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

6803 South Tucson Way, Centennial, Colorado 80112-3924
1.800.CALL OPP (225.5677)

Statement of Additional Information dated December 23, 2003,
revised January 12, 2004

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, 2003, revised January 12, 2004. 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....................................... 35
How the Fund is Managed ................................................ 36
    Organization and History............................................ 36
    Board of Directors and Oversight Committees......................... 38
    Directors and Officers of the Fund.................................. 38
    The Manager......................................................... 46
Brokerage Policies of the Fund.......................................... 49
Distribution and Service Plans.......................................... 52
Performance of the Fund................................................. 56

About Your Account
How to Buy Shares....................................................... 61
How to Sell Shares...................................................... 71
How to Exchange Shares.................................................. 76
Dividends, Capital Gains and Taxes...................................... 80
Additional Information About the Fund................................... 84

Financial Information About the Fund
Independent Auditors' Report............................................ 86
Financial Statements.................................................... 87

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

     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 below. To determine whether convertible  securities should be regarded
as "equity equivalents," the Manager may examine the following factors: 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,  (1) 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 (2) 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. In general, domestic and foreign debt
securities are subject to credit risk and interest rate risk, discussed below.

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. Credit risk relates to the ability of the issuer of a debt
security to meet interest and principal payment obligations as they become due.
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.

      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.

|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. The Fund's portfolio turnover rate increased from the
fiscal year ended 2002 because of the increased use of forward roll transactions
with respect to mortgage-related securities. For more information on forward
rolls, including risks, please see page 7 of this Statement of Additional
Information.

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, currency devaluation 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 purpose 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 "SEC"), 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 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. The interfund lending arrangement is
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
have been 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 have been 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).

      |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 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) an
individual stock ("single stock futures") (3) debt securities (these are
referred to as "interest rate futures"), (4) other broadly- based securities
indices (these are referred to as "financial futures"), (5) foreign currencies
(these are referred to as "forward contracts"), (6) securities or (7)
commodities (these are referred to as "commodity futures").

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

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

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

     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

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

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

      The Fund could write a call on a foreign currency to provide a hedge
against a decline in the U.S. dollar value of a security which the Fund owns or
has the right to acquire and which is denominated in the currency underlying the
option. That decline might be one that occurs due to an expected adverse change
in the exchange rate. This is known as a "cross-hedging" strategy. In those
circumstances, the Fund covers the option by identifying on its books 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.

o Regulatory Aspects of Hedging Instruments. The Commodities Futures Trading
Commission (the "CFTC") recently eliminated limitations on futures trading by
certain regulated entities including registered investment companies and
consequently registered investment companies may engage in unlimited futures
transactions and options thereon provided that the Fund claims an exclusion from
regulation as a commodity pool operator. The Fund has claimed such an exclusion
from registration as a commodity pool operator under the Commodity Exchange Act
("CEA"). The Fund may use futures and options for hedging and non-hedging
purposes to the extent consistent with its investment objective, internal risk
management guidelines adopted by the Fund's investment advisor (as they may be
amended from time to time), and as otherwise set forth in the Fund's prospectus
or this statement of additional information.

      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 SEC regarding applicable
provisions of the Investment Company Act, when the Fund purchases a future, it
must segregate cash or readily marketable short-term debt instruments in an
amount equal to the purchase price of 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.

      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.

      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.

|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 or when required to do so by the Investment Company Act or
other applicable law. 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 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 Company 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.

      The Board of Directors has an Audit Committee, a Regulatory & Oversight
Committee, a Governance Committee, and a Proxy Committee. The Audit Committee is
comprised solely of Independent Directors. The members of the Audit Committee
are Edward Regan (Chairman), Kenneth Randall and Russell Reynolds. The Audit
Committee held 6 meetings during the Fund's fiscal year ended October 31, 2003.
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 Regulatory  &  Oversight  Committee are Robert Galli
(Chairman),  Joel Motley and Phillip Griffiths.  The Regulatory &  Oversight
Committee held 6 meetings  during the Fund's fiscal year ended October 31, 2003.
The Regulatory &  Oversight  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 Governance Committee are Joel Motley (Acting Chairman),
Phillip Griffiths and Kenneth Randall. The Governance Committee held 3 meetings
during the Fund's fiscal year ended October 31, 2003. The Governance Committee
reviews the Fund's governance guidelines, the adequacy of the Fund's Codes of
Ethics, and develops qualification criteria for Board members consistent with
the Fund's governance guidelines, among other duties set forth in the
Committee's charter.

      The members of the Proxy Committee are Edward Regan (Chairman), Russell
Reynolds and John Murphy. The Proxy Committee held 2 meetings during the Fund's
fiscal year ended October 31, 2003. 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"  under the Investment  Company Act. 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 Municipals            Oppenheimer Global Opportunities Fund
Oppenheimer AMT-Free New York Municipals   Oppenheimer Gold & Special Minerals Fund
Oppenheimer California Municipal Fund      Oppenheimer Growth Fund
Oppenheimer Capital Appreciation Fund      Oppenheimer International Growth Fund
                                           Oppenheimer  International  Small Company
Oppenheimer Capital Preservation Fund      Fund
Oppenheimer Developing Markets Fund        Oppenheimer Money Market Fund, Inc.
Oppenheimer Discovery Fund                 Oppenheimer Multiple Strategies Fund
Oppenheimer Emerging Growth Fund           Oppenheimer Multi-Sector Income Trust
Oppenheimer Emerging Technologies Fund     Oppenheimer Multi-State Municipal Trust
Oppenheimer Enterprise Fund                Oppenheimer Series Fund, Inc.
Oppenheimer Global 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, Molleur, Vottiero, Wixted, Zack, Leavy, Ferreira and
Manioudakis, 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 24, 2003 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 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 $247,500 from January 1, 2001 through December 31,
2002. Mr. Reynolds estimates that The Directorship Search Group will not provide
consulting services to Massachusetts Mutual Life Insurance Company during the
calendar year 2003.

The Independent Directors have unanimously (except for Mr. Reynolds, who
abstained) determined that the consulting arrangements between The Directorship
Search Group and Massachusetts Mutual Life Insurance Company were not material
business or professional relationships that would compromise Mr. Reynolds'
status as an Independent Director. Nonetheless, to assure certainty as to
determinations of the Board and the Independent Directors as to matters upon
which the Investment Company Act or the rules thereunder require approval by a
majority of Independent Directors, Mr. Reynolds will not be counted for purposes
of determining whether a quorum of Independent Directors was present or whether
a majority of Independent Directors 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
                                                                         Shares
                                                                         Beneficially
                                                                         Owned in
                                                              Range of   Any of the
                   Years:                                     Shares     Oppenheimer
Held with Fund,    Other  Trusteeships/Directorships  Held by BeneficiallFunds
Length of          Director;  Number  of  Portfolios  in Fund Owned in   Overseen
Service, Age       Complex Currently Overseen by Director     the Fund   by Director
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
                                                                As of December 31,
                                                                            2002
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Clayton K.         Of Counsel  (since 1993),  Hogan & Hartson    $0  $50,001 -
Yeutter, Chairman  (a   law   firm).   Other   directorships:           $100,000
of the Board of    Weyerhaeuser   Corp.   (since   1999)  and
Directors,         Danielson   Holding  Corp.  (since  2002);
Director since     formerly a director of  Caterpillar,  Inc.
1996               (1993-December    2002).    Oversees    25
Age: 72            portfolios    in   the    OppenheimerFunds
                   complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Robert G. Galli,   A trustee or director of other
Director since     Oppenheimer funds. Formerly Trustee (May
1996               2000-2002) of Research Foundation of AIMR
Age: 70            (investment research, non-profit) and                Over
                   Vice Chairman (October 1995-December          $0     $100,000
                   1997) of the Manager. Oversees 35 portfolios in the
                   OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Phillip A.         A director  (since 1991) of the  Institute
Griffiths,         for  Advanced  Study,  Princeton,  N.J., a
Director since     director  (since 2001) of GSI Lumonics,  a
1999               trustee (since 1983) of Woodward  Academy,
Age: 65            a  Senior  Advisor  (since  2001)  of  The
                   Andrew W. Mellon Foundation.  A member of:
                   the  National  Academy of Sciences  (since
                   1979),   American   Academy  of  Arts  and    $0     Over
                   Sciences     (since    1995),     American           $100,000
                   Philosophical  Society  (since  1996)  and
                   Council   on  Foreign   Relations   (since
                   2002).  Formerly  a  director  of  Bankers
                   Trust  New York  Corporation  (1994-1999).
                   Oversees    25     portfolios    in    the
                   OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Joel W. Motley,    Director   (since  2002)  Columbia  Equity
Director since     Financial Corp.  (privately-held financial
2002               adviser);  Managing  Director (since 2002)
Age: 51            Carmona   Motley,   Inc.   (privately-held
                   financial  adviser);  Formerly he held the
                   following  positions:   Managing  Director
                   (January   1998-December   2001),  Carmona    $0          $0
                   Motley   Hoffman   Inc.    (privately-held
                   financial   adviser);   Managing  Director
                   (January   1992-December   1997),  Carmona
                   Motley  &  Co.  (privately-held  financial
                   adviser).  Oversees 25  portfolios  in the
                   OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Kenneth A.         A director  of  Dominion  Resources,  Inc.
Randall, Director  (electric    utility   holding   company);
since 1996         formerly a director of Prime Retail,  Inc.
Age: 76            (real   estate   investment   trust)   and
                   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  25  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: 73            formerly  Trustee,   Financial  Accounting
                   Foundation (FASB and GASB),  Senior Fellow
                   of Jerome Levy Economics Institute, Bard $50,001 - College,
                   Chairman of Municipal Assistance $1-$10,000 $100,000
                   Corporation for the City of New York, New York State
                   Comptroller and Trustee of New York State and Local
                   Retirement Fund. Oversees 25 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: 72            (non-profit   educational   organization),    $0     $10,001 -
                   and  a   trustee   (since   1996)  of  the           $50,000
                   Greenwich Historical Society.  Oversees 25
                   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 25 portfolios in the                 $0       Over
Director since     OppenheimerFunds complex.                            100,000
1996
Age: 78
-------------------------------------------------------------------------------------

      The address of Mr. Murphy in the chart below is Two World Financial Center, 225
Liberty Street, New York, New York  10281-1008.  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      Other   Trusteeships/Directorships   Held  by Shares    Owned in Any
Fund, Length   Director;                                     Beneficialof the
of Service,    Number   of   Portfolios   in  Fund   Complex Owned in  Oppenheimer
Age            Currently Overseen by Director                the Fund  Funds
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
                                                        As of December 31, 2002
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
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 other
Trustee since  Oppenheimer  funds;  President and a director
2001           (since July 2001) of Oppenheimer  Acquisition
Age: 54        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., the Fund's distributor;
               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 following 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 (from
               September 2000 to June 2001) of the Manager; President and
               trustee (from November 1999 to November 2001) of MML Series
               Investment Fund and MassMutual Institutional Funds, open-end
               investment companies; a director (from September 1999 to August
               2000) of C.M. Life Insurance Company; President, Chief Executive
               Officer and director (from September 1999 to August 2000) of MML
               Bay State Life Insurance Company; a director (from June 1989 to
               June 1998) of Emerald Isle Bancorp and Hibernia Savings Bank, a
               wholly-owned subsidiary of Emerald Isle Bancorp. Oversees 72
               portfolios as Trustee/Director and 10 portfolios as Officer in
               the OppenheimerFunds complex.
-------------------------------------------------------------------------------------

     The  address of the  Officers  in the chart  below is as  follows:  Messrs.
Leavy, Ferriera, Manioudakis, Molleur and Zack and Ms. Feld, Two World Financial
Center, 225 Liberty Street, New York, New York 10281-1008,  for Messrs. 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
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Christopher Leavy, Vice Senior Vice President (since September 2000) of the
President and Portfolio Manager; an officer of 7 portfolios in the Manager since
November 2000 OppenheimerFunds complex; prior to joining the Age: 31 Manager in
September 2000, he was a portfolio manager
                              of Morgan Stanley Dean Witter Investment Management
                              (1997 - September 2000).
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Angelo Manioudakis, Senior Vice President of the Manager (since April Vice
President and 2002); an officer of 12 portfolios in the Portfolio Manager
OppenheimerFunds complex; formerly Executive Director since April 2002 and
portfolio manager for Miller, Anderson & Age: 36 Sherrerd, a division of Morgan
Stanley Investment
                      Management (August 1993-April 2002).
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Emmanuel    Ferreira,    Vice Vice  President of the Manager  (since  January 2003).
President    and    Portfolio An officer  of 3  portfolios  in the  OppenheimerFunds
Manager since 2003            complex.   Formerly,   Portfolio  Manager  at  Lashire
Age:                          Investments  (July  1999-December  2002), and a Senior
                              Analyst  at  Mark  Asset  Management  (July  1997-June
                              1999).
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
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: 44                       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 82 portfolios in the OppenheimerFunds
Age: 40                       complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Philip Vottiero,              Vice  President/Fund  Accounting of the Manager (since
Assistant Treasurer since     March   2002);   formerly   Vice   President/Corporate
2002                          Accounting  of  the  Manager  (July  1999-March  2002)
Age: 40                       prior to  which  he was  Chief  Financial  Officer  at
                              Sovlink   Corporation   (April   1996-June  1999).  An
                              officer  of  82  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: 55                       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
                              OppenheimerFunds plc (October 1997-November 2001).
                              An officer of 82 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: 45                       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  82   portfolios   in   the
                              OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Kathleen T. Ives,             Vice  President  (since June 1998) and Senior  Counsel
Assistant Secretary since     (since  October 2003) of the Manager;  Vice  President
2001                          (since 1999) of  OppenheimerFunds  Distributor,  Inc.;
Age: 38                       Vice  President and Assistant  Secretary  (since 1999)
                              of Shareholder  Services,  Inc.;  Assistant  Secretary
                              (since  December  2001)  of  OppenheimerFunds   Legacy
                              Program  and  Shareholder  Financial  Services,  Inc.;
                              formerly an  Assistant  Counsel  (August  1994-October
                              2003) and  Assistant  Vice  President  of the  Manager
                              (August  1997-June  1998). An officer of 82 portfolios
                              in the OppenheimerFunds 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: 46                       1999).   An   officer   of  73   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, 2003. 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
2002.

----------------------------------------------------------------------------------
  Director Name and      Aggregate    Retirement    Estimated         Total
                                                                   Compensation
                                                      Annual         From All
                                       Benefits     Retirement     Oppenheimer
                                      Accrued as  Benefits Paid  Funds For Which
      Other Fund                       Part of     ato be Paid      Individual
     Position(s)       Compensation      Fund          Upon         Serves As
   (as applicable)      from Fund1    Expenses2    Retirement3   Trustee/Director
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Clayton K. Yeutter         $5234          $0         $36,372         $71,792
Chairman of the Board
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Robert G. Galli            $444           $0        $55,678 5       $198,386 6
Regulatory &
Oversight Committee
Chairman
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Phillip Griffiths          $2797          $0         $10,256         $60,861
Regulatory &
Oversight Committee
Member and Governance
Committee Member
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Leon Levy 8                $268           $0         $133,352        $173,700
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Benjamin Lipstein 8        $347           $0         $115,270        $150,152
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Joel W. Motley            $257 9          $0            $0           $14,453
Governance Committee
Acting Chairman and
Regulatory &
Oversight Committee
Member
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Elizabeth B.  Moynihan     $353           $0         $57,086         $105,760
8
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Kenneth A. Randall         $364           $0         $74,471         $97,012
Audit Committee
Member and Governance
Committee Member
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Edward V. Regan            $379           $0         $46,313         $95,960
Audit Committee
Chairman and Proxy
Committee Chairman
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Russell S. Reynolds,       $293           $0         $48,991         $71,792
Jr.
Proxy Committee
Member and Audit
Committee Member
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Donald Spiro               $247           $0        $9,396 10        $64,080
Vice Chairman of the
Board
----------------------------------------------------------------------------------
1 Aggregate Compensation From Fund includes fees and deferred compensation, if
any, for a Director.
2 No retirement benefits were accrued by the Fund during its fiscal year ended
October 31, 2003 due to a reallocation on retirement plan benefits previously
accrued for a deceased Director.
3  Estimated Annual Retirement Benefits to be Paid Upon Retirement is based on a
   straight life payment plan election with the assumption that a Director will
   retire at the age of 75 and is eligible (after 7 years of service) to receive
   retirement plan benefits as described below under "Retirement Plan for
   Director."
4 Includes $131 deferred by Mr. Yeutter under the Deferred Compensation Plan
described below.
5 Includes $24,989 estimated to be paid to Mr. Galli for serving as a trustee or
director of 10 other Oppenheimer funds that are not Board I Funds.
6  Includes $92,626 paid to Mr. Galli for serving as a trustee or director of 10
   other Oppenheimer funds that are not Board I Funds.
7  Includes $279 deferred by Mr. Griffiths under the Deferred Compensation Plan
described below.
8  Messrs. Levy and Lipstein and Ms. Moynihan retired as Trustees from the
Board I Funds effective January 1, 2003, March 31, 2003 and July 31, 2003,
respectively.
9  Includes $51 deferred by Mr. Motley under Deferred Compensation Plan
described below.
10 The amount for Mr. Spiro is based on the assumption that he will retire at
age 82 when he becomes eligible to receive retirement plan benefits (after 7
years of service)

|X| Retirement Plan for Directors. The Fund and its parent corporation have
adopted a retirement plan that provides for payments to retired Independent
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 seven years in order to be eligible for retirement plan benefits and must
serve for at least 15 years to be eligible for the maximum benefit. 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 SEC, 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 24, 2003, 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:

         Lyn H. Hammond Tr, Pelham Family Practice 401K, 25 Creek View Ct,
   Greenville, SC 29615-4800 which owned 2,635.069 Class N shares (8.53% of the
   Class N shares then outstanding).

         RPSS Tr, Country Hills Health Care Inc, 401K Plan, Attn: Sandi Steers,
   1580 Broadway, El Cajon, CA 92021-5124, which owned 2,885.213 Class N shares
   (9.34% of the Class N shares then outstanding).

         RPSS Tr Rollover IRA, FBO David Runyon, 4 Apple Blossom Ln, Alexandria,
   KY 41001-1202, which owned 2,181.006 Class N shares (7.06% of the Class N
   shares then outstanding).

      Amdon Fein & Robert M Hecht Tr, Ramapo Valley OB GYN PC 401K, Fbo Joan
   Berkley, 4 Essex Ct, Washingtonville, NY 10992-1365, which owned 1,871.230
   Class N shares (6.06% 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 1,585.535 Class N shares (5.13% of
   the Class N shares then outstanding).

      RPSS Tr, Industry Bancshares Inc, 401(K) Plan, Attn: Bonnie Schulz, P.O.
   Box 66, Industry, TX 78944-0066, which owned 5,750.349 Class N shares (18.63%
   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, a
global, diversified insurance and financial services organization.

|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 SEC 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| Portfolio Proxy Voting. The Fund has adopted Portfolio Proxy Voting Policies
and Procedures under which the Fund votes proxies relating to securities
("portfolio proxies") held by the Fund. The Fund's primary consideration in
voting portfolio proxies is the financial interests of the Fund and its
shareholders. The Fund has retained an unaffiliated third-party as its agent to
vote portfolio proxies in accordance with the Fund's Portfolio Proxy Voting
Guidelines and to maintain records of such portfolio proxy voting. The Proxy
Voting Guidelines include provisions to address conflicts of interest that may
arise between the Fund and OFI where an OFI directly-controlled affiliate
manages or administers the assets of a pension plan of a company soliciting the
proxy. The Fund's Portfolio Proxy Voting Guidelines on routine and non-routine
proxy proposals are summarized below.

o           The Fund votes with the recommendation of the issuer's management on
            routine matters, including election of directors nominated by
            management and ratification of auditors, unless circumstances
            indicate otherwise.
o           In general, the Fund opposes anti-takeover proposals and supports
            elimination of anti-takeover proposals, absent unusual
            circumstances.
o           The Fund supports shareholder proposals to reduce a super-majority
            vote requirement, and opposes management proposals to add a
            super-majority vote requirement.
o           The Fund opposes proposals to classify the board of directors.
o           The Fund supports proposals to eliminate cumulative voting.
o           The Fund opposes re-pricing of stock options.
o           The Fund generally considers executive compensation questions such
            as stock option plans and bonus plans to be ordinary business
            activity. The Fund analyzes stock option plans, paying particular
            attention to their dilutive effect. While the Fund generally supports
            management proposals, the Fund opposes plans it considers to be
            excessive.

      The Fund will be required to file new Form N-PX, with its complete proxy
voting record for the 12 months ended June 30th, no later than August 31st of
each year. The first such filing is due no later than August 31, 2004, for the
twelve months ended June 30, 2004. Once filed, the Fund's Form N-PX filing will
be available (i) without charge, upon request, by calling the Fund toll-free at
1.800.225.5677 and (ii) on the SEC's website at WWW.SEC.GOV.

The Investment Advisory Agreement. The Manager provides investment advisory and
management services to the Fund under an investment advisory agreement between
the Manager and the Fund. The Manager selects securities for the Fund's
portfolio and handles its day-to-day business. The portfolio managers of the
Fund are employed by the Manager and are the persons who are principally
responsible for the day-to-day management of the Fund's portfolio. Other members
of the Manager's Equity Portfolio Department provide the portfolio managers with
counsel and support in managing the Fund's portfolio.

      The 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 Trustees, legal and audit expenses, custodian and transfer agent
expenses, share issuance costs, certain printing and registration costs and
non-recurring expenses, including litigation costs. The management fees paid by
the Fund to the Manager are calculated at the rates described in the Prospectus,
which are applied to the assets of the Fund as a whole. The fees are allocated
to each class of shares based upon the relative proportion of the Fund's net
assets represented by that class. The management fees paid by the Fund to the
Manager during its last three fiscal years were:

----------------------------------------------------
Fiscal Year            Management Fee Paid to
Ended 10/31            OppenheimerFunds, Inc.
----------------------------------------------------
----------------------------------------------------
      2001                    $927,181
----------------------------------------------------
----------------------------------------------------
      2002                    $757,734
----------------------------------------------------
----------------------------------------------------
      2003                    $698,136
----------------------------------------------------

      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 the Fund sustains for any
investment, adoption of any investment policy, or the purchase, sale or
retention of any security.

      The agreement permits the Manager to act as investment advisor for any
other person, firm or corporation and to use the name "Oppenheimer" in
connection with other investment companies for which it may act as investment
advisor or general distributor. If the Manager shall no longer act as investment
advisor to the Fund, the Manager may withdraw the right of the Fund to use the
name "Oppenheimer" as part of its name.

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

      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. When possible, the Manager tries to combine concurrent
orders to purchase or sell the same security by more than one of the accounts
managed by the Manager or its affiliates. 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.

      The investment advisory agreement permits the Manager to allocate
brokerage for research services. The research services provided by a particular
broker may be useful only to one or more of the advisory accounts of the Manager
and its affiliates. The investment research received for the commissions of
those other accounts may be useful both to the Fund and one or more of the
Manager's other accounts. Investment research may be supplied to the Manager by
a third party at the instance of a broker through which trades are placed.

      Investment research services include information and analysis on
particular companies and industries as well as market or economic trends and
portfolio strategy, market quotations for portfolio evaluations, information
systems, computer hardware and similar products and services. If a research
service also assists the Manager in a non-research capacity (such as bookkeeping
or other administrative functions), then only the percentage or component that
provides assistance to the Manager in the investment decision-making process may
be paid in commission dollars.

      The Board of 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
----------------------------------------------------------------------------
----------------------------------------------------------------------------
           2001                                $390,844
----------------------------------------------------------------------------
----------------------------------------------------------------------------
           2002                                $275,091
----------------------------------------------------------------------------
----------------------------------------------------------------------------
           2003                               $262,3252
----------------------------------------------------------------------------
1. Amounts do not include spreads or commissions on principal transactions on a
   net trade basis.
2. In the fiscal year ended 10/31/03, the amount of transactions directed to
   brokers for research services was $40,087,809 and the amount of the
   commissions paid to broker-dealers for those services was $67,721.

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 three most recent fiscal years are shown in the
tables below.

----------------------------------------------
Fiscal Year  Aggregate       Class A
             Front-End       Front-End Sales
             Sales Charges   Charges
Ended 10/31: on Class A      Retained by
             Shares          Distributor1
----------------------------------------------
----------------------------------------------
    2001        $109,771         $72,391
----------------------------------------------
----------------------------------------------
    2002        $100,924         $63,284
----------------------------------------------
----------------------------------------------
    2003        $110,906          54,405
----------------------------------------------
1.  Includes amounts retained by a broker-dealer that is an affiliate or a
    parent of the Distributor.

--------------------------------------------------------------------------------
Fiscal Year   Concessions on   Concessions on  Concessions on   Concessions on
              Class A Shares   Class B Shares  Class C Shares   Class N Shares
              Advanced by      Advanced by     Advanced by      Advanced by
Ended 10/31:  Distributor1     Distributor1    Distributor1     Distributor1
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
    2001          $10,575          $88,402          $5,518            $72
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
    2002           $7,439          $65,199          $8,315          $1,759
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
    2003           $7,898          $75,513         $10,372          $2,258
--------------------------------------------------------------------------------
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 Year   Class A          Class B         Class C          Class N
              Contingent       Contingent      Contingent       Contingent
              Deferred Sales   Deferred Sales  Deferred Sales   Deferred Sales
              Charges          Charges         Charges          Charges
              Retained by      Retained by     Retained by      Retained by
Ended 10/31:  Distributor      Distributor     Distributor      Distributor
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
    2001            $925           $53,529           $975             $0
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
    2002            $300           $40,714          $1,530           $775
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
    2003            $791           $70,283           $742            $567
--------------------------------------------------------------------------------

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 Directors1, cast in person at
a meeting called for the purpose of voting on that plan.

      Under the plans, the Manager and the Distributor may make payments to
affiliates and in their sole discretion, from time to time, may use their own
resources (at no direct cost to the Fund) to make payments to brokers, dealers
or other financial institutions for distribution and administrative services
they perform. The Manager may use its profits from the advisory fee it receives
from the Fund. In their sole discretion, the Distributor and the Manager may
increase or decrease the amount of payments they make from their own resources
to plan recipients.

      Unless a plan is terminated as described below, the plan continues in
effect from year to year but only if the Fund's Board of 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 72 months after purchase, 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 who are not "interested persons" of 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 plans 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, regarding
grandfathered retirement accounts. 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. 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, 2003 payments under the Class A plan
totaled $234,550, of which $791 was retained by the Distributor under the
arrangement described above, regarding grandfathered retirement accounts, and
included $182,977 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 Distribution and Service Plan Fees. Under each
plan, distribution and service 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, after their purchase, 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 increase
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 or Class N service fee and the
asset-based sales charge to the dealer quarterly in lieu of paying the sales
concession and service fee in advance at the time of purchase.

      The asset-based sales charge on Class B, Class C and Class N shares allows
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 charge 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.

      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 10/31/03
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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      $127,687        $92,3751         $472,270          3.20%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class C Plan      $38,009          $9,1672         $107,287          2.30%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class N Plan       $1,706          $1,5103          $3,586           0.91%
--------------------------------------------------------------------------------
1. Includes $7,509 paid to an affiliate of the Distributor's parent company. 2.
Includes $4,523 paid to an affiliate of the Distributor's parent company. 3.
Includes $72 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 1.800.225.5677
or by visiting the OppenheimerFunds Internet website at
www.oppenheimerfunds.com.

      The Fund's illustrations of its performance data in advertisements must
comply with rules of the SEC. 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 may 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, ten years). An average annual
total return shows the average rate of return for each year in a period that
would produce the cumulative total return over the entire period. However,
average annual total returns do not show actual year-by-year performance. The
Fund uses standardized calculations for its total returns as prescribed by the
SEC. The methodology is discussed below.

      In calculating total returns for Class A shares, the current maximum sales
charge of 5.75% (as a percentage of the offering price) is deducted from the
initial investment ("P" in the formula below) (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
1.0% contingent deferred sales charge is deducted for returns for the one-year
period, and total returns for the periods prior to 03/01/01 (the inception date
for Class N shares) are 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:

     1/n
ERV       - 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:


ATVD   l/n
---        - 1 = Average Annual Total Return (After Taxes on 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 or Class N shares. Each
is based on the difference in net asset value per share at the beginning and the
end of the period for a hypothetical investment in that class of shares (without
considering front-end or contingent deferred sales charges) and takes into
consideration the reinvestment of dividends and capital gains distributions.

--------------------------------------------------------------------------------
            The Fund's Total Returns for the Periods Ended 10/31/03
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
          Cumulative Total              Average Annual Total Returns



Class of  Returns (10 years
Shares    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 A    64.09%1   74.09%1   7.60%   14.17%    0.23%    1.42%   5.08%   5.70%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class B    44.09%2   44.09%2   8.21%   13.21%    0.30%    0.64%  4.62%2  4.62%2
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class C    33.10%3   33.10%3  12.18%   13.18%    0.63%    0.63%  3.89%3  3.89%3
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class N   -1.65%4   -1.65%4  12.81%   13.81%  -0.62%4  -0.62%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 10/31/03
--------------------------------------------------------------------------
--------------------------------------------------------------------------
                                 1-Year         5-Year        10-Year
--------------------------------------------------------------------------
--------------------------------------------------------------------------
After Taxes on Distributions     7.23%          -1.22%         2.61%
--------------------------------------------------------------------------
--------------------------------------------------------------------------
After Taxes on                   5.00%          -0.56%         2.92%
Distributions and
Redemption of Fund Shares
--------------------------------------------------------------------------

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.

      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, information about the
performance of certain securities or commodities markets or segments of those
markets,
o information about the performance of the economies of particular
countries or regions,
o the earnings of companies included in segments of particular industries,
sectors, securities markets, countries or regions,
o the availability of different types of securities or offerings of securities,
o information relating to the gross national or gross domestic product of the
United States or other countries or regions,
o comparisons of various market sectors or indices to demonstrate performance,
risk, or other characteristics of the Fund.

ABOUT YOUR ACCOUNT

How to Buy Shares

Additional information is presented below about the methods that can be used to
buy shares of the Fund. Appendix C contains more information about the special
sales charge arrangements offered by the Fund, and the circumstances in which
sales charges may be reduced or waived for certain classes of investors.

AccountLink. When shares are purchased through AccountLink, each purchase must
be at least $50 and shareholders must invest at least $500 before an Asset
Builder Plan (described below) can be established on a new account. Accounts
established prior to November 1, 2002 will remain at $25 for additional
purchases. Shares will be purchased on the regular business day the Distributor
is instructed to initiate the Automated Clearing House ("ACH") transfer to buy
the shares. Dividends will begin to accrue on shares purchased with the proceeds
of ACH transfers on the business day the Fund receives Federal Funds for the
purchase through the ACH system before the close of The New York Stock Exchange
("the Exchange"). The Exchange normally closes at 4:00 P.M., but may close
earlier on certain days. If Federal Funds are received on a business day after
the close of the Exchange, the shares will be purchased and dividends will begin
to accrue on the next regular business day. The proceeds of ACH transfers are
normally received by the Fund three days after the transfers are initiated. If
the proceeds of the ACH transfer are not received on a timely basis, the
Distributor reserves the right to cancel the purchase order. The Distributor and
the Fund are not responsible for any delays in purchasing shares resulting from
delays in ACH transmissions.

Reduced Sales Charges. As discussed in the Prospectus, a reduced sales charge
rate may be obtained for Class A shares under Right of Accumulation and Letters
of Intent because of the economies of sales efforts and reduction in expenses
realized by the Distributor, dealers and brokers making such sales. No sales
charge is imposed in certain other circumstances described in Appendix C to this
Statement of Additional Information because the Distributor or dealer or broker
incurs little or no selling expenses.

      |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,
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 Municipals Oppenheimer Limited Term Municipal Fund
Oppenheimer AMT-Free New York Municipals Oppenheimer Main Street Fund
Oppenheimer Bond Fund Oppenheimer Main Street Opportunity Fund Oppenheimer
California Municipal Fund Oppenheimer Main Street Small Cap Fund Oppenheimer
Capital Appreciation Fund Oppenheimer Multiple Strategies Fund Oppenheimer
Capital Preservation Fund Oppenheimer New Jersey Municipal Fund Oppenheimer
Capital Income Fund Oppenheimer Pennsylvania Municipal Fund
                                          Oppenheimer   Principal  Protected  Main
Oppenheimer Champion Income Fund          Street Fund
                                          Oppenheimer   Principal  Protected  Main
Oppenheimer Convertible Securities Fund   Street Fund II
Oppenheimer Developing Markets Fund       Oppenheimer Quest Balanced Value Fund
                                          Oppenheimer  Quest  Capital  Value Fund,
Oppenheimer Disciplined Allocation Fund   Inc.
                                          Oppenheimer  Quest  International  Value
Oppenheimer Discovery Fund                Fund, Inc.
Oppenheimer Emerging Growth Fund          Oppenheimer Quest Opportunity Value Fund
Oppenheimer Emerging Technologies Fund    Oppenheimer Quest Value Fund, Inc.
Oppenheimer Enterprise Fund               Oppenheimer Real Asset Fund
Oppenheimer Equity Fund, Inc.             Oppenheimer Real Estate Fund
                                          Oppenheimer      Rochester      National
Oppenheimer Global Fund                   Municipals
Oppenheimer Global Opportunities Fund Oppenheimer Senior Floating Rate Fund
Oppenheimer Gold & Special Minerals Fund Oppenheimer Small Cap Value Fund
Oppenheimer Growth Fund Oppenheimer Strategic Income Fund Oppenheimer High Yield
Fund Oppenheimer Total Return Bond Fund Oppenheimer International Bond Fund
Oppenheimer U.S. Government Trust Oppenheimer International Growth Fund
Oppenheimer Value Fund Oppenheimer International Small Company Fund Limited-Term
New York Municipal Fund Oppenheimer Limited-Term Government Fund Rochester Fund
Municipals Oppenheimer MidCap Fund And the following money market funds:

Oppenheimer Cash Reserves                 Centennial Government Trust
Oppenheimer Money Market Fund, Inc.       Centennial Money Market Trust
Centennial America Fund, L. P.            Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust    Centennial Tax Exempt Trust

      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. 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 ("Letter"), 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 do not consider Class C or
Class N shares you purchase or may have purchased.

      A Letter 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 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 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. 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.

      If the total eligible purchases made during the Letter 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 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. If the intended purchase amount under a Letter entered
into by an OppenheimerFunds prototype 401(k) plan is not purchased by the plan
by the end of the Letter 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 period will be
deducted. It is the responsibility of the dealer of record and/or the investor
to advise the Distributor about the Letter when placing any purchase orders for
the investor during the Letter 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 period, the escrowed shares will be promptly released
to the investor.

      3. If, at the end of the 13-month Letter period the total purchases
pursuant to the Letter are less than the intended purchase amount specified in
the Letter, the investor must remit to the Distributor an amount equal to the
difference between the dollar amount of sales charges actually paid and the
amount of sales charges which would have been paid if the total amount purchased
had been made at a single time. That sales charge adjustment will apply to any
shares redeemed prior to the completion of the Letter. If the difference in
sales charges is not paid within twenty days after a request from the
Distributor or the dealer, the Distributor will, within sixty days of the
expiration of the Letter, redeem the number of escrowed shares necessary to
realize such difference in sales charges. Full and fractional shares remaining
after such redemption will be released from escrow. If a request is received to
redeem escrowed shares prior to the payment of such additional sales charge, the
sales charge will be withheld from the redemption proceeds.

      4. By signing the Letter, the investor irrevocably constitutes and
appoints the Transfer Agent as attorney-in-fact to surrender for redemption any
or all escrowed shares.

5. The shares eligible for purchase under the Letter (or the holding of which
may be counted toward completion of a Letter) include:
(a) Class A shares sold with a front-end sales charge or subject to a Class A
contingent deferred sales charge,
(b)         Class B shares of other Oppenheimer funds acquired subject to a
            contingent deferred sales charge, and
(c)         Class A or Class B shares acquired by exchange of either (1) Class A
            shares of one of the other Oppenheimer funds that were acquired
            subject to a Class A initial or contingent deferred sales charge or
            (2) Class B shares of one of the other Oppenheimer funds that were
            acquired subject to a contingent deferred sales charge.

      6. Shares held in escrow hereunder will automatically be exchanged for
shares of another fund to which an exchange is requested, as described in the
section of the Prospectus entitled "How to Exchange Shares" and the escrow will
be transferred to that other fund.

Asset Builder Plans. As explained in the Prospectus, you must initially
establish your account with $500. Subsequently, you can establish an Asset
Builder Plan to automatically purchase additional shares directly from a bank
account for as little as $50. For those accounts established prior to November
1, 2002 and which have previously established Asset Builder Plans, additional
purchases will remain at $25. Shares purchased by Asset Builder Plan payments
from bank accounts are subject to the redemption restrictions for recent
purchases described in the Prospectus. Asset Builder Plans are available only if
your bank is an ACH member. Asset Builder Plans may not be used to buy shares
for OppenheimerFunds employer-sponsored qualified retirement accounts. Asset
Builder Plans also enable shareholders of Oppenheimer Cash Reserves to use their
fund account to make monthly automatic purchases of shares of up to four other
Oppenheimer funds.

      If you make payments from your bank account to purchase shares of the
Fund, your bank account will be debited automatically. Normally the debit will
be made two business days prior to the investment dates you selected on your
application. Neither the Distributor, the Transfer Agent nor the Fund shall be
responsible for any delays in purchasing shares that result from delays in ACH
transmissions.

      Before you establish Asset Builder payments, you should obtain a
prospectus of the selected fund(s) from your financial advisor (or the
Distributor) and request an application from the Distributor. Complete the
application and return it. You may change the amount of your Asset Builder
payment or you can terminate these automatic investments at any time by writing
to the Transfer Agent. The Transfer Agent requires a reasonable period
(approximately 10 days) after receipt of your instructions to implement them.
The Fund reserves the right to amend, suspend or discontinue offering Asset
Builder plans at any time without prior notice.

Retirement Plans. Certain types of retirement plans are entitled to purchase
shares of the Fund without sales charge or at reduced sales charge rates, as
described in Appendix C to this Statement of Additional Information. Certain
special sales charge arrangements described in that Appendix apply to retirement
plans whose records are maintained on a daily valuation basis by Merrill Lynch
Pierce Fenner & Smith, Inc. ("Merrill Lynch") or an independent record keeper
that has a contract or special arrangement with Merrill Lynch. If on the date
the plan sponsor signed the Merrill Lynch record keeping service agreement the
plan has less than $3 million in assets (other than assets invested in money
market funds) invested in applicable investments, then the retirement plan may
purchase only Class B shares of the Oppenheimer funds. Any retirement plans in
that category that currently invest in Class B shares of the Fund will have
their Class B shares converted to Class A shares of the Fund when the plan's
applicable investments reach $5 million.

      OppenheimerFunds has entered into arrangements with certain record keepers
whereby the Transfer Agent compensates the record keeper for its record keeping
and account servicing functions that it performs on behalf of the participant
level accounts of a retirement plan. While such compensation may act to reduce
the record keeping fees charged by the retirement plan's record keeper, that
compensation arrangement may be terminated at any time, potentially affecting
the record keeping fees charged by the retirement plan's record keeper.

Cancellation of Purchase Orders. Cancellation of purchase orders for the Fund's
shares (for example, when a purchase check is returned to the Fund unpaid)
causes a loss to be incurred when the net asset values of the Fund's shares on
the cancellation date is less than on the purchase date. That loss is equal to
the amount of the decline in the net asset value per share multiplied by the
number of shares in the purchase order. The investor is responsible for that
loss. If the investor fails to compensate the Fund for the loss, the Distributor
will do so. The Fund may reimburse the Distributor for that amount by redeeming
shares from any account registered in that investor's name, or the Fund or the
Distributor may seek other redress.

Classes of Shares. Each class of shares of the Fund represents an interest in
the same portfolio of investments of the Fund. However, each class has different
shareholder privileges and features. The net income attributable to Class B,
Class C or Class N shares and the dividends payable on Class B, Class C or Class
N shares will be reduced by incremental expenses borne solely by that class.
Those expenses include the asset-based sales charges to which Class B, Class C
and Class N shares are subject.

      The availability of different classes of shares permits an investor to
choose the method of purchasing shares that is more appropriate for the
investor. That may depend on the amount of the purchase, the length of time the
investor expects to hold shares, and other relevant circumstances. Class A
shares normally are sold subject to an initial sales charge. While Class B,
Class C and Class N shares have no initial sales charge, the purpose of the
deferred sales charge and asset-based sales charge on Class B, Class C and Class
N shares is the same as that of the initial sales charge on Class A shares - to
compensate the Distributor and brokers, dealers and financial institutions that
sell shares of the Fund. A salesperson who is entitled to receive compensation
from his or her firm for selling Fund shares may receive different levels of
compensation for selling one class of shares rather than another.

      The Distributor will not accept any order in the amount of $250,000 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 72 months after purchase is not treated as a taxable
event for the shareholder. If those laws or the IRS interpretation of those laws
should change, the automatic conversion feature may be suspended. In that event,
no further conversions of Class B shares would occur while that suspension
remained in effect. Although Class B shares could then be exchanged for Class A
shares on the basis of relative net asset value of the two classes, without the
imposition of a sales charge or fee, such exchange could constitute a taxable
event for the shareholder, and absent such exchange, Class B shares might
continue to be subject to the asset-based sales charge for longer than six
years.

      |X| Availability of Class N Shares. In addition to the description of the
types of retirement plans which may purchase Class N shares contained in the
prospectus, Class N shares also are offered to the following:
o     to all rollover IRAs (including SEP IRAs and SIMPLE IRAs),
o     to all rollover contributions made to Individual 401(k) plans, Profit-
      Sharing Plans and Money Purchase Pension Plans,
o     to all direct rollovers from OppenheimerFunds-sponsored Pinnacle and
      Ascender retirement plans,
o     to all trustee-to-trustee IRA transfers,
o     to all 90-24 type 403(b) transfers,
o     to Group Retirement Plans (as defined in Appendix C to this
      Statement of Additional Information) which have entered into a
      special agreement with the Distributor for that purpose,
o     to Retirement Plans qualified under Sections 401(a) or 401(k) of the
      Internal Revenue Code, the recordkeeper or the plan sponsor for
      which has entered into a special agreement with the Distributor,
o     to Retirement Plans of a plan sponsor where the aggregate assets of
      all such plans invested in the Oppenheimer funds is $500,000 or
      more,
o     to OppenheimerFunds-sponsored Ascender 401(k) plans that pay for the
      purchase with the redemption proceeds of Class A shares of one or
      more Oppenheimer funds, and
o     to certain customers of broker-dealers and financial advisors that
      are identified in a special agreement between the broker-dealer or
      financial advisor and the Distributor for that purpose.

      The sales concession and the advance of the service fee, as described in
the Prospectus, will not be paid to dealers of record on sales of Class N shares
on:
         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),
         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
         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, Directors' 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
Directors, 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, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day. It may also close on other days.

      Dealers other than Exchange members may conduct trading in certain
securities on days on which the Exchange is closed (including weekends and
holidays) or after 4:00 P.M. on a regular business day. Because 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.

      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.

      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
or 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 aggregate
net asset value of those shares is less than $500 or such lesser amount as the
Board may fix. The Board will not cause the involuntary redemption of shares in
an account if the aggregate net asset value of such shares has fallen below the
stated minimum solely as a result of market fluctuations. If the Board exercises
this right, it may also fix the requirements for any notice to be given to the
shareholders in question (not less than 30 days). The Board may alternatively
set requirements for the shareholder to increase the investment, or set other
terms and conditions so that the shares would not be involuntarily redeemed.

Transfers of Shares. A transfer of shares to a different registration is not an
event that triggers the payment of sales charges. Therefore, shares are not
subject to the payment of a contingent deferred sales charge of any class at the
time of transfer to the name of another person or entity. It does not matter
whether the transfer occurs by absolute assignment, gift or bequest, as long as
it does not involve, directly or indirectly, a public sale of the shares. When
shares subject to a contingent deferred sales charge are transferred, the
transferred shares will remain subject to the contingent deferred sales charge.
It will be calculated as if the transferee shareholder had acquired the
transferred shares in the same manner and at the same time as the transferring
shareholder.

      If less than all shares held in an account are transferred, and some but
not all shares in the account would be subject to a contingent deferred sales
charge if redeemed at the time of transfer, the priorities described in the
Prospectus under "How to Buy Shares" for the imposition of the Class B, Class C
and Class N contingent deferred sales charge will be followed in determining the
order in which shares are transferred.

Distributions From Retirement Plans. Requests for distributions from
OppenheimerFunds-sponsored IRAs, SEP-IRAs, SIMPLE IRAs, 403(b)(7) custodial
plans, 401(k) plans or pension or profit-sharing plans should be addressed to
"Trustee, OppenheimerFunds Retirement Plans," c/o the Transfer Agent at its
address listed in "How To Sell Shares" in the Prospectus or on the back cover of
this Statement of Additional Information. The request must:
(1) state the reason for the distribution;
(2) state the owner's awareness of tax penalties if the distribution is
premature; and
(3) conform to the requirements of the plan and the Fund's other
redemption requirements.

      Participants (other than self-employed plan sponsors) in
OppenheimerFunds-sponsored pension or profit-sharing plans with shares of the
Fund held in the name of the plan or its fiduciary may not directly request
redemption of their accounts. The plan administrator or fiduciary must sign the
request.

      Distributions from pension and profit sharing plans are subject to special
requirements under the Internal Revenue Code and certain documents (available
from the Transfer Agent) must be completed and submitted to the Transfer Agent
before the distribution may be made. Distributions from retirement plans are
subject to withholding requirements under the Internal Revenue Code, and IRS
Form W-4P (available from the Transfer Agent) must be submitted to the Transfer
Agent with the distribution request, or the distribution may be delayed. Unless
the shareholder has provided the Transfer Agent with a certified tax
identification number, the Internal Revenue Code requires that tax be withheld
from any distribution even if the shareholder elects not to have tax withheld.
The Fund, the Manager, the Distributor, and the Transfer Agent assume no
responsibility to determine whether a distribution satisfies the conditions of
applicable tax laws and will not be responsible for any tax penalties assessed
in connection with a distribution. Special Arrangements for Repurchase of Shares
from Dealers and Brokers. The Distributor is the Fund's agent to repurchase its
shares from authorized dealers or brokers on behalf of their customers.
Shareholders should contact their broker or dealer to arrange this type of
redemption. The repurchase price per share will be the net asset value next
computed after the Distributor receives an order placed by the dealer or broker.
However, if the Distributor receives a repurchase order from a dealer or broker
after the close of the Exchange on a regular business day, it will be processed
at that day's net asset value if the order was received by the dealer or broker
from its customers prior to the time the Exchange closes. Normally, the Exchange
closes at 4:00 P.M., but may do so earlier on some days. Additionally, the order
must have been transmitted to and received by the Distributor prior to its close
of business that day (normally 5:00 P.M.).

      Ordinarily, for accounts redeemed by a broker-dealer under this procedure,
payment will be made within three business days after the shares have been
redeemed upon the Distributor's receipt of the required redemption documents in
proper form. The signature(s) of the registered owners on the redemption
documents must be guaranteed as described in the Prospectus.

Automatic Withdrawal and Exchange Plans. Investors owning shares of the Fund
valued at $5,000 or more can authorize the Transfer Agent to redeem shares
(having a value of at least $50) automatically on a monthly, quarterly,
semi-annual or annual basis under an Automatic Withdrawal Plan. Shares will be
redeemed three business days prior to the date requested by the shareholder for
receipt of the payment. Automatic withdrawals of up to $1,500 per month may be
requested by telephone if payments are to be made by check payable to all
shareholders of record. Payments must also be sent to the address of record for
the account and the address must not have been changed within the prior 30 days.
Required minimum distributions from OppenheimerFunds-sponsored retirement plans
may not be arranged on this basis.

      Payments are normally made by check, but shareholders having AccountLink
privileges (see "How To Buy Shares") may arrange to have Automatic Withdrawal
Plan payments transferred to the bank account designated on the account
application or by signature-guaranteed instructions sent to the Transfer Agent.
Shares are normally redeemed pursuant to an Automatic Withdrawal Plan three
business days before the payment transmittal date you select in the account
application. If a contingent deferred sales charge applies to the redemption,
the amount of the check or payment will be reduced accordingly.

      The Fund cannot guarantee receipt of a payment on the date requested. The
Fund reserves the right to amend, suspend or discontinue offering these plans at
any time without prior notice. Because of the sales charge assessed on Class A
share purchases, shareholders should not make regular additional Class A share
purchases while participating in an Automatic Withdrawal Plan. Class B, Class C
and Class N shareholders should not establish automatic withdrawal plans,
because of the potential imposition of the contingent deferred sales charge on
such withdrawals (except where the Class B, Class C or Class N contingent
deferred sales charge is waived as described in Appendix C to this Statement of
Additional Information).

      By requesting an Automatic Withdrawal or Exchange Plan, the shareholder
agrees to the terms and conditions that apply to such plans, as stated below.
These provisions may be amended from time to time by the Fund and/or the
Distributor. When adopted, any amendments will automatically apply to existing
Plans.
      |X| Automatic Exchange Plans. Shareholders can authorize the Transfer
Agent to exchange a pre-determined amount of shares of the Fund for shares (of
the same class) of other Oppenheimer funds automatically on a monthly,
quarterly, semi-annual or annual basis under an Automatic Exchange Plan. The
minimum amount that may be exchanged to each other fund account is $50.
Instructions should be provided on the OppenheimerFunds Application or
signature-guaranteed instructions. Exchanges made under these plans are subject
to the restrictions that apply to exchanges as set forth in "How to Exchange
Shares" in the Prospectus and below in this Statement of Additional Information.

|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 Class A 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 Municipals           Oppenheimer Pennsylvania Municipal
                                      Fund
   Oppenheimer AMT-Free New York             Oppenheimer Rochester National
   Municipals                                Municipals
   Oppenheimer California Municipal Fund     Limited Term New York Municipal Fund
   Oppenheimer Limited Term Municipal        Oppenheimer Senior Floating Rate Fund
   Fund
   Oppenheimer New Jersey Municipal Fund     Rochester Fund Municipals

   The following funds do not offer Class Y shares:
   Oppenheimer AMT-Free Municipals Oppenheimer Limited Term Municipal Fund
   Oppenheimer AMT-Free New York Oppenheimer Multiple Strategies Fund Municipals
   Oppenheimer California Municipal Fund Oppenheimer New Jersey Municipal Fund
   Oppenheimer Capital Income Fund Oppenheimer Pennsylvania Municipal Fund
   Oppenheimer Cash Reserves Oppenheimer Principal Protected Main
                                           Street Fund
   Oppenheimer Champion Income Fund        Oppenheimer Principal Protected Main
                                           Street Fund II
   Oppenheimer Convertible Securities Fund Oppenheimer Quest Capital Value Fund,
                                      Inc.
   Oppenheimer Disciplined Allocation Fund Oppenheimer Quest International 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 Oppenheimer Total Return Bond Fund
   Oppenheimer International Small Limited Term New York Municipal Fund Company
   Fund

o     Class Y shares of Oppenheimer Real Asset Fund may not be exchanged for
      shares of any other fund.
o     Class B, Class C and Class N shares of Oppenheimer Cash Reserves are
      generally available only by exchange from the same class of shares of
      other Oppenheimer funds or through OppenheimerFunds-sponsored 401(k)
      plans.
o     Class M shares of Oppenheimer Convertible Securities Fund may be exchanged
      only for Class A shares of other Oppenheimer funds. They may not be
      acquired by exchange of shares of any class of any other Oppenheimer funds
      except Class A shares of Oppenheimer Money Market Fund or Oppenheimer Cash
      Reserves acquired by exchange of Class M shares.
o     Class X shares of Limited Term New York Municipal Fund may be exchanged
      only for Class B shares of other Oppenheimer funds and no exchanges may be
      made to Class X shares.
o     Shares of Oppenheimer Capital Preservation Fund may not be exchanged for
      shares of Oppenheimer Money Market Fund, Inc., Oppenheimer Cash Reserves
      or Oppenheimer Limited-Term Government Fund. Only participants in certain
      retirement plans may purchase shares of Oppenheimer Capital Preservation
      Fund, and only those participants may exchange shares of other Oppenheimer
      funds for shares of Oppenheimer Capital Preservation Fund.
o     Class A shares of Oppenheimer 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.
o     Shares of Oppenheimer Principal Protected Main Street Fund may be
      exchanged at net asset value for shares of any of the Oppenheimer funds.
      However, shareholders are not permitted to exchange shares of other
      Oppenheimer funds for shares of Oppenheimer Principal Protected Main
      Street Fund until after the expiration of the warranty period (8/5/2010).
o     Shares of Oppenheimer Principal Protected Main Street Fund II may be
      exchanged at net asset value for shares of any of the Oppenheimer funds.
      However, shareholders are not permitted to exchange shares of other
      Oppenheimer funds for shares of Oppenheimer Principal Protected Main
      Street Fund II until after the expiration of the warranty period
      (2/4/2011).

      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 28% 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 28% 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 Series Fund, Inc.:
 We have audited the accompanying statement of assets and liabilities including
 the statement of investments of Oppenheimer Disciplined Allocation Fund (one of
 the portfolios constituting the Oppenheimer Series Fund, Inc.) as of October
 31, 2003, 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, 2003, 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, 2003, the results of
 its operations for the year then ended, the changes in its net assets for each
 of the two years in the period then ended, and the financial highlights for
 each of the five years in the period then ended, in conformity with accounting
 principles generally accepted in the United States of America.



 /s/ KPMG LLP
 ------------
 KPMG LLP

 Denver, Colorado
 November 21, 2003

41  |  OPPENHEIMER DISCIPLINED ALLOCATION FUND



STATEMENT OF INVESTMENTS  October 31, 2003

                                                                   Market Value
                                                          Shares     See Note 1
--------------------------------------------------------------------------------
 Common Stocks--65.8%
--------------------------------------------------------------------------------
 Consumer Discretionary--10.1%
--------------------------------------------------------------------------------
 Automobiles--0.2%
 Harley-Davidson, Inc.                                     5,500   $    260,755
--------------------------------------------------------------------------------
 Hotels, Restaurants & Leisure--0.8%
 McDonald's Corp.                                         38,700        967,887
--------------------------------------------------------------------------------
 Internet & Catalog Retail--1.8%
 Amazon.com, Inc. 1                                        5,000        272,100
--------------------------------------------------------------------------------
 eBay, Inc. 1                                              3,000        167,820
--------------------------------------------------------------------------------
 InterActiveCorp 1                                        45,000      1,651,950
                                                                   -------------
                                                                      2,091,870

--------------------------------------------------------------------------------
 Media--4.6%
 EchoStar Communications Corp., Cl. A 1                   50,600      1,938,992
--------------------------------------------------------------------------------
 Liberty Media Corp., Cl. A 1                            232,300      2,343,907
--------------------------------------------------------------------------------
 UGC Europe, Inc. 1                                          800         53,600
--------------------------------------------------------------------------------
 UnitedGlobalCom, Inc., Cl. A 1                           29,600        209,568
--------------------------------------------------------------------------------
 Univision Communications, Inc., Cl. A 1                  27,000        916,650
                                                                   -------------
                                                                      5,462,717

--------------------------------------------------------------------------------
 Multiline Retail--0.5%
 Target Corp.                                             16,000        635,840
--------------------------------------------------------------------------------
 Specialty Retail--1.8%
 Bed Bath & Beyond, Inc. 1                                23,126        976,842
--------------------------------------------------------------------------------
 Gap, Inc. (The)                                          11,000        209,880
--------------------------------------------------------------------------------
 OfficeMax, Inc. 1                                       100,700        964,706
                                                                   -------------
                                                                      2,151,428

--------------------------------------------------------------------------------
 Textiles, Apparel & Luxury Goods--0.4%
 Nike, Inc., Cl. B                                         7,700        492,030
--------------------------------------------------------------------------------
 Consumer Staples--4.3%
--------------------------------------------------------------------------------
 Beverages--0.4%
 Constellation Brands, Inc., Cl. A 1                      17,200        539,564
--------------------------------------------------------------------------------
 Food & Staples Retailing--2.1%
 Costco Wholesale Corp. 1                                 40,100      1,418,337
--------------------------------------------------------------------------------
 Wal-Mart Stores, Inc.                                    18,600      1,096,470
                                                                   -------------
                                                                      2,514,807

--------------------------------------------------------------------------------
 Personal Products--0.4%
 Avon Products, Inc.                                       6,200        421,352
--------------------------------------------------------------------------------
 Tobacco--1.4%
 Altria Group, Inc.                                       36,600      1,701,900



12  |  OPPENHEIMER DISCIPLINED ALLOCATION FUND




                                                                   Market Value
                                                          Shares     See Note 1
--------------------------------------------------------------------------------
 Energy--2.7%
--------------------------------------------------------------------------------
 Energy Equipment & Services--0.5%
 Halliburton Co.                                          20,400   $    487,152
--------------------------------------------------------------------------------
 Talisman Energy, Inc.                                     2,100        102,480
                                                                   -------------
                                                                        589,632

--------------------------------------------------------------------------------
 Oil & Gas--2.2%
 BP plc, ADR                                              54,200      2,296,996
--------------------------------------------------------------------------------
 Pioneer Natural Resources Co. 1                           4,400        116,380
--------------------------------------------------------------------------------
 Spinnaker Exploration Co. 1                               5,000        127,950
--------------------------------------------------------------------------------
 Westport Resources Corp. 1                                4,000         95,760
                                                                   -------------
                                                                      2,637,086

--------------------------------------------------------------------------------
 Financials--14.0%
--------------------------------------------------------------------------------
 Capital Markets--0.7%
 Bank of New York Co., Inc. (The)                         27,300        851,487
--------------------------------------------------------------------------------
 Commercial Banks--2.5%
 SunTrust Banks, Inc.                                     21,000      1,408,470
--------------------------------------------------------------------------------
 Wachovia Corp.                                           20,200        926,574
--------------------------------------------------------------------------------
 Wells Fargo & Co.                                        12,800        720,896
                                                                   -------------
                                                                      3,055,940

--------------------------------------------------------------------------------
 Diversified Financial Services--5.5%
 Citigroup, Inc.                                          45,277      2,146,130
--------------------------------------------------------------------------------
 Franklin Resources, Inc.                                 14,900        706,558
--------------------------------------------------------------------------------
 Merrill Lynch & Co., Inc.                                 7,600        449,920
--------------------------------------------------------------------------------
 Morgan Stanley                                           34,900      1,914,963
--------------------------------------------------------------------------------
 SLM Corp.                                                32,180      1,260,169
                                                                   -------------
                                                                      6,477,740

--------------------------------------------------------------------------------
 Insurance--5.0%
 American International Group, Inc.                       15,200        924,616
--------------------------------------------------------------------------------
 Chubb Corp.                                              23,000      1,536,630
--------------------------------------------------------------------------------
 MBIA, Inc.                                                9,400        560,334
--------------------------------------------------------------------------------
 Platinum Underwriters Holdings Ltd.                      29,400        844,956
--------------------------------------------------------------------------------
 Prudential Financial, Inc.                               35,700      1,379,448
--------------------------------------------------------------------------------
 Travelers Property Casualty Corp., Cl. B                 28,344        463,991
--------------------------------------------------------------------------------
 XL Capital Ltd., Cl. A                                    3,300        229,350
                                                                   -------------
                                                                      5,939,325

--------------------------------------------------------------------------------
 Thrifts & Mortgage Finance--0.3%
 Radian Group, Inc.                                        8,000        423,200



13  |  OPPENHEIMER DISCIPLINED ALLOCATION FUND

STATEMENT OF INVESTMENTS  Continued

                                                                   Market Value
                                                          Shares     See Note 1
--------------------------------------------------------------------------------
 Health Care--11.0%
--------------------------------------------------------------------------------
 Biotechnology--5.0%
 Amgen, Inc. 1                                            34,000   $  2,099,840
--------------------------------------------------------------------------------
 Genentech, Inc. 1                                        23,200      1,901,704
--------------------------------------------------------------------------------
 Gilead Sciences, Inc. 1                                  33,200      1,812,056
--------------------------------------------------------------------------------
 Medimmune, Inc. 1                                         4,600        122,636
                                                                   -------------
                                                                      5,936,236

--------------------------------------------------------------------------------
 Health Care Equipment & Supplies--2.7%
 Boston Scientific Corp. 1                                11,300        765,236
--------------------------------------------------------------------------------
 Medtronic, Inc.                                          15,800        720,006
--------------------------------------------------------------------------------
 Stryker Corp.                                            10,400        843,544
--------------------------------------------------------------------------------
 Varian Medical Systems, Inc. 1                           14,900        952,706
                                                                   -------------
                                                                      3,281,492

--------------------------------------------------------------------------------
 Health Care Providers & Services--1.1%
 Aetna, Inc.                                              18,800      1,079,308
--------------------------------------------------------------------------------
 Service Corp. International 1                            37,000        179,450
                                                                   -------------
                                                                      1,258,758

--------------------------------------------------------------------------------
 Pharmaceuticals--2.2%
 Eli Lilly & Co.                                           7,200        479,664
--------------------------------------------------------------------------------
 Mylan Laboratories, Inc.                                 23,550        568,733
--------------------------------------------------------------------------------
 Schering-Plough Corp.                                    44,800        684,096
--------------------------------------------------------------------------------
 Teva Pharmaceutical Industries Ltd.,
 Sponsored ADR                                            16,100        915,929
                                                                   -------------
                                                                      2,648,422

--------------------------------------------------------------------------------
 Industrials--6.3%
--------------------------------------------------------------------------------
 Aerospace & Defense--2.5%
 Boeing Co.                                               22,700        873,723
--------------------------------------------------------------------------------
 Raytheon Co.                                             81,300      2,152,824
                                                                   -------------
                                                                      3,026,547

--------------------------------------------------------------------------------
 Commercial Services & Supplies--2.5%
 Cendant Corp. 1                                         124,300      2,539,449
--------------------------------------------------------------------------------
 ChoicePoint, Inc. 1                                      13,100        459,024
                                                                   -------------
                                                                      2,998,473

--------------------------------------------------------------------------------
 Industrial Conglomerates--0.9%
 General Electric Co.                                      7,000        203,070
--------------------------------------------------------------------------------
 Tyco International Ltd.                                  44,500        929,160
                                                                   -------------
                                                                      1,132,230

--------------------------------------------------------------------------------
 Road & Rail--0.4%
 CNF Transportation, Inc.                                 12,200        427,244

14  |  OPPENHEIMER DISCIPLINED ALLOCATION FUND



                                                                   Market Value
                                                          Shares     See Note 1
--------------------------------------------------------------------------------
 Information Technology--11.7%
--------------------------------------------------------------------------------
 Communications Equipment--1.3%
 Cisco Systems, Inc. 1                                     5,000   $    104,900
--------------------------------------------------------------------------------
 Geotek Communications, Inc., Series B,
 Escrow Shares 1,3,9                                         100             --
--------------------------------------------------------------------------------
 QUALCOMM, Inc.                                           17,300        821,750
--------------------------------------------------------------------------------
 Scientific-Atlanta, Inc.                                 20,400        603,840
                                                                   -------------
                                                                      1,530,490

--------------------------------------------------------------------------------
 Computers & Peripherals--3.2%
 Dell, Inc. 1                                             53,500      1,932,420
--------------------------------------------------------------------------------
 EMC Corp. 1                                              36,600        506,544
--------------------------------------------------------------------------------
 Hewlett-Packard Co.                                      64,800      1,445,688
                                                                   -------------
                                                                      3,884,652

--------------------------------------------------------------------------------
 Electronic Equipment & Instruments--0.9%
 California Amplifier, Inc. 1                                 24            238
--------------------------------------------------------------------------------
 Flextronics International Ltd. 1                         48,200        674,800
--------------------------------------------------------------------------------
 Thermo Electron Corp. 1                                  19,000        417,620
                                                                   -------------
                                                                      1,092,658

--------------------------------------------------------------------------------
 Internet Software & Services--1.3%
 Yahoo!, Inc. 1                                           34,600      1,512,020
--------------------------------------------------------------------------------
 Semiconductors & Semiconductor Equipment--0.9%
 Intel Corp.                                              19,300        637,865
--------------------------------------------------------------------------------
 National Semiconductor Corp. 1                            4,700        190,961
--------------------------------------------------------------------------------
 Texas Instruments, Inc.                                   8,000        231,360
                                                                   -------------
                                                                      1,060,186

--------------------------------------------------------------------------------
 Software--4.1%
 Microsoft Corp.                                          63,300      1,655,295
--------------------------------------------------------------------------------
 Oracle Corp. 1                                           75,400        901,784
--------------------------------------------------------------------------------
 Symantec Corp. 1                                         25,700      1,712,905
--------------------------------------------------------------------------------
 Veritas Software Corp. 1                                 17,700        639,855
                                                                   -------------
                                                                      4,909,839

--------------------------------------------------------------------------------
 Materials--1.8%
--------------------------------------------------------------------------------
 Chemicals--1.0%
 Dow Chemical Co.                                         32,500      1,224,925
--------------------------------------------------------------------------------
 Containers & Packaging--0.2%
 Smurfit-Stone Container Corp. 1                          14,900        230,950
--------------------------------------------------------------------------------
 Paper & Forest Products--0.6%
 Sappi Ltd., Sponsored ADR                                54,600        698,880
--------------------------------------------------------------------------------
 Telecommunication Services--1.8%
--------------------------------------------------------------------------------
 Diversified Telecommunication Services--0.5%
 IDT Corp., Cl. B 1                                       33,200        634,784



15  |  OPPENHEIMER DISCIPLINED ALLOCATION FUND


STATEMENT OF INVESTMENTS  Continued

                                                                   Market Value
                                                          Shares     See Note 1
--------------------------------------------------------------------------------
 Wireless Telecommunication Services--1.3%
 AT&T Corp.                                               49,900   $    927,641
--------------------------------------------------------------------------------
 Price Communications Corp. 1                              1,355         17,032
--------------------------------------------------------------------------------
 Vodafone Group plc, Sponsored ADR                        28,900        611,235
                                                                   -------------
                                                                      1,555,908

--------------------------------------------------------------------------------
 Utilities--2.1%
--------------------------------------------------------------------------------
 Electric Utilities--1.7%
 AES Corp. (The) 1                                       115,200      1,008,000
--------------------------------------------------------------------------------
 Dominion Resources, Inc.                                 10,300        634,480
--------------------------------------------------------------------------------
 PG&E Corp. 1                                             19,500        476,775
                                                                   -------------
                                                                      2,119,255

--------------------------------------------------------------------------------
 Multi-Utilities & Unregulated Power--0.4%
 Equitable Resources, Inc.                                11,100        457,320
                                                                   -------------
 Total Common Stocks (Cost $67,475,956)                              78,835,829

--------------------------------------------------------------------------------
 Other Securities--1.3%
 Nasdaq-100 Unit Investment Trust 1
 (Cost $1,098,130)                                        43,400      1,526,812

                                                           Units
--------------------------------------------------------------------------------
 Rights, Warrants and Certificates--0.0%
 Concentric Network Corp. Wts., Exp. 12/15/07 1,3            100             --
--------------------------------------------------------------------------------
 Microcell Telecommunications, Inc.,
 Cl. A Wts., Exp. 5/1/05 1                                    21             22
--------------------------------------------------------------------------------
 Microcell Telecommunications, Inc.,
 Cl. B Wts., Exp. 5/1/08 1                                    35             57
                                                                   -------------
 Total Rights, Warrants and Certificates (Cost $4,293)                       79

                                                       Principal
                                                          Amount
--------------------------------------------------------------------------------
 Asset-Backed Securities--9.3%
 Bank One Auto Securitization Trust,
 Automobile Receivables, Series 2003-1,
 Cl A2, 1.29%, 8/21/06                                $  240,000        239,391
--------------------------------------------------------------------------------
 BMW Vehicle Owner Trust, Automobile
 Loan Certificates, Series 2003-A,
 Cl. A2, 1.45%, 11/25/05                                 410,000        410,405
--------------------------------------------------------------------------------
 Capital Auto Receivables Asset Trust,
 Automobile Mtg.-Backed Nts.,
 Series 2002-4, Cl. A2B, 1.74%, 1/17/05                  221,200        221,599
--------------------------------------------------------------------------------
 Caterpillar Financial Asset Trust,
 Equipment Loan Pass-Through
 Certificates, Series 2003-A,
 Cl. A2, 1.25%, 10/25/05                                 170,000        169,975
--------------------------------------------------------------------------------
 Centex Home Equity Co. LLC, Home
 Equity Loan Asset-Backed Certificates:
 Series 2003-B, Cl. AF1, 1.64%, 2/25/18                   87,777         87,718
 Series 2003-C, Cl. AF1, 2.14%, 7/25/18 3                276,202        276,839
--------------------------------------------------------------------------------
 Chase Funding Mortgage Loan Asset-Backed
 Certificates, Home Equity Mtg. Obligations:
 Series 2003-3, Cl. 1A1, 1.20%, 8/25/17 4                137,652        137,646
 Series 2003-4, Cl. 1A1, 1.24%, 9/25/17 3,4              290,573        290,597



16  |  OPPENHEIMER DISCIPLINED ALLOCATION FUND



                                                       Principal   Market Value
                                                          Amount     See Note 1
--------------------------------------------------------------------------------
 Asset-Backed Securities Continued
 Chase Manhattan Auto Owner Trust, Automobile
 Loan Pass-Through Certificates:
 Series 2003-A, Cl. A2, 1.26%, 1/16/06                  $110,000   $    109,948
 Series 2003-B, Cl. A2, 1.287%, 3/15/06                  140,000        139,893
--------------------------------------------------------------------------------
 CitiFinancial Mortgage Securities, Inc.,
 Home Equity Collateralized Mtg. Obligations:
 Series 2002-1, Cl. AF1, 2.474%, 9/25/32                  98,839         99,165
 Series 2003-2, Cl. AF1, 1.22%, 5/25/33 4                152,427        152,407
 Series 2003-3, Cl. AF1, 1.24%, 8/25/33 3,4              221,244        221,242
--------------------------------------------------------------------------------
 DaimlerChrysler Auto Trust, Automobile
 Loan Pass-Through Certificates:
 Series 2002-B, Cl. A2, 2.20%, 4/6/05                    118,962        119,234
 Series 2003-A, Cl. A2, 1.52%, 12/8/05 3                 410,000        410,415
--------------------------------------------------------------------------------
 Ford Credit Auto Owner Trust,
 Automobile Installment Sales,
 Series 2003-A, Cl. A2A, 1.62%, 8/15/05                  200,819        201,156
--------------------------------------------------------------------------------
 Ford Credit Auto Owner Trust,
 Automobile Loan Certificates,
 Series 2002-D, Cl. A2A, 2.10%, 3/15/05                  267,878        268,673
--------------------------------------------------------------------------------
 Harley-Davidson Motorcycle Trust,
 Motorcycle Receivable Nts.:
 Series 2002-2, Cl. A1, 1.91%, 4/16/07                   251,497        252,333
 Series 2003-3, Cl. A1, 1.50%, 1/15/08                   398,648        399,049
--------------------------------------------------------------------------------
 Honda Auto Receivables Owner Trust,
 Automobile Receivables Obligations:
 Series 2002-3, Cl. A2, 2.26%, 12/18/04                 123,706        123,947
 Series 2002-4, Cl. A2, 1.66%, 6/15/05                  790,937        792,321
 Series 2003-3, Cl. A2, 1.52%, 4/21/06 3                460,000        460,359
 Series 2003-4, Cl. A2, 1.52%, 7/17/06                  410,000        409,872
--------------------------------------------------------------------------------
 Household Automotive Trust, Automobile
 Loan Certificates,
 Series 2002-2, Cl. A2, 2.15%, 12/19/05                  121,302        121,595
--------------------------------------------------------------------------------
 Litigation Settlement Monetized Fee
 Trust, Asset-Backed Certificates,
 Series 2001-1A, Cl. A1, 8.33%, 4/25/31 3                784,885        756,679
--------------------------------------------------------------------------------
 M&I Auto Loan Trust, Automobile Loan
 Certificates, Series 2002-1,
 Cl. A2, 1.95%, 7/20/05                                   56,229         56,312
--------------------------------------------------------------------------------
 MMCA Auto Lease Trust, Auto Retail
 Installment Contracts,
 Series 2002-A, Cl. A2, 1.29%, 5/16/05 4,5               147,021        147,136
--------------------------------------------------------------------------------
 Nissan Auto Lease Trust, Auto Lease Obligations:
 Series 2002-A, Cl. A2, 1.86%, 11/15/04 5                219,753        220,019
 Series 2003-A, Cl. A2, 1.69%, 12/15/05                  270,000        270,035
--------------------------------------------------------------------------------
 Nissan Auto Receivables Owner Trust,
 Automobile Receivable Nts.:
 Series 2002-C, Cl. A2, 1.94%, 9/15/04                    78,797         78,867
 Series 2003-B, Cl. A2, 1.20%, 11/15/05                  420,000        419,660
--------------------------------------------------------------------------------
 Salomon Smith Barney Auto Loan Trust,
 Asset-Backed Auto Loan Obligations,
 Series 2002-1, Cl. A2, 1.83%, 9/15/05                   171,322        171,702
--------------------------------------------------------------------------------
 Toyota Auto Receivables Owner Trust,
 Automobile Mtg.-Backed Obligations:
 Series 2002-B, Cl. A3, 3.76%, 6/15/06                   128,387        130,195
 Series 2003-A, Cl. A2, 1.28%, 8/15/05                   470,000        470,113
 Series 2003-B, Cl. A2, 1.43%, 2/15/06 3                 310,000        309,860
--------------------------------------------------------------------------------
 USAA Auto Owner Trust, Automobile Loan
 Asset-Backed Nts.:
 Series 2002-1, Cl. A2, 1.95%, 3/15/05                    19,981         20,001
 Series 2002-1, Cl. A3, 2.41%, 10/16/06                  190,000        191,432
 Series 2003-1, Cl. A2, 1.22%, 4/17/06                   250,000        249,797



17  |  OPPENHEIMER DISCIPLINED ALLOCATION FUND


STATEMENT OF INVESTMENTS  Continued

                                                       Principal    Market Value
                                                          Amount      See Note 1
--------------------------------------------------------------------------------
 Asset-Backed Securities Continued
 Volkswagen Auto Lease Trust, Automobile
 Lease Asset-Backed Securities,
 Series 2002-A, Cl. A2, 1.77%, 2/20/05                $  270,120   $    270,652
--------------------------------------------------------------------------------
 Volkswagen Auto Loan Enhanced Trust,
 Automobile Loan Receivables:
 Series 2003-1, Cl. A2, 1.11%, 12/20/05                  176,000        175,710
 Series 2003-2, Cl. A2, 1.55%, 6/20/06                   240,000        239,888
--------------------------------------------------------------------------------
 Whole Auto Loan Trust, Automobile Loan Receivables:
 Series 2002-1, Cl. A2, 1.88%, 6/15/05                   411,849        413,028
 Series 2003-1, Cl. A2A, 1.40%, 4/15/06                  440,000        439,916
                                                                   ------------
 Total Asset-Backed Securities (Cost $11,168,113)                    11,146,781

--------------------------------------------------------------------------------
 Mortgage-Backed Obligations--20.3%
 CIT Equipment Collateral, Equipment
 Receivable-Backed Nts.,
 Series 2003-EF1, Cl. A2, 1.49%, 12/20/05 3              120,000        119,850
--------------------------------------------------------------------------------
 Federal Home Loan Mortgage Corp.:
 5%, 11/1/33 2                                           622,000        612,281
 7%, 9/1/33                                              279,793        294,427
 8%, 4/1/16                                              200,019        216,285
 9%, 8/1/22-5/1/25                                        54,776         61,064
--------------------------------------------------------------------------------
 Federal Home Loan Mortgage Corp.,
 Gtd. Real Estate Mtg. Investment
 Conduit Multiclass Pass-Through Certificates:
 Series 2500, Cl. FD, 1.62%, 3/15/32 4                   117,021        117,409
 Series 2526, Cl. FE, 1.52%, 6/15/29 4                   121,867        121,643
 Series 2551, Cl. FD, 1.52%, 1/15/33 4                   106,771        107,223
--------------------------------------------------------------------------------
 Federal Home Loan Mortgage Corp.,
 Structured Pass-Through Securities,
 Collateralized Mtg. Obligations:
 Series H003, Cl. A2, 1.88%, 1/15/07                      32,453         32,467
 Series T-42, Cl. A2, 5.50%, 2/25/42                      60,719         61,868
--------------------------------------------------------------------------------
 Federal National Mortgage Assn.:
 5%, 11/1/33 2                                           799,000        788,263
 5.50%, 11/14/33 2                                     2,964,000      2,991,788
 6.50%, 3/1/26                                            99,062        103,261
 6.50%, 11/25/33 2                                     8,249,000      8,571,222
 7%, 2/25/22-11/1/33                                     718,972        757,384
 7%, 11/25/33 2                                        7,182,000      7,563,544
 7.50%, 1/1/08-6/1/08                                     70,793         75,365
 8.50%, 7/1/32                                            47,892         51,556
--------------------------------------------------------------------------------
 Federal National Mortgage Assn.,
 Collateralized Mtg. Obligations, Gtd.
 Real Estate Mtg. Investment Conduit
 Pass-Through Certificates,
 Trust 2002-77, Cl. WF, 1.52%, 12/18/32 4                186,844        187,417
--------------------------------------------------------------------------------
 Federal National Mortgage Assn., Interest-Only
 Stripped Mtg.-Backed Security:
 Trust 1993-223, Cl. PM, 1.984%, 10/25/23 6              193,300         20,586
 Trust 222, Cl. 2, 1.25%, 6/1/23 6                       358,401         59,282
 Trust 240, Cl. 2, 1.073%, 9/1/23 6                      142,525         24,796
 Trust 321, Cl. 2, (4.745)%, 3/1/32 6                    184,619         30,758
--------------------------------------------------------------------------------
 Government National Mortgage Assn.:
 7%, 4/15/09-2/15/24                                     262,848        280,269
 7.50%, 3/15/09                                          132,364        142,059
 8%, 5/15/17                                              70,524         77,144
 8.50%, 8/15/17-12/15/17                                  65,322         72,261



18  |  OPPENHEIMER DISCIPLINED ALLOCATION FUND



                                                       Principal   Market Value
                                                          Amount     See Note 1
--------------------------------------------------------------------------------
 Mortgage-Backed Obligations Continued
 Norwest Asset Securities Corp.,
 Collateralized Mtg. Obligations
 Pass-Through Certificates, Series
 1999-18, Cl. A2, 6%, 7/25/29                         $  228,170   $    228,060
--------------------------------------------------------------------------------
 Prudential Mortgage Capital Co. II
 LLC, Commercial Mtg. Pass-Through
 Certificates, Series PRU-HTG 2000-C1,
 Cl. A2, 7.306%, 10/6/15                                 192,000        220,792
--------------------------------------------------------------------------------
 Washington Mutual Mortgage Securities Corp.,
 Collateralized Mtg. Obligations Pass-Through
 Certificates, Series 2003-AR7, Cl. A1,
 1.51%, 8/25/33 4                                        273,965        273,584
                                                                   -------------
 Total Mortgage-Backed Obligations (Cost $24,108,874)                24,263,908

--------------------------------------------------------------------------------
 U.S. Government Obligations--3.6%
 Federal Home Loan Mortgage Corp. Unsec. Nts.:
 4.50%, 1/15/13-7/15/13                                  130,000        127,901
 5.50%, 7/15/06 7                                      1,600,000      1,725,621
--------------------------------------------------------------------------------
 Federal National Mortgage Assn. Unsec. Nts.:
 6.375%, 6/15/09                                          70,000         79,024
 7.25%, 1/15/10                                        1,050,000      1,236,162
--------------------------------------------------------------------------------
 Tennessee Valley Authority Bonds:
 5.375%, 11/13/08                                        122,000        131,826
 7.125%, 5/1/30                                          128,000        155,089
--------------------------------------------------------------------------------
 U.S. Treasury Bonds:
 4.25%, 8/15/13                                          343,000        341,714
 5.375%, 2/15/31                                         160,000        165,394
 STRIPS, 2.99%, 2/15/10 8                                125,000         98,428
 STRIPS, 4.96%, 2/15/16 8                                171,000         92,339
 STRIPS, 5.48%, 11/15/27 8                                97,000         25,482
--------------------------------------------------------------------------------
 U.S. Treasury Nts., 3.125%, 9/15/08                     190,000        189,191
                                                                   -------------
 Total U.S. Government Obligations (Cost $4,395,998)                  4,368,171

--------------------------------------------------------------------------------
 Foreign Government Obligations--0.1%
 United Mexican States Nts., 7.50%, 1/14/12
 (Cost $111,094)                                         110,000        123,200

--------------------------------------------------------------------------------
 Non-Convertible Corporate Bonds and Notes--10.3%
 AEP Resources, Inc., 6.50% Sr. Nts., 12/1/03 5          180,000        180,576
--------------------------------------------------------------------------------
 Aetna, Inc., 7.375% Sr. Unsec. Nts., 3/1/06              75,000         82,883
--------------------------------------------------------------------------------
 Allied Waste North America, Inc., 10%
 Sr. Unsec. Sub. Nts., Series B, 8/1/09                   85,000         92,863
--------------------------------------------------------------------------------
 American Honda Finance Corp., 3.85% Nts.,
 11/6/08 2                                                60,000         59,994
--------------------------------------------------------------------------------
 AT&T Wireless Services, Inc., 7.50% Sr.
 Unsec. Nts., 5/1/07                                     175,000        196,475
--------------------------------------------------------------------------------
 AXA Group, 8.60% Unsec. Sub. Nts., 12/15/30             190,000        234,971
--------------------------------------------------------------------------------
 Bankers Trust Corp., 7.375% Unsec. Sub.
 Nts., 5/1/08                                             20,000         22,890
--------------------------------------------------------------------------------
 Boeing Capital Corp., 7.375% Sr. Nts., 9/27/10          290,000        330,071
--------------------------------------------------------------------------------
 British Sky Broadcasting Group plc, 8.20%
 Sr. Unsec. Nts., 7/15/09                                 95,000        110,835
--------------------------------------------------------------------------------
 British Telecommunications plc, 7.875% Nts.,
 12/15/05                                                155,000        171,724
--------------------------------------------------------------------------------
 Cardinal Health, Inc., 4.45% Nts., 6/30/05              160,000        166,310
--------------------------------------------------------------------------------
 CenterPoint Energy, Inc., 5.875% Nts., 6/1/08 5         135,000        139,074
--------------------------------------------------------------------------------
 CIT Group, Inc., 7.75% Sr. Unsec. Unsub. Nts.,
 4/2/12                                                  120,000        140,270
--------------------------------------------------------------------------------
 Citigroup, Inc., 6.625% Unsec. Sub. Nts.,
 6/15/32                                                 350,000        379,965
--------------------------------------------------------------------------------
 Citizens Communications Co., 9.25% Sr. Nts.,
 5/15/11                                                 115,000        143,779



19  |  OPPENHEIMER DISCIPLINED ALLOCATION FUND

STATEMENT OF INVESTMENTS  Continued

                                                       Principal   Market Value
                                                          Amount     See Note 1
--------------------------------------------------------------------------------
 Non-Convertible Corporate Bonds and Notes Continued
 Credit Suisse First Boston, Inc. (USA),
 6.125% Nts., 11/15/11                                $  230,000   $    248,955
--------------------------------------------------------------------------------
 CSX Corp., 6.25% Unsec. Nts., 10/15/08                  120,000        131,860
--------------------------------------------------------------------------------
 DaimlerChrysler NA Holding Corp., 6.40% Nts.,
 5/15/06                                                 225,000        240,664
--------------------------------------------------------------------------------
 Delhaize America, Inc., 9% Unsub. Debs.,
 4/15/31                                                 165,000        186,863
--------------------------------------------------------------------------------
 Delphi Corp., 6.55% Nts., 6/15/06                       135,000        143,935
--------------------------------------------------------------------------------
 Deutsche Telekom International Finance BV,
 8.50% Unsub. Nts., 6/15/10                              155,000        186,836
--------------------------------------------------------------------------------
 Dime Capital Trust I, 9.33% Capital Securities,
 Series A, 5/6/27                                        240,000        281,759
--------------------------------------------------------------------------------
 Dominion Resources, Inc., 8.125% Sr.
 Unsub. Nts., 6/15/10                                    135,000        161,674
--------------------------------------------------------------------------------
 DTE Energy Co., 6.375% Sr. Nts., 4/15/33                125,000        124,994
--------------------------------------------------------------------------------
 El Paso Natural Gas Co., 6.75% Unsec.
 Unsub. Nts., 11/15/03 3                                  30,000         30,000
--------------------------------------------------------------------------------
 EOP Operating LP, 7.75% Unsec. Nts., 11/15/07           145,000        166,229
--------------------------------------------------------------------------------
 Farmers Insurance Exchange, 8.625% Nts.,
 5/1/24 5                                                300,000        310,654
--------------------------------------------------------------------------------
 Ford Motor Co., 7.45% Bonds, 7/16/31                     70,000         63,053
--------------------------------------------------------------------------------
 France Telecom SA:
 8.45% Sr. Unsec. Nts., 3/1/06                            80,000         89,651
 9% Sr. Unsec. Nts., 3/1/11                               80,000         96,674
 9.75% Sr. Unsec. Nts., 3/1/31 4                          45,000         59,596
--------------------------------------------------------------------------------
 Franklin Resources, Inc., 3.70% Nts., 4/15/08            80,000         79,854
--------------------------------------------------------------------------------
 Gap, Inc. (The), 6.90% Nts., 9/15/07                    100,000        109,250
--------------------------------------------------------------------------------
 General Electric Capital Corp., 2.75% Nts.,
 Series A, 9/25/06                                        15,000         15,015
--------------------------------------------------------------------------------
 General Motors Acceptance Corp., 6.875% Unsec.
 Unsub. Nts., 8/28/12                                    340,000        349,097
--------------------------------------------------------------------------------
 General Motors Corp., 8.375% Sr. Unsec. Debs.,
 7/15/33                                                 150,000        158,707
--------------------------------------------------------------------------------
 Hartford Financial Services Group, Inc. (The),
 2.375% Nts., 6/1/06                                      70,000         69,288
--------------------------------------------------------------------------------
 Health Net, Inc., 8.375% Sr. Unsec. Unsub. Nts.,
 4/15/11                                                  95,000        112,511
--------------------------------------------------------------------------------
 Hertz Corp. (The), 7.625% Sr. Nts., 6/1/12              360,000        362,438
--------------------------------------------------------------------------------
 Household Finance Corp., 7% Nts., 5/15/12               160,000        182,005
--------------------------------------------------------------------------------
 Hutchison Whampoa International Ltd., 6.50%
 Nts., 2/13/13 5                                         155,000        161,776
--------------------------------------------------------------------------------
 John Hancock Global Funding II:
 5% Nts., 7/27/07 5                                      165,000        174,514
 7.90% Nts., 7/2/10 5                                    105,000        124,764
--------------------------------------------------------------------------------
 Kinder Morgan, Inc., 6.50% Sr. Unsec. Nts.,
 9/1/12                                                  150,000        165,485
--------------------------------------------------------------------------------
 Kroger Co. (The), 7.80% Sr. Nts., 8/15/07               180,000        207,023
--------------------------------------------------------------------------------
 Liberty Media Corp., 3.50% Nts., 9/25/06                110,000        108,723
--------------------------------------------------------------------------------
 Merrill Lynch & Co., Inc., 3.375% Nts.,
 Series B, 9/14/07                                       135,000        135,691
--------------------------------------------------------------------------------
 MidAmerican Energy Holdings Co., 5.875% Sr.
 Nts., 10/1/12                                           265,000        274,664
--------------------------------------------------------------------------------
 Morgan Stanley, 6.60% Nts., 4/1/12                      155,000        172,871
--------------------------------------------------------------------------------
 Nationwide Financial Services, Inc.,
 5.90% Nts., 7/1/12                                      125,000        130,128
--------------------------------------------------------------------------------
 News America Holdings, Inc., 7.75% Sr.
 Unsec. Debs., 12/1/45                                   165,000        189,882
--------------------------------------------------------------------------------
 Niagara Mohawk Power Corp., 5.375% Sr.
 Unsec. Nts., 10/1/04                                     75,000         77,425
--------------------------------------------------------------------------------
 NiSource Finance Corp., 7.875% Sr. Unsec.
 Nts., 11/15/10                                          190,000        225,127
--------------------------------------------------------------------------------
 NorAm Energy Corp., 6.375% Unsec. Term
 Enhanced Remarketable Nts., 11/1/03                       6,000          6,000
--------------------------------------------------------------------------------
 Northrop Grumman Corp., 7.125% Sr. Nts.,
 2/15/11                                                 140,000        161,107



20  |  OPPENHEIMER DISCIPLINED ALLOCATION FUND



                                                       Principal   Market Value
                                                          Amount     See Note 1
--------------------------------------------------------------------------------
 Non-Convertible Corporate Bonds and Notes Continued
 Petroleos Mexicanos, 9.50% Sr. Sub. Nts.,
 9/15/27                                              $   70,000   $     81,725
--------------------------------------------------------------------------------
 PF Export Receivables Master Trust, 3.748% Sr.
 Nts., Series B, 6/1/13 5                                 75,000         73,051
--------------------------------------------------------------------------------
 Progress Energy, Inc., 6.55% Sr. Unsec. Nts.,
 3/1/04                                                  225,000        228,661
--------------------------------------------------------------------------------
 Prudential Holdings LLC, 8.695% Bonds,
 Series C, 12/18/23 5                                    195,000        236,526
--------------------------------------------------------------------------------
 Prudential Insurance Co. of America, 8.30%
 Nts., 7/1/25 5                                          260,000        316,893
--------------------------------------------------------------------------------
 Pulte Homes, Inc., 8.375% Sr. Nts., 8/15/04              45,000         46,584
--------------------------------------------------------------------------------
 Raytheon Co., 5.70% Sr. Unsec. Nts., 11/1/03            275,000        275,000
--------------------------------------------------------------------------------
 Safeway, Inc., 4.80% Sr. Unsec. Nts., 7/16/07           170,000        177,382
--------------------------------------------------------------------------------
 Sears Roebuck Acceptance Corp., 3.03% Nts.,
 Series VII, 2/25/04 4                                    55,000         55,104
--------------------------------------------------------------------------------
 Shopping Center Associates, 6.75% Sr. Unsec.
 Nts., 1/15/04 5                                          40,000         40,406
--------------------------------------------------------------------------------
 Sprint Capital Corp., 8.75% Nts., 3/15/32               180,000        205,433
--------------------------------------------------------------------------------
 TCI Communications, Inc., 9.80% Sr. Unsec.
 Debs., 2/1/12                                           290,000        377,293
--------------------------------------------------------------------------------
 Telefonos de Mexico SA, 8.25% Sr. Unsec.
 Nts., 1/26/06                                            95,000        105,569
--------------------------------------------------------------------------------
 Time Warner Cos., Inc., 9.125% Debs., 1/15/13           130,000        162,981
--------------------------------------------------------------------------------
 Time Warner Entertainment Co. LP:
 8.375% Sr. Debs., 3/15/23                                35,000         42,718
 10.15% Sr. Nts., 5/1/12                                  65,000         86,269
--------------------------------------------------------------------------------
 Tyco International Group SA, 6.75% Sr.
 Unsub. Nts., 2/15/11                                    375,000        400,781
--------------------------------------------------------------------------------
 Vornado Realty LP, 5.625% Sr. Unsec.
 Unsub. Nts., 6/15/07                                    135,000        142,705
--------------------------------------------------------------------------------
 Walt Disney Co. (The), 6.75% Sr. Nts., 3/30/06          145,000        158,309
--------------------------------------------------------------------------------
 Waste Management, Inc., 7% Sr. Nts., 7/15/28             90,000         96,704
--------------------------------------------------------------------------------
 Weyerhaeuser Co., 5.50% Unsec. Unsub.
 Nts., 3/15/05                                           175,000        182,396
--------------------------------------------------------------------------------
 Wyeth, 5.875% Nts., 3/15/04                             165,000        167,753
                                                                   -------------
 Total Non-Convertible Corporate Bonds and
 Notes (Cost $11,637,210)                                            12,389,665

--------------------------------------------------------------------------------
 Structured Notes--2.7%
 Deutsche Bank AG, COUNTS Corp. Sec.
 Credit Linked Nts., Series 2003-1,
 2.89%, 1/7/05 3,4                                       950,000        936,605
--------------------------------------------------------------------------------
 JPMorgan Chase Bank, High Yield Index
 BB Linked Nts., 6.40%, 6/20/08                        1,350,000      1,346,625
--------------------------------------------------------------------------------
 UBS AG, High Grade Credit Linked Nts.,
 2.783%, 12/10/04 4                                      950,000        954,750
                                                                   -------------
 Total Structured Notes (Cost $3,268,482)                             3,237,980

--------------------------------------------------------------------------------
 Joint Repurchase Agreements--3.7%
 Undivided interest of 13.45% in joint
 repurchase agreement (Principal
 Amount/Market Value $33,038,000, with
 a maturity value of $33,040,671) with
 Zions Bank/Capital Markets Group, 0.97%,
 dated 10/31/03, to be repurchased at
 $4,443,359 on 11/3/03, collateralized
 by U.S. Treasury Bonds, 1.625%, 1/31/05,
 with a value of $33,755,317 (Cost $4,443,000)         4,443,000      4,443,000
--------------------------------------------------------------------------------
 Total Investments, at Value (Cost $127,711,150)           117.1%   140,335,425
--------------------------------------------------------------------------------
 Liabilities in Excess of Other Assets                     (17.1)   (20,497,838)
                                                      --------------------------
 Net Assets                                                100.0%  $119,837,587
                                                      ==========================






21  |  OPPENHEIMER DISCIPLINED ALLOCATION FUND


STATEMENT OF INVESTMENTS  Continued

Footnotes to Statement of Investments

1. Non-income producing security.
2. When-issued security to be delivered and settled after October 31, 2003. See
Note 1 of Notes to Financial Statements.
3. Identifies issues considered to be illiquid or restricted. See Note 8 of
Notes to Financial Statements.
4. Represents the current interest rate for a variable or increasing rate
security.
5. 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 $2,125,389 or 1.77% of the Fund's net
assets as of October 31, 2003.
6. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline. Most other fixed income securities
increase in price when interest rates decline. The principal amount of the
underlying pool represents the notional amount on which current interest is
calculated. The price of these securities is typically more sensitive to changes
in prepayment rates than traditional mortgage-backed securities (for example,
GNMA pass-throughs). Interest rates disclosed represent current yields based
upon the current cost basis and estimated timing and amount of future cash
flows. These securities amount to $135,422 or 0.11% of the Fund's net assets as
of October 31, 2003.
7. Securities with an aggregate market value of $129,422 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 6 of Notes to Financial Statements.
8. Zero coupon bond reflects effective yield on the date of purchase.
9. Received as the result of issuer reorganization. Currently has minimal market
value.

See accompanying Notes to Financial Statements.


22  |  OPPENHEIMER DISCIPLINED ALLOCATION FUND


STATEMENT OF ASSETS AND LIABILITIES  October 31, 2003




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

 Assets
 Investments, at value (cost $127,711,150)--see accompanying statement                          $140,335,425
-------------------------------------------------------------------------------------------------------------
 Cash                                                                                                  6,869
-------------------------------------------------------------------------------------------------------------
 Receivables and other assets:
 Investments sold (including $1,074,309 sold on a when-issued basis)                               1,213,679
 Interest, dividends and principal paydowns                                                          544,246
 Shares of capital stock sold                                                                        103,882
 Futures margins                                                                                      26,513
 Swap contract                                                                                        21,596
 Other                                                                                                   390
                                                                                                -------------
 Total assets                                                                                    142,252,600

-------------------------------------------------------------------------------------------------------------
 Liabilities
 Payables and other liabilities:
 Investments purchased (including $21,686,570 purchased on a when-issued basis)                   22,191,440
 Shareholder reports                                                                                  66,638
 Shares of capital stock redeemed                                                                     50,211
 Transfer and shareholder servicing agent fees                                                        25,400
 Distribution and service plan fees                                                                   25,065
 Directors' compensation                                                                              24,380
 Other                                                                                                31,879
                                                                                                -------------
 Total liabilities                                                                                22,415,013

-------------------------------------------------------------------------------------------------------------
 Net Assets                                                                                     $119,837,587
                                                                                                =============

-------------------------------------------------------------------------------------------------------------
 Composition of Net Assets
 Par value of shares of capital stock                                                           $      9,178
-------------------------------------------------------------------------------------------------------------
 Additional paid-in capital                                                                      130,589,388
-------------------------------------------------------------------------------------------------------------
 Undistributed net investment income                                                                 170,158
-------------------------------------------------------------------------------------------------------------
 Accumulated net realized loss on investments and foreign currency transactions                  (23,523,270)
-------------------------------------------------------------------------------------------------------------
 Net unrealized appreciation on investments and translation of
 assets and liabilities denominated in foreign currencies                                         12,592,133
                                                                                                -------------
 Net Assets                                                                                     $119,837,587
                                                                                                =============






23  |  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 $100,032,147 and 7,670,718 shares of capital stock outstanding)                                   $13.04
 Maximum offering price per share (net asset value plus sales charge
 of 5.75% of offering price)                                                                          $13.84
-------------------------------------------------------------------------------------------------------------
 Class B Shares:
 Net asset value, redemption price (excludes applicable contingent deferred
 sales charge) and offering price per share (based on net
 assets of $14,747,074 and 1,114,743 shares of capital stock outstanding)                             $13.23
-------------------------------------------------------------------------------------------------------------
 Class C Shares:
 Net asset value, redemption price (excludes applicable contingent deferred
 sales charge) and offering price per share (based on net
 assets of $4,666,100 and 362,249 shares of capital stock outstanding)                                $12.88
-------------------------------------------------------------------------------------------------------------
 Class N Shares:
 Net asset value, redemption price (excludes applicable contingent deferred
 sales charge) and offering price per share (based on net
 assets of $392,266 and 30,169 shares of capital stock outstanding)                                   $13.00




 See accompanying Notes to Financial Statements.




24  |  OPPENHEIMER DISCIPLINED ALLOCATION FUND


STATEMENT OF OPERATIONS  For the Year Ended October 31, 2003




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

 Investment Income
 Interest                                                                                          $ 2,001,467
----------------------------------------------------------------------------------------------------------------
 Dividends (net of foreign withholding taxes of $7,730)                                                711,899
                                                                                                   -------------
 Total investment income                                                                             2,713,366

----------------------------------------------------------------------------------------------------------------
 Expenses
 Management fees                                                                                       698,136
----------------------------------------------------------------------------------------------------------------
 Distribution and service plan fees:
 Class A                                                                                               234,550
 Class B                                                                                               127,687
 Class C                                                                                                38,009
 Class N                                                                                                 1,706
----------------------------------------------------------------------------------------------------------------
 Transfer and shareholder servicing agent fees:
 Class A                                                                                               225,317
 Class B                                                                                                48,680
 Class C                                                                                                15,078
 Class N                                                                                                 2,635
----------------------------------------------------------------------------------------------------------------
 Shareholder reports                                                                                   107,603
----------------------------------------------------------------------------------------------------------------
 Accounting service fees                                                                                15,000
----------------------------------------------------------------------------------------------------------------
 Directors' compensation                                                                                 1,301
----------------------------------------------------------------------------------------------------------------
 Custodian fees and expenses                                                                               692
----------------------------------------------------------------------------------------------------------------
 Other                                                                                                  35,897
                                                                                                   -------------
 Total expenses                                                                                      1,552,291
 Less reduction to custodian expenses                                                                     (692)
 Less voluntary waiver of transfer and shareholder servicing agent fees--Class A                        (2,584)
 Less voluntary waiver of transfer and shareholder servicing agent fees--Class B                        (5,235)
 Less voluntary waiver of transfer and shareholder servicing agent fees--Class C                        (2,016)
 Less voluntary waiver of transfer and shareholder servicing agent fees--Class N                        (1,586)
                                                                                                   -------------
 Net expenses                                                                                        1,540,178

----------------------------------------------------------------------------------------------------------------
 Net Investment Income                                                                               1,173,188

----------------------------------------------------------------------------------------------------------------
 Realized and Unrealized Gain (Loss)
 Net realized gain (loss) on:
 Investments (including premiums on options exercised)                                               1,674,168
 Closing of futures contracts                                                                         (222,469)
 Foreign currency transactions                                                                            (248)
                                                                                                   -------------
 Net realized gain                                                                                   1,451,451
----------------------------------------------------------------------------------------------------------------
 Net change in unrealized appreciation on:
 Investments                                                                                        11,836,685
 Translation of assets and liabilities denominated in foreign currencies                                   365
 Futures contracts                                                                                     107,054
                                                                                                   -------------
 Net change in unrealized appreciation                                                              11,944,104

----------------------------------------------------------------------------------------------------------------
 Net Increase in Net Assets Resulting from Operations                                              $14,568,743
                                                                                                   =============



 See accompanying Notes to Financial Statements.


25  |  OPPENHEIMER DISCIPLINED ALLOCATION FUND


STATEMENTS OF CHANGES IN NET ASSETS




 Year Ended October 31,                                                           2003                2002
-------------------------------------------------------------------------------------------------------------

 Operations
 Net investment income                                                    $  1,173,188        $  1,967,602
-------------------------------------------------------------------------------------------------------------
 Net realized gain (loss)                                                    1,451,451         (10,767,199)
-------------------------------------------------------------------------------------------------------------
 Net change in unrealized appreciation                                      11,944,104           1,737,908
                                                                          -----------------------------------
 Net increase (decrease) in net assets resulting from operations            14,568,743          (7,061,689)

-------------------------------------------------------------------------------------------------------------
 Dividends and/or Distributions to Shareholders
 Dividends from net investment income:
 Class A                                                                    (1,140,244)         (2,252,545)
 Class B                                                                       (45,309)           (179,379)
 Class C                                                                       (15,476)            (40,660)
 Class N                                                                        (2,774)             (3,372)

-------------------------------------------------------------------------------------------------------------
 Capital Stock Transactions
 Net increase (decrease) in net assets resulting from capital stock
 transactions:
 Class A                                                                    (4,085,561)        (11,878,838)
 Class B                                                                     1,001,740          (1,491,347)
 Class C                                                                     1,212,712             322,450
 Class N                                                                       109,096             276,606

-------------------------------------------------------------------------------------------------------------
 Net Assets
 Total increase (decrease)                                                  11,602,927         (22,308,774)
-------------------------------------------------------------------------------------------------------------
 Beginning of period                                                       108,234,660         130,543,434
                                                                          -----------------------------------
 End of period [including undistributed net investment income
 of $170,158 and $176,788, respectively]                                  $119,837,587        $108,234,660
                                                                          ===================================




 See accompanying Notes to Financial Statements.




26  |  OPPENHEIMER DISCIPLINED ALLOCATION FUND


FINANCIAL HIGHLIGHTS




 Class A           Year Ended October 31,                      2003        2002        2001       2000       1999
-------------------------------------------------------------------------------------------------------------------

 Per Share Operating Data
 Net asset value, beginning of period                       $11.56      $12.54      $14.23     $15.03     $15.45
-------------------------------------------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment income                                         .14         .22         .26        .44        .44
 Net realized and unrealized gain (loss)                      1.48        (.94)      (1.69)       .68       (.01)
                                                          ---------------------------------------------------------
 Total from investment operations                             1.62        (.72)      (1.43)      1.12        .43
-------------------------------------------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income                         (.14)       (.26)       (.26)      (.44)      (.44)
 Distributions from net realized gain                           --          --          --      (1.48)      (.41)
                                                          ---------------------------------------------------------
 Total dividends and/or distributions
 to shareholders                                              (.14)       (.26)       (.26)     (1.92)      (.85)
-------------------------------------------------------------------------------------------------------------------
 Net asset value, end of period                             $13.04      $11.56      $12.54     $14.23     $15.03
                                                          =========================================================

-------------------------------------------------------------------------------------------------------------------
 Total Return, at Net Asset Value 1                          14.17%      (5.86)%    (10.12)%     8.27%      2.62%

-------------------------------------------------------------------------------------------------------------------
 Ratios/Supplemental Data
 Net assets, end of period (in thousands)                 $100,032    $ 92,806    $112,864   $144,244   $258,159
-------------------------------------------------------------------------------------------------------------------
 Average net assets (in thousands)                        $ 94,811    $104,415    $128,477   $172,514   $293,677
-------------------------------------------------------------------------------------------------------------------
 Ratios to average net assets: 2
 Net investment income                                        1.18%       1.73%       1.88%      2.88%      2.72%
 Total expenses                                               1.26% 3,4   1.21% 3,4   1.19% 3    1.11% 3    1.04% 3
-------------------------------------------------------------------------------------------------------------------
 Portfolio turnover rate                                       275%        193%        164%        34%       122%




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. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year.
3. Reduction to custodian expenses less than 0.01%.
4. Voluntary waiver of transfer agent fees less than 0.01%.

See accompanying Notes to Financial Statements.

27  |  OPPENHEIMER DISCIPLINED ALLOCATION FUND



FINANCIAL HIGHLIGHTS Continued



 Class B           Year Ended October 31,                        2003       2002       2001       2000       1999
-------------------------------------------------------------------------------------------------------------------

 Per Share Operating Data
 Net asset value, beginning of period                         $11.73    $ 12.72    $ 14.43     $15.20     $15.62
-------------------------------------------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment income                                           .04        .11        .15        .30        .31
 Net realized and unrealized gain (loss)                        1.50       (.94)     (1.70)       .73         --
                                                              -----------------------------------------------------
 Total from investment operations                               1.54       (.83)     (1.55)      1.03        .31
-------------------------------------------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income                           (.04)      (.16)      (.16)      (.32)      (.32)
 Distributions from net realized gain                             --         --         --      (1.48)      (.41)
                                                              -----------------------------------------------------
 Total dividends and/or distributions
 to shareholders                                                (.04)      (.16)      (.16)     (1.80)      (.73)
-------------------------------------------------------------------------------------------------------------------
 Net asset value, end of period                               $13.23     $11.73     $12.72     $14.43     $15.20
                                                              =====================================================

-------------------------------------------------------------------------------------------------------------------
 Total Return, at Net Asset Value 1                            13.21%     (6.61)%   (10.79)%     7.48%      1.84%

-------------------------------------------------------------------------------------------------------------------
 Ratios/Supplemental Data
 Net assets, end of period (in thousands)                    $14,747    $12,204    $14,770    $17,892    $23,522
-------------------------------------------------------------------------------------------------------------------
 Average net assets (in thousands)                           $12,776    $13,639    $16,569    $19,643    $24,648
-------------------------------------------------------------------------------------------------------------------
 Ratios to average net assets: 2
 Net investment income                                          0.31%      0.94%      1.14%      2.12%      1.97%
 Total expenses                                                 2.15%      2.00%      1.94%      1.87%      1.80%
 Expenses after expense reimbursement or fee
 waiver and reduction to custodian expenses                     2.11%       N/A 3,4    N/A 3      N/A 3      N/A 3
-------------------------------------------------------------------------------------------------------------------
 Portfolio turnover rate                                         275%       193%       164%        34%       122%




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. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year.
3. Reduction to custodian expenses less than 0.01%.
4. Voluntary waiver of transfer agent fees less than 0.01%.

See accompanying Notes to Financial Statements.

28  |  OPPENHEIMER DISCIPLINED ALLOCATION FUND






 Class C           Year Ended October 31,                        2003       2002       2001       2000       1999
-------------------------------------------------------------------------------------------------------------------

 Per Share Operating Data
 Net asset value, beginning of period                        $ 11.43    $ 12.41    $ 14.08     $14.88     $15.31
-------------------------------------------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment income                                           .07        .13        .13        .28        .32
 Net realized and unrealized gain (loss)                        1.43       (.94)     (1.64)       .72       (.01)
                                                             ------------------------------------------------------
 Total from investment operations                               1.50       (.81)     (1.51)      1.00        .31
-------------------------------------------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income                           (.05)      (.17)      (.16)      (.32)      (.33)
 Distributions from net realized gain                             --         --         --      (1.48)      (.41)
                                                             ------------------------------------------------------
 Total dividends and/or distributions
 to shareholders                                                (.05)      (.17)      (.16)     (1.80)      (.74)
-------------------------------------------------------------------------------------------------------------------
 Net asset value, end of period                               $12.88     $11.43     $12.41     $14.08     $14.88
                                                             ======================================================

-------------------------------------------------------------------------------------------------------------------
 Total Return, at Net Asset Value 1                            13.18%     (6.64)%   (10.76)%     7.44%      1.84%

-------------------------------------------------------------------------------------------------------------------
 Ratios/Supplemental Data
 Net assets, end of period (in thousands)                     $4,666      $2,984    $2,893     $3,931     $5,719
-------------------------------------------------------------------------------------------------------------------
 Average net assets (in thousands)                            $3,806      $2,961    $3,280     $4,255     $5,876
-------------------------------------------------------------------------------------------------------------------
 Ratios to average net assets: 2
 Net investment income                                          0.29%      0.93%      1.14%      2.13%      1.97%
 Total expenses                                                 2.17%      2.00%      1.94%      1.86%      1.80%
 Expenses after expense reimbursement or fee
 waiver and reduction to custodian expenses                     2.12%       N/A 3,4    N/A 3      N/A 3      N/A 3
-------------------------------------------------------------------------------------------------------------------
 Portfolio turnover rate                                         275%       193%       164%        34%       122%




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. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year.
3. Reduction to custodian expenses less than 0.01%.
4. Voluntary waiver of transfer agent fees less than 0.01%.

See accompanying Notes to Financial Statements.

29  |  OPPENHEIMER DISCIPLINED ALLOCATION FUND


FINANCIAL HIGHLIGHTS Continued



 Class N           Year Ended October 31,                                2003        2002      2001 1
-----------------------------------------------------------------------------------------------------

 Per Share Operating Data
 Net asset value, beginning of period                                $ 11.52     $ 12.52   $ 13.74
-----------------------------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment income                                                   .12         .16       .12
 Net realized and unrealized gain (loss)                                1.46        (.91)    (1.20)
                                                                     --------------------------------
 Total from investment operations                                       1.58        (.75)    (1.08)
-----------------------------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income                                   (.10)       (.25)     (.14)
 Distributions from net realized gain                                     --          --        --
                                                                     --------------------------------
 Total dividends and/or distributions to shareholders                   (.10)       (.25)     (.14)
-----------------------------------------------------------------------------------------------------
 Net asset value, end of period                                       $13.00      $11.52    $12.52
                                                                     ================================

-----------------------------------------------------------------------------------------------------
 Total Return, at Net Asset Value 2                                    13.81%      (6.17)%   (7.90)%

-----------------------------------------------------------------------------------------------------
 Ratios/Supplemental Data
 Net assets, end of period (in thousands)                               $392        $241        $2
-----------------------------------------------------------------------------------------------------
 Average net assets (in thousands)                                      $342        $160        $1
-----------------------------------------------------------------------------------------------------
 Ratios to average net assets: 3
 Net investment income                                                  0.79%       1.28%     1.04%
 Total expenses                                                         2.04%       1.60%     1.68%
 Expenses after expense reimbursement or fee
 waiver and reduction to custodian expenses                             1.58%        N/A 4,5   N/A 4
-----------------------------------------------------------------------------------------------------
 Portfolio turnover rate                                                 275%        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. Returns do not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or the redemption of
Fund shares.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.
5. Voluntary waiver of transfer agent fees less than 0.01%.

See accompanying Notes to Financial Statements.

30  |  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. Securities traded on NASDAQ are valued based on the closing
 price provided by NASDAQ prior to the time when the Fund's assets are valued.
 In the absence of a sale, the security is valued at the last sale price on the
 prior trading day, if it is within the spread of the closing bid and asked
 prices, and if not, at the closing bid price. Securities (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 using 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).

--------------------------------------------------------------------------------
 Structured Notes. The Fund invests in index-linked structured notes whose
 principal and/or interest depend on the performance of an underlying index. The
 structured notes are leveraged, which increases the volatility of each note's
 market value relative to the change in the underlying index. Fluctuations in
 value of these securities are recorded as unrealized gains and losses in the
 accompanying financial statements. The Fund records a realized gain or loss
 when a structured note is sold or matures. As of October 31, 2003, the market
 value of these securities comprised 2.7% of the Fund's net assets, and resulted
 in unrealized losses of $30,502.



31  |  OPPENHEIMER DISCIPLINED ALLOCATION FUND


NOTES TO FINANCIAL STATEMENTS Continued

--------------------------------------------------------------------------------
 1. Significant Accounting Policies Continued
 Securities 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 purchase commitments. The purchase 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 purchases while remaining substantially fully
 invested. As of October 31, 2003, the Fund had entered into when-issued
 purchase commitments of $21,686,570. Additionally, the Fund had when-issued
 sale commitments of $1,074,309.
    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 Fund records the
 incremental difference between the forward purchase and sale of each forward
 roll as realized gain (loss) on investments.
    Risks 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 Fund's accounting records are maintained in
 U.S. dollars. Prices of securities denominated in foreign currencies are
 translated into U.S. dollars at the closing rates of exchange. Amounts related
 to the purchase and sale of foreign securities and investment income are
 translated at the rates of exchange prevailing on the respective dates of such
 transactions.
    The effect of changes in foreign currency exchange rates on investments is
 separately identified from the fluctuations arising from changes in market
 values of securities held and reported with all other foreign currency gains
 and losses in the Fund's Statement of Operations.

--------------------------------------------------------------------------------
 Joint Repurchase Agreements. Pursuant to an Exemptive Order issued by the
 Securities and Exchange Commission, the Fund, along with other affiliated funds
 advised by the Manager, may transfer uninvested cash balances into joint
 trading accounts on a daily basis. Secured by U.S. government securities, these
 balances are invested in one or more repurchase agreements. Securities pledged
 as collateral for repurchase agreements are held by a custodian bank until the
 agreements mature. Each agreement requires that the market value of the
 collateral be sufficient to cover payments of interest and principal. In the
 event of default by the other party to the agreement, retention of the
 collateral may be subject to legal proceedings.



32  |  OPPENHEIMER DISCIPLINED ALLOCATION FUND



--------------------------------------------------------------------------------
 Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than
 those attributable to a specific class), gains and losses are allocated on a
 daily basis to each class of shares based upon the relative proportion of net
 assets represented by such class. Operating expenses directly attributable to a
 specific class are charged against the operations of that class.

--------------------------------------------------------------------------------
 Federal Taxes. The Fund intends to comply with provisions of the Internal
 Revenue Code applicable to regulated investment companies and to distribute
 substantially all of its investment company taxable income, including any net
 realized gain on investments not offset by capital loss carryforwards, if any,
 to shareholders, therefore, no federal income or excise tax provision is
 required.

 The tax components of capital shown in the table below represent distribution
 requirements the Fund must satisfy under the income tax regulations, losses the
 Fund may be able to offset against income and gains realized in future years
 and unrealized appreciation or depreciation of securities and other investments
 for federal income tax purposes.


                                                                                   Net Unrealized
                                                                                     Appreciation
              Undistributed        Undistributed          Accumulated            Based on Cost of
              Net Investment           Long-Term                 Loss      Securities for Federal
              Income                        Gain     Carryforward 1,2         Income Tax Purposes
              -----------------------------------------------------------------------------------

              $194,197                       $--          $22,954,949                 $12,023,811

 1. As of October 31, 2003, the Fund had $22,954,949 of net capital loss
 carryforwards available to offset future realized capital gains, if any, and
 thereby reduce future taxable gain distributions. As of October 31, 2003,
 details of the capital loss carryforwards were as follows:

                              Expiring
                              ----------------------
                              2009       $12,735,068
                              2010        10,219,881
                                         -----------
                              Total      $22,954,949
                                         ===========

 2. During the fiscal year October 31, 2003, the Fund utilized $1,129,404 of
 capital loss carryforward to offset capital gains realized in that fiscal year.
 During the fiscal year October 31, 2002, the Fund did not utilize any capital
 loss carryforwards.

 Net investment income (loss) and net realized gain (loss) may differ for
 financial statement and tax purposes. The character of dividends and
 distributions made during the fiscal year from net investment income or net
 realized gains may differ from their ultimate characterization for federal
 income tax purposes. Also, due to timing of dividends and distributions, the
 fiscal year in which amounts are distributed may differ from the fiscal year in
 which the income or net realized gain was recorded by the Fund. Accordingly,
 the following amounts have been reclassified for October 31, 2003. Net assets
 of the Fund were unaffected by the reclassifications.

                To                   To                                   Net
                Ordinary        Capital           Tax Return       Investment
                Income             Loss           of Capital             Loss
                -------------------------------------------------------------
                $23,985         $23,985                  $--              $--

 The tax character of distributions paid during the years ended October 31, 2003
 and October 31, 2002 was as follows:

                                           Year Ended        Year Ended
                                     October 31, 2003  October 31, 2002
-----------------------------------------------------------------------
        Distributions paid from:
        Ordinary income                    $1,203,803        $2,475,956


33  |  OPPENHEIMER DISCIPLINED ALLOCATION FUND

NOTES TO FINANCIAL STATEMENTS Continued

--------------------------------------------------------------------------------
 1. Significant Accounting Policies Continued
 The aggregate cost of securities and other investments and the composition of
 unrealized appreciation and depreciation of securities and other investments
 for federal income tax purposes as of October 31, 2003 are noted below. The
 primary difference between book and tax appreciation or depreciation of
 securities and other investments, if applicable, is attributable to the tax
 deferral of losses or tax realization of financial statement unrealized gain or
 loss.

                 Federal tax cost of securities
                 and other investments                       $133,128,480
                                                             ============
                 Gross unrealized appreciation               $ 13,813,222
                 Gross unrealized depreciation                 (1,789,411)
                                                             ------------
                 Net unrealized appreciation                 $ 12,023,811
                                                             ============

--------------------------------------------------------------------------------
 Directors' Compensation. The Fund has adopted an unfunded retirement plan for
 the Fund's independent directors. Benefits are based on years of service and
 fees paid to each director during the years of service. During the year ended
 October 31, 2003, the Fund's projected benefit obligations were decreased by
 $2,453 and payments of $3,931 were made to retired directors, resulting in an
 accumulated liability of $24,040 as of October 31, 2003.
    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 the annual compensation they are entitled to receive from the
 Fund. Under the plan, deferred amounts are treated as though equal dollar
 amounts had been invested in shares of the Fund or are invested in other
 Oppenheimer funds selected by the Director. 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.
 Amounts will be deferred until distributed in accordance to the Plan.

--------------------------------------------------------------------------------
 Dividends and Distributions to Shareholders. Dividends and distributions to
 shareholders, which are determined in accordance with income tax regulations,
 are recorded on the ex-dividend date. Income distributions, if any, are
 declared and paid quarterly. Capital gain distributions, if any, are declared
 and paid annually.

--------------------------------------------------------------------------------
 Investment Income. Dividend income is recorded on the ex-dividend date or upon
 ex-dividend notification in the case of certain foreign dividends where the
 ex-dividend date may have passed. Non-cash dividends included in dividend
 income, if any, are recorded at the fair market value of the securities
 received. Interest income, which includes accretion of discount and
 amortization of premium, is accrued as earned.

--------------------------------------------------------------------------------
 Expense Offset Arrangement. The reduction of custodian fees represents earnings
 on cash balances maintained by the Fund.

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



34  |  OPPENHEIMER DISCIPLINED ALLOCATION 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 550 million shares of $0.001 par value capital stock.
 Transactions in shares of capital stock were as follows:



                                  Year Ended October 31, 2003            Year Ended October 31, 2002
                                      Shares           Amount           Shares               Amount
-----------------------------------------------------------------------------------------------------

 Class A
 Sold                                999,373     $ 12,060,988          628,916         $  7,576,816
 Dividends and/or
 distributions reinvested             91,508        1,096,971          174,069            2,175,432
 Redeemed                         (1,446,531)     (17,243,520)      (1,777,767)         (21,631,086)
                                  -------------------------------------------------------------------
 Net decrease                       (355,650)    $ (4,085,561)        (974,782)        $(11,878,838)
                                  ===================================================================

-----------------------------------------------------------------------------------------------------
 Class B
 Sold                                443,368     $  5,482,870          220,549         $  2,710,789
 Dividends and/or
 distributions reinvested              3,597           42,750           13,413              171,302
 Redeemed                           (372,443)      (4,523,880)        (354,813)          (4,373,438)
                                  -------------------------------------------------------------------
 Net increase (decrease)              74,522     $  1,001,740         (120,851)        $ (1,491,347)
                                  ===================================================================

-----------------------------------------------------------------------------------------------------
 Class C
 Sold                                186,268     $  2,221,285          101,338         $  1,207,406
 Dividends and/or
 distributions reinvested              1,273           14,766            3,185               39,488
 Redeemed                            (86,326)      (1,023,339)         (76,698)            (924,444)
                                  -------------------------------------------------------------------
 Net increase                        101,215     $  1,212,712           27,825         $    322,450
                                  ===================================================================

-----------------------------------------------------------------------------------------------------
 Class N
 Sold                                 21,478     $    261,761          108,852         $  1,331,998
 Dividends and/or
 distributions reinvested                230            2,766              134                1,621
 Redeemed                            (12,426)        (155,431)         (88,230)          (1,057,013)
                                  -------------------------------------------------------------------
 Net increase                          9,282     $    109,096           20,756         $    276,606
                                  ===================================================================



--------------------------------------------------------------------------------
 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, 2003, were
 $334,038,680 and $325,463,748, respectively.


35  |  OPPENHEIMER DISCIPLINED ALLOCATION FUND



NOTES TO FINANCIAL STATEMENTS Continued

--------------------------------------------------------------------------------
 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 at an
 annual rate 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 per account fee. For the year ended October 31, 2003, the Fund
 paid $280,964 to OFS for services to the Fund.
    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, 2003      $110,906           $54,405           $7,898           $75,513          $10,372            $2,258


 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, 2003                 $791               $70,283                  $742                 $567



--------------------------------------------------------------------------------
 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, 2003, expense under
 the Class A Plan totaled $234,550, all of which were paid by the Distributor to
 recipients, which included $1,229 retained by the Distributor and $182,977
 which was 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.



36  |  OPPENHEIMER DISCIPLINED ALLOCATION FUND


--------------------------------------------------------------------------------
 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, 2003,
 were as follows:



                                                                                Distributor's
                                                              Distributor's         Aggregate
                                                                  Aggregate     Uncompensated
                                                              Uncompensated     Expenses as %
                      Total Expenses     Amount Retained           Expenses     of Net Assets
                          Under Plan      by Distributor         Under Plan          of Class
----------------------------------------------------------------------------------------------

 Class B Plan               $127,687             $92,375           $472,270              3.20%
 Class C Plan                 38,009               9,167            107,287              2.30
 Class N Plan                  1,706               1,510              3,586              0.91



--------------------------------------------------------------------------------
 5. Foreign Currency Contracts
 A foreign currency contract is a commitment to purchase or sell a foreign
 currency at a future date, at a negotiated rate. The Fund may enter into
 foreign currency contracts to settle specific purchases or sales of securities
 denominated in a foreign currency and for protection from adverse exchange rate
 fluctuation. Risks to the Fund include the potential inability of the
 counterparty to meet the terms of the contract.
    The net U.S. dollar value of foreign currency underlying all contractual
 commitments held by the Fund and the resulting unrealized appreciation or
 depreciation are determined using prevailing foreign currency exchange rates.
 Unrealized appreciation and depreciation on foreign currency contracts are
 reported in the Statement of Assets and Liabilities as a receivable or payable
 and in the Statement of Operations with the change in unrealized appreciation
 or depreciation.
    The Fund may realize a gain or loss upon the closing or settlement of the
 forward transaction. Contracts closed or settled with the same broker are
 recorded as net realized gain or loss. Such realized gains and losses are
 reported with all other foreign currency gains and losses in the Statement of
 Operations.
    As of October 31, 2003, the Fund had no outstanding foreign currency
contracts.

--------------------------------------------------------------------------------
 6. Futures Contracts
 A futures contract is a commitment to buy or sell a specific amount of a
 commodity or financial instrument at a negotiated price on a stipulated future
 date. 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 protection from 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.

37  |  OPPENHEIMER DISCIPLINED ALLOCATION FUND


NOTES TO FINANCIAL STATEMENTS Continued

--------------------------------------------------------------------------------
 6. Futures Contracts Continued
 The Fund generally sells futures contracts as a 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 has expired.
    Cash held by the broker to cover initial margin requirements on open futures
 contracts is noted in the Statement of Assets and Liabilities. 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 on the
 Statement of Operations as closing and expiration of futures contracts. The net
 change in unrealized appreciation and depreciation is reported on the Statement
 of Operations.
    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, 2003, the Fund had outstanding futures contracts as follows:



                                                                                          Unrealized
                                  Expiration     Number of       Valuation as of        Appreciation
 Contract Description                  Dates     Contracts      October 31, 2003       (Depreciation)
------------------------------------------------------------------------------------------------------

 Contracts to Purchase
 U.S. Long Bonds                    12/19/03            19            $2,065,656            $(12,991)
 U.S. Treasury Nts., 10 yr.         12/19/03            57             6,400,922              17,037
                                                                                            ---------
                                                                                               4,046
                                                                                            ---------
 Contracts to Sell
 U.S. Treasury Nts., 2 yr.          12/29/03             2               428,938                 (39)
 U.S. Treasury Nts., 5 yr.          12/19/03            29             3,242,563             (57,937)
                                                                                            ---------
                                                                                             (57,976)
                                                                                            ---------
                                                                                            $(53,930)
                                                                                            =========


--------------------------------------------------------------------------------
 7. 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,


38  |  OPPENHEIMER DISCIPLINED ALLOCATION FUND


 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, 2003 was as follows:

                                               Call Options
                               ------------------------------
                               Number of          Amount of
                               Contracts           Premiums
-------------------------------------------------------------
 Options outstanding as of
 October 31, 2002                      2           $    106
 Options written                     236             11,340
 Options exercised                  (238)           (11,446)
                                -----------------------------
 Options outstanding as of
 October 31, 2003                     --           $     --
                                =============================


--------------------------------------------------------------------------------
 8. Illiquid or Restricted Securities
 As of October 31, 2003, investments in securities included issues that are
 illiquid or restricted. Restricted securities are purchased in private
 placement transactions, are not registered under the Securities Act of 1933,
 may have contractual restrictions on resale, and are 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, 2003 was
 $3,812,446, which represents 3.18% of the Fund's net assets, of which zero is
 considered restricted. Information concerning restricted securities is as
 follows:


39  |  OPPENHEIMER DISCIPLINED ALLOCATION FUND


NOTES TO FINANCIAL STATEMENTS  Continued

--------------------------------------------------------------------------------
 8. Illiquid or Restricted Securities Continued



                                                                                Valuation as of      Unrealized
 Security                                        Acquisition Date      Cost       Oct. 31, 2003    Depreciation
---------------------------------------------------------------------------------------------------------------

 Stocks and/or Warrants
 Geotek Communications, Inc., Series B,
 Escrow Shares                                             1/4/01      $400                 $--            $400



--------------------------------------------------------------------------------
 9. Total Return Swap Contracts
 The Fund may enter into a total return swap transaction to maintain a total
 return on a particular investment, or portion of its portfolio, or for other
 non-speculative purposes. Because the principal amount is not exchanged, it
 represents neither an asset nor a liability to either counterparty, and is
 referred to as notional. The Fund records an increase or decrease to interest
 income, in the amount due to or owed by the Fund at termination or settlement.
 Total return swaps are subject to risks (if the counterparty fails to meet its
 obligations).

 As of October 31, 2003, the Fund had entered into the following total return
 swap agreements:



                                               Paid by          Received by
 Swap                                      the Fund at          the Fund at      Termination         Unrealized
 Counterparty            Notional        Oct. 31, 2003        Oct. 31, 2003             Date       Appreciation
---------------------------------------------------------------------------------------------------------------

                                                             Value of total
                                             Six-Month     return of Lehman
                                         LIBOR less 40        Brothers CMBS
 Deutsche Bank           $871,000         basis points                Index         12/31/03            $21,596



--------------------------------------------------------------------------------
 10. Borrowing and Lending Arrangements
 The Fund entered into an "interfund borrowing and lending arrangement" with
 other funds in the Oppenheimer funds complex, to allow funds to borrow for
 liquidity purposes. The arrangement was initiated pursuant to exemptive relief
 granted by the Securities and Exchange Commission to allow these affiliated
 funds to lend money to, and borrow money from, each other, in an attempt to
 reduce borrowing costs below those of bank loan facilities. Under the
 arrangement the Fund may lend money to other Oppenheimer funds and may borrow
 from other Oppenheimer funds at a rate set by the Fund's Board of Directors,
 based upon a recommendation by the Manager. The Fund's borrowings, if any, are
 subject to asset coverage requirements under the Investment Company Act and the
 provisions of the SEC order and other applicable regulations. If the Fund
 borrows money, there is a risk that the loan could be called on one day's
 notice, in which case the Fund might have to borrow from a bank at higher rates
 if a loan were not available from another Oppenheimer fund. If the Fund lends
 money to another fund, it will be subject to the risk that the other fund might
 not repay the loan in a timely manner, or at all.
    The Fund had no interfund borrowings or loans outstanding during the year
 ended or at October 31, 2003.



                                   Appendix A

                               RATINGS DEFINITIONS

Below are summaries of the rating definitions used by the nationally-recognized
rating agencies listed below. Those ratings represent the opinion of the agency
as to the credit quality of issues that they rate. The summaries below are based
upon publicly available information provided by the rating organizations.

Moody's Investors Service, Inc. ("Moody's")

LONG-TERM RATINGS: BONDS AND PREFERRED STOCK ISSUER RATINGS

Aaa: Bonds and preferred stock 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 and preferred stock 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 and preferred stock 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 and preferred stock 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 and preferred stock 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 and preferred stock 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 and preferred stock 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 and preferred stock rated "Ca" represent
obligations which are speculative in a high degree. Such issues are often in
default or have other marked shortcomings.

C: Bonds and preferred stock 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.

PRIME RATING SYSTEM (SHORT-TERM RATINGS - TAXABLE DEBT)
These ratings are opinions of the ability of issuers to honor senior financial
obligations and contracts. Such obligations generally have an original maturity
not exceeding one year, unless explicitly noted.

Prime-1: Issuer has a superior ability for repayment of senior short-term debt obligations.

Prime-2: Issuer has a strong ability for repayment of senior short-term debt
obligations. Earnings trends and coverage ratios, while sound, may be more
subject to variation. Capitalization characteristics, while appropriate, may be
more affected by external conditions. Ample alternate liquidity is maintained.

Prime-3: Issuer has an acceptable ability for repayment of senior short-term
obligations. The effect of industry characteristics and market compositions may
be more pronounced. Variability in earnings and profitability may result in
changes in the level of debt protection measurements and may require relatively
high financial leverage. Adequate alternate liquidity is maintained.

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

Standard & Poor's Ratings Services ("Standard & Poor's"), a division of The McGraw-Hill
Companies, Inc.

LONG-TERM ISSUE CREDIT RATINGS
Issue credit ratings are based in varying degrees, on the following considerations:
o     Likelihood of payment-capacity and willingness of the obligor to meet its financial
      commitment on an obligation in accordance with the terms of the obligation;
o     Nature of and provisions of the obligation; and
o     Protection afforded by, and relative position of, the obligation in the event of
      bankruptcy, reorganization, or other arrangement under the laws of bankruptcy and
      other laws affecting creditors' rights.
   The issue ratings definitions are expressed in terms of default risk. As
such, they pertain to senior obligations of an entity. Junior obligations are
typically rated lower than senior obligations, to reflect the lower priority in
bankruptcy, as noted above.

AAA: An obligation  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: An obligation 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: An obligation 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: An obligation 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
An obligation 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: An obligation rated "BB" are less vulnerable to nonpayment than other
speculative issues. However, they face major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions which could lead to the
obligor's inadequate capacity to meet its financial commitment on the
obligation.

B: An obligation 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: An obligation 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: An obligation rated "CC" are currently highly vulnerable to nonpayment.

C: Subordinated debt or preferred stock obligations rated "C" are currently
highly vulnerable to nonpayment. The "C" rating may be used to cover a situation
where a bankruptcy petition has been filed or similar action taken, but payments
on this obligation are being continued. A "C" also will be assigned to a
preferred stock issue in arrears on dividends or sinking fund payments, but that
is currently paying.

D: An obligation rated "D" are in payment default. The "D" rating category is
used when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The "D" rating also will be
used upon the filing of a bankruptcy petition or the taking of a similar action
if payments on an obligation are jeopardized.

The ratings from "AA" to "CCC" may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within the major rating categories.

c: The `c' subscript is used to provide additional information to investors that
the bank may terminate its obligation to purchase tendered bonds if the
long-term credit rating of the issuer is below an investment-grade level and/or
the issuer's bonds are deemed taxable.

p: The letter `p' indicates that the rating is provisional. A provisional rating
assumes the successful completion of the project financed by the debt being
rated and indicates that payment of debt service requirements is largely or
entirely dependent upon the successful, timely completion of the project. This
rating, however, while addressing credit quality subsequent to completion of the
project, makes no comment on the likelihood of or the risk of default upon
failure of such completion. The investor should exercise his own judgment with
respect to such likelihood and risk.

Continuance of the ratings is contingent upon Standard & Poor's receipt of an
executed copy of the escrow agreement or closing documentation confirming
investments and cash flows.

r: The `r' highlights derivative, hybrid, and certain other obligations that
Standard & Poor's believes may experience high volatility or high variability in
expected returns as a result of noncredit risks. Examples of such obligations
are securities with principal or interest return indexed to equities,
commodities, or currencies; certain swaps and options; and interest-only and
principal-only mortgage securities. The absence of an `r' symbol should not be
taken as an indication that an obligation will exhibit no volatility or
variability in total return.

N.R. Not rated.

Debt obligations of issuers outside the United States and its territories are
rated on the same basis as domestic corporate and municipal issues. The ratings
measure the creditworthiness of the obligor but do not take into account
currency exchange and related uncertainties.

Bond Investment Quality Standards

Under present commercial bank regulations issued by the Comptroller of the
Currency, bonds rated in the top four categories (`AAA', `AA', `A', `BBB',
commonly known as investment-grade ratings) generally are regarded as eligible
for bank investment. Also, the laws of various states governing legal
investments impose certain rating or other standards for obligations eligible
for investment by savings banks, trust companies, insurance companies, and
fiduciaries in general

SHORT-TERM ISSUE CREDIT RATINGS
Short-term ratings are generally assigned to those obligations considered
short-term in the relevant market. In the U.S., for example, that means
obligations with an original maturity of no more than 365 days-including
commercial paper.

A-1: A short-term obligation rated "A-1" is rated in the highest category by
Standard & Poor's. The obligor's capacity to meet its financial commitment on
the obligation is strong. Within this category, certain obligations are
designated with a plus sign (+). This indicates that the obligor's capacity to
meet its financial commitment on these obligations is extremely strong.

A-2: A short-term obligation rated "A-2" is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than
obligations in higher rating categories. However, the obligor's capacity to meet
its financial commitment on the obligation is satisfactory.
A-3: A short-term obligation rated "A-3" exhibits adequate protection
parameters. However, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity of the obligor to meet its financial
commitment on the obligation.

B: A short-term obligation rated "B" is regarded as having significant
speculative characteristics. The obligor currently has the capacity to meet its
financial commitment on the obligation; however, it faces major ongoing
uncertainties which could lead to the obligor's inadequate capacity to meet its
financial commitment on the obligation.

C: A short-term obligation rated "C" is currently vulnerable to nonpayment and
is dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation.

D: A short-term obligation rated "D" is in payment default. The "D" rating
category is used when payments on an obligation are not made on the date due
even if the applicable grace period has not expired, unless Standard & Poor's
believes that such payments will be made during such grace period. The "D"
rating also will be used upon the filing of a bankruptcy petition or the taking
of a similar action if payments on an obligation are jeopardized.

NOTES:
A Standard & Poor's note rating reflects the liquidity factors and market access
risks unique to notes. Notes due in three years or less will likely receive a
note rating. Notes maturing beyond three years will most likely receive a
long-term debt rating. The following criteria will be used in making that
assessment:
o     Amortization schedule-the larger the final maturity relative to other
      maturities, the more likely it will be treated as a note; and
o     Source of payment-the more dependent the issue is on the market for its
      refinancing, the more likely it will be treated as a note.

SP-1: Strong capacity to pay principal and interest. An issue with a very strong
capacity to pay debt service is given a (+) designation.

SP-2: Satisfactory capacity to pay principal and interest, with some
vulnerability to adverse financial and economic changes over the term of the
notes.

SP-3: Speculative capacity to pay principal and interest.

Fitch, Inc.
International credit ratings assess the capacity to meet foreign currency or
local currency commitments. Both "foreign currency" and "local currency" ratings
are internationally comparable assessments. The local currency rating measures
the probability of payment within the relevant sovereign state's currency and
jurisdiction and therefore, unlike the foreign currency rating, does not take
account of the possibility of foreign exchange controls limiting transfer into
foreign currency.

INTERNATIONAL LONG-TERM CREDIT RATINGS
The following ratings scale applies to foreign currency and local currency
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
The following ratings scale applies to foreign currency and local currency
ratings. A short-term rating has a time horizon of less than 12 months for most
obligations, or up to three years for U.S. public finance securities, and thus
places greater emphasis on the liquidity necessary to meet financial commitments
in a timely manner.

F1: Highest credit quality. Strongest capacity for timely payment of financial
commitments. May have an added "+" to denote any exceptionally strong credit
feature.

F2: Good credit quality. A satisfactory capacity for timely payment of financial
commitments, but the margin of safety is not as great as in the case of higher ratings.

F3: Fair credit quality. Capacity for timely payment of financial commitments is adequate.
However, near-term adverse changes could result in a reduction to non-investment grade.

B: Speculative. Minimal capacity for timely payment of financial commitments, plus
vulnerability to near-term adverse changes in financial and economic conditions.

C: High default risk. Default is a real possibility. Capacity for meeting financial
commitments is solely reliant upon a sustained, favorable business and economic environment.

D: Default. Denotes actual or imminent payment default.







                                       B-1
                                   Appendix _B

                            Industry Classifications

Aerospace & Defense                  Household Products
Air Freight & Couriers               Industrial Conglomerates
Airlines                             Insurance
Auto Components                      Internet & Catalog Retail
Automobiles                          Internet Software & Services
Beverages                            IT Services
Biotechnology                        Leisure Equipment & Products
Building Products                    Machinery
Chemicals                            Marine
Consumer Finance                     Media
Commercial Banks                     Metals & Mining
Commercial Services & Supplies       Multiline Retail
Communications Equipment             Multi-Utilities
Computers & Peripherals              Office Electronics
Construction & Engineering           Oil & Gas
Construction Materials               Paper & Forest Products
Containers & Packaging               Personal Products
Distributors                         Pharmaceuticals
Diversified Financial Services       Real Estate
Diversified Telecommunication        Road & Rail
Services
Electric Utilities                   Semiconductors and Semiconductor
                                     Equipment
Electrical Equipment                 Software
Electronic Equipment & Instruments   Specialty Retail
Energy Equipment & Services          Textiles, Apparel & Luxury Goods
Food & Staples Retailing             Thrifts & Mortgage Finance
Food Products                        Tobacco
Gas Utilities                        Trading Companies & Distributors
Health Care Equipment & Supplies     Transportation Infrastructure
Health Care Providers & Services     Water Utilities
Hotels Restaurants & Leisure         Wireless Telecommunication Services
Household Durables








                                      C-12
                                   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 International 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:
         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.
         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:
         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
         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:
         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);
         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
         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 AMT-Free Municipals, Oppenheimer U.S. Government
Trust, Oppenheimer Strategic Income Fund and Oppenheimer Capital Income Fund who
acquired (and still hold) shares of those funds as a result of the
reorganization of series of Advance America Funds, Inc. into those Oppenheimer
funds on October 18, 1991, and who held shares of Advance America Funds, Inc. on
March 30, 1990, may purchase Class A shares of those four Oppenheimer funds at a
maximum sales charge rate of 4.50%.
VII.      Sales Charge Waivers on Purchases of Class M Shares of Oppenheimer Convertible
                                         Securities Fund
--------------------------------------------------------------------------------------------

Oppenheimer Convertible Securities Fund (referred to as the "Fund" in this
section) may sell Class M shares at net asset value without any initial sales
charge to the classes of investors listed below who, prior to March 11, 1996,
owned shares of the Fund's then-existing Class A and were permitted to purchase
those shares at net asset value without sales charge:
|_|   the Manager and its affiliates,
|_|      present or former officers, directors, trustees and employees (and
         their "immediate families" as defined in the Fund's Statement of
         Additional Information) of the Fund, the Manager and its affiliates,
         and retirement plans established by them or the prior investment
         advisor of the Fund for their employees,
|_|      registered management investment companies or separate accounts of
         insurance companies that had an agreement with the Fund's prior
         investment advisor or distributor for that purpose,
|_|      dealers or brokers that have a sales agreement with the Distributor, if
         they purchase shares for their own accounts or for retirement plans for
         their employees,
|_|      employees and registered representatives (and their spouses) of dealers
         or brokers described in the preceding section or financial institutions
         that have entered into sales arrangements with those dealers or brokers
         (and whose identity is made known to the Distributor) or with the
         Distributor, but only if the purchaser certifies to the Distributor at
         the time of purchase that the purchaser meets these qualifications,
|_|      dealers, brokers, or registered investment advisors that had entered
         into an agreement with the Distributor or the prior distributor of the
         Fund specifically providing for the use of Class M shares of the Fund
         in specific investment products made available to their clients, and
|_|      dealers, brokers or registered investment advisors that had entered
         into an agreement with the Distributor or prior distributor of the
         Fund's shares to sell shares to defined contribution employee
         retirement plans for which the dealer, broker, or investment advisor
         provides administrative services.





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


Internet Website
      WWW.OPPENHEIMERFUNDS.COM

Investment Advisor
      OppenheimerFunds, Inc.
      Two World Financial Center
      225 Liberty Street, 11th Floor
      New York, New York 10281-1008

Distributor
      OppenheimerFunds Distributor, Inc.
      Two World Financial Center
      225 Liberty Street, 11th Floor
      New York, New York 10281-1008

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 LLP
      1675 Broadway
      New York, New York 10019





PX205.002.0104

--------
1 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 and who do not have
any direct or indirect financial interest in the operation of the distribution
plan or any agreement under the plan. 2 Certain waivers also apply to Class M
shares of Oppenheimer Convertible Securities Fund. 3 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. 4 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. 5 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.
6 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.
7 This provision does not apply to IRAs.
8 This provision does not apply to 403(b)(7) custodial plans if the participant
is less than age 55, nor to IRAs. 9 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.