the OTC market usually
involve transactions with the dealers acting as principal for their own
accounts, the Master Fund will not deal with affiliated persons, including
Merrill Lynch and its affiliates, in connection with such transactions. However,
an affiliated person of the Master Fund may serve as its broker in OTC
transactions conducted on an agency basis provided that, among other things, the
fee or commission received by such affiliated broker is reasonable and fair
compared to the fee or commission received by non-affiliated brokers in
connection with comparable transactions. In addition, the Master Fund may not
purchase securities during the existence of any underwriting syndicate for such
securities of which Merrill Lynch is a member or in a private placement in which
Merrill Lynch serves as placement agent except pursuant to procedures approved
by the Board of Trustees of the Master Fund that either comply with rules
adopted by the Commission or with interpretations of the Commission staff. The
Master Fund(s) have received an exemptive order from the Commission permitting
them to lend portfolio securities to Merrill Lynch or its affiliates. Pursuant
to that order, the Master Funds also have retained an affiliated entity of the
Adviser as the securities lending agent for a fee, including a fee based on a
share of the returns on investment of cash collateral. For the fiscal period
ended November 30, 2001 and for the fiscal year ended November 30, 2002, that
affiliated entity received $1,260 and $44,826, respectively in securities
lending agent fees from the respective Master Fund. That entity may, on behalf
of a Master Fund, invest cash collateral received by that Master Fund for such
loans, among other things, in a private investment company managed by that
entity or in registered money market funds advised by the Adviser or its
affiliates.

Section 11(a) of the Exchange Act generally prohibits members of the U.S.
national securities exchanges from executing exchange transactions for their
affiliates and institutional accounts that they manage unless the member (i) has
obtained prior express authorization from the account to effect such
transactions, (ii) at least annually furnishes the account with a statement
setting forth the aggregate compensation received by the member in effecting
such transactions, and (iii) complies with any rules the Commission has
prescribed with respect to the requirements of clauses (i) and (ii). To the
extent Section 11(a) would apply to Merrill Lynch acting as a broker for the
Master Fund in any of its portfolio transactions executed on any such securities
exchange of which it is a member, appropriate consents have been obtained from
the Master Fund and annual statements as to aggregate compensation will be
provided to the Master Fund. Securities may be held by, or be appropriate
investments for, the Master Fund as well as other funds or investment advisory
clients of the Adviser or its affiliates.

The Board of Trustees of each Master Fund has considered the possibility
of seeking to recapture for the benefit of the Master Fund brokerage commissions
and other expenses of possible portfolio transactions by conducting portfolio
transactions through affiliated entities. For example, brokerage commissions
received by affiliated brokers could be offset against the advisory fee paid by
the Master Fund to the Adviser. After considering all factors deemed relevant,
the Board of Trustees of the Master Fund made a determination not to seek such
recapture. The Board of Trustees of the Master Fund will reconsider this matter
from time to time.

Because of different objectives or other factors, a particular security
may be bought for one or more clients of the Adviser or its affiliates when one
or more clients of the Adviser or its affiliates are selling the same security.
If purchases or sales of securities arise for consideration at or about the same
time that would involve a Master Fund or other clients or funds for which the
Adviser or an affiliate act as investment adviser, transactions in such
securities will be made, insofar as feasible, for the respective funds and
clients in a manner deemed equitable to all. To the extent that transactions on
behalf of more than one client of the Adviser or its affiliates during the same
period may increase the demand for securities being purchased or the supply of
securities being sold, there may be an adverse effect on price.

Brokerage Provisions of the Investment Advisory Agreements and the Subadvisory
Agreements - OSM - Jennison Growth Fund, OSM - QM Active Balanced Fund, OSM -
Salomon Brothers All Cap Fund and OSM - Gartmore Millennium Growth Fund II.

One of the duties of the Subadviser under the Subadvisory Agreement is to
arrange the portfolio transactions for the Funds. Each Fund's investment
advisory agreement with the Manager and the Subadvisory Agreement contain
provisions relating to the selection of broker-dealers to effect each Fund's
portfolio transactions. The Manager and the Subadviser are authorized to select
broker-dealers, including "affiliated" brokers, as that term is defined in the
Investment Company Act. They may employ broker-dealers that the Manager or the
Subadviser thinks, in its best judgment based on all relevant factors, will
implement the policy of the Funds to obtain, at reasonable expense, the "best
execution" of each of the Fund's portfolio transactions. "Best execution" means
prompt and reliable execution at the most favorable price obtainable.

The Manager and the Subadviser need not seek competitive commission bidding.
However, they are expected to be aware of the current rates of eligible brokers
and to minimize the commissions paid to the extent consistent with the interests
and policies of the Funds as established by their Board of Trustees.

The Manager and the Subadviser may select brokers (other than affiliates)
that provide brokerage and/or research services for the Funds and/or the other
accounts over which the Manager, the Subadviser or their respective affiliates
have investment discretion. The commissions paid to such brokers may be higher
than another qualified broker would charge, if the Manager or Subadviser, as
applicable, makes a good faith determination that the commission is fair and
reasonable in relation to the services provided. Subject to those
considerations, as a factor in selecting brokers for each of the Fund's
portfolio transactions, the Manager and the Subadviser may also consider sales
of shares of each of the Funds and other investment companies for which the
Manager or an affiliate serves as investment adviser.

The Subadvisory Agreement permits the Subadviser to enter into "soft-dollar"
arrangements through the agency of third parties to obtain services for the
Funds. Pursuant to these arrangements, the Subadviser will undertake to place
brokerage business with broker-dealers who pay third parties that provide
services. Any such "soft-dollar" arrangements will be made in compliance with
applicable law.

Brokerage Practices. Brokerage for the Funds is allocated subject to the
provisions of the Investment Advisory Agreement and the Subadvisory Agreement
and the procedures and rules described above. Generally, the Subadviser's
portfolio traders allocate brokerage based upon recommendations from the Fund's
portfolio manager. In certain instances, portfolio managers may directly place
trades and allocate brokerage. In either case, the Subadviser's executive
officers supervise the allocation of brokerage.

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

Each Subadviser serves as investment manager to a number of clients,
including other investment companies, and may in the future act as investment
manager or advisor to others. It is the practice of the Subadviser to allocate
purchase or sale transactions among the Fund it manages and other clients whose
assets it manages in a manner it deems equitable. In making those allocations,
the Subadviser considers several main factors, including the respective
investment objectives, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment, the size of
investment commitments generally held and the opinions of the persons
responsible for managing the portfolios of the Fund and each other client's
accounts.

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

Most purchases of debt obligations are principal transactions at net prices.
Instead of using a broker for those transactions, a Fund will normally deal
directly with the selling or purchasing principal or market maker unless the
Subadviser determines that a better price or execution can be obtained by using
the services of a broker. Purchases of portfolio securities from underwriters
include a commission or concession paid by the issuer to the underwriter.
Purchases from dealers include a spread between the bid and asked prices. The
Funds seek to obtain prompt execution of these orders at the most favorable net
price.

The Investment Advisory Agreement and the Subadvisory Agreement permit the
Manager and the Subadviser to allocate brokerage for research services. The
research services provided by a particular broker may be useful only to one or
more of the advisory accounts of the Subadviser and its affiliates. The
investment research received for the commissions of those other accounts may be
useful both to the respective Fund and one or more of the Subadviser's other
accounts. Investment research may be supplied to the Subadviser by a third party
at the instance of a broker through which trades are placed.

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

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

Total Brokerage Commissions
Paid by the Funds1
-------------------------------------------------------------------------------
--------------------------------------------------------------

Fiscal Period Fiscal Year Ended
Fund Ended 11/30/01 11/30/022

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

QM Active Balanced Fund $1,475 $5,454

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

Jennison Growth Fund $5,832 $22,425

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

Salomon Brothers All Cap Fund $19,495 $356,961

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

Gartmore Millennium Growth $11,810 $57,264
Fund II

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

1. Amounts do not include spreads or commissions on principal transactions on a
net trade basis. 2. In the fiscal year ended 11/30/02, the amount of
transactions directed to brokers for research services and the amount of the
commissions paid to broker-dealers for those services were as follows:

----------------------------------------------------
Amount of Amount of
Fund TransactionCommissions
----------------------------------------------------
----------------------------------------------------
QM Active Balanced Fund $0 $0
----------------------------------------------------
----------------------------------------------------

Jennison Growth Fund $120,448 $249

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

Salomon Brothers All Cap Fund $699,824 $1,594

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

Gartmore Millennium Growth $141,908 $293
Fund II

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

Distribution and Service Plans

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

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

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

Aggregate Class A
Fiscal Front-End Front-End
Year Sales Sales
Ended Charges Charges

Fund 11/30 on Class A Retained by
Shares Distributor*
--------------------------------------------------------------
--------------------------------------------------------------

Mercury Advisors S&P 500 2002* $71,413 $23,220
Index Fund

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

Mercury Advisors Focus Growth 2002 $7,624 $4,188
Fund

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

QM Active Balanced Fund 2002 $6,890 $1,094

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

Jennison Growth Fund 2002 $34,373 $10,966

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

Salomon Brothers All Cap Fund 2002 $62,590 $21,424

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

Gartmore Millennium Growth 2002 $2,876 $1,899
Fund II

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

Includes amounts retained by a broker-dealer that is an affiliate or a parent of
the distributor. *For fiscal year ended 12/31.

----------------------------------------------------------------------------
ConcessionsConcessionConcessions Concessions

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

Fund 11/30 by by Distributor1Advance
DistributorDistributor1 by
Distributor1
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Mercury Advisors S&P 500 2002* $11,364 $130,765 $48,663 $130,233
Index Fund

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

Mercury Advisors Focus Growth 2002 $93 $9,049 $5,678 $1,055
Fund

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

QM Active Balanced Fund 2002 $121 $14,392 $3,011 $2,750

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

Jennison Growth Fund 2002 $1,016 $38,831 $15,462 $12,938

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

Salomon Brothers All Cap Fund 2002 $7,615 $91,244 $48,537 $49,699

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

Gartmore Millennium Growth 2002 $7 $4,524 $926 $279
Fund II

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

*For fiscal year ended 12/31.

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

---------------------------------------------------------------------------------
Class A Class B Class C Class N
Contingent ContingentContingent Contingent
Deferred Deferred Deferred Deferred
Fiscal Sales Sales Sales Sales
Year Charges Charges Charges Charges
Ended Retained Retained Retained by Retained
Fund 11/30 by by Distributor by
DistributorDistributor Distributor
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Mercury Advisors S&P 500 2002* $0 $4,358 $2,608 $27,006
Index Fund

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

Mercury Advisors Focus Growth 2002 $0 $2,930 $118 $3
Fund

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

QM Active Balanced Fund 2002 $0 $2,303 $168 $27

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

Jennison Growth Fund 2002 $0 $3,447 $546 $530

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

Salomon Brothers All Cap Fund 2002 $0 $8,641 $2,017 $3,541

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

Gartmore Millennium Growth 2002 $0 $2,142 $8 $4
Fund II

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

*For fiscal year ended 12/31.

Distribution and Service Plans. Each Fund has adopted a Service Plan for Class A
shares and Distribution and Service Plans for Class B, Class C and Class N
shares under Rule 12b-1 of the Investment Company Act. Under those plans a Fund
pays the Distributor for all or a portion of its costs incurred in connection
with the distribution and/or servicing of the shares of the particular class.

Each plan has been approved by a vote of the Board of Trustees, including
a majority of the Independent Trustees1, cast in person at a meeting called for
the purpose of voting on that plan. The shareholder votes for the plans were
cast by the Manager as the sole initial holder of the shares of each class of
shares of each Fund.

Under the plans, OppenheimerFunds, Inc. and the Distributor may make
payments to affiliates and in their sole discretion, from time to time, may use
their own resources (at no direct cost to the Fund) to make payments to brokers,
dealers or other financial institutions for distribution and administrative
services they perform. The Manager may use its profits from the advisory fee it
receives from each Fund. In their sole discretion, the Distributor and the
Manager may increase or decrease the amount of payments they make from their own
resources to plan recipients.

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

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

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

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

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

|X| Class A Service Plan Fees. Under the Class A service plan, the
Distributor currently uses the fees it receives from the Fund to pay brokers,
dealers and other financial institutions (they are referred to as "recipients")
for personal services and account maintenance services they provide for their
customers who hold Class A shares. The services include, among others, answering
customer inquiries about the Funds, assisting in establishing and maintaining
accounts in the Funds, making the Funds' investment plans available and
providing other services at the request of the Funds or the Distributor. While
the plan permits the Board to authorize payments to the Distributor to reimburse
itself for services under the plan, the Board has not yet done so except in the
case of the special arrangement described below. The Distributor makes payments
to plan recipients quarterly at an annual rate not to exceed 0.25% of the
average annual net assets consisting of Class A shares held in the accounts of
the recipients or their customers. With respect to purchases of Class A shares
subject to a contingent deferred sales charge by certain retirement plans that
purchased such shares prior to March 1, 2001 ("grandfathered retirement
accounts"), the Distributor currently intends to pay the service fee to
Recipients in advance for the first year after the shares are purchased. After
the first year shares are outstanding, the Distributor makes service fee
payments to Recipients quarterly on those shares. The advance payment is based
on the net asset value of shares sold. Shares purchased by exchange do not
qualify for the advance service fee payment. If Class A shares purchased by
grandfathered retirement accounts are redeemed during the first year after their
purchase, the Recipient of the service fees on those shares will be obligated to
repay the Distributor a pro rata portion of the advance payment of the service
fee made on those shares.

During the first year the shares are sold, the Distributor retains the
service fee to reimburse itself for the cost of distributing the shares. For the
fiscal year ended November 30, 2002 (December 31, 2002 for the Mercury Advisors
S&P 500 Index Fund), payments under the Class A Plan paid by the Distributor to
recipients and to an affiliate of the Distributor were as follows:

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

Payments Retained by Payments
Fund to Distributor to an Affiliate
Recipients

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

Mercury Advisors S&P 500 Index $12,489 $191 $540
Fund

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

Mercury Advisors Focus Growth Fund $3,383 $0 $282

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

QM Active Balanced Fund $281 $0 $60

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

Jennison Growth Fund $2,332 $2 $349

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

Salomon Brothers All Cap Fund $12,376 $10 $814

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

Gartmore Millennium Growth Fund II $593 $0 $167

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

Any unreimbursed expenses the Distributor incurs with respect to Class A
shares in any fiscal year cannot be recovered in subsequent years. The
Distributor may not use payments received under the Class A Plan to pay any of
its interest expenses, carrying charges, or other financial costs, or allocation
of overhead.

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

The Class B, Class C and Class N Plans permit the Distributor to retain
both the asset-based sales charges and the service fees or to pay recipients the
service fee on a quarterly basis, without payment in advance. However, the
Distributor currently intends to pay the service fee to recipients in advance
for the first year after the shares are purchased. After the first year shares
are outstanding, the Distributor makes service fee payments quarterly on those
shares. The advance payment is based on the net asset value of shares sold.
Shares purchased by exchange do not qualify for the advance service fee payment.
If Class B, Class C or Class N shares are redeemed during the first year after
their purchase, the recipient of the service fees on those shares will be
obligated to repay the Distributor a pro rata portion of the advance payment of
the service fee made on those shares.

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

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

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

When Class B, Class C or Class N shares are sold without the designation of a
broker-dealer, the Distributor is automatically designated as the
broker-dealer of record. In those cases, the Distributor retains the service
fee and asset-based sales charge paid on Class B, Class C and Class N shares.

All payments under the Class B, Class C and Class N plans are subject to
the limitations imposed by the Conduct Rules of the National Association of
Securities Dealers, Inc. on payments of asset-based sales charges and service
fees.

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

Distribution Fees Paid to the Distributor in the Fiscal Year Ended 11/30/02*

-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Distributor'sDistributor's
Total Amount Aggregate Unreimbursed
Payments Retained Unreimbursed Expenses as
Under By Expenses %
Fund Class Plan Plan DistributoUnder Plan of Net
Assets
of Class
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

Mercury Advisors S&P 500 Class B $29,212 $26,9021 $181,893 4.35%

Index Fund Plan

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

Class C $35,829 $30,5782 $106,844 2.16%
Plan

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

Class N $49,775 $48,1893 $392,192 3.00%
Plan

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

Mercury Advisors Focus Class B $8,635 $6,8844 $60,326 7.65%

Growth Fund Plan

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

Class C $4,529 $3,156 $81,033 12.31%
Plan

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

Class N $257 $230 $48,561 67.66%
Plan

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

QM Active Balanced Fund Class B $2,536 $2,3345 $40,973 9.00%

Plan
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

Class C $4,667 $3,858 $26,366 5.06%
Plan

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

Class N $731 $561 $14,271 4.44%
Plan

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

Jennison Growth Fund Class B $6,176 $5,5966 $64,956 5.01%

Plan
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

Class C $15,244 $12,2587 $315,521 14.38%
Plan

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

Class N $5,143 $4,763 $111,848 8.52%
Plan

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

Salomon Brothers All Cap Class B $34,095 $30,7158 $163,386 3.78%
Fund Plan

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

Class C $57,794 $38,4659 $121,309 1.77%
Plan

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

Class N $15,207 $5,77010 $99,503 1.75%
Plan

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

Gartmore Millennium Growth Class B $1,479 $1,33911 $41,203 21.29%
Fund II Plan

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

Class C $1,309 $1,025 $41,624 26.67%
Plan

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

Class N $251 $23612 $5,037 7.40%
Plan

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

*For Mercury Advisors S&P 500 Index Fund this information is for the fiscal
year ended 12/31/02.
1. Includes $49 paid to an affiliate of the Distributor's parent company.
2.: Includes$130 paid to an affiliate of the Distributor's parent company.
3. Includes $35 paid to an affiliate of the Distributor's parent company.
4. Includes $9 paid to an affiliate of the Distributor's parent company.
5. Includes $4 paid to an affiliate of the Distributor's parent company.
6. Includes $4 paid to an affiliate of the Distributor's parent company.
7. Includes $170 paid to an affiliate of the Distributor's parent company.
8. Includes $208 paid to an affiliate of the Distributor's parent company.
9. Includes $120 paid to an affiliate of the Distributor's parent company.
10. Includes $1 paid to an affiliate of the Distributor's parent company.
11. Includes $2 paid to an affiliate of the Distributor's parent company.
12. Includes $1 paid to an affiliate of the Distributor's parent company.

Performance of the Funds

Explanation of Performance Terminology. Each Fund uses a variety of terms to
illustrate its investment performance. Those terms include "cumulative total
return," "average annual total return," "average annual total return at net
asset value" and "total return at net asset value." An explanation of how total
returns are calculated is set forth below. You can obtain current performance
information by calling the Funds' Transfer Agent at 1.800.525.7048 or by
visiting the OppenheimerFunds Internet web site at www.oppenheimerfunds.com.

Each Fund's illustrations of its performance data in advertisements must
comply with rules of the Securities and Exchange Commission. Those rules
describe the types of performance data that may be used and how it is to be
calculated. In general, any advertisement by a Fund of its performance data must
include the average annual total returns for the advertised class of shares of
the Fund. Those returns must be shown for the 1-, 5- and 10-year periods (or the
life of the class, if less) ending as of the most recently ended calendar
quarter prior to the publication of the advertisement (or its submission for
publication).

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

|_| Total returns measure the performance of a hypothetical account in a
Fund over various periods and do not show the performance of each shareholder's
account. Your account's performance will vary from the model performance data if
your dividends are received in cash, or you buy or sell shares during the
period, or you bought your shares at a different time and price than the shares
used in the model.

|_| A Fund's performance returns do no reflect the effect of taxes on
dividends and capital gains distributions.

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

|_| The principal value of a Fund's shares and total returns are not
guaranteed and normally will fluctuate on a daily basis.

|_| When an investor's shares are redeemed, they may be worth more or less
than their original cost.

|_| Total returns for any given past period represent historical
performance information and are not, and should not be considered, a prediction
of future returns.

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

|X| Total Return Information. There are different types of "total returns"
to measure a Fund's performance. Total return is the change in value of a
hypothetical investment in a Fund over a given period, assuming that all
dividends and capital gains distributions are reinvested in additional shares
and that the investment is redeemed at the end of the period. Because of
differences in expenses for each class of shares, the total returns for each
class are separately measured. The cumulative total return measures the change
in value over the entire period (for example, ten (10) years). An average annual
total return shows the average rate of return for each year in a period that
would produce the cumulative total return over the entire period. However,
average annual total returns do not show actual year-by-year performance. A Fund
uses standardized calculations for its total returns as prescribed by the SEC.
The methodology is discussed below.

In calculating total returns for Class A shares, the current maximum sales
charge of 5.75% (as a percentage of the offering price) is deducted from the
initial investment ("P") (unless the return is shown without sales charge, as
described below). For Class B shares, payment of the applicable contingent
deferred sales charge is applied, depending on the period for which the return
is shown: 5.0% in the first year, 4.0% in the second year, 3.0% in the third and
fourth years, 2.0% in the fifth year, 1.0% in the sixth year and none
thereafter. For Class C shares, the 1% contingent deferred sales charge is
deducted for returns for the 1-year period. For Class N shares, the 1%
contingent deferred sales charge is deducted for returns for the one year
period. Class N total returns may also be calculated for the periods prior to
3/1/01 (the inception of Class N shares), based on the Fund's Class A returns,
adjusted to reflect the higher Class N 12b-1 fees. There is no sales charge on
Class Y shares.

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

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

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

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

ERV - P
------- = Total Return
P

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

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

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

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

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

|_| Total Returns at Net Asset Value. From time to time a Fund may
also quote a cumulative or an average annual total return "at net asset value"
(without deducting sales charges) for Class A, Class B, Class C or Class N
shares. There is no sales charge on Class Y shares. Each is based on the
difference in net asset value per share at the beginning and the end of the
period for a hypothetical investment in that class of shares (without
considering front-end or contingent deferred sales charges) and takes into
consideration the reinvestment of dividends and capital gains distributions.

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

The Funds' Total Returns for the Periods Ended 11/30/02*

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Average Annual Total Returns

Class Cumulative
of Total Returns
Shares (10 years or Life
of Class)
--------------------------------------------------------------------------------
-----------------------------------------------------------------------------------

1-Year 5-Year
(or life-of-class)

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

After Without After Without After Without
Sales Sales Sales Sales Sales Sales
Charge Charge Charge Charge Charge Charge

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

Mercury Class A -35.95%1 -32.04%1 -27.62% -23.21% -21.15%1 -18.61%1
Advisors
S&P 500 Index
Fund

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

Class B -35.58%1 -32.90%1 -27.56% -23.75% -20.91%1 -19.17%1

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

Class C -33.00%1 -33.00%1 -24.54% -23.78% -19.23%1 -19.23%1

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

Class N -29.12%2 -29.12%2 -24.10% -23.33% -17.12%2 -17.12%2

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

Class Y -31.52%1 -31.52%1 -23.06% -23.06% -18.29%1 -18.29%1

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

Mercury Class A -76.25%1 -74.80%1 -39.87% -36.20% -55.23%1 -53.72%1
Advisors
Focus Growth
Fund

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

Class B -76.10%1 -75.10%1 -39.66% -36.48% -55.07%1 -54.03%1

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

Class C -75.10%1 -75.10%1 -37.12% -36.48% -54.03%1 -54.03%1

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

Class N -69.57%2 -69.57%2 -36.68% -36.04% -49.38%2 -49.38%2

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

Class Y -74.70%1 -74.70%1 -36.11% -36.11% -53.62%1 -53.62%1

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

QM Active Class A -18.58%1 -13.61%1 -13.75% -8.49% -10.85%1 -7.85%1
Balanced
Fund

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

Class B -18.21%1 -14.83%1 -13.61% -9.11% -10.63%1 -8.58%1

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

Class C -14.76%1 -14.76%1 -10.02% -9.12% -8.54%1 -8.54%1

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

Class N -11.79%2 -11.79%2 -9.51% -8.60% -6.93%2 -6.93%2

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

Class Y -13.22%1 -13.22%1 -8.27% -8.27% -7.62%1 -7.62%1

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

Jennison Class A -38.83%1 -35.10%1 -28.54% -24.18% -24.03%1 -21.47%1
Growth Fund

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

Class B -38.56%1 -36.00%1 -28.47% -24.71% -23.84%1 -22.08%1

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

Class C -36.00%1 -36.00%1 -25.37% -24.62% -22.08% -22.08%1

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

Class N -31.75%2 -31.75%2 -25.05% -24.30% -19.64%2 -19.64%2

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

Class Y -34.90%1 -34.90%1 -24.04% -24.04% -21.33%1 -21.33%1

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

Salomon Class A -23.43%1 -18.75%1 -17.22% -12.17% -13.86%1 -10.96%1
Brothers
All Cap Fund

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

Class B -23.08%1 -19.90%1 -17.08% -12.75% -13.65%1 -11.67%1

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

Class C -19.93%1 -19.93%1 -13.65% -12.78% -11.69%1 -11.69%1

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

Class N -17.91%2 -17.91%2 -13.17% -12.30% -10.68%2 -10.68%2

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

Class Y -18.06%1 -18.06%1 -11.52% -11.52% -10.54%1 -10.54%1

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

Gartmore Class A -45.62%1 -42.30%1 -28.07% -23.68% -28.86%1 -26.46%1
Millennium
Growth Fund

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

Class B -45.38%1 -43.10%1 -28.02% -24.23% -28.68%1 -27.04%1

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

Class C -43.10%1 -43.10%1 -24.99% -24.23% -27.04%1 -27.04%1

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

Class N -36.76%2 -36.76%2 -24.67% -23.90% -23.07%2 -23.07%2

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

Class Y -42.10%1 -42.10%1 -23.51% -23.51% -26.32%1 -26.32%1

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

*For Mercury Advisors S&P 500 Index Fund, this is information is for the
periods ended 12/31/02.
1. Inception of Class A, Class B, Class C and Class Y shares: 2/16/01
2. Inception of Class N shares: 3/1/01

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

Average Annual Total Returns for Class A Shares (After Sales Charge) For the
Periods Ended 11/30/02*

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

After Taxes on
After Taxes on Distributions and Sale
Fund Distributions of Fund Shares

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

1 Year 5 Years 1 Year 5 Years

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

Mercury Advisors S&P Index Fund -27.73% -21.21%1 -16.82% -16.57%1

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

Mercury Advisors Focus Growth Fund -39.87% -55.23%1 -24.28% -40.92%1

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

QM Active Balanced Fund -14.10% -11.05%1 -8.35% -8.69%1

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

Jennison Growth Fund -28.54% -24.03%1 -17.38% -18.78%1

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

Salomon Brothers All Cap Fund -17.51% -14.03%1 -10.46% -11.02%1

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

Gartmore Millennium Growth Fund -28.07% -28.86%1 -17.09% -22.42%1

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

*For Mercury Advisors S&P 500 Index Fund, this is information is for the periods
ended 12/31/02.
1. Inception of Class A shares: 2/16/01

Other Performance Comparisons. Each Fund compares its performance annually to
that of an appropriate broadly-based market index in its Annual Report to
shareholders. You can obtain that information by contacting the Transfer Agent
at the addresses or telephone numbers shown on the cover of this Statement of
Additional Information. Each Fund may also compare its performance to that of
other investments, including other mutual funds, or use rankings of its
performance by independent ranking entities. Examples of these performance
comparisons are set forth below.

|X| Lipper Rankings. From time to time a Fund may publish the ranking of
the performance of its classes of shares by Lipper, Inc ("Lipper"). Lipper is a
widely-recognized independent mutual fund monitoring service. Lipper monitors
the performance of regulated investment companies, including the Funds, and
ranks their performance for various periods based on categories relating to
investment objectives. Lipper currently ranks (i) the performance of the OSM -
Jennison Growth Fund and the OSM - Mercury Advisors Focus Growth Fund against
all other large cap growth funds, (ii) the performance of the OSM - Mercury
Advisors S&P 500 Index Fund against all other S&P 500 Index objective funds,
(iii) the performance of the OSM - QM Active Balanced Fund against all other
balanced funds, (iv) the performance of the OSM - Salomon Brothers All Cap Fund
against all other multi-cap value funds, and (v) the performance of the OSM -
Gartmore Millennium Growth Fund II against all other mid cap core funds. The
Lipper performance rankings are based on total returns that include the
reinvestment of capital gain distributions and income dividends but do not take
sales charges or taxes into consideration. Lipper also publishes "peer-group"
indices of the performance of all mutual funds in a category that it monitors
and averages of the performance of the funds in particular categories.

|X| Morningstar Ratings. From time to time a Fund may publish the star
rating of the performance of its classes of shares by Morningstar, Inc., an
independent mutual fund monitoring service. Morningstar rates mutual funds in
their specialized market sector. Each Fund is rated among domestic stock funds.

Morningstar proprietary star ratings reflect historical
risk-adjusted total investment return. For each fund with at least a three-year
history, Morningstar calculates a Morningstar Rating(TM) based on a Morningstar
Risk-Adjusted Return measure that accounts for variation in a fund's monthly
performance (including the effects of sales charges, loads, and redemption
fees), placing more emphasis on downward variations and rewarding consistent
performance. The top 10% of funds in each category receive 5 stars, the next
22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2
stars, and the bottom 10% receive 1 star. (Each share class is counted as a
fraction of one fund within this scale and rated separately, which may cause
slight variations in the distribution percentages.) The Overall Morningstar
Rating for a fund is derived from a weighted average of the performance figures
associated with its three-, five-and ten-year (if applicable) Morningstar Rating
metrics.

|X| Performance Rankings and Comparisons by Other Entities and
Publications. From time to time a Fund may include in its advertisements and
sales literature performance information about the Fund cited in newspapers and
other periodicals such as The New York Times, The Wall Street Journal, Barron's,
or similar publications. That information may include performance quotations
from other sources, including Lipper and Morningstar. The performance of a
Fund's classes of shares may be compared in publications to the performance of
various market indices or other investments, and averages, performance rankings
or other benchmarks prepared by recognized mutual fund statistical services.

From time to time, a Fund may publish rankings or ratings of the Manager
or Transfer Agent, and of the investor services provided by them to shareholders
of the Oppenheimer funds, other than performance rankings of the Oppenheimer
funds themselves. Those ratings or rankings of shareholder and investor services
by third parties may include comparisons of their services to those provided by
other mutual fund families selected by the rating or ranking services. They may
be based upon the opinions of the rating or ranking service itself, using its
research or judgment, or based upon surveys of investors, brokers, shareholders
or others.

From time to time the Fund may include in its advertisements and sales
literature the total return performance of a hypothetical investment account
that includes shares of the fund and other Oppenheimer funds. The combined
account may be part of an illustration of an asset allocation model or similar
presentation. The account performance may combine total return performance of
the fund and the total return performance of other Oppenheimer funds included in
the account. Additionally, from time to time, the Fund's advertisements and
sales literature may include, for illustrative or comparative purposes,
statistical data or other information about general or specific market and
economic conditions. That may include, for example, o information about the
performance of certain securities or commodities
markets or segments of those markets,
o information about the performance of the economies of particular
countries or regions,
o the earnings of companies included in segments of particular
industries, sectors, securities markets, countries or regions,
o the availability of different types of securities or offerings of
securities,
o information relating to the gross national or gross domestic product of
the United States or other countries or regions,
o comparisons of various market sectors or indices to demonstrate
performance, risk, or other characteristics of the Fund.

ABOUT YOUR ACCOUNT

How to Buy Shares

Additional information is presented below about the methods that can be used to
buy shares of a Fund. Appendix C contains more information about the special
sales charge arrangements offered by a Fund, and the circumstances in which
sales charges may be reduced or waived for certain classes of investors.

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

Reduced Sales Charges. As discussed in the Prospectus, a reduced sales charge
rate may be obtained for Class A shares under Right of Accumulation and Letters
of Intent because of the economies of sales efforts and reduction in expenses
realized by the Distributor, dealers and brokers making such sales. No sales
charge is imposed in certain other circumstances described in Appendix C to this
Statement of Additional Information because the Distributor or dealer or broker
incurs little or no selling expenses.

|X| Right of Accumulation. To qualify for the lower sales charge rates
that apply to larger purchases of Class A shares, you and your spouse can add
together:
Class A and Class B shares you purchase for your individual accounts
(including IRAs and 403(b) plans), or for your joint accounts, or
for trust or custodial accounts on behalf of your children who are
minors, and

Current purchases of Class A and Class B shares of the Fund and other
Oppenheimer funds to reduce the sales charge rate that applies to
current purchases of Class A shares, and

o Class A and Class B shares of Oppenheimer funds you previously
purchased subject to an initial or contingent deferred sales charge
to reduce the sales charge rate for current purchases of Class A
shares, provided that you still hold your investment in one of the
Oppenheimer funds.

A fiduciary can count all shares purchased for a trust, estate or other
fiduciary account (including one or more employee benefit plans of the same
employer) that has multiple accounts. The Distributor will add the value, at
current offering price, of the shares you previously purchased and currently own
to the value of current purchases to determine the sales charge rate that
applies. The reduced sales charge will apply only to current purchases. You must
request it when you buy shares.

The Oppenheimer Funds. The Oppenheimer funds are those mutual funds for which
the Distributor acts as the distributor and currently include the following:

Oppenheimer AMT-Free New York Municipals Oppenheimer Multiple Strategies Fund
Oppenheimer Bond Fund Oppenheimer Municipal Bond Fund
Oppenheimer California Municipal Fund Oppenheimer New Jersey Municipal Fund
Oppenheimer Capital Appreciation Fund Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Capital Preservation Fund Oppenheimer Quest Balanced Value Fund
Oppenheimer Quest Capital Value Fund,
Oppenheimer Capital Income Fund Inc.
Oppenheimer Quest Global Value Fund,

Oppenheimer Champion Income Fund Inc.
Oppenheimer Convertible Securities Fund Oppenheimer Quest Opportunity Value Fund
Oppenheimer Developing Markets Fund Oppenheimer Quest Value Fund, Inc.
Oppenheimer Disciplined Allocation Fund Oppenheimer Real Asset Fund

Oppenheimer Rochester National
Oppenheimer Discovery Fund Municipals
Oppenheimer Emerging Growth Fund Oppenheimer Senior Floating Rate Fund
Oppenheimer Emerging Technologies Fund Oppenheimer Small Cap Value Fund
Oppenheimer Enterprise Fund Oppenheimer Strategic Income Fund
Oppenheimer Europe Fund Oppenheimer Total Return Bond Fund
Oppenheimer Global Fund Oppenheimer Total Return Fund, Inc.
Oppenheimer Global Growth & Income Fund Oppenheimer Trinity Core Fund
Oppenheimer Trinity Large Cap Growth

Oppenheimer Gold & Special Minerals Fund Fund

Oppenheimer Growth Fund Oppenheimer Trinity Value Fund
Oppenheimer High Yield Fund Oppenheimer U.S. Government Trust
Oppenheimer International Bond Fund Oppenheimer Value Fund
Oppenheimer International Growth Fund Limited-Term New York Municipal Fund
Oppenheimer International Small Company
Fund Rochester Fund Municipals

OSM1- Gartmore Millennium Growth Fund
Oppenheimer Limited-Term Government Fund II

Oppenheimer Limited Term Municipal Fund OSM1 - Jennison Growth Fund
Oppenheimer Main Street Growth & Income OSM1 - Mercury Advisors S&P
Fund 500 Index Fund

OSM1 - Mercury Advisors Focus Growth

Oppenheimer Main Street Opportunity Fund Fund
Oppenheimer Main Street Small Cap Fund OSM1 - QM Active Balanced Fund
Oppenheimer MidCap Fund OSM1 - Salomon Brothers All Cap Fund And the following
money market funds:
Oppenheimer Cash Reserves Centennial Government Trust
Oppenheimer Money Market Fund, Inc. Centennial Money Market Trust
Centennial America Fund, L. P. Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust Centennial Tax Exempt Trust

1 - "OSM" stands for Oppenheimer Select
Managers

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

Letters of Intent. Under a Letter of Intent, if you purchase Class A shares or
Class A and Class B shares of a Fund and other Oppenheimer funds during a
13-month period, you can reduce the sales charge rate that applies to your
purchases of Class A shares. The total amount of your intended purchases of both
Class A and Class B shares will determine the reduced sales charge rate for the
Class A shares purchased during that period. You can include purchases made up
to 90 days before the date of the Letter. Letters of Intent do not consider
Class C or Class N shares you purchase or may have purchased.

A Letter of Intent is an investor's statement in writing to the
Distributor of the intention to purchase Class A shares or Class A and Class B
shares of a Fund (and other Oppenheimer funds) during a 13-month period (the
"Letter of Intent period"). At the investor's request, this may include
purchases made up to 90 days prior to the date of the Letter. The Letter states
the investor's intention to make the aggregate amount of purchases of shares
which, when added to the investor's holdings of shares of those funds, will
equal or exceed the amount specified in the Letter. Purchases made by
reinvestment of dividends or distributions of capital gains and purchases made
at net asset value without sales charge do not count toward satisfying the
amount of the Letter.

A Letter enables an investor to count the Class A and Class B shares
purchased under the Letter to obtain the reduced sales charge rate on purchases
of Class A shares of a Fund (and other Oppenheimer funds) that applies under the
Right of Accumulation to current purchases of Class A shares. Each purchase of
Class A shares under the Letter will be made at the offering price (including
the sales charge) that applies to a single lump-sum purchase of shares in the
amount intended to be purchased under the Letter.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Retirement Plans. Certain types of retirement plans are entitled to purchase
shares of a Fund without sales charge or at reduced sales charge rates, as
described in Appendix C to this Statement of Additional Information. Certain
special sales charge arrangements described in that Appendix apply to retirement
plans whose records are maintained on a daily valuation basis by Merrill Lynch
Pierce Fenner & Smith, Inc. ("Merrill Lynch") or an independent record keeper
that has a contract or special arrangement with Merrill Lynch. If on the date
the plan sponsor signed the Merrill Lynch record keeping service agreement the
plan has less than $3 million in assets (other than assets invested in money
market funds) invested in applicable investments, then the retirement plan may
purchase only Class B shares of the Oppenheimer funds. Any retirement plans in
that category that currently invest in Class B shares of a Fund will have their
Class B shares converted to Class A shares of the Fund when the plan's
applicable investments reach $5 million. OppenheimerFunds has entered into
arrangements with certain record keepers whereby the Transfer Agent compensates
the record keeper for its record keeping and account servicing functions that it
performs on behalf of the participant level accounts of a retirement plan. While
such compensation may act to reduce the record keeping fees charged by the
retirement plan's record keeper, that compensation arrangement may be terminated
at any time, potentially affecting the record keeping fees charged by the
retirement plan's record keeper.

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

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

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

The Distributor will not accept any order in the amount of $500,000 or
more for Class B shares or $1 million or more for Class C shares on behalf of a
single investor (not including dealer "street name" or omnibus accounts). That
is because generally it will be more advantageous for that investor to purchase
Class A shares of a Fund.

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

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

|X| Availability of Class N Shares. In addition to the description of the
types of retirement plans which may purchase Class N shares contained in the
prospectus, Class N shares also are offered to the following:
o to all rollover IRAs (including
SEP IRAs and SIMPLE IRAs),
o to all rollover contributions made
to Individual 401(k) plans,
Profit-Sharing Plans and
Money Purchase Pension Plans,
o to all direct rollovers from
OppenheimerFunds-sponsored
Pinnacle and Ascender
retirement plans,
o to all trustee-to-trustee IRA
transfers,
o to all 90-24 type 403(b) transfers,
o to Group Retirement Plans (as defined in Appendix C to this
Statement of Additional Information) which have entered into a
special agreement with the Distributor for that purpose,
o to Retirement Plans qualified
under Sections 401(a) or
401(k) of the Internal
Revenue Code, the
recordkeeper or the plan
sponsor for which has
entered into a special
agreement with the
Distributor,
o to Retirement Plans of a plan sponsor where the aggregate assets of
all such plans invested in the Oppenheimer funds is $500,000 or
more,
o to OppenheimerFunds-sponsored Ascender 401(k) plans that pay for the
purchase with the redemption proceeds of Class A shares of one or
more Oppenheimer funds, and
o to certain customers of broker-dealers and financial advisors that
are identified in a special agreement between the broker-dealer or
financial advisor and the Distributor for that purpose.

The sales concession and the advance of the service fee, as described in
the Prospectus, will not be paid to dealers of record on sales of Class N shares
on:
o purchases of Class N shares in
amounts of $500,000 or more
by a retirement plan that
pays for the purchase with
the redemption proceeds of
Class A shares of one or
more Oppenheimer funds
(other than rollovers from
an
OppenheimerFunds-sponsored
Pinnacle or Ascender 401(k)
plan to any IRA invested in
the Oppenheimer funds),
o purchases of Class N shares in
amounts of $500,000 or more
by a retirement plan that
pays for the purchase with
the redemption proceeds of
Class C shares of one or
more Oppenheimer funds held
by the plan for more than
one year (other than
rollovers from an
OppenheimerFunds-sponsored
Pinnacle or Ascender 401(k)
plan to any IRA invested in
the Oppenheimer funds), and
o on purchases of Class N shares by
an
OppenheimerFunds-sponsored
Pinnacle or Ascender 401(k)
plan made with the
redemption proceeds of Class
A shares of one or more
Oppenheimer funds.

No sales concessions will be paid to the broker-dealer of record, as
described in the Prospectus, on sales of Class N shares purchased with the
redemption proceeds of shares of another mutual fund offered as an investment
option in a retirement plan in which Oppenheimer funds are also offered as
investment options under a special arrangement with the Distributor, if the
purchase occurs more than 30 days after the Oppenheimer funds are added as an
investment option under that plan.

|X| Allocation of Expenses. A Fund pays expenses related to its daily
operations, such as custodian fees, Trustees' fees, transfer agency fees, legal
fees and auditing costs. Those expenses are paid out of the Fund's assets and
are not paid directly by shareholders. However, those expenses reduce the net
asset values of shares, and therefore are indirectly borne by shareholders
through their investment.

The methodology for calculating the net asset value, dividends and
distributions of each Fund's share classes recognizes two types of expenses.
General expenses that do not pertain specifically to any one class are allocated
pro rata to the shares of all classes. The allocation is based on the percentage
of the Fund's total assets that is represented by the assets of each class, and
then equally to each outstanding share within a given class. Such general
expenses include management fees, legal, bookkeeping and audit fees, printing
and mailing costs of shareholder reports, Prospectuses, Statements of Additional
Information and other materials for current shareholders, fees to unaffiliated
Trustees, custodian expenses, share issuance costs, organization and start-up
costs, interest, taxes and brokerage commissions, and non-recurring expenses,
such as litigation costs.

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

Account Fees. As stated in the
Prospectus, a $12 annual fee is assessed
on any account valued at less than $500.
This fee will not be assessed on the
following accounts:
o Accounts that have balances below $500 due to the automatic conversion of
shares from Class B to Class A shares;
o Accounts with an active Asset
Builder Plan, payroll deduction
plan or a military allotment plan;
o OppenheimerFunds-sponsored group
retirement accounts that are
making continuing purchases;
o Certain accounts held by
broker-dealers through the
National Securities Clearing
Corporation; and
o Accounts that fall below the $500 threshold due solely to market
fluctuations within the 12-month period preceding the date the fee is
deducted.

The fee is automatically deducted from qualifying accounts annually on or
about the second to last business day of September. This annual fee is waived
for any shareholders who elect to access their account documents through
electronic document delivery rather than in paper copy and who elect to utilize
the Internet or PhoneLink as their primary source for their general servicing
needs. To sign up to access account documents electronically via eDocs Direct,
please visit the Service Center on our website at WWW.OPPENHEIMERFUNDS.COM or
call 1.888.470.0862 for instructions.

Determination of Net Asset Values Per Share. The net asset values per share of
each class of shares of a Fund are determined as of the close of business of the
Exchange on each day that the Exchange is open. The calculation is done by
dividing the value of the Fund's net assets attributable to a class by the
number of shares of that class that are outstanding. The Exchange normally
closes at 4:00 P.M., Eastern time, but may close earlier on some other days (for
example, in case of weather emergencies or on days falling before a U.S.
holiday). All references to time in this Statement of Additional Information
mean "Eastern time." The Exchange's most recent annual announcement (which is
subject to change) states that it will close on New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day. It may also close on other days.

Dealers other than Exchange members may conduct trading in certain
securities on days on which the Exchange is closed (including weekends and
holidays) or after 4:00 P.M. on a regular business day. Because a Fund's net
asset values will not be calculated on those days, the Fund's net asset values
per share may be significantly affected on such days when shareholders may not
purchase or redeem shares. Additionally, trading on European and Asian stock
exchanges and over-the-counter markets normally is completed before the close of
the Exchange.

Changes in the values of securities traded on foreign exchanges or markets
as a result of events that occur after the prices of those securities are
determined, but before the close of the Exchange, will not be reflected in the
Fund's calculation of its net asset values that day unless the Manager or the
Adviser determines that the event is likely to effect a material change in the
value of the security. For all of the Funds, except the OSM - Mercury Advisors
S&P 500 Index Fund and the OSM - Mercury Advisors Focus Growth Fund, if such
determination is made, the Manager, or an internal valuation committee
established by the Manager, as applicable, may establish a valuation, under
procedures established by the Board and subject to the approval, ratification
and confirmation by the Board at its next ensuing meeting. For the OSM - Mercury
Advisors S&P 500 Index Fund and the OSM - Mercury Advisors Focus Growth Fund,
securities may be valued at their fair value as determined in good faith by the
Board of Trustees of the applicable Master Fund or by the Adviser using
procedures approved by the Board of Trustees of that Master Fund.

|X| Securities Valuation. Each of the Fund's Board of Trustees and
theBoard of Trustees of the Master Fund (in the case of the OSM - Mercury
Advisors S&P 500 Index Fund or the OSM - Mercury Advisors Focus Growth Fund)
has established procedures for the valuation of each Fund's securities. In
general those procedures are as follows: o Equity securities traded on a U.S.
securities exchange or on Nasdaq(R) are valued as follows:
(1) if last sale information is
regularly reported, they
are valued at the last
reported sale price on
the principal exchange on
which they are traded or
on Nasdaq, as applicable,
on that day, or
(2) if last sale information is not
available on a valuation
date, they are valued at
the last reported sale
price preceding the
valuation date if it is
within the spread of the
closing "bid" and "asked"
prices on the valuation
date or, if not, at the
closing "bid" price on
the valuation date.
o Equity securities traded on a foreign securities exchange generally are valued
in one of the following ways: (1) at the last sale price available
to the pricing service
approved by the Board of
Trustees, or
(2) at the last sale price obtained by
the Manager or Adviser from the report of the principal exchange
on which the security is traded at its last trading session on or
immediately before the valuation date, or
(3) at the mean between the "bid" and
"asked" prices obtained
from the principal
exchange on which the
security is traded or, on
the basis of reasonable
inquiry, from two market
makers in the security.
o Long-term debt securities having a remaining maturity in excess of 60 days are
valued based on the mean between the "bid" and "asked" prices determined by a
portfolio pricing service approved by each Fund's Board of Trustees or the Board
of Trustees of the Master Fund or obtained by the Manager from two active market
makers in the security on the basis of reasonable inquiry. o The following
securities are valued at the mean between the "bid" and "asked" prices
determined by a pricing service approved by each Fund's Board of Trustees or the
Board of Trustees of the Master Fund or obtained by the Manager or Adviser, as
the case may be, from two active market makers in the security on the basis of
reasonable inquiry: (1) debt instruments that have a
maturity of more than 397
days when issued,
(2) debt instruments that had a maturity of 397 days or less when
issued and have a remaining maturity of more than 60 days, and
(3) non-money market debt instruments that had a maturity of 397 days
or less when issued and which have a remaining maturity of 60
days or less.
o The following securities are valued at cost, adjusted for amortization of
premiums and accretion of discounts:
(1) money market debt securities held
by a non-money market
fund that had a maturity
of less than 397 days
when issued that have a
remaining maturity of 60
days or less, and
(2) debt instruments held by a money market fund that have a
remaining maturity of 397 days or less.

However, for the OSM - Mercury Advisors S&P 500 Index Fund and the OSM -
Mercury Advisors Focus Growth Fund, obligations with remaining maturities of 60
days or less will not be valued at amortized cost if the Adviser believes that
the method no longer produces fair valuations.

|_| For the OSM - Mercury Advisors S&P 500 Index Fund and the OSM -
Mercury Advisors Focus Growth Fund, repurchase agreements will be valued at cost
plus accrued interest.

o Securities (including restricted securities) not having readily-available
market quotations are valued at fair value determined under the Board's
procedures. If the Manager is unable to locate two market makers willing to give
quotes, a security may be priced at the mean between the "bid" and "asked"
prices provided by a single active market maker (which in certain cases may be
the "bid" price if no "asked" price is available).

In the case of U.S. government securities, mortgage-backed securities,
corporate bonds and foreign government securities, when last sale information is
not generally available, the Manager or Adviser, as the case may be, may use
pricing services approved by the applicable Board of Trustees. The pricing
service may use "matrix" comparisons to the prices for comparable instruments on
the basis of quality, yield and maturity. Other special factors may be involved
(such as the tax-exempt status of the interest paid by municipal securities).
The Manager or Adviser, as the case may be, will monitor the accuracy of the
pricing services. That monitoring may include comparing prices used for
portfolio valuation to actual sales prices of selected securities.

The closing prices in the London foreign exchange market on a particular
business day that are provided to the Manager or Adviser, as the case may be, by
a bank, dealer or pricing service that the Manager or Adviser has determined to
be reliable are used to value foreign currency, including forward contracts, and
to convert to U.S. dollars securities that are denominated in foreign currency.

Puts, calls, and futures are valued at the last sale price on the
principal exchange on which they are traded or on Nasdaq, as applicable, as
determined by a pricing service approved by the applicable Board of Trustees or
by the Manager or Adviser. If there were no sales that day, they shall be valued
at the last sale price on the preceding trading day if it is within the spread
of the closing "bid" and "asked" prices on the principal exchange or on Nasdaq
on the valuation date. If not, the value shall be the closing bid price on the
principal exchange or on Nasdaq on the valuation date. If the put, call or
future is not traded on an exchange or on Nasdaq, it shall be valued by the mean
between "bid" and "asked" prices obtained by the Manager or Adviser from two
active market makers. In certain cases that may be at the "bid" price if no
"asked" price is available.

When the Fund writes an option, an amount equal to the premium received is
included in a Fund's Statement of Assets and Liabilities as an asset. An
equivalent credit is included in the liability section. The credit is adjusted
("marked-to-market") to reflect the current market value of the option. In
determining a Fund's gain on investments, if a call or put written by the Fund
is exercised, the proceeds are increased by the premium received. If a call or
put written by a Fund expires, the Fund has a gain in the amount of the premium.
If a Fund enters into a closing purchase transaction, it will have a gain or
loss, depending on whether the premium received was more or less than the cost
of the closing transaction. If a Fund exercises a put it holds, the amount the
Fund receives on its sale of the underlying investment is reduced by the amount
of premium paid by the Fund.

How to Sell Shares

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

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

Reinvestment Privilege. Within six months of a redemption, a shareholder may
reinvest all or part of the redemption proceeds of:
Class A shares purchased subject to an initial sales charge or Class A
shares on which a contingent deferred sales charge was paid, or
Class B shares that were subject to the Class B contingent deferred sales
charge when redeemed.

The reinvestment may be made without sales charge only in Class A shares
of a Fund or any of the other Oppenheimer funds into which shares of a Fund are
exchangeable as described in "How to Exchange Shares" below. Reinvestment will
be at the net asset value next computed after the Transfer Agent receives the
reinvestment order. The shareholder must ask the Transfer Agent for that
privilege at the time of reinvestment. This privilege does not apply to Class C,
Class N or Class Y shares. A Fund may amend, suspend or cease offering this
reinvestment privilege at any time as to shares redeemed after the date of such
amendment, suspension or cessation.

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

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

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

Involuntary Redemptions. Each Fund's Board of Trustees has the right to cause
the involuntary redemption of the shares held in any account if the aggregate
net asset value of those shares is less than $500 or such lesser amount as the
Board may fix. The Board will not cause the involuntary redemption of shares in
an account if the aggregate net asset value of such shares has fallen below the
stated minimum solely as a result of market fluctuations. If the Board exercises
this right, it may also fix the requirements for any notice to be given to the
shareholders in question (not less than 30 days). The Board may alternatively
set requirements for the shareholder to increase the investment, or set other
terms and conditions so that the shares would not be involuntarily redeemed.

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

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

Distributions From Retirement Plans. Requests for distributions from
OppenheimerFunds-sponsored IRAs, SEP-IRAs, SIMPLE IRAs, 403(b)(7) custodial
plans, 401(k) plans or pension or profit-sharing plans should be addressed to
"Trustee, OppenheimerFunds Retirement Plans," c/o the Transfer Agent at its
address listed in "How To Sell Shares" in the Prospectus or on the back cover of
this Statement of Additional Information. The request must:

(1) state the reason for the distribution;
(2) state the owner's awareness of tax penalties if the distribution is
premature; and
(3) conform to the requirements of the plan and the Fund's other redemption
requirements.

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

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

Special Arrangements for Repurchase of Shares from Dealers and Brokers. The
Distributor is each Fund's agent to repurchase its shares from authorized
dealers or brokers on behalf of their customers. Shareholders should contact
their broker or dealer to arrange this type of redemption. The repurchase price
per share will be the net asset value next computed after the Distributor
receives an order placed by the dealer or broker. However, if the Distributor
receives a repurchase order from a dealer or broker after the close of The
Exchange on a regular business day, it will be processed at that day's net asset
value if the order was received by the dealer or broker from its customers prior
to the time the Exchange closes. Normally, the Exchange closes at 4:00 P.M., but
may do so earlier on some days. Additionally, the order must have been
transmitted to and received by the Distributor prior to its close of business
that day (normally 5:00 P.M.).

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

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

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

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

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

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

|X| Automatic Withdrawal Plans. Fund shares will be redeemed as necessary
to meet withdrawal payments. Shares acquired without a sales charge will be
redeemed first. Shares acquired with reinvested dividends and capital gains
distributions will be redeemed next, followed by shares acquired with a sales
charge, to the extent necessary to make withdrawal payments. Depending upon the
amount withdrawn, the investor's principal may be depleted. Payments made under
these plans should not be considered as a yield or income on your investment.

The Transfer Agent will administer the investor's Automatic Withdrawal
Plan as agent for the shareholder(s) (the "Planholder") who executed the Plan
authorization and application submitted to the Transfer Agent. Neither a Fund
nor the Transfer Agent shall incur any liability to the Planholder for any
action taken or not taken by the Transfer Agent in good faith to administer the
Plan. Share certificates will not be issued for shares of a Fund purchased for
and held under the Plan, but the Transfer Agent will credit all such shares to
the account of the Planholder on the records of the Fund. Any share certificates
held by a Planholder may be surrendered unendorsed to the Transfer Agent with
the Plan application so that the shares represented by the certificate may be
held under the Plan.

For accounts subject to Automatic Withdrawal Plans, distributions of
capital gains must be reinvested in shares of a Fund, which will be done at net
asset value without a sales charge. Dividends on shares held in the account may
be paid in cash or reinvested.

Shares will be redeemed to make withdrawal payments at the net asset value
per share determined on the redemption date. Checks or AccountLink payments
representing the proceeds of Plan withdrawals will normally be transmitted three
business days prior to the date selected for receipt of the payment, according
to the choice specified in writing by the Planholder. Receipt of payment on the
date selected cannot be guaranteed.

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

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

To use shares held under the Plan as collateral for a debt, the Planholder
may request issuance of a portion of the shares in certificated form. Upon
written request from the Planholder, the Transfer Agent will determine the
number of shares for which a certificate may be issued without causing the
withdrawal checks to stop. However, should such uncertificated shares become
exhausted, Plan withdrawals will terminate.

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

How to Exchange Shares

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

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

The following funds only offer Class A shares:
Centennial America Fund, L.P. Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust Centennial Tax Exempt Trust
Centennial Government Trust Oppenheimer Money Market Fund, Inc.
Centennial Money Market Trust

The following funds do not offer Class N shares:
Oppenheimer AMT-Free New York Oppenheimer Pennsylvania Municipal
Municipals Fund
Oppenheimer California Municipal Fund Oppenheimer Rochester National
Municipals
Oppenheimer Limited Term Municipal Oppenheimer Senior Floating Rate
Fund Fund
Oppenheimer Municipal Bond Fund Limited Term New York Municipal Fund
Oppenheimer New Jersey Municipal Fund Rochester Fund Municipals

The following funds do not offer Class Y shares:
Oppenheimer AMT-Free New York Oppenheimer Limited Term Municipal
Municipals Fund
Oppenheimer California Municipal Fund Oppenheimer Multiple Strategies Fund
Oppenheimer Capital Income Fund Oppenheimer New Jersey Municipal Fund
Oppenheimer Cash Reserves Oppenheimer Pennsylvania Municipal
Fund
Oppenheimer Champion Income Fund Oppenheimer Quest Capital Value
Fund, Inc.
Oppenheimer Convertible Securities Fund Oppenheimer Quest Global Value Fund,
Inc.
Oppenheimer Disciplined Allocation Fund Oppenheimer Rochester National
Municipals
Oppenheimer Developing Markets Fund Oppenheimer Senior Floating Rate Fund
Oppenheimer Gold & Special Minerals Oppenheimer Small Cap Value Fund Fund
Oppenheimer International Bond Fund Oppenheimer Total Return Bond Fund
Oppenheimer International Growth Fund Limited Term New York Municipal Fund
Oppenheimer International Small Company Fund

o Class Y shares of Oppenheimer Real Asset Fund may not be exchanged for
shares of any other fund.

o Class B, Class C and Class N shares of Oppenheimer Cash Reserves are
generally available only by exchange from the same class of shares of
other Oppenheimer funds or through OppenheimerFunds-sponsored 401(k)
plans.
o Class M shares of Oppenheimer Convertible Securities Fund may be exchanged
only for Class A shares of other Oppenheimer funds. They may not be
acquired by exchange of shares of any class of any other Oppenheimer funds
except Class A shares of Oppenheimer Money Market Fund or Oppenheimer Cash
Reserves acquired by exchange of Class M shares.

o Class X shares of Limited Term New York Municipal Fund may be exchanged
only for Class B shares of other Oppenheimer funds and no exchanges may be
made to Class X shares.

o Shares of Oppenheimer Capital Preservation Fund may not be exchanged for
shares of Oppenheimer Money Market Fund, Inc., Oppenheimer Cash Reserves
or Oppenheimer Limited-Term Government Fund. Only participants in certain
retirement plans may purchase shares of Oppenheimer Capital Preservation
Fund, and only those participants may exchange shares of other Oppenheimer
funds for shares of Oppenheimer Capital Preservation Fund.
o Class A shares of Oppenheimer Senior Floating Rate Fund are not available
by exchange of shares of Oppenheimer Money Market Fund or Class A shares
of Oppenheimer Cash Reserves.
Shares of Oppenheimer Select Managers Mercury Advisors S&P 500 Index Fund
and Oppenheimer Select Managers QM Active Balanced Fund are only available to
retirement plans and are available only by exchange from the same class of
shares of other Oppenheimer funds held by retirement plans.
Class A shares of Oppenheimer funds may be exchanged at net asset value for
shares of any money market fund offered by the Distributor. Shares of any
money market fund purchased without a sales charge may be exchanged for
shares of Oppenheimer funds offered with a sales charge upon payment of
the sales charge. They may also be used to purchase shares of Oppenheimer
funds subject to an early withdrawal charge or contingent deferred sales
charge.
Shares of Oppenheimer Money Market Fund, Inc. purchased with the redemption
proceeds of shares of other mutual funds (other than funds managed by the
Manager or its subsidiaries) redeemed within the 30 days prior to that
purchase may subsequently be exchanged for shares of other Oppenheimer
funds without being subject to an initial sales charge or contingent
deferred sales charge. To qualify for that privilege, the investor or the
investor's dealer must notify the Distributor of eligibility for this
privilege at the time the shares of Oppenheimer Money Market Fund, Inc.
are purchased. If requested, they must supply proof of entitlement to this
privilege.
o Shares of the Fund acquired by reinvestment of dividends or distributions
from any of the other Oppenheimer funds or from any unit investment trust
for which reinvestment arrangements have been made with the Distributor
may be exchanged at net asset value for shares of any of the Oppenheimer
funds.

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

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

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

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

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

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

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

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

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

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

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

|X| Limits on Multiple Exchange Orders. Each Fund reserves the right to
reject telephone or written exchange requests submitted in bulk by anyone on
behalf of more than one account. Each Fund may accept requests for exchanges of
up to 50 accounts per day from representatives of authorized dealers that
qualify for this privilege.

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

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

When you exchange some or all of your shares from one fund to another, any
special account feature such as an Asset Builder Plan or Automatic Withdrawal
Plan, will be switched to the new fund account unless you tell the Transfer
Agent not to do so. However, special redemption and exchange features such as
Automatic Exchange Plans and Automatic Withdrawal Plans cannot be switched to an
account in Oppenheimer Senior Floating Rate Fund.

In connection with any exchange request, the number of shares exchanged
may be less than the number requested if the exchange or the number requested
would include shares subject to a restriction cited in the Prospectus or this
Statement of Additional Information, or would include shares covered by a share
certificate that is not tendered with the request. In those cases, only the
shares available for exchange without restriction will be exchanged.

The different Oppenheimer funds available for exchange have different
investment objectives, policies and risks. A shareholder should assure that the
fund selected is appropriate for his or her investment and should be aware of
the tax consequences of an exchange. For federal income tax purposes, an
exchange transaction is treated as a redemption of shares of one fund and a
purchase of shares of another. "Reinvestment Privilege," above, discusses some
of the tax consequences of reinvestment of redemption proceeds in such cases.
Each Fund, the Distributor, and the Transfer Agent are unable to provide
investment, tax or legal advice to a shareholder in connection with an exchange
request or any other investment transaction.

Dividends, Capital Gains and Taxes

Dividends and Distributions. Each Fund has no fixed dividend rate and there can
be no assurance as to the payment of any dividends or the realization of any
capital gains. The dividends and distributions paid by a class of shares will
vary from time to time depending on market conditions, the composition of each
Fund's portfolio, and expenses borne by a Fund or borne separately by a class.
Dividends are calculated in the same manner, at the same time, and on the same
day for each class of shares. However, dividends on Class B, Class C and Class N
shares are expected to be lower than dividends on Class A and Class Y shares.
That is because of the effect of the asset-based sales charge on Class B, Class
C and Class N shares. Those dividends will also differ in amount as a
consequence of any difference in the net asset values of the different classes
of shares.

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

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

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

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

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

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

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

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

|X| Excise Tax on Regulated Investment Companies. Under the Internal
Revenue Code, by December 31 each year, a Fund must distribute 98% of its
taxable investment income earned from January 1 through December 31 of that year
and 98% of its capital gains realized in the period from November 1 of the prior
year through October 31 of the current year. If it does not, a Fund must pay an
excise tax on the amounts not distributed. It is presently anticipated that the
Funds will meet those requirements. To meet this requirement, in certain
circumstances a Fund might be required to liquidate portfolio investments to
make sufficient distributions to avoid excise tax liability. However, the Board
of Trustees and the Manager might determine in a particular year that it would
be in the best interests of shareholders for a Fund not to make such
distributions at the required levels and to pay the excise tax on the
undistributed amounts. That would reduce the amount of income or capital gains
available for distribution to shareholders.

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

Special provisions of the Internal Revenue Code govern the eligibility of
a Fund's dividends for the dividends-received deduction for corporate
shareholders. Long-term capital gains distributions are not eligible for the
deduction. The amount of dividends paid by a Fund that may qualify for the
deduction is limited to the aggregate amount of qualifying dividends that a Fund
derives from portfolio investments that the Fund has held for a minimum period,
usually 46 days. A corporate shareholder will not be eligible for the deduction
on dividends paid on Fund shares held for 45 days or less. To the extent a
Fund's dividends are derived from gross income from option premiums, interest
income or short-term gains from the sale of securities or dividends from foreign
corporations, those dividends will not qualify for the deduction.

The Fund may either retain or distribute to shareholders its net capital
gain for each taxable year. The Fund currently intends to distribute any such
amounts. If net long term capital gains are distributed and designated as a
capital gain distribution, it will be taxable to shareholders as a long-term
capital gain and will be properly identified in reports sent to shareholders in
January of each year. Such treatment will apply no matter how long the
shareholder has held his or her shares or whether that gain was recognized by
the Fund before the shareholder acquired his or her shares.

If the Fund elects to retain its net capital gain, the Fund will be
subject to tax on it at the 35% corporate tax rate. If the Fund elects to retain
its net capital gain, the Fund will provide to shareholders of record on the
last day of its taxable year information regarding their pro rata share of the
gain and tax paid. As a result, each shareholder will be required to report his
or her pro rata share of such gain on their tax return as long-term capital
gain, will receive a refundable tax credit for his/her pro rata share of tax
paid by the Fund on the gain, and will increase the tax basis for his/her shares
by an amount equal to the deemed distribution less the tax credit.

Investment income that may be received by the Fund from sources within
foreign countries may be subject to foreign taxes withheld at the source. The
United States has entered into tax treaties with many foreign countries which
entitle the Fund to a reduced rate of, or exemption from, taxes on such income.

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

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

The Fund will be required in certain cases to withhold 30% (29% for
payments after December 31, 2003) of ordinary income dividends, capital gains
distributions and the proceeds of the redemption of shares, paid to any
shareholder (1) who has failed to provide a correct taxpayer identification
number or to properly certify that number when required, (2) who is subject to
backup withholding for failure to report the receipt of interest or dividend
income properly, or (3) who has failed to certify to the Fund that the
shareholder is not subject to backup withholding or is an "exempt recipient"
(such as a corporation). All income and any tax withheld by the Fund is remitted
by the Fund to the U.S. Treasury and is identified in reports mailed to
shareholders in January of each year.

|X| Tax Effects of Redemptions of Shares. If a shareholder redeems all or
a portion of his/her shares, the shareholder will recognize a gain or loss on
the redeemed shares in an amount equal to the difference between the proceeds of
the redeemed shares and the shareholder's adjusted tax basis in the shares. All
or a portion of any loss recognized in that manner may be disallowed if the
shareholder purchases other shares of the Fund within 30 days before or after
the redemption.

In general, any gain or loss arising from the redemption of shares of the
Fund will be considered capital gain or loss, if the shares were held as a
capital asset. It will be long-term capital gain or loss if the shares were held
for more than one year. However, any capital loss arising from the redemption of
shares held for six months or less will be treated as a long-term capital loss
to the extent of the amount of capital gain dividends received on those shares.
Special holding period rules under the Internal Revenue Code apply in this case
to determine the holding period of shares and there are limits on the
deductibility of capital losses in any year.

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

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

If the ordinary income dividends from the Fund are effectively connected
with the conduct of a U.S. trade or business, then the foreign person may claim
an exemption from the U.S. tax described above provided the Fund obtains a
properly completed and signed Certificate of Foreign Status.

If the foreign person fails to provide a certification of his/her foreign
status, the Fund will be required to withhold U.S. tax at a rate of 30% (29% for
payments after December 31, 2003) on ordinary income dividends, capital gains
distributions and the proceeds of the redemption of shares, paid to any foreign
person. All income and any tax withheld (in this situation) by the Fund is
remitted by the Fund to the U.S. Treasury and is identified in reports mailed to
shareholders in January of each year.

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

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

Additional Information About the Fund

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

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

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

Independent Auditors. Deloitte & Touche, LLP are the independent auditors of
each Fund. They audit each Fund's financial statements and perform other related
audit services. They also act as auditors for [the Manager and for certain other
funds advised by the Manager and its affiliates.

License Agreement. Under a separate agreement, Merrill Lynch affiliates have
granted the Trust, on behalf of the OSM - Mercury Advisors S&P 500 Index Fund
and the OSM - Mercury Advisors Focus Growth Fund, the right to use the "Mercury"
name and has reserved the right to withdraw its consent to the use of such name
by either Fund under certain circumstances or to grant the use of such name to
any other company.

Financial Statements. The audited financial statements for the Master Focus
Twenty Trust are incorporated in this Statement of Additional Information by
reference to the 2002 annual report to shareholders of Mercury Focus Twenty
Fund, Inc. You may request a copy of that annual report at no charge by calling
888.763.2260 between 8:00 a.m. and 8:00 p.m. Eastern time on any business day.
The audited financial statements for the Quantitative Master Series Trust -
Master S&P 500 Index Series are incorporated in this Statement of Additional
Information by reference to the 2002 annual report to shareholders of the
Quantitative Master Series Trust - Master S&P 500 Index Series, and the
unaudited financial statements for the Quantitative Master Series Trust - Master
S&P 500 Index Series are incorporated in this Statement of Additional
Information by reference to the June 30, 2002 semi-annual report to shareholders
of the Quantitative Master Series Trust - Master S&P 500 Index Series. You
may request a copy of that annual and semi-annual report at no charge by calling
888.763.2260 between 8:00 a.m. and 8:00 p.m. Eastern time on any business day.

INDEPENDENT AUDITORS' REPORT

================================================================================
To the Board of Trustees and Shareholders of Oppenheimer Select Managers
Mercury Advisors Focus Growth Fund: We have audited the accompanying statement
of assets and liabilities of Oppenheimer Select Managers Mercury Advisors Focus
Growth Fund, which is a series of Oppenheimer Select Managers, as of November
30, 2002, and the related statement of operations for the year then ended, the
statements of changes in net assets and the financial highlights for the
periods indicated. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer Select Managers Mercury Advisors Focus Growth Fund as of November
30, 2002, the results of its operations for the year then ended, the changes in
its net assets and the financial highlights for the periods indicated, in
conformity with accounting principles generally accepted in the United States
of America.

/s/ Deloitte & Touche LLP
-------------------------
Deloitte & Touche LLP

Denver, Colorado
January 22, 2003

16 | OPPENHEIMER SELECT MANAGERS MERCURY ADVISORS FOCUS GROWTH FUND

STATEMENT OF ASSETS AND LIABILITIES November 30, 2002

=============================================================================
Assets
Investment in Master Focus Twenty Trust $ 3,125,102
-----------------------------------------------------------------------------
Receivables and other assets:
Shares of beneficial interest sold 1,513
Other 7,683
------------
Total assets 3,134,298

=============================================================================
Liabilities Payables and other liabilities:
Shares of beneficial interest redeemed 12,093
Legal, auditing and other professional fees 8,781
Transfer and shareholder servicing agent fees 1,231
Distribution and service plan fees 1,167
Trustees' compensation 324
Other 1,129
------------
Total liabilities 24,725

=============================================================================
Net Assets $3,109,573
============

=============================================================================
Composition of Net Assets
Paid-in capital $4,818,511
-----------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (1,866,551)
-----------------------------------------------------------------------------
Net unrealized appreciation on investments 157,613
------------
Net Assets $3,109,573
============

6 | OPPENHEIMER SELECT MANAGERS MERCURY ADVISORS FOCUS GROWTH FUND

================================================================================
Net Asset Value Per Share
Class A Shares: Net asset value and redemption price per share (based on
net assets of $1,591,147 and 630,670 shares of beneficial interest outstanding)
$2.52 Maximum offering price per share (net asset value plus sales charge of
5.75% of offering price) $2.67
--------------------------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price
per share (based on net assets of $788,283 and 316,640 shares of beneficial interest outstanding) $2.49
--------------------------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price
per share (based on net assets of $658,117 and 264,479 shares of beneficial interest outstanding) $2.49
--------------------------------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price
per share (based on net assets of $71,773 and 28,511 shares of beneficial interest outstanding) $2.52
--------------------------------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net assets of $253 and
100 shares of beneficial interest outstanding) $2.53

See accompanying Notes to Financial Statements.

7 | OPPENHEIMER SELECT MANAGERS MERCURY ADVISORS FOCUS GROWTH FUND

STATEMENT OF OPERATIONS For the Year Ended November 30, 2002

============================================================================
Net Investment Loss Allocated from Master Focus Twenty Trust

============================================================================
Investment Income $ 7,718

============================================================================
Expenses 21,049

============================================================================
Net Investment Loss Allocated from Master Focus Twenty Trust (13,331)

Fund Income and Expenses
============================================================================
Investment Income
Interest income from short-term obligations 11

============================================================================
Expenses
Distribution and service plan fees:
Class A 3,383
Class B 8,635
Class C 4,529
Class N 257
----------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 6,797
Class B 4,485
Class C 2,205
Class N 339
Class Y 865
----------------------------------------------------------------------------
Administrative fees 13,841
----------------------------------------------------------------------------
Legal, auditing and other professional fees 9,624
----------------------------------------------------------------------------
Shareholder reports 5,193
----------------------------------------------------------------------------
Trustees' compensation 4,036
----------------------------------------------------------------------------
Custodian fees and expenses 6
----------------------------------------------------------------------------
Other 2,693
------------
Total expenses 66,888
Less voluntary reimbursement of expenses (25,297)
Less voluntary waiver of transfer and shareholder servicing
agent fees--Classes A, B, C and N (3,353)
Less voluntary waiver of transfer and shareholder
servicing agent fees--Class Y (865)
------------
Net expenses 37,373

============================================================================
Net Investment Loss (50,693)

============================================================================
Realized and Unrealized Loss Allocated from Master Focus Twenty Trust
Net realized loss on investments (1,359,626)
----------------------------------------------------------------------------
Net change in unrealized appreciation on investments 146,859
------------
Net realized and unrealized loss (1,212,767)

============================================================================
Net Decrease in Net Assets Resulting from Operations $(1,263,460)
============

See accompanying Notes to Financial Statements.

8 | OPPENHEIMER SELECT MANAGERS MERCURY ADVISORS FOCUS GROWTH FUND

STATEMENTS OF CHANGES IN NET ASSETS

Year Ended November 30, 2002 2001 1
======================================================================================================================
Operations

Net investment loss $ (50,693) $ (12,445)
----------------------------------------------------------------------------------------------------------------------
Net realized loss (1,359,626) (506,925)
----------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation 146,859 10,754
-----------------------------
Net decrease in net assets resulting from operations (1,263,460) (508,616)

======================================================================================================================
Beneficial Interest Transactions
Net increase in net assets resulting from beneficial interest transactions:
Class A 1,177,797 1,301,825
Class B 541,064 841,255
Class C 542,491 363,914
Class N 95,080 1,223
Class Y -- --

======================================================================================================================
Net Assets
Total increase 1,092,972 1,999,601
----------------------------------------------------------------------------------------------------------------------
Beginning of period 2,016,601 17,000 2
-----------------------------
End of period $3,109,573 $2,016,601
=============================

1. For the period from February 16, 2001 (inception of offering) to November 30,
2001. 2. Reflects the value of the Manager's initial seed money investment at
December 22, 2000.

See accompanying Notes to Financial Statements.

9 | OPPENHEIMER SELECT MANAGERS MERCURY ADVISORS FOCUS GROWTH FUND

FINANCIAL HIGHLIGHTS

See accompanying Notes to Financial Statements.

10 | OPPENHEIMER SELECT MANAGERS MERCURY ADVISORS FOCUS GROWTH FUND

========================================================================================================================
Total Return, at Net Asset Value 3 (36.04)% (52.42)% (36.11)% (60.40)%

See accompanying Notes to Financial Statements.

11 | OPPENHEIMER SELECT MANAGERS MERCURY ADVISORS FOCUS GROWTH FUND

NOTES TO FINANCIAL STATEMENTS

================================================================================
1. Significant Accounting Policies
Oppenheimer Select Managers Mercury Advisors Focus Growth Fund (the Fund) is a
separate series of Oppenheimer Select Managers, a non-diversified, open-end
management investment company registered under the Investment Company Act of
1940, as amended. The Fund invests substantially all of its assets in the
Master Focus Twenty Trust (the Trust), a registered open-end investment company
that has the same goals as the Fund. The financial statements of the Trust are
included elsewhere in this report and should be read with the Fund's financial
statements. The percentage of the Trust owned by the Fund at November 30, 2002
was 1.57%. As of December 31, 2002, the total return for the Master Focus
Twenty Fund was (34.07)%. The Fund's investment objective is to seek long-term
capital appreciation. The Fund's administrator 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. All classes of shares have identical
rights and voting privileges. Earnings, net assets and net asset value per
share may differ by minor amounts due to each class having its own expenses
directly attributable to that class. Classes 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 following is a summary of significant accounting policies consistently
followed by the Fund.
--------------------------------------------------------------------------------
Securities Valuation. The Fund's investment in the Trust is valued based on the
daily reported net asset value of the Trust. Valuation of securities held by
the Trust is discussed in the notes to Master Focus Twenty Trust included
elsewhere in this report.
--------------------------------------------------------------------------------
Allocation of Income, Expenses, Gains and Losses. The Fund records daily its
proportionate share of the Trust's income, expenses and realized and unrealized
gains and losses. In addition, the Fund accrues its own expenses. Income,
expenses (other than those attributable to a specific class), gains and losses
are allocated daily 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 continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to shareholders. Therefore, no federal
income or excise tax provision is required.
During the fiscal year ended November 30, 2002, the Fund did not utilize any
capital loss carryforward.

As of November 30, 2002, the Fund had available for federal income tax purposes
unused capital loss carryovers as follows:

Expiring
-------------------------
2009 $ 468,169
2010 1,297,925
----------
Total $1,766,094
==========

As of December 31, 2002, the Fund had approximately $59,538 of post-October
losses available to offset future capital gains, if any. Such losses, if
unutilized, will expire in 2011.
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
Classification of Dividends and Distributions to Shareholders. 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

12 | OPPENHEIMER SELECT MANAGERS MERCURY ADVISORS FOCUS GROWTH FUND

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 realized gain was recorded by the Fund.
The Fund adjusts the classification of distributions to shareholders to
reflect the differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly, during the
year ended November 30, 2002, amounts have been reclassified to reflect a
decrease in paid-in capital of $50,693. Accumulated net investment loss was
decreased by the same amount. Net assets of the Fund were unaffected by the
reclassifications.
No distributions were paid during the year ended November 30, 2002 and the
period ended November 30, 2001.

As of November 30, 2002, the components of distributable earnings on a tax
basis were as follows:

Accumulated net realized loss $(1,866,551)
Net unrealized appreciation 157,613
-----------
Total $(1,708,938)
===========
--------------------------------------------------------------------------------
Other. The preparation of financial statements in conformity with generally
accepted accounting principles in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of 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 no par value shares of
beneficial interest of each class. Transactions in shares of beneficial
interest were as follows:

Sold 545,912 $1,705,805 317,853 $1,545,075
Redeemed (180,980) (528,008) (53,515) (243,250)
-----------------------------------------------------------------
Net increase 364,932 $1,177,797 264,338 $1,301,825
=================================================================

-----------------------------------------------------------------------------------------------------------------
Class B
Sold 340,922 $1,107,732 185,529 $ 898,904
Redeemed (194,498) (566,668) (15,413) (57,649)
-----------------------------------------------------------------
Net increase 146,424 $ 541,064 170,116 $ 841,255
=================================================================

-----------------------------------------------------------------------------------------------------------------
Class C
Sold 287,759 $ 836,915 94,725 $ 436,597
Redeemed (99,749) (294,424) (18,356) (72,683)
-----------------------------------------------------------------
Net increase 188,010 $ 542,491 76,369 $ 363,914
=================================================================

-----------------------------------------------------------------------------------------------------------------
Class N
Sold 33,236 $ 109,548 180 $ 1,223
Redeemed (4,905) (14,468) -- --
-----------------------------------------------------------------
Net increase 28,331 $ 95,080 180 $ 1,223
=================================================================

-----------------------------------------------------------------------------------------------------------------
Class Y
Sold -- $ -- -- $ --
Redeemed -- -- -- --
-----------------------------------------------------------------
Net increase (decrease) -- $ -- -- $ --
=================================================================

13 | OPPENHEIMER SELECT MANAGERS MERCURY ADVISORS FOCUS GROWTH FUND

NOTES TO FINANCIAL STATEMENTS Continued

================================================================================
3. Increases and Decreases of Investments in the Trust Increases and decreases
in the Fund's investment in the Trust for the year ended November 30, 2002,
were $2,985,810 and $667,386, respectively.

================================================================================
4. Fees and Other Transactions With Affiliates
Administration Fees. Administration fees paid to the Manager were in accordance
with the administration agreement with the Fund which provides for a fee of
0.50% of the average annual net assets of the Fund. During the year ended
November 30, 2002, the Fund paid $13,841 to the Manager for administrative
services.
--------------------------------------------------------------------------------
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 $19.75 per account fee.
Additionally, Class Y shares are subject to minimum fees of $5,000 for
assets of less than $10 million and $10,000 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.
OFS has voluntarily agreed to limit transfer and shareholder servicing agent
fees up to an annual rate of 0.35% for all classes. Effective November 1, 2002,
Class Y shares were changed from 0.25% to 0.35%. This undertaking may be
amended or withdrawn at any time.
--------------------------------------------------------------------------------
Distribution and Service Plan (12b-1) Fees. Under its General Distributor's
Agreement with the Manager, OppenheimerFunds Distributor, Inc. (the
Distributor) acts as the Fund's principal underwriter in the continuous public
offering of the different classes of shares of the Fund.

The compensation paid to (or retained by) the Distributor from the sale of
shares or on the redemption of shares is shown in the table below for the
period indicated.

Aggregate Class A Concessions Concessions Concessions Concessions
Front-End Front-End on Class A on Class B on Class C on Class N
Sales Charges Sales Charges Shares Shares Shares Shares
on Class A Retained by Advanced by Advanced by Advanced by Advanced by
Year Ended Shares Distributor Distributor 1 Distributor 1 Distributor 1 Distributor 1
----------------------------------------------------------------------------------------------------------------------------

November 30, 2002 $7,624 $4,188 $93 $9,049 $5,678 $1,055

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

Class A Class B Class C Class N
Contingent Deferred Contingent Deferred Contingent Deferred Contingent Deferred
Sales Charges Sales Charges Sales Charges Sales Charges
Retained by Retained by Retained by Retained by
Year Ended Distributor Distributor Distributor Distributor
------------------------------------------------------------------------------------------------------------------------------------

November 30, 2002 $-- $2,930 $118 $3

--------------------------------------------------------------------------------
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
quarterly at an annual rate of up to 0.25% of the average annual net assets of
Class A shares of the Fund. For the year ended November 30, 2002, payments
under the Class A Plan totaled $3,383, all of which were paid by the
Distributor to recipients, and included $282 paid to an affiliate of the
Manager. Any unreimbursed expenses the Distributor incurs with respect to Class
A shares in any fiscal year cannot be recovered in subsequent years.
--------------------------------------------------------------------------------
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. Under the plans, the Fund pays the Distributor an annual asset-based
sales charge of 0.75% per year on Class B shares and on Class C shares and the
Fund pays the Distributor an annual asset-based sales charge of 0.25% per year
on Class N shares. The Distributor also receives a service fee of 0.25% per
year under each plan.

14 | OPPENHEIMER SELECT MANAGERS MERCURY ADVISORS FOCUS GROWTH FUND

Distribution fees paid to the Distributor for the year ended November 30, 2002,
were as follows:

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

Class B Plan $8,635 $6,884 $60,326 7.65%
Class C Plan 4,529 3,156 81,033 12.31
Class N Plan 257 230 48,561 67.66

================================================================================
5. Borrowing and Lending Arrangements
Bank Borrowings. Until November 12, 2002, the Fund had the ability to borrow
from a bank for temporary or emergency purposes provided asset coverage for
borrowings exceeded 300%. The Fund and other Oppenheimer funds participated in
a $400 million unsecured line of credit with a bank. Under that unsecured line
of credit, interest was charged to each fund, based on its borrowings, at a
rate equal to the Federal Funds Rate plus 0.45%. Under that credit facility,
the Fund paid a commitment fee equal to its pro rata share of the average
unutilized amount of the credit facility at a rate of 0.08% per annum.
--------------------------------------------------------------------------------
Interfund Borrowing and Lending Arrangements. Effective November 12, 2002, the
following interfund borrowing and lending arrangements went into effect.
Consistent with its fundamental policies and pursuant to an exemptive order
issued by the Securities and Exchange Commission ("SEC"), the Fund may engage
in borrowing and lending activities with other funds in the OppenheimerFunds
complex. Borrowing money from affiliated funds may afford the Fund the
flexibility to use the most cost-effective alternative to satisfy its borrowing
requirements. Lending money to an affiliated fund may allow the Fund to obtain
a higher rate of return than it could from interest rates on alternative
short-term investments. Implementation of interfund lending will be
accomplished consistent with applicable regulatory requirements, including the
provisions of the SEC order. There is a risk that a borrowing fund could have a
loan called on one day's notice. In that circumstance, the Fund might have to
borrow from a bank at a higher interest cost if money to lend were not
available from another Oppenheimer fund. When the Fund lends assets to another
affiliated fund, the Fund is subject to the risk that the borrowing fund fails
to repay the loan.
The Fund had no borrowings and/or lending arrangements outstanding during
the year ended or at November 30, 2002.

Financial
Statements
for the
Master Focus
Twenty Trust

November 30, 2002

SCHEDULE OF INVESTMENTS Master Focus Twenty Trust

Shares Percent of
Industry* Held Common Stocks Value Net Assets

United States

Automobiles 188,300 Harley-Davidson, Inc. $ 9,140,082 4.6%

Biotechnology 166,100 ++Genentech, Inc. 5,481,300 2.8

Commercial 144,300 ++Career Education Corporation 5,614,713 2.8
Services & 176,900 ++CheckFree Corp. 3,465,471 1.8
Supplies 197,100 ++Corinthian Colleges, Inc. 7,686,900 3.9
294,600 Manpower Inc. 10,979,742 5.5
--------------- ------
27,746,826 14.0

Communications 961,000 ++Cisco Systems, Inc. 14,338,120 7.2
Equipment

Computers & 364,600 Hewlett-Packard Company 7,102,408 3.6
Peripherals

Diversified 391,000 ++Nasdaq-100 Shares (a) 10,799,420 5.4
Financials

Health Care 178,900 Medtronic, Inc. 8,363,575 4.2
Equipment & 111,300 ++Zimmer Holdings, Inc. 4,189,332 2.1
Supplies --------------- ------
12,552,907 6.3

Health Care 98,200 ++Accredo Health, Incorporated 5,229,150 2.7
Providers & 189,100 HCA Inc. 7,598,038 3.8
Services 77,600 ++LifePoint Hospitals, Inc. 2,444,400 1.2
72,900 ++Quest Diagnostics Incorporated 4,067,091 2.1
--------------- ------
19,338,679 9.8

Media 317,100 ++Clear Channel Communications, Inc. 13,781,166 6.9
1 ++Comcast Corporation (Class A) 5 0.0
155,400 ++Fox Entertainment Group, Inc. (Class A) 4,142,964 2.1
247,300 ++Viacom, Inc. (Class B) 11,625,573 5.9
--------------- ------
29,549,708 14.9

Oil & Gas 133,700 Devon Energy Corporation 6,122,123 3.1

Pharmaceuticals 105,950 ++Forest Laboratories, Inc. 11,371,613 5.7
302,500 Pfizer Inc. 9,540,850 4.8
--------------- ------
20,912,463 10.5

Software 361,400 ++BEA Systems, Inc. 3,993,470 2.0
59,000 ++Electronic Arts Inc. 4,001,970 2.0
336,100 ++Microsoft Corporation 19,433,302 9.8
--------------- ------
27,428,742 13.8

Specialty Retail 114,400 ++Bed Bath & Beyond Inc. 3,984,552 2.0

Wireless 523,500 ++AT&T Wireless Services Inc. 3,952,425 2.0
Telecommunication
Services

Total Investments in Common Stocks
(Cost--$182,376,213) 198,449,755 100.0

Merrill Lynch Focus Twenty Fund, Inc., November 30, 2002

SCHEDULE OF INVESTMENTS (concluded) Master Focus Twenty Trust

Shares Percent of
Held Short-Term Securities Value Net Assets

United States (concluded)

Common Stock 3,981,307 Merrill Lynch Liquidity Series, LLC Cash Sweep Series I (b) $ 3,981,307 2.0%

Total Investments in Short-Term Securities
(Cost--$3,981,307) 3,981,307 2.0

Total Investments (Cost--$186,357,520) 202,431,062 102.0
Liabilities in Excess of Other Assets (4,025,250) (2.0)
--------------- ------
Net Assets $ 198,405,812 100.0%
=============== ======

*For Fund compliance purposes, "Industry" means any one or more of the industry
sub-classifications used by one or more widely recognized market indexes or
ratings group indexes, and/or as defined by Fund management. This definition may
not apply for purposes of this report, which may combine such industry sub-
classifications for reporting ease.
++Non-income producing security.
(a)Represents ownership in the Nasdaq-100 Trust, a registered unit investment
trust. The investment objective of the Nasdaq-100 Trust is to provide investment
results that generally correspond to the price performance and dividend yield of
the component. (b)Investments in companies considered to be an affiliate of the
Trust (such companies are defined as "Affiliated Companies" in Section 2 (a)(3)
of the Investment Company Act of 1940) are as follows:

Net Share Net Dividend
Affiliate Activity Cost Income
Merrill Lynch Liquidity Series,
LLC Cash Sweep Series I 3,981,307 $3,981,307 $1,744

See Notes to Financial Statements.

Merrill Lynch Focus Twenty Fund, Inc., November 30, 2002

FINANCIAL INFORMATION

Statement of Assets and Liabilities Master Focus Twenty Trust

As of November 30, 2002

Assets: Investments, at value (including securities loaned of $41,284,767)
(identified cost--$186,357,520) $ 202,431,062
Investments held as collateral for loaned securities, at value 42,715,852
Receivables:
Securities sold $ 2,787,677
Contributions 178,746
Dividends 75,294
Loaned securities income 6,097 3,047,814
---------------
Prepaid expenses and other assets 2,608
---------------
Total assets 248,197,336
---------------

Liabilities: Collateral on securities loaned, at value 42,715,852
Payables:
Securities purchased 6,021,454
Withdrawals 887,305
Investment adviser 90,641 6,999,400
---------------
Accrued expenses 76,272
---------------
Total liabilities 49,791,524
---------------

Net Assets: Net assets $ 198,405,812
===============

Net Assets Investors' capital $ 182,332,270
Consist of: Unrealized appreciation on investments 16,073,542
---------------
Net assets $ 198,405,812
===============

See Notes to Financial Statements.

Merrill Lynch Focus Twenty Fund, Inc., November 30, 2002

FINANCIAL INFORMATION (continued)

Statement of Operations Master Focus Twenty Trust

For the Year Ended November 30, 2002

Investment Dividends $ 404,473
Income: Interest 228,473
Securities lending--net 113,888
---------------
Total income 746,834
---------------

Expenses: Investment advisory fees $ 1,718,971
Accounting services 174,143
Professional fees 121,702
Custodian fees 58,672
Trustees' fees and expenses 39,670
Offering costs 9,903
Pricing fees 921
Other 15,956
---------------
Total expenses 2,139,938
---------------
Investment loss--net (1,393,104)
---------------

Realized & Realized loss on investments--net (154,513,735)
Unrealized Change in unrealized appreciation/depreciation on investments--net 21,047,177
Gain (Loss) on ---------------
Investments--Net: Total realized and unrealized loss on investments--net (133,466,558)
---------------
Net Decrease in Net Assets Resulting from Operations $ (134,859,662)
===============

See Notes to Financial Statements.

Merrill Lynch Focus Twenty Fund, Inc., November 30, 2002

FINANCIAL INFORMATION (concluded)

Statements of Changes in Net Assets Master Focus Twenty Trust

For the
Year Ended
November 30,
Increase (Decrease) in Net Assets: 2002 2001

Operations: Investment loss--net $ (1,393,104) $ (1,870,504)
Realized loss on investments--net (154,513,735) (1,204,513,199)
Change in unrealized appreciation/depreciation on investments--net 21,047,177 331,418,796
--------------- ---------------
Net decrease in net assets resulting from operations (134,859,662) (874,964,907)
--------------- ---------------

Capital Proceeds from contributions 5,360,875 404,613,481
Transactions: Fair value of withdrawals (102,048,536) (288,410,915)
--------------- ---------------
Net increase (decrease) in net assets derived from
capital transactions (96,687,661) 116,202,566
--------------- ---------------
Net Assets: Total decrease in net assets (231,547,323) (758,762,341)
Beginning of year 429,953,135 1,188,715,476
--------------- ---------------
End of year $ 198,405,812 $ 429,953,135
=============== ===============

See Notes to Financial Statements.

Financial Highlights Master Focus Twenty Trust

For the For the Period
Year Ended March 20, 2000++
The following ratios have been derived from information November 30, to November 30,
provided in the financial statements. 2002 2001 2000

Total Investment (34.70%) -- --
Return:** ============= ============= =============

Ratios to Expenses .75% .68% .90%*
Average ============= ============= =============
Net Assets: Investment loss--net (.49%) (.25%) (.33%)*
============= ============= =============

Supplemental Net assets, end of period (in thousands) $ 198,406 $ 429,953 $ 1,188,715
Data: ============= ============= =============
Portfolio turnover 275.69% 137.66% 62.85%
============= ============= =============

*Annualized.
**Total return is required to be disclosed for fiscal years beginning after
December 15, 2000. ++Commencement of operations.

See Notes to Financial Statements.

Merrill Lynch Focus Twenty Fund, Inc., November 30, 2002

NOTES TO FINANCIAL STATEMENTS

Master Focus Twenty Trust

1. Significant Accounting Policies:
Master Focus Twenty Trust (the "Trust") is registered under the Investment
Company Act of 1940 and is organized as a Delaware business trust. The
Declaration of Trust permits the Trustees to issue nontransferable interest in
the Trust, subject to certain limitations. The Trust's financial statements are
prepared in conformity with accounting principles generally accepted in the
United States of America, which may require the use of management accruals and
estimates. The following is a summary of significant accounting policies
followed by the Trust.

(a) Valuation of investments--Portfolio securities that are traded on stock
exchanges are valued at the last sale price on the exchange on which such
securities are traded, as of the close of business on the day the securities are
being valued or, lacking any sales, at the last available bid price. Securities
that are traded in the over- the-counter market are valued at the last available
bid price prior to the time of valuation. In cases where securities are traded
on more than one exchange, the securities are valued on the exchange designated
by or under the authority of the Board of Trustees as the primary market.
Securities that are traded both in the over-the- counter market and on a stock
exchange are valued according to the broadest and most representative market.
Options written or purchased are valued at the last sale price in the case of
exchange- traded options. In the case of options traded in the over-the- counter
market, valuation is the last asked price (options written) or the last bid
price (options purchased). Short-term securities are valued at amortized cost,
which approximates market value. Other investments, including futures contracts
and related options, are stated at market value. Securities and assets for which
market quotations are not readily available are valued at fair market value, as
determined in good faith by or under the direction of the Trust's Board of
Trustees.

(b) Derivative financial instruments--The Trust may engage in various portfolio
investment techniques to increase or decrease the level of risk to which the
Trust is exposed more quickly and efficiently than transactions in other types
of investments. Losses may arise due to changes in the value of the contract or
if the counterparty does not perform under the contract.

* Financial futures contracts--The Trust may purchase or sell financial futures
contracts and options on such futures contracts for the purpose of hedging the
market risk on existing securities or the intended purchase of securities. Upon
entering into a contract, the Trust deposits and maintains as collateral such
initial margin as required by the exchange on which the transaction is effected.
Pursuant to the contract, the Trust agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in the value of the contract.
Such receipts or payments are known as variation margin and are recorded by the
Trust as unrealized gains or losses. When the contract is closed, the Trust
records a realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.

* Options--The Trust is authorized to purchase and write call and put options.
When the Trust writes an option, an amount equal to the premium received by the
Trust is reflected as an asset and an equivalent liability. The amount of the
liability is subsequently marked to market to reflect the current market value
of the option written. When a security is purchased or sold through an exercise
of an option, the related premium paid (or received) is added to (or deducted
from) the basis of the security acquired or deducted from (or added to) the
proceeds of the security sold. When an option expires (or the Trust enters into
a closing transaction), the Trust realizes a gain or loss on the option to the
extent of the premiums received or paid (or a gain or loss to the extent that
the cost of the closing transaction exceeds the premium paid or received).

Written and purchased options are non-income producing investments.

* Forward foreign exchange contracts--The Trust is authorized to enter into
forward foreign exchange contracts as a hedge against either specific
transactions or portfolio positions. The contract is marked-to-market daily and
the change in market value is recorded by the Trust as an unrealized gain or
loss. When the contract is closed, the Trust records a realized gain or loss
equal to the difference between the value at the time it was opened and the
value at the time it was closed.

Merrill Lynch Focus Twenty Fund, Inc., November 30, 2002

NOTES TO FINANCIAL STATEMENTS (concluded)

Master Focus Twenty Trust

* Foreign currency options and futures--The Trust may also purchase or sell
listed or over-the-counter foreign currency options, foreign currency futures
and related options on foreign currency futures as a short or long hedge against
possible variations in foreign exchange rates. Such transactions may be effected
with respect to hedges on non-U.S. dollar denominated securities owned by the
Trust, sold by the Trust but not yet delivered, or committed or anticipated to
be purchased by the Trust.

(c) Foreign currency transactions--Transactions denominated in foreign
currencies are recorded at the exchange rate prevailing when recognized. Assets
and liabilities denominated in foreign currencies are valued at the exchange
rate at the end of the period. Foreign currency transactions are the result of
settling (realized) or valuing (unrealized) assets or liabilities expressed in
foreign currencies into U.S. dollars. Realized and unrealized gains or losses
from investments include the effects of foreign exchange rates on investments.

(d) Income taxes--The Trust is classified as a partnership for Federal income
tax purposes. As a partnership for Federal income tax purposes, the Trust will
not incur Federal income tax liability. Items of partnership income, gain, loss
and deduction will pass through to investors as partners in the Trust.
Therefore, no Federal income tax provision is required. Under the applicable
foreign tax law, a withholding tax may be imposed on interest, dividends and
capital gains at various rates.

(e) Security transactions and investment income--Security transactions are
accounted for on the date the securities are purchased or sold (the trade
dates). Realized gains and losses on security transactions are determined on the
identified cost basis. Dividend income is recorded on the ex-dividend dates.
Dividends from foreign securities where the ex-dividend date may have passed are
subsequently recorded when the Trust has determined the ex-dividend date.
Interest income is recognized on the accrual basis.

(f) Securities lending--The Trust may lend securities to financial institutions
that provide cash or securities issued or guaranteed by the U.S. government as
collateral, which will be maintained at all times in an amount equal to at least
100% of the current market value of the loaned securities. Where the Trust
receives securities as collateral for the loaned securities, it collects a fee
from the borrower. The Trust typically receives the income on the loaned
securities but does not receive income on the collateral. Where the Trust
receives cash collateral, it may invest such collateral and retain the amount
earned on such investment, net of any amount rebated to the borrower. Loans of
securities are terminable at any time and the borrower, after notice, is
required to return borrowed securities within five business days. The Trust may
pay reasonable finder's, lending agent, administrative and custodial fees in
connection with its loans. In the event that the borrower defaults on its
obligation to return borrowed securities because of insolvency or for any other
reason, the Trust could experience delays and costs in gaining access to the
collateral. The Trust also could suffer a loss where the value of the collateral
falls below the market value of the borrowed securities, in the event of
borrower default or in the event of losses on investments made with cash
collateral.

2. Investment Advisory Agreement and Transactions with Affiliates: The Trust has
entered into an Investment Advisory Agreement with Fund Asset Management, L.P.
("FAM"). The general partner of FAM is Princeton Services, Inc. ("PSI"), an
indirect, wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."),
which is the limited partner.

FAM is responsible for the management of the Trust's investments and provides
the necessary personnel, facilities, equipment and certain other services
necessary to the operations of the Trust. For such services, the Trust pays a
monthly fee at an annual rate of .60% of the average daily value of the Trust's
net assets.

The Trust has received an exemptive order from the Securities and Exchange
Commission permitting it to lend portfolio securities to Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("MLPF&S"), a subsidiary of ML & Co., or its
affiliates. As of November 30, 2002, the Trust lent securities with a value of
$11,013,528 to MLPF&S or its affiliates. Pursuant to that order, the Trust also
has retained QA Advisors, LLC ("QA Advisors"), an affiliate of FAM, as the
securities lending agent for a fee based on a share of the returns on investment
of cash collateral. QA Advisors may, on behalf of the Trust, invest cash
collateral received by the Trust for such loans, among other things, in a
private investment company managed by QA Advisors or in registered money market
funds advised by FAM or its affiliates. As of November 30, 2002, cash collateral
of $19,222,135 was invested in the Money Market Series of the Merrill Lynch
Liquidity Series, LLC and $23,493,717 was invested in the Merrill Lynch Premier
Institutional Fund. For the year ended November 30, 2002, QA Advisors received
$44,826 in securities lending agent fees.

Merrill Lynch Focus Twenty Fund, Inc., November 30, 2002

In addition, MLPF&S received $161,190 in commissions on the execution of
portfolio security transactions for the Trust for the year ended November 30,
2002.

For the year ended November 30, 2002, the Trust reimbursed FAM $23,452 for
certain accounting services.

Certain officers and/or trustees of the Trust are officers and/or directors of
FAM, PSI, and/or ML & Co.

3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
year ended November 30, 2002 were $757,219,940 and $822,668,782, respectively.

Net realized gains (losses) for the year ended November 30, 2002 and net
unrealized gains as of November 30, 2002 were as follows:

Realized Unrealized
Gains (Losses) Gains

Long-term investments $ (154,141,729) $ 16,073,542
Short-term investments (218) --
Options purchased (506,361) --
Options written 134,573 --
--------------- --------------
Total investments $ (154,513,735) $ 16,073,542
=============== ==============

As of November 30, 2002, net unrealized apprecia-tion for Federal income tax
purposes aggregated $8,409,259, of which $14,877,950 related to appreciated
securities and $6,468,691 related to depreciated securities. At November 30,
2002, the aggregate cost of investments for Federal income tax purposes was
$194,021,803.

Transactions in call options written for the year ended November 30, 2002 were
as follows:

Nominal
Value Premiums
Covered Received

Outstanding call options
written, beginning of year 798,500 $ 1,057,029
Options written 814,000 1,535,300
Options closed (1,612,500) (2,592,329)
--------------- --------------
Outstanding call options
written, end of year -- $ --
=============== ==============

Transactions in put options written for the year ended November 30, 2002 were as
follows:

Nominal
Value Premiums
Covered Received

Outstanding put options
written, beginning of year 111,000 $ 134,065
Options written 172,000 326,957
Options closed (283,000) (461,022)
--------------- --------------
Outstanding put options
written, end of year -- $ --
=============== ==============

4. Short-Term Borrowings:
The Trust, along with certain other funds managed by FAM and its affiliates, is
a party to a credit agreement with Bank One, N.A. and certain other lenders.
Effective November 29, 2002, in conjunction with the renewal for one year at the
same terms, the total commitment was reduced from $1,000,000,000 to
$500,000,000. The Trust may borrow under the credit agreement to fund investor
withdrawals and for other lawful purposes other than for leverage. The Trust may
borrow up to the maximum amount allowable under the Trust's current prospectus
and statement of additional information, subject to various other legal,
regulatory or contractual limits. The Trust pays a commitment fee of .09% per
annum based on the Trust's pro rata share of the unused portion of the credit
agreement. Amounts borrowed under the credit agreement bear interest at a rate
equal to, at each fund's election, the Federal Funds rate plus .50% or a base
rate as determined by Bank One, N.A. The Trust did not borrow under the credit
agreement during the year ended November 30, 2002.

Merrill Lynch Focus Twenty Fund, Inc., November 30, 2002

INDEPENDENT AUDITORS' REPORT

To The Board of Trustees and Investors,
Master Focus Twenty Trust:

We have audited the accompanying statement of assets and liabilities of Master
Focus Twenty Trust, including the schedule of investments as of November 30,
2002, the related statements of operations for the year then ended and changes
in net assets for each of the years in the two-year period then ended, and the
financial highlights for each of the periods presented. These financial
statements and the financial highlights are the responsibility of the
Portfolio's management. Our responsibility is to express an opinion on these
financial statements and the financial highlights based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned at November 30, 2002 by correspondence with the custodian and
brokers; where replies were not received from brokers, we performed other
auditing procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Master Focus Twenty
Trust as of November 30, 2002, the results of its operations, the changes in its
net assets and the financial highlights for the respective stated periods in
conformity with accounting principles generally accepted in the United States of
America.

/s/ Deloitte & Touche LLP
-------------------------
Deloitte & Touche LLP
Princeton, New Jersey
January 21, 2003

INDEPENDENT AUDITORS' REPORT

--------------------------------------------------------------------------------
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER SELECT MANAGERS QM
ACTIVE BALANCED FUND:
We have audited the accompanying statement of assets and liabilities of
Oppenheimer Select Managers QM Active Balanced Fund, which is a series of
Oppenheimer Select Managers, including the statement of investments, as of
November 30, 2002, and the related statement of operations for the year then
ended, the statements of changes in net assets and the financial highlights for
the periods indicated. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of November 30, 2002, by correspondence with the custodian
and brokers; where replies were not received from brokers, we performed other
auditing procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer Select Managers QM Active Balanced Fund as of November 30, 2002, the
results of its operations for the year then ended, the changes in its net assets
and the financial highlights for the periods indicated, in conformity with
accounting principles generally accepted in the United States of America.

/s/ Deloitte & Touche LLP
-------------------------
Deloitte & Touche LLP

Denver, Colorado
December 20, 2002

STATEMENT OF INVESTMENTS November 30, 2002
--------------------------------------------------------------------------------

Market Value
Shares See Note 1
--------------------------------------------------------------------------------
Common Stocks--67.2%
--------------------------------------------------------------------------------
Consumer Discretionary--9.7%
--------------------------------------------------------------------------------
Auto Components--0.4%
American Axle & Manufacturing Holdings, Inc. 1 400 $ 9,592
--------------------------------------------------------------------------------
Cooper Tire & Rubber Co. 300 4,770
--------------------------------------------------------------------------------
Lear Corp. 1 200 7,338
--------------------------------------------------------------------------------
Stoneridge, Inc. 1 100 983
--------
22,683

--------------------------------------------------------------------------------
Automobiles--0.5%
General Motors Corp. 600 23,820
--------------------------------------------------------------------------------
Harley-Davidson, Inc. 100 4,854
--------
28,674

--------------------------------------------------------------------------------
Distributors--0.0%
Handleman Co. 1 200 2,250
--------------------------------------------------------------------------------
Hotels, Restaurants & Leisure--1.0%
Harrah's Entertainment, Inc. 1 500 20,000
--------------------------------------------------------------------------------
Jack in the Box, Inc. 1 200 4,024
--------------------------------------------------------------------------------
Marriott International, Inc., Cl. A 300 10,725
--------------------------------------------------------------------------------
McDonald's Corp. 800 14,800
--------------------------------------------------------------------------------
Papa John's International, Inc. 1 100 2,714
--------------------------------------------------------------------------------
Park Place Entertainment Corp. 1 800 6,624
--------------------------------------------------------------------------------
Ryan's Family Steak Houses, Inc. 1 400 4,348
--------------------------------------------------------------------------------
Yum! Brands, Inc. 1 100 2,391
--------
65,626

--------------------------------------------------------------------------------
Household Durables--0.4%
Lancaster Colony Corp. 100 3,619
--------------------------------------------------------------------------------
Lennar Corp. 100 5,302
--------------------------------------------------------------------------------
Maytag Corp. 500 15,455
--------
24,376

--------------------------------------------------------------------------------
Internet & Catalog Retail--0.5%
Amazon.com, Inc. 1 600 14,010
--------------------------------------------------------------------------------
USA Interactive, Inc. 1 600 16,680
--------
30,690

--------------------------------------------------------------------------------
Leisure Equipment & Products--0.3%
Eastman Kodak Co. 200 7,384
--------------------------------------------------------------------------------
SCP Pool Corp. 1 300 9,453
--------
16,837

--------------------------------------------------------------------------------
Media--2.5%
AOL Time Warner, Inc. 1 1,200 19,644
--------------------------------------------------------------------------------
Clear Channel Communications, Inc. 1 400 17,384
--------------------------------------------------------------------------------
Comcast Corp., Cl. A 1 226 5,297
--------------------------------------------------------------------------------
Comcast Corp., Cl. A Special, Non-Vtg. 1 200 4,560

Market Value
Shares See Note 1
--------------------------------------------------------------------------------
Media Continued
Disney (Walt) Co. 700 $ 13,874
--------------------------------------------------------------------------------
E.W. Scripps Co. (The), Cl. A 100 7,928
--------------------------------------------------------------------------------
Gannett Co., Inc. 300 21,375
--------------------------------------------------------------------------------
Liberty Media Corp., Cl. A 1 700 7,392
--------------------------------------------------------------------------------
McGraw-Hill Cos., Inc. (The) 100 5,929
--------------------------------------------------------------------------------
Pulitzer, Inc. 100 4,396
--------------------------------------------------------------------------------
Tribune Co. 200 9,160
--------------------------------------------------------------------------------
Viacom, Inc., Cl. B 1 800 37,608
---------
154,547

--------------------------------------------------------------------------------
Multiline Retail--1.4%
Federated Department Stores, Inc. 1 700 22,876
--------------------------------------------------------------------------------
May Department Stores Co. 200 4,892
--------------------------------------------------------------------------------
Sears Roebuck & Co. 500 13,850
--------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 800 43,328
---------
84,946

--------------------------------------------------------------------------------
Specialty Retail--2.2%
Abercrombie & Fitch Co., Cl. A 1 500 12,435
--------------------------------------------------------------------------------
AnnTaylor Stores Corp. 1 200 4,750
--------------------------------------------------------------------------------
AutoNation, Inc. 1 1,200 14,808
--------------------------------------------------------------------------------
AutoZone, Inc. 1 100 8,170
--------------------------------------------------------------------------------
Home Depot, Inc. 1,100 29,062
--------------------------------------------------------------------------------
Lowe's Cos., Inc. 800 33,200
--------------------------------------------------------------------------------
Payless ShoeSource, Inc. 1 100 5,669
--------------------------------------------------------------------------------
PetsMart, Inc. 1 700 12,915
--------------------------------------------------------------------------------
Sherwin-Williams Co. 300 8,649
--------------------------------------------------------------------------------
TJX Cos., Inc. (The) 200 3,914
--------------------------------------------------------------------------------
Too, Inc. 1 100 2,935
--------------------------------------------------------------------------------
United Auto Group, Inc. 1 100 1,351
---------
137,858

--------------------------------------------------------------------------------
Textiles & Apparel--0.5%
Jones Apparel Group, Inc. 1 400 14,720
--------------------------------------------------------------------------------
Nike, Inc., Cl. B 100 4,478
--------------------------------------------------------------------------------
Phillips-Van Heusen Corp. 500 6,575
--------------------------------------------------------------------------------
Timberland Co., Cl. A 1 200 7,304
---------
33,077

--------------------------------------------------------------------------------
Consumer Staples--5.9%
--------------------------------------------------------------------------------
Beverages--1.6%
Anheuser-Busch Cos., Inc. 800 39,296
--------------------------------------------------------------------------------
Coca-Cola Co. (The) 500 22,820
--------------------------------------------------------------------------------
Pepsi Bottling Group, Inc. (The) 300 8,616
--------------------------------------------------------------------------------
PepsiAmericas, Inc. 200 3,046
--------------------------------------------------------------------------------
PepsiCo, Inc. 600 25,488
---------
99,266

6 | OPPENHEIMER SELECT MANAGERS QM ACTIVE BALANCED FUND

Market Value
Shares See Note 1
--------------------------------------------------------------------------------
Food & Drug Retailing--0.8%
Albertson's, Inc. 400 $ 9,336
--------------------------------------------------------------------------------
Kroger Co. (The) 1 1,100 17,303
--------------------------------------------------------------------------------
Safeway, Inc. 1 600 14,268
--------------------------------------------------------------------------------
Winn-Dixie Stores, Inc. 400 5,968
---------
46,875

--------------------------------------------------------------------------------
Food Products--0.9%
ConAgra Foods, Inc. 100 2,437
--------------------------------------------------------------------------------
International Multifoods Corp. 1 300 5,994
--------------------------------------------------------------------------------
Interstate Bakeries Corp. 200 4,610
--------------------------------------------------------------------------------
Kraft Foods, Inc., Cl. A 200 7,512
--------------------------------------------------------------------------------
Sara Lee Corp. 500 11,665
--------------------------------------------------------------------------------
Tyson Foods, Inc., Cl. A 700 8,260
--------------------------------------------------------------------------------
Unilever NV, NY Shares 300 17,445
---------
57,923

--------------------------------------------------------------------------------
Household Products--1.7%
Clorox Co. (The) 600 26,304
--------------------------------------------------------------------------------
Colgate-Palmolive Co. 100 5,139
--------------------------------------------------------------------------------
Dial Corp. (The) 400 8,328
--------------------------------------------------------------------------------
Kimberly-Clark Corp. 500 25,160
--------------------------------------------------------------------------------
Procter & Gamble Corp. (The) 500 42,000
---------
106,931

--------------------------------------------------------------------------------
Personal Products--0.4%
Avon Products, Inc. 100 5,135
--------------------------------------------------------------------------------
Gillette Co. 600 18,192
---------
23,327

--------------------------------------------------------------------------------
Tobacco--0.5%
Philip Morris Cos., Inc. 800 30,176
--------------------------------------------------------------------------------
Energy--3.3%
--------------------------------------------------------------------------------
Oil & Gas--3.3%
Anadarko Petroleum Corp. 500 23,600
--------------------------------------------------------------------------------
Ashland, Inc. 100 2,917
--------------------------------------------------------------------------------
ChevronTexaco Corp. 431 28,890
--------------------------------------------------------------------------------
ConocoPhillips 400 19,124
--------------------------------------------------------------------------------
Devon Energy Corp. 100 4,579
--------------------------------------------------------------------------------
Exxon Mobil Corp. 2,800 97,440
--------------------------------------------------------------------------------
Occidental Petroleum Corp. 700 19,495
--------------------------------------------------------------------------------
Patina Oil & Gas Corp. 375 11,280
---------
207,325

--------------------------------------------------------------------------------
Financials--14.2%
--------------------------------------------------------------------------------
Banks--6.2%
AmSouth Bancorp 300 5,721
--------------------------------------------------------------------------------
Associated Banc-Corp 110 3,688

Market Value
Shares See Note 1
--------------------------------------------------------------------------------
Banks Continued
Astoria Financial Corp. 500 $ 13,140
--------------------------------------------------------------------------------
Bank of America Corp. 800 56,064
--------------------------------------------------------------------------------
Bank One Corp. 300 11,847
--------------------------------------------------------------------------------
Banknorth Group, Inc. 400 8,812
--------------------------------------------------------------------------------
Charter One Financial, Inc. 800 24,080
--------------------------------------------------------------------------------
Comerica, Inc. 200 9,466
--------------------------------------------------------------------------------
Commercial Federal Corp. 200 4,490
--------------------------------------------------------------------------------
FleetBoston Financial Corp. 700 18,991
--------------------------------------------------------------------------------
Flushing Financial Corp. 200 3,446
--------------------------------------------------------------------------------
Golden West Financial Corp. 300 20,760
--------------------------------------------------------------------------------
Greater Bay Bancorp 600 10,776
--------------------------------------------------------------------------------
Greenpoint Financial Corp. 200 8,540
--------------------------------------------------------------------------------
Independence Community Bank Corp. 100 2,571
--------------------------------------------------------------------------------
KeyCorp 300 7,827
--------------------------------------------------------------------------------
National City Corp. 900 25,020
--------------------------------------------------------------------------------
New York Community Bancorp, Inc. 200 5,576
--------------------------------------------------------------------------------
PNC Financial Services Group 200 8,440
--------------------------------------------------------------------------------
Popular, Inc. 200 6,726
--------------------------------------------------------------------------------
Sky Financial Group, Inc. 100 1,910
--------------------------------------------------------------------------------
Staten Island Bancorp, Inc. 200 3,932
--------------------------------------------------------------------------------
TCF Financial Corp. 100 4,265
--------------------------------------------------------------------------------
Trustmark Corp. 100 2,297
--------------------------------------------------------------------------------
U.S. Bancorp 606 13,272
--------------------------------------------------------------------------------
Union Planters Corp. 300 8,850
--------------------------------------------------------------------------------
Wachovia Corp. 600 21,090
--------------------------------------------------------------------------------
Washington Mutual, Inc. 850 30,583
--------------------------------------------------------------------------------
Webster Financial Corp. 100 3,260
--------------------------------------------------------------------------------
Wells Fargo Co. 400 18,484
--------------------------------------------------------------------------------
WSFS Financial Corp. 600 19,794
--------
383,718

--------------------------------------------------------------------------------
Diversified Financials--4.6%
Capital One Financial Corp. 600 20,280
--------------------------------------------------------------------------------
Citigroup, Inc. 2,200 85,536
--------------------------------------------------------------------------------
Countrywide Financial Corp. 400 19,720
--------------------------------------------------------------------------------
Doral Financial Corp. 100 2,695
--------------------------------------------------------------------------------
DVI, Inc. 1 400 3,536
--------------------------------------------------------------------------------
Fannie Mae 600 37,830
--------------------------------------------------------------------------------
Freddie Mac 500 28,820
--------------------------------------------------------------------------------
Household International, Inc. 1,000 28,700
--------------------------------------------------------------------------------
J.P. Morgan Chase & Co. 1,700 42,789
--------------------------------------------------------------------------------
Principal Financial Group, Inc. (The) 400 11,600
--------------------------------------------------------------------------------
Walter Industries, Inc. 500 5,225
--------
286,731

7 | OPPENHEIMER SELECT MANAGERS QM ACTIVE BALANCED FUND

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

Market Value
Shares See Note 1
--------------------------------------------------------------------------------
Insurance--2.9%
American Financial Group, Inc. 400 $ 9,500
--------------------------------------------------------------------------------
American International Group, Inc. 615 40,067
--------------------------------------------------------------------------------
AmerUs Group Co. 500 16,025
--------------------------------------------------------------------------------
Fidelity National Financial, Inc. 450 14,558
--------------------------------------------------------------------------------
John Hancock Financial Services, Inc. 600 18,342
--------------------------------------------------------------------------------
Loews Corp. 200 8,096
--------------------------------------------------------------------------------
MBIA, Inc. 100 4,548
--------------------------------------------------------------------------------
MetLife, Inc. 900 24,156
--------------------------------------------------------------------------------
MGIC Investment Corp. 100 4,667
--------------------------------------------------------------------------------
Stewart Information Services Corp. 1 100 2,070
--------------------------------------------------------------------------------
Travelers Property Casualty Corp., Cl. A 1 1,277 20,368
--------------------------------------------------------------------------------
Travelers Property Casualty Corp., Cl. B 1 559 8,944
--------------------------------------------------------------------------------
UnumProvident Corp. 400 6,820
--------
178,161

--------------------------------------------------------------------------------
Real Estate--0.5%
Boykin Lodging Co. 300 2,730
--------------------------------------------------------------------------------
CarrAmerica Realty Corp. 100 2,532
--------------------------------------------------------------------------------
Equity Inns, Inc. 100 576
--------------------------------------------------------------------------------
Equity Office Properties Trust 200 5,142
--------------------------------------------------------------------------------
FBR Asset Investment Corp. 100 3,280
--------------------------------------------------------------------------------
Impac Mortgage Holdings, Inc. 800 9,352
--------------------------------------------------------------------------------
LNR Property Corp. 100 3,640
--------------------------------------------------------------------------------
National Health Investors, Inc. 200 3,388
--------
30,640

--------------------------------------------------------------------------------
Health Care--10.3%
--------------------------------------------------------------------------------
Biotechnology--1.6%
Amgen, Inc. 1 820 38,704
--------------------------------------------------------------------------------
Chiron Corp. 1 500 20,100
--------------------------------------------------------------------------------
Genentech, Inc. 1 800 26,400
--------------------------------------------------------------------------------
Wyeth 300 11,529
--------
96,733

--------------------------------------------------------------------------------
Health Care Equipment & Supplies--1.6%
Bard (C.R.), Inc. 300 16,650
--------------------------------------------------------------------------------
Becton, Dickinson & Co. 600 17,802
--------------------------------------------------------------------------------
Guidant Corp. 1 400 11,972
--------------------------------------------------------------------------------
Hillenbrand Industries, Inc. 100 4,821
--------------------------------------------------------------------------------
Medtronic, Inc. 100 4,675
--------------------------------------------------------------------------------
Mentor Corp. 200 8,650
--------------------------------------------------------------------------------
Possis Medical, Inc. 1 100 1,618
--------------------------------------------------------------------------------
St. Jude Medical, Inc. 1 200 6,964
--------------------------------------------------------------------------------
Steris Corp. 1 400 9,092
--------------------------------------------------------------------------------
Stryker Corp. 300 18,555
--------
100,799

Market Value
Shares See Note 1
-------------------------------------------------------------------------------
Health Care Providers & Services--1.6%
AdvancePCS, Inc. 1 100 $ 2,468
--------------------------------------------------------------------------------
Anthem, Inc. 1 100 5,925
--------------------------------------------------------------------------------
Cardinal Health, Inc. 300 18,462
--------------------------------------------------------------------------------
Cigna Corp. 300 13,059
--------------------------------------------------------------------------------
DaVita, Inc. 1 100 2,565
--------------------------------------------------------------------------------
Express Scripts, Inc. 1 300 15,183
--------------------------------------------------------------------------------
Five Star Quality Care, Inc. 1 40 67
--------------------------------------------------------------------------------
PacifiCare Health Systems, Inc. 1 100 2,675
--------------------------------------------------------------------------------
Tenet Healthcare Corp. 1 200 3,690
--------------------------------------------------------------------------------
UnitedHealth Group, Inc. 300 24,435
--------------------------------------------------------------------------------
US Oncology, Inc. 1 700 6,041
--------------------------------------------------------------------------------
WebMD Corp. 1 900 7,704
--------
102,274

--------------------------------------------------------------------------------
Pharmaceuticals--5.5%
Abbott Laboratories 500 21,890
--------------------------------------------------------------------------------
Allergan, Inc. 400 23,516
--------------------------------------------------------------------------------
Bristol-Myers Squibb Co. 700 18,550
--------------------------------------------------------------------------------
Forest Laboratories, Inc. 1 100 10,733
--------------------------------------------------------------------------------
Johnson & Johnson 1,496 85,302
--------------------------------------------------------------------------------
Merck & Co., Inc. 1,000 59,410
--------------------------------------------------------------------------------
Mylan Laboratories, Inc. 500 16,865
--------------------------------------------------------------------------------
Pfizer, Inc. 3,100 97,774
--------------------------------------------------------------------------------
Pharmacia Corp. 100 4,230
--------
338,270
--------------------------------------------------------------------------------
Industrials--6.9%
--------------------------------------------------------------------------------
Aerospace & Defense--1.0%
Boeing Co. 500 17,000
--------------------------------------------------------------------------------
Goodrich Corp. 300 5,520
--------------------------------------------------------------------------------
Honeywell International, Inc. 300 7,761
--------------------------------------------------------------------------------
Mercury Computer Systems, Inc. 1 300 9,369
--------------------------------------------------------------------------------
United Technologies Corp. 400 24,988
--------
64,638

--------------------------------------------------------------------------------
Air Freight & Couriers--0.2%
FedEx Corp. 200 10,514
--------------------------------------------------------------------------------
Building Products--0.2%
NCI Building Systems, Inc. 1 500 9,600
--------------------------------------------------------------------------------
Commercial Services & Supplies--1.8%
Allied Waste Industries, Inc. 1 600 6,408
--------------------------------------------------------------------------------
Apollo Group, Inc., Cl. A 1 300 12,375
--------------------------------------------------------------------------------
Automatic Data Processing, Inc. 200 8,694
--------------------------------------------------------------------------------
Cendant Corp. 1 1,700 21,386
--------------------------------------------------------------------------------
Deluxe Corp. 200 8,680
--------------------------------------------------------------------------------
Education Management Corp. 1 100 3,864
--------------------------------------------------------------------------------
First Data Corp. 300 10,392

8 | OPPENHEIMER SELECT MANAGERS QM ACTIVE BALANCED FUND

Market Value
Shares See Note 1
--------------------------------------------------------------------------------
Commercial Services & Supplies Continued
H&R Block, Inc. 500 $ 19,165
--------------------------------------------------------------------------------
MemberWorks, Inc. 1 500 9,525
--------------------------------------------------------------------------------
Republic Services, Inc. 1 400 8,600
--------------------------------------------------------------------------------
Right Management Consultants, Inc. 1 150 1,837
--------------------------------------------------------------------------------
Sabre Holdings Corp. 1 100 2,176
--------
113,102

--------------------------------------------------------------------------------
Construction & Engineering--0.2%
Shaw Group, Inc. (The) 1 600 10,380
--------------------------------------------------------------------------------
Electrical Equipment--0.7%
Acuity Brands, Inc. 400 5,432
--------------------------------------------------------------------------------
Emerson Electric Co. 100 5,215
--------------------------------------------------------------------------------
Energizer Holdings, Inc. 1 700 20,727
--------------------------------------------------------------------------------
Genlyte Group, Inc. (The) 1 200 6,600
--------------------------------------------------------------------------------
Paxar Corp. 1 300 4,239
--------
42,213

--------------------------------------------------------------------------------
Industrial Conglomerates--2.0%
3M Co. 100 12,985
--------------------------------------------------------------------------------
General Electric Co. 3,200 86,720
--------------------------------------------------------------------------------
Tyco International Ltd. 1,400 24,976
--------
124,681

--------------------------------------------------------------------------------
Machinery--0.4%
Cascade Corp. 100 1,400
--------------------------------------------------------------------------------
Harsco Corp. 200 6,182
--------------------------------------------------------------------------------
ITT Industries, Inc. 100 6,028
--------------------------------------------------------------------------------
Pentair, Inc. 100 3,576
--------------------------------------------------------------------------------
Timken Co. 200 3,970
--------------------------------------------------------------------------------
Trinity Industries, Inc. 100 1,953
--------
23,109

--------------------------------------------------------------------------------
Road & Rail--0.4%
Burlington Northern Santa Fe Corp. 300 7,599
--------------------------------------------------------------------------------
CSX Corp. 100 2,765
--------------------------------------------------------------------------------
Union Pacific Corp. 300 17,370
--------
27,734
--------------------------------------------------------------------------------
Information Technology--10.8%
--------------------------------------------------------------------------------
Communications Equipment--2.1%
Cisco Systems, Inc. 1 4,600 68,632
--------------------------------------------------------------------------------
Inter-Tel, Inc. 100 2,511
--------------------------------------------------------------------------------
McData Corp., Cl. A 1 500 4,360
--------------------------------------------------------------------------------
Motorola, Inc. 500 5,690
--------------------------------------------------------------------------------
NetScreen Technologies, Inc. 1 500 8,625
--------------------------------------------------------------------------------
QUALCOMM, Inc. 1 900 37,098
--------
126,916

Market Value
Shares See Note 1
--------------------------------------------------------------------------------
Computers & Peripherals--2.7%
Dell Computer Corp. 1 1,600 $ 45,760
--------------------------------------------------------------------------------
Hewlett-Packard Co. 1,479 28,811
--------------------------------------------------------------------------------
Intergraph Corp. 1 200 3,620
--------------------------------------------------------------------------------
International Business Machines Corp. 700 60,970
--------------------------------------------------------------------------------
Iomega Corp. 1 500 4,275
--------------------------------------------------------------------------------
Lexmark International, Inc., Cl. A 1 400 26,456
--------
169,892

--------------------------------------------------------------------------------
Electronic Equipment & Instruments--0.0%
Intermagnetics General Corp. 1 100 2,171
--------------------------------------------------------------------------------
Internet Software & Services--0.2%
WebEx Communications, Inc. 1 500 9,730
--------------------------------------------------------------------------------
IT Consulting & Services--0.1%
Acxiom Corp. 1 500 7,675
--------------------------------------------------------------------------------
Semiconductor Equipment & Products--2.1%
Altera Corp. 1 300 4,359
--------------------------------------------------------------------------------
Intel Corp. 2,500 52,200
--------------------------------------------------------------------------------
LSI Logic Corp. 1 500 4,145
--------------------------------------------------------------------------------
Maxim Integrated Products, Inc. 300 12,615
--------------------------------------------------------------------------------
QLogic Corp. 1 600 26,064
--------------------------------------------------------------------------------
RF Micro Devices, Inc. 1 600 7,314
--------------------------------------------------------------------------------
Texas Instruments, Inc. 1,200 24,132
--------
130,829

--------------------------------------------------------------------------------
Software--3.6%
Cerner Corp. 1 200 6,582
--------------------------------------------------------------------------------
Citrix Systems, Inc. 1 200 2,350
--------------------------------------------------------------------------------
Electronic Arts, Inc. 1 200 13,572
--------------------------------------------------------------------------------
Fair, Isaac & Co., Inc. 500 21,900
--------------------------------------------------------------------------------
Microsoft Corp. 1 2,000 115,360
--------------------------------------------------------------------------------
Oracle Corp. 1 900 10,935
--------------------------------------------------------------------------------
Reynolds & Reynolds Co., Cl. A 400 10,668
--------------------------------------------------------------------------------
Sybase, Inc. 1 500 6,660
--------------------------------------------------------------------------------
Symantec Corp. 1 600 26,238
--------------------------------------------------------------------------------
Take-Two Interactive Software, Inc. 1 200 5,986
--------
220,251

--------------------------------------------------------------------------------
Materials--1.4%
--------------------------------------------------------------------------------
Chemicals--0.5%
Du Pont (E.I.) de Nemours & Co. 300 13,386
--------------------------------------------------------------------------------
Engelhard Corp. 100 2,424
--------------------------------------------------------------------------------
Hercules, Inc. 1 900 8,478
--------------------------------------------------------------------------------
Monsanto Co. 17 299
--------------------------------------------------------------------------------
PolyOne Corp. 500 3,900
--------------------------------------------------------------------------------
PPG Industries, Inc. 100 5,008
--------
33,495

9 | OPPENHEIMER SELECT MANAGERS QM ACTIVE BALANCED FUND

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

Market Value
Shares See Note 1
--------------------------------------------------------------------------------
Construction Materials--0.1%
Lafarge North America, Inc. 200 $ 6,420
--------------------------------------------------------------------------------
Containers & Packaging--0.2%
Ball Corp. 200 9,896
--------------------------------------------------------------------------------
Owens-Illinois, Inc. 1 200 3,140
-----------
13,036

--------------------------------------------------------------------------------
Metals & Mining--0.3%
Steel Dynamics, Inc. 1 900 12,780
--------------------------------------------------------------------------------
United States Steel Corp. 600 8,688
-----------
21,468

--------------------------------------------------------------------------------
Paper & Forest Products--0.3%
Georgia-Pacific Corp. 600 12,438
--------------------------------------------------------------------------------
International Paper Co. 100 3,925
-----------
16,363
--------------------------------------------------------------------------------
Telecommunication Services--3.2%
--------------------------------------------------------------------------------
Diversified Telecommunication Services--2.5%
Alltel Corp. 100 5,508
--------------------------------------------------------------------------------
BellSouth Corp. 900 25,020
--------------------------------------------------------------------------------
CenturyTel, Inc. 200 6,176
--------------------------------------------------------------------------------
SBC Communications, Inc. 1,500 42,750
--------------------------------------------------------------------------------
Sprint Corp. (Fon Group) 2,000 29,160
--------------------------------------------------------------------------------
Verizon Communications, Inc. 1,100 46,068
-----------
154,682

--------------------------------------------------------------------------------
Wireless Telecommunication Services--0.7%
AT&T Corp. 140 3,926
--------------------------------------------------------------------------------
AT&T Wireless Services, Inc. 1 2,486 18,769
--------------------------------------------------------------------------------
Nextel Communications, Inc., Cl. A 1 1,600 22,000
-----------
44,695

--------------------------------------------------------------------------------
Utilities--1.5%
--------------------------------------------------------------------------------
Electric Utilities--1.2%
Alliant Energy Corp. 700 11,396
--------------------------------------------------------------------------------
CenterPoint Energy, Inc. 500 3,825
--------------------------------------------------------------------------------
Cleco Corp. 100 1,358
--------------------------------------------------------------------------------
Dominion Resources, Inc. 100 5,095
--------------------------------------------------------------------------------
Duke Energy Corp. 400 7,896
--------------------------------------------------------------------------------
Edison International 1 1,000 11,090
--------------------------------------------------------------------------------
Exelon Corp. 200 10,038
--------------------------------------------------------------------------------
PG&E Corp. 1 700 9,667
--------------------------------------------------------------------------------
Public Service Enterprise Group, Inc. 300 8,982
--------------------------------------------------------------------------------
TXU Corp. 200 3,084
-----------
72,431

Market Value
Shares See Note 1
--------------------------------------------------------------------------------
Gas Utilities--0.3%
Nicor, Inc. 200 $ 6,302
--------------------------------------------------------------------------------
NiSource, Inc. 200 3,898
--------------------------------------------------------------------------------
Sempra Energy 400 9,268
-----------
19,468
-----------
Total Common Stocks (Cost $4,476,250) 4,166,206
Units
--------------------------------------------------------------------------------
Rights, Warrants and Certificates--0.0%

Liberty Media Corp., Cl. A Rts.,
Exp. 12/2/02 1 (Cost $0) 28 129

Principal
Amount
--------------------------------------------------------------------------------
U.s. Government Obligations--22.9%
U.S. Treasury Bonds, 6.50%, 11/15/26 $ 50,000 58,600
--------------------------------------------------------------------------------
U.S. Treasury Nts.:
3.50%, 11/15/06 175,000 178,534
5%, 2/15/11 50,000 53,227
5.25%, 5/15/04 185,000 194,337
5.75%, 11/15/05 855,000 933,153
-----------
Total U.S. Government Obligations (Cost $1,360,970) 1,417,851

--------------------------------------------------------------------------------
Short-Term Notes--1.2%
U.S. Treasury Bills, 1.66%, 12/19/02 2
(Cost $74,938) 75,000 74,938

--------------------------------------------------------------------------------
Joint Repurchase Agreements--8.7%
Undivided interest of 0.12% in joint repurchase agreement
(Market Value $453,323,000) with Banc One Capital Markets, Inc.,
1.29%, dated 11/29/02, to be repurchased at $538,058 on 12/2/02,
collateralized by U.S. Treasury Nts., 1.875%--7%, 3/31/03--8/15/11,
with a value of $408,234,710 and U.S. Treasury Bonds, 6.25%
--10.625%, 8/15/15--8/15/23, with a value of $55,304,803
(Cost $538,000) 538,000 538,000

--------------------------------------------------------------------------------
Total Investments, at Value
(Cost $6,450,158) 100.0% 6,197,124
--------------------------------------------------------------------------------
Other Assets Net of Liabilities 0.0 233
--------------------------
Net Assets 100.0% $6,197,357
==========================

Footnotes to Statement of Investments
1. Non-income producing security.
2. Securities with an aggregate market value of $74,938 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 5 of Notes to Financial Statements.

See accompanying Notes to Financial Statements.

10 | OPPENHEIMER SELECT MANAGERS QM ACTIVE BALANCED FUND

STATEMENT OF ASSETS AND LIABILITIES November 30, 2002
--------------------------------------------------------------------------------

Assets
Investments, at value (cost $6,450,158)--see accompanying statement $6,197,124
-----------------------------------------------------------------------------------------
Receivables and other assets:
Daily variation on futures contracts 14,728
Interest and dividends 10,604
Shares of beneficial interest sold 1,633
Other 1,024
-----------
Total assets 6,225,113

-----------------------------------------------------------------------------------------
Liabilities
Bank overdraft 13,006
-----------------------------------------------------------------------------------------
Payables and other liabilities:
Legal, auditing and other professional fees 7,424
Shareholder reports 5,305
Transfer and shareholder servicing agent fees 451
Distribution and service plan fees 388
Trustees' compensation 323
Other 859
-----------
Total liabilities 27,756

-----------------------------------------------------------------------------------------
Net Assets $6,197,357
===========

-----------------------------------------------------------------------------------------
Composition of Net Assets
Paid-in Capital $7,015,039
-----------------------------------------------------------------------------------------
Undistributed net investment income 47,740
-----------------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (651,350)
-----------------------------------------------------------------------------------------
Net unrealized depreciation on investments (214,072)
-----------
Net Assets $6,197,357
===========

11 | OPPENHEIMER SELECT MANAGERS QM ACTIVE BALANCED FUND

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

-----------------------------------------------------------------------------------------
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$4,898,145 and 572,702 shares of beneficial interest outstanding)
Maximum offering price per share (net asset value plus sales charge of $8.55
5.75% of offering price) $9.07
-----------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $455,259 and 53,951
shares of beneficial interest outstanding) $8.44
-----------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $521,465 and 61,789
shares of beneficial interest outstanding) $8.44
-----------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $321,631 and 37,765
shares of beneficial interest outstanding) $8.52
-----------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $857 and 100 shares of beneficial interest outstanding) $8.57

See accompanying Notes to Financial Statements.

12 | OPPENHEIMER SELECT MANAGERS QM ACTIVE BALANCED FUND

STATEMENT OF OPERATIONS FOR THE YEAR ENDED NOVEMBER 30, 2002
--------------------------------------------------------------------------------

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

Investment Income
Interest $ 89,161
--------------------------------------------------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $96) 53,691
-----------
Total investment income 142,852

--------------------------------------------------------------------------------------------------------------------------
Expenses
Management fees 53,310
--------------------------------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 281
Class B 2,536
Class C 4,667
Class N 731
--------------------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 3,288
Class B 827
Class C 1,100
Class N 423
Class Y 866
--------------------------------------------------------------------------------------------------------------------------
Shareholder reports 14,249
--------------------------------------------------------------------------------------------------------------------------
Legal, auditing and other professional fees 6,878
--------------------------------------------------------------------------------------------------------------------------
Trustees' compensation 3,963
--------------------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 23
--------------------------------------------------------------------------------------------------------------------------
Other 1,674
-----------
Total expenses 94,816
Less voluntary reimbursement of expenses (5,116)
Less voluntary waiver of transfer and shareholder servicing agent fees--Classes A, B, C and N (545)
Less voluntary waiver of transfer and shareholder servicing agent fees--Class Y (863)
-----------
Net expenses 88,292

--------------------------------------------------------------------------------------------------------------------------
Net Investment Income 54,560

--------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Loss Net realized loss on:
Investments (283,951)
Closing of futures contracts (134,425)
-----------
Net realized loss (418,376)

--------------------------------------------------------------------------------------------------------------------------
Net change in unrealized depreciation on investments (118,544)
-----------
Net realized and unrealized loss (536,920)

--------------------------------------------------------------------------------------------------------------------------
Net Decrease in Net Assets Resulting from Operations $(482,360)
===========

See accompanying Notes to Financial Statements.

13 | OPPENHEIMER SELECT MANAGERS QM ACTIVE BALANCED FUND

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

Year Ended November 30, 2002 2001 1
------------------------------------------------------------------------------------------------------------------------------------

Operations
Net investment income $ 54,560 $ 44,954
------------------------------------------------------------------------------------------------------------------------------------
Net realized loss (418,376) (232,974)
------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized depreciation (118,544) (95,528)
----------------------------
Net decrease in net assets resulting from operations (482,360) (283,548)

------------------------------------------------------------------------------------------------------------------------------------
Dividends and/or Distributions to Shareholders Dividends from net investment
income:
Class A (49,625) --
Class B (947) --
Class C (3,716) --
Class N (358) --
Class Y (12) --

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

Beneficial Interest Transactions
Net increase in net assets resulting from beneficial interest transactions:
Class A 534,329 5,098,701
Class B 376,649 98,964
Class C 207,640 358,757
Class N 284,637 40,246
Class Y -- --

------------------------------------------------------------------------------------------------------------------------------------
Net Assets
Total increase 866,237 5,313,120
------------------------------------------------------------------------------------------------------------------------------------
Beginning of period 5,331,120 18,000 2
----------------------------
End of period [including undistributed net investment income of $47,740 and $47,838, respectively] $6,197,357 $5,331,120

1. For the period from February 16, 2001 (inception of offering) to November 30,
2001.
2. Reflects the value of the Manager's initial seed money investment at December
22, 2000.

See accompanying Notes to Financial Statements.

14 | OPPENHEIMER SELECT MANAGERS QM ACTIVE BALANCED FUND

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

----------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data

See accompanying Notes to Financial Statements.

15 | OPPENHEIMER SELECT MANAGERS QM ACTIVE BALANCED FUND

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

Class N Class Y
Year Ended Year Ended
Nov. 30, Nov.
30, 2002 2001 1 2002
2001 2
---------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 3 (8.60)% (3.49)% (8.27)% (5.40)%

---------------------------------------------------------------------------------------------------
Ratios/Supplemental Data

See accompanying Notes to Financial Statements.

16 | OPPENHEIMER SELECT MANAGERS QM ACTIVE BALANCED FUND

NOTES TO FINANCIAL STATEMENTS

--------------------------------------------------------------------------------
1. Significant Accounting Policies
Oppenheimer Select Managers QM Active Balanced Fund (the Fund), a series of
Oppenheimer Select Managers, is an open-end management investment company
registered under the Investment Company Act of 1940, as amended. The Fund's
investment objective is to seek income and long-term growth of capital. The
Fund's investment advisor is OppenheimerFunds, Inc. (the Manager). The Manager
has entered into a sub-advisory agreement with The Prudential Investment Corp.
(the Sub-Advisor).
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. All classes of shares have identical
rights and voting privileges. Earnings, net assets and net asset value per share
may differ by minor amounts due to each class having its own expenses directly
attributable to that class. Classes 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 following is a summary of significant accounting policies consistently
followed by the Fund.
--------------------------------------------------------------------------------
Securities Valuation. Securities listed or traded on National Stock Exchanges or
other domestic or foreign 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. 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 (including
restricted securities) for which quotations are not readily available are valued
primarily using dealer-supplied valuations, a portfolio pricing service
authorized by the Board of Trustees, or at their fair value. Fair value is
determined in good faith under 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. The Fund, along with other affiliated funds of the
Manager, may transfer uninvested cash balances into one or more joint repurchase
agreement accounts. These balances are invested in one or more repurchase
agreements, secured by U.S. government securities. Securities pledged as
collateral for repurchase agreements are held by a custodian bank until the
agreements mature. Each agreement requires that the market value of the
collateral be sufficient to cover payments of interest and principal; however,
in the event of default by the other party to the agreement, retention of the
collateral may be subject to legal proceedings.
--------------------------------------------------------------------------------
Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated daily 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 continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to shareholders. Therefore, no federal
income or excise tax provision is required.
During the fiscal year ended November 30, 2002, the Fund did not utilize
any capital loss carryforward.

17 | OPPENHEIMER SELECT MANAGERS QM ACTIVE BALANCED FUND

NOTES TO FINANCIAL STATEMENTS Continued

As of November 30, 2002, the Fund had available for federal income tax purposes
unused capital loss carryforwards as follows:

EXPIRING
----------------------
2009 $197,620
2010 412,104
--------
Total $609,724
========

As of November 30, 2002, the Fund had approximately $3,000 of post-October
losses available to offset future capital gains, if any. Such losses, if
unutilized, will expire in 2011.
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
Classification of Distributions to Shareholders. 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.

The tax character of distributions paid during the year ended November 30, 2002
and the period ended November 30, 2001 was as follows:

Year Ended Period Ended
November 30, 2002 November 30, 2001
-------------------------------------------------------------------
Distributions paid from:
Ordinary income $ 54,658 $--
Long-term capital gain -- --
Return of capital -- --
------------------------------
Total $ 54,658 $--
==============================

As of November 30, 2002, the components of distributable earnings on a tax basis
were as follows:

Undistributed net investment income $ 47,740
Accumulated net realized loss (651,350)
Net unrealized depreciation (214,072)
---------
Total $(817,682)
=========

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

18 | OPPENHEIMER SELECT MANAGERS QM ACTIVE BALANCED FUND

--------------------------------------------------------------------------------
2. Shares of Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of
beneficial interest of each class. Transactions in shares of beneficial
interest were as follows:

Class A
Sold 86,940 $ 763,888 518,964 $ 5,179,848
Dividends and/or distributions reinvested 88 829 -- --
Redeemed (26,054) (230,388) (8,736) (81,147)
-------------------------------------------------------------------
Net increase 60,974 $ 534,329 510,228 $ 5,098,701
===================================================================

------------------------------------------------------------------------------------------------------------------------------
Class B
Sold 54,765 $ 476,135 12,037 $ 112,429
Dividends and/or distributions reinvested 100 938 -- --
Redeemed (11,601) (100,424) (1,450) (13,465)
-------------------------------------------------------------------
Net increase 43,264 $ 376,649 10,587 $ 98,964
===================================================================

------------------------------------------------------------------------------------------------------------------------------
Class C
Sold 34,916 $ 305,372 38,622 $ 359,346
Dividends and/or distributions reinvested 398 3,706 -- --
Redeemed (12,182) (101,438) (65) (589)
-------------------------------------------------------------------
Net increase 23,132 $ 207,640 38,557 $ 358,757
===================================================================

------------------------------------------------------------------------------------------------------------------------------
Class N
Sold 34,605 $ 291,806 9,462 $ 93,952
Dividends and/or distributions reinvested 37 348 -- --
Redeemed (920) (7,517) (5,419) (53,706)
-------------------------------------------------------------------
Net increase 33,722 $ 284,637 4,043 $ 40,246
===================================================================

------------------------------------------------------------------------------------------------------------------------------
Class Y
Sold -- $ -- -- $ --
Dividends and/or distributions reinvested -- -- -- --
Redeemed -- -- -- --
-------------------------------------------------------------------
Net increase (decrease) -- $ -- -- $ --
===================================================================

19 | OPPENHEIMER SELECT MANAGERS QM ACTIVE BALANCED FUND

NOTES TO FINANCIAL STATEMENTS Continued

--------------------------------------------------------------------------------
3. Purchases and Sales of Securities
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the year ended November 30, 2002, were
$4,821,683 and $3,663,873, respectively.

As of November 30, 2002, unrealized appreciation (depreciation) based on cost of
securities for federal income tax purposes of $6,450,158 was composed of:

Gross unrealized appreciation $ 285,895
Gross unrealized depreciation (538,929)
----------
Net unrealized depreciation $ (253,034)
==========

The difference between book-basis and tax-basis unrealized appreciation and
depreciation, if applicable, is attributable primarily to the tax deferral of
losses on wash sales, or return of capital dividends, and the realization for
tax purposes of unrealized gain (loss) on certain futures contracts, investments
in passive foreign investment companies, and forward foreign currency exchange
contracts.
--------------------------------------------------------------------------------
4. Fees and Other Transactions with Affiliates
Management Fees. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee at an
annual rate of 0.95% of the first $300 million of average annual net assets of
the Fund and 0.90% of average annual net assets in excess of $300 million. The
Manager has voluntarily undertaken to assume certain Fund expenses. The Manager
reserves the right to amend or terminate that expense assumption at any time.
--------------------------------------------------------------------------------
Sub-Advisor Fees. The Manager has retained The Prudential Investment Corp. as
the Sub-Advisor to provide the day-to-day portfolio management of the Fund. For
the year ended November 30, 2002, the Manager paid $24,903 to the Sub-Advisor.
--------------------------------------------------------------------------------
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 $19.75 per account fee.
Additionally, Class Y shares are subject to minimum fees of $5,000 for
assets of less than $10 million and $10,000 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.
OFS has voluntarily agreed to limit transfer and shareholder servicing
agent fees up to an annual rate of 0.35% for all classes. Effective November 1,
2002, Class Y shares were changed from 0.25% to 0.35%. This undertaking may be
amended or withdrawn at any time.
--------------------------------------------------------------------------------
Distribution and Service Plan (12B-1) Fees. Under its General Distributor's
Agreement with the Manager, OppenheimerFunds Distributor, Inc. (the Distributor)
acts as the Fund's principal underwriter in the continuous public offering of
the different classes of shares of the Fund.

20 | OPPENHEIMER SELECT MANAGERS QM ACTIVE BALANCED FUND

--------------------------------------------------------------------------------
4. Fees and Other Transactions with Affiliates Continued The compensation paid
to (or retained by) the Distributor from the sale of shares or on the redemption
of shares is shown in the table below for the period indicated.

November 30, 2002 $6,890 $1,094 $121 $14,392 $3,011 $2,750

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

November 30, 2002 $-- $2,303 $168 $27
-----------------------------------------------------------------------------------------------------------------------------------

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
quarterly at an annual rate of up to 0.25% of the average annual net assets of
Class A shares of the Fund. For the year ended November 30, 2002, payments
under the Class A Plan totaled $281, all of which were paid by the Distributor
to recipients, and included $60 paid to an affiliate of the Manager. Any
unreimbursed expenses the Distributor incurs with respect to Class A shares in
any fiscal year cannot be recovered in subsequent years.
--------------------------------------------------------------------------------
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. Under the plans, the Fund pays the Distributor an annual asset-based
sales charge of 0.75% per year on Class B shares and on Class C shares and the
Fund pays the Distributor an annual asset-based sales charge of 0.25% per year
on Class N shares. The Distributor also receives a service fee of 0.25% per
year under each plan.

Distribution fees paid to the Distributor for the year ended November 30, 2002,
were as follows:

Class B Plan $2,536 $2,334 $40,973 9.00%
Class C Plan 4,667 3,858 26,366 5.06
Class N Plan 731 561 14,271 4.44

--------------------------------------------------------------------------------
5. Futures Contracts
A futures contract is a commitment to buy or sell a specific amount of a
commodity or financial instrument at a particular price on a stipulated future
date at a negotiated price. Futures contracts are traded on a commodity
exchange. The Fund may buy and sell futures contracts that relate to broadly
based securities indices "financial futures" or debt securities "interest rate
futures" in order to gain exposure to or to seek to protect against changes in
market value of stock and bonds or interest rates. The Fund may also buy or
write put or call options on these futures contracts.
The Fund generally sells futures contracts to hedge against increases in
interest rates and decreases in market value of portfolio securities. The Fund
may also purchase futures contracts to gain exposure to market changes as it
may be more efficient or cost effective than actually buying fixed income
securities.

21 | OPPENHEIMER SELECT MANAGERS QM ACTIVE BALANCED FUND

NOTES TO FINANCIAL STATEMENTS Continued

Upon entering into a futures contract, the Fund is required to deposit
either cash or securities (initial margin) in an amount equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Fund each day. The variation margin payments are equal
to the daily changes in the contract value and are recorded as unrealized gains
and losses. The Fund recognizes a realized gain or loss when the contract is
closed or expires.
Securities held in collateralized accounts to cover initial margin
requirements on open futures contracts are noted in the Statement of
Investments. The Statement of Assets and Liabilities reflects a receivable
and/or payable for the daily mark to market for variation margin. Realized
gains and losses are reported in the Statement of Operations as closing and
expiration of futures contracts.
Risks of entering into futures contracts (and related options) include the
possibility that there may be an illiquid market and that a change in the value
of the contract or option may not correlate with changes in the value of the
underlying securities.

As of November 30, 2002 had outstanding futures contracts as follows:

Expiration Number of Valuation as of Unrealized
Contract Description Date Contracts November 30, 2002 Appreciation
------------------------------------------------------------------------------------------------------------------------------

Contracts to Purchase
Standard & Poor's 500 E-Mini 12/20/02 12 $561,600 $38,963

--------------------------------------------------------------------------------
6. Borrowing and Lending Arrangements
Bank Borrowings. Until November 12, 2002, the Fund had the ability to borrow
from a bank for temporary or emergency purposes provided asset coverage for
borrowings exceeded 300%. The Fund and other Oppenheimer funds participated in
a $400 million unsecured line of credit with a bank. Under that unsecured line
of credit, interest was charged to each fund, based on its borrowings, at a
rate equal to the Federal Funds Rate plus 0.45%. Under that credit facility,
the Fund paid a commitment fee equal to its pro rata share of the average
unutilized amount of the credit facility at a rate of 0.08% per annum.
--------------------------------------------------------------------------------
Interfund Borrowing and Lending Arrangements. Effective November 12, 2002, the
following interfund borrowing and lending arrangements went into effect.
Consistent with its fundamental policies and pursuant to an exemptive order
issued by the Securities and Exchange Commission ("SEC"), the Fund may engage
in borrowing and lending activities with other funds in the OppenheimerFunds
complex. Borrowing money from affiliated funds may afford the Fund the
flexibility to use the most cost-effective alternative to satisfy its borrowing
requirements. Lending money to an affiliated fund may allow the Fund to obtain
a higher rate of return than it could from interest rates on alternative
short-term investments. Implementation of interfund lending will be
accomplished consistent with applicable regulatory requirements, including the
provisions of the SEC order. There is a risk that a borrowing fund could have a
loan called on one day's notice. In that circumstance, the Fund might have to
borrow from a bank at a higher interest cost if money to lend were not
available from another Oppenheimer fund. When the Fund lends assets to another
affiliated fund, the Fund is subject to the risk that the borrowing fund fails
to repay the loan.
The Fund had no borrowing or lending arrangements outstanding during the
year ended or at November 30, 2002.

22 | OPPENHEIMER SELECT MANAGERS QM ACTIVE BALANCED FUND

INDEPENDENT AUDITORS' REPORT

================================================================================
To the Board of Trustees and Shareholders of
Oppenheimer Select Managers Jennison Growth Fund:
We have audited the accompanying statement of assets and liabilities of
Oppenheimer Select Managers Jennison Growth Fund, which is a series of
Oppenheimer Select Managers, including the statement of investments, as of
November 30, 2002, and the related statement of operations for the year then
ended, the statements of changes in net assets and the financial highlights for
the periods indicated. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures
included confirmation of securities owned as of November 30, 2002, by
correspondence with the custodian and brokers; where replies were not received
from brokers, we performed other auditing procedures. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer Select Managers Jennison Growth Fund as of November 30, 2002, the
results of its operations for the year then ended, the changes in its net
assets and the financial highlights for the periods indicated, in conformity
with accounting principles generally accepted in the United States of America.

/s/ Deloitte & Touche LLP
-------------------------
Deloitte & Touche LLP

Denver, Colorado
December 20, 2002

STATEMENT OF INVESTMENTS November 30, 2002

Market Value
Shares See Note 1
===============================================================================
Common Stocks--93.1%
-------------------------------------------------------------------------------
Consumer Discretionary--22.9%
-------------------------------------------------------------------------------
Automobiles--1.5%
Harley-Davidson, Inc. 3,100 $ 150,474
-------------------------------------------------------------------------------
Hotels, Restaurants & Leisure--2.6%
Marriott International, Inc., Cl. A 4,200 150,150
-------------------------------------------------------------------------------
Starbucks Corp. 1 4,700 102,178
----------
252,328

-------------------------------------------------------------------------------
Internet & Catalog Retail--0.7%
USA Interactive, Inc. 1 2,500 69,500
-------------------------------------------------------------------------------
Media--6.4%
Clear Channel Communications, Inc. 1 300 13,038
-------------------------------------------------------------------------------
New York Times Co., Cl. A 2,800 134,512
-------------------------------------------------------------------------------
Omnicom Group, Inc. 900 61,245
-------------------------------------------------------------------------------
Univision Communications, Inc., Cl. A 1 4,800 154,272
-------------------------------------------------------------------------------
Viacom, Inc., Cl. B 1 5,700 267,957
----------
631,024

-------------------------------------------------------------------------------
Multiline Retail--7.1%
Costco Wholesale Corp. 1 4,200 135,660
-------------------------------------------------------------------------------
Kohl's Corp. 1 4,000 274,000
-------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 5,200 281,632
----------
691,292

-------------------------------------------------------------------------------
Specialty Retail--4.6%
Bed Bath & Beyond, Inc. 1 4,900 169,981
-------------------------------------------------------------------------------
Lowe's Cos., Inc. 3,700 153,550
-------------------------------------------------------------------------------
Tiffany & Co. 4,500 127,710
----------
451,241

-------------------------------------------------------------------------------
Consumer Staples--5.5%
-------------------------------------------------------------------------------
Beverages--2.3%
Anheuser-Busch Cos., Inc. 2,300 112,976
-------------------------------------------------------------------------------
Coca-Cola Co. (The) 2,500 114,100
----------
227,076

-------------------------------------------------------------------------------
Food & Drug Retailing--1.1%
Walgreen Co. 3,600 103,644
-------------------------------------------------------------------------------
Household Products--1.1%
Procter & Gamble Corp. (The) 1,300 109,200
-------------------------------------------------------------------------------
Personal Products--1.0%
Gillette Co. 3,400 103,088

9 | OPPENHEIMER SELECT MANAGERS JENNISON GROWTH FUND

STATEMENT OF INVESTMENTS CONTINUED

Market Value
Shares See Note 1
-------------------------------------------------------------------------------
ENERGY--4.1%
-------------------------------------------------------------------------------
Energy Equipment & Services--2.3%
Schlumberger Ltd. 5,000 $ 221,250
-------------------------------------------------------------------------------
Oil & Gas--1.8%
TotalFinaElf SA, Sponsored ADR 2,700 180,225
-------------------------------------------------------------------------------
Financials--16.0%
-------------------------------------------------------------------------------
Banks--1.6%
Bank One Corp. 3,900 154,011
-------------------------------------------------------------------------------
Diversified Financials--8.8%
American Express Co. 5,800 225,794
-------------------------------------------------------------------------------
Citigroup, Inc. 7,100 276,048
-------------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The) 2,500 197,175
-------------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 3,600 156,600
----------
855,617

-------------------------------------------------------------------------------
Insurance--5.6%
American International Group, Inc. 4,500 293,175
-------------------------------------------------------------------------------
Hartford Financial Services Group, Inc. 2,400 117,744
-------------------------------------------------------------------------------
XL Capital Ltd., Cl. A 1,700 140,658
----------
551,577

-------------------------------------------------------------------------------
Health Care--15.5%
-------------------------------------------------------------------------------
Biotechnology--5.8%
Amgen, Inc. 1 4,800 226,560
-------------------------------------------------------------------------------
Genentech, Inc. 1 3,200 105,600
-------------------------------------------------------------------------------
Medimmune, Inc. 1 2,700 71,226
-------------------------------------------------------------------------------
Wyeth 4,300 165,249
----------
568,635

-------------------------------------------------------------------------------
Health Care Providers & Services--1.7%
-------------------------------------------------------------------------------
AmerisourceBergen Corp. 1,500 87,030
-------------------------------------------------------------------------------
UnitedHealth Group, Inc. 1,000 81,450
----------
168,480

-------------------------------------------------------------------------------
Pharmaceuticals--8.0%
Abbott Laboratories 5,100 223,278
-------------------------------------------------------------------------------
Johnson & Johnson 4,500 256,590
-------------------------------------------------------------------------------
Pfizer, Inc. 3,300 104,082
-------------------------------------------------------------------------------
Pharmacia Corp. 3,400 143,820
-------------------------------------------------------------------------------
Teva Pharmaceutical Industries Ltd., ADR 600 47,436
----------
775,206

10 | OPPENHEIMER SELECT MANAGERS JENNISON GROWTH FUND

Market Value
Shares See Note 1
-------------------------------------------------------------------------------
Industrials--5.1%
-------------------------------------------------------------------------------
Aerospace & Defense--3.1%
Boeing Co. 1,400 $ 47,600
-------------------------------------------------------------------------------
Lockheed Martin Corp. 2,100 109,620
-------------------------------------------------------------------------------
Northrop Grumman Corp. 1,500 145,365
----------
302,585

-------------------------------------------------------------------------------
Industrial Conglomerates--2.0%
3M Co. 1,500 194,775
-------------------------------------------------------------------------------
Information Technology--21.1%
-------------------------------------------------------------------------------
Communications Equipment--3.7%
Cisco Systems, Inc. 1 16,200 241,704
-------------------------------------------------------------------------------
Nokia Corp., Sponsored ADR, A Shares 6,400 122,944
----------
364,648

-------------------------------------------------------------------------------
Computers & Peripherals--5.7%
Dell Computer Corp. 1 7,400 211,640
-------------------------------------------------------------------------------
Hewlett-Packard Co. 11,400 222,072
-------------------------------------------------------------------------------
International Business Machines Corp. 1,400 121,940
----------
555,652

-------------------------------------------------------------------------------
Semiconductor Equipment & Products--7.7%
Applied Materials, Inc. 1 5,900 100,595
-------------------------------------------------------------------------------
Intel Corp. 11,500 240,120
-------------------------------------------------------------------------------
Novellus Systems, Inc. 1 1,600 58,064
-------------------------------------------------------------------------------
STMicroelectronics NV, NY Registered Shares 2,100 53,340
-------------------------------------------------------------------------------
Texas Instruments, Inc. 8,400 168,924
-------------------------------------------------------------------------------
Xilinx, Inc. 1 5,200 128,128
----------
749,171

-------------------------------------------------------------------------------
Software--4.0%
Microsoft Corp. 1 6,800 392,224
-------------------------------------------------------------------------------
Materials--2.9%
-------------------------------------------------------------------------------
Paper & Forest Products--2.9%
International Paper Co. 4,400 172,700
-------------------------------------------------------------------------------
Weyerhaeuser Co. 2,200 115,720
----------
288,420
----------
Total Common Stocks (Cost $9,333,773) 9,111,343

11 | OPPENHEIMER SELECT MANAGERS JENNISON GROWTH FUND

STATEMENT OF INVESTMENTS CONTINUED

PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
===============================================================================
JOINT REPURCHASE AGREEMENTS--6.8%
Undivided interest of 0.15% in joint repurchase
agreement (Market Value $453,323,000) with Banc
One Capital Markets, Inc., 1.29%, dated 11/29/02,
to be repurchased at $668,072 on 12/2/02,
collateralized by U.S. Treasury Nts.,
1.875%--7%, 3/31/03--8/15/11, with A value of
$408,234,710 and U.S. Treasury Bonds,
6.25%--10.625%, 8/15/15--8/15/23, with a
value of $55,304,803 (Cost $668,000) $668,000 $668,000

-------------------------------------------------------------------------------
Total Investments, at Value (Cost $10,001,773) 99.9% 9,779,343
-------------------------------------------------------------------------------
Other Assets Net of Liabilities 0.1 5,435
-------------------------
Net Assets 100.0% $9,784,778
=========================

Footnotes to Statement of Investments
1. Non-income producing security.
See accompanying Notes to Financial Statements.

12 | OPPENHEIMER SELECT MANAGERS JENNISON GROWTH FUND

STATEMENT OF ASSETS AND LIABILITIES NOVEMBER 30, 2002

===============================================================================
ASSETS
Investments, at value (cost $10,001,773)
--see accompanying statement $9,779,343
-------------------------------------------------------------------------------
Cash 6,609
-------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 46,231
Shares of beneficial interest sold 24,190
Interest and dividends 10,446
Other 1,098
----------
Total assets 9,867,917

===============================================================================
Liabilities Payables and other liabilities:
Investments purchased 58,629
Shareholder reports 7,595
Legal, auditing and other professional fees 7,660
Transfer and shareholder servicing agent fees 4,774
Distribution and service plan fees 1,719
Shares of beneficial interest redeemed 796
Trustees' compensation 338
Other 1,628
----------
Total liabilities 83,139

===============================================================================
Net Assets $9,784,778
==========

===============================================================================
Composition of Net Assets
Paid-in capital $12,581,386
-------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (2,574,178)
-------------------------------------------------------------------------------
Net unrealized depreciation on investments (222,430)
----------
Net Assets $9,784,778
==========

13 | OPPENHEIMER SELECT MANAGERS JENNISON GROWTH FUND

STATEMENT OF ASSETS AND LIABILITIES CONTINUED

===============================================================================
NET ASSET VALUE PER SHARE

Class A Shares:
Net asset value and redemption price per share (based on net
assets of $4,980,878 and 767,137 shares of beneficial interest
outstanding) $6.49
Maximum offering price per share (net asset
value plus sales charge of 5.75% of offering price) $6.89
-------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $1,296,032 and
202,489 shares
of beneficial interest outstanding) $6.40
-------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $2,194,281 and
343,031 shares
of beneficial interest outstanding) $6.40
-------------------------------------------------------------------------------
Class N Shares: Net asset value, redemption price
(excludes applicable contingent deferred sales charge) and
offering price per share (based on net assets of $1,312,936
and 203,494 shares of beneficial interest outstanding) $6.45
-------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $651 and 100 shares of beneficial
interest outstanding) $6.51

See accompanying Notes to Financial Statements.

14 | OPPENHEIMER SELECT MANAGERS JENNISON GROWTH FUND

STATEMENT OF OPERATIONS FOR THE YEAR ENDED NOVEMBER 30, 2002

===============================================================================
INVESTMENT INCOME
Dividends (net of foreign withholding taxes of $375) $ 65,038
-------------------------------------------------------------------------------
Interest 8,646
-----------
Total investment income 73,684

===============================================================================
Expenses
Management fees 76,321
-------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 2,332
Class B 6,176
Class C 15,244
Class N 5,143
-------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 21,939
Class B 4,300
Class C 7,131
Class N 6,931
Class Y 867
-------------------------------------------------------------------------------
Shareholder reports 18,192
-------------------------------------------------------------------------------
Legal, auditing and other professional fees 10,669
-------------------------------------------------------------------------------
Trustees' compensation 3,864
-------------------------------------------------------------------------------
Custodian fees and expenses 32
-------------------------------------------------------------------------------
Other 2,689
-----------
Total expenses 181,830
Less voluntary reimbursement of expenses (30,828)
Less voluntary waiver of transfer and shareholder
servicing agent fees--Classes A, B, C and N (10,920)
Less voluntary waiver of transfer and shareholder
servicing agent fees--Class Y (863)
-----------
Net expenses 139,219

===============================================================================
Net Investment Loss (65,535)

===============================================================================
Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:
Investments (1,916,063)
Closing and expiration of option contracts written 754
-----------
Net realized loss (1,915,309)
-------------------------------------------------------------------------------
Net change in unrealized depreciation on investments (167,888)
-----------
Net realized and unrealized loss (2,083,197)

===============================================================================
Net Decrease in Net Assets Resulting from Operations $(2,148,732)
============

See accompanying Notes to Financial Statements.

15 | OPPENHEIMER SELECT MANAGERS JENNISON GROWTH FUND

STATEMENTS OF CHANGES IN NET ASSETS

YEAR ENDED NOVEMBER 30, 2002 2001 1
==============================================================================
OPERATIONS
Net investment loss $ (65,535) $ (24,066)
------------------------------------------------------------------------------
Net realized loss (1,915,309) (658,869)
------------------------------------------------------------------------------
Net change in unrealized depreciation (167,888) (54,542)
----------------------
Net decrease in net assets resulting from operations (2,148,732) (737,477)

==============================================================================
Beneficial Interest Transactions

Net increase in net assets resulting from beneficial interest transactions:
Class A 1,078,766 5,943,697
Class B 1,055,537 372,738
Class C 1,628,681 952,832
Class N 1,252,822 368,914
Class Y -- --

==============================================================================
Net Assets

Total increase 2,867,074 6,900,704
Beginning of period 6,917,704 17,000 2
----------------------
End of period $9,784,778 $6,917,704
======================

1. For the period from February 16, 2001 (inception of offering) to November 30,
2001. 2. Reflects the value of the Manager's initial seed money investment at
December 22, 2000.

See accompanying Notes to Financial Statements.

16 | OPPENHEIMER SELECT MANAGERS JENNISON GROWTH FUND

FINANCIAL HIGHLIGHTS

See accompanying Notes to Financial Statements.

17 | OPPENHEIMER SELECT MANAGERS JENNISON GROWTH FUND

FINANCIAL HIGHLIGHTS CONTINUED

CLASS N CLASS Y
Year Year
Ended Ended
Nov. 30, Nov. 30,
2002 2001 1 2002 2001 2
========================================================================================

========================================================================================
Total Return, at Net Asset Value 3 (24.30)% (9.84)% (24.04)% (14.30)%

See accompanying Notes to Financial Statements.

18 | OPPENHEIMER SELECT MANAGERS JENNISON GROWTH FUND

NOTES TO FINANCIAL STATEMENTS

================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Select Managers Jennison Growth Fund (the Fund), a series of
Oppenheimer Select Managers, is an open-end management investment company
registered under the Investment Company Act of 1940, as amended. The Fund's
investment objective is to seek long-term growth of capital. The Fund's
investment advisor is OppenheimerFunds, Inc. (the Manager). The Manager has
entered into a sub-advisory agreement with Jennison Associates LLC (the
Sub-Advisor).
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. All classes of shares have identical
rights and voting privileges. Earnings, net assets and net asset value per
share may differ by minor amounts due to each class having its own expenses
directly attributable to that class. Classes 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 following is a summary of significant accounting policies consistently
followed by the Fund.
--------------------------------------------------------------------------------
Securities Valuation. Securities listed or traded on National Stock Exchanges
or other domestic or foreign 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. 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
(including restricted securities) for which quotations are not readily
available are valued primarily using dealer-supplied valuations, a portfolio
pricing service authorized by the Board of Trustees, or at their fair value.
Fair value is determined in good faith under 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. The Fund, along with other affiliated funds of the
Manager, may transfer uninvested cash balances into one or more joint
repurchase agreement accounts. These balances are invested in one or more
repurchase agreements, secured by U.S. government securities. Securities
pledged as collateral for repurchase agreements are held by a custodian bank
until the agreements mature. Each agreement requires that the market value of
the collateral be sufficient to cover payments of interest and principal;
however, in the event of default by the other party to the agreement, retention
of the collateral may be subject to legal proceedings.

19 | OPPENHEIMER SELECT MANAGERS JENNISON GROWTH FUND

NOTES TO FINANCIAL STATEMENTS CONTINUED

================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated daily
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 continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to shareholders. Therefore, no federal
income or excise tax provision is required.
During the fiscal year ended November 30, 2002, the Fund did not utilize any
capital loss carryforward.

As of November 30, 2002, the Fund had available for federal income tax purposes
unused capital loss carryforwards as follows:

Expiring
----------------------
2009 $ 637,074
2010 1,804,042
Total $2,441,116
==========
As of November 30, 2002, the Fund had approximately $110,000 of post-October
losses available to offset future capital gains, if any. Such losses, if
unutilized, will expire in 2011.
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
Classification of Distributions to Shareholders. 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.
The Fund adjusts the classification of distributions to shareholders to
reflect the differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly, during the
year ended November 30, 2002, amounts have been reclassified to reflect a
decrease in paid-in capital of $65,535. Accumulated net investment loss was
decreased by the same amount. Net assets of the Fund were unaffected by the
reclassifications.
No distributions were paid during the year ended November 30, 2002 and the
period ended November 30, 2001.

20 | OPPENHEIMER SELECT MANAGERS JENNISON GROWTH FUND

As of November 30, 2002, the components of distributable earnings on a tax
basis were as follows:

Accumulated net realized loss $(2,574,178)
Net unrealized depreciation (222,430)
------------
Total $(2,796,608)
============

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

21 | OPPENHEIMER SELECT MANAGERS JENNISON GROWTH FUND

NOTES TO FINANCIAL STATEMENTS CONTINUED

================================================================================

2. Shares of Beneficial Interest The Fund has authorized an unlimited number of
no par value shares of beneficial interest of each class. Transactions in shares
of beneficial interest were as follows:

Year Ended November 30, 2002 Period Ended November 30, 2001 1
Shares Amount Shares Amount
--------------------------------------------------------------------------------
Class A
Sold 215,428 $1,516,617 618,231 $6,011,437
Redeemed (59,923) (437,851) (7,999) (67,740)
-------------------------------------------------------
Net increase 155,505 $1,078,766 610,232 $5,943,697
=======================================================
--------------------------------------------------------------------------------
Class B
Sold 178,140 $1,172,929 53,558 $ 474,235
Redeemed (17,259) (117,392) (12,050) (101,497)
-------------------------------------------------------
Net increase 160,881 $1,055,537 41,508 $ 372,738
=======================================================
--------------------------------------------------------------------------------
Class C
Sold 261,409 $1,843,044 117,610 $ 985,629
Redeemed (32,313) (214,363) (3,775) (32,797)
-------------------------------------------------------
Net increase 229,096 $1,628,681 113,835 $ 952,832
=======================================================
--------------------------------------------------------------------------------
Class N
Sold 193,853 $1,476,441 43,880 $ 380,385
Redeemed (32,720) (223,619) (1,519) (11,471)
-------------------------------------------------------
Net increase 161,133 $1,252,822 42,361 $ 368,914
=======================================================
--------------------------------------------------------------------------------
Class Y
Sold -- $ -- -- $ --
Redeemed -- -- -- --
-------------------------------------------------------
Net increase (decrease) -- $ -- -- $ --
=======================================================

================================================================================
3. Purchases and Sales of Securities
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the year ended November 30, 2002, were
$10,389,327 and $5,857,931, respectively.

As of November 30, 2002, unrealized appreciation (depreciation) based on cost of
securities for federal income tax purposes of $10,024,841 was composed of:

Gross unrealized appreciation $ 266,294
Gross unrealized depreciation (511,792)
----------
Net unrealized depreciation $(245,498)
==========

22 | OPPENHEIMER SELECT MANAGERS JENNISON GROWTH FUND

The difference between book-basis and tax-basis unrealized appreciation and
depreciation, if applicable, is attributable primarily to the tax deferral of
losses on wash sales, or return of capital dividends, and the realization for
tax purposes of unrealized gain (loss) on certain futures contracts, investments
in passive foreign investment companies, and forward foreign currency exchange
contracts.
================================================================================
4. Fees and Other Transactions with Affiliates
Management Fees. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee at an
annual rate of 0.95% of the first $300 million of average annual net assets of
the Fund and 0.90% of average annual net assets in excess of $300 million. The
Manager has voluntarily undertaken to assume certain Fund expenses. The Manager
reserves the right to amend or terminate that expense assumption at any time.
--------------------------------------------------------------------------------
Sub-Advisor Fees. The Manager has retained Jennison Associates LLC as the
Sub-Advisor to provide the day-to-day portfolio management of the Fund. For the
year ended November 30, 2002, the Manager paid $35,059 to the Sub-Advisor.
--------------------------------------------------------------------------------
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 $19.75 per account fee.
Additionally, Class Y shares are subject to minimum fees of $5,000 for assets
of less than $10 million and $10,000 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.
OFS has voluntarily agreed to limit transfer and shareholder servicing agent
fees up to an annual rate of 0.35% for all classes. Effective November 1, 2002,
Class Y shares were changed from 0.25% to 0.35%. This undertaking may be amended
or withdrawn at any time.
--------------------------------------------------------------------------------
Distribution and Service Plan (12b-1) Fees. Under its General Distributor's
Agreement with the Manager, OppenheimerFunds Distributor, Inc. (the Distributor)
acts as the Fund's principal underwriter in the continuous public offering of
the different classes of shares of the Fund.

The compensation paid to (or retained by) the Distributor from the sale of
shares or on the redemption of shares is shown in the table below for the period
indicated.

November 30, 2002 $34,373 $10,966 $1,016 $38,831 $15,462 $12,938

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

23 | OPPENHEIMER SELECT MANAGERS JENNISON GROWTH FUND

NOTES TO FINANCIAL STATEMENTS CONTINUED

4. Fees and Other Transactions with Affiliates CONTINUED

Class A Class B Class C Class N
Contingent Contingent Contingent Contingent
Deferred Deferred Deferred Deferred
Sales Charges Sales Charges Sales Charges Sales Charges
Retained by Retained by Retained by Retained by
Year Ended Distributor Distributor Distributor Distributor
-------------------------------------------------------------------------------
November 30, 2002 $-- $3,447 $546 $530

--------------------------------------------------------------------------------
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
quarterly at an annual rate of up to 0.25% of the average annual net assets of
Class A shares of the Fund. For the year ended November 30, 2002, payments under
the Class A Plan totaled $2,332, all of which were paid by the Distributor to
recipients, and included $349 paid to an affiliate of the Manager. Any
unreimbursed expenses the Distributor incurs with respect to Class A shares in
any fiscal year cannot be recovered in subsequent years.
--------------------------------------------------------------------------------
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. Under the plans, the Fund pays the Distributor an annual asset-based
sales charge of 0.75% per year on Class B shares and on Class C shares and the
Fund pays the Distributor an annual asset-based sales charge of 0.25% per year
on Class N shares. The Distributor also receives a service fee of 0.25% per year
under each plan.
Distribution fees paid to the Distributor for the year ended November 30, 2002,
were as follows:

Distributor's
Distributor's Aggregate
Aggregate Unreimbursed
Unreimbursed Expenses as %
Total Payments Amount Retained Expenses of Net Assets
Under Plan by Distributor Under Plan of Class
------------------------------------------------------------------------------
Class B Plan $ 6,176 $ 5,596 $ 64,956 5.01%
Class C Plan 15,244 12,258 315,521 14.38
Class N Plan 5,143 4,763 111,848 8.52

================================================================================
5. Option Activity
The Fund may buy and sell put and call options, or write put and covered call
options on portfolio securities in order to produce incremental earnings or
protect against changes in the value of portfolio securities.
The Fund generally purchases put options or writes covered call options to
hedge against adverse movements in the value of portfolio holdings. When an
option is written, the Fund receives a premium and becomes obligated to sell or
purchase the underlying security at a fixed price, upon exercise of the option.

24 | OPPENHEIMER SELECT MANAGERS JENNISON GROWTH FUND

Options are valued daily based upon the last sale price on the principal
exchange on which the option is traded and unrealized appreciation or
depreciation is recorded. The Fund will realize a gain or loss upon the
expiration or closing of the option transaction. When an option is exercised,
the proceeds on sales for a written call option, the purchase cost for a written
put option, or the cost of the security for a purchased put or call option is
adjusted by the amount of premium received or paid.
Securities designated to cover outstanding call options are noted in the
Statement of Investments where applicable. Shares subject to call, expiration
date, exercise price, premium received and market value are detailed in a note
to the Statement of Investments. Options written are reported as a liability in
the Statement of Assets and Liabilities. Realized gains and losses are reported
in the Statement of Operations.
The risk in writing a call option is that the Fund gives up the opportunity
for profit if the market price of the security increases and the option is
exercised. The risk in writing a put option is that the Fund may incur a loss if
the market price of the security decreases and the option is exercised. The risk
in buying an option is that the Fund pays a premium whether or not the option is
exercised. The Fund also has the additional risk of not being able to enter into
a closing transaction if a liquid secondary market does not exist.

Written option activity for the year ended November 30, 2002 was as follows:

Call Options
------------------------
Number of Amount of
Contracts Premiums
-----------------------------------------------------
Options outstanding as of
November 30, 2001 -- $ --
Options written 18 2,919
Options closed or expired (18) (2,919)
------------------------
Options outstanding as of
November 30, 2002 -- $ --
========================

================================================================================
6. Borrowing and Lending Arrangements
Bank Borrowings. Until November 12, 2002, the Fund had the ability to borrow
from a bank for temporary or emergency purposes provided asset coverage for
borrowings exceeded 300%. The Fund and other Oppenheimer funds participated in
a $400 million unsecured line of credit with a bank. Under that unsecured line
of credit, interest was charged to each fund, based on its borrowings, at a
rate equal to the Federal Funds Rate plus 0.45%. Under that credit facility,
the Fund paid a commitment fee equal to its pro rata share of the average
unutilized amount of the credit facility at a rate of 0.08% per annum.

25 | oppenheimer select managers Jennison Growth Fund

NOTES TO FINANCIAL STATEMENTS Continued

================================================================================
6. Borrowing and Lending Arrangements Continued
Interfund Borrowing and Lending Arrangements. Effective November 12, 2002, the
following interfund borrowing and lending arrangements went into effect.
Consistent with its fundamental policies and pursuant to an exemptive order
issued by the Securities and Exchange Commission ("SEC"), the Fund may engage
in borrowing and lending activities with other funds in the OppenheimerFunds
complex. Borrowing money from affiliated funds may afford the Fund the
flexibility to use the most cost-effective alternative to satisfy its borrowing
requirements. Lending money to an affiliated fund may allow the Fund to obtain
a higher rate of return than it could from interest rates on alternative
short-term investments. Implementation of interfund lending will be
accomplished consistent with applicable regulatory requirements, including the
provisions of the SEC order. There is a risk that a borrowing fund could have a
loan called on one day's notice. In that circumstance, the Fund might have to
borrow from a bank at a higher interest cost if money to lend were not
available from another Oppenheimer fund. When the Fund lends assets to another
affiliated fund, the Fund is subject to the risk that the borrowing fund fails
to repay the loan.
The Fund had no borrowing or lending arrangements outstanding during the
year ended or at November 30, 2002.

26 | OPPENHEIMER SELECT MANAGERS JENNISON GROWTH FUND

INDEPENDENT AUDITORS' REPORT
--------------------------------------------------------------------------------
To the Board of Trustees and Shareholders of Oppenheimer Select Managers Salomon
Brothers All Cap Fund:

We have audited the accompanying statement of assets and liabilities of
Oppenheimer Select Managers Salomon Brothers All Cap Fund, which is a series of
Oppenheimer Select Managers, which operated under the name of Oppenheimer Select
Managers Salomon Brothers Capital Fund through April 30, 2002, including the
statement of investments, as of November 30, 2002, and the related statement of
operations for the year then ended, the statements of changes in net assets and
the financial highlights for the periods indicated. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of November 30, 2002, by correspondence with the custodian
and brokers; where replies were not received from brokers, we performed other
auditing procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer Select Managers Salomon Brothers All Cap Fund as of November 30,
2002, the results of its operations for the year then ended, the changes in its
net assets and the financial highlights for the periods indicated, in conformity
with accounting principles generally accepted in the United States of America.

/s/ Deloitte & Touche LLP
-------------------------
Deloitte & Touche LLP

Denver, Colorado
December 20, 2002

STATEMENT OF INVESTMENTS November 30, 2002
Market Value
Shares See Note 1
--------------------------------------------------------------------------------
Common Stocks--89.3%
--------------------------------------------------------------------------------
Consumer Discretionary--21.8%
--------------------------------------------------------------------------------
Hotels, Restaurants & Leisure--1.9%
Extended Stay America, Inc. 1 8,500 $ 118,915
--------------------------------------------------------------------------------
McDonald's Corp. 17,100 316,350
------------
435,265

--------------------------------------------------------------------------------
Household Durables--0.7%
Clayton Homes, Inc. 6,000 80,880
--------------------------------------------------------------------------------
Fleetwood Enterprises, Inc. 1 11,300 93,112
------------
173,992

--------------------------------------------------------------------------------
Leisure Equipment & Products--2.1%
Eastman Kodak Co. 7,500 276,900
--------------------------------------------------------------------------------
Hasbro, Inc. 17,500 224,350
------------
501,250

--------------------------------------------------------------------------------
Media--12.7%
AOL Time Warner, Inc. 1 30,000 491,100
--------------------------------------------------------------------------------
Cablevision Systems New York Group, Cl. A 1 17,107 289,279
--------------------------------------------------------------------------------
Comcast Corp., Cl. A Special, Non-Vtg. 1 16,500 376,200
--------------------------------------------------------------------------------
Disney (Walt) Co. 18,500 366,670
--------------------------------------------------------------------------------
Liberty Media Corp., Cl. A 1 51,000 538,560
--------------------------------------------------------------------------------
Metro-Goldwyn-Mayer, Inc. 1 20,000 285,000
--------------------------------------------------------------------------------
News Corp. Ltd. (The), Sponsored ADR 9,700 272,570
--------------------------------------------------------------------------------
News Corp. Ltd. (The), Sponsored ADR, Preference 15,700 373,817
------------
2,993,196

--------------------------------------------------------------------------------
Multiline Retail--3.5%
Costco Wholesale Corp. 1 15,900 513,570
--------------------------------------------------------------------------------
Federated Department Stores, Inc. 1 9,800 320,264
------------
833,834

--------------------------------------------------------------------------------
Specialty Retail--0.9%
Home Depot, Inc. 8,300 219,286
--------------------------------------------------------------------------------
Consumer Staples--0.5%
--------------------------------------------------------------------------------
Food Products--0.5%
Archer-Daniels-Midland Co. 9,700 129,301
--------------------------------------------------------------------------------
Energy--4.8%
--------------------------------------------------------------------------------
Energy Equipment & Services--1.6%
GlobalSantaFe Corp. 7,700 197,274
--------------------------------------------------------------------------------
Schlumberger Ltd. 4,100 181,425
------------
378,699

9 | OPPENHEIMER SELECT MANAGERS SALOMON BROTHERS ALL CAP FUND

STATEMENT OF INVESTMENTS CONTINUED
Market Value
Shares See Note 1
--------------------------------------------------------------------------------
Oil & Gas--3.2%
Amerada Hess Corp. 1,600 $ 89,600
--------------------------------------------------------------------------------
Anadarko Petroleum Corp. 5,500 259,600
--------------------------------------------------------------------------------
ChevronTexaco Corp. 6,000 402,180
------------
751,380

--------------------------------------------------------------------------------
Financials--12.9%
--------------------------------------------------------------------------------
Banks--1.0%
Bank One Corp. 5,900 232,991
--------------------------------------------------------------------------------
Diversified Financials--3.4%
American Express Co. 10,600 412,658
--------------------------------------------------------------------------------
Countrywide Financial Corp. 8,200 404,260
------------
816,918

--------------------------------------------------------------------------------
Insurance--8.5%
AMBAC Financial Group, Inc. 5,000 312,550
--------------------------------------------------------------------------------
Chubb Corp. 6,000 351,600
--------------------------------------------------------------------------------
Hartford Financial Services Group, Inc. 5,000 245,300
--------------------------------------------------------------------------------
MBIA, Inc. 5,100 231,948
--------------------------------------------------------------------------------
MGIC Investment Corp. 5,000 233,350
--------------------------------------------------------------------------------
Radian Group, Inc. 4,100 167,690
--------------------------------------------------------------------------------
St. Paul Cos., Inc. 12,500 465,500
------------
2,007,938

--------------------------------------------------------------------------------
Health Care--13.3%
--------------------------------------------------------------------------------
Biotechnology--1.7%
Aphton Corp. 1 8,600 23,048
--------------------------------------------------------------------------------
Enzo Biochem, Inc. 11,500 166,750
--------------------------------------------------------------------------------
Wyeth 5,500 211,365
------------
401,163

--------------------------------------------------------------------------------
Pharmaceuticals--11.6%
Abbott Laboratories 11,000 481,580
--------------------------------------------------------------------------------
Bristol-Myers Squibb Co. 15,300 405,450
--------------------------------------------------------------------------------
Elan Corp. plc, ADR 1 55,000 134,200
--------------------------------------------------------------------------------
ICN Pharmaceuticals, Inc. 8,300 97,525
--------------------------------------------------------------------------------
Johnson & Johnson 5,400 307,908
--------------------------------------------------------------------------------
Merck & Co., Inc. 3,900 231,699
--------------------------------------------------------------------------------
Novartis AG, ADR 12,700 482,600
--------------------------------------------------------------------------------
Pfizer, Inc. 8,300 261,782
--------------------------------------------------------------------------------
Schering-Plough Corp. 15,700 355,762
------------
2,758,506

10 | OPPENHEIMER SELECT MANAGERS SALOMON BROTHERS ALL CAP FUND

Market Value
Shares See Note 1
--------------------------------------------------------------------------------
Industrials--4.8%
--------------------------------------------------------------------------------
Aerospace & Defense--1.8%
Honeywell International, Inc. 7,700 $ 199,199
--------------------------------------------------------------------------------
Raytheon Co. 7,700 224,609
------------
423,808

--------------------------------------------------------------------------------
Commercial Services & Supplies--1.8%
Waste Management, Inc. 17,100 426,132
--------------------------------------------------------------------------------
Machinery--1.2%
Deere & Co. 2,800 143,220
--------------------------------------------------------------------------------
Ingersoll-Rand Co., Cl. A 3,100 143,220
------------
286,440

--------------------------------------------------------------------------------
Information Technology--20.0%
--------------------------------------------------------------------------------
Communications Equipment--7.0%
3Com Corp. 1 84,000 432,600
--------------------------------------------------------------------------------
Lucent Technologies, Inc. 1 131,300 229,775
--------------------------------------------------------------------------------
Motorola, Inc. 29,700 337,986
--------------------------------------------------------------------------------
Nokia Corp., Sponsored ADR, A Shares 20,900 401,489
--------------------------------------------------------------------------------
Telefonaktiebolaget Ericsson (L.M.), Sponsored ADR 1 26,760 263,051
------------
1,664,901

--------------------------------------------------------------------------------
Computers & Peripherals--2.9%
Electronics for Imaging, Inc. 1 8,000 141,520
--------------------------------------------------------------------------------
Hewlett-Packard Co. 16,300 317,524
--------------------------------------------------------------------------------
Maxtor Corp. 1 40,000 216,800
------------
675,844

--------------------------------------------------------------------------------
Electronic Equipment & Instruments--2.8%
Agilent Technologies, Inc. 1 13,800 267,858
--------------------------------------------------------------------------------
Solectron Corp. 1 85,000 392,700
------------
660,558

--------------------------------------------------------------------------------
Internet Software & Services--0.8%
RealNetworks, Inc. 1 40,000 154,400
--------------------------------------------------------------------------------
Register.com, Inc. 1 10,900 46,652
------------
201,052

--------------------------------------------------------------------------------
IT Consulting & Services--1.7%
Unisys Corp. 1 35,000 392,000
--------------------------------------------------------------------------------
Semiconductor Equipment & Products--4.3%
Intel Corp. 14,000 292,320
--------------------------------------------------------------------------------
Lattice Semiconductor Corp. 1 22,000 220,000
--------------------------------------------------------------------------------
LSI Logic Corp. 1 33,500 277,715

11 | OPPENHEIMER SELECT MANAGERS SALOMON BROTHERS ALL CAP FUND

STATEMENT OF INVESTMENTS Continued
Market Value
Shares See Note 1
--------------------------------------------------------------------------------
Semiconductor Equipment & Products Continued
Taiwan Semiconductor Manufacturing Co. Ltd., ADR 25,400 $ 233,680
------------
1,023,715

--------------------------------------------------------------------------------
Software--0.5%
Micromuse, Inc. 1 26,000 116,740
--------------------------------------------------------------------------------
Materials--5.6%
--------------------------------------------------------------------------------
Chemicals--2.2%
Cabot Corp. 6,500 164,645
--------------------------------------------------------------------------------
Dow Chemical Co. 7,600 242,440
--------------------------------------------------------------------------------
Engelhard Corp. 4,700 113,928
------------
521,013

--------------------------------------------------------------------------------
Metals & Mining--1.8%
Alcoa, Inc. 15,000 383,250
--------------------------------------------------------------------------------
Brush Wellman, Inc. 1 5,300 32,065
------------
415,315

--------------------------------------------------------------------------------
Paper & Forest Products--1.6%
Weyerhaeuser Co. 7,300 383,980
--------------------------------------------------------------------------------
Telecommunication Services--4.7%
--------------------------------------------------------------------------------
Diversified Telecommunication Services--3.0%
Nippon Telegraph & Telephone Corp., ADR 13,000 254,150
--------------------------------------------------------------------------------
SBC Communications, Inc. 16,000 456,000
------------
710,150

--------------------------------------------------------------------------------
Wireless Telecommunication Services--1.7%
Vodafone Group plc, Sponsored ADR 20,900 391,875
--------------------------------------------------------------------------------
Utilities--0.9%
--------------------------------------------------------------------------------
Gas Utilities--0.9%
El Paso Corp. 25,000 213,000
------------
Total Common Stocks (Cost $23,046,816) 21,140,242

12 | OPPENHEIMER SELECT MANAGERS SALOMON BROTHERS ALL CAP FUND

Principal Market Value
Amount See Note 1
--------------------------------------------------------------------------------
Convertible Corporate Bonds and Notes--1.6%
American Tower Corp., 2.25% Cv. Nts.,
10/15/09 (Cost $355,783) $ 500,000 $ 372,500

--------------------------------------------------------------------------------
Joint Repurchase Agreements--8.8%
Undivided interest of 0.46% in joint repurchase
agreement (Market Value $453,323,000) with Banc
One Capital Markets, Inc., 1.29%, dated 11/29/02,
to be repurchased at $2,080,224 on 12/2/02,
collateralized by U.S. Treasury Nts., 1.875%--7%,
3/31/03--8/15/11, witH a value of $408,234,710
and U.S. Treasury Bonds, 6.25%--10.625%,
8/15/15--8/15/23, with a value of $55,304,803
(Cost $2,080,000) 2,080,000 2,080,000
--------------------------------------------------------------------------------
Total Investments, at Value (Cost $25,482,599) 99.7% 23,592,742
--------------------------------------------------------------------------------
Other Assets Net of Liabilities 0.3 77,725
-----------------------------
Net Assets 100.0% $23,670,467
=============================

Footnotes to Statement of Investments

1. Non-income producing security.

See accompanying Notes to Financial Statements.

13 | OPPENHEIMER SELECT MANAGERS SALOMON BROTHERS ALL CAP FUND

STATEMENT OF ASSETS AND LIABILITIES November 30, 2002
---------------------------------------------------------------------
Assets Investments, at value (cost $25,482,599)--
see accompanying statement $ 23,592,742
---------------------------------------------------------------------
Cash 7,016
---------------------------------------------------------------------
Receivables and other assets:
Investments sold 59,061
Interest and dividends 32,420
Shares of beneficial interest sold 20,326
Other 1,912
-------------
Total assets 23,713,477

---------------------------------------------------------------------
Liabilities Payables and other liabilities:
Shareholder reports 10,170
Transfer and shareholder servicing agent fees 9,147
Legal, auditing and other professional fees 7,746
Distribution and service plan fees 6,312
Investments purchased 4,806
Shares of beneficial interest redeemed 2,046
Trustees' compensation 326
Other 2,457
-------------
Total liabilities 43,010

---------------------------------------------------------------------
Net Assets $ 23,670,467
=============

---------------------------------------------------------------------
Composition of Net Assets
Paid-in capital $ 28,029,517
---------------------------------------------------------------------
Accumulated net realized loss on investments and
foreign currency transactions (2,469,193)
---------------------------------------------------------------------
Net unrealized depreciation on investments and
translation of asset and liabilities denominated
in foreign currencies (1,889,857)
-------------
Net Assets $ 23,670,467
=============

14 | OPPENHEIMER SELECT MANAGERS SALOMON BROTHERS ALL CAP FUND

----------------------------------------------------------------------
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share
(based on net assets of $6,774,546 and 841,303
shares of beneficial interest outstanding) $8.05
Maximum offering price per share (net asset value
plus sales charge of 5.75% of offering price) $8.54
----------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $4,325,199 and
543,668 shares of beneficial
interest outstanding) $7.96
----------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $6,872,361 and
864,608 shares of beneficial
interest outstanding) $7.95
----------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $5,697,551 and
712,389 shares of beneficial
interest outstanding) $8.00
----------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $810 and 100 shares of beneficial interest outstanding)
$8.10

See accompanying Notes to Financial Statements.

15 | OPPENHEIMER SELECT MANAGERS SALOMON BROTHERS ALL CAP FUND

STATEMENT OF OPERATIONS For the Year Ended November 30, 2002
--------------------------------------------------------------------------------
Investment Income
Dividends (net of foreign withholding taxes of $2,919) $ 192,958
--------------------------------------------------------------------------------
Interest 60,190
-------------
Total investment income 253,148

--------------------------------------------------------------------------------
Expenses
Management fees 238,043
--------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 12,376
Class B 34,095
Class C 57,794
Class N 15,207
--------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 40,614
Class B 15,879
Class C 24,684
Class N 13,454
Class Y 863
--------------------------------------------------------------------------------
Shareholder reports 22,805
--------------------------------------------------------------------------------
Trustees' compensation 4,126
--------------------------------------------------------------------------------
Custodian fees and expenses 236
--------------------------------------------------------------------------------
Other 14,996
-------------
Total expenses 495,172
Less voluntary reimbursement of expenses (44,330)
Less voluntary waiver of transfer and shareholder servicing
agent fees--Classes A, B, C and N (16,433)
Less voluntary waiver of transfer and shareholder servicing
agent fees--Class Y (863)
-------------
Net expenses 433,546
--------------------------------------------------------------------------------
Net Investment Loss (180,398)

--------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) Net realized gain (loss) on:
Investments (2,085,922)
Foreign currency transactions 729
-------------
Net realized loss (2,085,193)
--------------------------------------------------------------------------------
Net change in unrealized depreciation on:
Investments (1,552,018)
Translation of assets and liabilities denominated in
foreign currencies (253)
Net change (1,552,271)
-------------
Net realized and unrealized loss (3,637,464)

--------------------------------------------------------------------------------
Net Decrease in Net Assets Resulting from Operations $(3,817,862)
=============

See accompanying Notes to Financial Statements.

16 | OPPENHEIMER SELECT MANAGERS SALOMON BROTHERS ALL CAP FUND

STATEMENTS OF CHANGES IN NET ASSETS

Year Ended November 30, 2002 2001 1
--------------------------------------------------------------------------------
Operations
Net investment income (loss) $ (180,398) $ 103,450
--------------------------------------------------------------------------------
Net realized loss (2,085,193) (384,050)
--------------------------------------------------------------------------------
Net change in unrealized depreciation (1,552,271) (337,586)
---------------------------
Net decrease in net assets resulting from operations (3,817,862) (618,186)

--------------------------------------------------------------------------------
Dividends and/or Distributions to Shareholders Dividends from net investment
income:
Class A (82,700) --
Class B (14,442) --
Class C (28,229) --
Class N (8,740) --
Class Y (11) --

--------------------------------------------------------------------------------
Beneficial Interest Transactions Net increase in net assets resulting from
beneficial interest transactions:
Class A 143,096 9,139,908
Class B 2,802,559 2,154,215
Class C 4,079,221 3,823,011
Class N 5,419,588 662,039
Class Y -- --

--------------------------------------------------------------------------------
Net Assets
Total increase 8,492,480 15,160,987
--------------------------------------------------------------------------------
Beginning of period 15,177,987 17,000 2
---------------------------
End of period [including accumulated net investment
income of $105,757 for the period ended November 30,
2001] $23,670,467 $15,177,987
===========================

1. For the period from February 16, 2001 (inception of offering) to November 30,
2001. 2. Reflects the value of the Manager's initial seed money investment at
December 22, 2000.

See accompanying Notes to Financial Statements.

17 | OPPENHEIMER SELECT MANAGERS SALOMON BROTHERS ALL CAP FUND

FINANCIAL HIGHLIGHTS

-----------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 2 (12.17)% (7.50)% (12.75)% (8.20)% (12.78)% (8.20)%

See accompanying Notes to Financial Statements.

18 | OPPENHEIMER SELECT MANAGERS SALOMON BROTHERS ALL CAP FUND

Class N Class Y
Year Year
Ended Ended
Nov. 30, Nov. 30,
2002 2001 1 2002 2001 2
---------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 3 (12.30)% (6.40)% (11.52)% (7.40)%

1. For the period from March 1, 2001 (inception of offering) to November 30,
2001. 2. For the period from February 16, 2001 (inception of offering) to
November 30, 2001.
3. Assumes an investment on the business day before the first day of the fiscal
period (or inception of offering), 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.
4. Annualized for periods of less than one full year. See accompanying Notes to
Financial Statements.

19 | OPPENHEIMER SELECT MANAGERS SALOMON BROTHERS ALL CAP FUND

NOTES TO FINANCIAL STATEMENTS

--------------------------------------------------------------------------------
1. Significant Accounting Policies
Oppenheimer Select Managers Salomon Brothers All Cap Fund (the Fund), a series
of Oppenheimer Select Managers, which operated under the name of Oppenheimer
Select Managers Salomon Brothers Capital Fund through April 30, 2002, is a
non-diversified, open-end management investment company registered under the
Investment Company Act of 1940, as amended. The Fund's investment objective is
to seek capital appreciation. The Fund's investment advisor is OppenheimerFunds,
Inc. (the Manager). The Manager has entered into a sub-advisory agreement with
Salomon Brothers Asset Management, Inc. (the Sub-Advisor).
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. All classes of shares have identical rights
and voting privileges. Earnings, net assets and net asset value per share may
differ by minor amounts due to each class having its own expenses directly
attributable to that class. Classes 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 following is a summary of significant accounting policies consistently
followed by the Fund.
--------------------------------------------------------------------------------
Securities Valuation. Securities listed or traded on National Stock Exchanges or
other domestic or foreign 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. 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 (including
restricted securities) for which quotations are not readily available are valued
primarily using dealer-supplied valuations, a portfolio pricing service
authorized by the Board of Trustees, or at their fair value. Fair value is
determined in good faith under 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).
--------------------------------------------------------------------------------
Foreign Currency Translation. The accounting records of the Fund are maintained
in U.S. dollars. Prices of securities denominated in foreign currencies are
translated into U.S. dollars at the prevailing exchange rates on the valuation
date. Amounts related to the purchase and sale of foreign securities and
investment income are translated at the prevailing exchange rates on the
respective dates of such transactions.

The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held

20 | OPPENHEIMER SELECT MANAGERS SALOMON BROTHERS ALL CAP FUND

and reported with all other foreign currency gains and losses in the Fund's
Statement of Operations.
--------------------------------------------------------------------------------
Joint Repurchase Agreements. The Fund, along with other affiliated funds of the
Manager, may transfer uninvested cash balances into one or more joint repurchase
agreement accounts. These balances are invested in one or more repurchase
agreements, secured by U.S. government securities. Securities pledged as
collateral for repurchase agreements are held by a custodian bank until the
agreements mature. Each agreement requires that the market value of the
collateral be sufficient to cover payments of interest and principal; however,
in the event of default by the other party to the agreement, retention of the
collateral may be subject to legal proceedings.
--------------------------------------------------------------------------------
Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated daily 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 continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to shareholders. Therefore, no federal
income or excise tax provision is required.
During the fiscal year ended November 30, 2002, the Fund did not utilize any
capital loss carryforward.

As of November 30, 2002, the Fund had available for federal income tax purposes
unused capital loss carryforwards as follows:
Expiring
--------------------
2009 $ 167,424
2010 2,019,897
Total $2,187,321
==========

As of November 30, 2002, the Fund had approximately $282,000 of post-October
losses available to offset future capital gains, if any. Such losses, if
unutilized, will expire in 2011.
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
Classification of Distributions to Shareholders. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax purposes
primarily because of the recognition of certain foreign currency gains (losses)
as ordinary income (loss) for 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

21 | OPPENHEIMER SELECT MANAGERS SALOMON BROTHERS ALL CAP FUND

NOTES TO FINANCIAL STATEMENTS Continued

--------------------------------------------------------------------------------
1. Significant Accounting Policies Continued
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.
The Fund adjusts the classification of distributions to shareholders to
reflect the differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly, during the
year ended November 30, 2002, amounts have been reclassified to reflect a
decrease in paid-in capital of $208,799, a decrease in overdistributed net
investment income of $208,763, and a decrease in accumulated net realized loss
on investments of $36. Net assets of the Fund were unaffected by the
reclassifications.

The tax character of distributions paid during the year ended November 30, 2002
and the period ended November 30, 2001 was as follows:
Year Ended Period Ended
November 30, 2002 November 30, 2001

Distributions paid from:
Ordinary income $134,122 $--
Long-term capital gain -- --
Return of capital -- --
---------------------------
Total $134,122 $--
===========================
As of November 30, 2002, the components of distributable earnings on a tax basis
were as follows:

Accumulated net realized loss $(2,469,193)
Net unrealized depreciation (1,889,857)
------------
Total $(4,359,050)
============

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

22 | OPPENHEIMER SELECT MANAGERS SALOMON BROTHERS ALL CAPFUND

--------------------------------------------------------------------------------
2. Shares of Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of beneficial
interest of each class. Transactions in shares of beneficial interest were as
follows:

Year Ended November 30, 2002 Period Ended November 30, 2001 1
Shares Amount Shares Amount
-----------------------------------------------------------------------------------------------------------

Class A
Sold 629,798 $ 5,376,405 957,273 $9,291,205
Dividends and/or
distributions reinvested 4,288 39,537 -- --
Redeemed (735,506) (5,272,846) (15,950) (151,297)
--------------------------------------------------------------
Net increase (decrease) (101,420) $ 143,096 941,323 $9,139,908
==============================================================

-----------------------------------------------------------------------------------------------------------
Class B
Sold 412,196 $ 3,515,598 241,090 $2,298,825
Dividends and/or
distributions reinvested 1,486 13,648 -- --
Redeemed (95,522) (726,687) (15,682) (144,610)
--------------------------------------------------------------
Net increase 318,160 $2,802,559 225,408 $2,154,215
==============================================================

-----------------------------------------------------------------------------------------------------------
Class C
Sold 680,933 $ 5,766,521 408,168 $3,842,581
Dividends and/or distributions reinvested 2,928 26,858 -- --
Redeemed (225,394) (1,714,158) (2,127) (19,570)
--------------------------------------------------------------
Net increase 458,467 $4,079,221 406,041 $3,823,011
==============================================================

-----------------------------------------------------------------------------------------------------------
Class N
Sold 781,100 $ 6,523,549 72,245 $ 667,732
Dividends and/or distributions reinvested 951 8,731 -- --
Redeemed (141,274) (1,112,692) (633) (5,693)
--------------------------------------------------------------
Net increase 640,777 $5,419,588 71,612 $ 662,039
==============================================================

-----------------------------------------------------------------------------------------------------------
Class Y
Sold -- $ -- -- $ --
Dividends and/or
distributions reinvested -- -- -- --
Redeemed -- -- -- --
--------------------------------------------------------------
Net increase (decrease) -- $ -- -- $ --
==============================================================

1. For the period from February 16, 2001 (inception of offering) to November 30,
2001, for Class A, B, C and Y shares and for the period from March 1, 2001
(inception of offering) to November 30, 2001, for Class N shares.
--------------------------------------------------------------------------------
3. Purchases and Sales of Securities
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the year ended November 30, 2002, were
$36,483,792 and $24,209,558, respectively.

23 | OPPENHEIMER SELECT MANAGERS SALOMON BROTHERS ALL CAP FUND

NOTES TO FINANCIAL STATEMENTS Continued

--------------------------------------------------------------------------------
3. Purchases and Sales of Securities Continued

As of November 30, 2002, unrealized appreciation (depreciation) based on cost of
securities for federal income tax purposes of $25,482,599 was composed of:

Gross unrealized appreciation $ 1,405,691
Gross unrealized depreciation (3,295,548)
------------
Net unrealized depreciation $(1,889,857)
============

The difference between book-basis and tax-basis unrealized appreciation and
depreciation, if applicable, is attributable primarily to the tax deferral of
losses on wash sales, or return of capital dividends, and the realization for
tax purposes of unrealized gain (loss) on certain futures contracts, investments
in passive foreign investment companies, and forward foreign currency exchange
contracts.
--------------------------------------------------------------------------------
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 of 1.10% of
the first $100 million of average annual net assets of the Fund and 1.00% of
average annual net assets in excess of $100 million. The Manager has voluntarily
undertaken to assume certain Fund expenses. The Manager reserves the right to
amend or terminate that expense assumption at any time.
--------------------------------------------------------------------------------
Sub-Advisor Fees. The Manager has retained Salomon Brothers Asset Management,
Inc. as the Sub-Advisor to provide the day-to-day portfolio management of the
Fund. For the year ended November 30, 2002, the Manager paid $125,900 to the
Sub-Advisor.
--------------------------------------------------------------------------------
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 $19.75 per account fee.
Additionally, Class Y shares are subject to minimum fees of $5,000 for
assets of less than $10 million and $10,000 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.
OFS has voluntarily agreed to limit transfer and shareholder servicing agent
fees up to an annual rate of 0.35% for all classes. Effective November 1, 2002,
Class Y shares were changed from 0.25% to 0.35%. This undertaking may be amended
or withdrawn at any time.
--------------------------------------------------------------------------------
Distribution and Service Plan (12b-1) Fees. Under its General Distributor's
Agreement with the Manager, OppenheimerFunds Distributor, Inc. (the Distributor)
acts as the Fund's principal underwriter in the continuous public offering of
the different classes of shares of the Fund.

24 | OPPENHEIMER SELECT MANAGERS SALOMON BROTHERS ALL CAP FUND

The compensation paid to (or retained by) the Distributor from the sale of
shares or on the redemption of shares is shown in the table below for the period
indicated.

November 30, 2002 $62,590 $21,424 $7,615 $91,244 $48,537 $49,699

1. The Distributor advances concession payments to dealers for certain sales of
Class A shares and for sales of Class B, Class C and Class N shares from its own
resources at the time of sale.
Class A Class B Class C Class N
Contingent Contingent Contingent Contingent
Deferred Deferred Deferred Deferred
Sales Charges Sales Charges Sales Charges Sales Charges
Retained by Retained by Retained by Retained by
Year Ended Distributor Distributor Distributor Distributor
--------------------------------------------------------------------------------
November 30, 2002 $-- $8,641 $2,017 $3,541

--------------------------------------------------------------------------------
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
quarterly at an annual rate of up to 0.25% of the average annual net assets of
Class A shares of the Fund. For the year ended November 30, 2002, payments under
the Class A Plan totaled $12,376, all of which were paid by the Distributor to
recipients, and included $814 paid to an affiliate of the Manager. Any
unreimbursed expenses the Distributor incurs with respect to Class A shares in
any fiscal year cannot be recovered in subsequent years.
--------------------------------------------------------------------------------
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. Under the plans, the Fund pays the Distributor an annual asset-based
sales charge of 0.75% per year on Class B shares and on Class C shares and the
Fund pays the Distributor an annual asset-based sales charge of 0.25% per year
on Class N shares. The Distributor also receives a service fee of 0.25% per year
under each plan.

Distribution fees paid to the Distributor for the year ended November 30, 2002,
were as follows:

Distributor's
Distributor's Aggregate
Aggregate Unreimbursed
Unreimbursed Expenses as %
Total Payments Amount Retained Expenses of Net Assets
Under Plan by Distributor Under Plan of Class
--------------------------------------------------------------------------------
Class B Plan $34,095 $30,715 $163,386 3.78%
Class C Plan 57,794 38,465 121,309 1.77
Class N Plan 15,207 5,770 99,503 1.75

--------------------------------------------------------------------------------
5. Foreign Currency Contracts

A foreign currency contract is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate. The Fund may enter into foreign
currency contracts to

25 | OPPENHEIMER SELECT MANAGERS SALOMON BROTHERS ALL CAP FUND

NOTES TO FINANCIAL STATEMENTS Continued

--------------------------------------------------------------------------------
5. Foreign Currency Contracts Continued

settle specific purchases or sales of securities denominated in a foreign
currency and to seek to protect against adverse exchange rate fluctuation. Risks
to the Fund include the potential inability of the counterparty to meet the
terms of the contract.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using prevailing foreign currency exchange rates.
Unrealized appreciation and depreciation on foreign currency contracts are
reported in the Statement of Assets and Liabilities as a receivable or payable
and in the Statement of Operations with the change in unrealized appreciation or
depreciation.
The Fund may realize a gain or loss upon the closing or settlement of the
forward transaction. Such realized gains and losses are reported with all other
foreign currency gains and losses in the Statement of Operations.

--------------------------------------------------------------------------------
6. Borrowing and Lending Arrangements
Bank Borrowings. Until November 12, 2002, the Fund had the ability to borrow
from a bank for temporary or emergency purposes provided asset coverage for
borrowings exceeded 300%. The Fund and other Oppenheimer funds participated in a
$400 million unsecured line of credit with a bank. Under that unsecured line of
credit, interest was charged to each fund, based on its borrowings, at a rate
equal to the Federal Funds Rate plus 0.45%. Under that credit facility, the Fund
paid a commitment fee equal to its pro rata share of the average unutilized
amount of the credit facility at a rate of 0.08% per annum.
--------------------------------------------------------------------------------
Interfund Borrowing and Lending Arrangements. Effective November 12, 2002, the
following interfund borrowing and lending arrangements went into effect.
Consistent with its fundamental policies and pursuant to an exemptive order
issued by the Securities and Exchange Commission ("SEC"), the Fund may engage in
borrowing and lending activities with other funds in the OppenheimerFunds
complex. Borrowing money from affiliated funds may afford the Fund the
flexibility to use the most cost-effective alternative to satisfy its borrowing
requirements. Lending money to an affiliated fund may allow the Fund to obtain a
higher rate of return than it could from interest rates on alternative
short-term investments. Implementation of interfund lending will be accomplished
consistent with applicable regulatory requirements, including the provisions of
the SEC order. There is a risk that a borrowing fund could have a loan called on
one day's notice. In that circumstance, the Fund might have to borrow from a
bank at a higher interest cost if money to lend were not available from another
Oppenheimer fund. When the Fund lends assets to another affiliated fund, the
Fund is subject to the risk that the borrowing fund fails to repay the loan.

The Fund had no borrowing or lending arrangements outstanding during the
year ended or at November 30, 2002.

26 | OPPENHEIMER SELECT MANAGERS SALOMON BROTHERS ALL CAP FUND

INDEPENDENT AUDITORS' REPORT

--------------------------------------------------------------------------------
To the Board of Trustees and Shareholders of Oppenheimer Select Managers
Gartmore Millennium Growth Fund II:

We have audited the accompanying statement of assets and liabilities of
Oppenheimer Select Managers Gartmore Millennium Growth Fund II, which is a
series of Oppenheimer Select Managers, including the statement of investments,
as of November 30, 2002, and the related statement of operations for the year
then ended, the statements of changes in net assets and the financial
highlights for the periods indicated. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures
included confirmation of securities owned as of November 30, 2002, by
correspondence with the custodian and brokers; where replies were not received
from brokers, we performed other auditing procedures. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer Select Managers Gartmore Millennium Growth Fund II as of November
30, 2002, the results of its operations for the year then ended, the changes in
its net assets and the financial highlights for the periods indicated, in
conformity with accounting principles generally accepted in the United States
of America.

/s/ Deloitte & Touche LLP
-------------------------
Deloitte & Touche LLP

Denver, Colorado
December 20, 2002

STATEMENT OF INVESTMENTS

Market Value
Shares See Note 1
----------------------------------------------------------------
Common Stocks--104.4%
----------------------------------------------------------------
Consumer Discretionary--19.9%
----------------------------------------------------------------
Auto Components--1.5%
CarMax, Inc. 1 1,913 $ 37,686
----------------------------------------------------------------
Gentex Corp. 1 472 14,165
------------
51,851

----------------------------------------------------------------
Hotels, Restaurants & Leisure--3.4%
CBRL Group, Inc. 807 21,999
----------------------------------------------------------------
Cheesecake Factory, Inc. (The) 1 1,021 36,409
----------------------------------------------------------------
Darden Restaurants, Inc. 938 20,289
----------------------------------------------------------------
International Game Technology 1 310 23,901
----------------------------------------------------------------
Yum! Brands, Inc. 1 712 17,024
------------
119,622

----------------------------------------------------------------
Household Durables--1.4%
Mohawk Industries, Inc. 1 353 21,748
----------------------------------------------------------------
Newell Rubbermaid, Inc. 877 27,819
------------
49,567

----------------------------------------------------------------
Internet & Catalog Retail--2.0%
Amazon.com, Inc. 1 1,520 35,492
----------------------------------------------------------------
eBay, Inc. 1 510 35,149
------------
70,641

----------------------------------------------------------------
Media--2.0%
Getty Images, Inc. 1 859 25,658
----------------------------------------------------------------
Insight Communications Co., Inc. 1 1,427 19,764
----------------------------------------------------------------
Regal Entertainment Group 1,212 27,391
------------
72,813

----------------------------------------------------------------
Multiline Retail--1.3%
99 Cents Only Stores 1 714 19,970
----------------------------------------------------------------
Family Dollar Stores, Inc. 920 27,131
------------
47,101

----------------------------------------------------------------
Specialty Retail--8.3%
Advance Auto Parts, Inc. 1 604 31,136
----------------------------------------------------------------
AutoZone, Inc. 1 280 22,876
----------------------------------------------------------------
Bed Bath & Beyond, Inc. 1 1,890 65,564
----------------------------------------------------------------
GameStop Corp. 1 3,487 64,858
----------------------------------------------------------------
Guitar Center, Inc. 1 1,190 23,753
----------------------------------------------------------------
Rent-A-Center, Inc. 1 309 15,354
----------------------------------------------------------------
Tiffany & Co. 657 18,646
----------------------------------------------------------------
TJX Cos., Inc. (The) 874 17,104
----------------------------------------------------------------
Tractor Supply Co. 1 448 19,926
----------------------------------------------------------------
Williams-Sonoma, Inc. 1 683 17,990
------------
297,207

Market Value
Shares See Note 1
----------------------------------------------------------------
Consumer Staples--3.2%
----------------------------------------------------------------
Beverages--1.3%
Constellation Brands, Inc., Cl. A 1 920 $ 21,638
----------------------------------------------------------------
Pepsi Bottling Group, Inc. (The) 827 23,752
------------
45,390

----------------------------------------------------------------
Food & Drug Retailing--0.8%
Whole Foods Market, Inc. 1 557 29,604
----------------------------------------------------------------
Food Products--1.1%
Wrigley, William Jr. Co. 720 38,729
----------------------------------------------------------------
Energy--4.0%
----------------------------------------------------------------
Energy Equipment & Services--2.3%
Nabors Industries Ltd. 1 580 20,532
----------------------------------------------------------------
Pride International, Inc. 1 2,160 30,197
----------------------------------------------------------------
Smith International, Inc. 1 936 31,824
------------
82,553

----------------------------------------------------------------
Oil & Gas--1.7%
Burlington Resources, Inc. 596 25,104
----------------------------------------------------------------
Noble Energy, Inc. 947 35,048
------------
60,152

----------------------------------------------------------------
Financials--7.7%
----------------------------------------------------------------
Banks--2.3%
Charter One Financial, Inc. 755 22,726
----------------------------------------------------------------
Investors Financial Services Corp. 577 20,183
----------------------------------------------------------------
Synovus Financial Corp. 1,840 38,327
------------
81,236

----------------------------------------------------------------
Diversified Financials--3.3%
Federated Investors, Inc., Cl. B 679 18,367
----------------------------------------------------------------
Moody's Corp. 589 25,928
----------------------------------------------------------------
Portfolio Recovery Associates, Inc. 1 2,283 40,158
----------------------------------------------------------------
SLM Corp. 337 32,935
------------
117,388

----------------------------------------------------------------
Insurance--1.4%
AMBAC Financial Group, Inc. 806 50,383
----------------------------------------------------------------
Real Estate--0.7%
Host Marriott Corp. 1 2,767 25,318
----------------------------------------------------------------
Health Care--23.8%
----------------------------------------------------------------
Biotechnology--3.1%
Biogen, Inc. 1 510 22,573
----------------------------------------------------------------
Gilead Sciences, Inc. 1 715 28,185
----------------------------------------------------------------
IDEC Pharmaceuticals Corp. 1 610 20,069
----------------------------------------------------------------
Medimmune, Inc. 1 1,120 29,546
----------------------------------------------------------------
Millennium Pharmaceuticals, Inc. 1 920 9,209
------------
109,582

6 OPPENHEIMER SELECT MANAGERS GARTMORE MILLENNIUM GROWTH FUND II

Market Value
Shares See Note 1
----------------------------------------------------------------
Health Care Equipment & Supplies--6.9%
Biomet, Inc. 1,530 $ 42,075
----------------------------------------------------------------
Boston Scientific Corp. 1 602 25,284
----------------------------------------------------------------
Dentsply International, Inc. 786 26,370
----------------------------------------------------------------
ResMed, Inc. 1 1,127 36,526
----------------------------------------------------------------
St. Jude Medical, Inc. 1 1,100 38,302
----------------------------------------------------------------
Stryker Corp. 506 31,296
----------------------------------------------------------------
Varian Medical Systems, Inc. 1 572 26,707
----------------------------------------------------------------
Zimmer Holdings, Inc. 1 540 20,326
------------
246,886

----------------------------------------------------------------
Health Care Providers & Services--11.2%
Advisory Board Co. (The) 1 546 16,926
----------------------------------------------------------------
AmerisourceBergen Corp. 250 14,505
----------------------------------------------------------------
Anthem, Inc. 1 303 17,953
----------------------------------------------------------------
Caremark Rx, Inc. 1 920 16,247
----------------------------------------------------------------
Community Health Systems, Inc. 1,486 30,537
----------------------------------------------------------------
Express Scripts, Inc. 1 564 28,544
----------------------------------------------------------------
First Health Group Corp. 1 716 17,084
----------------------------------------------------------------
Health Management Assn., Inc., Cl. A 1,084 19,002
----------------------------------------------------------------
ICON plc, Sponsored ADR 1 1,757 40,938
----------------------------------------------------------------
Laboratory Corp. of America Holdings 1 596 14,304
----------------------------------------------------------------
McKesson Corp. 648 16,796
----------------------------------------------------------------
Medical Staffing Network
Holdings, Inc. 1 1,033 16,993
----------------------------------------------------------------
Pharmaceutical Product
Development, Inc. 1 1,020 30,549
----------------------------------------------------------------
Priority Healthcare Corp., Cl. B 1 1,377 30,322
----------------------------------------------------------------
Schein (Henry), Inc. 1 334 14,215
----------------------------------------------------------------
Triad Hospitals, Inc. 1 884 26,653
----------------------------------------------------------------
Universal Health Services, Inc., Cl. B 1 410 18,347
----------------------------------------------------------------
WellPoint Health Networks, Inc. 1 447 29,426
------------
399,341

----------------------------------------------------------------
Pharmaceuticals--2.6%
Allergan, Inc. 550 32,334
----------------------------------------------------------------
Barr Laboratories, Inc. 1 161 10,631
----------------------------------------------------------------
IVAX Corp. 1 1,037 14,010
----------------------------------------------------------------
Medicis Pharmaceutical Corp., Cl. A 1 391 18,084
----------------------------------------------------------------
Watson Pharmaceuticals, Inc. 1 610 18,294
------------
93,353

----------------------------------------------------------------
Industrials--15.7%
----------------------------------------------------------------
Aerospace & Defense--0.4%
InVision Technologies, Inc. 1 510 14,755
----------------------------------------------------------------
Airlines--1.0%
JetBlue Airways Corp. 1 988 36,576
----------------------------------------------------------------
Building Products--1.0%
Masco Corp. 1,784 35,983

Market Value
Shares See Note 1
----------------------------------------------------------------
Commercial Services & Supplies--11.0%
Administaff, Inc. 1 2,287 $ 15,552
----------------------------------------------------------------
Apollo Group, Inc., Cl. A 1 775 31,969
----------------------------------------------------------------
Automatic Data Processing, Inc. 400 17,388
----------------------------------------------------------------
BISYS Group, Inc. (The) 1 604 12,249
----------------------------------------------------------------
Career Education Corp. 1 323 12,568
----------------------------------------------------------------
CheckFree Corp. 1 1,120 21,941
----------------------------------------------------------------
ChoicePoint, Inc. 1 1,046 39,309
----------------------------------------------------------------
Cintas Corp. 510 25,740
----------------------------------------------------------------
Corporate Executive Board Co. 1 503 16,599
----------------------------------------------------------------
First Data Corp. 510 17,666
----------------------------------------------------------------
Fiserv, Inc. 1 1,330 45,114
----------------------------------------------------------------
H&R Block, Inc. 1,001 38,368
----------------------------------------------------------------
Iron Mountain, Inc. 1 883 29,218
----------------------------------------------------------------
Stericycle, Inc. 1 978 32,586
----------------------------------------------------------------
Weight Watchers International, Inc. 1 762 34,480
------------
390,747

----------------------------------------------------------------
Electrical Equipment--0.5%
AU Optronics Corp., ADR 1 2,400 16,464
----------------------------------------------------------------
Machinery--1.5%
Danaher Corp. 410 25,764
----------------------------------------------------------------
SureBeam Corp., Cl. A 1 5,310 28,621
------------
54,385

----------------------------------------------------------------
Trading Companies & Distributors--0.3%
Fastenal Co. 310 11,076
----------------------------------------------------------------
Information Technology--27.7%
----------------------------------------------------------------
Communications Equipment--3.3%
3Com Corp. 1 3,600 18,540
----------------------------------------------------------------
Avaya, Inc. 1 6,900 20,010
----------------------------------------------------------------
CommScope, Inc. 1 1,000 9,000
----------------------------------------------------------------
Comverse Technology, Inc. 1 1,300 15,756
----------------------------------------------------------------
JDS Uniphase Corp. 1 2,700 9,207
----------------------------------------------------------------
Sycamore Networks, Inc. 1 5,600 17,360
----------------------------------------------------------------
Tellabs, Inc. 1 3,000 26,610
------------
116,483

----------------------------------------------------------------
Computers & Peripherals--3.9%
ATI Technologies, Inc. 1 4,600 37,122
----------------------------------------------------------------
Dell Computer Corp. 1 720 20,592
----------------------------------------------------------------
Lexmark International, Inc., Cl. A 1 200 13,228
----------------------------------------------------------------
Pinnacle Systems, Inc. 1 1,600 22,608
----------------------------------------------------------------
SanDisk Corp. 1 1,200 33,300
----------------------------------------------------------------
Sigma Designs, Inc. 1 2,600 10,501
------------
137,351

7 | OPPENHEIMER SELECT MANAGERS GARTMORE MILLENNIUM GROWTH FUND II

STATEMENT OF INVESTMENTS Continued

Market Value
Shares See Note 1
----------------------------------------------------------------
Electronic Equipment & Instruments--3.2%
Fisher Scientific International, Inc. 1 1,140 $ 34,155
----------------------------------------------------------------
PerkinElmer, Inc. 3,600 30,816
----------------------------------------------------------------
ScanSource, Inc. 1 356 25,988
----------------------------------------------------------------
Waters Corp. 1 904 24,227
------------
115,186

----------------------------------------------------------------
Internet Software & Services--1.0%
Ameritrade Holding Corp. 1 3,300 16,995
----------------------------------------------------------------
Yahoo!, Inc. 1 1,100 20,097
------------
37,092

----------------------------------------------------------------
IT Consulting & Services--1.7%
Anteon International Corp. 1 720 16,812
----------------------------------------------------------------
MPS Group, Inc. 1 2,660 15,960
----------------------------------------------------------------
Unisys Corp. 1 2,500 28,000
------------
60,772

----------------------------------------------------------------
Office Electronics--0.6%
Zebra Technologies Corp., Cl. A 1 351 22,541
----------------------------------------------------------------
Semiconductor Equipment & Products--6.0%
Altera Corp. 1 1,500 21,795
----------------------------------------------------------------
Analog Devices, Inc. 1 320 9,821
----------------------------------------------------------------
ChipPAC, Inc. 1 4,600 20,796
----------------------------------------------------------------
Linear Technology Corp. 1,020 33,895
----------------------------------------------------------------
National Semiconductor Corp. 1 1,400 28,420
----------------------------------------------------------------
Skyworks Solutions, Inc. 1 4,460 53,743
----------------------------------------------------------------
Taiwan Semiconductor
Manufacturing Co. Ltd., ADR 4,900 45,080
------------
213,550

----------------------------------------------------------------
Software--8.0%
Adobe Systems, Inc. 700 20,671
----------------------------------------------------------------
Autodesk, Inc. 1,200 18,588
----------------------------------------------------------------
BEA Systems, Inc. 1 1,300 14,378
----------------------------------------------------------------
Cadence Design Systems, Inc. 1 1,120 16,150
----------------------------------------------------------------
Electronic Arts, Inc. 1 610 41,395
----------------------------------------------------------------
Informatica Corp. 1 2,600 17,940
----------------------------------------------------------------
Intuit, Inc. 1 500 26,970
----------------------------------------------------------------
Network Associates, Inc. 1 1,220 22,265
----------------------------------------------------------------
SAP AG (Systeme, Anwendungen,
Produkte in der Datenverarbeitung),
Sponsored ADR 820 18,245
----------------------------------------------------------------
Symantec Corp. 1 800 34,984
----------------------------------------------------------------
Take-Two Interactive Software, Inc. 1 600 17,958
----------------------------------------------------------------
Veritas Software Corp. 1 1,900 34,542
------------
284,086

Market Value
Shares See Note 1
----------------------------------------------------------------
Materials--1.9%
----------------------------------------------------------------
Chemicals--1.4%
Ecolab, Inc. 586 $ 29,106
----------------------------------------------------------------
International Flavors & Fragrances, Inc. 691 22,817
------------
51,923

----------------------------------------------------------------
Metals & Mining--0.5%
Nucor Corp. 363 18,237
----------------------------------------------------------------
Telecommunication Services--0.5%
----------------------------------------------------------------
Wireless Telecommunication Services--0.5%
Vodafone Group plc, Sponsored ADR 1,000 18,750
------------
Total Common Stocks (Cost $3,686,118) 3,724,674

----------------------------------------------------------------
Total Investments, at Value
(Cost $3,686,118) 104.4% 3,724,674
----------------------------------------------------------------
Liabilities in Excess of Other Assets (4.4) (158,564)
---------------------
Net Assets 100.0% $ 3,566,110
=====================

Footnotes to Statement of Investments

1. Non-income producing security.

See accompanying Notes to Financial Statements.

8 | OPPENHEIMER SELECT MANAGERS GARTMORE MILLENNIUM GROWTH FUND II

STATEMENT OF ASSETS AND LIABILITIES November 30, 2002

-----------------------------------------------------------------------------------------
Assets

Investments, at value (cost $3,686,118)--see accompanying statement $ 3,724,674
-----------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 183,601
Interest and dividends 754
Shares of beneficial interest sold 458
Other 846
------------
Total assets 3,910,333

-----------------------------------------------------------------------------------------
Liabilities
Bank overdraft 86,049
-----------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 238,636
Shareholder reports 9,963
Legal, auditing and other professional fees 7,659
Transfer and shareholder servicing agent fees 569
Trustees' compensation 321
Distribution and service plan fees 210
Other 816
------------
Total liabilities 344,223

-----------------------------------------------------------------------------------------
Net Assets $ 3,566,110
============

-----------------------------------------------------------------------------------------
Composition of Net Assets
Paid-in capital $ 5,783,279
-----------------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (2,255,725)
-----------------------------------------------------------------------------------------
Net unrealized appreciation on investments 38,556
------------
Net Assets $ 3,566,110
============

9 | OPPENHEIMER SELECT MANAGERS GARTMORE MILLENNIUM GROWTH FUND II

STATEMENT OF ASSETS AND LIABILITIES Continued

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

Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share
(based on net assets of $3,147,846 and 545,996
shares of beneficial interest outstanding) $5.77
Maximum offering price per share (net asset value
plus sales charge of 5.75% of offering price) $6.12
-----------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $193,490 and
34,012
shares of beneficial interest outstanding) $5.69
-----------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $156,099 and
27,452
shares of beneficial interest outstanding) $5.69
-----------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $68,096 and
11,882
shares of beneficial interest outstanding) $5.73
-----------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $579 and 100 shares
of beneficial interest outstanding) $5.79

See accompanying Notes to Financial Statements.

10 | OPPENHEIMER SELECT MANAGERS GARTMORE MILLENNIUM GROWTH FUND II

STATEMENT OF OPERATIONS For the Year Ended November 30, 2002

--------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends (net of foreign withholding taxes of $61) $ 9,524
--------------------------------------------------------------------------------
Interest 3,247
-------------
Total investment income 12,771

--------------------------------------------------------------------------------
Expenses
Management fees 46,707
--------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 593
Class B 1,479
Class C 1,309
Class N 251
--------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 4,697
Class B 849
Class C 547
Class N 276
Class Y 866
--------------------------------------------------------------------------------
Shareholder reports 18,055
--------------------------------------------------------------------------------
Legal, auditing and other professional fees 10,667
--------------------------------------------------------------------------------
Trustees' compensation 3,945
--------------------------------------------------------------------------------
Custodian fees and expenses 82
--------------------------------------------------------------------------------
Other 1,680
-------------
Total expenses 92,003
Less voluntary reimbursement of expenses (19,411)
Less voluntary waiver of transfer and shareholder
servicing agent fees--Classes A, B, C and N (1,433)
Less voluntary waiver of transfer and shareholder
servicing agent fees--Class Y (863)
-------------
Net expenses 70,296

--------------------------------------------------------------------------------
Net Investment Loss (57,525)

--------------------------------------------------------------------------------
Realized and Unrealized Loss
Net realized loss on investments (885,171)
--------------------------------------------------------------------------------
Net change in unrealized depreciation on investments (121,962)
-------------
Net realized and unrealized loss (1,007,133)

--------------------------------------------------------------------------------
Net Decrease in Net Assets Resulting from Operations $(1,064,658)
=============

See accompanying Notes to Financial Statements.

11 | OPPENHEIMER SELECT MANAGERS GARTMORE MILLENNIUM GROWTH FUND II

STATEMENTS OF CHANGES IN NET ASSETS

Year Ended November 30, 2002 2001 1
------------------------------------------------------------------------------------

Operations
Net investment loss $ (57,525) $ (37,343)
------------------------------------------------------------------------------------
Net realized loss (885,171) (1,370,554)
------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) (121,962) 160,518
-----------------------------
Net decrease in net assets resulting from operations (1,064,658) (1,247,379)

------------------------------------------------------------------------------------
Beneficial Interest Transactions Net increase in net assets resulting from
beneficial interest transactions:
Class A 79,719 5,282,582
Class B 133,805 88,164
Class C 79,667 118,917
Class N 50,078 28,215
Class Y -- --

------------------------------------------------------------------------------------
Net Assets
Total increase (decrease) (721,389) 4,270,499
------------------------------------------------------------------------------------
Beginning of period 4,287,499 17,000 2
-----------------------------
End of period $ 3,566,110 $ 4,287,499
=============================

1. For the period from February 16, 2001 (inception of offering) to November 30,
2001. 2. Reflects the value of the Manager's initial seed money investment at
December 22, 2000.

See accompanying Notes to Financial Statements.

12 | OPPENHEIMER SELECT MANAGERS GARTMORE MILLENNIUM GROWTH FUND II

FINANCIAL HIGHLIGHTS

13 | OPPENHEIMER SELECT MANAGERS GARTMORE MILLENNIUM GROWTH FUND II

FINANCIAL HIGHLIGHTS Continued

Class N Class Y
Year Year
Ended Ended
Nov. 30, Nov. 30,
2002 2001 1 2002 2001 2
-----------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------
Total Return, at Net Asset Value 3 (23.90)% (16.89)% (23.51)% (24.30)%

1. For the period from March 1, 2001 (inception of offering) to November 30,
2001. 2. For the period from February 16, 2001 (inception of offering) to
November 30, 2001.
3. Assumes an investment on the business day before the first day of the fiscal
period (or inception of offering), 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.
4. Annualized for periods of less than one full year. See accompanying Notes to
Financial Statements.

14 | OPPENHEIMER SELECT MANAGERS GARTMORE MILLENNIUM GROWTH FUND II

NOTES TO FINANCIAL STATEMENTS

--------------------------------------------------------------------------------
1. Significant Accounting Policies
Oppenheimer Select Managers Gartmore Millennium Growth Fund II (the Fund), a
series of Oppenheimer Select Managers, is an open-end management investment
company registered under the Investment Company Act of 1940, as amended. The
Fund's investment objective is to seek long-term capital appreciation. The
Fund's investment advisor is OppenheimerFunds, Inc. (the Manager). The Manager
has entered into a sub-advisory agreement with Gartmore Mutual Fund Capital
Trust (the Sub-Advisor).
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. All classes of shares have identical
rights and voting privileges. Earnings, net assets and net asset value per share
may differ by minor amounts due to each class having its own expenses directly
attributable to that class. Classes 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 following is a summary of significant accounting policies
consistently followed by the Fund.
--------------------------------------------------------------------------------
Securities Valuation. Securities listed or traded on National Stock Exchanges or
other domestic or foreign 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. 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 (including
restricted securities) for which quotations are not readily available are valued
primarily using dealer-supplied valuations, a portfolio pricing service
authorized by the Board of Trustees, or at their fair value. Fair value is
determined in good faith under 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. The Fund, along with other affiliated funds of the
Manager, may transfer uninvested cash balances into one or more joint repurchase
agreement accounts. These balances are invested in one or more repurchase
agreements, secured by U.S. government securities. Securities pledged as
collateral for repurchase agreements are held by a custodian bank until the
agreements mature. Each agreement requires that the market value of the
collateral be sufficient to cover payments of interest and principal; however,
in the event of default by the other party to the agreement, retention of the
collateral may be subject to legal proceedings.
--------------------------------------------------------------------------------
Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated daily 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 continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to shareholders. Therefore, no federal
income or excise tax provision is required.
During the fiscal year ended November 30, 2002, the Fund did not utilize any
capital loss carryforward.

15 | OPPENHEIMER SELECT MANAGERS GARTMORE MILLENNIUM GROWTH FUND II

NOTES TO FINANCIAL STATEMENTS Continued

--------------------------------------------------------------------------------
1. Significant Accounting Policies Continued
As of November 30, 2002, the Fund had available for federal income tax purposes
unused capital loss carryforwards as follows:

Expiring
-------------------------------------
2009 $1,370,554
2010 880,670
----------
Total $2,251,224
==========

As of November 30, 2002, the Fund had approximately $5,000 of post-October
losses available to offset future capital gains, if any. Such losses, if
unutilized, will expire in 2011.
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
Classification of Distributions to Shareholders. 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.
The Fund adjusts the classification of distributions to shareholders to
reflect the differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly, during the
year ended November 30, 2002, amounts have been reclassified to reflect
decrease in paid-in capital $57,525. Accumulated net investment loss was
decreased by the same amount. Net assets of the Fund were unaffected by the
reclassifications.
No distributions were paid during the year ended November 30, 2002 and the
period ended November 30, 2001.

As of November 30, 2002, the components of distributable earnings on a tax
basis were as follows:

Accumulated net realized loss $(2,255,725)
Net unrealized appreciation 38,556
-----------
Total $(2,217,169)
===========

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

16 | OPPENHEIMER SELECT MANAGERS GARTMORE MILLENNIUM GROWTH FUND II

Year Ended November 30, 2002 Period Ended November 30, 2001 1
Shares Amount Shares Amount
-----------------------------------------------------------------------------------------------

Class A
Sold 30,084 $ 196,309 595,277 $5,822,887
Redeemed (19,548) (116,590) (61,217) (540,305)
----------------------------------------------------------------
Net increase 10,536 $ 79,719 534,060 $5,282,582
================================================================
-----------------------------------------------------------------------------------------------
Class B
Sold 42,282 $ 258,845 69,186 $ 598,656
Redeemed (20,912) (125,040) (56,644) (510,492)
----------------------------------------------------------------
Net increase 21,370 $ 133,805 12,542 $ 88,164
================================================================
-----------------------------------------------------------------------------------------------
Class C
Sold 20,939 $ 138,980 15,134 $ 119,151
Redeemed (8,689) (59,313) (32) (234)
----------------------------------------------------------------
Net increase 12,250 $ 79,667 15,102 $ 118,917
================================================================
-----------------------------------------------------------------------------------------------
Class N
Sold 7,953 $ 51,460 4,166 $ 28,215
Redeemed (237) (1,382) -- --
----------------------------------------------------------------
Net increase 7,716 $ 50,078 4,166 $ 28,215
================================================================
-----------------------------------------------------------------------------------------------
Class Y
Sold -- $ -- -- $ --
Redeemed -- -- -- --
----------------------------------------------------------------
Net increase (decrease) -- $ -- -- $ --
================================================================

--------------------------------------------------------------------------------
3. Purchases and Sales of Securities The aggregate cost of purchases and
proceeds from sales of securities, other than short-term obligations, for the
year ended November 30, 2002, were $16,210,702 and $15,219,389, respectively.

As of November 30, 2002, unrealized appreciation (depreciation) based on cost
of securities for federal income tax purposes of $3,686,118 was composed of:

Gross unrealized appreciation $ 251,856
Gross unrealized depreciation (213,300)
---------
Net unrealized appreciation $ 38,556
=========

17 | OPPENHEIMER SELECT MANAGERS GARTMORE MILLENNIUM GROWTH FUND II

NOTES TO FINANCIAL STATEMENTS Continued

--------------------------------------------------------------------------------
4. Fees and Other Transactions with Affiliates
Management Fees. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee at an
annual rate of 1.20% of the first $400 million of average annual net assets of
the Fund, 1.10% of the next $400 million, and 1.00% of average annual net assets
in excess of $800 million. The Manager has voluntarily undertaken to assume
certain Fund expenses. The Manager reserves the right to amend or terminate that
expense assumption at any time.
--------------------------------------------------------------------------------
Sub-Advisor Fees. The Manager has retained Gartmore Mutual Fund Capital Trust as
the Sub-Advisor to provide the day-to-day portfolio management of the Fund. For
the year ended November 30, 2002, the Manager paid $27,568 to the Sub-Advisor.
--------------------------------------------------------------------------------
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 $19.75 per account fee.
Additionally, Class Y shares are subject to minimum fees of $5,000 for
assets of less than $10 million and $10,000 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.
OFS has voluntarily agreed to limit transfer and shareholder servicing agent
fees up to an annual rate of 0.35% for all classes. Effective November 1, 2002,
Class Y shares were changed from 0.25% to 0.35%. This undertaking may be amended
or withdrawn at any time.
--------------------------------------------------------------------------------
Distribution and Service Plan (12b-1) Fees. Under its General Distributor's
Agreement with the Manager, OppenheimerFunds Distributor, Inc. (the Distributor)
acts as the Fund's principal underwriter in the continuous public offering of
the different classes of shares of the Fund.

The compensation paid to (or retained by) the Distributor from the sale of
shares or on the redemption of shares is shown in the table below for the period
indicated.

November 30, 2002 $2,876 $1,899 $7 $4,524 $926 $279

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

November 30, 2002 $-- $2,142 $8 $4

--------------------------------------------------------------------------------
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
quarterly at an annual rate of up to 0.25% of the average annual net assets of
Class A shares of the Fund. For the year ended November 30, 2002, payments under
the Class A Plan totaled $593, all of which were paid by the Distributor to
recipients, and included $167 paid to an affiliate of the Manager. Any
unreimbursed expenses the Distributor incurs with respect to Class A shares in
any fiscal year cannot be recovered in subsequent years.
--------------------------------------------------------------------------------
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. Under the plans, the Fund pays the Distributor an annual asset-based
sales charge of 0.75% per year on Class B shares and on Class C shares and the
Fund pays the Distributor an annual asset-based sales charge of 0.25% per year
on Class N shares. The Distributor also receives a service fee of 0.25% per year
under each plan.

18 | OPPENHEIMER SELECT MANAGERS GARTMORE MILLENNIUM GROWTH FUND II

Distribution fees paid to the Distributor for the year ended November 30, 2002,
were as follows:

Class B Plan $1,479 $1,339 $41,203 21.29%
Class C Plan 1,309 1,025 41,624 26.67
Class N Plan 251 236 5,037 7.40

--------------------------------------------------------------------------------
5. Borrowing and Lending Arrangements
Bank Borrowings. Until November 12, 2002, the Fund had the ability to borrow
from a bank for temporary or emergency purposes provided asset coverage for
borrowings exceeded 300%. The Fund and other Oppenheimer funds participated in
a $400 million unsecured line of credit with a bank. Under that unsecured line
of credit, interest was charged to each fund, based on its borrowings, at a
rate equal to the Federal Funds Rate plus 0.45%. Under that credit facility,
the Fund paid a commitment fee equal to its pro rata share of the average
unutilized amount of the credit facility at a rate of 0.08% per annum.
--------------------------------------------------------------------------------
Interfund Borrowing and Lending Arrangements. Effective November 12, 2002, the
following interfund borrowing and lending arrangements went into effect.
Consistent with its fundamental policies and pursuant to an exemptive order
issued by the Securities and Exchange Commission ("SEC"), the Fund may engage
in borrowing and lending activities with other funds in the OppenheimerFunds
complex. Borrowing money from affiliated funds may afford the Fund the
flexibility to use the most cost-effective alternative to satisfy its borrowing
requirements. Lending money to an affiliated fund may allow the Fund to obtain
a higher rate of return than it could from interest rates on alternative
short-term investments. Implementation of interfund lending will be
accomplished consistent with applicable regulatory requirements, including the
provisions of the SEC order. There is a risk that a borrowing fund could have a
loan called on one day's notice. In that circumstance, the Fund might have to
borrow from a bank at a higher interest cost if money to lend were not
available from another Oppenheimer fund. When the Fund lends assets to another
affiliated fund, the Fund is subject to the risk that the borrowing fund fails
to repay the loan.
The Fund had no borrowing or lending arrangements outstanding during the
year ended or at November 30, 2002.

INDEPENDENT AUDITORS' REPORT

--------------------------------------------------------------------------------
To the Board of Trustees and Shareholders of Oppenheimer Select Managers
Mercury Advisors S&P 500 Index Fund: We have audited the accompanying statement
of assets and liabilities of Oppenheimer Select Managers Mercury Advisors S&P
500 Index Fund, which is a series of Oppenheimer Select Managers, including the
statement of investments, as of December 31, 2002, and the related statement of
operations for the year then ended, the statements of changes in net assets for
and the financial highlights for the periods indicated. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures
included confirmation of securities owned as of December 31, 2002, by
correspondence with the custodian and brokers; where replies were not received
from brokers, we performed other auditing procedures. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer Select Managers Mercury Advisors S&P 500 Index Fund as of December
31, 2002, the results of its operations for the year then ended, the changes in
its net assets and the financial highlights for the periods indicated, in
conformity with accounting principles generally accepted in the United States
of America.

/s/ Deloitte & Touche LLP
--------------------------
Deloitte & Touche LLP

Denver, Colorado
February 19, 2003

26 | OPPENHEIMER SELECT MANAGERS MERCURY ADVISORS S&P 500(R) INDEX FUND

STATEMENT OF ASSETS AND LIABILITIES December 31, 2002

--------------------------------------------------------------------------------
Assets

Investments in Master S&P 500 Index Series $28,596,226
--------------------------------------------------------------------------------
Receivables and other assets:
Shares of beneficial interest sold 101,971
Other 1,701
------------
Total assets 28,699,898

--------------------------------------------------------------------------------
Liabilities

Payables and other liabilities:
Shares of beneficial interest redeemed 22,539
Registration and filing fees 19,260
Transfer and shareholder servicing agent fees 16,879
Distribution and service plan fees 16,307
Legal, auditing and other professional fees 3,198
Trustees' compensation 222
Shareholder reports 77
Other 70,965
------------
Total liabilities 149,447

--------------------------------------------------------------------------------
Net Assets $28,550,451
============

--------------------------------------------------------------------------------
Composition of Net Assets

Paid-in capital $34,322,883
--------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (1,194,777)
--------------------------------------------------------------------------------
Net unrealized depreciation on investments (4,577,655)
------------
Net Assets $28,550,451
============

12 | OPPENHEIMER SELECT MANAGERS MERCURY ADVISORS S&P 500(R) INDEX FUND

--------------------------------------------------------------------------------
Net Asset Value Per Share

Class A Shares:
Net asset value and redemption price per share
(based on net assets of $6,334,062 and 935,227 shares
of beneficial interest outstanding) $6.77
Maximum offering price per share (net asset value plus sales
charge of 5.75% of offering price) $7.18
--------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $4,183,602
and 623,688 shares of beneficial interest outstanding) $6.71
--------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $4,952,056
and 738,703
shares of beneficial interest outstanding) $6.70
--------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $13,079,891
and 1,940,897 shares of beneficial interest outstanding) $6.74
--------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $840 and 123 shares of beneficial
interest outstanding) $6.83

See accompanying Notes to Financial Statements.

13 | OPPENHEIMER SELECT MANAGERS MERCURY ADVISORS S&P 500(R) INDEX FUND

STATEMENT OF OPERATIONS For the Year Ended December 31, 2002

----------------------------------------------------------------------------------------------------------------------
Net Investment Income Allocated from Master S&P 500 Index Series

Investment Income $ 365,180
----------------------------------------------------------------------------------------------------------------------
Expenses 8,629
----------------------------------------------------------------------------------------------------------------------
Net investment income from Master S&P 500 Index Series 356,551

Fund Income and Expenses
----------------------------------------------------------------------------------------------------------------------
Investment Income
Interest from short-term obligations 28

----------------------------------------------------------------------------------------------------------------------
Expenses
Distribution and service plan fees:
Class A 12,489
Class B 29,212
Class C 35,829
Class N 49,775
----------------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 34,893
Class B 19,283
Class C 20,717
Class N 53,988
Class Y 452
----------------------------------------------------------------------------------------------------------------------
Administrative fees 108,266
----------------------------------------------------------------------------------------------------------------------
Registration and filing fees 17,746
----------------------------------------------------------------------------------------------------------------------
Shareholder reports 14,832
----------------------------------------------------------------------------------------------------------------------
Legal, auditing and other professional fees 5,362
----------------------------------------------------------------------------------------------------------------------
Trustees' compensation 4,312
----------------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 5
----------------------------------------------------------------------------------------------------------------------
Other 84,265
-----------------
Total expenses 491,426
Less voluntary reimbursement of expenses (156,115)
Less voluntary waiver of transfer and shareholder servicing agent fees--
Classes A, B, C and N (41,755)
Less voluntary waiver of transfer and shareholder servicing agent fees--Class Y (446)
-----------------
Net expenses 293,110

----------------------------------------------------------------------------------------------------------------------
Net Investment Income 63,469

----------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Loss Allocated from Master S&P 500 Index Series
Net realized loss on investments (929,632)
----------------------------------------------------------------------------------------------------------------------
Net change in unrealized depreciation on investments (4,893,113)
-----------------
Net realized and unrealized loss (5,822,745)

----------------------------------------------------------------------------------------------------------------------
Net Decrease in Net Assets Resulting from Operations $(5,759,276)
=================

See accompanying Notes to Financial Statements.

14 | OPPENHEIMER SELECT MANAGERS MERCURY ADVISORS S&P 500(R) INDEX FUND

STATEMENTS OF CHANGES IN NET ASSETS

Year Ended December 31, 2002 2001 1
---------------------------------------------------------------------------------------------------------------

Operations
Net investment income $ 63,469 $ 1,533
---------------------------------------------------------------------------------------------------------------
Net realized loss (929,632) (265,145)
---------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) (4,893,113) 315,458
-----------------------------------
Net increase (decrease) in net assets resulting from operations (5,759,276) 51,846

---------------------------------------------------------------------------------------------------------------
Dividends and/or Distributions to Shareholders Dividends from net investment
income:
Class A (23,993) --
Class B -- --
Class C -- --
Class N (43,513) --
Class Y (2) --

---------------------------------------------------------------------------------------------------------------
Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from beneficial interest
transactions:
Class A 4,148,608 3,648,728
Class B 3,813,804 1,206,748
Class C 4,395,652 1,551,116
Class N 10,658,816 4,884,686
Class Y (12) 243

---------------------------------------------------------------------------------------------------------------
Net Assets
Total increase 17,190,084 11,343,367
---------------------------------------------------------------------------------------------------------------
Beginning of period 11,360,367 17,000 2
-----------------------------------
End of period [including accumulated net investment income of $1,533
for the period ended December 31, 2001] $28,550,451 $11,360,367
===================================

1. For the period from February 16, 2001 (inception of offering) to December 31,
2001. 2. Reflects the value of the Manager's initial seed money investment at
December 22, 2000.

See accompanying Notes to Financial Statements.

15 | OPPENHEIMER SELECT MANAGERS MERCURY ADVISORS S&P 500(R) INDEX FUND

FINANCIAL HIGHLIGHTS

Class A Year Ended December 31 2002 2001 1
-------------------------------------------------------------------------------------------------------------------------
Per Share Operating Data

-------------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 2 (23.21)% (11.50)%

See accompanying Notes to Financial Statements.

16 | OPPENHEIMER SELECT MANAGERS MERCURY ADVISORS S&P 500(R) INDEX FUND

Class B Year Ended December 31 2002 2001 1

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

----------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 2 (23.75)% (12.00)%

See accompanying Notes to Financial Statements.

17 | OPPENHEIMER SELECT MANAGERS MERCURY ADVISORS S&P 500(R) INDEX FUND

FINANCIAL HIGHLIGHTS Continued

Class C Year Ended December 31 2002 2001 1
-------------------------------------------------------------------------------------------------------------------
Per Share Operating Data

-------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 2 (23.78)% (12.10)%

See accompanying Notes to Financial Statements.

18 | OPPENHEIMER SELECT MANAGERS MERCURY ADVISORS S&P 500(R) INDEX FUND

Class N Year Ended December 31 2002 2001 1
-------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 2 (23.33)% (7.55)%

-------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $13,080 $5,014
-------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 9,977 $1,425
-------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 0.38% 0.07%
Expenses 2.16% 2.14%
Expenses, net of voluntary reimbursement of expenses and/or
voluntary waiver of transfer agent fees 1.29% 1.40%
-------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 4 4.59% 3.21%

See accompanying Notes to Financial Statements.

19 | OPPENHEIMER SELECT MANAGERS MERCURY ADVISORS S&P 500(R) INDEX FUND

FINANCIAL HIGHLIGHTS Continued

Class Y Year Ended December 31 2002 2001 1
----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 2 (23.06)% (11.00)%

----------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $1 $1
----------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $1 $1
----------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 0.80% 0.57%
Expenses 46.32% 384.04%
Expenses, net of voluntary reimbursement of expenses and/or
voluntary waiver of transfer agent fees 0.83% 0.62%
----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 4 4.59% 3.21%

See accompanying Notes to Financial Statements.

20 | OPPENHEIMER SELECT MANAGERS MERCURY ADVISORS S&P 500(R) INDEX FUND

NOTES TO FINANCIAL STATEMENTS

--------------------------------------------------------------------------------
1. Significant Accounting Policies
Oppenheimer Select Managers Mercury S&P 500(R) Index Fund (the Fund) is a
separate series of Oppenheimer Select Managers, a non-diversified, open-end
management investment company registered under the Investment Company Act of
1940, as amended. The Fund invests substantially all of its assets in the
Master S&P 500 Index Series of the Quantitative Master Series Trust (the
Trust), a registered open-end investment company that has the same goals as the
Fund. The financial statements of the Trust are included elsewhere in this
report and should be read with the Fund's financial statements. The percentage
of the Trust owned by the Fund at December 31, 2002 was 1.67%. As of December
31, 2002 the total return for the Master S&P 500 Index Fund was (22.22)%. The
Fund's investment objective is to seek to match the performance of the Standard
& Poor's 500 Composite Stock Price Index (the "S&P 500") as closely as possible
before the deduction of Fund expenses. The Fund's administrator 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. All classes of shares have identical
rights and voting privileges. Earnings, net assets and net asset value per
share may differ by minor amounts due to each class having its own expenses
directly attributable to that class. Classes 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 following is a summary of significant accounting policies consistently
followed by the Fund.

--------------------------------------------------------------------------------
Securities Valuation. The Fund's investment in the Trust is valued based on the
daily reported net asset value of the Trust. Valuation of securities held by
the Trust is discussed in the notes to Master S&P 500 Index Series included
elsewhere in this report.
--------------------------------------------------------------------------------
Allocation of Income, Expenses, Gains and Losses. The Fund records daily its
proportionate share of the Trust's income, expenses and realized and unrealized
gains and losses. In addition, the Fund accrues its own expenses. Income,
expenses (other than those attributable to a specific class), gains and losses
are allocated daily 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 continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by capital loss carryforwards, if any, to shareholders.
Therefore, no federal income tax provision is required, however, during the
year ended December 31, 2002, the Fund paid a federal excise tax of $60.

As of December 31, 2002, the Fund had available for federal income tax purposes
unused capital loss carryforwards as follows:
Expiring
--------------------------
2009 $ 200,753
2010 853,501
----------
$1,054,254
==========

During the fiscal year ended December 31, 2002, the Fund did not utilize any
capital loss carryforward.

21 | OPPENHEIMER SELECT MANAGERS MERCURY ADVISORS S&P 500(R) INDEX FUND

NOTES TO FINANCIAL STATEMENTS Continued

--------------------------------------------------------------------------------
1. Significant Accounting Policies Continued
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.
--------------------------------------------------------------------------------
Classification of Dividends and Distributions to Shareholders. 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.
The Fund adjusts the classification of distributions to shareholders to
reflect the differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly, during the
year ended December 31, 2002, amounts have been reclassified to reflect a
decrease in paid-in capital of $2,506. Overdistributed net investment income
was decreased by the same amount. Net assets of the Fund were unaffected by the
reclassifications.

The tax character of distributions paid during the year ended December 31, 2002
and the period ended December 31, 2001 was as follows:
Year Ended Period Ended
December 31, 2002 December 31, 2001
---------------------------------------------------------------------------
Distributions paid from:
Ordinary income $67,508 $--
Long-term capital gain -- --
Return of capital -- --
---------------------------------
Total $67,508 $--
=================================

As of December 31, 2002, the components of distributable earnings on a tax
basis were as follows:
Accumulated net realized loss $(1,194,777)
Net unrealized depreciation (4,577,655)
-----------
Total $(5,772,432)
===========

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

22 | OPPENHEIMER SELECT MANAGERS MERCURY ADVISORS S&P 500(R) INDEX FUND

Year Ended December 31, 2002 Period Ended December 31, 2001 1
Shares Amount Shares Amount
--------------------------------------------------------------------------------------------------------------------------

Class A
Sold 780,715 $ 6,024,191 508,428 $4,545,635
Dividends and/or distributions reinvested 3,389 23,559 -- --
Redeemed (255,444) (1,899,142) (103,261) (896,907)
--------------------------------------------------------------------
Net increase 528,660 $ 4,148,608 405,167 $3,648,728
====================================================================

--------------------------------------------------------------------------------------------------------------------------
Class B
Sold 616,148 $ 4,695,369 139,646 $1,247,649
Dividends and/or distributions reinvested -- -- -- --
Redeemed (127,633) (881,565) (4,573) (40,901)
--------------------------------------------------------------------
Net increase 488,515 $ 3,813,804 135,073 $1,206,748
====================================================================

--------------------------------------------------------------------------------------------------------------------------
Class C
Sold 746,146 $ 5,682,782 196,810 $1,722,460
Dividends and/or distributions reinvested -- -- -- --
Redeemed (184,645) (1,287,130) (19,708) (171,344)
--------------------------------------------------------------------
Net increase 561,501 $ 4,395,652 177,102 $1,551,116
====================================================================

--------------------------------------------------------------------------------------------------------------------------
Class N
Sold 1,916,160 $14,688,292 633,876 $5,457,358
Dividends and/or distributions reinvested 6,101 42,162 -- --
Redeemed (549,800) (4,071,638) (65,440) (572,672)
--------------------------------------------------------------------
Net increase 1,372,461 $10,658,816 568,436 $4,884,686
====================================================================

--------------------------------------------------------------------------------------------------------------------------
Class Y
Sold -- $ -- 27 $ 258
Dividends and/or distributions reinvested -- -- -- --
Redeemed (2) (12) (2) (15)
--------------------------------------------------------------------
Net increase (decrease) (2) $ (12) 25 $ 243
====================================================================

1. For the period from February 16, 2001 (inception of offering) to December
31, 2001, for Class A, B, C and Y shares and for the period from March 1, 2001
(inception of offering) to December 31, 2001, for Class N shares.

--------------------------------------------------------------------------------
3. Increases and Decreases of Investments in the Trust Increases and decreases
in the Fund's investment in the Trust for the year ended December 31, 2002,
were $41,113,812 and $24,007,760, respectively.

--------------------------------------------------------------------------------
4. Fees and Other Transactions with Affiliates
Administration Fees. Administration fees paid to the Manager were in accordance
with the administration agreement with the Fund which provides for a fee of
0.50% of the average annual net assets of the Fund. During the year ended
December 31, 2002, the Fund paid $108,266 to the Manager for administration
services.

--------------------------------------------------------------------------------
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 $19.75 per account fee.

23 | OPPENHEIMER SELECT MANAGERS MERCURY ADVISORS S&P 500(R) INDEX FUND

NOTES TO FINANCIAL STATEMENTS Continued

--------------------------------------------------------------------------------
4. Fees and Other Transactions with Affiliates Continued Additionally, Class Y
shares are subject to minimum fees of $5,000 for
assets of less than $10 million and $10,000 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.
OFS has voluntarily agreed to limit transfer and shareholder servicing agent
fees up to an annual rate of 0.35% of average annual net assets for all
classes. This undertaking may be amended or withdrawn at any time.

--------------------------------------------------------------------------------
Distribution and Service Plan (12b-1) Fees. Under its General Distributor's
Agreement with the Manager, OppenheimerFunds Distributor, Inc. (the
Distributor) acts as the Fund's principal underwriter in the continuous public
offering of the different classes of shares of the Fund.

The compensation paid to (or retained by) the Distributor from the sale of
shares or on the redemption of shares is shown in the table below for the
period indicated.

December 31, 2002 $71,413 $23,220 $11,364 $130,765 $48,663 $130,233

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

Class A Class B Class C Class D
Contingent Deferred Contingent Deferred Contingent Deferred Contingent Deferred
Sales Charges Sales Charges Sales Charges Sales Charges
Retained by Retained by Retained by Retained by
Year Ended Distributor Distributor Distributor Distributor
------------------------------------------------------------------------------------------------------------------------------------

December 31, 2002 $-- $4,358 $2,608 $27,006

--------------------------------------------------------------------------------
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
quarterly at an annual rate of up to 0.25% of the average annual net assets of
Class A shares of the Fund. For the year ended December 31, 2002, payments
under the Class A Plan totaled $12,489, all of which were paid by the
Distributor to recipients, and included $540 paid to an affiliate of the
Manager. Any unreimbursed expenses the Distributor incurs with respect to Class
A shares in any fiscal year cannot be recovered in subsequent years.
--------------------------------------------------------------------------------
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. Under the plans, the Fund pays the Distributor an annual asset-based
sales charge of 0.75% per year on Class B shares and on Class C shares and the
Fund pays the Distributor an annual asset-based sales charge of 0.25% per year
on Class N shares. The Distributor also receives a service fee of 0.25% per
year under each plan.

Distribution fees paid to the Distributor for the year ended December 31, 2002,
were as follows:

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

Class B Plan $29,212 $26,902 $181,893 4.35%
Class C Plan 35,829 30,578 106,844 2.16
Class N Plan 49,775 48,189 392,192 3.00

24 | OPPENHEIMER SELECT MANAGERS MERCURY ADVISORS S&P 500(R) INDEX FUND

--------------------------------------------------------------------------------
5. Bank Borrowings
The Fund had the ability to borrow from a bank for temporary or emergency
purposes provided asset coverage for borrowings exceeded 300%. The Fund and
other Oppenheimer funds participated in a $400 million unsecured line of credit
with a bank. Under that unsecured line of credit, interest was charged to each
fund, based on its borrowings, at a rate equal to the Federal Funds Rate plus
0.45%. Under that credit facility, the Fund paid a commitment fee equal to its
pro rata share of the average unutilized amount of the credit facility at a
rate of 0.08% per annum. The credit facility was terminated on November 12,
2002.

25 | OPPENHEIMER SELECT MANAGERS MERCURY ADVISORS S&P 500(R) INDEX FUND

Financial Statements for the Master S&P 500 Index Series

December 31, 2002

SCHEDULE OF INVESTMENTS (in U.S. dollars)

Master S&P 500 Index Series
------------------------------------------------------------------------------
Shares
Issue Held Value
================================================================================================

Common 3M Co. ..................................... 82,794 $10,208,500
Stocks ACE Limited ................................ 57,710 1,693,211
+ ADC Telecommunications, Inc. ............... 152,555 318,840
+ The AES Corporation ........................ 109,860 331,777
AFLAC Incorporated ......................... 102,599 3,090,282
ALLTEL Corporation ......................... 60,037 3,061,887
+ AMR Corporation ............................ 31,905 210,573
+ AOL Time Warner Inc. ....................... 929,484 12,176,240
AT&T Corp. ................................. 154,092 4,023,342
+ AT&T Wireless Services Inc. ................ 543,247 3,069,346
Abbott Laboratories ........................ 325,517 13,020,680
Adobe Systems Incorporated ................. 52,225 1,300,925
Adolph Coors Company (Class B) ............. 10,483 642,084
+ Advanced Micro Devices, Inc. ............... 70,047 452,504
Aetna Inc. (New Shares) .................... 30,092 1,237,383
+ Agilent Technologies, Inc. ................. 95,610 1,717,156
Air Products and Chemicals, Inc. ........... 46,947 2,006,984
Alberto-Culver Company (Class B) ........... 10,028 505,411
Albertson's, Inc. .......................... 84,366 1,877,987
Alcoa Inc. ................................. 172,145 3,921,463
Allegheny Energy, Inc. ..................... 31,520 238,291
Allegheny Technologies Incorporated ........ 14,228 88,640
Allergan Inc. .............................. 29,364 1,691,954
+ Allied Waste Industries, Inc. .............. 40,578 405,780
The Allstate Corporation ................... 146,944 5,435,459
+ Altera Corporation ......................... 85,790 1,058,649
Ambac Financial Group, Inc. ................ 21,766 1,224,120
Amerada Hess Corporation ................... 20,467 1,126,708
Ameren Corporation ......................... 28,381 1,179,798
American Electric Power Company, Inc. ...... 76,920 2,102,224
American Express Company ................... 276,884 9,787,849
+ American Greetings Corporation
(Class A) ................................ 13,116 207,233
American International Group, Inc. ......... 543,907 31,465,020
+ American Power Conversion
Corporation .............................. 36,644 555,157
+ American Standard Companies, Inc. .......... 13,900 988,846
AmerisourceBergen Corporation .............. 24,943 1,354,654
+ Amgen Inc. ................................. 266,247 12,870,380
AmSouth Bancorporation ..................... 75,103 1,441,978
Anadarko Petroleum Corporation ............. 49,061 2,350,022
+ Analog Devices, Inc. ....................... 73,016 1,742,892
+ Andrew Corporation ......................... 20,239 208,057
Anheuser-Busch Companies, Inc. ............. 180,885 8,754,834
+ Anthem, Inc. ............................... 26,980 1,697,042
Aon Corporation ............................ 57,385 1,084,003
Apache Corporation ......................... 33,492 1,908,709
+ Apollo Group, Inc. (Class A) ............... 37,800 1,663,200
+ Apple Computer, Inc. ....................... 78,617 1,126,582
Applera Corporation--Applied
Biosystems Group ......................... 40,455 709,581
+ Applied Materials, Inc. .................... 335,476 4,371,252
+ Applied Micro Circuits Corporation ......... 61,667 227,551
Archer-Daniels-Midland Company ............. 134,934 1,673,182
Ashland Inc. ............................... 13,158 375,398
Autodesk, Inc. ............................. 30,564 437,065
Automatic Data Processing, Inc. ............ 120,680 4,736,690
+ AutoZone, Inc. ............................. 22,777 1,609,195
+ Avaya Inc. ................................. 55,782 136,666
Avery Dennison Corporation ................. 22,658 1,383,951
Avon Products, Inc. ........................ 48,680 2,622,392
The B.F. Goodrich Company .................. 20,987 384,482
BB&T Corporation ........................... 95,900 3,547,341
+ BJ Services Company ........................ 34,600 1,117,926
+ BMC Software, Inc. ......................... 46,520 795,957
Baker Hughes Incorporated .................. 64,944 2,090,547
Ball Corporation ........................... 11,280 577,423
Bank of America Corporation ................ 315,813 21,971,110
The Bank of New York Company, Inc. ......... 154,195 3,694,512
Bank One Corporation ....................... 244,489 8,936,073
Bausch & Lomb Incorporated ................. 14,987 539,532
Baxter International Inc. .................. 130,127 3,643,556
The Bear Stearns Companies Inc. ............ 22,611 1,343,093
Becton, Dickinson and Company .............. 51,895 1,592,658
+ Bed Bath & Beyond Inc. ..................... 64,824 2,238,373
BellSouth Corporation ...................... 387,134 10,015,157
Bemis Company, Inc. ........................ 9,868 489,749
+ Best Buy Co., Inc. ......................... 71,046 1,715,761
+ Big Lots, Inc. ............................. 23,595 312,162
+ Biogen, Inc. ............................... 33,666 1,348,660
Biomet, Inc. ............................... 58,235 1,669,015
The Black & Decker Corporation ............. 19,642 842,445
The Boeing Company ......................... 180,120 5,942,159
Boise Cascade Corporation .................. 11,024 278,025
+ Boston Scientific Corporation .............. 83,082 3,532,647
Bristol-Myers Squibb Company ............... 403,561 9,342,437
+ Broadcom Corporation (Class A) ............. 60,881 916,868
Brown-Forman Corporation (Class B) ......... 14,044 917,916
Brunswick Corporation ...................... 17,764 352,793
Burlington Northern Santa Fe Corp. ......... 79,194 2,059,836
Burlington Resources Inc. .................. 41,418 1,766,478
C.R. Bard, Inc. ............................ 10,509 609,522
+ CIENA Corporation .......................... 92,895 477,480
CIGNA Corporation .......................... 30,796 1,266,332
CMS Energy Corporation ..................... 41,914 395,668
CSX Corporation ............................ 42,578 1,205,383
CVS Corporation ............................ 80,218 2,003,043
+ Calpine Corporation ........................ 76,560 249,586
Campbell Soup Company ...................... 77,035 1,808,011
Capital One Financial Corporation .......... 43,867 1,303,727
Cardinal Health, Inc. ...................... 93,791 5,551,489
Carnival Corporation ....................... 118,180 2,948,591
Caterpillar Inc. ........................... 75,944 3,472,160
+ Cendant Corporation ........................ 209,125 2,191,630
CenterPoint Energy, Inc. ................... 68,070 578,595
Centex Corporation ......................... 15,234 764,747
CenturyTel, Inc. ........................... 25,977 763,204
The Charles Schwab Corporation ............. 268,868 2,917,218
Charter One Financial, Inc. ................ 45,995 1,321,436
ChevronTexaco Corporation .................. 225,450 14,987,916
+ Chiron Corporation ......................... 42,334 1,591,758
The Chubb Corporation ...................... 37,753 1,970,707
Cincinnati Financial Corporation ........... 29,511 1,108,138
Cinergy Corp. .............................. 31,828 1,073,240
Cintas Corporation ......................... 35,002 1,601,342
Circuit City Stores--Circuit City Group .... 43,023 319,231
+ Cisco Systems, Inc. ........................ 1,504,671 19,711,190
Citigroup Inc. ............................. 1,070,236 37,661,605
+ Citizens Communications Company ............ 50,618 534,020
+ Citrix Systems, Inc. ....................... 38,705 476,846
+ Clear Channel Communications, Inc. ......... 125,004 4,661,399
The Clorox Company ......................... 52,298 2,157,292
The Coca-Cola Company ...................... 517,128 22,660,549
Coca-Cola Enterprises Inc. ................. 91,687 1,991,442
Colgate-Palmolive Company .................. 109,281 5,729,603
+ Comcast Corporation (Class A) .............. 326,544 7,696,642
+ Comcast Corporation (Special Class A) ...... 151,805 3,429,275
Comerica Incorporated ...................... 36,691 1,586,519
Computer Associates International, Inc. .... 119,012 1,606,662
+ Computer Sciences Corporation .............. 35,250 1,214,362
+ Compuware Corporation ...................... 67,949 326,155
+ Comverse Technology, Inc. .................. 48,843 489,407
ConAgra, Inc. .............................. 102,478 2,562,975
+ Concord EFS, Inc. .......................... 104,939 1,651,740
ConocoPhillips ............................. 138,889 6,720,839
Consolidated Edison, Inc. .................. 42,425 1,816,638
Constellation Energy Group ................. 29,049 808,143
+ Convergys Corporation ...................... 32,314 489,557
Cooper Industries, Ltd. (Class A) .......... 23,152 843,890
Cooper Tire & Rubber Company ............... 14,930 229,026
+ Corning Incorporated ....................... 192,875 638,416
+ Costco Wholesale Corporation ............... 100,424 2,817,897
Countrywide Credit Industries, Inc. ........ 28,478 1,470,889
Crane Co. .................................. 11,288 224,970
Cummins Engine Company, Inc. ............... 12,609 354,691
DTE Energy Company ......................... 33,538 1,556,163
Dana Corporation ........................... 26,845 315,697
Danaher Corporation ........................ 30,725 2,018,632
Darden Restaurants, Inc. ................... 41,707 852,908
Deere & Company ............................ 53,298 2,443,713
+ Del Monte Foods Company .................... 11,316 87,133
+ Dell Computer Corporation .................. 540,516 14,453,398
Delphi Automotive Systems Corporation ...... 110,625 890,531
Delta Air Lines, Inc. ...................... 25,376 307,050
Deluxe Corporation ......................... 13,636 574,076
Devon Energy Corporation ................... 28,758 1,319,992
Dillard's, Inc. (Class A) .................. 20,764 329,317
Dollar General Corporation ................. 61,150 730,742
Dominion Resources, Inc. ................... 67,257 3,692,409
Dover Corporation .......................... 37,659 1,098,136
The Dow Chemical Company ................... 185,076 5,496,757
Dow Jones & Company, Inc. .................. 17,419 753,023
Duke Energy Corporation .................... 183,719 3,589,869
Dynegy Inc. (Class A) ...................... 85,471 100,856
E.I. du Pont de Nemours and Company ........ 206,973 8,775,655
+ EMC Corporation ............................ 441,154 2,708,686
EOG Resources, Inc. ........................ 22,670 904,986
Eastman Chemical Company ................... 15,750 579,127
Eastman Kodak Company ...................... 66,153 2,318,001
Eaton Corporation .......................... 14,275 1,115,020
+ eBay Inc. .................................. 63,200 4,286,224
Ecolab Inc. ................................ 25,507 1,262,596

1 & 2

December 31, 2002

SCHEDULE OF INVESTMENTS (continued) (in U.S. dollars)

Master S&P 500 Index Series (continued)
------------------------------------------------------------------------------
Shares
Issue Held Value
================================================================================================

Common + Edison International ....................... 57,899 $ 686,103
Stocks El Paso Corporation ........................ 131,915 918,128
(continued) + Electronic Arts Inc. ....................... 30,900 1,537,893
Electronic Data Systems Corporation ........ 106,487 1,962,555
Eli Lilly and Company ...................... 236,977 15,048,040
Emerson Electric Co. ....................... 87,248 4,436,561
Engelhard Corporation ...................... 23,197 518,453
Entergy Corporation ........................ 42,355 1,930,964
Equifax Inc. ............................... 25,402 587,802
Equity Office Properties Trust ............. 80,064 1,999,999
Equity Residential Properties Trust ........ 55,840 1,372,547
Exelon Corporation ......................... 68,764 3,628,676
Exxon Mobil Corporation++ .................. 1,401,612 48,972,323
FPL Group, Inc. ............................ 39,507 2,375,556
Family Dollar Stores, Inc. ................. 30,664 957,023
Fannie Mae ................................. 207,273 13,333,872
+ Federated Department Stores, Inc. .......... 38,267 1,100,559
FedEx Corp. ................................ 58,608 3,177,726
Fifth Third Bancorp ........................ 124,244 7,274,486
First Data Corporation ..................... 157,240 5,567,868
First Tennessee National Corporation ....... 31,400 1,128,516
FirstEnergy Corp. .......................... 61,316 2,021,588
+ Fiserv, Inc. ............................... 39,792 1,350,938
FleetBoston Financial Corporation .......... 211,047 5,128,442
Fluor Corporation .......................... 15,261 427,308
Ford Motor Company ......................... 392,599 3,651,171
+ Forest Laboratories, Inc. .................. 38,882 3,818,990
Fortune Brands, Inc. ....................... 29,415 1,368,092
Franklin Resources, Inc. ................... 49,786 1,696,707
Freddie Mac ................................ 144,903 8,556,522
+ Freeport-McMoRan Copper & Gold,
Inc. (Class B) ........................... 36,034 604,650
Gannett Co., Inc. .......................... 56,779 4,076,732
The Gap, Inc. .............................. 179,293 2,782,627
+ Gateway Inc. ............................... 57,298 179,916
General Dynamics Corporation ............... 44,348 3,519,901
General Electric Company ................... 2,072,681 50,469,782
General Mills, Inc. ........................ 80,860 3,796,377
General Motors Corporation ................. 121,139 4,465,183
Genuine Parts Company ...................... 33,914 1,044,551
+ Genzyme Corporation ........................ 38,580 1,140,811
Georgia-Pacific Group ...................... 47,367 765,451
The Gillette Company ....................... 217,501 6,603,330
Golden West Financial Corporation .......... 32,948 2,365,996
The Goldman Sachs Group, Inc. .............. 100,500 6,844,050
The Goodyear Tire & Rubber Company ......... 33,593 228,768
Great Lakes Chemical Corporation ........... 10,035 239,636
+ Guidant Corporation ........................ 64,721 1,996,643
H & R Block, Inc. .......................... 41,985 1,687,797
H.J. Heinz Company ......................... 72,136 2,371,110
HCA Inc. ................................... 112,706 4,677,299
+ HEALTHSOUTH Corporation .................... 73,725 309,645
Halliburton Company ........................ 95,404 1,785,009
Harley-Davidson, Inc. ...................... 66,759 3,084,266
+ Harrah's Entertainment, Inc. ............... 23,130 915,948
The Hartford Financial Services
Group, Inc. .............................. 55,325 2,513,415
Hasbro, Inc. ............................... 35,094 405,336
Health Management Associates, Inc. .........
(Class A) ................................ 49,800 891,420
+ Hercules Incorporated ...................... 22,359 196,759
Hershey Foods Corporation .................. 29,228 1,971,136
Hewlett-Packard Company .................... 639,417 11,100,279
Hilton Hotels Corporation .................. 74,931 952,373
The Home Depot, Inc. ....................... 490,886 11,761,628
Honeywell International Inc. ............... 167,577 4,021,848
Household International, Inc. .............. 98,994 2,753,023
+ Humana Inc. ................................ 30,104 301,040
Huntington Bancshares Incorporated ......... 47,929 896,751
IMS Health Incorporated .................... 60,265 964,240
ITT Industries, Inc. ....................... 15,596 946,521
Illinois Tool Works Inc. ................... 62,821 4,074,570
Ingersoll-Rand Company (Class A) ........... 35,798 1,541,462
Intel Corporation .......................... 1,388,131 21,613,200
International Business Machines
Corporation .............................. 352,967 27,354,942
International Flavors & Fragrances Inc. .... 19,496 684,310
+ International Game Technology .............. 19,530 1,482,718
International Paper Company ................ 99,762 3,488,677
The Interpublic Group of
Companies, Inc. .......................... 77,786 1,095,227
+ Intuit Inc. ................................ 46,352 2,174,836
J.C. Penney Company, Inc. .................. 60,698 1,396,661
J.P. Morgan Chase & Co. .................... 423,255 10,158,120
+ JDS Uniphase Corporation ................... 315,687 779,747
+ Jabil Circuit, Inc. ........................ 37,464 671,355
Jefferson--Pilot Corporation ............... 29,736 1,133,239
John Hancock Financial Services, Inc. ...... 61,242 1,708,652
Johnson & Johnson .......................... 619,777 33,288,223
Johnson Controls, Inc. ..................... 16,110 1,291,539
+ Jones Apparel Group, Inc. .................. 25,860 916,478
KB HOME .................................... 13,611 583,231
+ KLA-Tencor Corporation ..................... 42,337 1,497,460
Kellogg Company ............................ 83,765 2,870,626
Kerr-McGee Corporation ..................... 24,265 1,074,939
KeyCorp .................................... 79,810 2,006,423
KeySpan Corporation ........................ 26,261 925,438
Kimberly-Clark Corporation ................. 106,723 5,066,141
Kinder Morgan, Inc. ........................ 26,934 1,138,500
+ King Pharmaceuticals, Inc. ................. 46,355 796,842
Knight Ridder, Inc. ........................ 14,151 895,051
+ Kohl's Corporation ......................... 72,709 4,068,068
+ The Kroger Co. ............................. 164,624 2,543,441
+ LSI Logic Corporation ...................... 68,566 395,626
Leggett & Platt, Incorporated .............. 40,516 909,179
Lehman Brothers Holdings, Inc. ............. 49,078 2,615,367
+ Lexmark International Group, Inc. ..........
(Class A) ................................ 26,839 1,623,759
The Limited, Inc. .......................... 99,944 1,392,220
Lincoln National Corporation ............... 39,019 1,232,220
Linear Technology Corporation .............. 70,199 1,805,518
Liz Claiborne, Inc. ........................ 19,838 588,197
Lockheed Martin Corporation ................ 98,570 5,692,418
Loews Corporation .......................... 38,690 1,720,157
+ Louisiana-Pacific Corporation .............. 18,528 149,336
Lowe's Companies, Inc. ..................... 158,740 5,952,750
+ Lucent Technologies Inc. ................... 666,158 839,359
MBIA, Inc. ................................. 27,745 1,216,896
MBNA Corporation ........................... 263,272 5,007,433
MGIC Investment Corporation ................ 22,080 911,904
+ Manor Care, Inc. ........................... 19,704 366,691
Marathon Oil Corporation ................... 58,447 1,244,337
Marriott International, Inc. (Class A) ..... 53,927 1,772,580
Marsh & McLennan Companies, Inc. ........... 115,598 5,341,784
Marshall & Ilsley Corporation .............. 38,600 1,056,868
Masco Corporation .......................... 94,579 1,990,888
Mattel, Inc. ............................... 88,934 1,703,086
Maxim Integrated Products, Inc. ............ 62,360 2,060,374
The May Department Stores Company .......... 60,428 1,388,635
Maytag Corporation ......................... 15,803 450,386
+ McDermott International, Inc. .............. 11,755 51,487
McDonald's Corporation ..................... 249,918 4,018,681
The McGraw-Hill Companies, Inc. ............ 39,908 2,412,040
McKesson HBOC, Inc. ........................ 59,284 1,602,447
MeadWestvaco Corporation ................... 35,372 874,042
+ MedImmune, Inc. ............................ 51,052 1,387,083
Medtronic, Inc. ............................ 252,740 11,524,944
Mellon Financial Corporation ............... 91,016 2,376,428
Merck & Co., Inc. .......................... 468,557 26,525,012
+ Mercury Interactive Corp. .................. 20,627 611,591
Meredith Corporation ....................... 8,821 362,631
Merrill Lynch & Co., Inc.** ................ 176,467 6,696,923
MetLife, Inc. .............................. 147,642 3,992,240
+ Micron Technology, Inc. .................... 121,768 1,186,020
+ Microsoft Corporation++ .................... 1,113,512 57,568,570
+ Millipore Corporation ...................... 8,655 294,270
+ Mirant Corporation ......................... 82,630 156,171
Molex Incorporated ......................... 40,062 923,028
Monsanto Company ........................... 54,177 1,042,907
Moody's Corporation ........................ 32,140 1,327,061
Morgan Stanley ............................. 228,198 9,109,664
Motorola, Inc. ............................. 463,069 4,005,547
+ NCR Corporation ............................ 20,018 475,227
NICOR, Inc. ................................ 8,054 274,078
+ NVIDIA Corporation ......................... 33,520 385,815
+ Nabors Industries, Ltd. .................... 31,215 1,100,953
National City Corporation .................. 118,902 3,248,403
National Grid Group PLC (ADR) .............. 1 37
+ National Semiconductor Corporation ......... 40,386 606,194
+ Navistar International Corporation ......... 12,358 300,423
+ Network Appliance, Inc. .................... 76,821 768,210
The New York Times Company (Class A) ....... 31,047 1,419,779
Newell Rubbermaid Inc. ..................... 55,054 1,669,788
Newmont Mining Corporation ................. 91,586 2,658,742
+ Nextel Communications, Inc. (Class A) ...... 198,177 2,288,944
Nike, Inc. (Class B) ....................... 55,210 2,455,189
NiSource Inc. .............................. 44,037 880,740
+ Noble Corporation .......................... 32,079 1,127,577
Nordstrom, Inc. ............................ 27,036 512,873
Norfolk Southern Corporation ............... 71,742 1,434,123
North Fork Bancorporation .................. 34,300 1,157,282
Northern Trust Corporation ................. 46,327 1,623,761
Northrop Grumman Corporation ............... 37,476 3,635,172
+ Novell, Inc. ............................... 63,824 213,172
+ Novellus Systems, Inc. ..................... 33,500 940,680
Nucor Corporation .......................... 18,516 764,711

3 & 4

December 31, 2002

SCHEDULE OF INVESTMENTS (continued) (in U.S. dollars)

Common Occidental Petroleum Corporation ........... 70,329 $ 2,000,860
Stocks + Office Depot, Inc. ......................... 63,258 933,688
(continued) Omnicom Group Inc. ......................... 41,097 2,654,866
+ Oracle Corporation ......................... 1,114,685 12,038,598
PACCAR Inc. ................................ 27,516 1,269,313
+ PG&E Corporation ........................... 73,377 1,019,940
+ PMC--Sierra, Inc. .......................... 43,454 241,604
PNC Bank Corp. ............................. 61,668 2,583,889
PPG Industries, Inc. ....................... 33,287 1,669,343
PPL Corporation ............................ 26,892 932,615
+ Pactiv Corporation ......................... 30,325 662,905
Pall Corporation ........................... 21,803 363,674
+ Parametric Technology Corporation .......... 46,865 118,100
Parker-Hannifin Corporation ................ 23,288 1,074,275
Paychex, Inc. .............................. 77,258 2,155,498
Peoples Energy Corporation ................. 7,304 282,300
+ PeopleSoft, Inc. ........................... 60,422 1,105,723
The Pepsi Bottling Group, Inc. ............. 58,822 1,511,725
PepsiCo, Inc. .............................. 359,788 15,190,249
PerkinElmer, Inc. .......................... 25,284 208,593
Pfizer Inc. ................................ 1,283,645 39,241,028
Pharmacia Corporation ...................... 268,812 11,236,342
+ Phelps Dodge Corporation ................... 21,688 686,425
Philip Morris Companies Inc. ............... 436,018 17,671,810
Pinnacle West Capital Corporation .......... 17,432 594,257
Pitney Bowes Inc. .......................... 50,282 1,642,210
Plum Creek Timber Company Inc. ............. 32,900 776,440
+ Power-One, Inc. ............................ 13,968 79,199
Praxair, Inc. .............................. 36,823 2,127,265
The Principal Financial Group, Inc. ........ 69,900 2,106,087
The Procter & Gamble Company ............... 270,798 23,272,380
Progress Energy, Inc. ...................... 45,126 1,956,212
+ Progress Energy, Inc. ...................... 900 117
The Progressive Corporation ................ 45,340 2,250,224
+ Providian Financial Corporation ............ 58,573 380,139
Prudential Financial, Inc. ................. 112,800 3,580,272
Public Service Enterprise Group
Incorporated ............................. 52,964 1,700,144
Pulte Corporation .......................... 12,393 593,253
+ QLogic Corporation ......................... 22,008 759,496
+ QUALCOMM Incorporated ...................... 164,680 5,992,705
+ Quest Diagnostics Incorporated ............. 20,700 1,177,830
+ Quintiles Transnational Corp. .............. 23,586 285,391
+ Qwest Communications
International Inc. ....................... 340,245 1,701,225
R.J. Reynolds Tobacco Holdings, Inc. ....... 18,700 787,457
R.R. Donnelley & Sons Company .............. 21,625 470,776
RadioShack Corporation ..................... 36,898 691,469
+ Rational Software Corporation .............. 40,430 420,068
Raytheon Company ........................... 78,474 2,413,076
+ Reebok International Ltd. .................. 12,187 358,298
Regions Financial Corporation .............. 41,158 1,373,031
+ Robert Half International Inc. ............. 31,311 504,420
Rockwell Collins ........................... 32,415 753,973
Rockwell International Corporation ......... 32,415 671,315
Rohm and Haas Company ...................... 40,403 1,312,289
Rowan Companies, Inc. ...................... 25,772 585,024
Ryder System, Inc. ......................... 12,474 279,917
SAFECO Corporation ......................... 34,122 1,183,010
SBC Communications Inc. .................... 692,605 18,776,522
SLM Corporation ............................ 32,310 3,355,717
SUPERVALU Inc. ............................. 24,142 398,584
SYSCO Corporation .......................... 141,900 4,227,201
+ Sabre Holdings Corporation ................. 26,373 477,615
+ Safeway Inc. ............................... 93,458 2,183,179
+ St. Jude Medical, Inc. ..................... 41,694 1,656,086
The St. Paul Companies, Inc. ............... 46,711 1,590,510
+ Sanmina Corporation ........................ 107,763 483,856
Sara Lee Corporation ....................... 161,841 3,643,041
Schering-Plough Corporation ................ 298,825 6,633,915
Schlumberger Limited ....................... 124,154 5,225,642
Scientific-Atlanta, Inc. ................... 38,194 452,981
+ Sealed Air Corporation ..................... 16,269 606,834
Sears, Roebuck & Co. ....................... 70,818 1,696,091
Sempra Energy .............................. 42,738 1,010,754
The Sherwin-Williams Company ............... 28,092 793,599
+ Siebel Systems, Inc. ....................... 92,237 689,933
Sigma-Aldrich Corporation .................. 19,123 931,290
Simon Property Group, Inc. ................. 37,100 1,263,997
Snap-On Incorporated ....................... 11,352 319,105
+ Solectron Corporation ...................... 156,912 557,038
The Southern Company ....................... 155,323 4,409,620
SouthTrust Corporation ..................... 63,644 1,581,553
Southwest Airlines Co. ..................... 157,995 2,196,131
+ Sprint Corp. (PCS Group) ................... 203,339 890,625
Sprint Corporation ......................... 182,881 2,648,117
The Stanley Works .......................... 17,543 606,637
+ Staples, Inc. .............................. 99,034 1,812,322
+ Starbucks Corporation ...................... 87,912 1,791,647
Starwood Hotels & Resorts
Worldwide, Inc. .......................... 44,468 1,055,670
State Street Corporation ................... 69,623 2,715,297
+ Stilwell Financial, Inc. ................... 41,305 539,856
Stryker Corporation ........................ 38,155 2,560,964
+ Sun Microsystems, Inc. ..................... 705,156 2,193,035
+ Sungard Data Systems Inc. .................. 60,700 1,430,092
Sunoco, Inc. ............................... 21,185 702,918
SunTrust Banks, Inc. ....................... 57,899 3,295,611
Symbol Technologies, Inc. .................. 47,111 387,252
Synovus Financial Corp. .................... 55,151 1,069,929
T. Rowe Price Group Inc. ................... 24,724 674,471
TECO Energy, Inc. .......................... 46,896 725,481
The TJX Companies, Inc. .................... 112,448 2,194,985
+ TMP Worldwide Inc. ......................... 27,239 308,073
TXU Corp. .................................. 65,722 1,227,687
Target Corporation ......................... 186,035 5,581,050
+ Tektronix, Inc. ............................ 18,936 344,446
+ Tellabs, Inc. .............................. 84,487 614,220
Temple-Inland, Inc. ........................ 12,553 562,500
+ Tenet Healthcare Corporation ............... 109,637 1,798,047
+ Teradyne, Inc. ............................. 41,332 537,729
Texas Instruments Incorporated ............. 352,972 5,298,110
Textron, Inc. .............................. 25,514 1,096,847
+ Thermo Electron Corporation ................ 36,657 737,539
+ Thomas & Betts Corporation ................. 11,967 202,242
Tiffany & Co. .............................. 29,901 714,933
Torchmark Corporation ...................... 24,456 893,378
+ Toys `R' Us, Inc. .......................... 49,997 499,970
Transocean Inc. ............................ 65,641 1,522,871
+ Travelers Property Casualty Corp. (Class B) 211,879 3,104,027
Tribune Company ............................ 57,942 2,634,043
Tupperware Corporation ..................... 11,933 179,950
Tyco International Ltd. .................... 409,525 6,994,687
U.S. Bancorp ............................... 398,565 8,457,549
UST Inc. ................................... 32,635 1,090,988
Union Pacific Corporation .................. 51,176 3,063,907
Union Planters Corporation ................. 40,881 1,150,391
+ Unisys Corporation ......................... 56,982 564,122
United Parcel Service, Inc. (Class B) ...... 235,700 14,867,956
United States Steel Corporation ............ 27,422 359,777
United Technologies Corporation ............ 100,248 6,209,361
UnitedHealth Group Incorporated ............ 64,809 5,411,552
+ Univision Communications Inc. (Class A) .... 47,171 1,155,690
Unocal Corporation ......................... 47,374 1,448,697
UnumProvident Corporation .................. 48,067 843,095
V. F. Corporation .......................... 22,167 799,120
+ VERITAS Software Corporation ............... 90,981 1,421,123
Verizon Communications ..................... 569,428 22,065,335
+ Viacom, Inc. (Class B) ..................... 367,563 14,981,868
Visteon Corporation ........................ 26,826 186,709
Vulcan Materials Company ................... 19,547 733,013
W. W. Grainger, Inc. ....................... 18,245 940,530
Wachovia Corporation ....................... 285,576 10,406,389
Wal-Mart Stores, Inc. ...................... 919,355 46,436,621
Walgreen Co. ............................... 208,524 6,086,816
The Walt Disney Company .................... 425,347 6,937,410
Washington Mutual, Inc. .................... 196,198 6,774,717
Waste Management, Inc. ..................... 129,414 2,966,169
+ Waters Corporation ......................... 26,920 586,318
+ Watson Pharmaceuticals, Inc. ............... 20,381 576,171
+ WellPoint Health Networks Inc. ............. 33,406 2,377,171
Wells Fargo Company ........................ 353,822 16,583,637
Wendy's International, Inc. ................ 22,572 611,024
Weyerhaeuser Company ....................... 45,361 2,232,215
Whirlpool Corporation ...................... 16,560 864,763
The Williams Companies, Inc. ............... 121,186 327,202

5 & 6

December 31, 2002

SCHEDULE OF INVESTMENTS (concluded) (in U.S. dollars)

Master S&P 500 Index Series (concluded)
------------------------------------------------------------------------------
Shares
Issue Held Value
================================================================================================

Common Winn-Dixie Stores, Inc. ................ 28,980 $ 442,814
Stocks Wm. Wrigley Jr. Company ................ 46,470 2,550,274
(concluded) Worthington Industries, Inc. ........... 17,567 267,721
Wyeth .................................. 276,099 10,326,103
XL Capital Ltd. (Class A) .............. 29,105 2,248,361
Xcel Energy, Inc. ...................... 90,402 994,422
+ Xerox Corporation ...................... 148,402 1,194,636
+ Xilinx, Inc. ........................... 74,993 1,544,856
+ YUM! Brands, Inc. ...................... 60,034 1,454,023
+ Yahoo! Inc. ............................ 119,699 1,957,079
+ Zimmer Holdings, Inc. .................. 39,977 1,659,845
Zions Bancorporation ................... 21,402 842,147
------------------------------------------------------------------------------
Total Common Stocks (Cost--$2,015,763,982)--97.8% 1,688,331,230
------------------------------------------------------------------------------------------------

Partnership
Interest Short-Term Investments
------------------------------------------------------------------------------------------------

$22,760,915 Merrill Lynch Liquidity Series, LLC Cash Sweep Series I** 22,760,915
------------------------------------------------------------------------------------------------
Total Short-Term Investments (Cost--$22,760,915)--1.3% 22,760,915
------------------------------------------------------------------------------------------------
Total Investments (Cost--$2,038,524,897)--99.1% 1,711,092,145
Variation Margin on Financial Futures Contracts*--0.0% 44,666
Other Assets Less Liabilities--0.9% 15,567,844
--------------
Net Assets--100.0% $1,726,704,655
==============
------------------------------------------------------------------------------------------------

+ Non-income producing security.
++ All or a portion of security held as collateral in connection with open
financial futures contracts.
* Financial futures contracts purchased as of December 31, 2002 were as
follows:

--------------------------------------------------------------------------
Number of Expiration
Contracts Issue Date Value
--------------------------------------------------------------------------
164 S&P 500 Stock Index March 2003 $36,034,900
--------------------------------------------------------------------------
Total Financial Futures Contracts Purchased
(Total Contract Price--$36,461,218) $36,034,900
===========
--------------------------------------------------------------------------

** Investments in companies considered to be an affiliate of the Series (such
companies are defined as "Affiliated Companies" in Section 2(a)(3) of the
Investment Company Act of 1940) are as follows:

--------------------------------------------------------------------------
Net Dividend/Interest
Affiliate Activity Net Cost Income
--------------------------------------------------------------------------
Merrill Lynch & Co. 27,570 $ 1,282,303 $ 104,987
Merrill Lynch Liquidity $22,760,915 22,760,915 61,040
Series, LLC Cash Sweep
Series I
--------------------------------------------------------------------------

See Notes to Financial Statements.

STATEMENT OF ASSETS AND LIABILITIES

MASTER
S&P 500
INDEX SERIES As of December 31, 2002
----------------------------------------------------------------------------------------------------------------------

Assets: Investments, at value (including securities loaned of $535,314,383)
(identified cost--$2,038,524,897) ................................. $ 1,711,092,145
Investments held as collateral for loaned securities, at value .... 550,276,850
Cash .............................................................. 51,158
Receivables:
Contributions ................................................... $ 23,874,584
Dividends ....................................................... 2,699,271
Variation margin ................................................ 44,666
Interest ........................................................ 31,245
Loaned securities income ........................................ 16,676
Securities sold ................................................. 7,895 26,674,337
------------
Prepaid expenses .................................................. 20,048
---------------
Total assets ...................................................... 2,288,114,538
---------------
----------------------------------------------------------------------------------------------------------------------
Liabilities: Collateral on securities loaned, at value ......................... 550,276,850
Payables:
Withdrawals ..................................................... 10,981,579
Investment adviser .............................................. 7,708 10,989,287
------------
Accrued expenses .................................................. 143,746
---------------
Total liabilities ................................................. 561,409,883
---------------
----------------------------------------------------------------------------------------------------------------------
Net Assets: Net assets ........................................................ $ 1,726,704,655
===============
----------------------------------------------------------------------------------------------------------------------
Net Assets Investors' capital ................................................ $ 2,054,563,725
Consist of: Unrealized depreciation on investments--net ....................... (327,859,070)
---------------
Net assets ........................................................ $ 1,726,704,655
===============
----------------------------------------------------------------------------------------------------------------------

See Notes to Financial Statements.

7 & 8

December 31, 2002

STATEMENT OF OPERATIONS

MASTER
S&P 500
INDEX SERIES For the Year Ended December 31, 2002
-------------------------------------------------------------------------------------------------------------

Investment Dividends (net of $78,432 foreign withholding tax) . $ 29,349,446
Income: Interest ........................................... 834,621
Securities lending--net ............................ 267,064
-------------
Total income ....................................... 30,451,131
-------------
-------------------------------------------------------------------------------------------------------------
Expenses: Accounting services ................................ $ 358,967
Professional fees .................................. 127,824
Investment advisory fees ........................... 93,240
Custodian fees ..................................... 57,655
Trustees' fees and expenses ........................ 27,273
Printing and shareholder reports ................... 4,998
Other .............................................. 71,002
-------------
Total expenses ..................................... 740,959
-------------
Investment income--net ............................. 29,710,172
-------------
-------------------------------------------------------------------------------------------------------------
Realized & Realized loss from:
Unrealized Loss Investments--net ................................. (82,781,943)
On Investments & Foreign currency transactions--net ............... (177) (82,782,120)
Foreign Currency -------------
Transactions--Net: Change in unrealized appreciation/depreciation on
investments--net ................................... (435,785,828)
-------------
Total realized and unrealized loss on investments
and foreign currency transactions--net ............. (518,567,948)
-------------
Net Decrease in Net Assets Resulting from Operations $(488,857,776)
=============
-------------------------------------------------------------------------------------------------------------

See Notes to Financial Statements.

STATEMENTS OF CHANGES IN NET ASSETS

For the Year Ended
MASTER December 31,
S&P 500 -----------------------------------
INDEX SERIES Increase (Decrease) in Net Assets: 2002 2001
-------------------------------------------------------------------------------------------------------------------------

Operations: Investment income--net ........................................... $ 29,710,172 $ 23,558,016
Realized loss on investments--net ................................ (82,782,120) (28,757,480)
Change in unrealized appreciation/depreciation on investments--net (435,785,828) (207,282,579)
--------------- ---------------
Net decrease in net assets resulting from operations ............. (488,857,776) (212,482,043)
--------------- ---------------
-------------------------------------------------------------------------------------------------------------------------
Capital Proceeds from contributions ...................................... 589,333,536 976,860,074
Transactions: Fair value of withdrawals ........................................ (267,267,758) (585,512,826)
--------------- ---------------
Net increase in net assets derived from capital transactions ..... 322,065,778 391,347,248
--------------- ---------------
-------------------------------------------------------------------------------------------------------------------------
Net Assets: Total increase (decrease) in net assets .......................... (166,791,998) 178,865,205
Beginning of year ................................................ 1,893,496,653 1,714,631,448
--------------- ---------------
End of year ...................................................... $ 1,726,704,655 $ 1,893,496,653
=============== ===============
-------------------------------------------------------------------------------------------------------------------------

See Notes to Financial Statements.

FINANCIAL HIGHLIGHTS

MASTER The following ratios have been derived For the Year Ended December 31,
S&P 500 from information provided in the ----------------------------------------------------------------------
INDEX SERIES financial statements. 2002 2001 2000 1999 1998
------------------------------------------------------------------------------------------------------------------------------------

Total Investment (22.22%) (11.97%) -- -- --
Return:* ========== ========== ========== ========== ==========
------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses ............................. .04% .05% .07% .07% .10%
Net Assets: ========== ========== ========== ========== ==========
Investment income--net ............... 1.59% 1.29% 1.16% 1.33% 1.56%
========== ========== ========== ========== ==========
------------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of year (in thousands) $1,726,705 $1,893,497 $1,714,631 $1,690,336 $1,118,220
Data: ========== ========== ========== ========== ==========
Portfolio turnover ................... 4.59% 3.21% 9.71% 29.91% 25.97%
========== ========== ========== ========== ==========
------------------------------------------------------------------------------------------------------------------------------------

* Total return is required to be disclosed for fiscal years beginning after
December 15, 2000.

See Notes to Financial Statements.

9 & 10

December 31, 2002

NOTES TO FINANCIAL STATEMENTS

MASTER
S&P 500
INDEX SERIES

1. Significant Accounting Policies:

Master S&P 500 Index Series (the "Series") is part of Quantitative Master Series
Trust (the "Trust"). The Trust is registered under the Investment Company Act of
1940 and is organized as a Delaware business trust. The Declaration of Trust
permits the Trustees to issue nontransferable interests in the Series, subject
to certain limitations. The Series' financial statements are prepared in
conformity with accounting principles generally accepted in the United States of
America, which may require the use of management accruals and estimates. The
following is a summary of significant accounting policies followed by the
Series.

(a) Valuation of investments -- Portfolio securities that are traded on stock
exchanges are valued at the last sale price as of the close of business on the
day the securities are being valued or, lacking any sales, at the closing bid
price. Securities traded in the over-the-counter market are valued at the last
quoted bid price at the close of trading on the New York Stock Exchange on each
day by brokers that make markets in the securities. Securities traded in the
NASDAQ National Market System are valued at the last sale price prior to the
time of valuation. Portfolio securities that are traded both in the
over-the-counter market and on a stock exchange are valued according to the
broadest and most representative market. Options written or purchased are valued
at the last sale price in the case of exchange-traded options. In the case of
options traded in the over-the-counter market, valuation is the last asked price
(options written) or the last bid price (options purchased). Other investments,
including futures contracts and related options, are stated at market value.
Short-term securities are valued at amortized cost, which approximates market
value. Securities and assets for which market quotations are not readily
available are valued at fair market value, as determined in good faith by or
under the direction of the Trust's Board of Trustees.

(b) Derivative financial instruments -- The Series may engage in various
portfolio investment strategies to provide liquidity or as a proxy for a direct
investment in securities underlying the Series' index. Losses may arise due to
changes in the value of the contract or if the counterparty does not perform
under the contract.

o Financial futures contracts -- The Series may purchase or sell financial
futures contracts and options on such futures contracts as a proxy for a direct
investment in securities underlying the Series' index. Upon entering into a
contract, the Series deposits and maintains as collateral such initial margin as
required by the exchange on which the transaction is effected. Pursuant to the
contract, the Series agrees to receive from or pay to the broker an amount of
cash equal to the daily fluctuation in value of the contract. Such receipts or
payments are known as variation margin and are recorded by the Series as
unrealized gains or losses. When the contract is closed, the Series records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed.

o Options -- The Series is authorized to purchase and write call and put
options. When the Series writes an option, an amount equal to the premium
received by the Series is reflected as an asset and an equivalent liability. The
amount of the liability is subsequently marked to market to reflect the current
market value of the option written. When a security is purchased or sold through
an exercise of an option, the related premium paid (or received) is added to (or
deducted from) the basis of the security acquired or deducted from (or added to)
the proceeds of the security sold. When an option expires (or the Series enters
into a closing transaction), the Series realizes a gain or loss on the option to
the extent of the premiums received or paid (or a gain or loss to the extent
that the cost of the closing transaction exceeds the premium paid or received).

Written and purchased options are non-income producing investments.

(c) Foreign currency transactions -- Transactions denominated in foreign
currencies are recorded at the exchange rate prevailing when recognized. Assets
and liabilities denominated in foreign currencies are valued at the exchange
rate at the end of the period. Foreign currency transactions are the result of
settling (realized) or valuing (unrealized) assets or liabilities expressed in
foreign currencies into U.S. dollars. Realized and unrealized gains or losses
from investments include the effects of foreign exchange rates on investments.

(d) Income taxes -- The Series is classified as a partnership for Federal income
tax purposes. As a partnership for Federal income tax purposes, the Series will
not incur Federal income tax liability. Items of partnership income, gain, loss
and deduction will pass through to investors as partners in the Series.
Therefore, no Federal income tax provision is required. Under the applicable
foreign tax law, a withholding tax may be imposed on interest, dividends and
capital gains at various rates. It is intended that the Series' assets will be
managed so an investor in the series can satisfy the requirements of subchapter
M of the Internal Revenue Code.

(e) Security transactions and investment income -- Security transactions are
accounted for on the date the securities are purchased or sold (the trade
dates). Realized gains and losses on security transactions are determined on the
identified cost basis. Dividend income is recorded on the ex-dividend dates.
Interest income is recognized on the accrual basis.

(f) Securities lending -- The Series may lend securities to financial
institutions that provide cash or securities issued or guaranteed by the U.S.
government as collateral, which will be maintained at all times in an amount
equal to at least 100% of the current market value of the loaned securities.
Where the Series receives securities as collateral for the loaned securities, it
collects a fee from the borrower. The Series typically receives the income on
the loaned securities but does not receive the income on the collateral. Where
the Series receives cash collateral, it may invest such collateral and retain
the amount earned on such investment, net of any amount rebated to the borrower.
Loans of securities are terminable at any time and the borrower, after notice,
is required to return borrowed securities within five business days. The Series
may pay reasonable finder's, lending agent, administrative and custodial fees in
connection with its loans. In the event that the borrower defaults on its
obligation to return borrowed securities because of insolvency or for any other
reason, the Series could experience delays and costs in gaining access to the
collateral. The Series also could suffer a loss where the value of the
collateral falls below the market value of the borrowed securities, in the event
of borrower default or in the event of losses on investments made with cash
collateral.

2. Investment Advisory Agreement and Transactions with Affiliates:

The Trust has entered into an Investment Advisory Agreement with Fund Asset
Management, L.P. ("FAM"). The general partner of FAM is Princeton Services, Inc.
("PSI"), an indirect, wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML
& Co."), which is the limited partner.

FAM is responsible for the management of the Series' portfolio and provides the
necessary personnel, facilities, equipment and certain other services necessary
to the operations of the Series. For such services, the Series pays a monthly
fee at an annual rate of .005% of the average daily value of the Series' net
assets.

The Trust has received an exemptive order from the Securities and Exchange
Commission permitting it to lend portfolio securities to Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("MLPF&S"), a subsidiary of ML & Co., or its
affiliates. Pursuant to that order, the Trust also has retained Merrill Lynch
Investment Advisors, LLC ("MLIA"), an affiliate of FAM, as the securities
lending agent for a fee based on a share of the returns on investment of cash
collateral. MLIA may, on behalf of the Trust and the Series, invest cash
collateral received by the Series for such loans, among other things, in a
private investment company managed by MLIA or in registered money market funds
advised by FAM or its affiliates. As of December 31, 2002, cash collateral of
$291,646,731 was invested in the Money Market Series of the Merrill Lynch
Liquidity Series, LLC and $258,630,119 was invested in the Merrill Lynch Premier
Institutional Fund. As of December 31, 2002, the Series lent securities with a
value of $151,182,378 to MLPF&S. For the year ended December 31, 2002, MLIA
received $123,306 in securities lending agent fees from the Series.

Merrill Lynch Trust Company ("MLTC"), an indirect, wholly-owned subsidiary of ML
& Co., is the Series' custodian.

In addition, MLPF&S received $862 in commissions on the execution of
portfolio transactions for the Series for the year ended December 31, 2002.

For the year ended December 31, 2002, the Series reimbursed FAM $41,620 for
certain accounting services.

11 & 12

December 31, 2002

NOTES TO FINANCIAL STATEMENTS (concluded)

MASTER
S&P 500
INDEX SERIES

Certain officers and/or trustees of the Series are officers and/or directors of
FAM, PSI, MLTC, and/or ML & Co.

3. Investments:

Purchases and sales of investments, excluding short-term securities, for the
year ended December 31, 2002 were $422,056,297 and $83,133,099, respectively.

Net realized losses for the year ended December 31, 2002 and net unrealized
losses as of December 31, 2002 were as follows:

--------------------------------------------------------------------------------
Realized Unrealized
Losses Losses
--------------------------------------------------------------------------------
Long-term investments ................ $ (72,369,989) $(327,432,752)
Financial futures contracts .......... (10,411,954) (426,318)
Foreign currency transactions ........ (177) --
------------- -------------
Total ................................ $ (82,782,120) $(327,859,070)
============= =============
--------------------------------------------------------------------------------

As of December 31, 2002, net unrealized depreciation for Federal income tax
purposes aggregated $402,863,518, of which $101,635,643 related to appreciated
securities and $504,499,161 related to depreciated securities. At December 31,
2002, the aggregate cost of investments for Federal income tax purposes was
$2,113,955,663.

4. Short-Term Borrowings:

The Series, along with certain other funds managed by FAM and its affiliates, is
a party to a credit agreement with Bank One, N.A. and certain other lenders.
Effective November 29, 2002, in conjunction with the renewal for one year at the
same terms, the total commitment was reduced from $1,000,000,000 to
$500,000,000. The Series may borrow under the credit agreement to fund partner
withdrawals and for other lawful purposes other than for leverage. The Series
may borrow up to the maximum amount allowable under the Series' current
prospectus and statement of additional information, subject to various other
legal, regulatory or contractual limits. The Series pays a commitment fee of
.09% per annum based on the Series pro rata share of the unused portion of the
credit agreement. Amounts borrowed under the credit agreement bear interest at a
rate equal to, at each fund's election, the Federal Funds rate plus .50% or a
base rate as determined by Bank One, N.A. The Series did not borrow under the
credit agreement during the year ended December 31, 2002.

INDEPENDENT AUDITORS' REPORT

The Board of Trustees and Investors, Master S&P 500 Index Series (One of the
series constituting Quantitative Master Series Trust):

We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Master S&P 500 Index Series (one of the series
constituting Quantitative Master Series Trust) as of December 31, 2002, the
related statements of operations for the year then ended and changes in net
assets for each of the years in the two-year period then ended, and the
financial highlights for each of the years presented. These financial statements
and the financial highlights are the responsibility of the Trust's management.
Our responsibility is to express an opinion on these financial statements and
the financial highlights based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned at December 31, 2002 by correspondence with the custodian and
brokers; where replies were not received, we performed other auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Master S&P 500 Index
Series of the Quantitative Master Series Trust as of December 31, 2002, the
results of its operations, the changes in its net assets and the financial
highlights for the respective stated periods in conformity with accounting
principles generally accepted in the United States of America.

/s/ Deloitte & Touche LLP
-------------------------
Deloitte & Touche LLP
Princeton, New Jersey
February 18, 2003

Appendix A

Ratings Definitions

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

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

LONG-TERM (TAXABLE) BOND RATINGS

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

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

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

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

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

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

Caa: Bonds rated "Caa" are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or
interest.

Ca: Bonds rated "Ca" represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.

C: Bonds rated "C" are the lowest class of rated bonds and can be regarded as
having extremely poor prospects of ever attaining any real investment standing.
Moody's applies numerical modifiers 1, 2, and 3 in each generic rating
classification from "Aa" through "Caa." The modifier "1" indicates that the
obligation ranks in the higher end of its generic rating category; the modifier
"2" indicates a mid-range ranking; and the modifier "3" indicates a ranking in
the lower end of that generic rating category. Advanced refunded issues that are
secured by certain assets are identified with a # symbol.

SHORT-TERM RATINGS - TAXABLE DEBT

These ratings apply to the ability of issuers to honor senior debt obligations
having an original maturity not exceeding one year:

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

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

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

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

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

LONG-TERM ISSUE CREDIT RATINGS

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

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

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

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

BB, B, CCC, CC, and C

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

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

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

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

CC: Bonds rated "CC" are currently highly vulnerable to nonpayment.

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

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

The ratings from "AA" to "CCC" may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within the major rating categories. The
"r" symbol is attached to the ratings of instruments with significant noncredit
risks.

SHORT-TERM ISSUE CREDIT RATINGS

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

A-2: A short-term bond rated "A-2" is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations in
higher rating categories. However, the obligor's capacity to meet its financial
commitment on the obligation is satisfactory.

A-3: A short-term bond rated "A-3" exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.

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

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

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

Fitch, Inc.

INTERNATIONAL LONG-TERM CREDIT RATINGS

Investment Grade:

AAA: Highest Credit Quality. "AAA" ratings denote the lowest expectation of
credit risk. They are assigned only in the case of exceptionally strong
capacity for timely payment of financial commitments. This capacity is highly
unlikely to be adversely affected by foreseeable events.

AA: Very High Credit Quality. "AA" ratings denote a very low expectation of
credit risk. They indicate a very strong capacity for timely payment of
financial commitments. This capacity is not significantly vulnerable to
foreseeable events.

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

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

Speculative Grade:

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

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

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

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

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

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

INTERNATIONAL SHORT-TERM CREDIT RATINGS

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

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

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

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

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

D: Default. Denotes actual or imminent payment default.

B-1
Appendix B

Industry Classifications

Aerospace & Defense Household Products
Air Freight & Couriers Industrial Conglomerates
Airlines Insurance
Auto Components Internet & Catalog Retail
Automobiles Internet Software & Services
Banks Information Technology Consulting &
Services
Beverages Leisure Equipment & Products Biotechnology Machinery Building Products
Marine Chemicals Media Commercial Services & Supplies Metals & Mining
Communications Equipment Multiline Retail Computers & Peripherals
Multi-Utilities Construction & Engineering Office Electronics Construction
Materials Oil & Gas Containers & Packaging Paper & Forest Products Distributors
Personal Products Diversified Financials Pharmaceuticals Diversified
Telecommunication Services Real Estate Electric Utilities Road & Rail Electrical
Equipment Semiconductor Equipment & Products Electronic Equipment & Instruments
Software Energy Equipment & Services Specialty Retail Food & Drug Retailing
Textiles & Apparel Food Products Tobacco Gas Utilities Trading Companies &
Distributors Health Care Equipment & Supplies Transportation Infrastructure
Health Care Providers & Services Water Utilities Hotels Restaurants & Leisure
Wireless Telecommunication Services Household Durables

C-11
Appendix C

OppenheimerFunds Special Sales Charge Arrangements and Waivers

In certain cases, the initial sales charge that applies to purchases of Class A
shares1 of the Oppenheimer funds or the contingent deferred sales charge that
may apply to Class A, Class B or Class C shares may be waived.2 That is because
of the economies of sales efforts realized by OppenheimerFunds Distributor,
Inc., (referred to in this document as the "Distributor"), or by dealers or
other financial institutions that offer those shares to certain classes of
investors.

Not all waivers apply to all funds. For example, waivers relating to Retirement
Plans do not apply to Oppenheimer municipal funds, because shares of those funds
are not available for purchase by or on behalf of retirement plans. Other
waivers apply only to shareholders of certain funds.

For the purposes of some of the waivers described below and in the Prospectus
and Statement of Additional Information of the applicable Oppenheimer funds, the
term "Retirement Plan" refers to the following types of plans:
1) plans qualified under Sections 401(a) or 401(k) of the Internal
Revenue Code,
2) non-qualified deferred compensation plans, 3) employee benefit
plans3
4) Group Retirement Plans4 5) 403(b)(7) custodial plan accounts
6) Individual Retirement Accounts ("IRAs"), including traditional IRAs,
Roth IRAs, SEP-IRAs, SARSEPs or SIMPLE plans

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

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

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

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

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

II.

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

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

Class A shares purchased by the following investors are not subject to any Class
A sales charges (and no concessions are paid by the Distributor on such
purchases):
|_| The Manager or its affiliates.

|_| Present or former officers, directors, trustees and employees (and
their "immediate families") of the Fund, the Manager and its
affiliates, and retirement plans established by them for their
employees. The term "immediate family" refers to one's spouse,
children, grandchildren, grandparents, parents, parents-in-law,
brothers and sisters, sons- and daughters-in-law, a sibling's
spouse, a spouse's siblings, aunts, uncles, nieces and nephews;
relatives by virtue of a remarriage (step-children, step-parents,
etc.) are included.

|_| Registered management investment companies, or separate accounts of
insurance companies having an agreement with the Manager or the
Distributor for that purpose.
|_| Dealers or brokers that have a sales agreement with the Distributor, if
they purchase shares for their own accounts or for retirement plans for
their employees.
|_| Employees and registered representatives (and their spouses) of dealers
or brokers described above or financial institutions that have
entered into sales arrangements with such dealers or brokers (and
which are identified as such to the Distributor) or with the
Distributor. The purchaser must certify to the Distributor at the
time of purchase that the purchase is for the purchaser's own
account (or for the benefit of such employee's spouse or minor
children).
|_| Dealers, brokers, banks or registered investment advisors that have
entered into an agreement with the Distributor providing specifically
for the use of shares of the Fund in particular investment products
made available to their clients. Those clients may be charged a
transaction fee by their dealer, broker, bank or advisor for the
purchase or sale of Fund shares.
|_| Investment advisors and financial planners who have entered into an
agreement for this purpose with the Distributor and who charge an
advisory, consulting or other fee for their services and buy shares for
their own accounts or the accounts of their clients.
|_| "Rabbi trusts" that buy shares for their own accounts, if the purchases
are made through a broker or agent or other financial intermediary that
has made special arrangements with the Distributor for those purchases.
|_| Clients of investment advisors or financial planners (that have entered
into an agreement for this purpose with the Distributor) who buy
shares for their own accounts may also purchase shares without sales
charge but only if their accounts are linked to a master account of
their investment advisor or financial planner on the books and
records of the broker, agent or financial intermediary with which
the Distributor has made such special arrangements . Each of these
investors may be charged a fee by the broker, agent or financial
intermediary for purchasing shares.
|_| Directors, trustees, officers or full-time employees of OpCap Advisors
or its affiliates, their relatives or any trust, pension, profit
sharing or other benefit plan which beneficially owns shares for those
persons.
|_| Accounts for which Oppenheimer Capital (or its successor) is the
investment advisor (the Distributor must be advised of this
arrangement) and persons who are directors or trustees of the company
or trust which is the beneficial owner of such accounts.
|_| A unit investment trust that has entered into an appropriate agreement
with the Distributor.
|_| Dealers, brokers, banks, or registered investment advisers that have
entered into an agreement with the Distributor to sell shares to
defined contribution employee retirement plans for which the dealer,
broker or investment adviser provides administration services.
Retirement Plans and deferred compensation plans and trusts used to fund
those plans (including, for example, plans qualified or created under
sections 401(a), 401(k), 403(b) or 457 of the Internal Revenue Code),
in each case if those purchases are made through a broker, agent or
other financial intermediary that has made special arrangements with
the Distributor for those purchases.
|_| A TRAC-2000 401(k) plan (sponsored by the former Quest for Value
Advisors) whose Class B or Class C shares of a Former Quest for Value
Fund were exchanged for Class A shares of that Fund due to the
termination of the Class B and Class C TRAC-2000 program on November
24, 1995.
|_| A qualified Retirement Plan that had agreed with the former Quest for
Value Advisors to purchase shares of any of the Former Quest for Value
Funds at net asset value, with such shares to be held through
DCXchange, a sub-transfer agency mutual fund clearinghouse, if that
arrangement was consummated and share purchases commenced by December
31, 1996.

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

Class A shares issued or purchased in the following transactions are not subject
to sales charges (and no concessions are paid by the Distributor on such
purchases):
|_| Shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which the Fund is a party.
|_| Shares purchased by the reinvestment of dividends or other
distributions reinvested from the Fund or other Oppenheimer funds
(other than Oppenheimer Cash Reserves) or unit investment trusts for
which reinvestment arrangements have been made with the Distributor.
|_| Shares purchased through a broker-dealer that has entered into a
special agreement with the Distributor to allow the broker's
customers to purchase and pay for shares of Oppenheimer funds using
the proceeds of shares redeemed in the prior 30 days from a mutual
fund (other than a fund managed by the Manager or any of its
subsidiaries) on which an initial sales charge or contingent
deferred sales charge was paid. This waiver also applies to shares
purchased by exchange of shares of Oppenheimer Money Market Fund,
Inc. that were purchased and paid for in this manner. This waiver
must be requested when the purchase order is placed for shares of
the Fund, and the Distributor may require evidence of qualification
for this waiver.
|_| Shares purchased with the proceeds of maturing principal units of any
Qualified Unit Investment Liquid Trust Series.
|_| Shares purchased by the reinvestment of loan repayments by a
participant in a Retirement Plan for which the Manager or an affiliate
acts as sponsor.

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

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

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

A. Waivers for Redemptions in Certain Cases.

The Class B, Class C and Class N contingent deferred sales charges will be
waived for redemptions of shares in the following cases: |_| Shares redeemed
involuntarily, as described in "Shareholder Account
Rules and Policies," in the applicable Prospectus.
|_| Redemptions from accounts other than Retirement Plans following the

death or disability of the last surviving shareholder. The death or
disability must have occurred after the account was established, and
for disability you must provide evidence of a determination of
disability by the Social Security Administration.
|_| The contingent deferred sales charges are generally not waived
following the death or disability of a grantor or trustee for a
trust account. The contingent deferred sales charges will only be
waived in the limited case of the death of the trustee of a grantor
trust or revocable living trust for which the trustee is also the
sole beneficiary. The death or disability must have occurred after
the account was established, and for disability you must provide
evidence of a determination of disability by the Social Security
Administration.

|_| Distributions from accounts for which the broker-dealer of record has
entered into a special agreement with the Distributor allowing this
waiver.
|_| Redemptions of Class B shares held by Retirement Plans whose records
are maintained on a daily valuation basis by Merrill Lynch or an
independent record keeper under a contract with Merrill Lynch.
|_| Redemptions of Class C shares of Oppenheimer U.S. Government Trust from
accounts of clients of financial institutions that have entered into a
special arrangement with the Distributor for this purpose.
|_| Redemptions requested in writing by a Retirement Plan sponsor of Class
C shares of an Oppenheimer fund in amounts of $500,000 or more and made
more than 12 months after the Retirement Plan's first purchase of Class
C shares, if the redemption proceeds are invested in Class N shares of
one or more Oppenheimer funds.
|_| Distributions8 from Retirement Plans or other employee benefit plans
for any of the following purposes: 1) Following the death or disability
(as defined in the Internal
Revenue Code) of the participant or beneficiary. The death or
disability must occur after the participant's account was
established in an Oppenheimer fund.
2) To return excess contributions made to a participant's account. 3)
To return contributions made due to a mistake of fact. 4) To make
hardship withdrawals, as defined in the plan.9 5) To make distributions
required under a Qualified Domestic
Relations Order or, in the case of an IRA, a divorce or separation
agreement described in Section 71(b) of the Internal Revenue Code.
6) To meet the minimum distribution requirements of the Internal
Revenue Code.
7) To make "substantially equal periodic payments" as described in
Section 72(t) of the Internal Revenue Code.
8) For loans to participants or beneficiaries.10 9) On account of the
participant's separation from service.11 10) Participant-directed
redemptions to purchase shares of a
mutual fund (other than a fund managed by the Manager or a
subsidiary of the Manager) offered as an investment option in a
Retirement Plan if the plan has made special arrangements with the
Distributor.
11)Distributions made on account of a plan termination or "in-service"
distributions, if the redemption proceeds are rolled over directly
to an OppenheimerFunds-sponsored IRA.
12)For distributions from a participant's account under an Automatic
Withdrawal Plan after the participant reaches age 59 1/2, as long as
the aggregate value of the distributions does not exceed 10% of the
account's value, adjusted annually.
13)Redemptions of Class B shares under an Automatic Withdrawal Plan
for an account other than a Retirement Plan, if the aggregate value
of the redeemed shares does not exceed 10% of the account's value,
adjusted annually.
14)For distributions from 401(k) plans sponsored by broker-dealers
that have entered into a special arrangement with the Distributor
allowing this waiver.
|_| Redemptions of Class B shares or Class C shares under an Automatic
Withdrawal Plan from an account other than a Retirement Plan if the
aggregate value of the redeemed shares does not exceed 10% of the
account's value annually.

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

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

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

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

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

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

A. Reductions or Waivers of Class A Sales Charges.

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

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

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

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

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

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

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

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

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

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

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

A shareholder's account will be credited with the amount of any contingent
deferred sales charge paid on the redemption of any Class A, Class B or Class C
shares of the Oppenheimer fund described in this section if the proceeds are
invested in the same Class of shares in that fund or another Oppenheimer fund
within 90 days after redemption.
V. Special Sales Charge Arrangements for Shareholders of Certain
Oppenheimer Funds Who Were Shareholders of Connecticut Mutual
Investment Accounts, Inc.
---------------------------------------------------------------------------

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

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

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

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

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

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

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

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

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

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

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

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

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

Oppenheimer Select Managers

Internet Web Site:
WWW.OPPENHEIMERFUNDS.COM

Investment Adviser for OSM - Mercury Advisors S&P 500 Index Fund and
OSM - Mercury Advisors Focus Growth Fund

Mercury Advisors
800 Scudders Mill Road
Plainsboro, New Jersey 08536

Investment Adviser for OSM - QM Active Balanced Fund, OSM - Jennison Growth
Fund, OSM - Salomon Brothers All Cap Fund and OSM - Gartmore Millennium
Growth Fund II

OppenheimerFunds, Inc.
498 Seventh Avenue
New York, New York 10018

Distributor
OppenheimerFunds Distributor, Inc.
498 Seventh Avenue
New York, New York 10018

Transfer Agent
OppenheimerFunds Services

P.O. Box 5270 Denver, Colorado 80217 1.800.CALL.OPP (225.5677)

Custodian Bank for the Funds

Citibank, N.A.
111 Wall Street
New York, New York 10005

Custodian Bank for Master Focus Twenty Trust

The Bank of New York
23 William Street
New York, New York 10286

Custodian Bank for the S&P 500 Index Series of the Quantitative
Master Series

Trust
Merrill Lynch Trust Company
800 Scudders Mill Road
Plainsboro, New Jersey 08536

Independent Auditors
Deloitte & Touche LLP
555 Seventeenth Street
Denver, Colorado 80202

Counsel to the Funds Counsel to the Independent Trustees
Myer, Swanson, Adams & Wolf, P.C. Mayer, Brown, Rowe & Maw
1600 Broadway 1675 Broadway
Denver, Colorado 80202 New York, New York 10019

PX0000.0303

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