Oppenheimer Disciplined Allocation Fund

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SjAEEh12hvA8yB6Is9rk66fRwDQC5oxM5ghaJfMmNiwGZE66dFlcuvPEyEL+j0Jq USfgxWkg+E5V5ExmPQo/kg== 0000356865-03-000002.txt : 20030117 0000356865-03-000002.hdr.sgml : 20030117 20030117165316 ACCESSION NUMBER: 0000356865-03-000002 CONFORMED SUBMISSION TYPE: 497 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20030117 EFFECTIVENESS DATE: 20030117 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPPENHEIMER SERIES FUND INC CENTRAL INDEX KEY: 0000356865 IRS NUMBER: 061207374 STATE OF INCORPORATION: MD FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 002-75276 FILM NUMBER: 03518220 BUSINESS ADDRESS: STREET 1: 498 SEVENTH AVENUE STREET 2: 14TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10018 BUSINESS PHONE: 2123230200 MAIL ADDRESS: STREET 1: 498 SEVENTH AVENUE STREET 2: 14TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10018 FORMER COMPANY: FORMER CONFORMED NAME: CONNECTICUT MUTUAL LIQUID ACCOUNT INC DATE OF NAME CHANGE: 19851106 FORMER COMPANY: FORMER CONFORMED NAME: CONNECTICUT MUTUAL INVESTMENT ACCOUNTS INC DATE OF NAME CHANGE: 19920703 497 1 sais.htm REVISED STATEMENTS OF ADDITIONAL INFORMATION Oppenheimer Disciplined Allocation Fund

Oppenheimer
Disciplined Allocation Fund
(A series of Oppenheimer Series Fund, Inc.)

6803 S. Tucson Way, Centennial, CO 80112
1.800.225.5677

Statement of Additional Information dated December 23, 2002, Revised January
15, 2003

This Statement of Additional Information is not a prospectus. This document
contains additional information about the Fund and supplements information in
the Prospectus dated December 23, 2002. It should be read together with the
Prospectus, which may be obtained by writing to the Fund's Transfer Agent,
OppenheimerFunds Services, at P.O. Box 5270, Denver, Colorado 80217, 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.......................... 13
Other Investment Restrictions....................................... 33
How the Fund is Managed ................................................ 35
Organization and History............................................ 35
Board of Directors and Oversight Committees......................... 36
Directors and Officers of the Fund.................................. 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...................................................... 69
How to Exchange Shares.................................................. 73
Dividends, Capital Gains and Taxes...................................... 77
Additional Information About the Fund................................... 81

Financial Information About the Fund
Independent Auditors' Report............................................ 82
Financial Statements.................................................... 83

Appendix A: Ratings Definitions......................................A-1
Appendix B: Industry Classifications.................................B-1
Appendix C: OppenheimerFunds 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., (the "Manager") 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 Fund's Manager may use in selecting
portfolio securities will vary over time. The Fund is not required to use all
of the investment techniques and strategies described below at all times in
seeking its goal. It may use some of the special investment techniques and
strategies at some times or not at all.

In selecting equity investments for the Fund's portfolio, the portfolio
managers currently use both "value" and "growth" investing styles.

|X| Value Investing. In selecting equity investments for the Fund's
portfolio, the portfolio managers currently use a value investing style
coupled with fundamental analysis of issuers. In using a value approach, the
managers look 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 (or its long-term earnings potential) 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, liquidation value and intellectual property value.

|X| Growth Investing. In using a growth approach, the Funds' portfolio
managers look for high-growth companies. Currently, the portfolio managers,
look for:
o Companies that have exceptional revenue growth
o Companies with above-average earnings growth
o Companies that can sustain exceptional revenue and earnings growth
o Companies that are well established as leaders in high growth markets
|X| Investments in Stocks and Other Equity Securities. The Fund does
not limit its investments in equity securities to issuers having a market
capitalization of a specified size or range, and therefore may invest in
securities of small-, mid- and large-capitalization issuers. At times, the
Fund may have substantial amounts of its assets invested in securities of
issuers in one or more capitalization ranges, based upon the Manager's use of
its investment strategies and its judgment of where the best market
opportunities are to seek the Fund's objective.

At times, the market may favor or disfavor securities of issuers of a
particular capitalization range. Securities of small capitalization issuers
may be subject to greater price volatility in general than securities of
larger companies. Therefore, if the Fund has substantial investments in
smaller capitalization companies at times of market volatility, the Fund's
share price may fluctuate more than that of funds focusing on larger
capitalization issuers.

At times, the Fund may increase the emphasis of its investments in a
particular industry. Therefore, it may be subject to the risks that economic,
political or other events can have a negative effect on the values of issuers
in that particular industry (this is referred to as "industry risk"). Stocks
of issuers in a particular industry may be affected by changes in economic
conditions that affect that industry more than others, or changes in
government regulations, availability of basic resources or supplies, or other
events. To the extent that the Fund is emphasizing investments in a
particular industry, its share values may fluctuate in response to events
affecting that industry.

o Rights and Warrants. The Fund can invest up to 5% of its total assets
in warrants or rights. That limit does not apply to warrants and rights that
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.

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

The value of a convertible security is a function of its "investment
value" and its "conversion value." If the investment value exceeds the
conversion value, the security will behave more like a debt security, and the
security's price will likely increase when interest rates fall and decrease
when 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.

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.

o Preferred Stocks. Preferred stocks are equity securities but have
certain attributes of debt securities. 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 the issuer can pay dividends on
common shares.

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 for
their call or redemption prior to maturity which can have a negative effect
on their prices when interest prior to maturity rates decline. Preferred
stock may be "participating" stock, which means that it may be entitled to a
dividend exceeding the stated dividend in certain cases.

Preferred stocks are equity securities because they do not constitute a
liability of the issuer and therefore do not offer the same degree of
protection of capital as debt securities and may not offer the same degree of
assurance of continued income as debt securities. The rights of preferred
stock on distribution of a corporation's assets in the event of its
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 its liquidation.

o Real Estate Investment Trusts (REITs). The Fund can invest in real
estate investment trusts, as well as real estate development companies and
operating companies. It can also buy shares of companies engaged in other
real estate businesses. REITs are trusts that sell shares to investors and
use the proceeds to invest in real estate. A REIT can focus on a particular
project, such as a shopping center or apartment complex, or may buy many
properties or properties located in a particular geographic region.

To the extent a REIT focuses on a particular project, sector of the
real estate market or geographic region, its share price will be affected by
economic and political events affecting that project, sector or geographic
region. Property values may fall due to increasing vacancies or declining
rents resulting from unanticipated economic, legal, cultural or technological
developments. REIT prices also may drop because of the failure of borrowers
to pay their loans, a dividend cut, a disruption to the real estate
investment sales market, changes in federal or state taxation policies
affecting REITs, and poor management.

|X| Investments in Bonds and Other Debt Securities. The Fund can
invest in a variety of bonds, debentures and other debt securities to seek
its objective. It will invest at least 25% of its assets in fixed-income
senior securities and could have a larger portion of its assets in debt
investments.
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., ("Moody's") or at least "BBB" by Standard & Poor's Rating
Services ("S&P") or Fitch, Inc., ("Fitch") or that have comparable ratings by
another nationally-recognized 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 that the Fund buys are unrated, to be
considered part of the Fund's holdings of investment-grade securities, they
must be judged by the Manager to be of comparable quality to bonds rated as
investment grade by a rating organization.

o Special Risks of Lower-Grade Securities. It is not anticipated that the
Fund will normally 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 (and, in some
cases, the appreciation possibilities of lower-grade securities might be a
reason they are selected for the Fund's portfolio). High-yield convertible
debt securities might be selected as "equity substitutes," as described above.

As mentioned above, "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 Fitch, or similar ratings by other
nationally recognized rating organizations. If they are unrated, and are
determined by the Manager to be of comparable quality to debt securities
rated below investment grade, they are included in the limitation on the
percentage of the Fund's assets that can be invested in lower-grade
securities, as stated in the Prospectus. The Fund can invest in securities
rated as low as "B" at the time the Fund buys them.

While securities rated "Baa" by Moody's or "BBB" by S&P or Fitch are
investment grade and are not regarded as junk bonds, those securities may be
subject to greater risks than other investment-grade securities, and have
some speculative characteristics. Definitions of the debt security ratings
categories of Moody's, S&P and Fitch are included in Appendix A to this
Statement of Additional Information.

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

o 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 income payable on those
securities (unless the security pays interest at a variable rate pegged to
interest rate changes). However, those price fluctuations will be reflected
in the valuations of the securities, and therefore the Fund's net asset
values will be affected by those fluctuations.
|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 instrumentalities 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. Mortgage-related
securities issued by private issuers have greater credit risk.

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, and 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. As a result, 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.

o 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 opposite
direction of 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.

o Forward Rolls. The Fund can enter into "forward roll" transactions with
respect to mortgage-related securities in amounts up to 50% of its net
assets. 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, and 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
liquid assets 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| U.S. Government Securities. These are securities issued or
guaranteed by the U.S. Treasury or other government agencies or
federally-chartered corporate entities referred to as "instrumentalities."
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 not 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 the agency or instrumentality is minimal.
o U.S. Treasury Obligations. These include Treasury bills (maturities of
one year or less when issued), Treasury notes (maturities of 1 to 10 years),
and Treasury bonds (maturities of more than 10 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").

o Treasury Inflation-Protection Securities. The Fund can buy these TIPS,
which 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.

o 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 ("GNMA") 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").

|X| 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.

o GNMA Certificates. The Government National Mortgage Association 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
mortgage 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 Ginnie
Maes 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. In giving that guaranty, GNMA
expects 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 Ginnie Maes. However, if those
payments are insufficient, the guaranty agreements between the issuers of the
Ginnie Maes 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.

o Federal Home Loan Mortgage Corporation ("FHLMC") 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.

o 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.

|X| 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| Commercial (Privately-Issued) Mortgage Related Securities. The
Fund can 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| 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 losses 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| Municipal Securities. The Fund can buy municipal
bonds and notes, tax-exempt commercial paper, certificates of participation
in municipal leases and other debt obligations. These debt obligations are
issued by the governments of states, as well as their political subdivisions
(such as cities, towns and counties), or by the District of Columbia and
their agencies and authorities. The Fund can also buy securities issued by
any commonwealths, territories or possessions of the United States, or their
respective agencies, instrumentalities or authorities. The Fund would invest
in municipal securities because of the income and portfolio diversification
they offer rather than for the tax-exempt nature of the income they pay.

The Fund can buy both long-term and short-term municipal securities.
Long-term securities have a maturity of more than one year. In selecting
municipal securities the Fund would normally focus on longer-term securities,
to seek higher income. In general, the values of longer-term bonds are more
affected by changes in interest rates than are short-term bonds.

Municipal securities are issued to raise money for a variety of public
or private purposes, including financing state or local governments,
financing specific projects or public facilities. The Fund can invest in
municipal securities that are "general obligations," secured by the issuer's
pledge of its full faith, credit and taxing power for the payment of
principal and interest.

The Fund can also buy "revenue obligations," payable only from the
revenues derived from a particular facility or class of facilities, or a
specific excise tax or other revenue source. Some of these revenue
obligations are private activity bonds that pay interest that may be a tax
preference for investors subject to alternative minimum tax.

o Municipal Lease Obligations. Municipal leases are used by state and
local government authorities to obtain funds to acquire land, equipment or
facilities. The Fund may invest in certificates of participation that
represent a proportionate interest in payments made under municipal lease
obligations. If the government stops making payments or transfers its payment
obligations to a private entity, the obligation could lose value or become
taxable.

|X| Money Market Instruments and Short-Term Debt Obligations. The
Fund can invest in a variety of high quality money market instruments and
short-term debt obligations, both under normal market conditions and for
defensive purposes. The following is a brief description of the types of
money market securities and short-term debt obligations the Fund can invest
in. Those money market securities are high-quality, short-term debt
instruments that are issued by the U.S. government, corporations, banks or
other entities. They may have fixed, variable or floating interest rates. The
Fund's investments in foreign money market instruments and short-term debt
obligations are subject to its limits on investing in foreign securities and
the risks of foreign investing, described above.
o U.S. Government Securities. These include obligations issued or
guaranteed by the U.S. government or any of its agencies or instrumentalities.

o 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 or foreign bank
(including a foreign branch of a domestic bank) having
total assets of at least U.S. $1 billion, and
o banker's acceptances (which may or may not be supported by letters of
credit) only if guaranteed by a U.S. commercial bank with
total assets of at least U.S. $1 billion.

The Fund can make time deposits. These are non-negotiable deposits in a
bank for a specified period of time. They may be subject to early withdrawal
penalties. Time deposits that are subject to early withdrawal penalties are
subject to the Fund's limits on illiquid investments, as described below.
"Banks" include commercial banks, savings banks and savings and loan
associations.

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

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

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

The Fund has no limitations on the type of issuer from whom these notes
will be purchased. However, in connection with such purchases and on an
ongoing basis, the Manager will consider the earning power, cash flow and
other liquidity ratios of the issuer, and its ability to pay principal and
interest on demand, including a situation in which all holders of such notes
made demand simultaneously. Investments in master demand notes are subject to
the limitation on investments by the Fund in illiquid securities, as
described below. 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. "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, depending on market conditions, and
the Fund may have a portfolio turnover of more than 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 can purchase up to 25% of its total
assets 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 and their agencies
and instrumentalities. Those securities may be traded on foreign securities
exchanges or in the foreign over-the-counter markets.

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

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

o 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 foreign exchange contracts;
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 foreign withholding taxes on interest and dividends;
o possibilities in some countries of expropriation, nationalization,
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.

o Special Risks of Emerging Markets. Emerging and developing markets
abroad may also offer special opportunities for 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 investment objective. The Fund currently expects that it will not
invest significantly in emerging market countries.

o 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.

|X| Floating Rate and Variable Rate Obligations. Some securities the
Fund can purchase have variable or floating interest rates. Variable rates
are adjusted at stated periodic intervals. Variable rate obligations can 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 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| "Stripped" Mortgage-Related Securities. The Fund may 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. The market for
some of these securities may be limited, making it difficult for the Fund to
dispose of its holdings at an acceptable price.

|X| Participation Interests. The Fund may 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 buyer's
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| "When-Issued" and "Delayed-Delivery" Transactions. The Fund can
purchase securities on a "when-issued" basis, and may purchase or sell
securities on a "delayed-delivery" basis. "When-issued" or "delayed-delivery"
refers 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, the Fund makes no payment to the issuer and no
interest accrues to the Fund from the investment until it receives the
security at settlement. There is a risk of loss to the Fund if the value of
the security changes prior to the settlement date, and there is the risk that
the other party may not perform.

The Fund may engage in when-issued transactions to secure what the
Manager considers to be an advantageous price and yield at the time the
obligation is entered into. 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 purposes
of investment leverage. Although the Fund will enter into when-issued or
delayed-delivery purchase transactions to acquire securities, the Fund 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
deliver or receive against a forward commitment, it may incur a gain or loss.
At the time the Fund makes the commitment to purchase or sell a
security on a when-issued or delayed-delivery basis, it records the
transaction on its books and reflects the value of the security purchased in
determining the Fund's net asset value. In a sale transaction, it records the
proceeds to be received. The Fund will identify on its books liquid assets at
least equal in value to the value of the Fund's purchase commitments until
the Fund pays for the investment.

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

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

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 Manager from time to time.

The majority of these transactions run from day to day, and delivery
pursuant to the resale typically occurs within one to five days of the
purchase. Repurchase agreements having a maturity beyond seven days are
subject to the Fund's policy limits on holding illiquid investments,
described below. The Fund cannot 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 of 1940 (the `Investment Company Act"), are collateralized by the
underlying security. The Fund's repurchase agreements require that at all
times while the repurchase agreement is in effect, the value of the
collateral must equal or exceed the repurchase price to fully collateralize
the repayment obligation. However, if the vendor fails to pay the resale
price on the delivery date, the Fund may incur costs in disposing of the
collateral and may experience losses if there is any delay in its ability to
do so. The Manager will monitor the vendor's creditworthiness to confirm that
the vendor is financially sound and will continuously monitor the
collateral's value.

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

o Reverse Repurchase Agreements. The Fund can use reverse repurchase
agreements on debt obligations it owns. Under a reverse repurchase agreement,
the Fund sells an underlying debt obligation and simultaneously agrees to
repurchase the same security at an agreed-upon price at an agreed-upon date.
The Fund will identify on its books liquid assets in an amount sufficient to
cover its obligations under reverse repurchase agreements, including
interest, until payment is made to the seller.

These transactions involve the risk that the market value of the
securities sold by the Fund under a reverse repurchase agreement could
decline below the price at which the Fund is obligated to repurchase them.
These agreements are considered borrowings by the Fund and will be subject to
the asset coverage requirement under the Fund's policy on borrowing discussed
below.

|X| Illiquid and Restricted Securities. Under the policies and
procedures established by the Fund's Board of Directors, 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
applicable securities laws, the Fund may have to cause those securities to be
registered. The expenses of registering restricted securities may be
negotiated by the Fund with the issuer at the time the Fund buys the
securities. When the Fund must arrange registration because the Fund wishes
to sell the security, a considerable period may elapse between the time the
decision is made to sell the security and the time the security is registered
so that the Fund could sell it. The Fund would bear the risks of any downward
price fluctuation during that period.

The Fund can 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| Borrowing. From time to time, the Fund may borrow from banks or
affiliated investment companies. Such borrowing may be used to fund
shareholder redemptions or for other purposes. Currently, under the
Investment Company Act, absent exemptive relief, a mutual fund may borrow
only from banks and the maximum amount it may borrow is up to one-third of
its total assets (including the amount borrowed) less all liabilities and
indebtedness other than borrowing. The Fund may also borrow up to 5% of its
total assets for temporary purposes from any person. Under the Investment
Company Act, there is a rebuttable presumption that a loan is temporary if it
is repaid within 60 days and not extended or renewed. In addition, as
discussed below, the Fund can borrow from affiliated mutual funds. If the
value of the Fund's assets so computed should fail to meet the 300% asset
coverage requirement, the Fund is required within three days to reduce its
bank debt to the extent necessary to meet such requirement. To do so, it
might have to sell a portion of its investments at a time when independent
investment judgment would not dictate such sale.

Since substantially all of the Fund's assets fluctuate in value, but
borrowing obligations are fixed, when the Fund has outstanding borrowings, its
net asset value per share correspondingly will tend to increase and decrease
more when portfolio assets fluctuate in value than otherwise would be the
case. While the Fund borrow a greater amount, as discussed in the immediately
preceding paragraph, the Fund currently does not expect its borrowings to
exceed 5% of its total assets.

The Fund will pay interest on its borrowings, and that interest expense
will raise the overall expenses of the Fund and reduce its returns. Borrowing
may subject the Fund to greater risks and costs than funds that do not
borrow. These risks may include the possible reduction of income and
increased fluctuation or volatility in the Fund's net asset value per share.

|X| Loans of Portfolio Securities. To attempt to generate income, the Fund
may lend its portfolio securities to brokers, dealers, and other financial
institutions. The Fund presently does not intend to lend its portfolio
securities, but if it does, these loans are limited to not more than
one-third of the Fund's net assets and are subject to other conditions
described below.

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. Each type of interest may be shared with the borrower. The Fund
may also pay reasonable finders', 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| Interfund Borrowing and Lending Arrangements. 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.

o Interfund Borrowing. The Fund will not borrow from affiliated funds
unless the terms of the borrowing arrangement are at least as favorable as
the terms the Fund could otherwise negotiate with a third party. To assure
that the Fund will not be disadvantaged by borrowing from an affiliated fund,
certain safeguards may be implemented. Examples of these safeguards include
the following:
o the Fund will not borrow money from affiliated funds unless the
interest rate is more favorable than available bank loan
rates;
o the 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
the Fund;
o if the 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 the 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 the 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 the Fund could have an interfund 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.

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

o the Fund will not lend money to affiliated funds unless the interest
rate on such loan is determined to be reasonable under the
circumstances;
o the 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 the
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 the Fund's participation is appropriate and
that the loan is consistent with its investment objectives and
policies.
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.

|X| Derivatives. The Fund may invest in a variety of derivative
investments to seek income for liquidity needs or for hedging purposes. Some
derivative investments the Fund may use are the hedging instruments described
below in this Statement of Additional Information.

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 may not be as high as the
Manager expected.

Other derivative investments the Fund may invest in include
"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.

o "Inverse Floaters." Certain types of variable rate bonds known as
"inverse floaters" pay interest at rates that vary as the yields generally
available on short-term tax-exempt bonds change. However, the yields on
inverse floaters move in the opposite direction of yields on short-term bonds
in response to market changes. As interest rates rise, inverse floaters
produce less current income, and their market value can become volatile.
Inverse floaters are a type of "derivative security." Some have a "cap," so
that if interest rates rise above the "cap," the security pays additional
interest income. If rates do not rise above the "cap," the Fund will have
paid an additional amount for a feature that proves worthless. The Fund will
not invest more than 5% of its total assets in inverse floaters.

o "Structured" Notes. The Fund can buy "structured" notes, which are
specially-designed derivative debt investments with principal payments or
interest payments that are linked to the value of an index (such as a
currency or securities index) or commodity. The terms of the instrument may
be "structured" by the purchaser (the Fund) and the borrower issuing the
note.

The principal and/or interest payments depend on the performance of one
or more other securities or indices, and the values of these notes will
therefore fall or rise in response to the changes in the values of the
underlying security or index. They are subject to both credit and interest
rate risks and therefore the Fund could receive more or less than it
originally invested when the notes mature, or it might receive less interest
than the stated coupon payment if the underlying investment or index does not
perform as anticipated. Their values may be very volatile and they may have a
limited trading market, making it difficult for the Fund to sell its
investment at an acceptable price.

o 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).

write covered calls on securities or futures. Covered calls can
also be used to increase the Fund's income, but the Manager does
not expect to engage extensively in that practice.

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

The Fund is not obligated to use hedging instruments, even though it is
permitted to use them in the Manager's discretion, as described below. The
Fund's strategy of hedging with futures and options on futures will be
incidental to the Fund's activities in the underlying cash market. The
particular hedging instruments the Fund can use are described below. The Fund
may employ new hedging instruments and strategies when they are developed, if
those investment methods are consistent with the Fund's investment objective
and are permissible under applicable regulations governing the Fund.

o Futures. The Fund can buy and sell exchange-traded futures contracts
that relate to (1) broadly-based stock indices ("stock index futures") (2)
debt securities (these are referred to as "interest rate futures"), (3) other
broadly-based securities indices (these are referred to as "financial
futures"), (4) foreign currencies (these are referred to as "forward
contracts"), (5) securities or (6) commodities (these are referred to as
"commodity futures").

A broadly-based stock index is used as the basis for trading stock
index futures. An index 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.

The Fund can invest a portion of its assets in commodity futures
contracts. Commodity futures may be based upon commodities within five main
commodity groups:
(1) energy, which includes crude oil, natural gas, gasoline and heating
oil;
(2) livestock, which includes cattle and hogs;
(3) agriculture, which includes wheat, corn, soybeans, cotton, coffee,
sugar and cocoa;
(4) industrial metals, which includes aluminum, copper, lead, nickel, tin
and zinc; and
(5) precious metals, which includes gold, platinum and silver. The Fund
may purchase and sell commodity futures contracts, options on
futures contracts and options and futures on commodity indices
with respect to these five main commodity groups and the
individual commodities within each group, as well as other types
of commodities.
No money is paid or received by the Fund on the purchase or sale of a
future. Upon entering into a futures transaction, the Fund will be required
to deposit an initial margin payment with the futures commission merchant
(the "futures broker"). Initial margin payments will be deposited with the
Fund's custodian bank in an account registered in the futures broker's name.
However, the futures broker can gain access to that account only under
specified conditions. As the future is marked to market (that is, its value
on the Fund's books is changed) to reflect changes in its market value,
subsequent margin payments, called variation margin, will be paid to or by
the futures broker daily.

At any time prior to expiration of the future, the Fund may elect to
close out its position by taking an opposite position, at which time a final
determination of variation margin is made and any additional cash must be
paid by or released to the Fund. Any loss or gain on the future is then
realized by the Fund for tax purposes. All futures transactions, except
forward contracts, are effected through a clearinghouse associated with the
exchange on which the contracts are traded.
o Put and Call Options. The Fund can buy and sell certain kinds of put
options ("puts") and call options ("calls"). The Fund can buy and sell
exchange-traded and over-the-counter put and call options, including index
options, securities options, currency options, commodities options, and
options on the other types of futures described above.

o Writing Covered Call Options. The Fund can write (that is, sell) 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 25% of the Fund's total assets may be subject to calls the
Fund writes.

When the Fund writes a call on a security, it receives cash (a
premium). 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 the 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.

If the Fund writes an over-the-counter ("OTC") option, it will enter
into an arrangement with a primary U.S. government securities dealer which
will establish a formula price at which the Fund will have the absolute right
to repurchase that OTC option. The formula price will generally be based on
a multiple of the premium received for the option, plus the amount by which
the option is exercisable below the market price of the underlying security
(that is, the option is "in the money"). 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 identifying on
its books 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.

o 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 50%
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 liquid assets
identified on the Fund's books. 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 on its books liquid
assets with a value equal to or greater than the
exercise price of the underlying securities. The Fund therefore forgoes the
opportunity of investing the identified 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.

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

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

o Buying and Selling Call and Put 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

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 liquid assets in an amount equal to the exercise
price of the option.

o Risks of Hedging with Options and Futures. The use of hedging
instruments requires special skills and knowledge of investment techniques
that are different than what is required for normal portfolio management. If
the Manager uses a hedging instrument at the wrong time or judges market
conditions incorrectly, hedging strategies may reduce the Fund's return. The
Fund could also experience losses if the prices of its futures and options
positions were not correlated with its other investments.

The Fund's option activities 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 might advance and the value of the securities held in the
Fund's portfolio might decline. If that occurred, the Fund would lose money
on the hedging instruments and also experience a decline in the value of its
portfolio securities. However, while this could occur for a very brief period
or to a very small degree, over time the value of a diversified portfolio of
securities will tend to move in the same direction as the indices upon which
the hedging instruments are based.

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

The ordinary spreads between prices in the cash and futures markets are
subject to distortions, due to differences in the nature of those markets.
First, all participants in the futures market are subject to margin deposit
and maintenance requirements. Rather than meeting additional margin deposit
requirements, investors may close futures contracts through offsetting
transactions which could distort the normal relationship between the cash and
futures markets. Second, the liquidity of the futures market depends on
participants entering into offsetting transactions rather than making or
taking delivery. To the extent participants decide to make or take delivery,
liquidity in the futures market could be reduced, thus producing distortion.
Third, from the point of view of speculators, the deposit requirements in the
futures market are less onerous than margin requirements in the securities
markets. Therefore, increased participation by speculators in the futures
market may cause temporary price distortions.
The Fund can use hedging instruments to establish a position in the
securities markets as a temporary substitute for the purchase of individual
securities (long hedging) by buying futures and/or calls on such futures,
broadly-based indices or on securities. It is possible that when the Fund
does so the market might decline. If the Fund then concludes not to invest
in securities because of concerns that the market might decline further or
for other reasons, the Fund will realize a loss on the hedging instruments
that is not offset by a reduction in the price of the securities purchased.

o Forward Contracts. Forward contracts are foreign currency exchange
contracts. They are used to buy or sell foreign currency for future delivery
at a fixed price. The Fund uses them to "lock in" the U.S. dollar price of a
security denominated in a foreign currency that the Fund has bought or sold,
or to protect against possible losses from changes in the relative values of
the U.S. dollar and a foreign currency. The Fund 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 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.

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 might
have to purchase additional foreign currency on the "spot" (that is, cash)
market to settle the security trade. If the market value of the security
instead exceeds the amount of foreign currency the Fund is obligated to
deliver to settle the trade, the Fund might have to sell on the spot market
some of the foreign currency received upon the sale of the security. There
will be additional transaction costs on the spot market in those cases.

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

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

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

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

o 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 on its books
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 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."

o Total Return Swap Transactions. The Fund may enter into total return
swaps. The Fund will only enter into total return swaps if consistent with
its fundamental investment objectives or policies and not invest in swaps
with respect to more than 30% of the Fund's total assets. A swap contract is
essentially like a portfolio of forward contracts, under which one party
agrees to exchange an asset (for example, bushels of wheat) for another asset
(cash) at specified dates in the future. A one-period swap contract operates
in a manner similar to a forward or futures contract because there is an
agreement to swap a commodity for cash at only one forward date. The Fund may
engage in swap transactions that have more than one period and therefore more
than one exchange of assets.

The Fund may invest in total return swaps to gain exposure to the
overall commodity markets. In a total return commodity swap the Fund will
receive the price appreciation of a
commodity index, a portion of the index, or a single commodity in exchange
for paying an agreed-upon fee. If the commodity swap is for one period, the
Fund will pay a fixed fee, established at the outset of the swap. However,
if the term of the commodity swap is more than one period, with interim swap
payments, the Fund will pay an adjustable or floating fee. With a "floating"
rate, the fee is pegged to a base rate such as the London Interbank Offered
Rate ("LIBOR"), and is adjusted each period. Therefore, if interest rates
increase over the term of the swap contract, the Fund may be required to pay
a higher fee at each swap reset date. The Fund does not currently anticipate
investing in total return swaps.

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 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 staff members of the Securities and Exchange
Commission regarding applicable provisions of the Investment Company Act,
when the 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.

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

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

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

Investment in Other Investment Companies. The Fund can also invest in the
securities of other investment companies, which can include open-end funds,
closed-end funds and unit investment trusts, subject to the limits set forth
in the Investment Company Act that apply to those types of investments. For
example, the Fund can invest in Exchange-Traded Funds, which are typically
open-end funds or unit investment trusts, listed on a stock exchange. The
Fund might do so as a way of gaining exposure to the segments of the equity
or fixed-income markets represented by the Exchange-Traded 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.

Other Investment Restrictions

|X| What Are "Fundamental Policies?" Fundamental policies are those
policies that the Fund has adopted to govern its investments that can be
changed only by the vote of a "majority" of the Fund's outstanding voting
securities. Under the Investment Company Act, a "majority" vote is defined as
the vote of the holders of the lesser of:
o 67% or more of the shares present or represented by proxy at a
shareholder meeting, if the holders of more than 50% of the
outstanding shares are present or represented by proxy, or
o more than 50% of the outstanding shares.
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 Directors can change non-fundamental policies without shareholder
approval. However, significant changes to investment policies will be
described in supplements or updates to the Prospectus or this Statement of
Additional Information, as appropriate. The Fund's principal investment
policies are described in the Prospectus.

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

o The Fund cannot issue senior securities. However, it can make payments
or deposits of margin in connection with options or futures transactions,
lend its portfolio securities, enter into repurchase agreements, borrow money
and pledge its assets as permitted by its other fundamental policies. For
purposes of this restriction, the issuance of shares of common stock in
multiple classes or series, the purchase or sale of options, futures
contracts and options on futures contracts, forward commitments, and
repurchase agreements entered into in accordance with the Fund's investment
policies, and the pledge, mortgage or hypothecation of the Fund's assets are
not deemed to be senior securities.

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

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

o The Fund cannot invest in physical commodities or commodities
contracts. However, the Fund can invest in hedging instruments permitted by
any of its other investment policies, and can buy or 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, commodity
contracts or currencies.

o The Fund cannot invest in real estate or in interests in real estate.
However, the Fund can purchase securities of issuers holding real estate or
interests in real estate (including securities of real estate investment
trusts) if permitted by its other investment policies.

o The Fund cannot underwrite securities of other issuers. A permitted
exception is in case it is deemed to be an underwriter under the Securities
Act of 1933 in reselling its portfolio securities.

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

o The Fund may not borrow money, except to the extent permitted under the
Investment Company Act, the rules or regulations thereunder or any exemption
therefrom that is
applicable to the Fund, as such statute, rules or regulations may be amended
or interpreted from time to time. 1

|X| Does the Fund Have Additional Restrictions That Are Not "Fundamental"
Policies? The Fund has additional operating policies which are stated below,
that are not "fundamental," and which can be changed by the Board of
Directors without shareholder approval.

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

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 (except in the case of
borrowing and investments in illiquid securities). The Fund need not sell
securities to meet the percentage limits if the value of the investment
increases in proportion to the size of the Fund.

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 one of two investment portfolios, or
"series," of Oppenheimer Series Fund, Inc. That corporation is an open-end,
management investment company organized as a Maryland corporation in 1981,
and was called Connecticut Mutual Investment Accounts, Inc. until March 18,
1996, when the Manager became the Fund's investment advisor. The Fund is a
diversified mutual fund, and until March 18, 1996 was called Connecticut
Mutual Total Return Account.

|X| Classes of Shares. The Directors are authorized, without
shareholder approval, to create new series and classes of shares. The
Directors may reclassify unissued shares of the Fund into additional series
or classes of shares. The Directors 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.

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. Although the Fund is not required by
Maryland law to hold annual meetings, it may hold shareholder meetings from
time to time on important matters. The shareholders of the Fund's parent
corporation have the right to call a meeting to remove a Director or to take
certain other action described in the Articles of Incorporation or under
Maryland law.
The Fund will hold meetings when required to do so by the Investment
Company Act or other applicable law. The Fund will hold a meeting when the
Directors call a meeting or upon proper request of shareholders. If the
Fund's parent corporation receives a written request of the record holders of
at least 25% of the outstanding shares eligible to be voted at a meeting to
call a meeting for a specified purpose (which might include the removal of a
Director), the Directors will call a meeting of shareholders for that
specified purpose. The Fund's parent corporation has undertaken that it will
then either give the applicants access to the Fund's shareholder list or mail
the applicants' communication to all other shareholders at the applicants'
expense.

Shareholders of the Fund and of its parent corporation's other series
vote together in the aggregate on certain matters at shareholders' meetings.
Those matters include the election of Directors and ratification of
appointment of the independent auditors. Shareholders of a particular series
or class vote separately on proposals that affect that series or class.
Shareholders of a series or class that is not affected by a proposal are not
entitled to vote on the proposal. For example, only shareholders of a
particular series vote on any material amendment to the investment advisory
agreement for that series. Only shareholders of a particular class of a
series vote on certain amendments to the Distribution and/or Service Plans if
the amendments affect only that class.

Board of Directors and Oversight Committees . The Fund's parent corporation
is governed by a Board of Directors, which is responsible for protecting the
interests of shareholders under Maryland law. The Directors meet periodically
throughout the year to oversee the Fund's activities, review its performance,
and review the actions of the Manager. 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 Director or to take other action described in the
Fund's Articles of Incorporation.

The Board of Directors has an Audit Committee, a Study Committee and a
Proxy Committee. The Audit Committee is comprised solely of Independent
Directors. The members of the Audit Committee are Kenneth Randall (Chairman),
Benjamin Lipstein and Edward Regan. The Audit Committee held five meetings
during the Fund's fiscal year ended October 31, 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 eight meetings
during the Fund's fiscal year ended October 31, 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
fiscal year ended October 31, 2002.The Proxy Committee provides the Board
with recommendations for proxy voting and monitors proxy voting by the Fund.

Directors and Officers of the Fund. Except for Mr. Murphy, each of the
Directors is an independent director of the Fund ("Independent Director").
Mr. Murphy is an "Interested Director," because he is affiliated with the
Manager by virtue of his positions as an officer and director of the Manager,
and as a shareholder of its parent company.

The Fund's Directors 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 Directors 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
Directors. All of the Directors are also trustees or directors of the
following publicly offered Oppenheimer funds (referred to as "Board I Funds"):

Oppenheimer AMT-Free New York Municipals Oppenheimer Growth Fund
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 Series Fund, Inc.
Oppenheimer Europe Fund Oppenheimer Trinity Core Fund
Oppenheimer Global Fund Oppenheimer Trinity Large Cap Growth Fund
Oppenheimer Global Growth & Income Fund Oppenheimer Trinity Value Fund
Oppenheimer Gold & Special Minerals
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. Murphy, Bartlett, Leavy, Manioudakis, Molleur, Wixted and Zack
and Mses. Bechtolt, Feld and Ives respectively hold the same offices with one
or more of the other Board I Funds as with the Fund. As of November 27, 2002,
the Directors 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 Director, and his 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 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, Inc. 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, Inc. 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 Director in the chart below is 6803 S. Tucson Way,
Centennial, CO 80112-3924. Each Director serves for an indefinite term, until
his or her resignation, retirement, death or removal.

- -------------------------------------------------------------------------------------
Independent Directors
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Name, Position(s) Principal Occupation(s) During Past 5 Dollar Aggregate
Dollar
Range of
y Shares
Beneficially
Owned in
Range of any of the
Years / Other Trusteeships/Directorships Shares Oppenheimer
Held with Fund, Held by Director / Number of Portfolios Beneficiall Funds
Length of in Fund Complex Currently Overseen by Owned in Overseen
Service, Age Director the Fund by Director
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
As of December 31,
2001
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------

Clayton K. Of Counsel (since 1993), Hogan & Hartson $0 $50,001 -
Yeutter, Chairman (a law firm). Other directorships:
of the Board of Caterpillar, Inc. (since 1993) and
Directors, Weyerhaeuser Co. (since 1999). Oversees
Director since 31 portfolios in the OppenheimerFunds
1996 complex.
Age: 71 $100,000

- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Robert G. Galli, A trustee or director of other
Director since Oppenheimer funds. Formerly Vice Chairman
1996 (October 1995-December 1997) of the $0 Over
Age: 69 Manager. Oversees 41 portfolios in the $100,000
OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Phillip A. The Director (since 1991) of the
Griffiths, Institute for Advanced Study, Princeton,
Director since N.J., director (since 2001) of GSI
1999 Lumonics and a member of the National
Age: 63 Academy of Sciences (since 1979);
formerly (in descending chronological
order) a director of Bankers Trust Over
Corporation, Provost and Professor of $0 $100,000
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 Professor Emeritus of Marketing, Stern
Lipstein, Graduate School of Business
Director since Administration, New York University. $0 Over
1996 Oversees 31 portfolios in the $100,000
Age: 79 OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Joel W. Motley, Director (January 2002-present), Columbia
Director since Equity Financial Corp. (privately-held
2002 financial adviser); Managing Director
Age: 50 (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. $02 $03
(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
Moynihan, trustee of the Freer Gallery of Art and
Director since Arthur M. Sackler Gallery (Smithsonian
1996 Institute), Trustees Council of the $50,001 -
Age: 72 National Building Museum; a member of the $0 $100,000
Trustees Council, Preservation League of
New York State. Oversees 31 portfolios in
the OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Kenneth A. A director of Dominion Resources, Inc.
Randall, Director (electric utility holding company) and
since 1996 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 Over
Board, Inc. (international economic and $0 $100,000
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
Director since director of RBAsset (real estate
1996 manager); a director of OffitBank;
Age: 72 formerly Trustee, Financial Accounting
Foundation (FASB and GASB), Senior Fellow
of Jerome Levy Economics Institute, Bard $50,001 -
College, Chairman of Municipal Assistance $0 $100,000
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 Directorship
Reynolds, Jr., Search Group, Inc. (corporate governance
Director since consulting and executive recruiting); a
1996 life trustee of International House
Age: 70 (non-profit educational organization), $0 $10,001 -
and a trustee (since 1996) of the $50,000
Greenwich Historical Society. Oversees 31
portfolios in the OppenheimerFunds
complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Donald W. Spiro, Chairman Emeritus (since January 1991) of
Vice Chairman of the Manager. Formerly a director (January
the Board of 1969-August 1999) of the Manager.
Directors, Oversees 31 portfolios in the $0 Over
Director since OppenheimerFunds complex. $100,000
1996
Age: 76
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------

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
Director and
Officer
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Name, Principal Occupation(s) During Past 5 Years Dollar Aggregate
Dollar Range
of Shares
Position(s) Range of Beneficially
Held with Shares Owned in any
Fund, Length / Other Trusteeships/Directorships Held by Beneficial of the
of Service, Director / Number of Portfolios in Fund Owned in Oppenheimer
Age Complex Currently Overseen by Director the Fund Funds
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
As of December 31, 2001
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
John V. Chairman, Chief Executive Officer and
Murphy, director (since June 2001) and President $0 Over $100,000
President and (since September 2000) of the Manager;
Trustee, President and a director or trustee of other
Trustee since Oppenheimer funds; President and a director
2001 (since July 2001) of Oppenheimer Acquisition
Age: 53 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: Messrs.
Bartlett, Leavy, Manioudakis, 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, Position(s) Held with Principal Occupation(s) During Past 5 Years
Fund, Length of Service, Age
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Bruce Bartlett, Vice Senior Vice President (since January 1999) of the
President and Portfolio Manager; an officer and portfolio manager of other
Manager (since November 2000) Oppenheimer funds, prior to joining the Manager in
Age: 51 April, 1995, he was a Vice President and Senior
Portfolio Manager at First of America Investment
Corp. (September 1986 - April 1995).
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Christopher Leavy, Vice Senior Vice President (since September 2000) of the
President and Portfolio Manager; prior to joining the Manager in September
Manager (since November 2000) 2000, he was a portfolio manager of Morgan Stanley
Age: 30 Dean Witter Investment Management (from 1997) prior
to which he was a portfolio manager and equity
analyst of Crestar Asset Management (from 1995).
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Angelo Manioudakis, Senior Vice President of the Manager (since April
Vice President and 2002); an officer and portfolio manager of other
Portfolio Manager Oppenheimer funds; formerly Executive Director and
(since April 2002) portfolio manager for Miller, Anderson & Sherrerd, a
Age: 35. division of Morgan Stanley Investment Management
(August 1993-March 2002).
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Brian W. Wixted, Senior Vice President and Treasurer (since March
Treasurer, Principal 1999) of the Manager; Treasurer (since March 1999) of
Financial and Accounting HarbourView Asset Management Corporation, Shareholder
Officer since 1999 Services, Inc., Oppenheimer Real Asset Management
Age: 43 Corporation, Shareholder Financial Services, Inc.,
Oppenheimer Partnership Holdings, 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.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Connie Bechtolt, Assistant Vice President of the Manager (since
September 1998); formerly Manager/Fund Accounting
Assistant Treasurer since (September 1994-September 1998) of the Manager. An
2002 officer of 85 portfolios in the OppenheimerFunds
Age: 39 complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Vice President/Fund Accounting of the Manager (since
March 2002; formerly Vice President/Corporate
Philip Vottiero, Accounting of the Manager (July 1999-March 2002)
Assistant Treasurer since prior to which he was Chief Financial Officer at
2002 Sovlink Corporation (April 1996-June 1999). An
Age: 39 officer of 85 portfolios in the OppenheimerFunds
complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Robert G. Zack, Senior Vice President (since May 1985) and General
Secretary since 2001 Counsel (since February 2002) of the Manager; General
Age: 54 Counsel and a 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.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Katherine P. Feld, Vice President and Senior Counsel (since July 1999)
Assistant Secretary since of the Manager; Vice President (since June 1990) of
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
Assistant Secretary since 1998) of the Manager; Vice President (since 1999) of
2001 OppenheimerFunds Distributor, Inc.; Vice President
Age: 36 and 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.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Philip T. Masterson, Vice President and Assistant Counsel of the Manager
(since July 1998); formerly, an associate with Davis,
Assistant Secretary since Graham, & Stubbs LLP (January 1997-June 1998). An
2002 officer of 85 portfolios in the OppenheimerFunds
Age: 38 complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Denis R. Molleur, Vice President and Senior Counsel of the Manager
Assistant Secretary since (since July 1999); formerly a Vice President and
2001 Associate Counsel of the Manager (September 1995-July
Age: 45 1999). An officer of 82 portfolios in the
OppenheimerFunds complex.
- -------------------------------------------------------------------------------------

|X| Remuneration of Directors. The officers of the Fund and one of
the Directors of the Fund (Mr. Murphy) who are affiliated with the Manager
receive no salary or fee from the Fund. The remaining Directors of the Fund
received the compensation shown below from the Fund with respect to the
Fund's fiscal year ended October 31, 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 boards of those funds
during the calendar year 2001.

- ----------------------------------------------------------------------------------
Director Name and Aggregate Retirement Estimated Total
Compensation
Annual From All
Retirement Oppenheimer
Benefits Paid Funds For Which
Benefits at Retirement Individual
Other Fund Accrued as from all Serves As
Position(s) Compensation Part of Fund Board I Funds Trustee/Director
(as applicable) from Fund1 Expenses (33 Funds) 2 (33 Funds)
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------

Clayton K. Yeutter3 $3044 $384 $36,372 $71,792
Chairman and Proxy
Committee Member

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

Robert G. Galli $448 $580 $55,6782 $202,8865
Study Committee
Member

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

Phillip Griffiths $2336 $138 $10,256 $54,889

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

Leon Levy3 $736 $0 $133,352 $173,700

- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Benjamin Lipstein $636 $186 $115,270 $150,152
Study Committee
Chairman, Audit
Committee Member
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------

Joel W. Motley7 $0 $0 $0 $0

- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Elizabeth B. $448 $704 $57,086 $105,760
Moynihan
Study Committee
Member
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Kenneth A. Randall $411 $148 $74,471 $97,012
Audit Committee
Chairman
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Edward V. Regan $406 $371 $46,313 $95,960
Proxy Committee
Chairman, Audit
Committee Member
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Russell S. $304 $411 $48,991 $71,792
Reynolds, Jr.
Proxy Committee
Member
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Donald Spiro $271 $170 $9,396 $64,080
- ----------------------------------------------------------------------------------
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. Effective January 1, 2002, Clayton Yeutter became Chairman of the Board of
Trustees of the Board I Fund upon the retirement of Leon Levy.
4. Aggregate compensation from the Fund includes $76 deferred under Deferred
Compensation Plan described below.

5. Includes $97,126 for Mr.Galli for serving as trustee or director of 10 Oppenheimer
funds that are not Board I Funds.
6. Aggregate compensation from the Fund includes $233 deferred under Deferred
Compensation Plan described below.
7. Appointed to the Board on October 10, 2002 and therefore did not receive any
compensation.

|X| Retirement Plan for Directors. The Fund and its parent corporation have adopted a
retirement plan that provides for payments to retired Directors. Payments are up to 80% of
the average compensation paid during a Director's five years of service in which the highest
compensation was received. A Director must serve as director or trustee for any of
the Board I Funds for at least 15 years to be eligible for the maximum payment.
Each Director's retirement benefits will depend on the amount of the Director's future
compensation and length of service.

|X| Deferred Compensation Plan. The Board of Directors has adopted a Deferred
Compensation Plan for disinterested directors that enables them to elect to defer
receipt of all or a portion of the annual fees they are entitled to receive from the
Fund. Under the plan, the compensation deferred by a Director is periodically
adjusted as though an equivalent amount had been invested in shares of one or more
Oppenheimer funds selected by the Director. The amount paid to the Director under the
plan will be determined based upon the performance of the selected funds.

Deferral of Directors' fees under the plan will not materially affect the Fund's
assets, liabilities and net income per share. The plan will not obligate the Fund to retain
the services of any Director or to pay any particular level of compensation to any
Director. Pursuant to an Order issued by the Securities and Exchange Commission, the
Fund may invest in the funds selected by the Director under the plan without shareholder
approval for the limited purpose of determining the value of the Director's deferred
fee account.

|X| Major Shareholders. As of November 27, 2002, the only persons who owned of record
or were known by the Fund to own beneficially 5% or more of any class of the Fund's
outstanding shares were:

RPSS TR Country Hills Health Care Inc, 401K Plan, Attn: Sandi Steers,
580 Broadway, El Cajon, CA 92021-5124, which owned 2,509.428 Class N
shares (10.69% of the Class N shares then outstanding).

Lyn H Hammond Tr Pelham Family Practice 401K, 25 Creekview Ct.,
Greenville, SC 29615-4800, which owned 2,450.369 Class N shares
(10.44% of the Class N shares then outstanding).

RPSS TR Industry Bancshares Inc 401K Plan, Attn: Bonnie Schulz, PO BOX 66,
Industry TX 78944-0066, which owned 5,760.314 Class N shares (24.56% of
the Class N shares then outstanding).

Roof Depot Inc 401K BDA FBO Thomas A Griffin, 3058 Benjamin ST NE,
Minneapolis, MN 55418-2308 which owned 1,381.752 Class N shares
(5.89% of the Class N shares then outstanding).

Amnon Fein & Robert M Hecht Tr Ramapo Valley OB GYN PC 401K FBO
Joan Berkley, 7 Galileo Ct, Suffern, NY 10901-1901, which owned 1,545.782
Class N shares (6.59% of the Class N shares then outstanding).

R J FLETCHER & PEARSON SPAGHT TR, Fletcher Spaght PSP & Trust
BDA FBO Lisa Granick, 222 Berkeley St., Boston, MA 02116-3748, which
owned 1,913.916 Class N shares (8.16% 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 Codeto 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
|X| 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 Department 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 certain Directors, legal
and audit expenses, custodian and transfer agent expenses, share issuance costs, certain printing
and registration costs and non-recurring expenses, including litigation costs. The management fees
paid by the Fund to the Manager are calculated at the rates described in the Prospectus,
which are applied to the assets of the Fund as a whole. The fees are allocated to each
class of shares based upon the relative proportion of the Fund's net assets represented
by that class. The management fees paid by the Fund to the Manager during its last three
fiscal years are listed below.

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's parent corporation to use the name
"Oppenheimer" as part of its name and the name of the Fund.

o Accounting Services. The Manager provides accounting and record-keeping
services to the Fund pursuant to an Accounting Agreement. Under that agreement, the
Manager maintains the general ledger accounts and records relating to the Fund's business
and calculates the daily net asset values of the Fund's shares. The accounting service
fees paid by the Fund to the Manager during its last three fiscal years are listed below.

Fiscal Year Ended Management Fee Paid Accounting Services Fee Paid
10/31 to OppenheimerFunds, Inc. to OppenheimerFunds, Inc.

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

2000 $1,230,427 $15,000

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

2001 $927,181 $15,000

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

2002 $757,734 $15,000

- -------------------------------------------------------------------------------
|X| Annual Approval of Investment Advisory Agreement. Each
year, the Board of Directors, including a majority of the Independent
Directors, 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 Directors,
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.

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.

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, in its best judgment based on all relevant factors,
will implement the policy of the Fund to obtain, at reasonable expense, the
"best execution" of the Fund's portfolio transactions. "Best execution" means
prompt and reliable execution at the most favorable price obtainable. The
Manager need not seek competitive commission bidding. However, it is expected
to be aware of the current rates of eligible brokers and to minimize the
commissions paid to the extent consistent with the interests and policies of
the Fund as established by its Board of Directors.

Under the investment advisory agreement, 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 investment 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 Directors 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 Directors 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 10/31: Total Brokerage Commissions Paid by the Fund1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
2000 $224,949
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
2001 $390,844
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
2002 $275,0912
- -------------------------------------------------------------------------------
1. Amounts do not include spreads or commissions on principal transactions
on a net trade basis.
2. In the fiscal year ended 10/31/02, the amount of transactions directed
to brokers for research services was $51,488,924 and the amount of the
commissions paid to broker-dealers for those services was $92,893.

Distribution and Service Plans

The Distributor. Under its General Distributor's Agreement with the Fund, the
Distributor acts as the Fund's principal underwriter in the continuous public
offering of the Fund's classes of shares. The Distributor bears the expenses
normally attributable to sales, including advertising and the cost of
printing and mailing prospectuses, other than those furnished to existing
shareholders. The Distributor is not obligated to sell a specific number of
shares.

The sales charges and concessions paid to, or retained by, the
Distributor from the sale of shares 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 most recent fiscal year are
shown in the tables below.

- -------------------------------------------
Fiscal Aggregate Class A
Front-End
Year Front-End Sales Sales Charges
Ended Charges on Retained by
10/31: Class A Shares Distributor1
- -------------------------------------------
- -------------------------------------------
2000 $155,566 $112,021
- -------------------------------------------
- -------------------------------------------
2001 $109,771 $72,391
- -------------------------------------------
- -------------------------------------------
2002 $100,924 $63,284
- -------------------------------------------
1. Includes amounts retained by a broker-dealer that is an affiliate or a
parent of the Distributor.

- -----------------------------------------------------------------------------
Fiscal Concessions on Concessions on Concessions on Concessions on
Year Class A Shares Class B Shares Class C Shares Class N Shares
Ended Advanced by Advanced by Advanced by Advanced by
10/31: Distributor1 Distributor1 Distributor1 Distributor1
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
2000 $9,827 $98,076 $11,259 N/A
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
2001 $10,575 $88,402 $5,518 $72
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
2002 $7,439 $65,199 $8,315 $1,759
- -----------------------------------------------------------------------------
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.
2. The inception date of Class N shares was March 1, 2001.

- -----------------------------------------------------------------------------
Fiscal Class A Class B Class C Class N
Contingent Contingent Contingent Contingent
Year Deferred Sales Deferred Sales Deferred Sales Deferred Sales
Ended Charges Charges Charges Charges
10/31 Retained by Retained by Retained by Retained by
Distributor Distributor Distributor Distributor
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
2002 $300 $40,714 $1,530 $775
- -----------------------------------------------------------------------------

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.

Each plan has been approved by a vote of the Board of Directors,
including a majority of the Independent Directors3, cast in person at a
meeting called for the purpose of voting on that plan.

Under the plans, the Manager and the Distributor, 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 Directors and its
Independent Directors specifically vote annually to approve its continuance.
Approval must be by a vote cast in person at a meeting called for the purpose
of voting on continuing the plan. A plan may be terminated at any time by the
vote of a majority of the Independent Directors or by the vote of the holders
of a "majority" (as defined in the Investment Company Act) of the outstanding
shares of that class.

The Board of Directors and the Independent Directors must approve all
material amendments to a plan. An amendment to increase materially the amount
of payments to be made under a plan must be approved by shareholders of the
class affected by the amendment. Because Class B shares of the Fund
automatically convert into Class A shares 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 Directors at least quarterly for its
review. The reports shall detail the amount of all payments made under a plan
and the purpose for which the payments were made. Those reports are subject
to the review and approval of the Independent Directors.

Each plan states that while it is in effect, the selection and
nomination of those Directors of the Fund's parent corporation who are not
"interested persons" of the corporation (or the Fund) is committed to the
discretion of the Independent Directors. This does not prevent the
involvement of others in the selection and nomination process as long as the
final decision as to selection or nomination is approved by a majority of the
Independent Directors.

Under the 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 Directors. The Board of Directors 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 Fund, assisting in
establishing and maintaining accounts in the Fund, making the Fund's
investment plans available and providing other services at the request of the
Fund or the Distributor. The Class A service plan permits reimbursements to
the Distributor at a rate of up to 0.25% of average annual net assets of
Class A shares. The Board has set the rate at that level. 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. During the first year the shares
are sold, the Distributor retains the service fee to reimburse itself for the
costs of distributing the shares sold under this arrangement. 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 year ended October 31, 2002 payments under the Class A
plan totaled $258,615, of which $17 was retained by the Distributor under the
arrangement described above, and included $129,116 paid to an affiliate of
the Distributor's parent company. Any unreimbursed expenses the Distributor
incurs with respect to Class A shares in any fiscal year cannot be recovered
in subsequent years. The Distributor may not use payments received under the
Class A plan to pay any of its interest expenses, carrying charges, or other
financial costs, or allocation of overhead.

|X| Class B, Class C and Class N 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. Each plan
provides for the Distributor to be compensated at a flat rate, whether the
Distributor's distribution expenses are more or less than the amounts paid by
the Fund under the plan during the period for which the fee is paid. The
types of services that recipients provide are similar to the services
provided under the Class A service plan, described above.

Each Plan permits the Distributor to retain both the asset-based sales
charges and the service fees or to pay recipients the service fee on a
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 Class B, Class C and Class N shares are purchased. After
the first year Class B, Class C or Class N 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. In cases where the Distributor is the broker of record
for Class B, Class C and Class N shares, i.e. shareholders without the
services of a broker directly invest in the Fund, the Distributor will retain
the asset-based sales charge and service fee for Class B, Class C and Class N
shares.

The asset-based sales charge and service fees increase Class B and
Class C expenses by 1.00% and the asset-based sales charge and service fees
increases Class N expenses by 0.50% of the net assets 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, 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.

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 Directors may allow the Fund to continue payments of
the asset-based sales charge to the Distributor for distributing shares
before the plan was terminated.

- --------------------------------------------------------------------------------
Distribution Fees Paid to the Distributor for the Year Ended 10/31/02
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class: Total Payments Amount Distributor's Distributor's
Aggregate Unreimbursed
Unreimbursed Expenses as %
Retained by Expenses Under of Net Assets
Under Plan Distributor Plan of Class
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B Plan $136,465 $106,5781 $522,569 4.28%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C Plan $29,608 $7,0832 $93,429 3.13%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class N Plan $795 $739 $42 0.02%
- --------------------------------------------------------------------------------
1. Includes $7,182 paid to an affiliate of the Distributor's parent
company.
2. Includes $2,959 paid to an affiliate of the Distributor's parent
company.

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.

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 1.800.225.5567 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 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 the Fund's performance to the performance of other funds for the same
periods. However, a number of factors should be considered before using the
Fund's performance information as a basis for comparison with other
investments:
o Total returns measure the performance of a hypothetical account in the
Fund over various periods and do not show the performance of each
shareholder's account. Your account's
performance will vary from the model performance data if your dividends are
received in cash, or you buy or sell shares during the period, or you bought
your shares at a different time and price than the shares used in the model.
o The Fund's performance returns do not reflect the effect of taxes on
dividends and capital gains distributions.
o An investment in the Fund is not insured by the FDIC or any other
government agency.
o The principal value of the Fund's shares, and total returns are not
guaranteed and normally will fluctuate on a daily basis.
o When an investor's shares are redeemed, they may be worth more or less
than their original cost.
o Total returns for any given past period represent historical
performance information 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 those
investments, the types of investments the Fund holds, and its operating
expenses that are allocated to the particular class.

|X| Total Return Information. There are different types of "total
returns" to measure the Fund's performance. Total return is the change in
value of a hypothetical investment in the Fund over a given period, assuming
that all dividends and capital gains distributions are reinvested in
additional shares and that the investment is redeemed at the end of the
period. Because of differences in expenses for each class of shares, the
total returns for each class are separately measured. The cumulative total
return measures the change in value over the entire period (for example, 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. 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 period. 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.
o Average Annual Total Return. The "average annual total return" of each
class is an average annual compounded rate of return for each year in a
specified number of years. It is the rate of return based on the change in
value of a hypothetical initial investment of $1,000 ("P" in the formula
below) held for a number of years ("n" in the formula) to achieve an Ending
Redeemable Value ("ERV" in the formula) of that investment, according to the
following formula:
ERV l/n - 1 Average Annual Total
Return
- ----------
P

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

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

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

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

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

ERV - P = Total Return
- -----------
P

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

- --------------------------------------------------------------------------------
The Fund's Total Returns for the Periods Ended 10/31/02
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class of Cumulative Average Annual Total Returns
Total
Returns (10
Shares years
or life of
Class)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

1-Year 5-Year 10-Year
(or life of (or life of
class) 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 A1 73.75% 84.34% -11.28% -5.86% -1.26% -0.08% 5.68% 6.31%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B 26.21%2 26.21%2 -11.22% -6.61% -1.13% -0.85% 3.34%2 3.34%2
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C 17.60%3 17.60%3 -7.56% -6.64% -0.85% -0.85% 2.53%3 2.53%3
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class N -13.58%4 -13.58%4 -7.09% -6.17% -8.38%4 -8.38%4 N/A N/A
- --------------------------------------------------------------------------------
1. Inception of Class A: 9/16/85
2. Inception of Class B: 10/2/95
3. Inception of Class C: 5/1/96
4. Inception of Class N: 3/1/01

- --------------------------------------------------------------------------
Average Annual Total Returns for Class A Shares (After Sales Charges)
For the Periods Ended 10/31/02
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
1-Year 5-Year 10-Year
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
After Taxes on Distributions -12.00% -3.50% 2.85%1
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
After Taxes on -6.83% -1.73% 3.45%1
Distributions and
Redemption of Fund Shares
- --------------------------------------------------------------------------
1. Inception date of Class A: 9/16/85

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 in categories based on
investment styles. The Lipper performance rankings are based on total returns
that include the reinvestment of capital gain distributions and income
dividends but do not take sales charges or taxes into consideration. Lipper
also publishes "peer-group" indices of the performance of all mutual funds in
a category that it monitors and averages of the performance of the funds in
particular categories.

|X| Morningstar Ratings. From time to time the Fund may publish the star
rating of the performance of its classes of shares by Morningstar, Inc., an
independent mutual fund monitoring service. Morningstar rates mutual funds
in their specialized market sector. The Fund is rated among the domestic
stock funds category.

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.

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 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 Fund are not responsible for any
delays in purchasing shares resulting from delays in ACH transmissions.

|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:
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 AMT-Free New York Municipals Oppenheimer MidCap Fund
Oppenheimer Bond Fund Oppenheimer Multiple Strategies Fund

Oppenheimer California Municipal Fund Oppenheimer Municipal Bond Fund
Oppenheimer Capital Appreciation Fund Oppenheimer New Jersey 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
OSM1 - Salomon Brothers All Cap 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.

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.

|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 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 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.

|X| Securities Valuation. The Fund's Board of Directors has
established procedures for the valuation of the Fund's securities. In general
those procedures are as follows:
o Equity securities traded on a U.S. securities exchange 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 Directors, or
(2) at the last sale price obtained by the Manager from the report of the
principal exchange on which the security is traded at its last
trading session on or immediately before the valuation date, or
(3) at the mean between the "bid" and "asked" prices obtained from the
principal exchange on which the security is traded or, on the
basis of reasonable inquiry, from two market makers in the
security.
o Long-term debt securities having a remaining maturity in excess of 60
days are valued based on the mean between the "bid" and "asked" prices
determined by a portfolio pricing service approved by the Fund's Board of
Directors or obtained by the Manager from two active market makers in the
security on the basis of reasonable inquiry.
o The following securities are valued at the mean between the "bid" and
"asked" prices determined by a pricing service approved by the Fund's Board
of Directors or obtained by the Manager from two active market makers in the
security on the basis of reasonable inquiry:
(1) debt instruments that have a maturity of more than 397 days when
issued,
(2) debt instruments that had a maturity of 397 days or less when issued
and have a remaining maturity of more than 60 days, and
(3) non-money market debt instruments that had a maturity of 397 days or
less when issued and which have a remaining maturity of 60
days or less.
o The following securities are valued at cost, adjusted for amortization
of premiums and accretion of discounts:
(1) money market debt securities held by a non-money market fund that had a
maturity of less than 397 days when issued that have a
remaining maturity of 60 days or less, and
(2) debt instruments held by a money market fund that have a remaining
maturity of 397 days or less.
o Securities (including restricted securities) not having
readily-available market quotations are valued at fair value determined under
the Board's procedures. If the Manager is unable to locate two market makers
willing to give quotes, a security may be priced at the mean between the
"bid" and "asked" prices provided by a single active market maker (which in
certain cases may be the "bid" price if no "asked" price is available).

In the case of U.S. government securities, mortgage-backed securities,
corporate bonds and foreign government securities, when last sale information
is not generally available, the Manager may use pricing services approved by
the Board of Directors. The pricing service may use "matrix" comparisons to
the prices for comparable instruments on the basis of quality, yield and
maturity. Other special factors may be involved (such as the tax-exempt
status of the interest paid by municipal securities). The Manager will
monitor the accuracy of the pricing services. That monitoring may include
comparing prices used for portfolio valuation to actual sales prices of
selected securities.

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 Directors or by the
Manager. If there were no sales that day, they shall be valued at the last
sale price on the preceding trading day if it is within the spread of the
closing "bid" and "asked" prices on the principal exchange 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.

Sending Redemption Proceeds by Federal Funds Wire. The Federal Funds wire of
redemption proceeds may be delayed if the Fund's custodian bank is not open
for business on a day when the Fund would normally authorize the wire to be
made, which is usually the Fund's next regular business day following the
redemption. In those circumstances, the wire will not be transmitted until
the next bank business day on which the Fund is open for business. No
dividends will be paid on the proceeds of redeemed shares awaiting transfer
by Federal Funds wire.

Reinvestment Privilege. Within six months of a redemption, a shareholder may
reinvest all or part of the redemption proceeds of:
o Class A shares purchased subject to an initial sales charge or Class A
shares on which a contingent deferred sales charge was paid, or
o Class B shares that were subject to the Class B contingent deferred
sales charge when redeemed.
The reinvestment may be made without sales charge only in Class A
shares of the Fund or any of the other Oppenheimer funds into which shares of
the Fund are exchangeable as described in "How to Exchange Shares" below.
Reinvestment will be at the net asset value next computed after the Transfer
Agent receives the reinvestment order. The shareholder must ask the Transfer
Agent for that privilege at the time of reinvestment. This privilege does not
apply to Class C and Class N shares. The Fund may amend, suspend or cease
offering this reinvestment privilege at any time as to shares redeemed after
the date of such amendment, suspension or cessation.

Any capital gain that was realized when the shares were redeemed is
taxable, and reinvestment will not alter any capital gains tax payable on
that gain. If there has been a capital loss on the redemption, some or all
of the loss may not be tax deductible, depending on the timing and amount of
the reinvestment. Under the Internal Revenue Code, if the redemption
proceeds of Fund shares on which a sales charge was paid are reinvested in
shares of the Fund or another of the Oppenheimer funds within 90 days of
payment of the sales charge, the shareholder's basis in the shares of the
Fund that were redeemed may not include the amount of the sales charge paid.
That would reduce the loss or increase the gain recognized from the
redemption. However, in that case the sales charge would be added to the
basis of the shares acquired by the reinvestment of the redemption proceeds.
Payments "In Kind". The Prospectus states that payment for shares tendered
for redemption is ordinarily made in cash. However, under certain
circumstances, the Board of Directors of the Fund may determine that it would
be detrimental to the best interests of the remaining shareholders of the
Fund to make payment of a redemption order wholly or partly in cash. In that
case, the Fund may pay the redemption proceeds in whole or in part by a
distribution "in kind" of liquid securities from the portfolio of the Fund,
in lieu of cash.

The Fund has elected to be governed by Rule 18f-1 under the Investment
Company Act. Under that rule, the Fund is obligated to redeem shares solely
in cash up to the lesser of $250,000 or 1% of the net assets of the Fund
during any 90-day period for any one shareholder. If shares are redeemed in
kind, the redeeming shareholder might incur brokerage or other costs in
selling the securities for cash. The Fund will value securities used to pay
redemptions in kind using the same method the Fund uses to value its
portfolio securities described above under "Determination of Net Asset Values
Per Share." That valuation will be made as of the time the redemption price
is determined.

Involuntary Redemptions. The Fund's Board of Directors has the right to cause
the involuntary redemption of the shares held in any account if the account
holds fewer than 100 shares. 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.

|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 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 AMT-Free New York Oppenheimer Pennsylvania Municipal
Municipals Fund

Oppenheimer California Municipal Fund Oppenheimer Rochester National
Municipals

Oppenheimer Limited Term Municipal Fund Oppenheimer Senior Floating Rate
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 International Small
Municipals Company Fund
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 Pennsylvania Municipal
Fund
Oppenheimer Convertible Securities Fund Oppenheimer Quest Capital Value
Fund, Inc.
Oppenheimer Disciplined Allocation Fund Oppenheimer Quest Global Value
Fund, Inc.
Oppenheimer Developing Markets Fund Oppenheimer Rochester National
Municipals
Oppenheimer Gold & Special Minerals Oppenheimer Senior Floating Rate
Fund Fund
Oppenheimer International Bond Fund Oppenheimer Small Cap Value Fund
Oppenheimer International Growth Fund Limited Term New York Municipal
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.

|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.
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 Directors 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. Citibank, N.A. 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

================================================================================
The Board of Directors and Shareholders of
Oppenheimer Disciplined Allocation Fund:

We have audited the accompanying statement of assets and liabilities of
Oppenheimer Disciplined Allocation Fund, including the statement of investments,
as of October 31, 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 October 31, 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 Disciplined Allocation Fund as of October 31, 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
November 21, 2002

Financial Statements
Pages 12-37

11 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
STATEMENT OF INVESTMENTS October 31, 2002

Market Value
Shares See Note 1
===================================================================================
Common Stocks--52.2%
- -----------------------------------------------------------------------------------
Consumer Discretionary--8.9%
- -----------------------------------------------------------------------------------
Automobiles--1.5%
Harley-Davidson, Inc. 30,600 $ 1,600,380
- -----------------------------------------------------------------------------------
Leisure Equipment & Products--0.3%
Mattel, Inc. 19,900 365,364
- -----------------------------------------------------------------------------------
Media--1.9%
Fox Entertainment Group, Inc., A Shares 1 41,200 1,005,692
- -----------------------------------------------------------------------------------
News Corp. Ltd. (The), Sponsored ADR, Preference 52,900 1,045,833
-------------
2,051,525

- -----------------------------------------------------------------------------------
Multiline Retail--2.5%
Costco Wholesale Corp. 1 35,800 1,214,694
- -----------------------------------------------------------------------------------
Kohl's Corp. 1 25,300 1,478,785
-------------
2,693,479
- -----------------------------------------------------------------------------------
Specialty Retail--1.6%
Bed Bath & Beyond, Inc. 1 48,850 1,732,221
- -----------------------------------------------------------------------------------
Textiles & Apparel--1.1%
Nike, Inc., Cl. B 24,700 1,165,593
- -----------------------------------------------------------------------------------
Consumer Staples--1.4%
- -----------------------------------------------------------------------------------
Food & Drug Retailing--1.1%
Walgreen Co. 34,500 1,164,375
- -----------------------------------------------------------------------------------
Tobacco--0.3%
Philip Morris Cos., Inc. 9,300 378,975
- -----------------------------------------------------------------------------------
Energy--1.7%
- -----------------------------------------------------------------------------------
Energy Equipment & Services--0.3%
Noble Corp. 1 10,800 349,056
- -----------------------------------------------------------------------------------
Oil & Gas--1.4%
Ashland, Inc. 10,000 262,500
- -----------------------------------------------------------------------------------
BP plc, ADR 32,700 1,257,315
-------------
1,519,815

- -----------------------------------------------------------------------------------
Financials--12.6%
- -----------------------------------------------------------------------------------
Banks--2.2%
Bank of America Corp. 25,300 1,765,940
- -----------------------------------------------------------------------------------
Wachovia Corp. 18,000 626,220
-------------
2,392,160

- -----------------------------------------------------------------------------------
Diversified Financials--5.6%
Capital One Financial Corp. 10,000 304,700
- -----------------------------------------------------------------------------------
Citigroup, Inc. 11,777 435,160
- -----------------------------------------------------------------------------------
Franklin Resources, Inc. 33,300 1,098,567
- -----------------------------------------------------------------------------------
Freddie Mac 25,193 1,551,385
- -----------------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 7,200 273,240

12 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
Market Value
Shares See Note 1
- -----------------------------------------------------------------------------------
Diversified Financials Continued
SLM Corp. 23,169 $ 2,380,383
-------------
6,043,435

- -----------------------------------------------------------------------------------
Insurance--4.8%
Allstate Corp. 15,800 628,524
- -----------------------------------------------------------------------------------
AMBAC Financial Group, Inc. 13,300 821,940
- -----------------------------------------------------------------------------------
American International Group, Inc. 22,300 1,394,865
- -----------------------------------------------------------------------------------
Hartford Financial Services Group, Inc. 4,500 177,750
- -----------------------------------------------------------------------------------
MBIA, Inc. 18,700 816,255
- -----------------------------------------------------------------------------------
Prudential Financial, Inc. 1 20,800 607,360
- -----------------------------------------------------------------------------------
Travelers Property Casualty Corp., Cl. A 1 897 11,975
- -----------------------------------------------------------------------------------
Travelers Property Casualty Corp., Cl. B 1 1,844 24,931
- -----------------------------------------------------------------------------------
XL Capital Ltd., Cl. A 9,200 700,580
-------------
5,184,180

- -----------------------------------------------------------------------------------
Health Care--11.1%
- -----------------------------------------------------------------------------------
Biotechnology--1.4%
Gilead Sciences, Inc. 1 29,000 1,007,460
- -----------------------------------------------------------------------------------
IDEC Pharmaceuticals Corp. 1 10,500 483,210
-------------
1,490,670

- -----------------------------------------------------------------------------------
Health Care Equipment & Supplies--2.0%
Biomet, Inc. 12,200 359,412
- -----------------------------------------------------------------------------------
Medtronic, Inc. 6,000 268,800
- -----------------------------------------------------------------------------------
Stryker Corp. 19,900 1,255,690
- -----------------------------------------------------------------------------------
Varian Medical Systems, Inc. 1 6,300 303,786
-------------
2,187,688

- -----------------------------------------------------------------------------------
Health Care Providers & Services--4.7%
Aetna, Inc. 21,200 854,360
- -----------------------------------------------------------------------------------
AmerisourceBergen Corp. 15,100 1,074,365
- -----------------------------------------------------------------------------------
Cardinal Health, Inc. 12,500 865,125
- -----------------------------------------------------------------------------------
HCA, Inc. 5,300 230,497
- -----------------------------------------------------------------------------------
Lincare Holdings, Inc. 1 27,100 923,297
- -----------------------------------------------------------------------------------
McKesson Corp. 6,900 205,689
- -----------------------------------------------------------------------------------
Service Corp. International 1 31,700 99,855
- -----------------------------------------------------------------------------------
Tenet Healthcare Corp. 1 27,375 787,031
-------------
5,040,219

- -----------------------------------------------------------------------------------
Pharmaceuticals--3.0%
Forest Laboratories, Inc. 1 6,700 656,533
- -----------------------------------------------------------------------------------
Johnson & Johnson 27,750 1,630,313
- -----------------------------------------------------------------------------------
Pharmacia Corp. 21,000 903,000

13 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
STATEMENT OF INVESTMENTS Continued

Market Value
Shares See Note 1
- -----------------------------------------------------------------------------------
Pharmaceuticals Continued
Schering-Plough Corp. 5,100 $ 108,885
-------------
3,298,731

- -----------------------------------------------------------------------------------
Industrials--4.7%
- -----------------------------------------------------------------------------------
Aerospace & Defense--2.3%
Boeing Co. 40,600 1,207,850
- -----------------------------------------------------------------------------------
Lockheed Martin Corp. 22,300 1,291,170
-------------
2,499,020

- -----------------------------------------------------------------------------------
Commercial Services & Supplies--1.9%
Concord EFS, Inc. 1 41,455 591,977
- -----------------------------------------------------------------------------------
Republic Services, Inc. 1 70,000 1,440,600
-------------
2,032,577

- -----------------------------------------------------------------------------------
Industrial Conglomerates--0.4%
Tyco International Ltd. 33,600 485,856
- -----------------------------------------------------------------------------------
Machinery--0.1%
Navistar International Corp. 1 3,300 73,986
- -----------------------------------------------------------------------------------
Information Technology--6.0%
- -----------------------------------------------------------------------------------
Communications Equipment--1.2%
Geotek Communications, Inc., Series B (Escrowed) 1,2 100 --
- -----------------------------------------------------------------------------------
JDS Uniphase Corp. 1,3 204,300 459,879
- -----------------------------------------------------------------------------------
QUALCOMM, Inc. 1 23,500 811,220
-------------
1,271,099

- -----------------------------------------------------------------------------------
Computers & Peripherals--2.3%
Dell Computer Corp. 1 33,500 958,435
- -----------------------------------------------------------------------------------
Hewlett-Packard Co. 57,000 900,600
- -----------------------------------------------------------------------------------
International Business Machines Corp. 3,800 299,972
- -----------------------------------------------------------------------------------
Lexmark International, Inc., Cl. A 1 3,500 207,970
- -----------------------------------------------------------------------------------
Pinnacle Systems, Inc. 1 8,600 102,254
-------------
2,469,231

- -----------------------------------------------------------------------------------
Electronic Equipment & Instruments--1.3%
California Amplifier, Inc. 1 24 88
- -----------------------------------------------------------------------------------
Thermo Electron Corp. 1 78,100 1,436,259
-------------
1,436,347

- -----------------------------------------------------------------------------------
Software--1.2%
- -----------------------------------------------------------------------------------
Microsoft Corp. 1 24,800 1,326,056
- -----------------------------------------------------------------------------------
Materials--2.8%
- -----------------------------------------------------------------------------------
Chemicals--0.5%
FMC Corp. 1 13,300 406,847
- -----------------------------------------------------------------------------------
Monsanto Co. 8,751 144,654
-------------
551,501

14 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
Market Value
Shares See Note 1
- -----------------------------------------------------------------------------------
Metals & Mining--0.7%
Alcoa, Inc. 35,400 $ 780,924
- -----------------------------------------------------------------------------------
Paper & Forest Products--1.6%
Sappi Ltd., Sponsored ADR 140,700 1,724,982
- -----------------------------------------------------------------------------------
Telecommunication Services--2.1%
- -----------------------------------------------------------------------------------
Wireless Telecommunication Services--2.1%
AT&T Corp. 171,600 2,237,664
- -----------------------------------------------------------------------------------
Microcell Telecommunications, Inc., Cl. B 1 1,899 228
-------------
2,237,892

- -----------------------------------------------------------------------------------
Utilities--0.9%
- -----------------------------------------------------------------------------------
Electric Utilities--0.9%
Dominion Resources, Inc. 20,700 993,600
-------------
Total Common Stocks (Cost $56,848,980) 56,540,937

- -----------------------------------------------------------------------------------
Other Securities--0.7%
- -----------------------------------------------------------------------------------
Nasdaq-100 Unit Investment Trust 1 (Cost $833,185) 28,600 702,130

Units
- -----------------------------------------------------------------------------------
Rights, Warrants and Certificates--0.0%
- -----------------------------------------------------------------------------------
Concentric Network Corp. Wts., Exp. 12/15/07 1,2 100 1
- -----------------------------------------------------------------------------------
McCaw International Ltd. Wts., Exp. 4/15/07 1,2 100 1
- -----------------------------------------------------------------------------------
Microcell Telecommunications, Inc. Wts., Exp. 6/1/06 1,4 500 170
- -----------------------------------------------------------------------------------
Price Communications Corp. Wts., Exp. 8/1/07 1,2 516 19,092
-------------
Total Rights, Warrants and Certificates (Cost $5,248) 19,264

Principal
Amount
- -----------------------------------------------------------------------------------
Asset-Backed Securities--5.3%
- -----------------------------------------------------------------------------------
Capital Auto Receivables Asset Trust, Automobile Mtg.-Backed Nts.,
Series 2002-4, Cl. A2B, 1.74%, 1/17/05 2,5 $540,000 539,975
- -----------------------------------------------------------------------------------
CitiFinancial Mortgage Securities, Inc., Collateralized Mtg. Obligations,
Series 2002-1, Cl. AF1, 2.474%, 10/30/32 2 280,000 280,000
- -----------------------------------------------------------------------------------
Daimler Chrysler Auto Trust, Automobile Loan Pass-Through Certificates,
Series 2002-B, Cl. A2, 2.20%, 4/6/05 330,000 331,231
- -----------------------------------------------------------------------------------
Ford Credit Auto Owner Trust, Automobile Loan Certificates,
Series 2002-D, Cl. A2A, 2.10%, 3/15/05 600,000 601,855
- -----------------------------------------------------------------------------------
Harley-Davidson Motorcycle Trust, Motorcycle Receivable Nts.,
Series 2002-2, Cl. A1, 1.91%, 4/15/07 337,905 338,431
- -----------------------------------------------------------------------------------
Honda Auto Receivables Owner Trust, Automobile Mtg. Obligations,
Series 2002-3, Cl. A2, 2.26%, 12/18/04 410,000 411,783
- -----------------------------------------------------------------------------------
Household Automotive Trust, Automobile Loan Certificates,
Series 2002-2, Cl. A2, 2.15%, 12/19/05 300,000 301,125
- -----------------------------------------------------------------------------------
Litigation Settlement Monetized Fee Trust, Asset-Backed Certificates,
Series 2001-1A, Cl. A1, 8.33%, 4/25/31 2 867,514 908,721
- -----------------------------------------------------------------------------------
M&I Auto Loan Trust, Automobile Loan Certificates, Series 2002-1,
Cl. A2, 1.95%, 7/20/05 190,000 190,342

15 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
STATEMENT OF INVESTMENTS Continued

Principal Market Value
Amount See Note 1
- -----------------------------------------------------------------------------------
Asset-Backed Securities Continued
- -----------------------------------------------------------------------------------
MMCA Auto Lease Trust, Auto Retail Installment Contracts,
Series 2002-A, Cl. A2, 1.967%, 5/16/05 2,5 $ 280,000 $ 280,000
- -----------------------------------------------------------------------------------
Nissan Auto Receivables Owner Trust, Auto Receivable Nts.,
Series 2002-C, Cl. A2, 1.94%, 9/15/04 2 430,000 430,756
- -----------------------------------------------------------------------------------
Norse CBO Ltd., Collateralized Bond Obligations, Series 1A, Cl. A3,
6.515%, 8/13/10 2 948,887 949,480
- -----------------------------------------------------------------------------------
USAA Auto Owner Trust, Automobile Loan Asset-Backed Certificates,
Series 2002-1, Cl. A2, 1.95%, 3/15/05 130,000 130,259
-------------
Total Asset-Backed Securities (Cost $5,643,791) 5,693,958

- -----------------------------------------------------------------------------------
Mortgage-Backed Obligations--19.5%
- -----------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Gtd. Mtg.
Pass-Through Participation Certificates:
8%, 4/1/16 397,631 424,485
9%, 8/1/22-5/1/25 92,330 102,487
- -----------------------------------------------------------------------------------
Federal National Mortgage Assn.:
6.50%, 3/1/26 277,045 288,098
6.50%, 11/25/32 6 12,000,000 12,435,000
7%, 2/25/22 1,052,691 1,122,875
7%, 11/25/32 6 2,016,000 2,106,720
7.50%, 1/1/08-6/1/08 146,395 155,241
- -----------------------------------------------------------------------------------
Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates Interest-Only Stripped Mtg.-Backed
Security, Trust 1993-223, Cl. PM, 5.389%, 10/25/23 7 366,055 36,045
- -----------------------------------------------------------------------------------
GE Capital Mortgage Services, Inc., Collateralized Mtg. Obligations,
Series 1999-2, Cl. A3, 6.50%, 4/25/29 500,000 529,198
- -----------------------------------------------------------------------------------
Government National Mortgage Assn.:
7%, 4/15/09-2/15/24 465,852 495,223
7.50%, 3/15/09 156,239 168,610
8%, 5/15/17 152,704 166,004
8.50%, 8/15/17-12/15/17 107,750 118,712
- -----------------------------------------------------------------------------------
Granite Mortgages plc, Mtg.-Backed Obligations, Series 2002-2,
Cl. 1A1, 1.929%, 1/21/17 5 300,000 300,090
- -----------------------------------------------------------------------------------
Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through Certificates,
Series 1996-WF1, Cl. A2, 7.328%, 11/15/28 4,5 428,488 441,134
- -----------------------------------------------------------------------------------
Norwest Asset Securities Corp., Collateralized Mtg. Obligations,
Mtg. Pass-Through Certificates:
Series 1999-16, Cl. A3, 6%, 6/25/29 500,000 509,063
Series 1999-18, Cl. A2, 6%, 7/25/29 1,000,000 1,041,085
- -----------------------------------------------------------------------------------
Washington Mutual Mortgage Securities Corp., Collateralized Mtg.
Obligations, Mtg. Pass-Through Certificates:
Series 2002-AR10, Cl. A1, 2.359%, 10/25/32 2,5 354,042 354,374
Series 2002-AR15, Cl. A1, 2.26%, 12/25/32 2 340,000 340,000
-------------
Total Mortgage-Backed Obligations (Cost $20,729,626) 21,134,444

16 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
Principal Market Value
Amount See Note 1
===================================================================================
U.S. Government Obligations--8.6%
Federal National Mortgage Assn. Unsec. Nts.,
3.625%, 4/15/04 8 $ 2,000,000 $ 2,056,700
- -----------------------------------------------------------------------------------
U.S. Treasury Bonds:
4.375%, 8/15/12 580,000 602,294
5.375%, 2/15/31 1,800,000 1,900,478
7.50%, 11/15/16 700,000 902,618
8.75%, 5/15/17 1,250,000 1,779,981
- -----------------------------------------------------------------------------------
U.S. Treasury Nts.:
3.25%, 8/15/07 235,000 240,481
5.75%, 11/15/05 790,000 873,845
6.50%, 2/15/10 8 800,000 951,051
-------------
Total U.S. Government Obligations (Cost $8,466,610) 9,307,448

===================================================================================
Foreign Government Obligations--0.1%
- -----------------------------------------------------------------------------------
United Mexican States Nts., 7.50%, 1/14/12 (Cost $111,228) 110,000 114,812

===================================================================================
Non-Convertible Corporate Bonds and Notes--19.3%
- -----------------------------------------------------------------------------------
ABN Amro NA Holding Capital NV, 6.473% Bonds, 12/29/49 4 105,000 104,621
- -----------------------------------------------------------------------------------
Albertson's, Inc., 7.45% Unsec. Debs., 8/1/29 215,000 235,045
- -----------------------------------------------------------------------------------
American International Group, Inc./SunAmerica Global Financing VI,
6.30% Sr. Sec. Nts., 5/10/11 4 155,000 169,332
- -----------------------------------------------------------------------------------
Anthem, Inc., 6.80% Unsec. Unsub. Bonds, 8/1/12 170,000 183,413
- -----------------------------------------------------------------------------------
AOL Time Warner, Inc., 6.875% Nts., 5/1/12 700,000 692,950
- -----------------------------------------------------------------------------------
Archer Daniels Midland Co., 5.875% Nts., 10/1/32 35,000 33,573
- -----------------------------------------------------------------------------------
AT&T Corp.:
5.625% Nts., 3/15/04 550,000 547,462
8% Sr. Nts., 11/15/31 350,000 335,344
- -----------------------------------------------------------------------------------
AT&T Wireless Services, Inc., 7.50% Sr. Unsec. Nts., 5/1/07 600,000 531,582
- -----------------------------------------------------------------------------------
AXA Group, 8.60% Unsec. Sub. Nts., 12/15/30 190,000 193,529
- -----------------------------------------------------------------------------------
Boeing Capital Corp., 5.65% Sr. Unsec. Nts., 5/15/06 200,000 205,113
- -----------------------------------------------------------------------------------
Bombardier Capital, Inc., 7.30% Nts., 12/15/02 4 190,000 188,184
- -----------------------------------------------------------------------------------
Bristol-Myers Squibb Co., 5.75% Nts., 10/1/11 210,000 223,761
- -----------------------------------------------------------------------------------
Burlington Northern Santa Fe Corp., 5.90% Sr. Nts., 7/1/12 155,000 165,139
- -----------------------------------------------------------------------------------
Cardinal Health, Inc., 4.45% Nts., 6/30/05 160,000 167,665
- -----------------------------------------------------------------------------------
Carolina Power & Light Co., 6.50% Nts., 7/15/12 30,000 31,353
- -----------------------------------------------------------------------------------
Cincinnati Gas & Electric Co., 5.70% Nts., 9/15/12 45,000 44,721
- -----------------------------------------------------------------------------------
CIT Group, Inc., 7.75% Sr. Unsec. Unsub. Nts., 4/2/12 120,000 122,873
- -----------------------------------------------------------------------------------
Citigroup, Inc.:
6.625% Unsec. Sub. Nts., 6/15/32 350,000 357,777
7.25% Sub. Nts., 10/1/10 210,000 238,327
- -----------------------------------------------------------------------------------
Columbia Gas System, Inc., 6.80% Nts., Series C, 11/28/05 500,000 499,928
- -----------------------------------------------------------------------------------
Comcast Cable Communications, Inc., 8.875% Unsub.
Nts., 5/1/17 209,000 216,303
- -----------------------------------------------------------------------------------
ConocoPhillips, 3.625% Nts., 10/15/07 4 70,000 70,030
- -----------------------------------------------------------------------------------
Cox Communications, Inc., 7.125% Nts., 10/1/12 135,000 139,728
- -----------------------------------------------------------------------------------
Credit Suisse First Boston (USA), Inc., 5.75% Nts., 4/15/07 205,000 213,139

17 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
STATEMENT OF INVESTMENTS Continued

Principal Market Value
Amount See Note 1
===================================================================================
Non-Convertible Corporate Bonds and Notes Continued
- -----------------------------------------------------------------------------------
Delphi Corp., 6.55% Nts., 6/15/06 $130,000 $ 136,800
- -----------------------------------------------------------------------------------
Deutsche Telekom International BV, 8.25% Unsec.
Unsub. Nts., 6/15/05 5 205,000 221,086
- -----------------------------------------------------------------------------------
Dime Bancorp, Inc., 9.33% Capital Securities,
Series A, 5/6/27 240,000 267,494
- -----------------------------------------------------------------------------------
Dominion Resources, Inc., 8.125% Sr. Unsub. Nts., 6/15/10 135,000 151,243
- -----------------------------------------------------------------------------------
El Paso Electric Co., 8.25% First Mtg. Bonds,
Series C, 2/1/03 500,000 503,510
- -----------------------------------------------------------------------------------
EOP Operating LP, 7.75% Unsec. Nts., 11/15/07 145,000 164,583
- -----------------------------------------------------------------------------------
Farmers Insurance Exchange, 8.625% Nts., 5/1/24 4 300,000 206,006
- -----------------------------------------------------------------------------------
Federated Department Stores, Inc., 6.30% Sr. Nts., 4/1/09 210,000 219,517
- -----------------------------------------------------------------------------------
FirstEnergy Corp., 7.375% Sr. Unsub. Nts.,
Series C, 11/15/31 150,000 130,838
- -----------------------------------------------------------------------------------
Ford Motor Co., 7.45% Bonds, 7/16/31 360,000 275,719
- -----------------------------------------------------------------------------------
Fort James Corp., 6.875% Sr. Nts., 9/15/07 1,000,000 881,048
- -----------------------------------------------------------------------------------
France Telecom SA, 8.70% Sr. Unsec. Nts., 3/1/06 5 90,000 96,502
- -----------------------------------------------------------------------------------
General Electric Capital Corp., 6% Nts., 6/15/12 285,000 303,303
- -----------------------------------------------------------------------------------
General Motors Acceptance Corp.:
6.75% Nts., 1/15/06 250,000 247,831
6.875% Unsec. Unsub. Nts., 8/28/12 200,000 181,313
7% Auto Loan Nts., 2/1/12 280,000 258,476
- -----------------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The), 6.60% Sr.
Unsec. Nts., 1/15/12 120,000 130,649
- -----------------------------------------------------------------------------------
GTE North, Inc., 6.73% Debs., Series G, 2/15/28 125,000 115,762
- -----------------------------------------------------------------------------------
Hertz Corp. (The), 7.625% Sr. Nts., 6/1/12 420,000 356,307
- -----------------------------------------------------------------------------------
Household Finance Corp., 8% Sr. Nts., 5/9/05 230,000 216,380
- -----------------------------------------------------------------------------------
J.P. Morgan Chase & Co., 6.625% Sub. Nts., 3/15/12 115,000 123,456
- -----------------------------------------------------------------------------------
John Hancock Global Funding II:
5% Nts., 7/27/07 4 165,000 171,843
7.90% Nts., 7/2/10 4 105,000 121,734
- -----------------------------------------------------------------------------------
Kraft Foods, Inc., 6.50% Bonds, 11/1/31 155,000 165,032
- -----------------------------------------------------------------------------------
Kroger Co. (The), 6.75% Nts., 4/15/12 370,000 402,706
- -----------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc., 6.625% Nts., 1/18/12 80,000 86,969
- -----------------------------------------------------------------------------------
Lockheed Martin Corp., 8.20% Nts., 12/1/09 120,000 145,518
- -----------------------------------------------------------------------------------
MBNA America Bank NA, 6.625% Sub. Nts., 6/15/12 180,000 174,510
- -----------------------------------------------------------------------------------
Metropolitan Life Global Funding I, 4.75% Nts., 6/20/07 230,000 241,711
- -----------------------------------------------------------------------------------
MidAmerican Energy Holdings Co., 5.875% Sr. Nts., 10/1/12 4 265,000 260,928
- -----------------------------------------------------------------------------------
Morgan Stanley, 6.60% Nts., 4/1/12 155,000 168,746
- -----------------------------------------------------------------------------------
Nationwide CSN Trust, 9.875% Sec. Nts., 2/15/25 4 1,000,000 1,048,056
- -----------------------------------------------------------------------------------
Nationwide Financial Services, Inc., 5.90% Nts., 7/1/12 125,000 125,093
- -----------------------------------------------------------------------------------
New England Telephone & Telegraph Co., 7.875%
Debs., 11/15/29 90,000 95,237
- -----------------------------------------------------------------------------------
News America Holdings, Inc., 7.75% Sr. Unsec.
Debs., 12/1/45 373,000 326,802
- -----------------------------------------------------------------------------------
NiSource Finance Corp., 7.875% Sr. Unsec. Nts., 11/15/10 130,000 126,899
- -----------------------------------------------------------------------------------
Oncor Electric Delivery Co., 7% Nts., 9/1/22 4 180,000 157,323
- -----------------------------------------------------------------------------------
Petroleos Mexicanos, 9.50% Sr. Sub. Nts., 9/15/27 70,000 73,850
- -----------------------------------------------------------------------------------
Pharmacia Corp., 6.60% Sr. Unsec. Nts., 12/1/28 75,000 81,675
- -----------------------------------------------------------------------------------
PHH Corp., 8.125% Nts., 2/3/03 500,000 500,042

18 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
Principal Market Value
Amount See Note 1
===================================================================================
Non-Convertible Corporate Bonds and Notes Continued
- -----------------------------------------------------------------------------------
Philip Morris Cos., Inc., 7.25% Nts., 1/15/03 $420,000 $ 423,271
- -----------------------------------------------------------------------------------
Progress Energy, Inc., 7.10% Nts., 3/1/11 155,000 159,163
- -----------------------------------------------------------------------------------
Prudential Holdings LLC, 8.695% Bonds, Series C, 12/18/23 4 170,000 185,175
- -----------------------------------------------------------------------------------
Prudential Insurance Co. of America, 8.30% Nts., 7/1/25 4 250,000 268,028
- -----------------------------------------------------------------------------------
Pulte Corp., 8.125% Sr. Unsec. Nts., 3/1/11 155,000 166,053
- -----------------------------------------------------------------------------------
Raytheon Co., 5.70% Sr. Unsec. Nts., 11/1/03 265,000 270,552
- -----------------------------------------------------------------------------------
Reed Elsevier Capital, Inc., 6.75% Bonds, 8/1/11 110,000 121,597
- -----------------------------------------------------------------------------------
Safeway, Inc.:
4.80% Sr. Unsec. Nts., 7/16/07 170,000 176,528
5.80% Sr. Nts., 8/15/12 170,000 178,322
- -----------------------------------------------------------------------------------
Sears Roebuck Acceptance Corp.:
6% Unsec. Bonds, 3/20/03 140,000 140,246
6.90% Nts., 8/1/03 100,000 100,589
- -----------------------------------------------------------------------------------
Simon DeBartolo Group LP, 6.875% Unsec. Nts., 11/15/06 155,000 168,798
- -----------------------------------------------------------------------------------
Sprint Capital Corp., 8.75% Nts., 3/15/32 100,000 76,232
- -----------------------------------------------------------------------------------
TCI Communications, Inc., 9.80% Sr. Unsec. Debs., 2/1/12 700,000 776,920
- -----------------------------------------------------------------------------------
Tenet Healthcare Corp., 6.375% Sr. Nts., 12/1/11 165,000 175,014
- -----------------------------------------------------------------------------------
Union Carbide Corp., 6.25% Nts., 6/15/03 150,000 151,597
- -----------------------------------------------------------------------------------
Union Pacific Corp., 7.60% Unsec. Nts., 5/1/05 500,000 557,376
- -----------------------------------------------------------------------------------
Viacom, Inc., 7.70% Sr. Unsec. Nts., 7/30/10 135,000 158,249
- -----------------------------------------------------------------------------------
Vornado Realty LP, 5.625% Sr. Unsec. Unsub. Nts., 6/15/07 135,000 138,322
- -----------------------------------------------------------------------------------
Walt Disney Co., 6.75% Sr. Nts., 3/30/06 145,000 155,557
- -----------------------------------------------------------------------------------
Waste Management, Inc.:
7% Sr. Nts., 7/15/28 460,000 406,696
7.75% Bonds, 5/15/32 4 90,000 88,210
- -----------------------------------------------------------------------------------
WellPoint Health Networks, Inc., 6.375% Nts., 1/15/12 110,000 119,049
- -----------------------------------------------------------------------------------
Wyeth, 5.875% Nts., 3/15/04 160,000 165,135
-------------
Total Non-Convertible Corporate Bonds and Notes (Cost $20,965,393) 20,900,068

===================================================================================
Short-Term Notes--2.0%
- -----------------------------------------------------------------------------------
Federal Home Loan Bank,
1.65%, 11/1/02 (Cost $2,150,000) 2,150,000 2,150,000

===================================================================================
Joint Repurchase Agreements--5.1%
- -----------------------------------------------------------------------------------
Undivided interest of 29.68% in joint repurchase
agreement (Market Value $18,754,000) with Zion
Bank/Capital Markets Group, 1.85%, dated 10/31/02,
to be repurchased at $5,567,286 on 11/1/02,
collateralized by U.S. Treasury Bonds, 2.125%,
10/31/04, with a value of $19,178,339 (Cost
$5,567,000) 5,567,000 5,567,000
- -----------------------------------------------------------------------------------
Total Investments, at Value (Cost $121,321,061) 112.8% 122,130,061
- -----------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (12.8) (13,895,401)
--------------------------
Net Assets 100.0% $108,234,660
==========================

19 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments

1. Non-income producing security.
2. Identifies issues considered to be illiquid or restricted--See Note 7 of
Notes to Financial Statements.
3. 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 Date Price Received See Note 1
- ------------------------------------------------------------------------------

JDS Uniphase Corp. 2 3/24/03 $2.50 $106 $100

4. 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
Directors. These securities amount to $3,480,774 or 3.22% of the Fund's net
assets as of October 31, 2002.
5. Represents the current interest rate for a variable or increasing rate
security.
6. When-issued security to be delivered and settled after October 31, 2002.
7. 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.
8. Securities with an aggregate market value of $1,622,757 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.

20 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
STATEMENT OF ASSETS AND LIABILITIES October 31, 2002

=======================================================================================
Assets
- ---------------------------------------------------------------------------------------
Investments, at value (cost $121,321,061)--see accompanying statement $ 122,130,061
- ---------------------------------------------------------------------------------------
Cash 15,829
- ---------------------------------------------------------------------------------------
Receivables and other assets:
Interest and dividends 710,800
Investments sold 290,873
Shares of capital stock sold 92,713
Other 1,658
---------------
Total assets 123,241,934

=======================================================================================
Liabilities
- ---------------------------------------------------------------------------------------
Options written, at value (premiums received $106)--see accompanying statement 100
- ---------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased (including $14,516,186 purchased on a when-issued
basis) 14,791,007
Shares of capital stock redeemed 46,106
Shareholder reports 39,131
Directors' compensation 30,979
Daily variation on futures contracts 29,156
Transfer and shareholder servicing agent fees 26,075
Distribution and service plan fees 22,475
Other 22,245
---------------
Total liabilities 15,007,274

=======================================================================================
Net Assets $108,234,660
---------------

=======================================================================================
Composition of Net Assets
- ---------------------------------------------------------------------------------------
Par value of shares of capital stock $ 9,349
- ---------------------------------------------------------------------------------------
Additional paid-in capital 132,351,230
- ---------------------------------------------------------------------------------------
Undistributed net investment income 176,788
- ---------------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (24,950,736)
- ---------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of
assets and liabilities denominated in foreign currencies 648,029
-------------
Net Assets $108,234,660
=============

21 | OPPENHEIMER DISCIPLINED ALLOCATION 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 $92,805,690 and 8,026,368 shares of capital stock outstanding) $11.56
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price) $12.27
- ---------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets of $12,204,286 and 1,040,221 shares of capital stock
outstanding) $11.73
- ---------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets of $2,983,992 and 261,034 shares of capital stock
outstanding) $11.43
- ---------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets of $240,692 and 20,887 shares of capital stock outstanding) $11.52

See accompanying Notes to Financial Statements.

22 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
STATEMENT OF OPERATIONS For the Year Ended October 31, 2002

===================================================================================
Investment Income
- -----------------------------------------------------------------------------------
Interest $ 2,965,786
- -----------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $3,229) 592,392
------------
Total investment income 3,558,178

===================================================================================
Expenses
- -----------------------------------------------------------------------------------
Management fees 757,734
- -----------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 258,615
Class B 136,465
Class C 29,608
Class N 795
- -----------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 266,932
Class B 40,517
Class C 8,811
Class N 641
- -----------------------------------------------------------------------------------
Shareholder reports 52,401
- -----------------------------------------------------------------------------------
Accounting service fees 15,000
- -----------------------------------------------------------------------------------
Directors' compensation 7,290
- -----------------------------------------------------------------------------------
Custodian fees and expenses 321
- -----------------------------------------------------------------------------------
Other 19,030
------------
Total expenses 1,594,160
Less reduction to custodian expenses (321)
Less voluntary waiver of transfer and shareholder servicing agent
fees--Classes A, B, C and N (3,263)
------------
Net expenses 1,590,576

===================================================================================
Net Investment Income 1,967,602

===================================================================================
Realized and Unrealized Gain (Loss)
- -----------------------------------------------------------------------------------
Net realized gain (loss) on:
Investments (including premiums on options exercised) (9,930,085)
Closing of futures contracts (878,870)
Closing and expiration of option contracts written 41,756
------------
Net realized loss (10,767,199)

- -----------------------------------------------------------------------------------
Net change in unrealized appreciation on:
Investments 1,737,740
Translation of assets and liabilities denominated in foreign currencies 168
------------
Net change 1,737,908
------------
Net realized and unrealized loss (9,029,291)

===================================================================================
Net Decrease in Net Assets Resulting from Operations $(7,061,689)
============

See accompanying Notes to Financial Statements.

23 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
STATEMENTS OF CHANGES IN NET ASSETS

Year Ended October 31, 2002 2001
===================================================================================
Operations
- -----------------------------------------------------------------------------------
Net investment income $ 1,967,602 $ 2,654,379
- -----------------------------------------------------------------------------------
Net realized loss (10,767,199) (13,176,727)
- -----------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 1,737,908 (5,224,834)
---------------------------
Net decrease in net assets resulting from operations (7,061,689) (15,747,182)

===================================================================================
Dividends and/or Distributions to Shareholders
- -----------------------------------------------------------------------------------
Dividends from net investment income:
Class A (2,252,545) (2,498,703)
Class B (179,379) (195,117)
Class C (40,660) (40,745)
Class N (3,372) (10)

===================================================================================
Capital Stock Transactions
- -----------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from capital stock transactions:
Class A (11,878,838) (15,345,653)
Class B (1,491,347) (1,061,078)
Class C 322,450 (637,673)
Class N 276,606 1,730

===================================================================================
Net Assets
- -----------------------------------------------------------------------------------
Total decrease (22,308,774) (35,524,431)
- -----------------------------------------------------------------------------------
Beginning of period 130,543,434 166,067,865
---------------------------
End of period [including undistributed net investment
income of $176,788 and $685,142, respectively] $108,234,660 $130,543,434
===========================

See accompanying Notes to Financial Statements.

24 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
FINANCIAL HIGHLIGHTS

Class A Year Ended October 31 2002 2001 2000 1999 1998
==========================================================================================
Per Share Operating Data
- ------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.54 $ 14.23 $ 15.03 $ 15.45 $ 16.81
- ------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .22 .26 .44 .44 .45
Net realized and unrealized gain (loss) (.94) (1.69) .68 (.01) .45
------------------------------------------------
Total from investment operations (.72) (1.43) 1.12 .43 .90
- ------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.26) (.26) (.44) (.44) (.45)
Distributions from net realized gain -- -- (1.48) (.41) (1.81)
------------------------------------------------
Total dividends and/or distributions
to shareholders (.26) (.26) (1.92) (.85) (2.26)
- ------------------------------------------------------------------------------------------
Net asset value, end of period $11.56 $12.54 $14.23 $15.03 $15.45
===============================================

==========================================================================================
Total Return, at Net Asset Value 1 (5.86)% (10.12)% 8.27% 2.62% 5.93%
- ------------------------------------------------------------------------------------------

==========================================================================================
Ratios/Supplemental Data
- ------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 92,806 $112,864 $144,244 $258,159 $298,558
- ------------------------------------------------------------------------------------------
Average net assets (in thousands) $104,415 $128,477 $172,514 $293,677 $268,715
- ------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 1.73% 1.88% 2.88% 2.72% 2.96%
Expenses 1.21% 1.19% 1.11% 1.04% 1.04% 3
- ------------------------------------------------------------------------------------------
Portfolio turnover rate 193% 164% 34% 122% 97%

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.

25 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
FINANCIAL HIGHLIGHTS Continued

Class B Year Ended October 31 2002 2001 2000 1999 1998
==========================================================================================
Per Share Operating Data
- ------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.72 $ 14.43 $ 15.20 $ 15.62 $ 16.99
- ------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .11 .15 .30 .31 .36
Net realized and unrealized gain (loss) (.94) (1.70) .73 -- .43
------------------------------------------------
Total from investment operations (.83) (1.55) 1.03 .31 .79
- ------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
- ------------------------------------------------------------------------------------------
Dividends from net investment income (.16) (.16) (.32) (.32) (.35)
Distributions from net realized gain -- -- (1.48) (.41) (1.81)
------------------------------------------------
Total dividends and/or distributions
to shareholders (.16) (.16) (1.80) (.73) (2.16)
- ------------------------------------------------------------------------------------------
Net asset value, end of period $11.73 $12.72 $14.43 $15.20 $15.62
===============================================

==========================================================================================
Total Return, at Net Asset Value 1 (6.61)% (10.79)% 7.48% 1.84% 5.10%
- ------------------------------------------------------------------------------------------

==========================================================================================
Ratios/Supplemental Data
- ------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $12,204 $14,770 $17,892 $23,522 $21,754
- ------------------------------------------------------------------------------------------
Average net assets (in thousands) $13,639 $16,569 $19,643 $24,648 $14,235
- ------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 0.94% 1.14% 2.12% 1.97% 2.19%
Expenses 2.00% 1.94% 1.87% 1.80% 1.80% 3
- ------------------------------------------------------------------------------------------
Portfolio turnover rate 193% 164% 34% 122% 97%

See accompanying Notes to Financial Statements.

26 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
Class C Year Ended October 31 2002 2001 2000 1999 1998
==========================================================================================
Per Share Operating Data
- ------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.41 $ 14.08 $ 14.88 $ 15.31 $ 16.70
- ------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .13 .13 .28 .32 .37
Net realized and unrealized gain (loss) (.94) (1.64) .72 (.01) .40
------------------------------------------------
Total from investment operations (.81) (1.51) 1.00 .31 .77
- ------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.17) (.16) (.32) (.33) (.35)
Distributions from net realized gain -- -- (1.48) (.41) (1.81)
------------------------------------------------
Total dividends and/or distributions
to shareholders (.17) (.16) (1.80) (.74) (2.16)
- ------------------------------------------------------------------------------------------
Net asset value, end of period $11.43 $12.41 $14.08 $14.88 $15.31
===============================================

==========================================================================================
Total Return, at Net Asset Value 1 (6.64)% (10.76)% 7.44% 1.84% 5.10%
- ------------------------------------------------------------------------------------------

==========================================================================================
Ratios/Supplemental Data
- ------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $2,984 $2,893 $3,931 $5,719 $4,824
- ------------------------------------------------------------------------------------------
Average net assets (in thousands) $2,961 $3,280 $4,255 $5,876 $2,861
- ------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 0.93% 1.14% 2.13% 1.97% 2.18%
Expenses 2.00% 1.94% 1.86% 1.80% 1.80% 3
- ------------------------------------------------------------------------------------------
Portfolio turnover rate 193% 164% 34% 122% 97%

See accompanying Notes to Financial Statements.

27 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
FINANCIAL HIGHLIGHTS Continued

Class N Year Ended October 31 2002 2001 1
=======================================================================================
Per Share Operating Data
- ---------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.52 $ 13.74
- ---------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .16 .12
Net realized and unrealized loss (.91) (1.20)
--------------------
Total from investment operations (.75) (1.08)
- ---------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.25) (.14)
Distributions from net realized gain -- --
--------------------
Total dividends and/or distributions
to shareholders (.25) (.14)
- ---------------------------------------------------------------------------------------
Net asset value, end of period $11.52 $12.52
====================

=======================================================================================
Total Return, at Net Asset Value 2 (6.17)% (7.90)%
- ---------------------------------------------------------------------------------------

=======================================================================================
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $241 $2
- ---------------------------------------------------------------------------------------
Average net assets (in thousands) $160 $1
- ---------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 1.28% 1.04%
Expenses 1.60% 1.68%
- ---------------------------------------------------------------------------------------
Portfolio turnover rate 193% 164%

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

See accompanying Notes to Financial Statements.

28 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS

- --------------------------------------------------------------------------------
1. Significant Accounting Policies
Oppenheimer Disciplined Allocation Fund (the Fund), a series of Oppenheimer
Series Fund, Inc. (the Company), 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 to maximize total investment return (including
capital appreciation and income) principally by allocating its assets among
stocks, corporate bonds, U.S. government securities and money market
instruments, according to changing market conditions. 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 Directors, or at their fair value. Fair value is
determined in good faith under consistently applied procedures under the
supervision of the Board of Directors. Short-term "money market type" debt
securities with remaining maturities of sixty days or less are valued at
amortized cost (which approximates market value).
- --------------------------------------------------------------------------------
Securities Purchased on a When-Issued Basis. Delivery and payment for securities
that have been purchased by the Fund on a when-issued basis can take place a
month or more after the trade date. Normally the settlement date occurs within
six months after the trade date; however, the Fund may, from time to time,
purchase securities whose settlement date extends six months or more beyond
trade date. During this period, such securities do not earn interest, are
subject to market fluctuation and may increase or decrease in value prior to
their delivery. The Fund maintains segregated assets with a market value equal
to or greater than the amount of its commitments. These transactions of
securities on a when-issued basis may increase the volatility of the Fund's net
asset value to the extent the Fund executes such transactions while remaining

29 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS Continued

- --------------------------------------------------------------------------------
1. Significant Accounting Policies Continued
substantially fully invested. As of October 31, 2002, the Fund had entered into
when-issued purchase commitments of $14,516,186.
In connection with its ability to purchase securities on a when-issued basis,
the Fund may enter into forward roll transactions with respect to
mortgage-related securities. Forward roll transactions require the sale of
securities for delivery in the current month, and a simultaneous agreement with
the same counterparty to repurchase similar (same type, coupon and maturity) but
not identical securities on a specified future date. The forward roll may not
extend for a period of greater than one year. The Fund generally records the
incremental difference between the forward purchase and sell of each forward
roll as interest income.
Risks to the Fund of entering into forward roll transactions include the
potential inability of the counterparty to meet the terms of the agreement; the
potential of the Fund to receive inferior securities to what was sold to the
counterparty at redelivery; counterparty credit risk; and the potential pay down
speed variance between the mortgage-related pools.
- --------------------------------------------------------------------------------
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 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.

30 | OPPENHEIMER DISCIPLINED ALLOCATION FUND

- --------------------------------------------------------------------------------
Directors' Compensation. The Fund has adopted a nonfunded retirement plan for
the Fund's independent directors. Benefits are based on years of service and
fees paid to each trustee during the years of service. During the year ended
October 31, 2002, the Fund's projected benefit obligations were increased by
$3,093 and payments of $4,585 were made to retired directors, resulting in an
accumulated liability of $30,424 as of October 31, 2002.
The Board of Directors has adopted a deferred compensation plan for
independent directors that enables directors to elect to defer receipt of all or
a portion of annual compensation they are entitled to receive from the Fund.
Under the plan, the compensation deferred is invested for the Board of Directors
in shares of one or more Oppenheimer funds selected by the director. The amount
paid to the Board of Directors under the plan will be determined based upon the
performance of the selected funds. Deferral of directors' fees under the plan
will not affect the net assets of the Fund, and will not materially affect the
Fund's assets, liabilities or net investment income per share.
- --------------------------------------------------------------------------------
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.
During the fiscal year ended October 31, 2002, the Fund did not utilize any
capital loss carryforward.

As of October 31, 2002, the Fund had available for federal income tax purposes
unused capital loss carryforwards as follows:

Expiring
----------------------
2008 $ 167,496
2009 13,696,976
2010 10,218,293
-----------
Total $24,082,765
===========
- --------------------------------------------------------------------------------
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 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
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.

31 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS Continued

================================================================================
1. Significant Accounting Policies Continued
The tax character of distributions paid during the year ended October 31, 2002
and year ended October 31, 2001 was as follows:

Year Ended Year Ended
October 31, 2002 October 31, 2001
------------------------------------------------------
Distributions paid from:
Ordinary income $2,475,956 $2,734,575
Long-term capital gain -- --
Return of capital -- --
----------------------------
Total $2,475,956 $2,734,575
============================

As of October 31, 2002, the components of distributable earnings on a tax basis
were as follows:

Undistributed net investment income $ 176,788
Accumulated net realized loss (24,950,736)
Net unrealized appreciation 648,029
------------
Total $(24,125,919)
============
- --------------------------------------------------------------------------------
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.

32 | OPPENHEIMER DISCIPLINED ALLOCATION FUND

================================================================================
2. Shares of Capital Stock
The Fund has authorized 550 million shares of $0.001 par value capital stock.
Transactions in shares of capital stock were as follows:

Year Ended October 31, 2002 Year Ended October 31, 2001 1
Shares Amount Shares Amount
- -----------------------------------------------------------------------------------
Class A
Sold 628,916 $ 7,576,816 453,469 $ 6,078,435
Dividends and/or
distributions reinvested 174,069 2,175,432 182,218 2,404,510
Redeemed (1,777,767) (21,631,086) (1,772,576) (23,828,598)
-------------------------------------------------------
Net decrease (974,782) $(11,878,838) (1,136,889) $(15,345,653)
=======================================================

- -----------------------------------------------------------------------------------
Class B
Sold 220,549 $ 2,710,789 229,496 $ 3,127,331
Dividends and/or
distributions reinvested 13,413 171,302 13,741 184,308
Redeemed (354,813) (4,373,438) (322,213) (4,372,717)
-------------------------------------------------------
Net decrease (120,851) $ (1,491,347) (78,976) $ (1,061,078)
=======================================================

- -----------------------------------------------------------------------------------
Class C
Sold 101,338 $ 1,207,406 63,616 $ 848,633
Dividends and/or
distributions reinvested 3,185 39,488 3,008 39,397
Redeemed (76,698) (924,444) (112,706) (1,525,703)
-------------------------------------------------------
Net increase (decrease) 27,825 $ 322,450 (46,082) $ (637,673)
=======================================================

- -----------------------------------------------------------------------------------
Class N
Sold 108,852 $ 1,331,998 131 $ 1,730
Dividends and/or
distributions reinvested 134 1,621 -- --
Redeemed (88,230) (1,057,013) -- --
-------------------------------------------------------
Net increase 20,756 $ 276,606 131 $ 1,730
=======================================================

1. For the year ended October 31, 2001, for Class A, B and C shares and for the
period from March 1, 2001 (inception of offering) to October 31, 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 October 31, 2002, were
$216,983,384 and $220,483,280, respectively.

As of October 31, 2002, unrealized appreciation (depreciation) based on cost of
securities for federal income tax purposes of $122,350,018 was composed of:

Gross unrealized appreciation $ 6,376,349
Gross unrealized depreciation (6,596,306)
-----------
Net unrealized depreciation $ (219,957)
===========

33 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS Continued

================================================================================
3. Purchases and Sales of Securities Continued
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 0.625%
of the first $300 million of average annual net assets of the Fund, 0.50% of the
next $100 million, and 0.45% of average annual net assets in excess of $400
million.
- --------------------------------------------------------------------------------
Accounting Fees. The Manager acts as the accounting agent for the Fund at an
annual fee of $15,000, plus out-of-pocket costs and expenses reasonably
incurred.
- --------------------------------------------------------------------------------
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.

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
- -----------------------------------------------------------------------------------------------
October 31, 2002 $100,924 $63,284 $7,439 $65,199 $8,315 $1,759

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
- --------------------------------------------------------------------------------
October 31, 2002 $300 $40,714 $1,530 $775

34 | OPPENHEIMER DISCIPLINED ALLOCATION FUND

- --------------------------------------------------------------------------------
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 October 31, 2002, payments under
the Class A Plan totaled $258,615, all of which were paid by the Distributor to
recipients, and included $129,116 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 October 31, 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 $136,465 $106,578 $522,569 4.28%
Class C Plan 29,608 7,083 93,429 3.13
Class N Plan 795 739 42 0.02

================================================================================
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.
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.

35 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS Continued

================================================================================
5. Futures Contracts Continued
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 October 31, 2002, the Fund had outstanding futures contracts as follows:

Unrealized
Expiration Number of Valuation as of Appreciation
Contract Description Dates Contracts October 31, 2002 (Depreciation)
- -----------------------------------------------------------------------------------
Contracts to Purchase
U.S. Treasury Nts., 2 yr. 12/27/02 9 $1,936,547 $ 13,422
U.S. Treasury Nts., 10 yr. 12/19/02 3 344,156 5,922
----------
19,344
----------
Contracts to Sell
U.S. Long Bonds 12/19/02 36 3,983,625 (38,117)
U.S. Treasury Nts., 5 yr. 12/19/02 63 7,165,266 (142,211)
----------
(180,328)
----------
$(160,984)
==========

================================================================================
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.

36 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
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 October 31, 2002 was as follows:

Call Options
------------------------
Number of Amount of
Contracts Premiums
- -----------------------------------------------------
Options outstanding as of
October 31, 2001 -- $ --
Options written 539 107,296
Options closed or expired (457) (87,763)
Options exercised (80) (19,427)
------------------------
Options outstanding as of
October 31, 2002 2 $ 106
========================

================================================================================
7. Illiquid or Restricted Securities
As of October 31, 2002, investments in securities included issues that are
illiquid or restricted. Restricted securities are often purchased in private
placement transactions, are not registered under the Securities Act of 1933, may
have contractual restrictions on resale, and are valued under methods approved
by the Board of Directors as reflecting fair value. A security may also be
considered illiquid if it lacks a readily available market or if its valuation
has not changed for a certain period of time. The Fund intends to invest no more
than 10% of its net assets (determined at the time of purchase and reviewed
periodically) in illiquid or restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors, are not
subject to that limitation. The aggregate value of illiquid or restricted
securities subject to this limitation as of October 31, 2002 was $4,102,400,
which represents 3.79% of the Fund's net assets, of which zero is considered
restricted. Information concerning restricted securities is as follows:

Valuation
Acquisition as of Unrealized
Security Date Cost October 31, 2002 Depreciation
- --------------------------------------------------------------------------------
Stocks and/or Warrants
Geotek Communications, Inc.,
Series B (Escrowed) 1/4/01 $400 $-- $400

================================================================================
8. Bank Borrowings
Effective November 13, 2001, the Fund no longer participated in an agreement
with other Oppenheimer funds in an unsecured line of credit with a bank. The
Fund may borrow from a bank for temporary or emergency purposes, provided asset
coverage for borrowings exceeds 300%.
The Fund had no borrowings outstanding during the year ended October 31,
2002.

A-1
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 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 Rating Services
- ------------------------------------------------------------------------------

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 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 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

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 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 obligations rated
"BB", but the obligor currently has the capacity to meet its financial
commitment on the obligation. Adverse business, financial, or economic
conditions will likely impair the obligor's capacity or willingness to meet
its financial commitment on the obligation.

CCC: 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: A subordinated debt or preferred stock obligation rated "C" is 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 has
been 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 default. Payments on the obligation are not being
made on the date due even if the applicable grace period has not expired,
unless Standard and Poor's believes that such payments will be made during
such grace period. The "D" rating will also 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: Obligation is 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 obligor's capacity to
meet its financial obligation is extremely 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: Obligation 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: Obligation 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: Obligation 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: Obligation is in payment default. Payments on the obligation have not been
made on the due date even if the applicable grace period has not expired,
unless Standard and Poor's believes that such payments will be made during
such grace period. The "D" rating will also 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.
(i)

B-1
Appendix B
Industry Classification
-----------------------

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

C-1
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.
|X|

Oppenheimer Disciplined Allocation 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
Citibank, N.A.
111 Wall Street
New York, New York 10005

Independent Auditors
KPMG LLP
707 Seventeenth Street
Denver, Colorado 80202

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

1234

PX205.002.1202 (Rev 0103)

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1 Currently, under the 1940 Act, a mutual fund may borrow only from banks and
the maximum amount it may borrow is up to one-third of its total assets
(including the amount borrowed). In addition, the Fund may borrow from
affiliated funds as described above. A fund may borrow up to 5% of its total
assets for temporary purposes from any person. Under the 1940 Act, there is a
rebuttable presumption that a loan is temporary if it is repaid within 60
days and not extended or renewed.
2 Mr. Motley was elected as Trustee to the Board I Funds effective October
10, 2002.
3 In accordance with Rule 12b-1 of the Investment Company Act, the term
"Independent Directors" in this Statement of Additional Information refers to
those Directors who are not "interested persons" of the Fund (or its parent
corporation) and who do not have any direct or indirect financial interest in
the operation of the distribution plan or any agreement under the plan.
1 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.

Oppenheimer
Value Fund
(A series of Oppenheimer Series Fund, Inc.)

6803 S. Tucson Way, Centennial, CO 80112
1.800.225.5677

Statement of Additional Information dated December 23, 2002, Revised January
15, 2003

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........................... 6
Other Investment Restrictions........................................ 29
How the Fund is Managed................................................. 31
Organization and History............................................. 31
Board of Directors and Oversight Committees.......................... 32
Directors and Officers of the Fund................................... 33
The Manager.......................................................... 40
Brokerage Policies of the Fund.......................................... 43
Distribution and Service Plans.......................................... 45
Performance of the Fund................................................. 49

About Your Account
How To Buy Shares....................................................... 54
How To Sell Shares...................................................... 64
How To Exchange Shares.................................................. 68
Dividends, Capital Gains and Taxes...................................... 72
Additional Information About the Fund................................... 76

Financial Information About the Fund
Independent Auditors' Report............................................ 77
Financial Statements ................................................... 78

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

Additional Information About the Fund's Investment Policies and Risks

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

|X| Value Investing. In selecting equity investments for the Fund's
portfolio, the portfolio manager currently 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.

|X| Investments in Equity Securities. The Fund does not limit its
investments in equity securities to issuers having a market capitalization of
a specified size or range, and therefore may invest in securities of small-,
mid- and large-capitalization issuers. At times, the Fund may have
substantial amounts of its assets invested in securities of issuers in one or
more capitalization ranges, based upon the Manager's use of its investment
strategies and its judgment of where the best market opportunities are to
seek the Fund's objective.

At times, the market may favor or disfavor securities of issuers of a
particular capitalization range. Securities of small capitalization issuers
may be subject to greater price
volatility in general than securities of larger companies. Therefore, if the
Fund has substantial investments in smaller capitalization companies at times
of market volatility, the Fund's share price may fluctuate more than that of
funds focusing on larger capitalization issuers.

|X| Rights and Warrants. The Fund can invest up to 5% of its total
assets in warrants or rights. That limit does not apply to warrants and
rights that the Fund has acquired as part of units of securities or that are
attached to other securities that the Fund buys. No more than 2% of the
Fund's total assets may be invested in warrants that are not listed on either
The New York Stock Exchange or The American Stock Exchange.

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

While many convertible securities are a form of debt security, in some
cases their conversion feature (allowing conversion into equity securities)
causes the Manager to regard them more as "equity equivalents." In those
cases, the credit rating assigned to the security has less impact on the
Manager's investment decision than in the case of non-convertible fixed
income securities. Convertible securities are subject to the credit risks and
interest rate risks described above. To determine whether convertible
securities should be regarded as "equity equivalents," the Manager may
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.

|X| Preferred Stocks. Preferred stocks are equity securities
but have certain attributes of debt securities. 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 the issuer can pay
dividends on common shares.
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 for
their call or redemption prior to maturity which can have a negative effect
on their prices when interest prior to maturity rates decline. Preferred
stock may be "participating" stock, which means that it may be entitled to a
dividend exceeding the stated dividend in certain cases.

|X| Foreign Securities. The Fund can purchase up to 25% of its total assets
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 and their agencies
and instrumentalities. Those securities may be traded on foreign securities
exchanges or in the foreign over-the-counter markets.

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

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

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 foreign exchange contracts;
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 foreign withholding taxes on interest and dividends;
o possibilities in some countries of expropriation, nationalization,
confiscatory taxation, political, financial or social
instability or adverse diplomatic developments; and
o unfavorable differences between the U.S. economy and foreign economies.

|X| Investments in Bonds and Other Debt Securities. The Fund can
invest in bonds, debentures and other debt securities under normal market
conditions. Because the Fund currently emphasizes investments in equity
securities, such as stocks, it is not anticipated that significant amounts of
the Fund's assets will be invested in debt securities. However, if market
conditions suggest that debt securities may offer better growth opportunities
than stocks, or if the Manager determines to seek a higher income for
liquidity purposes, the Manager may shift up to 10% of the Fund's net assets
into debt securities.

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., ("Moody's") or at least "BBB" by Standard & Poor's Rating
Services ("S&P") or Fitch, Inc. ("Fitch") or that have comparable ratings by
another nationally recognized 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 that the Fund buys are unrated, to be
considered part of the Fund's holdings of investment-grade securities, they
must be judged by the Manager to be of comparable quality to bonds rated as
investment grade by a rating organization.

o Special Risks of Lower-Grade Securities. It is not anticipated that the
Fund will 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 (and, in some cases, the
appreciation possibilities of lower-grade securities might be a reason they
are selected for the Fund's portfolio). High-yield convertible debt
securities might be selected as "equity substitutes," as described above but
are subject to the Fund's limitation on its investment in debt securities as
stated in the Prospectus.

As mentioned above, "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 Fitch or similar ratings by other
nationally recognized rating organizations. If they are unrated, and are
determined by the Manager to be of comparable quality to debt securities
rated below investment grade, they are included in 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 "B" at the time
the Fund buys them.

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

o 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.

|X| Floating Rate and Variable Rate Obligations. Some securities the
Fund can purchase have variable or floating interest rates. Variable rates
are adjusted at stated periodic intervals. Variable rate obligations can
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.

|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 instrumentalities 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.

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 responses 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.

o U.S. Treasury Obligations. These include Treasury bills (maturities of
one year or less when issued), Treasury notes (maturities of one to 10
years), and Treasury bonds (maturities of more than 10 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").

The Ginnie Maes in which the Fund invests are of the "fully modified
pass-through" type. They provide that the registered holders of the Ginnie
Maes 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.

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 owned by the Fund. All of the mortgages in the
pools relating to the Ginnie Maes in the Fund are subject to prepayment
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.
o Federal Home Loan Mortgage Corporation ("FHLMC") 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.

o 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.

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. The market for some of these securities may be limited, making
it difficult for the Fund to dispose of its holdings at an acceptable price.

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

o 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 or foreign bank
(including a foreign branch of a domestic bank) having
total assets of at least $1 billion,
o banker's acceptances (which may or may not be supported by letters of
credit) only if guaranteed by a U.S. commercial bank with
total assets of at least U.S. $1 billion.

Commercial Paper. The Fund can invest in commercial paper if it
is rated within the top two 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 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.

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
below. Currently, the Fund does not intend that its investments in variable
amount master demand notes will exceed 5% of its total assets.

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.

Repurchase agreements, considered "loans" under the Investment Company
Act of 1940 (the "Investment Company Act"), are collateralized by the
underlying security. The Fund's repurchase agreements require that at all
times while the repurchase agreement is in effect, the value of the
collateral must equal or exceed the repurchase price to fully collateralize
the repayment obligation. However, if the vendor fails to pay the resale
price on the delivery date, the Fund may incur costs in disposing of the
collateral and may experience losses if there is any delay in its ability to
do so. The Manager will monitor the vendor's creditworthiness to confirm that
the vendor is financially sound and will continuously monitor the
collateral's value.

Pursuant to an Exemptive Order issued by the Securities and Exchange
Commission, 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.

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

Since substantially all of the Fund's assets fluctuate in value, but
borrowing obligations are fixed, when the Fund has outstanding borrowings, its
net asset value per share correspondingly will tend to increase and decrease
more when portfolio assets fluctuate in value than otherwise would be the
case. While the Fund may borrow a greater amount, as discussed in the
immediately preceding paragraph, the Fund currently does not expect its
borrowings to exceed 5% of its total assets.

|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"), 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.

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

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.

|X| Hedging. The Fund can use hedging to attempt to protect against
declines in the market value of the Fund's portfolio, to permit the Fund to
retain unrealized gains in the value of portfolio securities which have
appreciated, or to facilitate selling securities for investment reasons. To
do so, the Fund could:
o sell futures contracts,
o buy puts on futures or on securities, or
o write covered calls on securities or futures. Covered calls can also
be used to increase the Fund's income, but the Manager does not
expect to engage extensively in that practice.

The Fund is not obligated to use hedging instruments, even though it is
permitted to use them in the Manager's discretion, as described below. 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.

A broadly-based stock index is used as the basis for trading stock
index futures. An index 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.

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.

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

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.

The Fund may also write calls on a futures contract without owning the
futures contract or securities deliverable under the contract. To do so, at
the time the call is written, the Fund must cover the call by identifying on
its books 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.

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

o 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.

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.

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'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 values being more
sensitive to changes in the value of the underlying investment.

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 might
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 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.

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.

The Fund will cover its short positions in these cases by identifying
on its books 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.

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 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.

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 may invest in total return swaps to gain exposure to the
overall commodity markets. In a total return commodity swap the Fund will
receive the price appreciation of a commodity index, a portion of the index,
or a single commodity in exchange for paying an agreed-upon fee. If the
commodity swap is for one period, the Fund will pay a fixed fee, established
at the outset of the swap. However, if the term of the commodity swap is
more than one period, with interim swap payments, the Fund will pay an
adjustable or floating fee. With a "floating" rate, the fee is pegged to a
base rate such as the London Interbank Offered Rate ("LIBOR"), and is
adjusted each period. Therefore, if interest rates increase over the term of
the swap contract, the Fund may be required to pay a higher fee at each swap
reset date. The Fund does not currently anticipate investing in total return
swaps.

o 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 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.

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

Other Investment Restrictions

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 Directors can change non-fundamental policies without shareholder
approval. However, significant changes to investment policies will be
described in supplements or updates to the Prospectus or this Statement of
Additional Information, as appropriate. The Fund's principal investment
policies are described in the Prospectus.

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

o The Fund cannot underwrite securities of other issuers. A permitted
exception is in case it is deemed to be an underwriter under the Securities
Act of 1933 in reselling its portfolio securities.

o The Fund may not borrow money, except to the extent permitted under the
Investment Company Act, the rules or regulations thereunder or any exemption
therefrom that is applicable to the Fund, as such statute, rules or
regulations may be amended or interpreted from time to time. 1

How the Fund is Managed

Organization and History. The Fund is one of two investment portfolios, or
"series," of Oppenheimer Series Fund, Inc. That corporation is an open-end,
management investment company organized as a Maryland corporation in 1981,
and was called Connecticut Mutual Investment Accounts, Inc. until March 18,
1996, when the Manager became the Fund's investment advisor. The Fund is a
diversified mutual fund. On March 18, 1996 the Fund changed its name from
Connecticut Mutual Growth Account to Oppenheimer Disciplined Value Fund and
effective March 1, 2001 subsequently changed its name to Oppenheimer Value
Fund.

|X| Classes of Shares. The Directors are authorized, without shareholder
approval, to create new series and classes of shares. The Directors may
reclassify unissued shares of the Fund into additional series or classes of
shares. The Directors 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.

The 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.

Board of Directors and Oversight Committees. The Fund's parent corporation is
governed by a Board of Directors, which is responsible for protecting the
interests of shareholders under Maryland law. The Directors meet periodically
throughout the year to oversee the Fund's activities, review its performance,
and review the actions of the Manager. 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 Director or to take other action described in the
Fund's Articles of Incorporation.

The members of the Study Committee are Benjamin Lipstein (Chairman),
Robert Galli and Elizabeth Moynihan. The Study Committee held eight meetings
during the Fund's fiscal year ended October 31, 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.

Oppenheimer AMT-Free New York Municipals Oppenheimer Growth Fund
Oppenheimer California Municipal Fund Oppenheimer International Growth Fund

Oppenheimer International Small Company
Oppenheimer Capital Appreciation Fund Fund

Messrs. Murphy, Leavy, Molleur, Wixted and Zack and Mses. Bechtolt,
Feld and Ives respectively hold the same offices with one or more of the
other Board I Funds as with the Fund. As of December 12, 2002, the Directors
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 Director, and his 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 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, Inc. 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.

- -------------------------------------------------------------------------------------
Independent Directors
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Name, Position(s) Principal Occupation(s) During Past 5 Dollar Aggregate
Dollar
Range of
Shares
Beneficially
Owned in
any of
the
Range of Oppenheimer
Shares Funds
Held with Fund, Years / Other Trusteeships/Directorships BeneficiallOverseen
Length of Held by Director / Number of Portfolios in Owned in by
Service, Age Fund Complex Currently Overseen by Director the Fund Director
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
As of December 31,
2001
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------

Clayton K. Of Counsel (since 1993), Hogan & Hartson $0 $50,001-$100,000
Yeutter, Chairman
of the Board of
Directors, (a law firm). Other directorships:
Director since Caterpillar, Inc. (since 1993) and
1996 Weyerhaeuser Co. (since 1999). Oversees 31
Age: 71 portfolios in the OppenheimerFunds complex.

- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Robert G. Galli, A trustee or director of other Oppenheimer $50,001- Over
Director since funds. Formerly Vice Chairman (October
1996 1995-December 1997) of the Manager.
Age: 69 Oversees 41 portfolios in the
OppenheimerFunds complex. $100,000 $100,000
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Phillip A. The Director (since 1991) of the Institute $0 Over
Griffiths, for Advanced Study, Princeton, N.J.,
Director since director (since 2001) of GSI Lumonics and
1999 a member of the National Academy of
Age: 63 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 $100,000
University. Oversees 31 portfolios in the
OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Benjamin Professor Emeritus of Marketing, Stern $0 Over
Lipstein, Graduate School of Business
Director since Administration, New York University.
1996 Oversees 31 portfolios in the
Age: 79 OppenheimerFunds complex. $100,000
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Joel W. Motley, Director (January 2002-present), Columbia $02 $03
Director since Equity Financial Corp. (privately-held
2002 financial adviser); Managing Director
Age: 50 (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
Moynihan, trustee of the Freer Gallery of Art and
Director since Arthur M. Sackler Gallery (Smithsonian
1996 Institute), Trustees Council of the
Age: 72 National Building Museum; a member of the $0 $50,001-$100,000
Trustees Council, Preservation League of
New York State. Oversees 31 portfolios in
the OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Kenneth A. A director of Dominion Resources, Inc. $1- Over
Randall, Director (electric utility holding company) and
since 1996 Prime Retail, Inc. (real estate investment
Age: 75 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 $10,000 $100,000
Manufacturers Mutual Insurance Company.
Oversees 31 portfolios in the
OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Edward V. Regan, President, Baruch College, CUNY; a $1- $50,001-$100,000
Director since director of RBAsset (real estate manager);
1996 a director of OffitBank; formerly Trustee,
Age: 72 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. $10,000
Oversees 31 investment companies in the
OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Russell S. Chairman (since 1993) of The Directorship $0 $10,001-$50,000
Reynolds, Jr., Search Group, Inc. (corporate governance
Director since consulting and executive recruiting); a
1996 life trustee of International House
Age: 70 (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) of $0 Over
Vice Chairman of
the Board of
Directors, the Manager. Formerly a director (January
Director since 1969-August 1999) of the Manager. Oversees
1996 31 portfolios in the OppenheimerFunds $100,000
Age: 76 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
Director and
Officer
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Name, Principal Occupation(s) During Past 5 Years Dollar Aggregate
Dollar
Range of
y Shares
Range of Beneficially
Position(s) Shares Owned in
Held with Fund, / Other Trusteeships/Directorships Held by Beneficiall any of the
Length of Director / Number of Portfolios in Fund Owned in Oppenheimer
Service, Age Complex Currently Overseen by Director the Fund Funds
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
As of December 31, 2001
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
John V. Chairman, Chief Executive Officer and
Murphy, director (since June 2001) and President $0 Over
President and (since September 2000) of the Manager; $100,000
Trustee, President and a director or trustee of
Trustee since other Oppenheimer funds; President and a
2001 director (since July 2001) of Oppenheimer
Age: 53 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: Messrs.
Leavy, 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, Position(s) Held Principal Occupation(s) During Past 5 Years
with Fund, Length of
Service, Age
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Christopher Leavy, Vice Senior Vice President (since September 2000) of the
President and Portfolio Manager; prior to joining the Manager in September 2000,
Manager (since November he was a portfolio manager of Morgan Stanley Dean Witter
2000) Investment Management (from 1997) prior to which he was a
Age: 30 portfolio manager and equity analyst of Crestar Asset
Management (from 1995).
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
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
Age: 43 Holdings, 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.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Vice President/Fund Accounting of the Manager (since March
Philip Vottiero, 2002; formerly Vice President/Corporate Accounting of the
Assistant Treasurer Manager (July 1999-March 2002) prior to which he was Chief
since 2002 Financial Officer at Sovlink Corporation (April 1996-June
Age: 39 1999). An officer of 85 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
Age: 54 a 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.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
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
since 2001 Counsel of the Manager (September 1995-July 1999). An
Age: 45 officer of 82 portfolios in the OppenheimerFunds complex.
- -------------------------------------------------------------------------------------

Clayton K. Yeutter3 $6524 $711 $36,372 $71,792
Chairman and
Proxy Committee
Member

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

Robert G. Galli $960 $1,074 $55,6782 $202,8865
Study Committee
Member

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

Phillip Griffiths $4986 $256 $10,256 $54,889

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

Leon Levy3 $1,577 $0 $133,352 $173,700

- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Benjamin Lipstein $1,363 $345 $115,270 $150,152
Study Committee
Chairman, Audit
Committee Member
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------

Joel W. Motley7 $0 $0 $0 $0

- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Elizabeth B. $960 $1,304 $57,086 $105,760
Moynihan
Study Committee
Member
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Kenneth A. Randall $881 $274 $74,471 $97,012
Audit Committee
Chairman
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Edward V. Regan $871 $687 $46,313 $95,960
Proxy Committee
Chairman, Audit
Committee Member
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Russell S. $652 $761 $48,991 $71,792
Reynolds, Jr.
Proxy Committee
Member
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Donald Spiro $582 $315 $9,396 $64,080
- ----------------------------------------------------------------------------------
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. Effective January 1, 2002, Clayton Yeutter became Chairman of the Board of
Trustees of the Board I Fund upon the retirement of Leon Levy.
4. Aggregate compensation from the Fund includes $163 deferred under Deferred
Compensation Plan described below.

5. Includes $97,126 for Mr. Galli for serving as trustee or director of 10 Oppenheimer funds
that are not Board I Funds.
6. Aggregate compensation from the Fund includes $498 deferred under Deferred
Compensation Plan described below.
7. Appointed to the Board on October 10, 2002 and therefore did not receive any
compensation.

|X| Retirement Plan for Directors. The Fund and its parent corporation have adopted a
retirement plan that provides for payments to retired Directors. Payments are up to
80% of the average compensation paid during a Director's five years of service
in which the highest compensation was received. A Director must serve as director
or trustee for any of the Board I Oppenheimer funds for at least 15 years to be
eligible for the maximum payment. Each Director's retirement benefits will depend on the
amount of the Director's future compensation and length of service.

Deferral of Directors' fees under the plan will not materially affect
the Fund's assets, liabilities and net income per share. The plan will not obligate
the Fund to retain the services of any Director or to pay any particular level of
compensation to any Director. Pursuant to an Order issued by the Securities and
Exchange Commission, the Fund may invest in the funds selected by the Director
under the plan without shareholder approval for the limited purpose of determining the
value of the Director's deferred fee account.

|X| Major Shareholders. As of December 12, 2002, the only persons who owned
of record or were known by the Fund to own beneficially 5% or more of any class
of the Fund's outstanding shares were:
RPSS TR united staffing & assoc Inc., 401K Plan, Attn: Robert
Bilnoski, 1400 Woodloch Forest Dr. Ste. 200, The Woodlands, TX 77380-1179
which owned 13,433.600 Class N shares (15.36% of the Class N shares
then outstanding).

RPSS TR Gussco Manufacturing Inc., 401K Plan, Attn: Robert Sharp,
5112 2nd Ave., Brooklyn, NY 11232-4309, which owned 6,988.616 Class N
shares (7.99% of the Class N shares then outstanding).

RPSS TR IRA FBO Donald Sinclair, 1816 N. Fremont St., Chicago, IL
60614-5005, which owned 5,470.319 Class N shares (6.25% of the Class
N shares then outstanding).

RPSS TR IRA FBO Garry J Kroeger, 8104 Melody Ln., Dickinson, TX
77539-7404, which owned 5,349.914 Class N shares (6.11% of the Class
N shares then outstanding).

RPSS TR SEP IRA BRUCE E HARRISON PLUMBING FBO Bruce E Harrison, 1904
Pleasant Ridge Rd., Virginia Beach, VA 23457-1507, which owned 5,139.495
Class N shares (5.87% of the Class N shares then outstanding).

IBT & CO, CUST OPPENHEIMERFUNDS CAP ACCUM PLAN, Attn: MML037,
200 ClarendonSt. Fl 16, Boston, MA 12116-5021, which owned 73,017.771
Class Y shares (99.92% of the Class Y shares then outstanding).

The Manager. The Manager is holly-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 manager of the Fund is employed by the
Manager and is 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
Department provide the portfolio manager 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 certain
Directors, legal and audit xpenses, 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 fees paid by the Fund to the Manager during its last three fiscal years
are listed below.

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's parent corporation to use the name
"Oppenheimer" as part of its name and the name of the Fund.

o Accounting Services. The Manager provides accounting and record-keeping
services to the Fund pursuant to an Accounting Agreement. Under that agreement,
the Manager maintains the general ledger accounts and records relating to the Fund's
business and calculates the daily net asset values of the Fund's shares. The accounting
service fees paid by the Fund to the Manager during its last three fiscal years are listed
below.

Fiscal Year Ended Management Fee Paid to Accounting Services Fee Paid to
10/31 OppenheimerFunds, Inc. OppenheimerFunds, Inc.

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

2000 $2,235,663 $15,000

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

2001 $1,612,092 $15,000

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

2002 $1,481,518 $15,000

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

|X| Annual Approval of Investment Advisory Agreement. Each
year, the Board of Directors, including a majority of the Independent
Directors, 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.

Brokerage Policies of the Fund

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, a portfolio manager may
directly place trades and allocate brokerage. In either case, the Manager's
executive officers supervise the allocation of brokerage.

------------------------------------------------------------------------------
Fiscal Year Ended 10/31: Total Brokerage Commissions Paid by the Fund1
------------------------------------------------------------------------------
------------------------------------------------------------------------------
2000 $1,148,957
------------------------------------------------------------------------------
------------------------------------------------------------------------------
2001 $2,329,407
------------------------------------------------------------------------------
------------------------------------------------------------------------------
2002 $1,590,3212
------------------------------------------------------------------------------
1. Amounts do not include spreads or commissions on principal transactions
on a net trade basis.
2. In the fiscal year ended 10/31/02, the amount of transactions directed
to brokers for research services was $177,759,262 and the amount of the
commissions paid to broker-dealers for those services was $426,915.

Distribution and Service Plans

- -------------------------------------------
Fiscal Aggregate Class A
Front-End
Year Front-End Sales Sales Charges
Ended Charges on Retained by
10/31: Class A Shares Distributor1
- -------------------------------------------
- -------------------------------------------
2000 $370,966 $174,293
- -------------------------------------------
- -------------------------------------------
2001 $317,775 $140,878
- -------------------------------------------
- -------------------------------------------
2002 $328,773 $140,953
- -------------------------------------------
1. Includes amounts retained by a broker-dealer that is an affiliate or a
parent of the Distributor.

- ------------------------------------------------------------------------------
Fiscal Concessions on Concessions on Concessions on Concessions on
Year Class A Shares Class B Shares Class C Shares Class N Shares
Ended Advanced by Advanced by Advanced by Advanced by
10/31: Distributor1 Distributor1 Distributor1 Distributor1
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
2000 $54,817 $372,763 $28,351 N/A
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
2001 $46,553 $289,729 $26,187 $1182
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
2002 $24,890 $321,368 $55,902 $13,817
- ------------------------------------------------------------------------------
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.
2. The inception date of Class N shares was March 1, 2001.

- ------------------------------------------------------------------------------
Fiscal Class A Class B Class C Class N
Contingent Contingent Contingent Contingent
Year Deferred Sales Deferred Sales Deferred Sales Deferred Sales
Ended Charges Charges Charges Charges
10/31 Retained by Retained by Retained by Retained by
Distributor Distributor Distributor Distributor
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
2002 $5,940 $147,720 $2,050 $782
- ------------------------------------------------------------------------------

Each plan has been approved by a vote of the Board of Directors,
including a majority of the Independent Directors3, cast in person at a
meeting called for the purpose of voting on that plan.

While the plans are in effect, the Treasurer of the Fund shall provide
separate written reports on the plans to the Board of Directors at least
quarterly for its review. The reports shall detail the amount of all payments
made under a plan and the purpose for which the payments were made. Those
reports are subject to the review and approval of the Independent Directors.

Under the plan for a class, no payment will be made to any recipient in
any quarter in which the aggregate net asset values of all Fund shares of
that class held by the recipient for itself and its customers does not exceed
a minimum amount, if any, that may be set from time to time by a majority of
the Independent Directors. The Board of Directors has set no minimum amount
of assets to qualify for payments under the plans.

For the fiscal year ended October 31, 2002 payments under the Class A
Plan totaled $405,280, of which $37 was retained by the Distributor under the
arrangement described above, and included $119,416 paid to an affiliate of
the Distributor's parent company. Any unreimbursed expenses the Distributor
incurs with respect to Class A shares in any fiscal year cannot be recovered
in subsequent years. The Distributor may not use payments received under the
Class A Plan to pay any of its interest expenses, carrying charges, or other
financial costs, or allocation of overhead.

|X| Class B, Class C and Class N 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. Each plan provides for
the Distributor to be compensated at a flat rate, whether the Distributor's
distribution expenses are more or less than the amounts paid by the Fund
under the plan during the period for which the fee is paid. The types of
services that recipients provide are similar to the services provided under
the Class A service plan, described above.

Each Plan permits the Distributor to retain both the asset-based sales
charges and the service fees or to pay recipients the service fee on a
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 Class B, Class C and Class N shares are purchased. After
the first year Class B, Class C or Class N 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. In cases where the Distributor is
the broker of record for Class B, Class C and Class N shares, i.e.
shareholders without the services of a broker directly invest in the Fund,
the Distributor will retain the asset-based sales charge and service fee for
Class B, Class C and Class N shares.

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.

- --------------------------------------------------------------------------------
Distribution Fees Paid to the Distributor for the Year Ended 10/31/02
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class: Total Payments Amount Distributor's Distributor's
Aggregate Unreimbursed
Unreimbursed Expenses as %
Retained by Expenses Under of Net Assets
Under Plan Distributor Plan of Class
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B Plan $562,278 $439,4481 $2,197,410 4.64%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C Plan $129,685 $34,0482 $374,036 2.78%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class N Plan $2,521 $2,218 $20,528 1.71%
- --------------------------------------------------------------------------------
1. Includes $18,642 paid to an affiliate of the Distributor's parent
company.
2. Includes $5,714 paid to an affiliate of the Distributor's parent
company.

Performance of the Fund

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 o account's performance will vary from the model
performance data if your dividends are received in cash, or you buy or sell
shares during the period, or you bought your shares at a different time and
price than the shares used in the model.

o The Fund's performance returns do not reflect the effect of taxes on
dividends and capital gains distributions.
o An investment in the Fund is not insured by the FDIC or any other
government agency.
o The principal value of the Fund's shares, and total returns are not
guaranteed and normally will fluctuate on a daily basis.
o When an investor's shares are redeemed, they may be worth more or less
than their original cost.
o Total returns for any given past period represent historical
performance information 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.

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

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

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

ERV - P = Total Return
- -----------
P
o Total Returns at Net Asset Value. From time to time the Fund may also
quote a cumulative or an average annual total return "at net asset value"
(without deducting sales charges) for Class A, Class B, Class C and 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.

1-Year 5-Year 10-Year
(or life of (or life of
class) 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 A1 113.08% 126.09% -12.49% -7.15% -3.15% -1.99% 7.86% 8.50%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B 32.49%2 32.49%2 -12.47% -7.87% -3.02% -2.74% 4.05%2 4.05%2
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C 16.16%3 16.16%3 -8.77% -7.85% -2.73% -2.73% 2.33%3 2.33%3
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class N -18.57%4 -18.57%4 -8.33% -7.41% -11.60%4 -11.60%4 N/A N/A
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class Y N/A 13.21%5 N/A -7.18% N/A -1.74% N/A 2.13%5
- --------------------------------------------------------------------------------
1. Inception of Class A: 9/16/85.
2. Inception of Class B: 10/2/95.
3. Inception of Class C: 5/1/96.
4. Inception of Class N: 3/1/01.
5. Inception of Class Y: 12/16/96.

- --------------------------------------------------------------------------
Average Annual Total Returns for Class A Shares (After Sales Charges)
For the Periods Ended 10/31/02
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
1-Year 5-Year 10-Year
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
After Taxes on Distributions -12.51% -4.83% 5.39%1
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
After Taxes on -7.60% -2.71% 5.65%1
Distributions and
Redemption of Fund Shares
- --------------------------------------------------------------------------
1. Inception date of Class A: 9/16/85

|X| Lipper Rankings. From time to time the Fund may publish the
ranking of the performance of its classes of shares by Lipper, Inc.
("Lipper"). Lipper is a widely-recognized independent mutual fund monitoring
service. Lipper monitors the performance of regulated investment companies,
including the Fund, and ranks their performance for various periods in
categories based on investment styles. The Lipper performance rankings are
based on total returns that include the reinvestment of capital gain
distributions and income dividends but do not take sales charges or taxes
into consideration. Lipper also publishes "peer-group" indices of the
performance of all mutual funds in a category that it monitors and averages
of the performance of the funds in particular categories.

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

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:
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.

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 MidCap Fund
Oppenheimer Bond Fund Oppenheimer Multiple Strategies Fund

Oppenheimer California Municipal Fund Oppenheimer Municipal Bond Fund
Oppenheimer Capital Appreciation Fund Oppenheimer New Jersey Municipal Fund

Oppenheimer Main Street Small Cap Fund OSM1 - QM Active Balanced Fund
OSM1 - Salomon Brothers All Cap Fund

And the following money market funds:

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.

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.

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

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.

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.

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.

Determination of Net Asset Value Per Share. The net asset value per share of
each class of shares of the 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, 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.

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 Directors or by the
Manager. If there were no sales that day, they shall be valued at the last
sale price on the preceding trading day if it is within the spread of the
closing "bid" and "asked" prices on the principal exchange 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.

How to Sell Shares

The information below supplements the terms and conditions for redeeming
shares set forth in the Prospectus.

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, Class N or Class Y 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.

Payments "In Kind". The Prospectus states that payment for shares tendered
for redemption is ordinarily made in cash. However, under certain
circumstances, the Board of Directors of the Fund may determine that it would
be detrimental to the best interests of the remaining shareholders of the
Fund to make payment of a redemption order wholly or partly in cash. In that
case, the Fund may pay the redemption proceeds in whole or in part by a
distribution "in kind" of liquid securities from the portfolio of the Fund,
in lieu of cash.

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.

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

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 Fund Oppenheimer Senior Floating Rate
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 International Small
Municipals Company Fund
Oppenheimer California Municipal Fund Oppenheimer Limited Term Municipal

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.
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.

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

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.

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.

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
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 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.

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.

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.

Additional Information About the Fund

INDEPENDENT AUDITORS' REPORT

================================================================================
The Board of Directors and Shareholders of
Oppenheimer Value Fund:

We have audited the accompanying statement of assets and liabilities of
Oppenheimer Value Fund, including the statement of investments, as of October
31, 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 October 31, 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 Value Fund as of October 31, 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
November 21, 2002

STATEMENT OF INVESTMENTS October 31, 2002

Market Value
Shares See Note 1
====================================================
Common Stocks--92.7%
- ----------------------------------------------------
Consumer Discretionary--8.5%
- ----------------------------------------------------
Auto Components--0.7%
Delphi Corp. 214,500 $ 1,492,920
- ----------------------------------------------------
Leisure Equipment & Products--1.0%
Mattel, Inc. 110,800 2,034,288
- ----------------------------------------------------
Media--3.3%
News Corp. Ltd. (The),
Sponsored ADR,
Preference 336,300 6,648,651
- ----------------------------------------------------
Textiles & Apparel--3.5%
Nike, Inc., Cl. B 151,000 7,125,690
- ----------------------------------------------------
Consumer Staples--1.2%
- ----------------------------------------------------
Tobacco--1.2%
Philip Morris Cos., Inc. 59,600 2,428,700
- ----------------------------------------------------
Energy--6.7%
- ----------------------------------------------------
Energy Equipment & Services--0.5%
Noble Corp. 1 30,800 995,456
- ----------------------------------------------------
Oil & Gas--6.2%
Ashland, Inc. 70,200 1,842,750
- ----------------------------------------------------
BP plc, ADR 258,200 9,927,790
ChevronTexaco Corp. 14,000 946,820
------------
12,717,360

- ----------------------------------------------------
Financials--31.8%
- ----------------------------------------------------
Banks--7.6%
Bank of America Corp. 163,600 11,419,280
- ----------------------------------------------------
Wachovia Corp. 119,800 4,167,842
------------
15,587,122

- ----------------------------------------------------
Diversified Financials--14.3%
Capital One
Financial Corp. 71,000 2,163,370
- ----------------------------------------------------
Citigroup, Inc. 39,966 1,476,744
- ----------------------------------------------------
Franklin
Resources, Inc. 176,100 5,809,539
- ----------------------------------------------------
Freddie Mac 127,200 7,832,976
- ----------------------------------------------------
Merrill Lynch
& Co., Inc. 35,400 1,343,430
- ----------------------------------------------------
SLM Corp. 102,600 10,541,124
------------
29,167,183

- ----------------------------------------------------
Insurance--9.9%
Allstate Corp. 76,500 3,043,170
- ----------------------------------------------------
American International
Group, Inc. 175,200 10,958,760

Market Value
Shares See Note 1
- ----------------------------------------------------
Insurance Continued
Hartford Financial
Services Group, Inc. 36,200 $ 1,429,900
- ----------------------------------------------------
Prudential
Financial, Inc. 1 162,600 4,747,920
- ----------------------------------------------------
Travelers Property
Casualty Corp., Cl. A 1 3,368 44,963
- ----------------------------------------------------
Travelers Property
Casualty Corp., Cl. B 1 6,920 93,558
------------
20,318,271

- ----------------------------------------------------
Health Care--5.4%
- ----------------------------------------------------
Health Care Providers & Services--3.7%
Aetna, Inc. 171,800 6,923,540
- ----------------------------------------------------
Service Corp.
International 1 224,200 706,230
------------
7,629,770

- ----------------------------------------------------
Pharmaceuticals--1.7%
Pharmacia Corp. 62,600 2,691,800
- ----------------------------------------------------
Schering-Plough Corp. 39,100 834,785
------------
3,526,585

- ----------------------------------------------------
Industrials--10.0%
- ----------------------------------------------------
Aerospace & Defense--8.0%
Boeing Co. 310,500 9,237,375
- ----------------------------------------------------
Lockheed
Martin Corp. 124,400 7,202,760
------------
16,440,135

- ----------------------------------------------------
Industrial Conglomerates--1.7%
Tyco
International Ltd. 235,000 3,398,100
- ----------------------------------------------------
Machinery--0.3%
Navistar
International Corp. 1 125,800 578,436
- ----------------------------------------------------
Information Technology--11.6%
- ----------------------------------------------------
Communications Equipment--4.6%
JDS Uniphase Corp. 1,2 1,458,800 3,283,759
- ----------------------------------------------------
QUALCOMM, Inc 1 177,900 6,141,108
------------
9,424,867

- ----------------------------------------------------
Computers & Peripherals--3.9%
Hewlett-Packard Co. 371,800 5,874,440
- ----------------------------------------------------
Lexmark
International, Inc., Cl. A 1 26,800 1,592,456

13 | OPPENHEIMER VALUE FUND
STATEMENT OF INVESTMENTS Continued

Market Value
Shares See Note 1
- ----------------------------------------------------
Computers & Peripherals Continued
Pinnacle Systems, Inc. 1 40,600 $ 482,734
--------------
7,949,630

- ----------------------------------------------------
Electronic Equipment & Instruments--3.1%
Thermo
Electron Corp. 1 343,700 6,320,643
- ----------------------------------------------------
Materials--5.8%
- ----------------------------------------------------
Chemicals--0.9%
FMC Corp. 1 53,700 1,642,683
- ----------------------------------------------------
Monsanto Co. 13,357 220,791
--------------
1,863,474

- ----------------------------------------------------
Metals & Mining--0.4%
Alcoa, Inc. 42,000 926,520
- ----------------------------------------------------
Paper & Forest Products--4.5%
Sappi Ltd.,
Sponsored ADR 743,300 9,112,858
- ----------------------------------------------------
Telecommunication Services--8.8%
- ----------------------------------------------------
Diversified Telecommunication Services--2.2%
Verizon
Communications, Inc. 121,600 4,591,616
- ----------------------------------------------------
Wireless Telecommunication Services--6.6%
AT&T Corp. 1,033,200 13,472,928
- ----------------------------------------------------
Utilities--2.9%
- ----------------------------------------------------
Electric Utilities--2.9%
Dominion
Resources, Inc. 125,200 6,009,600
--------------
Total Common Stocks
(Cost $186,306,877) 189,760,803

Principal Market Value
Amount See Note 1
====================================================
Short-Term Notes--2.1%
Federal Home Loan Bank,
1.65%, 11/1/02
(Cost $4,200,000) $4,200,000 $ 4,200,000

====================================================
Joint Repurchase Agreements--4.5%
Undivided interest of 49.65% in joint
repurchase agreement (Market Value
$18,754,000) with Zion Bank/Capital
Markets Group, 1.85%, dated 10/31/02, to
be repurchased at $9,311,478 on 11/1/02,
collateralized by U.S. Treasury
Bonds, 2.125%, 10/31/04, with a
value of $19,178,339
(Cost $9,311,000) 9,311,000 9,311,000

- ----------------------------------------------------
Total Investments, at Value
(Cost $199,817,877) 99.3% 203,271,803
- ----------------------------------------------------
Other Assets Net
of Liabilities 0.7 1,355,812
---------------------
Net Assets 100.0% $204,627,615
=====================

Footnotes to Statement of Investments
1. Non-income producing security.
2. 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 Date Price Received See
Note 1
- --------------------------------------------------------------------------------
- -------
JDS Uniphase Corp. 14 3/24/03 $2.50 $742
$700

See accompanying Notes to Financial Statements.

14 | OPPENHEIMER VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES October 31, 2002

================================================================================
===
Assets
Investments, at value (cost $199,817,877)--see accompanying statement
$203,271,803
- --------------------------------------------------------------------------------
- ---
Cash
56,772
- --------------------------------------------------------------------------------
- ---
Receivables and other assets:
Investments sold
5,466,226
Shares of capital stock sold
124,254
Interest and dividends
115,849
Other
1,660
----------
- ---
Total assets
209,036,564

================================================================================
===
Liabilities
Options written, at value (premiums received $742)--see accompanying statement
700
- --------------------------------------------------------------------------------
- ---
Payables and other liabilities:
Investments purchased
3,976,112
Shares of capital stock redeemed
148,740
Shareholder reports
87,054
Transfer and shareholder servicing agent fees
69,827
Directors' compensation
47,526
Distribution and service plan fees
41,070
Other
37,920
----------
- ---
Total liabilities
4,408,949

================================================================================
===
Net Assets
$204,627,615

=============

================================================================================
===
Composition of Net Assets
Par value of shares of capital stock $
13,895
- --------------------------------------------------------------------------------
- ---
Additional paid-in capital
245,650,297
- --------------------------------------------------------------------------------
- ---
Undistributed net investment income
177,268
- --------------------------------------------------------------------------------
- ---
Accumulated net realized loss on investment transactions
(44,667,813)
- --------------------------------------------------------------------------------
- ---
Net unrealized appreciation on investments
3,453,968
----------
- ---
Net Assets
$204,627,615

=============

15 | OPPENHEIMER VALUE 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 $141,562,779 and 9,576,254
shares of capital stock outstanding) $14.78
Maximum offering price per share (net asset value
plus sales charge of 5.75% of offering price) $15.68
- --------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes
applicable contingent deferred sales charge) and
offering price per share (based on net assets of
$47,323,320 and 3,232,435 shares of capital stock
outstanding) $14.64
- --------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes
applicable contingent deferred sales charge) and
offering price per share (based on net assets of
$13,466,078 and 932,473 shares of capital stock
outstanding) $14.44
- --------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes
applicable contingent deferred sales charge) and
offering price per share (based on net assets of
$1,201,397 and 81,857 shares of capital stock
outstanding) $14.68
- --------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering
price per share (based on net assets of $1,074,041
and 71,781 shares of capital stock outstanding) $14.96

See accompanying Notes to Financial Statements.

16 | OPPENHEIMER VALUE FUND
STATEMENT OF OPERATIONS For the Year Ended October 31, 2002

================================================================================
===
Investment Income
Dividends (net of foreign withholding taxes of $21,725) $
3,535,454
- --------------------------------------------------------------------------------
- ---
Interest
240,249
----------
- ---
Total investment income
3,775,703

================================================================================
===
Expenses
Management fees
1,481,518
- --------------------------------------------------------------------------------
- ---
Distribution and service plan fees:
Class A
405,280
Class B
562,278
Class C
129,685
Class N
2,521
- --------------------------------------------------------------------------------
- ---
Transfer and shareholder servicing agent fees:
Class A
497,606
Class B
184,551
Class C
41,558
Class N
1,600
Class Y
29,516
- --------------------------------------------------------------------------------
- ---
Shareholder reports
75,031
- --------------------------------------------------------------------------------
- ---
Accounting service fees
15,000
- --------------------------------------------------------------------------------
- ---
Directors' compensation
14,722
- --------------------------------------------------------------------------------
- ---
Custodian fees and expenses
2,227
- --------------------------------------------------------------------------------
- ---
Other
15,310
----------
- ---
Total expenses
3,458,403
Less reduction to custodian expenses
(485)
Less voluntary waiver of transfer and shareholder servicing agent
fees--Classes A, B, C and N
(19,021)
Less voluntary waiver of transfer and shareholder servicing agent
fees--Class Y
(24,241)
----------
- ---
Net expenses
3,414,656

================================================================================
===
Net Investment Income
361,047

================================================================================
===
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments (including premiums on options exercised)
(28,016,793)
Closing and expiration of option contracts written
875,186
----------
- ---
Net realized loss
(27,141,607)
- --------------------------------------------------------------------------------
- ---
Net change in unrealized appreciation on investments
10,745,185
----------
- ---
Net realized and unrealized loss
(16,396,422)

================================================================================
===
Net Decrease in Net Assets Resulting from Operations
$(16,035,375)

=============

See accompanying Notes to Financial Statements.

17 | OPPENHEIMER VALUE FUND

STATEMENTS OF CHANGES IN NET ASSETS

Year Ended October 31, 2002
2001
================================================================================
===
Operations
Net investment income (loss) $ 361,047 $
(91,479)
- --------------------------------------------------------------------------------
- ---
Net realized loss (27,141,607)
(7,841,920)
- --------------------------------------------------------------------------------
- ---
Net change in unrealized appreciation (depreciation) 10,745,185
(7,812,172)
------------------------
- ---
Net decrease in net assets resulting from operations (16,035,375)
(15,745,571)

================================================================================
===
Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Class A (135,466)
(1,847,746)
Class B --
(87,334)
Class C --
(18,346)
Class N (43)
- --
Class Y (3,575)
- --

================================================================================
===
Capital Stock Transactions
Net increase (decrease) in net assets resulting from capital stock transactions:
Class A (14,210,177)
(3,267,773)
Class B (6,150,602)
(2,239,487)
Class C 4,299,663
1,787,816
Class N 1,286,579
13,360
Class Y 563,632
716,127

================================================================================
===
Net Assets
Total decrease (30,385,364)
(20,688,954)
- --------------------------------------------------------------------------------
- ---
Beginning of period 235,012,979
255,701,933
------------------------
- ---
End of period [including undistributed (overdistributed)
net investment income of $177,268 and $(44,695),
respectively] $204,627,615
$235,012,979

===========================

See accompanying Notes to Financial Statements.

18 | OPPENHEIMER VALUE FUND

FINANCIAL highlights

Class A Year Ended October 31, 2002 2001 2000 1999
1998
================================================================================
===========
Per Share Operating Data
Net asset value, beginning of period $ 15.93 $ 17.06 $ 20.69 $ 20.91
$ 23.31
- --------------------------------------------------------------------------------
- -----------
Income (loss) from investment operations:
Net investment income .07 .03 .16 .17
..16
Net realized and unrealized gain (loss) (1.21) (.98) (.65) .64
..32
--------------------------------------
- -----------
Total from investment operations (1.14) (.95) (.49) .81
..48
- --------------------------------------------------------------------------------
- -----------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.01) (.18) (.16) (.17)
(.12)
Distributions from net realized gain -- -- (2.98) (.86)
(2.76)
--------------------------------------
- -----------
Total dividends and/or distributions
to shareholders (.01) (.18) (3.14) (1.03)
(2.88)
- --------------------------------------------------------------------------------
- -----------
Net asset value, end of period $14.78 $15.93 $17.06 $20.69
$20.91

=================================================

================================================================================
===========
Total Return, at Net Asset Value 1 (7.15)% (5.60)% (2.60)% 3.60%
2.24%

================================================================================
===========
Ratios/Supplemental Data
Net assets, end of period (in thousands) $141,563 $166,285 $181,566 $392,483
$456,264
- --------------------------------------------------------------------------------
- -----------
Average net assets (in thousands) $166,319 $181,631 $234,840 $448,884
$442,138
- --------------------------------------------------------------------------------
- -----------
Ratios to average net assets: 2
Net investment income 0.38% 0.19% 0.66% 0.68%
0.84%
Expenses 1.22% 1.26% 1.17% 1.02%
0.98% 3
- --------------------------------------------------------------------------------
- -----------
Portfolio turnover rate 150% 336% 86% 135%
106%

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.

19 | OPPENHEIMER VALUE FUND
FINANCIAL HIGHLIGHTS Continued

Class B Year Ended October 31, 2002 2001 2000 1999
1998
================================================================================
===========
Per Share Operating Data
Net asset value, beginning of period $ 15.89 $ 16.99 $ 20.58 $ 20.83
$ 23.32
- --------------------------------------------------------------------------------
- -----------
Income (loss) from investment operations:
Net investment income (loss) (.10) (.11) (.05) (.03)
..02
Net realized and unrealized gain (loss) (1.15) (.97) (.56) .66
..30
--------------------------------------
- -----------
Total from investment operations (1.25) (1.08) (.61) .63
..32
- --------------------------------------------------------------------------------
- -----------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- (.02) -- (.02)
(.05)
Distributions from net realized gain -- -- (2.98) (.86)
(2.76)
--------------------------------------
- -----------
Total dividends and/or distributions
to shareholders -- (.02) (2.98) (.88)
(2.81)
- --------------------------------------------------------------------------------
- -----------
Net asset value, end of period $14.64 $15.89 $16.99 $20.58
$20.83

=================================================

================================================================================
===========
Total Return, at Net Asset Value 1 (7.87)% (6.34)% (3.28)% 2.79%
1.47%

================================================================================
===========
Ratios/Supplemental Data
Net assets, end of period (in thousands) $47,323 $57,584 $64,287 $102,736
$123,260
- --------------------------------------------------------------------------------
- -----------
Average net assets (in thousands) $56,200 $65,115 $79,239 $123,616
$110,240
- --------------------------------------------------------------------------------
- -----------
Ratios to average net assets: 2
Net investment income (loss) (0.40)% (0.57)% (0.14)%
(0.08)% 0.08%
Expenses 2.01% 2.01% 1.93% 1.77%
1.73% 3
- --------------------------------------------------------------------------------
- -----------
Portfolio turnover rate 150% 336% 86% 135%
106%

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.

20 | OPPENHEIMER VALUE FUND

Class C Year Ended October 31, 2002 2001 2000 1999
1998
================================================================================
===========
Per Share Operating Data
Net asset value, beginning of period $ 15.67 $ 16.77 $ 20.35 $ 20.60
$ 23.07
- --------------------------------------------------------------------------------
- -----------
Income (loss) from investment operations:
Net investment income (loss) (.01) (.08) (.04) (.02)
..01
Net realized and unrealized gain (loss) (1.22) (.99) (.56) .65
..31
--------------------------------------
- -----------
Total from investment operations (1.23) (1.07) (.60) .63
..32
- --------------------------------------------------------------------------------
- -----------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- (.03) -- (.02)
(.03)
Distributions from net realized gain -- -- (2.98) (.86)
(2.76)
--------------------------------------
- -----------
Total dividends and/or distributions
to shareholders -- (.03) (2.98) (.88)
(2.79)
- --------------------------------------------------------------------------------
- -----------
Net asset value, end of period $14.44 $15.67 $16.77 $20.35
$20.60

=================================================

================================================================================
===========
Total Return, at Net Asset Value 1 (7.85)% (6.38)% (3.27)% 2.82%
1.47%

================================================================================
===========
Ratios/Supplemental Data
Net assets, end of period (in thousands) $13,466 $10,494 $ 9,849 $14,582
$18,204
- --------------------------------------------------------------------------------
- -----------
Average net assets (in thousands) $12,977 $11,088 $11,975 $17,746
$15,355
- --------------------------------------------------------------------------------
- -----------
Ratios to average net assets: 2
Net investment income (loss) (0.41)% (0.56)% (0.14)%
(0.07)% 0.06%
Expenses 2.00% 2.01% 1.93% 1.77%
1.73% 3
- --------------------------------------------------------------------------------
- -----------
Portfolio turnover rate 150% 336% 86% 135%
106%

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.

21 | OPPENHEIMER VALUE FUND
FINANCIAL HIGHLIGHTS Continued

Class N Year Ended October 31, 2002 2001 1
================================================================================
Per Share Operating Data
Net asset value, beginning of period $ 15.90 $ 18.08
- --------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .05 (.02)
Net realized and unrealized loss (1.22) (2.16)
--------------------
Total from investment operations (1.17) (2.18)
- --------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.05) --
Distributions from net realized gain -- --
--------------------
Total dividends and/or distributions
to shareholders (.05) --
- --------------------------------------------------------------------------------
Net asset value, end of period $14.68 $15.90
====================

================================================================================
Total Return, at Net Asset Value 2 (7.41)% (12.06)%

================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $1,201 $12
- --------------------------------------------------------------------------------
Average net assets (in thousands) $ 508 $ 5
- --------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income (loss) 0.00% (0.45)%
Expenses 1.49% 1.61%
- --------------------------------------------------------------------------------
Portfolio turnover rate 150% 336%

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

See accompanying Notes to Financial Statements.

22 | OPPENHEIMER VALUE FUND

Class Y Year Ended October 31, 2002 2001 2000 1999
1998
================================================================================
===========
Per Share Operating Data
Net asset value, beginning of period $ 16.20 $ 17.07 $ 20.72 $ 20.97
$ 23.34
- --------------------------------------------------------------------------------
- -----------
Income (loss) from investment operations:
Net investment income (loss) .06 1 .10 1 .17 1 .22
..22
Net realized and unrealized gain (loss) (1.21) 1 (.97) 1 (.63) 1 .64
..34
--------------------------------------
- -----------
Total from investment operations (1.15) (.87) (.46) .86
..56
- --------------------------------------------------------------------------------
- -----------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.09) -- (.21) (.25)
(.17)
Distributions from net realized gain -- -- (2.98) (.86)
(2.76)
--------------------------------------
- -----------
Total dividends and/or distributions
to shareholders (.09) -- (3.19) (1.11)
(2.93)
- --------------------------------------------------------------------------------
- -----------
Net asset value, end of period $14.96 $16.20 $17.07 $20.72
$20.97

=================================================

================================================================================
===========
Total Return, at Net Asset Value 2 (7.18)% (5.10)% (2.42)% 3.81%
2.63%

================================================================================
===========
Ratios/Supplemental Data
Net assets, end of period (in thousands) $1,074 $638 $ 1 $76,571
$136,729
- --------------------------------------------------------------------------------
- -----------
Average net assets (in thousands) $ 955 $155 $48,714 $95,765
$118,010
- --------------------------------------------------------------------------------
- -----------
Ratios to average net assets: 3
Net investment income 0.33% 0.62% 1.06% 0.90%
1.19%
Expenses 3.77% 1.20% 0.97% 0.76%
0.62% 4
Expenses, net of voluntary waiver
of transfer agent fees and/or
reduction to custodian expenses 1.23% 0.83% 0.97% 0.76%
0.62%
- --------------------------------------------------------------------------------
- -----------
Portfolio turnover rate 150% 336% 86% 135%
106%

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

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

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

4. Expense ratio has been calculated without adjustment for the reduction to
custodian expenses.

See accompanying Notes to Financial Statements.

23 | OPPENHEIMER VALUE FUND
NOTES TO FINANCIAL STATEMENTS

- --------------------------------------------------------------------------------
1. Significant Accounting Policies
Oppenheimer Value Fund (the Fund), a series of Oppenheimer Series Fund, Inc.
(the Company), is registered under the Investment Company Act of 1940, as
amended, as an open-end management investment company. The Fund's investment
objective is to seek long-term growth of capital by investing primarily in
common stocks with low price-earnings ratios and better-than-anticipated
earnings. The Fund's investment advisor is OppenheimerFunds, Inc. (the Manager).
The Fund offers Class A, Class B, Class C, Class N and Class Y shares. Class
A shares are sold at their offering price, which is normally net asset value
plus a front-end sales charge. Class B, Class C and Class N shares are sold
without a front-end sales charge but may be subject to a contingent deferred
sales charge (CDSC). Class N shares are sold only through retirement plans.
Retirement plans that offer Class N shares may impose charges on those accounts.
Class Y shares are sold to certain institutional investors without either a
front-end sales charge or a CDSC. 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 Directors, or at their fair value. Fair value is
determined in good faith under consistently applied procedures under the
supervision of the Board of Directors. 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.

24 | OPPENHEIMER VALUE FUND

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.

During the fiscal year ended October 31, 2002, the Fund did not utilize any
capital loss carryforward.

25 | OPPENHEIMER VALUE FUND
NOTES TO FINANCIAL STATEMENTS Continued

- --------------------------------------------------------------------------------
1. Significant Accounting Policies Continued
As of October 31, 2002, the Fund had available for federal income tax purposes
unused capital loss carryforwards as follows:

Expiring
----------------------
2008 $ 9,239,162
2009 5,386,519
2010 27,168,039
-----------
Total $41,793,720
===========

- --------------------------------------------------------------------------------
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 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
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 October 31, 2002
and year ended October 31, 2001 was as follows:

Year Ended Year Ended
October 31, 2002 October 31, 2001
------------------------------------------------------
Distributions paid from:
Ordinary income $139,084 $1,953,426
Long-term capital gain -- --
Return of capital -- --
--------------------------
Total $139,084 $1,953,426
==========================

As of October 31, 2002, the components of distributable earnings on a tax basis
were as follows:

Undistributed net investment income $ 177,268
Accumulated net realized loss (44,667,813)
Net unrealized appreciation 3,453,968
------------
Total $(41,036,577)
============

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

26 | OPPENHEIMER VALUE FUND

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

================================================================================
2. Shares of Capital Stock
The Fund has authorized 600 million shares of $0.001 par value capital stock.
Transactions in shares of capital stock were as follows:

Year Ended October 31, 2002 Year Ended October 31,
2001 1
Shares Amount Shares
Amount
- --------------------------------------------------------------------------------
- ---
Class A
Sold 1,908,060 $ 31,560,410 2,495,305
$43,546,414
Dividends and/or
distributions reinvested 7,395 129,115 110,601
1,770,750
Redeemed (2,777,138) (45,899,702) (2,809,551)
(48,584,937)
----------------------------------------------------
- ---
Net decrease (861,683) $(14,210,177) (203,645)
$(3,267,773)

=======================================================

- --------------------------------------------------------------------------------
- ---
Class B
Sold 849,996 $ 13,980,805 1,321,460
$23,155,557
Dividends and/or
distributions reinvested -- -- 5,009
80,552
Redeemed (1,241,241) (20,131,407) (1,487,290)
(25,475,596)
----------------------------------------------------
- ---
Net decrease (391,245) $ (6,150,602) (160,821)
$(2,239,487)

=======================================================

- --------------------------------------------------------------------------------
- ---
Class C
Sold 508,463 $ 8,150,546 535,330 $
9,404,405
Dividends and/or
distributions reinvested -- -- 1,085
17,218
Redeemed (245,484) (3,850,883) (454,363)
(7,633,807)
----------------------------------------------------
- ---
Net increase 262,979 $ 4,299,663 82,052 $
1,787,816

=======================================================

- --------------------------------------------------------------------------------
- ---
Class N
Sold 91,314 $ 1,447,129 763 $
13,364
Dividends and/or
distributions reinvested 2 40 --
- --
Redeemed (10,222) (160,590) --
(4)
----------------------------------------------------
- ---
Net increase 81,094 $ 1,286,579 763 $
13,360

=======================================================

- --------------------------------------------------------------------------------
- ---
Class Y
Sold 46,172 $ 771,487 42,200 $
765,652
Dividends and/or
distributions reinvested 201 3,570 --
- --
Redeemed (13,958) (211,425) (2,892)
(49,525)
----------------------------------------------------
- ---
Net increase 32,415 $ 563,632 39,308 $
716,127

=======================================================

1. For the year ended October 31, 2001, for Class A, B, C and Y shares and for
the period from March 1, 2001 (inception of offering) to October 31, 2001, for
Class N shares.

27 | OPPENHEIMER VALUE 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 October 31, 2002, were
$334,479,987 and $333,369,595, respectively.

As of October 31, 2002, unrealized appreciation (depreciation) based on cost of
securities for federal income tax purposes of $202,691,968 was composed of:

Gross unrealized appreciation $ 16,413,941
Gross unrealized depreciation (15,834,106)
------------
Net unrealized appreciation $ 579,835
============

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 0.625%
of the first $300 million of average annual net assets of the Fund, 0.50% of the
next $100 million, and 0.45% of average annual net assets in excess of $400
million.

- --------------------------------------------------------------------------------
Accounting Fees. The Manager acts as the accounting agent for the Fund at an
annual fee of $15,000, plus out-of-pocket costs and expenses reasonably
incurred.

- --------------------------------------------------------------------------------
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 0.25% of average net assets of Class Y shares and
for all other classes, up to an annual rate of 0.35% of average net assets of
each class. Beginning November 1, 2002, transfer agent fees for Class Y shares
are limited to 0.35% of the Fund's average daily net assets. 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.

28 | OPPENHEIMER VALUE 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
- --------------------------------------------------------------------------------
- -------------------------
October 31, 2002 $328,773 $140,953 $24,890 $321,368
$55,902 $13,817

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.

- --------------------------------------------------------------------------------
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 October 31, 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 $562,278 $439,448 $2,197,410 4.64%
Class C Plan 129,685 34,048 374,036 2.78
Class N Plan 2,521 2,218 20,528 1.71

29 | OPPENHEIMER VALUE FUND
NOTES TO FINANCIAL STATEMENTS Continued

================================================================================
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.
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 October 31, 2002 was as follows:

Call Options
------------------------
Number of Amount of
Contracts Premiums
- -------------------------------------------------------------------
Options outstanding as of October 31, 2001 2,600 $ 267,991
Options written 9,176 1,216,250
Options closed or expired (11,312) (1,373,347)
Options exercised (450) (110,152)
------------------------
Options outstanding as of October 31, 2002 14 $ 742
========================

================================================================================
6. Bank Borrowings
Effective November 13, 2001 the Fund no longer participated in an agreement with
other Oppenheimer funds in an unsecured line of credit with a bank. The Fund may
borrow from a bank for temporary or emergency purposes, provided asset coverage
for borrowings exceeds 300%.
The Fund had no borrowings outstanding during the year ended October 31,
2002.

A-1
Appendix A

RATINGS DEFINITIONS
-------------------

Moody's Investors Service, Inc.
- ------------------------------------------------------------------------------

Long-Term (Taxable) Bond Ratings

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.

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.

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

Standard & Poor's Rating Services
- ------------------------------------------------------------------------------

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 obligations only in small
degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.

BB, B, CCC, CC, and C

CC: Bonds rated "CC" are currently highly vulnerable to nonpayment.

Short-Term Issue Credit Ratings

C: Obligation 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.

Fitch, Inc.
- ------------------------------------------------------------------------------

International Long-Term Credit Ratings

Speculative Grade:

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.
(i)

B-1
Appendix B
Industry Classification
-----------------------

C-1
Appendix C

OppenheimerFunds Special Sales Charge Arrangements and Waivers
- --------------------------------------------------------------

In certain cases, the initial sales charge that applies to purchases of Class
A shares4 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.5 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.

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 plans6
4) Group Retirement Plans7
5) 403(b)(7) custodial plan accounts
6) Individual Retirement Accounts ("IRAs"), including traditional
IRAs, Roth IRAs, SEP-IRAs, SARSEPs or SIMPLE plans

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."8 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.

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

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.9
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.10
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.
|_| Distributions11 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.12
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.13
9) On account of the participant's separation from service.14
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.

These arrangements also apply to shareholders of the following funds
when they merged (were reorganized) into various Oppenheimer funds 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.

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

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

|X|

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.

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

Oppenheimer Value 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
Citibank, N.A.
111 Wall Street
New York, New York 10005

Independent Auditors
KPMG LLP
707 Seventeenth Street
Denver, Colorado 80202

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

1234

PX375.002.1202 (Revised 01.03)

- --------
1 Currently, under the 1940 Act, a mutual fund may borrow only from banks and
the maximum amount it may borrow is up to one-third of its total assets
(including the amount borrowed). In addition, the Fund may borrow from
affiliated funds as described above. A fund may borrow up to 5% of its total
assets for temporary purposes from any person. Under the 1940 Act, there is a
rebuttable presumption that a loan is temporary if it is repaid within 60
days and not extended or renewed.
2 Mr. Motley was elected as Trustee to the Board I Funds effective October
10, 2002.
3. In accordance with Rule 12b-1 of the Investment Company Act, the term
"Independent Directors" in this Statement of Additional Information refers to
those Directors who are not "interested persons" of the Fund (or its parent
corporation) and who do not have any direct or indirect financial interest in
the operation of the distribution plan or any agreement under the plan.
4 Certain waivers also apply to Class M shares of Oppenheimer Convertible
Securities Fund.
5 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.
6 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.
7 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.
8 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.
9 This provision does not apply to IRAs.
10 This provision does not apply to 403(b)(7) custodial plans if the
participant is less than age 55, nor to IRAs.
11 The distribution must be requested prior to Plan termination or the
elimination of the Oppenheimer funds as an investment option under the Plan.
12 This provision does not apply to IRAs.
13 This provision does not apply to loans from 403(b)(7) custodial plans and
loans from the OppenheimerFunds-sponsored Single K retirement plan.
14 This provision does not apply to 403(b)(7) custodial plans if the
participant is less than age 55, nor to IRAs.

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