N-14

As filed with the Securities and Exchange Commission on May 19, 2003

Registration No. 2-86903
                 -------

                   U.S. SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                  FORM N-14

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933           / X /

PRE-EFFECTIVE AMENDMENT NO.___                                    /   /

POST-EFFECTIVE AMENDMENT NO.__                                    /   /

                     OPPENHEIMER MULTIPLE STRATEGIES FUND
              (Exact Name of Registrant as Specified in Charter)

              6803 South Tucson Way, Centennial, Colorado 80112
                   (Address of Principal Executive Offices)

                                 303-768-3200
                       (Registrant's Telephone Number)

                             Robert G. Zack, Esq.
                   Senior Vice President & General Counsel
                            OppenheimerFunds, Inc.
                 498 Seventh Avenue, New York, New York 10018
                                (212) 323-0250
                   (Name and Address of Agent for Service)

  As soon as practicable after the Registration Statement becomes effective.
                (Approximate Date of Proposed Public Offering)

Title of Securities Being Registered: Class A, Class B, Class C and Class N
shares of Oppenheimer Multiple Strategies Fund.

It is proposed that this filing will become effective on June 19, 2003
pursuant to Rule 488.

No filing fee is due because of reliance on Section 24(f) of the Investment
Company Act of 1940.



                      CONTENTS OF REGISTRATION STATEMENT

This Registration Statement contains the following pages and documents:

Front Cover
Contents Page
Cross-Reference Sheet


Part A

Proxy Statement for Oppenheimer Select Managers QM Active Balanced Fund and
Prospectus for Oppenheimer Multiple Strategies Fund

Exhibit A - Agreement and Plan of Reorganization between Oppenheimer Select
Mangers QM Active Balanced Fund and Oppenheimer Multiple Strategies Fund

Exhibit B - Principal Shareholders


Part B

Statement of Additional Information


Part C

Other Information
Signatures
Exhibits




                                  FORM N-14
                     OPPENHEIMER MULTIPLE STRATEGIES FUND
                            CROSS REFERENCE SHEET

Part A of Form N-14

Item No.    Proxy Statement and Prospectus Heading and/or Title of Document
- --------    ---------------------------------------------------------------
1.    (a)   Cross Reference Sheet.
(b)   Front Cover Page.
2.    (a)   *
(b)   Table of Contents.
3.    (a)   Synopsis.
      (b)   Comparative Fee Tables.
(c)   Principal Risk Factors.
4.    (a)   Synopsis;   Approval  or  Disapproval  of  the  Reorganization  of
            Oppenheimer   Select   Managers  QM  Active   Balanced  Fund  into
            Oppenheimer Multiple Strategies Fund.
5.    (a)   Method of Carrying Out the Reorganization; Additional Information.
(b)   Approval or Disapproval of the Reorganization - Capitalization Table.
(c)   Statement of Additional  Information of Oppenheimer  Multiple Strategies
            Fund  (see  Part  B);  Annual  Report  of   Oppenheimer   Multiple
            Strategies   Fund  dated   September   30,   2002  (see  Part  B);
            Semi-Annual Report dated March 31, 2003.
6.    Synopsis;  Comparison  Between  Oppenheimer  Select  Managers  QM Active
            Balanced Fund and Oppenheimer Multiple Strategies Fund.
7.          *
8.    (a)   *
(b)   *
9.          *


Part B of Form N-14

Item No.    Statement  of  Additional  Information  Heading  and/or  Title of
- --------    ------------------------------------------------------------------
Document
- --------
10.         Cover Page.
11.         Table of Contents.
12.   (a)   Statement  of  Additional   Information  of  Oppenheimer  Multiple
      Strategies Fund.
      (b)   *
13.   (a)   Statement  of  Additional   Information  of   Oppenheimer   Select
            Managers QM Active Balanced Fund.
      (b)   *
14.         Audited financial statements for the 12-month period ended September
            30, 2002 and financial statements for the six-month period ended
            March 31, 2003 of Oppenheimer Multiple Strategies Fund.
            Audited financial statements for the 12-month period ended November
            30, 2002 and financial statements for the six-month period ended May
            31, 2003 of Oppenheimer Select Managers QM Active Balanced Fund.

Part C of Form N-14

Item No.    Other Information Heading
- --------    -------------------------
15.         Indemnification.
16.         Exhibits.
17.         Undertakings.


- ---------------
* Not Applicable or negative answer

Dina C. Lee
Assistant Vice President and
Assistant Counsel


May 19, 2003


SEC Filer Support
Mail Stop 0-7; Securities Operations Center
6432 General Green Way
Alexandria, VA  22312

   Re:  Registration  Statement on Form N-14 for Oppenheimer
        Multiple Strategies Fund
        Proxy Materials for  Oppenheimer  Select Managers QM
        Active Balanced Fund

To the Securities and Exchange Commission:

      Enclosed for filing with the  Securities  and Exchange
Commission  under the  Securities  Act of 1933,  as  amended
(the "1933 Act"),  is a Registration  Statement on Form N-14
(the  "Registration   Statement")  of  Oppenheimer  Multiple
Strategies Fund (the  "Registrant"),  an open-end investment
company.    The   Registration    Statement   includes   the
prospectus  of the  Registrant  and the proxy  statement  of
Oppenheimer  Select  Managers QM Active  Balanced Fund, also
an  open-end   investment   company.   The   Registrant  and
Oppenheimer  Select  Managers QM Active  Balanced  Fund have
the same investment adviser (OppenheimerFunds, Inc.).

      As  stated  on the  facing  sheet of the  Registration
Statement,  it is expected that the  Registration  Statement
will become  effective  on June 19, 2003.  The  solicitation
of  Oppenheimer  Select  Managers  QM Active  Balanced  Fund
shareholders is expected to commence promptly thereafter.

      In accordance  with the general  instructions  to Form
N-14, the  preliminary  proxy material which forms a part of
the  Registration  Statement is deemed to be filed  pursuant
to the  Securities  Exchange  Act of 1934,  as  amended.  No
filing fee is due because the Registrant  previously filed a
declaration  to  register  an  indefinite  number  of shares
pursuant to Rule 24f-2 under the  Investment  Company Act of
1940,  as  amended.   Note  that  in  accordance   with  the
instructions   to  Item  14(a)2  of  Form  N-14,  pro  forma
financials for the  Registrant  reflecting the effect of the
proposed  reorganization  are not  included  because the net
asset  value  of  Oppenheimer   Select  Managers  QM  Active
Balanced  Fund  does  not  exceed  ten (10)  percent  of the
Registrant's net asset value.

      The  Agreement  and  Plan of  Reorganization  is filed
herewith as Exhibit A to the Prospectus and Proxy  Statement
concerning the  reorganization of Registrant and Oppenheimer
Select   Managers  QM  Active   Balanced  Fund.  Also  filed
herewith  are the  following  documents:  (1)  Part B to the
Prospectus and Proxy Statement,  which includes: (a) audited
financial  statements for the 12-month period ended November
30, 2002 and financial  statements for the six-month  period
ended  May 31,  2003 of QMAB  Fund;  (b)  audited  financial
statements for the 12-month  period ended September 30, 2002
and  financial  statements  for the  six-month  period ended
March 31, 2003 of MS Fund;  (c) the  Prospectus of QMAB Fund
dated March 28, 2003, as


well as the May 7, 2003  supplement to the  Prospectus;  (d)
the Statement of Additional  Information  of QMAB Fund dated
March  28,  2003;   and  (e)  the  Statement  of  Additional
Information  of MS Fund dated  November 22, 2002, as well as
the  January  2,  2003   supplement   to  the  Statement  of
Additional Information;  (2) the Prospectus of MS Fund dated
November  22,  2002,   as  well  as  the  January  13,  2003
supplement to the  Prospectus;  (3) Part C to the Prospectus
and  Proxy  Statement;   (4)  Proxy  Card;  (5)  Shareholder
Letter;  (6) Telephone Voting  Instructions;  and (7) Powers
of Attorney.

      If there are any  questions  concerning  this  filing,
please  contact the  undersigned.  It would be most  helpful
if the ballot  could be  reviewed  first,  to allow for this
document  to be  printed  and  coded  for  each  shareholder
account prior to mailing.


      Thank you for your assistance.

                                                Sincerely,


                                                /s/  Dina C.Lee

                                                -----------------------------
                                                Dina C. Lee
                                                Assistant Vice
                                                President & Assistant Counsel
                                                Tel.:  (212)323-5089
                                                Fax:   (212)323-4071


cc:   Mayer, Brown, Rowe & Maw
      Myer, Swanson, Adams & Wolf, P.C.
      Deloitte & Touche LLP
      KPMG LLP

    OPPENHEIMER SELECT MANAGERS QM ACTIVE BALANCED FUND
         6803 South Tucson Way, Centennial CO 80112
                       1.800.708.7780

         NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
               TO BE HELD ON AUGUST 29, 2003

To  the  Shareholders  of  Oppenheimer  Select  Managers  QM
Active Balanced Fund:

Notice  is  hereby  given  that  a  Special  Meeting  of the
Shareholders  of  Oppenheimer   Select  Managers  QM  Active
Balanced  Fund  ("QMAB  Fund"),   a  registered   investment
management  company,  will be held at 6803 South Tucson Way,
Centennial,  CO 80112 at 1:00 p.m., Mountain time, on August
29, 2003, or any adjournments  thereof (the "Meeting"),  for
the following purposes:

1.    To approve  an  Agreement  and Plan of  Reorganization
between  Oppenheimer Select Managers QM Active Balanced Fund
("QMAB  Fund")  and  Oppenheimer  Multiple  Strategies  Fund
("MS  Fund'),  and the  transactions  contemplated  thereby,
including  (a) the  transfer  of all the assets of QMAB Fund
to MS Fund in  exchange  for Class A,  Class B,  Class C and
Class N shares  of MS Fund,  (b) the  distribution  of these
shares  of MS Fund to the  corresponding  Class A,  Class B,
Class C and Class N  shareholders  of QMAB Fund in  complete
liquidation  of  QMAB  Fund,  (c)  the  cancellation  of the
outstanding   class   shares   of  QMAB  Fund  and  (d)  the
liquidation of outstanding  Class Y shares of QMAB Fund (all
of the foregoing being referred to as the "Proposal").

2.    To act upon such other  matters as may  properly  come
before the Meeting.

Shareholders  of record at the close of business on June 18,
2003  are  entitled  to  notice  of,  and to  vote  at,  the
Meeting.  The Proposal is more fully  discussed in the Proxy
Statement and  Prospectus.  Please read it carefully  before
telling us,  through  your proxy or in person,  how you wish
your  shares to be  voted.  The  Board of  Trustees  of QMAB
Fund  recommends  a vote in favor of the  Proposal.  WE URGE
YOU TO SIGN, DATE AND MAIL THE ENCLOSED PROXY PROMPTLY.

By Order of the Board of Trustees,
      Robert G. Zack, Secretary
      July 7, 2003
- ------------------------------------------------------------------------------
Shareholders  who do not  expect to attend the  Meeting  are
requested to indicate  voting  instructions  on the enclosed
proxy and to date,  sign and  return it in the  accompanying
postage-paid   envelope.   To  avoid  unnecessary  duplicate
mailings,  we ask your  cooperation in promptly mailing your
proxy no matter how large or small your holdings may be.

    OPPENHEIMER SELECT MANAGERS QM ACTIVE BALANCED FUND
         6803 South Tucson Way, Centennial CO 80112
                       1.800.708.7780

          COMBINED PROSPECTUS AND PROXY STATEMENT
                     DATED JULY 7, 2003

Acquisition of the Assets of OPPENHEIMER SELECT MANAGERS QM
                    ACTIVE BALANCED FUND

By and in exchange for Class A, Class B, Class C, and Class
                        N shares of
            OPPENHEIMER MULTIPLE STRATEGIES FUND

      This combined  Prospectus and Proxy Statement solicits
proxies  from  the   shareholders   of  Oppenheimer   Select
Managers QM Active  Balanced  Fund ("QMAB Fund") to be voted
at a Special  Meeting of  Shareholders  (the  "Meeting")  to
approve  the  Agreement  and  Plan  of  Reorganization  (the
"Reorganization    Agreement")    and    the    transactions
contemplated  thereby  (the  "Reorganization")  between QMAB
Fund and Oppenheimer  Multiple  Strategies Fund ("MS Fund").
This combined  Prospectus  and Proxy  Statement  constitutes
the  Prospectus  of MS Fund and the Proxy  Statement of QMAB
Fund  filed on Form N-14 with the  Securities  and  Exchange
Commission  ("SEC").  If  shareholders  vote to approve  the
Reorganization  Agreement  and the  Reorganization,  the net
assets of QMAB Fund will be acquired by and in exchange  for
shares of MS Fund.  The Meeting  will be held at the offices
of   OppenheimerFunds,   Inc.  at  6803  South  Tucson  Way,
Centennial,  CO 80112 at 1:00 p.m., Mountain time, on August
29, 2003 or any adjournment  thereof.  The Board of Trustees
of QMAB Fund is  soliciting  these proxies on behalf of QMAB
Fund.  This  Prospectus  and Proxy  Statement  will first be
sent to shareholders on or about July 14, 2003.

      If   the    shareholders    vote   to   approve    the
Reorganization  Agreement,  you will receive  Class A shares
of MS Fund  equal in value to the value as of the  Valuation
Date (as such term is defined in the  Agreement  and Plan of
Reorganization  attached  hereto as Exhibit A) of your Class
A shares of QMAB  Fund;  Class B shares of MS Fund  equal in
value to the value as of the Valuation  Date of your Class B
shares  of QMAB  Fund;  Class C shares  of MS Fund  equal in
value to the value as of the Valuation  Date of your Class C
shares of QMAB Fund;  and Class N shares of MS Fund equal in
value to the value as of the Valuation  Date of your Class N
shares of QMAB  Fund.  Class Y shares of QMAB Fund have been
liquidated.   QMAB  Fund  will   then  be   liquidated   and
de-registered  under the Investment Company Act of 1940 (the
"Investment Company Act").

      MS Fund's  investment  objective is to seek high total
investment    return   consistent   with   preservation   of
principal.  MS Fund  invests in equity  securities,  such as
common  stocks of U.S and foreign  companies.  It invests in
debt  securities,   including  bonds  and  notes  issued  by
domestic   and   foreign   companies   (which  can   include
lower-grade,  high-yield  securities),  securities issued or
guaranteed  by the  U.S.  Government  and its  agencies  and
instrumentalities,   including  mortgage-related  securities
(these are  referred  to as "U.S.  Government  securities"),
and debt  obligations of foreign  governments.  MS Fund also
invests in money market  instruments,  which are obligations
that  have  a  maturity  of 13  months  or  less,  including
short-term U.S.  Government  securities,  corporate and bank
debt obligations and commercial paper.

      This Prospectus and Proxy Statement gives  information
about  Class A,  Class B,  Class C and  Class N shares of MS
Fund that you  should  know  before  investing.  You  should
retain it for future  reference.  A Statement of  Additional
Information  relating  to the  Reorganization  described  in
this  Prospectus  and Proxy  Statement,  dated  July 7, 2003
(the "Proxy Statement of Additional  Information")  has been
filed with the SEC as part of the Registration  Statement on
Form   N-14   (the   "Registration    Statement")   and   is
incorporated  herein by  reference.  You may  receive a copy
by  written  request  to   OppenheimerFunds   Services  (the
"Transfer   Agent")  or  by  calling  the  toll-free  number
1.800.708.7780.    The   Proxy   Statement   of   Additional
Information  includes the following  documents:  (i) audited
financial   statements   for  the   12-month   period  ended
September  30,  2002,  and  financial   statements  for  the
six-month period ended March 31, 2003,  respectively,  of MS
Fund;  (ii) audited  financial  statements  for the 12-month
period ended  November 30, 2002,  and  financial  statements
for the six-month  period ended May 31, 2003,  respectively,
of  QMAB  Fund;   (iii)  MS  Fund  Statement  of  Additional
Information,   dated  November  22,  2002,  as  supplemented
February  12,  2003;   and  (iv)  QMAB  Fund   Statement  of
Additional Information.

      The  Prospectus of MS Fund,  dated  November 22, 2002,
as  supplemented  January  13,  2003,  is  attached  to  and
considered  a part of this  Prospectus  and Proxy  Statement
and is  intended to provide  you with  information  about MS
Fund.

      The following  documents  have been filed with the SEC
and are  available  without  charge upon written  request to
the Transfer Agent or by calling the toll-free  number shown
above:  (i) a  Prospectus  for QMAB  Fund,  dated  March 28,
2003,   supplemented  May  7,  2003;  (ii)  a  Statement  of
Additional  Information for QMAB Fund, dated March 28, 2003;
and  (iii) a  Statement  of  Additional  Information  for MS
Fund, dated November 22, 2002, as supplemented  February 12,
2003.

Mutual fund shares are not  deposits or  obligations  of any
bank,  and are not  insured  or  guaranteed  by the  Federal
Deposit Insurance  Corporation or any other U.S.  government
agency.   Mutual  fund  shares  involve   investment   risks
including the possible loss of principal.

As with  all  mutual  funds,  the SEC  has not  approved  or
disapproved  these securities or passed upon the adequacy of
this Prospectus and Proxy Statement.  Any  representation to
the contrary is a criminal offense.

This Prospectus and Proxy Statement is dated July 7, 2003.

                     TABLE OF CONTENTS
          COMBINED PROSPECTUS AND PROXY STATEMENT

                                                                         Page
                                                                         ----
Synopsis

   What am I being asked to vote on?..........................................6
   What are the general tax consequences of the
Reorganization?...............................................................7
   Comparisons of Some Important Features
   How do the investment objectives and policies of the
Funds compare?................................................................7
   Who manages the Funds?.....................................................7
   What are the fees and expenses of each Fund and those

expected after the

      Reorganization?.........................................................8
   Where can I find more financial information about the
Funds?........................................................................11
   How have the Funds performed?..............................................12
   What are other Key Features of the
Funds?........................................................................14
         Investment Management and
Fees..........................................................................15
         Transfer Agency and Custody
   Services...................................................................15
         Distribution Services................................................16
         Purchases, Redemptions, Exchanges and other
   Shareholder Services.......................................................16
         Dividends and Distributions..........................................16
What are the Principal Risks of an Investment in QMAB Fund
and MS Fund?..................................................................16
Reasons for the Reorganization
Information about the Reorganization
   How will the Reorganization be carried
out?..........................................................................18
   Who will pay the Expenses of the
Reorganization?...............................................................19
   What are the Tax Consequences of the
Reorganization?...............................................................19
   What should I know about Class A, Class B, Class C and
Class N shares of MS Fund?....................................................20
   What are the capitalizations of the Funds and what might
the capitalizations be after the
      Reorganization?.........................................................21
Comparison of Investment Objectives and Policies
   Are there any significant differences between the
investment objectives and strategies ofthe Funds?.............................22
   What are the main risks associated with an investment in
the Funds?....................................................................22
   How do the investment policies of the Funds
compare?......................................................................22
   What are the fundamental investment restrictions of the
Funds?........................................................................26
   How do the Account Features and Shareholder Services for
the Funds Compare?............................................................28
         Investment Management................................................28
         Distribution.........................................................29
         Purchases and Redemptions............................................29
         Shareholder Services.................................................30
         Dividends and Distributions..........................................30

Voting Information

   How many votes are necessary to approve the
Reorganization Agreement?.....................................................30
   How do I ensure my vote is accurately recorded?
...............................................................................31
   Can I revoke my proxy?.....................................................31
   What other matters will be voted upon at the
Meeting?......................................................................31
   Who is entitled to vote?...................................................32
   What other solicitations will be
made?.........................................................................32
   Are there any appraisal
rights?.......................................................................32
Information about MS Fund.....................................................32
Information about QMAB Fund...................................................33
Principal Shareholders........................................................33
Exhibit A - Agreement and Plan of Reorganization by and
between Oppenheimer Select
Managers QM Active Balanced Fund and Oppenheimer Multiple
Strategies Fund...............................................................37
Exhibit B - Principal Shareholders............................................48
Enclosures:
Prospectus of Oppenheimer Multiple Strategies Fund dated
November 22, 2002, as supplemented January 13, 2003

                          SYNOPSIS

      This  is  only  a  summary  and  is  qualified  in its
entirety by the more  detailed  information  contained in or
incorporated  by  reference  in this  Prospectus  and  Proxy
Statement  and  by the  Reorganization  Agreement  which  is
attached  as  Exhibit  A.   Shareholders   should  carefully
review  this   Prospectus   and  Proxy   Statement  and  the
Reorganization   Agreement   in  their   entirety   and,  in
particular,   the  current   Prospectus  of  MS  Fund  which
accompanies  this  Prospectus  and  Proxy  Statement  and is
incorporated herein by reference.

What am I being asked to vote on?

      Your  Fund's  investment  manager,   OppenheimerFunds,
Inc.  (the  "Manager"),  proposed to the Board of Trustees a
reorganization  of your Fund,  QMAB  Fund,  with and into MS
Fund  so  that   shareholders   of  QMAB  Fund  may   become
shareholders of a  substantially  larger fund advised by the
same  investment   advisor  with  generally  more  favorable
long-term   performance,   and  investment   objectives  and
policies  similar to those of their current Fund.  The Board
considered the  differences in investment  focus,  discussed
below.   The  Board  also   considered  the  fact  that  the
surviving   fund  has  the   potential   for  lower  overall
operating expenses.  In addition,  the Board considered that
both  Funds  have  Class  A,  Class B,  Class C and  Class N
shares offered under  identical  sales charge  arrangements.
The Board  considered that Class Y shares of QMAB Fund would
be  redeemed  by the  record  date  and  will no  longer  be
offered  for  sale.  The  Board  also  considered  that  the
Reorganization is expected to be a tax-free  reorganization,
and there would be no sales charge  imposed in effecting the
Reorganization.   In   addition,   due  to  the   relatively
moderate  costs of the  reorganization,  the  Boards of both
Funds concluded that neither Fund would experience  dilution
as a result of the Reorganization.

      A  reorganization  of QMAB  Fund with and into MS Fund
is  recommended  by the Manager  based on the fact that both
funds have similar investment  practices and industry sector
weightings.

      At a  meeting  held on April  28,  2003,  the Board of
Trustees of QMAB Fund approved a reorganization  transaction
that  will,  if  approved  by  shareholders,  result  in the
transfer  of the net  assets  of QMAB  Fund to MS  Fund,  in
exchange  for an equal  value  of  shares  of MS  Fund.  The
shares  of MS Fund  will  then be  distributed  to QMAB Fund
shareholders   and   QMAB   Fund   will    subsequently   be
liquidated.  As a  result  of the  Reorganization,  you will
cease to be a  shareholder  of QMAB  Fund and will  become a
shareholder  of MS Fund.  This  exchange  will  occur on the
Closing Date (as such term is defined in the  Agreement  and
Plan of Reorganization  attached hereto as Exhibit A) of the
Reorganization.

      Approval of the Reorganization  means you will receive
Class A shares of MS Fund  equal in value to the value as of
the  Valuation  Date of your  Class A shares  of QMAB  Fund;
Class B shares of MS Fund  equal in value to the value as of
the  Valuation  Date of your  Class B shares  of QMAB  Fund;
Class C shares of MS Fund  equal in value to the value as of
the Valuation  Date of your Class C shares of QMAB Fund; and
Class N shares of MS Fund  equal in value to the value as of
the Valuation  Date of your Class N shares of QMAB Fund. All
Class Y shares of QMAB Fund will be  redeemed  by the record
date and will no longer be  offered  for  sale.  The  shares
you  receive  will be issued at net  asset  value  without a
sales charge or the payment of a contingent  deferred  sales
charge  ("CDSC"),  although  if your shares of QMAB Fund are
subject to a CDSC,  your MS Fund shares will  continue to be
subject to the same CDSC applicable to your shares.

      For the  reasons  set  forth in the  "Reasons  for the
Reorganization"   section,   the  Board  of  QMAB  Fund  has
determined that the  Reorganization is in the best interests
of the shareholders of QMAB Fund.

       THE BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE
    TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION

What are the general tax consequences of the Reorganization?

      It is expected that  shareholders of QMAB Fund who are
U.S.  citizens  will  not  recognize  any  gain or loss  for
federal income tax purposes,  as a result of the exchange of
their  shares for shares of MS Fund.  You  should,  however,
consult your tax advisor  regarding  the effect,  if any, of
the    Reorganization    in   light   of   your   individual
circumstances.  You should  also  consult  your tax  advisor
about  state  and  local  tax   consequences.   For  further
information    about   the   tax    consequences    of   the
Reorganization,   please  see  the  "Information  About  the
Reorganization--What   are  the  Tax   Consequences   of  the
Reorganization?"

           Comparisons of Some Important Features

How do the investment objectives and policies of the Funds
compare?

      QMAB  Fund  seeks  income  and  long-term   growth  of
capital  and MS Fund  seeks  high  total  investment  return
consistent with  preservation  of principal.  QMAB Fund is a
balanced  fund  which  means its  investments  normally  are
allocated  among equity and debt securities and money market
instruments.

      In seeking their investment objectives,  QMAB Fund and
MS Fund  utilize a similar  investing  strategy.  Both Funds
invest  primarily  in a wide  variety of equity  securities,
debt securities and money market instruments.

      Please  refer to the Annual  Reports of both Funds for
a complete listing of the investments for each Fund.

Who Manages the Funds?

      The day-to-day  management of the business and affairs
of each Fund is the  responsibility of the Manager,  however
QMAB  Fund  also   utilizes   sub-advisers   to  manage  the
investment  and  reinvestment  of the assets.  MS Fund is an
open-end,  diversified management investment company with an
unlimited   number  of   authorized   shares  of  beneficial
interest,  organized as a Massachusetts  business trust. Its
predecessor  fund, OMC Growth & Income Trust,  was organized
on September 29, 1983.  OMC Growth & Income Trust  commenced
operations  in  September  1983.  QMAB Fund is an  open-end,
management  investment  company with an unlimited  number of
authorized  shares of  beneficial  interest  organized  as a
Massachusetts  business  trust  on  November  10,  2000.  It
commenced  operations  on February 16, 2001.  Both Funds are
governed by a Board of Trustees,  which is  responsible  for
protecting    the    interests   of    shareholders    under
Massachusetts  law.  Both  Funds are  located  at 6803 South
Tucson Way, Centennial, CO 80112.

      The Manager,  located at 498 Seventh Avenue, New York,
New York 10018,  acts as  investment  advisor to both Funds.
QMAB Fund's assets are managed by a sudadviser.

      MS Fund is managed by a team of  individuals  from the
Manager's growth,  value,  global, high grade and high yield
investment  departments.  The portfolio  management  team is
primarily  responsible  for  the  selection  of  the  Fund's
portfolio securities.


      The  portfolio  managers  for QMAB  Fund  are  Michael
Lenarcic and John Van Belle.  Both Mr.  Lenarcic and Mr. Van
Belle are employed by Prudential Investment Management,  the
Fund's  sub-advisor.  They  have been the  Fund's  portfolio
managers since February 8, 2002.


      Additional   information   about  the  Funds  and  the
Manager  is set forth  below in  "Comparison  of  Investment
Objectives and Policies."

What are the Fees and Expenses of each Fund and those
expected after the Reorganization?

      QMAB Fund and MS Fund each pay a variety  of  expenses
directly for  management  of their  assets,  administration,
distribution  of their  shares  and  other  services.  Those
expenses  are   subtracted   from  each  Fund's   assets  to
calculate   the   Fund's   net  asset   value   per   share.
Shareholders  pay these  expenses  indirectly.  Shareholders
for both Funds pay other  expenses  directly,  such as sales
charges.

      The   following   tables  are  provided  to  help  you
understand  and compare the fees and  expenses of  investing
in  shares  of QMAB  Fund  with  the fees  and  expenses  of
investing  in shares of MS Fund.  The pro forma  expenses of
the  surviving  MS Fund show what the fees and  expenses are
expected to be after  giving  effect to the  Reorganization.
All amounts  shown are a percentage  of each class of shares
of the Funds.

                    PRO FORMA FEE TABLE
           For the 12 month period ended 3/31/03
- ------------------------------------------------------------------------------------
                                                                Pro Forma
                       QMAB Fund           MS Fund              Surviving MS Fund
                       Class A shares      Class A Shares       Class A shares
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Shareholder Transaction Expenses (charges paid directly from a shareholder's
investment)
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Maximum Sales Charge
(Load) on purchases           5.75%               5.75%                5.75%
(as a
 %  of offering price)
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Maximum Deferred
Sales Charge (Load)           None1               None1                None1
(as a % of the lower
of the original
offering price or
redemption proceeds)
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Annual Fund Operating Expenses (deducted from Fund assets) (as a percentage of
average daily net assets)
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Management Fees               0.95%               0.72%                0.72%
- ------------------------------------------------------------------------------------
Distribution and/or
Service (12b-1) Fees          0.02%               0.20%                0.20%
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Other Expenses5               0.64%               0.20%                0.20%
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Total Fund Operating
Expenses                      1.61%               1.12%                1.12%
- ------------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------
                                                                Pro Forma
                       QMAB Fund           MS Fund              Surviving MS Fund
                       Class B shares      Class B Shares       Class B shares
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Shareholder Transaction Expenses (charges paid directly from a shareholder's
investment)
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Maximum Sales Charge
(Load) on purchases           None                 None                None
(as a  %  of offering
price)
- ------------------------------------------------------------------------------------
Maximum Deferred
Sales Charge (Load)            5%2                 5%2                  5%2
(as a % of the lower
of the original
offering price or
redemption proceeds)
- ------------------------------------------------------------------------------------
Annual Fund Operating Expenses (deducted from Fund assets) (as a percentage of
average daily net assets)
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Management Fees               0.95%               0.72%                0.72%
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Distribution and/or
Service (12b-1) Fees          1.00%               1.00%                1.00%
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Other Expenses5               0.56%               0.31%                0.31%
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------

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

Total Fund Operating
Expenses                      2.51%               2.03%                2.03%

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

- -----------------------------------------------------------------------------------
                                                               Pro Forma
                       QMAB Fund           MS Fund             Surviving MS Fund
                       Class C Shares       Class C Shares     Class C Shares
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Shareholder Transaction Expenses (charges paid directly from a shareholder's
investment)
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Maximum Sales Charge
(Load) on purchases           None                None                None
(as a  %  of offering
price)
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Maximum Deferred
Sales Charge (Load)            1%3                 1%3                 1%3
(as a % of the lower
of the original
offering price or
redemption proceeds)
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Annual Fund Operating Expenses (deducted from Fund assets) (as a percentage of
average daily net assets)
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Management Fees               0.95%               0.72%               0.72%
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Distribution and/or
Service (12b-1) Fees          1.00%               1.00%               1.00%
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Other Expenses5               0.36%               0.25%               0.25%
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Total Fund Operating
Expenses                      2.31%               1.97%               1.97%
- -----------------------------------------------------------------------------------

- -----------------------------------------------------------------------------------
                                                                Pro Forma
                       QMAB Fund           MS Fund              Surviving MS Fund
                       Class N shares      Class N Shares       Class N shares
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Shareholder Transaction Expenses (charges paid directly from a shareholder's
investment)
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Maximum Sales Charge
(Load) on purchases           None                 None                None
(as a  %  of offering
price)
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Maximum Deferred
Sales Charge (Load)            1%4                 1%4                 1%4
(as a % of the lower
of the original
offering price or
redemption proceeds)
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Annual Fund Operating Expenses (deducted from Fund assets) (as a percentage of
average daily net assets)
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Management Fees               0.95%               0.72%               0.72%
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Distribution and/or
Service (12b-1) Fees          0.50%               0.50%               0.50%
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Other Expenses5               0.35%               0.36%               0.36%
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Total Fund Operating
Expenses                      1.80%               1.58%               1.58%
- -----------------------------------------------------------------------------------
Note:  Expenses may vary in future years.
1. A   contingent   deferred   sales  charge  may  apply  to
   redemptions   of   investments  of  $1  million  or  more
   ($500,000  for  retirement  plan  accounts)  of  Class  A
   shares.   See  "How  to  Buy   Shares"  in  each   Fund's
   Prospectus.
2. Applies  to  redemptions  within  the  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.
5.    "Other  Expenses"  include  transfer  agent  fees  and
   custodial,  accounting and legal  expenses.  The Transfer
   Agent has  voluntarily  undertaken  to the Funds to limit
   the  transfer  agent fees to 0.25% of  average  daily net
   assets  per  fiscal  year for Class Y shares and 0.35% of
   average  daily net assets  per fiscal  year for all other
   classes.

Examples

      The  examples  below are  intended to help you compare
the  cost  of  investing  in  each  Fund  and  the  proposed
surviving  MS Fund.  These  examples  assume that you invest
$10,000 for the time  periods  indicated,  an annual  return
for  each  class of 5%,  the  operating  expenses  described
above and reinvestment of your dividends and distributions.

      Your  actual  costs  may be  higher  or lower  because
expenses will vary over time.  For each $10,000  investment,
you would pay the following  projected  expenses if you sold
your  shares  after the  number of years  shown or held your
shares  for the  number of years  shown  without  redeeming,
according to the following examples.

                  12 Months Ended 3/31/03
                  -----------------------

                         QMAB Fund
- --------------------------------------------------------------------------------
If shares are redeemed:    1 year       3 years       5 years       10 years
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class A                     $729        $1,054        $1,401         $2,376
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B                     $754        $1,082        $1,535        $2,4211
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C                     $334         $721         $1,235         $2,646
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class N                     $283         $566          $975          $2,116
- --------------------------------------------------------------------------------

                         QMAB Fund
- --------------------------------------------------------------------------------
If shares are not          1 year       3 years       5 years       10 years
redeemed:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class A                     $729        $1,054        $1,401         $2,376
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B                     $254         $782         $1,335        $2,4211
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C                     $234         $721         $1,235         $2,646
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class N                     $183         $566          $975          $2,116
- --------------------------------------------------------------------------------

                          MS Fund
- --------------------------------------------------------------------------------
If shares are redeemed:    1 year       3 years       5 years       10 years
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class A                     $683         $911         $1,156         $1,860
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B                     $706         $937         $1,293        $1,9081
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C                     $300         $618         $1,062         $2,296
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class N                     $261         $499          $860          $1,878
- --------------------------------------------------------------------------------

                          MS Fund
- --------------------------------------------------------------------------------
If shares are not          1 year       3 years       5 years       10 years
redeemed:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class A                     $683         $911         $1,156         $1,860
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B                     $206         $637         $1,093        $1,9081
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C                     $200         $618         $1,062         $2,296
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class N                     $161         $499          $860          $1,878
- --------------------------------------------------------------------------------

                Pro Forma Surviving MS Fund
- --------------------------------------------------------------------------------
If shares are redeemed:    1 year       3 years       5 years       10 years
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class A                     $683         $911         $1,156         $1,860
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B                     $706         $937         $1,293        $1,9081
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C                     $300         $618         $1,062         $2,296
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class N                     $261         $499          $860          $1,878
- --------------------------------------------------------------------------------

                Pro Forma Surviving MS Fund
- --------------------------------------------------------------------------------
If shares are not          1 year       3 years       5 years       10 years
redeemed:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class A                     $683         $911         $1,156         $1,860
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B                     $206         $637         $1,093        $1,9081
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C                     $200         $618         $1,062         $2,296
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class N                     $161         $499          $860          $1,878
- --------------------------------------------------------------------------------
In  the  "If  shares  are  redeemed"  example,   expenses
include  the  initial  sales  charge  for Class A and the
applicable  Class  B,  Class  C  or  Class  N  contingent
deferred  sales  charge.   In  the  "If  shares  are  not
redeemed"  example,  the  Class A  expenses  include  the
initial  sales  charge,  but Class B, Class C and Class N
expenses  do not include the  contingent  deferred  sales
charge.
1 Class B  expenses  for years 7 through  10 are based on
Class A  expenses,  since  Class B  shares  automatically
convert to Class A after 6 years.

Where can I find more financial information about the Funds?

      Performance  information  for  both MS Fund  and  QMAB
Fund  is set  forth  in each  Fund's  Prospectus  under  the
section "The Fund's Past  Performance." MS Fund's Prospectus
accompanies  this  Prospectus  and  Proxy  Statement  and is
incorporated by reference.

      The  financial  statements  of MS Fund and  additional
information  with  respect  to its  performance  during  its
fiscal  year  ended   September   30,   2002,   including  a
discussion   of  factors   that   materially   affected  its
performance  and  relevant  market  conditions  during  that
fiscal  year,  is set forth in MS Fund's  audited  financial
statements   dated  as  of  September  30,  2002,  that  are
included in the Proxy  Statement of  Additional  Information
and  incorporated  herein by reference.  These documents are
available upon request.  See section  entitled  "Information
About MS Fund."

      The financial  statements of QMAB Fund and  additional
information  with respect to the Fund's  performance  during
its  fiscal  year  ended  November  30,  2002,  including  a
discussion   of  factors   that   materially   affected  its
performance  and  relevant  market  conditions  during  that
fiscal  year,  is set  forth in QMAB  Fund's  Annual  Report
dated as of  November  30,  2002,  that is  included  in the
Proxy Statement of Additional  Information and  incorporated
herein by reference.  These  documents  are  available  upon
request.  See  section  entitled   "Information  About  QMAB
Fund."

How have the Funds performed?

      The following past  performance  information  for each
Fund is set forth  below,  and for earlier  periods,  in its
respective  Prospectus:  (i) a bar  chart  detailing  annual
total  returns of Class A shares of each Fund as of December
31st for each of the ten most  recent  full  calendar  years
(for QMAB Fund,  since that  Fund's  inception);  and (ii) a
table  showing how the average  annual total  returns of the
Funds'  shares,  both  before  and after  taxes,  compare to
those of broad-based  market indices.  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. Each Funds'
past investment performance,  before and after taxes, is not
necessarily  an  indication of how each Fund will perform in
the future.

      Calendar  year average  annual  total  returns for the
Funds  for the  periods  ended  December  31,  2002,  are as
follows:

[See appendix to Prospectus and Proxy  statement for data in
bar chart  showing  annual  total  returns  for  Oppenheimer
Select Managers QM Active Balanced Fund.]

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

For the period from 1/1/03 through  3/31/03,  the cumulative
return  for QMAB  Fund  (not  annualized)  before  taxes for
Class A shares was  -1.35%.  During the period  shown in the
bar  chart,  the  highest  return  for  Oppenheimer   Select
Managers QM Active  Balanced  Fund (not  annualized)  before
taxes for a calendar  quarter was 5.21% (4th Qtr'02) and the
lowest return (not  annualized)  before taxes for a calendar
quarter was -11.11% (3rdQtr'02).


[See appendix to Prospectus and Proxy  statement for data in
bar chart  showing  annual  total  returns  for  Oppenheimer
Multiple Strategies Fund.]

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

For the period from 1/1/03 through  3/31/03,  the cumulative
return for MS Fund (not  annualized)  before taxes for Class
A shares was  -1.12%.  During  the  period  shown in the bar
chart,   the  highest   return  for   Oppenheimer   Multiple
Strategies  Fund  (not   annualized)   before  taxes  for  a
calendar  quarter  was  11.15%  (4thQtr'98)  and the  lowest
return (not annualized)  before taxes for a calendar quarter
was -11.03% (3rdQtr'01).


Average  annual total  returns for the Funds for the periods
ended December 31, 2002 are as follows:

- ----------------------------------------------------------------------
QMAB Fund                          1 Year                  5 Years
                                             2 Years     (or life of
                                                          class, if
                                                            less)
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------

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

  Return Before Taxes
  Return After Taxes on
  Distributions                                            -12.08%
  Return After Taxes on           -17.82%                  -12.47%
  Distributions                   -10.64%                  -9.73%
  And Sale of Fund Shares
- ----------------------------------------------------------------------

S&P  500   Index   (reflects   no
deduction  for fees,  expenses or
taxes) (from 2/28/01)             -22.09%                  -15.80%

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

Lehman Brothers
Government/Credit Bond Index
(reflects no deduction for fees,
expenses or taxes) (from 2/28/01)  9.84%                    8.76%

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

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)

- ----------------------------------------------------------------------
- ----------------------------------------------------------------------------------
MS Fund                            1 Year                  5 Years     10 Years
                                             2 Years                   (or life
                                                                       of class,
                                                                       if less)
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------

Class A Shares (inception         -15.75%                   1.57%
4/24/87)

  Return Before Taxes
  Return After Taxes on

  Distributions                                                          7.69%
  Return After Taxes on           -16.57%                  -0.69%        4.99%
  Distributions                    -9.57%                   0.63%        5.30%
  And Sale of Fund Shares

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

S&P 500 Index (from 12/31/92)     -22.09%                  -0.58%        9.34%

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

Lehman Brothers Aggregate Bond     10.25%                   7.55%        7.51%
Index (reflects no deduction for
fees, expenses or taxes)(from
12/31/92)

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

Class B Shares (inception         -15.73%                   1.65%        6.39%
8/29/95)

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

Class C Shares (inception12/1/93) -12.22%                   1.93%        6.76%

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

Class N Shares (inception 3/1/01) -11.83%                  -6.78%         N/A

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

Average  annual total  returns for the Funds for the periods
ended March 31, 2003 are as follows:

- -------------------------------------------------------------------
QMAB Fund                       1 Year                  5 Years
                                           2 Years    (or life of
                                                       class, if
                                                         less)
- -------------------------------------------------------------------
- -------------------------------------------------------------------

Class A Shares (inception      -19.18%                   -11.31%
2/16/01)                                   -8.82%

  Return Before Taxes
  Return After Taxes on
  Distributions
  Return After Taxes on        -19.52%                  -11.65%
  Distributions And Sale of    -11.77%                   -9.07%
  Fund Shares
- -------------------------------------------------------------------

S&P  500  Index  (reflects  no
deduction  for fees,  expenses               N/A
or taxes) (from 2/28/01        -24.75%                   -3.76%

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

Lehman Brothers
Government/Credit Bond Index
(reflects no deduction for                   N/A
fees, expenses or taxes)        11.74%                   8.45%
(from 2/28/01)

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

Class B Shares (inception      -19.03%     -8.68%       -10.80%
2/16/01)

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

Class C Shares (inception      -15.64%     -6.78%        -9.49%
2/16/01)

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

Class N Shares (inception      -15.10%     -6.32%        -8.08%
3/1/01)

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

Class Y Shares (inception      -13.83%     -5.85%        -8.54%
2/16/01)

- -------------------------------------------------------------------
- ---------------------------------------------------------------------------------
MS Fund                         1 Year                  5 Years    10 Years (or
                                           2 Years                    life of
                                                                     class, if
                                                                       less)
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------

Class A Shares (inception      -17.15%                   -0.06%        7.07%
4/24/87)                                   -7.46%

  Return Before Taxes
  Return After Taxes on
  Distributions
  Return After Taxes on        -17.88%                   -2.25%        4.40%
  Distributions                -10.52%                   -0.64%        4.79%
  And Sale of Fund Shares
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------

S&P 500 Index (from 3/31/93)   -24.75%       N/A         -3.76%        8.53%

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

Lehman Brothers Aggregate       11.69%                   7.51%         7.23%
Bond Index (reflects no                      N/A
deduction for fees, expenses
or taxes) (from 3/31/93)

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

Class B Shares (inception      -17.19%     -7.28%        0.00%         6.02%
8/29/95)

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

Class C Shares                 -13.71%     -5.47%        0.30%         6.43%
(inception12/1/93)

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

Class N Shares (inception      -13.46%     -5.12%        -6.58%         N/A
3/1/01)

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

QMAB 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(R)Index  and the  Lehman
Brothers  Government/Credit  Bond Index.  The S&P 500(R)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.

MS 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 2% (5 years);  and for Class
C, the 1%  contingent  deferred  sales charge for the 1-year
period.  Because Class B shares convert to Class A shares 72
months after purchase,  Class B "life-of-class"  performance
does not include any  contingent  deferred  sales charge and
uses Class A  performance  for the period after  conversion.
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(R)Index,  an  unmanaged  index  of U.S.  equity
securities,  and  to  the  Lehman  Brothers  Aggregate  Bond
Index, an unmanaged index of U.S. corporate,  government and
mortgage-backed  securities.  The performance of the indices
includes   reinvestment  of  income  but  does  not  reflect
transaction   costs,   expenses,   or  taxes.   The   Fund's
investments vary from the securities in the indices.


What are other Key Features of the Funds?

      The  description  of certain key features of the Funds
below  is  supplemented   by  each  Fund's   Prospectus  and
Statement of Additional Information,  which are incorporated
by reference.

      Investment  Management  and Fees - Under  each  Fund's
investment advisory agreement,  the Fund pays the Manager an
advisory fee at an annual rate that  declines on  additional
assets as the Fund grows.

- ---------------------------------------------------------------------------------------
                 QMAB Fund                                    MS Fund
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
0.95% of the first $300 million of average   0.75% of the first $200 million of
annual net assets,                           average annual net assets,
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------

0.90% of average annual net assets in      0.72% of the next $200 million,
excess of $300 million.

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

                                          0.69% of the next $200 million,

                                          -------------------------------------------
                                          -------------------------------------------
                                          0.66% of the next $200 million,
                                          -------------------------------------------
                                          -------------------------------------------
                                          0.60% of the next $700 million, and
                                          -------------------------------------------
                                          -------------------------------------------
                                          0.58% of the average annual net assets in
                                          excess of $1.5 billion.
                                          -------------------------------------------

Based on average annual net assets of the respective Fund.

      The  management  fee for  QMAB  Fund  for  the  twelve
months ended March 31, 2003 was 0.95% of the average  annual
net  assets for each class of  shares.  The  management  fee
for MS Fund for the twelve  months  ended March 31, 2003 was
0.72% of the  average  annual  net  assets for each class of
shares.  The 12b-1  distribution  plans for both  Funds were
substantially similar.

- ---------------------------------------------------------------------------
                         QMAB         MS Fund        Combined Pro Forma
03/31/03               Class A        Class A             Class A
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Management Fee          0.95%          0.72%               0.72%
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
12b-1 Fees              0.02%1         0.20%               0.20%
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Other Expenses          0.64%          0.20%               0.20%
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Total Expenses          1.61%          1.12%               1.12%
- ---------------------------------------------------------------------------
"Other Expenses"  include transfer agent fees and custodial,
accounting  and legal  expenses the Funds pay. This chart is
for illustrative purposes only.
1.    Class A  shares  12b-1  fee is not the  full 25  basis
   points due to monies invested by OppenheimerFunds, Inc.

      The net assets under  management  for MS Fund on March
31, 2003 were  $586,315,488,  as compared to $6,383,174  for
QMAB   Fund.    Effective    upon   the   Closing   of   the
Reorganization,  the  management  fee  rate  for MS  Fund is
expected to be 0.72% of average  annual net assets  based on
combined   assets  of  the  Funds  as  of  March  31,  2003.
Additionally,  the "Other  Expenses" of the  surviving  Fund
are  expected to be less than the "Other  Expenses"  of QMAB
Fund.

      For a detailed  description of each Fund's  investment
management   agreement,   see  the  section  below  entitled
"Comparison  of Investment  Objectives and Policies - How do
the Account Features and Shareholder  Services for the Funds
Compare?"

      Transfer  Agency  and  Custody  Services  - Both Funds
receive  shareholder  accounting and other clerical services
from  OppenheimerFunds  Services in its capacity as transfer
agent and dividend  paying  agent.  It acts on an annual per
account  fee  basis  for  both  Funds.   The  terms  of  the
transfer agency  agreement for both Funds are  substantially
similar.

      Citibank,  N.A., located at 111 Wall Street, New York,
NY 10005,  acts as  custodian  of the  securities  and other
assets of QMAB  Fund.  JP Morgan  Chase  Bank,  located at 4
Chase  Metro  Tech  Center,  Brooklyn,  NY  11245,  acts  as
custodian of the securities and other assets of MS Fund.


      Distribution Services - OppenheimerFunds  Distributor,
Inc. (the "Distributor")  acts as the principal  underwriter
in a  continuous  public  offering  of shares of both Funds,
but is not  obligated  to sell a specific  number of shares.
Both Funds  have  adopted  distribution  and  service  plans
under Rule  12b-1 of the  Investment  Company  Act for their
Class A shares.  The  12b-1  fees for Class A shares of both
QMAB  Fund and MS Fund are  service  plan  fees  which are a
maximum  of 0.25% of  average  annual  net assets of Class A
shares.  The  12b-1  fees for  Class B,  Class C and Class N
shares of both Funds are  Distribution and Service plan fees
which  include a service fee of 0.25% of average  annual net
assets  and an  asset-based  sales  charge  for  Class B and
Class C shares of 0.75% and an  asset-based  sales charge of
0.25% for Class N shares of the average annual net assets.

      For   a   detailed    description   of   each   Fund's
distribution-related  services, see the section below titled
"Comparison  of Investment  Objectives and Policies - How do
the Account Features and Shareholder  Services for the Funds
Compare?"


      Purchases,    Redemptions,    Exchanges    and   other
Shareholder  Services  - Both  Funds  have  nearly  the same
requirements  and restrictions in connection with purchases,
redemptions  and  exchanges,  except  that QMAB Fund is only
offered for sale to  retirement  plans.  In  addition,  each
Fund also  offers  the same types of  shareholder  services.
More detailed information regarding purchases,  redemptions,
exchanges  and  shareholder  services  can be found below in
the  section   below  titled   "Comparison   of   Investment
Objectives  and  Policies - How do the Account  Features and
Shareholder Services for the Funds Compare?"

      Dividends  and  Distributions  -  QMAB  Fund  declares
dividends  separately  for  each  class of  shares  from net
investment  income  annually  and pays  those  dividends  to
shareholders  in December on a date selected by the Board of
the Fund. MS Fund  declares  dividends  separately  for each
class of shares  from net  investment  income on a quarterly
basis in  March,  June,  September  and  December  on a date
selected  by the Board of the Fund.  Both Funds may  realize
capital gains on the sale of portfolio  securities.  If they
do, they will make  distributions  out of any  short-term or
long-term capital gains in December of each year.


      For a detailed  description  of each Fund's  policy on
dividends  and  distributions,   see  the  section  entitled
"Comparison  of Investment  Objectives and Policies - How do
the Account Features and Shareholder  Services for the Funds
Compare?"

  WHAT ARE THE PRINCIPAL RISKS OF AN INVESTMENT IN QMAB
                    FUND AND MS FUND?


      As with most  investments,  investments in MS Fund and
QMAB Fund involve risks.  There can be no guarantee  against
loss  resulting  from an investment in either Fund,  nor can
there be any  assurance  that either  Fund will  achieve its
investment   objective.   The  risks   associated   with  an
investment  in each Fund are  similar.  Because  both  Funds
invest in stocks,  the value of each Fund's  portfolio  will
be  affected  by changes in the stock  markets in which they
invest.  The prices of individual  stocks do not all move in
the  same  direction  uniformly  at the  same  time  and the
volatility  of  their  prices  at  times  may  be  great.  A
particular  company's  stock price can be affected by, among
other  things,  a  poor  earnings  report,   loss  of  major
customers,  major litigation against the company, or changes
in  government  regulations  affecting  the  company  or its
industry.  Both  Funds  also  invest in  foreign  securities
which may be subject to special  risks.  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.  The value of foreign  investments may be
affected   by  change  in  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.


      In  addition,  both  Funds  invest in debt  securities
whose values are subject to change when prevailing  interest
rates  change.  The  change in values  may cause the  Funds'
share  prices  to go up or down.  Debt  securities  are also
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 Funds'  income may be  reduced,
and if the  issuer  fails to repay  principal,  the value of
that security and of the Funds' shares might fall.

      For more  information  about the  risks of the  Funds,
see "What are the Main Risks  Associated with Investments in
the Funds?"  under the  heading  "Comparison  of  Investment
Objectives and Policies."

               REASONS FOR THE REORGANIZATION

      At a  meeting  of the Board of  Trustees  of QMAB Fund
held  April  28,  2003,  the  Board  considered  whether  to
approve  the  proposed   Reorganization   and  reviewed  and
discussed  with the Manager and  independent  legal  counsel
the  materials  provided  by  the  Manager  relevant  to the
proposed  Reorganization.  Included  in  the  materials  was
information   with   respect   to  the   Funds'   respective
investment   objectives  and  policies,   management   fees,
distribution fees and other operating  expenses,  historical
performance and asset size.

      The  Board  reviewed  information  demonstrating  that
QMAB Fund is a relatively  smaller  fund with  approximately
$6,383,174  in net  assets as of March 31,  2003.  The Board
anticipates  that  QMAB  Fund's  assets  will  not  increase
substantially  in size in the near  future.  In  comparison,
MS Fund had  approximately  $586.3  million in net assets as
of  March   31,   2003.   After  the   Reorganization,   the
shareholders  of QMAB Fund would  become  shareholders  of a
larger  fund  that  is  anticipated  to have  lower  overall
operating  expenses  than QMAB Fund.  Economies of scale may
benefit shareholders of QMAB Fund.


      The Board  reviewed the  investment  objective of both
Funds.  QMAB  Fund  seeks  income  and  long-term  growth of
capital,  while MS Fund seeks high total  investment  return
consistent  with  preservation  of principal.  Additionally,
the Board  considered that both Funds invest in a variety of
equity   securities,   debt   securities  and  money  market
instruments.  The Board  noted  that  each Fund is  designed
for long-term  investors and each generally invests in a mix
of stocks,  debt  securities  and money  market  securities.
The  investment  strategies  and  policies  are  in  general
similar,  though  there  are some  differences  noted  below
under "How do the investment policies of the Funds compare."


      The  Board  noted  that MS  Fund's  management  fee is
currently  lower  than that of QMAB  Fund.  The  Board  also
considered  that MS Fund's  performance has been better than
that of QMAB Fund.

      The Board  also  considered  that the  procedures  for
purchases,  exchanges  and  redemptions  of  shares  of both
Funds are very  similar  and that both Funds  offer the same
investor services and options.

      The Board also  considered the terms and conditions of
the  Reorganization,  including that there would be no sales
charge imposed in effecting the  Reorganization and that the
Reorganization    is    expected    to    be   a    tax-free
reorganization.   The  Board   concluded  that  QMAB  Fund's
participation  in the  transaction  is in the best interests
of the Fund and that the Reorganization  would not result in
a dilution  of the  interests  of existing  shareholders  of
QMAB Fund.


      After  consideration  of the above  factors,  and such
other  factors  and  information  as the  Board of QMAB Fund
deemed relevant,  the Board,  including the Trustees who are
not  "interested  persons"  (as  defined  in the  Investment
Company  Act)  of  either  QMAB  Fund  or the  Manager  (the
"Independent    Trustees"),    unanimously    approved   the
Reorganization  and the  Reorganization  Agreement and voted
to recommend its approval to the shareholders of QMAB Fund.

      The  Board  of  MS  Fund  also   determined  that  the
Reorganization  was in the best interests of MS Fund and its
shareholders  and that no  dilution  would  result  to those
shareholders.  MS  Fund  shareholders  do  not  vote  on the
Reorganization.   The  Board  of  MS  Fund,   including  the
Independent     Trustees,     unanimously    approved    the
Reorganization and the Reorganization Agreement.

      For the reasons  discussed above, the Board, on behalf
of  QMAB   Fund,   recommends   that   you   vote   FOR  the
Reorganization  Agreement.  If  shareholders of QMAB Fund do
not    approve    the    Reorganization    Agreement,    the
Reorganization will not take place.

            INFORMATION ABOUT THE REORGANIZATION

This  is only a  summary  of the  Reorganization  Agreement.
You   should   read  the  actual   form  of   Reorganization
Agreement.  It is attached as Exhibit A.

How Will the Reorganization be Carried Out?

      If  the   shareholders   of  QMAB  Fund   approve  the
Reorganization   Agreement,  the  Reorganization  will  take
place after  various  conditions  are satisfied by QMAB Fund
and MS Fund,  including delivery of certain  documents.  The
Closing Date is presently  scheduled  for  September 5, 2003
and the Valuation Date is presently  scheduled for September
4, 2003.

      If    shareholders    of   QMAB   Fund   approve   the
Reorganization  Agreement, QMAB Fund will deliver to MS Fund
substantially  all of its net  assets on the  closing  date.
In exchange,  shareholders  of QMAB Fund will receive  Class
A, Class B, Class C and Class N MS Fund  shares  that have a
value equal to the dollar  value of the assets  delivered by
QMAB  Fund to MS Fund.  Class Y  shares  of QMAB  Fund  were
liquidated  prior to the  merger.  QMAB  Fund  will  then be
liquidated  and its  outstanding  shares will be  cancelled.
The stock  transfer  books of QMAB Fund will  permanently be
closed  at the  close of  business  on the  Valuation  Date.
Only redemption  requests  received by the Transfer Agent in
proper  form on or  before  the  close  of  business  on the
Valuation  Date will be fulfilled  by QMAB Fund.  Redemption
requests   received  after  that  time  will  be  considered
requests to redeem shares of MS Fund.

      Shareholders  of QMAB  Fund  who vote  their  Class A,
Class  B,  Class  C and  Class  N  shares  in  favor  of the
Reorganization  will be electing  in effect to redeem  their
shares  of QMAB  Fund at net  asset  value on the  Valuation
Date,  after  QMAB  Fund  subtracts  a  cash  reserve,   and
reinvests  the  proceeds  in Class A,  Class B,  Class C and
Class N  shares  of MS Fund at net  asset  value.  The  cash
reserve  is that  amount  retained  by QMAB  Fund,  which is
deemed  sufficient  in the  discretion  of the Board for the
payment  of the Fund's  outstanding  debts and  expenses  of
liquidation.  MS  Fund is not  assuming  any  debts  of QMAB
Fund except debts for unsettled securities  transactions and
outstanding  dividend and redemption checks.  QMAB Fund will
recognize  capital gains or losses on any sales of portfolio
securities made prior to the Reorganization.

      Under the  Reorganization  Agreement,  within one year
after the Closing Date,  QMAB Fund shall:  (a) either pay or
make  provision  for all of its  debts  and  taxes;  and (b)
either  (i)  transfer  any  remaining  amount  of  the  cash
reserve  to  MS  Fund,  if  such  remaining  amount  is  not
material  (as  defined  below)  or  (ii)   distribute   such
remaining  amount to the  shareholders of QMAB Fund who were
shareholders  on the Valuation  Date.  The remaining  amount
shall  be  deemed  to  be  material  if  the  amount  to  be
distributed,  after deducting the estimated  expenses of the
distribution,  equals or  exceeds  one cent per share of the
number  of QMAB Fund  shares  outstanding  on the  Valuation
Date.  If the cash  reserve is  insufficient  to satisfy any
of  QMAB  Fund's   liabilities,   the  Manager  will  assume
responsibility  for any such unsatisfied  liability.  Within
one year after the  Closing  Date,  QMAB Fund will  complete
its liquidation.

      Under the Reorganization  Agreement,  either QMAB Fund
or MS Fund may  abandon  and  terminate  the  Reorganization
Agreement  for any  reason and there  shall be no  liability
for damages or other  recourse  available to the other Fund,
provided,  however,  that in the event that one of the Funds
terminates  this  Agreement  without  reasonable  cause,  it
shall,  upon  demand,  reimburse  the  other  Fund  for  all
expenses,  including reasonable  out-of-pocket  expenses and
fees incurred in connection with this Agreement.

      To the extent  permitted  by law,  the Funds may agree
to amend the  Reorganization  Agreement without  shareholder
approval.  They may also agree to terminate  and abandon the
Reorganization   at  any  time  before  or,  to  the  extent
permitted  by law,  after the  approval of  shareholders  of
QMAB Fund.

Who Will Pay the Expenses of the Reorganization?

      The Funds will bear the cost of their  respective  tax
opinions.  Any documents  such as existing  prospectuses  or
annual  reports that are included in the proxy mailing or at
a  shareholder's  request will be a cost of the Fund issuing
the document.  Any other  out-of-pocket  expenses associated
with  the  Reorganization  will be paid by the  Funds in the
amounts  incurred by each.  The cost of printing and mailing
the  Prospectus   and  Proxy   Statement  will  be  paid  by
- ------------------.

What are the Tax Consequences of the Reorganization?

      The   Reorganization  is  intended  to  qualify  as  a
tax-free  reorganization  for  federal  income tax  purposes
under  Section  368(a)(1)  of the  Internal  Revenue Code of
1986,  as  amended.   Based  on  certain   assumptions   and
representations  received  from QMAB Fund and MS Fund, it is
expected to be the  opinion of  Deloitte & Touche  LLP,  tax
advisor to QMAB Fund,  that  shareholders  of QMAB Fund will
not  recognize  any  gain or loss  for  federal  income  tax
purposes  as a result of the  exchange  of their  shares for
shares  of MS Fund,  and that  shareholders  of MS Fund will
not  recognize  any gain or loss upon receipt of QMAB Fund's
assets.  If this  type of tax  opinion  is not  forthcoming,
the Fund may still  choose to go  forward  with the  merger,
pending shareholder approval.  In addition,  neither Fund is
expected  to  recognize  a gain or loss as a  result  of the
Reorganization.

      Immediately  prior to the  Valuation  Date,  QMAB Fund
will  pay  a   dividend   which  will  have  the  effect  of
distributing to QMAB Fund's  shareholders all of QMAB Fund's
net  investment  company  taxable  income for taxable  years
ending on or prior to the  Closing  Date  (computed  without
regard to any deduction  for dividends  paid) and all of its
net capital gains, if any,  realized in taxable years ending
on or prior to the  Closing  Date (after  reduction  for any
available capital loss  carry-forward).  Such dividends will
be   included   in  the   taxable   income  of  QMAB  Fund's
shareholders   as   ordinary   income  and   capital   gain,
respectively.

      You will continue to be  responsible  for tracking the
purchase  cost and holding  period of your shares and should
consult your tax advisor  regarding  the effect,  if any, of
the    Reorganization    in   light   of   your   individual
circumstances.  You should also  consult your tax advisor as
to state and local and other tax  consequences,  if any,  of
the  Reorganization  because this discussion only relates to
federal income tax consequences.

What should I know about Class A, Class B, Class C and
Class N shares of MS Fund?


      The   rights  of   shareholders   of  both  Funds  are
substantially   the  same.   Both  Funds  are  organized  as
Massachusetts  business  trusts.  The  Declarations of Trust
and  By-Laws  are  substantially  similar  with  respect  to
rights  voting for the election of Trustees,  and rights for
mergers,  liquidations and  distributions,  and redemptions.
Shareholders  of MS Fund have voting rights that are greater
on certain  significant  matters that  shareholders  of QMAB
Fund do not  have.  Class A,  Class B,  Class C and  Class N
shares of MS Fund will be  distributed  to  shareholders  of
Class A,  Class B,  Class C and Class N shares of QMAB Fund,
respectively,  in connection with the Reorganization.  Class
Y shares of QMAB Fund were  liquidated  prior to the merger.
Each  share  will  be  fully  paid  and  nonassessable  when
issued,  will have no preemptive  or  conversion  rights and
will be  transferable  on the books of MS Fund.  Each Fund's
Declaration  of Trust  contains  an  express  disclaimer  of
shareholder   or   Trustee    liability   for   the   Fund's
obligations,    and   provides   for   indemnification   and
reimbursement  of  expenses  out of  its  property  for  any
shareholder  held  personally  liable  for its  obligations.
Neither Fund  permits  cumulative  voting.  The shares of MS
Fund will be recorded  electronically in each  shareholder's
account.  MS Fund  will  then  send a  confirmation  to each
shareholder.  Shareholders  of Class A shares  of QMAB  Fund
holding  certificates  representing their shares will not be
required to surrender their  certificates in connection with
the  Reorganization.  However,  former Class A  shareholders
of QMAB Fund whose  shares are  represented  by  outstanding
share  certificates will not be allowed to redeem,  transfer
or  pledge  class  shares  of MS Fund  they  receive  in the
Reorganization  until  the  certificates  for the  exchanged
QMAB  Fund  have  been  returned  to  the  Transfer   Agent.
Shareholders  of  Class  B,  Class  C,  Class N and  Class Y
shares  of QMAB Fund do not have  certificates  representing
their shares.  Their shares will be cancelled.


      Like  QMAB  Fund,  MS Fund  does  not  routinely  hold
annual shareholder meetings.

What are the  capitalizations  of the Funds  and what  might
the capitalization be after the Reorganization?

      The  following  table sets  forth the  capitalizations
(unaudited)  of QMAB Fund and MS Fund and  indicates the pro
forma  combined  capitalization  as of March 31,  2003 as if
the Reorganization had occurred on that date.

                                                                  Net
Asset
                                                Shares
Value
                              Net Assets        Outstanding
Per Share
QMAB Fund
      Class A                $4,787,027           594,325          $8.05
      Class B               $   545,378            68,232          $7.99
      Class C               $   593,823            74,093          $8.01
      Class N               $   456,131            56,669          $8.05
      Class Y            $          812               100          $8.12
      TOTAL                  $6,383,171           793,419

MS Fund
      Class A              $494,484,889        45,083,558         $10.97
      Class B             $  54,404,880         5,019,843         $10.84
      Class C             $  36,047,450         3,313,615         $10.88
      Class N            $    1,378,267           126,175         $10.92
TOTAL $586,315,486           53,543,191
MS Fund
(Pro Forma Surviving Fund)
      Class A              $499,271,916        45,520,005         $10.97
      Class B             $  54,950,258         5,070,164         $10.84
      Class C             $  36,641,273         3,368,201         $10.88
      Class N            $    1,834,398           167,932         $10.92
      TOTAL                $592,697,845        54,126,302

*Reflects  the  issuance of 436,447  Class A shares,  50,321
Class B shares,  54,586  Class C shares and  41,757  Class N
shares of MS Fund in a tax-free  exchange for the net assets
of QMAB Fund, aggregating $6,383,171.

      COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES

      This  section  describes  key  investment  policies of
QMAB Fund and MS Fund,  and certain  noteworthy  differences
between the  investment  objectives  and policies of the two
Funds.  For a complete  description of MS Fund's  investment
policies  and  risks,   please  review  its  prospectus  and
Statement  of  Additional  Information  dated  November  22,
2002.  That  prospectus is attached to this  Prospectus  and
Proxy Statement as an enclosure.

      Are  there any  significant  differences  between  the
investment objectives and strategies of the Funds?


      In considering  whether to approve the Reorganization,
shareholders  of QMAB Fund should  consider the  differences
in investment  objectives,  policies and risks of the Funds.
Further  information  about  MS  Fund  is set  forth  in its
Prospectus,  which  accompanies  this  Prospectus  and Proxy
Statement   and  is   incorporated   herein  by   reference.
Additional  information  about  both  Funds is set  forth in
their  respective  Statements of Additional  Information and
Annual  Reports,  which may be obtained  upon request to the
Transfer  Agent.  See  "Information  about  QMAB  Fund"  and
"Information about MS Fund."

      QMAB  Fund's  investment  objective  is to seek income
and  long-term  growth of capital  and MS Fund's  investment
objective   is  to  seek  high   total   investment   return
consistent with preservation of principal.


What are the Main Risks  Associated  with an  Investment  in
the Funds?


      Like all  investments,  an  investment  in both of the
Funds  involves  risk.  There is no  assurance  that  either
Fund will meet its  investment  objective.  The  achievement
of  the  Funds'  goals   depends  upon  market   conditions,
generally,  and on the portfolio  manager's  analytical  and
portfolio  management  skills.  The  risks  described  below
collectively  form the risk  profiles of the Funds,  and can
affect  the  value  of the  Funds'  investments,  investment
performance  and prices per  share.  Particular  investments
and  investment  strategies  also have risks.  There is also
the risk that poor securities  selection by the Manager will
cause  the  Funds  to  underperform  other  funds  having  a
similar  objective.  These  risks  mean  that  you can  lose
money by  investing  in either  Fund.  When you redeem  your
shares,  they may be worth  more or less  than what you paid
for them.


How Do the Investment Policies of the Funds Compare?

      In  selecting   securities  for  MS  Fund,  MS  Fund's
portfolio managers use different  investment styles to carry
out  an  asset   allocation   strategy   that  seeks   broad
diversification   across  asset   classes.   They   normally
maintain  a  balanced  mix of stocks,  debt  securities  and
cash,  although  MS Fund has no  requirements  to weight the
portfolio  holdings in a fixed  proportion.  Therefore,  the
portfolio's  mix of equity and debt securities and cash will
change over time as the  portfolio  managers  seek  relative
values and opportunities in different asset classes.

      Because  the  goal  of  total   return  looks  for  an
increase in the overall  portfolio  value from a combination
of capital  growth  and  income,  MS Fund  invests in stocks
mainly for their capital appreciation  potential and in debt
securities for income.  The income from debt  securities and
money  market  instruments  can also help the Fund  preserve
principal when stock markets are volatile.

      The   portfolio   managers  of  MS  Fund  employ  both
"growth"  and  "value"  styles  in  selecting  stocks.  They
employ  fundamental   analysis  of  a  company's   financial
statements and management structure,  operations and product
development,  as well as the  industry  of which the company
is part.  Value  investing seeks stocks that are temporarily
out of  favor  or  undervalued  in  the  market  by  various
measures,  such as the stock's  price/earnings ratio. Growth
investing  seeks  stocks  that  the  manager  believes  have
possibilities  for  increases  in  stock  price  because  of
strong  earnings   growth   compared  to  the  market,   the
development  of new products or services or other  favorable
economic factors.

      In  selecting  securities  for QMAB Fund,  QMAB Fund's
portfolio  managers use a  quantitative  model.  They manage
the stock portion of QMAB 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   QMAB   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 (1) common  stocks
in  general  appear to be  overvalued,  (2) debt  securities
offer meaningful  capital growth  opportunities  relative to
common stocks, or (3) it is desirable to maintain  liquidity
pending  investment  in equity  securities  to seek  capital
growth opportunities.


      Each Fund attempts to reduce their  exposure to market
risks by  diversifying  their  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 Funds'
assets in any one  company.  Neither Fund  concentrates  25%
or more of its assets in  investments  in any one  industry.
Both  Funds  can  invest  in  companies  in  any  particular
capitalization  range;  however  both  Funds  are  primarily
invested  in  large-cap  ($9  billion  to $25  billion)  and
mega-cap (above $25 billion) stocks.

      Other  Equity  Securities.  While  MS Fund  emphasizes
investments  in  common  stocks,  it can also buy  preferred
stocks,  warrants  and  securities  convertible  into common
stock,  which may be  subject to credit  risks and  interest
rate risks.  QMAB Fund  invests in other  equity  securities
such as  non-convertible  preferred  stocks  and  securities
convertible into common stock.


      Illiquid and Restricted  Securities.  Investments  may
be  illiquid  because  they do not  have an  active  trading
market,  making it  difficult  to value  them or  dispose of
them   promptly  at  an  acceptable   price.   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. MS Fund will
not invest  more than 10% of its net assets in  illiquid  or
restricted  securities.  QMAB Fund will not invest more than
15%  of  its  net   assets   in   illiquid   of   restricted
securities.   Certain   restricted   securities   that   are
eligible  for resale to qualified  institutional  purchasers
may  not  be  subject  to  those  limits.   The  Manager  or
respective  Adviser  or  Subadviser   monitors  holdings  of
illiquid   securities  on  an  ongoing  basis  to  determine
whether  to  sell  any   holdings   to   maintain   adequate
liquidity.

      Foreign  Investing.  QMAB 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.


      MS Fund can buy  securities in any country,  including
developed  countries  and emerging  markets.  MS Fund has no
limits on the amount of its assets  that can be  invested in
foreign  securities;  however, it normally expects to invest
not  more  than 50% of its  assets  in  foreign  securities.
While  foreign   securities  may  offer  special  investment
opportunities,  they are  subject to special  risks that can
reduce the Fund's share prices and returns.

      Special  Risks of Emerging  Markets.  QMAB Fund and MS
Fund can invest in emerging markets.  Securities in emerging
and  developing  markets  present  risks  not  found in more
mature 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 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.  Economies  of
developing  countries  may be more  dependent on  relatively
few  industries  that may be highly  vulnerable to local and
global changes.  These investments may be very speculative.

      Derivative  Investments.  Both  Funds can  invest in a
number of different  kinds of "derivative"  investments.  In
general  terms,  a derivative  investment  is an  investment
contract  whose  value  depends on (or is derived  from) the
value  of an  underlying  asset,  interest  rate  or  index.
Options,   futures  contracts,   structured  notes  such  as
indexed  securities  or inverse  securities,  collateralized
mortgage  obligations  ("CMOs") and hedging  instruments are
"derivative   instruments"   QMAB  Fund  can  use.  Options,
futures  contracts  and  other  hedging  instruments  may be
considered  derivative  investments for MS Fund. In addition
to using derivatives for hedging,  QMAB Fund might use other
derivative  investments because they offer the potential for
increased  income  and  principal  value.  MS Fund might use
other   derivative   investments   because  they  offer  the
potential  for  increased  value.  QMAB Fund and MS Fund are
not required to use derivative  investments in seeking their
objectives.


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

      For  QMAB  Fund,   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.   Both   Funds  can  buy  and  sell   futures
contracts,  put and  call  options  and  forward  contracts.
These are all  referred  to as  "hedging  instruments."  The
Funds are not  required to use hedging  instruments  to seek
their  objectives.  The  Funds  have  limits on their use of
hedging and types of hedging  instruments  that can be used,
and do not  use  them  for  speculative  purposes.  Some  of
these   strategies   could  be  used  to  hedge  the  Funds'
portfolio   against   price   fluctuations.   Other  hedging
strategies,  such as buying futures and call options,  could
increase  the  Funds'  exposure  to the  securities  market.
Forward  contracts  can be  used  to try to  manage  foreign
currency risks on both Funds' foreign investments.

      There are also  special  risks in  particular  hedging
strategies.   Options   trading   involves  the  payment  of
premiums,  has  special  tax  effects  on the  Funds and can
increase portfolio  turnover.  If the Adviser or Sub-Adviser
for QMAB  Fund  and the  Manager  for MS Fund use a  hedging
instrument  at the wrong  time or judged  market  conditions
incorrectly,  the hedge  might fail and the  strategy  could
reduce the Funds' return.  Both Funds could also  experience
losses if the prices of their futures and options  positions
are not correlated  with their other  investments or if they
could  not  close  out a  position  because  of an  illiquid
market.


      Portfolio  Turnover.  "Portfolio  turnover"  describes
the  rate  at  which  the  Funds  traded   their   portfolio
securities  during  their last fiscal  year.  Both Funds can
engage in  short-term  trading to achieve  their  objective.
Increased  portfolio  turnover  affects  brokerage costs the
Funds  pay.  If QMAB Fund  realizes  capital  gains  when it
sells its portfolio  investments,  generally it must pay out
those gains to shareholders,  increasing non-retirement plan
or non-IRA or  non-education  savings account  shareholders'
taxable  distributions.  If MS Fund  realizes  capital gains
when it sells its portfolio  investments,  generally it must
pay  out  those  gains  to  shareholders,  increasing  their
taxable distributions.

      Investing in Small,  Unseasoned Companies.  Both Funds
can invest in  securities  of small,  unseasoned  companies.
These  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  Funds'
ability  to  dispose  of them and can  reduce  the price the
Funds  might be able to  obtain  for them.  Other  investors
that own a  security  issued by a small,  unseasoned  issuer
for  which  there  is  limited  liquidity  might  trade  the
security  when the Funds are  attempting to dispose of their
holdings  of that  security.  In that case the  Funds  might
receive  a  lower  price  for  their   holdings  than  might
otherwise   be   obtained.   These   are  more   speculative
securities  and can  increase the Funds'  overall  portfolio
risks.  MS Fund does not  intend  to invest  more than 5% of
its net assets in these securities.


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


      The  majority  of these  transactions  run from day to
day, and delivery  pursuant to the resale  typically  occurs
within  one  to  five  days  of  the  purchase.   Repurchase
agreements  having a maturity  beyond seven days are subject
to the Funds' limits on holding illiquid  investments.  QMAB
Fund and MS Fund will not enter into a repurchase  agreement
that causes more than 15% and 10%, respectively,  of each of
their net  assets to be  subject  to  repurchase  agreements
having a maturity  beyond seven (7) days.  There is no limit
on the amount of MS Fund's  net  assets  that may be subject
to repurchase  agreements having maturities of seven days or
less.


      Loans  of  Portfolio  Securities.  To  raise  cash for
liquidity   purposes,   MS  Fund  can  lend  its   portfolio
securities to brokers,  dealers and other types of financial
institutions  approved by the Fund's Board of Trustees. As a
fundamental  policy,  these  loans are  limited  to not more
than 25% of the value of MS  Fund's  total  assets.  MS Fund
currently  does not intend to engage in loans of securities,
but if it does so,  such loans will not likely  exceed 5% of
the Fund's total assets.

      There are some  risks in  connection  with  securities
lending.  MS 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.  The Fund must receive collateral for a loan.

      When MS Fund lends  securities,  it  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.  Any of these types of  interest  may
be  shared  with  the   borrower.   MS  Fund  may  also  pay
reasonable  finder's,  custodian and administrative  fees in
connection  with these loans.  The terms of the Fund's loans
must meet applicable  tests under the Internal  Revenue Code
and must permit the Fund to reacquire  loaned  securities on
five (5) days'  notice  or in time to vote on any  important
matter.  QMAB  Fund  is not  authorized  to  lend  portfolio
securities.


      Temporary  Defensive  and  Interim   Investments.   In
times of adverse or unstable  market,  economic or political
conditions,  both  Funds  can  invest  up to 100%  of  their
assets  in   temporary   defensive   investments   that  are
inconsistent   with   the   Funds'   principal    investment
strategies.  For QMAB  Fund they  would be cash  equivalents
(such  as  commercial  paper),   money  market  instruments,
short-term  debt  securities,  U.S.  government  securities,
repurchase  agreements and purchase and sales  contracts and
could include other  investment  grade debt  securities  and
short-term  securities for cash management purposes.  For MS
Fund, they would be  high-quality,  short-term  money market
instruments,  such as  U.S.  government  securities,  highly
rated   commercial   paper,    short-term   corporate   debt
obligations,  or repurchase  agreements.  MS Fund might also
hold these types of  securities  pending the  investment  of
proceeds  from  the  sale  of  Fund's  shares  or  portfolio
securities  or  to  meet  anticipated  redemptions  of  Fund
shares.   To  the   extent   the   Funds   invest  in  these
securities,   they  might  not  achieve   their   investment
objective.


What  are the  fundamental  investment  restrictions  of the
Funds?

      Both  QMAB Fund and MS Fund  have  certain  additional
investment   restrictions  that  are  fundamental  policies,
changeable  only  by  shareholder   approval.   Both  Funds'
investment   objectives  are  also   fundamental   policies.
Generally,   these   investment   restrictions  are  similar
between the Funds and are discussed below:

         |_|      Neither Fund can buy securities  issued or
         guaranteed  by any one  issuer  if more  than 5% of
         their total assets would be invested in  securities
         of that  issuer or if they would then own more than
         10%  of  that  issuer's  voting  securities.   That
         restriction  applies  to 75% of each  Fund's  total
         assets.  The  limit  does not  apply to  securities
         issued  by  the  U.S.  government  or  any  of  its
         agencies or  instrumentalities,  and in the case of
         QMAB   Fund,   securities   of   other   investment
         companies.

      |_|   Neither Fund can invest in physical  commodities
         or  physical  commodity  contracts.   However,  the
         Funds can buy and sell hedging  instruments  to the
         extent   specified   in  their   Prospectuses   and
         Statements of Additional  Information  from time to
         time.  The  Funds  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.

|_|   MS Fund cannot lend  money.  However,  it can buy debt
         securities   that  its   investment   policies  and
         restrictions  permit  it to  purchase.  MS Fund may
         also lend its portfolio  securities  subject to the
         restrictions   stated   in   its   Prospectus   and
         Statement of Additional  Information  and can enter
         into repurchase agreements
|_|   QMAB  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.

      |_|   Neither Fund can concentrate  investments.  That
         means  they  cannot  invest  25% or more  of  their
         total assets in companies in any one industry.  For
         MS Fund,  obligations of the U.S.  government,  its
         agencies and  instrumentalities  are not considered
         to be part of an  "industry"  for  purposes of this
         restriction.

      |_|   Neither Fund can underwrite  securities of other
         companies.  A permitted  exception  is in case they
         are deemed to be underwriters  under the Securities
         Act of 1933 when reselling any  securities  held in
         their own portfolio.

|_|   Neither   Fund  can  invest  in  real   estate  or  in
         interests  in  real  estate.   For  MS  Fund,  this
         includes  futures  contracts.  However,  QMAB  Fund
         may  purchase   readily-marketable   securities  of
         companies  holding real estate or interests in real
         estate.   MS  Fund  may  purchase  debt  securities
         secured by real estate or interests in real estate.

|_|   Neither Fund can issue "senior  securities."  However,
         that  restriction  does not prohibit the Funds from
         borrowing  money  subject  to  the  provisions  set
         forth   in   their    Statements    of   Additional
         Information,   or  from   entering   into   margin,
         collateral  or  escrow  arrangements  permitted  by
         their other investment policies.

|_|   QMAB Fund cannot  borrow money in excess of 33 1/3% of
         the  value  of its  total  assets.  QMAB  Fund  may
         borrow   only   from   banks   and/or    affiliated
         investment   companies.   With   respect   to  this
         fundamental  policy,  QMAB 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.
      |_|         MS Fund cannot  borrow  money in excess of
         5% of the value of its total assets.  It can borrow
         only as a temporary  measure for  extraordinary  or
         emergency purposes.

      |_|               MS  Fund   cannot   invest   in  the
         securities  issued by any  company  for the purpose
         of  acquiring   control  or   management   of  that
         company,   except  in  connection  with  a  merger,
         reorganization,  consolidation  or  acquisition  of
         assets.

      |_|         MS   Fund   cannot   invest   in  or  hold
         securities  of any issuer if officers  and Trustees
         of   MS   Fund   or   the   Manager    individually
         beneficially  own  more  than  1/2  of  1%  of  the
         securities  of that  issuer and  together  own more
         than 5% of the securities of that issuer.
      |_|               MS Fund  cannot  buy  securities  on
         margin.  However,  this does not  prohibit  MS Fund
         from making margin  deposits in connection with any
         of the hedging instruments  permitted by any of its
         other investment policies.

      MS Fund cannot mortgage,  hypothecate or pledge any of
         its  assets to secure a debt.  However,  the escrow
         arrangements    in    connection    with    hedging
         instruments   are  not   considered  to  involve  a
         mortgage, hypothecation or pledge.

How do the Account  Features  and  Shareholder  Services for
the Funds Compare?


      Investment  Management  - Pursuant to each  investment
advisory  agreement,  the  Manager  acts  as the  investment
advisor  for both  Funds.  For QMAB Fund,  the  Manager  has
retained Prudential Investment Management,  the Sub-Advisor,
to provide  day-to-day  portfolio  management for QMAB Fund.
The  sub-advisory  fee is  paid  by the  Manager  out of its
management  fee.  Under the  Investment  Advisory  Agreement
for MS Fund and under  the  Subadvisory  Agreement  for QMAB
Fund, the Manager,  Adviser, or SubAdviser is authorized and
directed  to (i)  regularly  provide  investment  advice and
recommendations  to each Fund  with  respect  to the  Fund's
investments,  investment  policies and the purchase and sale
of  securities  and other  investments;  (ii)  supervise and
monitor  the  investment   program  of  each  Fund  and  the
composition  of its portfolio to determine  what  securities
and  other  investments  shall be  purchased  or sold by the
Fund;  and (iii) arrange for the purchase of securities  and
other  investments  for each Fund and the sale of securities
and other investments held in the portfolio of the Fund.


      The  investment  advisory  agreements  state  that the
Manager will provide administrative  services for the Funds,
including    compilation   and   maintenance   of   records,
preparation  and  filing  of  reports  required  by the SEC,
reports   to   shareholders,   and   composition   of  proxy
statements and registration  statements  required by Federal
and state  securities laws. The  administrative  services to
be  provided by the Manager  under the  investment  advisory
agreement will be at its own expense.

      Expenses not  expressly  assumed by the Manager  under
each Fund's advisory  agreement or by the Distributor  under
the General  Distributor's  Agreement are paid by the Funds.
The  investment   advisory   agreements   list  examples  of
expenses  paid by the Funds,  the major  categories of which
relate to interest,  taxes, brokerage  commissions,  fees to
certain  Trustees,  legal and audit expenses,  custodian and
transfer  agent  expenses,  share  issuance  costs,  certain
printing and registration costs and non-recurring  expenses,
including litigation costs.

      Both investment advisory agreements  generally provide
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  sustained  by reason of good  faith  errors or
omissions  in  connection  with any  matters  to  which  the
agreement(s)  relate.  The agreements  permit the Manager to
act as  investment  advisor  for any other  person,  firm or
corporation.  Pursuant  to each  agreement,  the  Manager is
permitted to use the name  "Oppenheimer"  in connection with
other   investment   companies  for  which  it  may  act  as
investment  advisor or general  distributor.  If the Manager
shall no longer act as investment  advisor to the Funds, the
Manager may  withdraw the right of the Funds to use the name
"Oppenheimer" as part of their names.


      The Manager is controlled by  Oppenheimer  Acquisition
Corp.,  a holding  company owned in part by senior  officers
of the Manager and  ultimately  controlled by  Massachusetts
Mutual  Life  Insurance  Company,  a mutual  life  insurance
company  that also  advises  pension  plans  and  investment
companies.  The  Manager  has  been  an  investment  advisor
since January  1960.  The Manager and its  subsidiaries  and
controlled  affiliates  managed  more than $120  billion  in
assets as of March 31,  2003,  including  other  Oppenheimer
funds  with more than 7 million  shareholder  accounts.  The
Manager is  located at 498  Seventh  Avenue,  New York,  New
York  10018.  OppenheimerFunds  Services,  a division of the
Manager,  acts as transfer and  shareholder  servicing agent
and is paid an annual per  account  fee by each of QMAB Fund
and MS Fund and for certain other  open-end funds managed by
the Manager and its affiliates.


      Distribution  -  Pursuant  to  General   Distributor's
Agreements,  the Distributor  acts as principal  underwriter
in a  continuous  public  offering  of shares of both Funds,
but is not  obligated  to sell a specific  number of shares.
Expenses   normally   attributable   to   sales,   including
advertising   and  the   cost  of   printing   and   mailing
prospectuses   other  than  those   furnished   to  existing
shareholders,  are  borne  by the  Distributor,  except  for
those for which the  Distributor  is paid under each  Fund's
Rule 12b-1 Distribution and Service Plan described below.

      The Service  Plan  provides for the  reimbursement  to
OppenheimerFunds   Distributor,  Inc.  (the  "Distributor"),
for a portion of its costs  incurred in connection  with the
personal  service  and  maintenance  of  accounts  that hold
Class A shares of the  respective  Funds.  Under the Class A
Service Plans,  reimbursement is made quarterly at an annual
rate that may not  exceed  0.25% of the  average  annual net
assets  of  Class A  shares  of the  respective  Funds.  The
Distributor  currently  uses all of those fees to compensate
dealers,  brokers,  banks and other  financial  institutions
quarterly for providing  personal service and maintenance of
accounts of their  customers that hold Class A shares of the
respective Funds.

      Both  Funds  have  adopted  Distribution  and  Service
Plans and  Agreements  under  Rule  12b-1 of the  Investment
Company  Act for Class B, Class C and Class N shares.  These
plans  compensate the Distributor for its services and costs
in connection with the  distribution of Class B, Class C and
Class N shares and the personal  service and  maintenance of
shareholder  accounts.  Under each Class B and Class C Plan,
the Funds  pay the  Distributor  a service  fee at an annual
rate  of  0.25%  of   average   annual  net  assets  and  an
asset-based  sales  charge  at an  annual  rate of  0.75% of
average  annual net  assets.  Under  each Class N Plan,  the
Funds pay the  Distributor  a service  fee at an annual rate
of 0.25% of average  annual  net  assets and an  asset-based
sales  charge at an annual  rate of 0.25% of average  annual
net  assets.  All fee  amounts  are  computed on the average
annual  net assets of the class  determined  as of the close
of each regular  business day of each Fund. The  Distributor
uses  all of the  service  fees to  compensate  dealers  for
providing  personal  services and maintenance of accounts of
their  customers that hold shares of the Funds.  The Class B
and Class N  asset-based  sales  charge is  retained  by the
Distributor.  After the first year,  the Class C asset-based
sales  charge  is paid to the  broker-dealer  as an  ongoing
concession for shares that have been  outstanding for a year
or more.  The terms of the  Funds'  respective  Distribution
and Service Plans are substantially similar.


      Purchases  and  Redemptions  - Both  Funds are part of
the OppenheimerFunds  family of mutual funds. Shares of QMAB
Fund are  offered  for sale only to  retirement  plans.  The
procedures  for  purchases,  exchanges  and  redemptions  of
shares of the Funds are nearly identical;  however, for QMAB
Fund,   not  only  can  shares  be   redeemed  by  mail  and
telephone,  but by wire as well.  Shares of either  Fund may
be  exchanged   for  shares  of  the  same  class  of  other
Oppenheimer    funds   offering   such   shares.    Exchange
privileges  are subject to amendment or  termination  at any
time.


      Both  Funds  have  the  same  initial  and  subsequent
minimum  investment  amounts  for the  purchase  of  shares.
These amounts are $1,000 and $50,  respectively.  Both Funds
have a  maximum  initial  sales  charge  of 5.75% on Class A
shares  for  purchases  of  less  than  $25,000.  The  sales
charge of 5.75% is reduced for  purchases  of Class A shares
of $25,000 or more.  Investors  who  purchase  $1 million or
more of Class A shares pay no initial  sales  charge.  Class
B shares  of the Funds are sold  without a  front-end  sales
charge but investors  will pay an annual  asset-based  sales
charge.  If  investors  sell their  shares  within six years
from the beginning of the calendar month of their  purchase,
they will  normally  pay a CDSC.  The CDSC  begins at 5% for
shares  redeemed in the first year and declines to 1% in the
sixth  year and is  eliminated  after  that.  Class C shares
may be  purchased  without  an  initial  sales  charge,  but
investors will pay an annual  asset-based sales charge,  and
if redeemed  within 12 months of buying  them,  a CDSC of 1%
will be  deducted  from  the  redemption  proceeds.  Class N
shares  (available  only through certain  retirement  plans)
are  purchased   without  an  initial   sales  charge,   but
investors will pay an annual  asset-based sales charge,  and
if redeemed within 18 months of the retirement  plan's first
purchase of Class N shares, a CDSC of 1% may be deducted.

      Class A,  Class B,  Class C and  Class N shares  of MS
Fund  received in the  Reorganization  will be issued at net
asset  value,  without  a sales  charge  and no CDSC will be
imposed  on any  QMAB  Fund  shares  exchanged  for MS  Fund
shares  as a  result  of the  Reorganization.  However,  any
CDSC that  applies to QMAB Fund shares as of the date of the
exchange  will carry over to MS Fund shares  received in the
Reorganization.

      Shareholder  Services  - Both  Funds  also  offer  the
following  privileges:  (i)  Right  of  Accumulation,   (ii)
Letter  of  Intent,  (iii)  reinvestment  of  dividends  and
distributions  at net  asset  value,  (iv) net  asset  value
purchases by certain  individuals  and  entities,  (v) Asset
Builder   (automatic   investment)   Plans,  (vi)  Automatic
Withdrawal  and  Exchange  Plans  for  shareholders  who own
shares  of  the  Funds  valued  at  $5,000  or  more,  (vii)
AccountLink and PhoneLink arrangements,  (viii) exchanges of
shares for shares of the same class of certain  other  funds
at net asset value,  (ix) telephone and Internet  redemption
and exchange  privileges,  and (x) for QMAB Fund only,  wire
redemptions  of  fund  shares  (for  a  fee).  All  of  such
services  and   privileges   are  subject  to  amendment  or
termination  at any time and are subject to the terms of the
Funds' respective prospectuses.

      Dividends  and  Distributions  -  QMAB  Fund  declares
dividends  separately  for  each  class of  shares  from net
investment   income  on  an  annual  basis  and  pays  those
dividends to  shareholders in December on a date selected by
the  Board  of  Trustees  of  the  Fund.  MS  Fund  declares
dividends  separately  for  each  class of  shares  from net
investment  income  on a  quarterly  basis in  March,  June,
September  and  December on a date  selected by the Board of
Trustees  of  the  Fund.  Dividends  and  the  distributions
paid on Class A,  Class B,  Class C, and Class N shares  may
vary  over  time,   depending  on  market  conditions,   the
composition of the Funds' portfolios,  and expenses borne by
the  particular  class of shares.  Dividends paid on Class A
shares will  generally be higher than those paid on Class B,
Class C and Class N shares.  That is  because  of the effect
of the  asset-based  sales  charge  on Class B,  Class C and
Class N shares.  The Funds have no fixed  dividend rates and
there  can be no  guarantee  that  either  Fund will pay any
dividends or distributions.

      Either Fund may realize  capital  gains on the sale of
portfolio   securities.   If  either   does,   it  may  make
distributions   out  of  any  net  short-term  or  long-term
capital  gains in December of each year.  The Funds may make
supplemental  distributions  of dividends  and capital gains
following the end of their fiscal years.

                     VOTING INFORMATION

How many votes are necessary to approve the Reorganization
Agreement?

      The  affirmative  vote of the holders of a majority of
the  outstanding   voting  securities  (as  defined  in  the
Investment   Company   Act)  of  QMAB  Fund  voting  in  the
aggregate  and not by  class is  necessary  to  approve  the
Reorganization  Agreement and the transactions  contemplated
thereby.  As  defined in the  Investment  Company  Act,  the
vote of a majority of the outstanding  shares means the vote
of  (1)  67% or  more  of  QMAB  Fund's  outstanding  shares
present at a meeting if the  holders of more than 50% of the
outstanding  shares of the Fund are  present or  represented
by  proxy;  or (2) more than 50% of the  Fund's  outstanding
shares,   whichever  is  less.  Each   shareholder  will  be
entitled to one vote for each full share,  and a  fractional
vote for each  fractional  share  of QMAB  Fund  held on the
Record  Date.  If  sufficient  votes to approve the proposal
are not  received  by the date of the  Meeting,  the Meeting
may  be  adjourned  to  permit   further   solicitation   of
proxies.  The  holders of a majority  of shares  entitled to
vote at the  Meeting  and  present  in  person  or by  proxy
(whether  or not  sufficient  to  constitute  a quorum)  may
adjourn  the  Meeting  to  permit  further  solicitation  of
proxies.

How do I ensure my vote is accurately recorded?

      You can vote in three (3) different ways:
o     By mail, with the enclosed proxy card.
o     In person at the Meeting.
o     By telephone (please see the insert for instructions)

      A proxy card is, in essence,  a ballot.  If you simply
sign and date the  proxy  but give no  voting  instructions,
your  shares  will be voted  in favor of the  Reorganization
Agreement.

      Votes   may   also   be   recorded    by    telephone.
Shareholders  must enter a unique  control  number  found on
their  respective  proxy  ballots  before  providing  voting
instructions  by  telephone.  After a  shareholder  provides
his or her voting instructions,  those instructions are read
back to the  shareholder  and the  shareholder  must confirm
his or her  voting  instructions  before  disconnecting  the
telephone  call.  The voting  procedures  used in connection
with   telephone   voting   are   designed   to   reasonably
authenticate  the  identity  of   shareholders,   to  permit
shareholders  to  authorize  the  voting of their  shares in
accordance  with  their  instructions  and to  confirm  that
their instructions have been properly recorded.

Can I revoke my proxy?

      Yes.  You may revoke  your proxy at any time before it
is voted by (i)  writing  to the  Secretary  of QMAB Fund at
6803  South  Tucson  Way,  Centennial,  Colorado  80112  (if
received  in time to be  acted  upon);  (ii)  attending  the
Meeting  and  voting  in  person;   or  (iii)   signing  and
returning a  later-dated  proxy (if returned and received in
time to be voted).

What other matters will be voted upon at the Meeting?

      The Board of  Trustees of QMAB Fund does not intend to
bring any  matters  before  the  Meeting  other  than  those
described  in  this  proxy.  It is not  aware  of any  other
matters to be brought  before the Meeting by others.  If any
other  matters  legally come before the  Meeting,  the proxy
ballots confer discretionary  authority with respect to such
matters,  and it is the  intention  of the persons  named as
attorneys-in-fact  to vote  proxies  to  vote in  accordance
with their judgment in such matters.
Who is entitled to vote?

      Shareholders  of  record  of QMAB Fund at the close of
business  on June  18,  2003  (the  "record  date")  will be
entitled to vote at the  Meeting.  On June 18,  2003,  there
were __________  outstanding shares of QMAB Fund, consisting
of  __________  Class A  shares,  _________  Class B shares,
__________  Class C shares,  __________  Class N shares  and
_________  Class Y  shares.  On June 18,  2003,  there  were
_________  outstanding  shares  of MS  Fund,  consisting  of
_________   Class  A  shares,   _________  Class  B  shares,
__________  Class C shares,  and __________  Class N shares.
Under relevant state law, proxies  representing  abstentions
and  broker  non-votes  will be  included  for  purposes  of
determining  whether a quorum  is  present  at the  Meeting.
Shares owned of record by broker-dealers  for the benefit of
their customers  ("street  account shares") will be voted by
the  broker-dealer  based on instructions  received from its
customers.   If  no  instructions  are  received,   and  the
broker-dealer  does  not  have  discretionary  power to vote
such street account shares under  applicable  stock exchange
rules, the shares represented  thereby will be considered to
be present at the Meeting for  purposes of only  determining
the  quorum  ("broker  non-votes").  Because  of the need to
obtain  a vote of the  majority  of the  outstanding  voting
securities   for  the   Reorganization   proposal  to  pass,
abstentions  and broker  non-votes will have the same effect
as a  vote  "against"  the  Proposal.  For  purposes  of the
Meeting,  a majority of shares  outstanding  and entitled to
vote,   present   in   person  or   represented   by  proxy,
constitutes a quorum.  MS Fund  shareholders  do not vote on
the Reorganization.

What other solicitations will be made?

      QMAB   Fund   will   request    broker-dealer   firms,
custodians,   nominees  and  fiduciaries  to  forward  proxy
material to the  beneficial  owners of the shares of record,
and  may  reimburse  them  for  their  reasonable   expenses
incurred  in  connection  with such proxy  solicitation.  In
addition to solicitations by mail,  officers of QMAB Fund or
officers  and   employees  of   OppenheimerFunds   Services,
without  extra pay,  may  conduct  additional  solicitations
personally  or by  telephone or  telegraph.  Any expenses so
incurred  will  be  borne  by   OppenheimerFunds   Services.
Proxies may also be solicited by a proxy  solicitation  firm
hired at QMAB Fund's expense.  If a proxy  solicitation firm
is hired,  it is  anticipated  that the cost of  engaging  a
proxy  solicitation firm would not exceed $17,000,  plus the
additional  costs which would be incurred in connection with
contacting  those  shareholders  who have not voted,  in the
event of a need for resolicitation of votes.

Are there appraisal rights?

      No. Under the  Investment  Company  Act,  shareholders
do  not  have  rights  of  appraisal  as  a  result  of  the
Reorganization.  Although  appraisal rights are unavailable,
you have the right to redeem  your shares at net asset value
until the Valuation Date for the  Reorganization.  After the
closing  date,  you may  redeem  your new MS Fund  shares or
exchange  them into  shares of  certain  other  funds in the
OppenheimerFunds  family of  mutual  funds,  subject  to the
terms of the prospectuses of both funds.

         INFORMATION ABOUT MULTIPLE STRATEGIES FUND

      Information  about MS Fund is  included  in MS  Fund's
Prospectus  dated November 22, 2002 as supplemented  January
31,  2003,  which is  attached to and  considered  a part of
this Prospectus and Proxy Statement.  Additional information
about  MS  Fund  is  included   the  Fund's   Statement   of
Additional  Information  dated November 30, 2002, the Annual
Report  dated   September  30,  2002,   and  the  succeeding
Semi-Annual  Report  dated March 31,  2003,  which have been
filed   with  the  SEC  and  are   incorporated   herein  by
reference.  You may  request a free copy of these  materials
and  other  information  by  calling  1.800.708.7780  or  by
writing to MS Fund at  OppenheimerFunds  Services,  P.O. Box
5270,  Denver,  CO  80217-5270.  MS Fund  also  files  proxy
materials,  reports  and other  information  with the SEC in
accordance  with  the  informational   requirements  of  the
Securities  and  Exchange  Act of 1934  and  the  Investment
Company Act.  These  materials  can be inspected  and copied
at: the SEC's  Public  Reference  Room in  Washington,  D.C.
(Phone:  1.202.942.8090)  or the EDGAR database on the SEC's
Internet  website at  www.sec.gov.  Copies  may be  obtained
upon 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.

         INFORMATION ABOUT QM ACTIVE BALANCED FUND

      Information   about  QMAB  Fund  is  included  in  the
current QMAB Fund  Prospectus.  This document has been filed
with  the  SEC  and is  incorporated  herein  by  reference.
Additional  information  about QMAB Fund is also included in
the Fund's Statement of Additional  Information  dated March
28, 2003,  the Annual  Report dated  November 30, 2002,  and
the succeeding  Semi-Annual Report dated May 31, 2003, which
have been filed with the SEC and are incorporated  herein by
reference.  You may  request  free  copies of these or other
documents  relating  to QMAB Fund by calling  1.800.708.7780
or by writing to OppenheimerFunds  Services,  P.O. Box 5270,
Denver,  CO 80217-5270.  Reports and other information filed
by QMAB  Fund can be  inspected  and  copied  at:  the SEC's
Public   Reference  Room  in  www.sec.gov.   Copies  may  be
obtained  upon 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.

                      PRINCIPAL SHAREHOLDERS

      As of June 18,  2003,  the  officers  and  Trustees of
QMAB  Fund,   as  a  group,   owned  less  than  1%  of  the
outstanding  voting  shares  of QMAB  Fund.  As of June  18,
2003,  the only  persons who owned of record or was known by
QMAB  Fund to own  beneficially  or of  record 5% or more of
any class of the Fund's outstanding shares were as follows:


      5% Shareholder information will be updated
      ------------------------------------------


      As of June 18,  2003,  the officers and Trustees of MS
Fund,  as a group,  owned  less  than 1% of the  outstanding
voting  shares  of MS Fund.  As of June 18,  2003,  the only
persons  who  owned of record or was known by MS Fund to own
beneficially  or of  record  5% or more of any  class of the
Fund's outstanding shares were as follows:


      5% Shareholder information will be updated
      ------------------------------------------



By Order of the Board of Trustees

Robert G. Zack, Secretary
July 7, 2003

       Appendix to Prospectus and Proxy Statement of
            Oppenheimer Multiple Strategies Fund

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

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

Calendar
- --------
Year                                Oppenheimer Multiple
- ----                                ---------------------
Strategies Fund
- ---------------
Ended                               Class A Shares
- -----                               --------------


12/31/93                            16.30%
12/31/94                            -1.59%
12/31/95                            22.79%
12/31/96                            17.23%
12/31/97                            17.77%
12/31/98                              7.05%
12/31/99                              10.60%
12/31/00                              6.57%
12/31/01                              1.68%
12/31/02                            -10.60%

       Appendix to Prospectus and Proxy Statement of
    Oppenheimer Select Managers QM Active Balanced Fund

      Graphic   material   included  in  the  Prospectus  of
Oppenheimer  Select  Managers QM Active  Balanced Fund under
the heading  "Annual  Total  Returns  (Class A) (as of 12/31
each year)":

      A bar chart will be included in the  Prospectus of the
Fund  depicting the annual total  returns of a  hypothetical
investment  in Class A shares  of the Fund for the  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.


Calendar
- --------
Year                          Oppenheimer Select Managers QM
- ----                          -------------------------------
                                    Active Balanced Fund
                                    --------------------
Ended                         Class A Shares
- -----                         --------------

12/31/02                            -12.44%

               EXHIBITS TO THE COMBINED PROXY
                  STATEMENT AND PROSPECTUS

Exhibit
- -------

A  Agreement and Plan of Reorganization between Oppenheimer
   Select Managers QM Active Balanced Fund and Oppenheimer
   Multiple Strategies Fund

B  Principal Shareholders

                                                   EXHIBIT A

            AGREEMENT AND PLAN OF REORGANIZATION

      AGREEMENT    AND   PLAN   OF    REORGANIZATION    (the
"Agreement")  dated  as of  April  28,  2003 by and  between
Oppenheimer  Select  Managers QM Active Balanced Fund ("QMAB
Fund"),  a  Massachusetts  business  trust  and  Oppenheimer
Multiple   Strategies  Fund  ("MS  Fund"),  a  Massachusetts
business trust.

                                 W I T N E S S E T H:

      WHEREAS,  the  parties  are each  open-end  investment
companies of the management type; and

      WHEREAS,  the parties hereto desire to provide for the
reorganization   pursuant  to  Section   368(a)(1)   of  the
Internal  Revenue Code of 1986, as amended (the "Code"),  of
QMAB   Fund   through   the   acquisition   by  MS  Fund  of
substantially  all of the  assets of QMAB  Fund in  exchange
for the voting shares of beneficial  interest  ("shares") of
Class A,  Class B,  Class C, and  Class N shares  of MS Fund
and the  assumption  by MS Fund of  certain  liabilities  of
QMAB Fund,  for which Class A, Class B, Class C, and Class N
shares  of MS Fund are to be  distributed  by QMAB  Fund pro
rata to its  shareholders  in complete  liquidation  of QMAB
Fund and complete cancellation of its shares;

      NOW,   THEREFORE,   in  consideration  of  the  mutual
promises  herein  contained,  the  parties  hereto  agree as
follows:

   1. The parties  hereto  hereby adopt this  Agreement  and
Plan  of  Reorganization   (the  "Agreement")   pursuant  to
Section   368(a)(1)   of   the   Code   as   follows:    The
reorganization  will be comprised of the  acquisition  by MS
Fund of  substantially  all of the  assets  of QMAB  Fund in
exchange  for Class A,  Class B, Class C, and Class N shares
of MS  Fund  and  the  assumption  by  MS  Fund  of  certain
liabilities of QMAB Fund,  followed by the  distribution  of
such  Class A,  Class B,  Class C, and  Class N shares of MS
Fund  to the  Class  A,  Class  B,  Class  C,  and  Class  N
shareholders  of QMAB Fund in  exchange  for their  Class A,
Class B, Class C, and Class N shares of QMAB Fund,  all upon
and subject to the terms of the  Agreement  hereinafter  set
forth.  Class Y shares of QMAB Fund will be  redeemed  prior
to the merger.

      The  share   transfer  books  of  QMAB  Fund  will  be
permanently   closed  at  the  close  of   business  on  the
Valuation Date (as hereinafter  defined) and only redemption
requests  received  in proper  form on or prior to the close
of  business on the  Valuation  Date shall be  fulfilled  by
QMAB Fund;  redemption  requests received by QMAB Fund after
that date shall be treated as  requests  for the  redemption
of  the  shares  of  MS  Fund  to  be   distributed  to  the
shareholder in question as provided in Section 5 hereof.

2.    On the Closing Date (as hereinafter  defined),  all of
the  assets  of QMAB  Fund on that  date,  excluding  a cash
reserve  (the "cash  reserve")  to be  retained by QMAB Fund
sufficient  in  its   discretion  for  the  payment  of  the
expenses of QMAB  Fund's  dissolution  and its  liabilities,
but not in  excess of the  amount  contemplated  by  Section
10E,  shall be  delivered  as  provided  in  Section 8 to MS
Fund,  in exchange for and against  delivery to QMAB Fund on
the  Closing  Date of a number of Class A, Class B, Class C,
and  Class N shares  of MS Fund,  having  an  aggregate  net
asset  value  equal to the value of the  assets of QMAB Fund
so transferred and delivered.

   3. The net asset  value of Class A, Class B, Class C, and
Class N shares  of MS Fund and the  value of the  assets  of
QMAB  Fund  to  be   transferred   shall  in  each  case  be
determined  as of the  close  of  business  of The New  York
Stock  Exchange on the Valuation  Date.  The  computation of
the net asset  value of the Class A,  Class B,  Class C, and
Class N shares  of MS Fund and the Class A,  Class B,  Class
C, and  Class N  shares  of QMAB  Fund  shall be done in the
manner used by MS Fund and QMAB Fund,  respectively,  in the
computation  of such net asset  value per share as set forth
in their  respective  prospectuses.  The methods  used by MS
Fund in such  computation  shall be applied to the valuation
of the assets of QMAB Fund to be transferred to MS Fund.

    QMAB Fund shall  declare and pay,  immediately  prior to
the Valuation Date, a dividend or dividends which,  together
with all previous such  dividends,  shall have the effect of
distributing to QMAB Fund's  shareholders all of QMAB Fund's
investment  company  taxable income for taxable years ending
on or prior to the Closing Date (computed  without regard to
any  dividends  paid) and all of its net  capital  gain,  if
any,  realized  in taxable  years  ending on or prior to the
Closing   Date  (after   reduction   for  any  capital  loss
carry-forward).

   4. The closing  (the  "Closing")  shall be at the offices
of OppenheimerFunds,  Inc. (the "Agent"),  6803 South Tucson
Way, Centennial,  CO 80112, on such time or such other place
as the  parties  may  designate  or as  provided  below (the
"Closing  Date").  The  business day  preceding  the Closing
Date is herein referred to as the "Valuation Date."

    In the event that on the  Valuation  Date  either  party
has,  pursuant to the  Investment  Company  Act of 1940,  as
amended  (the  "Act"),  or any  rule,  regulation  or  order
thereunder,  suspended  the  redemption  of  its  shares  or
postponed  payment  therefore,  the  Closing  Date  shall be
postponed  until the first  business day after the date when
both parties have ceased such  suspension  or  postponement;
provided,  however,  that if such suspension  shall continue
for a period of 60 days beyond the Valuation  Date, then the
other  party  to  the   Agreement   shall  be  permitted  to
terminate  the Agreement  without  liability to either party
for such termination.

5.    In  conjunction  with the  Closing,  QMAB  Fund  shall
distribute on a pro rata basis to the  shareholders  of QMAB
Fund as of the  Valuation  Date  Class A,  Class B, Class C,
and Class N shares of MS Fund  received  by QMAB Fund on the
Closing  Date in  exchange  for the  assets  of QMAB Fund in
complete  liquidation  of QMAB Fund;  for the purpose of the
distribution  by QMAB Fund of Class A, Class B, Class C, and
Class N shares of MS Fund to QMAB  Fund's  shareholders,  MS
Fund will promptly  cause its transfer  agent to: (a) credit
an  appropriate  number  of Class A,  Class B,  Class C, and
Class N  shares  of MS Fund on the  books of MS Fund to each
Class A, Class B, Class C, and Class N  shareholder  of QMAB
Fund in accordance with a list (the  "Shareholder  List") of
QMAB Fund  shareholders  received  from QMAB  Fund;  and (b)
confirm an appropriate  number of Class A, Class B, Class C,
and  Class N shares  of MS Fund to each  Class  A,  Class B,
Class C, and Class N shareholder of QMAB Fund;  certificates
for Class A shares of MS Fund  will be issued  upon  written
request  of a former  shareholder  of QMAB Fund but only for
whole shares,  with  fractional  shares credited to the name
of the  shareholder  on the books of MS Fund and only  after
any share  certificates  for QMAB Fund are  returned  to the
transfer agent.

    The Shareholder List shall indicate,  as of the close of
business  on the  Valuation  Date,  the name and  address of
each  shareholder of QMAB Fund,  indicating his or her share
balance.  QMAB Fund  agrees to supply the  Shareholder  List
to MS Fund not later  than the  Closing  Date.  Shareholders
of QMAB Fund holding certificates  representing their shares
shall not be required to  surrender  their  certificates  to
anyone  in  connection  with the  reorganization.  After the
Closing  Date,  however,  it  will  be  necessary  for  such
shareholders  to surrender  their  certificates  in order to
redeem,  transfer or pledge the shares of MS Fund which they
received.

   6. Within  one year  after the  Closing  Date,  QMAB Fund
shall (a) either pay or make  provision  for  payment of all
of its  liabilities  and taxes,  and (b) either (i) transfer
any  remaining  amount of the cash  reserve  to MS Fund,  if
such  remaining  amount (as reduced by the estimated cost of
distributing  it  to   shareholders)  is  not  material  (as
defined below) or (ii) distribute  such remaining  amount to
the  shareholders  of QMAB Fund on the Valuation  Date. Such
remaining  amount  shall be  deemed  to be  material  if the
amount to be  distributed,  after deduction of the estimated
expenses  of the  distribution,  equals or exceeds  one cent
per share of QMAB Fund outstanding on the Valuation Date.

   7. Prior   to  the   Closing   Date,   there   shall   be
coordination  between  the  parties  as to their  respective
portfolios  so that,  after the Closing,  MS Fund will be in
compliance   with  all  of  its   investment   policies  and
restrictions.  At the  Closing,  QMAB Fund shall  deliver to
MS Fund two copies of a list  setting  forth the  securities
then owned by QMAB Fund.  Promptly  after the Closing,  QMAB
Fund  shall  provide  to MS Fund a list  setting  forth  the
respective federal income tax bases thereof.

8.    Portfolio  securities or written  evidence  acceptable
to MS Fund of record  ownership  thereof  by The  Depository
Trust  Company or through  the  Federal  Reserve  Book Entry
System  or  any  other  depository  approved  by  QMAB  Fund
pursuant  to Rule 17f-4 and Rule  17f-5  under the Act shall
be endorsed and  delivered,  or  transferred  by appropriate
transfer  or  assignment  documents,  by  QMAB  Fund  on the
Closing  Date  to MS  Fund,  or at  its  direction,  to  its
custodian   bank,  in  proper  form  for  transfer  in  such
condition  as  to  constitute   good  delivery   thereof  in
accordance   with  the  custom  of  brokers   and  shall  be
accompanied  by all  necessary  state  transfer  stamps,  if
any.  The cash  delivered  shall be in the form of certified
or  bank  cashiers'  checks  or by bank  wire or  intra-bank
transfer  payable to the order of MS Fund for the account of
MS Fund.  Class A,  Class B,  Class C, and Class N shares of
MS Fund  representing  the number of Class A, Class B, Class
C, and Class N shares  of MS Fund  being  delivered  against
the  assets  of QMAB  Fund,  registered  in the name of QMAB
Fund,  shall  be  transferred  to QMAB  Fund on the  Closing
Date.  Such shares shall  thereupon be assigned by QMAB Fund
to its  shareholders  so that the  shares  of MS Fund may be
distributed as provided in Section 5.

      If, at the Closing  Date,  QMAB Fund is unable to make
delivery  under  this  Section  8 to MS  Fund  of any of its
portfolio  securities  or cash  for the  reason  that any of
such  securities   purchased  by  QMAB  Fund,  or  the  cash
proceeds  of a sale of  portfolio  securities,  prior to the
Closing  Date  have  not yet  been  delivered  to it or QMAB
Fund's  custodian,  then the delivery  requirements  of this
Section 8 with  respect to said  undelivered  securities  or
cash will be waived  and QMAB Fund will  deliver  to MS Fund
by or on the Closing Date with  respect to said  undelivered
securities  or  cash  executed  copies  of an  agreement  or
agreements of assignment in a form  reasonably  satisfactory
to MS Fund, together with such other documents,  including a
due bill or due bills  and  brokers'  confirmation  slips as
may reasonably be required by MS Fund.

   9. MS Fund shall not assume the  liabilities  (except for
portfolio  securities  purchased  which have not settled and
for shareholder  redemption and dividend checks outstanding)
of QMAB  Fund,  but QMAB Fund  will,  nevertheless,  use its
best efforts to discharge all known  liabilities,  so far as
may be  possible,  prior to the  Closing  Date.  The cost of
printing and mailing the proxies and proxy  statements  will
be borne by QMAB  Fund.  QMAB Fund and MS Fund will bear the
cost of their  respective  tax opinions.  Any documents such
as  existing   prospectuses   or  annual  reports  that  are
included in that  mailing will be a cost of the Fund issuing
the document.  Any other  out-of-pocket  expenses of MS Fund
and  QMAB  Fund   associated   with   this   reorganization,
including  legal,  accounting and transfer  agent  expenses,
will be borne by QMAB  Fund  and MS Fund,  respectively,  in
the amounts so incurred by each.

   10.      The  obligations of MS Fund  hereunder  shall be
subject to the following conditions:

      A. The  Board of  Trustees  of QMAB  Fund  shall  have
authorized   the  execution  of  the   Agreement,   and  the
shareholders  of QMAB Fund shall have approved the Agreement
and the  transactions  contemplated  hereby,  and QMAB  Fund
shall have  furnished  to MS Fund copies of  resolutions  to
that effect  certified  by the  Secretary  or the  Assistant
Secretary  of QMAB Fund;  such  shareholder  approval  shall
have  been  by  the   affirmative   vote   required  by  the
Massachusetts  Law and its  charter  documents  at a meeting
for  which   proxies  have  been   solicited  by  the  Proxy
Statement and Prospectus (as hereinafter defined).

      B. MS Fund shall have  received an opinion dated as of
the Closing  Date from  counsel to QMAB Fund,  to the effect
that (i)  QMAB  Fund is a  business  trust  duly  organized,
validly  existing and in good standing under the laws of the
State of  Massachusetts  with full corporate powers to carry
on its  business as then being  conducted  and to enter into
and  perform  the  Agreement;   and  (ii)  that  all  action
necessary  to make the  Agreement,  according  to its terms,
valid,   binding  and   enforceable  on  QMAB  Fund  and  to
authorize  effectively the transactions  contemplated by the
Agreement  have  been  taken  by  QMAB  Fund.  Massachusetts
counsel may be relied upon for this opinion.

      C. The  representations  and  warranties  of QMAB Fund
contained  herein shall be true and correct at and as of the
Closing Date,  and MS Fund shall have been  furnished with a
certificate of the President,  or a Vice  President,  or the
Secretary or the  Assistant  Secretary  or the  Treasurer or
the  Assistant  Treasurer  of  QMAB  Fund,  dated  as of the
Closing Date, to that effect.

D.    On the Closing  Date,  QMAB Fund shall have  furnished
to MS  Fund a  certificate  of the  Treasurer  or  Assistant
Treasurer  of QMAB Fund as to the amount of the capital loss
carry-over and net unrealized  appreciation or depreciation,
if any, with respect to QMAB Fund as of the Closing Date.

      E. The cash reserve  shall not exceed 10% of the value
of the net assets,  nor 30% in value of the gross assets, of
QMAB Fund at the close of business on the Valuation Date.

F.    A  Registration  Statement  on Form  N-14  filed by MS
Fund  under the  Securities  Act of 1933,  as  amended  (the
"1933  Act"),  containing  a  preliminary  form of the Proxy
Statement and Prospectus,  shall have become effective under
the 1933 Act.

      G. On the Closing  Date, MS Fund shall have received a
letter  from  Robert  G.  Zack  or  other  senior  executive
officer of  OppenheimerFunds,  Inc.  acceptable  to MS Fund,
stating that nothing has come to his or her attention  which
in  his  or  her  judgment  would  indicate  that  as of the
Closing Date there were any  material,  actual or contingent
liabilities  of QMAB Fund arising out of litigation  brought
against QMAB Fund or claims asserted  against it, or pending
or to the best of his or her knowledge  threatened claims or
litigation  not  reflected  in or  apparent  from  the  most
recent audited  financial  statements and footnotes  thereto
of QMAB Fund  delivered  to MS Fund.  Such  letter  may also
include such additional  statements relating to the scope of
the  review   conducted  by  such  person  and  his  or  her
responsibilities  and  liabilities  as are not  unreasonable
under the circumstances.

      H. MS Fund shall have  received an  opinion,  dated as
of the  Closing  Date,  of  Deloitte  &  Touche  LLP  (or an
appropriate  substitute  tax expert),  to the same effect as
the opinion contemplated by Section 11.E. of the Agreement.

I.    MS Fund shall have  received at the Closing all of the
assets of QMAB Fund to be conveyed  hereunder,  which assets
shall  be  free  and  clear  of  all  liens,   encumbrances,
security interests, restrictions and limitations whatsoever.

   11.      The  obligations of QMAB Fund hereunder shall be
subject to the following conditions:

      A. The  Board  of  Trustees  of  MS  Fund  shall  have
authorized   the  execution  of  the   Agreement,   and  the
transactions  contemplated  thereby,  and MS Fund shall have
furnished to QMAB Fund copies of  resolutions to that effect
certified by the Secretary or the Assistant  Secretary of MS
Fund.

      B. QMAB Fund's  shareholders  shall have  approved the
Agreement and the transactions  contemplated  hereby,  by an
affirmative vote required by the  Massachusetts  Law and its
charter  documents  and QMAB Fund  shall have  furnished  MS
Fund copies of resolutions  to that effect  certified by the
Secretary or an Assistant Secretary of QMAB Fund.

C.    QMAB Fund shall have  received an opinion  dated as of
the  Closing  Date from  counsel  to MS Fund,  to the effect
that  (i)  MS  Fund  is a  business  trust  duly  organized,
validly  existing and in good standing under the laws of the
Commonwealth of  Massachusetts  with full powers to carry on
its business as then being  conducted  and to enter into and
perform the  Agreement;  (ii) all actions  necessary to make
the Agreement,  according to its terms,  valid,  binding and
enforceable  upon MS Fund and to authorize  effectively  the
transactions  contemplated  by the Agreement have been taken
by MS Fund;  and  (iii)  the  shares of MS Fund to be issued
hereunder  are  duly  authorized  and  when  issued  will be
validly  issued,  fully-paid and  non-assessable,  except as
set forth under  "Shareholder  and Trustee  Liability" in MS
Fund's  Statement of Additional  Information.  Massachusetts
counsel may be relied upon for this opinion.

      D. The  representations  and  warranties  of  MS  Fund
contained  herein shall be true and correct at and as of the
Closing Date,  and QMAB Fund shall have been  furnished with
a  certificate  of the  President,  a Vice  President or the
Secretary or the  Assistant  Secretary  or the  Treasurer or
the  Assistant  Treasurer  of the Trust to that effect dated
as of the Closing Date.

      E. QMAB  Fund  shall  have   received  an  opinion  of
Deloitte  & Touche LLP to the effect  that the  federal  tax
consequences  of  the  transaction,  if  carried  out in the
manner  outlined in the Agreement and in accordance with (i)
QMAB  Fund's   representation  that  there  is  no  plan  or
intention by any QMAB Fund  shareholder  who owns 5% or more
of QMAB Fund's outstanding  shares, and, to QMAB Fund's best
knowledge,  there is no plan or intention on the part of the
remaining QMAB Fund shareholders,  to redeem, sell, exchange
or otherwise  dispose of a number of MS Fund shares received
in   the   transaction   that   would   reduce   QMAB   Fund
shareholders'  ownership  of MS Fund  shares  to a number of
shares having a value,  as of the Closing Date, of less than
50% of the  value of all of the  formerly  outstanding  QMAB
Fund   shares   as  of  the   same   date,   and   (ii)  the
representation  by each of QMAB Fund and MS Fund that, as of
the  Closing  Date,  QMAB Fund and MS Fund will  qualify  as
regulated    investment   companies   or   will   meet   the
diversification  test  of  Section  368(a)(2)(F)(ii)  of the
Code, will be as follows:

1.    The  transactions  contemplated  by the Agreement will
qualify as a tax-free  "reorganization"  within the  meaning
of Section  368(a)(1) of the Code, and under the regulations
promulgated thereunder.

         2. QMAB  Fund and MS Fund will  each  qualify  as a
"party to a  reorganization"  within the  meaning of Section
368(b)(2) of the Code.

         3. No  gain  or  loss  will  be  recognized  by the
shareholders of QMAB Fund upon the  distribution of Class A,
Class B, Class C, and Class N shares of beneficial  interest
in MS Fund to the  shareholders  of QMAB  Fund  pursuant  to
Section 354 of the Code.

         4. Under  Section  361(a)  of the  Code  no gain or
loss  will be  recognized  by QMAB  Fund  by  reason  of the
transfer of  substantially  all its assets in  exchange  for
Class A, Class B, Class C, and Class N shares of MS Fund.

         5. Under  Section  1032 of the Code no gain or loss
will be  recognized  by MS Fund by reason of the transfer of
substantially  all of QMAB  Fund's  assets in  exchange  for
Class A,  Class B,  Class C, and  Class N shares  of MS Fund
and MS Fund's  assumption  of  certain  liabilities  of QMAB
Fund.

         6. The  shareholders  of QMAB  Fund  will  have the
same tax basis and holding  period for the Class A, Class B,
Class C, and Class N shares  of  beneficial  interest  in MS
Fund that  they  receive  as they had for QMAB  Fund  shares
that they  previously  held,  pursuant to Section 358(a) and
1223(1), respectively, of the Code.

         7. The  securities  transferred  by QMAB Fund to MS
Fund will have the same tax basis and holding  period in the
hands  of MS Fund as they  had for QMAB  Fund,  pursuant  to
Section 362(b) and 1223(1), respectively, of the Code.

      F. The cash reserve  shall not exceed 10% of the value
of the net assets,  nor 30% in value of the gross assets, of
QMAB Fund at the close of business on the Valuation Date.

      G. A  Registration  Statement on Form N-14 filed by MS
Fund under the 1933 Act,  containing a  preliminary  form of
the  Proxy  Statement  and  Prospectus,  shall  have  become
effective under the 1933 Act.

      H. On the Closing Date,  QMAB Fund shall have received
a letter  from  Robert  G.  Zack or other  senior  executive
officer of  OppenheimerFunds,  Inc. acceptable to QMAB Fund,
stating that nothing has come to his or her attention  which
in  his  or  her  judgment  would  indicate  that  as of the
Closing Date there were any  material,  actual or contingent
liabilities  of MS Fund  arising out of  litigation  brought
against MS Fund or claims  asserted  against  it, or pending
or, to the best of his or her knowledge,  threatened  claims
or  litigation  not  reflected  in or  apparent  by the most
recent audited  financial  statements and footnotes  thereto
of MS Fund  delivered  to QMAB  Fund.  Such  letter may also
include such additional  statements relating to the scope of
the  review   conducted  by  such  person  and  his  or  her
responsibilities  and  liabilities  as are not  unreasonable
under the circumstances.

I.    QMAB Fund  shall  acknowledge  receipt of the Class A,
Class B, Class C, Class N and Class Y shares of MS Fund.

   12.      QMAB Fund hereby represents and warrants that:

      A. The audited  financial  statements  of QMAB Fund as
of November 30, 2002 and unaudited  financial  statements as
of May 31, 2003  heretofore  furnished  to MS Fund,  present
fairly the financial  position,  results of operations,  and
changes  in net  assets  of QMAB  Fund as of that  date,  in
conformity  with generally  accepted  accounting  principles
applied on a basis  consistent  with the preceding year; and
that from May 31, 2003  through  the date hereof  there have
not been,  and through  the Closing  Date there will not be,
any  material  adverse  change in the  business or financial
condition  of QMAB Fund,  it being agreed that a decrease in
the size of QMAB  Fund due to a  diminution  in the value of
its portfolio  and/or  redemption of its shares shall not be
considered a material adverse change;

B.    Contingent  upon  approval  of the  Agreement  and the
transactions    contemplated    thereby   by   QMAB   Fund's
shareholders,  QMAB Fund has  authority  to transfer  all of
the assets of QMAB Fund to be  conveyed  hereunder  free and
clear  of  all  liens,  encumbrances,   security  interests,
restrictions and limitations whatsoever;

C.    The   Prospectus,   as   amended   and   supplemented,
contained in QMAB Fund's  Registration  Statement  under the
1933  Act,  as  amended,  is  true,  correct  and  complete,
conforms  to the  requirements  of the 1933 Act and does not
contain any untrue  statement of a material  fact or omit to
state a  material  fact  required  to be stated  therein  or
necessary  to make the  statements  therein not  misleading.
The Registration  Statement, as amended, was, as of the date
of the filing of the last  Post-Effective  Amendment,  true,
correct and complete,  conformed to the  requirements of the
1933  Act and did not  contain  any  untrue  statement  of a
material  fact or omit to state a material  fact required to
be  stated  therein  or  necessary  to make  the  statements
therein not misleading;

      D. There is no material  contingent  liability of QMAB
Fund  and  no  material   claim  and  no   material   legal,
administrative  or  other  proceedings  pending  or,  to the
knowledge of QMAB Fund,  threatened  against QMAB Fund,  not
reflected in such Prospectus;

      E. Except  for the  Agreement,  there are no  material
contracts  outstanding  to which QMAB Fund is a party  other
than those ordinary in the conduct of its business;


      F. QMAB Fund is a  Massachusetts  business  trust duly
organized,  validly  existing and in good standing under the
laws of the State of  Massachusetts;  and has all  necessary
and material Federal and state  authorizations to own all of
its  assets  and to  carry  on  its  business  as now  being
conducted;  and QMAB Fund is duly  registered  under the Act
and such  registration has not been rescinded or revoked and
is in full force and effect;

      G. All  federal  and other tax  returns and reports of
QMAB Fund  required by law to be filed have been filed,  and
all federal  and other  taxes shown due on said  returns and
reports  have been paid or  provision  shall  have been made
for the payment  thereof and to the best of the knowledge of
QMAB Fund no such  return is  currently  under  audit and no
assessment  has been  asserted with respect to such returns;
and

      H. QMAB Fund has elected  that QMAB Fund be treated as
a regulated  investment company and, for each fiscal year of
its  operations,  QMAB  Fund  has  met the  requirements  of
Subchapter M of the Code for  qualification and treatment as
a  regulated  investment  company  and QMAB Fund  intends to
meet such  requirements  with respect to its current taxable
year.

13.   MS Fund hereby represents and warrants that:

A.    The  audited  financial  statements  of MS  Fund as of
September 30, 2002 and unaudited financial  statements as of
March 31, 2003  heretofore  furnished to QMAB Fund,  present
fairly the financial  position,  results of operations,  and
changes  in net  assets  of MS  Fund,  as of that  date,  in
conformity  with generally  accepted  accounting  principles
applied on a basis  consistent  with the preceding year; and
that from April 30, 2003  through the date hereof there have
not been,  and through  the Closing  Date there will not be,
any  material  adverse  changes in the business or financial
condition of MS Fund,  it being  understood  that a decrease
in the size of MS Fund due to a  diminution  in the value of
its portfolio  and/or  redemption of its shares shall not be
considered a material or adverse change;

B.    The   Prospectus,   as   amended   and   supplemented,
contained  in MS  Fund's  Registration  Statement  under the
1933 Act,  is true,  correct and  complete,  conforms to the
requirements  of the  1933  Act and  does  not  contain  any
untrue  statement  of a  material  fact or  omit to  state a
material fact required to be stated  therein or necessary to
make   the   statements   therein   not   misleading.    The
Registration  Statement,  as amended, was, as of the date of
the  filing  of the  last  Post-Effective  Amendment,  true,
correct and complete,  conformed to the  requirements of the
1933  Act and did not  contain  any  untrue  statement  of a
material  fact or omit to state a material  fact required to
be  stated  therein  or  necessary  to make  the  statements
therein not misleading;

      C. Except  for this  Agreement,  there is no  material
contingent  liability  of MS Fund and no material  claim and
no  material  legal,  administrative  or  other  proceedings
pending or, to the knowledge of MS Fund,  threatened against
MS Fund, not reflected in such Prospectus;

      D. There  are no  material  contracts  outstanding  to
which MS Fund is a party  other than those  ordinary  in the
conduct of its business;

      E. MS  Fund  is  a  business  trust  duly   organized,
validly  existing and in good standing under the laws of the
Commonwealth  of  Massachusetts;  MS Fund has all  necessary
and  material  federal and state  authorizations  to own all
its  properties  and assets and to carry on its  business as
now  being  conducted;  the Class A,  Class B,  Class C, and
Class N shares  of MS Fund  which  it  issues  to QMAB  Fund
pursuant to the Agreement will be duly  authorized,  validly
issued,  fully-paid and non-assessable,  except as set forth
under   "Shareholder  &  Trustee  Liability"  in  MS  Fund's
Statement  of  Additional  Information,  will conform to the
description  thereof  contained  in MS  Fund's  Registration
Statement  and will be duly  registered  under  the 1933 Act
and in the states where  registration  is  required;  and MS
Fund is duly registered under the Act and such  registration
has not been revoked or  rescinded  and is in full force and
effect;

      F. All  federal  and other tax  returns and reports of
MS Fund  required  by law to be filed have been  filed,  and
all federal  and other  taxes shown due on said  returns and
reports  have been paid or  provision  shall  have been made
for the payment  thereof and to the best of the knowledge of
MS Fund,  no such  return is  currently  under  audit and no
assessment  has been  asserted  with respect to such returns
and to the  extent  such tax  returns  with  respect  to the
taxable  year of MS Fund ended  September  30, 2002 have not
been filed,  such  returns  will be filed when  required and
the  amount of tax shown as due  thereon  shall be paid when
due;

      G. MS Fund has  elected to be  treated as a  regulated
investment   company  and,  for  each  fiscal  year  of  its
operations,  MS Fund has met the  requirements of Subchapter
M  of  the  Code  for   qualification  and  treatment  as  a
regulated  investment  company  and MS Fund  intends to meet
such requirements with respect to its current taxable year;

      H. MS Fund  has no plan or  intention  (i) to  dispose
of any of the assets  transferred  by QMAB Fund,  other than
in the  ordinary  course of  business,  or (ii) to redeem or
reacquire  any of the Class A, Class B, Class C, and Class N
shares  issued  by  it  in  the  reorganization  other  than
pursuant to valid requests of shareholders; and

      I. After     consummation    of    the    transactions
contemplated  by the  Agreement,  MS Fund intends to operate
its business in a substantially unchanged manner.

   14.       Each party hereby  represents to the other that
no broker or finder has been  employed by it with respect to
the Agreement or the transactions  contemplated hereby. Each
party also  represents  and  warrants  to the other that the
information   concerning  it  in  the  Proxy  Statement  and
Prospectus  will  not  as of its  date  contain  any  untrue
statement  of a  material  fact  or  omit  to  state  a fact
necessary to make the  statements  concerning it therein not
misleading and that the financial  statements  concerning it
will  present the  information  shown  fairly in  accordance
with generally accepted  accounting  principles applied on a
basis  consistent  with the preceding  year. Each party also
represents  and warrants to the other that the  Agreement is
valid,  binding and enforceable in accordance with its terms
and that the  execution,  delivery  and  performance  of the
Agreement  will not  result  in any  violation  of, or be in
conflict  with,  any  provision  of  any  charter,  by-laws,
contract,  agreement,  judgment, decree or order to which it
is  subject  or to  which  it is a  party.  MS  Fund  hereby
represents  to and  covenants  with QMAB Fund  that,  if the
reorganization  becomes  effective,  MS Fund will treat each
shareholder  of QMAB  Fund  who  received  any of MS  Fund's
shares as a result of the  reorganization as having made the
minimum  initial  purchase of shares of MS Fund  received by
such  shareholder  for  the  purpose  of  making  additional
investments  in shares of MS Fund,  regardless  of the value
of the shares of MS Fund received.

   15.       MS Fund agrees that it will  prepare and file a
Registration  Statement  on Form  N-14  under  the  1933 Act
which shall  contain a preliminary  form of proxy  statement
and  prospectus  contemplated  by Rule  145  under  the 1933
Act. The final form of such proxy  statement and  prospectus
is referred to in the Agreement as the "Proxy  Statement and
Prospectus."  Each  party  agrees  that it will use its best
efforts  to  have  such  Registration   Statement   declared
effective and to supply such information  concerning  itself
for inclusion in the Proxy  Statement and  Prospectus as may
be  necessary or  desirable  in this  connection.  QMAB Fund
covenants  and agrees to liquidate  and  dissolve  under the
laws of the State of  Massachusetts,  following the Closing,
and,  upon  Closing,   to  cause  the  cancellation  of  its
outstanding shares.

   16.       The   obligations   of  the  parties  shall  be
subject  to  the  right  of  either  party  to  abandon  and
terminate  the  Agreement  for any reason and there shall be
no liability  for damages or other  recourse  available to a
party not so terminating this Agreement,  provided, however,
that  in  the  event  that  a  party  shall  terminate  this
Agreement   without   reasonable   cause,   the   party   so
terminating  shall, upon demand,  reimburse the party not so
terminating   for   all   expenses,   including   reasonable
out-of-pocket  expenses and fees incurred in connection with
this Agreement.

   17.       The   Agreement  may  be  executed  in  several
counterparts,  each of which  shall be deemed  an  original,
but all taken together shall  constitute one Agreement.  The
rights  and  obligations  of  each  party  pursuant  to  the
Agreement shall not be assignable.

   18.       All  prior or  contemporaneous  agreements  and
representations   are  merged  into  the  Agreement,   which
constitutes   the  entire   contract   between  the  parties
hereto.  No  amendment  or  modification  hereof shall be of
any force and  effect  unless in  writing  and signed by the
parties  and no party  shall be  deemed to have  waived  any
provision  herein  for its  benefit  unless  it  executes  a
written acknowledgment of such waiver.

   19.      MS Fund  understands  that  the  obligations  of
QMAB  Fund  under the  Agreement  are not  binding  upon any
Trustee or  shareholder  of QMAB Fund  personally,  but bind
only QMAB Fund and QMAB Fund's property.  MS Fund represents
that it has notice of the  provisions of the  Declaration of
Trust  of QMAB  Fund  disclaiming  shareholder  and  trustee
liability for acts or obligations of QMAB Fund.

   20.      QMAB Fund  understands  that the  obligations of
MS Fund  under  the  Agreement  are  not  binding  upon  any
trustee or shareholder of MS Fund personally,  but bind only
MS Fund and MS Fund's  property.  QMAB Fund  represents that
it has notice of the provisions of the  Declaration of Trust
of MS Fund  disclaiming  shareholder  and trustee  liability
for acts or obligations of MS Fund.

    IN WITNESS  WHEREOF,  each of the parties has caused the
Agreement  to be  executed  and  attested  by  its  officers
thereunto  duly  authorized  on the  date  first  set  forth
above.

                                          OPPENHEIMER
                                          SELECT MANAGERS
                                          QM ACTIVE
                                          BALANCED FUND



                                          By:
                                          ----------------------
                                           Robert G. Zack
                                           Vice President and Secretary

                                          OPPENHEIMER
                                          MULTIPLE
                                          STRATEGIES FUND



                                          By:
                                          ----------------------
                                           Robert G. Zack
                                           Secretary

                                                   EXHIBIT B

                   PRINCIPAL SHAREHOLDERS

A.    Major  Shareholders  of MS Fund.  As of June 18, 2003,
   the only  persons  who owned of record or who were  known
   by MS Fund to own  beneficially  5% or more of any  class
   of that Fund's outstanding  shares, and their holdings of
   that class as of that date, were the following:

                           [TBS]

   B.  Major  Shareholders  of QMAB  Fund.  As of  June  18,
   2003,  the only  persons  who owned of record or who were
   known by QMAB Fund to own  beneficially 5% or more of any
   class  of  that  Fund's  outstanding  shares,  and  their
   holdings  of  that  class  as  of  that  date,  were  the
   following:

                           [TBS]

            STATEMENT OF ADDITIONAL INFORMATION

             TO PROSPECTUS AND PROXY STATEMENT

                           PART B

              Acquisition of the Assets of the
    OPPENHEIMER SELECT MANAGERS QM ACTIVE BALANCED FUND

            By and in exchange for Shares of the
            OPPENHEIMER MULTIPLE STRATEGIES FUND



      This  Statement  of  Additional  Information  to  this
Prospectus   and  Proxy   Statement   (the  "SAI")   relates
specifically to the proposed  delivery of substantially  all
of the  assets  of  Oppenheimer  Select  Managers  QM Active
Balanced  Fund  ("QMAB  Fund")  for  shares  of  Oppenheimer
Multiple Strategies Fund ("MS Fund").

      This  SAI   consists   of  this  Cover  Page  and  the
following  documents:  (i) audited financial  statements for
the 12-month  period ended  November 30, 2002, and financial
statements  for the  six-month  period  ended May 31,  2003,
respectively,   of  QMAB  Fund;   (ii)   audited   financial
statements  for the  12-month  period  ended  September  30,
2002,  financial  statements for the six-month  period ended
March  31,  2002,  respectively,   of  MS  Fund;  (iii)  the
Prospectus   of  QMAB  Fund  dated   March  28,   2003,   as
supplemented  May 7, 2003;  (iv) the Statement of Additional
Information  of QMAB Fund dated March 28, 2003; and (iv) the
Statement  of  Additional   Information  of  MS  Fund  dated
November 30, 2002, as supplemented February 12, 2003.

      This SAI is not a  Prospectus;  you  should  read this
SAI in conjunction  with the Prospectus and Proxy  Statement
dated  July  7,  2003,  relating  to  the   above-referenced
transaction.  You can request a copy of the  Prospectus  and
Proxy  Statement  by  calling  1.800.708.7780  or by writing
OppenheimerFunds   Services  at  P.O.   Box  5270,   Denver,
Colorado 80217.  The date of this SAI is July 7, 2003.

             OPPENHEIMER MULTIPLE STRATEGIES FUND
                           FORM N-14

                            PART C

                       OTHER INFORMATION


Item 15.  Indemnification
- -------------------------

      Reference is made to the  provisions  of Article  Seventh
of  Registrant's  Amended and  Restated  Declaration  of Trust,
filed   by   cross-reference   to   Exhibit   16(1)   to   this
Registration Statement, and incorporated herein by reference.

Insofar as  indemnification  for liabilities  arising under the
Securities  Act of 1933 may be permitted to trustees,  officers
and   controlling   persons  of  Registrant   pursuant  to  the
foregoing   provisions  or  otherwise,   Registrant   has  been
advised  that in the  opinion of the  Securities  and  Exchange
Commission  such  indemnification  is against  public policy as
expressed  in the  Securities  Act of 1933  and is,  therefore,
unenforceable.  In the event  that a claim for  indemnification
against   such   liabilities   (other   than  the   payment  by
Registrant of expenses  incurred or paid by a trustee,  officer
or controlling  person of Registrant in the successful  defense
of  any  action,  suit  or  proceeding)  is  asserted  by  such
trustee,  officer  or  controlling  person,   Registrant  will,
unless  in the  opinion  of its  counsel  the  matter  has been
settled  by  controlling  precedent,   submit  to  a  court  of
appropriate    jurisdiction    the   question    whether   such
indemnification  by it is against  public  policy as  expressed
in the  Securities  Act of 1933  and  will be  governed  by the
final adjudication of such issue.

Item 16.  Exhibits
- ------------------

(1)   Amended and Restated  Declaration  of Trust dated 3/6/97:
      Previously   filed   with   Registrant's   Post-Effective
      Amendment   No.   29   to    Registrant's    registration
      statement,    (Reg.   No.   2-86903),    11/24/97,    and
      incorporated herein by reference.

(2)   Amended and Restated  By-Laws  dated  6/4/98:  Previously
      filed with Registrant's  Post-Effective  Amendment No. 32
      to  Registrant's   registration   statement,   (Reg.  No.
      2-86903), 1/29/99, and incorporated herein by reference.

(3)   N/A

(4)   Agreement  and Plan of  Reorganization:  See Exhibit A to
      Part A of the Registration Statement.

(5)   (i)  Specimen  Class  A  Share  Certificate:   Previously
      filed with Registrant's  Post-Effective  Amendment No. 37
      to  Registrant's   Registration   Statement,   (Reg.  No.
      2-86903),    11/21/02,   and   incorporated   herein   by
      reference.

      (ii) Specimen  Class  B  Share  Certificate:   Previously
      filed with Registrant's  Post-Effective  Amendment No. 37
      to  Registrant's   Registration   Statement,   (Reg.  No.
      2-86903),    11/21/02,   and   incorporated   herein   by
      reference.

      (iii)    Specimen Class C Share  Certificate:  Previously
      filed with Registrant's  Post-Effective  Amendment No. 37
      to  Registrant's   Registration   Statement,   (Reg.  No.
      2-86903),    11/21/02,   and   incorporated   herein   by
      reference.

      (iv)  Specimen  Class  N  Share  Certificate:  Previously
      filed with Registrant's  Post Effective  Amendment No. 37
      to  Registrant's   Registration   Statement,   (Reg.  No.
      2-86903),    11/21/02,   and   incorporated   herein   by
      reference.

(6)   (i) Amended and Restated  Investment  Advisory  Agreement
      dated  12/11/97:   Previously  filed  with   Registrant's
      Post-Effective   Amendment   No.   30   to   Registrant's
      Registration  Statement (Reg. No. 2-86903),  1/22/98, and
      incorporated herein by reference.

(7)   (i)  General  Distributor's   Agreement  dated  12/10/92:
      Previously   filed   with   Registrant's   Post-Effective
      Amendment   No.   15   to    Registrant's    Registration
      Statement,  (Reg.  No.  2-86903),  4/19/93,  refiled with
      Registrant's  Post-Effective  Amendment  No. 20,  3/2/95,
      pursuant to Item 102 of Regulation  S-T and  incorporated
      herein by reference.

      (ii)  Form  of  Dealer   Agreement  of   OppenheimerFunds
      Distributor,  Inc.:  Previously filed with Post-Effective
      Amendment  No.  45  to  the  Registration   Statement  of
      Oppenheimer   High  Yield  Fund   (Reg.   No.   2-62076),
      10/26/01, and incorporated herein by reference.

      (iii)  Form  of  Broker  Agreement  of   OppenheimerFunds
      Distributor,  Inc.:  Previously filed with Post-Effective
      Amendment  No.  45  to  the  Registration   Statement  of
      Oppenheimer   High  Yield  Fund   (Reg.   No.   2-62076),
      10/26/01, and incorporated herein by reference.

      (iv)  Form  of  Agency   Agreement  of   OppenheimerFunds
      Distributor,  Inc.:  Previously filed with Post-Effective
      Amendment  No.  45  to  the  Registration   Statement  of
      Oppenheimer   High  Yield  Fund   (Reg.   No.   2-62076),
      10/26/01, and incorporated herein by reference.

      (v) Form of Trust Company  Fund/SERV  Purchase  Agreement
      of OppenheimerFunds  Distributor,  Inc.: Previously filed
      with    Post-Effective    Amendment   No.   45   to   the
      Registration  Statement  of  Oppenheimer  High Yield Fund
      (Reg. No. 2-62076),  10/26/01,  and  incorporated  herein
      by reference.

      (vi)  Form  of  Trust   Company   Agency   Agreement   of
      OppenheimerFunds  Distributor,   Inc.:  Previously  filed
      with    Post-Effective    Amendment   No.   45   to   the
      Registration  Statement  of  Oppenheimer  High Yield Fund
      (Reg. No. 2-62076),  10/26/01,  and  incorporated  herein
      by reference.

(8)   Form of  Deferred  Compensation  Plans for  Disinterested
Trustees/Directors:

      (i)   Amended   and   Reinstated   Retirement   Plan  for
      Non-Interested   Trustees  or  Directors   dated  8/9/01:
      Previously  filed with  Post-Effective  Amendment  No. 34
      to  the  Registration  Statement  of  Oppenheimer  Gold &
      Special Minerals Fund (Reg. No. 2-82590),  10/25/01,  and
      incorporated herein by reference.

      (ii)   Form   of   Deferred    Compensation    Plan   for
      Disinterested  Trustees/Directors:  Previously filed with
      Post-Effective  Amendment  No.  26  to  the  Registration
      Statement of  Oppenheimer  Gold & Special  Minerals  Fund
      (Reg. No. 2-82590),  10/28/98,  and  incorporated  herein
      by reference.

(9)   Global  Custody  Agreement  dated August 16, 2002 between
      Registrant  and JP Morgan  Chase Bank:  Previously  filed
      with  Post-Effective  Amendment No. 9 to the Registration
      Statement of  Oppenheimer  International  Bond Fund (Reg.
      No.  33-58383),  11/21/02,  and  incorporated  herein  by
      reference.

(10)  (i)  Amended  and  Restated  Service  Plan and  Agreement
      for Class A shares dated 4/11/02:  Previously  filed with
      Registrant's   Post-Effective   Amendment   No.   37   to
      Registrant's  Registration  Statement (Reg. No. 2-86903),
      11/21/02, and incorporated herein by reference.

      (ii)  Distribution  and Service  Plan and  Agreement  for
      Class B  shares  dated  2/12/98:  Previously  filed  with
      Registrant's   Post-Effective   Amendment   No.   30   to
      Registrant's  Registration  Statement (Reg. No. 2-86903),
      1/22/98, and incorporated herein by reference.

      (iii)  Distribution  and Service Plan and  Agreement  for
      Class C  shares  dated  2/12/98:  Previously  filed  with
      Registrant's   Post-Effective   Amendment   No.   30   to
      Registrant's  Registration  Statement (Reg. No. 2-86903),
      1/22/98, and incorporated herein by reference.

      (iv)  Distribution  and Service  Plan and  Agreement  for
      Class N shares  dated  10/12/00:  Previously  filed  with
      Registrant's   Post-Effective   Amendment   No.   37   to
      Registrant's  Registration  Statement (Reg. No. 2-86903),
      11/21/02, and incorporated herein by reference.

(11)  Opinion  and   Consent  of   Counsel:   To  be  filed  by
    Amendment.

(12)  Tax  Opinion  Relating to the  Reorganization:  Draft Tax
      Opinion  of  Deloitte  and  Touche  LLP - To be  filed by
      Amendment.

(13)  N/A.

(14)  (i)  Consent of Deloitte  and Touche  LLP:  Draft - To be
filed by Amendment.

      (ii)  Consent  of  KPMG  LLP:  Draft  - To  be  filed  by
      Amendment.

(15)  N/A.

(16)  (i) Powers of  Attorney  for all  Trustees/Directors  and
      Principal  Officers  except  for Joel W.  Motley and John
      V.  Murphy  (including   Certified  Board   Resolutions):
      Previously  filed with  Pre-Effective  Amendment No. 1 to
      the  Registration   Statement  of  Oppenheimer   Emerging
      Growth   Fund  (Reg.   No.   333-44176),   10/5/00,   and
      incorporated herein by reference.

      (ii)  Power  of  Attorney  for  John  Murphy   (including
      Certified  Board   Resolution):   Previously  filed  with
      Post-Effective  Amendment  No.  41  to  the  Registration
      Statement  of  Oppenheimer  U.S.  Government  Trust (Reg.
      No.  2-76645),   10/22/01,  and  incorporated  herein  by
      reference.

      (iii)  Power of Attorney  for Joel W.  Motley  (including
      Certified  Board   Resolution):   Previously  filed  with
      Post-Effective   Amendment  No.  8  to  the  Registration
      Statement  of  Oppenheimer  International  Small  Company
      Fund  (Reg.   333-31537),   10/22/02,   and  incorporated
      herein by reference.

Item 17.  Undertakings
- ----------------------

(1)   N/A.

(2)   N/A.


                          SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and/or the Investment
Company Act of 1940, the Registrant has duly caused this Registration  Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of New York and State of New York on the 19th day of May 2003.

                        OPPENHEIMER MULTIPLE STRATEGIES FUND

                        By:  /s/  John V. Murphy*

                  -------------------------------------------
                        John V. Murphy, President,
                        Principal Executive Officer & Trustee


Pursuant to the  requirements of the Securities Act of 1933,  this  Registration
Statement  has been signed below by the following  persons in the  capacities on
the dates indicated:

Signatures                         Title
- ----------                         -----
Date
- ----

/s/ Clayton K. Yeutter*       Chairman of the                   May 19, 2003
- ------------------------
                              Board of Trustees
Clayton K. Yeutter

/s/ Donald W. Spiro*          Vice Chairman of the              May 19, 2003
- ------------------------
Board and Trustee
Donald W. Spiro

/s/ John V. Murphy *          President, Principal              May 19, 2003
- ------------------------
Executive Officer
John V. Murphy                and Trustee

/s/ Brian W. Wixted*          Treasurer, Principal              May 19, 2003
- ------------------------
Financial and
Brian W. Wixted               Accounting Officer

/s/ Robert G. Galli*          Trustee                           May 19, 2003
- ------------------------
Robert G. Galli

/s/ Phillip A. Griffiths      Trustee                           May 19, 2003
- ---------------------------------
Phillip A. Griffiths

/s/ Benjamin Lipstein*        Trustee                           May 19, 2003
- ---------------------------------
Benjamin Lipstein

/s/ Joel W. Motley*           Trustee                           May 19, 2003
- ---------------------------------
Joel W. Motley

/s/ Elizabeth B. Moynihan*    Trustee                           May 19, 2003
- ---------------------------------
Elizabeth B. Moynihan

/s/ Kenneth A. Randall*       Trustee                           May 19, 2003
- ---------------------------------
Kenneth A. Randall

/s/ Edward V. Regan*          Trustee                           May 19, 2003
- ---------------------------------
Edward V. Regan

/s/ Russell S. Reynolds, Jr.* Trustee                           May 19, 2003
- ---------------------------------
Russell S. Reynolds, Jr.

*By: /s/ Robert G. Zack                                         May 19, 2003
- -----------------------------------------
Robert G. Zack, Attorney-in-Fact

             OPPENHEIMER MULTIPLE STRATEGIES FUND


                                    EXHIBIT INDEX



Exhibit No.                         Description
- -----------                         -----------

16(12)                  Draft   Tax    Opinion    Relating   to
Reorganization

16(14)(i)               Draft  Independent  Auditors Consent of
                        Deloitte and Touche LLP

16(14)(ii)              Draft  Independent  Auditors Consent of
                        KPMG LLP

                                  Proxy Card

             Oppenheimer Select Managers QM Active Balanced Fund

Proxy For a Special Shareholders Meeting of shareholders To Be Held on August
                                   29, 2003

The undersigned,  revoking prior proxies,  hereby appoints Brian Wixted,  Philip
Vottiero, Kate Ives and Philip Masterson, and each of them, as attorneys-in-fact
and proxies of the undersigned,  with full power of substitution, to vote shares
held in the name of the undersigned on the record date at the Special Meeting of
Shareholders of Oppenheimer  Select Managers QM Active Balanced Fund (the "Fund")
to be held at 6803 South Tucson Way, Centennial,  Colorado, 80112, on August 29,
2003,  at 1:00 P. M.  Mountain  time, or at any  adjournment  thereof,  upon the
proposal  described in the Notice of Meeting and  accompanying  Proxy Statement,
which have been received by the undersigned.

This proxy is solicited  on behalf of the Fund's  Board of  Trustees,  and the
proposal  (set forth on the reverse side of this proxy card) has been proposed
by the Board of Trustees.  When properly executed, this proxy will be voted as
indicated on the reverse  side or "FOR" a proposal if no choice is  indicated.
The proxy will be voted in  accordance  with the proxy  holders' best judgment
as to any other matters that may arise at the Meeting.

                              VOTE VIA THE TELEPHONE:  1-866-241-6192
                              CONTROL NUMBER:  999  9999  9999  999

                              Note:  Please  sign this  proxy  exactly as your
                              name or names  appear  hereon.  Each joint owner
                              should  sign.  Trustees  and  other  fiduciaries
                              should  indicate  the  capacity  in  which  they
                              sign.  If a  corporation,  partnership  or other
                              entity,  this signature should be that of a duly
                              authorized  individual  who should  state his or
                              her title.


                              Signature


                              Signature of joint owner, if any


                              Date


PLEASE VOTE ON THE REVERSE SIDE, SIGN AND DATE THIS PROXY AND RETURN PROMPTLY
                           IN THE ENCLOSED ENVELOPE



The Proposal:

To approve an Agreement and Plan of Reorganization  between Oppenheimer Select
Managers QM Active  Balanced  Fund ("QMAB  Fund"),  and  Oppenheimer  Multiple
Strategies  Fund  ("MS  Fund")  and  the  transactions  contemplated  thereby,
including:  (a) the  transfer of  substantially  all assets of QMAB Fund to MS
Fund in exchange  for Class A, Class B, Class C and Class N shares of MS Fund,
(b) the distribution of such shares of MS Fund to the  corresponding  Class A,
Class  B,  Class  C  and  Class  N  shareholders  of  QMAB  Fund  in  complete
liquidation of QMAB Fund, (c) the  cancellation of the  outstanding  shares of
QMAB Fund and (d) the liquidation of outstanding Class Y shares of QMAB Fund.

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK.  Example: [ ]

FOR [___]               AGAINST [___]           ABSTAIN [___]

John V. Murphy
- --------------
President &                                  OppenheimerFunds Logo
Chief Executive Officer                          498 Seventh Avenue, 10th Floor
                                                 New York, NY 10018
                                                 800.225.5677
                                                 www.oppenheimerfunds.com

                                                July 7, 2003

Dear Oppenheimer Select Managers QM Active Balanced Fund Shareholder,

One of the things we are proud of at OppenheimerFunds,  Inc. is our commitment
to our Fund  shareholders.  I am  writing to you today to let you know about a
positive  change that has been  proposed for  Oppenheimer  Select  Managers QM
Active Balanced Fund.

After  careful  consideration,  the Board of Trustees has  determined  that it
would be in the best interest of shareholders  of Oppenheimer  Select Managers
QM Active Balanced Fund ("QMAB Fund") to reorganize  into another  Oppenheimer
Fund,   Oppenheimer  Multiple  Strategies  Fund  ("MS  Fund").  A  shareholder
meeting  has been  scheduled  in  August,  and all QMAB Fund  shareholders  of
record as of June 18th are being  asked to vote  either in person or by proxy,
on the  proposed  reorganization.  You will  find a notice of the  meeting,  a
ballot card, a proxy statement  detailing the proposal,  an MS Fund prospectus
and a postage-paid return envelope enclosed for your use.

Why does the Board of Trustees recommend this change?
- -----------------------------------------------------

QMAB Fund seeks income and long-term  growth of capital and MS Fund seeks high
total  investment  return  consistent  with  preservation  of  principal.   In
seeking their investment  objectives,  QMAB Fund and MS Fund utilize a similar
investing  strategy.  Both Funds invest  primarily in a wide variety of equity
securities, debt securities and money market instruments.

Among other factors,  the QMAB Fund Board considered that the expense ratio of
MS Fund has been lower than the  expense  ratio of QMAB  Fund.  Although  past
performance is not  predictive of future  results,  shareholders  of QMAB Fund
would  have an  opportunity  to  become  shareholders  of a Fund with a better
long-term performance history.

How do you vote?

No matter  how large or small  your  investment,  your vote is  important,  so
please review the proxy statement  carefully.  To cast your vote, simply mark,
sign and date the  enclosed  proxy  ballot and  return it in the  postage-paid
envelope today.  Remember,  it can be costly for the Fund--and  ultimately for
you as a  shareholder--to  remail ballots if not enough responses are received
to conduct the meeting.


If you have any  questions  about the  proposal,  please  feel free to contact
your  financial  advisor  or  call  us  at   1.800.225.5677.   As  always,  we
appreciate  your  confidence in  OppenheimerFunds  and look forward to serving
you for many years to come.


                                          Sincerely,


                                        /s/John V. Murphy
                                        -------------------------------
                                          John V. Murphy


Enclosures

               Telephone Voting Instructions



                       1.800.597.7836

Vote your OppenheimerFunds  proxy over the phone Voting your proxy is important.
And now OppenheimerFunds has made it easy. Vote at your convenience,  24 hours a
day, and save postage costs,  ultimately reducing fund expenses. Read your Proxy
Card carefully. To exercise your proxy, just follow these simple steps:

1.    Call the toll free number: 1.800.597.7836.

2.    Enter the 14-digit Control Number, located on your
      Proxy Card.

3.    Follow the voice instructions.

If vote by phone, please do not mail your Proxy Card.

      KNOW ALL MEN BY THESE  PRESENTS,  that the  undersigned  constitutes and
appoints   Robert  G.  Zack  and   Katherine  P.  Feld  his  true  and  lawful
attorneys-in-fact   and  agents,   and  each  of  them,  with  full  power  of
substitution  and  resubstitution,  for him in his  capacity as an Officer and
Trustee/Director  of  Oppenheimer  Cash Reserves,  Oppenheimer  Capital Income
Fund,   Oppenheimer  Champion  Income  Fund,   Oppenheimer  High  Yield  Fund,
Oppenheimer  International Bond Fund, Oppenheimer Integrity Funds, Oppenheimer
Limited-Term  Government Fund, Oppenheimer Main Street Fund, Inc., Oppenheimer
Main  Street  Opportunity  Fund,  Oppenheimer  Main  Street  Small  Cap  Fund,
Oppenheimer  Municipal Fund,  Oppenheimer Real Asset Fund,  Oppenheimer Select
Managers,  Oppenheimer Senior Floating Rate Fund, Oppenheimer Strategic Income
Fund,  Oppenheimer Total Return Fund, Inc., Oppenheimer Variable Account Funds
and Panorama  Series Fund,  Inc. (the "Funds"),  to sign on his behalf any and
all proxy statements under the Securities Act of 1933, as amended,  (including
any amendments and  supplements  thereto),  and other  documents in connection
thereunder,  and to file  the  same,  with all  exhibits  thereto,  and  other
documents in connection  therewith,  and any and all  Registration  Statements
(including any  post-effective  amendments to Registration  Statements)  under
the  Securities  Act of  1933,  the  Investment  Company  Act of 1940  and any
amendments  and  supplements   thereto,  and  other  documents  in  connection
thereunder,  and to file  the  same,  with all  exhibits  thereto,  and  other
documents  in  connection   therewith,   with  the   Securities  and  Exchange
Commission,  granting  unto said  attorneys-in-fact  and  agents,  and each of
them,  full power and authority to do and perform each and every act and thing
requisite and  necessary to be done in and about the premises,  as fully as to
all intents and purposes as he might or could do in person,  hereby  ratifying
and confirming all that said  attorneys-in-fact  and agents, and each of them,
may lawfully do or cause to be done by virtue hereof.

Dated:      May 12, 2003


/s/ John Murphy
- -----------------------
John Murphy

      KNOW ALL MEN BY THESE  PRESENTS,  that the  undersigned  constitutes and
appoints   Robert  G.  Zack  and   Katherine  P.  Feld  his  true  and  lawful
attorneys-in-fact   and  agents,   and  each  of  them,  with  full  power  of
substitution  and  resubstitution,  for him in his  capacity as an Officer and
Trustee/Director of Centennial America Fund, L.P.,  Centennial  California Tax
Exempt Trust,  Centennial  Government  Trust,  Centennial  Money Market Trust,
Centennial   New  York  Tax  Exempt  Trust,   Centennial   Tax  Exempt  Trust,
Oppenheimer  Cash  Reserves,  Oppenheimer  Capital  Income  Fund,  Oppenheimer
Champion Income Fund, Oppenheimer High Yield Fund,  Oppenheimer  International
Bond Fund, Oppenheimer Integrity Funds,  Oppenheimer  Limited-Term  Government
Fund,  Oppenheimer Main Street Fund, Inc., Oppenheimer Main Street Opportunity
Fund,  Oppenheimer  Main Street Small Cap Fund,  Oppenheimer  Municipal  Fund,
Oppenheimer  Real  Asset  Fund,   Oppenheimer  Select  Managers,   Oppenheimer
Strategic  Income  Fund,  Oppenheimer  Total Return  Fund,  Inc.,  Oppenheimer
Variable  Account Funds and Panorama Series Fund, Inc. (the "Funds"),  to sign
on her behalf any and all proxy  statements  under the Securities Act of 1933,
as amended,  (including  any amendments and  supplements  thereto),  and other
documents in connection  thereunder,  and to file the same,  with all exhibits
thereto,  and  other  documents  in  connection  therewith,  and  any  and all
Registration   Statements   (including   any   post-effective   amendments  to
Registration  Statements)  under the  Securities  Act of 1933,  the Investment
Company Act of 1940 and any  amendments  and  supplements  thereto,  and other
documents in connection  thereunder,  and to file the same,  with all exhibits
thereto, and other documents in connection therewith,  with the Securities and
Exchange  Commission,  granting unto said  attorneys-in-fact  and agents,  and
each of them,  full power and  authority  to do and perform each and every act
and thing  requisite and  necessary to be done in and about the  premises,  as
fully as to all  intents  and  purposes  as she  might or could do in  person,
hereby  ratifying and confirming all that said  attorneys-in-fact  and agents,
and each of them, may lawfully do or cause to be done by virtue hereof.

Dated:      May 12, 2003


/s/ Beverly L. Hamilton
- -----------------------
Beverly L. Hamilton

      KNOW ALL MEN BY THESE  PRESENTS,  that the  undersigned  constitutes and
appoints   Robert  G.  Zack  and   Katherine  P.  Feld  his  true  and  lawful
attorneys-in-fact   and  agents,   and  each  of  them,  with  full  power  of
substitution  and  resubstitution,  for him in his  capacity as an Officer and
Trustee/Director of Centennial America Fund, L.P.,  Centennial  California Tax
Exempt Trust,  Centennial  Government  Trust,  Centennial  Money Market Trust,
Centennial   New  York  Tax  Exempt  Trust,   Centennial   Tax  Exempt  Trust,
Oppenheimer  Cash  Reserves,  Oppenheimer  Capital  Income  Fund,  Oppenheimer
Champion Income Fund, Oppenheimer High Yield Fund,  Oppenheimer  International
Bond Fund, Oppenheimer Integrity Funds,  Oppenheimer  Limited-Term  Government
Fund,  Oppenheimer Main Street Fund, Inc., Oppenheimer Main Street Opportunity
Fund,  Oppenheimer  Main Street Small Cap Fund,  Oppenheimer  Municipal  Fund,
Oppenheimer  Real  Asset  Fund,   Oppenheimer  Select  Managers,   Oppenheimer
Strategic  Income  Fund,  Oppenheimer  Total Return  Fund,  Inc.,  Oppenheimer
Variable  Account Funds and Panorama Series Fund, Inc. (the "Funds"),  to sign
on his behalf any and all proxy  statements  under the Securities Act of 1933,
as amended,  (including  any amendments and  supplements  thereto),  and other
documents in connection  thereunder,  and to file the same,  with all exhibits
thereto,  and  other  documents  in  connection  therewith,  and  any  and all
Registration   Statements   (including   any   post-effective   amendments  to
Registration  Statements)  under the  Securities  Act of 1933,  the Investment
Company Act of 1940 and any  amendments  and  supplements  thereto,  and other
documents in connection  thereunder,  and to file the same,  with all exhibits
thereto, and other documents in connection therewith,  with the Securities and
Exchange  Commission,  granting unto said  attorneys-in-fact  and agents,  and
each of them,  full power and  authority  to do and perform each and every act
and thing  requisite and  necessary to be done in and about the  premises,  as
fully as to all  intents  and  purposes  as he  might  or could do in  person,
hereby  ratifying and confirming all that said  attorneys-in-fact  and agents,
and each of them, may lawfully do or cause to be done by virtue hereof.

Dated:      May 12, 2003



/s/ Robert J. Malone
- -----------------------
Robert J. Malone

      KNOW ALL MEN BY THESE  PRESENTS,  that the  undersigned  constitutes and
appoints   Robert  G.  Zack  and   Katherine  P.  Feld  his  true  and  lawful
attorneys-in-fact   and  agents,   and  each  of  them,  with  full  power  of
substitution  and  resubstitution,  for him in his  capacity as an Officer and
Trustee/Director of Centennial America Fund, L.P.,  Centennial  California Tax
Exempt Trust,  Centennial  Government  Trust,  Centennial  Money Market Trust,
Centennial   New  York  Tax  Exempt  Trust,   Centennial   Tax  Exempt  Trust,
Oppenheimer  Cash  Reserves,  Oppenheimer  Capital  Income  Fund,  Oppenheimer
Champion Income Fund, Oppenheimer High Yield Fund,  Oppenheimer  International
Bond Fund, Oppenheimer Integrity Funds,  Oppenheimer  Limited-Term  Government
Fund,  Oppenheimer Main Street Fund, Inc., Oppenheimer Main Street Opportunity
Fund,  Oppenheimer  Main Street Small Cap Fund,  Oppenheimer  Municipal  Fund,
Oppenheimer   Real  Asset  Fund,   Oppenheimer   Senior  Floating  Rate  Fund,
Oppenheimer Select Managers,  Oppenheimer  Strategic Income Fund,  Oppenheimer
Total Return  Fund,  Inc.,  Oppenheimer  Variable  Account  Funds and Panorama
Series  Fund,  Inc.  (the  "Funds"),  to sign on his  behalf any and all proxy
statements  under the  Securities  Act of 1933,  as  amended,  (including  any
amendments  and  supplements  thereto),  and  other  documents  in  connection
thereunder,  and to file  the  same,  with all  exhibits  thereto,  and  other
documents in connection  therewith,  and any and all  Registration  Statements
(including any  post-effective  amendments to Registration  Statements)  under
the  Securities  Act of  1933,  the  Investment  Company  Act of 1940  and any
amendments  and  supplements   thereto,  and  other  documents  in  connection
thereunder,  and to file  the  same,  with all  exhibits  thereto,  and  other
documents  in  connection   therewith,   with  the   Securities  and  Exchange
Commission,  granting  unto said  attorneys-in-fact  and  agents,  and each of
them,  full power and authority to do and perform each and every act and thing
requisite and  necessary to be done in and about the premises,  as fully as to
all intents and purposes as he might or could do in person,  hereby  ratifying
and confirming all that said  attorneys-in-fact  and agents, and each of them,
may lawfully do or cause to be done by virtue hereof.

Dated:      May 12, 2003


/s/ James C. Swain
- -----------------------
James C. Swain

      KNOW ALL MEN BY THESE  PRESENTS,  that the  undersigned  constitutes and
appoints   Robert  G.  Zack  and   Katherine  P.  Feld  his  true  and  lawful
attorneys-in-fact   and  agents,   and  each  of  them,  with  full  power  of
substitution  and  resubstitution,  for him in his  capacity as an Officer and
Trustee/Director of Centennial America Fund, L.P.,  Centennial  California Tax
Exempt Trust,  Centennial  Government  Trust,  Centennial  Money Market Trust,
Centennial   New  York  Tax  Exempt  Trust,   Centennial   Tax  Exempt  Trust,
Oppenheimer  Cash  Reserves,  Oppenheimer  Capital  Income  Fund,  Oppenheimer
Champion Income Fund, Oppenheimer High Yield Fund,  Oppenheimer  International
Bond Fund, Oppenheimer Integrity Funds,  Oppenheimer  Limited-Term  Government
Fund,  Oppenheimer Main Street Fund, Inc., Oppenheimer Main Street Opportunity
Fund,  Oppenheimer  Main Street Small Cap Fund,  Oppenheimer  Municipal  Fund,
Oppenheimer   Real  Asset  Fund,   Oppenheimer   Senior  Floating  Rate  Fund,
Oppenheimer Select Managers,  Oppenheimer  Strategic Income Fund,  Oppenheimer
Total Return  Fund,  Inc.,  Oppenheimer  Variable  Account  Funds and Panorama
Series  Fund,  Inc.  (the  "Funds"),  to sign on his  behalf any and all proxy
statements  under the  Securities  Act of 1933,  as  amended,  (including  any
amendments  and  supplements  thereto),  and  other  documents  in  connection
thereunder,  and to file  the  same,  with all  exhibits  thereto,  and  other
documents in connection  therewith,  and any and all  Registration  Statements
(including any  post-effective  amendments to Registration  Statements)  under
the  Securities  Act of  1933,  the  Investment  Company  Act of 1940  and any
amendments  and  supplements   thereto,  and  other  documents  in  connection
thereunder,  and to file  the  same,  with all  exhibits  thereto,  and  other
documents  in  connection   therewith,   with  the   Securities  and  Exchange
Commission,  granting  unto said  attorneys-in-fact  and  agents,  and each of
them,  full power and authority to do and perform each and every act and thing
requisite and  necessary to be done in and about the premises,  as fully as to
all intents and purposes as he might or could do in person,  hereby  ratifying
and confirming all that said  attorneys-in-fact  and agents, and each of them,
may lawfully do or cause to be done by virtue hereof.

Dated:      May 12, 2003


/s/ William L. Armstrong
- -----------------------
William L. Armstrong

      KNOW ALL MEN BY THESE  PRESENTS,  that the  undersigned  constitutes and
appoints   Robert  G.  Zack  and   Katherine  P.  Feld  his  true  and  lawful
attorneys-in-fact   and  agents,   and  each  of  them,  with  full  power  of
substitution  and  resubstitution,  for him in his  capacity as an Officer and
Trustee/Director of Centennial America Fund, L.P.,  Centennial  California Tax
Exempt Trust,  Centennial  Government  Trust,  Centennial  Money Market Trust,
Centennial   New  York  Tax  Exempt  Trust,   Centennial   Tax  Exempt  Trust,
Oppenheimer  Cash  Reserves,  Oppenheimer  Capital  Income  Fund,  Oppenheimer
Champion Income Fund, Oppenheimer High Yield Fund,  Oppenheimer  International
Bond Fund, Oppenheimer Integrity Funds,  Oppenheimer  Limited-Term  Government
Fund,  Oppenheimer Main Street Fund, Inc., Oppenheimer Main Street Opportunity
Fund,  Oppenheimer  Main Street Small Cap Fund,  Oppenheimer  Municipal  Fund,
Oppenheimer   Real  Asset  Fund,   Oppenheimer   Senior  Floating  Rate  Fund,
Oppenheimer Select Managers,  Oppenheimer  Strategic Income Fund,  Oppenheimer
Total Return  Fund,  Inc.,  Oppenheimer  Variable  Account  Funds and Panorama
Series  Fund,  Inc.  (the  "Funds"),  to sign on his  behalf any and all proxy
statements  under the  Securities  Act of 1933,  as  amended,  (including  any
amendments  and  supplements  thereto),  and  other  documents  in  connection
thereunder,  and to file  the  same,  with all  exhibits  thereto,  and  other
documents in connection  therewith,  and any and all  Registration  Statements
(including any  post-effective  amendments to Registration  Statements)  under
the  Securities  Act of  1933,  the  Investment  Company  Act of 1940  and any
amendments  and  supplements   thereto,  and  other  documents  in  connection
thereunder,  and to file  the  same,  with all  exhibits  thereto,  and  other
documents  in  connection   therewith,   with  the   Securities  and  Exchange
Commission,  granting  unto said  attorneys-in-fact  and  agents,  and each of
them,  full power and authority to do and perform each and every act and thing
requisite and  necessary to be done in and about the premises,  as fully as to
all intents and purposes as he might or could do in person,  hereby  ratifying
and confirming all that said  attorneys-in-fact  and agents, and each of them,
may lawfully do or cause to be done by virtue hereof.

Dated:      May 12, 2003


/s/ Robert G. Avis
- -----------------------
Robert G. Avis

      KNOW ALL MEN BY THESE  PRESENTS,  that the  undersigned  constitutes and
appoints   Robert  G.  Zack  and   Katherine  P.  Feld  his  true  and  lawful
attorneys-in-fact   and  agents,   and  each  of  them,  with  full  power  of
substitution  and  resubstitution,  for him in his  capacity as an Officer and
Trustee/Director of Centennial America Fund, L.P.,  Centennial  California Tax
Exempt Trust,  Centennial  Government  Trust,  Centennial  Money Market Trust,
Centennial   New  York  Tax  Exempt  Trust,   Centennial   Tax  Exempt  Trust,
Oppenheimer  Cash  Reserves,  Oppenheimer  Capital  Income  Fund,  Oppenheimer
Champion Income Fund, Oppenheimer High Yield Fund,  Oppenheimer  International
Bond Fund, Oppenheimer Integrity Funds,  Oppenheimer  Limited-Term  Government
Fund,  Oppenheimer Main Street Fund, Inc., Oppenheimer Main Street Opportunity
Fund,  Oppenheimer  Main Street Small Cap Fund,  Oppenheimer  Municipal  Fund,
Oppenheimer   Real  Asset  Fund,   Oppenheimer   Senior  Floating  Rate  Fund,
Oppenheimer Select Managers,  Oppenheimer  Strategic Income Fund,  Oppenheimer
Total Return  Fund,  Inc.,  Oppenheimer  Variable  Account  Funds and Panorama
Series  Fund,  Inc.  (the  "Funds"),  to sign on his  behalf any and all proxy
statements  under the  Securities  Act of 1933,  as  amended,  (including  any
amendments  and  supplements  thereto),  and  other  documents  in  connection
thereunder,  and to file  the  same,  with all  exhibits  thereto,  and  other
documents in connection  therewith,  and any and all  Registration  Statements
(including any  post-effective  amendments to Registration  Statements)  under
the  Securities  Act of  1933,  the  Investment  Company  Act of 1940  and any
amendments  and  supplements   thereto,  and  other  documents  in  connection
thereunder,  and to file  the  same,  with all  exhibits  thereto,  and  other
documents  in  connection   therewith,   with  the   Securities  and  Exchange
Commission,  granting  unto said  attorneys-in-fact  and  agents,  and each of
them,  full power and authority to do and perform each and every act and thing
requisite and  necessary to be done in and about the premises,  as fully as to
all intents and purposes as he might or could do in person,  hereby  ratifying
and confirming all that said  attorneys-in-fact  and agents, and each of them,
may lawfully do or cause to be done by virtue hereof.

Dated:      May 12, 2003

/s/ George C. Bowen
- -----------------------
George C. Bowen

      KNOW ALL MEN BY THESE  PRESENTS,  that the  undersigned  constitutes and
appoints   Robert  G.  Zack  and   Katherine  P.  Feld  his  true  and  lawful
attorneys-in-fact   and  agents,   and  each  of  them,  with  full  power  of
substitution  and  resubstitution,  for him in his  capacity as an Officer and
Trustee/Director of Centennial America Fund, L.P.,  Centennial  California Tax
Exempt Trust,  Centennial  Government  Trust,  Centennial  Money Market Trust,
Centennial   New  York  Tax  Exempt  Trust,   Centennial   Tax  Exempt  Trust,
Oppenheimer  Cash  Reserves,  Oppenheimer  Capital  Income  Fund,  Oppenheimer
Champion Income Fund, Oppenheimer High Yield Fund,  Oppenheimer  International
Bond Fund, Oppenheimer Integrity Funds,  Oppenheimer  Limited-Term  Government
Fund,  Oppenheimer Main Street Fund, Inc., Oppenheimer Main Street Opportunity
Fund,  Oppenheimer  Main Street Small Cap Fund,  Oppenheimer  Municipal  Fund,
Oppenheimer   Real  Asset  Fund,   Oppenheimer   Senior  Floating  Rate  Fund,
Oppenheimer Select Managers,  Oppenheimer  Strategic Income Fund,  Oppenheimer
Total Return  Fund,  Inc.,  Oppenheimer  Variable  Account  Funds and Panorama
Series  Fund,  Inc.  (the  "Funds"),  to sign on his  behalf any and all proxy
statements  under the  Securities  Act of 1933,  as  amended,  (including  any
amendments  and  supplements  thereto),  and  other  documents  in  connection
thereunder,  and to file  the  same,  with all  exhibits  thereto,  and  other
documents in connection  therewith,  and any and all  Registration  Statements
(including any  post-effective  amendments to Registration  Statements)  under
the  Securities  Act of  1933,  the  Investment  Company  Act of 1940  and any
amendments  and  supplements   thereto,  and  other  documents  in  connection
thereunder,  and to file  the  same,  with all  exhibits  thereto,  and  other
documents  in  connection   therewith,   with  the   Securities  and  Exchange
Commission,  granting  unto said  attorneys-in-fact  and  agents,  and each of
them,  full power and authority to do and perform each and every act and thing
requisite and  necessary to be done in and about the premises,  as fully as to
all intents and purposes as he might or could do in person,  hereby  ratifying
and confirming all that said  attorneys-in-fact  and agents, and each of them,
may lawfully do or cause to be done by virtue hereof.

Dated:      May 12, 2003



/s/ Edward L. Cameron
- -----------------------
Edward L. Cameron

      KNOW ALL MEN BY THESE  PRESENTS,  that the  undersigned  constitutes and
appoints   Robert  G.  Zack  and   Katherine  P.  Feld  his  true  and  lawful
attorneys-in-fact   and  agents,   and  each  of  them,  with  full  power  of
substitution  and  resubstitution,  for him in his  capacity as an Officer and
Trustee/Director of Centennial America Fund, L.P.,  Centennial  California Tax
Exempt Trust,  Centennial  Government  Trust,  Centennial  Money Market Trust,
Centennial   New  York  Tax  Exempt  Trust,   Centennial   Tax  Exempt  Trust,
Oppenheimer  Cash  Reserves,  Oppenheimer  Capital  Income  Fund,  Oppenheimer
Champion Income Fund, Oppenheimer High Yield Fund,  Oppenheimer  International
Bond Fund, Oppenheimer Integrity Funds,  Oppenheimer  Limited-Term  Government
Fund,  Oppenheimer Main Street Fund, Inc., Oppenheimer Main Street Opportunity
Fund,  Oppenheimer  Main Street Small Cap Fund,  Oppenheimer  Municipal  Fund,
Oppenheimer   Real  Asset  Fund,   Oppenheimer   Senior  Floating  Rate  Fund,
Oppenheimer Select Managers,  Oppenheimer  Strategic Income Fund,  Oppenheimer
Total Return  Fund,  Inc.,  Oppenheimer  Variable  Account  Funds and Panorama
Series  Fund,  Inc.  (the  "Funds"),  to sign on his  behalf any and all proxy
statements  under the  Securities  Act of 1933,  as  amended,  (including  any
amendments  and  supplements  thereto),  and  other  documents  in  connection
thereunder,  and to file  the  same,  with all  exhibits  thereto,  and  other
documents in connection  therewith,  and any and all  Registration  Statements
(including any  post-effective  amendments to Registration  Statements)  under
the  Securities  Act of  1933,  the  Investment  Company  Act of 1940  and any
amendments  and  supplements   thereto,  and  other  documents  in  connection
thereunder,  and to file  the  same,  with all  exhibits  thereto,  and  other
documents  in  connection   therewith,   with  the   Securities  and  Exchange
Commission,  granting  unto said  attorneys-in-fact  and  agents,  and each of
them,  full power and authority to do and perform each and every act and thing
requisite and  necessary to be done in and about the premises,  as fully as to
all intents and purposes as he might or could do in person,  hereby  ratifying
and confirming all that said  attorneys-in-fact  and agents, and each of them,
may lawfully do or cause to be done by virtue hereof.

Dated:      May 12, 2003



/s/ Jon S. Fossel
- -----------------------
Jon S. Fossel

      KNOW ALL MEN BY THESE  PRESENTS,  that the  undersigned  constitutes and
appoints   Robert  G.  Zack  and   Katherine  P.  Feld  his  true  and  lawful
attorneys-in-fact   and  agents,   and  each  of  them,  with  full  power  of
substitution  and  resubstitution,  for him in his  capacity as an Officer and
Trustee/Director of Centennial America Fund, L.P.,  Centennial  California Tax
Exempt Trust,  Centennial  Government  Trust,  Centennial  Money Market Trust,
Centennial   New  York  Tax  Exempt  Trust,   Centennial   Tax  Exempt  Trust,
Oppenheimer  Cash  Reserves,  Oppenheimer  Capital  Income  Fund,  Oppenheimer
Champion Income Fund, Oppenheimer High Yield Fund,  Oppenheimer  International
Bond Fund, Oppenheimer Integrity Funds,  Oppenheimer  Limited-Term  Government
Fund,  Oppenheimer Main Street Fund, Inc., Oppenheimer Main Street Opportunity
Fund,  Oppenheimer  Main Street Small Cap Fund,  Oppenheimer  Municipal  Fund,
Oppenheimer   Real  Asset  Fund,   Oppenheimer   Senior  Floating  Rate  Fund,
Oppenheimer Select Managers,  Oppenheimer  Strategic Income Fund,  Oppenheimer
Total Return  Fund,  Inc.,  Oppenheimer  Variable  Account  Funds and Panorama
Series  Fund,  Inc.  (the  "Funds"),  to sign on his  behalf any and all proxy
statements  under the  Securities  Act of 1933,  as  amended,  (including  any
amendments  and  supplements  thereto),  and  other  documents  in  connection
thereunder,  and to file  the  same,  with all  exhibits  thereto,  and  other
documents in connection  therewith,  and any and all  Registration  Statements
(including any  post-effective  amendments to Registration  Statements)  under
the  Securities  Act of  1933,  the  Investment  Company  Act of 1940  and any
amendments  and  supplements   thereto,  and  other  documents  in  connection
thereunder,  and to file  the  same,  with all  exhibits  thereto,  and  other
documents  in  connection   therewith,   with  the   Securities  and  Exchange
Commission,  granting  unto said  attorneys-in-fact  and  agents,  and each of
them,  full power and authority to do and perform each and every act and thing
requisite and  necessary to be done in and about the premises,  as fully as to
all intents and purposes as he might or could do in person,  hereby  ratifying
and confirming all that said  attorneys-in-fact  and agents, and each of them,
may lawfully do or cause to be done by virtue hereof.

Dated:      May 12, 2003



/s/ Sam Freedman
- -----------------------
Sam Freedman

      KNOW ALL MEN BY THESE  PRESENTS,  that the  undersigned  constitutes and
appoints   Robert  G.  Zack  and   Katherine  P.  Feld  his  true  and  lawful
attorneys-in-fact   and  agents,   and  each  of  them,  with  full  power  of
substitution  and  resubstitution,  for him in his  capacity as an Officer and
Trustee/Director of Centennial America Fund, L.P.,  Centennial  California Tax
Exempt Trust,  Centennial  Government  Trust,  Centennial  Money Market Trust,
Centennial   New  York  Tax  Exempt  Trust,   Centennial   Tax  Exempt  Trust,
Oppenheimer  Cash  Reserves,  Oppenheimer  Capital  Income  Fund,  Oppenheimer
Champion Income Fund, Oppenheimer High Yield Fund,  Oppenheimer  International
Bond Fund, Oppenheimer Integrity Funds,  Oppenheimer  Limited-Term  Government
Fund,  Oppenheimer Main Street Fund, Inc., Oppenheimer Main Street Opportunity
Fund,  Oppenheimer  Main Street Small Cap Fund,  Oppenheimer  Municipal  Fund,
Oppenheimer   Real  Asset  Fund,   Oppenheimer   Senior  Floating  Rate  Fund,
Oppenheimer Select Managers,  Oppenheimer  Strategic Income Fund,  Oppenheimer
Total Return  Fund,  Inc.,  Oppenheimer  Variable  Account  Funds and Panorama
Series  Fund,  Inc.  (the  "Funds"),  to sign on his  behalf any and all proxy
statements  under the  Securities  Act of 1933,  as  amended,  (including  any
amendments  and  supplements  thereto),  and  other  documents  in  connection
thereunder,  and to file  the  same,  with all  exhibits  thereto,  and  other
documents in connection  therewith,  and any and all  Registration  Statements
(including any  post-effective  amendments to Registration  Statements)  under
the  Securities  Act of  1933,  the  Investment  Company  Act of 1940  and any
amendments  and  supplements   thereto,  and  other  documents  in  connection
thereunder,  and to file  the  same,  with all  exhibits  thereto,  and  other
documents  in  connection   therewith,   with  the   Securities  and  Exchange
Commission,  granting  unto said  attorneys-in-fact  and  agents,  and each of
them,  full power and authority to do and perform each and every act and thing
requisite and  necessary to be done in and about the premises,  as fully as to
all intents and purposes as he might or could do in person,  hereby  ratifying
and confirming all that said  attorneys-in-fact  and agents, and each of them,
may lawfully do or cause to be done by virtue hereof.

Dated:      May 12, 2003



/s/ F. William Marshall, Jr.
- -----------------------
F. William Marshall, Jr.

EX-99

                     OPPENHEIMER MULTIPLE STRATEGIES FUND
                   Supplement dated January 13, 2003 to the
                      Prospectus dated November 22, 2002


The following  replaces the paragraph  titled  "Portfolio  Management Team" on
page 15 of the Prospectus:

   "Portfolio  Managers.  Effective  January 13, 2003,  the equity  portion of
   the  Fund's  portfolio  is  managed  by  Christopher   Leavy  and  Emmanuel
   Ferreira,  supported  by other  members of the  Manager's  value  portfolio
   team,  and the  fixed-income  portion of the portfolio is managed by Angelo
   Manioudakis,  supported  by  other  members  of  the  Manager's  high-grade
   fixed-income  team.  Mr.  Leavy  has been a Senior  Vice  President  of the
   Manager since September 2000.  Prior to joining the Manager,  he had been a
   portfolio  manager at Morgan  Stanley  Dean  Witter  Investment  Management
   (1997-2000).  Mr.  Ferreira  is a Vice  President  of the  Manager  and Mr.
   Manioudakis  is a Senior Vice  President of the  Manager.  Prior to joining
   the  Manager in January  2003,  Mr.  Ferreira  was a  portfolio  manager at
   Lashire  Investments  (1999-2003),  and a  senior  analyst  at  Mark  Asset
   Management  (1997-1999).  Prior to joining the Manager, Mr. Manioudakis was
   a portfolio  manager at Morgan Stanley  Investment  Management (from August
   1993 to April 2002)."



January 13, 2003                                            PS0240.025

                  OPPENHEIMER MULTIPLE STRATEGIES FUND
                 Supplement dated January 2, 2003 to the
                  Statement of Additional Information
                           dated November 22, 2002


1.    Effective  December 31, 2002, Mr. Leon Levy resigned as a Trustee of the
   Fund  and Mr.  Clayton  Yeutter  was  elected  as  Chairman  of the  Board,
   effective  January  1,  2003.   Therefore,   the  Statement  of  Additional
   Information  is revised by deleting the  biography  for Mr. Levy on page 46
   and by adding the following to Mr.  Yeutter's  biography:  "Chairman of the
   Board of Trustees."

2.    In the Trustee  compensation  table on page 51, the title of  "Chairman"
   after Mr.  Levy's  name is  deleted  and the title of  "Chairman"  is added
   after Mr.  Yeutter's  name. In addition,  the  following  footnote is added
   following Mr. Levy's name and following Mr. Yeutter's name:

            7.  Effective  January 1, 2003,  Clayton  Yeutter became
           Chairman  of the Board of  Trustees  of the Board I Funds
           upon the retirement of Leon Levy.


January 2, 2003                                             PX0240.012

Oppenheimer
Multiple Strategies Fund


Prospectus dated November 22, 2002



                                          Oppenheimer Multiple Strategies Fund
                                          is a mutual fund that seeks total
                                          return consistent with the
                                          preservation of principal. It
                                          invests in a variety of equity and
                                          debt securities of U.S. and foreign
                                          issuers, as well as money market
                                          instruments.
                                             This Prospectus contains
                                          important information about the
                                          Fund's objective, its investment
                                          policies, strategies and risks. It
                                          also contains important information
                                          about how to buy and sell shares of
                                          the Fund and other account features.
                                          Please read this Prospectus
As with all mutual funds, the             carefully before you invest and keep
Securities and Exchange Commission        it for future reference about your
has not approved or disapproved the       account.
Fund's securities nor has it
determined that this Prospectus is
accurate or complete. It is a
criminal offense to represent
otherwise.



                                                      (logo) OppenheimerFunds
                                                       The Right Way to Invest







CONTENTS


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


                    ABOUT THE FUND

                    The Fund's Investment Objective and Strategies
                    Main Risks of Investing in the Fund
                    The Fund's Past Performance
                    Fees and Expenses of the Fund
                    About the Fund's Investments
                    How the Fund is Managed


                    ABOUT YOUR ACCOUNT

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

                    Special Investor Services
                    AccountLink
                    PhoneLink
                    OppenheimerFunds Internet Website
                    Retirement Plans

                    How to Sell Shares
                    By Mail
                    By Telephone

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

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








A B O U T  T H E  F U N D

The Fund's Investment Objective and Strategies

WHAT IS THE FUND'S INVESTMENT OBJECTIVE? The Fund seeks high total investment
return consistent with preservation of principal.

WHAT DOES THE FUND MAINLY INVEST IN? The Fund buys a variety of different
types of securities to seek its objective. Mainly, these include:
o     Equity securities. Primarily common stocks of U.S. and foreign
      companies.
o     Debt securities. Including bonds and notes issued by domestic and
      foreign companies (which can include lower-grade, high-yield
      securities), securities issued or guaranteed by the U.S. Government and
      its agencies and instrumentalities, including mortgage-related
      securities (these are referred to as "U.S. Government securities"), and
      debt obligations of foreign governments.
o     Money market instruments, which are obligations that have a maturity of
      13 months or less, including short-term U.S. Government securities,
      corporate and bank debt obligations and commercial paper.

      These investments are more fully explained in "About the Fund's
Investments," below.

HOW DO THE PORTFOLIO MANAGERS DECIDE WHAT SECURITIES TO BUY OR SELL? In
selecting securities for the Fund, the Fund's portfolio managers use
different investment styles to carry out an asset allocation strategy that
seeks broad diversification across asset classes. They normally maintain a
balanced mix of stocks, debt securities and cash, although the Fund has no
requirements to weight the portfolio holdings in a fixed proportion.
Therefore, the portfolio's mix of equity and debt securities and cash will
change over time as the portfolio managers seek relative values and
opportunities in different asset classes.

      Because the goal of total return looks for an increase in the overall
portfolio value from a combination of capital growth and income, the Fund
invests in stocks mainly for their capital appreciation potential and in debt
securities for income. The income from debt securities and money market
instruments can also help the Fund preserve principal when stock markets are
volatile.

      The portfolio managers employ both "growth" and "value" styles in
selecting stocks. They employ fundamental analysis of a company's financial
statements and management structure, operations and product development, as
well as the industry of which the company is part. Value investing seeks
stocks that are temporarily out of favor or undervalued in the market by
various measures, such as the stock's price/earnings ratio. Growth investing
seeks stocks that the manager believes have possibilities for increases in
stock price because of strong earnings growth compared to the market, the
development of new products or services or other favorable economic factors.

WHO IS THE FUND DESIGNED FOR? The Fund is designed primarily for investors
seeking high total return from their investment over the long term, from a
fund employing different investment styles in allocating its assets among a
variety of types of securities. While the Fund seeks to select investments
consistent with the preservation of principal, investors should be willing to
assume the risks of short-term share price fluctuations that are typical for
a fund with significant investments in stocks and foreign securities. Since
the Fund's income level will fluctuate, it is not designed for investors
needing an assured level of current income. Because of its focus on seeking
total return over the long-term, the Fund may be appropriate for a part of an
investor's retirement plan portfolio. However, the Fund is not a complete
investment program.

Main Risks of Investing in the Fund

All investments have risks to some degree. The Fund's investments are subject
to changes in their value from a number of factors described below. There is
also the risk that poor security selection by the Fund's investment Manager,
OppenheimerFunds, Inc., 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. The Fund will normally invest at least 25%
of its total assets in stocks and other equity securities, and the value of
the Fund's portfolio therefore will be affected by changes in the 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. A
variety of factors can affect the price of a particular stock and the prices
of individual stocks do not all move in the same direction uniformly or at
the same time. Different stock markets may behave differently from each
other.

      Other factors can affect a particular stock's price, such as poor
earnings reports by the issuer, loss of major customers, major litigation
against the issuer, or changes in government regulations affecting the
issuer. The Fund has no requirements to invest in companies in any particular
capitalization range, and can invest in securities of large companies and
also small and medium-size companies, which may have more volatile stock
prices than large companies.

RISKS OF FOREIGN INVESTING. The Fund can buy securities issued by companies
or governments in any country, whether a developed or an emerging market
country. While the Fund has no limits on the amounts it can invest in foreign
securities, it normally expects to invest not more than 50% of its assets in
foreign securities. Foreign securities may offer special investment
opportunities, but there are also special risks. The change in value of a
foreign currency against the U.S. dollar will result in a change in the U.S.
dollar value of foreign securities. 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.

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

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

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 might be reduced and if the issuer fails to repay
principal, the value of that security and of the Fund's shares might fall. A
downgrade in an issuer's credit rating or other adverse news about an issuer
can cause the market value of that issuer's securities to 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, particularly
high-yield lower-grade debt securities, are subject to risks of default.

Special Risks of Lower-Grade Securities. The Fund can invest up to 35% of its
      total assets in securities below investment-grade to seek income.
      Therefore, the Fund's credit risks are greater than those of funds that
      buy only investment-grade bonds. Lower-grade debt securities (commonly
      called "junk bonds") may be subject to greater market fluctuations and
      greater risks of loss of income and principal than investment-grade
      debt securities. Securities that are (or that have fallen) below
      investment grade are exposed to a greater risk that the issuers of
      those securities might not meet their debt obligations. The market for
      lower-grade securities may be less liquid, especially during times of
      general economic distress, and therefore they may be harder to sell at
      an acceptable price. These risks can reduce the Fund's share prices and
      the income it earns.

INTEREST RATE RISKS. The values of debt securities are subject to change when
prevailing interest rates change. When interest rates fall, the values 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 debt securities having longer maturities than
shorter-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.

PREPAYMENT RISK. Prepayment risk occurs when the issuer of a security can
prepay the principal prior to the security's maturity. Securities subject to
prepayment risk, including the mortgage-related securities that the Fund can
buy, have greater potential for loss when interest rates rise. The impact of
prepayments on the price of a security may be difficult to predict and may
increase the volatility of the price. Additionally, the Fund might buy
mortgage-related securities at a premium. Accelerated prepayments on those
securities could cause the Fund to lose a portion of its principal investment
represented by the premium the Fund paid.

      If interest rates rise rapidly, prepayments might occur at slower rates
than expected, which could have the effect of lengthening the expected
maturity of a short or medium-term security. That could cause its value to
fluctuate more widely in response to changes in interest rates. In turn, this
could cause the value of the Fund's shares to fluctuate more.

      The prices and yields of mortgage-related securities are determined, in
part, by assumptions about the cash flows from the rate of payments of the
underlying mortgages. Changes in interest rates may cause the rate of
expected prepayments of those mortgages to change. In general, prepayments
increase when general interest rates fall and decrease when interest rates
rise.

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

ASSET ALLOCATION RISKS. Because the Fund typically invests in a combination
of stocks, bonds and money market instruments to seek total return, it might
not achieve growth in its share prices to the same degree as funds focusing
on stocks during periods of rapidly rising prices. Also, the Fund's
investments in stocks may make it more difficult for the Manager to preserve
principal in volatile stock markets. The Fund's use of value and growth
styles in selecting stocks might not be successful, particularly if stocks
selected as value investments fail to appreciate in price to the extent the
Manager expected.

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

      In the short term, domestic and foreign stock markets can be volatile,
and the price of the Fund's shares will go up and down in response to those
changes. The Fund's income-oriented investments may help cushion the Fund's
total return from changes in stock prices, but debt securities are subject to
credit, prepayment and interest rate risks. In the OppenheimerFunds spectrum,
the Fund may be less volatile than funds that focus only on stock
investments, but has less opportunities for capital growth than funds focused
solely on stocks and more risks than the funds that focus solely on
investment grade bonds.

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


The Fund's Past Performance

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

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.  The after-tax returns for the other classes of shares will
vary. 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 annual total
returns]

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

For the period  from  1/1/02  through  9/30/02,  the  cumulative  return  (not
annualized)  before  taxes for Class A shares was  -16.14%.  During the period
             -------------
shown in the bar chart, the highest return (not  annualized)  before taxes for
                                                              ------------
a  calendar  quarter  was  11.15%  (4th Qtr '98) and the  lowest  return  (not
annualized) before taxes for a calendar quarter was -11.03% (3rd Qtr '01).
            ------------


- -------------------------------------------------------------------------------------
Average Annual Total Returns        1 Year            5 Years          10 Years
for    the    periods    ended    (or life of       (or life of       (or life of
December 31, 2001               class, if less)   class, if less)   class, if less)
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Class  A   Shares   (inception
4/24/87)                            -4.17%             7.33%             9.70%
  Return Before Taxes               -5.83%             4.41%             6.93%
  Return After Taxes on             -2.05%             4.95%             6.89%
  Distributions
  Return    After   Taxes   on
  Distributions  and  Sale  of
  Fund Shares
- -------------------------------------------------------------------------------------
S&P 500  Index (reflects no
deduction for fees, expenses        -11.88%           10.70%            12.93%1
or taxes)
- -------------------------------------------------------------------------------------
Lehman  Bros.  Aggregate  Bond
Index  (reflects  no deduction       8.44%             7.43%            7.23%1
for fees, expenses or taxes)
- -------------------------------------------------------------------------------------
Class  B   Shares   (inception      -4.02%             7.42%             9.35%
8/29/95)
- -------------------------------------------------------------------------------------
Class  C   Shares   (inception      -0.12%             7.71%             9.25%
12/1/93)
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Class  N   Shares   (inception       N/A2               N/A               N/A
3/1/01)
- -------------------------------------------------------------------------------------
1  From 12/31/91.
2  Because this is a new class of shares, return data for the period
specified is not available.

The Fund's average annual total returns include the applicable sales charge:
for Class A, the current maximum initial sales charge of 5.75%; for Class B,
the contingent deferred sales charges of 5% (1-year) and 2% (5 years); and
for Class C, the 1% contingent deferred sales charge for the 1-year period.
Because Class B shares convert to Class A shares 72 months after purchase,
Class B "life-of-class" performance does not include any contingent deferred
sales charge and uses Class A performance for the period after conversion.
The Fund's 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 Standard & Poor's 500 Index, an unmanaged index of U.S.
equity securities, and to the Lehman Brothers Aggregate Bond Index, an
unmanaged index of U.S. corporate, government and mortgage-backed
securities.  The performance of the indices includes the reinvestment of
income but does not reflect transaction costs.  The Fund's investments vary
from the securities in the indices.

Fees and Expenses of the Fund

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

Shareholder Fees (charges paid directly from your investment):

                                  Class A    Class B   Class C   Class N
                                   Shares    Shares     Shares    Shares
 --------------------------------------------------------------------------
 --------------------------------------------------------------------------
 Maximum Sales Charge (Load) on
 purchases (as % of offering       5.75%      None       None      None
 price)
 --------------------------------------------------------------------------
 --------------------------------------------------------------------------
 Maximum Deferred Sales Charge
 (Load) (as % of the lower of
 the original offering             None1       5%2        1%3       1%4
 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 a 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
                                      Shares     Shares     Shares    Shares
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Management Fees                      0.71%      0.71%      0.71%      0.71%
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Distribution     and/or    Service   0.20%      1.00%      1.00%      0.50%
 (12b-1) Fees
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Other Expenses                       0.24%      0.26%      0.25%      0.27%
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Total Annual Operating Expenses      1.15%      1.97%      1.96%      1.48%
 -----------------------------------

Expenses may vary in future years.  "Other expenses" include transfer agent
fees, custodial fees, and accounting and legal expenses that the Fund pays.
The Transfer Agent has voluntarily undertaken to the Fund to limit the
transfer agent fees to 0.35% of average daily net assets per fiscal year for
all classes.  That undertaking may be amended or withdrawn at any time.  For
the Fund's fiscal year ended September 30, 2002, the transfer agent fees did
not exceed the expense limitation described above.

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

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

 --------------------------
 If shares are redeemed:      1 Year      3 Years       5 Years     10 Years
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Class A Shares                $685         $919        $1,172       $1,892
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Class B Shares                $700         $918        $1,262       $1,8891
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Class C Shares                $299         $615        $1,057       $2,285
 --------------------------             -------------              ------------
 ------------------------------------------------------------------------------
 Class N Shares                $251         $468         $808        $1,768
 --------------------------


 --------------------------
 If shares are not            1 Year      3 Years       5 Years     10 Years
 redeemed:
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Class A Shares                $685         $919        $1,172       $1,892
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Class B Shares                $200         $618        $1,062       $1,8891
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Class C Shares                $199         $615        $1,057       $2,285
 --------------------------             -------------              ------------
 ------------------------------------------------------------------------------
 Class N Shares                $151         $468         $808        $1,768
 --------------------------

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.
1.    Class B expenses for years 7 through 10 are based on Class A expenses,
   since Class B shares automatically convert to Class A shares after 6 years.

About the Fund's Investments

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

      At times the Fund may focus more on investing for capital appreciation
with less emphasis on seeking income, while seeking to preserve principal. At
other times, for example when stock markets are less stable, the Fund might
have greater relative emphasis on income-seeking investments, such as
government securities and money market instruments.

      The Manager tries to reduce risks by carefully researching securities
before they are purchased. The Fund attempts to reduce its exposure to market
risks by diversifying its investments, that is, by not holding a substantial
amount of stock of any one company and by not investing too great a
percentage of the Fund's assets in any one issuer. Also, the Fund does not
concentrate 25% or more of its total assets in investments in any one
industry. However, changes in the overall market prices of securities and the
income they pay can occur at any time. The share prices of the Fund will
change daily based on changes in market prices of securities and market
conditions and in response to other economic events.

      In seeking broad diversification of the Fund's portfolio over asset
classes, issuers and economies, the portfolio managers consider overall and
relative economic conditions in U.S. and foreign markets. They seek broad
diversification by investing in different countries to help moderate the
special risks of investing in foreign securities and lower-grade, high-yield
debt securities.

Stock Investments. The Fund's stock investments may be exchange-traded or
      over-the-counter securities. Over-the-counter securities may have less
      liquidity than exchange-traded securities. Stocks represent an
      ownership interest in a company and common stocks rank below preferred
      stocks and bonds in their claim for dividends and assets if the issuer
      is liquidated or becomes bankrupt.




Debt Securities. The Fund will normally invest at least 25% of its assets in
      fixed-income senior securities, such as bonds and notes. The debt
      securities the Fund buys may be rated by nationally recognized rating
      organizations or they may be unrated securities assigned a rating by
      the Manager.

      The Fund has no requirements as to the maturity of the debt securities
      it can buy, or as to the market capitalization range of the issuers of
      those securities. The Fund's investments may be investment grade or
      below investment grade in credit quality. The Manager does not rely
      solely on ratings by rating organizations in selecting debt securities
      but evaluates business and economic factors affecting an issuer as well.

      The Fund's foreign debt investments can be denominated in U.S. dollars
      or in foreign currencies. Foreign government securities might not be
      backed by the government's full faith and credit. The Fund can buy
      "Brady Bonds." Those are U.S. dollar-denominated debt securities
      collateralized by zero-coupon U.S. Treasury securities. They are
      typically issued by governments of emerging market countries and are
      considered speculative securities with higher risks of default. The
      Fund will buy foreign currency only in connection with the purchase and
      sale of foreign securities and not for speculation.

   o  U.S. Government Securities. The Fund can invest in securities issued or
      guaranteed by the U.S. Treasury or other U.S. Government agencies or
      federally-chartered corporate entities referred to as
      "instrumentalities." These are referred to as "U.S. Government
      securities" in this Prospectus. They can include collateralized
      mortgage obligations ("CMOs") and other mortgage-related securities.

   o  U.S. Treasury Obligations. These include Treasury bills (having
      maturities of one year or less when issued), Treasury notes (having
      maturities of more than one and up to ten years when issued), and
      Treasury bonds (having maturities of more than ten years when issued).
      Treasury securities are backed by the full faith and credit of the
      United States as to timely payments of interest and repayment of
      principal. Although not rated, Treasury obligations have little credit
      risk, but prior to their maturity they are subject to interest rate
      risk.

   o  Obligations of U.S. Government Agencies or Instrumentalities. These
      include direct obligations and mortgage-related securities that have
      different levels of credit support from the U.S. Government. These have
      relatively little credit risk. 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").

   o  Mortgage-Related U.S. Government Securities. The Fund can buy interests
      in pools of residential or commercial mortgages, in the form of CMOs
      and other "pass-through" mortgage securities. CMOs that are U.S.
      Government securities have collateral to secure payment of interest and
      principal. They may be issued in different series each having different
      interest rates and maturities. The collateral is either in the form of
      mortgage pass-through certificates issued or guaranteed by a U.S.
      agency or instrumentality or mortgage loans insured by a U.S.
      Government agency.

o     Forward Rolls. The Fund can enter into "forward roll"  transactions with
      respect to  mortgage-related  securities.  In this type of  transaction,
      the   Fund   sells  a   mortgage-related   security   to  a  buyer   and
      simultaneously  agrees to repurchase a similar  security at a later date
      at a set price.

      During the period  between  the sale and the  repurchase,  the Fund will
      not be  entitled  to receive  interest  and  principal  payments  on the
      securities  that have been sold. It is possible that the market value of
      the  securities  the Fund sells may decline below the price at which the
      Fund is obligated to  repurchase  securities,  or that the  counterparty
      might default in its  obligation.  A  substantial  portion of the Fund's
      assets may be subject to forward roll transactions at any given time.

   o  Private-Issuer Mortgage-Backed Securities. The Fund can invest in
      mortgage-backed securities issued by private issuers, which do not
      offer the credit backing of U.S. Government mortgage-related
      securities. Primarily these would include multi-class debt or
      pass-through certificates secured by mortgage loans. They may be issued
      by banks, savings and loans, mortgage bankers and other
      non-governmental issuers. Private issuer mortgage-backed securities are
      subject to the credit risks of the issuers (as well as interest rate
      risks and prepayment risks), although in some cases they may be
      supported by insurance or guarantees.

   ?  High-Yield, Lower-Grade Debt Securities. The Fund can purchase a
      variety of lower-grade, high-yield debt securities, to seek current
      income. These securities are sometimes called "junk bonds." The Fund
      limits these investments to not more than 35% of its assets.

      Lower-grade debt securities are those rated below "Baa" by Moody's
      Investors Service ("Moody's") or lower than "BBB" by Standard & Poor's
      ("S&P") or that have comparable ratings by other nationally-recognized
      rating organizations. They include unrated securities assigned a
      comparable rating by the Manager. The Fund can invest in securities
      rated as low as "C" or "D" or which are in default at the time the Fund
      buys them. While securities rated "Baa" by Moody's or "BBB" by S&P are
      considered "investment grade," they have some speculative
      characteristics.

   o  Money Market Instruments. The Fund can invest in money market
      instruments, which include short-term certificates of deposit, bankers'
      acceptances, commercial paper, U.S. Government obligations, and other
      debt instruments (including bonds) issued by corporations. These
      securities may have variable or floating interest rates. The Fund's
      investments in commercial paper in general will be limited to paper in
      the top two rating categories of S&P or Moody's.

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

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



Other Equity Investments. The Fund's equity investments are mainly common
      stocks, but also include preferred stocks and securities convertible
      into common stock. The Manager considers some convertible securities to
      be "equity equivalents" because of the conversion feature and in that
      case their rating has less impact on the investment decision than in
      the case of other debt securities.

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

      Zero-coupon and stripped securities are subject to greater fluctuations
      in price from interest rate changes than interest-bearing securities.
      The Fund may have to pay out the imputed income on zero-coupon
      securities without receiving the actual cash currently. Interest-only
      securities are particularly sensitive to changes in interest rates.

      The values of interest-only mortgage related securities are also very
      sensitive to prepayments of underlying mortgages. When prepayments tend
      to fall, the timing of the cash flows to these securities increases,
      making them more sensitive to changes in interest rates. The market for
      some of these securities may be limited, making it difficult for the
      Fund to dispose of its holdings quickly at an acceptable price.

Illiquid and Restricted Securities. Investments may be illiquid because they
      do not have an active trading market, making it difficult to value them
      or dispose of them promptly at an acceptable price. Restricted
      securities may have terms that limit their resale to other investors or
      may require registration under federal securities laws before they can
      be publicly sold. The Fund will not invest more than 10% of its net
      assets in illiquid or restricted securities. The Board can increase
      that limit to 15%. Certain restricted securities that are eligible for
      resale to qualified institutional purchasers may not be subject to that
      limit. The Manager monitors holdings of illiquid securities on an
      ongoing basis to determine whether to sell any holdings to maintain
      adequate liquidity.

Derivative Investments. The Fund can invest in a number of different kinds of
      "derivative" investments. In general terms, a derivative investment is
      an investment contract whose value depends on (or is derived from) the
      value of an underlying asset, interest rate or index. In the broadest
      sense, options, futures contracts, and other hedging instruments the
      Fund might use may be considered "derivative" investments. In addition
      to using derivatives for hedging, the Fund might use other derivative
      investments because they offer the potential for increased value. The
      Fund currently does not use derivatives to a substantial degree and is
      not required to use them in seeking its 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 a derivative is based, and
      the derivative itself, may not perform the way the Manager expected it
      to. As a result of these risks, the Fund could realize less principal
      or income from the investment than expected or its hedge might be
      unsuccessful. As a result, the Fund's share prices could fall. Certain
      derivative investments held by the Fund might be illiquid.

   o  Credit Derivatives.  The Fund may enter into credit default swaps, both
      (i) directly and (ii) indirectly in the form of a swap embedded within
      a structured note, to protect against the risk that a security will
      default.   The Fund pays a fee to enter into the trade and receives a
      fixed payment during the life of the swap.   If there is a credit
      event, the Fund either delivers the defaulted bond (if the Fund has
      taken the short position in the credit default swap) or pays the par
      amount of the defaulted bond (if the Fund has taken the long position
      in the credit default swap note). Risks of credit default swaps include
      the cost of paying for credit protection if there are no credit events.

Hedging. The Fund can buy and sell futures contracts, put and call options,
      and forward contracts. These are all referred to as "hedging
      instruments."  The Fund is not required to use hedging instruments to
      seek its objective. The Fund does not use hedging instruments for
      speculative purposes, and has limits on its use of them.

      The Fund could buy and sell options, futures and forward contracts for
      a number of purposes. It might do so to try to manage its exposure to
      the possibility that the prices of its portfolio securities may
      decline, or to establish a position in the securities market as a
      temporary substitute for purchasing individual securities. It might do
      so to try to manage its exposure to changing interest rates. Forward
      contracts can be used to try to manage foreign currency risks on the
      Fund's foreign investments.

      There are also special risks in particular hedging strategies. Options
      trading involves the payment of premiums and can increase portfolio
      turnover. If a covered call written by the Fund is exercised on an
      investment that has increased in value, the Fund will be required to
      sell the investment at the call price and will not be able to realize
      any profit if the investment has increased in value above the call
      price.

      If the Manager used a hedging instrument at the wrong time or judged
      market conditions incorrectly, the strategy could reduce the Fund's
      return. The Fund could also experience losses if the prices of its
      futures and options positions were not correlated with its other
      investments or if it could not close out a position because of an
      illiquid market.

o     Temporary  Defensive  and  Interim  Investments.  In times of adverse or
      unstable market,  economic or political conditions,  the Fund can invest
      up to 100% of its assets in temporary defensive investments.  Generally,
      they would be high-quality,  short-term money market  instruments,  such
      as  U.S.   government   securities,   highly  rated  commercial   paper,
      short-term  corporate  debt  obligations,  bank  deposits or  repurchase
      agreements.  The Fund can also hold these  types of  securities  pending
      the  investment  of proceeds  from the sale of Fund shares or  portfolio
      securities or to meet  anticipated  redemptions  of Fund shares.  To the
      extent the Fund  invests in these  securities,  it might not achieve its
      investment objective of total return.

How the Fund Is Managed

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

      The Manager and its subsidiaries and controlled affiliates managed more
than $120 billion in assets as of September 30, 2002 including other
Oppenheimer funds, with more than 7 million shareholder accounts. The Manager
is located at 498 Seventh Avenue, New York, New York 10018.

Portfolio Management Team.   The Fund is managed by a team of individuals
      from the Manager's growth, value, global, high grade and high yield
      investment departments.  The portfolio management team is primarily
      responsible for the selection of the Fund's portfolio securities.

Advisory Fees. Under the investment advisory agreement, the Fund pays the
      Manager an advisory fee at an annual rate that declines on additional
      assets as the Fund grows: 0.75% of the first $200 million of average
      annual net assets of the Fund, 0.72% of the next $200 million, 0.69% of
      the next $200 million, 0.66% of the next $200 million, 0.60% of the
      next $700 million, and 0.58% of average annual net assets in excess of
      $1.5 billion. The Fund's management fee for its last fiscal year ended
      September 30, 2002 was 0.71% of average annual net assets for each
      class of shares.

ABOUT your account

How to Buy Shares

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

Buying Shares Through Your Dealer. You can buy shares through any dealer,
      broker or financial institution that has a sales agreement with the
      Distributor. Your dealer will place your order with the Distributor on
      your behalf.
Buying Shares Through the Distributor. Complete an OppenheimerFunds New
      Account Application and return it with a check payable to
      "OppenheimerFunds Distributor, Inc." Mail it to P.O. Box 5270, Denver,
      Colorado 80217. If you 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
      the 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:
o     If you establish one of the many types of retirement plan accounts that
      OppenheimerFunds offers, more fully described below under "Special
      Investor Services," you can start your account with as little as $500.
o     By using an Asset Builder Plan or Automatic Exchange Plan (details are
      in the Statement of Additional Information), or government allotment
      plan, you can make 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 the Fund or other Oppenheimer funds (a list of them
      appears in the Statement of Additional Information, or you can ask your
      dealer or call the Transfer Agent), or reinvesting distributions from
      unit investment trusts that have made arrangements with the
      Distributor.

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

Net Asset Value. The Fund calculates the net asset value of each class of
      shares as of the close of The New York Stock Exchange, 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
      the 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 the 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 the 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
      the Fund is traded, and before the time the Fund's securities are
      priced that day, an event occurs that the Manager deems likely to cause
      a material change in the value of such security, the Fund's Board of
      Trustees has authorized the Manager, 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 New York Stock 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 New York Stock 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? The Fund offers investors four
different classes of shares. The different classes of shares represent
investments in the same portfolio of securities, but the classes are subject
to different expenses and will likely have different share prices. When you
buy shares, be sure to specify the class of shares. If you do not choose a
class, your investment will be made in Class A shares.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------

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


WHICH CLASS OF SHARES SHOULD YOU CHOOSE? Once you decide that the Fund is an
appropriate investment for you, the decision as to which class of shares is
best suited to your needs depends on a number of factors that you should
discuss with your financial 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. The Fund's operating costs that apply to a class of
shares and the effect of the different types of sales charges on your
investment will vary your investment results over time.

      The discussion below is not intended to be investment advice or a
recommendation, because each investor's financial considerations are
different. The discussion below assumes that you will purchase only one class
of shares and not a combination of shares of different classes. Of course,
these examples are based on approximations of the effects of current sales
charges and expenses projected over time, and do not detail all of the
considerations in selecting a class of shares. You should analyze your
options carefully with your financial 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 the Fund is meant to be a
      long-term investment, if you have a relatively short-term investment
      horizon (that is, you plan to hold your shares for not more than six
      years), you should 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 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 the 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 the Fund by certain groups, or under specified
retirement plan arrangements or in other special types of transactions. To
receive a waiver or special sales charge rate, you must advise the
Distributor when purchasing shares or the Transfer Agent when redeeming
shares that a special condition applies.

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.

DISTRIBUTION AND SERVICE (12b-1) PLANS.

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

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

      The Distributor uses the service fees to compensate dealers for
      providing personal services for accounts that hold Class B, Class C or
      Class N shares. The Distributor 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 the Fund to pay for these
      purchases.
Exchanging Shares. With the OppenheimerFunds Exchange Privilege, described
      below, you can exchange shares automatically by phone from your Fund
      account to another OppenheimerFunds account you have already
      established by calling the special PhoneLink number.
Selling Shares. You can redeem shares by telephone automatically by calling
      the PhoneLink number and the Fund will send the proceeds directly to
      your AccountLink bank account. Please refer to "How to Sell Shares,"
      below for details.

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

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

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

REINVESTMENT PRIVILEGE.  If you redeem some or all of your Class A or Class B
shares of the 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 or Class N shares.
You must be sure to ask the Distributor for this privilege when you send your
payment.

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

How to Sell Shares

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

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

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

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

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

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

HOW DO you SELL SHARES BY TELEPHONE? You and your dealer representative of
record may also sell your shares by telephone. To receive the redemption
price calculated on a particular regular business day, your call must be
received by the Transfer Agent by the close of The New York Stock 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.  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.

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 the Fund for shares of other Oppenheimer funds. However, if you
exchange them within the applicable contingent deferred sales charge holding
period, the holding period will carry over to the fund whose shares you
acquire. Similarly, if you acquire shares of this Fund by exchanging shares
of another Oppenheimer fund that are still subject to a contingent deferred
sales charge holding period, that holding period will carry over to this Fund.

How to Exchange Shares

Shares of the 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 the 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 the 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 this 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 normally 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
      New York Stock Exchange that day, which is normally 4:00 P.M. but may
      be earlier on some days. However, either fund may delay the purchase of
      shares of the fund you are exchanging into up to seven days if it
      determines it would be disadvantaged by the same day exchange.
o     The interests of the 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, the 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 the 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 the Fund's
      performance and its shareholders. When the Manager believes frequent
      trading would have a disruptive effect on the 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  The Fund may amend, suspend or terminate the exchange privilege at any
      time. The 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 the 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 the Fund's best interest to do so.
Telephone transaction privileges for purchases, redemptions or exchanges may
      be modified, suspended or terminated by the Fund at any time. The Fund
      will provide you notice whenever it is required to do so by applicable
      law. If an account has more than one owner, the Fund and the Transfer
      Agent may rely on the instructions of any one owner. Telephone
      privileges apply to each owner of the account and the dealer
      representative of record for the account unless the Transfer Agent
      receives cancellation instructions from an owner of the account.
The Transfer Agent will record any telephone calls to verify data concerning
      transactions and has adopted other procedures to confirm that telephone
      instructions are genuine, by requiring callers to provide tax
      identification numbers and other account data or by using PINs, and by
      confirming such transactions in writing. The Transfer Agent and the
      Fund will not be liable for losses or expenses arising out of telephone
      instructions reasonably believed to be genuine.
Redemption or transfer requests will not be honored until the Transfer Agent
      receives all required documents in proper form. From time to time, the
      Transfer Agent in its discretion may waive certain of the requirements
      for redemptions stated in this Prospectus.
Dealers that perform account transactions for their clients by participating
      in NETWORKING through the National Securities Clearing Corporation are
      responsible for obtaining their clients' permission to perform those
      transactions, and are responsible to their clients who are shareholders
      of the Fund if the dealer performs any transaction erroneously or
      improperly.
The redemption price for shares will vary from day to day because the value
      of the securities in the Fund's portfolio fluctuates. The redemption
      price, which is the net asset value per share, will normally differ for
      each class of shares. The redemption value of your shares may be more
      or less than their original cost.
Payment for redeemed shares ordinarily is made in cash. It is forwarded by
      check, or through AccountLink 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 the Fund if the
      account value has fallen below $500 for reasons other than the fact
      that the market value of shares has dropped. In some cases, involuntary
      redemptions may be made to repay the Distributor for losses from the
      cancellation of share purchase orders.
Shares may be "redeemed in kind" under unusual circumstances (such as a lack
      of liquidity in the Fund's portfolio to meet redemptions). This means
      that the redemption proceeds will be paid with liquid securities from
      the Fund's portfolio.
"Backup withholding" of federal income tax may be applied against taxable
      dividends, distributions and redemption proceeds (including exchanges)
      if you fail to furnish the Fund your correct, certified Social Security
      or Employer Identification Number when you sign your application, or if
      you under-report your income to the Internal Revenue Service.
To avoid sending duplicate copies of materials to households, the Fund will
      mail only one copy of each prospectus, annual and semi-annual report
      and annual notice of the Fund's privacy policy to shareholders having
      the same last name and address on the Fund's records. The consolidation
      of these mailings, called householding, benefits the Fund through
      reduced mailing expense.

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

Dividends, Capital Gains and Taxes

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

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

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

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

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

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

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

Financial Highlights

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



29 | OPPENHEIMER MULTIPLE STRATEGIES FUND

FINANCIAL HIGHLIGHTS



Class A  Year Ended September 30,             2002      2001      2000      1999      1998
==========================================================================================

 Per Share Operating Data
- ------------------------------------------------------------------------------------------

 Net asset value, beginning of period       $12.14    $14.23    $14.06    $13.69    $16.17
- ------------------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment income                         .35       .43       .53       .54       .51
 Net realized and unrealized gain (loss)     (1.29)    (1.40)     1.21      1.59     (1.22)
                                            ----------------------------------------------
 Total from investment operations             (.94)     (.97)     1.74      2.13      (.71)
- ------------------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income         (.31)     (.38)     (.48)     (.54)     (.49)
 Distributions from net realized gain         (.38)     (.74)    (1.09)    (1.22)    (1.28)
                                            ----------------------------------------------
 Total dividends and/or distributions
 to shareholders                              (.69)    (1.12)    (1.57)    (1.76)    (1.77)
- ------------------------------------------------------------------------------------------
 Net asset value, end of period             $10.51    $12.14    $14.23    $14.06    $13.69
- ------------------------------------------------------------------------------------------

==========================================================================================
 Total Return, at Net Asset Value(1)         (8.58)%   (7.27)%   13.31%    16.29%    (4.71)%
- ------------------------------------------------------------------------------------------

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

 Net assets, end of period
 (in thousands)                           $483,311  $562,281  $639,648  $635,603  $624,895
- ------------------------------------------------------------------------------------------
 Average net assets (in thousands)        $570,796  $626,251  $644,356  $660,113  $699,665
- ------------------------------------------------------------------------------------------
 Ratios to average net assets:(2)
 Net investment income                        2.84%     3.16%     3.71%     3.70%     3.34%
 Expenses                                     1.15%     1.01%     1.13%     1.09%     1.08%(3)
- ------------------------------------------------------------------------------------------
 Portfolio turnover rate                        31%       40%       33%       15%       59%

1. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. 2. Annualized for periods of less than one full year. 3. Expense ratio has been calculated without adjustment for the reduction to custodian expenses. See accompanying Notes to Financial Statements. 30 | OPPENHEIMER MULTIPLE STRATEGIES FUND FINANCIAL HIGHLIGHTS Continued

Class B  Year Ended September 30,             2002      2001      2000      1999      1998
==========================================================================================

 Per Share Operating Data
- ------------------------------------------------------------------------------------------
 Net asset value, beginning of period      $ 12.01   $ 14.08   $ 13.93   $ 13.57   $ 16.04
- ------------------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment income                         .25       .31       .41       .41       .38
 Net realized and unrealized gain (loss)     (1.29)    (1.36)     1.19      1.58     (1.20)
                                            -----------------------------------------------
 Total from investment operations            (1.04)    (1.05)     1.60      1.99      (.82)
- ------------------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income         (.21)     (.28)     (.36)     (.41)     (.37)
 Distributions from net realized gain         (.38)     (.74)    (1.09)    (1.22)    (1.28)
                                            -----------------------------------------------
 Total dividends and/or distributions
 to shareholders                              (.59)    (1.02)    (1.45)    (1.63)    (1.65)
- ------------------------------------------------------------------------------------------
 Net asset value, end of period             $10.38    $12.01    $14.08    $13.93    $13.57
                                            ==============================================

==========================================================================================
 Total Return, at Net Asset Value(1)         (9.38)%   (7.96)%   12.30%    15.35%    (5.49)%
- ------------------------------------------------------------------------------------------


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

 Net assets, end of period (in thousands)  $54,757   $63,487   $66,777   $68,875   $73,036
- ------------------------------------------------------------------------------------------
 Average net assets (in thousands)         $64,702   $67,959   $66,956   $73,673   $74,442
 Ratios to average net assets:(2)
 Net investment income                        2.02%     2.37%     2.92%     2.85%     2.53%
 Expenses                                     1.97%     1.81%     1.94%     1.93%     1.91%(3)
- ------------------------------------------------------------------------------------------
 Portfolio turnover rate                        31%       40%       33%       15%       59%

1. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. 2. Annualized for periods of less than one full year. 3. Expense ratio has been calculated without adjustment for the reduction to custodian expenses. See accompanying Notes to Financial Statements. 31 | OPPENHEIMER MULTIPLE STRATEGIES FUND FINANCIAL HIGHLIGHTS Continued

Class C  Year Ended September 30,             2002      2001      2000      1999      1998
==========================================================================================

 Per Share Operating Data
- ------------------------------------------------------------------------------------------

 Net asset value, beginning of period      $ 12.06   $ 14.13   $ 13.97   $ 13.61   $ 16.07
- ------------------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment income                         .24       .31       .41       .42       .38
 Net realized and unrealized gain (loss)     (1.29)    (1.37)     1.20      1.57     (1.20)
                                            -----------------------------------------------
 Total from investment operations            (1.05)    (1.06)     1.61      1.99      (.82)
- ------------------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income         (.21)     (.27)     (.36)     (.41)     (.36)
 Distributions from net realized gain         (.38)     (.74)    (1.09)    (1.22)    (1.28)
                                            -----------------------------------------------
 Total dividends and/or distributions
 to shareholders                              (.59)    (1.01)    (1.45)    (1.63)    (1.64)
- ------------------------------------------------------------------------------------------
 Net asset value, end of period             $10.42    $12.06    $14.13    $13.97    $13.61
                                            ==============================================
==========================================================================================
 Total Return, at Net Asset Value(1)         (9.41)%   (8.00)%   12.35%    15.28%    (5.43)%
- ------------------------------------------------------------------------------------------

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

 Net assets, end of period (in thousands)  $33,300   $36,171   $38,522   $38,978   $48,417
- ------------------------------------------------------------------------------------------
 Average net assets (in thousands)         $37,412   $39,030   $38,597   $43,701   $52,325
- ------------------------------------------------------------------------------------------
 Ratios to average net assets:(2)
 Net investment income                        2.03%     2.37%     2.92%     2.85%     2.51%
 Expenses                                     1.96%     1.81%     1.94%     1.93%     1.91%(3)
- ------------------------------------------------------------------------------------------
 Portfolio turnover rate                        31%       40%       33%       15%       59%


1. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns.Total returns are not annualized for periods of less than one full
year.
2. Annualized for periods of less than one full year.
3. Expense ratio has been calculated without adjustment for the reduction to
custodian expenses. See accompanying Notes to Financial Statements.


32 | OPPENHEIMER MULTIPLE STRATEGIES FUND

FINANCIAL HIGHLIGHTS Continued


Class N  Year Ended September 30,                               2002    2001(1)
===============================================================================
 Per Share Operating Data
- -------------------------------------------------------------------------------
 Net asset value, beginning of period                        $ 12.13   $ 13.67
- -------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment income                                           .39       .24
 Net realized and unrealized loss                              (1.38)    (1.48)
                                                             ------------------
 Total from investment operations                               (.99)    (1.24)
- -------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income                           (.28)     (.30)
 Distributions from net realized gain                           (.38)       --
                                                             ------------------
 Total dividends and/or distributions
 to shareholders                                                (.66)     (.30)
- -------------------------------------------------------------------------------
 Net asset value, end of period                               $10.48    $12.13
                                                              =================

===============================================================================
 Total Return, at Net Asset Value(2)                           (8.94)%   (9.30)%
- -------------------------------------------------------------------------------


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

 Net assets, end of period (in thousands)                       $798       $95
- -------------------------------------------------------------------------------
 Average net assets (in thousands)                              $454       $12
- -------------------------------------------------------------------------------
 Ratios to average net assets:(3)
 Net investment income                                          2.49%     5.81%
 Expenses                                                       1.48%     1.32%
- -------------------------------------------------------------------------------
 Portfolio turnover rate                                          31%       40%



1. For the period from March 1, 2001 (inception of offering) to September 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.








INFORMATION AND SERVICES

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

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

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

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

- ------------------------------------------------------------------------------
By Telephone:                 Call OppenheimerFunds Services toll-free:
                              1.800.CALL.OPP (225-5677)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
By Mail:                      Write to:
                              OppenheimerFunds Services
                              P.O. Box 5270
                              Denver, Colorado 80217-5270
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
On the Internet:              You can send us a request by e-mail or read or
                              down-load documents on the OppenheimerFunds
                              website: www.oppenheimerfunds.com
                                       ------------------------
- ------------------------------------------------------------------------------

Information about the Fund including the Statement of Additional Information
can be reviewed and copied at the SEC's Public Reference Room in Washington,
D.C. Information on the operation of the Public Reference Room may be
obtained by calling the SEC at 1.202.942.8090.  Reports and other information
about the Fund are available on the EDGAR database on the SEC's Internet
website at www.sec.gov. Copies may be obtained after payment of a duplicating
           -----------
fee by electronic request at the SEC's e-mail address: publicinfo@sec.gov or
by writing to the SEC's Public Reference Section, Washington, D.C. 20549-0102.
No one has been authorized to provide any information about the Fund or to
make any representations about the Fund other than what is contained in this
Prospectus. This Prospectus is not an offer to sell shares of the Fund, nor a
solicitation of an offer to buy shares of the Fund, to any person in any
state or other jurisdiction where it is unlawful to make such an offer.

The Fund's shares are distributed by:                [logo]   OppenheimerFunds
Distributor, Inc.
The Fund's SEC File No.: 811-3864
PR0240.001.1102
Printed on recycled paper









                          Appendix to Prospectus of
                     Oppenheimer Multiple Strategies Fund


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

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

Calendar                Annual
Year                    Total
Ended                                           Returns

12/31/92                7.54%
12/31/93                16.30%
12/31/94                -1.59%
12/31/95                22.79%
12/31/96                17.23%
12/31/97                17.77%
12/31/98                 7.05%
12/31/99                10.60%
12/31/00                 6.57%
12/31/01                 1.68%

 ------------------------------------------------------------------------------
 Oppenheimer Multiple Strategies Fund
 ------------------------------------------------------------------------------

6803 S. Tucson Way, Centennial, Colorado 80112-3924
1.800.225.5677

Statement of Additional Information dated November 22, 2002

      This  Statement of  Additional  Information  is not a  Prospectus.  This
document  contains  additional  information  about  the Fund  and  supplements
information  in the  Prospectus  dated  November 22,  2002.  It should be read
together with the Prospectus.  You can obtain the Prospectus by writing to the
Fund's Transfer Agent,  OppenheimerFunds  Services,  at P.O. Box 5270, Denver,
Colorado  80217,  or by calling the  Transfer  Agent at the  toll-free  number
shown above, or by downloading it from the  OppenheimerFunds  Internet website
at www.oppenheimerfunds.com.

Contents
                                                                        Page
About the Fund
Additional Information About the Fund's Investment Policies and Risks.. 2
    The Fund's Investment Policies..................................... 2
    Other Investment Techniques and Strategies......................... 12
    Investment Restrictions............................................ 33
How the Fund is Managed ............................................... 35
    Organization and History........................................... 35
    Trustees and Officers.............................................. 37
    The Manager........................................................ 45
Brokerage Policies of the Fund......................................... 48
Distribution and Service Plans......................................... 50
Performance of the Fund................................................ 54

About Your Account
How To Buy Shares...................................................... 59
How To Sell Shares..................................................... 70
How To Exchange Shares................................................. 75
Dividends, Capital Gains and Taxes..................................... 78
Additional Information About the Fund.................................. 83

Financial Information About the Fund
Independent Auditors' Report........................................... 84
Financial Statements................................................... 85

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


   -------------------------------------------------------------------------
   ABOUT THE FUND
   -------------------------------------------------------------------------


Additional Information About the Fund's Investment Policies and Risks

      The investment objective, the principal investment policies and the
main risks of the Fund are described in the Prospectus. This Statement of
Additional Information contains supplemental information about those policies
and risks and the types of securities that the Fund's investment Manager,
OppenheimerFunds, Inc., 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 Fund's Investment Policies.

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

      In selecting securities for the Fund's portfolio, the Manager evaluates
the merits of particular securities primarily through the exercise of its own
investment analysis. That process may include, among other things, evaluation
of the issuer's historical operations, prospects for the industry of which
the issuer is part, the issuer's financial condition, its pending product
developments and business (and those of competitors), the effect of general
market and economic conditions on the issuer's business, and legislative
proposals that might affect the issuer.

      |X| Investments in Equity Securities. The Fund's investments in equity
securities can include those of foreign and U.S. companies. Equity securities
include common stocks, preferred stocks, rights and warrants, and securities
convertible into common stock. The Fund's investments can include stocks of
companies in any market capitalization range, if the Manager believes the
investment is consistent with the Fund's objective, including the
preservation of principal. Certain equity securities might be selected not
only for their appreciation possibilities but because they may provide
dividend income.

      Small-cap growth companies may offer greater opportunities for capital
appreciation than securities of large, more established companies. However,
these securities also involve greater risks than securities of larger
companies. Securities of small capitalization issuers may be subject to
greater price volatility in general than securities of large-cap and mid-cap
companies. Therefore, to the degree that the Fund has investments in smaller
capitalization companies at times of market volatility, the Fund's share
price may fluctuate more. Those investments may be limited to the extent the
Manager believes that such investments would be inconsistent with the goal of
preservation of principal. As noted below, the Fund limits investments in
unseasoned small-cap issuers.

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

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

            |_| Growth Companies. The Fund may invest in securities of
"growth" companies. Growth companies are those companies that the Manager
believes are entering into a growth cycle in their business, with the
expectation that their stock will increase in value. They may be established
companies as well as newer companies in the development stage.

      Growth companies may have a variety of characteristics that in the
Manager's view define them as "growth" issuers. They may be generating or
applying new technologies, new or improved distribution techniques or new
services. They may own or develop natural resources. They may be companies
that can benefit from changing consumer demands or lifestyles, or companies
that have projected earnings in excess of the average for their sector or
industry. In each case, they have prospects that the Manager believes are
favorable for the long term. The portfolio managers of the Fund look for
growth companies with strong, capable management, sound financial and
accounting policies, successful product development and marketing and other
factors.

            |_| Value Investing. In selecting equity investments for the
Fund's portfolio, the portfolio manager also uses a value investing style
coupled with fundamental analysis of issuers. In using a value approach, the
manager looks for stocks and other equity securities that appear to be
temporarily undervalued, by various measures, such as price/earnings ratios.
Value investing seeks stocks having prices that are low in relation to their
real worth or future prospects, with the expectation that the Fund will
realize appreciation in the value of its holdings when other investors
realize the intrinsic value of the stock.

      Using value investing requires research as to the issuer's underlying
financial condition and prospects. Some of the measures used to identify
these securities include, among others:
o     Price/earnings ratio, which is the stock's price divided by its
         earnings per share. A stock having a price/earnings ratio lower than
         its historical range, or lower than the market as a whole or that of
         similar companies may offer attractive investment opportunities.
o     Price/book value ratio, which is the stock price divided by the book
         value of the company per share. It measures the company's stock
         price in relation to its asset value.
o     Dividend yield, which is measured by dividing the annual dividend by
         the stock price per share.

o     Valuation of assets which compares the stock price to the value of the
         company's underlying assets, including their projected value in the
         marketplace and liquidation value.

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

      To determine whether convertible securities should be regarded as
"equity equivalents," the Manager examines the following factors:

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

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

            |_| Rights and Warrants. As a fundamental policy, the Fund cannot
invest more than 5% of its total assets in warrants nor more than 2% of that
amount in warrants that are not listed on the New York or American Stock
Exchanges. That limit does not apply to warrants and rights the Fund has
acquired as part of units of securities or that are attached to other
securities that the Fund buys.

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

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

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

      The Fund's debt investments can include investment-grade and
non-investment-grade bonds (commonly referred to as "junk bonds").
Investment-grade bonds are bonds rated at least "Baa" by Moody's Investors
Service, Inc., at least "BBB" by Standard & Poor's Rating Service or Duff &
Phelps, Inc., or have comparable ratings by another nationally-recognized
statistical rating organization.

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

         |_| Special Risks of Lower-Grade Securities. The Fund can invest a
substantial portion of its assets in lower-grade debt securities. Because
lower-grade securities tend to offer higher yields than investment-grade
securities, the Fund may invest in lower-grade securities if the Manager is
trying to achieve greater income. In some cases, the appreciation
possibilities of lower-grade securities may be a reason they are selected for
the Fund's portfolio. However, these investments will be made only when
consistent with the Fund's goal of preservation of principal that is part of
the Fund's objective.
      The Fund may invest up to 35% of its total assets in "lower-grade" debt
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 Standard & Poor's or similar ratings by other rating
organizations. If they are unrated, and are determined by the Manager to be
of comparable quality to debt securities rated below investment grade, they
are included in the limitation on the percentage of the Fund's assets that
can be invested in lower-grade securities. The Fund can invest in securities
rated as low as "C" or "D" or which are in default at the time the Fund buys
them.

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

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

      While securities rated "Baa" by Moody's or "BBB" by Standard & Poor's
or Duff & Phelps are investment-grade and are not regarded as junk bonds,
those securities may be subject to special risks, and have some speculative
characteristics. The debt security ratings definitions of the principal
rating definitions are included in Appendix A to this Statement of Additional
Information.

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

      Fluctuations in the market value of fixed-income securities after the
Fund buys them will not affect the interest payable on those securities, nor
the cash income from them. However, those price fluctuations will be
reflected in the valuations of the securities, and therefore the Fund's net
asset values will be affected by those fluctuations.

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

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

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

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


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

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

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

         |_| 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.

      |X| U.S. Government Securities. These are securities issued or
guaranteed by the U.S. Treasury or other U.S. government agencies or
federally-chartered corporate entities referred to as "instrumentalities."
The obligations of U.S. government agencies or instrumentalities in which the
Fund 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 Fund will invest in securities of U.S. government agencies and
instrumentalities only if the Manager is satisfied that the credit risk with
respect to such instrumentality is minimal.

         |_| U.S. Treasury Obligations. These include Treasury bills (having
maturities of one year or less when issued), Treasury notes (having
maturities of from one to ten years), and Treasury bonds (having maturities
of more than ten years). 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, zero-coupon U.S. Treasury securities
described below, and Treasury Inflation-Protection Securities ("TIPS").

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

         |_| 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. The Fund 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.

         |_| GNMA Certificates. The Government National Mortgage Association
("GNMA") is a wholly-owned corporate instrumentality of the United States
within the U.S. Department of Housing and Urban Development. GNMA's principal
programs involve its guarantees of privately-issued securities backed by
pools of mortgages. Ginnie Maes are debt securities representing an interest
in one or a pool of mortgages that are insured by the Federal Housing
Administration or the Farmers Home Administration or guaranteed by the
Veterans Administration.

      The Ginnie Maes in which the Fund invests are of the "fully modified
pass-through" type. They provide that the registered holders of the
Certificates will receive timely monthly payments of the pro-rata share of
the scheduled principal payments on the underlying mortgages, whether or not
those amounts are collected by the issuers. Amounts paid include, on a pro
rata basis, any prepayment of principal of such mortgages and interest (net
of servicing and other charges) on the aggregate unpaid principal balance of
the Ginnie Maes, whether or not the interest on the underlying mortgages has
been collected by the issuers.

      The Ginnie Maes purchased by the Fund are guaranteed as to timely
payment of principal and interest by GNMA. It is expected that payments
received by the issuers of Ginnie Maes on account of the mortgages backing
the Ginnie Maes will be sufficient to make the required payments of principal
of and interest on those GNMA Certificates. However if those payments are
insufficient, the guaranty agreements between the issuers of the Certificates
and GNMA require the issuers to make advances sufficient for the payments. If
the issuers fail to make those payments, GNMA will do so.

      Under federal law, the full faith and credit of the United States is
pledged to the payment of all amounts that may be required to be paid under
any guaranty issued by GNMA as to such mortgage pools. An opinion of an
Assistant Attorney General of the United States, dated December 9, 1969,
states that such guaranties "constitute general obligations of the United
States backed by its full faith and credit." GNMA is empowered to borrow from
the United States Treasury to the extent necessary to make any payments of
principal and interest required under those guaranties.

      Ginnie Maes are backed by the aggregate indebtedness secured by the
underlying FHA-insured, FMHA-insured or VA-guaranteed mortgages. Except to
the extent of payments received by the issuers on account of such mortgages,
Ginnie Maes do not constitute a liability of those issuers, nor do they
evidence any recourse against those issuers. Recourse is solely against GNMA.
Holders of Ginnie Maes (such as the Fund) have no security interest in or
lien on the underlying mortgages.

      Monthly payments of principal will be made, and additional prepayments
of principal may be made, to the Fund with respect to the mortgages
underlying the Ginnie Maes held by the Fund. All of the mortgages in the
pools relating to the Ginnie Maes in the Fund are subject to repayment
without any significant premium or penalty, at the option of the mortgagors.
While the mortgages on one-to-four-family dwellings underlying certain Ginnie
Maes have a stated maturity of up to 30 years, it has been the experience of
the mortgage industry that the average life of comparable mortgages, as a
result of prepayments, refinancing and payments from foreclosures, is
considerably less.

            |_| Federal Home Loan Mortgage Corporation Certificates. FHLMC, a
corporate instrumentality of the United States, issues FHLMC Certificates
representing interests in mortgage loans. FHLMC guarantees to each registered
holder of a FHLMC Certificate timely payment of the amounts representing a
holder's proportionate share in:

(i)   interest payments less servicing and guarantee fees,
(ii)  principal prepayments and
(iii) the ultimate collection of amounts representing the holder's
                  proportionate interest in principal payments on the
                  mortgage loans in the pool represented by the FHLMC
                  Certificate, in each case whether or not such amounts are
                  actually received.

      The obligations of FHLMC under its guarantees are obligations solely of
FHLMC and are not backed by the full faith and credit of the United States.

            |_| Federal National Mortgage Association (Fannie Mae)
Certificates. Fannie Mae, a federally-chartered and privately-owned
corporation, issues Fannie Mae Certificates which are backed by a pool of
mortgage loans. Fannie Mae guarantees to each registered holder of a Fannie
Mae Certificate that the holder will receive amounts representing the
holder's proportionate interest in scheduled principal and interest payments,
and any principal prepayments, on the mortgage loans in the pool represented
by such Certificate, less servicing and guarantee fees, and the holder's
proportionate interest in the full principal amount of any foreclosed or
other liquidated mortgage loan. In each case the guarantee applies whether or
not those amounts are actually received. The obligations of Fannie Mae under
its guarantees are obligations solely of Fannie Mae and are not backed by the
full faith and credit of the United States or any of its agencies or
instrumentalities other than Fannie Mae.

            |_| Zero-Coupon U.S. Government Securities. The Fund 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.

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

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

      The Fund will only enter into "covered" rolls.  That is, to assure its
future payment of the purchase price, the Fund will identify on its books
cash, U.S. government securities or other high-grade debt securities in an
amount equal to the payment obligation under the roll.

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

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

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

            |_| Bank Obligations. The Fund can buy time deposits,
certificates of deposit and bankers' acceptances. They must be:

               o obligations issued or guaranteed by a domestic bank
                 (including a foreign branch of a domestic bank) having total
                 assets of at least $500 million, or
               o banker's acceptances (which may or may not be supported by
                 letters of credit) but only if guaranteed by a U.S.
                 commercial bank with total assets of at least U.S. $500
                 million.

      The Fund can purchase certificates of deposit of $100,000 or less of a
domestic bank even if that bank has assets of less than $500 million, if the
certificate of deposit is fully insured as to principal by the Federal
Deposit Insurance Corporation. The Fund can buy only one such certificate of
deposit from any one bank with that amount of assets and limits its
investments in those certificates of deposit to 10% of its assets. "Banks"
include U.S. commercial banks, savings banks and savings and loan
associations.

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

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


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

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

      The Fund has no limitations on the type of issuer from whom these notes
will be purchased. However, in connection with such purchases and on an
ongoing basis, the Manager will consider the earning power, cash flow and
other liquidity ratios of the issuer, and its ability to pay principal and
interest on demand, including a situation in which all holders of such notes
made demand simultaneously. Investments in master demand notes are subject to
the limitation on investments by the Fund in illiquid securities, described
in the Prospectus. Currently, the Fund does not intend that its investments
in variable amount master demand notes will exceed 5% of its total assets.

      |X| Portfolio Turnover.  The Fund can engage in short-term trading to
try to achieve its objective. "Portfolio turnover" describes the rate at
which the Fund traded its portfolio securities during its last fiscal year.
For example, if a fund sold all of its securities during the year, its
portfolio turnover rate would have been 100%. The Fund's portfolio turnover
rate will fluctuate from year to year. Currently, the Fund expects to have a
portfolio turnover rate of at least 100% annually.

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

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

      |X| Foreign Securities. The Fund expects to have substantial
investments in foreign securities. These include equity securities issued by
foreign companies and debt securities issued by foreign companies or
governments, including supra-national entities. "Foreign securities" include
equity and debt securities of companies organized under the laws of countries
other than the United States and debt securities issued or guaranteed by
governments other than the U.S. government or by foreign supra-national
entities. They also include securities of companies (including those that are
located in the U.S. or organized under U.S. law) that derive a significant
portion of their revenue or profits from foreign businesses, investments or
sales, or that have a significant portion of their assets abroad. They may be
traded on foreign securities exchanges or in the foreign over-the-counter
markets.

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

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

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

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

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

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

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

            |_| 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. The Manager will consider these factors when evaluating
securities in these markets, because the selection of those securities must
be consistent with the Fund's goal of preservation of principal.

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

      The Fund may buy zero-coupon and delayed interest securities, and
"stripped" securities of corporations and of foreign government issuers.
These are similar in structure to zero-coupon and "stripped" U.S. government
securities, but in the case of foreign government securities may or may not
be backed by the "full faith and credit" of the issuing foreign government.
Zero coupon securities issued by foreign governments and by corporations will
be subject to greater credit risks than U.S. government zero-coupon
securities.

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

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

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

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

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

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

      The yields to maturity of I/Os and P/Os are very sensitive to principal
repayments (including prepayments) on the underlying mortgages. If the
underlying mortgages experience greater than anticipated prepayments of
principal, the Fund might not fully recoup its investment in an I/O based on
those assets. If underlying mortgages experience less than anticipated
prepayments of principal, the yield on the P/Os based on them could decline
substantially.

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

      The interest rate on a floating rate demand note is adjusted
automatically according to a stated prevailing market rate, such as a bank's
prime rate, the 91-day U.S. Treasury Bill rate, or some other standard. The
instrument's rate is adjusted automatically each time the base rate is
adjusted. The interest rate on a variable rate demand note is also based on a
stated prevailing market rate but is adjusted automatically at specified
intervals of not less than one year. Generally, the changes in the interest
rate on such securities reduce the fluctuation in their market value. As
interest rates decrease or increase, the potential for capital appreciation
or depreciation is less than that for fixed-rate obligations of the same
maturity. The Manager may determine that an unrated floating rate or variable
rate demand obligation meets the Fund's quality standards by reason of being
backed by a letter of credit or guarantee issued by a bank that meets those
quality standards.

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

      |X| Investing in Small, Unseasoned Companies. The Fund can invest in
securities of small, unseasoned companies. These are companies that have been
in operation for less than three years, including the operations of any
predecessors. Securities of these companies may be subject to volatility in
their prices. They may have a limited trading market, which may adversely
affect the Fund's ability to dispose of them and can reduce the price the
Fund might be able to obtain for them. Other investors that own a security
issued by a small, unseasoned issuer for which there is limited liquidity
might trade the security when the Fund is attempting to dispose of its
holdings of that security. In that case the Fund might receive a lower price
for its holdings than might otherwise be obtained. The Fund currently does
not intend to invest more than 5% of its net assets in those securities.

      |X| Investment in Other Investment Companies. The Fund can also invest
in the securities of other investment companies, which can include open-end
funds, closed-end funds and unit investment trusts, subject to the limits set
forth in the Investment Company Act of 1940 (the "Investment Company Act")
that apply to those types of investments.  For example, the Fund can invest
in Exchange-Traded Funds, which are typically open-end funds or unit
investment trusts, listed on a stock exchange.  The Fund might do so as a way
of gaining exposure to the segments of the equity or fixed-income markets
represented by the Exchange-Traded Funds' portfolio, at times when the Fund
may not be able to buy those portfolio securities directly.

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

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

      When such transactions are negotiated, the price (which is generally
expressed in yield terms) is fixed at the time the commitment is made.
Delivery and payment for the securities take place at a later date. The
securities are subject to change in value from market fluctuations during the
period until settlement. The value at delivery may be less than the purchase
price. For example, changes in interest rates in a direction other than that
expected by the Manager before settlement will affect the value of such
securities and may cause a loss to the Fund. During the period between
purchase and settlement, no payment is made by the Fund to the issuer and no
interest accrues to the Fund from the investment. No income begins to accrue
to the Fund on a when-issued security until the Fund receives the security at
settlement of the trade.

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


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

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

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

      |X| Participation Interests. The Fund can invest in participation
interests, subject to the Fund's limitation on investments in illiquid
investments. A participation interest is an undivided interest in a loan made
by the issuing financial institution in the proportion that the buyers
participation interest bears to the total principal amount of the loan. No
more than 5% of the Fund's net assets can be invested in participation
interests of the same borrower. The issuing financial institution may have no
obligation to the Fund other than to pay the Fund the proportionate amount of
the principal and interest payments it receives.

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

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

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

      The majority of these transactions run from day to day, and delivery
pursuant to the resale typically occurs within one to five days of the
purchase. Repurchase agreements having a maturity beyond seven days are
subject to the Fund's limits on holding illiquid investments. The Fund will
not enter into a repurchase agreement that causes more than 10% of its net
assets to be subject to repurchase agreements having a maturity beyond seven
days. There is no limit on the amount of the Fund's net assets that may be
subject to repurchase agreements having maturities of seven days or less.

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

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

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

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

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

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

      |X| Loans of Portfolio Securities. To raise cash for liquidity purposes
or income, the Fund can lend its portfolio securities to brokers, dealers and
other types of financial institutions approved by the Fund's Board of
Trustees. As a fundamental policy, these loans are limited to not more than
25% of the value of the Fund's net assets. The Fund currently does not intend
to engage in loans of securities, but if it does so, such loans will not
likely exceed 5% of the Fund's total assets.

      There are some risks in connection with securities lending. The 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. The
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 the Fund is permitted to invest. To be acceptable as collateral,
letters of credit must obligate a bank to pay amounts demanded by the 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, the 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. The Fund
may also pay reasonable finder's, custodian and administrative fees in
connection with these loans. The terms of the Fund's loans must meet
applicable tests under the Internal Revenue Code and must permit the Fund to
reacquire loaned securities on five days' notice or in time to vote on any
important matter.

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

      The value of an asset-backed security is affected by changes in the
market's perception of the asset backing the security, the creditworthiness
of the servicing agent for the loan pool, the originator of the loans, or the
financial institution providing any credit enhancement, and is also affected
if any credit enhancement has been exhausted. The risks of investing in
asset-backed securities are ultimately related to payment of consumer loans
by the individual borrowers. As a purchaser of an asset-backed security, the
Fund would generally have no recourse to the entity that originated the loans
in the event of default by a borrower. The underlying loans are subject to
prepayments, which may shorten the weighted average life of asset-backed
securities and may lower their return, in the same manner as in the case of
mortgage-backed securities and CMOs, described above. Unlike mortgage-backed
securities, asset-backed securities typically do not have the benefit of a
security interest in the underlying collateral.

      |X| Derivatives. The Fund can invest in a variety of derivative
investments to seek income or for hedging purposes. Some derivative
investments the Fund can use are the hedging instruments described below in
this Statement of Additional Information. However, the Fund is not obligated
to use derivatives in seeking its objective.

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

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

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

      The Fund  would  take a short  position  in a credit  default  swap (the
"unfunded  swap")  against a long portfolio  position to decrease  exposure to
specific  high yield  issuers.  If the short credit  default swap is against a
corporate  issue,  the Fund must own that  corporate  issue.  However,  if the
short credit default swap is against  sovereign debt, the Fund may own either:
(i) the  reference  obligation,  (ii)  any  sovereign  debt  of  that  foreign
country,  or (iii)  sovereign debt of any country that the Manager  determines
is closely correlated as an inexact bona fide hedge.

      If the Fund takes a short  position in the credit default swap, if there
is a credit  event  (including  bankruptcy,  failure to timely pay interest or
principal, or a restructuring),  the Fund will deliver the defaulted bonds and
the swap  counterparty  will pay the par  amount of the bonds.  An  associated
risk is  adverse  pricing  when  purchasing  bonds  to  satisfy  the  delivery
obligation.  If the swap is on a basket of securities,  the notional amount of
the swap is  reduced by the par amount of the  defaulted  bond,  and the fixed
payments are then made on the reduced notional amount.

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

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

      The Fund will invest no more than 25% of its total assets in  "unfunded"
credit default swaps.  The Fund will limit its  investments in "funded" credit
default swap notes to no more than 10% of its total assets.

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

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

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

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

      ?  buy futures, or
      ?  buy calls on such futures or on securities.

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

      |_| 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) bond indices (these are referred to as "bond index futures"),
(3) debt securities (these are referred to as "interest rate futures"), (4)
foreign currencies (these are referred to as "forward contracts") and (5)
commodities.

      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. Bond index futures are similar
contracts based on the future value of the basket of securities that comprise
the index. These contracts obligate the seller to deliver, and the purchaser
to take, cash to settle the futures transaction. There is no delivery made of
the underlying securities to settle the futures obligation. Either party may
also settle the transaction by entering into an offsetting contract.

      An interest rate future obligates the seller to deliver (and the
purchaser to take) cash or a specified type of debt security to settle the
futures transaction. Either party could also enter into an offsetting
contract to close out the position.

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

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

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

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

            |_| Writing Covered Call Options. The Fund can write (that is,
sell) covered calls. If the Fund sells a call option, it must be covered.
That means the Fund must own the security subject to the call while the call
is outstanding, or, for certain types of calls, the call may be covered by
segregating liquid assets to enable the Fund to satisfy its obligations if
the call is exercised. Up to 35% of the Fund's total assets may be subject to
calls the Fund writes.

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

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

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

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

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

      The Fund may also write calls on a futures contract without owning the
futures contract or securities deliverable under the contract. To do so, at
the time the call is written, the Fund must cover the call by segregating an
equivalent dollar amount of liquid assets. The 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 the Fund's receipt of an exercise notice as to that
future require the Fund to deliver a futures contract. It would simply put
the Fund in a short futures position, which is permitted by the Fund's
hedging policies.


            |_| Writing Put Options. The Fund can sell put options. A put
option on securities gives the purchaser the right to sell, and the writer
the obligation to buy, the underlying investment at the exercise price during
the option period. The Fund will not write puts if, as a result, more than
25% of the Fund's net assets would be required to be segregated to cover such
put options.

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

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

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

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

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

      The Fund can buy puts whether or not it holds the underlying investment
in its portfolio. When the Fund purchases a put, it pays a premium and,
except as to puts on indices, has the right to sell the underlying investment
to a seller of a put on a corresponding investment during the put period at a
fixed exercise price.

      Buying a put on an investment the Fund does not own (such as an index
or future) permits the 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.

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

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

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

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

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

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

      The Fund could write a call on a foreign currency to provide a hedge
against a decline in the U.S. dollar value of a security which the Fund owns
or has the right to acquire and which is denominated in the currency
underlying the option. That decline might be one that occurs due to an
expected adverse change in the exchange rate. This is known as a
"cross-hedging" strategy. In those circumstances, the Fund covers the option
by identifying on its books 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 Manager uses a hedging instrument at the wrong time or judges market
conditions incorrectly, hedging strategies may reduce the Fund's return. The
Fund could also experience losses if the prices of its futures and options
positions were not correlated with its other investments.

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

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

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

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

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

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

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

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

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

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

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

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

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

      The Fund will cover its short positions in these cases by identifying
on its books liquid assets having a value equal to the aggregate amount of
the Fund's commitment under forward contracts. The Fund will not enter into
forward contracts or maintain a net exposure to such contracts if the
consummation of the contracts would obligate the Fund to deliver an amount of
foreign currency in excess of the value of the Fund's portfolio securities or
other assets denominated in that currency or another currency that is the
subject of the hedge.

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

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

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

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

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

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

      ?  Interest  Rate Swap  Transactions.  The Fund can enter into  interest
rate swap  agreements.  In an interest  rate swap,  the Fund and another party
exchange  their  right to receive or their  obligation  to pay  interest  on a
security.  For  example,  they might swap the right to receive  floating  rate
payments  for fixed  rate  payments.  The Fund can enter  into  swaps  only on
securities  that it owns.  The Fund will not enter into swaps with  respect to
more than 25% of its total assets. Also,
the Fund will  identify  liquid  assets on the Fund's  books  (such as cash or
U.S.  government  securities)  to cover any  amounts it could owe under  swaps
that exceed the  amounts it is  entitled  to receive,  and it will adjust that
amount daily, as needed.

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

      The Fund can enter into swap  transactions  with certain  counterparties
pursuant to master netting  agreements.  A master netting  agreement  provides
that all swaps done between the Fund and that  counterparty  shall be regarded
as parts of an integral  agreement.  If amounts  are  payable on a  particular
date in the same  currency  in respect of one or more swap  transactions,  the
amount  payable  on that date in that  currency  shall be the net  amount.  In
addition,  the master netting agreement may provide that if one party defaults
generally or on one swap,  the  counterparty  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."

      |_| Regulatory Aspects of Hedging Instruments. When using futures and
options on futures, the 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, the Fund
is exempted from registration with the CFTC as a "commodity pool operator" if
the Fund complies with the requirements of Rule 4.5 adopted by the CFTC. The
Rule does not limit the percentage of the Fund's assets that may be used for
futures margin and related options premiums for a bona fide hedging position.
However, under the Rule, the Fund must limit its aggregate initial futures
margin and related options premiums to not more than 5% of the Fund's net
assets for hedging strategies that are not considered bona fide hedging
strategies under the Rule. Under the Rule, the 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 the Fund are subject to limitations
established by the option exchanges. The exchanges limit the maximum number
of options that may be written or held by a single investor or group of
investors acting in concert. Those limits apply regardless of whether the
options were written or purchased on the same or different exchanges or are
held in one or more accounts or through one or more different exchanges or
through one or more brokers. Thus, the number of options that the Fund may
write or hold may be affected by options written or held by other entities,
including other investment companies having the same advisor as the Fund (or
an advisor that is an affiliate of the Fund's advisor). 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 interpretations of the staff of the Securities and Exchange
Commission regarding applicable provisions of the Investment Company Act,
when the Fund purchases a future, it must identify liquid assets on its books
in an amount equal to the purchase price of the future, less the margin
deposit applicable to it.

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

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

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

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

Investment Restrictions

      |X| What Are "Fundamental Policies?" Fundamental policies are those
policies that the Fund has adopted to govern its investments that can be
changed only by the vote of a "majority" of the Fund's outstanding voting
securities. Under the Investment Company Act, a "majority" vote is defined as
the vote of the holders of the lesser of:

o     67% or more of the shares present or represented by proxy at a
      shareholder meeting, if the holders of more than 50% of the outstanding
      shares are present or represented by proxy, or
o     more than 50% of the outstanding shares.

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

      |X| What Are the Fund's Additional Fundamental Policies? The following
investment restrictions are fundamental policies of the Fund.

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

o     The Fund cannot lend money. However, it can buy debt securities that
      its investment policies and restrictions permit it to purchase. The
      Fund may also lend its portfolio securities subject to the percentage
      restrictions set forth in this Statement of Additional Information and
      may enter into repurchase agreements.

o     The Fund cannot concentrate investments. That means it cannot invest
      25% or more of its total assets in companies in any one industry.
      Obligations of the U.S. government, its agencies and instrumentalities
      are not considered to be part of an "industry" for the purposes of this
      restriction.
o     The Fund cannot buy or sell real estate, including futures contracts.
      However, the Fund can purchase debt securities secured by real estate
      or interests in real estate.

o     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.

o     The Fund cannot invest in physical commodities or commodity contracts.
      However, the Fund may buy and sell the hedging instruments permitted by
      any of its other investment policies. 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.

o     The Fund cannot invest in the securities issued by any company for the
      purpose of acquiring control or management of that company, except in
      connection with a merger, reorganization, consolidation or acquisition
      of assets.

o     The Fund cannot invest in or hold securities of any issuer if officers
      and Trustees of the Fund or the Manager individually beneficially own
      more than 1/2 of 1% of the securities of that issuer and together own
      more than 5% of the securities of that issuer.

o     The Fund cannot buy securities on margin. However, this does not
      prohibit the Fund from making margin deposits in connection with any of
      the hedging instruments permitted by any of its other investment
      policies.

o     The Fund cannot borrow money in excess of 5% of the value of its total
      assets. It can borrow only as a temporary measure for extraordinary or
      emergency purposes.

o     The Fund cannot mortgage, hypothecate or pledge any of its assets to
      secure a debt. However, the escrow arrangements in connection with
      hedging instruments are not considered to involve a mortgage,
      hypothecation or pledge.

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

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

      For purposes of the Fund's policy not to concentrate its investments as
described above, the Fund has adopted the industry classifications set forth
in Appendix B to this Statement of Additional Information. This is not a
fundamental policy.

How the Fund is Managed

Organization and History. The Fund is an open-end, diversified management
investment company with an unlimited number of authorized shares of
beneficial interest. The Fund was organized as a Massachusetts business trust
in 1987.

|X|   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 the 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 (for record owners) or by proxy at shareholder meetings.

      The Fund currently has four classes of shares: Class A, Class B, Class
C and Class N.  All classes invest in the same investment portfolio.  Only
retirement plans may purchase Class N shares.  Each class of shares:
o     has its own dividends and distributions,
o     pays certain expenses which may be different for the different classes,
o     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 the Fund
represents an interest in the Fund proportionately equal to the interest of
each other share of the same class.

|X|   Meetings of Shareholders.  As a Massachusetts business trust, the Fund
is not required to hold, and does not plan to hold, regular annual meetings
of shareholders. The Fund 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 Fund, 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
Fund's shareholder list available to the applicants or mail their
communication to all other shareholders at the applicants' expense. The
shareholders making the request must have been shareholders for at least six
months and must hold shares of the Fund valued at $25,000 or more or
constituting at least 1% of the Fund's outstanding shares. The Trustees may
also take other action as permitted by the Investment Company Act.


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

      The Fund's contractual arrangements state that any person doing
business with the Fund (and each shareholder of the Fund) agrees under its
Declaration of Trust to look solely to the assets of the Fund for
satisfaction of any claim or demand that may arise out of any dealings with
the Fund. 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 Fund is governed by a Board
of Trustees, which is responsible for protecting the interests of
shareholders under Massachusetts law. The Trustees meet periodically
throughout the year to oversee the Fund's activities, review its performance,
and review the actions of the Manager.  Although the Fund will not normally
hold annual meetings of its shareholders, it may hold shareholder meetings
from time to time on important matters, and shareholders have the right to
call a meeting to remove a Trustee or to take other action described in the
Fund's Declaration of Trust.

      The Board of Trustees has an Audit Committee, a Study Committee and a
Proxy Committee.  The members of the Audit Committee are Kenneth Randall
(Chairman), Benjamin Lipstein and Edward Regan.  The Audit Committee held 5
meetings during the Fund's fiscal year ended September 30, 2002.  The Audit
Committee provides the Board with recommendations regarding the selection of
the Fund's independent auditor. The Audit Committee also reviews the scope
and results of audits and the audit fees charged, reviews reports from the
Fund's independent auditor concerning the Fund's internal accounting
procedures, and controls and reviews reports of the Manager's internal
auditor, among other duties as set forth in the Committee's charter.

      The members of the Study Committee are Benjamin Lipstein (Chairman),
Robert Galli and Elizabeth Moynihan.  The Study Committee held 8 meetings
during the Fund's fiscal year ended September 30, 2002.  The Study Committee
evaluates and reports to the Board on the Fund's contractual arrangements,
including the Investment Advisory and Distribution Agreements, transfer and
shareholder service agreements and custodian agreements as well as the
policies and procedures adopted by the Fund to comply with the Investment
Company Act and other applicable law, among other duties as set forth in the
Committee's charter.

      The members of the Proxy Committee are Edward Regan (Chairman), Russell
Reynolds and Clayton Yeutter.  The Proxy Committee held one meeting during
the Fund's fiscal year ended September 30, 2002.  The Proxy Committee
provides the Board with recommendations for proxy voting and monitors proxy
voting by the Fund.

Trustees and Officers of the Fund. Except Mr. Murphy, each of the Trustees is
an "Independent Trustee", as defined in the Investment Company Act of the
Fund ("Independent Trustee"). Mr. Murphy is an "Interested Trustee," because
he is affiliated with the Manager by virtue of his positions as an officer
and director of the Manager, and as a shareholder of its parent company.

      The Fund's Trustees and officers and their positions held with the Fund
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 Fund 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 publicly
offered Oppenheimer funds (referred to as "Board I Funds"):

Oppenheimer California Municipal Fund   Oppenheimer International Growth Fund
                                        Oppenheimer  International  Small Company
Oppenheimer Capital Appreciation Fund   Fund
Oppenheimer Capital Preservation Fund   Oppenheimer Money Market Fund, Inc.
Oppenheimer Developing Markets Fund     Oppenheimer Multiple Strategies Fund
Oppenheimer Discovery Fund              Oppenheimer Multi-Sector Income Trust
Oppenheimer Emerging Growth Fund        Oppenheimer Multi-State Municipal Trust
Oppenheimer Emerging Technologies Fund  Oppenheimer Municipal Bond Fund
Oppenheimer Enterprise Fund             Oppenheimer New York Municipal Fund
Oppenheimer Europe Fund                 Oppenheimer Series Fund, Inc.
Oppenheimer Global Fund                 Oppenheimer Trinity Core Fund
Oppenheimer Global Growth & Income Fund Oppenheimer Trinity Large Cap Growth Fund
Oppenheimer  Gold  &  Special  Minerals
Fund                                    Oppenheimer Trinity Value Fund
Oppenheimer Growth Fund                 Oppenheimer U.S. Government Trust

      In addition  to being a trustee or  director  of the Board I Funds,  Mr.
Galli  is  also  a  director  or  trustee  of  10  other   portfolios  in  the
OppenheimerFunds complex. Present or former officers,  directors, trustees and
employees (and their  immediate  family  members) of the Fund, the Manager and
its affiliates,  and retirement plans  established by them for their employees
are  permitted  to  purchase  Class  A  shares  of  the  Fund  and  the  other
Oppenheimer  funds at net asset value without sales charge.  The sales charges
on Class A shares is waived for that group  because of the  economies of sales
efforts realized by the Distributor.

      Messrs. Evans, Levine, Murphy, Masterson, Molleur, Negri, Rubinstein,
Vottiero, Wixted and Zack, and Mses. Bechtolt, Feld and Ives and respectively
hold the same offices with one or more of the other Board I Funds as with the
Fund.  As of October 29, 2002, the Trustees and officers of the Fund, as a
group, owned of record or beneficially less than 1% of each class of shares
of the Fund.  The foregoing statement does not reflect ownership of shares of
the Fund held of record by an employee benefit plan for employees of the
Manager, other than the shares beneficially owned under the plan by the
officers of the Fund listed above. In addition, each Independent Trustee, and
his or her family members, do not own securities of either the Manager or
Distributor of the Board I Funds or any person directly or indirectly
controlling, controlled by or under common control with the Manager or
Distributor.

|X|   Affiliated Transactions and Material Business Relationships. Mr.
Reynolds has reported that he has a controlling interest in The Directorship
Search Group, Inc. ("The Directorship Search Group"), a director recruiting
firm that provided consulting services to Massachusetts Mutual Life Insurance
Company (which controls the Manager) for fees aggregating $110,000 from
January 1, 2000 through December 31, 2001, an amount representing less than
5% of the annual revenues of The Directorship Search Group.  Mr. Reynolds
estimates that The Directorship Search Group will bill Massachusetts Mutual
Life Insurance Company $150,000 for services to be provided during the
calendar year 2002.

      The Independent Trustees have unanimously (except for Mr. Reynolds, who
abstained) determined that the consulting arrangements between The
Directorship Search Group and Massachusetts Mutual Life Insurance Company
were not material business or professional relationships that would
compromise Mr. Reynolds' status as an Independent Trustee. Nonetheless, to
assure certainty as to determinations of the Board and the Independent
Trustees as to matters upon which the Investment Company Act or the rules
thereunder require approval by a majority of Independent Trustees, Mr.
Reynolds will not be counted for purposes of determining whether a quorum of
Independent Trustees was present or whether a majority of Independent
Trustees approved the matter.

      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.

- -------------------------------------------------------------------------------------
                                Independent Trustees
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
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             the Fund   by Trustee
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
                                                                As of December 31,
                                                                       2001
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Leon Levy,          General  Partner  (since 1982) of Odyssey $0         None
Chairman of the     Partners,  L.P. (investment  partnership)
Board of Trustees,  and  Chairman of the Board  (since  1981)
Trustee since 1987  of Avatar  Holdings,  Inc.  (real  estate
Age: 77             development).  Oversees 31  portfolios in
                    the OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Robert G. Galli,    A   trustee   or    director   of   other $0         Over
Trustee since 1993  Oppenheimer    funds.    Formerly    Vice            $100,000
Age: 69             Chairman (October  1995-December 1997) of
                    the Manager.  Oversees 41  portfolios  in
                    the OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Phillip A.          The   Director   (since   1991)   of  the $0         Over
Griffiths,          Institute for Advanced Study,  Princeton,            $100,000
Trustee, since 1999 N.J.,   director   (since  2001)  of  GSI
Age: 64             Lumonics  and a  member  of the  National
                    Academy   of   Sciences   (since   1979);
                    formerly  (in  descending   chronological
                    order)  a  director   of  Bankers   Trust
                    Corporation,  Provost  and  Professor  of
                    Mathematics   at   Duke   University,   a
                    director of Research Triangle  Institute,
                    Raleigh,   N.C.,   and  a  Professor   of
                    Mathematics   at   Harvard    University.
                    Oversees    31    portfolios    in    the
                    OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Benjamin Lipstein,  Professor  Emeritus of  Marketing,  Stern $0         Over
Trustee since 1987  Graduate      School     of      Business            $100,000
Age: 79             Administration,   New  York   University.
                    Oversees    31    portfolios    in    the
                    OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Joel W. Motley1,    Director (January 2002-present),          $0         $0
Trustee since 2002  Columbia Equity Financial Corp.
Age: 50             (privately-held financial adviser);
                    Managing Director (January
                    2002-present), Carmona Motley, Inc.
                    (privately-held financial adviser);
                    Formerly he held the following
                    positions: Managing Director (January
                    1998-December 2001), Carmona Motley
                    Hoffman Inc. (privately-held financial
                    adviser); Managing Director (January
                    1992-December 1997), Carmona Motley &
                    Co. (privately-held financial adviser).
                    Oversees 31 portfolios in the
                    OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Elizabeth B.        Author  and  architectural  historian;  a $0         $50,001-$100,000
Moynihan,           trustee  of the Freer  Gallery of Art and
Trustee since 1992  Arthur M.  Sackler  Gallery  (Smithsonian
Age: 73             Institute),   Trustees   Council  of  the
                    National  Building  Museum;  a member  of
                    the   Trustees   Council,    Preservation
                    League  of New York  State.  Oversees  31
                    portfolios   in   the    OppenheimerFunds
                    complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Kenneth A.          A director  of Dominion  Resources,  Inc. $10,001-$50Over
Randall, Trustee    (electric  utility  holding  company) and            $100,000
since 1987          Prime   Retail,    Inc.    (real   estate
Age: 75             investment  trust);  formerly  a director
                    of Dominion Energy,  Inc. (electric power
                    and oil & gas  producer),  President  and
                    Chief    Executive    Officer    of   The
                    Conference  Board,  Inc.   (international
                    economic  and  business  research)  and a
                    director of  Lumbermens  Mutual  Casualty
                    Company,   American  Motorists  Insurance
                    Company   and   American    Manufacturers
                    Mutual  Insurance  Company.  Oversees  31
                    portfolios   in   the    OppenheimerFunds
                    complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Edward V. Regan,    President,   Baruch   College,   CUNY;  a $1-$10,000 $50,001-$100,000
Trustee since 1993  director   of   RBAsset    (real   estate
Age: 72             manager);   a  director   of   OffitBank;
                    formerly  Trustee,  Financial  Accounting
                    Foundation   (FASB  and   GASB),   Senior
                    Fellow   of   Jerome    Levy    Economics
                    Institute,   Bard  College,  Chairman  of
                    Municipal Assistance  Corporation for the
                    City  of  New   York,   New  York   State
                    Comptroller   and  Trustee  of  New  York
                    State   and   Local    Retirement   Fund.
                    Oversees 31  investment  companies in the
                    OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Russell S.          Chairman     (since    1993)    of    The $0         $10,001-$50,000
Reynolds, Jr.,      Directorship     Search    Group,    Inc.
Trustee since 1989  (corporate   governance   consulting  and
Age: 70             executive recruiting);  a life trustee of
                    International      House      (non-profit
                    educational organization),  and a trustee
                    (since 1996) of the Greenwich  Historical
                    Society.  Oversees 31  portfolios  in the
                    OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Donald W. Spiro,    Chairman  Emeritus  (since  January 1991) $0         Over
Vice Chairman of    of  the  Manager.   Formerly  a  director            $100,000
the Board of        (January   1969-August   1999)   of   the
Trustees,           Manager.  Oversees 31  portfolios  in the
Trustee since 1987  OppenheimerFunds complex.
Age: 76
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Clayton K.          Of Counsel (since 1993),  Hogan & Hartson $0         $50,001-$100,000
Yeutter, Trustee    (a  law   firm).   Other   directorships:
since 1991          Caterpillar,   Inc.   (since   1993)  and
Age: 71             Weyerhaeuser  Co. (since 1999).  Oversees
                    31  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
                                                                         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             the Fund   by Trustee
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
                                                                As of December 31,
                                                                       2001
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
John V. Murphy,     Chairman,  Chief  Executive  Officer  and $0            Over
President and       director  (since June 2001) and President             $100,000
Trustee,            (since  September  2000) of the  Manager;
Trustee since 2001  President  and a  director  or trustee of
Age: 53             other Oppenheimer funds;  President and a
                    director    (since    July    2001)    of
                    Oppenheimer    Acquisition   Corp.   (the
                    Manager's  parent holding company) and of
                    Oppenheimer  Partnership  Holdings,  Inc.
                    (a  holding  company  subsidiary  of  the
                    Manager);   a  director  (since  November
                    2001)  of  OppenheimerFunds  Distributor,
                    Inc.  (a   subsidiary  of  the  Manager);
                    Chairman  and  a  director   (since  July
                    2001) of Shareholder  Services,  Inc. and
                    of Shareholder  Financial Services,  Inc.
                    (transfer   agent   subsidiaries  of  the
                    Manager);   President   and  a   director
                    (since  July  2001)  of  OppenheimerFunds
                    Legacy   Program  (a   charitable   trust
                    program  established  by the Manager);  a
                    director  of  the   investment   advisory
                    subsidiaries   of   the   Manager:    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 the 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 69  portfolios in the
                    OppenheimerFunds complex.
- -------------------------------------------------------------------------------------

      The address of the Officers in the chart below is as follows: for
Messrs. Evans, Levine, Molleur, Negri, Rubinstein and Zack and Mses. Feld and
Switzer, 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
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Richard H. Rubinstein,  Senior Vice  President  (since October 1995) of the Manager;
Vice President and      an officer of 2 portfolios in the OppenheimerFunds  complex;
Portfolio Manager       formerly  a Vice  President  of  the  Manager  (June  1990 -
since 1998              October 1995).
Age:  54
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
David P. Negri, Vice    Senior Vice  President  of the Manager  (since May 1998) and
President and           of HarbourView  Asset  Management  Corporation  (since April
Portfolio Manager       1999);  an officer of 9 portfolios  in the  OppenheimerFunds
since 1998              complex;  formerly Vice  President of the Manager (July 1988
Age:  48                - May 1998).
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
George Evans, Vice      Vice President of the Manager (since October 1993) and of
President and           HarbourView Asset Management Corporation (since July 1994);
Portfolio Manager       an officer of 4 portfolios in the OppenheimerFunds complex.
since 1998
Age:  43
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Michael S. Levine,      Vice President (since June 1998) of the Manager;  an officer
Vice President and      of 4 portfolios in the  OppenheimerFunds  complex;  formerly
Portfolio Manager       Assistant  Vice  President  and  Portfolio  Manager  of  the
since 1998              Manager  (April  1996 - June  1998);  prior to  joining  the
Age:  37                Manager  in  June  1994,  he  was a  portfolio  manager  and
                        research associate for Amas Securities,  Inc. (February 1990
                        - February 1994).
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Susan Switzer, Vice     Vice President of the Manager (since December 2000);
President and           Assistant Vice President of the Manager (December 1997 -
Portfolio Manager       December 2000); an officer of 3 portfolios in the
since 2001              OppenheimerFunds complex. Prior to joining the Manager, she
Age:  36                was a portfolio manager at Neuberger Berman (November 1994
                        - November 1997).
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
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 1999              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) (offshore fund
                        management  subsidiaries  of  the  Manager);  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 85
                        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 85 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 85
Age: 39                 portfolios in the OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Robert G. Zack,         Senior Vice President  (since May 1985) and General  Counsel
Secretary since 2001    (since February 2002) of the Manager;  General Counsel and a
Age: 54                 director   (since   November   2001)   of   OppenheimerFunds
                        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 85 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 85
Age: 38                 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 82
Age: 45                 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 85 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: 36                 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 85 portfolios in the OppenheimerFunds complex.
- -------------------------------------------------------------------------------------

      |X|  Remuneration  of Trustees.  The officers of the Fund and one of the
Trustees of the Fund (Mr.  Murphy) who are affiliated with the Manager receive
no salary or fee from the Fund.  The  remaining  Trustees of the Fund received
the  compensation  shown below from the Fund with respect to the Fund's fiscal
year  ended  September  30,  2002.  The  compensation  from all of the Board I
Funds  (including the Fund)  represents  compensation  received as a director,
trustee or member of a committee of the Board during the calendar year 2001.

- -------------------------------------------------------------------------------------
Trustee Name and          For Fiscal Year Ended    For Calendar Year Ended 12/31/01
Other Fund
Position(s)
(as applicable)                  9/30/02
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
                         Aggregate    Retirement      Estimated    Total
                                                                   Compensation
                                                       Annual      From          All
                                                     Retirement    Oppenheimer
                                                    Benefits Paid  Funds  For  Which
                                       Benefits     at Retirement  Individual
                                      Accrued as   from all Board  Serves         As
                       Compensation  Part of Fund      I Funds     Trustee/Director
                        From Fund1     Expenses     (33 Funds) 2      (33 Funds)
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Leon Levy                 $4,105          $0          $133,352         $173,700
Chairman
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Robert G. Galli           $2,499        $3,581        $55,6782         $202,8863
Study Committee Member
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Phillip Griffiths         $1,2974        $854          $10,256          $54,889
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Benjamin Lipstein         $3,548        $1,149        $115,270         $150,152
Study Committee
Chairman, Audit
Committee Member
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Joel W. Motley5             $0            $0             $0               $0
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Elizabeth B. Moynihan     $2,499        $4,351         $57,086         $105,760
Study Committee Member
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Kenneth A. Randall        $2,293         $913          $74,471          $97,012
Audit Committee
Chairman
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Edward V. Regan           $2,268        $2,293         $46,313          $95,960
Proxy Committee
Chairman, Audit
Committee Member
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Russell S. Reynolds,      $1,696        $2,539         $48,991          $71,792
Jr.
Proxy Committee Member
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Donald Spiro              $1,514        $1,050         $9,396           $64,080
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Clayton K. Yeutter        $1,6966       $2,371         $36,372          $71,792
Proxy Committee
Member
- -------------------------------------------------------------------------------------
1.    Aggregate   compensation  from  the  Fund  includes  fees  and  deferred
 compensation, if any.
2.    Estimated  annual  retirement  benefits paid at retirement is based on a
 straight life payment plan election.  The amount for Mr. Galli includes  $24,989
 for  serving  as a trustee  or  director  of 10  Oppenheimer  funds that are not
 Board I Funds.
3.    Includes  $97,126 for Mr. Galli for serving as trustee or director of 10
 Oppenheimer funds that are not Board I Funds.
4.    Aggregate  total  compensation  from the Fund includes  $1,297  deferred
under Deferred Compensation Plan described below.
5.    Elected to the Board on October 10, 2002 and  therefore  did not receive
any compensation.
6.    Aggregate  compensation  from  the Fund  includes  $424  deferred  under
Deferred Compensation Plan described below.

      |X| Retirement Plan for Trustees. The Fund has adopted a retirement
plan that provides for payments to retired Trustees. Payments are up to 80%
of the average compensation paid during a Trustee's five years of service in
which the highest compensation was received. A Trustee must serve as trustee
for any of the Board I Funds for at least 15 years to be eligible for the
maximum payment. Each Trustee's retirement benefits will depend on the amount
of the Trustee's future compensation and length of service.

      |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 the Fund. Under the plan, the compensation
deferred by a Trustee is periodically adjusted as though an equivalent amount
had been invested in shares of one or more Oppenheimer funds selected by the
Trustee. The amount paid to the Trustee under the plan will be determined
based upon the performance of the selected funds.

      Deferral of Trustees' fees under the plan will not materially affect
the Fund's assets, liabilities or net income per share. The plan will not
obligate the Fund to retain the services of any Trustee or to pay any
particular level of compensation to any Trustee. Pursuant to an Order issued
by the Securities and Exchange Commission, the Fund 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 October 29, 2002, there were no persons
who owned of record or were known by the Fund to own of record 5% or more of
any class of the Fund's outstanding Class A, Class B, Class C or Class N
shares except the following:

      Sandra Joan Morris TR Sandra Joan Morris, a Prof Corp. 401(K) PSP, 3200
      4th Avenue, Suite 101, San Diego, CA 92103-5716, which owned 5,326.53
      Class N shares (5.81% of the Class N shares then outstanding).

      HSBC U/A Jun 01 95, Attn: Lynne Marshall, North American Watch Corp.
      Deferred Compensation Plan, 1 HSBC Center, Floor 17, Buffalo, NY
      14203-2842, which owned 22,092.10 Class N shares (24.11% of the Class N
      shares then outstanding).

      Reliance Trust Co. TR Mission Gorge Development, P.O. Box 48529,
      Atlanta, GA 30362-1529, which owned 5,311.01 Class N shares (5.79% of
      the Class N shares then outstanding).

      RPSS TR Rollover IRA FBO Michael W. Smith, 123 142nd Avenue, NW,
      Andover, MN 55304-6794, which owned 7,070.07 Class N shares (7.71% of
      the Class N shares then outstanding).

      RPSS TR Rollover IRA FBO Jacqueline M. Flanery, 5920 Parkoaks Drive,
      Citrus Heights, CA 95621-6113, which owned 4,784.59 Class N shares
      (5.22% of the Class N shares then outstanding).

      Oppenheimer Trust Co. Cust Greater Leveland Hospital Assoc. FBO Account
      Pooled, 1226 Huron Road E, Cleveland, OH 44115-1702, which owned
      7,299.85 Class N shares (7.96% of the Class N shares then outstanding).

      RPSS TR Healthcomp Inc. 401(K) Plan, Attn: Pam Szucs, 1226 Huron Road
      E, Cleveland, OH 44115-1702, which owned 5,660.27 Class N shares (6.17%
      of the Class N 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 Fund, The Manager and the Distributor have a
Code of Ethics.  It is designed to detect and prevent improper personal
trading by certain employees, including portfolio managers, that would
compete with or take advantage of the Fund's portfolio transactions.  Covered
persons include persons with knowledge of the investments and investment
intentions of the Fund and other funds advised by the Manager.  The Code of
Ethics does permit personnel subject to the Code to invest in securities,
including securities that may be purchased or held by the Fund, subject to a
number of restrictions and controls.  Compliance with the Code of Ethics is
carefully monitored and enforced by the Manager.

      The Code of Ethics is an exhibit to the Fund's registration statement
filed with the 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 website at www.sec.gov.  Copies may be obtained, after paying
a duplicating fee, by electronic request at the following E-mail address:
publicinfo@sec.gov., or by writing to the SEC's Public Reference Section,
Washington, D.C., 20549-0102.

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

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

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

      --------------------------------------------------------------------
      Fiscal Year ended 9/30:  Management Fees Paid to OppenheimerFunds,
                                                 Inc.
      --------------------------------------------------------------------
      --------------------------------------------------------------------
               2000                           $5,313,004
      --------------------------------------------------------------------
      --------------------------------------------------------------------
               2001                           $5,197,414
      --------------------------------------------------------------------
      --------------------------------------------------------------------
               2002                           $4,805,477
      --------------------------------------------------------------------

      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 advisor 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
advisor or general distributor. If the Manager shall no longer act as
investment advisor to the Fund, the Manager may withdraw the right of the
Fund to use the name "Oppenheimer" as part of its name.

         |X|      Annual Approval of Investment Advisory Agreement.  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
the 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 agreement.  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 Fund.
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 Fund 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 Fund who
assisted the Board in its deliberations.  The Fund's Counsel is independent
of the Manager within the meaning and intent of the SEC Rules regarding the
independence of counsel.

    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.

Brokerage Policies of the Fund

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

      Under the investment advisory agreement, the Manager may select brokers
(other than affiliates) that provide brokerage and/or research services for
the Fund and/or the other accounts over which the Manager or its affiliates
have investment discretion. The commissions paid to such brokers may be
higher than another qualified broker would charge, if the Manager makes a
good faith determination that the commission is fair and reasonable in
relation to the services provided. Subject to those considerations, as a
factor in selecting brokers for the Fund's portfolio transactions, the
Manager may also consider sales of shares of the Fund and other investment
companies for which the Manager or an affiliate serves as investment advisor.

Brokerage Practices Followed by the Manager. The Manager allocates brokerage
for the Fund subject to the provisions of the investment advisory agreement
and the procedures and rules described above. Generally, the Manager's
portfolio traders allocate brokerage based upon recommendations from the
Manager's portfolio managers. In certain instances, portfolio managers may
directly place trades and allocate brokerage. In either case, the Manager's
executive officers supervise the allocation of brokerage.

      Transactions in securities other than those for which an exchange is
the primary market are generally done with principals or market makers. In
transactions on foreign exchanges, the Fund may be required to pay fixed
brokerage commissions and therefore would not have the benefit of negotiated
commissions 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. In an option transaction, the Fund ordinarily uses the
same broker for the purchase or sale of the option and any transaction in the
securities to which the option relates. Other funds advised by the Manager
have investment policies similar to those of the Fund. Those other funds may
purchase or sell the same securities as the Fund at the same time as the
Fund, which could affect the supply and price of the securities. If two or
more funds advised by the Manager purchase the same security on the same day
from the same dealer, the transactions under those combined orders are
averaged as to price and allocated in accordance with the purchase or sale
orders actually placed for each account.

      Most purchases of debt obligations are principal transactions at net
prices. Instead of using a broker for those transactions, the Fund normally
deals directly with the selling or purchasing principal or market maker
unless the Manager 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 Fund seeks to obtain prompt execution of these orders at
the most favorable net price.

      The investment advisory agreement permits the Manager 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 Manager and its affiliates. The investment research received for the
commissions of those other accounts may be useful both to the Fund and one or
more of the Manager's other accounts. Investment research may be supplied to
the Manager 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 Manager in a non-research capacity (such as
bookkeeping or other administrative functions), then only the percentage or
component that provides assistance to the Manager in the investment
decision-making process may be paid in commission dollars.

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

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

 ------------------------------------------------------------------------------
  Fiscal Year Ended 9/30:     Total Brokerage Commissions Paid by the Fund1
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
           2000                                 $720,340
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
           2001                                 $874,242
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
           2002                                 $559,5972
 ------------------------------------------------------------------------------

1.    Amounts do not include spreads or commissions on principal  transactions
   on a net trade basis.
2.    In the fiscal year ended 9/30/02,  the amount of  transactions  directed
   to brokers for  research  services  was  $20,997,522  and the amount of the
   commissions paid to broker-dealers for those services was $37,478.

Distribution and Service Plans

            The Distributor. Under its General Distributor's Agreement with
the Fund, the Distributor whose primary address is P.O. Box 5270, Denver, CO
80217 acts as the Fund's principal underwriter in the continuous public
offering of the Fund's classes of shares. The Distributor is not obligated to
sell a specific number 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 sales charges and concessions paid to, or retained by, the
Distributor from the sale of shares during the Fund's three most recent
fiscal years, and the contingent deferred sales charges retained by the
Distributor on the redemption of shares for the three most recent fiscal
years are shown in the tables below.

             ------------------------------------------------------
                                  Aggregate       Class A Front-
                  Fiscal          Front-End         End Sales
                   Year         Sales Charges        Charges
                  Ended          on Class A        Retained by
                  9/30:            Shares          Distributor
             ------------------------------------------------------
             ------------------------------------------------------
                   2000           $392,339           $144,549
             ------------------------------------------------------
             ------------------------------------------------------
                   2001           $436,534           $155,780
             ------------------------------------------------------
             ------------------------------------------------------
                   2002           $428,672          $152,0451
             ------------------------------------------------------

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


- -------------------------------------------------------------------------
                 Concessions   Concessions   Concessions   Concessions
                 on Class A    on Class B    on Class C     on Class N
  Fiscal Year      Shares        Shares        Shares         Shares
  Ended 9/30     Advanced by   Advanced by   Advanced by   Advanced by
                Distributor1  Distributor1  Distributor1   Distributor1
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
     2000          $14,825      $348,915       $48,291         N/A
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
     2001          $21,811      $477,441       $69,856        $ 172
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
     2002          $19,253      $449,947       $57,203        $7,184
- -------------------------------------------------------------------------

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.

   -------------------------------------------------------------------------
    Fiscal Year     Class A        Class B        Class C       Class N
       Ended      Contingent     Contingent     Contingent     Contingent
       9/30        Deferred    Deferred Sales    Deferred       Deferred
                     Sales         Charges         Sales     Sales Charges
                    Charges       Retained        Charges     Retained by
                   Retained    by Distributor    Retained     Distributor
                      by                            by
                  Distributor                   Distributor
   -------------------------------------------------------------------------
   -------------------------------------------------------------------------
       2002         $3,142        $171,979        $4,681         $1,298
   -------------------------------------------------------------------------


Distribution and Service Plans. The Fund has adopted a Service Plan for Class
A shares and Distribution and Service Plans for Class B, Class C and Class N
shares under Rule 12b-1 of the Investment Company Act. Under those plans the
Fund pays the Distributor for all or a portion of its costs incurred in
connection with the distribution and/or servicing of the shares of the
particular class.

      Under the plans, the Manager 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 the 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 the Fund's Board of Trustees and its
Independent Trustees specifically vote annually to approve its continuance.
Approval must be by a vote cast in person at a meeting called for the purpose
of voting on continuing the plan. A plan may be terminated at any time by the
vote of a majority of the Independent Trustees or by the vote of the holders
of a "majority" (as defined in the Investment Company Act) of the outstanding
shares of that class.

      The Board of Trustees and the Independent Trustees must approve all
material amendments to a plan. An amendment to increase materially the amount
of payments to be made under a plan must be approved by shareholders of the
class affected by the amendment. Because Class B shares of the Fund
automatically convert into Class A shares after six years, the Fund must
obtain the approval of both Class A and Class B shareholders for a proposed
material amendment to the Class A plan that would materially increase
payments under the plan. That approval must be by a "majority" (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 the Fund shall provide
separate written reports on the plans to the Board of Trustees at least
quarterly for its review. The reports shall detail the amount of all payments
made under a plan, and the purpose for which the payments were made. The
reports on the Class B, Class C and Class N plans shall also include the
Distributor's distribution costs for that quarter. Those reports are subject
to the review and approval of the Independent Trustees.

      Each Plan states that while it is in effect, the selection and
nomination of those Trustees of the Fund who are not "interested persons" of
the Fund is committed to the discretion of the Independent Trustees. This
does not prevent the involvement of others in the selection and nomination
process as long as the final decision as to selection or nomination is
approved by a majority of the Independent Trustees.

      Under the 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. 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 Fund, assisting in
establishing and maintaining accounts in the Fund, making the Fund's
investment plans available and providing other services at the request of the
Fund or the Distributor. 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. 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.  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.

      For the fiscal period ended September 30, 2002, payments under the
Class A Plan totaled $1,114,460, all of which was paid by the Distributor to
recipients.  That included $65,458 paid to an affiliate of the Distributor's
parent company. Any unreimbursed expenses the Distributor incurs with respect
to Class A shares in any fiscal year cannot be recovered in subsequent years.
The Distributor may not use payments received 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 Plans. 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 Fund under the plan during the period for which the
fee is paid. The types of services that recipients provide are similar to the
services provided under the Class A service plan, described above.

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

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

- -------------------------------------------------------------------------------
  Distribution Fees Paid to the Distributor in the Fiscal Year Ended 9/30/02
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
                                                Distributor's   Distributor's
                                                  Aggregate      Unreimbursed
                     Total         Amount       Unreimbursed    Expenses as %
                   Payments     Retained by       Expenses      of Net Assets
     Class        Under Plan    Distributor      Under Plan        of Class
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Class B Plan       $647,256      $513,1681       $2,557,075         4.67%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Class C Plan       $374,199      $ 64,6052        $873,469          2.62%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Class N Plan        $ 2,259       $ 1,8473         $ 9,675          1.21%
- -------------------------------------------------------------------------------
1.    Includes  $9,257  paid  to an  affiliate  of  the  Distributor's  parent
   company.
2.    Includes  $10,471  paid  to an  affiliate  of the  Distributor's  parent
   company.
3.    Includes $0 paid to an affiliate of the Distributor's parent company.

      All payments under the Class B, Class C and the 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.

Performance of the Fund

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

      The Fund's illustrations of its performance data in advertisements must
comply with rules of the 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 the 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 one-, five- and
ten-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 the Fund's performance to the performance of other funds for the same
periods. However, a number of factors should be considered before using the
Fund's performance information as a basis for comparison with other
investments:

o     Total returns measure the performance of a hypothetical account in the
      Fund over various periods and do not show the performance of each
      shareholder's account. Your account's performance will vary from the
      model performance data if your dividends are received in cash, or you
      buy or sell shares during the period, or you bought your shares at a
      different time and price than the shares used in the model.
o     An investment in the Fund is not insured by the FDIC or any other
      government agency.
o     The Fund's performance returns may not reflect the effect of taxes on
      dividends and capital gains distributions.
o     The principal value of the Fund's shares and total returns are not
      guaranteed and normally will fluctuate on a daily basis.
o     When an investor's shares are redeemed, they may be worth more or less
      than their original cost.
o     Total returns for any given past period represent historical
      performance information 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 the Fund are affected by market
conditions, the quality of the Fund's investments, the maturity of debt
investments, the types of investments the Fund holds, and its operating
expenses that are allocated to the particular class.

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

      In calculating total returns for Class A shares, the current maximum
sales charge of 5.75% (as a percentage of the offering price) is deducted
from the initial investment ("P") (unless the return is shown without sales
charge, as described below). For Class B shares, payment of the applicable
contingent deferred sales charge is applied, depending on the period for
which the return is shown: 5.0% in the first year, 4.0% in the second year,
3.0% in the third and fourth years, 2.0% in the fifth year, 1.0% in the sixth
year and none thereafter. For Class C shares, the 1.0% contingent deferred
sales charge is deducted for returns for the one-year period. For Class N
shares, the 1% contingent deferred sales charge is deducted for returns for
the one year and life of class periods.  Class N total returns may also be
calculated for the periods prior to 3/1/01 (the inception date for Class N
shares), based on the Fund's Class A returns, adjusted to reflect the higher
Class N 12b-1 fees.

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

ERV - 1 = AVERAGE ANNUAL 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
- ----
1/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 Redemption)
  P


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

      Average Annual Total Returns for Class A Shares (After Taxes)
                      For the Periods Ended 9/30/02
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
                                 1-Year         5-Year
                                                              10-Year
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
After Taxes on Distributions    -15.18%         -2.59%         4.66%1
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
After Taxes on                   -7.75%         -0.59%         5.09%1
Distributions and
Redemption of Fund Shares
- --------------------------------------------------------------------------
   1. Inception date of Class A: 4/24/87


      |_| 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

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

 --------------------------------------------------------------------------------
             The Fund's Total Returns for the Periods Ended 9/30/02
 --------------------------------------------------------------------------------
 --------------------------------------------------------------------------------
          Cumulative Total               Average Annual Total Returns
          Returns (10 years
 Class    or Life of Class)
 of
 Shares
 --------------------------------------------------------------------------------
 --------------------------------------------------------------------------------
                                                   5-Year           10-Year
                                  1-Year            (or               (or
                                               life-of-class)   life-of-class)
 --------------------------------------------------------------------------------
 --------------------------------------------------------------------------------
          After     Without   After   Without After    Without After    Without
          Sales     Sales     Sales   Sales   Sales    Sales   Sales    Sales
          Charge    Charge    Charge  Charge  Charge   Charge  Charge   Charge
 --------------------------------------------------------------------------------
 --------------------------------------------------------------------------------
 Class A  103.65%(1)116.07%(1)-13.83% -8.58%   0.07%    1.26%  7.37%(1) 8.01%(1)
 --------------------------------------------------------------------------------
 --------------------------------------------------------------------------------
 Class B                      -13.70% -9.38%   0.16%    0.42%  5.67%(2) 5.67%(2)
          47.80%(2) 47.80%(2)
 --------------------------------------------------------------------------------
 --------------------------------------------------------------------------------
 Class C  70.36%(3) 70.36%(3) -10.27% -9.41%   0.43%    0.43%  6.22%(3) 6.22%(3)
 --------------------------------------------------------------------------------
 --------------------------------------------------------------------------------
 Class N  -17.34%(4)-17.34%(4)-9.81%  -8.94%  -11.35%  -11.35%   N/A      N/A
 --------------------------------------------------------------------------------

 1. Inception of Class A:     4/24/87.
 2. Inception of Class B:     8/29/95.
 3. Inception of Class C:     12/1/93.
 4. Inception of Class N:     3/1/01.

Other Performance Comparisons.  The Fund compares its performance annually to
that of an appropriate broadly-based market index in its Annual Report to
shareholders. You can obtain that information by contacting the Transfer
Agent at the addresses or telephone numbers shown on the cover of this
Statement of Additional Information. The Fund may also compare its
performance to that of other investments, including other mutual funds, or
use rankings of its performance by independent ranking entities. Examples of
these performance comparisons are set forth below.

      |X| Lipper Rankings. From time to time the Fund may publish the ranking
of the performance of its classes of shares by Lipper, Inc. ("Lipper").
Lipper is a widely-recognized independent mutual fund monitoring service.
Lipper monitors the performance of regulated investment companies, including
the Fund, and ranks their performance for various periods based in categories
based on investment styles.  The performance of the Fund is ranked by Lipper
against all other balanced 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 the 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.  The Fund is rated among domestic hybrid
funds.

      Morningstar proprietary star ratings reflect historical risk-adjusted
total investment return. For each fund with at least a three-year history,
Morningstar calculates a Morningstar Rating(TM)based on a Morningstar
Risk-Adjusted Return measure that accounts for variation in a fund's monthly
performance (including the effects of sales charges, loads, and redemption
fees), placing more emphasis on downward variations and rewarding consistent
performance.   The top 10% of funds in each category receive 5 stars, the
next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5%
receive 2 stars, and the bottom 10% receive 1 star.  (Each share class is
counted as a fraction of one fund within this scale and rated separately,
which may cause slight variations in the distribution percentages.) The
Overall Morningstar Rating for a fund is derived from a weighted average of
the performance figures associated with its three-, five-and ten-year (if
applicable) Morningstar Rating metrics.

      |X| Performance Rankings and Comparisons by Other Entities and
Publications. From time to time the Fund may include in its advertisements
and sales literature performance information about the Fund cited in
newspapers and other periodicals such as The New York Times, The Wall Street
Journal, Barron's, or similar publications. That information may include
performance quotations from other sources, including Lipper and Morningstar.
The performance of the Fund's classes of shares may be compared in
publications to the performance of various market indices or other
investments, and averages, performance rankings or other benchmarks prepared
by recognized mutual fund statistical services.

      Investors may also wish to compare the returns on the Fund's share
classes to the return on fixed-income investments available from banks and
thrift institutions. Those include certificates of deposit, ordinary
interest-paying checking and savings accounts, and other forms of fixed or
variable time deposits, and various other instruments such as Treasury bills.
However, the Fund's returns and share price are not guaranteed or insured by
the FDIC or any other agency and will fluctuate daily, while bank depository
obligations may be insured by the FDIC and may provide fixed rates of return.
Repayment of principal and payment of interest on Treasury securities is
backed by the full faith and credit of the U.S. government.

      From time to time, the Fund may publish rankings or ratings of the
Manager or Transfer Agent, and of the investor services provided by them to
shareholders of the Oppenheimer funds, other than performance rankings of the
Oppenheimer funds themselves. Those ratings or rankings of shareholder and
investor services by third parties may include comparisons of their services
to those provided by other mutual fund families selected by the rating or
ranking services. They may be based upon the opinions of the rating or
ranking service itself, using its research or judgment, or based upon surveys
of investors, brokers, shareholders or others.


      From time to time the Fund may include in its advertisements and sales
literature the total return performance of a hypothetical investment account
that includes shares of the fund and other Oppenheimer funds. The combined
account may be part of an illustration of an asset allocation model or
similar presentation. The account performance may combine total return
performance of the fund and the total return performance of other Oppenheimer
funds included in the account. Additionally, from time to time, the Fund's
advertisements and sales literature may include, for illustrative or
comparative purposes, statistical data or other information about general or
specific market and economic conditions. That may include, for example,

o     information about the performance of certain securities or commodities
         markets or segments of those markets,
o     information about the performance of the economies of particular
         countries or regions,
o     the earnings of companies included in segments of particular
         industries, sectors, securities markets, countries or regions,
o     the availability of different types of securities or offerings of
         securities,
o     information relating to the gross national or gross domestic product of
         the United States or other countries or regions,
o     comparisons of various market sectors or indices to demonstrate
         performance, risk, or other characteristics of the Fund.


ABOUT your account

How to Buy Shares

Additional information is presented below about the methods that can be used
to buy shares of the Fund. Appendix C contains more information about the
special sales charge arrangements offered by the Fund, and the circumstances
in which sales charges may be reduced or waived for certain classes of
investors.

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 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 Fund are not responsible
for any delays in purchasing shares resulting from delays in ACH
transmissions.

Reduced Sales Charges.  As discussed in the Prospectus, a reduced sales
charge rate may be obtained for Class A shares under Right of Accumulation
and Letters of Intent because of the economies of sales efforts and reduction
in expenses realized by the Distributor, dealers and brokers making such
sales.  No sales charge is imposed in certain other circumstances described
in Appendix C to this Statement of Additional Information because the
Distributor or dealer or broker incurs little or no selling expenses.

      ?  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:
o     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
o     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 Bond Fund                     Oppenheimer Municipal Bond Fund
Oppenheimer California Municipal Fund     Oppenheimer New Jersey Municipal Fund
Oppenheimer Capital Appreciation Fund     Oppenheimer New York Municipal Fund
Oppenheimer Capital Preservation Fund     Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Capital Income Fund           Oppenheimer Quest Balanced Value Fund
                                          Oppenheimer  Quest  Capital  Value Fund,
Oppenheimer Champion Income Fund          Inc.
                                          Oppenheimer  Quest  Global  Value  Fund,
Oppenheimer Convertible Securities Fund   Inc.
Oppenheimer Developing Markets Fund       Oppenheimer Quest Opportunity Value Fund
Oppenheimer Disciplined Allocation Fund   Oppenheimer Quest Value Fund, Inc.
Oppenheimer Discovery Fund                Oppenheimer Real Asset Fund
                                          Oppenheimer      Rochester      National
Oppenheimer Emerging Growth Fund          Municipals
Oppenheimer Emerging Technologies Fund    Oppenheimer Senior Floating Rate Fund
Oppenheimer Enterprise Fund               Oppenheimer Small Cap Value Fund
Oppenheimer Europe Fund                   Oppenheimer Strategic Income 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
Oppenheimer Limited-Term Government Fund  OSM1- Gartmore Millennium Growth Fund II
Oppenheimer Limited Term Municipal Fund   OSM1 - Jennison Growth Fund
Oppenheimer  Main Street  Growth & Income OSM1 -  Mercury  Advisors  S& P 500 Index
Fund                                      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
Oppenheimer Multiple Strategies Fund
And the following money market funds:

Centennial America Fund, L. P.            Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust    Centennial Tax Exempt Trust
Centennial Government Trust               Oppenheimer Cash Reserves
Centennial Money Market Trust             Oppenheimer Money Market Fund, Inc.
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 the 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 the 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 the 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 the 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 the 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 the Fund equal in value up to 5% of the
intended purchase amount specified in the Letter shall be held in escrow by
the Transfer Agent.  For example, if the intended purchase amount is $50,000,
the escrow shall be shares valued in the amount of $2,500 (computed at the
offering price adjusted for a $50,000 purchase).  Any dividends and capital
gains distributions on the escrowed shares will be credited to the investor's
account.

      2. If the total minimum investment specified under the Letter is
completed within the 13-month Letter 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 the
Fund, your bank account will be debited automatically.  Normally the debit
will be made two business days prior to the investment dates you selected on
your application.  Neither the Distributor, the Transfer Agent nor the Fund
shall be responsible for any delays in purchasing shares that result from
delays in ACH transmissions.

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

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

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

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

      The Distributor will not accept 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 the Fund.

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 after six years 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.
o     to certain customers of broker-dealers and financial advisors that are
            identified in a special agreement between the broker-dealer or
            financial advisor and the Distributor for that purpose.

      The sales concession and the advance of the service fee, as described
in the Prospectus, will not be paid to dealers of record on sales of Class N
shares on:
o     purchases of Class N shares in amounts of $500,000 or more by a
            retirement plan that pays for the purchase with the redemption
            proceeds of Class A shares of one or more Oppenheimer funds
            (other than rollovers from an OppenheimerFunds-sponsored Pinnacle
            or Ascender 401(k) plan to any IRA invested in the Oppenheimer
            funds),
o     purchases of Class N shares in amounts of $500,000 or more by a
            retirement plan that pays for the purchase with the redemption
            proceeds of  Class C shares of one or more Oppenheimer funds held
            by the plan for more than one year (other than rollovers from an
            OppenheimerFunds-sponsored Pinnacle or Ascender 401(k) plan to
            any IRA invested in the Oppenheimer funds), and
o     on purchases of Class N shares by an OppenheimerFunds-sponsored
            Pinnacle or Ascender 401(k) plan made with the redemption
            proceeds of Class A shares of one or more Oppenheimer funds.

      No sales concessions will be paid to the broker-dealer of record, as
described in the Prospectus, on sales of Class N shares purchased with the
redemption proceeds of shares of another mutual fund offered as an investment
option in a retirement plan in which Oppenheimer funds are also offered as
investment options under a special arrangement with the Distributor, if the
purchase occurs more than 30 days after the Oppenheimer funds are added as an
investment option under that plan.

      |X|   Allocation of Expenses. The Fund pays expenses related to its
daily operations, such as custodian fees, Trustees' fees, transfer agency
fees, legal fees and auditing costs.  Those expenses are paid out of the
Fund's assets and are  not paid directly by shareholders.  However, those
expenses reduce the net asset values of shares, and therefore are indirectly
borne by shareholders through their investment.

      The methodology for calculating the net asset value, dividends and
distributions of the Fund's share classes recognizes two types of expenses.
General expenses that do not pertain specifically to any one class are
allocated pro rata to the shares of all classes. The allocation is based on
the percentage of the Fund's total assets that is represented by the assets
of each class, and then equally to each outstanding share within a given
class.  Such general expenses include management fees, legal, bookkeeping and
audit fees, printing and mailing costs of shareholder reports, Prospectuses,
Statements of Additional Information and other materials for current
shareholders, fees to unaffiliated Trustees, custodian expenses, share
issuance costs, organization and start-up costs, interest, taxes and
brokerage commissions, and non-recurring expenses, such as litigation costs.

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

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 the Fund are determined as of the close of
business of The New York Stock Exchange ("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, Presidents' Day, Martin Luther
King, Jr. 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 the Fund's
net asset values will not be calculated on those days, the Fund's net asset
values per share may be significantly affected on such days when shareholders
may not purchase or redeem shares. Additionally, trading on 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
determines that the event is likely to effect a material change in the value
of the security. The Manager, or an internal valuation committee established
by the Manager, as applicable, may establish a valuation, under procedures
established by the Board and subject to the approval, ratification and
confirmation by the Board at its next ensuing meeting.

      ?  Securities Valuation.  The Fund's Board of Trustees has established
procedures for the valuation of the Fund's securities. In general those
procedures are as follows:
o     Equity securities traded on a U.S. securities exchange 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 from the report of the
               principal exchange on which the security is traded at its last
               trading session on or immediately before the valuation date, or
(3)   at the mean between the "bid" and "asked" prices obtained from the
               principal exchange on which the security is traded or, on the
               basis of reasonable inquiry, from two market makers in the
               security.
o     Long-term debt securities having a remaining maturity in excess of 60
days are valued based on the mean between the "bid" and "asked" prices
determined by a portfolio pricing service approved by the Fund's Board of
Trustees or obtained by the Manager from two active market makers in the
security on the basis of reasonable inquiry.
o     The following securities are valued at the mean between the "bid" and
"asked" prices determined by a pricing service approved by the Fund's Board
of Trustees or obtained by the Manager from two active market makers in the
security on the basis of reasonable inquiry:
(1)   debt instruments that have a maturity of more than 397 days when
               issued,
(2)   debt instruments that had a maturity of 397 days or less when issued
               and have a remaining maturity of more than 60 days, and
(3)   non-money market debt instruments that had a maturity of 397 days or
               less when issued and which have a remaining maturity of 60
               days or less.
o     The following securities are valued at cost, adjusted for amortization
of premiums and accretion of discounts:
(1)   money market debt securities held by a non-money market fund that had a
               maturity of less than 397 days when issued that have a
               remaining maturity of 60 days or less, and
(2)   debt instruments held by a money market fund that have a remaining
               maturity of 397 days or less.
o     Securities (including restricted securities) not having
readily-available market quotations are valued at fair value determined under
the Board's procedures.  If the Manager is unable to locate two market makers
willing to give quotes, a security may be priced at the mean between the
"bid" and "asked" prices provided by a single active market maker (which in
certain cases may be the "bid" price if no "asked" price is available).

      In the case of U.S. government securities, mortgage-backed securities,
corporate bonds and foreign government securities, when last sale information
is not generally available, the Manager may use pricing services approved by
the Board of Trustees. The pricing service may use "matrix" comparisons to
the prices for comparable instruments on the basis of quality, yield and
maturity. Other special factors may be involved (such as the tax-exempt
status of the interest paid by municipal securities).  The Manager will
monitor the accuracy of the pricing services. That monitoring may include
comparing prices used for portfolio valuation to actual sales prices of
selected securities.

      The closing prices in the London foreign exchange market on a
particular business day that are provided to the Manager by a bank, dealer or
pricing service that the Manager has determined to be reliable are used to
value foreign currency, including forward contracts, and to convert to U.S.
dollars securities that are denominated in foreign currency.

      Puts, calls, and futures are valued at the last sale price on the
principal exchange on which they are traded or on Nasdaq, as applicable, as
determined by a pricing service approved by the Board of Trustees or by the
Manager.  If there were no sales that day, they shall be valued at the last
sale price on the preceding trading day if it is within the spread of the
closing "bid" and "asked" prices on the principal exchange 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 from two active
market makers. In certain cases that may be at the "bid" price if no "asked"
price is available.

      When the Fund writes an option, an amount equal to the premium received
is included in the Fund's Statement of Assets and Liabilities as an asset. An
equivalent credit is included in the liability section.  The credit is
adjusted ("marked-to-market") to reflect the current market value of the
option. In determining the Fund's gain on investments, if a call or put
written by the Fund is exercised, the proceeds are increased by the premium
received.  If a call or put written by the Fund expires, the Fund has a gain
in the amount of the premium. If the Fund enters into a closing purchase
transaction, it will have a gain or loss, depending on whether the premium
received was more or less than the cost of the closing transaction.  If the
Fund exercises a put it holds, the amount the Fund receives on its sale of
the underlying investment is reduced by the amount of premium paid by the
Fund.


How to Sell Shares

The information below supplements the terms and conditions for redeeming
shares set forth in the Prospectus.

Reinvestment Privilege.  Within six months of a redemption, a shareholder may
reinvest all or part of the redemption proceeds of:
o     Class A shares purchased subject to an initial sales charge or Class A
   shares on which a contingent deferred sales charge was paid, or
o     Class B shares that were subject to the Class B contingent deferred
   sales charge when redeemed.

      The reinvestment may be made without sales charge only in Class A
shares of the Fund or any of the other Oppenheimer funds into which shares of
the Fund are exchangeable as described in "How to Exchange Shares" below.
Reinvestment will be at the net asset value next computed after the Transfer
Agent receives the reinvestment order.  The shareholder must ask the Transfer
Agent for that privilege at the time of reinvestment. This privilege does not
apply to Class C and Class N shares. The Fund may amend, suspend or cease
offering this reinvestment privilege at any time as to shares redeemed after
the date of such amendment, suspension or cessation.

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

Payments "In Kind". The Prospectus states that payment for shares tendered
for redemption is ordinarily made in cash. However, under certain
circumstances, the Board of Trustees of the Fund may determine that it would
be detrimental to the best interests of the remaining shareholders of the
Fund to make payment of a redemption order wholly or partly in cash. In that
case, the Fund may pay the redemption proceeds in whole or in part by a
distribution "in kind" of liquid securities from the portfolio of the Fund,
in lieu of cash.


      The Fund has elected to be governed by Rule 18f-1 under the Investment
Company Act. Under that rule, the Fund is obligated to redeem shares solely
in cash up to the lesser of $250,000 or 1% of the net assets of the Fund
during any 90-day period for any one shareholder. If shares are redeemed in
kind, the redeeming shareholder might incur brokerage or other costs in
selling the securities for cash. The Fund will value securities used to pay
redemptions in kind using the same method the Fund uses to value its
portfolio securities described above under "Determination of Net Asset Values
Per Share." That valuation will be made as of the time the redemption price
is determined.

Involuntary Redemptions. The Fund's Board of Trustees  has the right to cause
the involuntary redemption of the shares held in any account if the aggregate
net asset value of those shares is less than $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 the
Fund held in the name of the plan or its fiduciary may not directly request
redemption of their accounts.  The plan administrator or fiduciary must sign
the request.

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

Special Arrangements for Repurchase of Shares from Dealers and Brokers.  The
Distributor is the Fund's agent to repurchase its shares from authorized
dealers or brokers on behalf of their customers.  Shareholders should contact
their broker or dealer to arrange this type of redemption. The repurchase
price per share will be the net asset value next computed after the
Distributor receives an order placed by the dealer or broker. However, if the
Distributor receives a repurchase order from a dealer or broker after the
close of The 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 the Fund
valued at $5,000 or more can authorize the Transfer Agent to redeem shares
(having a value of at least $50) automatically on a monthly, quarterly,
semi-annual or annual basis under an Automatic Withdrawal Plan.  Shares will
be redeemed three business days prior to the date requested by the
shareholder for receipt of the payment.  Automatic withdrawals of up to
$1,500 per month may be requested by telephone if payments are to be made by
check payable to all shareholders of record. Payments must also be sent to
the address of record for the account and the address must not have been
changed within the prior 30 days.  Required minimum distributions from
OppenheimerFunds-sponsored retirement plans may not be arranged on this
basis.

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

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

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

Automatic  Withdrawal  Plans.  Fund shares will be  redeemed as  necessary  to
meet  withdrawal  payments.  Shares  acquired  without a sales  charge will be
redeemed first.  Shares  acquired with reinvested  dividends and capital gains
distributions will be redeemed next,  followed by shares acquired with a sales
charge,  to the extent necessary to make withdrawal  payments.  Depending upon
the amount  withdrawn,  the  investor's  principal  may be depleted.  Payments
made under these plans should not be  considered  as a yield or income on your
investment.

      The Transfer Agent will administer the investor's Automatic Withdrawal
Plan as agent for the shareholder(s) (the "Planholder") who executed the Plan
authorization and application submitted to the Transfer Agent.  Neither the
Fund nor the Transfer Agent shall incur any liability to the Planholder for
any action taken or not taken by the Transfer Agent in good faith to
administer the Plan. Share certificates will not be issued for shares of the
Fund purchased for and held under the Plan, but the Transfer Agent will
credit all such shares to the account of the Planholder on the records of the
Fund. Any share certificates held by a Planholder may be surrendered
unendorsed to the Transfer Agent with the Plan application so that the shares
represented by the certificate may be held under the Plan.

      For accounts subject to Automatic Withdrawal Plans, distributions of
capital gains must be reinvested in shares of the Fund, which will be done at
net asset value without a sales charge. Dividends on shares held in the
account may be paid in cash or reinvested.

      Shares will be redeemed to make withdrawal payments at the net asset
value per share determined on the redemption date.  Checks or AccountLink
payments representing the proceeds of Plan withdrawals will normally be
transmitted three business days prior to the date selected for receipt of the
payment, according to the choice specified in writing by the Planholder.
Receipt of payment on the date selected cannot be guaranteed.

      The amount and the interval of disbursement payments and the address to
which checks are to be mailed or AccountLink payments are to be sent may be
changed at any time by the Planholder by writing to the Transfer Agent.  The
Planholder should allow at least two weeks' time after mailing such
notification for the requested change to be put in effect.  The Planholder
may, at any time, instruct the Transfer Agent by written notice to redeem
all, or any part of, the shares held under the Plan. That notice must be in
proper form in accordance with the requirements of the then-current
Prospectus of the Fund. In that case, the Transfer Agent will redeem the
number of shares requested at the net asset value per share in effect and
will mail a check for the proceeds to the Planholder.

      The Planholder may terminate a Plan at any time by writing to the
Transfer Agent.  The Fund may also give directions to the Transfer Agent to
terminate a Plan. The Transfer Agent will also terminate a Plan upon its
receipt of evidence satisfactory to it that the Planholder has died or is
legally incapacitated. Upon termination of a Plan by the Transfer Agent or
the Fund, shares that have not been redeemed will be held in uncertificated
form in the name of the Planholder. The account will continue as a
dividend-reinvestment, uncertificated account unless and until proper
instructions are received from the Planholder, his or her executor or
guardian, or another authorized person.

      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 the Fund, the
Planholder will be deemed to have appointed any successor transfer agent to
act as agent in administering the Plan.

How to Exchange Shares

As stated in the Prospectus, shares of a particular class of Oppenheimer
funds having more than one class of shares may be exchanged only for shares
of the same class of other Oppenheimer funds. Shares of Oppenheimer funds
that have a single class without a class designation are deemed "Class A"
shares for this purpose. You can obtain a current list showing which funds
offer which classes of shares by calling the Distributor.

o     All of the Oppenheimer funds currently offer Class A, B, C, N and Y
      shares with the following exceptions:


      The following funds only offer Class A shares:
      Centennial 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 California Municipal Fund   Oppenheimer Pennsylvania Municipal
                                              Fund
      Oppenheimer Limited Term Municipal Fund Oppenheimer Rochester National
                                              Municipals
      Oppenheimer Municipal Bond Fund         Oppenheimer Senior Floating Rate
                                              Fund
      Oppenheimer New Jersey Municipal Fund   Limited Term New York Municipal
                                              Fund
      Oppenheimer New York Municipal Fund     Rochester Fund Municipals

      The following funds do not offer Class Y shares:

      Oppenheimer California Municipal Fund   Oppenheimer Limited Term Municipal
                                              Fund
      Oppenheimer Capital Income Fund         Oppenheimer Multiple Strategies
                                              Fund
      Oppenheimer Cash Reserves               Oppenheimer New Jersey Municipal
                                              Fund
      Oppenheimer Champion Income Fund        Oppenheimer New York Municipal Fund
      Oppenheimer Convertible Securities Fund Oppenheimer Pennsylvania Municipal
                                              Fund
      Oppenheimer Disciplined Allocation Fund Oppenheimer Quest Capital Value
                                              Fund, Inc.
      Oppenheimer Developing Markets Fund     Oppenheimer Quest Global Value
                                              Fund, Inc.
      Oppenheimer Gold & Special Minerals     Oppenheimer Rochester National
      Fund                                    Municipals
      Oppenheimer International Bond Fund     Oppenheimer Senior Floating Rate
                                              Fund
      Oppenheimer International Growth Fund   Oppenheimer Small Cap Value Fund
      Oppenheimer International Small         Limited Term New York Municipal
      Company Fund                            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.
o     Shares of Oppenheimer Select Managers Mercury Advisors S& P 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.

o     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.
o     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.

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

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

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

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

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

      When you exchange some or all of your shares from one fund to another,
any special account 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.  The Fund, the Distributor, and the Transfer Agent are unable
to provide investment, tax or legal advice to a shareholder in connection
with an exchange request or any other investment transaction.



Dividends, Capital Gains and Taxes

Dividends and Distributions. The Fund has no fixed dividend rate and there
can be no assurance as to the payment of any dividends or the realization of
any capital gains. The dividends and distributions paid by a class of shares
will vary from time to time depending on market conditions, the composition
of the Fund's portfolio, and expenses borne by the Fund or borne separately
by a class. Dividends are calculated in the same manner, at the same time,
and on the same day for each class of shares. However, dividends on Class B,
Class C and Class N shares are expected to be lower than dividends on Class A
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 Fund shares
represented by
checks returned to the Transfer Agent by the Postal Service as undeliverable
will be invested in shares of Oppenheimer Money Market Fund, Inc.
Reinvestment will be made as promptly as possible after the return of such
checks to the Transfer Agent, to enable the investor to earn a return on
otherwise idle funds. Unclaimed accounts may be subject to state escheatment
laws, and the Fund and the Transfer Agent will not be liable to shareholders
or their representatives for compliance with those laws in good faith.

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

      The tax discussion in the Prospectus and this 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.  The Fund has
elected to be taxed as a regulated investment company under Subchapter M of
the Internal Revenue Code of 1986, as amended.  As a regulated investment
company, the Fund is not subject to federal income tax on the portion of its
net investment income (that is, taxable interest, dividends, and other
taxable ordinary income, net of expenses) and capital gain net income (that
is, the excess of net long-term capital gains over net short-term capital
losses) that it distributes to shareholders. That qualification enables the
Fund to "pass through" its income and realized capital gains to shareholders
without having to pay tax on them. This avoids a "double tax" on that income
and capital gains, since shareholders normally will be taxed on the dividends
and capital gains they receive from the Fund (unless their Fund shares are
held in a retirement account or the shareholder is otherwise exempt from
tax).

      The Internal Revenue Code contains a number of complex tests relating
to qualification that the Fund might not meet in a particular year. If it did
not qualify as a regulated investment company, the Fund would be treated for
tax purposes as an ordinary corporation and would receive no tax deduction
for payments made to shareholders.

      To qualify as a regulated investment company, the Fund must distribute
at least 90% of its investment company taxable income (in brief, net
investment income and the excess of net short-term capital gain over net
long-term capital loss) for the taxable year. The Fund must also satisfy
certain other requirements of the Internal Revenue Code, some of which are
described below.  Distributions by the Fund made during the taxable year or,
under specified circumstances, within 12 months after the close of the
taxable year, will be considered distributions of income and gains for the
taxable year and will therefore count toward satisfaction of the
above-mentioned requirement.

      To qualify as a regulated investment company, the Fund must derive at
least 90% of its gross income from dividends, interest, certain payments with
respect to securities loans, gains from the sale or other disposition of
stock or securities or foreign currencies (to the extent such currency gains
are directly related to the regulated investment company's principal business
of investing in stock or securities) and certain other income.

      In addition to satisfying the requirements described above, the Fund
must satisfy an asset diversification test in order to qualify as a regulated
investment company.  Under that test, at the close of each quarter of the
Fund's taxable year, at least 50% of the value of the Fund's assets must
consist of cash and cash items (including receivables), U.S. government
securities, securities of other regulated investment companies, and
securities of other issuers. As to each of those issuers, the Fund must not
have invested more than 5% of the value of the Fund's total assets in
securities of each such issuer and the Fund must not hold more than 10% of
the outstanding voting securities of each such issuer. No more than 25% of
the value of its total assets may be invested in the securities of any one
issuer (other than U.S. government securities and securities of other
regulated investment companies), or in two or more issuers which the Fund
controls and which are engaged in the same or similar trades or businesses.
For purposes of this test, obligations issued or guaranteed by certain
agencies or instrumentalities of the U.S. government are treated as U.S.
government securities.

      |X|  Excise Tax on Regulated Investment Companies. Under the Internal
Revenue Code, by December 31 each year, the Fund must distribute 98% of its
taxable investment income earned from January 1 through December 31 of that
year and 98% of its capital gains realized in the period from November 1 of
the prior year through October 31 of the current year. If it does not, the
Fund must pay an excise tax on the amounts not distributed. It is presently
anticipated that the Fund will meet those requirements. To meet this
requirement, in certain circumstances the Fund might be required to liquidate
portfolio investments to make sufficient distributions to avoid excise tax
liability. However, the Board of Trustees and the Manager might determine in
a particular year that it would be in the best interests of shareholders for
the Fund not to make such distributions at the required levels and to pay the
excise tax on the undistributed amounts. That would reduce the amount of
income or capital gains available for distribution to shareholders.

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

      Special provisions of the Internal Revenue Code govern the eligibility
of the Fund's dividends for the dividends-received deduction for corporate
shareholders.  Long-term capital gains distributions are not eligible for the
deduction.  The amount of dividends paid by the Fund that may qualify for the
deduction is limited to the aggregate amount of qualifying dividends that the
Fund derives from portfolio investments that the Fund has held for a minimum
period, usually 46 days. A corporate shareholder will not be eligible for the
deduction on dividends paid on Fund shares held for 45 days or less.  To the
extent the Fund's dividends are derived from gross income from option
premiums, interest income or short-term gains from the sale of securities or
dividends from foreign corporations, those dividends will not qualify for the
deduction.

      The Fund may either retain or distribute to shareholders its net
capital gain for each taxable year.  The Fund currently intends to distribute
any such amounts.  If net long term capital gains are distributed and
designated as a capital gain distribution, it will be taxable to shareholders
as a long-term capital gain and will be properly identified in reports sent
to shareholders in January of each year. Such treatment will apply no matter
how long the shareholder has held his or her shares or whether that gain was
recognized by the Fund before the shareholder acquired his or her shares.

      If the Fund elects to retain its net capital gain, the Fund will be
subject to tax on it at the 35% corporate tax rate. If the Fund elects to
retain its net capital gain, the Fund will provide to shareholders of record
on the last day of its taxable year information regarding their pro rata
share of the gain and tax paid. As a result, each shareholder will be
required to report his or her pro rata share of such gain on their tax return
as long-term capital gain, will receive a refundable tax credit for his/her
pro rata share of tax paid by the Fund on the gain, and will increase the tax
basis for his/her shares by an amount equal to the deemed distribution less
the tax credit.

      Investment income that may be received by the Fund from sources within
foreign countries may be subject to foreign taxes withheld at the source.
The United States has entered into tax treaties with many foreign countries
which entitle the Fund to a reduced rate of, or exemption from, taxes on such
income.

      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 Fund, including the applicability of the U.S.
withholding taxes described above.

Dividend Reinvestment in Another Fund.  Shareholders of the Fund may elect to
reinvest all dividends and/or capital gains distributions in shares of the
same class of any of the other Oppenheimer funds 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 this Fund
on the same basis.


Additional Information About the Fund

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

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

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

Independent Auditors. KPMG LLP are the independent auditors of the Fund. They
audit the Fund's financial statements and perform other related audit
services.  They also act as auditors for certain other funds advised by the
Manager and its affiliates.

INDEPENDENT AUDITORS' REPORT
 OPPENHEIMER MULTIPLE STRATEGIES FUND


===============================================================================
 The Board of Trustees and Shareholders of
 Oppenheimer Multiple Strategies Fund:

We have  audited  the  accompanying  statement  of  assets  and  liabilities  of
Oppenheimer Multiple Strategies Fund, including the statement of investments, as
of September 30, 2002, and the related statement of operations for the year then
ended,  the statements of changes in net assets for each of the two years in the
period then ended,  and the financial  highlights  for each of the five years in
the period then ended. These financial  statements and financial  highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these  financial  statements  and financial  highlights  based on our
audits.

We conducted our audits in accordance with 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 September 30, 2002, by correspondence  with the custodian
and brokers or by other  appropriate  auditing  procedures  where  replies  from
brokers were not  received.  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
Multiple Strategies Fund as of September 30, 2002, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period  then ended,  and the  financial  highlights  for each of the five
years in the  period  then  ended,  in  conformity  with  accounting  principles
generally accepted in the United States of America.

/s/KPMG LLP
 KPMG LLP

 Denver, Colorado
 October 21, 2002

OPPENHEIMER MULTIPLE STRATEGIES FUND

STATEMENT OF INVESTMENTS  September 30, 2002



                                                                      Market
Value
                                                             Shares     See
Note 1
- ----------------------------------------------------------------------------------

 Common Stocks--50.3%
- ----------------------------------------------------------------------------------
 Consumer Discretionary--9.1%
- ----------------------------------------------------------------------------------
 Auto Components--0.8%
 Borg-Warner Automotive, Inc.(1)                             43,000    $
2,134,520
- ----------------------------------------------------------------------------------
 Delphi Corp.                                               250,000
2,137,500

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

4,272,020

- ----------------------------------------------------------------------------------
 Hotels, Restaurants & Leisure--0.7%
 Brinker International, Inc.(2)                              90,000
2,331,000
- ----------------------------------------------------------------------------------
 MGM Mirage, Inc.(2)                                         49,700
1,853,810

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

4,184,810

- ----------------------------------------------------------------------------------
 Household Durables--0.8%
 Matsushita Electric Industrial Co. Ltd., Sponsored ADR     100,000
1,037,000
- ----------------------------------------------------------------------------------
 Nintendo Co. Ltd.                                           16,000
1,863,644
- ----------------------------------------------------------------------------------
 Sony Corp.                                                  13,000
545,671
- ----------------------------------------------------------------------------------
 Sony Corp., Sponsored ADR                                   10,000
411,000
- ----------------------------------------------------------------------------------
 Toll Brothers, Inc.(2)                                      22,200
482,628

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

4,339,943

- ----------------------------------------------------------------------------------
 Leisure Equipment & Products--1.2%
 Callaway Golf Co.(1)                                       155,000
1,612,000
- ----------------------------------------------------------------------------------
 Mattel, Inc.                                               163,000
2,935,630
- ----------------------------------------------------------------------------------
 Shimano, Inc.                                              165,000
2,473,509

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

7,021,139

- ----------------------------------------------------------------------------------
 Media--3.9%
 Cox Radio, Inc., Cl. A(2)                                   61,900
1,619,304
- ----------------------------------------------------------------------------------
 EchoStar Communications Corp., Cl. A(2)                    132,000
2,283,600
- ----------------------------------------------------------------------------------
 General Motors Corp., Cl. H(2)                              56,000
512,400
- ----------------------------------------------------------------------------------
 News Corp. Ltd. (The), Sponsored ADR, Preference            60,000
996,000
- ----------------------------------------------------------------------------------
 Omnicom Group, Inc.(1)                                      61,900
3,446,592
- ----------------------------------------------------------------------------------
 Reed Elsevier plc                                          180,000
1,546,967
- ----------------------------------------------------------------------------------
 SCMP Group Ltd.                                          2,356,000
1,019,475
- ----------------------------------------------------------------------------------
 SES Global, FDR                                            110,000
543,565
- ----------------------------------------------------------------------------------
 Viacom, Inc., Cl. B(2)                                     260,000
10,543,000

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

22,510,903

- ----------------------------------------------------------------------------------
 Multiline Retail--0.3%
 Federated Department Stores, Inc.(1,2)                      37,500
1,104,000
- ----------------------------------------------------------------------------------
 Sears Roebuck & Co.                                         20,000
780,000

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

1,884,000



11 | OPPENHEIMER MULTIPLE STRATEGIES FUND



STATEMENT OF INVESTMENTS  Continued



                                                                      Market
Value
                                                             Shares     See
Note 1
- ----------------------------------------------------------------------------------

- ----------------------------------------------------------------------------------
 Specialty Retail--1.0%
 Borders Group, Inc.(1,2)                                    90,000    $
1,422,000
- ----------------------------------------------------------------------------------
 Children's Place Retail Stores, Inc.(2)                     42,000
424,200
- ----------------------------------------------------------------------------------
 Gap, Inc. (The)                                            160,000
1,736,000
- ----------------------------------------------------------------------------------
 Talbots, Inc. (The)                                         44,000
1,232,000
- ----------------------------------------------------------------------------------
 Tiffany & Co.(1)                                            33,000
707,190

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

5,521,390

- ----------------------------------------------------------------------------------
 Textiles & Apparel--0.4%
 Compagnie Financiere Richemont AG, A Units                  30,650
454,590
- ----------------------------------------------------------------------------------
 Nike, Inc., Cl. B(1)                                        44,000
1,899,920

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

2,354,510

- ----------------------------------------------------------------------------------
 Consumer Staples--3.2%
- ----------------------------------------------------------------------------------
 Food & Drug Retailing--0.3%
 Safeway, Inc.(2)                                            77,000
1,717,100
- ----------------------------------------------------------------------------------
 Food Products--1.2%
 ConAgra Foods, Inc.                                         65,000
1,615,250
- ----------------------------------------------------------------------------------
 Sara Lee Corp.                                              66,000
1,207,140
- ----------------------------------------------------------------------------------
 Tyson Foods, Inc., Cl. A                                   205,000
2,384,150
- ----------------------------------------------------------------------------------
 Unilever NV, NY Shares                                      33,500
1,991,575

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

7,198,115

- ----------------------------------------------------------------------------------
 Personal Products--1.0%
 Estee Lauder Cos., Inc. (The), Cl. A                        60,000
1,724,400
- ----------------------------------------------------------------------------------
 Wella AG                                                    93,210
3,971,269

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

5,695,669

- ----------------------------------------------------------------------------------
 Tobacco--0.7%
 Philip Morris Cos., Inc.                                   100,000
3,880,000
- ----------------------------------------------------------------------------------
 Energy--4.6%
- ----------------------------------------------------------------------------------
 Energy Equipment & Services--1.3%
 Cooper Cameron Corp.(2)                                     23,000
960,480
- ----------------------------------------------------------------------------------
 Core Laboratories NV(2)                                     91,000
852,670
- ----------------------------------------------------------------------------------
 GlobalSantaFe Corp.                                         91,000
2,033,850
- ----------------------------------------------------------------------------------
 Noble Corp.(1,2)                                            98,000
3,038,000
- ----------------------------------------------------------------------------------
 Petroleum Geo-Services ASA, Sponsored ADR(2)               110,000
83,600
- ----------------------------------------------------------------------------------
 Transocean, Inc.(1)                                         20,000
416,000

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

7,384,600

- ----------------------------------------------------------------------------------
 Oil & Gas--3.3%
 ChevronTexaco Corp.                                         11,000
761,750
- ----------------------------------------------------------------------------------
 Devon Energy Corp.(1)                                       62,000
2,991,500
- ----------------------------------------------------------------------------------
 Exxon Mobil Corp.                                           16,000
510,400
- ----------------------------------------------------------------------------------
 Houston Exploration Co.(2)                                  21,700
675,955



12 | OPPENHEIMER MULTIPLE STRATEGIES FUND



STATEMENT OF INVESTMENTS  Continued




                                                                      Market
Value
                                                             Shares     See
Note 1
- ----------------------------------------------------------------------------------

 Oil & Gas Continued
 Ocean Energy, Inc.                                          60,000    $
1,197,000
- ----------------------------------------------------------------------------------
 Perez Companc SA, Sponsored ADR(2)                          28,336
142,530
- ----------------------------------------------------------------------------------
 Petroleo Brasileiro SA, Preference                          33,300
312,108
- ----------------------------------------------------------------------------------
 Talisman Energy, Inc.                                       90,000
3,608,624
- ----------------------------------------------------------------------------------
 TotalFinaElf SA, Sponsored ADR                              33,000
2,173,050
- ----------------------------------------------------------------------------------
 Unocal Corp.(1)                                            173,000
5,430,470
- ----------------------------------------------------------------------------------
 Westport Resources Corp.(2)                                 74,900
1,370,670

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

19,174,057

- ----------------------------------------------------------------------------------
 Financials--7.4%
- ----------------------------------------------------------------------------------
 Banks--3.3%
 Bank of America Corp.(1)                                   114,000
7,273,200
- ----------------------------------------------------------------------------------
 Bank of New York Co., Inc. (The)                            73,000
2,098,020
- ----------------------------------------------------------------------------------
 BBVA Banco Frances SA, ADR(2)                               25,000
43,750
- ----------------------------------------------------------------------------------
 U.S. Bancorp                                               110,000
2,043,800
- ----------------------------------------------------------------------------------
 UBS AG(2)                                                   33,600
1,398,100
- ----------------------------------------------------------------------------------
 UniCredito Italiano SpA                                    620,000
2,242,650
- ----------------------------------------------------------------------------------
 Washington Mutual, Inc.                                    110,000
3,461,700

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

18,561,220

- ----------------------------------------------------------------------------------
 Diversified Financials--1.5%
 CIT Group, Inc.(2)                                          91,000
1,636,180
- ----------------------------------------------------------------------------------
 J.P. Morgan Chase & Co.                                    315,000
5,981,850
- ----------------------------------------------------------------------------------
 Merrill Lynch & Co., Inc.                                   36,000
1,186,200

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

8,804,230

- ----------------------------------------------------------------------------------
 Insurance--0.9%
 American International Group, Inc.                          37,000
2,023,900
- ----------------------------------------------------------------------------------
 Hartford Financial Services Group, Inc.                     64,000
2,624,000
- ----------------------------------------------------------------------------------
 Zurich Financial Services AG                                 3,300
308,003

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

4,955,903

- ----------------------------------------------------------------------------------
 Real Estate--1.7%
 Camden Property Trust                                       35,000
1,160,250
- ----------------------------------------------------------------------------------
 CarrAmerica Realty Corp.                                    45,000
1,132,650
- ----------------------------------------------------------------------------------
 Developers Diversified Realty Corp.                         54,000
1,188,540
- ----------------------------------------------------------------------------------
 Equity Office Properties Trust                              59,000
1,523,380
- ----------------------------------------------------------------------------------
 Health Care Property Investors, Inc.                        48,000
2,044,800
- ----------------------------------------------------------------------------------
 Host Marriott Corp.(2)                                     295,000
2,737,600
- ----------------------------------------------------------------------------------
 IRSA Inversiones y Representaciones SA, Sponsored GDR(2)    33,151
187,303

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

9,974,523



13 | OPPENHEIMER MULTIPLE STRATEGIES FUND



STATEMENT OF INVESTMENTS  Continued




                                                                      Market
Value
                                                             Shares     See
Note 1
- ----------------------------------------------------------------------------------

 Health Care--8.4%
- ----------------------------------------------------------------------------------
 Biotechnology--1.1%
 Affymetrix, Inc.(2)                                         52,000    $
1,081,600
- ----------------------------------------------------------------------------------
 Human Genome Sciences, Inc.(2)                              89,500
1,079,370
- ----------------------------------------------------------------------------------
 Millennium Pharmaceuticals, Inc.(1,2)                       46,000
428,720
- ----------------------------------------------------------------------------------
 Wyeth                                                      105,000
3,339,000

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

5,928,690

- ----------------------------------------------------------------------------------
 Health Care Equipment & Supplies--0.6%
 Boston Scientific Corp.(2)                                  35,000
1,104,600
- ----------------------------------------------------------------------------------
 Guidant Corp.(2)                                            76,000
2,455,560
- ----------------------------------------------------------------------------------
 Sun Healthcare Group, Inc.(2)                                  198
1,050

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

3,561,210

- ----------------------------------------------------------------------------------
 Health Care Providers & Services--1.5%
 Anthem, Inc.(1,2)                                           20,000
1,300,000
- ----------------------------------------------------------------------------------
 Covance, Inc.(2)                                           114,000
2,230,980
- ----------------------------------------------------------------------------------
 Healthsouth Corp.(2)                                       177,000
734,550
- ----------------------------------------------------------------------------------
 Humana, Inc.(2)                                            142,000
1,760,800
- ----------------------------------------------------------------------------------
 Quintiles Transnational Corp.(2)                           133,000
1,264,830
- ----------------------------------------------------------------------------------
 Service Corp. International(2)                             420,000
1,470,000

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

8,761,160

- ----------------------------------------------------------------------------------
 Pharmaceuticals--5.2%
 Abbott Laboratories                                        118,000
4,767,200
- ----------------------------------------------------------------------------------
 AstraZeneca plc                                             61,600
1,833,551
- ----------------------------------------------------------------------------------
 Bristol-Myers Squibb Co.                                    73,000
1,737,400
- ----------------------------------------------------------------------------------
 GlaxoSmithKline plc, ADR                                    84,000
3,228,120
- ----------------------------------------------------------------------------------
 Johnson & Johnson                                          103,000
5,570,240
- ----------------------------------------------------------------------------------
 Merck & Co., Inc.                                           15,000
685,650
- ----------------------------------------------------------------------------------
 Novartis AG                                                118,800
4,697,325
- ----------------------------------------------------------------------------------
 Pharmacia Corp.                                             50,000
1,944,000
- ----------------------------------------------------------------------------------
 Pliva d.d., GDR(3)                                          20,000
246,000
- ----------------------------------------------------------------------------------
 Schering-Plough Corp.                                      121,000
2,579,720
- ----------------------------------------------------------------------------------
 Watson Pharmaceuticals, Inc.(2)                            107,600
2,637,276

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

29,926,482

- ----------------------------------------------------------------------------------
 Industrials--2.7%
- ----------------------------------------------------------------------------------
 Aerospace & Defense--0.5%
 Boeing Co.                                                  47,000
1,604,110
- ----------------------------------------------------------------------------------
 Northrop Grumman Corp.                                       8,000
992,320
- ----------------------------------------------------------------------------------
 Orbital Sciences Corp.(2)                                      790
2,686

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

2,599,116



14 | OPPENHEIMER MULTIPLE STRATEGIES FUND


STATEMENT OF INVESTMENTS  Continued



                                                                      Market
Value
                                                             Shares     See
Note 1
- ----------------------------------------------------------------------------------

 Air Freight & Couriers--0.2%
 United Parcel Service, Inc., Cl. B                          23,000    $
1,438,190
- ----------------------------------------------------------------------------------
 Airlines--0.2%
 Delta Air Lines, Inc.(1)                                    70,000
650,300
- ----------------------------------------------------------------------------------
 Singapore Airlines Ltd.                                    144,000
777,809

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

1,428,109

- ----------------------------------------------------------------------------------
 Commercial Services & Supplies--0.4%
 Pittston Brink's Group                                     100,000
2,240,000
- ----------------------------------------------------------------------------------
 Construction & Engineering--0.1%
 Insituform Technologies, Inc., Cl. A(2)                     35,100
503,650
- ----------------------------------------------------------------------------------
 Electrical Equipment--0.0%
 Active Power, Inc.(2)                                      160,000
214,400
- ----------------------------------------------------------------------------------
 Industrial Conglomerates--0.3%
 Tyco International Ltd.(1)                                 110,000
1,551,000
- ----------------------------------------------------------------------------------
 Machinery--0.4%
 Komatsu Ltd.                                               227,000
762,633
- ----------------------------------------------------------------------------------
 Morgan Crucible Co. plc                                    400,200
376,858
- ----------------------------------------------------------------------------------
 SureBeam Corp., Cl. A(2)                                   166,885
300,393
- ----------------------------------------------------------------------------------
 Wolverine Tube, Inc.(2)                                    123,000
753,990

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

2,193,874

- ----------------------------------------------------------------------------------
 Road & Rail--0.6%
 Burlington Northern Santa Fe Corp.                          56,000
1,339,520
- ----------------------------------------------------------------------------------
 Swift Transportation Co., Inc.(1,2)                        120,000
1,872,000

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

3,211,520

- ----------------------------------------------------------------------------------
 Information Technology--7.7%
- ----------------------------------------------------------------------------------
 Communications Equipment--0.7%
 Brocade Communications Systems, Inc.(2)                     75,000
564,750
- ----------------------------------------------------------------------------------
 Cisco Systems, Inc.(2)                                     115,000
1,205,200
- ----------------------------------------------------------------------------------
 Juniper Networks, Inc.(2)                                   45,000
216,000
- ----------------------------------------------------------------------------------
 Motorola, Inc.                                             183,000
1,862,940

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

3,848,890

- ----------------------------------------------------------------------------------
 Computers & Peripherals--1.7%
 EMC Corp.(2)                                               131,000
598,670
- ----------------------------------------------------------------------------------
 International Business Machines Corp.(1)                   160,000
9,342,400

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

9,941,070

- ----------------------------------------------------------------------------------
 Electronic Equipment & Instruments--1.2%
 Cognex Corp.(2)                                             90,000
1,251,900
- ----------------------------------------------------------------------------------
 Keyence Corp.                                               13,530
2,271,671
- ----------------------------------------------------------------------------------
 Millipore Corp.                                             51,000
1,621,290
- ----------------------------------------------------------------------------------
 Waters Corp.(2)                                             77,000
1,867,250

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

7,012,111



15 | OPPENHEIMER MULTIPLE STRATEGIES FUND



STATEMENT OF INVESTMENTS  Continued




                                                                      Market
Value
                                                             Shares     See
Note 1
- ----------------------------------------------------------------------------------

 Internet Software & Services--0.1%
 Yahoo!, Inc.(2)                                             43,000    $
411,510
- ----------------------------------------------------------------------------------
 IT Consulting & Services--0.3%
 Titan Corp. (The)(2)                                       160,000
1,536,000
- ----------------------------------------------------------------------------------
 Office Electronics--0.2%
 Canon, Inc.                                                 35,000
1,144,242
- ----------------------------------------------------------------------------------
 Semiconductor Equipment & Products--2.3%
 Analog Devices, Inc.(2)                                     73,000
1,438,100
- ----------------------------------------------------------------------------------
 Applied Micro Circuits Corp.(2)                            115,000
328,900
- ----------------------------------------------------------------------------------
 ASML Holding NV(2)                                         113,000
699,470
- ----------------------------------------------------------------------------------
 Intel Corp.                                                316,000
4,389,240
- ----------------------------------------------------------------------------------
 KLA-Tencor Corp.(2)                                         60,000
1,676,400
- ----------------------------------------------------------------------------------
 Lam Research Corp.(2)                                       96,000
854,400
- ----------------------------------------------------------------------------------
 National Semiconductor Corp.(1,2)                           67,000
799,980
- ----------------------------------------------------------------------------------
 STMicroelectronics NV, NY Registered Shares                 84,000
1,136,520
- ----------------------------------------------------------------------------------
 Teradyne, Inc.(1,2)                                        150,000
1,440,000
- ----------------------------------------------------------------------------------
 Texas Instruments, Inc.                                     32,000
472,640

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

13,235,650

- ----------------------------------------------------------------------------------
 Software--1.2%
 BEA Systems, Inc.(2)                                       130,000
673,400
- ----------------------------------------------------------------------------------
 i2 Technologies, Inc.(2)                                   165,000
85,800
- ----------------------------------------------------------------------------------
 Intuit, Inc.(1,2)                                           10,000
455,300
- ----------------------------------------------------------------------------------
 Peoplesoft, Inc.(2)                                        102,000
1,261,740
- ----------------------------------------------------------------------------------
 Rational Software Corp.(2)                                  83,000
358,560
- ----------------------------------------------------------------------------------
 Red Hat, Inc.(2)                                           137,000
650,750
- ----------------------------------------------------------------------------------
 Reynolds & Reynolds Co., Cl. A                              50,000
1,122,000
- ----------------------------------------------------------------------------------
 Synopsys, Inc.(2)                                           45,000
1,716,750
- ----------------------------------------------------------------------------------
 Veritas Software Corp.(2)                                   38,300
561,861

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

6,886,161

- ----------------------------------------------------------------------------------
 Materials--4.3%
- ----------------------------------------------------------------------------------
 Chemicals--2.8%
 Cabot Corp.(1)                                              94,600
1,986,600
- ----------------------------------------------------------------------------------
 Dow Chemical Co.                                            37,000
1,010,470
- ----------------------------------------------------------------------------------
 Engelhard Corp.(1)                                         110,000
2,621,300
- ----------------------------------------------------------------------------------
 Ferro Corp.                                                 90,000
2,079,000
- ----------------------------------------------------------------------------------
 Hercules, Inc.(2)                                          210,000
1,934,100
- ----------------------------------------------------------------------------------
 International Flavors & Fragrances, Inc.                    85,000
2,707,250
- ----------------------------------------------------------------------------------
 Monsanto Co.                                                84,823
1,296,944
- ----------------------------------------------------------------------------------
 Praxair, Inc.(1)                                            43,000
2,197,730

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

15,833,394




16 | OPPENHEIMER MULTIPLE STRATEGIES FUND



STATEMENT OF INVESTMENTS  Continued




                                                                      Market
Value
                                                             Shares     See
Note 1
- ----------------------------------------------------------------------------------

 Metals & Mining--0.8%
 Alcoa, Inc.                                                 68,000    $
1,312,400
- ----------------------------------------------------------------------------------
 Companhia Vale do Rio Doce, Sponsored ADR                   83,200
1,801,280
- ----------------------------------------------------------------------------------
 GrafTech International Ltd.(2)                             200,000
1,450,000

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

4,563,680

- ----------------------------------------------------------------------------------
 Paper & Forest Products--0.7%
 Georgia-Pacific Corp.                                      168,000
2,199,120
- ----------------------------------------------------------------------------------
 Sappi Ltd., Sponsored ADR                                   70,000
801,500
- ----------------------------------------------------------------------------------
 UPM-Kymmene Oyj                                             45,000
1,236,363

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

4,236,983

- ----------------------------------------------------------------------------------
 Telecommunication Services--1.3%
- ----------------------------------------------------------------------------------
 Diversified Telecommunication Services--0.1%
 Adelphia Business Solutions, Inc.(2)
3,333            117
- ----------------------------------------------------------------------------------
 Focal Communications Corp.(2)                                3,813
1,906
- ----------------------------------------------------------------------------------
 SBC Communications, Inc.(1)                                 15,000
301,500
- ----------------------------------------------------------------------------------
 Tele Norte Leste Participacoes SA (Telemar)             26,283,402
107,557
- ----------------------------------------------------------------------------------
 Tele Norte Leste Participacoes SA (Telemar), Preference  3,077,585
16,747
- ----------------------------------------------------------------------------------
 Telefonica SA, BDR(2)                                       16,262
116,603
- ----------------------------------------------------------------------------------
 WorldCom, Inc./WorldCom Group(2)                           500,000
50,000

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

594,430

- ----------------------------------------------------------------------------------
 Wireless Telecommunication Services--1.2%
 AT& T Corp.                                                 390,000
4,683,900
- ----------------------------------------------------------------------------------
 AT& T Wireless Services, Inc.(2)                            425,000
1,751,000
- ----------------------------------------------------------------------------------
 Millicom International Cellular SA(2)                      225,000
148,725
- ----------------------------------------------------------------------------------
 Telesp Celular Participacoes SA(2)                      49,153,261
32,727

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

6,616,352

- ----------------------------------------------------------------------------------
 Utilities--1.6%
- ----------------------------------------------------------------------------------
 Electric Utilities--0.8%
 Edison International(1,2)                                   58,000
580,000
- ----------------------------------------------------------------------------------
 Northeast Utilities Co.                                    115,000
1,943,500
- ----------------------------------------------------------------------------------
 Progress Energy, Inc.                                       37,000
1,512,190
- ----------------------------------------------------------------------------------
 Xcel Energy, Inc.                                           80,000
744,800

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

4,780,490

- ----------------------------------------------------------------------------------
 Gas Utilities--0.4%
 El Paso Corp.                                               90,000
744,300
- ----------------------------------------------------------------------------------
 NiSource, Inc.                                              72,000
1,240,560

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

1,984,860




17 | OPPENHEIMER MULTIPLE STRATEGIES FUND



STATEMENT OF INVESTMENTS  Continued




                                                                      Market
Value
                                                             Shares     See
Note 1
- ----------------------------------------------------------------------------------

 Multi-Utilities--0.4%
 Energy East Corp.                                           75,000    $
1,485,750
- ----------------------------------------------------------------------------------
 NorthWestern Corp.                                          75,000
732,000

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

2,217,750

 Total Common Stocks (Cost $299,977,206)
287,835,106

==================================================================================
 Preferred Stocks--0.4%
- ----------------------------------------------------------------------------------

 Qwest Trends Trust, 5.75% Cv.(3)                            40,000
316,800
- ----------------------------------------------------------------------------------
 Rouse Co. (The), $3.00 Cv., Series B                        23,000
1,058,000
- ----------------------------------------------------------------------------------
 Sovereign Capital Trust II, 7.50% Cv. Preferred Income Equity
 Redeemable Stock, Units (each unit consists of one preferred
 plus one warrant to purchase 5.3355 shares of Sovereign Bancorp
 common stock)(4)                                            12,500
912,500

- -----------
 Total Preferred Stocks (Cost $3,254,427)
2,287,300

                                                              Units
==================================================================================
 Rights, Warrants and Certificates--0.0%
- ----------------------------------------------------------------------------------

 Comunicacion Celular SA Wts., Exp. 11/15/03(2,5)
300              6
- ----------------------------------------------------------------------------------
 Covergent Communications, Inc. Wts., Exp. 4/1/08(2,5)
1,000             10
- ----------------------------------------------------------------------------------
 Sun Healthcare Group, Inc. Wts., Exp. 2/28/05(2,5)
496            248

- -----------
 Total Rights, Warrants and Certificates (Cost $0)
                        264

                                                          Principal
                                                             Amount
==================================================================================
 Mortgage-Backed Obligations--6.5%
- ----------------------------------------------------------------------------------

 Federal Home Loan Mortgage Corp., Gtd. Mtg. Pass-Through
 Certificates, Series 151, Cl. F, 9%, 5/15/21           $   212,971
222,498
- ----------------------------------------------------------------------------------
 Federal Home Loan Mortgage Corp., Gtd. Multiclass Mtg.
 Pass-Through Certificates, 7%, 5/1/29                    3,305,649
3,452,456
- ----------------------------------------------------------------------------------
 Federal Home Loan Mortgage Corp., Interest-Only
 Stripped Mtg.-Backed Security:
 Series 199, Cl. IO, (19.84)%, 8/1/28(6)                    789,654
104,876
 Series 203, Cl. IO, (18.19)%, 6/15/29(6)                 9,408,691
1,290,755
 Series 204, Cl. IO, (11.83)%, 5/15/29(6)                 9,372,366
1,397,068
- ----------------------------------------------------------------------------------
 Federal National Mortgage Assn.:
 6%, 5/1/16                                              15,750,788
16,377,066
 6.50%, 12/1/27-2/1/28                                    4,438,968
4,610,146
- ----------------------------------------------------------------------------------
 Federal National Mortgage Assn. Nts., 7.125%, 1/15/30      500,000
621,932
- ----------------------------------------------------------------------------------
 Government National Mortgage Assn.:
 5.375%, 3/20/26                                            144,717
148,879
 7%, 4/15/26                                              1,588,285
1,672,585
 7.50%, 5/15/27                                           5,840,365
6,212,229
- ----------------------------------------------------------------------------------
 Mortgage Capital Funding, Inc., Commercial Mtg. Pass-Through
 Certificates, Series 1996-MC1, Cl. G, 7.15%, 6/15/06(5)    400,000
402,875




18 | OPPENHEIMER MULTIPLE STRATEGIES FUND


STATEMENT OF INVESTMENTS  Continued



                                                          Principal   Market
Value
                                                             Amount     See
Note 1
==================================================================================

 Mortgage-Backed Obligations Continued
- ----------------------------------------------------------------------------------

 Salomon Brothers Mortgage Securities VII, Inc., Commercial Mtg.
 Pass-Through Certificates:
 Series 1996-B, Cl. 1, 7.054%, 4/25/26(5)               $   199,194    $
161,223
 Series 1996-C1, Cl. F, 8.493%, 1/20/06(7)                  250,000
242,344

- -----------
 Total Mortgage-Backed Obligations (Cost $36,795,698)
36,916,932

==================================================================================
 U.S. Government Obligations--7.8%
- ----------------------------------------------------------------------------------

 U.S. Treasury Bonds:
 6%, 2/15/26                                                500,000
582,988
 6.50%, 11/15/26                                            360,000
445,922
 8.875%, 8/15/17                                          3,650,000
5,411,698
 STRIPS, 6.30%, 8/15/25(8)                               15,300,000
4,707,887
 STRIPS, 6.54%, 8/15/15(8)                                8,500,000
4,745,363
 STRIPS, 7.10%, 11/15/18(8)                               9,350,000
4,190,773
 STRIPS, 7.31%, 8/15/19(8)                               10,200,000
4,353,788
- ----------------------------------------------------------------------------------
 U.S. Treasury Nts.:
 5%, 8/15/11                                              4,000,000
4,443,596
 5.875%, 2/15/04                                         15,000,000
15,885,945

- -----------
 Total U.S. Government Obligations (Cost $37,883,730)
44,767,960

==================================================================================
 Foreign Government Obligations--8.7%
- ----------------------------------------------------------------------------------

 Argentina (Republic of) Nts.:
 11.75%, 2/12/07(2,5,9)[ARP]                                150,000
2,303
 14.062%, 11/30/02(2,5,9)                                13,125,000
2,756,250
- ----------------------------------------------------------------------------------
 Argentina (Republic of) Par Bonds, 5.984%, 3/31/23(2,9)  2,335,000
1,062,425
- ----------------------------------------------------------------------------------
 Brazil (Federal Republic of) Debt Capitalization Bonds,
 Series 20 yr., 8%, 4/15/14                              14,783,077
7,317,623
- ----------------------------------------------------------------------------------
 Brazil (Federal Republic of) Eligible Interest Bonds,
 3.063%, 4/15/06(7)                                       6,348,800
4,221,952
- ----------------------------------------------------------------------------------
 Canada (Government of) Bonds:
 6.50%, 6/1/04[CAD]                                      13,320,000
8,868,524
 8.75%, 12/1/05[CAD]                                        495,000
359,959
 11.75%, 2/1/03[CAD]                                        290,000
188,524
 Series WL43, 5.75%, 6/1/29[CAD]                          7,130,000
4,708,533
- ----------------------------------------------------------------------------------
 Denmark (Kingdom of) Bonds, 8%, 3/15/06[DKK]            21,900,000
3,299,162
- ----------------------------------------------------------------------------------
 Eskom Depositary Receipts, Series E168, 11%,
 6/1/08[ZAR]                                              6,430,000
574,349
- ----------------------------------------------------------------------------------
 Eskom Sec. Bonds, Series E168, 11%, 6/1/08[ZAR]          3,000,000
267,970
- ----------------------------------------------------------------------------------
 Finland (Republic of) Bonds, Series RG, 9.50%,
 3/15/04[EUR]                                               672,752
724,135
- ----------------------------------------------------------------------------------
 Germany (Republic of) Bonds, Series 94, 6.25%,
 1/4/24[EUR]                                              1,362,593
1,581,506
- ----------------------------------------------------------------------------------
 New South Wales Treasury Corp. Gtd. Bonds, 7%,
 4/1/04[AUD]                                              1,570,000
876,681
- ----------------------------------------------------------------------------------
 Philippines (Republic of) Bonds, 8.60%, 6/15/27          1,150,000
967,437
- ----------------------------------------------------------------------------------
 Poland (Republic of) Bonds, Series 0403, Zero Coupon,
 14.37%, 4/21/03(8)[PLZ]                                 23,285,000
5,409,686
- ----------------------------------------------------------------------------------
 Queensland Treasury Corp. Global Exchangeable Gtd. Nts.,
 10.50%, 5/15/03[AUD]                                     2,590,000
1,455,855
- ----------------------------------------------------------------------------------
 United Kingdom Treasury Bonds:
 7.25%, 12/7/07[GBP]                                      2,400,000
4,304,521
 10%, 9/8/03[GBP]                                           325,000
540,585



19 | OPPENHEIMER MULTIPLE STRATEGIES FUND



STATEMENT OF INVESTMENTS  Continued




                                                          Principal   Market
Value
                                                             Amount     See
Note 1
==================================================================================

- ----------------------------------------------------------------------------------
 Foreign Government Obligations Continued
- ----------------------------------------------------------------------------------

 United Mexican States Bonds, Series RG, 16.50%,
 9/1/08[GBP]                                                 35,000    $
77,624

- -----------
 Total Foreign Government Obligations (Cost $67,817,013)
49,565,604

==================================================================================
 Non-Convertible Corporate Bonds and Notes--10.8%
- ----------------------------------------------------------------------------------

 ABN Amro Bank NV (NY Branch), 7.125% Sub. Nts.,
 Series B, 10/15/93                                         500,000
549,179
- ----------------------------------------------------------------------------------
 Adelphia Communications Corp.:
 10.25% Sr. Unsec. Sub. Nts., 6/15/11(9)                    200,000
74,000
 10.875% Sr. Unsec. Nts., 10/1/10(9)                        200,000
73,000
- ----------------------------------------------------------------------------------
 AES Corp. (The), 8.875% Sr. Unsec. Nts., 2/15/11           300,000
154,500
- ----------------------------------------------------------------------------------
 Alcoa, Inc., 6% Bonds, 1/15/12                           1,000,000
1,109,119
- ----------------------------------------------------------------------------------
 Allied Waste North America, Inc.:
 8.50% Sr. Sub. Nts., 12/1/08                               300,000
286,500
 8.875% Sr. Nts., Series B, 4/1/08                          400,000
390,000
 10% Sr. Unsec. Sub. Nts., Series B, 8/1/09                 200,000
185,000
- ----------------------------------------------------------------------------------
 Amazon.com, Inc., 0%/10% Sr. Unsec. Disc. Nts., 5/1/08(10) 500,000
463,750
- ----------------------------------------------------------------------------------
 AMC Entertainment, Inc., 9.50% Sr. Unsec.
 Sub. Nts., 2/1/11                                          600,000
525,000
- ----------------------------------------------------------------------------------
 American Cellular Corp., 9.50% Sr. Sub. Nts.,
 10/15/09(9)                                              1,300,000
175,500
- ----------------------------------------------------------------------------------
 American International Group, Inc./SunAmerica Global
 Financing VI,  6.30% Sr. Sec. Nts., 5/10/11(3)           1,000,000
1,114,551
- ----------------------------------------------------------------------------------
 American Tower Corp., 9.375% Sr. Nts., 2/1/09              150,000
89,250
- ----------------------------------------------------------------------------------
 Amgen, Inc., 8.125% Unsec. Debs., 4/1/97                   110,000
134,650
- ----------------------------------------------------------------------------------
 Amkor Technology, Inc., 9.25% Sr. Unsec. Nts., 5/1/06      600,000
417,000
- ----------------------------------------------------------------------------------
 AMRESCO, Inc., 10% Sr. Sub. Nts., Series 97-A,
 3/15/04(2,9)                                               200,000
45,000
- ----------------------------------------------------------------------------------
 Amtran, Inc., 10.50% Sr. Nts., 8/1/04                      500,000
202,500
- ----------------------------------------------------------------------------------
 Aurora Foods, Inc., 8.75% Sr. Sub. Nts., Series B, 7/1/08  400,000
230,500
- ----------------------------------------------------------------------------------
 Bank of America Corp., 7.80% Jr. Unsec. Sub. Nts.,
 2/15/10                                                    500,000
605,250
- ----------------------------------------------------------------------------------
 Beazer Homes USA, Inc., 8.375% Sr. Nts., 4/15/12           400,000
402,000
- ----------------------------------------------------------------------------------
 Blount, Inc., 13% Sr. Sub. Nts., 8/1/09                    350,000
208,250
- ----------------------------------------------------------------------------------
 Boeing Capital Corp., 6.50% Nts., 2/15/12                1,000,000
1,074,336
- ----------------------------------------------------------------------------------
 Boyd Gaming Corp., 8.75% Sr. Sub. Nts., 4/15/12            200,000
209,000
- ----------------------------------------------------------------------------------
 Bristol-Myers Squibb Co., 5.75% Nts., 10/1/11            1,000,000
1,082,779
- ----------------------------------------------------------------------------------
 BRL Universal Equipment Corp., 8.875% Sr. Sec. Nts.,
 2/15/08                                                    500,000
512,500
- ----------------------------------------------------------------------------------
 Calpine Corp.:
 8.50% Sr. Unsec. Nts., 2/15/11                           1,000,000
415,000
 8.75% Sr. Nts., 7/15/07                                    150,000
65,250
- ----------------------------------------------------------------------------------
 Canandaigua Brands, Inc., 8.625% Sr. Unsec. Nts., 8/1/06   750,000
791,250
- ----------------------------------------------------------------------------------
 Caterpillar, Inc., 7.375% Unsec. Debs., 3/1/97             500,000
608,570
- ----------------------------------------------------------------------------------
 Celcaribe SA, 14.50% Sr. Sec. Nts., 3/15/04(5)             350,000
176,750
- ----------------------------------------------------------------------------------
 Charter Communications Holdings LLC/
 Charter Communications Holdings Capital Corp.:
 0%/9.92% Sr. Unsec. Disc. Nts., 4/1/11(10)                 400,000
188,000
 10% Sr. Nts., 4/1/09                                       600,000
375,000




20 | OPPENHEIMER MULTIPLE STRATEGIES FUND



STATEMENT OF INVESTMENTS  Continued




                                                          Principal   Market
Value
                                                             Amount     See
Note 1
==================================================================================

- ----------------------------------------------------------------------------------
 Non-Convertible Corporate Bonds and Notes Continued
- ----------------------------------------------------------------------------------

 Chesapeake Energy Corp.:
 8.125% Sr. Unsec. Nts., 4/1/11                            $200,000    $
201,000
 8.375% Sr. Unsec. Nts., 11/1/08                            400,000
404,500
- ----------------------------------------------------------------------------------
 CIT Group, Inc., 7.75% Sr. Unsec. Unsub. Nts., 4/2/12    1,000,000
1,089,793
- ----------------------------------------------------------------------------------
 Citigroup, Inc., 6.875% Unsec. Nts., 2/15/98               550,000
568,939
- ----------------------------------------------------------------------------------
 Coast Hotels & Casinos, Inc., 9.50% Sr.
 Unsec. Sub. Nts., 4/1/09                                   200,000
210,000
- ----------------------------------------------------------------------------------
 Coca-Cola Co. (The), 7.375% Unsec. Debs., 7/29/93          440,000
530,225
- ----------------------------------------------------------------------------------
 Collins & Aikman Floorcoverings, Inc., 9.75% Sr.
 Sub. Nts., 2/15/10(3)                                      200,000
204,000
- ----------------------------------------------------------------------------------
 Comcast UK Cable Partner Ltd., 11.20% Sr.
 Unsec. Disc. Debs., 11/15/07                               850,000
693,812
- ----------------------------------------------------------------------------------
 Conoco, Inc., 6.95% Sr. Unsec. Nts., 4/15/29               500,000
566,648
- ----------------------------------------------------------------------------------
 CSK Auto, Inc., 12% Sr. Unsec. Nts., 6/15/06               300,000
319,125
- ----------------------------------------------------------------------------------
 Cumulus Media, Inc., 10.375% Sr. Unsec. Sub. Nts., 7/1/08  400,000
424,000
- ----------------------------------------------------------------------------------
 D.R. Horton, Inc., 9.75% Sr. Sub. Nts., 9/15/10            600,000
592,500
- ----------------------------------------------------------------------------------
 Dole Food Co., Inc., 7.25% Sr. Nts., 5/1/09                500,000
450,581
- ----------------------------------------------------------------------------------
 Doman Industries Ltd., 8.75% Sr. Nts., 3/15/04(9)        1,400,000
287,000
- ----------------------------------------------------------------------------------
 Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07(5)              100,000
103,500
- ----------------------------------------------------------------------------------
 Dynegy Holdings, Inc., 8.75% Sr. Nts., 2/15/12             250,000
78,750
- ----------------------------------------------------------------------------------
 EchoStar Broadband Corp., 10.375% Sr. Unsec. Nts.,
 10/1/07                                                  1,000,000
995,000
- ----------------------------------------------------------------------------------
 EchoStar DBS Corp., 9.375% Sr. Unsec. Nts., 2/1/09         700,000
675,500
- ----------------------------------------------------------------------------------
 Entravision Communications Corp., 8.125% Sr. Sub. Nts.,
 3/15/09                                                    200,000
205,000
- ----------------------------------------------------------------------------------
 Fleming Cos., Inc., 10.625% Sr. Unsec. Sub. Nts.,
 Series D, 7/31/07                                          400,000
234,000
- ----------------------------------------------------------------------------------
 Focal Communications Corp., 11.875% Sr. Unsec. Nts.,
 Series B, 1/15/10                                           85,000
8,075
- ----------------------------------------------------------------------------------
 Ford Motor Co., 7.70% Unsec. Debs., 5/15/97                500,000
410,165
- ----------------------------------------------------------------------------------
 Forest Oil Corp., 10.50% Sr. Unsec. Sub. Nts., 1/15/06     600,000
642,000
- ----------------------------------------------------------------------------------
 Frontier Oil Corp., 11.75% Sr. Nts., 11/15/09              250,000
255,000
- ----------------------------------------------------------------------------------
 Georgia-Pacific Corp., 8.125% Sr. Unsec. Nts., 5/15/11     600,000
501,031
- ----------------------------------------------------------------------------------
 Goldman Sachs Group, Inc. (The), 7.80% Sr. Unsec.
 Unsub. Nts., Series B, 1/28/10                             500,000
580,653
- ----------------------------------------------------------------------------------
 Graphic Packaging Corp., 8.625% Sub. Nts., 2/15/12         200,000
202,000
- ----------------------------------------------------------------------------------
 Great Atlantic & Pacific Tea Co., Inc. (The),
 9.125% Sr. Nts., 12/15/11                                  100,000
74,500
- ----------------------------------------------------------------------------------
 Hornbeck-Leevac Marine Services, Inc.,
 10.625% Sr. Nts., 8/1/08                                   250,000
262,500
- ----------------------------------------------------------------------------------
 Horseshoe Gaming LLC, 8.625% Sr. Sub. Nts., 5/15/09        600,000
630,000
- ----------------------------------------------------------------------------------
 Host Marriott LP, 9.50% Sr. Nts., 1/15/07                  400,000
401,000
- ----------------------------------------------------------------------------------
 Huntsman Corp./ICI Chemical Co. plc, Zero Coupon Sr. Unsec.
 Disc. Nts., 13.08%, 12/31/09(8)                            800,000
180,000
- ----------------------------------------------------------------------------------
 Huntsman International LLC, 9.875% Sr. Nts., 3/1/09(3)     200,000
201,000
- ----------------------------------------------------------------------------------
 International Business Machines Corp., 7.125% Sr. Unsec.
 Unsub. Debs., 12/1/96                                      500,000
547,479
- ----------------------------------------------------------------------------------
 International Wire Group, Inc., 11.75% Sr. Sub. Nts.,
 Series B, 6/1/05                                           500,000
320,000
- ----------------------------------------------------------------------------------
 Isle of Capri Casinos, Inc., 9% Sr. Sub. Nts., 3/15/12     300,000
309,750
- ----------------------------------------------------------------------------------
 ISP Holdings, Inc., 10.625% Sr. Sec. Nts., 12/15/09        250,000
226,250
- ----------------------------------------------------------------------------------
 IT Group, Inc., 11.25% Sr. Unsec. Sub. Nts.,
 Series B, 4/1/09(2,5,9)
600,000            750




21 | OPPENHEIMER MULTIPLE STRATEGIES FUND



STATEMENT OF INVESTMENTS  Continued




                                                          Principal   Market
Value
                                                             Amount     See
Note 1
==================================================================================

- ----------------------------------------------------------------------------------
 Non-Convertible Corporate Bonds and Notes Continued
- ----------------------------------------------------------------------------------

 J.P. Morgan Chase & Co., 6.75% Sub. Nts., 2/1/11        $1,000,000    $
1,092,579
- ----------------------------------------------------------------------------------
 John Deere Capital Corp., 6% Unsec. Nts., 2/15/09          700,000
766,996
- ----------------------------------------------------------------------------------
 K. Hovnanian Enterprises, Inc.,
 8.875% Sr. Sub. Nts., 4/1/12                               700,000
626,500
- ----------------------------------------------------------------------------------
 Kaiser Aluminum & Chemical Corp.:
 10.875% Sr. Nts., Series B, 10/15/06(9)                    250,000
172,500
 12.75% Sr. Sub. Nts., 2/1/03(2,9)                          500,000
62,500
- ----------------------------------------------------------------------------------
 KB Home:
 7.75% Sr. Nts., 10/15/04                                   400,000
402,000
 8.625% Sr. Sub. Nts., 12/15/08                             600,000
594,000
- ----------------------------------------------------------------------------------
 Lamar Advertising Co., 9.625% Sr. Unsec. Sub. Nts.,
 12/1/06                                                    100,000
103,750
- ----------------------------------------------------------------------------------
 Leap Wireless International, Inc.:
 0%/14.50% Sr. Unsec. Disc. Nts., 4/15/10(9,10)             300,000
13,500
 12.50% Sr. Nts., 4/15/10(9)                                600,000
58,500
- ----------------------------------------------------------------------------------
 Lyondell Chemical Co.:
 9.625% Sr. Sec. Nts., Series A, 5/1/07                     150,000
139,125
 9.875% Sec. Nts., Series B, 5/1/07                         400,000
371,000
- ----------------------------------------------------------------------------------
 MBNA America Bank NA, 6.625% Sub. Nts., 6/15/12          1,000,000
999,494
- ----------------------------------------------------------------------------------
 Mediacom LLC/Mediacom Capital Corp.,
 9.50% Sr. Unsec. Nts., 1/15/13                             400,000
328,000
- ----------------------------------------------------------------------------------
 MeriStar Hospitality Corp.:
 8.75% Sr. Unsec. Sub. Nts., 8/15/07                        500,000
402,500
 9.125% Sr. Unsec. Nts., 1/15/11                            750,000
671,250
- ----------------------------------------------------------------------------------
 MGM Mirage, Inc., 8.375% Sr. Unsec. Sub. Nts., 2/1/11      600,000
624,000
- ----------------------------------------------------------------------------------
 Millicom International Cellular SA,
 13.50% Sr. Disc. Nts., 6/1/06                            1,500,000
412,500
- ----------------------------------------------------------------------------------
 Mohegan Tribal Gaming Authority, 8% Sr. Sub. Nts.,
 4/1/12                                                     600,000
618,000
- ----------------------------------------------------------------------------------
 Motorola, Inc., 5.22% Unsec. Debs., 10/1/97                170,000
104,497
- ----------------------------------------------------------------------------------
 News America Holdings, Inc., 8.50% Sr. Nts., 2/15/05     1,000,000
1,069,252
- ----------------------------------------------------------------------------------
 Nextel Communications, Inc.:
 0%/9.95% Sr. Disc. Nts., 2/15/08(10)                       200,000
149,000
 9.375% Sr. Unsec. Nts., 11/15/09                           400,000
306,000
 12% Sr. Unsec. Nts., 11/1/08                               250,000
211,250
- ----------------------------------------------------------------------------------
 Norfolk Southern Corp., 7.90% Sr. Bonds, 5/15/97           500,000
607,848
- ----------------------------------------------------------------------------------
 Ocwen Financial Corp., 11.875% Nts., 10/1/03               325,000
326,625
- ----------------------------------------------------------------------------------
 OM Group, Inc., 9.25% Sr. Sub. Nts., 12/15/11              250,000
247,500
- ----------------------------------------------------------------------------------
 Orbcomm Global LP (Escrow)
155,000             --
- ----------------------------------------------------------------------------------
 PanAmSat Corp., 8.50% Sr. Nts., 2/1/12(3)                  300,000
241,500
- ----------------------------------------------------------------------------------
 Pathmark Stores, Inc., 8.75% Sr. Sub. Nts., 2/1/12         300,000
279,000
- ----------------------------------------------------------------------------------
 Penn National Gaming, Inc., 8.875% Sr. Sub. Nts., 3/15/10  500,000
505,000
- ----------------------------------------------------------------------------------
 Pennzoil-Quaker State Co., 10% Sr. Nts., 11/1/08           250,000
297,187
- ----------------------------------------------------------------------------------
 Petco Animal Supplies, Inc., 10.75% Sr. Sub. Nts.,
 11/1/11                                                    250,000
270,000
- ----------------------------------------------------------------------------------
 R& B Falcon Corp., 9.50% Sr. Unsec. Nts., 12/15/08          750,000
946,030
- ----------------------------------------------------------------------------------
 Revlon Consumer Products Corp., 12% Sr. Sec. Nts.,
 12/1/05                                                    250,000
226,250
- ----------------------------------------------------------------------------------
 Riverwood International Corp.:
 10.625% Sr. Unsec. Nts., 8/1/07                            500,000
512,500
 10.875% Sr. Sub. Nts., 4/1/08                              250,000
251,250




22 | OPPENHEIMER MULTIPLE STRATEGIES FUND



STATEMENT OF INVESTMENTS  Continued




                                                          Principal   Market
Value
                                                             Amount     See
Note 1
==================================================================================

- ----------------------------------------------------------------------------------
 Non-Convertible Corporate Bonds and Notes Continued
- ----------------------------------------------------------------------------------

 Rogers Cablesystems Ltd.,
 10% Second Priority Sr. Sec. Debs., 12/1/07            $ 1,300,000
$1,300,000
- ----------------------------------------------------------------------------------
 Rohm & Haas Co., 7.85% Unsec. Debs., 7/15/29               500,000
631,567
- ----------------------------------------------------------------------------------
 Rural Cellular Corp., 9.625% Sr. Sub. Nts.,
 Series B, 5/15/08                                          750,000
401,250
- ----------------------------------------------------------------------------------
 Sears Roebuck Acceptance Corp.,
 6.70% Unsec. Unsub. Nts., 4/15/12                        1,000,000
1,061,251
- ----------------------------------------------------------------------------------
 Sinclair Broadcast Group, Inc.:
 8.75% Sr. Sub. Nts., 12/15/07                            1,100,000
1,133,000
 8.75% Sr. Sub. Nts., 12/15/11                              250,000
259,375
 9% Sr. Unsec. Sub. Nts., 7/15/07                           375,000
388,125
- ----------------------------------------------------------------------------------
 Six Flags, Inc., 8.875% Sr. Nts., 2/1/10                   300,000
247,500
- ----------------------------------------------------------------------------------
 Smithfield Foods, Inc., 8% Sr. Nts., Series B, 10/15/09    600,000
594,000
- ----------------------------------------------------------------------------------
 Standard Pacific Corp., 9.25% Sr. Sub. Nts., 4/15/12       200,000
190,000
- ----------------------------------------------------------------------------------
 Sterling Chemicals, Inc., 12.375% Sr. Sec. Nts.,
 Series B, 7/15/06(2,9)                                     400,000
406,000
- ----------------------------------------------------------------------------------
 Stone Energy Corp., 8.25% Sr. Unsec. Sub. Nts., 12/15/11   250,000
257,500
- ----------------------------------------------------------------------------------
 Subic Power Corp.:
 9.50% Sr. Sec. Nts., 12/28/08                              224,138
219,655
 9.50% Sr. Sec. Nts., 12/28/08(3)                            44,828
43,931
- ----------------------------------------------------------------------------------
 Sun International Hotels Ltd.,
 8.875% Sr. Sub. Unsec. Nts., 8/15/11                       400,000
403,000
- ----------------------------------------------------------------------------------
 Swift & Co., 10.125% Sr. Nts., 10/1/09(3)                1,500,000
1,398,750
- ----------------------------------------------------------------------------------
 Terex Corp., 9.25% Sr. Unsec. Sub. Nts., 7/15/11           250,000
245,000
- ----------------------------------------------------------------------------------
 Toll Corp., 8.25% Sr. Sub. Nts., 12/1/11                 2,000,000
1,980,000
- ----------------------------------------------------------------------------------
 Tritel PCS, Inc., 10.375% Sr. Sub. Nts., 1/15/11           377,000
329,875
- ----------------------------------------------------------------------------------
 Triton PCS, Inc., 8.75% Sr. Unsec. Sub. Nts., 11/15/11     400,000
266,000
- ----------------------------------------------------------------------------------
 TV Azteca SA de CV, 10.50% Sr. Nts., Series B, 2/15/07     200,000
186,500
- ----------------------------------------------------------------------------------
 Tyco International Group SA, 6.375% Nts., 10/15/11       1,000,000
821,590
- ----------------------------------------------------------------------------------
 Unifrax Investment Corp., 10.50% Sr. Nts., 11/1/03(5)      500,000
502,500
- ----------------------------------------------------------------------------------
 United Auto Group, Inc., 9.625% Sr. Sub. Nts., 3/15/12(3)  100,000
101,500
- ----------------------------------------------------------------------------------
 United Pan-Europe Communications NV,
 10.875% Sr. Unsec. Nts., Series B, 8/1/09(2,9)             400,000
14,000
- ----------------------------------------------------------------------------------
 United Rentals, Inc., 9% Sr. Unsec. Sub. Nts.,
 Series B, 4/1/09                                           500,000
415,000
- ----------------------------------------------------------------------------------
 United States Steel LLC, 10.75% Sr. Nts., 8/1/08           600,000
594,000
- ----------------------------------------------------------------------------------
 Venetian Casino Resort LLC/Las Vegas Sands, Inc.,
 11% Bonds, 6/15/10(3)                                      200,000
197,000
- ----------------------------------------------------------------------------------
 Viacom, Inc., 7.70% Sr. Unsec. Nts., 7/30/10             1,000,000
1,176,726
- ----------------------------------------------------------------------------------
 Vodafone Group plc, 7.75% Unsec. Unsub. Nts., 2/15/10      500,000
566,468
- ----------------------------------------------------------------------------------
 VoiceStream Wireless Corp., 10.375% Sr. Unsec. Nts.,
 11/15/09                                                   149,000
153,470
- ----------------------------------------------------------------------------------
 Wal-Mart Stores, Inc., 7.55% Sr. Unsec. Nts., 2/15/30      500,000
643,669
- ----------------------------------------------------------------------------------
 Walt Disney Co. (The), 6.375% Sr. Unsec, Nts., 3/1/12    1,000,000
1,064,688
- ----------------------------------------------------------------------------------
 Westport Resources Corp., 8.25% Sr. Unsec. Sub. Nts.,
 11/1/11                                                    250,000
258,750
- ----------------------------------------------------------------------------------
 Williams Scotsman, Inc., 9.875% Sr. Unsec. Nts., 6/1/07    400,000
342,000
- ----------------------------------------------------------------------------------
 Wolverine Tube, Inc., 10.50% Sr. Nts., 4/1/09              500,000
477,500
- ----------------------------------------------------------------------------------
 WorldCom, Inc., 6.95% Sr. Unsec. Nts., 8/15/28(2,9)      1,000,000
125,000

- -----------
 Total Non-Convertible Corporate Bonds and Notes (Cost $68,425,257)
61,924,483




23 | OPPENHEIMER MULTIPLE STRATEGIES FUND



STATEMENT OF INVESTMENTS  Continued




                                                          Principal   Market
Value
                                                             Amount     See
Note 1
==================================================================================

 Convertible Corporate Bonds and Notes--0.3%
- ----------------------------------------------------------------------------------

 Fletcher Building Ltd., 8.05% Cv. Sub. Nts., 6/15/03[NZD]   12,500    $
5,889
- ----------------------------------------------------------------------------------
 Fletcher Challenge Ltd., 10.50% Cv. Unsec. Sub. Nts.,
 4/30/05[NZD]                                                12,500
6,193
- ----------------------------------------------------------------------------------
 Gilat Satellite Networks Ltd.,
 4.25% Cv. Unsec. Sub. Nts., 3/15/05(5,9)                 1,500,000
225,000
- ----------------------------------------------------------------------------------
 Incyte Genomics, Inc., 5.50% Cv. Unsec. Nts., 2/1/07     2,500,000
1,684,375

- -----------
 Total Convertible Corporate Bonds and Notes (Cost $3,057,602)
1,921,457

==================================================================================
 Loan Participations--0.1%
- ----------------------------------------------------------------------------------

 Morocco (Kingdom of) Loan Participation Agreement, Tranche A,
 2.563%, 1/1/09(5,7) (Cost $386,949)                        411,667
363,296

==================================================================================
 Structured Notes--0.8%
- ----------------------------------------------------------------------------------

 JPMorgan Chase Bank, Credit Linked Trust Certificates,
 8.75%, 5/15/07 (Cost $4,555,765)                         4,900,000
4,508,000

==================================================================================
 Joint Repurchase Agreements--14.1%
- ----------------------------------------------------------------------------------

 Undivided interest of 26.89% in joint repurchase
 agreement with BNP Paribas Securities Corp., 1.85%,
 dated 9/30/02, to be repurchased at $80,832,154
 on 10/1/02, collateralized by U.S. Treasury Bonds,
 7.25%--10.375%, 11/15/12--2/15/20, with a value of
 $308,594,118 (Cost $80,828,000)                         80,828,000
80,828,000
- ----------------------------------------------------------------------------------
 Total Investments, at Value (Cost $602,981,647)               99.8%
570,918,402
- ----------------------------------------------------------------------------------
 Other Assets Net of Liabilities                                0.2
1,248,550

- --------------------
 Net Assets                                                   100.0%
$572,166,952

====================


24 | OPPENHEIMER MULTIPLE STRATEGIES FUND



Footnotes to Statement of Investments
Principal amount is reported in U.S. Dollars, except for those denoted in the
following currencies:

ARP   Argentine Peso                 GBP   British Pound Sterling
AUD   Australian Dollar              NZD   New Zealand Dollar
CAD   Canadian Dollar                PLZ   Polish Zloty
DKK   Danish Krone                   ZAR   South African Rand
EUR   Euro

1. A sufficient amount of liquid assets has been designated to cover
outstanding
written options, as follows:




                                  Contracts  Expiration   Exercise
Premium   Market Value
                            Subject to Call       Dates      Price
Received     See Note 1
- ----------------------------------------------------------------------------------------------

 Anthem, Inc.                            80     3/24/03   $  65.00   $
80,559       $ 60,000
 Anthem, Inc.                           120    12/23/02      80.00
62,039          8,400
 Bank of America Corp.                  250    11/18/02      75.00
70,499          5,000
 Borders Group, Inc.                    150    11/18/02      25.00
28,800             --
 Borg-Warner Automotive, Inc.           220    10/21/02      65.00
109,613             --
 Cabot Corp.                            230    10/21/02      40.00
28,060             --
 Callaway Golf Co.                      260    11/18/02      22.50
27,820             --
 Delta Air Lines, Inc.                  100    10/21/02      45.00
27,700             --
 Devon Energy Corp.                     130    10/21/02      55.00
23,660             --
 Edison International                   480    10/21/02      17.50
56,159             --
 Engelhard Corp.                        204    10/21/02      35.00
17,136             --
 Federated Department Stores, Inc.      225    11/18/02      47.50
74,136             --
 International Business Machines Corp.  224    10/21/02     140.00
25,088             --
 Intuit, Inc.                           100    10/21/02      50.00
29,700          4,000
 Millennium Pharmaceuticals, Inc.       230    11/18/02      45.00
17,020             --
 National Seimiconductor Corp.          280    11/18/02      45.00
55,159             --
 Nike, Inc. Cl. B                        64    10/21/02      75.00
12,288             --
 Noble Corp.                            181     1/20/03      50.00
39,276          1,810
 Omnicom Group, Inc.                    129     4/21/03      75.00
62,822         31,605
 Praxair, Inc.                          160    10/21/02      65.00
36,106             --
 SBC Communications, Inc.               150    10/21/02      45.00
14,100             --
 Swift Transportation Co., Inc.         240    10/21/02      25.00
57,378             --
 Teradyne, Inc.                         460    10/21/02      50.00
120,715             --
 Tiffany & Co.                           70    11/18/02      42.50
18,340             --
 Transocean, Inc.                       170    11/18/02      45.00
19,890             --
 Tyco International Ltd.                320    10/21/02      47.50
32,640             --
 Unocal Corp.                           250    10/21/02      40.00
56,749             --

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

$1,203,452       $110,815

=========================


2. Non-income producing security.
3. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities
have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $4,065,032 or 0.71% of the Fund's net
assets as of September 30, 2002.
4. Units may be comprised of several components, such as debt and equity
and/or
warrants to purchase equity at some point in the future. For units, which
represent debt securities, principal amount disclosed represents total
underlying principal.
5. Identifies issues considered to be illiquid--See Note 7 of Notes to
Financial
Statements.
6. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline. Most other fixed income securities
increase in price when interest rates decline. The principal amount of the
underlying pool represents the notional amount on which current interest is
calculated. The price of these securities is typically more sensitive to
changes
in prepayment rates than traditional mortgage-backed securities (for example,
GNMA pass-throughs). Interest rates disclosed represent current yields based
upon the current cost basis and estimated timing and amount of future cash
flows.
7. Represents the current interest rate for a variable or increasing rate
security.
8. Zero coupon bond reflects effective yield on the date of purchase.
9. Issuer is in default.
10. Denotes a step bond: a zero coupon bond that converts to a fixed or
variable
interest rate at a designated future date.

See accompanying Notes to Financial Statements.

25 | OPPENHEIMER MULTIPLE STRATEGIES FUND



STATEMENT OF ASSETS AND LIABILITIES  September 30, 2002




==================================================================================

 Assets
- ----------------------------------------------------------------------------------

 Investments, at value
 (including $80,828,000 in repurchase agreements)
 (cost $602,981,647)--see accompanying statement
$570,918,402
- ----------------------------------------------------------------------------------
 Cash
76,517
- ----------------------------------------------------------------------------------
 Receivables and other assets:
 Interest, dividends and principal paydowns
4,075,440
 Shares of beneficial interest sold
241,346
 Investments sold
10,059
 Other
2,497

- ------------
 Total assets
575,324,261

==================================================================================
 Liabilities
 Options written, at value (premiums received $1,203,452)
 --see accompanying statement
110,815
- ----------------------------------------------------------------------------------
 Payables and other liabilities:
 Shares of beneficial interest redeemed
1,235,824
 Investments purchased
1,027,288
 Distribution and service plan fees
313,717
 Transfer and shareholder servicing agent fees
153,362
 Shareholder reports
139,162
 Trustees' compensation
137,052
 Other
40,089

- ------------
 Total liabilities
3,157,309

==================================================================================
 Net Assets
$572,166,952

============


==================================================================================
 Composition of Net Assets
- ----------------------------------------------------------------------------------

 Paid-in capital                                                    $
607,985,574
- ----------------------------------------------------------------------------------
 Undistributed net investment income
2,930,086
- ----------------------------------------------------------------------------------
 Accumulated net realized loss on
 investments and foreign currency transactions(7,786,275)
- ----------------------------------------------------------------------------------
 Net unrealized depreciation on investments and translation of
 assets and liabilities denominated in foreign currencies
(30,962,433)

- ------------
 Net Assets
$572,166,952

============



26 | OPPENHEIMER MULTIPLE STRATEGIES FUND





==================================================================================

 Net Asset Value Per Share
- ----------------------------------------------------------------------------------

 Class A Shares:
 Net asset value and redemption price per share (based on net assets of
 $483,310,948 and 46,005,114 shares of beneficial interest outstanding)
$10.51
 Maximum offering price per share (net asset value plus sales
 charge of 5.75% of offering price)
$11.15
- ----------------------------------------------------------------------------------
 Class B Shares:
 Net asset value, redemption price (excludes applicable contingent
 deferred sales charge) and offering price per share (based on net
 assets of $54,757,251 and 5,274,727 shares of beneficial interest
 outstanding)
$10.38
- ----------------------------------------------------------------------------------
 Class C Shares:
 Net asset value, redemption price (excludes applicable contingent
 deferred sales charge) and offering price per share (based on net
 assets of $33,300,283 and 3,195,530 shares of beneficial interest
 outstanding)
$10.42
- ----------------------------------------------------------------------------------
 Class N Shares:
 Net asset value, redemption price (excludes applicable contingent
 deferred sales charge) and offering price per share (based on net
 assets of $798,470 and 76,215 shares of beneficial interest
 outstanding)
$10.48




 See accompanying Notes to Financial Statements.


27 | OPPENHEIMER MULTIPLE STRATEGIES FUND




STATEMENT OF OPERATIONS  For the Year Ended September 30, 2002




==================================================================================

 Investment Income
- ----------------------------------------------------------------------------------

 Interest (net of foreign withholding taxes of $243)                $
21,940,954
- ----------------------------------------------------------------------------------
 Dividends (net of foreign withholding taxes of $83,507)
4,877,035

- --------------
 Total investment income
26,817,989

==================================================================================
 Expenses
- ----------------------------------------------------------------------------------
 Management fees
4,805,477
- ----------------------------------------------------------------------------------
 Distribution and service plan fees:
 Class A
1,114,460
 Class B
647,256
 Class C
374,199
 Class N
2,259
- ----------------------------------------------------------------------------------
 Transfer and shareholder servicing agent fees:
 Class A
987,951
 Class B
121,998
 Class C
66,482
 Class
N                                                                       918
- ----------------------------------------------------------------------------------
 Shareholder reports
306,771
- ----------------------------------------------------------------------------------
 Trustees' compensation
42,516
- ----------------------------------------------------------------------------------
 Custodian fees and expenses
25,838
- ----------------------------------------------------------------------------------
 Other
50,482

- --------------
 Total expenses
8,546,607
 Less reduction to custodian expenses
(4,790)

- --------------
 Net expenses
8,541,817


==================================================================================
 Net Investment Income
18,276,172


==================================================================================
 Realized and Unrealized Gain (Loss)
- ----------------------------------------------------------------------------------

 Net realized gain (loss) on:
 Investments (including premiums on options exercised)
(1,387,001)
 Closing and expiration of option contracts written
5,775,584
 Foreign currency transactions
(3,778,161)

- --------------
 Net realized gain
610,422

- ----------------------------------------------------------------------------------
 Net change in unrealized appreciation (depreciation) on:
 Investments
(78,476,758)
 Translation of assets and liabilities denominated in foreign
 currencies
5,088,697

- --------------
 Net change
(73,388,061)

- --------------
 Net realized and unrealized loss
(72,777,639)


==================================================================================
 Net Decrease in Net Assets Resulting from Operations               $
(54,501,467)

==============


 See accompanying Notes to Financial Statements.


28 | OPPENHEIMER MULTIPLE STRATEGIES FUND



STATEMENTS OF CHANGES IN NET ASSETS




 Year Ended September 30,                                       2002
2001
==================================================================================

 Operations
- ----------------------------------------------------------------------------------

 Net investment income                                  $ 18,276,172  $
22,334,614
- ----------------------------------------------------------------------------------
 Net realized gain                                           610,422
17,877,549
- ----------------------------------------------------------------------------------
 Net change in unrealized depreciation                   (73,388,061)
(92,767,891)
- ----------------------------------------------------------------------------------
 Net decrease in net assets resulting from operations    (54,501,467)
(52,555,728)

==================================================================================
 Dividends and/or Distributions to Shareholders
- ----------------------------------------------------------------------------------
 Dividends from net investment income:
 Class A                                                 (14,210,521)
(17,552,533)
 Class B                                                  (1,133,097)
(1,403,156)
 Class C                                                    (661,527)
(799,605)
 Class N                                                     (11,506)
(860)
- ----------------------------------------------------------------------------------
 Distributions from net realized gain:
 Class A                                                 (17,457,674)
(33,019,457)
 Class B                                                  (1,994,603)
(3,502,853)
 Class C                                                  (1,138,028)
(2,017,780)
 Class N
(3,571)           --

==================================================================================
 Beneficial Interest Transactions
- ----------------------------------------------------------------------------------
 Net increase (decrease) in net assets resulting from
 beneficial interest transactions:
 Class A                                                  (2,115,218)
16,962,286
 Class B                                                     184,684
7,203,058
 Class C                                                   2,353,216
3,669,703
 Class N                                                     822,605
102,856

==================================================================================
 Net Assets
- ----------------------------------------------------------------------------------
 Total decrease                                          (89,866,707)
(82,914,069)
- ----------------------------------------------------------------------------------
 Beginning of period                                     662,033,659
744,947,728

- --------------------------
 End of period [including undistributed net investment
 income of $2,930,086 and $2,198,544, respectively]     $572,166,952
$662,033,659

==========================




 See accompanying Notes to Financial Statements.


29 | OPPENHEIMER MULTIPLE STRATEGIES FUND



FINANCIAL HIGHLIGHTS




Class A  Year Ended September 30,             2002      2001      2000
1999      1998
==========================================================================================

 Per Share Operating Data
- ------------------------------------------------------------------------------------------

 Net asset value, beginning of period       $12.14    $14.23    $14.06
$13.69    $16.17
- ------------------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment income                         .35       .43       .53
..54       .51
 Net realized and unrealized gain (loss)     (1.29)    (1.40)     1.21
1.59     (1.22)

- ----------------------------------------------
 Total from investment operations             (.94)     (.97)     1.74
2.13      (.71)
- ------------------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income         (.31)     (.38)     (.48)
(.54)     (.49)
 Distributions from net realized gain         (.38)     (.74)    (1.09)
(1.22)    (1.28)

- ----------------------------------------------
 Total dividends and/or distributions
 to shareholders                              (.69)    (1.12)    (1.57)
(1.76)    (1.77)
- ------------------------------------------------------------------------------------------
 Net asset value, end of period             $10.51    $12.14    $14.23
$14.06    $13.69
- ------------------------------------------------------------------------------------------

==========================================================================================
 Total Return, at Net Asset Value(1)         (8.58)%   (7.27)%   13.31%
16.29%    (4.71)%
- ------------------------------------------------------------------------------------------

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

 Net assets, end of period
 (in thousands)                           $483,311  $562,281  $639,648
$635,603  $624,895
- ------------------------------------------------------------------------------------------
 Average net assets (in thousands)        $570,796  $626,251  $644,356
$660,113  $699,665
- ------------------------------------------------------------------------------------------
 Ratios to average net assets:(2)
 Net investment income                        2.84%     3.16%     3.71%
3.70%     3.34%
 Expenses                                     1.15%     1.01%     1.13%
1.09%     1.08%(3)
- ------------------------------------------------------------------------------------------
 Portfolio turnover rate                        31%       40%       33%
15%       59%




1. Assumes an investment on the business day before the first day of the
fiscal
period, with all dividends and distributions reinvested in additional shares
on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year.
2. Annualized for periods of less than one full year.
3. Expense ratio has been calculated without adjustment for the reduction to
custodian expenses.

See accompanying Notes to Financial Statements.


30 | OPPENHEIMER MULTIPLE STRATEGIES FUND



FINANCIAL HIGHLIGHTS Continued




Class B  Year Ended September 30,             2002      2001      2000
1999      1998
==========================================================================================

 Per Share Operating Data
- ------------------------------------------------------------------------------------------
 Net asset value, beginning of period      $ 12.01   $ 14.08   $ 13.93   $
13.57   $ 16.04
- ------------------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment income                         .25       .31       .41
..41       .38
 Net realized and unrealized gain (loss)     (1.29)    (1.36)     1.19
1.58     (1.20)

- -----------------------------------------------
 Total from investment operations            (1.04)    (1.05)     1.60
1.99      (.82)
- ------------------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income         (.21)     (.28)     (.36)
(.41)     (.37)
 Distributions from net realized gain         (.38)     (.74)    (1.09)
(1.22)    (1.28)

- -----------------------------------------------
 Total dividends and/or distributions
 to shareholders                              (.59)    (1.02)    (1.45)
(1.63)    (1.65)
- ------------------------------------------------------------------------------------------
 Net asset value, end of period             $10.38    $12.01    $14.08
$13.93    $13.57

==============================================

==========================================================================================
 Total Return, at Net Asset Value(1)         (9.38)%   (7.96)%   12.30%
15.35%    (5.49)%
- ------------------------------------------------------------------------------------------


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

 Net assets, end of period (in thousands)  $54,757   $63,487   $66,777
$68,875   $73,036
- ------------------------------------------------------------------------------------------
 Average net assets (in thousands)         $64,702   $67,959   $66,956
$73,673   $74,442
 Ratios to average net assets:(2)
 Net investment income                        2.02%     2.37%     2.92%
2.85%     2.53%
 Expenses                                     1.97%     1.81%     1.94%
1.93%     1.91%(3)
- ------------------------------------------------------------------------------------------
 Portfolio turnover rate                        31%       40%       33%
15%       59%




1. Assumes an investment on the business day before the first day of the
fiscal
period, with all dividends and distributions reinvested in additional shares
on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year.
2. Annualized for periods of less than one full year.
3. Expense ratio has been calculated without adjustment for the reduction to
custodian expenses. See accompanying Notes to Financial Statements.


31 | OPPENHEIMER MULTIPLE STRATEGIES FUND



FINANCIAL HIGHLIGHTS Continued




Class C  Year Ended September 30,             2002      2001      2000
1999      1998
==========================================================================================

 Per Share Operating Data
- ------------------------------------------------------------------------------------------

 Net asset value, beginning of period      $ 12.06   $ 14.13   $ 13.97   $
13.61   $ 16.07
- ------------------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment income                         .24       .31       .41
..42       .38
 Net realized and unrealized gain (loss)     (1.29)    (1.37)     1.20
1.57     (1.20)

- -----------------------------------------------
 Total from investment operations            (1.05)    (1.06)     1.61
1.99      (.82)
- ------------------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income         (.21)     (.27)     (.36)
(.41)     (.36)
 Distributions from net realized gain         (.38)     (.74)    (1.09)
(1.22)    (1.28)

- -----------------------------------------------
 Total dividends and/or distributions
 to shareholders                              (.59)    (1.01)    (1.45)
(1.63)    (1.64)
- ------------------------------------------------------------------------------------------
 Net asset value, end of period             $10.42    $12.06    $14.13
$13.97    $13.61

==============================================
==========================================================================================
 Total Return, at Net Asset Value(1)         (9.41)%   (8.00)%   12.35%
15.28%    (5.43)%
- ------------------------------------------------------------------------------------------

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

 Net assets, end of period (in thousands)  $33,300   $36,171   $38,522
$38,978   $48,417
- ------------------------------------------------------------------------------------------
 Average net assets (in thousands)         $37,412   $39,030   $38,597
$43,701   $52,325
- ------------------------------------------------------------------------------------------
 Ratios to average net assets:(2)
 Net investment income                        2.03%     2.37%     2.92%
2.85%     2.51%
 Expenses                                     1.96%     1.81%     1.94%
1.93%     1.91%(3)
- ------------------------------------------------------------------------------------------
 Portfolio turnover rate                        31%       40%       33%
15%       59%




1. Assumes an investment on the business day before the first day of the
fiscal
period, with all dividends and distributions reinvested in additional shares
on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns.Total returns are not annualized for periods of less than one
full
year.
2. Annualized for periods of less than one full year.
3. Expense ratio has been calculated without adjustment for the reduction to
custodian expenses. See accompanying Notes to Financial Statements.


32 | OPPENHEIMER MULTIPLE STRATEGIES FUND



FINANCIAL HIGHLIGHTS Continued


Class N  Year Ended September 30,                               2002
2001(1)
===============================================================================
 Per Share Operating Data
- -------------------------------------------------------------------------------
 Net asset value, beginning of period                        $ 12.13   $ 13.67
- -------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment income                                           .39       .24
 Net realized and unrealized loss                              (1.38)
(1.48)

- ------------------
 Total from investment operations                               (.99)
(1.24)
- -------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income                           (.28)
(.30)
 Distributions from net realized gain                           (.38)       --

- ------------------
 Total dividends and/or distributions
 to shareholders                                                (.66)
(.30)
- -------------------------------------------------------------------------------
 Net asset value, end of period                               $10.48    $12.13

=================

===============================================================================
 Total Return, at Net Asset Value(2)                           (8.94)%
(9.30)%
- -------------------------------------------------------------------------------


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

 Net assets, end of period (in thousands)                       $798       $95
- -------------------------------------------------------------------------------
 Average net assets (in thousands)                              $454       $12
- -------------------------------------------------------------------------------
 Ratios to average net assets:(3)
 Net investment income                                          2.49%
5.81%
 Expenses                                                       1.48%
1.32%
- -------------------------------------------------------------------------------
 Portfolio turnover rate                                          31%
40%



1. For the period from March 1, 2001 (inception of offering) to September 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.

See accompanying Notes to Financial Statements.


33 | OPPENHEIMER MULTIPLE STRATEGIES FUND



NOTES TO FINANCIAL STATEMENTS

================================================================================
 1. Significant Accounting Policies
 Oppenheimer Multiple Strategies Fund (the Fund) is registered under the
 Investment Company Act of 1940, as amended, as an open-end management
 investment company. The Fund's investment objective is to seek high total
 investment return consistent with preservation of principal. The Fund's
 investment advisor is OppenheimerFunds, Inc. (the Manager).
    The Fund offers Class A, Class B, Class C and Class N shares. Class A
shares
 are sold at their offering price, which is normally net asset value plus a
 front-end sales charge. Class B, Class C and Class N shares are sold without
a
 front-end sales charge but may be subject to a contingent deferred sales
charge
 (CDSC). Class N shares are sold only through retirement plans. Retirement
plans
 that offer Class N shares may impose charges on those accounts. All classes
of
 shares have identical rights and voting privileges. 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. 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).

- --------------------------------------------------------------------------------
 Structured Notes. The Fund invests in structured notes whose market values
and
 redemption prices are linked to the market value of specific securities. The
 structured notes are leveraged, which increases the Fund's exposure to
changes
 in prices of the underlying securities and increases the volatility of each
 note's market value relative to the change in the underlying security prices.
 Fluctuations in value of these securities are recorded as unrealized gains
and
 losses in the accompanying financial statements. The Fund records a realized
 gain or loss when a structured note is sold or matures. As of September 30,
 2002, the market value of these securities comprised of 0.8% of the Fund's
net
 assets, and resulted in unrealized losses in the current period of $47,765.


34 | OPPENHEIMER MULTIPLE STRATEGIES FUND




- --------------------------------------------------------------------------------
 Security Credit Risk. The Fund invests in high-yield securities, which may be
 subject to a greater degree of credit risk, greater market fluctuations and
 risk of loss of income and principal, and may be more sensitive to economic
 conditions than lower-yielding, higher-rated fixed-income securities. The
Fund
 may acquire securities in default, and is not obligated to dispose of
 securities whose issuers subsequently default. As of September 30, 2002,
 securities with an aggregate market value of $5,553,228, representing 0.97%
of
 the Fund's net assets, were in default.

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

 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 closing rates of exchange. Amounts
related
 to the purchase and sale of foreign securities and investment income are
 translated at the rates of exchange prevailing 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 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, including any net realized gain on
 investments not offset by capital loss carryforwards, if any, to
shareholders.
 Therefore, no federal income or excise tax provision is required.
    As of September 30, 2002, the Fund had approximately $1,180,000 of
 post-October losses available to offset future capital gains, if any. Such
 losses, if unutilized, will expire in 2011. Additionally, the Fund had
 approximately $2,413,000 of post-October foreign currency losses which were
 deferred.


35 | OPPENHEIMER MULTIPLE STRATEGIES FUND



NOTES TO FINANCIAL STATEMENTS  Continued

- --------------------------------------------------------------------------------
 1. Significant Accounting Policies Continued
 Trustees' Compensation. The Fund has adopted an unfunded retirement plan for
 the Fund's independent trustees. Benefits are based on years of service and
 fees paid to each trustee during the years of service. During the year ended
 September 30, 2002, the Fund's projected benefit obligations were increased
by
 $19,102 and payments of $9,080 were made to retired trustees, resulting in an
 accumulated liability of $130,481 as of September 30, 2002.
    The Board of Trustees has adopted a deferred compensation plan for
 independent trustees that enables trustees to elect to defer receipt of all
or
 a portion of annual compensation they are entitled to receive from the Fund.
 Under the plan, the compensation deferred is periodically adjusted as though
an
 equivalent amount had been invested for the Board of Trustees in shares of
one
 or more Oppenheimer funds selected by the trustee. The amount paid to the
Board
 of Trustees under the plan will be determined based upon the performance of
the
 selected funds. Deferral of trustees' fees under the plan will not affect the
 net assets of the Fund, and will not materially affect the Fund's assets,
 liabilities or net investment income per share.

- --------------------------------------------------------------------------------
 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 September 30, 2002, amounts have been reclassified to reflect an
 increase in paid-in capital of $58,107, a decrease in undistributed net
 investment income of $1,527,979, and a decrease in accumulated net realized
 loss on investments of $1,469,872. This reclassification includes $2,894
 distributed in connection with Fund share redemptions which increased paid-in
 capital and reduced accumulated net realized gain. Net assets of the Fund
were
 unaffected by the reclassifications.


36 | OPPENHEIMER MULTIPLE STRATEGIES FUND



 The tax character of distributions paid during the years ended September 30,
2002 and September 30, 2001 was as follows:

                                           Year Ended          Year Ended
                                   September 30, 2002  September 30, 2001
- -------------------------------------------------------------------------
                 Distributions paid from:
                 Ordinary income          $16,739,835         $23,605,134
                 Long-term capital gain    19,870,692          34,691,110
                 Return of capital                 --                  --
                                          -------------------------------
                 Total                    $36,610,527         $58,296,244
                                          ===============================

 As of September 30, 2002, the components of distributable earnings on a tax
basis were as follows:
                 Undistributed net investment income  $  2,930,086
                 Accumulated net realized loss          (7,786,275)
                 Net unrealized depreciation           (30,962,433)
                                                      -------------
                 Total                                $(35,818,622)
                                                      =============

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


37 | OPPENHEIMER MULTIPLE STRATEGIES 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 for each class. Transactions in shares of beneficial
 interest were as follows:



                            Year Ended September 30, 2002        Year Ended
September 30, 2001(1)
                                Shares             Amount
Shares         Amount
- -------------------------------------------------------------------------------------------------


 Class A
 Sold                        3,119,704       $ 38,219,004
2,352,686   $ 31,857,830
 Dividends and/or
 distributions reinvested    2,300,598         28,557,940
3,456,341     45,547,155
 Redeemed                   (5,720,740)       (68,892,162)
(4,468,559)   (60,442,699)

- ---------------------------------------------------------------------
 Net increase (decrease)      (300,438)      $ (2,115,218)
1,340,468   $ 16,962,286

=====================================================================

- --------------------------------------------------------------------------------------------------
 Class B
 Sold                        1,621,677       $ 19,347,586
1,243,002   $ 16,611,081
 Dividends and/or
 distributions reinvested      237,129          2,923,736
347,123      4,528,696
 Redeemed                   (1,869,194)       (22,086,638)
(1,046,722)   (13,936,719)

- ---------------------------------------------------------------------
 Net increase (decrease)       (10,388)      $    184,684
543,403   $  7,203,058

=====================================================================

- --------------------------------------------------------------------------------------------------
 Class C
 Sold                          785,399       $  9,356,388
659,612   $  8,880,910
 Dividends and/or
 distributions reinvested      129,600          1,602,446
190,652      2,495,830
 Redeemed                     (719,571)        (8,605,618)
(576,263)    (7,707,037)

- ---------------------------------------------------------------------
 Net increase                  195,428       $  2,353,216
274,001   $  3,669,703

=====================================================================

- --------------------------------------------------------------------------------------------------
 Class N
 Sold                           83,325       $  1,000,643
7,987   $    104,522
 Dividends and/or
 distributions reinvested        1,206
14,492                       69            838
 Redeemed                      (16,163)          (192,530)
(209)        (2,504)

- ---------------------------------------------------------------------
 Net increase                   68,368       $    822,605
7,847   $    102,856

=====================================================================


 1. For the year ended September 30, 2001, for Class A, B and C shares and for
 the period from March 1, 2001 (inception of offering) to September 30, 2001,
 for Class N shares.


38 | OPPENHEIMER MULTIPLE STRATEGIES FUND



===============================================================================
 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 September 30, 2002, were
 $184,248,689 and $214,348,729, respectively.

 As of September 30, 2002, unrealized appreciation (depreciation) based on
cost
 of securities for federal income tax purposes of $605,435,403 was composed
of:

                     Gross unrealized appreciation  $  66,734,752
                     Gross unrealized depreciation   (101,251,753)
                                                    --------------
                     Net unrealized depreciation    $ (34,517,001)
                                                    ==============
    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 are in accordance with
the
 investment advisory agreement with the Fund which provides for a fee of 0.75%
 of the first $200 million of average annual net assets of the Fund, 0.72% of
 the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200
 million, 0.60% of the next $700 million, and 0.58% of average annual net
assets
 in excess of $1.5 billion.

- --------------------------------------------------------------------------------
 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.
    OFS has voluntarily agreed to limit transfer and shareholder servicing
agent
 fees for all classes, up to an annual rate of 0.35% of average net assets per
 class. 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.


39 | OPPENHEIMER MULTIPLE STRATEGIES FUND



NOTES TO FINANCIAL STATEMENTS  Continued



===============================================================================
 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.




                    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)
- ------------------------------------------------------------------------------------------------------------


 September 30, 2002  $428,672       $152,045         $19,253
$449,947         $57,203          $7,184


 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
- -------------------------------------------------------------------------------
 September 30, 2002          $3,142      $171,979         $4,681
$1,298


- --------------------------------------------------------------------------------
 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 September 30, 2002, payments
 under the Class A Plan totaled $1,114,460, all of which were paid by the
 Distributor to recipients, and included $65,458 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 September 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           $647,256        $513,168     $2,557,075
4.67%
 Class C Plan            374,199          64,605        873,469           2.62
 Class N Plan              2,259           1,847          9,675           1.21


40 | OPPENHEIMER MULTIPLE STRATEGIES FUND





===============================================================================
 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 for operational purposes and to seek to protect
 against adverse exchange rate fluctuations. 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 foreign currency exchange rates as provided
 by a reliable bank, dealer or pricing service. Unrealized appreciation and
 depreciation on foreign currency contracts are reported in the Statement of
 Assets and Liabilities as a receivable or payable and in the Statement of
 Operations with the change in unrealized appreciation or depreciation.
    The Fund may realize a gain or loss upon the closing or settlement of the
 foreign currency transactions. Such realized gains and losses are reported
with
 all other foreign currency gains and losses in the Statement of Operations.

===============================================================================
 6. 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.
    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.


41 | OPPENHEIMER MULTIPLE STRATEGIES FUND



NOTES TO FINANCIAL STATEMENTS  Continued



===============================================================================
 6. Option Activity Continued
 Written option activity for the year ended September 30, 2002 was as follows:




                                        Call Options                   Put
Options
                             -----------------------
- ------------------------
                             Number of     Amount of      Number of
Amount of
                             Contracts      Premiums      Contracts
Premiums
- ----------------------------------------------------------------------------------

 Options outstanding as of
 September 30, 2001             10,910   $ 2,787,906          1,529      $
460,058
 Options written                21,365     4,777,196
- --             --
 Options closed or expired     (24,936)   (5,776,669)          (600)
(127,696)
 Options exercised              (1,862)     (584,981)          (929)
(332,362)

- ------------------------------------------------------
 Options outstanding as of
 September 30, 2002              5,477    $1,203,452             --
$      --

======================================================


===============================================================================
 7. Illiquid Securities
 As of September 30, 2002, investments in securities included issues that are
 illiquid. A security may be considered illiquid if it lacks a readily
available
 market or if its valuation has not changed for a certain period of time. The
 Fund intends to invest no more than 10% of its net assets (determined at the
 time of purchase and reviewed periodically) in illiquid securities. The
 aggregate value of illiquid securities subject to this limitation as of
 September 30, 2002 was $4,694,711, which represents 0.82% of the Fund's net
 assets.

===============================================================================
 8. Bank Borrowings
 The Fund may borrow from a bank for temporary or emergency purposes
including,
 without limitation, funding of shareholder redemptions provided asset
coverage
 for borrowings exceeds 300%. The Fund has entered into an agreement which
 enables it to participate with other Oppenheimer funds in an unsecured line
of
 credit with a bank, which permits borrowings up to $400 million,
collectively.
 Interest is charged to each fund, based on its borrowings, at a rate equal to
 the Federal Funds Rate plus 0.45%. Borrowings are payable within 30 days
after
 such loan is executed. The Fund also pays 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 Fund had no borrowings outstanding during the year ended or at
September
 30, 2002.

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

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 risks appear somewhat larger than
those 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 sometime 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 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 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 and 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 and 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 category; the modifier "2"
indicates a mid-range ranking and the modifier "3" indicates a ranking in the
lower end of the category.

Short-Term Ratings - Taxable Debt

These ratings apply to the ability of issuers to repay punctually 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, while sound, may be 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 Rating Services
- ------------------------------------------------------------------------------

Long-Term 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 obligations 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 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.

Bonds 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, these face major 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: A bond rated B is more vulnerable to nonpayment than an obligation rated
BB, but the obligor currently has the capacity to meet its financial
commitment on the obligation.

CCC: A bond rated CCC 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. In the event of adverse
business, financial or economic conditions, the obligor is not likely to have
the capacity to meet its financial commitment on the obligation.
CC: An obligation rated CC is currently highly vulnerable to nonpayment.

C: The C rating may used where a bankruptcy petition has been filed or
similar action has been taken, but payments on this obligation are being
continued.

D: Bonds rated D are in default. Payments on the obligation are not being
made on the date due.

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: Rated in the highest category. The obligor's capacity to meet its
financial commitment on the obligation is strong. Within this category, a
plus (+) sign designation indicates the issuer's capacity to meet its
financial obligation is very strong.

A-2: Obligation 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: 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: 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: 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: In payment default. Payments on the obligation have not been made on the
due date. The rating may also be used if a bankruptcy petition has been filed
or similar actions jeopardize payments on the obligation.




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 rates 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.


                                  Appendix B

                           Industry Classifications
                           ------------------------

Aerospace & Defense                Household Durables
Air Freight & Couriers             Household Products
Airlines                           Industrial Conglomerates
Auto Components                    Insurance
Automobiles                        Internet & Catalog Retail
Banks                              Internet Software & Services
Beverages                          Information Technology Consulting &
                                   Services
Biotechnology                      Leisure Equipment & Products
Building Products                  Machinery
Chemicals                          Marine
Commercial Services & Supplies     Media
Communications Equipment           Metals & Mining
Computers & Peripherals            Multiline Retail
Construction & Engineering         Multi-Utilities
Construction Materials             Office Electronics
Containers & Packaging             Oil & Gas
Distributors                       Paper & Forest Products
Diversified Financials             Personal Products
Diversified Telecommunication      Pharmaceuticals
Services
Electric Utilities                 Real Estate
Electrical Equipment               Road & Rail
Electronic Equipment & Instruments Semiconductor Equipment & Products
Energy Equipment & Services        Software
Food & Drug Retailing              Specialty Retail
Food Products                      Textiles & Apparel
Gas Utilities                      Tobacco
Health Care Equipment & Supplies   Trading Companies & Distributors
Health Care Providers & Services   Transportation Infrastructure
Hotels Restaurants & Leisure       Water Utilities
                                   Wireless Telecommunication Services


                                  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 Multiple Strategies Fund

Internet Website:
      www.oppenheimerfunds.com
      ------------------------

Investment Advisor
      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
      JP Morgan Chase Bank
      4 Chase MetroTech Center
      Brooklyn, New York 11245

Independent Auditors
      KPMG LLP
      707 Seventeenth Street
      Denver, Colorado 80202

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

1234



PX240.1102

EX-99.2O

       Oppenheimer
       Multiple
       Strategies Fund


                                                       Annual Report
                                                    September 30, 2002


Fund Highlights
Performance Update
Investment Strategy Discussion
Listing of Individual Investments

"Oppenheimer Multiple Strategies Fund helped shelter shareholders from the
full
brunt of the stock market's decline. In an environment characterized by
corporate scandals, terrorism and a weak economy, the Fund's bond portfolio
helped offset losses among equities. Within the stock portfolio, some
defensive
holdings such as healthcare and food retailers, held their value better than
more growth-oriented positions."

OppenheimerFunds(R)
The Right Way to Invest




REPORT HIGHLIGHTS

Fund Objective
Oppenheimer Multiple Strategies Fund seeks high total investment return
consistent with the preservation of principal.


    CONTENTS

 1  Letter to Shareholders

 3  An Interview
    with Your Fund's
    Managers

 7  Fund Performance

11  Financial
    Statements

43  Independent
    Auditors' Report

44  Federal Income Tax
    Information

45  Trustees and Officers

52  Privacy Policy Notice




Average Annual Total Returns*
          For the 1-Year Period
          Ended 9/30/02
          Without      With
          Sales Chg.   Sales Chg.
- ---------------------------------
Class A   -8.58%       -13.83%
Class B   -9.38        -13.70
Class C   -9.41        -10.27
Class N   -8.94         -9.81


Top Ten Common Stock Holdings(1)
Viacom, Inc., Cl. B                                      1.8%
International Business Machines Corp.                    1.6
Bank of America Corp.                                    1.3
J.P. Morgan Chase & Co.                                  1.0
Johnson & Johnson                                        1.0
Unocal Corp.                                             0.9
Abbott Laboratories                                      0.8
Novartis AG                                              0.8
AT&T Corp.                                               0.8
Intel Corp.                                              0.8

For up-to-date Top 10 Fund holdings, please visit www.oppenheimerfunds.com.

1. Portfolio is subject to change. Percentages are as of September 30, 2002,
and
are based on net assets.

Shares of Oppenheimer funds are not deposits or obligations of any bank, are
not
guaranteed by any bank, are not insured by the FDIC or any other agency, and
involve investment risks, including the possible loss of the principal amount
invested.

*See Notes on page 10 for further details.

LETTER TO SHAREHOLDERS

Dear Shareholder,


As we near the end of 2002, global tensions and economic challenges that began
in 2001 continue to impact events around the world and in the financial
markets.
When it comes to investing, words like trust, experience and consistency have
never been more meaningful.
   Recently, accounting scandals and an overall lack of investor confidence in
corporate America have weakened the stock market and caused the prices of many
individual securities to drop sharply during the period. On the other hand,
the
overall bond market has provided some positive returns and stability, helping
to
provide investors with a safe haven from the equity markets. Not surprisingly,
many investors are unsure what their next step should be and where they should
turn to invest their money.
   Despite the continued challenges, there are signs of a moderate recovery in
the U.S. economy. Rooted in a combination of low inflation and little pressure
on the Federal Reserve Board to raise interest rates, business conditions are
slowly improving, and we believe the prospects for long-term investors look
bright. With that said, we expect the economy and markets to return to
historical levels and not the exaggerated growth levels that typified the late
1990s and early 2000s.
   Now more than ever, investors can see on two levels the fundamental
advantage
of mutual funds: diversification. Investors can diversify their portfolios by
investing among several types of funds to reduce short-term risks. The right
asset allocation among equity and fixed-income funds can help cushion an
investor's portfolio from tough market conditions. Secondly, mutual funds,
while
certainly not immune to volatility and declines in either the equity or
fixed-income markets, offer clear-cut advantages over direct ownership of
individual

[PHOTO OMITTED]
John V. Murphy
President
Oppenheimer
Multiple Strategies Fund


1 | OPPENHEIMER MULTIPLE STRATEGIES FUND

LETTER TO SHAREHOLDERS

securities. Because fund portfolios often contain a number of different
investments, one security's poor performance usually does not have a dramatic
effect on the fund as a whole.
   Your financial advisor is also an equally important player on your team of
investment professionals. Even if you consult with your advisor on a regular
basis, now may be a good time to make sure that your portfolio still reflects
the right mix of investments to help you reach your long-term goals.
   We at OppenheimerFunds appreciate and thank you for your continued trust as
we strive toward our ongoing goal of investment excellence. To us, this is
not a
phrase uttered lightly. It's a commitment to providing shareholders with
world-class asset management, top-quality service and strong fund performance
over time. In other words, it's what makes OppenheimerFunds The Right Way to
Invest.

Sincerely,

/s/ JOHN V. MURPHY
- ------------------
    John V. Murphy
    October 21, 2002

These general market views represent opinions of OppenheimerFunds, Inc.
and are not intended to predict performance of the securities markets or any
particular fund. Specific information that applies to your Fund is contained
in
the pages that follow.


2 | OPPENHEIMER MULTIPLE STRATEGIES FUND


AN INTERVIEW WITH YOUR FUND'S MANAGERS

Q How did Oppenheimer Multiple Strategies Fund perform during the 12-month
period that ended September 30, 2002?

A. While negative returns are never satisfying, we believe that challenging
conditions in the U.S. stock market once again demonstrated the value of
broadly
diversified, balanced portfolios such as those in the Fund. Although the
Fund's
Class A shares returned -13.83% after taking sales charges into account, the
Fund outpaced its benchmark, the S&P 500 Composite Stock Price Index.(2) In
what
is potentially shaping up to be the third consecutive year of negative stock
market performance, the Fund's bond portfolio helped cushion equity-related
losses. Within the Fund's stock portfolio, our multi-style,
multi-capitalization
approach helped the Fund avoid the brunt of particularly disappointing returns
produced by individual stocks and industry groups.

How has recent economic weakness affected the Fund's performance?

When the reporting period began, the U.S. was mired in a recession that had
recently been intensified by the September 11 attacks. In that environment,
the
Federal Reserve Board continued to reduce short-term interest rates
aggressively, driving the benchmark federal funds rate to 1.75%, its lowest
level in 40 years. As investors began to anticipate the start of an economic
recovery, both stocks and bonds rallied off the lows established after the
attacks. The Fund benefited during the market rebound because it was invested
opportunistically during the decline in some hard hit industries, including
several consumer-oriented stocks that bounced back quickly when investors
recognized their value.
   When the economic recovery finally arrived in early 2002, however, it
proved
to be less robust and more uncertain than most investors had hoped. As a
result,
the Fed held interest

[SIDEBAR]
Portfolio Management Team
Richard Rubinstein
David Negri
George Evans
Michael Levine
Susan Switzer

2. The S&P 500 Index had a one-year return for the period ended 9/30/02 of
- -20.49%. For more information on the S&P 500 please see "Comparing the Fund's
Performance to the Market" on page 7.


3 | OPPENHEIMER MULTIPLE STRATEGIES FUND



AN INTERVIEW WITH YOUR FUND'S MANAGERS

rates steady through the remainder of the reporting period, contrary to
investors' early expectations that interest rates would rise. The economy's
lackluster growth proved positive for U.S. government bonds, which benefited
from a "flight to quality" among investors. The Fund's broad, multi-sector
exposure to the bond market hindered performance in this environment. Although
the Fund's holdings of U.S. Treasury securities and high quality corporates
rallied, its high yield bonds, emerging market bonds and mortgage-backed
securities languished, detracting from overall performance.

What factors contributed positively to the Fund's performance?

In addition to U.S. Treasury securities, relatively attractive returns were
produced by the equity portfolio's tilt toward the value style of investing.
Value investors favor companies that are attractively priced relative to their
future earnings potential, and the value style tends to preserve capital more
effectively during downturns than other investment approaches. As of the end
of
the reporting period, approximately 40% of the Fund's stocks fell under the
value category. In contrast, the growth style represented the next largest
area
of concentration at about 25%.
   The Fund's equity returns were also boosted by its ability to invest across
different capitalization ranges. Because smaller companies generally provided
higher returns than large-cap stocks during the 12-month period, the Fund
benefited from its exposure to small- and mid-cap companies. In addition, the
Fund maintained a relatively high percentage of assets in cash through much of
the period, helping to preserve capital. Finally, the Fund's foreign stock
positions benefited from the favorable movements of currency exchange rates.

How did the Fund's stock portfolio change during the reporting period?

As we mentioned in our semiannual report to shareholders six months ago, we
substantially increased the Fund's exposure to the healthcare group, primarily
among pharmaceutical

[SIDEBAR]
Our strategy of diversifying broadly across asset classes, investment styles
and
capitalization ranges helped the Fund avoid the brunt of the stock market's
steep declines.

4 | OPPENHEIMER MULTIPLE STRATEGIES FUND



companies. In our view, many drug stocks fell to unwarranted low levels
because
of concerns that upcoming patent expirations and potential government
regulation
might limit earnings. Despite these factors, we believe that profits at
pharmaceutical companies should continue to grow, partly because we expect
demographic trends to increasingly favor drug therapies. We also added to
other
holdings that we consider defensive, including food retailers. After all,
people
continue to need food and medicine regardless of the economic environment.
   On the other hand, we reduced the Fund's energy holdings because of our
view
that high prevailing oil prices limited their opportunities for future gains.
Otherwise, we identified opportunities to invest in individual companies that
we
considered attractive. For example, we liked auto parts retailer Delphi Corp.
and financial services provider CIT Group, Inc. because of their low stock
prices and ability to generate substantial levels of cash flow. We also
invested
opportunistically in companies that we believe will survive current industry
downturns, including advertising conglomerate Omnicom Group, Inc., Delta Air
Lines, Inc. and technology companies EMC Corp. and Cisco Systems, Inc.

What is your outlook for the foreseeable future?

We are cautiously optimistic. We expect stock market volatility to continue
over
the near term as long as current economic and political uncertainties persist.
However, we believe that volatility breeds opportunity when fundamentally
sound
companies see their stocks decline because of concerns that have little to do
with their businesses or markets. That's why we believe in owning companies,
not
stocks. We look at factors such as book value, effective barriers to entry and
return on equity to determine whether these are businesses we would like to
buy
at their

Average Annual Total Returns with Sales Charge
For the Periods Ended 9/30/02(3)
Class A
1-Year  5-Year 10-Year
- -------------------------
- -13.83% 0.07%   7.37%
Class B        Since
1-Year  5-Year Inception
- -------------------------
- -13.70% 0.16%   5.67%
Class C        Since
1-Year  5-Year Inception
- -------------------------
- -10.27% 0.43%   6.22%
Class N        Since
1-Year  5-Year Inception
- -------------------------
 -9.81% N/A   -11.35%

3. See Notes on page 10 for further details.


5 | OPPENHEIMER MULTIPLE STRATEGIES FUND



AN INTERVIEW WITH YOUR FUND'S MANAGERS

current prices. In the current environment, the answer is frequently "yes"
when
we look at these companies' earnings potential if the U.S. economy recovers
moderately into 2003 and beyond helping to make Oppenheimer Multiple
Strategies
Fund an important part of The Right Way to Invest.


Top Five Common Stock Industries(5)
- -------------------------------------------------------------
Pharmaceuticals                                          5.2%
- -------------------------------------------------------------
Media                                                    3.9
- -------------------------------------------------------------
Oil & Gas                                                3.3
- -------------------------------------------------------------
Banks                                                    3.3
- -------------------------------------------------------------
Chemicals                                                2.8


Portfolio Allocation(4)
[GRAPHIC OMITTED]

Stocks          50.8%
Bonds           35.0
Cash
Equivalents     14.2

4. Portfolio's holdings and strategies are subject to change. Percentages are
as
of September 30, 2002, and are based on total market value of investments.
5. Portfolio's holdings and strategies are subject to change. Percentages are
as
of September 30, 2002, and are based on net assets.


6 | OPPENHEIMER MULTIPLE STRATEGIES FUND



FUND PERFORMANCE

How Has the Fund Performed? Below is a discussion by OppenheimerFunds, Inc.,
of
the Fund's performance during its fiscal year ended September 30, 2002,
followed
by a graphical comparison of the Fund's performance to an appropriate
broad-based market indices.
Management's Discussion of Performance. During the Fund's fiscal year that
ended
September 30, 2002, Oppenheimer Multiple Strategies Fund's Class A performance
(-13.83% after taking sales charges into account) was strongly influenced by
changing economic and market conditions. Prices of interest rate-sensitive
bonds
rallied in the low interest rate-environment, offsetting losses among high
yield
fixed-income securities and emerging market bonds. In the stock portfolio, the
Fund benefited from its holdings of small- and mid-cap stocks, which generally
performed better than their large-cap counterparts. The Fund also benefited
from
the portfolio manager's decision to emphasize the value style of investing
over
other investment approaches. The Fund's technology holdings generally
detracted
from returns, but we continue to focus on dominant companies that we believe
should benefit in a recovery. The Fund's portfolio holdings and allocations
are
subject to change.
Comparing the Fund's Performance to the Market. The graphs that follow show
the
performance of a hypothetical $10,000 investment in Class A, Class B, Class C
and Class N shares of the Fund held until September 30, 2002. In the case of
Class A shares, performance is measured over a ten-year period. In the case of
Class B shares, performance is measured from inception of the class on August
29, 1995. In the case of Class C shares, performance is measured from
inception
of the class on December 1, 1993. In the case of Class N shares, performance
is
measured from inception of the class on March 1, 2001. The Fund's performance
reflects the deduction of the 5.75% maximum initial sales charge on Class A
shares, the 5% (1-year) and 2% (5-year) applicable contingent deferred sales
charge for Class B, and the 1% (1-year) contingent deferred sales charge for
Class C and Class N shares. The graphs assume that all dividends and capital
gains distributions were reinvested in additional shares.
   Because the Fund invests in a variety of equity and fixed-income
securities,
the Fund's performance is compared to the performance of two indices: (i) the
Standard & Poor's (S&P) 500 Index, a broad-based index of equity securities
widely regarded as a general measure of the performance of the U.S. equity
securities market; and (ii) the Lehman Brothers Aggregate Bond Index, an
unmanaged index of U.S. Government Treasury and agency issues, investment
grade
corporate bond issues and fixed-rate mortgage-backed securities. That index is
widely regarded as a measure of the performance of the domestic debt
securities
market.
   Index performance reflects the reinvestment of dividends but does not
consider the effect of capital gains or transaction costs, and none of the
data
in the graphs that follow shows the effect of taxes. The Fund's performance
reflects the effects of Fund business and operating expenses. While index
comparisons may be useful to provide a benchmark for the Fund's performance,
it
must be noted that the Fund's investments are not limited to the securities or
countries in the indices.

7 | OPPENHEIMER MULTIPLE STRATEGIES FUND



FUND PERFORMANCE

Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:

                                [GRAPHIC OMITTED]
     EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC AS FOLLOWS:

          Oppenheimer Multiple
            Strategies Fund                        Lehman Brothers
              (Class A)         S&P 500 Index    Aggregate Bond Index

 12/31/1992   $ 9,425              $10,000           $10,000
 03/31/1993     9,871               10,436            10,413
 06/30/1993    10,149               10,486            10,690
 09/30/1993    10,570               10,757            10,968
 12/31/1993    10,961               11,006            10,975
 03/31/1994    10,613               10,589            10,660
 06/30/1994    10,511               10,633            10,550
 09/30/1994    10,989               11,152            10,615
 12/31/1994    10,787               11,150            10,655
 03/31/1995    11,509               12,235            11,192
 06/30/1995    12,253               13,401            11,874
 09/30/1995    12,957               14,465            12,107
 12/31/1995    13,245               15,335            12,623
 03/31/1996    13,782               16,158            12,399
 06/30/1996    14,182               16,883            12,470
 09/30/1996(6) 14,731               17,405            12,701
 12/31/1996    15,527               18,854            13,082
 03/31/1997    15,636               19,361            13,008
 06/30/1997    17,051               22,737            13,486
 09/30/1997    18,482               24,440            13,934
 12/31/1997    18,286               25,142            14,345
 03/31/1998    19,605               28,647            14,568
 06/30/1998    19,653               29,598            14,908
 09/30/1998    17,612               26,660            15,538
 12/31/1998    19,575               32,332            15,591
 03/31/1999    19,817               33,943            15,513
 06/30/1999    21,298               36,331            15,377
 09/30/1999    20,481               34,068            15,481
 12/31/1999    21,650               39,133            15,462
 03/31/2000    22,883               40,029            15,804
 06/30/2000    23,044               38,966            16,079
 09/30/2000    23,207               38,588            16,564
 12/31/2000    23,073               35,571            17,260
 03/31/2001    22,824               31,357            17,784
 06/30/2001    24,189               33,190            17,884
 09/30/2001    21,520               28,321            18,709
 12/31/2001    23,462               31,347            18,718
 03/31/2002    23,592               31,433            18,735
 06/30/2002    21,852               27,224            19,427
 09/30/2002    19,674               22,524            20,317

Average Annual Total Returns of Class A Shares of the Fund at 9/30/02(7)
1-Year -13.83%    5-Year 0.07%    10-Year 7.37%


Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:

                                [GRAPHIC OMITTED]
     EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC AS FOLLOWS:

          Oppenheimer Multiple
            Strategies Fund                          Lehman Brothers
              (Class B)           S&P 500 Index    Aggregate Bond Index

08/29/1995    $10,000               $10,000             $10,000
09/30/1995     10,241                10,422              10,097
12/31/1995     10,444                11,049              10,528
03/31/1996     10,825                11,642              10,341
06/30/1996     11,113                12,163              10,400
09/30/1996(6)  11,526                12,540              10,592
12/31/1996     12,121                13,584              10,910
03/31/1997     12,176                13,949              10,849
06/30/1997     13,246                16,382              11,247
09/30/1997     14,332                17,609              11,621
12/31/1997     14,143                18,114              11,963
03/31/1998     15,144                20,639              12,149
06/30/1998     15,140                21,324              12,433
09/30/1998     13,544                19,208              12,959
12/31/1998     15,020                23,295              13,002
03/31/1999     15,176                24,455              12,938
06/30/1999     16,275                26,175              12,824
09/30/1999     15,623                24,545              12,911
12/31/1999     16,482                28,194              12,895
03/31/2000     17,379                28,840              13,180
06/30/2000     17,468                28,074              13,409
09/30/2000     17,545                27,802              13,814
12/31/2000     17,426                25,628              14,395
03/31/2001     17,195                22,592              14,831
06/30/2001     18,187                23,913              14,915
09/30/2001     16,166                20,404              15,603
12/31/2001     17,624                22,584              15,610
03/31/2002     17,722                22,647              15,625
06/30/2002     16,415                19,614              16,202
09/30/2002     14,780                16,228              16,944

Average Annual Total Returns of Class B Shares of the Fund at 9/30/02(7)
1-Year -13.70%    5-Year 0.16%    Since Inception 5.67%

6. The Fund changed its fiscal year end from 12/31 to 9/30.
7. See Notes on page 10 for further details.

8 | OPPENHEIMER MULTIPLE STRATEGIES FUND



Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:

                                [GRAPHIC OMITTED]
     EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC AS FOLLOWS:

          Oppenheimer Multiple
            Strategies Fund                          Lehman Brothers
              (Class C)           S&P 500 Index    Aggregate Bond Index

12/01/1993     $10,000                $10,000            $10,000
12/31/1993      10,219                 10,121             10,054
03/31/1994       9,865                  9,738              9,766
06/30/1994       9,746                  9,778              9,665
09/30/1994      10,171                 10,256              9,724
12/31/1994       9,963                 10,254              9,761
03/31/1995      10,604                 11,251             10,253
06/30/1995      11,261                 12,324             10,878
09/30/1995      11,892                 13,302             11,092
12/31/1995      12,124                 14,103             11,564
03/31/1996      12,591                 14,859             11,359
06/30/1996      12,925                 15,525             11,424
09/30/1996(6)   13,403                 16,005             11,635
12/31/1996      14,101                 17,338             11,984
03/31/1997      14,164                 17,804             11,917
06/30/1997      15,415                 20,910             12,355
09/30/1997      16,676                 22,476             12,765
12/31/1997      16,468                 23,121             13,141
03/31/1998      17,618                 26,344             13,345
06/30/1998      17,625                 27,218             13,657
09/30/1998      15,771                 24,517             14,235
12/31/1998      17,481                 29,733             14,283
03/31/1999      17,662                 31,214             14,212
06/30/1999      18,951                 33,410             14,087
09/30/1999      18,180                 31,329             14,183
12/31/1999      19,176                 35,987             14,165
03/31/2000      20,231                 36,811             14,478
06/30/2000      20,320                 35,833             14,730
09/30/2000      20,424                 35,486             15,174
12/31/2000      20,271                 32,712             15,812
03/31/2001      20,018                 28,836             16,292
06/30/2001      21,168                 30,522             16,384
09/30/2001      18,790                 26,044             17,139
12/31/2001      20,441                 28,827             17,147
03/31/2002      20,525                 28,906             17,163
06/30/2002      18,976                 25,036             17,797
09/30/2002      17,036                 20,713             18,613

Average Annual Total Returns of Class C Shares of the Fund at 9/30/02(7)
1-Year -10.27%    5-Year 0.43%    Since Inception 6.22%

Class N Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:

                                [GRAPHIC OMITTED]
     EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC AS FOLLOWS:

           Oppenheimer Multiple
            Strategies Fund                          Lehman Brothers
              (Class N)           S&P 500 Index    Aggregate Bond Index

03/01/2001    $10,000                $10,000             $10,000
03/31/2001      9,640                  9,367              10,050
06/30/2001     10,197                  9,915              10,107
09/30/2001      9,070                  8,460              10,573
12/31/2001      9,876                  9,364              10,578
03/31/2002      9,930                  9,390              10,588
06/30/2002      9,190                  8,132              10,979
09/30/2002      8,266                  6,728              11,482

Average Annual Total Returns of Class N Shares of the Fund at 9/30/02(7)
1-Year  -9.81%             Since Inception  -11.35%

The performance information for both indices in the graphs begins on 12/31/92
for Class A, 8/31/95 for Class B, 11/30/93 for Class C and 2/28/01 for Class N
shares.
Past performance cannot guarantee future results. Graphs are not drawn
to same scale.

9 | OPPENHEIMER MULTIPLE STRATEGIES FUND



NOTES

In reviewing performance, please remember that past performance cannot
guarantee
future results. Investment return and principal value of an investment in the
Fund will fluctuate so that an investor's shares, when redeemed, may be worth
more or less than the original cost. Because of ongoing market volatility, the
Fund's performance may be subject to substantial fluctuations, and current
performance may be more or less than the results shown. For updates on the
Fund's performance, visit our website at www.oppenheimerfunds.com.

Total returns and the ending account values in the graphs include changes in
share price and reinvestment of dividends and capital gains distributions in a
hypothetical investment for the periods shown. The Fund's total returns shown
do
not reflect the deduction of income taxes on an individual's investment. Taxes
may reduce your actual investment returns on income or gains paid by the Fund
or
any gains you may realize if you sell your shares. For more complete
information
about the Fund, including charges, expenses and risks, please refer to the
prospectus. To obtain a copy, call your financial advisor, call
OppenheimerFunds
Distributor, Inc. at 1.800.CALL.OPP (1.800.225.5677) or visit the
OppenheimerFunds website at www.oppenheimerfunds.com. Read the prospectus
carefully before you invest or send money.

Class A shares of the Fund were first publicly offered on 4/24/87. Unless
otherwise noted, Class A returns include the current maximum initial sales
charge of 5.75%. The Fund's maximum sales charge for Class A shares was lower
prior to 4/1/91, so actual performance may have been higher.

Class B shares of the Fund were first publicly offered on 8/29/95. Unless
otherwise noted, Class B returns include the applicable contingent deferred
sales charge of 5% (1-year) and 2% (5-year). Because Class B shares convert to
Class A shares 72 months after purchase, the "since inception" return for
Class
B uses Class A performance for the period after conversion. Class B shares are
subject to an annual 0.75% asset-based sales charge.

Class C shares of the Fund were first publicly offered on 12/1/93. Unless
otherwise noted, Class C returns include the contingent deferred sales charge
of
1% for the one-year period. Class C shares are subject to an annual 0.75%
asset-based sales charge.

Class N shares of the Fund were first publicly offered on 3/1/01. Class N
shares
are offered only through retirement plans. Unless otherwise noted, Class N
returns include the contingent deferred sales charge of 1% for the one-year
period. Class N shares are subject to an annual 0.25% asset-based sales
charge.

An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.

10 | OPPENHEIMER MULTIPLE STRATEGIES FUND



STATEMENT OF INVESTMENTS  September 30, 2002



                                                                      Market
Value
                                                             Shares     See
Note 1
- ----------------------------------------------------------------------------------

 Common Stocks--50.3%
- ----------------------------------------------------------------------------------
 Consumer Discretionary--9.1%
- ----------------------------------------------------------------------------------
 Auto Components--0.8%
 Borg-Warner Automotive, Inc.(1)                             43,000    $
2,134,520
- ----------------------------------------------------------------------------------
 Delphi Corp.                                               250,000
2,137,500

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

4,272,020

- ----------------------------------------------------------------------------------
 Hotels, Restaurants & Leisure--0.7%
 Brinker International, Inc.(2)                              90,000
2,331,000
- ----------------------------------------------------------------------------------
 MGM Mirage, Inc.(2)                                         49,700
1,853,810

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

4,184,810

- ----------------------------------------------------------------------------------
 Household Durables--0.8%
 Matsushita Electric Industrial Co. Ltd., Sponsored ADR     100,000
1,037,000
- ----------------------------------------------------------------------------------
 Nintendo Co. Ltd.                                           16,000
1,863,644
- ----------------------------------------------------------------------------------
 Sony Corp.                                                  13,000
545,671
- ----------------------------------------------------------------------------------
 Sony Corp., Sponsored ADR                                   10,000
411,000
- ----------------------------------------------------------------------------------
 Toll Brothers, Inc.(2)                                      22,200
482,628

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

4,339,943

- ----------------------------------------------------------------------------------
 Leisure Equipment & Products--1.2%
 Callaway Golf Co.(1)                                       155,000
1,612,000
- ----------------------------------------------------------------------------------
 Mattel, Inc.                                               163,000
2,935,630
- ----------------------------------------------------------------------------------
 Shimano, Inc.                                              165,000
2,473,509

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

7,021,139

- ----------------------------------------------------------------------------------
 Media--3.9%
 Cox Radio, Inc., Cl. A(2)                                   61,900
1,619,304
- ----------------------------------------------------------------------------------
 EchoStar Communications Corp., Cl. A(2)                    132,000
2,283,600
- ----------------------------------------------------------------------------------
 General Motors Corp., Cl. H(2)                              56,000
512,400
- ----------------------------------------------------------------------------------
 News Corp. Ltd. (The), Sponsored ADR, Preference            60,000
996,000
- ----------------------------------------------------------------------------------
 Omnicom Group, Inc.(1)                                      61,900
3,446,592
- ----------------------------------------------------------------------------------
 Reed Elsevier plc                                          180,000
1,546,967
- ----------------------------------------------------------------------------------
 SCMP Group Ltd.                                          2,356,000
1,019,475
- ----------------------------------------------------------------------------------
 SES Global, FDR                                            110,000
543,565
- ----------------------------------------------------------------------------------
 Viacom, Inc., Cl. B(2)                                     260,000
10,543,000

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

22,510,903

- ----------------------------------------------------------------------------------
 Multiline Retail--0.3%
 Federated Department Stores, Inc.(1,2)                      37,500
1,104,000
- ----------------------------------------------------------------------------------
 Sears Roebuck & Co.                                         20,000
780,000

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

1,884,000



11 | OPPENHEIMER MULTIPLE STRATEGIES FUND



STATEMENT OF INVESTMENTS  Continued



                                                                      Market
Value
                                                             Shares     See
Note 1
- ----------------------------------------------------------------------------------

- ----------------------------------------------------------------------------------
 Specialty Retail--1.0%
 Borders Group, Inc.(1,2)                                    90,000    $
1,422,000
- ----------------------------------------------------------------------------------
 Children's Place Retail Stores, Inc.(2)                     42,000
424,200
- ----------------------------------------------------------------------------------
 Gap, Inc. (The)                                            160,000
1,736,000
- ----------------------------------------------------------------------------------
 Talbots, Inc. (The)                                         44,000
1,232,000
- ----------------------------------------------------------------------------------
 Tiffany & Co.(1)                                            33,000
707,190

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

5,521,390

- ----------------------------------------------------------------------------------
 Textiles & Apparel--0.4%
 Compagnie Financiere Richemont AG, A Units                  30,650
454,590
- ----------------------------------------------------------------------------------
 Nike, Inc., Cl. B(1)                                        44,000
1,899,920

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

2,354,510

- ----------------------------------------------------------------------------------
 Consumer Staples--3.2%
- ----------------------------------------------------------------------------------
 Food & Drug Retailing--0.3%
 Safeway, Inc.(2)                                            77,000
1,717,100
- ----------------------------------------------------------------------------------
 Food Products--1.2%
 ConAgra Foods, Inc.                                         65,000
1,615,250
- ----------------------------------------------------------------------------------
 Sara Lee Corp.                                              66,000
1,207,140
- ----------------------------------------------------------------------------------
 Tyson Foods, Inc., Cl. A                                   205,000
2,384,150
- ----------------------------------------------------------------------------------
 Unilever NV, NY Shares                                      33,500
1,991,575

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

7,198,115

- ----------------------------------------------------------------------------------
 Personal Products--1.0%
 Estee Lauder Cos., Inc. (The), Cl. A                        60,000
1,724,400
- ----------------------------------------------------------------------------------
 Wella AG                                                    93,210
3,971,269

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

5,695,669

- ----------------------------------------------------------------------------------
 Tobacco--0.7%
 Philip Morris Cos., Inc.                                   100,000
3,880,000
- ----------------------------------------------------------------------------------
 Energy--4.6%
- ----------------------------------------------------------------------------------
 Energy Equipment & Services--1.3%
 Cooper Cameron Corp.(2)                                     23,000
960,480
- ----------------------------------------------------------------------------------
 Core Laboratories NV(2)                                     91,000
852,670
- ----------------------------------------------------------------------------------
 GlobalSantaFe Corp.                                         91,000
2,033,850
- ----------------------------------------------------------------------------------
 Noble Corp.(1,2)                                            98,000
3,038,000
- ----------------------------------------------------------------------------------
 Petroleum Geo-Services ASA, Sponsored ADR(2)               110,000
83,600
- ----------------------------------------------------------------------------------
 Transocean, Inc.(1)                                         20,000
416,000

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

7,384,600

- ----------------------------------------------------------------------------------
 Oil & Gas--3.3%
 ChevronTexaco Corp.                                         11,000
761,750
- ----------------------------------------------------------------------------------
 Devon Energy Corp.(1)                                       62,000
2,991,500
- ----------------------------------------------------------------------------------
 Exxon Mobil Corp.                                           16,000
510,400
- ----------------------------------------------------------------------------------
 Houston Exploration Co.(2)                                  21,700
675,955



12 | OPPENHEIMER MULTIPLE STRATEGIES FUND



STATEMENT OF INVESTMENTS  Continued




                                                                      Market
Value
                                                             Shares     See
Note 1
- ----------------------------------------------------------------------------------

 Oil & Gas Continued
 Ocean Energy, Inc.                                          60,000    $
1,197,000
- ----------------------------------------------------------------------------------
 Perez Companc SA, Sponsored ADR(2)                          28,336
142,530
- ----------------------------------------------------------------------------------
 Petroleo Brasileiro SA, Preference                          33,300
312,108
- ----------------------------------------------------------------------------------
 Talisman Energy, Inc.                                       90,000
3,608,624
- ----------------------------------------------------------------------------------
 TotalFinaElf SA, Sponsored ADR                              33,000
2,173,050
- ----------------------------------------------------------------------------------
 Unocal Corp.(1)                                            173,000
5,430,470
- ----------------------------------------------------------------------------------
 Westport Resources Corp.(2)                                 74,900
1,370,670

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

19,174,057

- ----------------------------------------------------------------------------------
 Financials--7.4%
- ----------------------------------------------------------------------------------
 Banks--3.3%
 Bank of America Corp.(1)                                   114,000
7,273,200
- ----------------------------------------------------------------------------------
 Bank of New York Co., Inc. (The)                            73,000
2,098,020
- ----------------------------------------------------------------------------------
 BBVA Banco Frances SA, ADR(2)                               25,000
43,750
- ----------------------------------------------------------------------------------
 U.S. Bancorp                                               110,000
2,043,800
- ----------------------------------------------------------------------------------
 UBS AG(2)                                                   33,600
1,398,100
- ----------------------------------------------------------------------------------
 UniCredito Italiano SpA                                    620,000
2,242,650
- ----------------------------------------------------------------------------------
 Washington Mutual, Inc.                                    110,000
3,461,700

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

18,561,220

- ----------------------------------------------------------------------------------
 Diversified Financials--1.5%
 CIT Group, Inc.(2)                                          91,000
1,636,180
- ----------------------------------------------------------------------------------
 J.P. Morgan Chase & Co.                                    315,000
5,981,850
- ----------------------------------------------------------------------------------
 Merrill Lynch & Co., Inc.                                   36,000
1,186,200

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

8,804,230

- ----------------------------------------------------------------------------------
 Insurance--0.9%
 American International Group, Inc.                          37,000
2,023,900
- ----------------------------------------------------------------------------------
 Hartford Financial Services Group, Inc.                     64,000
2,624,000
- ----------------------------------------------------------------------------------
 Zurich Financial Services AG                                 3,300
308,003

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

4,955,903

- ----------------------------------------------------------------------------------
 Real Estate--1.7%
 Camden Property Trust                                       35,000
1,160,250
- ----------------------------------------------------------------------------------
 CarrAmerica Realty Corp.                                    45,000
1,132,650
- ----------------------------------------------------------------------------------
 Developers Diversified Realty Corp.                         54,000
1,188,540
- ----------------------------------------------------------------------------------
 Equity Office Properties Trust                              59,000
1,523,380
- ----------------------------------------------------------------------------------
 Health Care Property Investors, Inc.                        48,000
2,044,800
- ----------------------------------------------------------------------------------
 Host Marriott Corp.(2)                                     295,000
2,737,600
- ----------------------------------------------------------------------------------
 IRSA Inversiones y Representaciones SA, Sponsored GDR(2)    33,151
187,303

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

9,974,523



13 | OPPENHEIMER MULTIPLE STRATEGIES FUND



STATEMENT OF INVESTMENTS  Continued




                                                                      Market
Value
                                                             Shares     See
Note 1
- ----------------------------------------------------------------------------------

 Health Care--8.4%
- ----------------------------------------------------------------------------------
 Biotechnology--1.1%
 Affymetrix, Inc.(2)                                         52,000    $
1,081,600
- ----------------------------------------------------------------------------------
 Human Genome Sciences, Inc.(2)                              89,500
1,079,370
- ----------------------------------------------------------------------------------
 Millennium Pharmaceuticals, Inc.(1,2)                       46,000
428,720
- ----------------------------------------------------------------------------------
 Wyeth                                                      105,000
3,339,000

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

5,928,690

- ----------------------------------------------------------------------------------
 Health Care Equipment & Supplies--0.6%
 Boston Scientific Corp.(2)                                  35,000
1,104,600
- ----------------------------------------------------------------------------------
 Guidant Corp.(2)                                            76,000
2,455,560
- ----------------------------------------------------------------------------------
 Sun Healthcare Group, Inc.(2)                                  198
1,050

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

3,561,210

- ----------------------------------------------------------------------------------
 Health Care Providers & Services--1.5%
 Anthem, Inc.(1,2)                                           20,000
1,300,000
- ----------------------------------------------------------------------------------
 Covance, Inc.(2)                                           114,000
2,230,980
- ----------------------------------------------------------------------------------
 Healthsouth Corp.(2)                                       177,000
734,550
- ----------------------------------------------------------------------------------
 Humana, Inc.(2)                                            142,000
1,760,800
- ----------------------------------------------------------------------------------
 Quintiles Transnational Corp.(2)                           133,000
1,264,830
- ----------------------------------------------------------------------------------
 Service Corp. International(2)                             420,000
1,470,000

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

8,761,160

- ----------------------------------------------------------------------------------
 Pharmaceuticals--5.2%
 Abbott Laboratories                                        118,000
4,767,200
- ----------------------------------------------------------------------------------
 AstraZeneca plc                                             61,600
1,833,551
- ----------------------------------------------------------------------------------
 Bristol-Myers Squibb Co.                                    73,000
1,737,400
- ----------------------------------------------------------------------------------
 GlaxoSmithKline plc, ADR                                    84,000
3,228,120
- ----------------------------------------------------------------------------------
 Johnson & Johnson                                          103,000
5,570,240
- ----------------------------------------------------------------------------------
 Merck & Co., Inc.                                           15,000
685,650
- ----------------------------------------------------------------------------------
 Novartis AG                                                118,800
4,697,325
- ----------------------------------------------------------------------------------
 Pharmacia Corp.                                             50,000
1,944,000
- ----------------------------------------------------------------------------------
 Pliva d.d., GDR(3)                                          20,000
246,000
- ----------------------------------------------------------------------------------
 Schering-Plough Corp.                                      121,000
2,579,720
- ----------------------------------------------------------------------------------
 Watson Pharmaceuticals, Inc.(2)                            107,600
2,637,276

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

29,926,482

- ----------------------------------------------------------------------------------
 Industrials--2.7%
- ----------------------------------------------------------------------------------
 Aerospace & Defense--0.5%
 Boeing Co.                                                  47,000
1,604,110
- ----------------------------------------------------------------------------------
 Northrop Grumman Corp.                                       8,000
992,320
- ----------------------------------------------------------------------------------
 Orbital Sciences Corp.(2)                                      790
2,686

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

2,599,116



14 | OPPENHEIMER MULTIPLE STRATEGIES FUND


STATEMENT OF INVESTMENTS  Continued



                                                                      Market
Value
                                                             Shares     See
Note 1
- ----------------------------------------------------------------------------------

 Air Freight & Couriers--0.2%
 United Parcel Service, Inc., Cl. B                          23,000    $
1,438,190
- ----------------------------------------------------------------------------------
 Airlines--0.2%
 Delta Air Lines, Inc.(1)                                    70,000
650,300
- ----------------------------------------------------------------------------------
 Singapore Airlines Ltd.                                    144,000
777,809

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

1,428,109

- ----------------------------------------------------------------------------------
 Commercial Services & Supplies--0.4%
 Pittston Brink's Group                                     100,000
2,240,000
- ----------------------------------------------------------------------------------
 Construction & Engineering--0.1%
 Insituform Technologies, Inc., Cl. A(2)                     35,100
503,650
- ----------------------------------------------------------------------------------
 Electrical Equipment--0.0%
 Active Power, Inc.(2)                                      160,000
214,400
- ----------------------------------------------------------------------------------
 Industrial Conglomerates--0.3%
 Tyco International Ltd.(1)                                 110,000
1,551,000
- ----------------------------------------------------------------------------------
 Machinery--0.4%
 Komatsu Ltd.                                               227,000
762,633
- ----------------------------------------------------------------------------------
 Morgan Crucible Co. plc                                    400,200
376,858
- ----------------------------------------------------------------------------------
 SureBeam Corp., Cl. A(2)                                   166,885
300,393
- ----------------------------------------------------------------------------------
 Wolverine Tube, Inc.(2)                                    123,000
753,990

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

2,193,874

- ----------------------------------------------------------------------------------
 Road & Rail--0.6%
 Burlington Northern Santa Fe Corp.                          56,000
1,339,520
- ----------------------------------------------------------------------------------
 Swift Transportation Co., Inc.(1,2)                        120,000
1,872,000

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

3,211,520

- ----------------------------------------------------------------------------------
 Information Technology--7.7%
- ----------------------------------------------------------------------------------
 Communications Equipment--0.7%
 Brocade Communications Systems, Inc.(2)                     75,000
564,750
- ----------------------------------------------------------------------------------
 Cisco Systems, Inc.(2)                                     115,000
1,205,200
- ----------------------------------------------------------------------------------
 Juniper Networks, Inc.(2)                                   45,000
216,000
- ----------------------------------------------------------------------------------
 Motorola, Inc.                                             183,000
1,862,940

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

3,848,890

- ----------------------------------------------------------------------------------
 Computers & Peripherals--1.7%
 EMC Corp.(2)                                               131,000
598,670
- ----------------------------------------------------------------------------------
 International Business Machines Corp.(1)                   160,000
9,342,400

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

9,941,070

- ----------------------------------------------------------------------------------
 Electronic Equipment & Instruments--1.2%
 Cognex Corp.(2)                                             90,000
1,251,900
- ----------------------------------------------------------------------------------
 Keyence Corp.                                               13,530
2,271,671
- ----------------------------------------------------------------------------------
 Millipore Corp.                                             51,000
1,621,290
- ----------------------------------------------------------------------------------
 Waters Corp.(2)                                             77,000
1,867,250

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

7,012,111



15 | OPPENHEIMER MULTIPLE STRATEGIES FUND



STATEMENT OF INVESTMENTS  Continued




                                                                      Market
Value
                                                             Shares     See
Note 1
- ----------------------------------------------------------------------------------

 Internet Software & Services--0.1%
 Yahoo!, Inc.(2)                                             43,000    $
411,510
- ----------------------------------------------------------------------------------
 IT Consulting & Services--0.3%
 Titan Corp. (The)(2)                                       160,000
1,536,000
- ----------------------------------------------------------------------------------
 Office Electronics--0.2%
 Canon, Inc.                                                 35,000
1,144,242
- ----------------------------------------------------------------------------------
 Semiconductor Equipment & Products--2.3%
 Analog Devices, Inc.(2)                                     73,000
1,438,100
- ----------------------------------------------------------------------------------
 Applied Micro Circuits Corp.(2)                            115,000
328,900
- ----------------------------------------------------------------------------------
 ASML Holding NV(2)                                         113,000
699,470
- ----------------------------------------------------------------------------------
 Intel Corp.                                                316,000
4,389,240
- ----------------------------------------------------------------------------------
 KLA-Tencor Corp.(2)                                         60,000
1,676,400
- ----------------------------------------------------------------------------------
 Lam Research Corp.(2)                                       96,000
854,400
- ----------------------------------------------------------------------------------
 National Semiconductor Corp.(1,2)                           67,000
799,980
- ----------------------------------------------------------------------------------
 STMicroelectronics NV, NY Registered Shares                 84,000
1,136,520
- ----------------------------------------------------------------------------------
 Teradyne, Inc.(1,2)                                        150,000
1,440,000
- ----------------------------------------------------------------------------------
 Texas Instruments, Inc.                                     32,000
472,640

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

13,235,650

- ----------------------------------------------------------------------------------
 Software--1.2%
 BEA Systems, Inc.(2)                                       130,000
673,400
- ----------------------------------------------------------------------------------
 i2 Technologies, Inc.(2)                                   165,000
85,800
- ----------------------------------------------------------------------------------
 Intuit, Inc.(1,2)                                           10,000
455,300
- ----------------------------------------------------------------------------------
 Peoplesoft, Inc.(2)                                        102,000
1,261,740
- ----------------------------------------------------------------------------------
 Rational Software Corp.(2)                                  83,000
358,560
- ----------------------------------------------------------------------------------
 Red Hat, Inc.(2)                                           137,000
650,750
- ----------------------------------------------------------------------------------
 Reynolds & Reynolds Co., Cl. A                              50,000
1,122,000
- ----------------------------------------------------------------------------------
 Synopsys, Inc.(2)                                           45,000
1,716,750
- ----------------------------------------------------------------------------------
 Veritas Software Corp.(2)                                   38,300
561,861

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

6,886,161

- ----------------------------------------------------------------------------------
 Materials--4.3%
- ----------------------------------------------------------------------------------
 Chemicals--2.8%
 Cabot Corp.(1)                                              94,600
1,986,600
- ----------------------------------------------------------------------------------
 Dow Chemical Co.                                            37,000
1,010,470
- ----------------------------------------------------------------------------------
 Engelhard Corp.(1)                                         110,000
2,621,300
- ----------------------------------------------------------------------------------
 Ferro Corp.                                                 90,000
2,079,000
- ----------------------------------------------------------------------------------
 Hercules, Inc.(2)                                          210,000
1,934,100
- ----------------------------------------------------------------------------------
 International Flavors & Fragrances, Inc.                    85,000
2,707,250
- ----------------------------------------------------------------------------------
 Monsanto Co.                                                84,823
1,296,944
- ----------------------------------------------------------------------------------
 Praxair, Inc.(1)                                            43,000
2,197,730

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

15,833,394




16 | OPPENHEIMER MULTIPLE STRATEGIES FUND



STATEMENT OF INVESTMENTS  Continued




                                                                      Market
Value
                                                             Shares     See
Note 1
- ----------------------------------------------------------------------------------

 Metals & Mining--0.8%
 Alcoa, Inc.                                                 68,000    $
1,312,400
- ----------------------------------------------------------------------------------
 Companhia Vale do Rio Doce, Sponsored ADR                   83,200
1,801,280
- ----------------------------------------------------------------------------------
 GrafTech International Ltd.(2)                             200,000
1,450,000

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

4,563,680

- ----------------------------------------------------------------------------------
 Paper & Forest Products--0.7%
 Georgia-Pacific Corp.                                      168,000
2,199,120
- ----------------------------------------------------------------------------------
 Sappi Ltd., Sponsored ADR                                   70,000
801,500
- ----------------------------------------------------------------------------------
 UPM-Kymmene Oyj                                             45,000
1,236,363

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

4,236,983

- ----------------------------------------------------------------------------------
 Telecommunication Services--1.3%
- ----------------------------------------------------------------------------------
 Diversified Telecommunication Services--0.1%
 Adelphia Business Solutions, Inc.(2)
3,333            117
- ----------------------------------------------------------------------------------
 Focal Communications Corp.(2)                                3,813
1,906
- ----------------------------------------------------------------------------------
 SBC Communications, Inc.(1)                                 15,000
301,500
- ----------------------------------------------------------------------------------
 Tele Norte Leste Participacoes SA (Telemar)             26,283,402
107,557
- ----------------------------------------------------------------------------------
 Tele Norte Leste Participacoes SA (Telemar), Preference  3,077,585
16,747
- ----------------------------------------------------------------------------------
 Telefonica SA, BDR(2)                                       16,262
116,603
- ----------------------------------------------------------------------------------
 WorldCom, Inc./WorldCom Group(2)                           500,000
50,000

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

594,430

- ----------------------------------------------------------------------------------
 Wireless Telecommunication Services--1.2%
 AT&T Corp.                                                 390,000
4,683,900
- ----------------------------------------------------------------------------------
 AT&T Wireless Services, Inc.(2)                            425,000
1,751,000
- ----------------------------------------------------------------------------------
 Millicom International Cellular SA(2)                      225,000
148,725
- ----------------------------------------------------------------------------------
 Telesp Celular Participacoes SA(2)                      49,153,261
32,727

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

6,616,352

- ----------------------------------------------------------------------------------
 Utilities--1.6%
- ----------------------------------------------------------------------------------
 Electric Utilities--0.8%
 Edison International(1,2)                                   58,000
580,000
- ----------------------------------------------------------------------------------
 Northeast Utilities Co.                                    115,000
1,943,500
- ----------------------------------------------------------------------------------
 Progress Energy, Inc.                                       37,000
1,512,190
- ----------------------------------------------------------------------------------
 Xcel Energy, Inc.                                           80,000
744,800

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

4,780,490

- ----------------------------------------------------------------------------------
 Gas Utilities--0.4%
 El Paso Corp.                                               90,000
744,300
- ----------------------------------------------------------------------------------
 NiSource, Inc.                                              72,000
1,240,560

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

1,984,860




17 | OPPENHEIMER MULTIPLE STRATEGIES FUND



STATEMENT OF INVESTMENTS  Continued




                                                                      Market
Value
                                                             Shares     See
Note 1
- ----------------------------------------------------------------------------------

 Multi-Utilities--0.4%
 Energy East Corp.                                           75,000    $
1,485,750
- ----------------------------------------------------------------------------------
 NorthWestern Corp.                                          75,000
732,000

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

2,217,750

 Total Common Stocks (Cost $299,977,206)
287,835,106

==================================================================================
 Preferred Stocks--0.4%
- ----------------------------------------------------------------------------------

 Qwest Trends Trust, 5.75% Cv.(3)                            40,000
316,800
- ----------------------------------------------------------------------------------
 Rouse Co. (The), $3.00 Cv., Series B                        23,000
1,058,000
- ----------------------------------------------------------------------------------
 Sovereign Capital Trust II, 7.50% Cv. Preferred Income Equity
 Redeemable Stock, Units (each unit consists of one preferred
 plus one warrant to purchase 5.3355 shares of Sovereign Bancorp
 common stock)(4)                                            12,500
912,500

- -----------
 Total Preferred Stocks (Cost $3,254,427)
2,287,300

                                                              Units
==================================================================================
 Rights, Warrants and Certificates--0.0%
- ----------------------------------------------------------------------------------

 Comunicacion Celular SA Wts., Exp. 11/15/03(2,5)
300              6
- ----------------------------------------------------------------------------------
 Covergent Communications, Inc. Wts., Exp. 4/1/08(2,5)
1,000             10
- ----------------------------------------------------------------------------------
 Sun Healthcare Group, Inc. Wts., Exp. 2/28/05(2,5)
496            248

- -----------
 Total Rights, Warrants and Certificates (Cost
$0)                             264

                                                          Principal
                                                             Amount
==================================================================================
 Mortgage-Backed Obligations--6.5%
- ----------------------------------------------------------------------------------

 Federal Home Loan Mortgage Corp., Gtd. Mtg. Pass-Through
 Certificates, Series 151, Cl. F, 9%, 5/15/21           $   212,971
222,498
- ----------------------------------------------------------------------------------
 Federal Home Loan Mortgage Corp., Gtd. Multiclass Mtg.
 Pass-Through Certificates, 7%, 5/1/29                    3,305,649
3,452,456
- ----------------------------------------------------------------------------------
 Federal Home Loan Mortgage Corp., Interest-Only
 Stripped Mtg.-Backed Security:
 Series 199, Cl. IO, (19.84)%, 8/1/28(6)                    789,654
104,876
 Series 203, Cl. IO, (18.19)%, 6/15/29(6)                 9,408,691
1,290,755
 Series 204, Cl. IO, (11.83)%, 5/15/29(6)                 9,372,366
1,397,068
- ----------------------------------------------------------------------------------
 Federal National Mortgage Assn.:
 6%, 5/1/16                                              15,750,788
16,377,066
 6.50%, 12/1/27-2/1/28                                    4,438,968
4,610,146
- ----------------------------------------------------------------------------------
 Federal National Mortgage Assn. Nts., 7.125%, 1/15/30      500,000
621,932
- ----------------------------------------------------------------------------------
 Government National Mortgage Assn.:
 5.375%, 3/20/26                                            144,717
148,879
 7%, 4/15/26                                              1,588,285
1,672,585
 7.50%, 5/15/27                                           5,840,365
6,212,229
- ----------------------------------------------------------------------------------
 Mortgage Capital Funding, Inc., Commercial Mtg. Pass-Through
 Certificates, Series 1996-MC1, Cl. G, 7.15%, 6/15/06(5)    400,000
402,875




18 | OPPENHEIMER MULTIPLE STRATEGIES FUND


STATEMENT OF INVESTMENTS  Continued



                                                          Principal   Market
Value
                                                             Amount     See
Note 1
==================================================================================

 Mortgage-Backed Obligations Continued
- ----------------------------------------------------------------------------------

 Salomon Brothers Mortgage Securities VII, Inc., Commercial Mtg.
 Pass-Through Certificates:
 Series 1996-B, Cl. 1, 7.054%, 4/25/26(5)               $   199,194    $
161,223
 Series 1996-C1, Cl. F, 8.493%, 1/20/06(7)                  250,000
242,344

- -----------
 Total Mortgage-Backed Obligations (Cost $36,795,698)
36,916,932

==================================================================================
 U.S. Government Obligations--7.8%
- ----------------------------------------------------------------------------------

 U.S. Treasury Bonds:
 6%, 2/15/26                                                500,000
582,988
 6.50%, 11/15/26                                            360,000
445,922
 8.875%, 8/15/17                                          3,650,000
5,411,698
 STRIPS, 6.30%, 8/15/25(8)                               15,300,000
4,707,887
 STRIPS, 6.54%, 8/15/15(8)                                8,500,000
4,745,363
 STRIPS, 7.10%, 11/15/18(8)                               9,350,000
4,190,773
 STRIPS, 7.31%, 8/15/19(8)                               10,200,000
4,353,788
- ----------------------------------------------------------------------------------
 U.S. Treasury Nts.:
 5%, 8/15/11                                              4,000,000
4,443,596
 5.875%, 2/15/04                                         15,000,000
15,885,945

- -----------
 Total U.S. Government Obligations (Cost $37,883,730)
44,767,960

==================================================================================
 Foreign Government Obligations--8.7%
- ----------------------------------------------------------------------------------

 Argentina (Republic of) Nts.:
 11.75%, 2/12/07(2,5,9)[ARP]                                150,000
2,303
 14.062%, 11/30/02(2,5,9)                                13,125,000
2,756,250
- ----------------------------------------------------------------------------------
 Argentina (Republic of) Par Bonds, 5.984%, 3/31/23(2,9)  2,335,000
1,062,425
- ----------------------------------------------------------------------------------
 Brazil (Federal Republic of) Debt Capitalization Bonds,
 Series 20 yr., 8%, 4/15/14                              14,783,077
7,317,623
- ----------------------------------------------------------------------------------
 Brazil (Federal Republic of) Eligible Interest Bonds,
 3.063%, 4/15/06(7)                                       6,348,800
4,221,952
- ----------------------------------------------------------------------------------
 Canada (Government of) Bonds:
 6.50%, 6/1/04[CAD]                                      13,320,000
8,868,524
 8.75%, 12/1/05[CAD]                                        495,000
359,959
 11.75%, 2/1/03[CAD]                                        290,000
188,524
 Series WL43, 5.75%, 6/1/29[CAD]                          7,130,000
4,708,533
- ----------------------------------------------------------------------------------
 Denmark (Kingdom of) Bonds, 8%, 3/15/06[DKK]            21,900,000
3,299,162
- ----------------------------------------------------------------------------------
 Eskom Depositary Receipts, Series E168, 11%,
 6/1/08[ZAR]                                              6,430,000
574,349
- ----------------------------------------------------------------------------------
 Eskom Sec. Bonds, Series E168, 11%, 6/1/08[ZAR]          3,000,000
267,970
- ----------------------------------------------------------------------------------
 Finland (Republic of) Bonds, Series RG, 9.50%,
 3/15/04[EUR]                                               672,752
724,135
- ----------------------------------------------------------------------------------
 Germany (Republic of) Bonds, Series 94, 6.25%,
 1/4/24[EUR]                                              1,362,593
1,581,506
- ----------------------------------------------------------------------------------
 New South Wales Treasury Corp. Gtd. Bonds, 7%,
 4/1/04[AUD]                                              1,570,000
876,681
- ----------------------------------------------------------------------------------
 Philippines (Republic of) Bonds, 8.60%, 6/15/27          1,150,000
967,437
- ----------------------------------------------------------------------------------
 Poland (Republic of) Bonds, Series 0403, Zero Coupon,
 14.37%, 4/21/03(8)[PLZ]                                 23,285,000
5,409,686
- ----------------------------------------------------------------------------------
 Queensland Treasury Corp. Global Exchangeable Gtd. Nts.,
 10.50%, 5/15/03[AUD]                                     2,590,000
1,455,855
- ----------------------------------------------------------------------------------
 United Kingdom Treasury Bonds:
 7.25%, 12/7/07[GBP]                                      2,400,000
4,304,521
 10%, 9/8/03[GBP]                                           325,000
540,585



19 | OPPENHEIMER MULTIPLE STRATEGIES FUND



STATEMENT OF INVESTMENTS  Continued




                                                          Principal   Market
Value
                                                             Amount     See
Note 1
==================================================================================

- ----------------------------------------------------------------------------------
 Foreign Government Obligations Continued
- ----------------------------------------------------------------------------------

 United Mexican States Bonds, Series RG, 16.50%,
 9/1/08[GBP]                                                 35,000    $
77,624

- -----------
 Total Foreign Government Obligations (Cost $67,817,013)
49,565,604

==================================================================================
 Non-Convertible Corporate Bonds and Notes--10.8%
- ----------------------------------------------------------------------------------

 ABN Amro Bank NV (NY Branch), 7.125% Sub. Nts.,
 Series B, 10/15/93                                         500,000
549,179
- ----------------------------------------------------------------------------------
 Adelphia Communications Corp.:
 10.25% Sr. Unsec. Sub. Nts., 6/15/11(9)                    200,000
74,000
 10.875% Sr. Unsec. Nts., 10/1/10(9)                        200,000
73,000
- ----------------------------------------------------------------------------------
 AES Corp. (The), 8.875% Sr. Unsec. Nts., 2/15/11           300,000
154,500
- ----------------------------------------------------------------------------------
 Alcoa, Inc., 6% Bonds, 1/15/12                           1,000,000
1,109,119
- ----------------------------------------------------------------------------------
 Allied Waste North America, Inc.:
 8.50% Sr. Sub. Nts., 12/1/08                               300,000
286,500
 8.875% Sr. Nts., Series B, 4/1/08                          400,000
390,000
 10% Sr. Unsec. Sub. Nts., Series B, 8/1/09                 200,000
185,000
- ----------------------------------------------------------------------------------
 Amazon.com, Inc., 0%/10% Sr. Unsec. Disc. Nts., 5/1/08(10) 500,000
463,750
- ----------------------------------------------------------------------------------
 AMC Entertainment, Inc., 9.50% Sr. Unsec.
 Sub. Nts., 2/1/11                                          600,000
525,000
- ----------------------------------------------------------------------------------
 American Cellular Corp., 9.50% Sr. Sub. Nts.,
 10/15/09(9)                                              1,300,000
175,500
- ----------------------------------------------------------------------------------
 American International Group, Inc./SunAmerica Global
 Financing VI,  6.30% Sr. Sec. Nts., 5/10/11(3)           1,000,000
1,114,551
- ----------------------------------------------------------------------------------
 American Tower Corp., 9.375% Sr. Nts., 2/1/09              150,000
89,250
- ----------------------------------------------------------------------------------
 Amgen, Inc., 8.125% Unsec. Debs., 4/1/97                   110,000
134,650
- ----------------------------------------------------------------------------------
 Amkor Technology, Inc., 9.25% Sr. Unsec. Nts., 5/1/06      600,000
417,000
- ----------------------------------------------------------------------------------
 AMRESCO, Inc., 10% Sr. Sub. Nts., Series 97-A,
 3/15/04(2,9)                                               200,000
45,000
- ----------------------------------------------------------------------------------
 Amtran, Inc., 10.50% Sr. Nts., 8/1/04                      500,000
202,500
- ----------------------------------------------------------------------------------
 Aurora Foods, Inc., 8.75% Sr. Sub. Nts., Series B, 7/1/08  400,000
230,500
- ----------------------------------------------------------------------------------
 Bank of America Corp., 7.80% Jr. Unsec. Sub. Nts.,
 2/15/10                                                    500,000
605,250
- ----------------------------------------------------------------------------------
 Beazer Homes USA, Inc., 8.375% Sr. Nts., 4/15/12           400,000
402,000
- ----------------------------------------------------------------------------------
 Blount, Inc., 13% Sr. Sub. Nts., 8/1/09                    350,000
208,250
- ----------------------------------------------------------------------------------
 Boeing Capital Corp., 6.50% Nts., 2/15/12                1,000,000
1,074,336
- ----------------------------------------------------------------------------------
 Boyd Gaming Corp., 8.75% Sr. Sub. Nts., 4/15/12            200,000
209,000
- ----------------------------------------------------------------------------------
 Bristol-Myers Squibb Co., 5.75% Nts., 10/1/11            1,000,000
1,082,779
- ----------------------------------------------------------------------------------
 BRL Universal Equipment Corp., 8.875% Sr. Sec. Nts.,
 2/15/08                                                    500,000
512,500
- ----------------------------------------------------------------------------------
 Calpine Corp.:
 8.50% Sr. Unsec. Nts., 2/15/11                           1,000,000
415,000
 8.75% Sr. Nts., 7/15/07                                    150,000
65,250
- ----------------------------------------------------------------------------------
 Canandaigua Brands, Inc., 8.625% Sr. Unsec. Nts., 8/1/06   750,000
791,250
- ----------------------------------------------------------------------------------
 Caterpillar, Inc., 7.375% Unsec. Debs., 3/1/97             500,000
608,570
- ----------------------------------------------------------------------------------
 Celcaribe SA, 14.50% Sr. Sec. Nts., 3/15/04(5)             350,000
176,750
- ----------------------------------------------------------------------------------
 Charter Communications Holdings LLC/
 Charter Communications Holdings Capital Corp.:
 0%/9.92% Sr. Unsec. Disc. Nts., 4/1/11(10)                 400,000
188,000
 10% Sr. Nts., 4/1/09                                       600,000
375,000




20 | OPPENHEIMER MULTIPLE STRATEGIES FUND



STATEMENT OF INVESTMENTS  Continued




                                                          Principal   Market
Value
                                                             Amount     See
Note 1
==================================================================================

- ----------------------------------------------------------------------------------
 Non-Convertible Corporate Bonds and Notes Continued
- ----------------------------------------------------------------------------------

 Chesapeake Energy Corp.:
 8.125% Sr. Unsec. Nts., 4/1/11                            $200,000    $
201,000
 8.375% Sr. Unsec. Nts., 11/1/08                            400,000
404,500
- ----------------------------------------------------------------------------------
 CIT Group, Inc., 7.75% Sr. Unsec. Unsub. Nts., 4/2/12    1,000,000
1,089,793
- ----------------------------------------------------------------------------------
 Citigroup, Inc., 6.875% Unsec. Nts., 2/15/98               550,000
568,939
- ----------------------------------------------------------------------------------
 Coast Hotels & Casinos, Inc., 9.50% Sr.
 Unsec. Sub. Nts., 4/1/09                                   200,000
210,000
- ----------------------------------------------------------------------------------
 Coca-Cola Co. (The), 7.375% Unsec. Debs., 7/29/93          440,000
530,225
- ----------------------------------------------------------------------------------
 Collins & Aikman Floorcoverings, Inc., 9.75% Sr.
 Sub. Nts., 2/15/10(3)                                      200,000
204,000
- ----------------------------------------------------------------------------------
 Comcast UK Cable Partner Ltd., 11.20% Sr.
 Unsec. Disc. Debs., 11/15/07                               850,000
693,812
- ----------------------------------------------------------------------------------
 Conoco, Inc., 6.95% Sr. Unsec. Nts., 4/15/29               500,000
566,648
- ----------------------------------------------------------------------------------
 CSK Auto, Inc., 12% Sr. Unsec. Nts., 6/15/06               300,000
319,125
- ----------------------------------------------------------------------------------
 Cumulus Media, Inc., 10.375% Sr. Unsec. Sub. Nts., 7/1/08  400,000
424,000
- ----------------------------------------------------------------------------------
 D.R. Horton, Inc., 9.75% Sr. Sub. Nts., 9/15/10            600,000
592,500
- ----------------------------------------------------------------------------------
 Dole Food Co., Inc., 7.25% Sr. Nts., 5/1/09                500,000
450,581
- ----------------------------------------------------------------------------------
 Doman Industries Ltd., 8.75% Sr. Nts., 3/15/04(9)        1,400,000
287,000
- ----------------------------------------------------------------------------------
 Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07(5)              100,000
103,500
- ----------------------------------------------------------------------------------
 Dynegy Holdings, Inc., 8.75% Sr. Nts., 2/15/12             250,000
78,750
- ----------------------------------------------------------------------------------
 EchoStar Broadband Corp., 10.375% Sr. Unsec. Nts.,
 10/1/07                                                  1,000,000
995,000
- ----------------------------------------------------------------------------------
 EchoStar DBS Corp., 9.375% Sr. Unsec. Nts., 2/1/09         700,000
675,500
- ----------------------------------------------------------------------------------
 Entravision Communications Corp., 8.125% Sr. Sub. Nts.,
 3/15/09                                                    200,000
205,000
- ----------------------------------------------------------------------------------
 Fleming Cos., Inc., 10.625% Sr. Unsec. Sub. Nts.,
 Series D, 7/31/07                                          400,000
234,000
- ----------------------------------------------------------------------------------
 Focal Communications Corp., 11.875% Sr. Unsec. Nts.,
 Series B, 1/15/10                                           85,000
8,075
- ----------------------------------------------------------------------------------
 Ford Motor Co., 7.70% Unsec. Debs., 5/15/97                500,000
410,165
- ----------------------------------------------------------------------------------
 Forest Oil Corp., 10.50% Sr. Unsec. Sub. Nts., 1/15/06     600,000
642,000
- ----------------------------------------------------------------------------------
 Frontier Oil Corp., 11.75% Sr. Nts., 11/15/09              250,000
255,000
- ----------------------------------------------------------------------------------
 Georgia-Pacific Corp., 8.125% Sr. Unsec. Nts., 5/15/11     600,000
501,031
- ----------------------------------------------------------------------------------
 Goldman Sachs Group, Inc. (The), 7.80% Sr. Unsec.
 Unsub. Nts., Series B, 1/28/10                             500,000
580,653
- ----------------------------------------------------------------------------------
 Graphic Packaging Corp., 8.625% Sub. Nts., 2/15/12         200,000
202,000
- ----------------------------------------------------------------------------------
 Great Atlantic & Pacific Tea Co., Inc. (The),
 9.125% Sr. Nts., 12/15/11                                  100,000
74,500
- ----------------------------------------------------------------------------------
 Hornbeck-Leevac Marine Services, Inc.,
 10.625% Sr. Nts., 8/1/08                                   250,000
262,500
- ----------------------------------------------------------------------------------
 Horseshoe Gaming LLC, 8.625% Sr. Sub. Nts., 5/15/09        600,000
630,000
- ----------------------------------------------------------------------------------
 Host Marriott LP, 9.50% Sr. Nts., 1/15/07                  400,000
401,000
- ----------------------------------------------------------------------------------
 Huntsman Corp./ICI Chemical Co. plc, Zero Coupon Sr. Unsec.
 Disc. Nts., 13.08%, 12/31/09(8)                            800,000
180,000
- ----------------------------------------------------------------------------------
 Huntsman International LLC, 9.875% Sr. Nts., 3/1/09(3)     200,000
201,000
- ----------------------------------------------------------------------------------
 International Business Machines Corp., 7.125% Sr. Unsec.
 Unsub. Debs., 12/1/96                                      500,000
547,479
- ----------------------------------------------------------------------------------
 International Wire Group, Inc., 11.75% Sr. Sub. Nts.,
 Series B, 6/1/05                                           500,000
320,000
- ----------------------------------------------------------------------------------
 Isle of Capri Casinos, Inc., 9% Sr. Sub. Nts., 3/15/12     300,000
309,750
- ----------------------------------------------------------------------------------
 ISP Holdings, Inc., 10.625% Sr. Sec. Nts., 12/15/09        250,000
226,250
- ----------------------------------------------------------------------------------
 IT Group, Inc., 11.25% Sr. Unsec. Sub. Nts.,
 Series B, 4/1/09(2,5,9)
600,000            750




21 | OPPENHEIMER MULTIPLE STRATEGIES FUND



STATEMENT OF INVESTMENTS  Continued




                                                          Principal   Market
Value
                                                             Amount     See
Note 1
==================================================================================

- ----------------------------------------------------------------------------------
 Non-Convertible Corporate Bonds and Notes Continued
- ----------------------------------------------------------------------------------

 J.P. Morgan Chase & Co., 6.75% Sub. Nts., 2/1/11        $1,000,000    $
1,092,579
- ----------------------------------------------------------------------------------
 John Deere Capital Corp., 6% Unsec. Nts., 2/15/09          700,000
766,996
- ----------------------------------------------------------------------------------
 K. Hovnanian Enterprises, Inc.,
 8.875% Sr. Sub. Nts., 4/1/12                               700,000
626,500
- ----------------------------------------------------------------------------------
 Kaiser Aluminum & Chemical Corp.:
 10.875% Sr. Nts., Series B, 10/15/06(9)                    250,000
172,500
 12.75% Sr. Sub. Nts., 2/1/03(2,9)                          500,000
62,500
- ----------------------------------------------------------------------------------
 KB Home:
 7.75% Sr. Nts., 10/15/04                                   400,000
402,000
 8.625% Sr. Sub. Nts., 12/15/08                             600,000
594,000
- ----------------------------------------------------------------------------------
 Lamar Advertising Co., 9.625% Sr. Unsec. Sub. Nts.,
 12/1/06                                                    100,000
103,750
- ----------------------------------------------------------------------------------
 Leap Wireless International, Inc.:
 0%/14.50% Sr. Unsec. Disc. Nts., 4/15/10(9,10)             300,000
13,500
 12.50% Sr. Nts., 4/15/10(9)                                600,000
58,500
- ----------------------------------------------------------------------------------
 Lyondell Chemical Co.:
 9.625% Sr. Sec. Nts., Series A, 5/1/07                     150,000
139,125
 9.875% Sec. Nts., Series B, 5/1/07                         400,000
371,000
- ----------------------------------------------------------------------------------
 MBNA America Bank NA, 6.625% Sub. Nts., 6/15/12          1,000,000
999,494
- ----------------------------------------------------------------------------------
 Mediacom LLC/Mediacom Capital Corp.,
 9.50% Sr. Unsec. Nts., 1/15/13                             400,000
328,000
- ----------------------------------------------------------------------------------
 MeriStar Hospitality Corp.:
 8.75% Sr. Unsec. Sub. Nts., 8/15/07                        500,000
402,500
 9.125% Sr. Unsec. Nts., 1/15/11                            750,000
671,250
- ----------------------------------------------------------------------------------
 MGM Mirage, Inc., 8.375% Sr. Unsec. Sub. Nts., 2/1/11      600,000
624,000
- ----------------------------------------------------------------------------------
 Millicom International Cellular SA,
 13.50% Sr. Disc. Nts., 6/1/06                            1,500,000
412,500
- ----------------------------------------------------------------------------------
 Mohegan Tribal Gaming Authority, 8% Sr. Sub. Nts.,
 4/1/12                                                     600,000
618,000
- ----------------------------------------------------------------------------------
 Motorola, Inc., 5.22% Unsec. Debs., 10/1/97                170,000
104,497
- ----------------------------------------------------------------------------------
 News America Holdings, Inc., 8.50% Sr. Nts., 2/15/05     1,000,000
1,069,252
- ----------------------------------------------------------------------------------
 Nextel Communications, Inc.:
 0%/9.95% Sr. Disc. Nts., 2/15/08(10)                       200,000
149,000
 9.375% Sr. Unsec. Nts., 11/15/09                           400,000
306,000
 12% Sr. Unsec. Nts., 11/1/08                               250,000
211,250
- ----------------------------------------------------------------------------------
 Norfolk Southern Corp., 7.90% Sr. Bonds, 5/15/97           500,000
607,848
- ----------------------------------------------------------------------------------
 Ocwen Financial Corp., 11.875% Nts., 10/1/03               325,000
326,625
- ----------------------------------------------------------------------------------
 OM Group, Inc., 9.25% Sr. Sub. Nts., 12/15/11              250,000
247,500
- ----------------------------------------------------------------------------------
 Orbcomm Global LP (Escrow)
155,000             --
- ----------------------------------------------------------------------------------
 PanAmSat Corp., 8.50% Sr. Nts., 2/1/12(3)                  300,000
241,500
- ----------------------------------------------------------------------------------
 Pathmark Stores, Inc., 8.75% Sr. Sub. Nts., 2/1/12         300,000
279,000
- ----------------------------------------------------------------------------------
 Penn National Gaming, Inc., 8.875% Sr. Sub. Nts., 3/15/10  500,000
505,000
- ----------------------------------------------------------------------------------
 Pennzoil-Quaker State Co., 10% Sr. Nts., 11/1/08           250,000
297,187
- ----------------------------------------------------------------------------------
 Petco Animal Supplies, Inc., 10.75% Sr. Sub. Nts.,
 11/1/11                                                    250,000
270,000
- ----------------------------------------------------------------------------------
 R&B Falcon Corp., 9.50% Sr. Unsec. Nts., 12/15/08          750,000
946,030
- ----------------------------------------------------------------------------------
 Revlon Consumer Products Corp., 12% Sr. Sec. Nts.,
 12/1/05                                                    250,000
226,250
- ----------------------------------------------------------------------------------
 Riverwood International Corp.:
 10.625% Sr. Unsec. Nts., 8/1/07                            500,000
512,500
 10.875% Sr. Sub. Nts., 4/1/08                              250,000
251,250




22 | OPPENHEIMER MULTIPLE STRATEGIES FUND



STATEMENT OF INVESTMENTS  Continued




                                                          Principal   Market
Value
                                                             Amount     See
Note 1
==================================================================================

- ----------------------------------------------------------------------------------
 Non-Convertible Corporate Bonds and Notes Continued
- ----------------------------------------------------------------------------------

 Rogers Cablesystems Ltd.,
 10% Second Priority Sr. Sec. Debs., 12/1/07            $ 1,300,000
$1,300,000
- ----------------------------------------------------------------------------------
 Rohm & Haas Co., 7.85% Unsec. Debs., 7/15/29               500,000
631,567
- ----------------------------------------------------------------------------------
 Rural Cellular Corp., 9.625% Sr. Sub. Nts.,
 Series B, 5/15/08                                          750,000
401,250
- ----------------------------------------------------------------------------------
 Sears Roebuck Acceptance Corp.,
 6.70% Unsec. Unsub. Nts., 4/15/12                        1,000,000
1,061,251
- ----------------------------------------------------------------------------------
 Sinclair Broadcast Group, Inc.:
 8.75% Sr. Sub. Nts., 12/15/07                            1,100,000
1,133,000
 8.75% Sr. Sub. Nts., 12/15/11                              250,000
259,375
 9% Sr. Unsec. Sub. Nts., 7/15/07                           375,000
388,125
- ----------------------------------------------------------------------------------
 Six Flags, Inc., 8.875% Sr. Nts., 2/1/10                   300,000
247,500
- ----------------------------------------------------------------------------------
 Smithfield Foods, Inc., 8% Sr. Nts., Series B, 10/15/09    600,000
594,000
- ----------------------------------------------------------------------------------
 Standard Pacific Corp., 9.25% Sr. Sub. Nts., 4/15/12       200,000
190,000
- ----------------------------------------------------------------------------------
 Sterling Chemicals, Inc., 12.375% Sr. Sec. Nts.,
 Series B, 7/15/06(2,9)                                     400,000
406,000
- ----------------------------------------------------------------------------------
 Stone Energy Corp., 8.25% Sr. Unsec. Sub. Nts., 12/15/11   250,000
257,500
- ----------------------------------------------------------------------------------
 Subic Power Corp.:
 9.50% Sr. Sec. Nts., 12/28/08                              224,138
219,655
 9.50% Sr. Sec. Nts., 12/28/08(3)                            44,828
43,931
- ----------------------------------------------------------------------------------
 Sun International Hotels Ltd.,
 8.875% Sr. Sub. Unsec. Nts., 8/15/11                       400,000
403,000
- ----------------------------------------------------------------------------------
 Swift & Co., 10.125% Sr. Nts., 10/1/09(3)                1,500,000
1,398,750
- ----------------------------------------------------------------------------------
 Terex Corp., 9.25% Sr. Unsec. Sub. Nts., 7/15/11           250,000
245,000
- ----------------------------------------------------------------------------------
 Toll Corp., 8.25% Sr. Sub. Nts., 12/1/11                 2,000,000
1,980,000
- ----------------------------------------------------------------------------------
 Tritel PCS, Inc., 10.375% Sr. Sub. Nts., 1/15/11           377,000
329,875
- ----------------------------------------------------------------------------------
 Triton PCS, Inc., 8.75% Sr. Unsec. Sub. Nts., 11/15/11     400,000
266,000
- ----------------------------------------------------------------------------------
 TV Azteca SA de CV, 10.50% Sr. Nts., Series B, 2/15/07     200,000
186,500
- ----------------------------------------------------------------------------------
 Tyco International Group SA, 6.375% Nts., 10/15/11       1,000,000
821,590
- ----------------------------------------------------------------------------------
 Unifrax Investment Corp., 10.50% Sr. Nts., 11/1/03(5)      500,000
502,500
- ----------------------------------------------------------------------------------
 United Auto Group, Inc., 9.625% Sr. Sub. Nts., 3/15/12(3)  100,000
101,500
- ----------------------------------------------------------------------------------
 United Pan-Europe Communications NV,
 10.875% Sr. Unsec. Nts., Series B, 8/1/09(2,9)             400,000
14,000
- ----------------------------------------------------------------------------------
 United Rentals, Inc., 9% Sr. Unsec. Sub. Nts.,
 Series B, 4/1/09                                           500,000
415,000
- ----------------------------------------------------------------------------------
 United States Steel LLC, 10.75% Sr. Nts., 8/1/08           600,000
594,000
- ----------------------------------------------------------------------------------
 Venetian Casino Resort LLC/Las Vegas Sands, Inc.,
 11% Bonds, 6/15/10(3)                                      200,000
197,000
- ----------------------------------------------------------------------------------
 Viacom, Inc., 7.70% Sr. Unsec. Nts., 7/30/10             1,000,000
1,176,726
- ----------------------------------------------------------------------------------
 Vodafone Group plc, 7.75% Unsec. Unsub. Nts., 2/15/10      500,000
566,468
- ----------------------------------------------------------------------------------
 VoiceStream Wireless Corp., 10.375% Sr. Unsec. Nts.,
 11/15/09                                                   149,000
153,470
- ----------------------------------------------------------------------------------
 Wal-Mart Stores, Inc., 7.55% Sr. Unsec. Nts., 2/15/30      500,000
643,669
- ----------------------------------------------------------------------------------
 Walt Disney Co. (The), 6.375% Sr. Unsec, Nts., 3/1/12    1,000,000
1,064,688
- ----------------------------------------------------------------------------------
 Westport Resources Corp., 8.25% Sr. Unsec. Sub. Nts.,
 11/1/11                                                    250,000
258,750
- ----------------------------------------------------------------------------------
 Williams Scotsman, Inc., 9.875% Sr. Unsec. Nts., 6/1/07    400,000
342,000
- ----------------------------------------------------------------------------------
 Wolverine Tube, Inc., 10.50% Sr. Nts., 4/1/09              500,000
477,500
- ----------------------------------------------------------------------------------
 WorldCom, Inc., 6.95% Sr. Unsec. Nts., 8/15/28(2,9)      1,000,000
125,000

- -----------
 Total Non-Convertible Corporate Bonds and Notes (Cost $68,425,257)
61,924,483




23 | OPPENHEIMER MULTIPLE STRATEGIES FUND



STATEMENT OF INVESTMENTS  Continued




                                                          Principal   Market
Value
                                                             Amount     See
Note 1
==================================================================================

 Convertible Corporate Bonds and Notes--0.3%
- ----------------------------------------------------------------------------------

 Fletcher Building Ltd., 8.05% Cv. Sub. Nts., 6/15/03[NZD]   12,500    $
5,889
- ----------------------------------------------------------------------------------
 Fletcher Challenge Ltd., 10.50% Cv. Unsec. Sub. Nts.,
 4/30/05[NZD]                                                12,500
6,193
- ----------------------------------------------------------------------------------
 Gilat Satellite Networks Ltd.,
 4.25% Cv. Unsec. Sub. Nts., 3/15/05(5,9)                 1,500,000
225,000
- ----------------------------------------------------------------------------------
 Incyte Genomics, Inc., 5.50% Cv. Unsec. Nts., 2/1/07     2,500,000
1,684,375

- -----------
 Total Convertible Corporate Bonds and Notes (Cost $3,057,602)
1,921,457

==================================================================================
 Loan Participations--0.1%
- ----------------------------------------------------------------------------------

 Morocco (Kingdom of) Loan Participation Agreement, Tranche A,
 2.563%, 1/1/09(5,7) (Cost $386,949)                        411,667
363,296

==================================================================================
 Structured Notes--0.8%
- ----------------------------------------------------------------------------------

 JPMorgan Chase Bank, Credit Linked Trust Certificates,
 8.75%, 5/15/07 (Cost $4,555,765)                         4,900,000
4,508,000

==================================================================================
 Joint Repurchase Agreements--14.1%
- ----------------------------------------------------------------------------------

 Undivided interest of 26.89% in joint repurchase
 agreement with BNP Paribas Securities Corp., 1.85%,
 dated 9/30/02, to be repurchased at $80,832,154
 on 10/1/02, collateralized by U.S. Treasury Bonds,
 7.25%--10.375%, 11/15/12--2/15/20, with a value of
 $308,594,118 (Cost $80,828,000)                         80,828,000
80,828,000
- ----------------------------------------------------------------------------------
 Total Investments, at Value (Cost $602,981,647)               99.8%
570,918,402
- ----------------------------------------------------------------------------------
 Other Assets Net of Liabilities                                0.2
1,248,550

- --------------------
 Net Assets                                                   100.0%
$572,166,952

====================


24 | OPPENHEIMER MULTIPLE STRATEGIES FUND



Footnotes to Statement of Investments
Principal amount is reported in U.S. Dollars, except for those denoted in the
following currencies:

ARP   Argentine Peso                 GBP   British Pound Sterling
AUD   Australian Dollar              NZD   New Zealand Dollar
CAD   Canadian Dollar                PLZ   Polish Zloty
DKK   Danish Krone                   ZAR   South African Rand
EUR   Euro

1. A sufficient amount of liquid assets has been designated to cover
outstanding
written options, as follows:




                                  Contracts  Expiration   Exercise
Premium   Market Value
                            Subject to Call       Dates      Price
Received     See Note 1
- ----------------------------------------------------------------------------------------------

 Anthem, Inc.                            80     3/24/03   $  65.00   $
80,559       $ 60,000
 Anthem, Inc.                           120    12/23/02      80.00
62,039          8,400
 Bank of America Corp.                  250    11/18/02      75.00
70,499          5,000
 Borders Group, Inc.                    150    11/18/02      25.00
28,800             --
 Borg-Warner Automotive, Inc.           220    10/21/02      65.00
109,613             --
 Cabot Corp.                            230    10/21/02      40.00
28,060             --
 Callaway Golf Co.                      260    11/18/02      22.50
27,820             --
 Delta Air Lines, Inc.                  100    10/21/02      45.00
27,700             --
 Devon Energy Corp.                     130    10/21/02      55.00
23,660             --
 Edison International                   480    10/21/02      17.50
56,159             --
 Engelhard Corp.                        204    10/21/02      35.00
17,136             --
 Federated Department Stores, Inc.      225    11/18/02      47.50
74,136             --
 International Business Machines Corp.  224    10/21/02     140.00
25,088             --
 Intuit, Inc.                           100    10/21/02      50.00
29,700          4,000
 Millennium Pharmaceuticals, Inc.       230    11/18/02      45.00
17,020             --
 National Seimiconductor Corp.          280    11/18/02      45.00
55,159             --
 Nike, Inc. Cl. B                        64    10/21/02      75.00
12,288             --
 Noble Corp.                            181     1/20/03      50.00
39,276          1,810
 Omnicom Group, Inc.                    129     4/21/03      75.00
62,822         31,605
 Praxair, Inc.                          160    10/21/02      65.00
36,106             --
 SBC Communications, Inc.               150    10/21/02      45.00
14,100             --
 Swift Transportation Co., Inc.         240    10/21/02      25.00
57,378             --
 Teradyne, Inc.                         460    10/21/02      50.00
120,715             --
 Tiffany & Co.                           70    11/18/02      42.50
18,340             --
 Transocean, Inc.                       170    11/18/02      45.00
19,890             --
 Tyco International Ltd.                320    10/21/02      47.50
32,640             --
 Unocal Corp.                           250    10/21/02      40.00
56,749             --

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

$1,203,452       $110,815

=========================


2. Non-income producing security.
3. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities
have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $4,065,032 or 0.71% of the Fund's net
assets as of September 30, 2002.
4. Units may be comprised of several components, such as debt and equity
and/or
warrants to purchase equity at some point in the future. For units, which
represent debt securities, principal amount disclosed represents total
underlying principal.
5. Identifies issues considered to be illiquid--See Note 7 of Notes to
Financial
Statements.
6. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline. Most other fixed income securities
increase in price when interest rates decline. The principal amount of the
underlying pool represents the notional amount on which current interest is
calculated. The price of these securities is typically more sensitive to
changes
in prepayment rates than traditional mortgage-backed securities (for example,
GNMA pass-throughs). Interest rates disclosed represent current yields based
upon the current cost basis and estimated timing and amount of future cash
flows.
7. Represents the current interest rate for a variable or increasing rate
security.
8. Zero coupon bond reflects effective yield on the date of purchase.
9. Issuer is in default.
10. Denotes a step bond: a zero coupon bond that converts to a fixed or
variable
interest rate at a designated future date.

See accompanying Notes to Financial Statements.

25 | OPPENHEIMER MULTIPLE STRATEGIES FUND



STATEMENT OF ASSETS AND LIABILITIES  September 30, 2002




==================================================================================

 Assets
- ----------------------------------------------------------------------------------

 Investments, at value
 (including $80,828,000 in repurchase agreements)
 (cost $602,981,647)--see accompanying statement
$570,918,402
- ----------------------------------------------------------------------------------
 Cash
76,517
- ----------------------------------------------------------------------------------
 Receivables and other assets:
 Interest, dividends and principal paydowns
4,075,440
 Shares of beneficial interest sold
241,346
 Investments sold
10,059
 Other
2,497

- ------------
 Total assets
575,324,261

==================================================================================
 Liabilities
 Options written, at value (premiums received $1,203,452)
 --see accompanying statement
110,815
- ----------------------------------------------------------------------------------
 Payables and other liabilities:
 Shares of beneficial interest redeemed
1,235,824
 Investments purchased
1,027,288
 Distribution and service plan fees
313,717
 Transfer and shareholder servicing agent fees
153,362
 Shareholder reports
139,162
 Trustees' compensation
137,052
 Other
40,089

- ------------
 Total liabilities
3,157,309

==================================================================================
 Net Assets
$572,166,952

============


==================================================================================
 Composition of Net Assets
- ----------------------------------------------------------------------------------

 Paid-in capital                                                    $
607,985,574
- ----------------------------------------------------------------------------------
 Undistributed net investment income
2,930,086
- ----------------------------------------------------------------------------------
 Accumulated net realized loss on
 investments and foreign currency transactions(7,786,275)
- ----------------------------------------------------------------------------------
 Net unrealized depreciation on investments and translation of
 assets and liabilities denominated in foreign currencies
(30,962,433)

- ------------
 Net Assets
$572,166,952

============



26 | OPPENHEIMER MULTIPLE STRATEGIES FUND





==================================================================================

 Net Asset Value Per Share
- ----------------------------------------------------------------------------------

 Class A Shares:
 Net asset value and redemption price per share (based on net assets of
 $483,310,948 and 46,005,114 shares of beneficial interest outstanding)
$10.51
 Maximum offering price per share (net asset value plus sales
 charge of 5.75% of offering price)
$11.15
- ----------------------------------------------------------------------------------
 Class B Shares:
 Net asset value, redemption price (excludes applicable contingent
 deferred sales charge) and offering price per share (based on net
 assets of $54,757,251 and 5,274,727 shares of beneficial interest
 outstanding)
$10.38
- ----------------------------------------------------------------------------------
 Class C Shares:
 Net asset value, redemption price (excludes applicable contingent
 deferred sales charge) and offering price per share (based on net
 assets of $33,300,283 and 3,195,530 shares of beneficial interest
 outstanding)
$10.42
- ----------------------------------------------------------------------------------
 Class N Shares:
 Net asset value, redemption price (excludes applicable contingent
 deferred sales charge) and offering price per share (based on net
 assets of $798,470 and 76,215 shares of beneficial interest
 outstanding)
$10.48




 See accompanying Notes to Financial Statements.


27 | OPPENHEIMER MULTIPLE STRATEGIES FUND




STATEMENT OF OPERATIONS  For the Year Ended September 30, 2002




==================================================================================

 Investment Income
- ----------------------------------------------------------------------------------

 Interest (net of foreign withholding taxes of $243)                $
21,940,954
- ----------------------------------------------------------------------------------
 Dividends (net of foreign withholding taxes of $83,507)
4,877,035

- --------------
 Total investment income
26,817,989

==================================================================================
 Expenses
- ----------------------------------------------------------------------------------
 Management fees
4,805,477
- ----------------------------------------------------------------------------------
 Distribution and service plan fees:
 Class A
1,114,460
 Class B
647,256
 Class C
374,199
 Class N
2,259
- ----------------------------------------------------------------------------------
 Transfer and shareholder servicing agent fees:
 Class A
987,951
 Class B
121,998
 Class C
66,482
 Class
N                                                                       918
- ----------------------------------------------------------------------------------
 Shareholder reports
306,771
- ----------------------------------------------------------------------------------
 Trustees' compensation
42,516
- ----------------------------------------------------------------------------------
 Custodian fees and expenses
25,838
- ----------------------------------------------------------------------------------
 Other
50,482

- --------------
 Total expenses
8,546,607
 Less reduction to custodian expenses
(4,790)

- --------------
 Net expenses
8,541,817


==================================================================================
 Net Investment Income
18,276,172


==================================================================================
 Realized and Unrealized Gain (Loss)
- ----------------------------------------------------------------------------------

 Net realized gain (loss) on:
 Investments (including premiums on options exercised)
(1,387,001)
 Closing and expiration of option contracts written
5,775,584
 Foreign currency transactions
(3,778,161)

- --------------
 Net realized gain
610,422

- ----------------------------------------------------------------------------------
 Net change in unrealized appreciation (depreciation) on:
 Investments
(78,476,758)
 Translation of assets and liabilities denominated in foreign
 currencies
5,088,697

- --------------
 Net change
(73,388,061)

- --------------
 Net realized and unrealized loss
(72,777,639)


==================================================================================
 Net Decrease in Net Assets Resulting from Operations               $
(54,501,467)

==============


 See accompanying Notes to Financial Statements.


28 | OPPENHEIMER MULTIPLE STRATEGIES FUND



STATEMENTS OF CHANGES IN NET ASSETS




 Year Ended September 30,                                       2002
2001
==================================================================================

 Operations
- ----------------------------------------------------------------------------------

 Net investment income                                  $ 18,276,172  $
22,334,614
- ----------------------------------------------------------------------------------
 Net realized gain                                           610,422
17,877,549
- ----------------------------------------------------------------------------------
 Net change in unrealized depreciation                   (73,388,061)
(92,767,891)
- ----------------------------------------------------------------------------------
 Net decrease in net assets resulting from operations    (54,501,467)
(52,555,728)

==================================================================================
 Dividends and/or Distributions to Shareholders
- ----------------------------------------------------------------------------------
 Dividends from net investment income:
 Class A                                                 (14,210,521)
(17,552,533)
 Class B                                                  (1,133,097)
(1,403,156)
 Class C                                                    (661,527)
(799,605)
 Class N                                                     (11,506)
(860)
- ----------------------------------------------------------------------------------
 Distributions from net realized gain:
 Class A                                                 (17,457,674)
(33,019,457)
 Class B                                                  (1,994,603)
(3,502,853)
 Class C                                                  (1,138,028)
(2,017,780)
 Class N
(3,571)           --

==================================================================================
 Beneficial Interest Transactions
- ----------------------------------------------------------------------------------
 Net increase (decrease) in net assets resulting from
 beneficial interest transactions:
 Class A                                                  (2,115,218)
16,962,286
 Class B                                                     184,684
7,203,058
 Class C                                                   2,353,216
3,669,703
 Class N                                                     822,605
102,856

==================================================================================
 Net Assets
- ----------------------------------------------------------------------------------
 Total decrease                                          (89,866,707)
(82,914,069)
- ----------------------------------------------------------------------------------
 Beginning of period                                     662,033,659
744,947,728

- --------------------------
 End of period [including undistributed net investment
 income of $2,930,086 and $2,198,544, respectively]     $572,166,952
$662,033,659

==========================




 See accompanying Notes to Financial Statements.


29 | OPPENHEIMER MULTIPLE STRATEGIES FUND



FINANCIAL HIGHLIGHTS




Class A  Year Ended September 30,             2002      2001      2000
1999      1998
==========================================================================================

 Per Share Operating Data
- ------------------------------------------------------------------------------------------

 Net asset value, beginning of period       $12.14    $14.23    $14.06
$13.69    $16.17
- ------------------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment income                         .35       .43       .53
..54       .51
 Net realized and unrealized gain (loss)     (1.29)    (1.40)     1.21
1.59     (1.22)

- ----------------------------------------------
 Total from investment operations             (.94)     (.97)     1.74
2.13      (.71)
- ------------------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income         (.31)     (.38)     (.48)
(.54)     (.49)
 Distributions from net realized gain         (.38)     (.74)    (1.09)
(1.22)    (1.28)

- ----------------------------------------------
 Total dividends and/or distributions
 to shareholders                              (.69)    (1.12)    (1.57)
(1.76)    (1.77)
- ------------------------------------------------------------------------------------------
 Net asset value, end of period             $10.51    $12.14    $14.23
$14.06    $13.69
- ------------------------------------------------------------------------------------------

==========================================================================================
 Total Return, at Net Asset Value(1)         (8.58)%   (7.27)%   13.31%
16.29%    (4.71)%
- ------------------------------------------------------------------------------------------

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

 Net assets, end of period
 (in thousands)                           $483,311  $562,281  $639,648
$635,603  $624,895
- ------------------------------------------------------------------------------------------
 Average net assets (in thousands)        $570,796  $626,251  $644,356
$660,113  $699,665
- ------------------------------------------------------------------------------------------
 Ratios to average net assets:(2)
 Net investment income                        2.84%     3.16%     3.71%
3.70%     3.34%
 Expenses                                     1.15%     1.01%     1.13%
1.09%     1.08%(3)
- ------------------------------------------------------------------------------------------
 Portfolio turnover rate                        31%       40%       33%
15%       59%




1. Assumes an investment on the business day before the first day of the
fiscal
period, with all dividends and distributions reinvested in additional shares
on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year.
2. Annualized for periods of less than one full year.
3. Expense ratio has been calculated without adjustment for the reduction to
custodian expenses.

See accompanying Notes to Financial Statements.


30 | OPPENHEIMER MULTIPLE STRATEGIES FUND



FINANCIAL HIGHLIGHTS Continued




Class B  Year Ended September 30,             2002      2001      2000
1999      1998
==========================================================================================

 Per Share Operating Data
- ------------------------------------------------------------------------------------------
 Net asset value, beginning of period      $ 12.01   $ 14.08   $ 13.93   $
13.57   $ 16.04
- ------------------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment income                         .25       .31       .41
..41       .38
 Net realized and unrealized gain (loss)     (1.29)    (1.36)     1.19
1.58     (1.20)

- -----------------------------------------------
 Total from investment operations            (1.04)    (1.05)     1.60
1.99      (.82)
- ------------------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income         (.21)     (.28)     (.36)
(.41)     (.37)
 Distributions from net realized gain         (.38)     (.74)    (1.09)
(1.22)    (1.28)

- -----------------------------------------------
 Total dividends and/or distributions
 to shareholders                              (.59)    (1.02)    (1.45)
(1.63)    (1.65)
- ------------------------------------------------------------------------------------------
 Net asset value, end of period             $10.38    $12.01    $14.08
$13.93    $13.57

==============================================

==========================================================================================
 Total Return, at Net Asset Value(1)         (9.38)%   (7.96)%   12.30%
15.35%    (5.49)%
- ------------------------------------------------------------------------------------------


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

 Net assets, end of period (in thousands)  $54,757   $63,487   $66,777
$68,875   $73,036
- ------------------------------------------------------------------------------------------
 Average net assets (in thousands)         $64,702   $67,959   $66,956
$73,673   $74,442
 Ratios to average net assets:(2)
 Net investment income                        2.02%     2.37%     2.92%
2.85%     2.53%
 Expenses                                     1.97%     1.81%     1.94%
1.93%     1.91%(3)
- ------------------------------------------------------------------------------------------
 Portfolio turnover rate                        31%       40%       33%
15%       59%




1. Assumes an investment on the business day before the first day of the
fiscal
period, with all dividends and distributions reinvested in additional shares
on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year.
2. Annualized for periods of less than one full year.
3. Expense ratio has been calculated without adjustment for the reduction to
custodian expenses. See accompanying Notes to Financial Statements.


31 | OPPENHEIMER MULTIPLE STRATEGIES FUND



FINANCIAL HIGHLIGHTS Continued




Class C  Year Ended September 30,             2002      2001      2000
1999      1998
==========================================================================================

 Per Share Operating Data
- ------------------------------------------------------------------------------------------

 Net asset value, beginning of period      $ 12.06   $ 14.13   $ 13.97   $
13.61   $ 16.07
- ------------------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment income                         .24       .31       .41
..42       .38
 Net realized and unrealized gain (loss)     (1.29)    (1.37)     1.20
1.57     (1.20)

- -----------------------------------------------
 Total from investment operations            (1.05)    (1.06)     1.61
1.99      (.82)
- ------------------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income         (.21)     (.27)     (.36)
(.41)     (.36)
 Distributions from net realized gain         (.38)     (.74)    (1.09)
(1.22)    (1.28)

- -----------------------------------------------
 Total dividends and/or distributions
 to shareholders                              (.59)    (1.01)    (1.45)
(1.63)    (1.64)
- ------------------------------------------------------------------------------------------
 Net asset value, end of period             $10.42    $12.06    $14.13
$13.97    $13.61

==============================================
==========================================================================================
 Total Return, at Net Asset Value(1)         (9.41)%   (8.00)%   12.35%
15.28%    (5.43)%
- ------------------------------------------------------------------------------------------

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

 Net assets, end of period (in thousands)  $33,300   $36,171   $38,522
$38,978   $48,417
- ------------------------------------------------------------------------------------------
 Average net assets (in thousands)         $37,412   $39,030   $38,597
$43,701   $52,325
- ------------------------------------------------------------------------------------------
 Ratios to average net assets:(2)
 Net investment income                        2.03%     2.37%     2.92%
2.85%     2.51%
 Expenses                                     1.96%     1.81%     1.94%
1.93%     1.91%(3)
- ------------------------------------------------------------------------------------------
 Portfolio turnover rate                        31%       40%       33%
15%       59%




1. Assumes an investment on the business day before the first day of the
fiscal
period, with all dividends and distributions reinvested in additional shares
on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns.Total returns are not annualized for periods of less than one
full
year.
2. Annualized for periods of less than one full year.
3. Expense ratio has been calculated without adjustment for the reduction to
custodian expenses. See accompanying Notes to Financial Statements.


32 | OPPENHEIMER MULTIPLE STRATEGIES FUND



FINANCIAL HIGHLIGHTS Continued


Class N  Year Ended September 30,                               2002
2001(1)
===============================================================================
 Per Share Operating Data
- -------------------------------------------------------------------------------
 Net asset value, beginning of period                        $ 12.13   $ 13.67
- -------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment income                                           .39       .24
 Net realized and unrealized loss                              (1.38)
(1.48)

- ------------------
 Total from investment operations                               (.99)
(1.24)
- -------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income                           (.28)
(.30)
 Distributions from net realized gain                           (.38)       --

- ------------------
 Total dividends and/or distributions
 to shareholders                                                (.66)
(.30)
- -------------------------------------------------------------------------------
 Net asset value, end of period                               $10.48    $12.13

=================

===============================================================================
 Total Return, at Net Asset Value(2)                           (8.94)%
(9.30)%
- -------------------------------------------------------------------------------


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

 Net assets, end of period (in thousands)                       $798       $95
- -------------------------------------------------------------------------------
 Average net assets (in thousands)                              $454       $12
- -------------------------------------------------------------------------------
 Ratios to average net assets:(3)
 Net investment income                                          2.49%
5.81%
 Expenses                                                       1.48%
1.32%
- -------------------------------------------------------------------------------
 Portfolio turnover rate                                          31%
40%



1. For the period from March 1, 2001 (inception of offering) to September 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.

See accompanying Notes to Financial Statements.


33 | OPPENHEIMER MULTIPLE STRATEGIES FUND



NOTES TO FINANCIAL STATEMENTS

================================================================================
 1. Significant Accounting Policies
 Oppenheimer Multiple Strategies Fund (the Fund) is registered under the
 Investment Company Act of 1940, as amended, as an open-end management
 investment company. The Fund's investment objective is to seek high total
 investment return consistent with preservation of principal. The Fund's
 investment advisor is OppenheimerFunds, Inc. (the Manager).
    The Fund offers Class A, Class B, Class C and Class N shares. Class A
shares
 are sold at their offering price, which is normally net asset value plus a
 front-end sales charge. Class B, Class C and Class N shares are sold without
a
 front-end sales charge but may be subject to a contingent deferred sales
charge
 (CDSC). Class N shares are sold only through retirement plans. Retirement
plans
 that offer Class N shares may impose charges on those accounts. All classes
of
 shares have identical rights and voting privileges. 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. 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).

- --------------------------------------------------------------------------------
 Structured Notes. The Fund invests in structured notes whose market values
and
 redemption prices are linked to the market value of specific securities. The
 structured notes are leveraged, which increases the Fund's exposure to
changes
 in prices of the underlying securities and increases the volatility of each
 note's market value relative to the change in the underlying security prices.
 Fluctuations in value of these securities are recorded as unrealized gains
and
 losses in the accompanying financial statements. The Fund records a realized
 gain or loss when a structured note is sold or matures. As of September 30,
 2002, the market value of these securities comprised of 0.8% of the Fund's
net
 assets, and resulted in unrealized losses in the current period of $47,765.


34 | OPPENHEIMER MULTIPLE STRATEGIES FUND




- --------------------------------------------------------------------------------
 Security Credit Risk. The Fund invests in high-yield securities, which may be
 subject to a greater degree of credit risk, greater market fluctuations and
 risk of loss of income and principal, and may be more sensitive to economic
 conditions than lower-yielding, higher-rated fixed-income securities. The
Fund
 may acquire securities in default, and is not obligated to dispose of
 securities whose issuers subsequently default. As of September 30, 2002,
 securities with an aggregate market value of $5,553,228, representing 0.97%
of
 the Fund's net assets, were in default.

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

 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 closing rates of exchange. Amounts
related
 to the purchase and sale of foreign securities and investment income are
 translated at the rates of exchange prevailing 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 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, including any net realized gain on
 investments not offset by capital loss carryforwards, if any, to
shareholders.
 Therefore, no federal income or excise tax provision is required.
    As of September 30, 2002, the Fund had approximately $1,180,000 of
 post-October losses available to offset future capital gains, if any. Such
 losses, if unutilized, will expire in 2011. Additionally, the Fund had
 approximately $2,413,000 of post-October foreign currency losses which were
 deferred.


35 | OPPENHEIMER MULTIPLE STRATEGIES FUND



NOTES TO FINANCIAL STATEMENTS  Continued

- --------------------------------------------------------------------------------
 1. Significant Accounting Policies Continued
 Trustees' Compensation. The Fund has adopted an unfunded retirement plan for
 the Fund's independent trustees. Benefits are based on years of service and
 fees paid to each trustee during the years of service. During the year ended
 September 30, 2002, the Fund's projected benefit obligations were increased
by
 $19,102 and payments of $9,080 were made to retired trustees, resulting in an
 accumulated liability of $130,481 as of September 30, 2002.
    The Board of Trustees has adopted a deferred compensation plan for
 independent trustees that enables trustees to elect to defer receipt of all
or
 a portion of annual compensation they are entitled to receive from the Fund.
 Under the plan, the compensation deferred is periodically adjusted as though
an
 equivalent amount had been invested for the Board of Trustees in shares of
one
 or more Oppenheimer funds selected by the trustee. The amount paid to the
Board
 of Trustees under the plan will be determined based upon the performance of
the
 selected funds. Deferral of trustees' fees under the plan will not affect the
 net assets of the Fund, and will not materially affect the Fund's assets,
 liabilities or net investment income per share.

- --------------------------------------------------------------------------------
 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 September 30, 2002, amounts have been reclassified to reflect an
 increase in paid-in capital of $58,107, a decrease in undistributed net
 investment income of $1,527,979, and a decrease in accumulated net realized
 loss on investments of $1,469,872. This reclassification includes $2,894
 distributed in connection with Fund share redemptions which increased paid-in
 capital and reduced accumulated net realized gain. Net assets of the Fund
were
 unaffected by the reclassifications.


36 | OPPENHEIMER MULTIPLE STRATEGIES FUND



 The tax character of distributions paid during the years ended September 30,
2002 and September 30, 2001 was as follows:

                                           Year Ended          Year Ended
                                   September 30, 2002  September 30, 2001
- -------------------------------------------------------------------------
                 Distributions paid from:
                 Ordinary income          $16,739,835         $23,605,134
                 Long-term capital gain    19,870,692          34,691,110
                 Return of capital                 --                  --
                                          -------------------------------
                 Total                    $36,610,527         $58,296,244
                                          ===============================

 As of September 30, 2002, the components of distributable earnings on a tax
basis were as follows:
                 Undistributed net investment income  $  2,930,086
                 Accumulated net realized loss          (7,786,275)
                 Net unrealized depreciation           (30,962,433)
                                                      -------------
                 Total                                $(35,818,622)
                                                      =============

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


37 | OPPENHEIMER MULTIPLE STRATEGIES 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 for each class. Transactions in shares of beneficial
 interest were as follows:



                            Year Ended September 30, 2002        Year Ended
September 30, 2001(1)
                                Shares             Amount
Shares         Amount
- -------------------------------------------------------------------------------------------------


 Class A
 Sold                        3,119,704       $ 38,219,004
2,352,686   $ 31,857,830
 Dividends and/or
 distributions reinvested    2,300,598         28,557,940
3,456,341     45,547,155
 Redeemed                   (5,720,740)       (68,892,162)
(4,468,559)   (60,442,699)

- ---------------------------------------------------------------------
 Net increase (decrease)      (300,438)      $ (2,115,218)
1,340,468   $ 16,962,286

=====================================================================

- --------------------------------------------------------------------------------------------------
 Class B
 Sold                        1,621,677       $ 19,347,586
1,243,002   $ 16,611,081
 Dividends and/or
 distributions reinvested      237,129          2,923,736
347,123      4,528,696
 Redeemed                   (1,869,194)       (22,086,638)
(1,046,722)   (13,936,719)

- ---------------------------------------------------------------------
 Net increase (decrease)       (10,388)      $    184,684
543,403   $  7,203,058

=====================================================================

- --------------------------------------------------------------------------------------------------
 Class C
 Sold                          785,399       $  9,356,388
659,612   $  8,880,910
 Dividends and/or
 distributions reinvested      129,600          1,602,446
190,652      2,495,830
 Redeemed                     (719,571)        (8,605,618)
(576,263)    (7,707,037)

- ---------------------------------------------------------------------
 Net increase                  195,428       $  2,353,216
274,001   $  3,669,703

=====================================================================

- --------------------------------------------------------------------------------------------------
 Class N
 Sold                           83,325       $  1,000,643
7,987   $    104,522
 Dividends and/or
 distributions reinvested        1,206
14,492                       69            838
 Redeemed                      (16,163)          (192,530)
(209)        (2,504)

- ---------------------------------------------------------------------
 Net increase                   68,368       $    822,605
7,847   $    102,856

=====================================================================


 1. For the year ended September 30, 2001, for Class A, B and C shares and for
 the period from March 1, 2001 (inception of offering) to September 30, 2001,
 for Class N shares.


38 | OPPENHEIMER MULTIPLE STRATEGIES FUND



===============================================================================
 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 September 30, 2002, were
 $184,248,689 and $214,348,729, respectively.

 As of September 30, 2002, unrealized appreciation (depreciation) based on
cost
 of securities for federal income tax purposes of $605,435,403 was composed
of:

                     Gross unrealized appreciation  $  66,734,752
                     Gross unrealized depreciation   (101,251,753)
                                                    --------------
                     Net unrealized depreciation    $ (34,517,001)
                                                    ==============
    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 are in accordance with
the
 investment advisory agreement with the Fund which provides for a fee of 0.75%
 of the first $200 million of average annual net assets of the Fund, 0.72% of
 the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200
 million, 0.60% of the next $700 million, and 0.58% of average annual net
assets
 in excess of $1.5 billion.

- --------------------------------------------------------------------------------
 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.
    OFS has voluntarily agreed to limit transfer and shareholder servicing
agent
 fees for all classes, up to an annual rate of 0.35% of average net assets per
 class. 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.


39 | OPPENHEIMER MULTIPLE STRATEGIES FUND



NOTES TO FINANCIAL STATEMENTS  Continued



===============================================================================
 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.




                    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)
- ------------------------------------------------------------------------------------------------------------


 September 30, 2002  $428,672       $152,045         $19,253
$449,947         $57,203          $7,184


 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
- -------------------------------------------------------------------------------
 September 30, 2002          $3,142      $171,979         $4,681
$1,298


- --------------------------------------------------------------------------------
 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 September 30, 2002, payments
 under the Class A Plan totaled $1,114,460, all of which were paid by the
 Distributor to recipients, and included $65,458 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 September 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           $647,256        $513,168     $2,557,075
4.67%
 Class C Plan            374,199          64,605        873,469           2.62
 Class N Plan              2,259           1,847          9,675           1.21


40 | OPPENHEIMER MULTIPLE STRATEGIES FUND





===============================================================================
 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 for operational purposes and to seek to protect
 against adverse exchange rate fluctuations. 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 foreign currency exchange rates as provided
 by a reliable bank, dealer or pricing service. Unrealized appreciation and
 depreciation on foreign currency contracts are reported in the Statement of
 Assets and Liabilities as a receivable or payable and in the Statement of
 Operations with the change in unrealized appreciation or depreciation.
    The Fund may realize a gain or loss upon the closing or settlement of the
 foreign currency transactions. Such realized gains and losses are reported
with
 all other foreign currency gains and losses in the Statement of Operations.

===============================================================================
 6. 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.
    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.


41 | OPPENHEIMER MULTIPLE STRATEGIES FUND



NOTES TO FINANCIAL STATEMENTS  Continued



===============================================================================
 6. Option Activity Continued
 Written option activity for the year ended September 30, 2002 was as follows:




                                        Call Options                   Put
Options
                             -----------------------
- ------------------------
                             Number of     Amount of      Number of
Amount of
                             Contracts      Premiums      Contracts
Premiums
- ----------------------------------------------------------------------------------

 Options outstanding as of
 September 30, 2001             10,910   $ 2,787,906          1,529      $
460,058
 Options written                21,365     4,777,196
- --             --
 Options closed or expired     (24,936)   (5,776,669)          (600)
(127,696)
 Options exercised              (1,862)     (584,981)          (929)
(332,362)

- ------------------------------------------------------
 Options outstanding as of
 September 30, 2002              5,477    $1,203,452             --
$      --

======================================================


===============================================================================
 7. Illiquid Securities
 As of September 30, 2002, investments in securities included issues that are
 illiquid. A security may be considered illiquid if it lacks a readily
available
 market or if its valuation has not changed for a certain period of time. The
 Fund intends to invest no more than 10% of its net assets (determined at the
 time of purchase and reviewed periodically) in illiquid securities. The
 aggregate value of illiquid securities subject to this limitation as of
 September 30, 2002 was $4,694,711, which represents 0.82% of the Fund's net
 assets.

===============================================================================
 8. Bank Borrowings
 The Fund may borrow from a bank for temporary or emergency purposes
including,
 without limitation, funding of shareholder redemptions provided asset
coverage
 for borrowings exceeds 300%. The Fund has entered into an agreement which
 enables it to participate with other Oppenheimer funds in an unsecured line
of
 credit with a bank, which permits borrowings up to $400 million,
collectively.
 Interest is charged to each fund, based on its borrowings, at a rate equal to
 the Federal Funds Rate plus 0.45%. Borrowings are payable within 30 days
after
 such loan is executed. The Fund also pays 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 Fund had no borrowings outstanding during the year ended or at
September
 30, 2002.


42 | OPPENHEIMER MULTIPLE STRATEGIES FUND



INDEPENDENT AUDITORS' REPORT


===============================================================================
 The Board of Trustees and Shareholders of
 Oppenheimer Multiple Strategies Fund:
 We have audited the accompanying statement of assets and liabilities of
 Oppenheimer Multiple Strategies Fund, including the statement of investments,
 as of September 30, 2002, and the related statement of operations for the
year
 then ended, the statements of changes in net assets for each of the two years
 in the period then ended, and the financial highlights for each of the five
 years in the period then ended. These financial statements and financial
 highlights are the responsibility of the Fund's management. Our
responsibility
 is to express an opinion on these financial statements and financial
highlights
 based on our audits.
    We conducted our audits in accordance with 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 September 30, 2002, by
 correspondence with the custodian and brokers or by other appropriate
auditing
 procedures where replies from brokers were not received. 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 Multiple Strategies Fund as of September 30, 2002, the results of
 its operations for the year then ended, the changes in its net assets for
each
 of the two years in the period then ended, and the financial highlights for
 each of the five years in the period then ended, in conformity with
accounting
 principles generally accepted in the United States of America.





 KPMG LLP

 Denver, Colorado
 October 21, 2002


43 | OPPENHEIMER MULTIPLE STRATEGIES FUND



FEDERAL INCOME TAX INFORMATION Unaudited


===============================================================================
 In early 2003, shareholders of record will receive information regarding all
 dividends and distributions paid to them by the Fund during calendar year
2002.
 Regulations of the U.S. Treasury Department require the Fund to report this
 information to the Internal Revenue Service.
    Dividends and distributions of $0.4615, $0.4363, $0.4362 and $0.4527 per
 share were paid to Class A, Class B, Class C and Class N shareholders,
 respectively, on December 12, 2001, of which $0.3663 was designated as a
 "capital gain distribution" for federal income tax purposes. Whether received
 in stock or in cash, the capital gain distribution should be treated by
 shareholders as a gain from the sale of capital assets held for more than one
 year (long-term capital gains).
    Dividends paid by the Fund during the fiscal year ended September 30, 2002
 which are not designated as capital gain distributions should be multiplied
by
 24.234% to arrive at the amount eligible for the corporate dividend-received
 deduction.
    The foregoing information is presented to assist shareholders in reporting
 distributions received from the Fund to the Internal Revenue Service. Because
 of the complexity of the federal regulations which may affect your individual
 tax return and the many variations in state and local tax regulations, we
 recommend that you consult your tax advisor for specific guidance.


44 | OPPENHEIMER MULTIPLE STRATEGIES FUND





TRUSTEES AND OFFICERS


==================================================================================================================================


Name, Address, Age, Position(s)         Principal Occupation(s) During Past 5
Years / Other Trusteeships / Directorships Held by
Held with Fund and Length of            Trustee / Number of Portfolios in
Fund Complex Currently Overseen by Trustee
Service


INDEPENDENT TRUSTEES                    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.

Leon Levy, Chairman of the              General Partner (since 1982) of
Odyssey Partners, L.P. (investment partnership)
Board of Trustees,                      and Chairman of the Board (since
1981) of Avatar Holdings, Inc. (real estate
Trustee (since 1987)                    development). Oversees 31 portfolios
in the OppenheimerFunds complex.
Age: 77

Robert G. Galli,                        A trustee or director of other
Oppenheimer funds. Formerly Vice Chairman
Trustee (since 1993)                    (October 1995-December 1997) of
OppenheimerFunds, Inc. (the Manager). Oversees
Age: 69                                 41 portfolios in the OppenheimerFunds
complex.

Phillip A. Griffiths, Trustee           The Director (since 1991) of the
Institute for Advanced Study, Princeton, N.J.,
(since 1999)                            director (since 2001) of GSI Lumonics
and a member of the National Academy of
Age: 64                                 Sciences (since 1979); formerly (in
descending chronological order) a director
                                        of Bankers Trust Corporation, Provost
and Professor of Mathematics at Duke
                                        University, a director of Research
Triangle Institute, Raleigh, N.C., and a
                                        Professor of Mathematics at Harvard
University. Oversees 31 portfolios in the
                                        OppenheimerFunds
complex.

Benjamin Lipstein, Trustee              Professor Emeritus of Marketing,
Stern Graduate School of Business
(since 1987)                            Administration, New York University.
Oversees 31 portfolios in the
Age: 79                                 OppenheimerFunds
complex.

Joel W. Motley,                         Director (January 2002-present),
Columbia Equity Financial Corp. (privately-held
Trustee (since October 10,              financial adviser); Managing Director
(January 2002-present), Carmona Motley
2002)                                   Inc. (privately-held financial
adviser); Formerly he held the following
Age: 50                                 positions: Managing Director (January
1998-December 2001), Carmona Motley
                                        Hoffman Inc. (privately-held
financial adviser); Managing Director (January
                                        1992-December 1997), Carmona Motley &
Co. (privately-held financial adviser).
                                        Oversees 31 portfolios in the
OppenheimerFunds complex.

Elizabeth B. Moynihan,                  Author and architectural historian; a
trustee of the Freer Gallery of Art and
Trustee (since 1992)                    Arthur M. Sackler Gallery
(Smithsonian Institute), Trustees Council of the
Age: 73                                 National Building Museum; a member of
the Trustees Council, Preservation League
                                        of New York State. Oversees 31
portfolios in the OppenheimerFunds complex.

Kenneth A. Randall, Trustee             A director of Dominion Resources,
Inc. (electric utility holding company) and
(since 1987)                            Prime Retail, Inc. (real estate
investment trust); formerly a director of
Age: 75                                 Dominion Energy, Inc. (electric power
and oil & gas producer), President and
                                        Chief Executive Officer of The
Conference Board, Inc. (international economic
                                        and business research) and a director
of Lumbermens Mutual Casualty Company,
                                        American Motorists Insurance Company
and American Manufacturers Mutual Insurance
                                        Company. Oversees 31 portfolios in
the OppenheimerFunds complex.




45 | OPPENHEIMER MULTIPLE STRATEGIES FUND






TRUSTEES AND OFFICERS  Continued


Edward V. Regan,                        President, Baruch College, CUNY; a
director of RBAsset (real estate manager); a
Trustee (since 1993)                    director of OffitBank; formerly
Trustee, Financial Accounting Foundation (FASB
Age: 72                                 and GASB), Senior Fellow of Jerome
Levy Economics Institute, Bard College,
                                        Chairman of Municipal Assistance
Corporation for the City of New York, New York
                                        State Comptroller and Trustee of New
York State and Local Retirement Fund.
                                        Oversees 31 investment companies in
the OppenheimerFunds complex.

Russell S. Reynolds, Jr.,               Chairman (since 1993) of The
Directorship Search Group, Inc. (corporate
Trustee (since 1989)                    governance consulting and executive
recruiting); a life trustee of International
Age: 70                                 House (non-profit educational
organization), and a trustee (since 1996) of the
                                        Greenwich Historical Society.
Oversees 31 portfolios in the OppenheimerFunds

complex.

Donald W. Spiro, Vice                   Chairman Emeritus (since January
1991) of the Manager. Formerly a director
Chairman of the Board                   (January 1969-August 1999) of the
Manager. Oversees 31 portfolios in the
of Trustees,                            OppenheimerFunds
complex.
Trustee (since 1987)
Age: 76


Clayton K. Yeutter, Trustee             Of Counsel (since 1993), Hogan &
Hartson (a law firm). Other directorships:
(since 1991)                            Caterpillar, Inc. (since 1993) and
Weyerhaeuser Co. (since 1999). Oversees 31
Age: 71                                 portfolios in the OppenheimerFunds
complex.


==================================================================================================================================
INTERESTED TRUSTEE                      The address of Mr. Murphy in the
chart below is 498 Seventh Avenue, New York, NY
AND OFFICER                             10018. Mr. Murphy serves for an
indefinite term, until his resignation, death or

removal.


John V. Murphy, President               Chairman, Chief Executive Officer and
director (since June 2001) and President
and Trustee,                            (since September 2000) of the
Manager; President and a director or trustee of
Trustee (since October 2001)            other Oppenheimer funds; President
and a director (since July 2001) of
Age: 53                                 Oppenheimer Acquisition Corp. (the
Manager's parent holding company) and of
                                        Oppenheimer Partnership Holdings,
Inc. (a holding company subsidiary of the
                                        Manager); a director (since November
2001) of OppenheimerFunds Distributor, Inc.
                                        (a subsidiary of the Manager);
Chairman and a director (since July 2001) of
                                        Shareholder Services, Inc. and of
Shareholder Financial Services, Inc. (transfer
                                        agent subsidiaries of the Manager);
President and a director (since July 2001)
                                        of OppenheimerFunds Legacy Program (a
charitable trust program established by
                                        the Manager); a director of the
investment advisory subsidiaries of the Manager:
                                        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 DBL Acquisition Corporation;
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 69 portfolios in the
                                        OppenheimerFunds
complex.




46 | OPPENHEIMER MULTIPLE STRATEGIES FUND





==================================================================================================================================

OFFICERS                                The address of the Officers in the
chart below is as follows: Messrs. Evans,
                                        Levine, Molleur, Negri, Rubinstein
and Zack and Mses. Feld and Switzer is 498
                                        Seventh Avenue, New York, NY 10018,
Messrs. Masterson, Vottiero and Wixted and
                                        Mses. Bechtolt and Ives is 6803 S.
Tucson Way, Centennial, CO 80112-3924. Each
                                        Officer serves for an annual term or
until his or her resignation, death or

removal.

George Evans, Vice President            Vice President of the Manager (since
October 1993) and of HarbourView Asset
(since 1998)                            Management Corporation (since July
1994). An officer of 4 portfolios in the
Age: 42                                 OppenheimerFunds
complex.

Michael S. Levine, Vice President       Vice President (since June 1998) of
the Manager; formerly Assistant Vice
(since 1998)                            President and Portfolio Manager of
the Manager (April 1996-June 1998); prior to
Age: 36                                 joining the Manager in June 1994, he
was a portfolio manager and research
                                        associate for Amas Securities, Inc.
(February 1990-February 1994). An officer of
                                        4 portfolios in the OppenheimerFunds
complex.

David P. Negri, Vice President          Senior Vice President of the Manager
(since May 1998) and of HarbourView Asset
(since 1998)                            Management Corporation (since April
1999); formerly Vice President of the
Age: 48                                 Manager (July 1988-May 1998). An
officer of 9 portfolios in the OppenheimerFunds

complex.

Richard H. Rubinstein,                  Senior Vice President (since October
1995) of the Manager; formerly a Vice
Vice President                          President of the Manager (June
1990-October 1995). An officer of 2 portfolios in
(since 1991)                            the OppenheimerFunds
complex.
Age: 53

Susan Switzer, Vice President           Vice President of the Manager (since
December 2000); Assistant Vice President of
(since 2001)                            the Manager (December 1997-December
2000). Prior to joining the Manager, she was
Age: 36                                 a portfolio manager at Neuberger
Berman (November 1994-November 1997). An
                                        officer of 3 portfolios in the
OppenheimerFunds complex.

Brian W. Wixted,                        Senior Vice President and Treasurer
(since March 1999) of the Manager; Treasurer
Treasurer, Principal Financial          (since March 1999) of HarbourView
Asset Management Corporation, Shareholder
and Accounting Officer                  Services, Inc., Oppenheimer Real
Asset Management Corporation, Shareholder
(since April 1999)                      Financial Services, Inc., Oppenheimer
Partnership Holdings, Inc., OFI Private
Age: 43                                 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) (offshore fund management subsidiaries of
                                        the Manager); 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 85
portfolios in the OppenheimerFunds complex.

Connie Bechtolt,                        Assistant Vice President of the
Manager (since September 1998); formerly
Assistant Treasurer                     Manager/Fund Accounting of the
Manager (September 1994-September 1998). An
(since October 2002)                    officer of 85 portfolios in the
OppenheimerFunds complex.
Age: 39

Philip F. Vottiero,                     Vice President/Fund Accounting of the
Manager (since March 2002); formerly Vice
Assistant Treasurer                     President/Corporate Accounting of the
Manager (July 1999-March 2002) prior to
(since August 15, 2002)                 which he was Chief Financial Officer
at Sovlink Corporation (April 1996-June
Age: 39                                 1999). An officer of 72 portfolios in
the OppenheimerFunds complex.





47 | OPPENHEIMER MULTIPLE STRATEGIES FUND





TRUSTEES AND OFFICERS  Continued


Robert G. Zack,                         Senior Vice President (since May
1985) and General Counsel (since February 2002)
Secretary                               of the Manager; General Counsel and a
director (since November 2001) of
(since November 1, 2001)                OppenheimerFunds Distributor, Inc.;
Senior Vice President and General Counsel
Age: 54                                 (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 85 portfolios
                                        in the OppenheimerFunds
complex.


Philip T. Masterson,                    Vice President and Assistant Counsel
of the Manager (since July 1998); formerly,
Assistant Secretary                     an associate with Davis, Graham, &
Stubbs LLP (January 1997-June 1998). An
(since August 15, 2002)                 officer of 72 portfolios in the
OppenheimerFunds complex.
Age: 38

Denis R. Molleur,                       Vice President and Senior Counsel of
the Manager (since July 1999); formerly a
Assistant Secretary                     Vice President and Associate Counsel
of the Manager (September 1995-July 1999).
(since November 1, 2001)                An officer of 82 portfolios in the
OppenheimerFunds complex.
Age: 45

Katherine P. Feld,                      Vice President and Senior Counsel
(since July 1999) of the Manager; Vice
Assistant Secretary                     President (since June 1990) of
OppenheimerFunds Distributor, Inc.; Director,
(since November 1, 2001)                Vice President and Assistant
Secretary (since June 1999) of Centennial Asset
Age: 44                                 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
85 portfolios in the OppenheimerFunds

complex.

Kathleen T. Ives,                       Vice President and Assistant Counsel
(since June 1998) of the Manager; Vice
Assistant Secretary                     President (since 1999) of
OppenheimerFunds Distributor, Inc.; Vice President and
(since November 1, 2001)                Assistant Secretary (since 1999) of
Shareholder Services, Inc.; Assistant
Age: 37                                 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 85 portfolios in the
                                        OppenheimerFunds
complex.



The Fund's Statement of Additional Information contains additional information
about the Fund's Trustees and is available without charge upon request.


48 | OPPENHEIMER MULTIPLE STRATEGIES FUND



OPPENHEIMER MULTIPLE STRATEGIES FUND



===============================================================================
 Investment Advisor     OppenheimerFunds, Inc.


===============================================================================
 Distributor            OppenheimerFunds Distributor, Inc.


===============================================================================
 Transfer and           OppenheimerFunds Services
 Shareholder
 Servicing Agent


===============================================================================
 Independent Auditors   KPMG LLP


===============================================================================
 Legal Counsel          Mayer Brown Rowe and Maw

                        Oppenheimer funds are distributed by OppenheimerFunds
                        Distributor, Inc., 498 Seventh Avenue, New York,
                        NY 10018.


(C)Copyright 2002 OppenheimerFunds, Inc. All rights reserved.


49 | OPPENHEIMER MULTIPLE STRATEGIES FUND





OPPENHEIMERFUNDS FAMILY

===========================================================================================================================

 Global Equity          Developing Markets Fund                 Global Fund
                        International Small Company Fund        Quest Global
Value Fund
                        Europe Fund                             Global Growth
& Income Fund
                        International Growth Fund
- ---------------------------------------------------------------------------------------------------------------------------
 Equity                 Stock                                   Stock & Bond
                        Emerging Technologies Fund              Quest
Opportunity Value Fund
                        Emerging Growth Fund                    Total Return
Fund
                        Enterprise Fund                         Quest
Balanced Value Fund
                        Discovery Fund                          Capital
Income Fund
                        Main Street(R) Small Cap Fund           Multiple
Strategies Fund
                        Small Cap Value Fund                    Disciplined
Allocation Fund
                        MidCap Fund                             Convertible
Securities Fund
                        Main Street(R) Opportunity Fund         Specialty
                        Growth Fund                             Real Asset
Fund(R)
                        Capital Appreciation Fund               Gold &
Special Minerals Fund
                        Main Street(R) Growth & Income Fund     Tremont
Market Neutral Fund, LLC(1)
                        Value Fund                              Tremont
Opportunity Fund, LLC(1)
                        Quest Capital Value Fund
                        Quest Value Fund
                        Trinity Large Cap Growth Fund
                        Trinity Core Fund
                        Trinity Value Fund
- ---------------------------------------------------------------------------------------------------------------------------
 Income                 Taxable                                 Rochester
Division
                        International Bond Fund                 California
Municipal Fund(3)
                        High Yield Fund                         New Jersey
Municipal Fund(3)
                        Champion Income Fund                    New York
Municipal Fund(3)
                        Strategic Income Fund                   Municipal
Bond Fund
                        Bond Fund                               Limited Term
Municipal Fund(4)
                        Senior Floating Rate Fund               Rochester
National Municipals
                        U.S. Government Trust                   Rochester
Fund Municipals
                        Limited-Term Government Fund            Limited Term
New York Municipal Fund
                        Capital Preservation Fund(2)            Pennsylvania
Municipal Fund(3)
- ---------------------------------------------------------------------------------------------------------------------------
 Select Managers        Stock                                   Stock & Bond
                        Mercury Advisors Focus Growth Fund      QM Active
Balanced Fund(2)
                        Gartmore Millennium Growth Fund II
                        Jennison Growth Fund
                        Salomon Brothers All Cap Fund(5)
                        Mercury Advisors S&P 500(R) Index Fund(2)
 Money Market(6)        Money Market Fund                       Cash Reserves




 1. Special investor qualification and minimum investment requirements apply.
 See the prospectus for details.
 2. Available only through qualified retirement plans.
 3. Available to investors only in certain states.
 4. The Fund's name was changed from "Oppenheimer Intermediate Municipal Fund"
 on September 30, 2002.
 5. The Fund's name was changed from "Oppenheimer Select Managers Salomon
 Brothers Capital Fund" on May 1, 2002.
 6. An investment in money market funds is neither insured nor guaranteed by
the
 Federal Deposit Insurance Corporation or any other government agency.
Although
 these funds may seek to preserve the value of your investment at $1.00 per
 share, it is possible to lose money by investing in these funds.


50 | OPPENHEIMER MULTIPLE STRATEGIES FUND



1.800.CALL OPP PHONELINK

Call 1.800.CALL OPP (1.800.225.5677) for answers to many of your questions.
Our
automated speech recognition system provides you access to all the information
and services you need.

With PhoneLink you can:

   o Obtain account balances, share price (NAV) and dividends paid

   o Verify your most recent transactions

   o Buy, redeem or exchange mutual fund shares

   o Create custom lists of your accounts, funds or market indices

   o Order duplicate statements or Form 1099 DIV

   o Obtain market data (closing market information for Dow Jones Industrial
     Average, Nasdaq Composite and S&P 500 Index)

   o Speak to a Customer Service Representative(1) by saying "Agent" when
     prompted

   o And more!



Quick list of PhoneLink commands

Say                                     To:

[Account # or Social Security # + PIN]  Get dollar and share balances, NAVs,
                                        transaction history or request
                                        transactions

[Fund name, share class]                Get current price/dividend information

Balance                                 Hear your balance/list of accounts

History                                 Hear your most recent transactions

Purchase or buy                         Buy shares

Exchange                                Exchange shares

Liquidation or redemption               Sell shares

Dow Jones or Market Indices             Hear closing market information
                                        (Dow Jones Industrial Average, Nasdaq
                                        Composite and S&P 500)

Custom list                             Create, play or edit custom list of
your
                                        accounts, funds or market indices


1. You may speak to a Customer Service Representative during normal business
hours.


51 | OPPENHEIMER MULTIPLE STRATEGIES FUND



PRIVACY POLICY NOTICE

As an Oppenheimer fund shareholder, you are entitled to know how we protect
your
personal information and how we limit its disclosure.

Information Sources
We obtain nonpublic personal information about our shareholders from the
following sources:
o Applications or other forms
o When you create a user ID and password for online account access
o When you enroll in eDocs Direct
o Your transactions with us, our affiliates or others
o A software program on our website, often referred to as a "cookie," which
  indicates which parts of our site you've visited

If you visit www.oppenheimerfunds.com and do not log on to the secure account
information areas, we do not obtain any personal information about you. When
you
do log on to a secure area, we do obtain your user ID and password to identify
you. We also use this information to provide you with products and services
you
have requested, to inform you about products and services that you may be
interested in and to assist you in other ways.

Protection of Information
We do not disclose any nonpublic personal information (such as names on a
customer list) about current or former customers to anyone, except as
permitted
by law.

Disclosure of Information
We send your financial advisor (as designated by you) copies of confirmations,
account statements and other documents reporting activity in your fund
accounts.
We may also use details about you and your investments to help us, our
financial
service affiliates or firms that jointly market their financial products and
services with ours, to better serve your investment needs or suggest financial
services or educational material that may be of interest to you.

Right of Refusal
We will not disclose your personal information to unaffiliated third parties
(except as permitted by law), unless we first offer you a reasonable
opportunity
to refuse or "opt out" of such disclosure.

Security
In the coming months, an Internet browser that supports 128-bit encryption
will
be required to view the secure pages of www.oppenheimerfunds.com. These areas
include:
o Account access
o Create a user ID and profile
o User profile
o eDocs Direct, our electronic document delivery service


52 | OPPENHEIMER MULTIPLE STRATEGIES FUND



To find out if your Internet browser supports 128-bit encryption, or for
instructions on how to upgrade your browser, visit the Help section of
www.oppenheimerfunds.com.

Emails and Encryption
As a security measure, we do not include personal or account information in
nonsecure emails, and we advise you not to send such information to us in
nonsecure emails. Instead, you may take advantage of the secure features of
our
website to encrypt your email correspondence. To do this, you will need to use
an Internet browser that supports 128-bit encryption. If you are not sure if
your Internet browser supports 128-bit encryption, or need instructions on how
to upgrade your browser, visit the Help section of www.oppenheimerfunds.com
for
assistance.

o  All transactions, including redemptions, exchanges and purchases are
secured
   by Secure Socket Layers (SSL) and encryption. SSL is used to establish a
   secure connection between your PC and OppenheimerFunds' server. It
transmits
   information in an encrypted and scrambled format.

o  Encryption is achieved through an electronic scrambling technology that
uses
   a "key" to code and then decode the data. Encryption acts like the cable
   converter box you may have on your television set. It scrambles data with
   secret code so that no one can make sense of it while it is being
   transmitted. When the data reaches its destination, the same software
   unscrambles the data.

o  You can exit the secure area by either closing your browser, or for added
   security, you can use the Log Out of Account Area button before you close
   your browser.

Other Security Measures
We maintain physical, electronic and procedural safeguards to protect your
personal account information. Our employees and agents have access to that
information only so that they may offer you products or provide services to
you,
for example, when responding to your account questions.

How You Can Help
You can also do your part to keep your account information private, and to
prevent unauthorized transactions. If you obtain a user ID and password for
your
account, do not allow it to be used by anyone else. Also, take special
precautions when accessing your account on a computer used by others.


- --------------------------------------------------------------------------------
This joint notice describes the privacy policies of Oppenheimer funds,
OppenheimerFunds Distributor, Inc., the trustee of OppenheimerFunds Individual
Retirement Accounts (IRAs) and the custodian of the OppenheimerFunds 403(b)(7)
tax-sheltered custodial accounts. It applies to all Oppenheimer fund accounts
you presently have, or may open in the future, using your Social Security
number--whether or not you remain a shareholder of our funds. If you have any
questions about these privacy policies, write to us at P.O. Box 5270, Denver,
CO
80217-5270, email us by clicking on the Contact Us section of our website at
www.oppenheimerfunds.com or call us at 1.800.CALL OPP (1.800.225.5677).


53 | OPPENHEIMER MULTIPLE STRATEGIES FUND



INFORMATION AND SERVICES

                                                     [GRAPHIC OMITTED]
                                                        eDocsDirect

Get This Report Online!
You can quickly view, download and print this report at
your convenience. It's EASY, FAST, CONVENIENT, and FREE!
With OppenheimerFunds eDocs Direct, you'll receive email notification when
shareholder reports, prospectuses or prospectus supplements for your fund(s)
become available online, instead of receiving them through the mail. You'll
cut
down on paper mail and help reduce fund expenses!

Sign up for eDocs Direct today
at www.oppenheimerfunds.com

Internet
24-hr access to account information and transactions(1)
www.oppenheimerfunds.com
- --------------------------------------------------------------------------------
PhoneLink(1) and General Information
24-hr automated information and automated transactions
Representatives also available Mon-Fri 8am-9pm ET
Sat (January-April) 10am-4pm ET
1.800.CALL OPP (1.800.225.5677)
- --------------------------------------------------------------------------------
Written Correspondence and Transaction Requests
OppenheimerFunds Services
P.O. Box 5270, Denver, CO 80217-5270

For Overnight Delivery
OppenheimerFunds Services
10200 East Girard Avenue, Building D
Denver, CO 80231
- --------------------------------------------------------------------------------
Ticker Symbols
Class A: OPASX  Class B: OASBX  Class C: OASCX  Class N: OASNX


1. At times the website or PhoneLink may be inaccessible or their transaction
features may be unavailable.


                                                     [LOGO OMITTED]
                                                     OppenheimerFunds(R)
                                                     Distributor, Inc.

0240.001.0902   November 29, 2002

EX-99

                           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.

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

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.

- ------------------------------------------------------------------------------
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'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).


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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):

- ---------------------------------------------------------------------------------
                                     Class A Class B  Class C  Class N  Class Y
                                     Shares   Shares   Shares   Shares   Shares
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------

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

- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
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)
- ---------------------------------------------------------------------------------
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                    0.005%   0.005%   0.005%   0.005%    0.005%
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------

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

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

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

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

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

- ---------------------------------------------------------------------------------
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:

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

Class A Shares            $770          $1,176       $1,608        $2,803

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

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

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

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

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

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

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

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

Class A Shares            $770          $1,176       $1,608        $2,803

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

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

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

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

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

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

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

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

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


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 period ended November 30, 2002.


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.


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

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

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

If shares are redeemed:1  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.

- ------------------------------------------------------------------------------
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'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):

- ---------------------------------------------------------------------------------
                                     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
$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.


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

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

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

Class A Shares            $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

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

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

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

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

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

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.

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 Fund
generally does not use income-oriented investments to help cushion the Fund's
total return from changes in stock prices. 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, but may be less volatile than
small-cap and emerging markets stock funds.

- ------------------------------------------------------------------------------
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'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. 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 2.76% (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%

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


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 vary from those in the index.


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):

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


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

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

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

Class A Shares            $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

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

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

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

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

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.

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

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.

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.

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 Fund
generally does not use income-oriented investments to help cushion the Fund's
total return from changes in stock prices. The Fund focuses investments in a
limited number of issuers and is non-diversified. It will therefore be
vulnerable to the effects of economic changes that affect those issuers. In the
OppenheimerFunds spectrum, the Fund is generally more aggressive than funds that
invest in bonds or in investment grade debt securities, but may be less volatile
than small-cap and emerging markets stock funds.

- ------------------------------------------------------------------------------
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'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. 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 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


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):

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


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

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

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

Class A Shares            $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

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

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

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

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

      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 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.

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

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 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.


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.

- ------------------------------------------------------------------------------
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'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. 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 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):

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


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

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

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

Class A Shares            $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

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

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

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

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





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%


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.

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%



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             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%


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.

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%


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           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%


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.

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



                                                                   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                 $ 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%




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. See accompanying Notes to
Financial Statements.

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%

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.

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%




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.


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%




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.



                          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

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                                                                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.

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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.

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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.

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

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.

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

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.

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

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.

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

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.

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

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



                                                                   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.




       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:



                                              Year Ended November 30, 2002      Period Ended November 30, 2001 1
                                                  Shares            Amount              Shares            Amount
- -----------------------------------------------------------------------------------------------------------------
 Class A

 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)                              --        $       --                  --        $       --
                                                =================================================================

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.


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


                                                                 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%


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.

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%



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.

            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:



                                                         Year Ended November 30, 2002      Period Ended November 30, 2001 1
                                                             Shares            Amount              Shares            Amount
 ------------------------------------------------------------------------------------------------------------------------------

 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)                                         --         $      --                  --       $        --
                                                            ===================================================================


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.

            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.



                                  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                   $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.



                                            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                              $--                    $2,303                      $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:



                                                                                                           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                                 $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



                                                 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%


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.

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%


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.

                           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)       --    $       --                --     $       --
                         =======================================================

 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
$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.



                  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  $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



                                                         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%


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.

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.


        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.



                        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         $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



                                                                   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                 $ 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%




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. See accompanying Notes to
Financial Statements.

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.

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


- --------------------------------------------------------------------------------
 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                           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)            --         $      --                  --        $       --
                               ================================================================


 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 $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
                                               =========

 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.

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.



                   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     $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.



                                            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                               $--                    $2,142                        $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:



                                                                                                          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                                 $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

 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%




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.

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%




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.


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%




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.

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
 





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



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

 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)



                  Master S&P 500 Index Series (continued)
                  ------------------------------------------------------------------------------
                                                                          Shares
                  Issue                                                   Held           Value
================================================================================================

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.

EX-99.2O

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


                                                                 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%


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.

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%



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.

            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:



                                                         Year Ended November
30, 2002      Period Ended November 30, 2001 1

Shares            Amount              Shares            Amount

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


 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)                                         --
$      --                  --       $        --

===================================================================


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.

            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.



                                  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                   $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.



                                            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                              $--
$2,303                      $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:




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                                 $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