Oppenheimer Series Fund, Inc.

485APOS 1 seriesfund485afiling.htm SERIES FUND INC. 485(A) FILING Oppenheimer Series Fund, Inc.






Registration No. 2-75276
                                                             File No. 811-3346

                      SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, DC 20549

                                  FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933           [X]

      Pre-Effective Amendment No. __                                     [   ]


      Post-Effective Amendment No. 44                                      [X]
                                   --


                                    and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940                                                                [X]


      Amendment No. 45                                                     [X]
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                        Oppenheimer Series Fund, Inc.
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              (Exact Name of Registrant as Specified in Charter)

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            6803 South Tucson Way, Centennial, Colorado 80112-3924
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             (Address of Principal Executive Offices) (Zip Code)

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                                 303-768-3200
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             (Registrant's Telephone Number, including Area Code)

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                             Robert G. Zack, Esq.
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                            OppenheimerFunds, Inc.
                Two World Financial Center, 225 Liberty Street
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                        New York, New York 10281-1008
                   (Name and Address of Agent for Service)

It is proposed that this filing will become effective (check appropriate box):


[   ] Immediately upon filing pursuant to paragraph (b)
[   ] On February 28, 2005 pursuant to paragraph (b)
[X]   60 days after filing pursuant to paragraph (a)(1)
[   ] On ______________ pursuant to paragraph (a)(1)
[   ] 75 days after filing pursuant to paragraph (a)(2)
[   ] On _______________ pursuant to paragraph (a)(2) of Rule 485


If appropriate, check the following box:

[   ]       This post-effective  amendment designates a new effective date for
     a previously filed post-effective amendment.

Oppenheimer
Disciplined Allocation Fund

Prospectus dated February 28, 2005

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

Oppenheimer Disciplined Allocation Fund is a mutual fund. It seeks to
maximize total investment return by allocating its assets primarily among
stocks, corporate bonds, U.S. government securities and money market
instruments.

This Prospectus contains important information about the Fund's
objective, its investment policies, strategies and risks. It also contains
important information about how to buy and sell shares of the Fund and other
account features. Please read this Prospectus carefully before you invest and
keep it for future reference about your account.

(logo) OppenheimerFunds
The Right Way to Invest

Contents

About the Fund
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The Fund's Investment Objective and Principal Investment
Strategies

Main Risks of Investing in the Fund

The Fund's Past Performance

Fees and Expenses of the Fund

About the Fund's Investments

How the Fund is Managed

About Your Account
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How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
Class N Shares

Special Investor Services
AccountLink
PhoneLink
OppenheimerFunds Internet Website
Retirement Plans

How to Sell Shares
By Wire
By Mail
By Telephone

How to Exchange Shares

Shareholder Account Rules and Policies

Dividends, Capital Gains and Taxes

Financial Highlights

ABOUT THE FUND

The Fund's Investment Objective and Principal Investment Strategies

WHAT IS THE FUND'S INVESTMENT OBJECTIVE? The Fund seeks 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.

WHAT DOES THE FUND MAINLY INVEST IN? The Fund invests mainly in stocks, bonds
and money market instruments. The Fund's investment Manager,
OppenheimerFunds, Inc., can allocate the Fund's investments among these
different types of securities in different proportions at different times to
seek the Fund's objective. That allocation is based on the Manager's judgment
of where the best opportunities are for total return after evaluating market
and economic conditions.

At least 25% of the Fund's total assets normally will be invested in
fixed-income senior securities. Otherwise, the Fund is not required to
allocate its investments among stocks, bonds and money market instruments in
any fixed proportion. The Fund may have none or some of its assets invested
in each asset class in relative proportions that change over time based on
market and economic conditions.

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What is a "Senior" security?

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A security that has priority over other securities in the event of a
claim or bankruptcy liquidation.
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Equity Securities. The Fund can buy a variety of domestic and foreign equity
investments, including common and preferred stocks, warrants and
convertible securities (many of which are debt securities that the
Manager considers to be "equity substitutes" because of their
conversion feature). The Fund currently emphasizes its equity
investments in stocks of domestic issuers. The Fund can buy securities
of companies in different capitalization ranges.

Debt Securities. The Fund can invest in a variety of debt securities
(including convertible securities), such as securities issued or
guaranteed by the U.S. government and its agencies and
instrumentalities, including mortgage-related securities and
collateralized mortgage obligations ("CMOs"), and forward rolls with
respect to mortgage-related securities. It also can buy municipal
securities, foreign government securities, and domestic and foreign
corporate debt obligations. The Fund can buy debt securities rated
below investment grade (these are commonly called "junk bonds"), but
has limits on those investments, as discussed below. The Fund does not
limit its investments to debt securities of a particular maturity
range, and may hold both short- and long term debt securities.

Money Market Instruments. Under normal market conditions (when the equity and
debt securities markets are not unstable, in the Manager's view), the
Fund can hold up to 40% of its total assets in money market
instruments, such as short-term U.S. government securities and
commercial paper.

HOW DO THE PORTFOLIO MANAGERS DECIDE WHAT SECURITIES TO BUY OR SELL? In
selecting equity securities for purchase or sale by the Fund, the Fund's
portfolio managers use an investment process that combines both "value" and
"growth" investment styles. They use a value strategy to find issuers whose
securities are believed to be undervalued in the marketplace. A growth
investing style encompasses a search for companies whose stock price is
expected to increase at a greater rate than the overall market. These issuers
may be entering a growth phase marked by increases in earnings, sales, cash
flows or other factors, which suggest that the stock may increase in value
over time.

The portfolio managers construct the equity portion of the portfolio
using a "bottom up" approach, focusing on the fundamental prospects of
individual companies and issuers, rather than on broad economic trends
affecting entire markets and industries. The portfolio managers focus on
factors that may vary over time and in particular cases. Currently they look
for:
o Individual stocks that are attractive based on fundamental stock
analysis and company characteristics;
o Growth stocks having high earnings potential and earnings and sales
momentum; and
o Dividend-paying common stocks of established companies for income.

The portfolio managers monitor individual issuers for changes in profit
margins or slowing revenues that might affect future cash flows or growth.
The existence of these changes in a particular case may trigger a decision to
sell the security. The portfolio managers may consider selling a stock for
one or more of the following reasons:
o The stock price has reached its target,
o The company's fundamentals appear to be deteriorating, or
o Better stock selections are believed to have been identified.
These approaches may change over time.

The Fund's portfolio managers analyze the overall investment
opportunities and risks in different sectors of the debt securities markets
by focusing on business cycle analysis and relative values between the
corporate and government sectors. The portfolio managers' overall strategy is
to build a broadly diversified portfolio of corporate and government bonds.
The portfolio managers currently focus on the factors below (which may vary
in particular cases and may change over time), looking for:
o Debt securities in market sectors that offer attractive relative value,
o Investment-grade securities that offer more income than U.S. Treasury
obligations with a good balance of risk and return,
o High income potential from different types of corporate and government
securities, and
o Broad portfolio diversification to help reduce the volatility of the
Fund's share prices.

The portfolio managers may consider selling a bond for one or more of
the following reasons:
o The bond price has reached its target,
o The bond's fundamentals appear to be deteriorating, or
o Better bond selections are believed to have been identified.

WHO IS THE FUND DESIGNED FOR? The Fund is designed primarily for investors
seeking total investment return over the long term from a flexible portfolio
investing in different asset classes, including stocks and bonds. Because the
Fund generally invests a substantial portion of its assets in stocks, those
investors should be willing to assume the risks of share price fluctuations
that are typical for a fund that can have substantial stock investments.
Because the Fund's income level will fluctuate and generally will not be
significant, it is not designed for investors needing an assured level of
current income. Because of its focus on long-term total return, the Fund may
be appropriate for a portion of a retirement plan investment. However, the
Fund is not a complete investment program.

Main Risks of Investing in the Fund

All investments have risks to some degree. The Fund's investments are
subject to changes in value from a number of factors described below. There
is also the risk that poor security selection by the Manager will cause the
Fund to underperform other funds having similar objectives. The share prices
of the Fund will change daily based on changes in market prices of securities
and market conditions, and in response to other economic events.

RISKS OF INVESTING IN STOCKS. Stocks fluctuate in price, and their short-term
volatility at times may be great. Because the Fund currently has substantial
investments in stocks, the value of the Fund's portfolio will be affected by
changes in the stock markets. Market risk will affect the Fund's per share
prices, which will fluctuate as the values of the Fund's portfolio securities
change.

A variety of factors can affect the price of a particular stock and
the prices of individual stocks do not all move in the same direction
uniformly or at the same time. Different stock markets may behave differently
from each other. In particular, because the Fund currently emphasizes
investments in stocks of U.S. issuers, it will be affected primarily by
changes in U.S. stock markets.

Additionally, stocks of issuers in a particular industry may be
affected by changes in economic conditions that affect that industry more
than others, or by changes in government regulations, availability of basic
resources or supplies, or other events affecting that industry. To the extent
that the Fund emphasizes investments in a particular industry, its share
values may fluctuate in response to events affecting that industry.

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

Risks of Value Investing. Value investing seeks stocks having prices that are
low in relation to what is believed to be their real worth or
prospects. The Fund seeks to realize appreciation in the value of its
holdings when other investors realize the intrinsic value of those
stocks. In using a value investing style, there is the risk that the
market will not recognize that the securities are undervalued and they
might not appreciate in value as the Manager anticipates.

Risks of Growth Investing. Stocks of growth companies, particularly newer
companies, may offer opportunities for greater capital appreciation but
may be more volatile than stocks of larger, more established companies.
If the company's earnings growth or stock price fails to increase as
expected, the stock price of a growth company may decline sharply.
CREDIT RISK. Debt securities are subject to credit risk. Credit risk
relates to the ability of the issuer of a security to make interest and
principal payments on the security as they become due. If the issuer fails to
pay interest, the Fund's income might be reduced, and if the issuer fails to
repay principal, the value of that security and of the Fund's shares might be
reduced. While the Fund's investments in U.S. government securities are
subject to little credit risk, the Fund's other investments in debt
securities, particularly high-yield, lower-grade debt securities, are subject
to risks of default. A downgrade in an issuer's credit rating or other
adverse news about an issuer can reduce the value of that issuer's securities.

INTEREST RATE RISKS. Debt securities are subject to changes in value when
prevailing interest rates change. When prevailing interest rates fall, the
values of outstanding debt securities generally rise. When prevailing
interest rates rise, the values of outstanding debt securities generally
fall, and the securities may sell at a discount from their face amount. The
magnitude of these price changes is generally greater for debt securities
with longer-term maturities. However, interest rate changes may have
different effects on the values of mortgage-related securities because of
prepayment risks, discussed below.

PREPAYMENT RISK. Mortgage-related securities, including forward rolls, are
subject to the risks of unanticipated prepayment. The risk is that when
interest rates fall, borrowers under the mortgages that underlie these
securities will prepay their mortgages more quickly than expected, causing
the issuer of the security to prepay the principal to the Fund prior to the
security's expected maturity. The Fund may be required to reinvest the
proceeds at a lower interest rate, reducing its income. Mortgage-related
securities subject to prepayment risk generally offer less potential for
gains when prevailing interest rates fall and have greater potential for loss
when prevailing interest rates rise. The impact of prepayments on the price
of a security may be difficult to predict and may increase the volatility of
the price. If the Fund buys mortgage-related securities at a premium,
accelerated prepayments on those securities could cause the Fund to lose a
portion of its principal investment represented by the premium.

RISKS OF FOREIGN INVESTING. While foreign securities offer special investment
opportunities, there are also special risks. The change in value of a foreign
currency against the U.S. dollar will result in a change in the U.S. dollar
value of securities denominated in that foreign currency. Foreign issuers are
not subject to the same accounting and disclosure requirements that U.S.
companies are subject to.

The value of foreign investments may be affected by exchange control
regulations, expropriation or nationalization of a company's assets, foreign
taxes, delays in settlement of transactions, changes in governmental,
economic or monetary policy in the U.S. or abroad, or other political and
economic factors.

Additionally, if a fund invests a significant amount of its assets in
foreign securities, it might expose the fund to "time-zone arbitrage"
attempts by investors seeking to take advantage of the differences in value
of foreign securities that might result from events that occur after the
close of the foreign securities market on which a foreign security is traded
and the close of The New York Stock Exchange that day, when the Fund's net
asset value is calculated. If such time-zone arbitrage were successful, it
might dilute the interests of other shareholders. However, the Fund's use of
"fair value pricing" to adjust the closing market prices of foreign
securities under certain circumstances, to reflect what the Manager and the
Board believe to be their fair value, and the imposition of redemption fees
may help deter those activities.

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

The stock markets can be volatile, and the prices of the Fund's shares
will go up and down as a result. The Fund's income-oriented investments may
help cushion the Fund's total return from changes in stock prices, but
fixed-income securities have their own risks. The Fund seeks to reduce the
effects of these risks by diversifying its investments over different asset
classes. In the OppenheimerFunds spectrum, the Fund is generally more
conservative than funds that invest only in stocks, but more aggressive than
funds that invest solely in investment-grade bonds.

The Fund's Past Performance

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

The after-tax returns are shown for Class A shares only and are calculated
using the historical highest individual federal marginal income tax rates in
effect during the periods shown, and do not reflect the impact of state or
local taxes. The after-tax returns are calculated based on certain
assumptions mandated by regulation and your actual after-tax returns may
differ from those shown, depending on your individual tax situation. The
after-tax returns set forth below are not relevant to investors who hold
their fund shares through tax-deferred arrangements such as 401(k) plans or
IRAs or to institutional investors not subject to tax. The Fund's past
investment performance, before and after taxes, is not necessarily an
indication of how the Fund will perform in the future.

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

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

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

As of December 31, 2004, the year-to-date return before taxes for Class A
shares was 8.58%.
During the period shown in the bar chart, the highest return (not annualized)
before taxes for a calendar quarter was 12.09% (4thQtr98) and the lowest
return (not annualized) before taxes for a calendar quarter was -8.31%
(3rdQtr01).

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Average Annual Total Returns 5 Years 10 Years
for the periods ended (or life of (or life of
December 31, 2004 1 Year class, if less) class, if less)

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Class A Shares (inception 2.34% 1.85% 6.69%

9/16/85)
Return Before Taxes
Return After Taxes on
Distributions

Return After Taxes on 2.08% 1.19% 4.60%
Distributions and Sale of 1.74% 1.18% 4.57%
Fund Shares

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S & P 500 Index (reflects no

deduction for fees, expenses 10.87% -2.30% 12.07%1
or taxes)

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Merrill Lynch Gov't/Corp.
Master Index (reflects no
deduction for fees, expenses

or taxes) 4.15% 7.95% 7.78%1

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Class B Shares (inception 2.61% 1.86% 5.51%

10/02/95)
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Class C Shares (inception 6.66% 2.22% 4.80%

5/01/96)
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Class N Shares (inception 7.11% 2.88% N/A

3/1/01)
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1 From 12/31/94.

The Fund's average annual total returns include the applicable sales
charges: for Class A, the current maximum initial sales charge of 5.75%; for
Class B, the contingent deferred sales charges of 5% (1-year) and 2%
(5-year); and for Class C and Class N, the 1% contingent deferred sales
charge for the 1-year period. Because Class B shares convert to Class A
shares 72 months after purchase, Class B "life-of-class" performance does not
include any contingent deferred sales charge and uses Class A performance for
the period after conversion. The returns measure the performance of a
hypothetical account and assume that all dividends and capital gains
distributions have been reinvested in additional shares. The performance of
the Fund's Class A shares is compared to the S&P 500 Index, an unmanaged
index of common stocks, and the Merrill Lynch Government and Corporate Master
Index, a broad-based index of U.S. Treasury and government agency securities,
corporate and Yankee bonds. The indices' performance includes reinvestment of
income but does not reflect transaction costs, fees, expenses or taxes. The
Fund's investments vary from those in the indices.

Fees and Expenses of the Fund

The following tables are provided to help you understand the fees and
expenses you may pay if you buy and hold shares of the Fund. The Fund pays a
variety of expenses directly for management of its assets, administration,
distribution of its shares and other services. Those expenses are subtracted
from the Fund's assets to calculate the Fund's net asset values per share.
All shareholders therefore pay those expenses indirectly. Shareholders pay
other transaction expenses directly, such as sales charges. The numbers below
are based on the Fund's expenses during its fiscal year ended October 31,
2004.

Shareholder Fees (charges paid directly from your investment):

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Class A Class B Class C Class N
Shares Shares Shares Shares
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Maximum Sales Charge 5.75% None None None
(Load) on purchases (as %
of offering price)
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Maximum Deferred Sales
Charge (Load) (as % of the
lower of the original None1 5%2 1%3 1%4
offering price or
redemption proceeds)
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Annual Fund Operating Expenses (deducted from Fund assets):
(% of average daily net assets)

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Class A Class B Class C Class N
Shares Shares Shares Shares
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Management Fees 0.63% 0.63% 0.63% 0.63%

Other Expenses 0.25% 0.39% 0.39% 0.48%

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Total Annual Operating 1.13% 2.02% 2.02% 1.61%
Expenses

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Expenses may vary in future years. "Other Expenses" include transfer agent
fees, custodial fees, and accounting and legal expenses that the Fund pays.
The "Other Expenses" in the table are based on, among other things, the fees
the Fund would have paid if the transfer agent had not waived a portion of
its fee under a voluntary undertaking to the Fund to limit these fees to
0.35% of average daily net assets per fiscal year for all classes. That
undertaking may be amended or withdrawn at any time. After the waiver, the
actual "Other Expenses" and "Total Annual Operating Expenses" as percentages
of average daily net assets were 0.42% and 1.55% for Class N shares. "Other
Expenses" and "Total Annual Operating Expenses" for Class A, Class B and
Class C shares were the same as shown above.

1. A contingent deferred sales charge may apply to redemptions of
investments of $1 million or more ($500,000 for certain retirement plan
accounts) of Class A shares. See "How to Buy Shares" for details.
2. Applies to redemptions in first year after purchase. The contingent
deferred sales charge gradually declines from 5% to 1% in years one
through six and is eliminated after that.
3. Applies to shares redeemed within 12 months of purchase.
4. Applies to shares redeemed within 18 months of a retirement plan's
first purchase of Class N shares.

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

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

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If shares are redeemed: 1 Year 3 Years 5 Years 10 Years
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Class A Shares $684 $915 $1,165 $1,878

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Class B Shares $707 $940 $1,299 $1,9241

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Class C Shares $307 $640 $1,099 $2,371

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Class N Shares $265 $512 $883 $1,926

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If shares are not 1 Year 3 Years 5 Years 10 Years
redeemed:
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Class A Shares $684 $915 $1,165 $1,878

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Class B Shares $207 $640 $1,099 $1,9241

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Class C Shares $207 $640 $1,099 $2,371

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Class N Shares $165 $512 $883 $1,926

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In the first example, expenses include the initial sales charge for Class A
and the applicable Class B, Class C and Class N contingent deferred sales
charges. In the second example, the Class A expenses include the sales
charge, but Class B, Class C and Class N expenses do not include contingent
deferred sales charges.

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

About the Fund's Investments

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

The Manager tries to reduce risks by carefully researching securities
before they are purchased, and in some cases by using hedging techniques. The
Fund attempts to reduce its exposure to market risks by diversifying its
investments, that is, by not holding a substantial amount of securities of
any one issuer and by not investing too great a percentage of the Fund's
assets in any one company. Also, the Fund does not concentrate 25% or more
of its total assets in any one industry.

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

Stock and Other Equity Investments. Equity securities include common stocks,
preferred stocks, warrants and debt securities convertible into common
stock. The Fund's equity investments can include interests in real
estate investment trusts. Those securities may be sensitive to changes
in interest rates, and because the real estate market can be very
volatile at times, the prices of those securities may change
substantially. Because total return has two components, capital
appreciation and income, the Manager might select stocks that offer the
potential for either or both of those elements.

While many convertible securities are debt securities, the Manager
considers some of them to be "equity equivalents" because of the
conversion feature. In that case their credit rating has less impact on
the investment decision than in the case of other debt securities.
Convertible securities are subject to credit risk and interest rate
risk, discussed above.

These securities might be selected for the Fund because they offer the
ability to participate in stock market movements while offering some
current income. Preferred stocks, while a form of equity security,
typically have a fixed dividend that may cause their prices to behave
more like those of debt securities. If interest rates rise, the fixed
dividend on preferred stocks may be less attractive, causing the price
of preferred stocks to decline.

o Value Stocks. These are stocks that appear to be temporarily
undervalued, by various measures such as price/earnings ratios. Value
investing seeks stocks with prices that are low relative to what the
Manager believes to be their real worth or future prospects. The hope
is that the Fund will realize appreciation in the value of its holdings
when other investors realize the intrinsic value of the stock.
However, there is the risk that the stock will not appreciate in value
as anticipated.

o Growth Stocks. The types of growth companies the Manager focuses on are
larger, more established growth companies. Growth companies, for
example, may be developing new products or services, such as companies
in the technology sector, or they may be expanding into new markets for
their products, such as companies in the energy sector. Newer growth
companies tend to retain a large part of their earnings for research,
development or investment in capital assets. Therefore, they do not
tend to emphasize paying dividends and may not pay any dividends for
some time. If they are selected for the Fund's portfolio, it is because
the Manager believes the price of the stock will increase over time.

The Fund is not required to allocate its equity investments among value
and growth stocks in any fixed proportion. The Fund may invest its
assets in relative proportions that change over time.

Debt Securities. The Fund can invest in a variety of debt securities to seek
its objective. The debt securities the Fund buys may be rated by
nationally recognized rating organizations or they may be unrated
securities assigned an equivalent credit rating by the Manager. The
Fund's debt investments may be "investment grade" (that is, in the four
highest rating categories of a nationally recognized rating
organization) or may be lower-grade securities (sometimes called "junk
bonds") rated as low as "B" by Moody's Investor Services, Inc.
("Moody's"), Standard & Poor's Rating Services ("S&P") or Fitch, Inc.
("Fitch") or having comparable ratings by other nationally recognized
rating organizations (or, if they are unrated, having a comparable
rating assigned by the Manager). The Fund does not invest more than 10%
of its total assets in unrated debt securities. A description of the
ratings definitions of nationally recognized rating organizations is
included in Appendix A to the Statement of Additional Information.

While the Fund can invest as much as 20% of its total assets in
lower-grade securities, currently it does not intend to invest more
than 10% of its total assets in these investments. Lower-grade debt
securities may be subject to greater market fluctuations and greater
risks of loss of income and principal than investment-grade debt
securities. Securities that are (or that have fallen) below investment
grade are exposed to a greater risk that the issuers of those
securities might not meet their debt obligations. These risks can
reduce the Fund's share prices and the income it earns.

U.S. Government Securities. The Fund can invest in securities issued or
guaranteed by the U.S. Treasury or other government agencies or
federally-chartered corporate entities referred to as
"instrumentalities." These are referred to as "U.S. government
securities" in this Prospectus.

o U.S. Treasury Obligations. These include Treasury bills (having
maturities of one year or less when issued), Treasury notes (having
maturities of more than one year and up to ten years when issued), and
Treasury bonds (having maturities of more than ten years when issued).
Treasury securities are backed by the full faith and credit of the
United States as to timely payments of interest and repayments of
principal. The Fund also can buy U. S. Treasury securities that have
been "stripped" of their coupons by a Federal Reserve Bank, zero-coupon
U.S. Treasury securities, and Treasury Inflation-Protection Securities.

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 U.S. government. Some are supported by the full faith
and credit of the U.S. government, such as Government National Mortgage
Association pass-through mortgage certificates ("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"). Securities issued
by Fannie Mae, Freddie Mac and the Federal Home Loan Banks are neither
guaranteed nor issued by the U.S. Government.

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

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

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

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

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

If interest rates rise rapidly, prepayments of mortgages (the risks of
which are described above) may occur at a slower rate than expected,
and the expected maturity of long-term or medium-term mortgage-related
securities could lengthen as a result. That could cause their values to
fluctuate more, and the prices of the Fund's shares to fall.

Money Market Instruments and Short-Term Debt Securities. Under normal market
conditions the Fund can invest in a variety of short-term debt
obligations having a maturity of one year or less. These include:
o Money market instruments. Generally, these are debt obligations having
ratings in the top two rating categories of nationally recognized
rating organizations (or equivalent ratings assigned by the Manager).
Examples include commercial paper of domestic issuers or foreign
companies (foreign issuers must have assets of $1 billion or more).
o Short-term debt obligations of the U.S. government or corporations.
o Obligations of domestic or foreign banks or savings and loan
associations, such as certificates of deposit and bankers' acceptances.

Under normal market conditions this strategy would be used primarily
for cash management or liquidity purposes. The yields on shorter-term
debt obligations tend to be less than on longer-term debt. Therefore,
to the extent that the Fund uses this strategy, it might help preserve
principal but may reduce opportunities to seek growth of capital as
part of its objective of total return.

Foreign Securities. The Fund can invest up to 25% of its total assets in
securities of companies or governments in any country, developed or
underdeveloped. These 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. See the "Main Risks" section above for a description
of some of the risks associated with foreign investing. The Statement
of Additional Information includes more detailed information regarding
the risks of foreign investing, including the risks associated with
investments in emerging market countries.

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

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

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

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

The values of interest-only mortgage-related securities are also very
sensitive to prepayments of underlying mortgages. Principal-only
securities are also sensitive to changes in interest rates. For
example, when prepayments decrease, the yields on principal-only
securities also decrease. 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. The Fund can invest up to 50% of its total
assets in zero-coupon securities issued by either the U.S. government
or U.S. companies.

Derivative Investments. In general terms, a derivative investment is an
investment contract whose value depends on (or is derived from) the
value of an underlying asset, interest rate or index. Options, futures,
mortgage-related securities, asset-backed securities and "stripped"
securities are examples of derivatives the Fund can use.

o There are Special Risks in Using Derivative Investments. If the issuer
of the derivative does not pay the amount due, the Fund can lose money
on the investment. Also, the underlying security or investment on which
the derivative is based, and the derivative itself, might not perform
the way the Manager expected it to perform. If that happens, the Fund's
share prices could decline or the Fund could get less income than
expected. Interest rate and stock market changes in the U.S. and abroad
may also influence the performance of derivatives. Some derivative
investments held by the Fund may be illiquid. The Fund has limits on
the amount of particular types of derivatives it can hold. However,
using derivatives can cause the Fund to lose money on its investment
and/or increase the volatility of its share prices.

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

The Fund could buy and sell options, futures and forward contracts for
a number of purposes. Some of these strategies would hedge the Fund's
portfolio against price fluctuations. Other hedging strategies, such as
buying futures and call options, would tend to increase the Fund's
exposure to the securities market. The Fund may also try to manage its
exposure to changing interest rates by using hedging instruments.

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

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

Temporary Defensive and Interim Investments. In times of adverse or unstable
market, economic or political conditions, the Fund can invest up to
100% of its assets in temporary investments that are inconsistent with
the Fund's principal investment strategies. Generally, they would be
short-term U.S. government securities, high-grade commercial paper,
bank obligations or repurchase agreements. The Fund can also hold these
types of securities pending the investment of proceeds from the sale of
Fund shares or portfolio securities or to meet anticipated redemptions
of Fund shares. To the extent the Fund invests in these securities, it
might not achieve its investment objective.

Convertible Securities. Many convertible securities are a form of debt
security, but the Manager regards some of them as "equity substitutes"
because of their feature allowing them to be converted into common
stock. Therefore, their credit ratings have less impact on the
Manager's investment decision than in the case of other debt
securities. The Fund's investments in convertible securities may
include securities rated as low as "B" by Moody's, S&P or Fitch or
having comparable ratings by other nationally recognized rating
organizations (or, if they are unrated, having comparable ratings
assigned by the Manager and subject to the Fund's limitation on
investing in unrated securities as stated above). Those ratings are
below "investment grade" and the securities are subject to greater risk
of default by the issuer than investment-grade securities.

"When-Issued" and "Delayed-Delivery" Transactions. The Fund can purchase
securities on a "when-issued" basis and can purchase or sell securities
on a "delayed-delivery" basis. Between the purchase and settlement, no
payment is made for the security and no interest accrues to the buyer
from the investment. There is a risk of loss to the Fund if the value
of the when-issued security declines prior to the settlement date. No
income accrues to the Fund on a when-issued security until the Fund
receives the security on settlement of the trade.
Asset-Backed Securities. The Fund can buy asset-backed securities, which are
fractional interests in pools of loans collateralized by the loans or
other assets or receivables. They are issued by trusts and special
purpose corporations that pass the income from the underlying pool to
the buyer of the security. These securities are subject to the risk of
default by the issuer as well as by the borrowers of the underlying
loans in the pool.

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

Portfolio Turnover. The Fund may engage in active and frequent trading to try
to achieve its objective. The Fund's portfolio turnover rate will
fluctuate from year to year, depending on market conditions. Increased
portfolio turnover creates higher brokerage and transaction costs for
the Fund (and may reduce performance). If the Fund realizes capital
gains when it sells its portfolio investments, it must generally pay
those gains out to shareholders, increasing their taxable
distributions. The Financial Highlights table at the end of this
Prospectus shows the Fund's portfolio turnover rates during prior
fiscal years.

PORTFOLIO HOLDINGS. The Fund's portfolio holdings are included in
semi-annual and annual reports that are distributed to shareholders of the
Fund within 60 days after the close of the period for which such report is
being made. The Fund also makes disclosures of the portfolio securities
holdings in Statement of Investments under Form N-Q, filed with the
Securities and Exchange Commission (the "SEC") no later than 60 days after
the close of the first and third fiscal quarters. These additional quarterly
filings are publicly available at the SEC. Therefore, portfolio holdings of
the Fund are made publicly available no later than 60 days after the close of
the Fund's fiscal quarter.

A description of the Fund's policies and procedures with respect to the
disclosure of the Fund's portfolio securities is available in the Fund's
Statement of Additional Information.

How the Fund Is Managed

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

The Manager has been an investment advisor since 1960. The Manager and
its subsidiaries and controlled affiliates managed more than $170 billion in
assets as of December 31, 2004, including other Oppenheimer funds with more
than 7 million shareholder accounts. The Manager is located at Two World
Financial Center, 225 Liberty Street, 11th Floor, New York, New York
10281-1008.

Portfolio Managers. The equity portion of the Fund's portfolio is managed by
Christopher Leavy and Emmanuel Ferreira, supported by other members of
the Manager's value portfolio team, and the fixed-income portion of the
portfolio is managed by Angelo Manioudakis, supported by other members
of the Manager's high-grade fixed-income team. Mr. Leavy is a Senior
Vice President of the Manager since (September 2000), a Vice President
of the Fund and an officer of other Oppenheimer funds. Prior to
joining the Manager, he was a portfolio manager at Morgan Stanley Dean
Witter Investment Management (1997-September 2000). Mr. Ferreira is a
Vice President of the Manager and of the Fund and Mr. Manioudakis is a
Senior Vice President of the Manager (since April 2002). Prior to
joining the Manager in January 2003, Mr. Ferreira was a portfolio
manager at Lashire Investments (July 1999-December 2002). Prior to
joining the Manager, Mr. Manioudakis was an Executive Director and
portfolio manager for Miller, Anderson & Sherrerd, a division of Morgan
Stanley Investment Management (August 1993-April 2002).

Advisory Fees. Under the investment advisory agreement, the Fund pays the
Manager an advisory fee at an annual rate that declines as the Fund's
assets grow: 0.625% of the first $300 million of average annual net
assets of the Fund, 0.500% of the next $100 million, and 0.450% of
average annual net assets in excess of $400 million. The Fund's
management fee for the last fiscal year ended October 31, 2004, was
0.63% of average annual net assets for each class of shares.

PENDING LITIGATION. A consolidated amended complaint has been filed as
putative derivative and class actions against the Manager, Distributor and
Transfer Agent, as well as 51 of the Oppenheimer funds (collectively the
"funds") including the Fund, 31 present and former Directors or Trustees and
9 present and former officers of certain of the Funds. This complaint, filed
in the U.S. District Court for the Southern District of New York on January
10, 2005, consolidates into a single action and amends six individual
previously-filed putative derivative and class action complaints. Like those
prior complaints, the complaint alleges that the Manager charged excessive
fees for distribution and other costs, improperly used assets of the funds in
the form of directed brokerage commissions and 12b-1 fees to pay brokers to
promote sales of the funds, and failed to properly disclose the use of fund
assets to make those payments in violation of the Investment Company Act and
the Investment Advisers Act of 1940. Also, like those prior complaints, the
complaint further alleges that by permitting and/or participating in those
actions, the Directors/Trustees and the Officers breached their fiduciary
duties to Fund shareholders under the Investment Company Act and at common
law. The complaint seeks unspecified compensatory and punitive damages,
rescission of the funds' investment advisory agreements, an accounting of all
fees paid and an award of attorneys' fees and litigation expenses.

The Manager and the Distributor believe the claims asserted in these
law suits to be without merit, and intend to defend the suits vigorously. The
Manager and the Distributor do not believe that the pending actions are
likely to have a material adverse effect on the Fund or on their ability to
perform their respective investment advisory or distribution agreements with
the Fund.

ABOUT YOUR ACCOUNT

How to Buy Shares

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

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

o Paying by Federal Funds Wire. Shares purchased through the Distributor
may be paid for by Federal Funds wire. The minimum investment is
$2,500. Before sending a wire, call the Distributor's Wire Department
at 1.800.225.5677 to notify the Distributor of the wire and to receive
further instructions.
o Buying Shares Through OppenheimerFunds AccountLink. With AccountLink,
you pay for shares by electronic funds transfers from your bank
account. Shares are purchased for your account by a transfer of money
from your bank account through the Automated Clearing House (ACH)
system. You can provide those instructions automatically, under an
Asset Builder Plan, described below, or by telephone instructions using
OppenheimerFunds PhoneLink, also described below. Please refer to
"AccountLink," below for more details.

o Buying Shares Through Asset Builder Plans. You may purchase shares of
the Fund automatically each month from your account at a bank or other
financial institution under an Asset Builder Plan with AccountLink.
Details are in the Asset Builder application and the Statement of
Additional Information.

WHAT IS THE MINIMUM AMOUNT YOU MUST INVEST? In most cases, you can buy Fund
shares with a minimum initial investment of $1,000 and make additional
investments at any time with as little as $50. There are reduced minimums
available under the following special investment plans:
o If you establish one of the many types of retirement plan accounts that
OppenheimerFunds offers, more fully described below under "Special
Investor Services," you can start your account with as little as $500.
o By using an Asset Builder Plan or Automatic Exchange Plan (details are
in the Statement of Additional Information), or government allotment
plan, you can make subsequent investments (after making the initial
investment of $500) for as little as $50. For any type of account
established under one of these plans prior to November 1, 2002, the
minimum additional investment will remain $25.
o The minimum investment requirement does not apply to reinvesting
dividends from the Fund or other Oppenheimer funds (a list of them
appears in the Statement of Additional Information, or you can ask your
dealer or call the Transfer Agent), or reinvesting distributions from
unit investment trusts that have made arrangements with the Distributor.
AT WHAT PRICE ARE SHARES SOLD? Shares are sold at their offering price which
is the net asset value per share plus any initial sales charge that applies.
The offering price that applies to a purchase order is based on the next
calculation of the net asset value per share that is made after the
Distributor receives the purchase order at its offices in Colorado, or after
any agent appointed by the Distributor receives the order.

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

The net asset value per share for a class of shares on a "regular
business day" is determined by dividing the value of the Fund's net
assets attributable to that class by the number of shares of that class
outstanding on that day. To determine net asset values, the Fund
assets are valued primarily on the basis of current market quotations.
If market quotations are not readily available or do not accurately
reflect fair value for a security (in the Manager's judgment) or if a
security's value has been materially affected by events occurring after
the close of the exchange or market on which the security is
principally traded, that security may be valued by another method that
the Board of Directors believes accurately reflects the fair value.
Because some foreign securities trade in markets and on exchanges that
operate on weekends and U.S. holidays, the values of some of the Fund's
foreign investments may change on days when investors cannot buy or
redeem Fund shares.

The Board has adopted valuation procedures for the Fund and has
delegated the day-to-day responsibility for fair value determinations
to the Manager's Valuation Committee. Fair value determinations by the
Manager are subject to review, approval and ratification by the Board
at its next scheduled meeting after the fair valuations are
determined. In determining whether current market prices are readily
available and reliable, the Manager monitors the information it
receives in the ordinary course of its investment management
responsibilities for significant events that it believes in good faith
will affect the market prices of the securities of issuers held by the
Fund. Those may include events affecting specific issuers (for
example, a halt in trading of the securities of an issuer on an
exchange during the trading day) or events affecting securities markets
(for example, a foreign securities market closes early because of a
natural disaster).

If, after the close of the principal market on which a security held by
the Fund is traded and before the time as of which the Fund's net asset
values are calculated that day, a significant event occurs that the
Manager learns of and believes in the exercise of its judgment will
cause a material change in the value of that security from the closing
price of the security on the principal market on which it is traded,
the Manager will use its best judgment to determine a fair value for
that security.

The Manager believes that foreign securities values may be affected by
volatility that occurs in U.S. markets on a trading day after the close
of foreign securities markets. The Manager's fair valuation procedures
therefore include a procedure whereby foreign securities prices may be
"fair valued" to take those factors into account.

The Offering Price. To receive the offering price for a particular day, the
Distributor or your financial intermediary must receive your order by
the time the Exchange closes. If your order is received on a day when
the Exchange is closed or after it has closed on a regular business
day, the order will receive the offering price that is determined on
the next regular business day.

Buying Through a Dealer. If you buy shares through a dealer, your dealer must
receive the order by the close of the Exchange and transmit it to the
Distributor so that it is received before the Distributor's close of
business on a regular business day (normally 5:00 P.M.) to receive that
day's offering price, unless your dealer has made alternative
arrangements with the Distributor. Otherwise, the order will receive
the next offering price that is determined.

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WHAT CLASSES OF SHARES DOES THE FUND OFFER? The Fund offers investors four
different classes of shares. The different classes of shares represent
investments in the same portfolio of securities, but the classes are subject
to different expenses and will likely have different share prices. When you
buy shares, be sure to specify the class of shares. If you do not choose a
class, your investment will be made in Class A shares.
------------------------------------------------------------------------------
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Class A Shares. If you buy Class A shares, you pay an initial sales charge
(on investments up to $1 million for regular accounts or lesser amounts
for certain retirement plans). The amount of that sales charge will
vary depending on the amount you invest. The sales charge rates are
listed in "How Can You Buy Class A Shares?" below.
------------------------------------------------------------------------------
Class B Shares. If you buy Class B shares, you pay no sales charge at the
time of purchase, but you will pay an annual asset-based sales charge.
If you sell your shares within 6 years of buying them, you will
normally pay a contingent deferred sales charge. That contingent
deferred sales charge varies depending on how long you own your shares,
as described in "How Can You Buy Class B Shares?" below.
------------------------------------------------------------------------------
Class C Shares. If you buy Class C shares, you pay no sales charge at the
time of purchase, but you will pay an annual asset-based sales charge.
If you sell your shares within 12 months of buying them, you will
normally pay a contingent deferred sales charge of 1.0%, as described
in "How Can You Buy Class C Shares?" below.
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Class N Shares. If you buy Class N shares (available only through certain
retirement plans), you pay no sales charge at the time of purchase, but
you will pay an annual asset-based sales charge. If you sell your
shares within 18 months of the retirement plan's first purchase of
Class N shares, you may pay a contingent deferred sales charge of 1.0%,
as described in "How Can You Buy Class N Shares?" below.

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

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

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

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

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

If you invest $1 million or more, in most cases Class A shares will be
the most advantageous choice, no matter how long you intend to hold
your shares. For that reason, the Distributor normally will not accept
purchase orders of $100,000 or more of Class B shares or $1 million or
more of Class C shares from a single investor. Dealers or other
financial intermediaries purchasing shares for their customers in
omnibus accounts are responsible for compliance with those limits.

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

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

Additionally, the dividends payable to Class B, Class C and Class N
shareholders will be reduced by the additional expenses borne by those
classes that are not borne by Class A shares, such as the Class B,
Class C and Class N asset-based sales charge described below and in the
Statement of Additional Information.

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

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

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

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

Amount of Purchase Front-End Sales Front-End Sales Concession As a
Charge As a

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

Due to rounding, the actual sales charge for a particular transaction may
be higher or lower than the rates listed above.

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

o Right of Accumulation. To qualify for the reduced Class A sales charge
that would apply to a larger purchase than you are currently
making (as shown in the table above), you can add the value of
any Class A, Class B or, effective March 18, 2005, Class C shares
of the Fund or other Oppenheimer funds that you or your spouse
currently own, or are currently purchasing, to the value of your
Class A share purchase. Your Class A shares of Oppenheimer Money
Market Fund, Inc. or Oppenheimer Cash Reserves on which you did
not pay a sales charge will not be counted for this purpose. In
totaling your holdings, you may count shares held in your
individual accounts (including IRAs and 403(b) plans), your joint
accounts with your spouse, or accounts you or your spouse hold as
trustees/directors or custodians on behalf of your children who
are minors. A fiduciary can count all shares purchased for a
trust, estate or other fiduciary account (including employee
benefit plans for the same employer) that has multiple accounts.
To qualify for this Right of Accumulation, if you are buying
shares directly from the Fund you must inform the Fund's
Distributor of your eligibility and holdings at the time of your
purchase. If you are buying shares through your financial
intermediary you must notify your intermediary of your
eligibility for this Right of Accumulation at the time of your
purchase.

To count shares of eligible Oppenheimer funds held in
accounts at other intermediaries under this Right of
Accumulation, you may be requested to provide the Distributor or
your current intermediary (depending on the way you are buying
your shares) a copy of each account statement showing your
current holdings of the Fund or other eligible Oppenheimer funds,
including statements for accounts held by you and your spouse or
in retirement plans or trust or custodial accounts for minor
children as described above. The Distributor or intermediary
through which you are buying shares will combine the value of all
your eligible Oppenheimer fund accounts based on the current
offering price per share to determine what Class A sales charge
breakpoints you may qualify for on your current purchase.

o Letters of Intent. You may also qualify for reduced Class A sales
charges by submitting a Letter of Intent to the Distributor. A
Letter of Intent is a written statement of your intention to
purchase a specified value of Class A, Class B or (effective
March 18th) Class C shares of the Fund or other Oppenheimer funds
over a 13-month period. The total amount of your intended
purchases of Class A, Class B and (effective March 18th) Class C
shares will determine the reduced sales charge rate that will
apply to your Class A share purchases of the Fund during that
period. You can choose to include purchases made up to 90 days
before the date that you submit a Letter. Your Class A shares of
Oppenheimer Money Market Fund or Oppenheimer Cash Reserves on
which you did not pay a sales charge will not be counted for this
purpose. Submitting a Letter of Intent does not obligate you to
purchase the specified amount of shares. You may also be able to
also apply the Right of Accumulation to these purchases.

If you do not complete the Letter of Intent, the front-end
sales charge you paid on your purchases will be recalculated to
reflect the actual value of shares you purchased. A certain
portion of your shares will be held in escrow by the Fund's
Transfer Agent for this purpose. Please refer to "How to Buy
Shares - Letters of Intent" in the Fund's Statement of Additional
Information for more complete information.

Other Special Sales Charge Arrangements and Waivers. The Fund and the
Distributor offer other opportunities to purchase shares without front-end or
contingent deferred sales charges under the programs described below. The
Fund reserves the right to amend or discontinue these programs at any time
without prior notice.
o Dividend Reinvestment. Dividends and/or capital gains distributions
received by a shareholder from the Fund may be reinvested in
shares of the Fund or any of the other Oppenheimer funds without
a sales charge, at the net asset value per share in effect on the
payable date. You must notify the Transfer Agent in writing to
elect this option and must have an existing account in the fund
selected for reinvestment.
o Exchanges of Shares. Shares of the Fund may be exchanged for shares of
certain other Oppenheimer funds at net asset value per share at
the time of exchange, without sales charge, and shares of the
Fund can be purchased by exchange of shares of certain other
Oppenheimer funds on the same basis. Please refer to "How to
Exchange Shares" in this Prospectus and in the Statement of
Additional Information for more details, including a discussion
of circumstances in which sales charges may apply on exchanges.
o Reinvestment Privilege. Within six months of a redemption of certain
Class A and Class B shares, the proceeds may be reinvested in
Class A shares of the Fund without sales charge. This privilege
applies to redemptions of Class A shares that were subject to an
initial sales charge or Class A or Class B shares that were
subject to a contingent deferred sales charge when redeemed. The
investor must ask the Transfer Agent for that privilege at the
time of reinvestment and must identify the account from which the
redemption was made.
o Other Special Reductions and Waivers. The Fund and the Distributor
offer additional arrangements to reduce or eliminate front-end
sales charges or to waive contingent deferred sales charges for
certain types of transactions and for certain classes of
investors (primarily retirement plans that purchase shares in
special programs through the Distributor). These are described in
greater detail in Appendix C to the Statement of Additional
Information, which may be ordered by calling 1.800.225.5677 or
through the OppenheimerFunds website, at www.oppenheimerfunds.com
------------------------
(follow the hyperlinks: "Access Accounts and Services" - Forms &
Literature" - "Order Literature" - "Statements of Additional
Information"). A description of these waivers and special sales
charge arrangements is also available for viewing on the
OppenheimerFunds website (under the hyperlinks "Research Funds -
Fund Documents - View a description..."). To receive a waiver or
special sales charge rate under these programs, the purchaser
must notify the Distributor (or other financial intermediary
through which shares are being purchased) at the time of purchase
or notify the Transfer Agent at the time of redeeming shares for
those waivers that apply to contingent deferred sales charges.
o Purchases by Certain Retirement Plans. There is no initial sales charge
on purchases of Class A shares of the Fund by (1) retirement
plans that have $10 million or more in plan assets and that have
entered into a special agreement with the Distributor and by (2)
retirement plans that are part of a retirement plan product or
platform offered by banks, broker-dealers, financial advisors,
insurance companies or record-keepers that have entered into a
special agreement with the Distributor for this purpose. The
Distributor currently pays dealers of record concessions in an
amount equal to 0.25% of the purchase price of Class A shares by
those retirement plans from its own resources at the time of
sale, subject to certain exceptions described in "Retirement
Plans" in the Statement of Additional Information. No contingent
deferred sales charge is charged upon the redemption of such
shares.

Class A Contingent Deferred Sales Charge. There is no initial sales charge on
purchases of Class A shares of any one or more of the Oppenheimer funds
aggregating $1 million or more, or on purchases of Class A shares by
certain retirement plans that satisfied certain requirements prior to
March 1, 2001 ("grandfathered retirement accounts"). However, those
Class A shares may be subject to a Class A contingent deferred sales
charge, as described below. Retirement plans holding shares of
Oppenheimer funds in an omnibus account(s) for the benefit of plan
participants in the name of a fiduciary or financial intermediary
(other than OppenheimerFunds-sponsored Single DB Plus plans) are not
permitted to make initial purchases of Class A shares subject to a
contingent deferred sales charge.

The Distributor pays dealers of record concessions in an amount equal
to 1.0% of purchases of $1 million or more other than purchases by
grandfathered retirement accounts. For grandfathered retirement
accounts, the concession is 0.75% of the first $2.5 million of
purchases plus 0.25% of purchases in excess of $2.5 million. In either
case, the concession will not be paid on purchases of shares by
exchange or that were previously subject to a front-end sales charge
and dealer concession.

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

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

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

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

----------------------------------------------------------------------------
Years Since Beginning of Month in Contingent Deferred Sales Charge on
Which Purchase Order was Accepted Redemptions in That Year
(As % of Amount Subject to Charge)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
0 - 1 5.0%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
1 - 2 4.0%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
2 - 3 3.0%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
3 - 4 3.0%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
4 - 5 2.0%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
5 - 6 1.0%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
More than 6 None
----------------------------------------------------------------------------
In the table, a "year" is a 12-month period. In applying the contingent
deferred sales charge, all purchases are considered to have been made
on the first regular business day of the month in which the purchase
was made.

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

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

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

Class N shares are sold at net asset value without an initial sales
charge. A contingent deferred sales charge of 1.0% will be imposed upon the
redemption of Class N shares, if:
o The group retirement plan is terminated or Class N shares of all
Oppenheimer funds are terminated as an investment option of the plan
and Class N shares are redeemed within 18 months after the plan's first
purchase of Class N shares of any Oppenheimer fund, or
o With respect to an IRA or 403(b) plan, Class N shares are redeemed
within 18 months of the plan's first purchase of Class N shares of any
Oppenheimer fund.

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

DISTRIBUTION AND SERVICE (12b-1) PLANS.

Service Plan for Class A Shares. The Fund has adopted a Service Plan for
Class A shares. It reimburses the Distributor for a portion of its
costs incurred for services provided to accounts that hold Class A
shares. Reimbursement is made quarterly at an annual rate of up to
0.25% of the average annual net assets of Class A shares of the Fund.
The Distributor currently uses all of those fees to pay dealers,
brokers, banks and other financial institutions quarterly for providing
personal service and maintenance of accounts of their customers that
hold Class A shares. With respect to Class A shares subject to a Class
A contingent deferred sales charge purchased by grandfathered
retirement accounts, the Distributor pays the 0.25% service fee to
dealers in advance for the first year after the shares are sold by the
dealer. The Distributor retains the first year's service fee paid by
the Fund. After the shares have been held by grandfathered retirement
accounts for a year, the Distributor pays the service fee to dealers on
a quarterly basis.

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

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

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

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

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

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

Under certain circumstances, the Distributor will pay the full Class B,
Class C or Class N asset-based sales charge and the service fee to the
dealer beginning in the first year after purchase of such shares in
lieu of paying the dealer the sales concession and the advance of the
first year's service fee at the time of purchase, if there is a special
agreement between the dealer and the Distributor. In those
circumstances, the sales concession will not be paid to the dealer.

For Class C shares purchased through the OppenheimerFunds Recordkeeper
Pro program, the Distributor will pay the Class C asset-based sales
charge to the dealer of record in the first year after the purchase of
such shares in lieu of paying the dealer a sales concession at the time
of purchase. The Distributor will use the service fee it receives from
the Fund on those shares to reimburse FASCorp for providing personal
services to the Class C accounts holding those shares.

In addition, the Manager and the Distributor may make substantial
payments to dealers or other financial intermediaries and service
providers for distribution and/or shareholder servicing activities, out
of their own resources, including the profits from the advisory fees
the Manager receives from the Fund. Some of these distribution-related
payments may be made to dealers or financial intermediaries for
marketing, promotional or related expenses; these payments are often
referred to as "revenue sharing." In some circumstances, those types
of payments may create an incentive for a dealer or financial
intermediary or its representatives to recommend or offer shares of the
Fund or other Oppenheimer funds to its customers. You should ask your
dealer or financial intermediary for more details about any such
payments it receives.

Special Investor Services

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

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

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

PHONELINK. PhoneLink is the OppenheimerFunds automated telephone system that
enables shareholders to perform a number of account transactions
automatically using a touch-tone phone. PhoneLink may be used on
already-established Fund accounts after you obtain a Personal Identification
Number (PIN), by calling the PhoneLink number, 1.800.225.5677.
Purchasing Shares. You may purchase shares in amounts up to $100,000 by
phone, by calling 1.800.225.5677. You must have established AccountLink
privileges to link your bank account with the Fund to pay for these
purchases.
Exchanging Shares. With the OppenheimerFunds Exchange Privilege, described
below, you can exchange shares automatically by phone from your Fund
account to another OppenheimerFunds account you have already
established by calling the special PhoneLink number.
Selling Shares. You can redeem shares by telephone automatically by calling
the PhoneLink number and the Fund will send the proceeds directly to
your AccountLink bank account. Please refer to "How to Sell Shares,"
below for details.

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

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

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

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

How to Sell Shares

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

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

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

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

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

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

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

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

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

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

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

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

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

A contingent deferred sales charge will be based on the lesser of the
net asset value of the redeemed shares at the time of redemption or the
original net asset value. A contingent deferred sales charge is not imposed
on:
o the amount of your account value represented by an increase in net
asset value over the initial purchase price,
o shares purchased by the reinvestment of dividends or capital gains
distributions, or
o shares redeemed in the special circumstances described in Appendix C to
the Statement of Additional Information.
To determine whether a contingent deferred sales charge applies to a
redemption, the Fund redeems shares in the following order:
1. shares acquired by reinvestment of dividends and capital gains
distributions,
2. shares held for the holding period that applies to the class, and
3. shares held the longest during the holding period.

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

How to Exchange Shares

If you want to change all or part of your investment from one Oppenheimer
fund to another, you can exchange your shares for shares of the same class of
another Oppenheimer fund that offers the exchange privilege. For example, you
can exchange Class A shares of the Fund only for Class A shares of another
fund. To exchange shares, you must meet several conditions:

o Shares of the fund selected for exchange must be available for sale in
your state of residence.

o The prospectus of the selected fund must offer the exchange privilege.
o When you establish an account, you must hold the shares you buy for at
least seven days before you can exchange them. After your account is
open for seven days, you can exchange shares on any regular business
day, subject to the limitations described below.
o You must meet the minimum purchase requirements for the selected fund.
o Generally, exchanges may be made only between identically registered
accounts, unless all account owners send written exchange instructions
with a signature guarantee.
o Before exchanging into a fund, you must obtain its prospectus and
should read it.

For tax purposes, an exchange of shares of the Fund is considered a
sale of those shares and a purchase of the shares of the fund to which you
are exchanging. An exchange may result in a capital gain or loss.

You can find a list of the Oppenheimer funds that are currently
available for exchanges in the Statement of Additional Information or you can
obtain a list by calling a service representative at 1.800.225.5677. The
funds available for exchange can change from time to time.
In some cases, sales charges may be imposed on exchange transactions.
In general, a contingent deferred sales charge (CDSC) is not imposed on
exchanges of shares that are subject to a CDSC. However, if you exchange
shares that are subject to a CDSC, the CDSC holding period will be carried
over to the acquired shares, and the CDSC may be imposed if those shares are
redeemed before the end of the CDSC holding period.

There are a number of other special conditions and limitations that
apply to certain types of exchanges. These conditions and circumstances are
described in detail in the "How to Exchange Shares" section in the Statement
of Additional Information.

HOW DO YOU SUBMIT EXCHANGE REQUESTS? Exchanges may be requested in writing,
by telephone or internet, or by establishing an Automatic Exchange Plan.

Written Exchange Requests. Send an OppenheimerFunds Exchange Request form,
signed by all owners of the account, to the Transfer Agent at the
address on the back cover. Exchanges of shares for which share
certificates have been issued cannot be processed unless the Transfer
Agent receives the certificates with the request.

Telephone and Internet Exchange Requests. Telephone exchange requests may be
made either by calling a service representative or by using PhoneLink
by calling 1.800.225.5677. You may submit internet exchange requests on
the OppenheimerFunds internet website, at www.oppenheimerfunds.com. You
------------------------
must have obtained a user I.D. and password to make transactions on
that website. Telephone and/or internet exchanges may be made only
between accounts that are registered with the same name(s) and address.
Shares for which share certificates have been issued may not be
exchanged by telephone or the internet.

Automatic Exchange Plan. Shareholders can authorize the Transfer Agent to
exchange a pre-determined amount of shares automatically on a monthly,
quarterly, semi-annual or annual basis.

Please refer to "How to Exchange Shares" in the Statement of Additional
Information for more details.

ARE THERE LIMITATIONS ON FREQUENT PURCHASES, REDEMPTIONS AND EXCHANGES?

Risks from Excessive Purchase, Redemption and Short-Term Exchange Activity.
The OppenheimerFunds exchange privilege affords investors the ability to
switch their investments among Oppenheimer funds if their investment needs
change. However, there are limits on that privilege. Frequent purchases,
redemptions and exchanges of fund shares may interfere with the Manager's
ability to manage the fund's investments efficiently, increase the fund's
transaction and administrative costs and/or affect the fund's performance,
depending on various factors, such as the size of the fund, the nature of its
investments, the amount of fund assets the portfolio manager maintains in
cash or cash equivalents, the aggregate dollar amount and the number and
frequency of trades. If large dollar amounts are involved in exchange and/or
redemption transactions, the Fund might be required to sell portfolio
securities at unfavorable times to meet redemption or exchange requests, and
the Fund's brokerage or administrative expenses might be increased.
Therefore, the Manager and the Fund's Board of Directors have adopted the
following policies and procedures to detect and prevent frequent and/or
excessive exchanges, and/or purchase and redemption activity, while balancing
the needs of investors who seek liquidity from their investment and the
ability to exchange shares as investment needs change. There is no guarantee
that the policies and procedures described below will be sufficient to
identify and deter excessive short-term trading.

o Timing of Exchanges. Exchanged shares are normally redeemed from one
fund and the proceeds are reinvested in the fund selected for
exchange on the same regular business day on which the Transfer
Agent or its agent (such as a financial intermediary holding the
investor's shares in an "omnibus" or "street name" account) receives
an exchange request that conforms to these policies. The request
must be received by the close of the Exchange that day, which is
normally 4:00 p.m. Eastern time, but may be earlier on some days.
However, the Transfer Agent may delay the reinvestment of proceeds
from an exchange for up to five business days if it determines, in
its discretion, that an earlier transmittal of the redemption
proceeds to the receiving fund would be detrimental to either the
fund from which the exchange is made or the fund to which the
exchange is made.

o Limits on Disruptive Activity. The Transfer Agent may, in its
discretion, limit or terminate trading activity by any person, group
or account that it believes would be disruptive, even if the
activity has not exceeded the policy outlined in this Prospectus.
The Transfer Agent may review and consider the history of frequent
trading activity in all accounts in the Oppenheimer funds known to
be under common ownership or control as part of the Transfer Agent's
procedures to detect and deter excessive trading activity.

o Exchanges of Client Accounts by Financial Advisers. The Fund and the
Transfer Agent permit dealers and financial intermediaries to submit
exchange requests on behalf of their customers (unless the customer
has revoked that authority). The Distributor and/or the Transfer
Agent have agreements with a number of financial intermediaries that
permit them to submit exchange orders in bulk on behalf of their
clients. Those intermediaries are required to follow the exchange
policies stated in this Prospectus and to comply with additional,
more stringent restrictions. Those additional restrictions include
limitations on the funds available for exchanges, the requirement to
give advance notice of exchanges to the Transfer Agent, and limits
on the amount of client assets that may be invested in a particular
fund. A fund or the Transfer Agent may limit or refuse bulk exchange
requests submitted by such financial intermediaries if, in the
Transfer Agent's judgment, exercised in its discretion, the
exchanges would be disruptive to any of the funds involved in the
transaction.

o Redemptions of Shares. These exchange policy limits do not apply to
redemptions of shares. Shareholders are permitted to redeem their
shares on any regular business day, subject to the terms of this
Prospectus.

o Right to Refuse Exchange and Purchase Orders. The Distributor and/or
the Transfer Agent may refuse any purchase or exchange order in
their discretion and are not obligated to provide notice before
rejecting an order. The Fund may amend, suspend or terminate the
exchange privilege at any time. You will receive 60 days' notice of
any material change in the exchange privilege unless applicable law
allows otherwise.

o Right to Terminate or Suspend Account Privileges. The Transfer Agent
may send a written warning to direct shareholders who the Transfer
Agent believes may be engaging in excessive purchases, redemptions
and/or exchange activity and reserves the right to suspend or
terminate the ability to purchase shares and/or exchange privileges
for any account that the Transfer Agent determines, in carrying out
these policies and in the exercise of its discretion, has engaged in
disruptive or excessive trading activity with or without such
warning.

o Omnibus Accounts. If you hold your shares of the Fund through a
financial intermediary such as a broker-dealer, a bank, an insurance
company separate account, an investment adviser, an administrator or
trustee of a retirement plan or 529 plan that holds your shares in
an account under its name (these are sometimes referred to as
"omnibus" or "street name" accounts), that financial intermediary
may impose its own restrictions or limitations to discourage
short-term or excessive trading. You should consult your financial
intermediary to find out what trading restrictions, including
limitations on exchanges, they may apply.

While the Fund, the Distributor, the Manager and the Transfer Agent
encourage financial intermediaries to apply the Fund's policies to their
customers who invest indirectly in the Fund, the Transfer Agent may not be
able to detect excessive short term trading activity facilitated by or in
accounts maintained in, the "omnibus" or "street name" accounts of a
financial intermediary therefore the transfer agent might not be able to
apply this policy to accounts such as (a) accounts held in omnibus form in
the name of a broker-dealer or other financial institution, or (b) omnibus
accounts held in the name of a retirement plan or 529 plan trustee or
administrator, or (c) accounts held in the name of an insurance company for
its separate account(s), or (d) other accounts having multiple underlying
owners but registered in a manner such that the underlying beneficial owners
are not identified to the Transfer Agent.

However, the Transfer Agent will attempt to monitor overall purchase
and redemption activity in those accounts to seek to identify patterns that
may suggest excessive trading by the underlying owners. If evidence of
possible excessive trading activity is observed by the Transfer Agent, the
financial intermediary that is the registered owner will be asked to review
account activity, and to confirm to the Transfer Agent and the Fund that
appropriate action has been taken to curtail any excessive trading activity.
However, the Transfer Agent's ability to monitor and deter excessive
short-term trading in omnibus or street name accounts ultimately depends on
the capability and cooperation of the financial intermediaries controlling
those accounts.
Additional Policies and Procedures. The Fund's Board has adopted additional
policies and procedures to detect and prevent frequent and/or excessive
exchanges and purchase and redemption activity. Those additional policies and
procedures will take effect on June 20, 2005:

o 30-Day Limit. A direct shareholder may exchange some or all of the
shares of the Fund held in his or her account to another eligible
Oppenheimer fund once in a 30 calendar-day period. When shares are
exchanged into a fund account, that account will be "blocked" from
further exchanges into another fund for a period of 30 calendar days
from the date of the exchange. The block will apply to the full
account balance and not just to the amount exchanged into the
account. For example, if a shareholder exchanged $1,000 from one
fund into another fund in which the shareholder already owned shares
worth $10,000, then, following the exchange, the full account
balance ($11,000 in this example) would be blocked from further
exchanges into another fund for a period of 30 calendar days. A
"direct shareholder" is one whose account is registered on the
Fund's books showing the name, address and tax ID number of the
beneficial owner.

o Exchanges Into Money Market Funds. A direct shareholder will be
permitted to exchange shares of a stock or bond fund for shares of a
money market fund at any time, even if the shareholder has exchanged
shares into the stock or bond fund during the prior 30 days.
However, all of the shares held in that money market fund would then
be blocked from further exchanges into another fund for 30 calendar
days.

o Dividend Reinvestments/B Share Conversions. Reinvestment of dividends
or distributions from one fund to purchase shares of another fund
and the conversion of Class B shares into Class A shares will not be
considered exchanges for purposes of imposing the 30-day limit.

o Asset Allocation. Third-party asset allocation and rebalancing
programs will be subject to the 30-day limit described above. Asset
allocation firms that want to exchange shares held in accounts on
behalf of their customers must identify themselves to the Transfer
Agent and execute an acknowledgement and agreement to abide by these
policies with respect to their customers' accounts. "On-demand"
exchanges outside the parameters of portfolio rebalancing programs
will be subject to the 30-day limit. However, investment programs by
other Oppenheimer "funds-of-funds" that entail rebalancing of
investments in underlying Oppenheimer funds will not be subject to
these limits.

o Automatic Exchange Plans. Accounts that receive exchange proceeds
through automatic or systematic exchange plans that are established
through the Transfer Agent will not be subject to the 30-day block
as a result of those automatic or systematic exchanges (but may be
blocked from exchanges, under the 30-day limit, if they receive
proceeds from other exchanges).

Shareholder Account Rules and Policies

More information about the Fund's policies and procedures for buying, selling
and exchanging shares is contained in the Statement of Additional Information.
A $12 annual "Minimum Balance Fee" is assessed on each Fund account with a
value of less than $500. The fee is automatically deducted from each
applicable Fund account annually on or about the second to last
"regular business day" of September. See the Statement of Additional
Information to learn how you can avoid this fee and for circumstances
under which this fee will not be assessed.

Payment for redeemed shares ordinarily is made in cash. It is forwarded by
check, or through AccountLink or by Federal Funds wire (as elected by
the shareholder) within seven days after the Transfer Agent receives
redemption instructions in proper form. However, under unusual
circumstances determined by the SEC, payment may be delayed or
suspended. For accounts registered in the name of a broker-dealer,
payment will normally be forwarded within three business days after
redemption.

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

Involuntary redemptions of small accounts may be made by the Fund if the
account value has fallen below $500 for reasons other than the fact
that the market value of shares has dropped. In some cases, involuntary
redemptions may be made to repay the Distributor for losses from the
cancellation of share purchase orders.

Shares may be "redeemed in kind" under unusual circumstances (such as a lack
of liquidity in the Fund's portfolio to meet redemptions). This means
that the redemption proceeds will be paid with liquid securities from
the Fund's portfolio. If the Fund redeems your shares in kind, you may
bear transaction costs and will bear market risks until such time as
such securities are converted into cash.
Federal regulations may require the Fund to obtain your name, your date of
birth (for a natural person), your residential street address or
principal place of business and your Social Security Number, Employer
Identification Number or other government issued identification when
you open an account. Additional information may be required in certain
circumstances or to open corporate accounts. The Fund or the Transfer
Agent may use this information to attempt to verify your identity. The
Fund may not be able to establish an account if the necessary
information is not received. The Fund may also place limits on account
transactions while it is in the process of attempting to verify your
identity. Additionally, if the Fund is unable to verify your identity
after your account is established, the Fund may be required to redeem
your shares and close your account.
"Backup withholding" of federal income tax may be applied against taxable
dividends, distributions and redemption proceeds (including exchanges)
if you fail to furnish the Fund your correct, certified Social Security
or Employer Identification Number when you sign your application, or if
you under-report your income to the Internal Revenue Service.
To avoid sending duplicate copies of materials to households, the Fund will
mail only one copy of each prospectus, annual and semi-annual report
and annual notice of the Fund's privacy policy to shareholders having
the same last name and address on the Fund's records. The consolidation
of these mailings, called householding, benefits the Fund through
reduced mailing expense.

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

Dividends, Capital Gains and Taxes

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

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

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

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

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

The Fund intends each year to qualify as a "regulated investment
company" under the Internal Revenue Code, but reserves the right not to
qualify. It qualified during its last fiscal year. The Fund, as a regulated
investment company, will not be subject to Federal income taxes on any of its
income, provided that it satisfies certain income, diversification and
distribution requirements.

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

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

Financial Highlights

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

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

CLASS A YEAR ENDED OCTOBER 31,
2004 2003 2002 2001 2000
------------------------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA

Net asset value, beginning of period $ 13.04
$ 11.56 $ 12.54 $ 14.23 $ 15.03
------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .12
1 .14 .22 .26 .44
Net realized and unrealized gain (loss)
.81 1.48 (.94) (1.69) .68

--------------------------------------------------------------------
Total from investment operations
.93 1.62 (.72) (1.43) 1.12
------------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income
(.12) (.14) (.26) (.26) (.44)
Distributions from net realized gain
-- -- -- -- (1.48)

--------------------------------------------------------------------
Total dividends and/or distributions
to shareholders
(.12) (.14) (.26) (.26) (1.92)
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 13.85
$ 13.04 $ 11.56 $ 12.54 $ 14.23

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

------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA

Net assets, end of period (in thousands) $103,268
$100,032 $ 92,806 $112,864 $144,244
------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $103,979 $
94,811 $104,415 $128,477 $172,514
------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income
0.88% 1.18% 1.73% 1.88% 2.88%
Total expenses 1.13%
4,5 1.26% 4,5 1.21% 4,5 1.19% 4 1.11% 4
------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 79%
6 275% 193% 164% 34%

1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the
fiscal period, with all dividends and distributions reinvested in additional
shares on the reinvestment date, and redemption at the net asset value calculated
on the last business day of the fiscal period. Sales charges are not reflected
in the total returns. Total returns are not annualized for periods of less than
one full year. 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%.
6. The portfolio turnover rate excludes purchase and sales transactions of To
Be Announced (TBA)
mortgage-related securities of $316,759,702 and $306,486,129, respectively.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

38 | OPPENHEIMER DISCIPLINED ALLOCATION FUND

CLASS B YEAR ENDED OCTOBER 31,
2004 2003 2002 2001 2000
------------------------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA

Net asset value, beginning of period $ 13.23
$ 11.73 $ 12.72 $ 14.43 $ 15.20
------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) --
1 .04 .11 .15 .30
Net realized and unrealized gain (loss)
.81 1.50 (.94) (1.70) .73

--------------------------------------------------------------------
Total from investment operations
.81 1.54 (.83) (1.55) 1.03
------------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income --
2 (.04) (.16) (.16) (.32)
Distributions from net realized gain
-- -- -- -- (1.48)

--------------------------------------------------------------------
Total dividends and/or distributions
to shareholders
-- (.04) (.16) (.16) (1.80)
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $14.04
$13.23 $11.73 $12.72 $14.43

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

------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA

Net assets, end of period (in thousands) $13,619
$14,747 $12,204 $14,770 $17,892
------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $14,875
$12,776 $13,639 $16,569 $19,643
------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income (loss)
(0.01)% 0.31% 0.94% 1.14% 2.12%
Total expenses
2.02% 2.15% 2.00% 1.94% 1.87%
Expenses after payments and waivers and
reduction to custodian expenses N/A
5 2.11% N/A 5,6 N/A 5 N/A 5
------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 79%
7 275% 193% 164% 34%

1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Less than $0.005 per share.
3. Assumes an investment on the business day before the first day of the
fiscal period, with all dividends and distributions reinvested in additional
shares on the reinvestment date, and redemption at the net asset value calculated
on the last business day of the fiscal period. Sales charges are not reflected
in the total returns. Total returns are not annualized for periods of less than
one full year. Returns do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund shares.
4. Annualized for periods of less than one full year.
5. Reduction to custodian expenses less than 0.01%.
6. Voluntary waiver of transfer agent fees less than 0.01%.
7. The portfolio turnover rate excludes purchase and sales transactions of To
Be Announced (TBA)
mortgage-related securities of $316,759,702 and $306,486,129, respectively.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

39 | OPPENHEIMER DISCIPLINED ALLOCATION FUND

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

CLASS C YEAR ENDED OCTOBER 31,
2004 2003 2002 2001 2000
------------------------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA

Net asset value, beginning of period $ 12.88
$ 11.43 $ 12.41 $ 14.08 $ 14.88
------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income --
1 .07 .13 .13 .28
Net realized and unrealized gain (loss)
.79 1.43 (.94) (1.64) .72

--------------------------------------------------------------------
Total from investment operations
.79 1.50 (.81) (1.51) 1.00
------------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income
(.01) (.05) (.17) (.16) (.32)
Distributions from net realized gain
-- -- -- -- (1.48)

--------------------------------------------------------------------
Total dividends and/or distributions
to shareholders
(.01) (.05) (.17) (.16) (1.80)
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.66
$12.88 $11.43 $12.41 $14.08

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

------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA

Net assets, end of period (in thousands) $6,422
$4,666 $2,984 $2,893 $3,931
------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $5,726
$3,806 $2,961 $3,280 $4,255
------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income
0.00% 0.29% 0.93% 1.14% 2.13%
Total expenses
2.02% 2.17% 2.00% 1.94% 1.86%
Expenses after payments and waivers and
reduction to custodian expenses N/A
4 2.12% N/A 4,5 N/A 4 N/A 4
------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 79%
6 275% 193% 164% 34%

1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the
fiscal period, with all dividends and distribu- tions 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%.
6. The portfolio turnover rate excludes purchase and sales transactions of To
Be Announced (TBA)
mortgage-related securities of $316,759,702 and $306,486,129, respectively.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

40 | OPPENHEIMER DISCIPLINED ALLOCATION FUND

CLASS N YEAR ENDED OCTOBER 31,
2004 2003 2002 2001 1
-----------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA

Net asset value, beginning of period $ 13.00
$ 11.52 $ 12.52 $ 13.74
-----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .06
2 .12 .16 .12
Net realized and unrealized gain (loss)
.81 1.46 (.91) (1.20)

-------------------------------------------------------
Total from investment operations
.87 1.58 (.75) (1.08)
-----------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income
(.07) (.10) (.25) (.14)
Distributions from net realized gain
-- -- -- --

-------------------------------------------------------
Total dividends and/or distributions to shareholders
(.07) (.10) (.25) (.14)
-----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.80
$13.00 $11.52 $12.52

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

-----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3
6.68% 13.81% (6.17)% (7.90)%

-----------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA

Net assets, end of period (in thousands)
$1,488 $392 $241 $2
-----------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)
$1,030 $342 $160 $1
-----------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income
0.46% 0.79% 1.28% 1.04%
Total expenses
1.61% 2.04% 1.60% 1.68%
Expenses after payments and waivers and
reduction to custodian expenses
1.55% 1.58% N/A 5,6 N/A 5
-----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 79%
7 275% 193% 164%

1. For the period from March 1, 2001 (inception of offering) to October 31,
2001.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. Assumes an investment on the business day before the first day of the
fiscal period, with all dividends and distributions reinvested in additional
shares on the reinvestment date, and redemption at the net asset value calculated
on the last business day of the fiscal period. Sales charges are not reflected
in the total returns. Total returns are not annualized for periods of less than
one full year. Returns do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund shares.
4. Annualized for periods of less than one full year.
5. Reduction to custodian expenses less than 0.01%.
6. Voluntary waiver of transfer agent fees less than 0.01%.
7. The portfolio turnover rate excludes purchase and sales transactions of To
Be Announced (TBA)
mortgage-related securities of $316,759,702 and $306,486,129, respectively.

INFORMATION AND SERVICES

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

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

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

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

------------------------------------------------------------------------------
By Telephone: Call OppenheimerFunds Services toll-free:
1.800.CALL OPP (225.5677)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
By Mail: Write to:
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217-5270
------------------------------------------------------------------------------
------------------------------------------------------------------------------

On the Internet: You can request these documents by e-mail or
through the OppenheimerFunds website. You may
also read or download certain documents on the
OppenheimerFunds website at:
www.oppenheimerfunds.com
------------------------

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

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

The Fund's shares are distributed by: [logo] OppenheimerFunds
Distributor, Inc.
The Fund's SEC File No.: 811-3346
PR0205.001.0205
Printed on recycled paper

Appendix to Prospectus of
Oppenheimer Disciplined Allocation Fund

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

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

Calendar Annual
Year Ended Total Returns

1995 23.95%
1996 9.59%
1997 17.90%
1998 10.85%
1999 -1.78%
2000 5.27%
2001 -5.96%
2002 -9.00%
2003 18.89%
2004 8.58%

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 February 28, 2005

This Statement of Additional Information is not a prospectus. This document
contains additional information about the Fund and supplements information in
the Prospectus dated February 28, 2005. It should be read together with the
Prospectus, which may be obtained by writing to the Fund's Transfer Agent,
OppenheimerFunds Services, at P.O. Box 5270, Denver, Colorado 80217, by calling
the Transfer Agent at the toll-free number shown above, or by downloading it
from the OppenheimerFunds Internet website at www.oppenheimerfunds.com.

Contents
Page
About the Fund

Additional Information About the Fund's Investment Policies and Risks... 2
The Fund's Investment Policies...................................... 2
Other Investment Techniques and Strategies.......................... 13
Other Investment Restrictions....................................... 33
Disclosure of Portfolio Holdings.................................... 35
How the Fund is Managed ................................................ 39
Organization and History............................................ 39
Board of Directors and Oversight Committees......................... 40
Directors and Officers of the Fund.................................. 41
The Manager......................................................... 49
Brokerage Policies of the Fund.......................................... 52
Distribution and Service Plans.......................................... 55
Performance of the Fund................................................. 60

About Your Account

How to Buy Shares....................................................... 64
How to Sell Shares...................................................... 75
How to Exchange Shares.................................................. 79
Dividends, Capital Gains and Taxes...................................... 83
Additional Information About the Fund................................... 87

Financial Information About the Fund

Independent Registered Public Accounting Firm's Report.................. 88
Financial Statements.................................................... 89

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.

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 may borrow a greater amount, as discussed in the immediately
preceding paragraph, the Fund currently does not expect its borrowings to exceed
5% of its total assets.

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| 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.

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 iso 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.

Disclosure of Portfolio Holdings. The Fund has adopted policies and procedures
concerning the dissemination by employees, officers and/or directors of the
Investment Advisor, Distributor, and Transfer Agent of information about the
portfolio securities holdings of the Funds. These policies are designed to
assure that dissemination of non-public information about portfolio securities
is distributed for a legitimate business purpose, and is done in a manner that
(a) conforms to applicable laws and regulations and (b) is designed to prevent
that information from being used in a way that could negatively affect the
Fund's investment program or enable third parties to use that information in a
manner that is harmful to a Fund.

Until publicly disclosed, a Fund's portfolio holdings are proprietary,
confidential business information. While recognizing the importance of
providing Fund shareholders with information about their Fund's investments and
providing portfolio information to a variety of third parties to assist with
the management, distribution and administrative process, such need for
transparency must be balanced against the risk that third parties who gain
access to a Fund's portfolio holdings information could attempt to use that
information to trade ahead of or against the Fund, which could negatively
affect the prices the Fund is able to obtain in portfolio transactions or the
availability of the portfolio securities that portfolio managers are trading in
on a Fund's behalf.

The Investment Advisor and its subsidiaries and affiliates, employees,
officers, and directors, shall neither solicit nor accept any compensation or
other consideration (including any agreement to maintain assets in the Fund or
in other investment companies or accounts managed by the Investment Advisor or
any affiliated person of the Investment Advisor) in connection with the
disclosure of a Fund's non-public portfolio holdings. The receipt of investment
advisory fees or other fees and compensation paid to the investment Advisor and
their subsidiaries pursuant to agreements approved by the Fund's Board shall
not be deemed to be "compensation" or "consideration" for these purposes. It
is a violation of the Code of Ethics for any covered person to release holdings
in contravention of portfolio holdings disclosure policies and procedures
adopted by the Fund.

A list of the top 10 or more portfolio securities holdings (based on invested
assets), listed by security or by issuer, as of the end of each month may be
disclosed to third parties (subject to the procedures below) no sooner than 15
days after month-end. The top 10 or more holdings also shall be posted on the
OppenheimerFunds' website at www.oppenheimerfunds.com in the "Fund Profiles"
section. Other general information about a Fund's portfolio investments, such
as portfolio composition by asset class, industry, country, currency, credit
rating or maturity, may also be posted with a 15-day lag.

Except under special limited circumstances discussed below, month-end lists of
a Fund's complete portfolio holdings may be disclosed no sooner than 30-days
after the relevant month-end, subject to the procedures below. If they have not
been disclosed publicly, they may be disclosed pursuant to special requests for
legitimate business reasons, provided that:

o The third-party recipient must first submit a request for release of Fund
portfolio holdings, explaining the business reason for the request;
o Senior officers (a Senior Vice President or above) in the Investment
Advisor's Portfolio and Legal departments must approve the completed
request for release of Fund portfolio holdings; and
o The third-party recipient must sign the Investment Advisor's portfolio
holdings non-disclosure agreement before receiving the data, agreeing
to keep confidential information that is not publicly available
regarding a Fund's holdings and agreeing not to trade directly or
indirectly based on the information.

Complete Fund portfolio holdings positions may be released to the following
categories of entities or individuals on an ongoing basis, provided that such
entity or individual either (1) has signed an agreement to keep such
information confidential and not trade on the basis of such information or (2)
is subject to fiduciary obligations, as a member of the Fund's Board, or as an
employee, officer and/or director of the Investment Advisor, Distributor, or
Transfer Agent, or their respective legal counsel, not to disclose such
information except in conformity with these policies and procedures and not to
trade for his/her personal account on the basis of such information:

o Employees of the Fund's Investment Advisor, Distributor and Transfer
Agent who need to have access to such information (as determined by
senior officers of such entity),
o The Fund's certified public accountants and auditors,
o Members of the Fund's Board and the Board's legal counsel,
o The Fund's custodian bank,
o A proxy voting service designated by the Fund and its Board,
o Rating/ranking organizations (such as Lipper and Morningstar),
o Portfolio pricing services retained by the Investment Advisor to provide
portfolio security prices, and
o Dealers, to obtain bids (price quotations, because securities are not
priced by the Fund's regular pricing services).

Portfolio holdings information of a Fund may be provided, under limited
circumstances, to brokers and dealers or with whom the Fund trades and/or
entities that provide investment coverage and/or analytical information
regarding the Fund's portfolio, provided that there is a legitimate investment
reason for providing the information to the broker or dealer or other entity.
Month-end portfolio holdings information may, under this procedure, be provided
to vendors providing research information and/or analytics to the fund, with at
least a 15-day delay after the month end, but in certain cases may be provided
to a broker or analytical vendor with a 1- 2 day lag to facilitate the
provision of requested investment information to the manager to facilitate a
particular trade or the portfolio manager's investment process for the Fund.
Any third party receiving such information must first sign the Investment
Advisor's portfolio holdings non-disclosure agreement as a pre-condition to
receiving this information.

Portfolio holdings information (which may include information on individual
securities positions or multiple securities) may be provided to the entities
listed below (1) by portfolio traders employed by the Investment Advisor in
connection with portfolio trading, and (2) by the members of the Investment
Advisor's Security Valuation Group and Accounting Departments in connection
with portfolio pricing or other portfolio evaluation purposes:

o Brokers and dealers in connection with portfolio transactions
(purchases and sales)
o Brokers and dealers to obtain bids or bid and asked prices (if securities
held by a Fund are not priced by the fund's regular pricing services)
o Dealers to obtain price quotations where the fund is not identified as
the owner

Portfolio holdings information (which may include information on a Fund's
entire portfolio or individual securities therein) may be provided by senior
officers of the Investment Advisor or attorneys on the legal staff of the
Investment Advisor, Distributor, or Transfer Agent, in the following
circumstances:

o Response to legal process in litigation matters, such as responses to
subpoenas or in class action matters where the Fund may be part of the
plaintiff class (and seeks recovery for losses on a security) or a
defendant,
o Response to regulatory requests for information (the SEC, NASD, state
securities regulators, and/or foreign securities authorities,
including without limitation requests for information in inspections
or for position reporting purposes),
o To potential sub-advisors of portfolios (but only pursuant to
confidentiality agreements),
o To consultants for retirement plans for plan sponsors/discussions at due
diligence meetings (if entire portfolio holdings are provided,
however, it shall be done only pursuant to a confidentiality
agreement),
o Investment bankers in connection with merger discussions (but only
pursuant to confidentiality agreements)

Portfolio managers and analysts may, subject to the Investment Advisor's
policies on communications with the press and other media, discuss portfolio
information in interviews with members of the media, or in due diligence or
similar meetings with clients or prospective purchasers of Fund shares or their
financial intermediary representatives.

The Fund's shareholders may, under unusual circumstances (such as a lack of
liquidity in the Fund's portfolio to meet redemptions), receive redemption
proceeds of their Fund shares paid as pro rata shares of securities held in the
Fund's portfolio. In such circumstances, disclosure of the Fund's portfolio
holdings may be made to such shareholders.

The Chief Compliance Officer (the "CCO") of the Fund and the Investment
Advisor, Distributor, and Transfer Agent shall oversee the compliance by the
Investment Advisor, Distributor, Transfer Agent, and their personnel with these
policies and procedures. At least annually, the CCO shall report to the Fund
Board on such compliance oversight and on the categories of entities and
individuals to which disclosure of portfolio holdings of the Funds has been
made during the preceding year pursuant to these policies. The CCO shall report
to the Fund Board any material violation of these policies and procedures
during the previous calendar quarter and shall make recommendations to the
Companies and to the Boards as to any amendments that the CCO believes are
necessary and desirable to carry out or improve these policies and procedures.

The Investment Advisor and/or the Fund have entered into ongoing arrangements
to make available information about the Fund's portfolio holdings. One or more
of the Oppenheimer funds may currently disclose portfolio holdings information
based on ongoing arrangements to the following parties:

A.G. Edwards & Sons
ABG Securities
ABN AMRO
Advest
AG Edwards
American Technology Research
Auerbach Grayson
Banc of America Securities
Barclays
Baseline
Bear Stearns
Belle Haven
Bloomberg
BNP Paribas
BS Financial Services
Buckingham Research Group
Caris & Co.
CIBC World Markets
Citigroup
Citigroup Global Markets
Collins Stewart
Craig-Hallum Capital Group LLC
Credit Agricole Cheuvreux N.A. Inc.
Credit Suisse First Boston
Daiwa Securities
Davy
Deutsche Bank
Deutsche Bank Securities
Dresdner Kleinwort Wasserstein
Emmet & Co
Empirical Research
Enskilda Securities
Essex Capital Markets
Exane BNP Paribas
Factset
Fidelity Capital Markets
Fimat USA Inc.
First Albany
First Albany Corporation
Fixed Income Securities
Fortis Securities
Fox-Pitt, Kelton
Friedman, Billing, Ramsey
Fulcrum Global Partners
Garp Research
George K Baum & Co.
Goldman
Goldman Sachs
HSBC
HSBC Securities Inc
ING Barings
ISI Group
Janney Montgomery
Jefferies
Jeffries & Co.
JP Morgan
JP Morgan Securities
JPP Eurosecurities
Keefe, Bruyette & Woods
Keijser Securities
Kempen & Co. USA Inc.
Kepler Equities/Julius Baer Sec
KeyBanc Capital Markets
Leerink Swan
Legg Mason
Lehman
Lehman Brothers
Lipper
Loop Capital Markets
MainFirst Bank AG
Makinson Cowell US Ltd
Maxcor Financial
Merrill
Merrill Lynch
Midwest Research
Mizuho Securities
Morgan Stanley
Morningstar
Natexis Bleichroeder
Ned Davis Research Group
Nomura Securities
Pacific Crest
Pacific Crest Securities
Pacific Growth Equities
Petrie Parkman
Pictet
Piper Jaffray Inc.
Plexus
Prager Sealy & Co.
Prudential Securities
Ramirez & Co.
Raymond James
RBC Capital Markets
RBC Dain Rauscher
Research Direct
Robert W. Baird
Roosevelt & Cross
Russell Mellon
Ryan Beck & Co.
Sanford C. Bernstein
Scotia Capital Markets
SG Cowen & Co.
SG Cowen Securities
Soleil Securities Group
Standard & Poors
Stone & Youngberg
SWS Group
Taylor Rafferty
Think Equity Partners
Thomas Weisel Partners
UBS
Wachovia
Wachovia Corp
Wachovia Securities
Wescott Financial
William Blair
Yieldbook

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

Board of Directors and Oversight Committees. The Fund 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 Joel Motley (Chairman), Mary Miller, Edward V. Regan and Kenneth
Randall. The Audit Committee held 6 meetings during the Fund's fiscal year
ended October 31, 2004. 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 G. Galli
(Chairman), Joel Motley and Phillip Griffiths. The Regulatory & Oversight
Committee held 6 meetings during the Fund's fiscal year ended October 31, 2004.
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 Phillip Griffiths (Chairman),
Kenneth Randall and Russell S. Reynolds, Jr. The Governance Committee held 6
meetings during the Fund's fiscal year ended October 31, 2004. 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. Should the Board determine that a vacancy exists
or is likely to exist on the Board, the Governance Committee of the Board shall
consider any candidates for Board membership recommended by the shareholders of
the Fund. Any shareholders wishing to submit a nominee for election to the
Board may do so by mailing their submission to the offices of OppenheimerFunds,
Inc., Two World Financial Center, 225 Liberty Street - 11th Floor, New York, NY
10281-1008, to the attention of the Chair of the Governance Committee. The
Committee may also consider candidates proposed by any Board member(s),
executive search firm, or other person or entity as may be permitted by the
Committee's charter, the Board I Governance Guidelines, or other Board I
policy. The Committee may consider such persons at such time as it meets to
consider possible nominees. The Committee, however, reserves sole discretion
to determine the candidates for Board membership (both interested and
disinterested) to recommend to the Board and/or shareholders and may identify
candidates other than those submitted by shareholders. The Committee may, but
need not, consider the advice and recommendation of the Manager and its
affiliates in selecting nominees."

The members of the Proxy Committee are Edward V. Regan (Chairman),
Russell S. Reynolds, Jr. and John Murphy. The Proxy Committee held 1 meeting
during the Fund's fiscal year ended October 31, 2004. 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, their positions with the Fund, length
of service in such position(s) and principal occupations and business
affiliations during the past five years are listed in the chart below. The
information for each Trustee also includes the dollar range of shares
beneficially owned in the Fund and the aggregate dollar range of shares
beneficially owned in all registered investment companies in the Oppenheimer
fund family that are overseen by the Trustee ("Supervised Funds"). All of the
Directors except Mr. Fink and Mr. Murphy are also Trustees or Directors of each
of the following publicly offered Oppenheimer funds (referred to as "Board I
Funds"). Mr. Murphy is a Trustee/Director of the Funds indicated with an
asterisk and Mr. Fink and Mr. Murphy are both Trustees/Directors of the Funds
indicated with two asterisks.

Oppenheimer Global Opportunities

Oppenheimer AMT-Free Municipals Fund**
Oppenheimer AMT-Free New York Oppenheimer Gold & Special Minerals
Municipals** Fund**
Oppenheimer Balanced Fund Oppenheimer Growth Fund**
Oppenheimer California Municipal Fund** Oppenheimer International Growth Fund

Oppenheimer International Small

Oppenheimer Capital Appreciation Fund** Company Fund
Oppenheimer Developing Markets Fund Oppenheimer Money Market Fund, Inc.**
Oppenheimer Multi-Sector Income
Oppenheimer Discovery Fund** Trust**
Oppenheimer Multi-State Municipal
Oppenheimer Emerging Growth Fund* Trust
Oppenheimer Emerging Technologies Fund* Oppenheimer Series Fund, Inc.**
Oppenheimer Enterprise Fund Oppenheimer U.S. Government Trust*
Oppenheimer Global Fund

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, Petersen, Vandehey, Vottiero, Wixted, Zack, Leavy,
Manioudakis, and Ferreira, and Mses. Bloomberg and Ives respectively hold the
same offices with one or more of the other Board I Funds as with the Fund. As
of January 31, 2005, 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 of $137,500 for calendar year ended December 31,
2002. Mr. Reynolds reported that The Directorship Search Group did not provide
consulting services to Massachusetts Mutual Life Insurance Company during the
calendar years ended December 31, 2003 and 2004 and does not expect to provide any such
services in the calendar year ending December 31, 2005.

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. Ms. Mary Miller was
elected to the Board I Funds effective August 13, 2004 and did not hold shares
of Board I Funds during the calendar year ended December 31, 2004. Mr. Matthew
Fink was elected to the Board I Funds effective January 1, 2005 and therefore
did not hold shares of Board I Funds during the calendar year ended December 31,
2004.

-----------------------------------------------------------------------------------
Independent Directors
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------

Name, Principal Occupation(s) During Past 5 Dollar Aggregate
Dollar
Range Of
Shares
Beneficially
Owned in
Years; Range of Any of the
Position(s) Held Other Trusteeships/Directorships Held Shares Oppenheimer
with Fund, by Director; BeneficialFunds
Length of Service, Number of Portfolios in Fund Complex Owned in Overseen
Age Currently Overseen by Director the Fund by Director

-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
As of December 31,

2004

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

Clayton K. Of Counsel (since June 1993) Hogan & None None
Yeutter, Chairman Hartson (a law firm); a director (since
of the Board of 2002) of Danielson Holding Corp.
Directors since Formerly a director of Weyerhaeuser
2003; Corp. (1999-April 2004), Caterpillar,
Director since 1996 Inc. (1993-December 2002), ConAgra
Age: 74 Foods (1993-2001), Texas Instruments
(1993-2001) and FMC Corporation
(1993-2001). Oversees 25 portfolios in
the OppenheimerFunds complex.

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

Matthew P. Fink, Director (since October 1991) of ICI None None
Director since 2005 Education Foundation; President
Age: 64 (October 1991-October 2004) of the
Investment Company Institute; Director
(October 1991-October 2004) of ICI
Mutual Insurance Company. Oversees 11

portfolios in the OppenheimerFunds
complex.
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------

Robert G. Galli, A trustee or director of other None Over
Director since 1996 Oppenheimer funds. Oversees 35 $100,000
Age: 71 portfolios in the OppenheimerFunds

complex.
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------

Phillip A. A director (since 1991) of the None None
Griffiths, Institute for Advanced Study,
Director since 1999 Princeton, N.J., a director (since
Age: 66 2001) of GSI Lumonics, a trustee (since
1983) of Woodward Academy, 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
Sciences (since 1995), American
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.

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

Mary F. Miller, Trustee (since October 1998) of the None None
Director since American Symphony Orchestra. Formerly a
2004 Senior Vice President and General
Age: 62 Auditor of American Express Company
(July 1998-February 2003). Oversees 25

Joel W. Motley, Director (since January 2002) Columbia None None
Director since 2002 Equity Financial Corp. (privately-held
Age: 52 financial adviser); Managing Director
(since January 2002) Carmona Motley,
Inc. (privately-held financial
adviser). Formerly a Managing Director
of Carmona Motley Hoffman Inc.
(privately-held financial adviser)
(January 1998-December 2001). Oversees
25 portfolios in the OppenheimerFunds
complex.

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

Kenneth A. A director (since February 1972) of None Over
Randall, Director Dominion Resources, Inc. (electric $100,000
since 1996 utility holding company); formerly a
Age: 77 director of Prime Retail, Inc. (real
estate investment trust) and Dominion
Energy, Inc. (electric power and oil &
gas producer), President and Chief
Executive Officer of The Conference
Board, Inc. (international economic and
business research) and a director of
Lumbermens Mutual Casualty Company,
American Motorists Insurance Company
and American Manufacturers Mutual
Insurance Company. Oversees 25
portfolios in the OppenheimerFunds
complex.

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

Edward V. Regan, President, Baruch College, CUNY; a $1-$10,000 Over
Director since 1996 director of RBAsset (real estate $100,000
Age: 74 manager); a director of OffitBank;
formerly Trustee, Financial Accounting
Foundation (FASB and GASB), Senior
Fellow of Jerome Levy Economics
Institute, Bard College, Chairman of
Municipal Assistance Corporation for
the City of New York, New York State
Comptroller and Trustee of New York
State and Local Retirement Fund.
Oversees 25 investment companies in the
OppenheimerFunds complex.

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

Russell S. Chairman (since 1993) of The None Over
Reynolds, Jr., Directorship Search Group, Inc. $100,000
Director since 1996 (corporate governance consulting and
Age: 73 executive recruiting); a Life Trustee
of International House (non-profit
educational organization); a former
trustee of The Historical Society of
the Town of Greenwich. Oversees 25
portfolios in the OppenheimerFunds
complex.

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

The address of Mr. Murphy in the chart below is Two World Financial
Center, 225 Liberty Street, 11th Floor, New York, NY 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 Dollar Aggregate
Dollar
Range Of
Shares
Beneficially
Owned in
Years; Range of Any of the
Position(s) Held Other Trusteeships/Directorships Held Shares Oppenheimer
with Fund, by Director; BeneficialFunds
Length of Service Number of Portfolios in Fund Complex Owned in Overseen
Age Currently Overseen by Director the Fund by Director

-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
As of December 31,

2004

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

John V. Murphy, Chairman, Chief Executive Officer and None Over
President and director (since June 2001) and $100,000
Director, President (since September 2000) of the
Trustee since 2001 Manager; President and a director or
Age: 55 trustee of other Oppenheimer funds;
President and a director (since July
2001) of Oppenheimer Acquisition Corp.
(the Manager's parent holding company)
and of Oppenheimer Partnership
Holdings, Inc. (a holding company
subsidiary of the Manager); a director
(since November 2001) of
OppenheimerFunds Distributor, Inc. (a
subsidiary of the Manager); Chairman
and a director (since July 2001) of
Shareholder Services, Inc. and of
Shareholder Financial Services, Inc.
(transfer agent subsidiaries of the
Manager); President and a director
(since July 2001) of OppenheimerFunds
Legacy Program (a charitable trust
program established by the Manager); a
director of the following investment
advisory subsidiaries of the Manager:
OFI Institutional Asset Management,
Inc., Centennial Asset Management
Corporation, Trinity Investment
Management Corporation and Tremont
Capital Management, Inc. (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.; 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
Babson Capital Management LLC); a
member of the Investment Company
Institute's Board of Governors (elected
to serve from October 3, 2003 through
September 30, 2006). Formerly, Chief
Operating Officer (September 2000-June
2001) of the Manager; President and
trustee (November 1999-November 2001)
of MML Series Investment Fund and
MassMutual Institutional Funds
(open-end investment companies); a
director (September 1999-August 2000)
of C.M. Life Insurance Company;
President, Chief Executive Officer and
director (September 1999-August 2000)
of MML Bay State Life Insurance
Company; a director (June 1989-June
1998) of Emerald Isle Bancorp and
Hibernia Savings Bank (a wholly-owned
subsidiary of Emerald Isle Bancorp).
Oversees 62 portfolios as
Trustee/Director and 21 additional
portfolios as Officer in the
OppenheimerFunds complex.

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

The address of the Officers in the chart below is as follows: for Messrs.
Leavy, Ferriera, Manioudakis, Zack, Gillespie and Miao and Ms. Bloomberg, Two
World Financial Center, 225 Liberty Street, New York, NY 10281-1008, for
Messrs. Vandehey, Vottiero, Petersen and Wixted and Ms. Ives, 6803 S. Tucson
Way, Centennial, CO 80112-3924. Each Officer serves for an indefinite term or
until his or her earlier resignation, death or removal.

-------------------------------------------------------------------------------------
Officers of the Fund
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Name, Position(s) Held Principal Occupation(s) During Past 5 Years
with Fund, Length of
Service, Age
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

Christopher Leavy, Vice Senior Vice President of the Manager since September
President and Portfolio 2000; an officer of 8 portfolios in the
Manager since 2000 OppenheimerFunds complex. Formerly a portfolio manager
Age: 33 of Morgan Stanley Dean Witter Investment Management

(1997 - September 2000).
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

Angelo Manioudakis, Senior Vice President of the Manager (since April
Portfolio Manager since 2002), of HarbourView Asset Management Corporation
2002 (since April 2002) and of OFI Institutional Asset
Age: 38 Management, Inc. (since June 2002); an officer of 15
portfolios in the OppenheimerFunds complex. Formerly
Executive Director and portfolio manager for Miller,
Anderson & Sherrerd, a division of Morgan Stanley
Investment Management (August 1993-April 2002).

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

Emmanuel Ferreira, Vice Vice President of the Manager since January 2003. An
President and Portfolio officer of 5 portfolios in the OppenheimerFunds
Manager since 2003 complex. Formerly, Portfolio Manager at Lashire
Age: 37 Investments (July 1999-December 2002).

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

Mark S. Vandehey, Senior Vice President and Chief Compliance Officer
Vice President and Chief (since March 2004) of the Manager; Vice President
Compliance Officer since (since June 1983) of OppenheimerFunds Distributor,
2004 Inc., Centennial Asset Management Corporation and
Age: 54 Shareholder Services, Inc. Formerly (until February
2004) Vice President and Director of Internal Audit of
the Manager. An officer of 83 portfolios in the
Oppenheimer funds complex.

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

Brian W. Wixted, Senior Vice President and Treasurer (since March 1999)
Treasurer since 1999 of the Manager; Treasurer of HarbourView Asset
Age: 45 Management Corporation, Shareholder Financial Services,
Inc., Shareholder Services, Inc., Oppenheimer Real
Asset Management Corporation, and Oppenheimer
Partnership Holdings, Inc. (since March 1999), of OFI
Private Investments, Inc. (since March 2000), of
OppenheimerFunds International Ltd. and
OppenheimerFunds plc (since May 2000), of OFI
Institutional Asset Management, Inc. (since November
2000), and of OppenheimerFunds Legacy Program (a
Colorado non-profit corporation) (since June 2003);
Treasurer and Chief Financial Officer (since May 2000)
of OFI Trust Company (a trust company subsidiary of the
Manager); Assistant Treasurer (since March 1999) of
Oppenheimer Acquisition Corp. Formerly Assistant
Treasurer of Centennial Asset Management Corporation
(March 1999-October 2003) and OppenheimerFunds Legacy
Program (April 2000-June 2003); Principal and Chief
Operating Officer (March 1995-March 1999) at Bankers
Trust Company-Mutual Fund Services Division. An officer
of 83 portfolios in the OppenheimerFunds complex.

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

Brian Petersen, Assistant Vice President of the Manager since August
Assistant Treasurer since 2002; formerly Manager/Financial Product Accounting
2004 (November 1998-July 2002) of the Manager. An officer of
Age: 34 83 portfolios in the OppenheimerFunds 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) prior
Age: 41 to which he was Chief Financial Officer at Sovlink
Corporation (April 1996-June 1999). An officer of 83
portfolios in the OppenheimerFunds complex.

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

Robert G. Zack, Executive Vice President (since January 2004) and
Secretary since 2001 General Counsel (since February 2002) of the Manager;
Age: 56 General Counsel and a director (since November 2001) of
the Distributor; General Counsel (since November 2001)
of Centennial Asset Management Corporation; Senior Vice
President and General Counsel (since November 2001) of
HarbourView Asset Management Corporation; Secretary and
General Counsel (since November 2001) of Oppenheimer
Acquisition Corp.; Assistant Secretary and a director
(since October 1997) of OppenheimerFunds International
Ltd. and OppenheimerFunds plc; Vice President and a
director (since November 2001) of Oppenheimer
Partnership Holdings, Inc.; a director (since November
2001) of Oppenheimer Real Asset Management, Inc.;
Senior Vice President, General Counsel and a director
(since November 2001) of Shareholder Financial
Services, Inc., Shareholder Services, Inc., OFI Private
Investments, Inc. and OFI Trust Company; Vice President
(since November 2001) of OppenheimerFunds Legacy
Program; Senior Vice President and General Counsel
(since November 2001) of OFI Institutional Asset
Management, Inc.; a director (since June 2003) of
OppenheimerFunds (Asia) Limited. Formerly Senior Vice
President (May 1985-December 2003), 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); and
OppenheimerFunds International Ltd. (October
1997-November 2001). An officer of 83 portfolios in the
OppenheimerFunds complex.

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

Kathleen T. Ives, Vice President (since June 1998) and Senior Counsel and
Assistant Secretary since Assistant Secretary (since October 2003) of the
2001 Manager; Vice President (since 1999) and Assistant
Age: 39 Secretary (since October 2003) of the Distributor;
Assistant Secretary (since October 2003) of Centennial
Asset Management Corporation; Vice President and
Assistant Secretary (since 1999) of Shareholder
Services, Inc.; Assistant Secretary (since December
2001) of OppenheimerFunds Legacy Program and of
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 83 portfolios in the
OppenheimerFunds complex.

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

Lisa I. Bloomberg, Vice President and Associate Counsel of the Manager
Assistant Secretary since since May 2004; formerly First Vice President and
2004 Associate General Counsel of UBS Financial Services
Age: 37 Inc. (formerly, PaineWebber Incorporated) (May 1999 -
April 2004) prior to which she was an Associate at
Skaden, Arps, Slate, Meagher & Flom, LLP (September
1996 - April 1999). An officer of 83 portfolios in the
OppenheimerFunds complex.

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

Phillip S. Gillespie, Senior Vice
President
and Deputy
General
Counsel of
the Manager
since
September
2004.
Formerly Mr.
Gillespie
held the
following
positions at
Merrill
Lynch
Investment
Management:
First Vice
President
(2001-Septembe
2004); r
Director
(from 2000)
and Vice
President
(1998-2000).
An officer
of 83
portfolios
Assistant Secretary in the
since 2004 OppenheimerFun
Age: 41 complex. ds

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

Wayne Miao, Assistant
Assistant Secretary Vice
since 2004 President
Age: 32 and
Assistant
Counsel of
the Manager
since June
2004.
Formerly an
Associate
with Sidley
Austin Brown
& Wood LLP
(September
1999 - May
2004). An
officer of
83
portfolios
in the
OppenheimerFunds
complex.

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

|X| Remuneration of Directors. The officers of the Fund and Mr.
Murphy (who is an officer and Director of the Fund) are affiliated with the
Manager and 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, 2004. The compensation from all 25 of
the Board I Funds (including the Fund) represents compensation received for
serving as a director or trustee and member of a committee (if applicable) of
the boards of those funds during the calendar year ended December 31, 2004.

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

Director Name and Aggregate Retirement Estimated Total
Compensation9
From All
Oppenheimer
Annual Funds For
Benefits Retirement Which
Accrued as Benefits to Individual
Other Fund Position(s) Compensation Part of Fund be Paid Upon Serves As
(as applicable)10 From Fund1 Expenses2 Retirement2 Trustee/Director

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

Clayton K. Yeutter $6043 $1,511 $61,306 $173,700
Chairman of the Board

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

Robert G. Galli $449 $901 $80,9234 $237,3125
Regulatory & Oversight
Committee Chairman

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

Phillip Griffiths
Governance Committee
Chairman and $4926 $483 $23,309 $142,092
Regulatory & Oversight
Committee Member

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

Joel W. Motley
Audit Committee
Chairman and $5237 $200 $14,530 $150,760
Regulatory & Oversight
Committee Member

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

Mary F. Miller8 $28 $0 $0 $8,532
Audit Committee Member

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

Kenneth A. Randall $466 $0 $79,622 $134,080
Audit Committee Member
and Governance
Committee Member

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

Edward V. Regan $413 $1,066 $59,353 $118,788
Proxy Committee
Chairman and Audit
Committee Member

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

Russell S. Reynolds, $371 $943 $60,720 $106,792
Jr.
Proxy Committee Member
and Governance
Committee Member

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

Mr. Spiro retired as a Board I Trustee effective October 31, 2004.
Mr. Spiro received $64,080 of total compensation for the calendar year 2004
from all of the Oppenheimer funds for which he served as Trustee/Director.
Messrs. Levy, Lipstein and Spiro and Ms. Moynihan retired as Directors/Trustees
from Board I Funds effective January 1, 2003, March 31, 2003, October 31, 2004
and July 31, 2003, respectively. For the fiscal year ended October 31, 2004,
Mr. Spiro received $222 aggregate compensation from the Fund. For calendar
year ended December 31, 2003, Messrs Levy, Lipstein and Spiro and Ms. Moynihan
each received $43,425, $75,076, $64,080 and $ 88,229 respectively, of total
compensation from all of the Oppenheimer funds for which they served as
Director/Trustee.
1. Aggregate Compensation from Fund includes fees and deferred compensation,
if any, for a Director.
2. 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 Directors."
3. Includes $151 deferred by Mr. Yeutter under the Deferred Compensation
Plan described below.
4. Includes $36,990 estimated to be paid to Mr. Galli for serving as a
trustee or director.
5. Includes $108,000 paid to Mr. Galli for serving as trustee or director of
10 other Oppenheimer funds that are not Board I Funds.
6. Includes $492 deferred by Mr. Griffiths under the Deferred Compensation
Plan described below.
7. Includes $209 deferred by Mr. Motley under the Deferred Compensation Plan
described below.
8. Ms. Miller was appointed as a Director of the Fund effective August 13,
2004.
9. Total compensation paid out to Trustees/Directors for the calendar year
2004.
10. Mr. Fink was elected to certain Board I Funds effective January 1, 2005
and therefore did not receive any compensation during the calendar year
ended December 31, 2004.
|X| Retirement Plan for Directors. The Fund has 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 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 for Directors. The Board of Directors has
adopted a Deferred Compensation Plan for Independent 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 is 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 or 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 January 31, 2005, 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:

MCB Trust Services Cust Herman Herman Katz & Cotlar PSP, 700 17th
Street, Suite 300, Denver CO, 80202-3531 which owned 49,675.097 Class N
shares (44.98% of the Class N shares then outstanding).

Pershing LLC, P.O. Box 2052, Jersey City, NJ 07303-9998 which owned
11,750.731 Class N shares (10.64% 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 is 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 Fund's Form N-PX filing is available (i) without charge, upon
request, by calling the Fund toll-free at 1.800.525-7048 and (ii) on the SEC's
website at www.sec.gov.
-----------

|X| The Investment Advisory Agreement. The Manager provides investment
advisory and management services to the Fund under an investment advisory
agreement between the Manager and the Fund. The Manager selects securities for
the Fund's portfolio and handles its day-to-day business. The portfolio
managers of the Fund are employed by the Manager and are the persons who are
principally responsible for the day-to-day management of the Fund's portfolio.
Other members of the Manager's Equity Portfolio 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 Directors, legal and audit expenses, custodian and
transfer agent expenses, share issuance costs, certain printing and
registration costs and non-recurring expenses, including litigation costs. The
management fees paid by the Fund to the Manager are calculated at the rates
described in the Prospectus, which are applied to the assets of the Fund as a
whole. The fees are allocated to each class of shares based upon the relative
proportion of the Fund's net assets represented by that class. The management
fees paid by the Fund to the Manager during its last three fiscal years were:

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

Fiscal Year Ended 10/31: Management Fees Paid to OppenheimerFunds, Inc.
-----------------------

2004 $785,321

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

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 Manager, and
o The direct and indirect benefits the Manager received from its
relationship with the Fund. These included services provided by the
Distributor and the Transfer Agent, and brokerage and soft dollar
arrangements permissible under Section 28(e) of the Securities
Exchange Act.

The Board considered that the Manager must be able to pay and retain high
quality personnel at competitive rates to provide services to the Fund. The
Board also considered that maintaining the financial viability of the Manager
is important so that the Manager will be able to continue to provide quality
services to the Fund and its shareholders in adverse times. The Board also
considered the investment performance of other mutual funds advised by the
Manager. The Board is aware that there are alternatives to the use of the
Manager.

These matters were also considered by the Independent Directors, meeting
separately from the full Board with experienced Counsel to the Fund who
assisted the Board in its deliberations. The Fund's Counsel is independent of
the Manager within the meaning and intent of the SEC Rules regarding the
independence of counsel.

After careful deliberation, the Board, 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, in choosing brokers to execute
portfolio transactions for the Fund, the Manager may select brokers (other than
affiliates) that provide brokerage and/or research services to the Fund and/or
the other accounts over which the Manager or its affiliates have investment
discretion. The commissions paid to those 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.

Rule 12b-1 under the Investment Company Act prohibits any fund from
compensating a broker or dealer for promoting or selling the fund's shares by
(1) directing to that broker or dealer any of the fund's portfolio
transactions, or (2) directing any other remuneration to that broker or dealer,
such as commissions, mark-ups, mark downs or other fees from the fund's
portfolio transactions, that were effected by another broker or dealer (these
latter arrangements are considered to be a type of "step-out" transaction). In
other words, a fund and its investment adviser cannot use the fund's brokerage
for the purpose of rewarding broker-dealers for selling the fund's shares.

However, the Rule permits funds to effect brokerage transactions through
firms that also sell fund shares, provided that certain procedures are adopted
to prevent a quid pro quo with respect to portfolio brokerage allocations. As
permitted by the Rule, the Manager has adopted procedures (and the Fund's Board
of Directors has approved those procedures) that permit the Fund to direct
portfolio securities transactions to brokers or dealers that also promote or
sell shares of the Fund, subject to the "best execution" considerations
discussed above. Those procedures are designed to prevent: (1) the Manager's
personnel who effect the Fund's portfolio transactions from taking into account
a broker's or dealer's promotion or sales of the Fund shares when allocating
the Fund's portfolio transactions, and (2) the Fund, the Manager and the
Distributor from entering into agreements or understandings under which the
Manager directs or is expected to direct the Fund's brokerage directly, or
through a "step-out" arrangement, to any broker or dealer in consideration of
that broker's or dealer's promotion or sale of the Fund's shares or the shares
of any of the other Oppenheimer funds.

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.

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 broaden 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 Total Brokerage Commissions Paid by the
10/31: Fund1
---------------------------------------------------------------------
----------------------------------------------------------------------------
2002 $275,091
----------------------------------------------------------------------------
---------------------------------------------------------------------
2003 $262,325
---------------------------------------------------------------------
---------------------------------------------------------------------

2004 $150,2042

---------------------------------------------------------------------
1. Amounts do not include spreads or commissions on principal transactions
on a net trade basis.

2. In the fiscal year ended October 31, 2004, the amount of transactions
directed to brokers for research services was $11,846,444 and amount
of the commissions paid to broker-dealers for those services was
$20,229.

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 and the contingent deferred sales charges
retained by the Distributor on the redemption of shares during the Fund's three
most recent fiscal years are shown in the tables below.

-------------------------------------------
Fiscal Aggregate Class A
Front-End
Year Front-End Sales Sales Charges
Ended Charges on Retained by
10/31: Class A Shares Distributor1
-------------------------------------------
----------------------------------------------
2002 $100,924 $63,284
----------------------------------------------
-------------------------------------------

2003 $110,906 $54,405

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

2004 $167,766 $68,502

-------------------------------------------
1. Includes amounts retained by a broker-dealer that is an affiliate or a
parent of the Distributor.

-----------------------------------------------------------------------------
Fiscal Concessions on Concessions on Concessions on Concessions on
Year Class A Shares Class B Shares Class C Shares Class N Shares
Ended Advanced by Advanced by Advanced by Advanced by
10/31 Distributor1 Distributor1 Distributor1 Distributor1
-----------------------------------------------------------------------------
--------------------------------------------------------------------------------
2002 $7,439 $65,199 $8,315 $1,759
--------------------------------------------------------------------------------
-----------------------------------------------------------------------------
2003 $7,898 $75,513 $10,372 $2,258
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------

2004 $23,768 $76,101 $19,242 $9,710

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

1. The Distributor advances concession payments to financial intermediaries
for certain sales of Class A shares and for sales of Class B, Class C and
Class N shares from its own resources at the time of sale.

------------------------------------------------------------------------------
Fiscal Class A Class B Class C Class N
Contingent Contingent Contingent
Year Deferred Sales Deferred Sales Contingent Deferred Sales
Ended Charges Charges Deferred Sales Charges
10/31: Retained by Retained by Charges Retained Retained by
Distributor Distributor by Distributor Distributor
------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2002 $300 $40,714 $1,530 $775
--------------------------------------------------------------------------------
------------------------------------------------------------------------------
2003 $791 $70,283 $742 $567
------------------------------------------------------------------------------
------------------------------------------------------------------------------

2004 $814 $40,394 $1,835 $601

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

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. In their sole discretion, they may also from time to time make
substantial payments from their own resources, which include the profits the
Manager derives from the advisory fees it receives from the Fund, to compensate
brokers, dealers, financial institutions and other intermediaries for providing
distribution assistance and/or administrative services or that otherwise
promote sales of the Fund's shares. These payments, some of which may be
referred to as "revenue sharing," may relate to the Fund's inclusion on a
financial intermediary's preferred list of funds offered to its clients.

Financial intermediaries, brokers and dealers may receive other payments
from the Distributor or the Manager from their own resources in connection with
the promotion and/or sale of shares of the Fund, including payments to defray
expenses incurred in connection with educational seminars and meetings. The
Manager or Distributor may share expenses incurred by financial intermediaries
in conducting training and educational meetings about aspects of the Fund for
employees of the intermediaries or for hosting client seminars or meetings at
which the Fund is discussed. In their sole discretion, the Manager and/or the
Distributor may increase or decrease the amount of payments they make from
their own resources for these purposes.

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 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. The Distributor does not receive or retain the service fee
on Class A shares in accounts for which the Distributor has been listed as the
broker-dealer of record. 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 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, 2004 payments under the Class A
plan totaled $256,773, of which $38,051 was retained by the Distributor under
the arrangement described above, regarding grandfathered retirement accounts,
and included $163,091 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. Class B, Class C or Class N shares may not be purchased
by an investor directly from the Distributor without the investor designating
another broker-dealer of record. If the investor no longer has another
broker-dealer of record for an existing account, the Distributor is
automatically designated as the broker-dealer of record, but solely for the
purpose of acting as the investor's agent to purchase the shares. In those
cases, the Distributor retains the asset-based sales charge paid on Class B,
Class C and Class N shares, but does not retain any service fees as to the
assets represented by that account. The Distributor does not receive or retain
the service fee on Class B, Class C or Class N shares in accounts for which it
is listed as the broker-dealer of record.

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 classes.

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 allow
investors to buy shares without a front-end sales charge while allowing the
Distributor to compensate dealers that sell those shares. The Fund pays the
asset-based sales 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.

During a calendar year, 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 asset-based sales charges paid to the Distributor by the Fund under
the distribution and service plans. Those excess expenses are carried over on
the Distributor's books and may be recouped from asset-based sales charge
payments from the Fund in future years. However, the Distributor has
voluntarily agreed to cap the amount of expenses under the plans that may be
carried over from year to year and recouped that relate to (i) expenses the
Distributor has incurred that represent compensation and expenses of its sales
personnel and (ii) other direct distribution costs it has incurred, such as
sales literature, state registration fees, advertising and prospectuses used to
offer Fund shares. The cap on the carry-over of those categories of expenses is
set at 0.70% of annual gross sales of shares of the Fund. If those categories
of expenses exceed the capped amount, the Distributor bears the excess costs.
If the Class B, Class C or Class N plan were to be terminated by the Fund, the
Fund's Board of Directors may allow the Fund to continue payments of the
asset-based sales charge to the Distributor for distributing shares prior to
the termination of the plan.

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

Distribution Fees Paid to the Distributor for the Fiscal Year Ended 10/31/04

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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 $148,547 $116,7811 $428,108 3.14%

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

Class C Plan $57,073 $15,4412 $131,782 2.05%

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

Class N Plan $5,131 $3,5733 $15,505 1.04%

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

1. Includes $4,498 paid to an affiliate of the Distributor's parent company.
2. Includes $4,293 paid to an affiliate of the Distributor's parent company.
3. Includes $226 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.

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:

ERV l/n - 1 Average Annual Total
Return
P

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

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

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

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

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

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

o Total Returns at Net Asset Value. From time to time the Fund may also
quote a cumulative or an average annual total return "at net asset value"
(without deducting sales charges) for Class A, Class B, Class C 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 10/31/04

years or
Shares life-of-class)

class if less) if less)

----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
After Without After Without After Without After Without
Sales Sales Sales Sales Sales Sales Sales Sales
Charge Charge Charge Charge Charge Charge Charge Charge
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------

Class A1 77.59% 88.42% 0.97% 7.12% 1.10% 2.30% 5.91% 6.54%

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

Class B2 54.36% 54.36% 1.13% 6.13% 1.12% 1.47% 4.90% 4.90%

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

Class C3 41.25% 41.25% 5.13% 6.13% 1.46% 1.46% 4.15% 4.15%

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

Class N4 4.93% 4.93% 5.68% 6.68% 1.32% 1.32% N/A N/A

----------------------------------------------------------------------------------
Inception of Class A: 9/16/85
Inception of Class B: 10/2/95
Inception of Class C: 5/1/96
Inception of Class N: 3/1/01

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

Average Annual Total Returns for Class A1 Shares (After Sales Charge)
For the Periods Ended 10/31/04

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

1-Year 5-Year 10-Year
(or life of (or life of
class if less) class if less)

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

After Taxes on Distributions 0.79% -0.08% 3.72%

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

After Taxes on 0.75% 0.30% 3.83%

Distributions and
Redemption of Fund Shares
-----------------------------------------------------------------------------

1. Inception of Class A: 9/16/85

Other Performance Comparisons. The Fund compares its performance annually to
that of an appropriate broadly-based market index in its Annual Report to
shareholders. You can obtain that information by contacting the Transfer Agent
at the addresses or telephone numbers shown on the cover of this Statement of
Additional Information. The Fund may also compare its performance to that of
other investments, including other mutual funds, or use rankings of its
performance by independent ranking entities. Examples of these performance
comparisons are set forth below.

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

ABOUT YOUR ACCOUNT

How to Buy Shares

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

When you purchase shares of the Fund, your ownership interest in the shares of
the Fund will be recorded as a book entry on the records of the Fund. The Fund
will not issue or re-register physical share certificates.

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.

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 Main Street Opportunity

Oppenheimer Balanced Fund Fund
Oppenheimer California Municipal Fund Oppenheimer Main Street Small Cap Fund
Oppenheimer Capital Appreciation Fund Oppenheimer MidCap Fund
Oppenheimer Capital Income Fund Oppenheimer New Jersey Municipal Fund
Oppenheimer Champion Income Fund Oppenheimer Pennsylvania Municipal Fund

Oppenheimer Principal Protected Main

Oppenheimer Convertible Securities Fund Street Fund

Oppenheimer Principal Protected Main

Oppenheimer Core Bond Fund Street Fund II
Oppenheimer Principal Protected Main
Oppenheimer Developing Markets Fund Street Fund III
Oppenheimer Disciplined Allocation Fund Oppenheimer Quest Balanced Fund
Oppenheimer Quest Capital Value Fund,

Oppenheimer Discovery Fund Inc.

Oppenheimer Quest International Value
Oppenheimer Emerging Growth Fund Fund, Inc.
Oppenheimer Quest Opportunity Value

Oppenheimer Emerging Technologies Fund Fund

Oppenheimer Enterprise Fund Oppenheimer Quest Value Fund, Inc.
Oppenheimer Equity Fund, Inc. Oppenheimer Real Asset Fund
Oppenheimer Global Fund Oppenheimer Real Estate Fund
Oppenheimer Rochester National
Oppenheimer Global Opportunities Fund Municipals
Oppenheimer Gold & Special Minerals Fund Oppenheimer Select Value Fund
Oppenheimer Growth Fund Oppenheimer Senior Floating Rate Fund
Oppenheimer High Yield Fund Oppenheimer Small Cap Value Fund
Oppenheimer International Bond Fund Oppenheimer Strategic Income Fund
Oppenheimer International Growth Fund Oppenheimer Total Return Bond Fund
Oppenheimer International Small Company
Fund Oppenheimer U.S. Government Trust
Oppenheimer International Value Fund Oppenheimer Value Fund
Oppenheimer Limited Term California
Municipal Fund Limited-Term New York Municipal Fund
Oppenheimer Limited-Term Government Fund Rochester Fund Municipals

And the following money market funds:

Oppenheimer Cash Reserves Centennial Money Market Trust
Oppenheimer Money Market Fund, Inc. Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust Centennial Tax Exempt Trust
Centennial Government 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"), you can reduce the
sales charge rate that applies to your purchases of Class A shares if you
purchase Class A, Class B or (effective March 18, 2005) Class C shares of the
Fund or other Oppenheimer funds during a 13-month period. The total amount of
your purchases of Class A, Class B and (effective March 18th) Class C shares
will determine the sales charge rate that applies to your Class A share
purchases during that period. You can choose to include purchases made up to 90
days before the date of the Letter. Class A shares of Oppenheimer Money Market
Fund and Oppenheimer Cash Reserves fund on which you have not paid a sales
charge and any Class N shares you purchase, or may have purchased, will not be
counted towards satisfying the purchases specified in a Letter.

A Letter is an investor's statement in writing to the Distributor of his
or her intention to purchase a specified value of Class A, Class B and
(effective March 18th) Class C 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 will equal or exceed the amount specified in the
Letter. Purchases made by reinvestment of dividends or capital gains
distributions and purchases made at net asset value (i.e. without a sales
charge) do not count toward satisfying the amount of the Letter.

Each purchase of Class A shares under the Letter will be made at the
offering price (including the sales charge) that would apply 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 charges or at reduced sales charge rates, as
described in an Appendix 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 $1 million in assets invested in applicable
investments (other than assets invested in money market funds), then the
retirement plan may purchase only Class C shares of the Oppenheimer funds. If
on the date the plan sponsor signed the Merrill Lynch record keeping service
agreement the plan has $1 million or more in assets but less than $5 million in
assets invested in applicable investments (other than assets invested in money
market funds), then the retirement plan may purchase only Class N shares of the
Oppenheimer funds. If on the date the plan sponsor signed the Merrill Lynch
record keeping service agreement the plan has $5 million or more in assets
invested in applicable investments (other than assets invested in money market
funds), then the retirement plan may purchase only Class A shares of the
Oppenheimer funds.

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 purchase order of $100,000 or more for
Class B shares or a purchase order of $1 million or more to purchase Class C
shares on behalf of a single investor (not including dealer "street name" or
omnibus accounts).

|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.

o purchases of Class N shares in amounts of $500,000 or more by a
retirement plan that pays for the purchase with the redemption
proceeds of Class C shares of one or more Oppenheimer funds held
by the plan for more than one year (other than rollovers from an
OppenheimerFunds-sponsored Pinnacle or Ascender 401(k) plan to any
IRA invested in the Oppenheimer funds), and

o on purchases of Class N shares by an OppenheimerFunds-sponsored Pinnacle
or Ascender 401(k) plan made with the redemption proceeds of Class
A shares of one or more Oppenheimer funds.

No sales concessions will be paid to the broker-dealer of record, as
described in the Prospectus, on sales of Class N shares purchased with the
redemption proceeds of shares of another mutual fund offered as an investment
option in a retirement plan in which Oppenheimer funds are also offered as
investment options under a special arrangement with the Distributor, if the
purchase occurs more than 30 days after the Oppenheimer funds are added as an
investment option under that plan.

|X| Allocation of Expenses. The Fund pays expenses related to its daily
operations, such as custodian fees, 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).

Fund Account Fees. As stated in the Prospectus, a $12 annual "Minimum Balance
Fee" is assessed on each Fund account with a share balance valued under $500.
The Minimum Balance Fee is automatically deducted from each such Fund account
on or about the second to last business day of September.
Listed below are certain cases in which the Fund has elected, in its
discretion, not to assess the Fund Account Fees. These exceptions are subject
to change:
A fund account whose shares were acquired after September 30th of the
prior year;
o A fund account that has a balance below $500 due to the automatic
conversion of shares from Class B to Class A shares. However, once
all Class B shares held in the account have been converted to Class
A shares the new account balance may become subject to the Minimum
Balance Fee;
o Accounts of shareholders who elect to access their account documents
electronically via eDoc Direct;
o A fund account that has only certificated shares and, has a balance below
$500 and is being escheated;
o Accounts of shareholders that are held by broker-dealers under the NSCC
Fund/SERV system;
o Accounts held under the Oppenheimer Legacy Program and/or holding certain
Oppenheimer Variable Account Funds;
o Omnibus accounts holding shares pursuant to the Pinnacle, Ascender,
Custom Plus, Recordkeeper Pro and Pension Alliance Retirement Plan
programs; and
o A fund account that falls below the $500 minimum solely due to market
fluctuations within the 12-month period preceding the date the fee
is deducted.

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.

The Fund reserves the authority to modify Fund Account Fees in its
discretion.

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(R), 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 New York 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(R), 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(R)on the
valuation date. If not, the value shall be the closing bid price on the
principal exchange or on Nasdaq(R)on the valuation date. If the put, call or
future is not traded on an exchange or on Nasdaq(R), it shall be valued by the
mean between "bid" and "asked" prices obtained by the Manager from two active
market makers. In certain cases that may be at the "bid" price if no "asked"
price is available.

When the Fund writes an option, an amount equal to the premium received
is included in the Fund's Statement of Assets and Liabilities as an asset. An
equivalent credit is included in the liability section. The credit is adjusted
("marked-to-market") to reflect the current market value of the option. In
determining the Fund's gain on investments, if a call or put written by the
Fund is exercised, the proceeds are increased by the premium received. If a
call or put written by the Fund expires, the Fund has a gain in the amount of
the premium. If the Fund enters into a closing purchase transaction, it will
have a gain or loss, depending on whether the premium received was more or less
than the cost of the closing transaction. If the Fund exercises a put it holds,
the amount the Fund receives on its sale of the underlying investment is
reduced by the amount of premium paid by the Fund.

How to Sell Shares

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

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

Reinvestment Privilege. Within six months of a redemption, a shareholder may
reinvest all or part of the redemption proceeds of:
o Class A shares purchased subject to an initial sales charge or Class A
shares on which a contingent deferred sales charge was paid, or
o Class B shares that were subject to the Class B contingent deferred sales
charge when redeemed.

The reinvestment may be made without sales charge only in Class A shares
of the Fund or any of the other Oppenheimer funds into which shares of the Fund
are exchangeable as described in "How to Exchange Shares" below. Reinvestment
will be at the net asset value next computed after the Transfer Agent receives
the reinvestment order. The shareholder must ask the Transfer Agent for that
privilege at the time of reinvestment. This privilege does not apply to Class C
and Class N shares. The Fund may amend, suspend or cease offering this
reinvestment privilege at any time as to shares redeemed after the date of such
amendment, suspension or cessation.

Any capital gain that was realized when the shares were redeemed is
taxable, and reinvestment will not alter any capital gains tax payable on that
gain. If there has been a capital loss on the redemption, some or all of the
loss may not be tax deductible, depending on the timing and amount of the
reinvestment. Under the Internal Revenue Code, if the redemption proceeds of
Fund shares on which a sales charge was paid are reinvested in shares of the
Fund or another of the Oppenheimer funds within 90 days of payment of the sales
charge, the shareholder's basis in the shares of the Fund that were redeemed
may not include the amount of the sales charge paid. That would reduce the loss
or increase the gain recognized from the redemption. However, in that case the
sales charge would be added to the basis of the shares acquired by the
reinvestment of the redemption proceeds.

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

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

Involuntary Redemptions. The Fund's Board of Directors has the right to cause
the involuntary redemption of the shares held in any account if the 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.
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 California Tax Exempt Trust Centennial New York Tax Exempt Trust
Centennial Government Trust Centennial Tax Exempt Trust

Centennial Money Market Trust

The following funds do not offer Class N shares:

Limited Term New York Municipal Fund Oppenheimer New Jersey Municipal Fund
Oppenheimer AMT-Free Municipals Oppenheimer Principal Protected Main
Street Fund II
Oppenheimer AMT-Free New York Oppenheimer Pennsylvania Municipal Fund
Municipals
Oppenheimer California Municipal Fund Oppenheimer Rochester National Municipals
Oppenheimer International Value Fund Oppenheimer Senior Floating Rate Fund
Oppenheimer Limited Term Municipal Rochester Fund Municipals
Fund
Oppenheimer Limited Term California
Municipal Fund
Oppenheimer Money Market Fund, Inc.

The following funds do not offer Class Y shares:

Street Fund

Oppenheimer Capital Income Fund Oppenheimer Principal Protected Main
Street Fund II
Oppenheimer Cash Reserves Oppenheimer Principal Protected Main
Street Fund III
Oppenheimer Champion Income Fund Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Convertible Securities Oppenheimer Quest International Value

Fund Fund, Inc.

Oppenheimer Disciplined Allocation Oppenheimer Rochester National Municipals
Fund
Oppenheimer Developing Markets Fund Oppenheimer Senior Floating Rate Fund
Oppenheimer Gold & Special Minerals Oppenheimer Small Cap Value Fund
Fund
Oppenheimer International Growth Fund Oppenheimer Total Return Bond Fund

o Oppenheimer Money Market Fund,
Inc. only offers Class A and Class
Y shares.

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 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 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).

o Shares of Oppenheimer Principal
Protected Main Street Fund III
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 III until after
the expiration of the warranty
period (12/6/2011).

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
(other than Limited-Term Government
Fund, Limited Term Municipal Fund,
Limited Term New York Municipal Fund,
Oppenheimer Capital Preservation Fund
and Oppenheimer Senior Floating Rate
Fund), 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 B shares
of Limited-Term Government Fund,
Limited Term Municipal Fund, Limited
Term New York Municipal Fund,
Oppenheimer Capital Preservation Fund
and Oppenheimer Senior Floating Rate
Fund, the Class B contingent deferred
sales charge is imposed on Class B
shares acquired by exchange if they
are redeemed within 5 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.

|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). Any tax withheld by the
Fund is remitted by the Fund to the
U.S. Treasury and all income and any
tax withheld is identified in reports
mailed to shareholders in January of
each year with a copy sent to the IRS.

|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. Any tax
withheld by the Fund is remitted by
the Fund to the U.S. Treasury and all
income and any tax withheld is
identified in reports mailed to
shareholders in March of each year
with a copy sent to the IRS.

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 with a copy sent
to the IRS.

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 Registered Public
Accounting Firm. KPMG LLP serves as
the Independent Registered Public
Accounting Firm for the Fund. KPMG LLP
audits the Fund's financial statements
and performs other related audit
services. KPMG LLP also acts as the
independent registered public
accounting firm for certain other
funds advised by the Manager and its
affiliates. Audit and non-audit
services provided by KPMG LLP to the
Fund must be pre-approved by the Audit
Committee.

--------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS AND SHAREHOLDERS OF OPPENHEIMER SERIES FUND, INC.:
We have audited the accompanying statement of assets and liabilities of
Oppenheimer Disciplined Allocation Fund, (one of the portfolios constituting
the Oppenheimer Series Fund, Inc.) including the statement of investments, as
of October 31, 2004, 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 the standards of the Public
Company Accounting Oversight Board (United States). 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, 2004, 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, 2004, 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 U.S.
generally accepted accounting principles.

/s/ KPMG LLP
KPMG LLP

Denver, Colorado
December 16, 2004

--------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS OCTOBER 31, 2004
--------------------------------------------------------------------------------

VALUE

SHARES SEE NOTE 1
--------------------------------------------------------------------------------------------------------

COMMON STOCKS--53.3%
--------------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--8.0%
--------------------------------------------------------------------------------------------------------
AUTO COMPONENTS--0.1%
TRW Automotive Holdings Corp.
1 5,600 $ 102,816
--------------------------------------------------------------------------------------------------------
HOTELS, RESTAURANTS & Leisure--0.8%
McDonald's
Corp.
33,900 988,185
--------------------------------------------------------------------------------------------------------
HOUSEHOLD DURABLES--0.3%
WCI Communities, Inc.
1 16,600 391,760
--------------------------------------------------------------------------------------------------------
INTERNET & CATALOG RETAIL--0.8%
IAC/InterActiveCorp
1 49,000
1,059,380
--------------------------------------------------------------------------------------------------------
MEDIA--6.0%
EchoStar Communications Corp., Cl. A
1 24,400 771,528
--------------------------------------------------------------------------------------------------------
Liberty Media Corp., Cl. A
1 247,300 2,205,916
--------------------------------------------------------------------------------------------------------
Liberty Media International, Inc., A Shares
1 13,938 502,465
--------------------------------------------------------------------------------------------------------
UnitedGlobalCom, Inc., Cl. A
1 534,150 3,995,442

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

7,475,351

--------------------------------------------------------------------------------------------------------
CONSUMER STAPLES--3.1%
--------------------------------------------------------------------------------------------------------
BEVERAGES--0.6%
Constellation Brands, Inc., Cl. A
1 17,200 674,756
--------------------------------------------------------------------------------------------------------
FOOD & STAPLES RETAILING--0.8%
Wal-Mart Stores,
Inc. 18,600
1,002,912
--------------------------------------------------------------------------------------------------------
TOBACCO--1.7%
Altria Group,
Inc. 44,600
2,161,316
--------------------------------------------------------------------------------------------------------
ENERGY--4.0%
--------------------------------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES--0.7%
Halliburton
Co.
20,400 755,616
--------------------------------------------------------------------------------------------------------
Talisman Energy,
Inc. 6,300
169,281

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

924,897

--------------------------------------------------------------------------------------------------------
OIL & GAS--3.3%
BP plc,
ADR
39,800 2,318,350
--------------------------------------------------------------------------------------------------------
Kinder Morgan,
Inc. 7,700
495,649
--------------------------------------------------------------------------------------------------------
LUKOIL, Sponsored
ADR 10,400
1,297,400

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

4,111,399

--------------------------------------------------------------------------------------------------------
FINANCIALS--10.8%
--------------------------------------------------------------------------------------------------------
COMMERCIAL BANKS--3.2%
Bank of America
Corp. 43,202
1,935,018
--------------------------------------------------------------------------------------------------------
Commerce Bancorp,
Inc. 7,800
462,072
--------------------------------------------------------------------------------------------------------
SouthTrust
Corp.
19,200 836,544
--------------------------------------------------------------------------------------------------------
Wells Fargo &
Co.
12,800 764,416

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

3,998,050

19 | OPPENHEIMER DISCIPLINED ALLOCATION FUND

--------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS Continued
--------------------------------------------------------------------------------

VALUE

SHARES SEE NOTE 1
---------------------------------------------------------------------------------------------------------

DIVERSIFIED FINANCIAL SERVICES--4.0%
Assured Guaranty
Ltd. 40,500 $
665,010
--------------------------------------------------------------------------------------------------------
Citigroup,
Inc.
45,277 2,008,940
--------------------------------------------------------------------------------------------------------
JPMorgan Chase &
Co. 19,500
752,700
--------------------------------------------------------------------------------------------------------
Lehman Brothers Holdings,
Inc. 12,000 985,800
--------------------------------------------------------------------------------------------------------
Morgan
Stanley
10,400 531,336

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

4,943,786

--------------------------------------------------------------------------------------------------------
INSURANCE--2.8%
Aspen Insurance Holdings
Ltd. 14,500 333,500
--------------------------------------------------------------------------------------------------------
Genworth Financial, Inc., Cl.
A 59,400 1,417,284
--------------------------------------------------------------------------------------------------------
Prudential Financial,
Inc. 30,500 1,417,335
--------------------------------------------------------------------------------------------------------
UnumProvident
Corp.
27,200 371,552

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

3,539,671

--------------------------------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE--0.8%
Freddie
Mac
14,900 992,340
--------------------------------------------------------------------------------------------------------
HEALTH CARE--6.8%
--------------------------------------------------------------------------------------------------------
BIOTECHNOLOGY--2.0%
MedImmune, Inc.
1 38,300
1,088,486
--------------------------------------------------------------------------------------------------------

Wyeth
36,100 1,431,365

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

2,519,851

--------------------------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES--0.6%
Boston Scientific Corp.
1 22,600 797,780
--------------------------------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--1.6%
Manor Care,
Inc.
10,600 347,044
--------------------------------------------------------------------------------------------------------
PacifiCare Health Systems, Inc.
1 14,300 509,366
--------------------------------------------------------------------------------------------------------
Tenet Healthcare Corp.
1 108,900 1,167,408

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

2,023,818

--------------------------------------------------------------------------------------------------------
PHARMACEUTICALS--2.6%
Pfizer,
Inc.
45,900 1,328,805
--------------------------------------------------------------------------------------------------------
Schering-Plough
Corp. 44,800
811,328
--------------------------------------------------------------------------------------------------------
Watson Pharmaceuticals, Inc.
1 38,000 1,065,140

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

3,205,273

--------------------------------------------------------------------------------------------------------
INDUSTRIALS--7.5%
--------------------------------------------------------------------------------------------------------
AEROSPACE & DEFENSE--3.4%
Orbital Sciences Corp.
1 131,300 1,358,955
--------------------------------------------------------------------------------------------------------
Raytheon
Co.
81,300 2,965,824

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

4,324,779

20 | OPPENHEIMER DISCIPLINED ALLOCATION FUND

VALUE

SHARES SEE NOTE 1
--------------------------------------------------------------------------------------------------------

COMMERCIAL SERVICES & SUPPLIES--2.1%
Cendant
Corp.
124,300 $ 2,559,337
--------------------------------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES--2.0%
General Electric
Co. 24,500
835,940
--------------------------------------------------------------------------------------------------------
Tyco International
Ltd. 53,000
1,650,950

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

2,486,890

--------------------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--8.2%
--------------------------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT--0.0%
Geotek Communications, Inc., Series B, Escrow Shares
1,2,3 100 --
--------------------------------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS--2.0%
Dell, Inc.
1
23,500 823,910
--------------------------------------------------------------------------------------------------------
Hewlett-Packard
Co. 86,300
1,610,358

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

2,434,268

--------------------------------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS--0.4%
Flextronics International Ltd.
1 44,700 538,635
--------------------------------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES--0.3%
Net2Phone, Inc.
1 118,500
411,195
--------------------------------------------------------------------------------------------------------
IT SERVICES--0.4%
CSG Systems International, Inc.
1 27,900 468,999
--------------------------------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--1.1%
Freescale Semiconductor, Inc., Cl. A
1 62,500 971,250
--------------------------------------------------------------------------------------------------------
Intel
Corp.
19,300 429,618

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

1,400,868

--------------------------------------------------------------------------------------------------------
SOFTWARE--4.0%
Compuware Corp.
1 60,800
352,032
--------------------------------------------------------------------------------------------------------
Microsoft
Corp.
63,300 1,771,767
--------------------------------------------------------------------------------------------------------
Oracle Corp.
1
47,100 596,286
--------------------------------------------------------------------------------------------------------
Take-Two Interactive Software, Inc.
1 68,400 2,254,464

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

4,974,549

--------------------------------------------------------------------------------------------------------
MATERIALS--1.4%
--------------------------------------------------------------------------------------------------------
CHEMICALS--0.8%
Dow Chemical
Co.
9,800 440,412
--------------------------------------------------------------------------------------------------------
Praxair,
Inc.
14,300 603,460

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

1,043,872

--------------------------------------------------------------------------------------------------------
METALS & MINING--0.3%
GrafTech International Ltd.
1 41,100 380,586
--------------------------------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS--0.3%
Bowater,
Inc.
8,100 298,404

21 | OPPENHEIMER DISCIPLINED ALLOCATION FUND

--------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS Continued
--------------------------------------------------------------------------------

VALUE

SHARES SEE NOTE 1
--------------------------------------------------------------------------------------------------------

TELECOMMUNICATION SERVICES--1.6%
--------------------------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--1.6%
IDT Corp., Cl. B
1 141,400 $
1,954,148
--------------------------------------------------------------------------------------------------------
UTILITIES--1.9%
--------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--1.5%
AES Corp. (The)
1 115,200
1,255,680
--------------------------------------------------------------------------------------------------------
PG&E Corp.
1
19,500 624,780

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

1,880,460

--------------------------------------------------------------------------------------------------------
GAS UTILITIES--0.4%
Sempra
Energy
12,800 429,312

------------
Total Common Stocks (Cost
$59,837,209) 66,499,643

PRINCIPAL

AMOUNT
--------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES--7.3%

Bank One Auto Securitization Trust, Automobile Receivable Certificates,
Series 2003-1, Cl. A2, 1.29%, 8/21/06
$117,526 117,294
--------------------------------------------------------------------------------------------------------
BMW Vehicle Owner Trust, Automobile Loan Certificates, Series 2004-A,
Cl. A2, 1.88%,
10/25/06 270,000
269,447
--------------------------------------------------------------------------------------------------------
Capital Auto Receivables Asset Trust, Automobile Mtg.-Backed Nts.,
Series 2002-3, Cl. A2A, 3.05%,
9/15/05 53,125 53,210
--------------------------------------------------------------------------------------------------------
Centex Home Equity Co. LLC, Home Equity Loan Asset-Backed Certificates:
Series 2003-C, Cl. AF1, 2.14%,
7/25/18 103,679 103,550
Series 2004-A, Cl. AF1, 2.03%,
6/25/19 97,391 97,206
Series 2004-D, Cl. AF1, 2.98%, 4/25/20
2 127,796 127,818
--------------------------------------------------------------------------------------------------------
Chase Funding Mortgage Loan Asset-Backed Certificates, Home Equity
Mtg. Obligations:
Series 2002-4, Cl. 1A3, 3.44%,
4/25/23 58,050 58,152
Series 2003-1, Cl. 1A3, 3.14%,
7/25/23 141,543 141,629
Series 2003-3, Cl. 1A1, 2.013%, 8/25/17
4 8,272 8,277
Series 2003-4, Cl. 1A1, 2.053%, 9/25/17
4 70,868 70,910
Series 2003-4, Cl. 1A2, 2.138%,
7/25/18 100,000 99,716
Series 2004-1, Cl. 2A1, 2.043%, 9/25/21
4 300,943 301,105
--------------------------------------------------------------------------------------------------------
Chase Manhattan Auto Owner Trust, Automobile Loan
Pass-Through Certificates:
Series 2002-A, Cl. A4, 4.24%,
9/15/08 57,555 58,152
Series 2003-A, Cl. A2, 1.26%,
1/16/06 13,494 13,497
Series 2003-B, Cl. A2, 1.28%,
3/15/06 47,129 47,109
--------------------------------------------------------------------------------------------------------
CIT Equipment Collateral, Equipment Receivable-Backed Nts.,
Series 2004-DFS, Cl. A2, 2.66%, 11/20/06
2 190,000 189,970
--------------------------------------------------------------------------------------------------------
Citibank Credit Card Issuance Trust, Credit Card Receivable Nts.,
Series 2002-A3, Cl. A3, 4.40%,
5/15/07 200,000 202,282

22 | OPPENHEIMER DISCIPLINED ALLOCATION FUND

PRINCIPAL VALUE

AMOUNT SEE NOTE 1
--------------------------------------------------------------------------------------------------------

ASSET-BACKED SECURITIES Continued

CitiFinancial Mortgage Securities, Inc., Home Equity Collateralized
Mtg. Obligations:
Series 2003-2, Cl. AF1, 2.033%, 5/25/33 4
$ 26,326 $ 26,340
Series 2003-3, Cl. AF1, 2.053%, 8/25/33
4 70,534 70,577
--------------------------------------------------------------------------------------------------------
Citigroup Mortgage Loan Trust, Inc., Home Equity Mtg. Obligations,
Series 2004-OPT1, Cl. A1B, 2.388%, 9/1/34
2 305,000 305,000
--------------------------------------------------------------------------------------------------------
DaimlerChrysler Auto Trust, Automobile Loan Pass-Through Certificates:
Series 2002-A, Cl. A3, 3.85%,
4/6/06 104,599 104,812
Series 2003-A, Cl. A2, 1.52%,
12/8/05 147,828 147,838
Series 2003-B, Cl. A2, 1.61%,
7/10/06 381,030 380,657
Series 2004-B, Cl. A2, 2.48%, 2/8/07
2 100,000 100,074
--------------------------------------------------------------------------------------------------------
Ford Credit Auto Owner Trust, Automobile Loan Pass-Through Certificates:
Series 2003-A, Cl. A2A, 1.62%,
8/15/05 4,075 4,077
Series 2004-A, Cl. A2, 2.13%,
10/15/06 350,000 349,526
--------------------------------------------------------------------------------------------------------
Harley-Davidson Motorcycle Trust, Motorcycle Receivable Nts.:
Series 2002-2, Cl. A1, 1.91%, 4/15/07
2 15,804 15,804
Series 2003-3, Cl. A1, 1.50%,
1/15/08 180,522 180,060
--------------------------------------------------------------------------------------------------------
Honda Auto Receivables Owner Trust, Automobile Receivable Obligations:
Series 2003-3, Cl. A2, 1.52%,
4/21/06 238,047 237,796
Series 2003-4, Cl. A2, 1.58%,
7/17/06 292,488 292,063
--------------------------------------------------------------------------------------------------------
Litigation Settlement Monetized Fee Trust, Asset-Backed Certificates,
Series 2001-1A, Cl. A1, 8.33%, 4/25/31
2 694,719 712,087
--------------------------------------------------------------------------------------------------------
M&I Auto Loan Trust, Automobile Loan Certificates:
Series 2002-1, Cl. A3, 2.49%,
10/22/07 127,079 127,266
Series 2003-1, Cl. A2, 1.60%,
7/20/06 373,342 373,017
--------------------------------------------------------------------------------------------------------
National City Auto Receivables Trust, Automobile Receivable Obligations,
Series 2004-A, Cl. A2, 1.50%,
2/15/07 190,000 189,516
--------------------------------------------------------------------------------------------------------
Nissan Auto Lease Trust, Automobile Lease Obligations:
Series 2003-A, Cl. A2, 1.69%,
12/15/05 97,642 97,689
Series 2004-A, Cl. A2, 2.55%,
1/15/07 180,000 179,876
--------------------------------------------------------------------------------------------------------
Nissan Auto Receivables Owner Trust, Automobile Receivable Nts.:
Series 2002-A, Cl. A4, 4.28%,
10/16/06 49,730 50,119
Series 2003-C, Cl. A2, 1.62%,
4/17/06 91,227 91,164
Series 2004-A, Cl. A2, 1.40%,
7/17/06 210,000 209,361
--------------------------------------------------------------------------------------------------------
Option One Mortgage Loan Trust, Home Equity Mtg. Obligations,
Series 2004-3, Cl. A2, 1.99%, 11/25/34
2,4 130,000 130,081
--------------------------------------------------------------------------------------------------------
Toyota Auto Receivables Owner Trust, Automobile Mtg.-Backed Obligations:
Series 2002-B, Cl. A3, 3.76%,
6/15/06 27,268 27,363
Series 2003-B, Cl. A2, 1.43%,
2/15/06 124,975 124,935
--------------------------------------------------------------------------------------------------------
USAA Auto Owner Trust, Automobile Loan Asset-Backed Nts.:
Series 2002-1, Cl. A3, 2.41%,
10/16/06 57,082 57,154
Series 2003-1, Cl. A2, 1.22%,
4/17/06 25,805 25,811
Series 2004-1, Cl. A2, 1.43%,
9/15/06 510,000 508,710
Series 2004-2, Cl. A2, 2.41%,
2/15/07 210,000 210,016

23 | OPPENHEIMER DISCIPLINED ALLOCATION FUND

--------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS Continued
--------------------------------------------------------------------------------

PRINCIPAL VALUE

AMOUNT SEE NOTE 1
--------------------------------------------------------------------------------------------------------

ASSET-BACKED SECURITIES Continued

Volkswagen Auto Lease Trust, Automobile Lease Asset-Backed Securities,
Series 2004-A, Cl. A2, 2.47%, 1/22/07
$220,000 $ 219,785
--------------------------------------------------------------------------------------------------------
Volkswagen Auto Loan Enhanced Trust, Automobile Loan
Receivable Certificates:
Series 2003-1, Cl. A2, 1.11%,
12/20/05 41,367 41,352
Series 2003-2, Cl. A2, 1.55%,
6/20/06 169,374 169,149
--------------------------------------------------------------------------------------------------------
Wachovia Auto Owner Trust, Automobile Receivable Nts., Series 2004-B,
Cl. A2, 2.40%,
5/21/07 160,000
159,904
--------------------------------------------------------------------------------------------------------
Wells Fargo Home Equity Trust, Collateralized Mtg. Obligations,
Series 2004-2, Cl. AI1B, 2.94%,
9/25/18 344,996 344,625
--------------------------------------------------------------------------------------------------------
Whole Auto Loan Trust, Automobile Loan Receivable Certificates:
Series 2002-1, Cl. A3, 2.60%,
8/15/06 315,155 315,742
Series 2003-1, Cl. A2A, 1.40%,
4/15/06 293,040 292,701
Series 2004-1, Cl. A2A, 2.59%, 5/15/07
5 230,000 230,000

-----------
Total Asset-Backed Securities (Cost
$9,054,365) 9,061,371

--------------------------------------------------------------------------------------------------------
MORTGAGE-BACKED OBLIGATIONS--29.7%
--------------------------------------------------------------------------------------------------------
GOVERNMENT AGENCY--26.5%
--------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED--26.1%
Federal Home Loan Mortgage Corp.:
5%, 12/1/34 5
2,584,000 2,570,274
5.50%,
1/1/34
132,810 135,475
5.50%, 11/1/34-12/1/34 5
1,842,000 1,873,515
6.50%,
11/1/28
142,417 150,189
7%,
11/1/32-9/1/33
314,888 335,314
7%, 3/1/31-11/1/34 5
1,994,736 2,118,469
8%,
4/1/16
124,929 132,962
9%,
8/1/22-5/1/25
35,916 40,300
--------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Collateralized Mtg. Obligations,
Structured Pass-Through Securities, Series T-42, Cl. A2, 5.50%, 2/25/42
2 10 10
--------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Gtd. Real Estate Mtg. Investment
Conduit Multiclass Pass-Through Certificates:
Series 1669, Cl. G, 6.50%,
2/15/23 65,339 66,023
Series 2034, Cl. Z, 6.50%,
2/15/28 102,367 106,602
Series 2053, Cl. Z, 6.50%,
4/15/28 117,457 122,581
Series 2055, Cl. ZM, 6.50%,
5/15/28 161,566 168,551
Series 2075, Cl. D, 6.50%,
8/15/28 317,190 331,205
Series 2080, Cl. Z, 6.50%,
8/15/28 101,467 104,981
Series 2387, Cl. PD, 6%,
4/15/30 218,090 226,318
Series 2466, Cl. PD, 6.50%,
4/15/30 89,209 89,919
Series 2498, Cl. PC, 5.50%,
10/15/14 32,683 33,056
Series 2500, Cl. FD, 2.37%, 3/15/32
4 58,890 59,049
Series 2526, Cl. FE, 2.27%, 6/15/29
4 68,850 69,293
Series 2551, Cl. FD, 2.27%, 1/15/33
4 56,364 56,695
Series 2551, Cl. TA, 4.50%,
2/15/18 83,324 83,360

24 | OPPENHEIMER DISCIPLINED ALLOCATION FUND

PRINCIPAL VALUE

AMOUNT SEE NOTE 1
--------------------------------------------------------------------------------------------------------

FHLMC/FNMA/SPONSORED Continued
Federal Home Loan Mortgage Corp., Interest-Only Stripped Mtg.-Backed Security:
Series 176, Cl. IO, (2.40)%, 6/1/26 6
$ 99,372 $ 18,587
Series 183, Cl. IO, (3.043)%, 4/1/27
6 159,976 29,563
Series 184, Cl. IO, (0.737)%, 12/1/26
6 160,042 30,633
Series 192, Cl. IO, 1.541%, 2/1/28
6 47,091 8,179
Series 200, Cl. IO, 0.982%, 1/1/29
6 57,162 10,064
Series 2130, Cl. SC, 14.971%, 3/15/29
6 129,117 13,094
Series 2796, Cl. SD, 23.275%, 7/15/26
6 166,021 15,402
--------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Principal-Only Stripped
Mtg.-Backed Security, Series 176, Cl. PO, 7.358%, 6/1/26
7 55,484 49,361
--------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
4.50%, 11/1/19 5
1,138,000 1,141,200
5%,
6/1/17-7/1/17
741,789 758,487
5%, 11/1/34
5
854,000 851,064
5.50%, 3/1/33-9/1/34
1,725,599 1,760,844
5.50%, 11/1/19-11/1/34 5
6,437,000 6,630,363
6%, 11/1/34
5
168,000 174,195
6.50%,
3/1/26-10/1/30
126,104 133,083
6.50%, 11/1/34
5 390,000
410,109
7%, 2/25/22-8/1/34
2,493,213 2,641,061
7%, 11/1/34 5
6,297,000 6,686,627
7.50%,
1/1/08-6/1/08
36,517 38,298
8.50%,
7/1/32
15,268 16,614
--------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Collateralized Mtg. Obligations, Gtd.
Real Estate Mtg. Investment Conduit Pass-Through Certificates:
Trust 1993-87, Cl. Z, 6.50%,
6/25/23 263,549 277,713
Trust 1996-35, Cl. Z, 7%,
7/25/26 408,101 428,811
Trust 1998-63, Cl. PG, 6%,
3/25/27 63,421 63,853
Trust 2001-50, Cl. NE, 6%,
8/25/30 123,068 124,305
Trust 2001-70, Cl. LR, 6%,
9/25/30 111,284 113,722
Trust 2001-72, Cl. NH, 6%,
4/25/30 96,125 99,187
Trust 2001-74, Cl. PD, 6%,
5/25/30 38,272 38,882
Trust 2002-50, Cl. PD, 6%,
9/25/27 109,713 110,063
Trust 2002-77, Cl. WF, 2.289%, 12/18/32
4 91,653 92,075
Trust 2002-94, Cl. MA, 4.50%,
8/25/09 175,986 176,678
--------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment Conduit
Pass-Through Certificates, Interest-Only Stripped Mtg.-Backed Security:
Trust 319, Cl. 2, (1.708)%, 2/1/32
6 110,812 20,290
Trust 2002-38, Cl. SO, 27.335%, 4/25/32
6 141,484 10,440
Trust 2002-47, Cl. NS, 16.262%, 4/25/32
6 217,654 21,102
Trust 2002-51, Cl. S, 16.591%, 8/25/32
6 199,954 19,389
Trust 2002-77, Cl. IS, 21.643%, 12/18/32
6 241,046 22,674
--------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security:
Trust 222, Cl. 2, (5.431)%, 6/1/23
6 319,335 56,837
Trust 240, Cl. 2, (3.008)%, 9/1/23
6 491,331 92,007
Trust 252, Cl. 2, (3.173)%, 11/1/23
6 243,866 48,175
Trust 254, Cl. 2, (0.384)%, 1/1/24
6 118,308 23,065
Trust 273, Cl. 2, (2.295)%, 7/1/26
6 71,697 12,580

25 | OPPENHEIMER DISCIPLINED ALLOCATION FUND

--------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS Continued
--------------------------------------------------------------------------------

PRINCIPAL VALUE

AMOUNT SEE NOTE 1
--------------------------------------------------------------------------------------------------------

FHLMC/FNMA/SPONSORED Continued
Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed
Security: Continued
Trust 321, Cl. 2, (7.333)%, 3/1/32 5,6
$1,083,192 $ 201,166
Trust 333, Cl. 2, 1.99%, 3/1/33
6 156,148 33,096
Trust 334, Cl. 17, (36.239)%, 2/1/33
6 179,118 30,910
Trust 1993-223, Cl. PM, 0.823%, 10/25/23
6 96,073 10,041
Trust 2001-81, Cl. S, 22.192%, 1/25/32
6 112,431 11,935
Trust 2002-9, Cl. MS, 17.603%, 3/25/32
6 155,737 16,046
Trust 2002-52, Cl. SD, 13.708%, 9/25/32
6 256,703 23,915
Trust 2002-77, Cl. SH, 24.146%, 12/18/32
6 138,911 14,231
Trust 2004-54, Cl. DS, 25.719%, 11/25/30
6 215,379 18,655
--------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Principal-Only Stripped Mtg.-Backed
Security, Trust 1993-184, Cl. M, 10.518%, 9/25/23
7 101,525 89,787

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

32,592,599

--------------------------------------------------------------------------------------------------------
GNMA/GUARANTEED--0.4%
Government National Mortgage Assn.:
7%,
4/15/09-2/15/24
168,830 180,418
7.50%,
3/15/09
92,131 98,270
8%,
5/15/17
57,086 62,907
8.50%,
8/15/17-12/15/17
43,649 48,205
--------------------------------------------------------------------------------------------------------
Government National Mortgage Assn. , Interest-Only Stripped
Mtg.-Backed Security:
Series 2001-21, Cl. SB, 16.854%, 1/16/27
6 303,162 27,292
Series 2002-76, Cl. SY, 11.456%, 12/16/26
6 404,593 40,706
Series 2004-11, Cl. SM, 13.01%, 1/17/30
6 164,085 15,249

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

473,047

--------------------------------------------------------------------------------------------------------
PRIVATE--3.2%
--------------------------------------------------------------------------------------------------------
COMMERCIAL--3.2%
Bank of America Mortgage Securities, Inc., Collateralized Mtg.
Obligations Pass-Through Certificates:
Series 2004-E, Cl. 2A9, 3.712%,
6/25/34 216,744 217,117
Series 2004-G, Cl. 2A1, 2.469%,
8/25/34 199,697 199,257
Series 2004-2, Cl. 2A1, 6.50%,
7/20/32 360,877 375,788
Series 2004-8, Cl. 5A1, 6.50%,
9/25/34 306,406 317,609
--------------------------------------------------------------------------------------------------------
Countrywide Alternative Loan Trust, Collateralized Mtg. Obligations,
Series 2004-J9, Cl. 1A1, 2.113%, 10/25/34
4 307,413 307,292
--------------------------------------------------------------------------------------------------------
First Union National Bank/Lehman Brothers/Bank of America Commercial
Mtg. Trust, Pass-Through Certificates, Series 1998-C2, Cl. A2, 6.56%,
11/18/35 140,000 152,400
--------------------------------------------------------------------------------------------------------
GMAC Commercial Mortgage Securities, Inc., Mtg. Pass-Through
Certificates, Series 1997-C1, Cl. A3, 6.869%,
7/15/29 101,870 109,691
--------------------------------------------------------------------------------------------------------
GSR Mortgage Loan Trust, Collateralized Mtg. Obligations, Series 04-12,
Cl. 3A1, 4.593%,
12/25/34 520,000
520,000
--------------------------------------------------------------------------------------------------------
MASTR Asset Securitization Trust, Pass-Through Collateralized Mtg.
Obligations, Series 2004-9, Cl. A3, 4.70%,
8/25/34 543,496 546,019

26 | OPPENHEIMER DISCIPLINED ALLOCATION FUND

PRINCIPAL VALUE

AMOUNT SEE NOTE 1
--------------------------------------------------------------------------------------------------------

COMMERCIAL Continued
Nomura Asset Securities Corp., Commercial Mtg. Pass-Through Certificates,
Series 1998-D6, Cl. A1B, 6.59%, 3/15/30
$160,000 $ 175,328
--------------------------------------------------------------------------------------------------------
Prudential Mortgage Capital Co. II LLC, Commercial Mtg. Pass-Through
Certificates, Series PRU-HTG 2000-C1, Cl. A2, 7.306%,
10/6/15 192,000 224,195
--------------------------------------------------------------------------------------------------------
Washington Mutual Mortgage Securities Corp., Collateralized Mtg.
Pass-Through Certificates, Series 2003-AR12, Cl. A2, 2.446%, 2/25/34
4 168,984 169,126
--------------------------------------------------------------------------------------------------------
Wells Fargo Mortgage Backed Securities Trust, Collateralized Mtg. Obligations:
Series 2004-N, Cl. A10, 3.803%, 8/25/34
2 390,239 391,336
Series 2004-W, Cl. A2, 4.641%,
11/25/34 270,000 271,086

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

3,976,244

--------------------------------------------------------------------------------------------------------
OTHER--0.0%
CIT Equipment Collateral, Equipment Receivable-Backed Nts.,
Series 2003-EF1, Cl. A2, 1.49%,
12/20/05 47,451 47,447

------------
Total Mortgage-Backed Obligations (Cost
$36,931,368) 37,089,337

--------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--6.2%

Federal Home Loan Bank Unsec. Bonds, 2.75%,
10/15/06 520,000 519,891
--------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp. Unsec. Nts.:
2.375%,
4/15/06
545,000 543,414
6.625%,
9/15/09
470,000 532,628
--------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn. Unsec. Nts.:
4.25%, 7/15/07
1,010,000 1,043,294
7.25%,
5/15/30
245,000 313,274
7.25%, 1/15/10 8
1,350,000 1,574,656
--------------------------------------------------------------------------------------------------------
Tennessee Valley Authority Bonds:
5.375%,
11/13/08
122,000 130,926
7.125%,
5/1/30
128,000 160,881
Series A, 6.79%,
5/23/12 910,000
1,057,758
Series C, 4.75%,
8/1/13 15,000
15,405
Series C, 6%,
3/15/13
15,000 16,771
--------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds:
5.375%,
2/15/31
104,000 112,990
STRIPS, 2.99%, 2/15/10
9 125,000 104,260
STRIPS, 3.37%, 2/15/11
9 101,000 80,153
STRIPS, 4.96%, 2/15/16
9 171,000 103,243
--------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 2.50%, 9/30/06
1,370,000 1,369,305

------------
Total U.S. Government Obligations (Cost
$7,627,336) 7,678,849

--------------------------------------------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS--0.1%

United Mexican States Nts., 7.50%, 1/14/12 (Cost
$110,961) 110,000 125,235

27 | OPPENHEIMER DISCIPLINED ALLOCATION FUND

--------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS Continued
--------------------------------------------------------------------------------

PRINCIPAL VALUE

AMOUNT SEE NOTE 1
--------------------------------------------------------------------------------------------------------

NON-CONVERTIBLE CORPORATE BONDS AND NOTES--12.3%

Aetna, Inc., 7.375% Sr. Unsec. Nts., 3/1/06
$250,000 $ 263,623
--------------------------------------------------------------------------------------------------------
Allied Waste North America, Inc., 8.875% Sr. Nts., Series B,
4/1/08 110,000 117,150
--------------------------------------------------------------------------------------------------------
Allstate Financial Global Funding LLC, 4.25% Nts., 9/10/08
10 50,000 51,079
--------------------------------------------------------------------------------------------------------
Allstate Life Global Funding II, 3.50% Nts.,
7/30/07 65,000 65,413
--------------------------------------------------------------------------------------------------------
American Express Centurion Bank, 4.375% Nts.,
7/30/09 250,000 256,826
--------------------------------------------------------------------------------------------------------
American Honda Finance Corp., 3.85% Nts., 11/6/08
10 60,000 60,598
--------------------------------------------------------------------------------------------------------
AT&T Wireless Services, Inc., 7.50% Sr. Unsec. Nts.,
5/1/07 175,000 193,014
--------------------------------------------------------------------------------------------------------
AXA, 8.60% Unsec. Sub. Nts.,
12/15/30 190,000 248,597
--------------------------------------------------------------------------------------------------------
Bank of America Corp., 4.875% Sr. Unsec. Nts.,
1/15/13 3,000 3,069
--------------------------------------------------------------------------------------------------------
Bankers Trust Corp., 7.375% Unsec. Sub. Nts.,
5/1/08 20,000 22,524
--------------------------------------------------------------------------------------------------------
Beazer Homes USA, Inc., 8.625% Sr. Unsec. Nts.,
5/15/11 115,000 126,500
--------------------------------------------------------------------------------------------------------
Boeing Capital Corp., 5.65% Sr. Unsec. Nts.,
5/15/06 19,000 19,827
--------------------------------------------------------------------------------------------------------
British Telecommunications plc:
7.875% Nts.,
12/15/05
155,000 163,777
8.125% Nts.,
12/15/10
85,000 103,271
--------------------------------------------------------------------------------------------------------
Canadian National Railway Co., 4.25% Nts.,
8/1/09 32,000 32,597
--------------------------------------------------------------------------------------------------------
CenterPoint Energy, Inc.:
5.875% Sr. Nts.,
6/1/08 135,000
142,274
8.125% Unsec. Nts., Series B,
7/15/05 60,000 62,232
--------------------------------------------------------------------------------------------------------
Chesapeake Energy Corp., 7.50% Sr. Nts.,
6/15/14 120,000 134,100
--------------------------------------------------------------------------------------------------------
CIGNA Corp., 7.40% Unsec. Nts.,
5/15/07 295,000 321,595
--------------------------------------------------------------------------------------------------------
CIT Group, Inc., 7.75% Sr. Unsec. Unsub. Nts.,
4/2/12 120,000 143,055
--------------------------------------------------------------------------------------------------------
Citizens Communications Co., 9.25% Sr. Nts.,
5/15/11 60,000 69,300
--------------------------------------------------------------------------------------------------------
Clear Channel Communications, Inc., 8% Sr. Unsec. Nts.,
11/1/08 230,000 261,718
--------------------------------------------------------------------------------------------------------
ConAgra Foods, Inc., 6% Nts.,
9/15/06 130,000 136,953
--------------------------------------------------------------------------------------------------------
Conectiv, Inc., 5.30% Unsec. Unsub. Nts., Series B,
6/1/05 33,000 33,437
--------------------------------------------------------------------------------------------------------
Cox Communications, Inc., 6.40% Sr. Unsec. Nts.,
8/1/08 165,000 177,592
--------------------------------------------------------------------------------------------------------
CSX Corp., 6.25% Unsec. Nts.,
10/15/08 120,000 130,755
--------------------------------------------------------------------------------------------------------
D.R. Horton, Inc., 9.375% Sr. Unsec. Sub. Nts.,
3/15/11 105,000 117,338
--------------------------------------------------------------------------------------------------------
DaimlerChrysler North America Holding Corp., 4.75% Unsec. Nts.,
1/15/08 235,000 242,290
--------------------------------------------------------------------------------------------------------
Delphi Automotive Systems Corp., 6.50% Nts.,
5/1/09 130,000 136,351
--------------------------------------------------------------------------------------------------------
Deutsche Telekom International Finance BV, 8.50% Unsub. Nts.,
6/15/10 155,000 186,952
--------------------------------------------------------------------------------------------------------
Dominion Resources, Inc., 8.125% Sr. Unsub. Nts.,
6/15/10 135,000 160,885
--------------------------------------------------------------------------------------------------------
DTE Energy Co., 6.45% Sr. Unsub. Nts.,
6/1/06 120,000 126,104
--------------------------------------------------------------------------------------------------------
Duke Capital LLC, 5.668% Nts.,
8/15/14 135,000 140,052
--------------------------------------------------------------------------------------------------------
Federated Department Stores, Inc., 6.625% Sr. Unsec. Nts.,
9/1/08 160,000 176,423
--------------------------------------------------------------------------------------------------------
FedEx Corp., 2.65% Unsec. Nts.,
4/1/07 275,000 271,770

28 | OPPENHEIMER DISCIPLINED ALLOCATION FUND

PRINCIPAL VALUE

AMOUNT SEE NOTE 1
--------------------------------------------------------------------------------------------------------

NON-CONVERTIBLE CORPORATE BONDS AND NOTES Continued

FirstEnergy Corp.:
5.50% Sr. Unsub. Nts., Series A, 11/15/06
$105,000 $ 109,308
7.375% Sr. Unsub. Nts., Series C,
11/15/31 120,000 137,159
--------------------------------------------------------------------------------------------------------
Food Lion, Inc., 7.55% Nts.,
4/15/07 165,000 179,289
--------------------------------------------------------------------------------------------------------
Ford Holdings, Inc., 9.30% Unsec. Unsub. Debs.,
3/1/30 95,000 107,903
--------------------------------------------------------------------------------------------------------
Ford Motor Co., 8.90% Unsec. Unsub. Debs.,
1/15/32 65,000 72,889
--------------------------------------------------------------------------------------------------------
France Telecom SA:
7.95% Sr. Unsec. Nts.,
3/1/06 80,000 85,134
8.50% Sr. Unsec. Nts.,
3/1/11 80,000 96,203
9.25% Sr. Unsec. Nts., 3/1/31
4 45,000 60,927
--------------------------------------------------------------------------------------------------------
Franklin Resources, Inc., 3.70% Nts.,
4/15/08 80,000 80,577
--------------------------------------------------------------------------------------------------------
Gap, Inc. (The), 6.90% Nts., 9/15/07
2 100,000 109,000
--------------------------------------------------------------------------------------------------------
General Mills, Inc., 3.875% Nts.,
11/30/07 190,000 192,800
--------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., 7.25% Nts.,
3/2/11 340,000 361,479
--------------------------------------------------------------------------------------------------------
General Motors Corp., 8.375% Sr. Unsec. Debs.,
7/15/33 45,000 46,957
--------------------------------------------------------------------------------------------------------
Hartford Financial Services Group, Inc. (The), 2.375% Nts.,
6/1/06 70,000 68,955
--------------------------------------------------------------------------------------------------------
Hertz Corp. (The), 6.35% Nts.,
6/15/10 290,000 301,407
--------------------------------------------------------------------------------------------------------
Hilton Hotels Corp., 7.95% Sr. Nts.,
4/15/07 95,000 104,919
--------------------------------------------------------------------------------------------------------
Hutchison Whampoa International Ltd., 7.45% Sr. Bonds, 11/24/33
10 100,000 104,973
--------------------------------------------------------------------------------------------------------
IPALCO Enterprises, Inc., 8.375% Sr. Sec. Nts., 11/14/08
2,4 110,000 123,475
--------------------------------------------------------------------------------------------------------
iStar Financial, Inc.:
4.875% Sr. Unsec. Nts., Series B,
1/15/09 115,000 117,509
8.75% Sr. Unsec. Nts.,
8/15/08 85,000 98,692
--------------------------------------------------------------------------------------------------------
J.C. Penney Co., Inc., 8% Nts.,
3/1/10 240,000 276,000
--------------------------------------------------------------------------------------------------------
John Hancock Global Funding II, 7.90% Nts., 7/2/10
10 111,000 131,861
--------------------------------------------------------------------------------------------------------
Kinder Morgan, Inc., 6.50% Sr. Unsec. Nts.,
9/1/12 150,000 166,400
--------------------------------------------------------------------------------------------------------
Kraft Foods, Inc., 5.25% Nts.,
6/1/07 300,000 314,432
--------------------------------------------------------------------------------------------------------
Kroger Co. (The), 7.80% Sr. Nts.,
8/15/07 180,000 200,363
--------------------------------------------------------------------------------------------------------
Lear Corp.:
7.96% Sr. Unsec. Nts., Series B,
5/15/05 110,000 112,920
8.11% Sr. Unsec. Nts., Series B,
5/15/09 122,000 140,227
--------------------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc., 7% Nts.,
2/1/08 165,000 182,353
--------------------------------------------------------------------------------------------------------
Lehman Brothers, Inc., 6.625% Sr. Sub. Nts.,
2/15/08 25,000 27,400
--------------------------------------------------------------------------------------------------------
Lennar Corp., 5.95% Sr. Unsec. Nts.,
3/1/13 125,000 132,963
--------------------------------------------------------------------------------------------------------
Liberty Media Corp., 3.50% Nts.,
9/25/06 110,000 110,159
--------------------------------------------------------------------------------------------------------
Liberty Property Trust, 5.65% Sr. Nts.,
8/15/14 130,000 134,382
--------------------------------------------------------------------------------------------------------
Marsh & McLennan Cos., Inc., 5.375% Nts.,
7/15/14 155,000 151,779
--------------------------------------------------------------------------------------------------------
May Department Stores Co. (The), 3.95% Nts., 7/15/07
10 16,000 16,175
--------------------------------------------------------------------------------------------------------
MBNA America Bank NA, 5.375% Nts.,
1/15/08 185,000 195,076
--------------------------------------------------------------------------------------------------------
McDonnell Douglas Corp., 6.875% Unsec. Unsub. Nts.,
11/1/06 34,000 36,487

29 | OPPENHEIMER DISCIPLINED ALLOCATION FUND

--------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS Continued
--------------------------------------------------------------------------------

PRINCIPAL VALUE

AMOUNT SEE NOTE 1
--------------------------------------------------------------------------------------------------------

NON-CONVERTIBLE CORPORATE BONDS AND NOTES Continued

Merrill Lynch & Co., Inc., 4.125% Nts., 9/10/09
$255,000 $ 256,971
--------------------------------------------------------------------------------------------------------
MidAmerican Energy Holdings Co., 5.875% Sr. Unsec. Nts.,
10/1/12 265,000 284,024
--------------------------------------------------------------------------------------------------------
Morgan Stanley, 6.60% Nts.,
4/1/12 155,000 174,953
--------------------------------------------------------------------------------------------------------
National City Bank, 6.20% Sub. Nts.,
12/15/11 17,000 18,881
--------------------------------------------------------------------------------------------------------
Nationwide Financial Services, Inc., 5.90% Nts.,
7/1/12 125,000 133,663
--------------------------------------------------------------------------------------------------------
NiSource Finance Corp., 7.875% Sr. Unsec. Nts.,
11/15/10 190,000 225,813
--------------------------------------------------------------------------------------------------------
Northrop Grumman Corp., 7.125% Sr. Nts.,
2/15/11 150,000 173,176
--------------------------------------------------------------------------------------------------------
Petroleos Mexicanos, 9.50% Sr. Sub. Nts.,
9/15/27 70,000 86,450
--------------------------------------------------------------------------------------------------------
PF Export Receivables Master Trust, 3.748% Sr. Nts., Series B, 6/1/13
10 73,294 72,190
--------------------------------------------------------------------------------------------------------
Prudential Holdings LLC, 8.695% Bonds, Series C, 12/18/23
10 195,000 251,773
--------------------------------------------------------------------------------------------------------
Prudential Insurance Co. of America, 8.30% Nts., 7/1/25
10 260,000 329,523
--------------------------------------------------------------------------------------------------------
PSEG Energy Holdings LLC, 7.75% Unsec. Nts.,
4/16/07 115,000 123,625
--------------------------------------------------------------------------------------------------------
Safeway, Inc.:
2.50% Nts.,
11/1/05
75,000 74,779
4.80% Sr. Unsec. Nts.,
7/16/07 170,000 175,738
--------------------------------------------------------------------------------------------------------
Spieker Properties LP, 6.75% Unsec. Unsub. Nts.,
1/15/08 195,000 213,556
--------------------------------------------------------------------------------------------------------
Sprint Capital Corp.:
7.125% Sr. Unsec. Nts.,
1/30/06 135,000 142,036
8.75% Nts.,
3/15/32
100,000 131,432
--------------------------------------------------------------------------------------------------------
Starwood Hotels & Resorts Worldwide, Inc., 7.375% Nts.,
5/1/07 48,000 51,900
--------------------------------------------------------------------------------------------------------
SunTrust Banks, Inc.:
4% Nts.,
10/15/08
135,000 137,438
7.75% Unsec. Sub. Nts.,
5/1/10 11,000 12,974
--------------------------------------------------------------------------------------------------------
TCI Communications, Inc., 9.80% Sr. Unsec. Debs.,
2/1/12 245,000 316,124
--------------------------------------------------------------------------------------------------------
Telefonos de Mexico SA de CV, 4.50% Nts.,
11/19/08 105,000 106,189
--------------------------------------------------------------------------------------------------------
Texas Utilities Co., 6.375% Sr. Unsec. Nts., Series C,
1/1/08 105,000 113,806
--------------------------------------------------------------------------------------------------------
Time Warner Cos., Inc., 9.125% Debs.,
1/15/13 130,000 166,871
--------------------------------------------------------------------------------------------------------
Time Warner Entertainment Co. LP, 10.15% Sr. Nts.,
5/1/12 65,000 85,310
--------------------------------------------------------------------------------------------------------
Toll Corp., 8.25% Sr. Sub. Nts.,
12/1/11 115,000 129,375
--------------------------------------------------------------------------------------------------------
Tyco International Group SA:
5.875% Unsec. Unsub. Nts.,
11/1/04 25,000 25,000
6.375% Sr. Unsec. Unsub. Nts.,
2/15/06 180,000 187,972
6.75% Sr. Unsub. Nts.,
2/15/11 76,000 86,068
--------------------------------------------------------------------------------------------------------
Univision Communications, Inc.:
2.875% Sr. Unsec. Nts.,
10/15/06 32,000 31,721
3.50% Sr. Unsec. Nts.,
10/15/07 165,000 164,451
--------------------------------------------------------------------------------------------------------
Volkswagen Credit, Inc., 2.33% Nts., 7/21/05
4,10 245,000 245,027
--------------------------------------------------------------------------------------------------------
Vornado Realty LP, 5.625% Sr. Unsec. Unsub. Nts.,
6/15/07 245,000 257,492
--------------------------------------------------------------------------------------------------------
Walt Disney Co. (The), 5.375% Sr. Unsec. Nts.,
6/1/07 145,000 152,181
--------------------------------------------------------------------------------------------------------
Waste Management, Inc., 7% Sr. Nts.,
7/15/28 90,000 100,741

30 | OPPENHEIMER DISCIPLINED ALLOCATION FUND

PRINCIPAL VALUE

AMOUNT SEE NOTE 1
--------------------------------------------------------------------------------------------------------

NON-CONVERTIBLE CORPORATE BONDS AND NOTES Continued

Weyerhaeuser Co., 5.50% Unsec. Unsub. Nts., 3/15/05
$ 52,000 $ 52,548
--------------------------------------------------------------------------------------------------------
Yum! Brands, Inc., 8.50% Sr. Unsec. Nts.,
4/15/06 260,000 280,211

------------
Total Non-Convertible Corporate Bonds and Notes (Cost
$14,762,823) 15,359,555

--------------------------------------------------------------------------------------------------------
STRUCTURED NOTES--1.5%

Deutsche Bank AG, COUNTS Corp. Sec. Credit Linked Nts.,
Series 2003-1, 3.78%, 1/7/05
2,4 950,000 947,435
--------------------------------------------------------------------------------------------------------
UBS AG, High Grade Credit Linked Nts., 3.503%, 12/10/04
2 950,000 954,940

------------
Total Structured Notes (Cost
$1,900,000) 1,902,375

--------------------------------------------------------------------------------------------------------
SHORT-TERM NOTES--2.1%

Federal Home Loan Bank,
1.69%, 11/1/04 (Cost $2,600,000)
2,600,000 2,600,000

--------------------------------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--5.5%

Undivided interest of 11.95% in joint repurchase agreement (Principal Amount/
Value $57,987,000, with a maturity value of $57,995,553) with Zions
Bank/Capital
Markets Group, 1.77%, dated 10/29/04, to be repurchased at $6,929,022 on
11/1/04, collateralized by U.S. Treasury Nts., 2.375%, 8/15/06, with a value
of $59,191,443 (Cost $6,928,000)
6,928,000 6,928,000

--------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST
$139,752,062) 118.0% 147,244,365
--------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER
ASSETS (18.0) (22,447,444)

-------------------------
NET
ASSETS
100.0% $124,796,921

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

FOOTNOTES TO STATEMENT OF INVESTMENTS

1. Non-income producing security.
2. Illiquid or restricted security. See Note 8 of Notes to Financial Statements.
3. Received as the result of issuer reorganization.
4. Represents the current interest rate for a variable or increasing rate
security.
5. When-issued security or forward commitment to be delivered and settled after
October 31, 2004. See Note 1 of Notes to Financial Statements.
6. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline. Most other fixed income securities
increase in price when interest rates decline. The principal amount of the
underlying pool represents the notional amount on which current interest is
calculated. The price of these securities is typically more sensitive to changes
in prepayment rates than traditional mortgage-backed securities (for example,
GNMA pass-throughs). Interest rates disclosed represent current yields based
upon the current cost basis and estimated timing and amount of future cash
flows. These securities amount to $895,323 or 0.72% of the Fund's net assets as
of October 31, 2004.

31 | OPPENHEIMER DISCIPLINED ALLOCATION FUND

--------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS Continued
--------------------------------------------------------------------------------

FOOTNOTES TO STATEMENT OF INVESTMENTS Continued
7. Principal-Only Strips represent the right to receive the monthly principal
payments on an underlying pool of mortgage loans. The value of these securities
generally increases as interest rates decline and prepayment rates rise. The
price of these securities is typically more volatile than that of coupon-bearing
bonds of the same maturity. Interest rates disclosed represent current yields
based upon the current cost basis and estimated timing of future cash flows.
These securities amount to $139,148 or 0.11% of the Fund's net assets as of
October 31, 2004.
8. All or a portion of the security is held in collateralized accounts to cover
initial margin requirements on open futures sales contracts with an aggregate
market value of $256,611. See Note 6 of Notes to Financial Statements.
9. Zero coupon bond reflects effective yield on the date of purchase.
10. 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 $1,263,199 or 1.01% of the Fund's net
assets as of October 31, 2004.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

32 | OPPENHEIMER DISCIPLINED ALLOCATION FUND

--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES October 31, 2004
--------------------------------------------------------------------------------

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

ASSETS

Investments, at value (cost $139,752,062)--see accompanying statement of
investments $147,244,365
--------------------------------------------------------------------------------------------------------

Cash
745,950
--------------------------------------------------------------------------------------------------------
Unrealized appreciation on swap
contracts 8,105
--------------------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold (including $7,417,981 sold on a when-issued basis or forward
commitment) 7,814,066
Interest, dividends and principal
paydowns 474,478
Shares of capital stock
sold 56,306
Futures
margins
45,868

Other
5,316

-------------
Total
assets
156,394,454

--------------------------------------------------------------------------------------------------------
LIABILITIES

Payables and other liabilities:
Investments purchased (including $30,019,114
purchased on a when-issued basis or forward
commitment) 31,413,780
Shareholder
communications
39,595
Shares of capital stock
redeemed 36,308
Directors'
compensation
29,519
Distribution and service plan
fees 26,098
Transfer and shareholder servicing agent
fees 23,879

Other
28,354

-------------
Total
liabilities
31,597,533

--------------------------------------------------------------------------------------------------------
NET
ASSETS
$124,796,921

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

--------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS

Par value of shares of capital
stock $ 9,005
--------------------------------------------------------------------------------------------------------
Additional paid-in
capital
128,257,222
--------------------------------------------------------------------------------------------------------
Accumulated net investment
income 388,283
--------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency

transactions
(11,589,213)
--------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of assets and
liabilities denominated in foreign
currencies 7,731,624

-------------
NET
ASSETS
$124,796,921

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

33 | 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
$103,268,166 and 7,457,662 shares of capital stock
outstanding) $13.85
Maximum offering price per share (net asset value plus sales charge of 5.75% of
offering
price)
$14.69
--------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $13,618,529
and 969,909 shares of capital stock
outstanding) $14.04
--------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $6,421,873
and 469,979 shares of capital stock
outstanding) $13.66
--------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $1,488,353
and 107,886 shares of capital stock
outstanding) $13.80

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

34 | OPPENHEIMER DISCIPLINED ALLOCATION FUND

--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS For the Year Ended October 31, 2004
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
INVESTMENT INCOME

Interest $ 1,585,957
--------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $6,582) 939,982
--------------------------------------------------------------------------------
Fee income 822
------------
Total investment income 2,526,761

--------------------------------------------------------------------------------
EXPENSES

Management fees 785,321
--------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 256,773
Class B 148,547
Class C 57,073
Class N 5,131
--------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 212,136
Class B 41,636
Class C 16,887
Class N 3,747
--------------------------------------------------------------------------------
Shareholder communications:
Class A 18,816
Class B 11,653
Class C 3,563
Class N 694
--------------------------------------------------------------------------------
Accounting service fees 15,000
--------------------------------------------------------------------------------
Directors' compensation 5,834
--------------------------------------------------------------------------------
Custodian fees and expenses 3,220
--------------------------------------------------------------------------------
Other 23,323
------------
Total expenses 1,609,354
Less reduction to custodian expenses (1,574)
Less payments and waivers of expenses (1,512)
------------
Net expenses 1,606,268

--------------------------------------------------------------------------------
NET INVESTMENT INCOME 920,493

35 | OPPENHEIMER DISCIPLINED ALLOCATION FUND

--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS Continued
--------------------------------------------------------------------------------

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

REALIZED AND UNREALIZED GAIN (LOSS)

Net realized gain on:
Investments
$11,860,457
Closing of futures
contracts 204,251
Foreign currency
transactions 426
Swap
contracts
46,324
Net increase from payment by
affiliate 18,298

------------
Net realized gain
12,129,756
-----------------------------------------------------------------------------------------
Net change in unrealized appreciation on:
Investments
(5,131,630)
Translation of assets and liabilities denominated in foreign
currencies (113)
Futures
contracts 284,725
Swap
contracts
(13,491)

------------
Net change in unrealized appreciation
(4,860,509)

-----------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $
8,189,740

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

36 | OPPENHEIMER DISCIPLINED ALLOCATION FUND

--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------

YEAR ENDED OCTOBER
31, 2004
2003
--------------------------------------------------------------------------------------------------------

OPERATIONS

Net investment income
$ 920,493 $ 1,173,188
--------------------------------------------------------------------------------------------------------
Net realized gain
12,129,756 1,451,451
--------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(4,860,509) 11,944,104

----------------------------
Net increase in net assets resulting from operations
8,189,740 14,568,743

--------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS

Dividends from net investment income:
Class A
(888,024) (1,140,244)
Class
B
(1,401) (45,309)
Class
C
(3,750) (15,476)
Class
N
(4,892) (2,774)

--------------------------------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS

Net increase (decrease) in net assets resulting from
capital stock transactions:
Class A
(2,841,650) (4,085,561)
Class B
(1,999,035) 1,001,740
Class C
1,447,054 1,212,712
Class N
1,061,292 109,096

--------------------------------------------------------------------------------------------------------
NET ASSETS

Total increase
4,959,334 11,602,927
--------------------------------------------------------------------------------------------------------
Beginning of period
119,837,587 108,234,660

----------------------------
End of period (including accumulated net investment income
of $388,283 and $170,158, respectively)
$124,796,921 $119,837,587

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

37 | OPPENHEIMER DISCIPLINED ALLOCATION FUND

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

CLASS A YEAR ENDED OCTOBER 31,
2004 2003 2002 2001 2000
------------------------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA

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

------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA

1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the
fiscal period, with all dividends and distributions reinvested in additional shares
on the reinvestment date, and redemption at the net asset value calculated on
the last business day of the fiscal period. Sales charges are not reflected in
the total returns. Total returns are not annualized for periods of less than one
full year. 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%.
6. The portfolio turnover rate excludes purchase and sales transactions of To
Be Announced (TBA)
mortgage-related securities of $316,759,702 and $306,486,129, respectively.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

38 | OPPENHEIMER DISCIPLINED ALLOCATION FUND

CLASS B YEAR ENDED OCTOBER 31,
2004 2003 2002 2001 2000
------------------------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA

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

------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA

1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Less than $0.005 per share.
3. Assumes an investment on the business day before the first day of the
fiscal period, with all dividends and distributions reinvested in additional
shares on the reinvestment date, and redemption at the net asset value calculated
on the last business day of the fiscal period. Sales charges are not reflected
in the total returns. Total returns are not annualized for
periods of less than one full year. Returns do not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or the redemption of Fund
shares.
4. Annualized for periods of less than one full year.
5. Reduction to custodian expenses less than 0.01%.
6. Voluntary waiver of transfer agent fees less than 0.01%.
7. The portfolio turnover rate excludes purchase and sales transactions of To
Be Announced (TBA)
mortgage-related securities of $316,759,702 and $306,486,129, respectively.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

39 | OPPENHEIMER DISCIPLINED ALLOCATION FUND

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

CLASS C YEAR ENDED OCTOBER 31,
2004 2003 2002 2001 2000
------------------------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA

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

------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA

1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the
fiscal period, with all dividends and distributions reinvested in additional
shares on the reinvestment date, and redemption at the net asset value calculated
on the last business day of the fiscal period. Sales charges are not reflected
in the total returns. Total returns are not annualized for periods of less than
one full year. 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%.
6. The portfolio turnover rate excludes purchase and sales transactions of To
Be Announced (TBA)
mortgage-related securities of $316,759,702 and $306,486,129, respectively.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

40 | OPPENHEIMER DISCIPLINED ALLOCATION FUND

CLASS N YEAR ENDED OCTOBER 31,
2004 2003 2002 2001 1
-----------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA

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

-----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3
6.68% 13.81% (6.17)% (7.90)%

-----------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA

1. For the period from March 1, 2001 (inception of offering) to October 31,
2001.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. Assumes an investment on the business day before the first day of the
fiscal period, with all dividends and distribu- tions reinvested in additional
shares on the reinvestment date, and redemption at the net asset value calculated
on the last business day of the fiscal period. Sales charges are not reflected
in the total returns. Total returns are not annualized for periods of less than
one full year. Returns do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund shares.
4. Annualized for periods of less than one full year.
5. Reduction to custodian expenses less than 0.01%.
6. Voluntary waiver of transfer agent fees less than 0.01%.
7. The portfolio turnover rate excludes purchase and sales transactions of To
Be Announced (TBA)
mortgage-related securities of $316,759,702 and $306,486,129, respectively.

--------------------------------------------------------------------------------
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 with respect to the Fund in
general and exclusive voting rights on matters that affect that class alone.
Earnings, net assets and net asset value per share may differ due to each class
having its own expenses, such as transfer and shareholder servicing agent fees
and shareholder communications, directly attributable to that class. Class A,
B, C and N have separate distribution and/or service plans. Class B shares will
automatically convert to Class A shares six years after the date of purchase.
The following is a summary of significant accounting policies consistently
followed by the Fund.
--------------------------------------------------------------------------------
SECURITIES VALUATION. The Fund calculates the net asset value of its shares as
of the close of The New York Stock Exchange (the Exchange), normally 4:00 P.M.
Eastern time, on each day the Exchange is open for business. Securities 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. Corporate, government and municipal debt instruments having a remaining
maturity in excess of 60 days and all mortgage-backed securities will be valued
at the mean between the "bid" and "asked" prices. Securities may be valued
primarily using dealer-supplied valuations or a portfolio pricing service
authorized by the Board of Directors. Securities (including restricted
securities) for which market quotations are not readily available are valued at
their fair value. Foreign and domestic securities whose values have been
materially affected by what the Manager identifies as a significant event
occurring before the Fund's assets are valued but after the close of their
respective exchanges will be fair valued. Fair value is determined in good
faith using consistently applied procedures under the supervision of the Board
of Directors. Short-term "money market type" debt securities with

42 | OPPENHEIMER DISCIPLINED ALLOCATION FUND

remaining maturities of sixty days or less are valued at amortized cost (which
approximates market value).
--------------------------------------------------------------------------------
STRUCTURED NOTES. The Fund invests in structured notes whose market values,
interest rates and/or redemption prices are linked to the performance of
underlying foreign currencies, interest rate spreads, stock market indices,
prices of individual securities, commodities or other financial instruments or
the occurrence of other specific events. The structured notes are often
leveraged, increasing the volatility of each note's market value relative to
the change in the underlying linked financial element or event. 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, 2004, the market
value of these securities comprised 1.5% of the Fund's net assets and resulted
in unrealized cumulative gains of $2,375.
--------------------------------------------------------------------------------
SECURITIES ON A WHEN-ISSUED BASIS OR FORWARD COMMITMENT. Delivery and payment
for securities that have been purchased by the Fund on a when-issued basis or
forward commitment can take place up to ten days 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
internally designated 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 or forward commitment may increase the volatility of the Fund's net asset
value to the extent the Fund executes such transactions while remaining
substantially fully invested. The Fund may also sell securities that it
purchased on a when-issued basis or forward commitment prior to settlement of
the original purchase. As of October 31, 2004, the Fund had purchased
$30,019,114 of securities on a when-issued basis or forward commitment and sold
$7,417,981 of securities issued on a when-issued basis or forward commitment.
In connection with its ability to purchase or sell 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 or as fee income in
the case of such transactions that have an associated fee in lieu of a
difference in the forward purchase and sale price.
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 at redelivery as compared to the
securities sold to the counterparty; counterparty credit risk; and the
potential pay down speed variance between the mortgage-related pools.

43 | OPPENHEIMER DISCIPLINED ALLOCATION FUND

--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS Continued
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
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 as of the close of The New York Stock Exchange
(the Exchange), normally 4:00 P.M. Eastern time, on each day the Exchange is
open for business. 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. Foreign exchange rates
may be valued primarily using dealer supplied valuations or a portfolio pricing
service authorized by the Board of Directors.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in
the values of assets and liabilities, including investments in securities at
fiscal period end, resulting from changes in exchange rates.
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. These balances are invested in one or more
repurchase agreements. Securities pledged as collateral for repurchase
agreements are held by a custodian bank until the agreements mature. Each
agreement requires that the market value of the collateral be sufficient to
cover payments of interest and principal. In the event of default by the other
party to the agreement, retention of the collateral may be subject to legal
proceedings.
--------------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated on a
daily basis to each class of shares based upon the relative proportion of net
assets represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
--------------------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income, including any net
realized gain on investments not offset by capital loss carryforwards, if any,
to shareholders, therefore, no federal income or excise tax provision is
required.

44 | OPPENHEIMER DISCIPLINED ALLOCATION FUND

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
BASED ON COST OF
SECURITIES AND
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED OTHER INVESTMENTS
NET INVESTMENT LONG-TERM LOSS FOR FEDERAL INCOME
INCOME GAIN CARRYFORWARD 1,2,3,4 TAX PURPOSES
-----------------------------------------------------------------------
$565,546 $-- $11,266,279 $7,260,689

1. As of October 31, 2004, the Fund had $11,257,119 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, 2004,
details of the capital loss carryforwards were as follows:

EXPIRING
--------
2009 $ 1,037,238
2010 10,219,881
-----------
Total $11,257,119
===========

2. The Fund had $9,160 of straddle losses which were deferred.
3. During the fiscal year ended October 31, 2004, the Fund utilized $11,697,830
of capital loss carryforward to offset capital gains realized in that fiscal
year.
4. During the fiscal year ended October 31, 2003, the Fund utilized
$1,129,404 of capital loss carryforward to offset capital gains realized in
that fiscal year.

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, 2004. Net assets
of the Fund were unaffected by the reclassifications.

INCREASE TO INCREASE TO
ACCUMULATED ACCUMULATED NET
NET INVESTMENT REALIZED LOSS
INCOME ON INVESTMENTS
---------------------------------
$195,699 $195,699

The tax character of distributions paid during the years ended October 31, 2004
and October 31, 2003 was as follows:

YEAR ENDED YEAR ENDED
OCTOBER 31, 2004 OCTOBER 31, 2003
--------------------------------------------------------
Distributions paid from:
Ordinary income $898,067 $1,203,803

45 | OPPENHEIMER DISCIPLINED ALLOCATION FUND

--------------------------------------------------------------------------------
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, 2004 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 $139,975,604
Federal tax cost of other investments (626,231)
------------
Total federal tax cost $139,349,373
============

Gross unrealized appreciation $ 10,216,319
Gross unrealized depreciation (2,955,630)
------------
Net unrealized appreciation $ 7,260,689
============

--------------------------------------------------------------------------------
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, 2004, the Fund's projected benefit obligations were increased by
$2,351 and payments of $1,482 were made to retired directors, resulting in an
accumulated liability of $24,909 as of October 31, 2004.
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. For purposes of determining the amount owed to the under the plan,
deferred amounts are treated as though equal dollar amounts had been invested
in shares of the Fund or in other Oppenheimer funds selected by the Director.
The Fund purchases shares of the funds selected for deferral by the Director in
amounts equal to his or her deemed investment, resulting in a Fund asset equal
to the deferred compensation liability. Such assets are included as a component
of "Other" within the asset section of the Statement of Assets and Liabilities.
Deferral of 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.

46 | OPPENHEIMER DISCIPLINED ALLOCATION FUND

--------------------------------------------------------------------------------
CUSTODIAN FEES. Custodian Fees and Expenses in the Statement of Operations may
include interest expense incurred by the Fund on any cash overdrafts of its
custodian account during the period. The Fund pays interest to its custodian on
such cash overdrafts at a rate equal to the Federal Funds Rate plus 0.50%. The
Reduction to Custodian Expenses line item, if applicable, represents earnings
on cash balances maintained by the Fund during the period. Such interest
expense and other custodian fees may be paid with these earnings.
--------------------------------------------------------------------------------
SECURITY TRANSACTIONS. Security transactions are recorded on the trade date.
Realized gains and losses on securities sold are determined on the basis of
identified cost.
--------------------------------------------------------------------------------
OTHER. The preparation of financial statements in conformity with U.S.
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.

--------------------------------------------------------------------------------
2. SHARES OF 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, 2004 YEAR ENDED OCTOBER
31, 2003
SHARES AMOUNT
SHARES AMOUNT
----------------------------------------------------------------------------------------

CLASS A

Sold 1,031,614 $ 14,122,521 999,373 $
12,060,988
Dividends and/or
distributions reinvested 62,731 854,672 91,508
1,096,971
Redeemed (1,307,401) (17,818,843) (1,446,531)
(17,243,520)

------------------------------------------------------------
Net decrease (213,056) $ (2,841,650) (355,650) $
(4,085,561)

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

----------------------------------------------------------------------------------------
CLASS B
Sold 290,346 $ 4,026,294 443,368 $
5,482,870
Dividends and/or
distributions reinvested 96 1,314
3,597 42,750
Redeemed (435,276) (6,026,643) (372,443)
(4,523,880)

------------------------------------------------------------
Net increase (decrease) (144,834) $ (1,999,035) 74,522 $
1,001,740

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

----------------------------------------------------------------------------------------
CLASS C
Sold 221,557 $ 2,977,259 186,268 $
2,221,285
Dividends and/or
distributions reinvested 267 3,610
1,273 14,766
Redeemed (114,094) (1,533,815) (86,326)
(1,023,339)

------------------------------------------------------------
Net increase 107,730 $ 1,447,054 101,215 $
1,212,712

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

47 | OPPENHEIMER DISCIPLINED ALLOCATION FUND

--------------------------------------------------------------------------------
2. SHARES OF CAPITAL STOCK Continued

YEAR ENDED OCTOBER 31, 2004 YEAR ENDED OCTOBER
31, 2003
SHARES AMOUNT
SHARES AMOUNT
----------------------------------------------------------------------------------------
Class N

Sold 85,506 $ 1,165,275 21,478 $
261,761
Dividends and/or
distributions reinvested 357 4,887
230 2,766
Redeemed (8,146) (108,870) (12,426)
(155,431)

------------------------------------------------------------
Net increase 77,717 $ 1,061,292 9,282 $
109,096

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

--------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than U.S. government obligations and short-term obligations, for the year ended
October 31, 2004, were $76,733,133 and $84,881,502, respectively. There were
purchases of $12,340,077 and sales of $8,930,209 of U.S. government and
government agency obligations for the year ended October 31, 2004. In addition,
there were purchases of $316,759,702 and sales of $306,486,129 of To Be
Announced (TBA) mortgage-related securities for the year ended October 31,
2004.

--------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES. Management fees paid to the Manager were in accordance with
the investment advisory agreement with the Fund which provides for a fee at an
annual rate of 0.625% 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, 2004, the Fund
paid $274,415 to OFS for services to the Fund.
--------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN (12B-1) FEES. Under its General Distributor's
Agreement with the Fund, OppenheimerFunds Distributor, Inc. (the Distributor)
acts as the Fund's principal underwriter in the continuous public offering of
the Fund's classes of shares.
--------------------------------------------------------------------------------
SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted a Service Plan for Class
A shares. It reimburses the Distributor for a portion of its costs incurred for
services provided to accounts that hold Class A shares. Reimbursement is made
quarterly at an annual rate of up to 0.25% of the average annual net assets of
Class A shares of the Fund. The Distributor currently uses all of those fees to
pay dealers, brokers, banks and other financial institutions quarterly for
providing personal services and maintenance of accounts of their customers that
hold Class A shares. Any unreimbursed expenses the Distributor
--------------------------------------------------------------------------------

48 | OPPENHEIMER DISCIPLINED ALLOCATION FUND

incurs with respect to Class A shares in any fiscal year cannot be recovered in
subsequent years. Fees incurred by the Fund under the Plan are detailed in the
Statement of Operations.
--------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLANS FOR CLASS B, CLASS C AND CLASS N SHARES. The
Fund has adopted Distribution and Service Plans for Class B, Class C and Class
N shares to compensate the Distributor for its services in connection with the
distribution of those shares and servicing accounts. Under the plans, the Fund
pays the Distributor an annual asset-based sales charge of 0.75% per year on
Class B and Class C shares and 0.25% per year on Class N shares. The
Distributor also receives a service fee of up to 0.25% per year under each
plan. If either the Class B, Class C or Class N plan is terminated by the Fund
or by the shareholders of a class, the Board of Directors and its independent
directors must determine whether the Distributor shall be entitled to payment
from the Fund of all or a portion of the service fee and/or asset-based sales
charge in respect to shares sold prior to the effective date of such
termination. The Distributor's aggregate uncompensated expenses under the plan
at October 31, 2004 for Class B, Class C and Class N shares were $428,108,
$131,782 and $15,505, respectively. Fees incurred by the Fund under the plans
are detailed in the Statement of Operations.
--------------------------------------------------------------------------------
SALES CHARGES. Front-end sales charges and contingent deferred sales charges
(CDSC) do not represent expenses of the Fund. They are deducted from the
proceeds of sales of Fund shares prior to investment or from redemption
proceeds prior to remittance, as applicable. The sales charges retained by the
Distributor from the sale of shares and the CDSC retained by the Distributor on
the redemption of shares is shown in the table below for the period indicated.

CLASS A CLASS B CLASS
C CLASS N
CLASS A CONTINGENT CONTINGENT
CONTINGENT CONTINGENT
FRONT-END DEFERRED DEFERRED
DEFERRED DEFERRED
SALES CHARGES SALES CHARGES SALES CHARGES SALES
CHARGES SALES CHARGES
RETAINED BY RETAINED BY RETAINED BY RETAINED
BY RETAINED BY
YEAR ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
DISTRIBUTOR DISTRIBUTOR
------------------------------------------------------------------------------------------------

October 31, 2004 $68,502 $814 $40,394
$1,835 $601
------------------------------------------------------------------------------------------------

PAYMENTS AND WAIVERS OF EXPENSES. Following a review of its use of brokerage
commissions for sales that is permitted under its investment advisory
agreement, the Fund's Manager terminated that practice in July 2003.
Subsequently, the Manager paid the Fund $18,298, an amount equivalent to
certain of such commissions incurred in prior years.
OFS has voluntarily agreed to limit transfer and shareholder servicing agent
fees for all classes to 0.35% of average annual net assets per class. During
the year ended October 31, 2004 OFS waived $941 and $571 for Class A and Class
N shares, respectively. This undertaking may be amended or withdrawn at any
time.

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

49 | OPPENHEIMER DISCIPLINED ALLOCATION FUND

--------------------------------------------------------------------------------
5. FOREIGN CURRENCY CONTRACTS Continued
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
foreign transaction. Contracts closed or settled with the same broker are
recorded as net realized gains or losses. Such realized gains and losses are
reported with all other foreign currency gains and losses in the Statement of
Operations.
As of October 31, 2004, 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 stocks and bonds or
interest rates. The Fund may also buy or write put or call options on these
futures contracts.
The Fund generally sells futures contracts 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 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 in the
Statement of Operations as the closing and expiration of futures contracts. The
net change in unrealized appreciation and depreciation is reported in the
Statement of Operations.

50 | OPPENHEIMER DISCIPLINED ALLOCATION FUND

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, 2004, the Fund had outstanding futures contracts as follows:

UNREALIZED
EXPIRATION NUMBER OF VALUATION AS
OF APPRECIATION
CONTRACT DESCRIPTION DATES CONTRACTS OCTOBER 31,
2004 (DEPRECIATION)
--------------------------------------------------------------------------------------------------

CONTRACTS TO PURCHASE
U.S. Long Bonds 12/20/04 67
$7,627,531 $ 209,078
U.S. Treasury Nts., 10 yr. 12/20/04 55
6,245,938 92,365

-----------

301,443

-----------
CONTRACTS TO SELL
U.S. Treasury Nts., 2 yr. 12/30/04 27
5,717,672 969
U.S. Treasury Nts., 5 yr. 12/20/04 79
8,798,625 (71,617)

-----------

(70,648)

-----------

$ 230,795

===========

--------------------------------------------------------------------------------
7. 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 unrealized
gain (loss), 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, 2004, the Fund had entered into the following total return
swap agreements:

PAID BY RECEIVED BY
THE FUND AT THE FUND AT
SWAP NOTIONAL OCTOBER 31, OCTOBER 31,
TERMINATION UNREALIZED
COUNTERPARTY AMOUNT 2004 2004
DATES APPRECIATION
---------------------------------------------------------------------------------------------------

Value of
One-Month total return of
LIBOR less 50 Lehman Brothers
Deutsche Bank AG $850,000 basis points CMBS Index
1/1/05 $4,200
Value of
One-Month total return of
Goldman Sachs LIBOR Lehman Brothers
Capital Markets LP 850,000 BBA Rate CMBS Index
3/31/05 3,905

------

$8,105

======
Index abbreviations are as follows:
CMBS Commercial Mortgage Backed Securities Markets
LIBOR London-Interbank Offered Rate
LIBOR BBA London-Interbank Offered Rate British Bankers Association

51 | OPPENHEIMER DISCIPLINED ALLOCATION FUND

--------------------------------------------------------------------------------
8. ILLIQUID OR RESTRICTED SECURITIES
As of October 31, 2004, 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 will not
invest 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, 2004 was $4,107,030,
which represents 3.29% of the Fund's net assets. Information concerning
restricted securities is as follows:

ACQUISITION VALUATION AS
OF UNREALIZED
SECURITY DATE COST OCTOBER 31,
2004 DEPRECIATION
-------------------------------------------------------------------------------------------------

STOCKS AND/OR WARRANTS
Geotek Communications, Inc.,
Series B, Escrow Shares 1/4/01 $400
$-- $400

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

9. LITIGATION
Six complaints have been filed as putative derivative and class actions against
the Manager, OFS and the Distributor (collectively, "OppenheimerFunds"), as
well as 51 of the Oppenheimer funds (collectively, the "Funds") including this
Fund, and nine Directors/ Trustees of certain of the Funds (collectively, the
"Directors/Trustees"). The complaints allege that the Manager charged excessive
fees for distribution and other costs, improperly used assets of the Funds in
the form of directed brokerage commissions and 12b-1 fees to pay brokers to
promote sales of the Funds, and failed to properly disclose the use of Fund
assets to make those payments in violation of the Investment Company Act of
1940 and the Investment Advisers Act of 1940. The complaints further allege
that by permitting and/or participating in those actions, the
Directors/Trustees breached their fiduciary duties to Fund shareholders under
the Investment Company Act of 1940 and at common law. By order dated October
27, 2004, these six actions, and future related actions, were consolidated by
the U.S. District Court for the Southern District of New York into a single
consolidated proceeding in contemplation of the filing of a superseding
consolidated and amended complaint.
OppenheimerFunds believes that it is premature to render any opinion as to
the likelihood of an outcome unfavorable to them, the Funds or the
Directors/Trustees and that no estimate can yet be made with any degree of
certainty as to the amount or range of any potential loss. However,
OppenheimerFunds, the Funds and the Directors/Trustees believe that the
allegations contained in the complaints are without merit and intend to defend
these lawsuits vigorously.

A-6

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 Household Products

Aerospace & Defense
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
shares2 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.3 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 plans4
4) Group Retirement Plans5
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."6 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 by the reinvestment of loan repayments by a
participant in a Retirement Plan for which the Manager or an affiliate
acts as sponsor.

|_| Shares purchased in amounts of less than $5.

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.
Hardship withdrawals, as defined in the plan.7
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.8
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 of Class C shares of an Oppenheimer fund in amounts of $1
million or more requested in writing by a Retirement Plan sponsor and
submitted more than 12 months after the Retirement Plan's first
purchase of Class C shares, if the redemption proceeds are invested to
purchase Class N shares of one or more Oppenheimer funds.

|_| Distributions9 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.10
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.11
9) On account of the participant's separation from service.12
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 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:

o Shareholders who were shareholders of the AMA Family of Funds on February
28, 1991 and who acquired shares of any of the Former Quest for
Value Funds by merger of a portfolio of the AMA Family of Funds.
o Shareholders who acquired shares of any Former Quest for Value Fund by
merger of any of the portfolios of the Unified Funds.

|X| Waiver of Class A Contingent Deferred Sales Charge in Certain
Transactions. The Class A contingent deferred sales charge will not apply to
redemptions of Class A shares purchased by the following investors who were
shareholders of any Former Quest for Value Fund:

Investors who purchased Class A shares from a dealer that is or was not
permitted to receive a sales load or redemption fee imposed on a shareholder
with whom that dealer has a fiduciary relationship, under the Employee
Retirement Income Security Act of 1974 and regulations adopted under that law.

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

|X| Waivers for Redemptions of Shares Purchased Prior to March 6, 1995. In
the following cases, the contingent deferred sales charge will be waived for
redemptions of Class A, Class B or Class C shares of an Oppenheimer fund. The
shares must have been acquired by the merger of a Former Quest for Value Fund
into the fund or by exchange from an Oppenheimer fund that was a Former Quest
for Value Fund or into which such fund merged. Those shares must have been
purchased prior to March 6, 1995 in connection with:

o withdrawals under an automatic withdrawal plan holding only either Class
B or Class C shares if the annual withdrawal does not exceed 10% of
the initial value of the account value, adjusted annually, and
o liquidation of a shareholder's account if the aggregate net asset value
of shares held in the account is less than the required minimum
value of such accounts.

|X| Waivers for Redemptions of Shares Purchased on or After March 6, 1995 but
Prior to November 24, 1995. In the following cases, the contingent deferred
sales charge will be waived for redemptions of Class A, Class B or Class C
shares of an Oppenheimer fund. The shares must have been acquired by the merger
of a Former Quest for Value Fund into the fund or by exchange from an
Oppenheimer fund that was a Former Quest For Value Fund or into which such
Former Quest for Value Fund merged. Those shares must have been purchased on or
after March 6, 1995, but prior to November 24, 1995:
o redemptions following the death or disability of the shareholder(s) (as
evidenced by a determination of total disability by the U.S. Social
Security Administration);
o withdrawals under an automatic withdrawal plan (but only for Class B or
Class C shares) where the annual withdrawals do not exceed 10% of
the initial value of the account value; adjusted annually, and

o liquidation of a shareholder's account if the aggregate net asset value
of shares held in the account is less than the required minimum
account value.

A shareholder's account will be credited with the amount of any
contingent deferred sales charge paid on the redemption of any Class A, Class B
or Class C shares of the Oppenheimer fund described in this section if the
proceeds are invested in the same Class of shares in that fund or another
Oppenheimer fund within 90 days after redemption.
V. Special Sales Charge Arrangements for Shareholders of Certain Oppenheimer
Funds Who Were Shareholders of Connecticut Mutual Investment Accounts,
Inc.
------------------------------------------------------------------------------

The initial and contingent deferred sale charge rates and waivers for Class A
and Class B shares described in the respective Prospectus (or this Appendix) of
the following Oppenheimer funds (each is referred to as a "Fund" in this
section):
Oppenheimer U. S. Government Trust,
Oppenheimer Bond Fund,
Oppenheimer Value Fund and
Oppenheimer Disciplined Allocation Fund
are modified as described below for those Fund shareholders who were
shareholders of the following funds (referred to as the "Former Connecticut
Mutual Funds") on March 1, 1996, when OppenheimerFunds, Inc. became the
investment adviser to the Former Connecticut Mutual Funds:
Connecticut Mutual Liquid Account Connecticut Mutual Total Return
Account
Connecticut Mutual Government Securities Account CMIA LifeSpan Capital
Appreciation Account
Connecticut Mutual Income Account CMIA LifeSpan Balanced Account
Connecticut Mutual Growth Account CMIA Diversified Income Account

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

|X| Class A Contingent Deferred Sales Charge. Certain shareholders of a Fund
and the other Former Connecticut Mutual Funds are entitled to continue to make
additional purchases of Class A shares at net asset value without a Class A
initial sales charge, but subject to the Class A contingent deferred sales
charge that was in effect prior to March 18, 1996 (the "prior Class A CDSC").
Under the prior Class A CDSC, if any of those shares are redeemed within one
year of purchase, they will be assessed a 1% contingent deferred sales charge
on an amount equal to the current market value or the original purchase price
of the shares sold, whichever is smaller (in such redemptions, any shares not
subject to the prior Class A CDSC will be redeemed first).

Those shareholders who are eligible for the prior Class A CDSC are:
1) persons whose purchases of Class A shares of a Fund and other
Former Connecticut Mutual Funds were $500,000 prior to March 18,
1996, as a result of direct purchases or purchases pursuant to the
Fund's policies on Combined Purchases or Rights of Accumulation,
who still hold those shares in that Fund or other Former
Connecticut Mutual Funds, and
2) persons whose intended purchases under a Statement of Intention
entered into prior to March 18, 1996, with the former general
distributor of the Former Connecticut Mutual Funds to purchase
shares valued at $500,000 or more over a 13-month period entitled
those persons to purchase shares at net asset value without being
subject to the Class A initial sales charge

Any of the Class A shares of a Fund and the other Former Connecticut
Mutual Funds that were purchased at net asset value prior to March 18, 1996,
remain subject to the prior Class A CDSC, or if any additional shares are
purchased by those shareholders at net asset value pursuant to this arrangement
they will be subject to the prior Class A CDSC.

|X|

Class A Sales Charge Waivers. Additional Class A shares of a Fund may be
purchased without a sales charge, by a person who was in one (or more) of the
categories below and acquired Class A shares prior to March 18, 1996, and still
holds Class A shares:
1) any purchaser, provided the total initial amount invested in the
Fund or any one or more of the Former Connecticut Mutual Funds
totaled $500,000 or more, including investments made pursuant to
the Combined Purchases, Statement of Intention and Rights of
Accumulation features available at the time of the initial purchase
and such investment is still held in one or more of the Former
Connecticut Mutual Funds or a Fund into which such Fund merged;
2) any participant in a qualified plan, provided that the total
initial amount invested by the plan in the Fund or any one or more
of the Former Connecticut Mutual Funds totaled $500,000 or more;
3) Directors of the Fund or any one or more of the Former Connecticut
Mutual Funds and members of their immediate families;
4) employee benefit plans sponsored by Connecticut Mutual Financial
Services, L.L.C. ("CMFS"), the prior distributor of the Former
Connecticut Mutual Funds, and its affiliated companies;
5) one or more members of a group of at least 1,000 persons (and
persons who are retirees from such group) engaged in a common
business, profession, civic or charitable endeavor or other
activity, and the spouses and minor dependent children of such
persons, pursuant to a marketing program between CMFS and such
group; and
6) an institution acting as a fiduciary on behalf of an individual or
individuals, if such institution was directly compensated by the
individual(s) for recommending the purchase of the shares of the
Fund or any one or more of the Former Connecticut Mutual Funds,
provided the institution had an agreement with CMFS.

Purchases of Class A shares made pursuant to (1) and (2) above may be
subject to the Class A CDSC of the Former Connecticut Mutual Funds described
above.

Additionally, Class A shares of a Fund may be purchased without a sales
charge by any holder of a variable annuity contract issued in New York State by
Connecticut Mutual Life Insurance Company through the Panorama Separate Account
which is beyond the applicable surrender charge period and which was used to
fund a qualified plan, if that holder exchanges the variable annuity contract
proceeds to buy Class A shares of the Fund.

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

In addition to the waivers set forth in the Prospectus and in this Appendix,
above, the contingent deferred sales charge will be waived for redemptions of
Class A and Class B shares of a Fund and exchanges of Class A or Class B shares
of a Fund into Class A or Class B shares of a Former Connecticut Mutual Fund
provided that the Class A or Class B shares of the Fund to be redeemed or
exchanged were (i) acquired prior to March 18, 1996 or (ii) were acquired by
exchange from an Oppenheimer fund that was a Former Connecticut Mutual Fund.
Additionally, the shares of such Former Connecticut Mutual Fund must have been
purchased prior to March 18, 1996:
1) by the estate of a deceased shareholder;
2) upon the disability of a shareholder, as defined in Section 72(m)(7) of
the Internal Revenue Code;
3) for retirement distributions (or loans) to participants or beneficiaries
from retirement plans qualified under Sections 401(a) or 403(b)(7)of the
Code, or from IRAs, deferred compensation plans created under Section 457
of the Code, or other employee benefit plans;
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.C-11

|-|

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 Registered Public Accounting Firm

KPMG LLP
707 Seventeenth Street
Denver, Colorado 80202

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

1234

PX205.001.0205

--------
1 In accordance with Rule 12b-1 of the Investment Company Act, the term
"Independent Director" 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 only applies to qualified retirement plans and 403(b)(7)
custodial plans after your separation from service in or after the year you
reached age 55.

9 The distribution must be requested prior to Plan termination or the
elimination of the Oppenheimer funds as an investment option under the Plan.
10 This provision does not apply to IRAs.
11 This provision does not apply to loans from 403(b)(7) custodial plans and
loans from the OppenheimerFunds-sponsored Single K retirement plan.
12 This provision does not apply to 403(b)(7) custodial plans if the
participant is less than age 55, nor to IRAs.

Oppenheimer
Value Fund

Prospectus dated February 28, 2005

Oppenheimer Value Fund is a mutual fund. It seeks long-term growth of capital
by investing mainly in common stocks that the portfolio manager believes to
be undervalued.

(logo) OppenheimerFunds
The Right Way to Invest

43
CONTENTS

About the Fund
------------------------------------------------------------------------------

3 The Fund's Investment Objective and Principal Investment
Strategies

3 Main Risks of Investing in the Fund

5 The Fund's Past Performance

6 Fees and Expenses of the Fund

8 About the Fund's Investments

12 How the Fund is Managed

About Your Account
------------------------------------------------------------------------------

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

24 Special Investor Services

AccountLink
PhoneLink
OppenheimerFunds Internet Website
Retirement Plans

26 How to Sell Shares

By Wire
By Mail
By Telephone

29 How to Exchange Shares

33 Shareholder Account Rules and Policies

35 Dividends, Capital Gains and Taxes

36 Financial Highlights

ABOUT THE FUND

The Fund's Investment Objective and Principal Investment Strategies

WHAT IS THE FUND'S INVESTMENT OBJECTIVE? The Fund seeks long-term growth of
capital by investing primarily in common stocks with low price-earnings
ratios and better-than-anticipated earnings. Realization of current income is
a secondary consideration.

WHAT DOES THE FUND MAINLY INVEST IN? The Fund may invest mainly in common
stocks of different capitalization ranges. The Fund also can buy other
investments, including:
o Preferred stocks, rights and warrants and convertible debt securities,
and
o Securities of U.S. and foreign companies, although there are limits on
the Fund's investments in foreign securities.

HOW DOES THE PORTFOLIO MANAGER DECIDE WHAT SECURITIES TO BUY OR SELL? In
selecting securities for purchase or sale by the Fund, the Fund's portfolio
manager selects securities one at a time. This is called a "bottom up
approach." The portfolio manager uses a fundamental analysis to select
securities for the Fund that he believes are undervalued. While this process
and the inter-relationship of the factors used may change over time and its
implementation may vary in particular cases, the portfolio manager currently
considers the following factors when assessing a company's business prospects:
o Future supply/demand conditions for its key products,
o Product cycles,
o Quality of management,
o Competitive position in the market place,
o Reinvestment plans for cash generated, and
o Better-than-expected earnings reports.
Not all factors are relevant for every individual security.

The portfolio manager may consider selling a stock for one or more of the
following reasons:
o The stock price has reached its target,
o The company's fundamentals appear to be deteriorating, or
o Better stock selections are believed to have been identified.

WHO IS THE FUND DESIGNED FOR? The Fund is designed primarily for investors
seeking capital growth in their investment over the long term. Because the
Fund currently focuses its investments in stocks, those investors should be
willing to assume the risks of short-term share price fluctuations that are
typical for a fund that can have substantial stock investments. Since the
Fund's income level will fluctuate and will likely be small, it is not
designed for investors needing an assured level of current income. Because of
its focus on long-term total growth of capital, the Fund may be appropriate
for a portion of a retirement plan investment. However, the Fund is not a
complete investment program.

Main Risks of Investing in the Fund

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

RISKS OF INVESTING IN STOCKS. Stocks fluctuate in price, and their short-term
volatility at times may be great. Because the Fund currently focuses its
investments in stocks, the value of the Fund's portfolio will be affected by
changes in the stock markets. Market risk will affect the Fund's per share
prices, which will fluctuate as the values of the Fund's portfolio securities
change.

Additionally, stocks of issuers in a particular industry may be
affected by changes in economic conditions that affect that industry more
than others, or by changes in government regulations, availability of basic
resources or supplies, or other events affecting that industry. At times, the
Fund may increase the relative emphasis of its investments in a particular
industry. 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.

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

RISKS OF SMALL-CAP AND MID-CAP STOCKS. The Fund may invest in stocks of
small- or medium-size companies ("small-cap" or "mid-cap" stocks). Small-cap
companies are often newer companies that may have limited product lines or
markets for their products, limited access to financial resources and less
depth in management skill than larger, more established companies. It may
take a substantial period of time before the Fund realizes a gain on an
investment in a small-cap company, if it realizes any gain at all.

Mid-cap stocks tend to be more sensitive to changes in an issuer's earnings
expectations than the stocks of larger companies. While small- and mid-cap
stocks may offer greater opportunities for long-term capital appreciation
than the stocks of larger, more established companies, they also involve
greater risk of loss and price fluctuation. Since small- and mid-cap
companies typically reinvest a high proportion of earnings in their own
businesses, they may lack the dividend-yield that could help cushion their
total return in a declining market. Many small- and mid-cap stocks are traded
in over-the-counter markets and tend to have lower trading volumes than large
capitalization securities. Therefore, they may be less liquid than stocks of
larger exchange-traded issuers and the Fund could have greater difficulty
selling a security at an acceptable price, especially in periods of market
volatility.

The value of foreign investments may be affected by exchange control
regulations, expropriation or nationalization of a company's assets, foreign
taxes, delays in settlement of transactions, changes in governmental economic
or monetary policy in the U.S. or abroad, or other political and economic
factors.

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

The Fund focuses its investments on stocks for long-term growth. Stock
markets can be volatile, and the prices of the Fund's shares will go up and
down. The Fund generally does not use income-oriented investments to help
cushion the Fund's total return from changes in stock prices. In the
OppenheimerFunds spectrum, the Fund is generally more conservative than
aggressive growth stock funds, but more aggressive than funds that invest in
stocks and bonds.

The Fund's Past Performance

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

The after-tax returns are shown for Class A shares only and are
calculated using the historical highest individual federal marginal income
tax rates in effect during the periods shown, and do not reflect the impact
of state or local taxes. The after-tax returns are calculated based on
certain assumptions mandated by regulation and your actual after-tax returns
may differ from those shown, depending on your individual tax situation. The
after-tax returns set forth below are not relevant to investors who hold
their fund shares through tax-deferred arrangements such as 401(k) plans or
IRAs or to institutional investors not subject to tax. The Fund's past
investment performance, before and after taxes, is not necessarily an
indication of how the Fund will perform in the future.

Annual Total Returns (Class A) (as of 12/31 each year)
[See appendix to prospectus for data in bar chart showing the annual total
return]

Sales charges and taxes are not included in the calculations of return in
this bar chart, and if those charges and taxes were included, the returns may
be less than those shown.
As of December 31, 2004, the year-to-date return before taxes for Class A
shares was 15.25%.
During the period shown in the bar chart, the highest return (not annualized)
before taxes for a calendar quarter was 18.26% (4Qtr98) and the lowest return
(not annualized) before taxes for a calendar quarter was -16.69% (3Qtr01).

-------------------------------------------------------------------------------------
Average Annual Total Returns

------------------------------ 5 Years 10 Years
for the periods ended (or life of (or life of
December 31, 2004 1 Year class, if less) class, if less)

-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Class A Shares (inception

9/16/85) 8.62% 4.84% 10.12%
Return Before Taxes 8.41% 4.68% 8.56%
Return After Taxes on
Distributions 5.88% 4.08% 8.07%
Return After Taxes on
Distributions and Sale of
Fund Shares

-------------------------------------------------------------------------------------
S&P 500 Index (reflects no
deduction for fees, expenses

or taxes) 10.87% -2.30% 12.07%1

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

Class B Shares (inception 9.21% 4.91% 8.38%

10/02/95)
-------------------------------------------------------------------------------------

Class C Shares (inception 13.31% 5.26% 7.09%

05/01/96)
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

Class N Shares (inception 13.85% 6.69% N/A

03/01/01)
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

Class Y Shares (inception 15.78% 6.44% 7.69%

12/16/96)
-------------------------------------------------------------------------------------

1 From 12/31/94.

The Fund's average annual total returns include applicable sales charges: for
Class A, the current maximum initial sales charge of 5.75%; for Class B, the
contingent deferred sales charge of 5% (1-year) and 2% (5-year); and for
Class C and Class N, the 1% contingent deferred sales charge for the 1-year
period. There is no sales charge for Class Y shares. Because Class B shares
convert to Class A shares 72 months after purchase, Class B "life-of-class"
performance does not include any contingent deferred sales charge and uses
Class A performance for the period after conversion. The returns measure the
performance of a hypothetical account and assume that all dividends and
capital gains distributions have been reinvested in additional shares. The
performance of the Fund's Class A shares is compared to the S&P 500 Index, an
unmanaged index of common stocks. The index performance includes reinvestment
of income but does not reflect transaction costs, fees, expenses or taxes.
The Fund's investments vary from those in the index.

Fees and Expenses of the Fund

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

Shareholder Fees (charges paid directly from your investment):

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

% of offering price)
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Maximum Deferred Sales
Charge (Load) (as % of
the lower of the None1 5%2 1%3 1%4 None
original offering price
or redemption proceeds)
--------------------------------------------------------------------------------------

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

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

Management Fees 0.57% 0.57% 0.57% 0.57% 0.57%

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

Distribution and/or 0.24% 1.00% 1.00% 0.50% None
Service (12b-1) Fees

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

Other Expenses 0.26% 0.41% 0.32% 0.38% 0.04%

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

Total Annual Operating 1.07% 1.98% 1.89% 1.45% 0.61%
Expenses

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

Expenses may vary in future years. "Other Expenses" include transfer agent
fees, custodial fees, and accounting and legal expenses that the Fund pays.
The Transfer Agent has voluntarily undertaken to the Fund to limit the
transfer agent fees to 0.35% of average daily net assets per fiscal year for
all classes. That undertaking may be amended or withdrawn at any time.

2. Applies to redemptions in first year after purchase. The contingent
deferred sales charge gradually declines from 5% to 1% in years one
through six and is eliminated after that.

3. Applies to shares redeemed within 12 months of purchase.
4. Applies to shares redeemed within 18 months of a retirement plan's
first purchase of Class N shares.

Class A Shares $678 $897 $1134 $1812

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

Class B Shares $703 $927 $1278 $18701

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

Class C Shares $294 $599 $1031 $2232

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

Class N Shares $249 $462 $798 $1748

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

Class Y Shares $63 $196 $341 $764

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

Class A Shares $678 $897 $1134 $1812

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

Class B Shares $203 $627 $1078 $18701

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

Class C Shares $194 $599 $1031 $2232

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

Class N Shares $149 $462 $798 $1748

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

Class Y Shares $63 $196 $341 $764

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

In the first example, expenses include the initial sales charge for Class A
and the applicable Class B, Class C and Class N contingent deferred sales
charges. In the second example, the Class A expenses include the sales
charge, but Class B, Class C and Class N expenses do not include contingent
deferred sales charges. There is no sales charge on Class Y shares.
1. Class B expenses for years 7 through 10 are based on Class A expenses
since Class B shares automatically convert to Class A shares 72 months
after purchase.

About the Fund's Investments

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

Stock Investments. The Fund invests primarily in a diversified portfolio of
common stocks of issuers that may be of small, medium or large
capitalization, to seek capital growth. The Fund can invest in other
equity securities, including preferred stocks, rights and warrants, and
securities convertible into common stock. The Fund can buy securities
issued by domestic or foreign companies.

Preferred stocks, while a form of equity security, typically have a
fixed dividend that may cause their prices to behave more like those of
debt securities. If interest rates rise, the fixed dividend on
preferred stocks may be less attractive, causing the price of preferred
stocks to decline. While many convertible securities are debt
securities, the Manager considers some of them to be "equity
equivalents" because of their conversion feature. In these cases, their
credit rating has less impact on the investment decision than in the
case of other debt securities. Convertible securities are subject to
credit risk and interest rate risk, discussed below.

The Fund can buy convertible securities rated as low as "B" by Moody's
Investor Services, Inc. or Standard & Poor's Rating Service or having
comparable ratings by other nationally recognized rating organizations
(or, if they are unrated, having a comparable rating assigned by the
Manager). Those ratings are below "investment grade" and the securities
(commonly referred to as "junk bonds") are subject to greater risk of
default by the issuer than investment-grade securities. These
investments are subject to the Fund's policy of not investing more than
10% of its net assets in debt securities.

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

Cash and Cash Equivalents. Under normal market conditions the Fund can invest
up to 15% of its net assets in cash and cash equivalents such as
commercial paper, repurchase agreements, Treasury bills and other
short-term U.S. government securities. This strategy would be used
primarily for cash management or liquidity purposes. To the extent that
the Fund uses this strategy, it might reduce its opportunities to seek
its objective of long-term growth of capital.

Debt Securities. Under normal market conditions, the Fund can invest in debt
securities, such as securities issued or guaranteed by the U.S.
government or its agencies and instrumentalities, foreign government
securities, and foreign and domestic corporate bonds and debentures.
Normally these investments are limited to not more than 10% of the
Fund's net assets, including convertible debt securities.

The debt securities the Fund buys may be rated by nationally recognized
rating organizations or they may be unrated securities assigned an
equivalent rating by the Manager. The Fund's debt investments may be
"investment grade" (that is, rated in the four highest rating
categories of a nationally recognized rating organization) or may be
lower-grade securities rated as low as "B," as described above.

o Credit Risk. Debt securities are subject to credit risk. Credit risk
relates to the ability of the issuer of a security to make interest and
principal payments on the security as they become due. If the issuer fails
to pay interest, the Fund's income might be reduced, and if the issuer
fails to repay principal, the value of that security and of the Fund's
shares might be reduced. A downgrade in an issuer's credit rating or other
adverse news about an issuer can reduce the value of that issuer's
securities. While the Fund's investments in U.S. government securities are
subject to little credit risk, the Fund's other investments in debt
securities, particularly high-yield, lower-grade debt securities are
subject to risks of default. Lower-grade debt securities may be subject to
greater market fluctuations and greater risks of loss of income and
principal than investment-grade debt securities.

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

Derivative Investments. In general terms, a derivative investment is an
investment contract whose value depends on (or is derived from) the
value of an underlying asset, interest rate or index. Options, futures,
mortgage-related securities and "stripped" securities are examples of
derivatives the Fund can use. Currently, the Fund does not use
derivative investments to a significant degree.

o There Are Special Risks In Using Derivative Investments. If the issuer
of the derivative does not pay the amount due, the Fund can lose money on
the investment. Also, the underlying security or investment on which the
derivative is based, and the derivative itself, might not perform the way
the Manager expected it to perform. If that happens, the Fund's share
prices could decline or the Fund could get less income than expected.
Interest rate and stock market changes in the U.S. and abroad may also
influence the performance of derivatives. Some derivative investments held
by the Fund may be illiquid. The Fund has limits on the amount of
particular types of derivatives it can hold. However, using derivatives
can cause the Fund to lose money on its investment and/or increase the
volatility of its share prices.

The Fund can buy and sell options, swaps, futures and forward contracts
for a number of purposes. Some of these strategies would hedge the
Fund's portfolio against price fluctuations. Other hedging strategies,
such as buying futures and call options, would tend to increase the
Fund's exposure to the securities market. The Fund may also try to
manage its exposure to changing interest rates.

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

Portfolio Turnover. The Fund may engage in active or frequent trading to try
to achieve its objective. The Fund's portfolio turnover rate will
fluctuate from year to year, depending on market conditions. Increased
portfolio turnover creates higher brokerage and transaction costs for
the Fund (and may reduce performance). If the Fund realizes capital
gains when it sells its portfolio investments, it must generally pay
those gains out to shareholders, increasing their taxable
distributions. The Financial Highlights table at the end of this
Prospectus shows the Fund's portfolio turnover rates during prior
fiscal years.

PORTFOLIO HOLDINGS. The Fund's portfolio holdings are included in
semi-annual and annual reports that are distributed to shareholders of the
Fund within 60 days after the close of the period for which such report is
being made. The Fund also makes disclosures of the portfolio securities
holdings in Statement of Investments under Form N-Q, filed with the SEC no
later than 60 days after the close of the first and third fiscal quarters.
These additional quarterly filings are publicly available at the SEC.
Therefore, portfolio holdings of the Fund are made publicly available no
later than 60 days after the close of the Fund's fiscal quarter.

A description of the Fund's policies and procedures with respect to the
disclosure of the Fund's portfolio securities is available in the Fund's
Statement of Additional Information.

How the Fund Is Managed

Portfolio Manager. The Fund is managed by Christopher Leavy. Mr. Leavy
is a Senior Vice President of the Manager, since (September
2000), a Vice President of the Fund and an officer of other
Oppenheimer funds. Prior to joining the Manager in September
2000, he was a portfolio manager of Morgan Stanley Dean Witter
Investment Management (1997 - September 2000).

Advisory Fees. Under the Investment Advisory Agreement, the Fund pays the
Manager an advisory fee at an annual rate that declines on additional
assets as the Fund grows: 0.625% of the first $300 million of average
annual net assets of the Fund, 0.500% of the next $100 million, and
0.450% of average annual net assets in excess of $400 million. The
Fund's management fee for the fiscal year ended October 31, 2004, was
0.57% of average annual net assets for each class of shares.

Pending Litigation. A consolidated amended complaint has been filed as
putative derivative and class actions against the Manager, Distributor
and Transfer Agent, as well as 51 of the Oppenheimer funds (collectively
the "funds") including the Fund, 31 present and former Directors or
Trustees and 9 present and former officers of certain of the Funds. This
complaint, filed in the U.S. District Court for the Southern District of
New York on January 10, 2005, consolidates into a single action and
amends six individual previously-filed putative derivative and class
action complaints. Like those prior complaints, the complaint alleges
that the Manager charged excessive fees for distribution and other
costs, improperly used assets of the funds in the form of directed
brokerage commissions and 12b-1 fees to pay brokers to promote sales of
the funds, and failed to properly disclose the use of fund assets to
make those payments in violation of the Investment Company Act and the
Investment Advisers Act of 1940. Also, like those prior complaints, the
complaint further alleges that by permitting and/or participating in
those actions, the Directors/Trustees and the Officers breached their
fiduciary duties to Fund shareholders under the Investment Company Act
and at common law. The complaint seeks unspecified compensatory and
punitive damages, rescission of the funds' investment advisory
agreements, an accounting of all fees paid, and an award of attorneys'
fees and litigation expenses.

The Manager and the Distributor believe the claims asserted in these law
suits to be without merit, and intend to defend the suits vigorously.
The Manager and the Distributor do not believe that the pending actions
are likely to have a material adverse effect on the Fund or on their
ability to perform their respective investment advisory or distribution
agreements with the Fund.

ABOUT YOUR ACCOUNT

How to Buy Shares

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

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

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

Additionally, the dividends payable to Class B, Class C and Class N
shareholders will be reduced by the additional expenses borne by those
classes that are not borne by Class A or Class Y shares, such as the
Class B, Class C and Class N asset-based sales charge described below
and in the Statement of Additional Information.

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

Amount of Purchase Front-End Sales Front-End Sales Concession As a
Charge As a

Due to rounding, the actual sales charge for a particular transaction may be
higher or lower than the rates listed above.

Can You Reduce Class A Sales Charges? You and your spouse may be eligible to
buy Class A shares of the Fund at reduced sales charge rates set forth in the
table above under the Fund's "Right of Accumulation" or a "Letter of Intent."
The Fund reserves the right to modify or to cease offering these programs at
any time.
o Right of Accumulation. To qualify for the reduced Class A sales charge
that would apply to a larger purchase than you are currently making
(as shown in the table above), you can add the value of any Class A,
Class B or, effective March 18, 2005, Class C shares of the Fund or
other Oppenheimer funds that you or your spouse currently own, or
are currently purchasing, to the value of your Class A share
purchase. Your Class A shares of Oppenheimer Money Market Fund, Inc.
or Oppenheimer Cash Reserves on which you did not pay a sales charge
will not be counted for this purpose. In totaling your holdings, you
may count shares held in your individual accounts (including IRAs
and 403(b) plans), your joint accounts with your spouse, or accounts
you or your spouse hold as trustees or custodians on behalf of your
children who are minors. A fiduciary can count all shares purchased
for a trust, estate or other fiduciary account (including employee
benefit plans for the same employer) that has multiple accounts. To
qualify for this Right of Accumulation, if you are buying shares
directly from the Fund you must inform the Fund's Distributor of
your eligibility and holdings at the time of your purchase. If you
are buying shares through your financial intermediary you must
notify your intermediary of your eligibility for this Right of
Accumulation at the time of your purchase.

To count shares of eligible Oppenheimer funds held in accounts
at other intermediaries under this Right of Accumulation, you may be
requested to provide the Distributor or your current intermediary
(depending on the way you are buying your shares) a copy of each
account statement showing your current holdings of the Fund or other
eligible Oppenheimer funds, including statements for accounts held
by you and your spouse or in retirement plans or trust or custodial
accounts for minor children as described above. The Distributor or
intermediary through which you are buying shares will combine the
value of all your eligible Oppenheimer fund accounts based on the
current offering price per share to determine what Class A sales
charge breakpoints you may qualify for on your current purchase.

o Letters of Intent. You may also qualify for reduced Class A sales
charges by submitting a Letter of Intent to the Distributor. A
Letter of Intent is a written statement of your intention to
purchase a specified value of Class A, Class B or (effective March
18th) Class C shares of the Fund or other Oppenheimer funds over a
13-month period. The total amount of your intended purchases of
Class A, Class B and (effective March 18th) Class C shares will
determine the reduced sales charge rate that will apply to your
Class A share purchases of the Fund during that period. You can
choose to include purchases made up to 90 days before the date that
you submit a Letter. Your Class A shares of Oppenheimer Money
Market Fund, Inc. or Oppenheimer Cash Reserves on which you did not
pay a sales charge will not be counted for this purpose. Submitting
a Letter of Intent does not obligate you to purchase the specified
amount of shares. You can also apply the Right of Accumulation to
these purchases.

If you do not complete the Letter of Intent, the front-end
sales charge you paid on your purchases will be recalculated to
reflect the actual value of shares you purchased. A certain portion
of your shares will be held in escrow by the Fund's Transfer Agent
for this purpose. Please refer to "How to Buy Shares - Letters of
Intent" in the Fund's Statement of Additional Information for more
complete information.

Other Special Sales Charge Arrangements and Waivers. The Fund and the
Distributor offer other opportunities to purchase shares without front-end or
contingent deferred sales charges under the programs described below. The
Fund reserves the right to amend or discontinue these programs at any time
without prior notice.
o Dividend Reinvestment. Dividends and/or capital gains distributions
received by a shareholder from the Fund may be reinvested in shares
of the Fund or any of the other Oppenheimer funds without a sales
charge, at the net asset value per share in effect on the payable
date. You must notify the Transfer Agent in writing to elect this
option and must have an existing account in the fund selected for
reinvestment.
o Exchanges of Shares. Shares of the Fund may be exchanged for shares of
certain other Oppenheimer funds at net asset value per share at the
time of exchange, without sales charge, and shares of the Fund can
be purchased by exchange of shares of certain other Oppenheimer
funds on the same basis. Please refer to "How to Exchange Shares" in
this Prospectus and in the Statement of Additional Information for
more details, including a discussion of circumstances in which sales
charges may apply on exchanges.
o Reinvestment Privilege. Within six months of a redemption of certain
Class A and Class B shares, the proceeds may be reinvested in Class
A shares of the Fund without sales charge. This privilege applies to
redemptions of Class A shares that were subject to an initial sales
charge or Class A or Class B shares that were subject to a
contingent deferred sales charge when redeemed. The investor must
ask the Transfer Agent for that privilege at the time of
reinvestment and must identify the account from which the redemption
was made.
o Other Special Reductions and Waivers. The Fund and the Distributor
offer additional arrangements to reduce or eliminate front-end sales
charges or to waive contingent deferred sales charges for certain
types of transactions and for certain classes of investors
(primarily retirement plans that purchase shares in special programs
through the Distributor). These are described in greater detail in
Appendix C to the Statement of Additional Information, which may be
ordered by calling 800-225-5677 or through the OppenheimerFunds
website, at www.oppenheimerfunds.com (follow the hyperlinks "Access
------------------------
Accounts and Services" - "Forms & Literature" - "Order Literature" -
"Statements of Additional Information"). A description of these
waivers and special sales charge arrangements is also available for
viewing on the OppenheimerFunds website (under the hyperlinks
"Research Funds - Fund Documents - View a description . . ."). To
receive a waiver or special sales charge rate under these programs,
the purchaser must notify the Distributor (or other financial
intermediary through which shares are being purchased) at the time
of purchase or notify the Transfer Agent at the time of redeeming
shares for those waivers that apply to contingent deferred sales
charges.
o Purchases by Certain Retirement Plans. There is no initial sales charge
on purchases of Class A shares of the Fund by (1) retirement plans
that have $10 million or more in plan assets and that have entered
into a special agreement with the Distributor and by (2) retirement
plans that are part of a retirement plan product or platform offered
by banks, broker-dealers, financial advisors, insurance companies or
record-keepers that have entered into a special agreement with the
Distributor for this purpose. The Distributor currently pays dealers
of record concessions in an amount equal to 0.25% of the purchase
price of Class A shares by those retirement plans from its own
resources at the time of sale, subject to certain exceptions
described in "Retirement Plans" in the Statement of Additional
Information. No contingent deferred sales charge is charged upon the
redemption of such shares.

-------------------------------------------------------------------------------
Years Since Beginning of Month in Contingent Deferred Sales Charge on
Which Purchase Order was Accepted Redemptions in That Year
(As % of Amount Subject to Charge)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
0 - 1 5.0%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
1 - 2 4.0%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
2 - 3 3.0%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
3 - 4 3.0%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
4 - 5 2.0%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
5 - 6 1.0%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
More than 6 None
-------------------------------------------------------------------------------
In the table, a "year" is a 12-month period. In applying the contingent
deferred sales charge, all purchases are considered to have been made on the
first regular business day of the month in which the purchase was made.

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

WHO CAN BUY CLASS Y SHARES? Class Y shares are sold at net asset value per
share without a sales charge directly to institutional investors that have
special agreements with the Distributor for this purpose. They may include
insurance companies, registered investment companies, employee benefit plans
and Section 529 plans, among others. Individual investors cannot buy Class Y
shares directly.

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

DISTRIBUTION AND SERVICE (12b-1) PLANS.

Special Investor Services

How to Sell Shares

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

How to Exchange Shares

o Shares of the fund selected for exchange must be available for sale in
your state of residence.

In some cases, sales charges may be imposed on exchange transactions.
In general, a contingent deferred sales charge (CDSC) is not imposed on
exchanges of shares that are subject to a CDSC. However, if you exchange
shares that are subject to a CDSC, the CDSC holding period will be carried
over to the acquired shares, and the CDSC may be imposed if those shares are
redeemed before the end of the CDSC holding period.

HOW DO YOU SUBMIT EXCHANGE REQUESTS? Exchanges may be requested in writing,
by telephone or internet, or by establishing an Automatic Exchange Plan.

Automatic Exchange Plan. Shareholders can authorize the Transfer Agent to
exchange a pre-determined amount of shares automatically on a monthly,
quarterly, semi-annual or annual basis.

Please refer to "How to Exchange Shares" in the Statement of Additional
Information for more details.

ARE THERE LIMITATIONS ON FREQUENT PURCHASES, REDEMPTIONS AND EXCHANGES?

Therefore, the Manager and the Fund's Board of Trustees have adopted the
following policies and procedures to detect and prevent frequent and/or
excessive exchanges, and/or purchase and redemption activity, while balancing
the needs of investors who seek liquidity from their investment and the
ability to exchange shares as investment needs change. There is no guarantee
that the policies and procedures described below will be sufficient to
identify and deter excessive short-term trading.

o Timing of Exchanges. Exchanged shares are normally redeemed from one
fund and the proceeds are reinvested in the fund selected for exchange
on the same regular business day on which the Transfer Agent or its
agent (such as a financial intermediary holding the investor's shares
in an "omnibus" or "street name" account) receives an exchange request
that conforms to these policies. The request must be received by the
close of The New York Stock Exchange that day, which is normally 4:00
p.m. Eastern time, but may be earlier on some days. However, the
Transfer Agent may delay the reinvestment of proceeds from an exchange
for up to five business days if it determines, in its discretion, that
an earlier transmittal of the redemption proceeds to the receiving fund
would be detrimental to either the fund from which the exchange is made
or the fund to which the exchange is made.

o Limits on Disruptive Activity. The Transfer Agent may, in its
discretion, limit or terminate trading activity by any person, group or
account that it believes would be disruptive, even if the activity has
not exceeded the policy outlined in this Prospectus. The Transfer Agent
may review and consider the history of frequent trading activity in all
accounts in the Oppenheimer funds known to be under common ownership or
control as part of the Transfer Agent's procedures to detect and deter
excessive trading activity.

o Exchanges of Client Accounts by Financial Advisers. The Fund and the
Transfer Agent permit dealers and financial intermediaries to submit
exchange requests on behalf of their customers (unless the customer has
revoked that authority). The Distributor and/or the Transfer Agent have
agreements with a number of financial intermediaries that permit them
to submit exchange orders in bulk on behalf of their clients. Those
intermediaries are required to follow the exchange policies stated in
this Prospectus and to comply with additional, more stringent
restrictions. Those additional restrictions include limitations on the
funds available for exchanges, the requirement to give advance notice
of exchanges to the Transfer Agent, and limits on the amount of client
assets that may be invested in a particular fund. A fund or the
Transfer Agent may limit or refuse bulk exchange requests submitted by
such financial intermediaries if, in the Transfer Agent's judgment,
exercised in its discretion, the exchanges would be disruptive to any
of the funds involved in the transaction.

o Right to Refuse Exchange and Purchase Orders. The Distributor and/or
the Transfer Agent may refuse any purchase or exchange order in their
discretion and are not obligated to provide notice before rejecting an
order. The Fund may amend, suspend or terminate the exchange privilege
at any time. You will receive 60 days' notice of any material change in
the exchange privilege unless applicable law allows otherwise.

o Right to Terminate or Suspend Account Privileges. The Transfer Agent
may send a written warning to direct shareholders who the Transfer
Agent believes may be engaging in excessive purchases, redemptions
and/or exchange activity and reserves the right to suspend or terminate
the ability to purchase shares and/or exchange privileges for any
account that the Transfer Agent determines, in carrying out these
policies and in the exercise of its discretion, has engaged in
disruptive or excessive trading activity with or without such warning.

o Omnibus Accounts. If you hold your shares of the Fund through a
financial intermediary such as a broker-dealer, a bank, an insurance
company separate account, an investment adviser, an administrator or
trustee of a retirement plan or 529 plan that holds your shares in an
account under its name (these are sometimes referred to as "omnibus" or
"street name" accounts), that financial intermediary may impose its own
restrictions or limitations to discourage short-term or excessive
trading. You should consult your financial intermediary to find out
what trading restrictions, including limitations on exchanges, they may
apply.

While the Fund, the Distributor, the Manager and the Transfer Agent encourage
financial intermediaries to apply the Fund's policies to their customers who
invest indirectly in the Fund, the Transfer Agent may not be able to detect
excessive short term trading activity facilitated by, or in accounts
maintained in, the "omnibus" or "street name" accounts of a financial
intermediary. Therefore the Transfer Agent might not be able to apply this
policy to accounts such as (a) accounts held in omnibus form in the name of a
broker-dealer or other financial institution, or (b) omnibus accounts held in
the name of a retirement plan or 529 plan trustee or administrator, or (c)
accounts held in the name of an insurance company for its separate
account(s), or (d) other accounts having multiple underlying owners but
registered in a manner such that the underlying beneficial owners are not
identified to the Transfer Agent.

However, the Transfer Agent will attempt to monitor overall purchase and
redemption activity in those accounts to seek to identify patterns that may
suggest excessive trading by the underlying owners. If evidence of possible
excessive trading activity is observed by the Transfer Agent, the financial
intermediary that is the registered owner will be asked to review account
activity, and to confirm to the Transfer Agent and the fund that appropriate
action has been taken to curtail any excessive trading activity. However, the
Transfer Agent's ability to monitor and deter excessive short-term trading in
omnibus or street name accounts ultimately depends on the capability and
cooperation of the financial intermediaries controlling those accounts.

Additional Policies and Procedures. The Fund's Board has adopted additional
policies and procedures to detect and prevent frequent and/or excessive
exchanges and purchase and redemption activity. Those additional policies and
procedures will take effect on June 20, 2005:

o 30-Day Limit. A direct shareholder may exchange some or all of the
shares of the Fund held in his or her account to another eligible
Oppenheimer fund once in a 30 calendar-day period. When shares are
exchanged into a fund account, that account will be "blocked" from
further exchanges into another fund for a period of 30 calendar days
from the date of the exchange. The block will apply to the full account
balance and not just to the amount exchanged into the account. For
example, if a shareholder exchanged $1,000 from one fund into another
fund in which the shareholder already owned shares worth $10,000, then,
following the exchange, the full account balance ($11,000 in this
example) would be blocked from further exchanges into another fund for
a period of 30 calendar days. A "direct shareholder" is one whose
account is registered on the Fund's books showing the name, address and
tax ID number of the beneficial owner.

o Exchanges Into Money Market Funds. A direct shareholder will be
permitted to exchange shares of a stock or bond fund for shares of a
money market fund at any time, even if the shareholder has exchanged
shares into the stock or bond fund during the prior 30 days. However,
all of the shares held in that money market fund would then be blocked
from further exchanges into another fund for 30 calendar days.

o Dividend Reinvestments/B Share Conversions. Reinvestment of dividends
or distributions from one fund to purchase shares of another fund and
the conversion of Class B shares into Class A shares will not be
considered exchanges for purposes of imposing the 30-day limit.

o Asset Allocation. Third-party asset allocation and rebalancing
programs will be subject to the 30-day limit described above. Asset
allocation firms that want to exchange shares held in accounts on
behalf of their customers must identify themselves to the Transfer
Agent and execute an acknowledgement and agreement to abide by these
policies with respect to their customers' accounts. "On-demand"
exchanges outside the parameters of portfolio rebalancing programs will
be subject to the 30-day limit. However, investment programs by other
Oppenheimer "funds-of-funds" that entail rebalancing of investments in
underlying Oppenheimer funds will not be subject to these limits.

o Automatic Exchange Plans. Accounts that receive exchange proceeds
through automatic or systematic exchange plans that are established
through the Transfer Agent will not be subject to the 30-day block as a
result of those automatic or systematic exchanges (but may be blocked
from exchanges, under the 30-day limit, if they receive proceeds from
other exchanges).

Shareholder Account Rules and Policies

The offering of shares may be suspended during any period in which the
determination of net asset value is suspended, and the offering may be
suspended by the Board of Directors at any time the Board believes it
is in the Fund's best interest to do so.
Telephone transaction privileges for purchases, redemptions or exchanges may
be modified, suspended or terminated by the Fund at any time. The Fund
will provide you notice whenever it is required to do so by applicable
law. If an account has more than one owner, the Fund and the Transfer
Agent may rely on the instructions of any one owner. Telephone
privileges apply to each owner of the account and the dealer
representative of record for the account unless the Transfer Agent
receives cancellation instructions from an owner of the account.
The Transfer Agent will record any telephone calls to verify data concerning
transactions and has adopted other procedures to confirm that telephone
instructions are genuine, by requiring callers to provide tax
identification numbers and other account data or by using PINs, and by
confirming such transactions in writing. The Transfer Agent and the
Fund will not be liable for losses or expenses arising out of telephone
instructions reasonably believed to be genuine.
Redemption or transfer requests will not be honored until the Transfer Agent
receives all required documents in proper form. From time to time, the
Transfer Agent in its discretion may waive certain of the requirements
for redemptions stated in this Prospectus.
Dealers that perform account transactions for their clients by participating
in NETWORKING through the National Securities Clearing Corporation are
responsible for obtaining their clients' permission to perform those
transactions, and are responsible to their clients who are shareholders
of the Fund if the dealer performs any transaction erroneously or
improperly.
The redemption price for shares will vary from day to day because the value
of the securities in the Fund's portfolio fluctuates. The redemption
price, which is the net asset value per share, will normally differ for
each class of shares. The redemption value of your shares may be more
or less than their original cost.
Payment for redeemed shares ordinarily is made in cash. It is forwarded by
check, or through AccountLink or by Federal Funds wire (as elected by
the shareholder) within seven days after the Transfer Agent receives
redemption instructions in proper form. However, under unusual
circumstances determined by the Securities and Exchange Commission,
payment may be delayed or suspended. For accounts registered in the
name of a broker-dealer, payment will normally be forwarded within
three business days after redemption.
The Transfer Agent may delay processing any type of redemption payment as
described under "How to Sell Shares" for recently purchased shares, but
only until the purchase payment has cleared. That delay may be as much
as 10 days from the date the shares were purchased. That delay may be
avoided if you purchase shares by Federal Funds wire or certified
check, or arrange with your bank to provide telephone or written
assurance to the Transfer Agent that your purchase payment has cleared.

Dividends, Capital Gains and Taxes

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

Financial Highlights

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

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

CLASS A YEAR ENDED OCTOBER 31, 2004
2003 2002 2001 2000
------------------------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 18.46 $
14.78 $ 15.93 $ 17.06 $ 20.69
------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .13
1 .04 .07 .03 .16
Net realized and unrealized gain (loss) 2.61
3.67 (1.21) (.98) (.65)

---------------------------------------------------------------------------
Total from investment operations 2.74
3.71 (1.14) (.95) (.49)
------------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.05)
(.03) (.01) (.18) (.16)
Distributions from net realized gain
-- -- -- -- (2.98)

---------------------------------------------------------------------------
Total dividends and/or distributions to shareholders (.05)
(.03) (.01) (.18) (3.14)
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 21.15 $
18.46 $ 14.78 $ 15.93 $ 17.06

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

------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 14.85%
25.18% (7.15)% (5.60)% (2.60)%
------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 378,785 $
215,019 $ 141,563 $ 166,285 $ 181,566
------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 303,560 $
166,143 $ 166,319 $ 181,631 $ 234,840
------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 0.66%
0.37% 0.38% 0.19% 0.66%
Total expenses 1.07% 4,5
1.22% 4,5 1.22% 4,5 1.26% 4 1.17% 4
------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate
85% 117% 150% 336% 86%

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

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

26 | OPPENHEIMER VALUE FUND

CLASS B YEAR ENDED OCTOBER 31,
2004 2003 2002 2001 2000
----------------------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 18.18 $
14.64 $ 15.89 $ 16.99 $ 20.58
----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.05)
1 (.06) (.10) (.11) (.05)
Net realized and unrealized gain (loss)
2.55 3.60 (1.15) (.97) (.56)

------------------------------------------------------------------------
Total from investment operations
2.50 3.54 (1.25) (1.08) (.61)
----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income
-- -- -- (.02) --
Distributions from net realized gain
-- -- -- -- (2.98)

------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders
-- -- -- (.02) (2.98)
----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 20.68 $
18.18 $ 14.64 $ 15.89 $ 16.99

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

----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 13.75%
24.18% (7.87)% (6.34)% (3.28)%
----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 85,683 $
60,858 $ 47,323 $ 57,584 $ 64,287
----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 77,341 $
51,476 $ 56,200 $ 65,115 $ 79,239
----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (0.24)%
(0.44)% (0.40)% (0.57)% (0.14)%
Total expenses
1.98% 2.14% 2.01% 2.01% 1.93%
Expenses after payments and waivers
and reduction to custodian expenses N/A
4 2.05% N/A 4,5 N/A 4 N/A 4
----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate
85% 117% 150% 336% 86%

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

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

27 | OPPENHEIMER VALUE FUND

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

CLASS C YEAR ENDED OCTOBER 31,
2004 2003 2002 2001 2000
-----------------------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 17.93 $
14.44 $ 15.67 $ 16.77 $ 20.35
-----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.03)
1 .03 (.01) (.08) (.04)
Net realized and unrealized gain (loss)
2.51 3.46 (1.22) (.99) (.56)

-------------------------------------------------------------------------
Total from investment operations
2.48 3.49 (1.23) (1.07) (.60)
-----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income
-- -- -- (.03) --
Distributions from net realized gain
-- -- -- -- (2.98)

-------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders
-- -- -- (.03) (2.98)
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 20.41 $
17.93 $ 14.44 $ 15.67 $ 16.77

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

-----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 13.83%
24.17% (7.85)% (6.38)% (3.27)%
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 79,501 $
32,625 $ 13,466 $ 10,494 $ 9,849
-----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 61,387 $
21,366 $ 12,977 $ 11,088 $ 11,975
-----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (0.17)%
(0.49)% (0.41)% (0.56)% (0.14)%
Total expenses 1.89%
4,5 2.07% 4,5 2.00% 4,5 2.01% 4 1.93% 4
-----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate
85% 117% 150% 336% 86%

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

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

28 | OPPENHEIMER VALUE FUND

CLASS N YEAR ENDED OCTOBER 31,
2004 2003 2002 2001 1
-------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
-------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 18.25 $
14.68 $ 15.90 $ 18.08
-------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .06
2 .03 .05 (.02)
Net realized and unrealized gain (loss)
2.56 3.59 (1.22) (2.16)

---------------------------------------------------------
Total from investment operations
2.62 3.62 (1.17) (2.18)
-------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income
(.07) (.05) (.05) --
Distributions from net realized gain
-- -- -- --

---------------------------------------------------------
Total dividends and/or distributions to shareholders
(.07) (.05) (.05) --
-------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 20.80 $
18.25 $ 14.68 $ 15.90

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

-------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 14.39%
24.70% (7.41)% (12.06)%
-------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
-------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 33,100 $
7,417 $ 1,201 $ 12
-------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 23,344 $
3,275 $ 508 $ 5
-------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income (loss) 0.28%
(0.03)% 0.00% (0.45)%
Total expenses
1.45% 1.61% 1.49% 1.61%
Expenses after payments and waivers and reduction
to custodian expenses N/A
5,6 1.55% N/A 5,6 N/A 5
-------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate
85% 117% 150% 336%

1. For the period from March 1, 2001 (inception of offering) to October 31,
2001.

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

3. Assumes an investment on the business day before the first day of the
fiscal period, with all dividends and distributions reinvested in additional shares
on the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.

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

5. Reduction to custodian expenses less than 0.01%.

6. Voluntary waiver of transfer agent fees less than 0.01%.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

29 | OPPENHEIMER VALUE FUND

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

CLASS Y YEAR ENDED OCTOBER 31,
2004 2003 2002 2001 2000
----------------------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 18.79 $
14.96 $ 16.20 $ 17.07 $ 20.72
----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .24 1
(1.86) 1 .06 1 .10 1 .17 1
Net realized and unrealized gain (loss)
2.62 5.71 1 (1.21) 1 (.97) 1 (.63) 1

------------------------------------------------------------------------
Total from investment operations
2.86 3.85 (1.15) (.87) (.46)
----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income
(.11) (.02) (.09) -- (.21)
Distributions from net realized gain
-- -- -- -- (2.98)

------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders
(.11) (.02) (.09) -- (3.19)
----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 21.54 $
18.79 $ 14.96 $ 16.20 $ 17.07

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

----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 15.30%
25.78% (7.18)% (5.10)% (2.42)%
----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 31,914 $
2,617 $ 1,074 $ 638 $ 1
----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 8,398 $
1,558 $ 955 $ 155 $ 48,714
----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income
1.17% 0.76% 0.33% 0.62% 1.06%
Total expenses
0.61% 1.19% 3.77% 1.20% 0.97%
Expenses after payments and waivers and
reduction to custodian expenses N/A
4 0.80% 1.23% 0.83% N/A 4
----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate
85% 117% 150% 336% 86%

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

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

INFORMATION AND SERVICES

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

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

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

The Fund's shares are distributed by: [logo] OppenheimerFunds
Distributor, Inc.
The Fund's SEC File No.: 811-3346
PR0375.001.0205
Printed on recycled paper

Appendix to Prospectus of
Oppenheimer Value Fund

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

Calendar Annual
Year Ended Total Returns

1995 36.40%
1996 18.38%
1997 24.00%
1998 8.54%

1999 -4.71%
2000 -1.54%
2001 2.98%
2002 -13.03%
2003 32.22%
2004 15.25%

Oppenheimer Value 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 February 28, 2005

Contents Page

About the Fund

Additional Information About the Fund's Investment Policies and Risks... 2
The Fund's Investment Policies....................................... 2
Other Investment Techniques and Strategies........................... 6
Other Investment Restrictions........................................ 29
Disclosure of Portfolio Holdings..................................... 31
How the Fund is Managed................................................. 35
Organization and History............................................. 35
Board of Directors and Oversight Committees.......................... 36
Directors and Officers of the Fund................................... 37
The Manager.......................................................... 46
Brokerage Policies of the Fund.......................................... 49
Distribution and Service Plans.......................................... 51
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 Registered Public Accounting Firm's Report.................. 85
Financial Statements ................................................... 86

ABOUT THE FUND

Additional Information About the Fund's Investment Policies and Risks

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

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

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

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

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

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

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

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

|X| Preferred Stocks. Preferred stocks are equity securities but
have certain attributes of debt securities. Preferred stock, unlike common
stock, has a stated dividend rate payable from the corporation's earnings.
Preferred stock dividends may be cumulative or non-cumulative, participating,
or auction rate. "Cumulative" dividend provisions require all or a portion of
prior unpaid dividends to be paid before the issuer can pay dividends on common
shares.

|X| Foreign Securities. The Fund can purchase up to 25% of its total assets
in foreign securities. "Foreign securities" include equity and debt securities
of companies organized under the laws of countries other than the United States
and debt securities of foreign governments and their agencies and
instrumentalities. Those securities may be traded on foreign securities
exchanges or in the foreign over-the-counter markets.

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

|X| Passive Foreign Investment Companies. Some securities of corporations
domiciled outside the U.S. which the Fund may purchase, may be considered
passive foreign investment companies ("PFICs") under U.S. tax laws. PFICs are
those foreign corporations which generate primarily passive income. They tend
to be growth companies or "start-up" companies. For federal tax purposes, a
corporation is deemed a PFIC if 75% or more of the foreign corporation's gross
income for the income year is passive income or if 50% or more of its assets
are assets that produce or are held to produce passive income. Passive income
is further defined as any income to be considered foreign personal holding
company income within the subpart F provisions defined by IRCss.954.

Investing in PFICs involves the risks associated with investing in
foreign securities, as described above. There are also the risks that the Fund
may not realize that a foreign corporation it invests in is a PFIC for federal
tax purposes. Federal tax laws impose severe tax penalties for failure to
properly report investment income from PFICs. Following industry standards, the
Fund makes every effort to ensure compliance with federal tax reporting of
these investments. PFICs are considered foreign securities for the purposes of
the Fund's minimum percentage requirements or limitations of investing in
foreign securities.

Subject to the limits under the Investment Company Act of 1940 (the
"Investment Company Act"), the Fund may also invest in foreign mutual funds
which are also deemed PFICs (since nearly all of the income of a mutual fund is
generally passive income). Investing in these types of PFICs may allow exposure
to various countries because some foreign countries limit, or prohibit, all
direct foreign investment in the securities of companies domiciled therein.

In addition to bearing their proportionate share of a fund's expenses
(management fees and operating expenses), shareholders will also indirectly
bear similar expenses of such entities. Additional risks of investing in other
investment companies are described below under "Investment in Other Investment
Companies."

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

The Fund's debt investments can include investment-grade and
non-investment-grade bonds (commonly referred to as "junk bonds").
Investment-grade bonds are bonds rated at least "Baa" by Moody's Investors
Service, Inc., ("Moody's") or at least "BBB" by Standard & Poor's Rating
Services ("S&P") or Fitch, Inc. ("Fitch") or that have comparable ratings by
another nationally recognized rating organization. In making investments in
debt securities, the Manager may rely to some extent on the ratings of ratings
organizations or it may use its own research to evaluate a security's
credit-worthiness. If the securities that the Fund buys are unrated, to be
considered part of the Fund's holdings of investment-grade securities, they
must be judged by the Manager to be of comparable quality to bonds rated as
investment grade by a rating organization. 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 invest a substantial portion of its assets in lower-grade debt
securities. Because lower-grade securities tend to offer higher yields than
investment-grade securities, the Fund may invest in lower grade securities if
the Manager is trying to achieve greater income (and, in some cases, the
appreciation possibilities of lower-grade securities might be a reason they are
selected for the Fund's portfolio). High-yield convertible debt securities
might be selected as "equity substitutes," as described above but are subject
to the Fund's limitation on its investment in debt securities as stated in the
Prospectus.

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

o 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.

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.

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

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.

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.

|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.

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| "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.

The yields to maturity of I/Os and P/Os are very sensitive to principal
repayments (including prepayments) on the underlying mortgages. If the
underlying mortgages experience greater than anticipated prepayments of
principal, the Fund might not fully recoup its investment in an I/O based on
those assets. If underlying mortgages experience less than anticipated
prepayments of principal, the yield on the P/Os based on them could decline
substantially. The market for some of these securities may be limited, making
it difficult for the Fund to dispose of its holdings at an acceptable price.

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

o Bank Obligations. The Fund can buy time deposits, certificates of deposit
and bankers' acceptances. They must be :
o obligations issued or guaranteed by a domestic or foreign bank (including
a foreign branch of a domestic bank) having total assets of
at least $1 billion,
o banker's acceptances (which may or may not be supported by letters of
credit) only if guaranteed by a U.S. commercial bank with
total assets of at least U.S. $1 billion.

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

When such transactions are negotiated, the price (which is generally
expressed in yield terms) is fixed at the time the commitment is made.
Delivery and payment for the securities take place at a later date. The
securities are subject to change in value from market fluctuations during the
period until settlement. The value at delivery may be less than the purchase
price. For example, changes in interest rates in a direction other than that
expected by the Manager before settlement will affect the value of such
securities and may cause a loss to the Fund. During the period between purchase
and settlement, the Fund makes no payment to the issuer and no interest accrues
to the Fund from the investment until it receives the security at settlement.
There is a risk of loss to the Fund if the value of the security changes prior
to the settlement date, and there is the risk that the other party may not
perform.

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

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

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

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. 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. 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.

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.

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.

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.

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

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.

Other Investment Restrictions

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.

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

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

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

o The third-party recipient must first submit a request for release of Fund
portfolio holdings, explaining the business reason for the request;
o Senior officers (a Senior Vice President or above) in the Investment
Advisor's Portfolio and Legal departments must approve the
completed request for release of Fund portfolio holdings; and
o The third-party recipient must sign the Investment Advisor's portfolio
holdings non-disclosure agreement before receiving the data,
agreeing to keep confidential information that is not publicly
available regarding a Fund's holdings and agreeing not to trade
directly or indirectly based on the information.

Portfolio holdings information of a Fund may be provided, under limited
circumstances, to brokers and dealers or with whom the Fund trades and/or
entities that provide investment coverage and/or analytical information
regarding the Fund's portfolio, provided that there is a legitimate investment
reason for providing the information to the broker or dealer or other entity.
Month-end portfolio holdings information may, under this procedure, be provided
to vendors providing research information and/or analytics to the fund, with at
least a 15-day delay after the month end, but in certain cases may be provided
to a broker or analytical vendor with a 1-2 day lag to facilitate the provision
of requested investment information to the manager to facilitate a particular
trade or the portfolio manager's investment process for the Fund. Any third
party receiving such information must first sign the Investment Advisor's
portfolio holdings non-disclosure agreement as a pre-condition to receiving
this information.

o Brokers and dealers in connection with portfolio transactions (purchases
and sales)
o Brokers and dealers to obtain bids or bid and asked prices (if securities
held by a Fund are not priced by the fund's regular pricing
services)
o Dealers to obtain price quotations where the fund is not identified as
the owner

o Response to legal process in litigation matters, such as responses to
subpoenas or in class action matters where the Fund may be part of
the plaintiff class (and seeks recovery for losses on a security)
or a defendant,
o Response to regulatory requests for information (the SEC, NASD, state
securities regulators, and/or foreign securities authorities,
including without limitation requests for information in
inspections or for position reporting purposes),
o To potential sub-advisors of portfolios (but only pursuant to
confidentiality agreements),
o To consultants for retirement plans for plan sponsors/discussions at due
diligence meetings (if entire portfolio holdings are provided,
however, it shall be done only pursuant to a confidentiality
agreement),
o Investment bankers in connection with merger discussions (but only
pursuant to confidentiality agreements)

How the Fund is Managed

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

The Fund currently has five classes of shares: Class A, Class B, Class C,
Class N and Class Y. All classes invest in the same investment portfolio.
Only retirement plans may purchase Class N shares. Only certain institutional
investors may elect to purchase Class Y shares. Each class of shares:
o has its own dividends and distributions,
o pays certain expenses which may be different for the different classes,
o may have a different net asset value,
o may have separate voting rights on matters in which interests of one
class are different from interests of another class, and
o votes as a class on matters that affect that class alone.

Board of Directors and Oversight Committees. The 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 Joel Motley (Chairman), Mary F. Miller, Edward V. Regan and Kenneth A.
Randall. The Audit Committee held 6 meetings during the Fund's fiscal year
ended October 31, 2004. 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 G. Galli
(Chairman), Joel Motley and Phillip A. Griffiths. The Regulatory & Oversight
Committee held 6 meetings during the Fund's fiscal year ended October 31, 2004.
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 Phillip A. Griffiths
(Chairman), Kenneth A. Randall and Russell S. Reynolds, Jr. The Governance
Committee held 6 meetings during the Fund's fiscal year ended October 31, 2004.
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. Should the Board determine that a vacancy
exists or is likely to exist on the Board, the Governance Committee of the
Board shall consider any candidates for Board membership recommended by the
shareholders of the Fund. Any shareholders wishing to submit a nominee for
election to the Board may do so by mailing their submission to the offices of
OppenheimerFunds, Inc., Two World Financial Center, 225 Liberty Street - 11th
Floor, New York, NY 10281-1008, to the attention of the Chair of the Governance
Committee. The Committee may also consider candidates proposed by any Board
member(s), executive search firm, or other person or entity as may be permitted
by the Committee's charter, the Board I Governance Guidelines, or other Board I
policy. The Committee may consider such persons at such time as it meets to
consider possible nominees. The Committee, however, reserves sole discretion to
determine the candidates for Board membership (both interested and
disinterested) to recommend to the Board and/or shareholders and may identify
candidates other than those submitted by shareholders. The Committee may, but
need not, consider the advice and recommendation of the Manager and its
affiliates in selecting nominees.

The members of the Proxy Committee are Edward V. Regan (Chairman),
Russell S. Reynolds, Jr. and John V. Murphy. The Proxy Committee held 1
meeting during the Fund's fiscal year ended October 31, 2004. The Proxy
Committee provides the Board with recommendations for proxy voting and monitors
proxy voting by the Fund.

The Fund's Direcotrs and officers, their positions with the Fund, length
of service in such position(s) and principal occupations and business
affiliations during the past five years are listed in the chart below. The
information for each Director also includes the dollar range of shares
beneficially owned in the Fund and the aggregate dollar range of shares
beneficially owned in all registered investment companies in the Oppenheimer
fund family that are overseen by the Director ("Supervised Funds"). All of the
Directors except Mr. Fink and Mr. Murphy are also trustees or directors of each
of the following publicly offered Oppenheimer funds (referred to as "Board I
Funds"). Mr. Murphy is a trustee/director of the funds indicated with an
asterisk and Mr. Fink and Mr. Murphy are both trustees or directors of the
funds indicated with two asterisks.

Oppenheimer AMT-Free Municipals Oppenheimer Global Opportunities Fund**
Oppenheimer Gold & Special Minerals
Oppenheimer AMT-Free New York Municipals** Fund**
Oppenheimer Balanced Fund Oppenheimer Growth Fund**
Oppenheimer California Municipal Fund** Oppenheimer International Growth Fund

Oppenheimer International Small Company

Oppenheimer Capital Appreciation Fund** Fund
Oppenheimer Capital Preservation Fund Oppenheimer Money Market Fund, Inc.**
Oppenheimer Developing Markets Fund Oppenheimer Multi-Sector Income Trust**
Oppenheimer Discovery Fund** Oppenheimer Multi-State Municipal Trust
Oppenheimer Emerging Growth Fund* Oppenheimer Series Fund, Inc.**
Oppenheimer Emerging Technologies Fund* Oppenheimer U.S. Government Trust*
Oppenheimer Enterprise Fund
Oppenheimer Global Fund

Messrs. Leavy, Ferreira, Murphy, Petersen, Vandehey, Vottiero, Wixted and
Zack, and Mses. Bloomberg and Ives respectively hold the same offices with one
or more of the other Board I Funds as with the Fund. As of January 31, 2005,
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.

Name, Principal Occupation(s) During Past 5 Dollar Aggregate
Dollar
Range Of
Shares
Beneficially
Owned in
Years; Range of Any of the

Position(s) Held Other Trusteeships/Directorships Held Shares Oppenheimer
with Fund, by Director; BeneficiallFunds
Length of Service, Number of Portfolios in Fund Complex Owned in Overseen
Age Currently Overseen by Director the Fund by Director
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
As of December 31,

2004

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

Clayton K. Yeutter, Of Counsel (since June 1993) Hogan & None None
Chairman of the Hartson (a law firm); a director
Board of Directors (since 2002) of Danielson Holding
since 2003, Corp. Formerly a director of
Director since 1996 Weyerhaeuser Corp. (1999-April 2004),
Age: 74 Caterpillar, Inc. (1993-December
2002), ConAgra Foods (1993-2001),
Texas Instruments (1993-2001) and FMC
Corporation (1993-2001). Oversees 25

Matthew P. Fink, Director (since October 1991) of None None
Director since 2005 ICI Education Foundation; President
Age: 64 (October 1991-October 2004) of the
Investment Company Institute;
Director (October 1991-October
2004) of ICI Mutual Insurance
Company. Oversees 11 portfolios in
the OppenheimerFunds complex.

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

Robert G. Galli, A trustee or director of other Over Over
Director since 1996 Oppenheimer funds. Oversees 35 $100,000 $100,000
Age: 71 portfolios in the OppenheimerFunds

complex.
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------

Phillip A. A director (since 1991) of the None None
Griffiths, Director Institute for Advanced Study,
since 1999 Princeton, N.J., a director (since
Age: 66 2001) of GSI Lumonics, a trustee
(since 1983) of Woodward Academy, 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 Sciences (since 1995),
American 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.

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

Mary F. Miller, Trustee (since October 1998) of the None None
Director since 2004 American Symphony Orchestra. Formerly
Age: 62 a Senior Vice President and General
Auditor of American Express Company
(July 1998-February 2003). Oversees

25 portfolios in the OppenheimerFunds
complex.
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------

Joel W. Motley, Director (since January 2002) None None
Director since 2002 Columbia Equity Financial Corp.
Age: 52 (privately-held financial adviser);
Managing Director (since January
2002) Carmona Motley, Inc.
(privately-held financial adviser).
Formerly a Managing Director of
Carmona Motley Hoffman Inc.
(privately-held financial adviser)
(January 1998-December 2001).
Oversees 25 portfolios in the
OppenheimerFunds complex.

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

Kenneth A. Randall, A director (since February 1972) of None Over
Director since 1996 Dominion Resources, Inc. (electric $100,000
Age: 77 utility holding company); formerly a
director of Prime Retail, Inc. (real
estate investment trust) and Dominion
Energy, Inc. (electric power and oil
& gas producer), President and Chief
Executive Officer of The Conference
Board, Inc. (international economic
and business research) and a director
of Lumbermens Mutual Casualty
Company, American Motorists Insurance
Company and American Manufacturers
Mutual Insurance Company. Oversees 25
portfolios in the OppenheimerFunds
complex.

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

Edward V. Regan, President, Baruch College, CUNY; a $1,000- Over
Director since 1996 director of RBAsset (real estate $10,000 $100,000
Age: 74 manager); a director of OffitBank;
formerly Trustee, Financial
Accounting Foundation (FASB and
GASB), Senior Fellow of Jerome Levy
Economics Institute, Bard College,
Chairman of Municipal Assistance
Corporation for the City of New York,
New York State Comptroller and
Trustee of New York State and Local
Retirement Fund. Oversees 25
investment companies in the
OppenheimerFunds complex.

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

Russell S. Reynolds, Jr., None Over
Age: 73 $100,000
Chairman (since 1993) of The Directorship Search Group, Inc. (corporate
governance consulting and executive recruiting);
a Life Trustee of International House (non-profit
educational organization); a former trustee of The
Historical Society of the Town of Greenwich. Oversees
25 portfolios in the OppenheimerFunds complex.

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

Interested Director and Officer

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

Name, Principal Occupation(s) During Past 5 Dollar Aggregate
Dollar
Range Of
Shares
Beneficially
Owned in
Years; Range of Any of the
Position(s) Held Other Trusteeships/Directorships Held by Shares Oppenheimer
with Fund, Director; BeneficiallFunds
Length of Service Number of Portfolios in Fund Complex Owned in Overseen
Age Currently Overseen by Director the Fund by Director

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

As of December 31,
2004

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

John V. Murphy, Chairman, Chief Executive Officer and $10,001-$50,00O Over
President and director (since June 2001) and President $100,000
Director, (since September 2000) of the Manager;
Director since 2001 President and a director or trustee of
Age: 55 other Oppenheimer funds; President and a
director (since July 2001) of
Oppenheimer Acquisition Corp. (the
Manager's parent holding company) and of
Oppenheimer Partnership Holdings, Inc.
(a holding company subsidiary of the
Manager); a director (since November
2001) of OppenheimerFunds Distributor,
Inc. (a subsidiary of the Manager);
Chairman and a director (since July
2001) of Shareholder Services, Inc. and
of Shareholder Financial Services, Inc.
(transfer agent subsidiaries of the
Manager); President and a director
(since July 2001) of OppenheimerFunds
Legacy Program (a charitable trust
program established by the Manager); a
director of the following investment
advisory subsidiaries of the Manager:
OFI Institutional Asset Management,
Inc., Centennial Asset Management
Corporation, Trinity Investment
Management Corporation and Tremont
Capital Management, Inc. (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.; 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 Babson
Capital Management LLC); a member of the
Investment Company Institute's Board of
Governors (elected to serve from October
3, 2003 through September 30, 2006).
Formerly, Chief Operating Officer
(September 2000-June 2001) of the
Manager; President and trustee (November
1999-November 2001) of MML Series
Investment Fund and MassMutual
Institutional Funds (open-end investment
companies); a director (September
1999-August 2000) of C.M. Life Insurance
Company; President, Chief Executive
Officer and director (September
1999-August 2000) of MML Bay State Life
Insurance Company; a director (June
1989-June 1998) of Emerald Isle Bancorp
and Hibernia Savings Bank (a
wholly-owned subsidiary of Emerald Isle
Bancorp). Oversees 62 portfolios as
Trustee/Director and 21 additional
portfolios as Officer in the
OppenheimerFunds complex.

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

The address of the Officers in the chart below is as follows: for Messrs.
Leavy, Ferreira, Zack, Gillespie and Miao and Ms. Bloomberg, Two World
Financial Center, 225 Liberty Street, New York, NY 10281-1008, for Messrs.
Vandehey, Vottiero, Petersen and Wixted and Ms. Ives, 6803 S. Tucson Way,
Centennial, CO 80112-3924. Each Officer serves for an indefinite term or until
his or her earlier resignation, death or removal.

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

Officers of the Fund

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

Name, Principal Occupation(s) During Past 5 Years
Position(s) Held with Fund
Length of Service,
Age

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

Christopher Leavy, Senior Vice President of the Manager since September
Vice President and 2000; an officer of 8 portfolios in the OppenheimerFunds
Portfolio Manager since complex. Formerly a portfolio manager of Morgan Stanley
2000 Dean Witter Investment Management (1997 - September
Age: 33 2000).

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

Emmanuel Ferreira, Vice President of the Manager since January 2003. An
Vice President and officer of 5 portfolios in the OppenheimerFunds complex.
Portfolio Manager since Formerly, Portfolio Manager at Lashire Investments (July
2003 1999-December 2002).
Age: 37

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

Mark S. Vandehey, Senior Vice President and Chief Compliance Officer
Vice President and Chief (since March 2004) of the Manager; Vice President (since
Compliance Officer since June 1983) of OppenheimerFunds Distributor, Inc.,
2004 Centennial Asset Management Corporation and Shareholder
Age: 54 Services, Inc. Formerly (until February 2004) Vice
President and Director of Internal Audit of the Manager.
An officer of 83 portfolios in the Oppenheimer funds
complex.

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

Brian W. Wixted, Senior Vice President and Treasurer (since March 1999)
Treasurer since 1999 of the Manager; Treasurer of HarbourView Asset
Age: 45 Management Corporation, Shareholder Financial Services,
Inc., Shareholder Services, Inc., Oppenheimer Real Asset
Management Corporation, and Oppenheimer Partnership
Holdings, Inc. (since March 1999), of OFI Private
Investments, Inc. (since March 2000), of
OppenheimerFunds International Ltd. and OppenheimerFunds
plc (since May 2000), of OFI Institutional Asset
Management, Inc. (since November 2000), and of
OppenheimerFunds Legacy Program (a Colorado non-profit
corporation) (since June 2003); Treasurer and Chief
Financial Officer (since May 2000) of OFI Trust Company
(a trust company subsidiary of the Manager); Assistant
Treasurer (since March 1999) of Oppenheimer Acquisition
Corp. Formerly Assistant Treasurer of Centennial Asset
Management Corporation (March 1999-October 2003) and
OppenheimerFunds Legacy Program (April 2000-June 2003);
Principal and Chief Operating Officer (March 1995-March
1999) at Bankers Trust Company-Mutual Fund Services
Division. An officer of 83 portfolios in the
OppenheimerFunds complex.

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

Philip Vottiero, Vice President/Fund Accounting of the Manager since
Assistant Treasurer since March 2002. Formerly Vice President/Corporate Accounting
2002 of the Manager (July 1999-March 2002) prior to which he
Age: 41 was Chief Financial Officer at Sovlink Corporation
(April 1996-June 1999). An officer of 83 portfolios in
the OppenheimerFunds complex.

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

Robert G. Zack, Executive Vice President (since January 2004) and
Secretary General Counsel (since February 2002) of the Manager;
since 2001 General Counsel and a director (since November 2001) of
Age: 56 the Distributor; General Counsel (since November 2001)
of Centennial Asset Management Corporation; Senior Vice
President and General Counsel (since November 2001) of
HarbourView Asset Management Corporation; Secretary and
General Counsel (since November 2001) of Oppenheimer
Acquisition Corp.; Assistant Secretary and a director
(since October 1997) of OppenheimerFunds International
Ltd. and OppenheimerFunds plc; Vice President and a
director (since November 2001) of Oppenheimer
Partnership Holdings, Inc.; a director (since November
2001) of Oppenheimer Real Asset Management, Inc.; Senior
Vice President, General Counsel and a director (since
November 2001) of Shareholder Financial Services, Inc.,
Shareholder Services, Inc., OFI Private Investments,
Inc. and OFI Trust Company; Vice President (since
November 2001) of OppenheimerFunds Legacy Program;
Senior Vice President and General Counsel (since
November 2001) of OFI Institutional Asset Management,
Inc.; a director (since June 2003) of OppenheimerFunds
(Asia) Limited. Formerly Senior Vice President (May
1985-December 2003), 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); and OppenheimerFunds International
Ltd. (October 1997-November 2001). An officer of 83
portfolios in the OppenheimerFunds complex.

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

Kathleen T. Ives, Vice President (since June 1998) and Senior Counsel and
Assistant Secretary since Assistant Secretary (since October 2003) of the Manager;
2001 Vice President (since 1999) and Assistant Secretary
Age: 39 (since October 2003) of the Distributor; Assistant
Secretary (since October 2003) of Centennial Asset
Management Corporation; Vice President and Assistant
Secretary (since 1999) of Shareholder Services, Inc.;
Assistant Secretary (since December 2001) of
OppenheimerFunds Legacy Program and of 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 83
portfolios in the OppenheimerFunds complex.

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

Lisa I. Bloomberg, Vice President and Associate Counsel of the Manager
Assistant Secretary since since May 2004; formerly First Vice President and
2004 Associate General Counsel of UBS Financial Services Inc.
Age: 37 (formerly, PaineWebber Incorporated) (May 1999 - April
2004) prior to which she was an Associate at Skadden,
Arps, Slate, Meagher & Flom, LLP (September 1996 - April
1999). An officer of 83 portfolios in the
OppenheimerFunds complex.

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

Phillip S. Gillespie, Senior Vice President and Deputy General Counsel of the
Assistant Secretary since Manager since September 2004. Formerly Mr. Gillespie
2004 held the following positions at Merrill Lynch Investment
Age: 40 Management: First Vice President (2001-September 2004);
Director (from 2000) and Vice President (1998-2000). An
officer of 83 portfolios in the OppenheimerFunds complex.

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

Wayne Miao, Assistant Vice President and Assistant Counsel of the
Assistant Secretary since Manager since June 2004. Formerly an Associate with
2004 Sidley Austin Brown & Wood LLP (September 1999 - May
Age: 32 2004). An officer of 83 portfolios in the
OppenheimerFunds complex.

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

|X| Remuneration of Directors. The officers of the Fund and Mr. Murphy
(who is an officer and Director of the Fund) are affiliated with the Manager
and 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, 2004. The compensation from all 25 of the Board I
Funds (including the Fund) represents compensation received for serving as a
director or trustee and member of a committee (if applicable) of the boards of
those funds during the calendar year ended December 31, 2004.

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

Director Name and Aggregate Retirement Estimated Total
Compensation(9)
From All
Oppenheimer
Annual Funds For
Benefits Retirement Which
Accrued as Benefits to Individual
Other Fund Position(s) Compensation Part of Fund be Paid Upon Serves As
(as applicable)(10) from Fund(1) Expenses Retirement(2) Trustee/Director

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

Clayton K. Yeutter $2,200(3) $5,011 $61,306 $173,700
Chairman of the Board

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

Robert G. Galli $1,637 $2,989 $80,923(4) $237,312(5)
Regulatory & Oversight
Committee Chairman

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

Phillip Griffiths
Governance Committee
Chairman and $1,802(6) $1,602 $23,309 $142,092
Regulatory & Oversight
Committee Member

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

Mary F. Miller(8) $132 $0 $0 $8,532
Audit Committee Member

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

Joel W. Motley
Audit Committee
Chairman and $1,907(7) $664 $14,530 $150,760
Regulatory & Oversight
Committee Member

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

Kenneth A. Randall $1,698 $0 $79,622 $134,080
Audit Committee Member
and Governance
Committee Member

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

Edward V. Regan $1,501 $3,537 $59,353 $118,788
Proxy Committee
Chairman and Audit
Committee Member

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

Russell S. Reynolds, $1,352 $3,130 $60,720 $106,792
Jr.
Proxy Committee Member
and Governance
Committee Member

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

Mr. Spiro retired as a Board I Trustee or Director effective October 31, 2004.
Mr. Spiro received $64,080 of total compensation for the calendar year 2004
from all of the Oppenheimer funds for which he served as a Trustee or Director.
1. Aggregate Compensation from Fund includes fees and deferred compensation,
if any, for a Director.
2. 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 Directors".
3. Includes $550 deferred by Mr. Yeutter under the Deferred Compensation
Plan described below.
4. Includes $36,990 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.
5. Includes $108,000 paid to Mr. Galli for serving as a trustee or director
of 10 other Oppenheimer funds that are not Board I Funds.
6. Includes $1,802 deferred by Mr. Griffiths under the Deferred Compensation
Plan described below.
7. Includes $763 deferred by Mr. Motley under the Deferred Compensation Plan
described below.
8. Ms. Miller was appointed as a Director of the fund effective August 13,
2004.
9. Total Compensation paid out to Directors for the calendar year 2004.
10. Mr. Fink was elected to certain Board I funds effective January 1, 2005
and therefore did not receive any compensation during the calendar year
ended December 31, 2004.

|X| Retirement Plan for Directors. The Fund has 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 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| Major Shareholders. As of January 31, 2005, 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:

MLPF&S for the Sole Benefit of its Customers, 4800 Deer Lake Dr. E., Fl.
3, Jacksonville, FL, 32246-6484 which owned 1,404,150.550 Class A shares (7.06%
of the Class A shares then outstanding).

MLPF&S for the Sole Benefit of its Customers, 4800 Deer Lake Dr. E., Fl.
3, Jacksonville, FL, 32246-6484 which owned 361,839.560 Class C shares (8.07%
of the Class C shares then outstanding).

IBT & Co Cust, 200 Flarndon St, Fl. 16, Boston, MA 02116-5048 which owned
200,688.657 Class Y shares (12.09% of the Class Y shares then outstanding).

Oregon College Savings Plan Equity Portfolio, P.O. Box 5270, Denver, CO
80217-5270 which owned 89,420.440 Class Y shares (5.39% of the Class Y shares
then outstanding).

Oregon College Savings Plan Balanced Portfolio, P.O. Box 5270, Denver, CO
80217-5270 which owned 133,571.028 Class Y shares (8.05% of the Class Y shares
then outstanding).

Oregon College Savings Plan Moderate Portfolio, P.O. Box 5270, Denver, CO
80217-5270 which owned 301,180.894 Class Y shares (18.15% of the Class Y shares
then outstanding).

Oregon College Savings Plan Aggressive Portfolio, P.O. Box 5270, Denver,
CO 80217-5270 which owned 787,220.464 Class Y shares (47.46% of the Class Y
shares then outstanding).

Oregon College Savings Plan Conservative Portfolio, P.O. Box 5270,
Denver, CO 80217-5270 which owned 125,034.615 Class Y shares (7.53% of the
Class Y shares then outstanding).

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.

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 is 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 Fund's Form N-PX filing is available (i) without charge, upon
request, by calling the Fund toll-free at 1.800.525.7048 and (ii) on the SEC's
website at www.sec.gov.
-----------

|X| The Investment Advisory Agreement. The Manager provides investment
advisory and management services to the Fund under an investment advisory
agreement between the Manager and the Fund. The Manager selects securities for
the Fund's portfolio and handles its day-to-day business. The portfolio manager
of the Fund is employed by the Manager and is the person who is 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.

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

Fiscal Year Ended 10/31: Management Fees Paid to OppenheimerFunds, Inc.
-----------------------

2003 $1,520,857

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

2004 $2,702,576

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

The Board also receives information about the 12b-1 distribution fees the
Fund pays. These distribution fees are reviewed and approved at a different
time of the year.

Brokerage Policies of the Fund

---------------------------------------------------------------------
Fiscal Year Ended Total Brokerage Commissions Paid by the
10/31: Fund1
---------------------------------------------------------------------
---------------------------------------------------------------------------
2002 $1,590,321
---------------------------------------------------------------------------
---------------------------------------------------------------------
2003 $1,207,225
---------------------------------------------------------------------
---------------------------------------------------------------------

2004 $1,398,8072

---------------------------------------------------------------------
1. Amounts do not include spreads or commissions on principal transactions
on a net trade basis.

2. In the fiscal year ended October 31, 2004, the amount of transactions
directed to brokers for research services was $118,055,494 and
amount of the commissions paid to broker-dealers for those services
was $228,051.

Distribution and Service Plans

2002 $328,773 $140,878

-------------------------------------------
--------------------------------------------------
2003 $495,758 $205,051
--------------------------------------------------
-------------------------------------------

2004 $1,398,333 $515,449

-------------------------------------------
1. Includes amounts retained by a broker-dealer that is an affiliate or a
parent of the Distributor.

-----------------------------------------------------------------------------
Fiscal Concessions on Concessions on Concessions on Concessions on
Year Class A Shares Class B Shares Class C Shares Class N Shares
Ended Advanced by Advanced by Advanced by Advanced by
10/31: Distributor1 Distributor1 Distributor1 Distributor1
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
2002 $24,890 $321,368 $55,902 $13,817
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
2003 $27,569 $337,069 $109,612 $62,804
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------

2004 $59,668 $654,591 $245,218 $110,346

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

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

Fiscal Class A Class B Class C Class N
Contingent Contingent Contingent
Year Deferred Sales Deferred Sales Contingent Deferred Sales
Ended Charges Charges Deferred Sales Charges
10/31: Retained by Retained by Charges Retained Retained by
Distributor Distributor by Distributor Distributor

2004 $2,362 $142,868 $14,466 $13,039

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

For the fiscal year ended October 31, 2004 payments under the Class A
plan totaled $743,002, of which $47,046 was retained by the Distributor under
the arrangement described above, regarding grandfathered retirement accounts,
and included $187,746 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.

The asset-based sales charge on Class B, Class C and Class N shares allow
investors to buy shares without a front-end sales charge while allowing the
Distributor to compensate dealers that sell those shares. The Fund pays the
asset-based sales 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.

During a calendar year, the Distributor's actual expenses in selling
Class B, Class C and Class N shares may be more than the payments it receives
from contingent deferred sales charges collected on redeemed shares and from
asset-based sales charges paid to the Distributor by the Fund under the
distribution and service plans. Those excess expenses are carried over on the
Distributor's books and may be recouped from asset-based sales charge payments
from the Fund in future years. However, the Distributor has voluntarily agreed
to cap the amount of expenses under the plans that may be carried over from
year to year and recouped that relate to (i) expenses the Distributor has
incurred that represent compensation and expenses of its sales personnel and
(ii) other direct distribution costs it has incurred, such as sales literature,
state registration fees, advertising and prospectuses used to offer Fund
shares. The cap on the carry-over of those categories of expenses is set at
0.70% of annual gross sales of shares of the Fund. If those categories of
expenses exceed the capped amount, the Distributor bears the excess costs. If
the Class B, Class C or Class N plan were to be terminated by the Fund, the
Fund's Board of Directors may allow the Fund to continue payments of the
asset-based sales charge to the Distributor for distributing shares prior to
the termination of the plan.

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

Distribution Fees Paid to the Distributor for the Fiscal Year Ended 10/31/04

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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 $772,119 $612,2491 $2,650,135 3.09%

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

Class C Plan $612,515 $235.5492 $954,749 1.20%

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

Class N Plan $116,310 $74,1783 $408,066 1.23%

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

1. Includes $20,963 paid to an affiliate of the Distributor's parent company.
2. Includes $35,776 paid to an affiliate of the Distributor's parent company.
3. Includes $2,195 paid to an affiliate of the Distributor's parent company.

Performance of the Fund

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

ERV - 1 Average Annual Total
l/n Return
P

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

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

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

o Total Returns at Net Asset Value. From time to time the Fund may also
quote a cumulative or an average annual total return "at net asset value"
(without deducting sales charges) for Class A, Class B, Class C or Class N
shares. There is no sales charge on Class Y shares. Each is based on the
difference in net asset value per share at the beginning and the end of the
period for a hypothetical investment in that class of shares (without
considering front-end or contingent deferred sales charges) and takes into
consideration the reinvestment of dividends and capital gains distributions.

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

The Fund's Total Returns for the Periods Ended 10/31/04

years or
Shares life-of-class)

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

1-Year 5-Year (or life 10-Year (or life
of class if
less) of class if less)

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
After Without After Without After Without After Without
Sales Sales Sales Sales Sales Sales Sales Sales
Charge Charge Charge Charge Charge Charge Charge Charge
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Class A1 130.91% 144.99% 8.24% 14.85% 2.95% 4.18% 8.73% 9.37%

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

Class B2 90.61% 90.61% 8.75% 13.75% 2.99% 3.35% 7.36%(2) 7.36%(2)

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

Class C3 64.18% 64.18% 12.83% 13.83% 3.36% 3.36% 6.01%(3) 6.01%(3)

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

Class N4 16.15% 16.15% 13.39% 14.39% 4.17%(4) 4.17%(4) N/A N/A

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

Class Y5 64.18% 64.18% 15.30% 15.30% 4.51% 4.51% 6.50%(5) 6.50%(5)

---------------------------------------------------------------------------------
Inception of Class A: 9/16/85
Inception of Class B: 10/2/95
Inception of Class C: 5/1/96
Inception of Class N: 3/1/01
Inception of Class Y: 12/16/96

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

Average Annual Total Returns for Class A(1) Shares (After Sales Charge)
For the Periods Ended 10/31/04

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

1-Year 5-Year 10-Year
(or life of (or life of
class if less) class if less)

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

After Taxes on Distributions 8.20% 2.04% 7.08%

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

After Taxes on 5.40% 2.07% 6.75%

Distributions and
Redemption of Fund Shares
-----------------------------------------------------------------------------

1. Inception of Class A: 9/16/85

ABOUT YOUR ACCOUNT

How to 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 Balanced Fund Oppenheimer Main Street Opportunity Fund
Oppenheimer Bond Fund Oppenheimer Main Street Small Cap Fund
Oppenheimer California Municipal Fund Oppenheimer MidCap Fund
Oppenheimer Capital Appreciation Fund Oppenheimer New Jersey Municipal Fund
Oppenheimer Capital Preservation Fund Oppenheimer Pennsylvania Municipal Fund

Oppenheimer Principal Protected Main

Oppenheimer Capital Income Fund Street Fund

Oppenheimer Principal Protected Main

Oppenheimer Champion Income Fund Street Fund II
Oppenheimer Principal Protected Main
Oppenheimer Convertible Securities Fund Street Fund III
Oppenheimer Developing Markets Fund Oppenheimer Quest Balanced 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 Select Value Fund
Oppenheimer Gold & Special Minerals Fund Oppenheimer Senior Floating Rate Fund
Oppenheimer Growth Fund Oppenheimer Small Cap Value Fund
Oppenheimer High Yield Fund Oppenheimer Strategic Income Fund
Oppenheimer International Bond Fund Oppenheimer Total Return Bond Fund
Oppenheimer International Growth Fund Oppenheimer U.S. Government Trust
Oppenheimer International Small Company
Fund Oppenheimer Value Fund
Oppenheimer International Value Fund Limited-Term New York Municipal Fund
Oppenheimer Limited Term California
Municipal Fund Rochester Fund Municipals
Oppenheimer Limited-Term Government Fund
And the following money market funds:
Oppenheimer Cash Reserves Centennial Government Trust
Oppenheimer Money Market Fund, Inc. Centennial Money Market Trust
Centennial California Tax Exempt Trust Centennial New York Tax Exempt Trust

Centennial Tax Exempt Trust

Letters of Intent. Under a Letter of Intent ("Letter"), you can reduce the
sales charge rate that applies to your purchases of Class A shares if you
purchase Class A, Class B or (effective March 18, 2005) Class C shares of the
Fund or other Oppenheimer funds during a 13-month period. The total amount of
your purchases of Class A, Class B and (effective March 18th) Class C shares
will determine the sales charge rate that applies to your Class A share
purchases during that period. You can choose to include purchases that you made
up to 90 days before the date of the Letter. Class A shares of Oppenheimer
Money Market Fund and Oppenheimer Cash Reserves on which you have not paid a
sales charge and any Class N shares you purchase, or may have purchased, will
not be counted towards satisfying the purchases specified in a Letter.

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

2. If the total minimum investment specified under the Letter is
completed within the 13-month Letter period, the escrowed shares will be
promptly released to the investor.

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

The sales concession and the advance of the service fee, as described in
the Prospectus, will not be paid to dealers of record on sales of Class N
shares on:
o purchases of Class N shares in amounts of $500,000 or more by a
retirement plan that pays for the purchase with the redemption
proceeds of Class A shares of one or more Oppenheimer funds (other
than rollovers from an OppenheimerFunds-sponsored Pinnacle or
Ascender 401(k) plan to any IRA invested in the Oppenheimer funds),
o purchases of Class N shares in amounts of $500,000 or more by a
retirement plan that pays for the purchase with the redemption
proceeds of Class C shares of one or more Oppenheimer funds held
by the plan for more than one year (other than rollovers from an
OppenheimerFunds-sponsored Pinnacle or Ascender 401(k) plan to any
IRA invested in the Oppenheimer funds), and
o on purchases of Class N shares by an OppenheimerFunds-sponsored Pinnacle
or Ascender 401(k) plan made with the redemption proceeds of Class
A shares of one or more Oppenheimer funds.

Listed below are certain cases in which the Fund has elected, in its
discretion, not to assess the Fund Account Fees. These exceptions are subject
to change:
A fund account whose shares were acquired after September 30th of the
prior year;
o A fund account that has a balance below $500 due to the automatic
conversion of shares from Class B to Class A shares. However, once
all Class B shares held in the account have been converted to Class
A shares the new account balance may become subject to the Minimum
Balance Fee;
o Accounts of shareholders who elect to access their account documents
electronically via eDoc Direct;
o A fund account that has only certificated shares and, has a balance below
$500 and is being escheated;
o Accounts of shareholders that are held by broker-dealers under the NSCC
Fund/SERV system;
o Accounts held under the Oppenheimer Legacy Program and/or holding certain
Oppenheimer Variable Account Funds;
o Omnibus accounts holding shares pursuant to the Pinnacle, Ascender,
Custom Plus, Recordkeeper Pro and Pension Alliance Retirement Plan
programs; and
o A fund account that falls below the $500 minimum solely due to market
fluctuations within the 12-month period preceding the date the fee
is deducted.

The Fund reserves the authority to modify Fund Account Fees in its
discretion.

last reported sale price on the principal exchange on which they
are traded or on Nasdaq(R), as applicable, on that day, or

How to Sell Shares

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

The reinvestment may be made without sales charge only in Class A shares
of the Fund or any of the other Oppenheimer funds into which shares of the Fund
are exchangeable as described in "How to Exchange Shares" below. Reinvestment
will be at the net asset value next computed after the Transfer Agent receives
the reinvestment order. The shareholder must ask the Transfer Agent for that
privilege at the time of reinvestment. This privilege does not apply to Class
C, Class N or Class Y shares. The Fund may amend, suspend or cease offering
this reinvestment privilege at any time as to shares redeemed after the date of
such amendment, suspension or cessation.

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 $500or 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.

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.

If the Transfer Agent ceases to act as transfer agent for the Fund, the
Planholder will be deemed to have appointed any successor transfer agent to act
as agent in administering the plan.

How to Exchange Shares

o All of the Oppenheimer funds currently offer Class A, B, C, N and Y
shares with the following exceptions:

The following funds only offer Class A shares:

Centennial California Tax Exempt Trust Centennial Money Market Trust
Centennial Government Trust Centennial New York Tax Exempt

Trust

Centennial Tax Exempt Trust

The following funds do not offer Class N shares:

Limited Term New York Municipal Fund Oppenheimer New Jersey Municipal Fund
Oppenheimer AMT-Free Municipals Oppenheimer Principal Protected Main
Street Fund II
Oppenheimer AMT-Free New York Oppenheimer Pennsylvania Municipal
Municipals Fund
Oppenheimer California Municipal Fund Oppenheimer Rochester National
Municipals
Oppenheimer International Value Fund Oppenheimer Senior Floating Rate Fund
Oppenheimer Limited Term California Rochester Fund Municipals
Municipal Fund
Oppenheimer Limited Term Municipal
Fund
Oppenheimer Money Market Fund, Inc.

The following funds do not offer Class Y shares:

Limited Term New York Municipal Fund Oppenheimer International Small Company
Fund
Oppenheimer AMT-Free Municipals Oppenheimer Limited Term Municipal Fund
Oppenheimer AMT-Free New York Municipals Oppenheimer New Jersey Municipal Fund
Oppenheimer Balanced Fund Oppenheimer Pennsylvania Municipal Fund
Oppenheimer California Municipal Fund Oppenheimer Principal Protected Main
Street Fund
Oppenheimer Capital Income Fund Oppenheimer Principal Protected Main
Street Fund II
Oppenheimer Cash Reserves Oppenheimer Principal Protected Main
Street Fund III
Oppenheimer Champion Income Fund Oppenheimer Quest Capital Value Fund,
Inc.
Oppenheimer Convertible Securities Fund Oppenheimer Quest International Value
Fund, Inc.
Oppenheimer Disciplined Allocation Fund Oppenheimer Rochester National Municipals
Oppenheimer Developing Markets Fund Oppenheimer Senior Floating Rate Fund
Oppenheimer Gold & Special Minerals Fund Oppenheimer Small Cap Value Fund
Oppenheimer International Growth Fund Oppenheimer Total Return Bond Fund

o Oppenheimer Money Market Fund, Inc. only offers Class A and Class Y
shares.

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 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 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).

o Shares of Oppenheimer Principal Protected Main Street Fund III 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 III until after the expiration of the warranty period
(12/6/2011).

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 (other than Limited-Term Government Fund,
Limited Term Municipal Fund, Limited Term New York Municipal Fund, Oppenheimer
Capital Preservation Fund and Oppenheimer Senior Floating Rate Fund), 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 B shares of Limited-Term Government Fund, Limited
Term Municipal Fund, Limited Term New York Municipal Fund, Oppenheimer Capital
Preservation Fund and Oppenheimer Senior Floating Rate Fund, the Class B
contingent deferred sales charge is imposed on Class B shares acquired by
exchange if they are redeemed within 5 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.

|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 and Class
Y shares. That is because of the effect of the asset-based sales charge on
Class B, Class C and Class N shares. Those dividends will also differ in amount
as a consequence of any difference in the net asset values of the different
classes of shares.

Dividends, distributions and proceeds of the redemption of Fund shares
represented by checks returned to the Transfer Agent by the Postal Service as
undeliverable will be invested in shares of Oppenheimer Money Market Fund, Inc.
Reinvestment will be made as promptly as possible after the return of such
checks to the Transfer Agent, to enable the investor to earn a return on
otherwise idle funds. Unclaimed accounts may be subject to state escheatment
laws, and the Fund and the Transfer Agent will not be liable to shareholders or
their representatives for compliance with those laws in good faith.

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). Any tax withheld by the
Fund is remitted by the Fund to the U.S. Treasury and all income and any tax
withheld is identified in reports mailed to shareholders in January of each
year with a copy sent to the IRS.

|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.
Any tax withheld by the Fund is remitted by the Fund to the U.S. Treasury and
all income and any tax withheld is identified in reports mailed to shareholders
in March of each year with a copy sent to the IRS.

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 with a
copy sent to the IRS.

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 Registered Public Accounting Firm. KPMG LLP serves as the
Independent Registered Public Accounting Firm for the Fund. KPMG LLP audits the
Fund's financial statements and performs other related audit services. KPMG LLP
also acts as the independent registered public accounting firm for certain
other funds advised by the Manager and its affiliates. Audit and non-audit
services provided by KPMG LLP to the Fund must be pre-approved by the Audit
Committee.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS AND SHAREHOLDERS OF OPPENHEIMER SERIES FUND, INC.:

We have audited the accompanying statement of assets and liabilities of
Oppenheimer Value Fund (one of the portfolios constituting the Oppenheimer
Series Fund, Inc.), including the statement of investments, as of October 31,
2004, 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 the standards of the Public
Company Accounting Oversight Board (United States). 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, 2004, by correspondence
with the custodian and brokers or by other appropriate auditing procedures where
replies from brokers were not received. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial position of
Oppenheimer Value Fund as of October 31, 2004, 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 U.S. generally accepted
accounting principles.

/s/ KPMG LLP
KPMG LLP

Denver, Colorado
December 16, 2004

STATEMENT OF INVESTMENTS October 31, 2004
--------------------------------------------------------------------------------

VALUE
SHARES SEE
NOTE 1
--------------------------------------------------------------------------------
COMMON STOCKS--98.1%
--------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--11.9%
--------------------------------------------------------------------------------
HOTELS,RESTAURANTS & LEISURE--3.1%
McDonald's Corp. 657,670 $
19,171,081
--------------------------------------------------------------------------------
MEDIA--8.8%
Liberty Media
Corp., Cl. A 1 2,704,670
24,125,656
--------------------------------------------------------------------------------
UnitedGlobalCom,
Inc., Cl. A 1 3,932,062
29,411,824

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

53,537,480

--------------------------------------------------------------------------------
CONSUMER STAPLES--5.2%
--------------------------------------------------------------------------------
TOBACCO--5.2%
Altria Group, Inc. 649,600
31,479,616
--------------------------------------------------------------------------------
ENERGY--8.9%
--------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES--1.0%
Halliburton Co. 164,710
6,100,858
--------------------------------------------------------------------------------
OIL & GAS--7.9%
BP plc, ADR 547,130
31,870,323
--------------------------------------------------------------------------------
Kinder Morgan, Inc. 70,730
4,552,890
--------------------------------------------------------------------------------
LUKOIL, Sponsored
ADR 94,850
11,832,538

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

48,255,751

--------------------------------------------------------------------------------
FINANCIALS--25.9%
--------------------------------------------------------------------------------
COMMERCIAL BANKS--8.1%
Bank of America
Corp. 620,538
27,793,897
--------------------------------------------------------------------------------
Commerce
Bancorp, Inc. 63,600
3,767,664
--------------------------------------------------------------------------------
Wells Fargo & Co. 302,260
18,050,967

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

49,612,528

--------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--10.4%
Citigroup, Inc. 551,746
24,480,970
--------------------------------------------------------------------------------
Franklin Resources,
Inc. 322,060
19,523,277
--------------------------------------------------------------------------------
Lehman Brothers
Holdings, Inc. 234,200
19,239,530

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

63,243,777

--------------------------------------------------------------------------------
INSURANCE--4.9%
Genworth Financial,
Inc., Cl. A 111,300
2,655,618
--------------------------------------------------------------------------------
Platinum Underwriters
Holdings Ltd. 161,800
4,732,650
--------------------------------------------------------------------------------
Prudential Financial,
Inc. 477,650
22,196,396

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

29,584,664

--------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE--2.5%
Freddie Mac 227,930
15,180,138
--------------------------------------------------------------------------------
HEALTH CARE--2.6%
--------------------------------------------------------------------------------
BIOTECHNOLOGY--2.6%
MedImmune, Inc. 1 108,700
3,089,254
--------------------------------------------------------------------------------
Wyeth 325,970
12,924,711

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

16,013,965

--------------------------------------------------------------------------------
INDUSTRIALS--17.5%
--------------------------------------------------------------------------------
AEROSPACE & DEFENSE--6.4%
Empresa Brasileira
de Aeronautica
SA, ADR 370,200
9,825,108
--------------------------------------------------------------------------------
Raytheon Co. 800,890
29,216,467

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

39,041,575

--------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES--4.4%
Cendant Corp. 1,291,290
26,587,661
--------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES--6.5%
General Electric Co. 755,510
25,778,001
--------------------------------------------------------------------------------
Tyco International
Ltd. 443,770
13,823,436

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

39,601,437

--------------------------------------------------------------------------------
MACHINERY--0.2%
Deere & Co. 23,900
1,428,742
--------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--12.2%
--------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS--5.5%
Hewlett-Packard Co. 97,480
1,818,977
--------------------------------------------------------------------------------
International Business
Machines Corp. 351,170
31,517,508

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

33,336,485

20 | OPPENHEIMER VALUE FUND

VALUE
SHARES SEE
NOTE 1
--------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--1.6%
National
Semiconductor
Corp. 1 560,900 $
9,367,030
--------------------------------------------------------------------------------
SOFTWARE--5.1%
Compuware Corp. 1 549,220
3,179,984
--------------------------------------------------------------------------------
Novell, Inc. 1 435,700
3,132,683
--------------------------------------------------------------------------------
Take-Two Interactive
Software, Inc. 1 756,450
24,932,592

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

31,245,259

--------------------------------------------------------------------------------
MATERIALS--4.0%
--------------------------------------------------------------------------------
CHEMICALS--2.4%
Dow Chemical Co. 66,850
3,004,239
--------------------------------------------------------------------------------
Praxair, Inc. 280,280
11,827,816

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

14,832,055

--------------------------------------------------------------------------------
METALS & MINING--1.6%
Alcan, Inc. 91,600
4,242,912
--------------------------------------------------------------------------------
Inco Ltd. 1 145,830
5,162,382

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

9,405,294

--------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--5.2%
--------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--5.2%
IDT Corp., Cl. B 1 1,216,793
16,816,079
--------------------------------------------------------------------------------
SBC Communications,
Inc. 353,770
8,936,230
--------------------------------------------------------------------------------
Verizon
Communications, Inc. 157,800
6,169,980

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

31,922,289

--------------------------------------------------------------------------------
UTILITIES--4.7%
--------------------------------------------------------------------------------
ELECTRIC UTILITIES--3.6%
AES Corp. (The) 1 1,443,330
15,732,295
--------------------------------------------------------------------------------
PG&E Corp. 1 197,920
6,341,357

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

22,073,652

--------------------------------------------------------------------------------
GAS UTILITIES--1.1%
Sempra Energy 191,800
6,432,972

-------------
Total Common Stocks
(Cost $532,345,109)
597,454,309

PRINCIPAL
AMOUNT
--------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--2.3%
--------------------------------------------------------------------------------
Undivided interest of 24.40% in joint
repurchase agreement (Principal Amount/
Value $57,987,000, with a maturity value
of $57,995,553) with Zions Bank/Capital
Markets Group, 1.77%, dated 10/29/04,
to be repurchased at $14,150,087 on
11/1/04, collateralized by U.S. Treasury
Nts., 2.375%, 8/15/06, with a
value of $59,191,443
(Cost $14,148,000) $14,148,000
14,148,000
--------------------------------------------------------------------------------
TOTAL INVESTMENTS,
AT VALUE
(COST $546,493,109) 100.4%
611,602,309
--------------------------------------------------------------------------------
LIABILITIES
IN EXCESS OF
OTHER ASSETS (0.4)
(2,619,304)

----------------------------
NET ASSETS 100.0% $
608,983,005

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

FOOTNOTE TO STATEMENT OF INVESTMENTS

1. Non-income producing security.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

21 | OPPENHEIMER VALUE FUND

STATEMENT OF ASSETS AND LIABILITIES October 31, 2004
--------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------
ASSETS
-------------------------------------------------------------------------------------------------------

Investments, at value (cost $546,493,109)--see accompanying statement of
investments $ 611,602,309
-------------------------------------------------------------------------------------------------------
Cash
262,537
-------------------------------------------------------------------------------------------------------
Receivables and other assets:
Shares of capital stock
sold
1,562,927
Investments
sold
1,480,621
Interest and
dividends
698,414
Other
9,733

----------------
Total
assets
615,616,541

-------------------------------------------------------------------------------------------------------
LIABILITIES
-------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments
purchased
5,574,009
Shares of capital stock
redeemed
657,311
Transfer and shareholder servicing agent
fees 120,617
Distribution and service plan
fees 118,868
Shareholder
communications
69,271
Directors'
compensation
56,919
Other
36,541

----------------
Total
liabilities
6,633,536

-------------------------------------------------------------------------------------------------------
NET
ASSETS
$ 608,983,005

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

-------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
-------------------------------------------------------------------------------------------------------
Par value of shares of capital
stock $ 29,023
-------------------------------------------------------------------------------------------------------
Additional paid-in
capital
537,262,821
-------------------------------------------------------------------------------------------------------
Accumulated net investment
income 1,545,458
-------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency
transactions 5,036,503
-------------------------------------------------------------------------------------------------------
Net unrealized appreciation on
investments 65,109,200

----------------
NET
ASSETS
$ 608,983,005

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

22 | OPPENHEIMER VALUE FUND

---------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
---------------------------------------------------------------------------------------------------------

Class A Shares:
Net asset value and redemption price per share (based on net assets of
$378,784,635 and
17,913,014 shares of capital stock
outstanding) $ 21.15
Maximum offering price per share (net asset value plus sales charge of 5.75%
of offering price) $ 22.44
---------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge)
and offering price per share (based on net assets of $85,683,190 and
4,143,459 shares
of capital stock
outstanding)
$ 20.68
---------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge)
and offering price per share (based on net assets of $79,501,358 and
3,894,456 shares
of capital stock
outstanding)
$ 20.41
---------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge)
and offering price per share (based on net assets of $33,099,610 and
1,591,177 shares
of capital stock
outstanding)
$ 20.80
---------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net
assets of
$31,914,212 and 1,481,389 shares of capital stock
outstanding) $ 21.54

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

23 | OPPENHEIMER VALUE FUND

STATEMENT OF OPERATIONS For the Year Ended October 31, 2004
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
INVESTMENT INCOME
--------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $86,289) $
8,092,346
--------------------------------------------------------------------------------
Interest
114,391

---------------
Total investment income
8,206,737

--------------------------------------------------------------------------------
EXPENSES
--------------------------------------------------------------------------------
Management fees
2,702,576
--------------------------------------------------------------------------------
Distribution and service plan fees:
Class A
743,002
Class B
772,119
Class C
612,515
Class N
116,310
--------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A
636,014
Class B
249,851
Class C
160,911
Class N
80,227
Class Y
2,098
--------------------------------------------------------------------------------
Shareholder communications:
Class A
58,120
Class B
43,767
Class C
15,791
Class N
264
--------------------------------------------------------------------------------
Directors' compensation
19,021
--------------------------------------------------------------------------------
Accounting service fees
15,000
--------------------------------------------------------------------------------
Custodian fees and expenses
8,269
--------------------------------------------------------------------------------
Other
101,195

---------------
Total expenses
6,337,050
Less reduction to custodian expenses
(2,417)
Less payments and waivers of expenses
(3,739)

---------------
Net expenses
6,330,894

--------------------------------------------------------------------------------
NET INVESTMENT INCOME
1,875,843

--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
--------------------------------------------------------------------------------
Net realized gain on:
Investments
36,947,651
Foreign currency transactions
38,230
Net increase from payment by affiliate
126,396

---------------
Net realized gain
37,112,277
--------------------------------------------------------------------------------
Net change in unrealized appreciation on investments
18,764,765

--------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $
57,752,885

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

24 | OPPENHEIMER VALUE FUND

STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------

YEAR ENDED OCTOBER 31,
2004 2003
---------------------------------------------------------------------------------------------

OPERATIONS
---------------------------------------------------------------------------------------------
Net investment income $ 1,875,843
$ 300,084
---------------------------------------------------------------------------------------------
Net realized gain
37,112,277 15,182,559
---------------------------------------------------------------------------------------------
Net change in unrealized appreciation
18,764,765 39,305,650

----------------------------------
Net increase in net assets resulting from operations
57,752,885 54,788,293

---------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
---------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A
(574,991) (328,372)
Class B
-- --
Class C
-- --
Class N
(59,111) (4,026)
Class Y
(16,057) (1,634)

---------------------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS
---------------------------------------------------------------------------------------------
Net increase in net assets resulting from capital
stock transactions:
Class A
126,690,468 35,867,196
Class B
15,328,730 2,513,021
Class C
40,268,281 14,468,487
Class N
23,054,671 5,433,039
Class Y
28,001,783 1,172,727

---------------------------------------------------------------------------------------------
NET ASSETS
---------------------------------------------------------------------------------------------
Total increase
290,446,659 113,908,731
--------------------------------------------------------------------------------------------
Beginning of period
318,536,346 204,627,615

----------------------------------
End of period (including accumulated net investment
income of $1,545,458 and $158,891, respectively) $ 608,983,005
$ 318,536,346

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

25 | OPPENHEIMER VALUE FUND

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

CLASS A YEAR ENDED OCTOBER 31, 2004
2003 2002 2001 2000
------------------------------------------------------------------------------------------------------------------------------------

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

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

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

26 | OPPENHEIMER VALUE FUND

CLASS B YEAR ENDED OCTOBER 31,
2004 2003 2002 2001 2000
----------------------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 18.18 $
14.64 $ 15.89 $ 16.99 $ 20.58
----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.05)
1 (.06) (.10) (.11) (.05)
Net realized and unrealized gain (loss)
2.55 3.60 (1.15) (.97) (.56)

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

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

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

27 | OPPENHEIMER VALUE FUND

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

CLASS C YEAR ENDED OCTOBER 31,
2004 2003 2002 2001 2000
-----------------------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 17.93 $
14.44 $ 15.67 $ 16.77 $ 20.35
-----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.03)
1 .03 (.01) (.08) (.04)
Net realized and unrealized gain (loss)
2.51 3.46 (1.22) (.99) (.56)

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

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

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

28 | OPPENHEIMER VALUE FUND

CLASS N YEAR ENDED OCTOBER 31,
2004 2003 2002 2001 1
-------------------------------------------------------------------------------------------------------------------

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

1. For the period from March 1, 2001 (inception of offering) to October 31,
2001.

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

3. Assumes an investment on the business day before the first day of the
fiscal
period, with all dividends and distributions reinvested in additional shares
on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.