497 Series Fund (Disciplined Allocation and Value Fund

497 1 seriesfund497rev1205.htm SERIES FUNDS (DISCIPLINED ALLOCATION/VALUE-REV 497 Series Fund (Disciplined Allocation and Value Fund - Rev 1205

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, revised December 6, 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........................................................................ 34
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................................................................... 42
The Manager.......................................................................................... 51
Brokerage Policies of the Fund............................................................................ 55
Distribution and Service Plans............................................................................ 57
Payments to Fund Intermediaries........................................................................... 62
Performance of the Fund................................................................................... 66

About Your Account
How to Buy Shares......................................................................................... 70
How to Sell Shares........................................................................................ 81
How to Exchange Shares.................................................................................... 85
Dividends, Capital Gains and Taxes........................................................................ 89
Additional Information About the Fund..................................................................... 93

Financial Information About the Fund
Independent Registered Public Accounting Firm's Report.................................................... 94
Financial Statements...................................................................................... 95

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

Additional Information About the Fund's Investment Policies and Risks

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

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

|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 IRC ss.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."

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, 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. 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.

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 Swaption Transactions. The Fund may enter into a swaption transaction, which
is a contract that grants the holder, in return for payment of the purchase
price (the "premium") of the option, the right, but not the obligation, to enter
into an interest rate swap at a preset rate within a specified period of time,
with the writer of the contract. The writer of the contract receives the premium
and bears the risk of unfavorable changes in the preset rate on the underlying
interest rate swap. Unrealized gains/losses on swaptions are reflected in
investment assets and investment liabilities in the Fund's statement of
financial condition.

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

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

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

Transactions in options by the Fund are subject to limitations
established by the option exchanges. The exchanges limit the maximum number of
options that may be written or held by a single investor or group of investors
acting in concert. Those limits apply regardless of whether the options were
written or purchased on the same or different exchanges or are held in one or
more accounts or through one or more different exchanges or through one or more
brokers. Thus, the number of options that the Fund may write may be affected by
options written or held by other entities, including other investment companies
having the same advisor as the Fund (or an advisor that is an affiliate of the
Fund's advisor). The exchanges also impose position limits on futures
transactions. An exchange may order the liquidation of positions found to be in
violation of those limits and may impose certain other sanctions.

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

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

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

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

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

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

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

Other Investment Restrictions

|X| What Are "Fundamental Policies?" Fundamental policies are those
policies that the Fund has adopted to govern its investments that can be changed
only by the vote of a "majority" of the Fund's outstanding voting securities.
Under the Investment Company Act, a "majority" vote is defined as the vote of
the holders of the lesser of:
o 67% or more of the shares present or represented by proxy at a shareholder meeting, if the holders of more than 50% of the
outstanding shares are present or represented by proxy, or
o more than 50% of the outstanding shares.

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

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

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

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

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

o The Fund cannot invest in physical commodities or commodities contracts.
However, the Fund can invest in hedging instruments permitted by any of its
other investment policies, and can buy or sell options, futures, securities or
other instruments backed by, or the investment return from which is linked to,
changes in the price of physical commodities, commodity contracts or currencies.

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

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

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

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

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

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

Unless the Prospectus or this Statement of Additional Information
states that a percentage restriction applies on an ongoing basis, it applies
only at the time the Fund makes an investment (except in the case of borrowing
and investments in illiquid securities). The Fund need not sell securities to
meet the percentage limits if the value of the investment increases in
proportion to the size of the Fund.

For purposes of the Fund's policy not to concentrate its investments as
described above, the Fund has adopted the industry classifications set forth in
Appendix B to this Statement of Additional Information. This is not a
fundamental policy.

Disclosure of Portfolio Holdings. The Fund has adopted policies and
procedures concerning the dissemination of information about its portfolio
holdings by employees, officers and/or directors of the Investment Adviser
Distributor and Transfer Agent. These policies are designed to assure that
non-public information about portfolio securities is distributed only 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 the Fund.

o Public Disclosure. The Fund's portfolio holdings are made
publicly available no later than 60 days after the close of
each of the Fund's fiscal quarters in semi-annual and annual
reports to shareholders, or in its Statements of Investments
on Form N-Q, which are publicly available at the SEC. In
addition, the top 10 or more holdings are posted on the
OppenheimerFunds' website at www.oppenheimerfunds.com in the
"Fund Profiles" section. Other general information about the
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.

Until publicly disclosed, the 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, the need for transparency must be balanced against
the risk that third parties who gain access to the 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
securities that portfolio managers are trading on the Fund's behalf.

The Investment Adviser 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 Adviser or any affiliated person of the Investment Adviser) in
connection with the disclosure of the Fund's non-public portfolio
holdings. The receipt of investment advisory fees or other fees and
compensation paid to the Investment Adviser and its 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.

Except under special limited circumstances discussed below, month-end
lists of the Fund's complete portfolio holdings may be disclosed no sooner
than 30-days after the relevant month-end, subject to the procedures
below. If the Fund's complete portfolio holdings 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 Adviser'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 Adviser's
portfolio holdings non-disclosure agreement before receiving
the data, agreeing to keep information that is not publicly
available regarding the Fund's holdings confidential and
agreeing not to trade directly or indirectly based on the
information.

The Fund's complete 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
Adviser, 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 Adviser, 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 independent registered public
accounting firm, 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 Adviser to provide
portfolio security prices, and o Dealers, to obtain bids (price quotations if
securities are not priced by the Fund's regular pricing services).

Portfolio holdings information of the Fund may be provided, under limited
circumstances, to brokers and/or dealers 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, 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 Adviser'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 Adviser in connection with portfolio trading, and (2) by the
members of the Investment Adviser'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 the 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 the
Fund's entire portfolio or individual securities therein) may be provided
by senior officers of the Investment Adviser or attorneys on the legal
staff of the Investment Adviser, 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-advisers of portfolios (pursuant to confidentiality agreements),
o To consultants for retirement plans for plan sponsors/discussions at due diligence meetings (pursuant to confidentiality
agreements),
o Investment bankers in connection with merger discussions (pursuant to confidentiality agreements)

Portfolio managers and analysts may, subject to the Investment
Adviser'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 of the Fund and the Investment Adviser,
Distributor, and Transfer Agent (the "CCO") shall oversee the compliance
by the Investment Adviser, Distributor, Transfer Agent, and their
personnel with these policies and procedures. At least annually, the CCO
shall report to the Fund's 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's Board any material
violation of these policies and procedures during the previous calendar
quarter and shall make recommendations to the Board as to any amendments
that the CCO believes are necessary and desirable to carry out or improve
these policies and procedures.

The Investment Adviser 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, to reclassify unissued
shares into additional series or classes and to 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, preemptive rights or subscription rights. Shares
may be voted in person or by proxy at shareholder meetings.

The Fund currently has four classes of shares: Class A, Class B, Class
C and Class N. All classes invest in the same investment portfolio. Only
retirement plans may purchase Class N shares. Each class of shares:

o has its own dividends and distributions,
o pays certain expenses which may be different for the different classes,
o will generally have a different net asset value,
o will generally 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 a 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 have the right to call a meeting to
remove a Director or to take certain other action described in the Articles of
Incorporation or under Maryland law.

The Fund will hold a meeting when the Directors call a meeting or upon
proper request of shareholders. If the Fund 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 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.

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 Directors who are not "interested persons"
under the Investment Company Act (the "Independent Directors"). The members of
the Audit Committee are Joel W. Motley (Chairman), Mary F. Miller, Kenneth A.
Randall and Joseph M. Wikler. The Audit Committee held 6 meetings during the
Fund's fiscal year ended October 31, 2004. The Audit Committee furnishes the
Board with recommendations regarding the selection of the Fund's independent
registered public accounting firm (also referred to as the "independent
Auditors"). Other main functions of the Audit Committee outlined in the Audit
Committee Charter, include, but are not limited to: (i) reviewing the scope and
results of financial statement audits and the audit fees charged; (ii) reviewing
reports from the Fund's independent Auditors regarding the Fund's internal
accounting procedures and controls; (iii) reviewing reports from the Manager's
Internal Audit Department; (iv) maintaining a separate line of communication
between the Fund's independent Auditors and the Independent Directors; (v)
reviewing the independence of the Fund's independent Auditors; and (vi)
pre-approving the provision of any audit or non-audit services by the Fund's
independent Auditors, including tax services, that are not prohibited by the
Sarbanes-Oxley Act, to the Fund, the Manager and certain affiliates of the
Manager.

The members of the Regulatory & Oversight Committee are Robert G.
Galli (Chairman), Matthew P. Fink, Phillip A. Griffiths, Joel W. Motley and
Brian F. Wruble. 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 agency 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 Regulatory & Oversight Committee's Charter.

The members of the Governance Committee are, Phillip A. Griffiths
(Chairman), Kenneth A. Randall, Russell S. Reynolds, Jr. and Peter I Wold. 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 Governance Committee's Charter.

The Governance Committee's functions also include the selection and
nomination of Directors, including Independent Directors for election. The
Governance Committee may, but need not, consider the advice and recommendation
of the Manager and its affiliates in selecting nominees. The full Board elects
new Directors except for those instances when a shareholder vote is required.

To date, the Governance Committee has been able to identify from its
own resources an ample number of qualified candidates. Nonetheless, under the
current policy of the Board, if the Board determines that a vacancy exists or is
likely to exist on the Board, the Governance Committee will consider candidates
for Board membership including those recommended by the Fund's shareholders. The
Governance Committee will consider nominees recommended by Independent Board
members or recommended by any other Board members including Board members
affiliated with the Fund's Manager. The Governance Committee may, upon Board
approval, retain an executive search firm to assist in screening potential
candidates. Upon Board approval, the Governance Committee may also use the
services of legal, financial, or other external counsel that it deems necessary
or desirable in the screening process. 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, New York 10281-1008, to the attention of the Board of Directors
of Oppenheimer Disciplined Allocation Fund, c/o the Secretary of the Fund.

Submissions should, at a minimum, be accompanied by the following: (1)
the name, address, and business, educational, and/or other pertinent background
of the person being recommended; (2) a statement concerning whether the person
is an "interested person" as defined in the Investment Company Act; (3) any
other information that the Fund would be required to include in a proxy
statement concerning the person if he or she was nominated; and (4) the name and
address of the person submitting the recommendation and, if that person is a
shareholder, the period for which that person held Fund shares. Shareholders
should note that a person who owns securities issued by Massachusetts Mutual
Life Insurance Company (the parent company of the Manager) would be deemed an
"interested person" under the Investment Company Act. In addition, certain other
relationships with Massachusetts Mutual Life Insurance Company or its
subsidiaries, with registered broker-dealers, or with the Funds' outside legal
counsel may cause a person to be deemed an "interested person."

The Governance Committee has not established specific qualifications
that it believes must be met by a trustee nominee. In evaluating trustee
nominees, the Governance Committee considers, among other things, an
individual's background, skills, and experience; whether the individual is an
"interested person" as defined in the Investment Company Act; and whether the
individual would be deemed an "audit committee financial expert" within the
meaning of applicable SEC rules. The Governance Committee also considers whether
the individual's background, skills, and experience will complement the
background, skills, and experience of other nominees and will contribute to the
Board. There are no differences in the manner in which the Governance Committee
evaluates nominees for directors based on whether the nominee is recommended by
a shareholder. Candidates are expected to provide a mix of attributes,
experience, perspective and skills necessary to effectively advance the
interests of shareholders.

The members of the Proxy Committee are Russell S. Reynolds, Jr.
(Chairman), Matthew P. Fink and Mary F. Miller. 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 the proxy voting of
portfolio securities held by the Fund 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. All of the Directors are
also directors or trustees of the following Oppenheimer funds (referred to as "Board I Funds"):

Oppenheimer AMT-Free Municipals Oppenheimer International Growth Fund
Oppenheimer AMT-Free New York Municipals Oppenheimer International Large Cap Core Fund
Oppenheimer Balanced Fund Oppenheimer International Small Company Fund
Oppenheimer California Municipal Fund Oppenheimer International Value Fund
Oppenheimer Capital Appreciation Fund Oppenheimer Limited Term California Municipal Fund
Oppenheimer Developing Markets Fund Oppenheimer Money Market Fund, Inc.
Oppenheimer Discovery Fund Oppenheimer Multi-State Municipal Trust
Oppenheimer Dividend Growth Fund Oppenheimer Portfolio Series
Oppenheimer Emerging Growth Fund Oppenheimer Real Estate Fund
Oppenheimer Emerging Technologies Fund Oppenheimer Select Value Fund
Oppenheimer Enterprise Fund Oppenheimer Series Fund, Inc.
Oppenheimer Global Fund OFI Tremont Core Strategies Hedge Fund
Oppenheimer Global Opportunities Fund OFI Tremont Market Neutral Hedge Fund
Oppenheimer Gold & Special Minerals Fund Oppenheimer Tremont Market Neutral Fund LLC
Oppenheimer Growth Fund Oppenheimer Tremont Opportunity Fund LLC
Oppenheimer International Diversified Fund Oppenheimer U.S. Government Trust

In addition to being a director or trustee of each of the Board I
Funds, Messrs. Galli and Wruble are directors or trustees of ten other
portfolios, and Messrs. Wikler and Wold are trustees of one other portfolio, 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 charge on Class A shares is waived for
that group because of the reduced sales efforts realized by the Distributor.

Messrs. Ferreira, Leavy, Manioudakis, Gord, Caan, Moon, Bomfim,
Gillespie, Murphy, Petersen, Vandehey, Vottiero, Wixted and Zack and Mss.
Bloomberg and Ives, who are officers of the Fund, hold the same offices with one
or more of the other Board I Funds. As of October 31, 2005 the Directors and
officers of the Fund, as a group, owned of record or beneficially less than 1%
of any class of shares of the Fund. The foregoing statement does not reflect
ownership of shares held of record by an employee benefit plan for employees of
the Manager, other than the shares beneficially owned under that plan by the
officers of the Fund listed above. In addition, none of the Independent
Directors (nor any of their immediate family members) owns securities of either
the Manager or the Distributor of the Board I Funds or of any entity directly or
indirectly controlling, controlled by or under common control with the Manager
or the Distributor.

Affiliated Transactions and Material Business Relationships. Mr.
Reynolds has reported he has a controlling interest in The Directorship Group,
Inc. (the "Directorship 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 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 Group and Massachusetts Mutual Life Insurance Company were not
material business or professional relationships that would compromise Mr.
Reynolds's 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.

Biographical Information. The Directors and officers, their positions
with the Fund, length of service in such position(s) and principal occupations
and business affiliations during at least the past five years are listed in the
charts below. The charts also include information about each Director's
beneficial share ownership in the Fund and in all of the registered investment
companies that the Director oversees in the Oppenheimer family of funds
("Supervised Funds"). Ms. Miller was elected to certain Board I Funds during
2004 and did not hold shares of Board I Funds during the calendar year ended
December 31, 2004. Mr. Fink was elected to the Board I Funds in 2005 and did not
hold shares of Board I Funds during the calendar year ended December 31, 2004.
The address of each Director in the chart below is 6803 S. Tucson Way,
Centennial, Colorado 80112-3924. Each Director serves for an indefinite term, or
until his or her resignation, retirement, death or removal.

-------------------------------------------------------------------------------------------------------------------------------------
                                                       Independent Directors
-------------------------------------------------------------------------------------------------------------------------------------
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
Name, Position(s) Held       Principal Occupation(s) During the Past 5 Years; Other           Dollar Range of     Aggregate Dollar
                                                                                                   Shares
                                                                                                Beneficially      Range Of Shares
with the Fund, Length of     Trusteeships/Directorships Held; Number of Portfolios in the         Owned in       Beneficially Owned
Service, Age                 Fund Complex Currently Overseen                                      the Fund      in Supervised Funds
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
---------------------------- ---------------------------------------------------------------- ---------------------------------------
                                                                                                     As of December 31, 2004
---------------------------- ---------------------------------------------------------------- ---------------------------------------
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
Clayton K. Yeutter,          Director of American Commercial Lines (barge company) (since     None              Over $100,000
Chairman of the Board of     January 2005); Attorney at Hogan & Hartson (law firm) (since
Directors since 2003,        June 1993); Director of Covanta Holding Corp. (waste-to-energy
Director since 1996          company) (since 2002); Director of Weyerhaeuser Corp.
Age: 74                      (1999-April 2004); Director of Caterpillar, Inc.
                             (1993-December 2002); Director of ConAgra Foods
                             (1993-2001); Director of Texas Instruments
                             (1993-2001); Director of FMC Corporation
                             (1993-2001). Oversees 38 portfolios in the
                             OppenheimerFunds complex.
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
Matthew P. Fink,             Trustee of the Committee for Economic Development (policy        None              None
Director since 2005          research foundation) (since 2005); Director of ICI Education
Age: 64                      Foundation (education foundation) (since October 1991);
                             President of the Investment Company Institute
                             (trade association) (1991-2004); Director of ICI
                             Mutual Insurance Company (insurance company)
                             (1991-2004). Oversees 38 portfolios in the
                             OppenheimerFunds complex.
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
Robert G. Galli,             A director or trustee of other Oppenheimer funds. Oversees 48    None              Over $100,000
Director since 1996          portfolios in the OppenheimerFunds complex.
Age: 72

---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
Phillip A. Griffiths,        Director of GSI Lumonics Inc. (precision medical equipment       None              Over $100,000
Director since 1999          supplier) (since 2001); Trustee of Woodward Academy (since
Age: 67                      1983); Senior Advisor of The Andrew W. Mellon Foundation
                             (since 2001); Member of the National Academy of
                             Sciences (since 1979); Member of the American
                             Philosophical Society (since 1996); Council on
                             Foreign Relations (since 2002); Director of the
                             Institute for Advanced Study (1991-2004); Director
                             of Bankers Trust New York Corporation (1994-1999).
                             Oversees 38 portfolios in the OppenheimerFunds
                             complex.
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
Mary F. Miller,              Trustee of the American Symphony Orchestra (not-for-profit)      None              None
Director since 2004          (since October 1998); and Senior Vice President and General
Age: 63                      Auditor of American Express Company (financial services
                             company) (July 1998-February 2003). Oversees 38
                             portfolios in the OppenheimerFunds complex.
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
Joel W. Motley,              Director of Columbia Equity Financial Corp. (privately-held      None              Over $100,000
Director since 2002          financial adviser) (since 2002); Managing Director of Carmona
Age: 53                      Motley, Inc. (privately-held financial adviser) (since January
                             2002); Managing Director of Carmona Motley Hoffman
                             Inc. (privately-held financial adviser) (January
                             1998-December 2001); Member of the Finance and
                             Budget Committee of the Council on Foreign
                             Relations, the Investment Committee of the
                             Episcopal Church of America, the Investment
                             Committee of Human Rights Watch and the Investment
                             Committee of Historic Hudson Valley. Oversees 38
                             portfolios in the OppenheimerFunds complex.
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
Kenneth A. Randall,          Director of Dominion Resources, Inc. (electric utility holding   None              Over $100,000
Director since 1996          company) (since February 1972); Former Director of Prime
Age: 78                      Retail, Inc. (real estate investment trust), Dominion Energy
                             Inc. (electric power and oil & gas producer),
                             Lumbermens Mutual Casualty Company, American
                             Motorists Insurance Company and American
                             Manufacturers Mutual Insurance Company; Former
                             President and Chief Executive Officer of The
                             Conference Board, Inc. (international economic and
                             business research). Oversees 38 portfolios in the
                             OppenheimerFunds complex.
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
Russell S. Reynolds, Jr.,    Chairman of The Directorship Search Group, Inc. (corporate       None              Over $100,000
Director since 1996          governance consulting and executive recruiting) (since 1993);
Age: 73                      Life Trustee of International House (non-profit educational
                             organization); Former Trustee of The Historical Society of the
                             Town of Greenwich. Oversees 38 portfolios in the
                             OppenheimerFunds complex.
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
Joseph M. Wikler,            Director of the following  medical device  companies:  Medintec  None              $50,001-$100,000
Director since 2005          (since  1992)  and  Cathco  (since  1996);  Director  of  Lakes
Age: 64                      Environmental   Association   (since   1996);   Member  of  the
                             Investment Committee of the Associated Jewish
                             Charities of Baltimore (since 1994); Director of
                             Fortis/Hartford mutual funds (1994-December 2001).
                             Oversees 39 portfolios in the OppenheimerFunds
                             complex.
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
Peter I. Wold,               President   of  Wold  Oil   Properties,   Inc.   (oil  and  gas  None              Over $100,000
Director since 2005          exploration  and  production   company)   (since  1994);   Vice
Age: 57                      President,  Secretary and Treasurer of Wold Trona Company, Inc.
                             (soda ash processing and production) (since 1996);
                             Vice President of Wold Talc Company, Inc. (talc
                             mining) (since 1999); Managing Member of
                             Hole-in-the-Wall Ranch (cattle ranching) (since
                             1979); Director and Chairman of the Denver Branch
                             of the Federal Reserve Bank of Kansas City
                             (1993-1999); and Director of PacifiCorp. (electric
                             utility) (1995-1999). Oversees 39 portfolios in the
                             OppenheimerFunds complex.
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
Brian F. Wruble,             General Partner of Odyssey  Partners,  L.P. (hedge fund) (since  None              Over $100,000
Director since 2005          September 1995);  Director of Special Value Opportunities Fund,
Age: 62                      LLC (registered  investment  company) (since  September  2004);
                             Director of Zurich Financial Investment Advisory
                             Board (affiliate of the Manager's parent company)
                             (since October 2004); Board of Governing Trustees
                             of The Jackson Laboratory (non-profit) (since
                             August 1990); Trustee of the Institute for Advanced
                             Study (non-profit educational institute) (since May
                             1992); Special Limited Partner of Odyssey
                             Investment Partners, LLC (private equity
                             investment) (January 1999-September 2004); Trustee
                             of Research Foundation of AIMR (2000-2002)
                             (investment research, non-profit); Governor, Jerome
                             Levy Economics Institute of Bard College (August
                             1990-September 2001) (economics research); Director
                             of Ray & Berendtson, Inc. (May 2000-April 2002)
                             (executive search firm). Oversees 48 portfolios in
                             the OppenheimerFunds complex.
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------

         The address of Mr. Murphy is Two World Financial Center, 225 Liberty Street, 11th Floor, New York, New York 10281-1008. Mr.
Murphy serves as a Director and as an officer for an indefinite term, or until his resignation, retirement, death or removal. 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.

------------------------------------------------------------------------------------------------------------------------------------
                                                  Interested Director and Officer
------------------------------------------------------------------------------------------------------------------------------------
--------------------------- ----------------------------------------------------------------- ---------------- ---------------------
Name, Position(s) Held      Principal Occupation(s) During the Past 5 Years; Other             Dollar Range      Aggregate Dollar
                                                                                                 of Shares
                                                                                               Beneficially      Range Of Shares
with Fund, Length of        Trusteeships/Directorships Held; Number of Portfolios in the         Owned in       Beneficially Owned
Service, Age                Fund Complex Currently Overseen                                      the Fund      in Supervised Funds
--------------------------- ----------------------------------------------------------------- ---------------- ---------------------
--------------------------- ----------------------------------------------------------------- --------------------------------------
                                                                                                     As of December 31, 2004
--------------------------- ----------------------------------------------------------------- --------------------------------------
--------------------------- ----------------------------------------------------------------- ----------------- --------------------
John V. Murphy,             Chairman, Chief Executive Officer and Director (since June        None              Over $100,000
President since 2001 and    2001) and President (since September 2000) of the Manager;
Director since 2001         President and a director or trustee of other Oppenheimer funds;
Age: 56                     President and Director of Oppenheimer Acquisition Corp. ("OAC")
                            (the Manager's parent holding company) and of
                            Oppenheimer Partnership Holdings, Inc. (holding
                            company subsidiary of the Manager) (since July
                            2001); Director of OppenheimerFunds Distributor,
                            Inc. (subsidiary of the Manager) (since November
                            2001); Chairman and Director of Shareholder
                            Services, Inc. and of Shareholder Financial
                            Services, Inc. (transfer agent subsidiaries of the
                            Manager) (since July 2001); President and Director
                            of OppenheimerFunds Legacy Program (charitable trust
                            program established by the Manager) (since July
                            2001); 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
                            Director (since July 2001) of Oppenheimer Real Asset
                            Management, Inc.; Executive Vice President of
                            Massachusetts Mutual Life Insurance Company (OAC's
                            parent company) (since February 1997); Director of
                            DLB Acquisition Corporation (holding company parent
                            of Babson Capital Management LLC) (since June 1995);
                            Member of the Investment Company Institute's Board
                            of Governors (since October 3, 2003); Chief
                            Operating Officer of the Manager (September
                            2000-June 2001); President and Trustee of MML Series
                            Investment Fund and MassMutual Select Funds
                            (open-end investment companies) (November
                            1999-November 2001); Director of C.M. Life Insurance
                            Company (September 1999-August 2000); President,
                            Chief Executive Officer and Director of MML Bay
                            State Life Insurance Company (September 1999-August
                            2000); Director of Emerald Isle Bancorp and Hibernia
                            Savings Bank (wholly-owned subsidiary of Emerald
                            Isle Bancorp) (June 1989-June 1998). Oversees 77
                            portfolios in the OppenheimerFunds complex as a
                            director or trustee and officer and an additional 10
                            portfolios as an officer.
--------------------------- ----------------------------------------------------------------- ----------------- --------------------

         The addresses of the officers in the chart below are as follows: for Messrs. Ferreira, Leavy, Manioudakis, Gord, Caan, Moon,
Bomfim, Gillespie and Zack and Ms. Bloomberg, Two World Financial Center, 225 Liberty Street, New York, New York 10281-1008, for
Messrs. Petersen, Vandehey, Vottiero, and Wixted and Ms. Ives, 6803 S. Tucson Way, Centennial, Colorado 80112-3924. Each officer
serves for an indefinite term or until his or her resignation, retirement, death or removal.

-----------------------------------------------------------------------------------------------------------------------------
                                                 Other Officers of the Fund
-----------------------------------------------------------------------------------------------------------------------------
----------------------------------- -----------------------------------------------------------------------------------------
Name, Position(s) Held with Fund,   Principal Occupation(s) During Past 5 Years
Length of Service, Age
----------------------------------- -----------------------------------------------------------------------------------------
----------------------------------- -----------------------------------------------------------------------------------------
Emmanuel Ferreira,                  Vice President of the Manager since January 2003; Portfolio Manager at Lashire
Vice President and Portfolio        Investments (July 1999-December 2002). An officer of 5 portfolios in the
Manager since 2003                  OppenheimerFunds complex.
Age:  38
----------------------------------- -----------------------------------------------------------------------------------------
----------------------------------- -----------------------------------------------------------------------------------------
Christopher Leavy,                  Senior Vice President of the Manager since September 2000; portfolio manager of Morgan
Vice President and Portfolio        Stanley Dean Witter Investment Management (1997-September 2000). An officer of 8
Manager since 2000                  portfolios in the OppenheimerFunds complex.
Age:  34
----------------------------------- -----------------------------------------------------------------------------------------
----------------------------------- -----------------------------------------------------------------------------------------
Angelo Manioudakis, Senior Vice President of the Manager (since April 2002), of
HarbourView Asset Vice President and Portfolio Management Corporation (since
April, 2002 and of OFI Institutional Asset Management, Manager since 2002 Inc.
(since June 2002); Executive Director and portfolio manager for Miller, Anderson
& Age: 39 Sherrerd, a division of Morgan Stanley Investment Management
(August 1993-April 2002).
                                    An officer of 14 portfolios in the
OppenheimerFunds complex.

----------------------------------- -----------------------------------------------------------------------------------------
----------------------------------- -----------------------------------------------------------------------------------------
Benjamin J. Gord,                   Vice President of the Manager (since April 2002), of HarbourView Asset Management
Vice President and Portfolio        Corporation (since April 2002) and of OFI Institutional Asset Management, Inc. (as of
Manager since 2002                  June 2002); Executive Director and senior fixed income analyst at Miller Anderson &
Age:  43                            Sherrerd, a division of Morgan Stanley Investment Management (April 1992-March 2002). A
                                    portfolio manager of 11 other portfolios in the OppenheimerFunds complex.

----------------------------------- -----------------------------------------------------------------------------------------
----------------------------------- -----------------------------------------------------------------------------------------
Geoffrey Caan,                      Vice President and Portfolio Manager of the Manager since August 2003; Vice President
Vice President and Portfolio        of ABN AMRO NA, Inc. (June 2002-August 2003); Vice President of Zurich Scudder
Manager since 2003                  Investments (January 1999-June 2002). A portfolio manager of 11 other portfolios in the
Age:  36                            OppenheimerFunds complex.


----------------------------------- -----------------------------------------------------------------------------------------
----------------------------------- -----------------------------------------------------------------------------------------
Charles Moon,                       Vice President of the Manager (since April 2002, of HarbourView Asset Management
Vice President and Portfolio        Corporation (since April 2002) and of OFI Institutional Asset Management, Inc. (since
Manager since 2002                  June 2002); Executive Director and portfolio manager at Miller Anderson & Sherrerd, a
Age:  38                            division of Morgan Stanley Investment Management (June 1999-March 2002); Vice President
                                    of Citicorp Securities Inc. (June 1993-May 1999). A portfolio manager of 11 other
                                    portfolios in the OppenheimerFunds complex.
----------------------------------- -----------------------------------------------------------------------------------------
----------------------------------- -----------------------------------------------------------------------------------------
Antulio Bomfim, Vice President of the Manager since October 2003; Senior
Economist at the Board of Vice President and Portfolio Governors of the Federal
Reserve System from June 1992 to October 2003. A portfolio Manager since 2003
manager of 11 other portfolios in the OppenheimerFunds complex.
Age:  38
----------------------------------- -----------------------------------------------------------------------------------------
----------------------------------- -----------------------------------------------------------------------------------------
Mark S. Vandehey,                   Senior Vice President and Chief Compliance Officer of the Manager (since March 2004);
Vice President and Chief            Vice President of OppenheimerFunds Distributor, Inc., Centennial Asset Management
Compliance Officer since 2004       Corporation and Shareholder Services, Inc. (since June 1983). Former Vice President and
Age: 55                             Director of Internal Audit of the Manager (1997-February 2004). An officer of 87
                                    portfolios in the OppenheimerFunds complex.
----------------------------------- -----------------------------------------------------------------------------------------
----------------------------------- -----------------------------------------------------------------------------------------
Brian W. Wixted,                    Senior Vice President and Treasurer of the Manager (since March 1999); Treasurer of the
Treasurer since 1999                following: HarbourView Asset Management Corporation, Shareholder Financial Services,
Age: 46                             Inc., Shareholder Services, Inc., Oppenheimer Real Asset Management Corporation, and
                                    Oppenheimer Partnership Holdings, Inc.
                                    (since March 1999), OFI Private Investments,
                                    Inc. (since March 2000), OppenheimerFunds
                                    International Ltd. (since May 2000),
                                    OppenheimerFunds plc (since May 2000), OFI
                                    Institutional Asset Management, Inc. (since
                                    November 2000), and OppenheimerFunds Legacy
                                    Program (charitable trust program
                                    established by the Manager) (since June
                                    2003); Treasurer and Chief Financial Officer
                                    of OFI Trust Company (trust company
                                    subsidiary of the Manager) (since May 2000);
                                    Assistant Treasurer of the following: OAC
                                    (since March 1999),Centennial Asset
                                    Management Corporation (March 1999-October
                                    2003) and OppenheimerFunds Legacy Program
                                    (April 2000-June 2003); Principal and Chief
                                    Operating Officer of Bankers Trust
                                    Company-Mutual Fund Services Division (March
                                    1995-March 1999). An officer of 87
                                    portfolios in the OppenheimerFunds complex.
----------------------------------- -----------------------------------------------------------------------------------------
----------------------------------- -----------------------------------------------------------------------------------------
Brian Petersen,                     Assistant Vice President of the Manager (since August 2002); Manager/Financial Product
Assistant Treasurer since 2004      Accounting of the Manager (November 1998-July 2002). An officer of 87 portfolios in the
Age: 35                             OppenheimerFunds complex.

----------------------------------- -----------------------------------------------------------------------------------------
----------------------------------- -----------------------------------------------------------------------------------------
Philip F. Vottiero,                 Vice President/Fund Accounting of the Manager (since March 2002); Vice
Assistant Treasurer since 2002      President/Corporate Accounting of the Manager (July 1999-March 2002); Chief Financial
Age: 42                             Officer of Sovlink Corporation (April 1996-June 1999). An officer of 87 portfolios in
                                    the OppenheimerFunds complex.
----------------------------------- -----------------------------------------------------------------------------------------
----------------------------------- -----------------------------------------------------------------------------------------
Robert G. Zack,                     Executive Vice President (since January 2004) and General Counsel (since March 2002) of
Secretary since 2001                the Manager; General Counsel and Director of the Distributor (since December 2001);
Age: 57                             General Counsel of Centennial Asset Management Corporation (since December 2001);
                                    Senior Vice President and General Counsel of HarbourView Asset Management Corporation
                                    (since December 2001); Secretary and General Counsel of OAC (since November 2001);
                                    Assistant Secretary (since September 1997) and Director (since November 2001) of
                                    OppenheimerFunds International Ltd. and OppenheimerFunds plc; Vice President and
                                    Director of Oppenheimer Partnership Holdings, Inc. (since December 2002); Director of
                                    Oppenheimer Real Asset Management, Inc. (since November 2001); Senior Vice President,
                                    General Counsel and Director of Shareholder Financial Services, Inc. and Shareholder
                                    Services, Inc. (since December 2001); Senior Vice President, General Counsel and
                                    Director of OFI Private Investments, Inc. and OFI Trust Company (since November 2001);
                                    Vice President of OppenheimerFunds Legacy Program (since June 2003); Senior Vice
                                    President and General Counsel of OFI Institutional Asset Management, Inc. (since
                                    November 2001); Director of OppenheimerFunds (Asia) Limited (since December 2003);
                                    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 the following: Shareholder Services, Inc. (May
                                    1985-November 2001), Shareholder Financial Services, Inc. (November 1989-November
                                    2001), and OppenheimerFunds International Ltd. (September 1997-November 2001). An
                                    officer of 87 portfolios in the OppenheimerFunds complex.
----------------------------------- -----------------------------------------------------------------------------------------
----------------------------------- -----------------------------------------------------------------------------------------
Kathleen T. Ives,                   Vice President (since June 1998) and Senior Counsel and Assistant Secretary (since
Assistant Secretary since 2001      October 2003) of the Manager; Vice President (since 1999) and Assistant Secretary
Age: 40                             (since October 2003) of the Distributor; Assistant Secretary of Centennial Asset
                                    Management Corporation (since October 2003); Vice President and Assistant Secretary of
                                    Shareholder Services, Inc. (since 1999); Assistant Secretary of OppenheimerFunds Legacy
                                    Program and Shareholder Financial Services, Inc. (since December 2001); Assistant
                                    Counsel of the Manager (August 1994-October 2003). An officer of 87 portfolios in the
                                    OppenheimerFunds complex.
----------------------------------- -----------------------------------------------------------------------------------------
----------------------------------- -----------------------------------------------------------------------------------------
Lisa I. Bloomberg,                  Vice President and Associate Counsel of the Manager (since May 2004); First Vice
Assistant Secretary since 2004      President (April 2001-April 2004), Associate General Counsel (December 2000-April
Age: 37                             2004), Corporate Vice President (May 1999-April 2001) and Assistant General Counsel
                                    (May 1999-December 2000) of UBS Financial Services Inc. (formerly, PaineWebber
                                    Incorporated). An officer of 87 portfolios in the OppenheimerFunds complex.
----------------------------------- -----------------------------------------------------------------------------------------
----------------------------------- -----------------------------------------------------------------------------------------
Phillip S. Gillespie,               Senior Vice President and Deputy General Counsel of the Manager (since September 2004);
Assistant Secretary since 2004      Mr. Gillespie held the following positions at Merrill Lynch Investment Management:
Age: 41                             First Vice President (2001-September 2004); Director (2000-September 2004) and Vice
                                    President (1998-2000). An officer of 87
portfolios in the OppenheimerFunds complex.
----------------------------------- -----------------------------------------------------------------------------------------

|X| Remuneration of the Officers and Directors. The officers and the interested
Directors of the Fund, who are affiliated with the Manager, receive no salary or
fee from the Fund. The Independent Directors' compensation from the Fund, shown
below, is for serving as a Director and member of a committee (if applicable),
with respect to the Fund's fiscal year ended October 31, 2005. The total
compensation from the Fund and fund complex represents compensation, including
accrued retirement benefits, for serving as a Director and member of a committee
(if applicable) of the Boards of the Fund and other funds in the
OppenheimerFunds complex during the calendar year ended December 31, 2004.


--------------------------------- -------------------- --------------------- ---------------------- --------------------------
Name and Other Fund Position(s)        Aggregate       Retirement Benefits     Estimated Annual      Total Compensation From
                                   Compensation From    Accrued as Part of       Benefits Upon          the Fund and Fund
(as applicable)                       the Fund(1)         Fund Expenses          Retirement(2)               Complex
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
Clayton K. Yeutter                      $604(3)               $1,511                $86,171                 $173,700
Chairman of the Board
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
Matthew P. Fink(4)                       None                  None                 $2,641                    None
Proxy Committee Member and
Regulatory & Oversight
Committee Member
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
Robert G. Galli
Regulatory & Oversight                   $449                  $901               $100,824(5)              $237,312(6)
Committee Chairman
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
Phillip A. Griffiths                    $492(7)                $483                 $34,972                 $142,092
Governance Committee Chairman
and Regulatory & Oversight
Committee Member
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
Mary F. Miller(8)
Audit Committee Member and                $28                  None                 $7,128                   $8,532
Proxy Committee Member
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
Joel W. Motley                          $523(9)                $200                 $23,945                 $150,760
Audit Committee Chairman and
Regulatory & Oversight
Committee Member
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
Kenneth A. Randall                       $466                None(10)               $85,944                 $134,080
Audit Committee Member and
Governance Committee Member
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
Edward V. Regan(11)                      $413                 $1,066                $70,977                 $118,788
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
Russell S. Reynolds, Jr.                 $371                  $943                 $66,602                 $106,792
Proxy Committee Chairman and
Governance Committee Member
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
Donald W. Spiro(12)                      $222                  None                  None                    $64,080
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
Joseph M. Wikler(13)                     None                  None                    -                     $23,000
Audit Committee Member
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
Peter I. Wold(13)                        None                  None                    -                     $20,500
Governance Committee Member
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
Brian F. Wruble(1(4))
Regulatory & Oversight                   None                  None               $22,238(15)            $111,000(1(6))
Committee Member
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
1.   "Aggregate Compensation From the Fund" includes fees and deferred
     compensation, if any.
2.   "Estimated Annual Benefits 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.       Mr. Fink was appointed as a Board member of 10 of the Board I Funds effective January 1, 2005 and was elected as a Board
     Member of all of the other Board I Funds during 2005.
5.       Includes $45,840 estimated benefits to be paid to Mr. Galli for serving as a director or trustee of 10 other Oppenheimer
     funds that are not Board I Funds.
6.       Includes $111,000 for serving as a director or trustee of 10 other Oppenheimer funds (at December 31, 2004) that are not
     Board I Funds.
7.   Includes $492 deferred by Mr. Griffiths under the "Deferred Compensation
     Plan" described below.
8.   Ms. Miller was appointed as a Board member of 13 of the Board I Funds
     effective August13, 2004 and of 9 of the Board I Funds effective October
     26, 2004. She was elected as a Board member of all of the Board I Funds
     during 2005.
9.   Includes $209 deferred by Mr. Motley under the "Deferred Compensation Plan"
     described below. 10. Due to actuarial considerations, no additional
     retirement benefits were accrued with respect to Mr. Randall. 11. Mr. Regan
     retired as Directors of the Board I funds effective June 30, 2005. 12. Mr.
     Spiro retired as Directors of the Board I funds effective October 31, 2004.
     13. Mr. Wikler and Mr. Wold were elected as Board members of 23 of the
     Board I Funds, including the Fund, as of August 17, 2005.
     They had served as Board members of the other 11 Board I Funds prior to that date.
14.      Mr. Wruble was appointed as Director of the Board I Funds effective October 10, 2005.
15.  Estimated benefits to be paid to Mr. Wruble for serving as a director or
     trustee of 10 other Oppenheimer funds that are not Board I Funds. Mr.
     Wruble's service as a director or trustee of such funds will not be counted
     towards the fulfillment of his eligibility requirements for payments under
     the Board I retirement plan, described below.
16.      For serving as a director or trustee of 10 other Oppenheimer funds (at December 31, 2004) that are not Board I Funds.

|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
or trustee for any of the Board I Funds for at least seven years to be eligible
for retirement plan benefits and must serve for at least 15 years to be eligible
for the maximum benefit. The amount of retirement benefits a Director will
receive depends on the amount of the Director's compensation, including future
compensation and the length of his or her service on the Board.

         |X| Deferred Compensation Plan. 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 will be determined based upon the amount of
compensation deferred and the performance of the selected funds.

         Deferral of the 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 compensation account.

|X| Major Shareholders. As of January 31, 2005, the only persons or entities 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 the Manager where a directly-controlled affiliate of
the Manager 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 the independent registered public
              accounting firm, unless circumstances indicate otherwise.
o             In general, the Fund opposes "anti-takeover" proposals and
              supports the 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 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.
--------------------------------------- -----------------------------------------------------------------------------
--------------------------------------- -----------------------------------------------------------------------------
                 2002                                                         $757,734
--------------------------------------- -----------------------------------------------------------------------------
--------------------------------------- -----------------------------------------------------------------------------
                 2003                                                         $698,136
--------------------------------------- -----------------------------------------------------------------------------
--------------------------------------- -----------------------------------------------------------------------------
                 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.


 Portfolio Managers. The Fund's portfolio is managed by Emmanuel Ferreira,
Christopher Leavy, Angelo Manioudakis and a team of investment professionals
including Benjamin Gord, Geoffrey Caan, Charles Moon and Antulio N. Bomfim (each
is referred to as a "Portfolio Manager" and collectively they are referred to as
the "Portfolio Managers"). They are the persons who are responsible for the
day-to-day management of the Fund's investments.



                   Other Accounts Managed by the Portfolio Managers. The Fund's
         portfolio is managed by Emmanuel Ferreira, Christopher Leavy, Angelo
         Manioudakis and a team of investment professionals including Benjamin
         J. Gord, Geoffrey Caan, Charles Moon and Antulio N. Bomfim who are
         responsible for the day-to-day management of the fund's investments. In
         addition to managing the Fund's investment portfolio, Messrs. Ferreira,
         Leavy, Manioudakis, Gord, Caan, Moon and Bomfim also manage other
         investment portfolios on behalf of the Manager or its affiliates. The
         following table provides information, as of October 31, 2005, regarding
         the other portfolios managed by Messrs. Ferreira, Leavy, Manioudakis,
         Gord, Caan, Moon and Bomfim. None of those portfolios has an advisory
         fee based on performance:

     Portfolio Manager        Registered  Total Assets   Other Pooled  Total Assets in     Other     Total Assets
                                               in
                                           Registered                    Other Pooled
                              Investment   Investment     Investment      Investment                   in Other
                              Companies     Companies      Vehicles        Vehicles      Accounts      Accounts
                               Managed      Managed*       Managed         Managed*       Managed      Managed*
     ---------------------------------------------------------------------------------------------------------------
     ---------------------------------------------------------------------------------------------------------------
     Emmanuel Ferreira            4         $3,420.9                None            None          None          None
     ---------------------------------------------------------------------------------------------------------------
     ---------------------------------------------------------------------------------------------------------------
     Christopher Leavy            11        $7,676.2          2             $74.4          None          None
     ---------------------------------------------------------------------------------------------------------------
     ---------------------------------------------------------------------------------------------------------------
     Angelo Manioudakis           17        $12,417.7         6             $193.1           1           $39.1
     ---------------------------------------------------------------------------------------------------------------
     ---------------------------------------------------------------------------------------------------------------
     Benjamin Gord                14        $11,901.5         6             $193.1           1           $39.1
     ---------------------------------------------------------------------------------------------------------------
     ---------------------------------------------------------------------------------------------------------------
     Geoffrey Caan                14        $11,901.5         6             $193.1           1           $39.1
     ---------------------------------------------------------------------------------------------------------------
     ---------------------------------------------------------------------------------------------------------------
     Charles Moon                 14        $11,901.5         6             $193.1           1           $39.1
     ---------------------------------------------------------------------------------------------------------------
     ---------------------------------------------------------------------------------------------------------------
     Antulio N. Bomfim            14        $11,901.5         6             $193.1           1           $39.1

     *  In millions.


                As indicated above, each of the Portfolio Managers also manages
         other funds. Potentially, at times, those responsibilities could
         conflict with the interests of the Fund. That may occur whether the
         investment strategies of the other fund are the same as, or different
         from, the Fund's investment objectives and strategies. For example the
         Portfolio Manager may need to allocate investment opportunities between
         the Fund and another fund having similar objectives or strategies, or
         he may need to execute transactions for another fund that could have a
         negative impact on the value of securities held by the Fund. Not all
         funds and accounts advised by the Manager have the same management fee.
         If the management fee structure of another fund is more advantageous to
         the Manager than the fee structure of the Fund, the Manager could have
         an incentive to favor the other fund. However, the Manager's compliance
         procedures and Code of Ethics recognize the Manager's fiduciary
         obligations to treat all of its clients, including the Fund, fairly and
         equitably, and are designed to preclude the Portfolio Managers from
         favoring one client over another. It is possible, of course, that those
         compliance procedures and the Code of Ethics may not always be adequate
         to do so. At different times, one or more of the Fund's Portfolio
         Managers may manage other funds or accounts with investment objectives
         and strategies that are similar to those of the Fund, or may manage
         funds or accounts with investment objectives and strategies that are
         different from those of the Fund.

         Compensation of the Portfolio Managers. The Fund's Portfolio Managers
         are employed and compensated by the Manager, not the Fund. Under the
         Manager's compensation program for its portfolio managers and portfolio
         analysts, their compensation is based primarily on the investment
         performance results of the funds and accounts they manage, rather than
         on the financial success of the Manager. This is intended to align the
         portfolio managers' and analysts' interests with the success of the
         funds and accounts and their investors. The Manager's compensation
         structure is designed to attract and retain highly qualified investment
         management professionals and to reward individual and team
         contributions toward creating shareholder value. As of October 31, 2005
         each Portfolio Managers' compensation consisted of three elements: a
         base salary, an annual discretionary bonus and eligibility to
         participate in long-term awards of options and appreciation rights in
         regard to the common stock of the Manager's holding company parent.
         Senior portfolio managers may also be eligible to participate in the
         Manager's deferred compensation plan.

         The base pay component of each portfolio manager is reviewed regularly
         to ensure that it reflects the performance of the individual, is
         commensurate with the requirements of the particular portfolio,
         reflects any specific competence or specialty of the individual
         manager, and is competitive with other comparable positions, to help
         the Manager attract and retain talent. The annual discretionary bonus
         is determined by senior management of the Manager and is based on a
         number of factors, including a fund's pre-tax performance for periods
         of up to five years, measured against an appropriate benchmark selected
         by management. The Lipper benchmark with respect to the Fund is Lipper
         - Flexible Portfolio Funds. Other factors include management quality
         (such as style consistency, risk management, sector coverage, team
         leadership and coaching) and organizational development. The Portfolio
         Managers' compensation is not based on the total value of the Fund's
         portfolio assets, although the Fund's investment performance may
         increase those assets. The compensation structure is also intended to
         be internally equitable and serve to reduce potential conflicts of
         interest between the Fund and other funds and accounts managed by the
         Portfolio Managers. The compensation structure of the other funds and
         accounts managed by the Portfolio Manager is the same as the
         compensation structure of the Fund, described above.

                 Ownership of Fund Shares. As of October 31, 2005 the Portfolio
         Managers did not beneficially own any shares of the Fund.

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 10/31: Total Brokerage Commissions Paid by the Fund(1)
---------------------------------- -----------------------------------------------------------------
---------------------------------- -----------------------------------------------------------------
2002 $275,091
---------------------------------- -----------------------------------------------------------------
---------------------------------- -----------------------------------------------------------------
2003 $262,325
---------------------------------- -----------------------------------------------------------------
---------------------------------- -----------------------------------------------------------------
2004 $150,204(2)
---------------------------------- -----------------------------------------------------------------
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 Year Aggregate Front-End Class A Front-End
Sales Charges
Ended 10/31: Sales Charges on Retained by
Class A Shares Distributor(1)
--------------- ----------------------- -----------------------
--------------- ----------------------- -----------------------
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 Year Concessions on Class Concessions on Class Concessions on Class C Concessions on Class N
Ended 10/31: A Shares Advanced by B Shares Advanced by Shares Advanced by Shares Advanced by
Distributor(1) Distributor(1) Distributor(1) Distributor(1)
--------------- ----------------------- ---------------------- ------------------------ ------------------------
--------------- ----------------------- ---------------------- ------------------------ ------------------------
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 Year Class A Contingent Class B Contingent Class C Contingent Class N Contingent
Deferred Sales Deferred Sales Deferred Sales
Ended 10/31: Charges Retained by Charges Retained by Deferred Sales Charges Charges Retained by
Distributor Distributor Retained 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 Directors(1), 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.

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 period 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.

|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 periodically 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 periodically 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 periodic
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 periodically 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 registered
broker-dealer. 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 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 periodically 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 10/31/2004
---------------------------------------------------------------------------------------------------------------------
-------------------- ----------------------- ------------------------ ----------------------- -----------------------
Class: Total Payments Under Amount Retained by Distributor's Distributor's
Aggregate Unreimbursed Expenses
Unreimbursed Expenses as % of Net Assets of
Plan Distributor Under Plan Class
-------------------- ----------------------- ------------------------ ----------------------- -----------------------
-------------------- ----------------------- ------------------------ ----------------------- -----------------------
Class B Plan $148,547 $116,781(1) $428,108 3.14%
-------------------- ----------------------- ------------------------ ----------------------- -----------------------
-------------------- ----------------------- ------------------------ ----------------------- -----------------------
Class C Plan $57,073 $15,441(2) $131,782 2.05%
-------------------- ----------------------- ------------------------ ----------------------- -----------------------
-------------------- ----------------------- ------------------------ ----------------------- -----------------------
Class N Plan $5,131 $3,573(3) $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.

Payments to Fund Intermediaries

Financial intermediaries may receive various forms of compensation or
reimbursement from the Fund in the form of 12b-1 plan payments as described in
the preceding section of this SAI. They may also receive reallowance of
commissions from the Distributor, derived from sales charges paid by the clients
of the financial intermediary, also as described in this SAI. Additionally, the
Manager and/or the Distributor (including their affiliates) may make payments to
financial intermediaries in connection with their offering and selling shares of
the Fund and other Oppenheimer funds, providing marketing or promotional
support, transaction processing and/or administrative services. Among the
financial intermediaries that may receive these payments are brokers and dealers
who sell and/or hold shares of the Fund, banks (including bank trust
departments), registered investment advisers, insurance companies, retirement
plan and qualified tuition program administrators, third party administrators,
and other institutions that have selling, servicing or similar arrangements with
the Manager or Distributor. The payments to intermediaries vary by the types of
product sold, the features of the Fund share class and the role played by the
intermediary.

Possible types of payments to financial intermediaries include, without
limitation, those discussed below.

o Payments made by the Fund, or by an investor buying or selling shares of the
Fund may include:

o depending on the share class that the investor selects,
contingent deferred sales charges or initial front-end sales
charges, all or a portion of which front-end sales charges
are payable by the Distributor to financial intermediaries
as sales commissions (see "About Your Account" in the
Prospectus);
o ongoing asset-based payments attributable to the share class
selected, including fees payable under the Fund's
distribution and/or service plans adopted under Rule 12b-1
under the Investment Company Act, which are paid from the
Fund's assets and allocated to the class of shares to which
the plan relates (see "About the Fund -- Distribution and
Service Plans" above);
o shareholder servicing payments for providing omnibus
accounting, recordkeeping, networking, sub-transfer agency
or other administrative or shareholder services, including
retirement plan and 529 plan administrative services fees,
which are paid from the assets of a Fund as reimbursement to
the Manager or Distributor for expenses they incur on behalf
of the Fund.

o Payments made by the Manager or Distributor out of their respective
resources and assets, which may include profits the Manager derives
from investment advisory fees paid by the Fund. These payments are
made at the discretion of the Manager and/or the Distributor. These
payments, often referred to as "revenue sharing" payments, may be
in addition to the payments by the Fund listed above.

o These types of payments may reflect compensation for
marketing support, support provided in offering the Fund or
other Oppenheimer funds through certain trading platforms
and programs, transaction processing or other services;
o The Manager and Distributor each may also pay other
compensation to the extent the payment is not prohibited by
law or by any self-regulatory agency, such as the NASD.
Payments are made based on the guidelines established by the
Manager and Distributor, subject to applicable law.

These payments may provide an incentive to financial intermediaries to
actively market or promote the sale of shares of the Fund or other Oppenheimer
funds, or to support the marketing or promotional efforts of the Distributor in
offering shares of the Fund or other Oppenheimer funds. In addition, some types
of payments may provide a financial intermediary with an incentive to recommend
the Fund or a particular share class. Financial intermediaries may earn profits
on these payments, since the amount of the payment may exceed the cost of
providing the service. Certain of these payments are subject to limitations
under applicable law. Financial intermediaries may categorize and disclose these
arrangements to their clients and to members of the public in a manner different
from the disclosures in the Fund's prospectus and this SAI. You should ask your
financial intermediary for information about any payments it receives from the
Fund, the Manager or the Distributor and any services it provides, as well as
the fees and commissions it charges.

Although brokers or dealers that sell Fund shares may also act as a
broker or dealer in connection with the execution of the purchase or sale of
portfolio securities by the Fund or other Oppenheimer funds, a financial
intermediary's sales of shares of the Fund or such other Oppenheimer funds is
not a consideration for the Manager when choosing brokers or dealers to effect
portfolio transactions for the Fund or such other Oppenheimer funds.

Revenue sharing payments can pay for distribution-related or asset retention items including, without limitation,

o transactional support, one-time charges for setting up access for
the Fund or other Oppenheimer funds on particular trading systems,
and paying the intermediary's networking fees;
o program support, such as expenses related to including the
Oppenheimer funds in retirement plans, college savings plans,
fee-based advisory or wrap fee programs, fund "supermarkets", bank
or trust company products or insurance companies' variable annuity
or variable life insurance products;
o placement on the dealer's list of offered funds and providing
representatives of the Distributor with access to a financial
intermediary's sales meetings, sales representatives and management
representatives.

Additionally, the Manager or Distributor may make payments for firm
support, such as business planning assistance, advertising, and educating a
financial intermediary's sales personnel about the Oppenheimer funds and
shareholder financial planning needs.

For the year ended December 31, 2004, the following financial
intermediaries that are broker-dealers offering shares of the Oppenheimer funds,
and/or their respective affiliates, received revenue sharing or similar
distribution-related payments from the Manager or Distributor for marketing or
program support:

ADVEST INC. Aegon
A.G. Edwards & Sons, Inc AIG Network
Allianz Life Insurance Company Allstate Life Insurance Company
Ameritas Life Insurance Corporation American Centurian Life Insurance
American Enterprise Life Insurance American Express Financial Advisors Inc.
American Portfolios Annuity Investors Life
AXA Advisors Banc One Securities Corporation
Bank of New York Cadaret Grant & Co. Inc.
Charter One Securities Inc. Chase Investment Services
Citigroup Financial Network CitiStreet
Citizens Bank of Rhode Island CJM Planning Corp.
Columbus Life Insurance Company Commonwealth Financial Network
CUNA Brokerage Services Inc. CUSO Financial Services, L.P.
Federal Kemper First Allied Securities Inc
First Global Capital GE Financial Assurance
GlenBrook Life and Annuity Co. Great West Life & Annuity Co., Inc.
HD Vest Hewitt Associates
HSBC Brokerage (USA) Inc. ING Network
Jefferson Pilot Securities Corporation John Hancock Variable Life Insurance Company
Kemper Life Assurance Company Legend Equities Corporation
Legg Mason Wood Walker, Incorporated Lincoln National Life Insurance Company
Lincoln Financial Advisors Corporation Lincoln Investment Planning
Linsco/Private Ledger Corp. MassMutual Financial Group and affiliates
McDonald Investments, Inc. Merrill Lynch & Co., Inc. and affiliates
Metlife and affiliates Minnesota Life Insurance Company
Morgan Stanley DW Inc. NPH Network
Nationwide and affiliates New York Life Securities, LLC
PacLife Network Park Avenue Securities LLC
Planmember Securities Corporation Prime Capital Services, Inc.
Princor Financial Services Corporation Protective Life Insurance Co.
Provident Mutual Insurance Company Prudential Investment Management Services LLC
Raymond James Financial Services, Inc. Raymond James & Associates, Inc.
RBC Dain Rauscher Inc. Securities America, Inc.
Security Benefit Life Insurance Company Signator Investments
Sun Life Insurance Company Suntrust Investment Services, Inc.
Tower Square Securities, Inc Travelers Life & Annuity Co., Inc.
UBS Financial Services Inc. Union Central Life Insurance Company
Wachovia Securities LLC Wells Fargo Investments, LLC

For the year ended December 31, 2004, the following firms, which in
some cases are broker-dealers, received payments from the Manager or Distributor
for administrative or other services provided (other than revenue sharing
arrangements), as described above:

ABN AMRO ADP
Alliance Benefit Group AMVESCAP Retirement Plans
American Stock & Transfer Baden Retirement
BCG Benefit Administration Co., LLC
Benefit Administration, Inc. Benefit Plans Administrative Services
Benetech, Inc. BISYS Retirement Services
Boston Financial Data Services Ceridian
Circle Trust Company Citigroup
CitiStreet CPI
Daily Access.Com, Inc. Digital Retirement Solutions
Dyatech ERISA Administrative Services, Inc.
ExpertPlan.com FAScore
FBD Consulting Federated Investors
Fidelity Institutional First National Bank of Omaha
First Trust Corp. Franklin Templeton
Geller Group Gold K
Great West Financial Services Equities, Inc. Hartford Life Insurance Co.
ICMA - RC Services In West Pension Mgmt
Independent Plan Coordinators Ingham Group
Interactive Retirement Systems, Ltd. Invesmart, Inc.
Kaufman & Goble Leggette & Co., Inc.
Manulife MassMutual Financial Group and affiliates
Matrix Settlement & Clearance Services Mellon HR Solutions
Merrill Lynch & Co., Inc. Metavante
Metlife Securities Inc. MFS Investment Management
Mid Atlantic Capital Corp. Milliman USA
Morgan Stanley DW Inc. National City Bank
National Financial Services Corp. National Investors Services Corp.
Nationwide Investment Service Corp. New York Life Investment Management, Inc.
Northwest Plan Services Pension Administration and Consulting
PFPC, Inc. PSMI Group
Putnam Fiduciary Trust Company Quads Trust Company
RSM McGladrey SAFECO
Charles Schwab & Co., Inc. Security Trust Company
Sentinel / National Life Standard Insurance Co
Stanley, Hunt, Dupree & Rhine State Street Bank & Trust Company
Suntrust Investment Services, Inc. Swerdlin & Co.
T. Rowe Price Brokerage Services, L.P. Taylor, Perky & Parker, LLC
The 401k Company The Investment Center, Inc.
Trusource Union Bank and Trust Co.
USI Consulting Group Vanguard Group
Web401K.com Wilmington Trust Company

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

The performance of each class of shares is shown separately, because
the performance of each class of shares will usually be different. That is
because of the different kinds of expenses each class bears. The total returns
of each class of shares of the Fund are affected by market conditions, the
quality of the Fund's investments, the maturity of those investments, the types
of investments the Fund holds, and its operating expenses that are allocated to
the particular class.

|X| Total Return Information. There are different types of "total
returns" to measure the Fund's performance. Total return is the change in value
of a hypothetical investment in the Fund over a given period, assuming that all
dividends and capital gains distributions are reinvested in additional shares
and that the investment is redeemed at the end of the period. Because of
differences in expenses for each class of shares, the total returns for each
class are separately measured. The cumulative total return measures the change
in value over the entire period (for example, 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:

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

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

ATVDR l/n - 1 = Average Annual Total Return (After Taxes on Distributions 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 10/31/2004
----------------------------------------------------------------------------------------------------------------------
-------------- ------------------------- -----------------------------------------------------------------------------
Class of Cumulative Total Average Annual Total Returns
Returns (10 years or
Shares life-of-class)
-------------- ------------------------- -----------------------------------------------------------------------------
-------------- ------------------------- ------------------------- ------------------------- -------------------------
1-Year 5-Year 10-Year
(or life of class if (or life of class if

less) 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 A(1) 77.59% 88.42% 0.97% 7.12% 1.10% 2.30% 5.91% 6.54%
-------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
-------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Class B(2) 54.36% 54.36% 1.13% 6.13% 1.12% 1.47% 4.90% 4.90%
-------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
-------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Class C(3) 41.25% 41.25% 5.13% 6.13% 1.46% 1.46% 4.15% 4.15%
-------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
-------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Class N(4) 4.93% 4.93% 5.68% 6.68% 1.32% 1.32% N/A N/A
-------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
1. Inception of Class A: 9/16/85 2. Inception of Class B: 10/2/95 3. Inception
of Class C: 5/1/96 4. Inception of Class N: 3/1/01
----------------------------------------------------------------------------------------------------------------
Average Annual Total Returns for Class A(1) Shares (After Sales Charge)
For the Periods Ended 10/31/2004
----------------------------------------------------------------------------------------------------------------
------------------------------------------ --------------------- ------------------------ ----------------------
1-Year 5-Year 10-Year
(or life of class if (or life of class if
less)
less)
------------------------------------------ --------------------- ------------------------ ----------------------
------------------------------------------ --------------------- ------------------------ ----------------------
After Taxes on Distributions 0.79% -0.08% 3.72%
------------------------------------------ --------------------- ------------------------ ----------------------
------------------------------------------ --------------------- ------------------------ ----------------------
After Taxes on Distributions and 0.75% 0.30% 3.83%
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.

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

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

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 Core 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 Income Fund Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Champion Income Fund Oppenheimer Principal Protected Main Street Fund
Oppenheimer Convertible Securities Fund Oppenheimer Principal Protected Main Street Fund II
Oppenheimer Developing Markets Fund Oppenheimer Principal Protected Main Street Fund III
Oppenheimer Disciplined Allocation Fund Oppenheimer Quest Balanced Fund
Oppenheimer Discovery Fund Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Dividend Growth Fund Oppenheimer Quest International Value 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 Global Fund Oppenheimer Rochester National Municipals
Oppenheimer Global Opportunities Fund Oppenheimer Select Value Fund
Oppenheimer Gold & Special Minerals Fund Oppenheimer Senior Floating Rate Fund
Oppenheimer Growth Fund Oppenheimer Small- & Mid- Cap Value Fund
Oppenheimer High Yield Fund Oppenheimer Strategic Income Fund
Oppenheimer International Bond Fund Oppenheimer Total Return Bond Fund
Oppenheimer International Diversified Fund Oppenheimer U.S. Government Trust
Oppenheimer International Growth Fund Oppenheimer Value Fund
Oppenheimer International Small Company Fund Limited-Term New York Municipal Fund
Oppenheimer International Value Fund Rochester Fund Municipals
Oppenheimer Limited Term California Municipal Fund Oppenheimer Portfolio Series:
Active Allocation Fund
Aggressive Investor Fund
Conservative Investor Fund
Oppenheimer Limited-Term Government Fund Moderate Investor Fund

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 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
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.

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 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 and Class C shares of other Oppenheimer funds acquired
subject to a contingent deferred sales charge, and (c) Class A, Class B or Class
C 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 or Class C 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.

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 Appendix C to this Statement of Additional Information. Certain
special sales charge arrangements described in that Appendix apply to retirement
plans whose records are maintained on a daily valuation basis by Merrill Lynch
Pierce Fenner & Smith, Inc. ("Merrill Lynch") or an independent record
keeper that has a contract or special arrangement with Merrill Lynch. If on the
date the plan sponsor signed the Merrill Lynch record keeping service agreement
the plan has less than $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 a purchase order of more than $100,000
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).

Class B, Class C or Class N shares may not be purchased by an investor directly
from the Distributor without the investor designating another registered
broker-dealer.

|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 Retirement Plans with at least 100 eligible employees or $500,000 or more in plan assets,
o to OppenheimerFunds-sponsored Ascender 401(k) plans that pay for the purchase with the redemption proceeds of Class A shares
of one or more Oppenheimer funds, and
o to certain customers of broker-dealers and financial advisors
that are identified in a special agreement between the
broker-dealer or financial advisor and the Distributor for
that purpose.

The sales concession and the advance of the service fee, as described
in the Prospectus, will not be paid to dealers of record on sales of Class N
shares on: o purchases of Class N shares in amounts of $500,000 or more by a
retirement plan that pays for the purchase with the
redemption proceeds of Class A shares of one or more
Oppenheimer funds (other than rollovers from an
OppenheimerFunds-sponsored Pinnacle or Ascender 401(k) plan to
any IRA invested in the Oppenheimer funds),
o purchases of Class N shares in amounts of $500,000 or more by
a retirement plan that pays for the purchase with the
redemption proceeds of Class C shares of one or more
Oppenheimer funds held by the plan for more than one year
(other than rollovers from an OppenheimerFunds-sponsored
Pinnacle or Ascender 401(k) plan to any IRA invested in the
Oppenheimer funds), and
o on purchases of Class N shares by an
OppenheimerFunds-sponsored Pinnacle or Ascender 401(k) plan
made with the redemption proceeds of Class A shares of one or
more Oppenheimer funds.

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

|X| Allocation of Expenses. 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 in
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: o 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 NYSE on each day that the NYSE 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 NYSE 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 NYSE'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 NYSE members may conduct trading in certain
securities on days on which the NYSE 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 NYSE.

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 NYSE, 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 NYSE 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 NYSE closes. Normally, the NYSE 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 Municipals Oppenheimer Pennsylvania Municipal Fund
Oppenheimer California Municipal Fund Oppenheimer Rochester National Municipals
Oppenheimer International Value Fund Oppenheimer Senior Floating Rate Fund
Oppenheimer Limited Term California Municipal Fund Rochester Fund Municipals
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 Limited Term California Municipal 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 Dividend Growth Fund Oppenheimer Total Return Bond Fund
Oppenheimer Gold & Special Minerals 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 and Class C shares of Oppenheimer Cash Reserves are generally
available only by exchange from the same class of shares of other
Oppenheimer funds or through OppenheimerFunds-sponsored 401(k) plans.
o Class M shares of Oppenheimer Convertible Securities Fund may be
exchanged only for Class A shares of other Oppenheimer funds. They may
not be acquired by exchange of shares of any class of any other
Oppenheimer funds except Class A shares of Oppenheimer Money Market
Fund or Oppenheimer Cash Reserves acquired by exchange of Class M
shares.
o Class 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
(3/3/2011).
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
(12/16/2011).

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 Except with respect to the Class B shares described in the next two
paragraphs, the 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 California Municipal Fund,
Limited-Term Government Fund, Limited Term Municipal Fund, Limited Term New York
Municipal Fund and Oppenheimer Senior Floating Rate Fund, the Class B contingent
deferred sales charge is imposed on the acquired shares if they are redeemed
within five years of the initial purchase of the exchanged Class B shares.

o With respect to Class B shares of Cash Reserves that were acquired through the
exchange of Class B shares initially purchased in the Oppenheimer Capital
Preservation Fund, the Class B contingent deferred sales charge is imposed on
the acquired shares if they are redeemed within five years of that initial
purchase.

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.
The Fund may be subject to U.S. Federal income tax, and an interest charge, on
certain distributions or gains from the sale of shares of a foreign company
considered to be a PFIC, even if those amounts are paid out as dividends to
shareholders. To avoid imposition of the interest charge, the Fund may elect to
"mark to market" all PFIC shares that it holds at the end of each taxable year.
In that case, any increase or decrease in the value of those shares would be
recognized as ordinary income or as ordinary loss (but only to the extent of
previously recognized "mark-to-market" gains).

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. 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.

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 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 the Manager
and 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.

OPPENHEIMER DISCIPLINED ALLOCATION FUND
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


OPPENHEIMER DISCIPLINED ALLOCATION FUND
--------------------------------------------------------------------------------
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

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


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


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


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


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

                                                                               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


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



                                                                               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



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


                                                                               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


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

                                                                               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.

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

--------------------------------------------------------------------------------
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
                                                                                           =============



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

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

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


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

OPPENHEIMER DISCIPLINED ALLOCATION FUND
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
                                                                ====================================================================

------------------------------------------------------------------------------------------------------------------------------------
 TOTAL RETURN, AT NET ASSET VALUE 2                                7.12%         14.17%         (5.86)%       (10.12)%       8.27%

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

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

------------------------------------------------------------------------------------------------------------------------------------
 TOTAL RETURN, AT NET ASSET VALUE 3                                6.13%         13.21%         (6.61)%       (10.79)%       7.48%

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

--------------------------------------------------------------------------------
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
                                                                ====================================================================

------------------------------------------------------------------------------------------------------------------------------------
 TOTAL RETURN, AT NET ASSET VALUE 2                                6.13%         13.18%         (6.64)%       (10.76)%       7.44%

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


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 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.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

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

 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.

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

 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


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

--------------------------------------------------------------------------------
 1. SIGNIFICANT ACCOUNTING POLICIES Continued
 The aggregate cost of securities and other investments and the composition of
 unrealized appreciation and depreciation of securities and other investments
 for federal income tax purposes as of October 31, 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.

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

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

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

    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


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

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.

(1) In accordance with Rule 12b-1 of the Investment Company Act, the term
"Independent Directors" in this Statement of Additional Information refers to
those Directors who are not "interested persons" of the Fund and who do not have
any direct or indirect financial interest in the operation of the distribution
plan or any agreement under the plan. (2) Certain waivers also apply to Class M
shares of Oppenheimer Convertible Securities Fund. (3) In the case of
Oppenheimer Senior Floating Rate Fund, a continuously-offered closed-end fund,
references to contingent deferred sales charges mean the Fund's Early Withdrawal
Charges and references to "redemptions" mean "repurchases" of shares. (4) An
"employee benefit plan" means any plan or arrangement, whether or not it is
"qualified" under the Internal Revenue Code, under which Class N shares of an
Oppenheimer fund or funds are purchased by a fiduciary or other administrator
for the account of participants who are employees of a single employer or of
affiliated employers. These may include, for example, medical savings accounts,
payroll deduction plans or similar plans. The fund accounts must be registered
in the name of the fiduciary or administrator purchasing the shares for the
benefit of participants in the plan.
(5) The term "Group Retirement Plan" means any qualified or non-qualified
retirement plan for employees of a corporation or sole proprietorship, members
and employees of a partnership or association or other organized group of
persons (the members of which may include other groups), if the group has made
special arrangements with the Distributor and all members of the group
participating in (or who are eligible to participate in) the plan purchase
shares of an Oppenheimer fund or funds through a single investment dealer,
broker or other financial institution designated by the group. Such plans
include 457 plans, SEP-IRAs, SARSEPs, SIMPLE plans and 403(b) plans other than
plans for public school employees. The term "Group Retirement Plan" also
includes qualified retirement plans and non-qualified deferred compensation
plans and IRAs that purchase shares of an Oppenheimer fund or funds through a
single investment dealer, broker or other financial institution that has made
special arrangements with the Distributor. (6) However, that concession will not
be paid on purchases of shares in amounts of $1 million or more (including any
right of accumulation) by a Retirement Plan that pays for the purchase with the
redemption proceeds of Class C shares of one or more Oppenheimer funds held by
the Plan for more than one year.
(7) This provision does not apply to IRAs.
(8) This provision 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.

                                                              Appendix B

                                                       Industry Classifications

Aerospace & Defense                                   Household Products
Air Freight & Couriers                                Industrial Conglomerates
Airlines                                              Insurance
Auto Components                                       Internet & Catalog Retail
Automobiles                                           Internet Software & Services
Beverages                                             IT Services
Biotechnology                                         Leisure Equipment & Products
Building Products                                     Machinery
Chemicals                                             Marine
Consumer Finance                                      Media
Commercial Banks                                      Metals & Mining
Commercial Services & Supplies                        Multiline Retail
Communications Equipment                              Multi-Utilities
Computers & Peripherals                               Office Electronics
Construction & Engineering                            Oil & Gas
Construction Materials                                Paper & Forest Products
Containers & Packaging                                Personal Products
Distributors                                          Pharmaceuticals
Diversified Financial Services                        Real Estate
Diversified Telecommunication Services                Road & Rail
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


                                                              Appendix C

                                    OppenheimerFunds Special Sales Charge Arrangements and Waivers

In certain cases, the initial sales charge that applies to purchases of Class A
shares(2) 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 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 created or qualified under Sections 401(a) or 401(k) of
              the Internal Revenue Code, 2) non-qualified deferred compensation
              plans, 3) employee benefit plans(4) 4) Group Retirement Plans(5)
              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 $5 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.
|_|           Effective October 1, 2005, taxable accounts established with the
              proceeds of Required Minimum Distributions from Retirement Plans.

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

1.   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
              or unit investment trusts for which reinvestment arrangements have
              been made with the Distributor.
|_|           Shares purchased by certain Retirement Plans that are part of a
              retirement plan or platform offered by banks, broker-dealers,
              financial advisors or insurance companies, or serviced by
              recordkeepers.
|_|           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.

2.   Class A shares issued and purchased in the following transactions are not
     subject to sales charges (a dealer concession at the annual rate of 0.25%
     is paid by the Distributor on purchases made within the first 6 months of
     plan establishment):
|_| Retirement Plans that have $5 million or more in plan assets.
|_|      Retirement Plans with a single plan sponsor that have $5 million or more in aggregate assets invested in Oppenheimer funds.

C. Waivers of the Class A Contingent Deferred Sales Charge for Certain
Redemptions.

The Class A contingent deferred sales charge is also waived if shares that would
otherwise be subject to the contingent deferred sales charge are redeemed in the
following cases: |_| To make Automatic Withdrawal Plan payments that are limited
annually to no more than 12% of the account value adjusted
              annually.
|_|           Involuntary redemptions of shares by operation of law or
              involuntary redemptions of small accounts (please refer to
              "Shareholder Account Rules and Policies," in the applicable fund
              Prospectus).
|_|      For distributions from Retirement Plans, deferred compensation plans or other employee benefit plans for any of the
              following purposes:
              1)  Following the death or disability (as defined in the Internal Revenue Code) of the participant or beneficiary. The
                  death or disability must occur after the participant's account was established.
              2)  To return excess contributions.
              3)  To return contributions made due to a mistake of fact.
4) Hardship withdrawals, as defined in the plan.(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 (as defined
              in the Internal Revenue Code).
|_|           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.
|_|      Distributions(9) 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- & Mid- 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.

-------------------------------- ---------------------------- --------------------------------- ---------------------
Number of Eligible Employees     Initial Sales Charge as a    Initial Sales Charge as a % of    Concession as % of
or Members                       % of Offering Price          Net Amount Invested               Offering Price
-------------------------------- ---------------------------- --------------------------------- ---------------------
-------------------------------- ---------------------------- --------------------------------- ---------------------
9 or Fewer                                  2.50%                          2.56%                       2.00%
-------------------------------- ---------------------------- --------------------------------- ---------------------
-------------------------------- ---------------------------- --------------------------------- ---------------------
At least  10 but not more  than             2.00%                          2.04%                       1.60%
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 Core Bond Fund,
     Oppenheimer Value Fund and
     Oppenheimer Disciplined Allocation Fund
are modified as described below for those Fund shareholders who were
shareholders of the following funds (referred to as the "Former Connecticut
Mutual Funds") on March 1, 1996, when OppenheimerFunds, Inc. became the
investment adviser to the Former Connecticut Mutual Funds:
     Connecticut Mutual Liquid Account                            Connecticut Mutual Total Return Account
     Connecticut Mutual Government Securities Account             CMIA LifeSpan Capital Appreciation Account
     Connecticut Mutual Income Account                            CMIA LifeSpan Balanced Account
     Connecticut Mutual Growth Account                            CMIA Diversified Income Account

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

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

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

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

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

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

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

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

In addition to the waivers set forth in the Prospectus and in this Appendix,
above, the contingent deferred sales charge will be waived for redemptions of
Class A and Class B shares of a Fund and exchanges of Class A or Class B shares
of a Fund into Class A or Class B shares of a Former Connecticut Mutual Fund
provided that the Class A or Class B shares of the Fund to be redeemed or
exchanged were (i) acquired prior to March 18, 1996 or (ii) were acquired by
exchange from an Oppenheimer fund that was a Former Connecticut Mutual Fund.
Additionally, the shares of such Former Connecticut Mutual Fund must have been
purchased prior to March 18, 1996:
     1)  by the estate of a deceased shareholder;
     2)  upon the disability of a shareholder, as defined in Section 72(m)(7) of
         the Internal Revenue Code;
     3)  for retirement distributions (or loans) to participants or
         beneficiaries from retirement plans qualified under Sections 401(a) or
         403(b)(7)of the Code, or from IRAs, deferred compensation plans created
         under Section 457 of the Code, or other employee benefit plans;
4) as tax-free returns of excess contributions to such retirement or employee
benefit plans;
     5)  in whole or in part, in connection with shares sold to any state,
         county, or city, or any instrumentality, department, authority, or
         agency thereof, that is prohibited by applicable investment laws from
         paying a sales charge or concession in connection with the purchase of
         shares of any registered investment management company;
     6)  in connection with the redemption of shares of the Fund due to a
         combination with another investment company by virtue of a merger,
         acquisition or similar reorganization transaction;
     7)  in connection with the Fund's right to involuntarily redeem or
         liquidate the Fund;
     8)  in connection with automatic redemptions of Class A shares and Class B
         shares in certain retirement plan accounts pursuant to an Automatic
         Withdrawal Plan but limited to no more than 12% of the original value
         annually; or
     9)  as involuntary redemptions of shares by operation of law, or under
         procedures set forth in the Fund's Articles of Incorporation, or as
         adopted by the Board of Directors of the Fund.
VI.                           Special Reduced Sales Charge for Former Shareholders of Advance America Funds, Inc.
---------------------------------------------------------------------------------------------------------------------------------------

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

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

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

Internet Website
         www.oppenheimerfunds.com

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

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

Transfer Agent
         OppenheimerFunds Services
         P.O. Box 5270 Denver, Colorado 80217 1.800.CALL OPP (225.5677)

Custodian Bank
         Citibank, N.A.
         111 Wall Street
         New York, New York 10005

Independent 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

PX205.001.1205

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, revised December 6, 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.......................................................................................... 47
Brokerage Policies of the Fund............................................................................ 50
Distribution and Service Plans............................................................................ 53
Payments to Financial Intermediaries...................................................................... 57
Performance of the Fund................................................................................... 61

About Your Account
How To Buy Shares......................................................................................... 67
How To Sell Shares........................................................................................ 76
How To Exchange Shares.................................................................................... 80
Dividends, Capital Gains and Taxes........................................................................ 84
Additional Information About the Fund..................................................................... 89

Financial Information About the Fund
Independent Registered Public Accounting Firm's Report.................................................... 90
Financial Statements ..................................................................................... 91

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

Additional Information About the Fund's Investment Policies and Risks

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

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| 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.

|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.

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.

Subject to the limits under 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.

|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.

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 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.

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 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.

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.

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.

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 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.

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

|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 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.

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.

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.

|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, 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.

o The Fund cannot invest in real estate, physical commodities or commodity
contracts, 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.

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.

Disclosure of Portfolio Holdings. The Fund has adopted policies and
procedures concerning the dissemination of information about its portfolio
holdings by employees, officers and/or directors of the Investment
Adviser, Distributor and Transfer Agent. These policies are designed to
assure that non-public information about portfolio securities is
distributed only 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 the Fund.

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 the 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-advisers of portfolios (pursuant to confidentiality agreements),
o To consultants for retirement plans for plan sponsors/discussions at due diligence meetings (pursuant to
confidentiality agreements),
o Investment bankers in connection with merger discussions (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 will generally have a different net asset value,
o will generally 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.

Directors and Officers of the Fund. Except for Mr. Murphy, each of the Directors is an Independent Director. All
of the Directors are also directors or trustees of the following Oppenheimer funds (referred to as "Board I
Funds"):

Messrs. Leavy, Gillespie, Murphy, Petersen, Vandehey, Vottiero, Wixted
and Zack and Mss. Bloomberg and Ives, who are officers of the Fund, hold the
same offices with one or more of the other Board I Funds. As of October 31, 2005
the Directors and officers of the Fund, as a group, owned of record or
beneficially less than 1% of any class of shares of the Fund. The foregoing
statement does not reflect ownership of shares held of record by an employee
benefit plan for employees of the Manager, other than the shares beneficially
owned under that plan by the officers of the Fund listed above. In addition,
none of the Independent Directors (nor any of their immediate family members)
owns securities of either the Manager or the Distributor of the Board I Funds or
of any entity directly or indirectly controlling, controlled by or under common
control with the Manager or the Distributor.

Biographical Information. The Directors and officers, their positions with the Fund, length of service
in such position(s) and principal occupations and business affiliations during at least the past five years are
listed in the charts below. The charts also include information about each Director's beneficial share ownership
in the Fund and in all of the registered investment companies that the Director oversees in the Oppenheimer
family of funds ("Supervised Funds"). Ms. Miller was elected to certain Board I Funds during 2004 and did not
hold shares of Board I Funds during the calendar year ended December 31, 2004. Mr. Fink was elected to the Board
I Funds in 2005 and did not hold shares of Board I Funds during the calendar year ended December 31, 2004. The
address of each Director in the chart below is 6803 S. Tucson Way, Centennial, Colorado 80112-3924. Each Director
serves for an indefinite term, or until his or her resignation, retirement, death or removal.

-------------------------------------------------------------------------------------------------------------------------------------
                                                       Independent Directors
-------------------------------------------------------------------------------------------------------------------------------------
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
Name, Position(s) Held       Principal Occupation(s) During the Past 5 Years; Other           Dollar Range of     Aggregate Dollar
                                                                                                   Shares
                                                                                                Beneficially      Range Of Shares
with the Fund, Length of     Trusteeships/Directorships Held; Number of Portfolios in the         Owned in       Beneficially Owned
Service, Age                 Fund Complex Currently Overseen                                      the Fund      in Supervised Funds
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
---------------------------- ---------------------------------------------------------------- ---------------------------------------
                                                                                                     As of December 31, 2004
---------------------------- ---------------------------------------------------------------- ---------------------------------------
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
Clayton K. Yeutter,          Director of American Commercial Lines (barge company) (since     None              Over $100,000
Chairman of the Board of     January 2005); Attorney at Hogan & Hartson (law firm) (since
Directors since 2003,        June 1993); Director of Covanta Holding Corp. (waste-to-energy
Director since 1996          company) (since 2002); Director of Weyerhaeuser Corp.
Age: 74                      (1999-April 2004); Director of Caterpillar, Inc.
                             (1993-December 2002); Director of ConAgra Foods
                             (1993-2001); Director of Texas Instruments
                             (1993-2001); Director of FMC Corporation
                             (1993-2001). Oversees 38 portfolios in the
                             OppenheimerFunds complex.
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
Matthew P. Fink,             Trustee of the Committee for Economic Development (policy        None              None
Director since 2005          research foundation) (since 2005); Director of ICI Education
Age: 64                      Foundation (education foundation) (since October 1991);
                             President of the Investment Company Institute
                             (trade association) (1991-2004); Director of ICI
                             Mutual Insurance Company (insurance company)
                             (1991-2004). Oversees 38 portfolios in the
                             OppenheimerFunds complex.
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
Robert G. Galli,             A director or trustee of other Oppenheimer funds. Oversees 48    None              Over $100,000
Director since 1996          portfolios in the OppenheimerFunds complex.
Age: 72

---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
Phillip A. Griffiths,        Director of GSI Lumonics Inc. (precision medical equipment       None              Over $100,000
Director since 1999          supplier) (since 2001); Trustee of Woodward Academy (since
Age: 67                      1983); Senior Advisor of The Andrew W. Mellon Foundation
                             (since 2001); Member of the National Academy of
                             Sciences (since 1979); Member of the American
                             Philosophical Society (since 1996); Council on
                             Foreign Relations (since 2002); Director of the
                             Institute for Advanced Study (1991-2004); Director
                             of Bankers Trust New York Corporation (1994-1999).
                             Oversees 38 portfolios in the OppenheimerFunds
                             complex.
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
Mary F. Miller,              Trustee of the American Symphony Orchestra (not-for-profit)      None              None
Director since 2004          (since October 1998); and Senior Vice President and General
Age: 63                      Auditor of American Express Company (financial services
                             company) (July 1998-February 2003). Oversees 38
                             portfolios in the OppenheimerFunds complex.
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
Joel W. Motley,              Director of Columbia Equity Financial Corp. (privately-held      None              Over $100,000
Director since 2002          financial adviser) (since 2002); Managing Director of Carmona
Age: 53                      Motley, Inc. (privately-held financial adviser) (since January
                             2002); Managing Director of Carmona Motley Hoffman
                             Inc. (privately-held financial adviser) (January
                             1998-December 2001); Member of the Finance and
                             Budget Committee of the Council on Foreign
                             Relations, the Investment Committee of the
                             Episcopal Church of America, the Investment
                             Committee of Human Rights Watch and the Investment
                             Committee of Historic Hudson Valley. Oversees 38
                             portfolios in the OppenheimerFunds complex.
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
Kenneth A. Randall,          Director of Dominion Resources, Inc. (electric utility holding   None              Over $100,000
Director since 1996          company) (since February 1972); Former Director of Prime
Age: 78                      Retail, Inc. (real estate investment trust), Dominion Energy
                             Inc. (electric power and oil & gas producer),
                             Lumbermens Mutual Casualty Company, American
                             Motorists Insurance Company and American
                             Manufacturers Mutual Insurance Company; Former
                             President and Chief Executive Officer of The
                             Conference Board, Inc. (international economic and
                             business research). Oversees 38 portfolios in the
                             OppenheimerFunds complex.
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
Russell S. Reynolds, Jr.,    Chairman of The Directorship Search Group, Inc. (corporate       None              Over $100,000
Director since 1996          governance consulting and executive recruiting) (since 1993);
Age: 73                      Life Trustee of International House (non-profit educational
                             organization); Former Trustee of The Historical Society of the
                             Town of Greenwich. Oversees 38 portfolios in the
                             OppenheimerFunds complex.
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
Joseph M. Wikler,            Director of the following  medical device  companies:  Medintec  None              $50,001-$100,000
Director since 2005          (since  1992)  and  Cathco  (since  1996);  Director  of  Lakes
Age: 64                      Environmental   Association   (since   1996);   Member  of  the
                             Investment Committee of the Associated Jewish
                             Charities of Baltimore (since 1994); Director of
                             Fortis/Hartford mutual funds (1994-December 2001).
                             Oversees 39 portfolios in the OppenheimerFunds
                             complex.
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
Peter I. Wold,               President   of  Wold  Oil   Properties,   Inc.   (oil  and  gas  None              Over $100,000
Director since 2005          exploration  and  production   company)   (since  1994);   Vice
Age: 57                      President,  Secretary and Treasurer of Wold Trona Company, Inc.
                             (soda ash processing and production) (since 1996);
                             Vice President of Wold Talc Company, Inc. (talc
                             mining) (since 1999); Managing Member of
                             Hole-in-the-Wall Ranch (cattle ranching) (since
                             1979); Director and Chairman of the Denver Branch
                             of the Federal Reserve Bank of Kansas City
                             (1993-1999); and Director of PacifiCorp. (electric
                             utility) (1995-1999). Oversees 39 portfolios in the
                             OppenheimerFunds complex.
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------
Brian F. Wruble,             General Partner of Odyssey  Partners,  L.P. (hedge fund) (since  None              Over $100,000
Director since 2005          September 1995);  Director of Special Value Opportunities Fund,
Age: 62                      LLC (registered  investment  company) (since  September  2004);
                             Director of Zurich Financial Investment Advisory
                             Board (affiliate of the Manager's parent company)
                             (since October 2004); Board of Governing Trustees
                             of The Jackson Laboratory (non-profit) (since
                             August 1990); Trustee of the Institute for Advanced
                             Study (non-profit educational institute) (since May
                             1992); Special Limited Partner of Odyssey
                             Investment Partners, LLC (private equity
                             investment) (January 1999-September 2004); Trustee
                             of Research Foundation of AIMR (2000-2002)
                             (investment research, non-profit); Governor, Jerome
                             Levy Economics Institute of Bard College (August
                             1990-September 2001) (economics research); Director
                             of Ray & Berendtson, Inc. (May 2000-April 2002)
                             (executive search firm). Oversees 48 portfolios in
                             the OppenheimerFunds complex.
---------------------------- ---------------------------------------------------------------- ----------------- ---------------------

         The address of Mr. Murphy is Two World Financial Center, 225 Liberty Street, 11th Floor, New York, New
York 10281-1008. Mr. Murphy serves as a Director and as an officer for an indefinite term, or until his
resignation, retirement, death or removal. 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.

------------------------------------------------------------------------------------------------------------------------------------
                                                  Interested Director and Officer
------------------------------------------------------------------------------------------------------------------------------------
--------------------------- ----------------------------------------------------------------- ---------------- ---------------------
Name, Position(s) Held      Principal Occupation(s) During the Past 5 Years; Other             Dollar Range      Aggregate Dollar
                                                                                                 of Shares
                                                                                               Beneficially      Range Of Shares
with Fund, Length of        Trusteeships/Directorships Held; Number of Portfolios in the         Owned in       Beneficially Owned
Service, Age                Fund Complex Currently Overseen                                      the Fund      in Supervised Funds
--------------------------- ----------------------------------------------------------------- ---------------- ---------------------
--------------------------- ----------------------------------------------------------------- --------------------------------------
                                                                                                     As of December 31, 2004
--------------------------- ----------------------------------------------------------------- --------------------------------------
--------------------------- ----------------------------------------------------------------- ----------------- --------------------
John V. Murphy,             Chairman, Chief Executive Officer and Director (since June        $50,001 -         Over $100,000
President since 2001 and    2001) and President (since September 2000) of the Manager;        $100,000
Director since 2001         President and a director or trustee of other Oppenheimer funds;
Age: 56                     President and Director of Oppenheimer Acquisition Corp. ("OAC")
                            (the Manager's parent holding company) and of
                            Oppenheimer Partnership Holdings, Inc. (holding
                            company subsidiary of the Manager) (since July
                            2001); Director of OppenheimerFunds Distributor,
                            Inc. (subsidiary of the Manager) (since November
                            2001); Chairman and Director of Shareholder
                            Services, Inc. and of Shareholder Financial
                            Services, Inc. (transfer agent subsidiaries of the
                            Manager) (since July 2001); President and Director
                            of OppenheimerFunds Legacy Program (charitable trust
                            program established by the Manager) (since July
                            2001); 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
                            Director (since July 2001) of Oppenheimer Real Asset
                            Management, Inc.; Executive Vice President of
                            Massachusetts Mutual Life Insurance Company (OAC's
                            parent company) (since February 1997); Director of
                            DLB Acquisition Corporation (holding company parent
                            of Babson Capital Management LLC) (since June 1995);
                            Member of the Investment Company Institute's Board
                            of Governors (since October 3, 2003); Chief
                            Operating Officer of the Manager (September
                            2000-June 2001); President and Trustee of MML Series
                            Investment Fund and MassMutual Select Funds
                            (open-end investment companies) (November
                            1999-November 2001); Director of C.M. Life Insurance
                            Company (September 1999-August 2000); President,
                            Chief Executive Officer and Director of MML Bay
                            State Life Insurance Company (September 1999-August
                            2000); Director of Emerald Isle Bancorp and Hibernia
                            Savings Bank (wholly-owned subsidiary of Emerald
                            Isle Bancorp) (June 1989-June 1998). Oversees 77
                            portfolios in the OppenheimerFunds complex as a
                            director or trustee and officer and an additional 10
                            portfolios as an officer.
--------------------------- ----------------------------------------------------------------- ----------------- --------------------

         The addresses of the officers in the chart below are as follows: for Messrs. Leavy, Gillespie and Zack
and Ms. Bloomberg, Two World Financial Center, 225 Liberty Street, New York, New York 10281-1008, for Messrs.
Petersen, Vandehey, Vottiero, and Wixted and Ms. Ives, 6803 S. Tucson Way, Centennial, Colorado 80112-3924. Each
officer serves for an indefinite term or until his or her resignation, retirement, death or removal.

-----------------------------------------------------------------------------------------------------------------------------
                                                 Other Officers of the Fund
-----------------------------------------------------------------------------------------------------------------------------
----------------------------------- -----------------------------------------------------------------------------------------
Name, Position(s) Held with Fund,   Principal Occupation(s) During Past 5 Years
Length of Service, Age
----------------------------------- -----------------------------------------------------------------------------------------
----------------------------------- -----------------------------------------------------------------------------------------
Christopher Leavy,                  Senior Vice President of the Manager since September 2000; portfolio manager of Morgan
Vice President and Portfolio        Stanley Dean Witter Investment Management (1997-September 2000). An officer of 8
Manager since 2000                  portfolios in the OppenheimerFunds complex.
Age:  34
----------------------------------- -----------------------------------------------------------------------------------------
----------------------------------- -----------------------------------------------------------------------------------------
Mark S. Vandehey,                   Senior Vice President and Chief Compliance Officer of the Manager (since March 2004);
Vice President and Chief            Vice President of OppenheimerFunds Distributor, Inc., Centennial Asset Management
Compliance Officer since 2004       Corporation and Shareholder Services, Inc. (since June 1983). Former Vice President and
Age: 55                             Director of Internal Audit of the Manager (1997-February 2004). An officer of 87
                                    portfolios in the OppenheimerFunds complex.
----------------------------------- -----------------------------------------------------------------------------------------
----------------------------------- -----------------------------------------------------------------------------------------
Brian W. Wixted,                    Senior Vice President and Treasurer of the Manager (since March 1999); Treasurer of the
Treasurer since 1999                following: HarbourView Asset Management Corporation, Shareholder Financial Services,
Age: 46                             Inc., Shareholder Services, Inc., Oppenheimer Real Asset Management Corporation, and
                                    Oppenheimer Partnership Holdings, Inc.
                                    (since March 1999), OFI Private Investments,
                                    Inc. (since March 2000), OppenheimerFunds
                                    International Ltd. (since May 2000),
                                    OppenheimerFunds plc (since May 2000), OFI
                                    Institutional Asset Management, Inc. (since
                                    November 2000), and OppenheimerFunds Legacy
                                    Program (charitable trust program
                                    established by the Manager) (since June
                                    2003); Treasurer and Chief Financial Officer
                                    of OFI Trust Company (trust company
                                    subsidiary of the Manager) (since May 2000);
                                    Assistant Treasurer of the following: OAC
                                    (since March 1999),Centennial Asset
                                    Management Corporation (March 1999-October
                                    2003) and OppenheimerFunds Legacy Program
                                    (April 2000-June 2003); Principal and Chief
                                    Operating Officer of Bankers Trust
                                    Company-Mutual Fund Services Division (March
                                    1995-March 1999). An officer of 87
                                    portfolios in the OppenheimerFunds complex.
----------------------------------- -----------------------------------------------------------------------------------------
----------------------------------- -----------------------------------------------------------------------------------------
Brian Petersen,                     Assistant Vice President of the Manager (since August 2002); Manager/Financial Product
Assistant Treasurer since 2004      Accounting of the Manager (November 1998-July 2002). An officer of 87 portfolios in the
Age: 35                             OppenheimerFunds complex.

----------------------------------- -----------------------------------------------------------------------------------------
----------------------------------- -----------------------------------------------------------------------------------------
Philip F. Vottiero,                 Vice President/Fund Accounting of the Manager (since March 2002); Vice
Assistant Treasurer since 2002      President/Corporate Accounting of the Manager (July 1999-March 2002); Chief Financial
Age: 42                             Officer of Sovlink Corporation (April 1996-June 1999). An officer of 87 portfolios in
                                    the OppenheimerFunds complex.
----------------------------------- -----------------------------------------------------------------------------------------
----------------------------------- -----------------------------------------------------------------------------------------
Robert G. Zack,                     Executive Vice President (since January 2004) and General Counsel (since March 2002) of
Secretary since 2001                the Manager; General Counsel and Director of the Distributor (since December 2001);
Age: 57                             General Counsel of Centennial Asset Management Corporation (since December 2001);
                                    Senior Vice President and General Counsel of HarbourView Asset Management Corporation
                                    (since December 2001); Secretary and General Counsel of OAC (since November 2001);
                                    Assistant Secretary (since September 1997) and Director (since November 2001) of
                                    OppenheimerFunds International Ltd. and OppenheimerFunds plc; Vice President and
                                    Director of Oppenheimer Partnership Holdings, Inc. (since December 2002); Director of
                                    Oppenheimer Real Asset Management, Inc. (since November 2001); Senior Vice President,
                                    General Counsel and Director of Shareholder Financial Services, Inc. and Shareholder
                                    Services, Inc. (since December 2001); Senior Vice President, General Counsel and
                                    Director of OFI Private Investments, Inc. and OFI Trust Company (since November 2001);
                                    Vice President of OppenheimerFunds Legacy Program (since June 2003); Senior Vice
                                    President and General Counsel of OFI Institutional Asset Management, Inc. (since
                                    November 2001); Director of OppenheimerFunds (Asia) Limited (since December 2003);
                                    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 the following: Shareholder Services, Inc. (May
                                    1985-November 2001), Shareholder Financial Services, Inc. (November 1989-November
                                    2001), and OppenheimerFunds International Ltd. (September 1997-November 2001). An
                                    officer of 87 portfolios in the OppenheimerFunds complex.
----------------------------------- -----------------------------------------------------------------------------------------
----------------------------------- -----------------------------------------------------------------------------------------
Kathleen T. Ives,                   Vice President (since June 1998) and Senior Counsel and Assistant Secretary (since
Assistant Secretary since 2001      October 2003) of the Manager; Vice President (since 1999) and Assistant Secretary
Age: 40                             (since October 2003) of the Distributor; Assistant Secretary of Centennial Asset
                                    Management Corporation (since October 2003); Vice President and Assistant Secretary of
                                    Shareholder Services, Inc. (since 1999); Assistant Secretary of OppenheimerFunds Legacy
                                    Program and Shareholder Financial Services, Inc. (since December 2001); Assistant
                                    Counsel of the Manager (August 1994-October 2003). An officer of 87 portfolios in the
                                    OppenheimerFunds complex.
----------------------------------- -----------------------------------------------------------------------------------------
----------------------------------- -----------------------------------------------------------------------------------------
Lisa I. Bloomberg,                  Vice President and Associate Counsel of the Manager (since May 2004); First Vice
Assistant Secretary since 2004      President (April 2001-April 2004), Associate General Counsel (December 2000-April
Age: 37                             2004), Corporate Vice President (May 1999-April 2001) and Assistant General Counsel
                                    (May 1999-December 2000) of UBS Financial Services Inc. (formerly, PaineWebber
                                    Incorporated). An officer of 87 portfolios in the OppenheimerFunds complex.
----------------------------------- -----------------------------------------------------------------------------------------
----------------------------------- -----------------------------------------------------------------------------------------
Phillip S. Gillespie,               Senior Vice President and Deputy General Counsel of the Manager (since September 2004);
Assistant Secretary since 2004      Mr. Gillespie held the following positions at Merrill Lynch Investment Management:
Age: 41                             First Vice President (2001-September 2004); Director (2000-September 2004) and Vice
                                    President (1998-2000). An officer of 87
portfolios in the OppenheimerFunds complex.
----------------------------------- -----------------------------------------------------------------------------------------

|X| Remuneration of the Officers and Directors. The officers and the interested
Directors of the Fund, who are affiliated with the Manager, receive no salary or
fee from the Fund. The Independent Directors' compensation from the Fund, shown
below, is for serving as a Director and member of a committee (if applicable),
with respect to the Fund's fiscal year ended October 31, 2004. The total
compensation from the Fund and fund complex represents compensation, including
accrued retirement benefits, for serving as a Director and member of a committee
(if applicable) of the Boards of the Fund and other funds in the
OppenheimerFunds complex during the calendar year ended December 31, 2004.

--------------------------------- -------------------- --------------------- ---------------------- --------------------------
Name and Other Fund Position(s) Aggregate Retirement Benefits Estimated Annual Total Compensation From
Compensation From Accrued as Part of Benefits Upon the Fund and Fund
(as applicable) the Fund(1) Fund Expenses Retirement(2) Complex
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
Clayton K. Yeutter $2,200(3) $5,011 $86,171 $173,700
Chairman of the Board
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
Matthew P. Fink(4) None None $2,641 None
Proxy Committee Member and
Regulatory & Oversight
Committee Member
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
Robert G. Galli
Regulatory & Oversight $1,637 $2,989 $100,824(5) $237,312(6)
Committee Chairman
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
Phillip A. Griffiths $1,802(7) $1,602 $34,972 $142,092
Governance Committee Chairman
and Regulatory & Oversight
Committee Member
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
Mary F. Miller(8)
Audit Committee Member and $132 None $7,128 $8,532
Proxy Committee Member
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
Joel W. Motley $1,907(9) $664 $23,945 $150,760
Audit Committee Chairman and
Regulatory & Oversight
Committee Member
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
Kenneth A. Randall $1,698 None(10) $85,944 $134,080
Audit Committee Member and
Governance Committee Member
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
Edward V. Regan(11) $1,501 $3,537 $70,977 $118,788
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
Russell S. Reynolds, Jr. $1,352 $3,130 $66,602 $106,792
Proxy Committee Chairman and
Governance Committee Member
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
Donald W. Spiro(12) None None None $64,080
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
Joseph M. Wikler(13) None None - $23,000
Audit Committee Member
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
Peter I. Wold(13) None None - $20,500
Governance Committee Member
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
Brian F. Wruble(14)
Regulatory & Oversight None None $22,238(15) $111,000(16)
Committee Member
--------------------------------- -------------------- --------------------- ---------------------- --------------------------
1. "Aggregate Compensation From the Fund" includes fees and deferred
compensation, if any. 2. "Estimated Annual Benefits 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. Mr. Fink was appointed as a Board member of 10 of the Board
I Funds effective January 1, 2005 and was
elected as a Board Member of all of the other Board I Funds during 2005.
5. Includes $45,840 estimated benefits to be paid to Mr. Galli for serving as
a director or trustee of 10 other Oppenheimer funds that are not Board I
Funds.
6. Includes $111,000 for serving as a director or trustee of 10 other
Oppenheimer funds (at December 31, 2004) that are not Board I Funds.
7. Includes $1,802 deferred by Mr. Griffiths under the "Deferred Compensation
Plan" described below. 8. Ms. Miller was appointed as a Board member of 13
of the Board I Funds effective August13, 2004 and of 9
of the Board I Funds effective October 26, 2004. She was elected as a Board
member of all of the Board I Funds during 2005.
9. Includes $763 deferred by Mr. Motley under the "Deferred Compensation Plan"
described below. 10. Due to actuarial considerations, no additional retirement
benefits were accrued with respect to Mr.
Randall.
11. Mr. Regan retired as Directors of the Board I funds effective June 30, 2005.
12. Mr. Spiro retired as Directors of the Board I funds effective October 31,
2004. 13. Mr. Wikler and Mr. Wold were elected as Board members of 23 of the
Board I Funds, including the Fund, as
of August 17, 2005. They had served as Board members of the other 11 Board I Funds prior to that date.
14. Mr. Wruble was appointed as Director of the Board I Funds effective October 10, 2005.
15. Estimated benefits to be paid to Mr. Wruble for serving as a director or trustee of 10 other Oppenheimer
funds that are not Board I Funds. Mr. Wruble's service as a director or trustee of such funds will not be
counted towards the fulfillment of his eligibility requirements for payments under the Board I retirement
plan, described below.
16. For serving as a director or trustee of 10 other Oppenheimer funds (at
December 31, 2004) that are not Board I Funds.

|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
or trustee for any of the Board I Funds for at least seven years to be eligible
for retirement plan benefits and must serve for at least 15 years to be eligible
for the maximum benefit. The amount of retirement benefits a Director will
receive depends on the amount of the Director's compensation, including future
compensation and the length of his or her service on the Board.

|X| Deferred Compensation Plan. 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 will be determined based upon the amount of
compensation deferred and the performance of the selected funds.

Deferral of the 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 compensation account.

|X| Major Shareholders. As of January 31, 2005, the only persons or entities 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 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 the Manager where a directly-controlled affiliate of
the Manager 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 the independent registered public
accounting firm, unless circumstances indicate otherwise.
o In general, the Fund opposes "anti-takeover" proposals and
supports the 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 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.
--------------------------------------- -----------------------------------------------------------------------------
--------------------------------------- -----------------------------------------------------------------------------
2002 $1,481,518
--------------------------------------- -----------------------------------------------------------------------------
--------------------------------------- -----------------------------------------------------------------------------
2003 $1,520,857
--------------------------------------- -----------------------------------------------------------------------------
--------------------------------------- -----------------------------------------------------------------------------
2004 $2,702,576
--------------------------------------- -----------------------------------------------------------------------------

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.

Portfolio Manager. The Fund's portfolio is managed by Christopher Leavy (the "Portfolio Manager"). He is the
person who is responsible for the day-to-day management of the Fund's investments.

Other Accounts Managed. In addition to managing the Fund's
investment portfolio, the Portfolio Manager also manages other
investment portfolios and accounts on behalf of the Manager or its
affiliates. The following table provides information, as of October 31,
2005, regarding the other portfolios managed by the Portfolio Manager.
No account has a performance-based advisory fee:

Portfolio Manager Total Assets Total Assets in Total Assets
Registered in Registered Other Pooled Other Pooled
Investment Investment Investment Investment Other in Other
Companies Companies Vehicles Vehicles Accounts Accounts
Managed Managed* Managed Managed* Managed Managed*
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
11 $7,676.2 2 $74.4 None
Christopher Leavy None

* In millions.

As indicated above, the Portfolio Manager also manages other
funds and accounts. Potentially, at times, those responsibilities could
conflict with the interests of the Fund. That may occur whether the
investment strategies of the other fund or account are the same as, or
different from, the Fund's investment objectives and strategies. For
example, the Portfolio Manager may need to allocate investment
opportunities between the Fund and another fund or account having
similar objectives or strategies, or he may need to execute
transactions for another fund or account that could have a negative
impact on the value of securities held by the Fund. Not all funds and
accounts advised by the Manager have the same management fee. If the
management fee structure of another fund or account is more
advantageous to the Manager than the fee structure of the Fund, the
Manager could have an incentive to favor the other fund or account.
However, the Manager's compliance procedures and Code of Ethics
recognize the Manager's fiduciary obligations to treat all of its
clients, including the Fund, fairly and equitably, and are designed to
preclude the Portfolio Manager from favoring one client over another.
It is possible, of course, that those compliance procedures and the
Code of Ethics may not always be adequate to do so. At different times,
the Fund's Portfolio Manager may manage other funds or accounts with
investment objectives and strategies that are similar to those of the
Fund, or may manage funds or accounts with investment objectives and
strategies that are different from those of the Fund.

Compensation of the Portfolio Managers. The Fund's Portfolio Manager is
employed and compensated by the Manager, not the Fund. Under the
Manager's compensation program for its portfolio managers and portfolio
analysts, their compensation is based primarily on the investment
performance results of the funds and accounts they manage, rather than
on the financial success of the Manager. This is intended to align the
portfolio managers and analysts interests with the success of the funds
and accounts and their shareholders. The Manager's compensation
structure is designed to attract and retain highly qualified investment
management professionals and to reward individual and team
contributions toward creating shareholder value. As of October 31, 2005
the Portfolio Manager's compensation consisted of three elements: a
base salary, an annual discretionary bonus and eligibility to
participate in long-term awards of options and appreciation rights in
regard to the common stock of the Manager's holding company parent.
Senior portfolio managers may also be eligible to participate in the
Manager's deferred compensation plan.

To help the Manager attract and retain talent, the base pay component
of the Portfolio Manager is reviewed regularly to ensure that it
reflects the performance of the individual, is commensurate with the
requirements of the particular portfolio, reflects any specific
competence or specialty of the individual manager, and is competitive
with other comparable positions. The annual discretionary bonus is
determined by senior management of the Manager and is based on a number
of factors, including a fund's pre-tax performance for periods of up to
five years, measured against, an appropriate Lipper benchmark selected
by management. The Lipper benchmark with respect to the Fund is Lipper
- Large Cap Value Funds. Other factors considered include management
quality (such as style consistency, risk management, sector coverage,
team leadership and coaching) and organizational development. The
Portfolio Manager's compensation is not based on the total value of the
Fund's portfolio assets, although the Fund's investment performance may
increase those assets. The compensation structure is also intended to
be internally equitable and serve to reduce potential conflicts of
interest between the Fund and other funds and accounts managed by the
Portfolio Manager. The compensation structure of the other funds and
accounts managed by the Portfolio Manager is the same as the
compensation structure of the Fund, described above.

Ownership of Fund Shares. As of October 31, 2005, the
Portfolio Manager did not beneficially own any shares of the Fund.

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 10/31: Total Brokerage Commissions Paid by the Fund(1)
---------------------------------- -----------------------------------------------------------------
---------------------------------- -----------------------------------------------------------------
2002 $1,590,321
---------------------------------- -----------------------------------------------------------------
---------------------------------- -----------------------------------------------------------------
2003 $1,207,225
---------------------------------- -----------------------------------------------------------------
---------------------------------- -----------------------------------------------------------------
2004 $1,398,807(2)
---------------------------------- -----------------------------------------------------------------
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

--------------- ----------------------- -----------------------
Fiscal Year Aggregate Front-End Class A Front-End
Sales Charges
Ended 10/31: Sales Charges on Retained by
Class A Shares Distributor(1)
--------------- ----------------------- -----------------------
--------------- ----------------------- -----------------------
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 Year Concessions on Class Concessions on Class Concessions on Class C Concessions on Class N
Ended 10/31: A Shares Advanced by B Shares Advanced by Shares Advanced by Shares Advanced by
Distributor(1) Distributor(1) Distributor(1) Distributor(1)
--------------- ----------------------- ---------------------- ------------------------ ------------------------
--------------- ----------------------- ---------------------- ------------------------ ------------------------
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
--------------- ----------------------- ---------------------- ------------------------ ------------------------
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 Year Class A Contingent Class B Contingent Class C Contingent Class N Contingent
Deferred Sales Deferred Sales Deferred Sales
Ended 10/31: Charges Retained by Charges Retained by Deferred Sales Charges Charges Retained by
Distributor Distributor Retained by Distributor Distributor
--------------- ----------------------- ----------------------- ------------------------- -----------------------
--------------- ----------------------- ----------------------- ------------------------- -----------------------
2002 $5,940 $147,720 $2,050 $782
--------------- ----------------------- ----------------------- ------------------------- -----------------------
--------------- ----------------------- ----------------------- ------------------------- -----------------------
2003 $2,547 $161,071 $3,155 $8,724
--------------- ----------------------- ----------------------- ------------------------- -----------------------
--------------- ----------------------- ----------------------- ------------------------- -----------------------
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.

---------------------------------------------------------------------------------------------------------------------
Distribution Fees Paid to the Distributor for the Fiscal Year Ended 10/31/04
---------------------------------------------------------------------------------------------------------------------
-------------------- ----------------------- ------------------------ ----------------------- -----------------------
Class: Total Payments Under Amount Retained by Distributor's Distributor's
Aggregate Unreimbursed Expenses
Unreimbursed Expenses as % of Net Assets of
Plan Distributor Under Plan Class
-------------------- ----------------------- ------------------------ ----------------------- -----------------------
-------------------- ----------------------- ------------------------ ----------------------- -----------------------
Class B Plan $772,119 $612,249(1) $2,650,135 3.09%
-------------------- ----------------------- ------------------------ ----------------------- -----------------------
-------------------- ----------------------- ------------------------ ----------------------- -----------------------
Class C Plan $612,515 $235.549(2) $954,749 1.20%
-------------------- ----------------------- ------------------------ ----------------------- -----------------------
-------------------- ----------------------- ------------------------ ----------------------- -----------------------
Class N Plan $116,310 $74,178(3) $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.

Payments to Fund Intermediaries

Possible types of payments to financial intermediaries include, without
limitation, those discussed below.

o Payments made by the Fund, or by an investor buying or selling shares of the
Fund may include:

Revenue sharing payments can pay for distribution-related or asset
retention items including, without limitation,

ADVEST INC. AEGON
A.G. Edwards & Sons, Inc AIG Network
Allianz Life Insurance Company Allstate Life Insurance Company
Ameritas Life Insurance Corporation American Centurian Life Insurance
American Enterprise Life Insurance American Express Financial Advisors Inc.
American Portfolios Annuity Investors Life
AXA Advisors Banc One Securities Corporation
Bank of New York Cadaret Grant & Co. Inc.
Charter One Securities Inc. Chase Investment Services
Citigroup Financial Network CitiStreet
Citizens Bank of Rhode Island CJM Planning Corp.
Columbus Life Insurance Company Commonwealth Financial Network
CUNA Brokerage Services Inc. CUSO Financial Services, L.P.
Federal Kemper First Allied Securities Inc
First Global Capital GE Financial Assurance
GlenBrook Life and Annuity Co. Great West Life & Annuity Co., Inc.
HD Vest Hewitt Associates
HSBC Brokerage (USA) Inc. ING Network
Jefferson Pilot Securities Corporation John Hancock Variable Life Insurance Company
Kemper Life Assurance Company Legend Equities Corporation
Legg Mason Wood Walker, Incorporated Lincoln National Life Insurance Company
Lincoln Financial Advisors Corporation Lincoln Investment Planning
Linsco/Private Ledger Corp. MassMutual Financial Group and affiliates
McDonald Investments, Inc. Merrill Lynch & Co., Inc. and affiliates
Metlife and affiliates Minnesota Life Insurance Company
Morgan Stanley DW Inc. NPH Network
Nationwide and affiliates New York Life Securities, LLC
PacLife Network Park Avenue Securities LLC
Planmember Securities Corporation Prime Capital Services, Inc.
Princor Financial Services Corporation Protective Life Insurance Co.
Provident Mutual Insurance Company Prudential Investment Management Services LLC
Raymond James Financial Services, Inc. Raymond James & Associates, Inc.
RBC Dain Rauscher Inc. Securities America, Inc.
Security Benefit Life Insurance Company Signator Investments
Sun Life Insurance Company Suntrust Investment Services, Inc.
Tower Square Securities, Inc Travelers Life & Annuity Co., Inc.
UBS Financial Services Inc. Union Central Life Insurance Company
Wachovia Securities LLC Wells Fargo Investments, LLC

Performance of the Fund

o Total returns measure the performance of a hypothetical account in
the Fund over various periods and do not show the performance of
each shareholder's account. Your account's performance will vary
from the model performance data if your dividends are received in
cash, or you buy or sell shares during the period, or you bought
your shares at a different time and price than the shares used in
the model.
o The Fund's performance returns do not reflect the effect of taxes
on dividends and capital gains distributions.
o An investment in the Fund is not insured by the FDIC or any other government agency.
o The principal value of the Fund's shares, and total returns are not guaranteed and normally will
fluctuate on a daily basis.
o When an investor's shares are redeemed, they may be worth more or less than
their original cost. o Total returns for any given past period represent
historical performance information and are not, and
should not be considered, a prediction of future returns.

In calculating total returns for Class A shares, the current
maximum sales charge of 5.75%-equity funds (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. There
is no sales charge on Class Y shares.

ERV l/n - 1 = Average Annual Total Return
P

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

ATVDR l/n - 1 = Average Annual Total Return (After Taxes on Distributions 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
----------------------------------------------------------------------------------------------------------------------
-------------- ------------------------- -----------------------------------------------------------------------------
Class of Cumulative Total Average Annual Total Returns
Returns (10 years or
Shares life-of-class)
-------------- ------------------------- -----------------------------------------------------------------------------
-------------- ------------------------- ------------------------- ------------------------- -------------------------
1-Year 5-Year 10-Year
(or life of class if (or life of class if

less) 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 A(1) 130.91% 144.99% 8.24% 14.85% 2.95% 4.18% 8.73% 9.37%
-------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
-------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Class B(2) 90.61% 90.61% 8.75% 13.75% 2.99% 3.35% 7.36%(2) 7.36%(2)
-------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
-------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Class C(3) 64.18% 64.18% 12.83% 13.83% 3.36% 3.36% 6.01%(3) 6.01%(3)
-------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
-------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Class N(4) 16.15% 16.15% 13.39% 14.39% 4.17%(4) 4.17%(4) N/A N/A
-------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
-------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Class Y(5) 64.18% 64.18% 15.30% 15.30% 4.51% 4.51% 6.50%(5) 6.50%(5)
-------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
1. Inception of Class A: 9/16/85 2. Inception of Class B: 10/2/95 3. Inception
of Class C: 5/1/96 4. Inception of Class N: 3/1/01 5. Inception of Class Y:
12/16/96

----------------------------------------------------------------------------------------------------------------
Average Annual Total Returns for Class A(1) Shares (After Sales Charge)
For the Periods Ended 10/31/04
----------------------------------------------------------------------------------------------------------------
------------------------------------------ --------------------- ------------------------ ----------------------
1-Year 5-Year 10-Year
(or life of class if (or life of class if
less)
less)
------------------------------------------ --------------------- ------------------------ ----------------------
------------------------------------------ --------------------- ------------------------ ----------------------
After Taxes on Distributions 8.20% 2.04% 7.08%
------------------------------------------ --------------------- ------------------------ ----------------------
------------------------------------------ --------------------- ------------------------ ----------------------
After Taxes on Distributions and 5.40% 2.07% 6.75%
Redemption of Fund Shares
------------------------------------------ --------------------- ------------------------ ----------------------
1. Inception of Class A: 9/16/85

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.
o

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:

And the following money market funds:

|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.

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 and Class C shares of other Oppenheimer funds acquired
subject to a contingent deferred sales charge, and
(c) Class A, Class B or Class C 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 or Class C
shares of one of the other Oppenheimer funds that were
acquired subject to a contingent deferred sales charge.

Class B, Class C or Class N shares may not be purchased by an investor directly
from the Distributor without the investor designating another registered
broker-dealer.

|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 Retirement Plans with at least 100 eligible employees or $500,000 or more
in plan assets, o to OppenheimerFunds-sponsored Ascender 401(k) plans that pay
for the purchase with the redemption
proceeds of Class A shares of one or more Oppenheimer funds, and
o to certain customers of broker-dealers and financial advisors
that are identified in a special agreement between the
broker-dealer or financial advisor and the Distributor for
that purpose.

The sales concession and the advance of the service fee, as described
in the Prospectus, will not be paid to dealers of record on sales of Class N
shares on: o purchases of Class N shares in amounts of $500,000 or more by a
retirement plan that pays for the
purchase with the redemption proceeds of Class A shares of one
or more Oppenheimer funds (other than rollovers from an
OppenheimerFunds-sponsored Pinnacle or Ascender 401(k) plan to
any IRA invested in the Oppenheimer funds),
o purchases of Class N shares in amounts of $500,000 or more by
a retirement plan that pays for the purchase with the
redemption proceeds of Class C shares of one or more
Oppenheimer funds held by the plan for more than one year
(other than rollovers from an OppenheimerFunds-sponsored
Pinnacle or Ascender 401(k) plan to any IRA invested in the
Oppenheimer funds), and
o on purchases of Class N shares by an
OppenheimerFunds-sponsored Pinnacle or Ascender 401(k) plan
made with the redemption proceeds of Class A shares of one or
more Oppenheimer funds.

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: o 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.

|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).

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.

How to Sell Shares

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

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

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

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.

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:

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 and Class C shares of Oppenheimer Cash Reserves are
generally available only by exchange from
the same class of shares of other Oppenheimer funds or through
OppenheimerFunds-sponsored 401(k) plans. o Class M shares of Oppenheimer
Convertible Securities Fund may be exchanged only for Class A shares of
other Oppenheimer funds. They may not be acquired by exchange of shares
of any class of any other Oppenheimer funds except Class A shares of
Oppenheimer Money Market Fund or Oppenheimer Cash Reserves acquired by
exchange of Class M shares.
o Class 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
(3/3/2011).
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
(12/16/2011).

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.

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.

Additional Information About the Fund

OPPENHEIMER VALUE FUND
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


OPPENHEIMER VALUE FUND

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


                                                                           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.


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


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


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.


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.






OPPENHEIMER VALUE FUND
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.

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.

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.

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.


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%.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

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

--------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES

Oppenheimer Value Fund (the Fund), a series of Oppenheimer Series Fund, Inc.
(the Company), is registered under the Investment Company Act of 1940, as
amended, as an open-end management investment company. The Fund's investment
objective is to seek long-term growth of capital by investing primarily in
common stocks with low price earnings ratios and better-than-anticipated
earnings. The Fund's investment advisor is OppenheimerFunds, Inc. (the Manager).

      The Fund offers Class A, Class B, Class C, Class N and Class Y shares.
Class A shares are sold at their offering price, which is normally net asset
value plus a front-end sales charge. Class B, Class C and Class N shares are
sold without a front-end sales charge but may be subject to a contingent
deferred sales charge (CDSC). Class N shares are sold only through retirement
plans. Retirement plans that offer Class N shares may impose charges on those
accounts. Class Y shares are sold to certain institutional investors without
either a front-end sales charge or a CDSC, however, the institutional investor
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. No such plan has been adopted for
Class Y shares. Class B shares will automatically convert to Class A shares six
years after the date of purchase.

      The following is a summary of significant accounting policies consistently
followed by the Fund.

--------------------------------------------------------------------------------
SECURITIES VALUATION. The Fund 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

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

--------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued

value is determined in good faith using consistently applied procedures under
the supervision of the Board of Directors. Short-term "money market type" debt
securities with remaining maturities of sixty days or less are valued at
amortized cost (which approximates market value).

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

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         TAX PURPOSES
    ------------------------------------------------------------------------
    $ 1,601,750        $ 5,711,852                 $ --         $ 64,433,852

1. During the fiscal year ended October 31, 2004, the Fund utilized $29,785,615
a,b of capital loss carryforward to offset capital gains realized in that fiscal
year.

   a. Includes $1,348,115 of capital loss carryforwards acquired in the November
   6, 2003 merger of Oppenheimer Select Managers Salomon Brothers All Cap Fund.

   b. Includes $444,392 of capital loss carryforwards acquired in the September
   18, 2003 merger of Oppenheimer Trinity Value Fund.

2. During the fiscal year ended October 31, 2003, the Fund utilized $13,852,965
c of capital loss carryforward to offset capital gains realized in that fiscal
year.

   c. Includes $52,353 of capital loss carryforwards acquired in the September
   18, 2003 merger of Oppenheimer Trinity Value Fund.

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            REDUCTION TO
                           ACCUMULATED ACCUMULATED NET
                 INCREASE TO        NET INVESTMENT           REALIZED GAIN
                 PAID-IN CAPITAL            INCOME        ON INVESTMENTS 3
                 ---------------------------------------------------------
                 $ 2,377,284             $ 160,883             $ 2,538,167

3. $618,995, all of which was long-term capital gain, was distributed in
connection with Fund share redemptions.

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                   $ 650,159           $ 334,032


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

--------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued

The aggregate cost of securities and other investments and the composition of
unrealized appreciation and depreciation of securities and other investments for
federal income tax purposes as of October 31, 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         $ 547,168,457
                                                        ==============

                 Gross unrealized appreciation          $  70,083,866
                 Gross unrealized depreciation             (5,650,014)
                                                        --------------
                 Net unrealized appreciation            $  64,433,852
                                                        ==============

--------------------------------------------------------------------------------
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
$6,163 and payments of $2,806 were made to retired directors, resulting in an
accumulated liability of $47,797 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 and 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.

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

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 600 million shares of $0.001 par value capital stock of
each class. 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                             8,369,840    $   170,220,679          4,264,565    $    70,376,827
Dividends and/or
distributions reinvested            26,697            512,868             20,386            312,728
Acquisition-Note 5                 393,950          7,335,351            248,058          4,532,025
Redeemed                        (2,522,842)       (51,378,430)        (2,463,894)       (39,354,384)
                                --------------------------------------------------------------------
Net increase                     6,267,645    $   126,690,468          2,069,115    $    35,867,196
                                ====================================================================

----------------------------------------------------------------------------------------------------
CLASS B
Sold                             2,032,579    $    40,623,831          1,231,988    $    19,785,723
Dividends and/or
distributions reinvested                --                 --                 --                 --
Acquisition-Note 5                 286,209          5,246,208            113,904          2,051,415
Redeemed                        (1,523,503)       (30,541,309)        (1,230,153)       (19,324,117)
                                --------------------------------------------------------------------
Net increase                       795,285    $    15,328,730            115,739    $     2,513,021
                                ====================================================================

----------------------------------------------------------------------------------------------------
CLASS C
Sold                             2,218,314    $    43,763,468          1,864,248    $    28,908,203
Dividends and/or
distributions reinvested                --                 --                 --                 --
Acquisition-Note 5                 440,763          7,968,992            101,608          1,804,555
Redeemed                          (584,362)       (11,464,179)        (1,078,588)       (16,244,271)
                                --------------------------------------------------------------------
Net increase                     2,074,715    $    40,268,281            887,268    $    14,468,487
                                ====================================================================


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

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



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

CLASS N
Sold                             1,012,546    $    20,320,194            348,563    $     5,697,204
Dividends and/or
distributions reinvested             3,115             59,100                264              4,022
Acquisition-Note 5                 452,633          8,332,974             31,233            564,383
Redeemed                          (283,432)        (5,657,597)           (55,602)          (832,570)
                                --------------------------------------------------------------------
Net increase                     1,184,862    $    23,054,671            324,458    $     5,433,039
                                ====================================================================

----------------------------------------------------------------------------------------------------
CLASS Y
Sold                             1,405,605    $    29,328,236             65,067    $     1,092,179
Dividends and/or
distributions reinvested               822             16,039                105              1,632
Acquisition-Note 5                      51                969             33,446            621,753
Redeemed                           (64,351)        (1,343,461)           (31,137)          (542,837)
                                --------------------------------------------------------------------
Net increase                     1,342,127    $    28,001,783             67,481    $     1,172,727
                                ====================================================================


--------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES

The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the year ended October 31, 2004, were
$627,996,449 and $392,688,685, respectively.

--------------------------------------------------------------------------------
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
$1,071,535 to OFS for services to the Fund.

      Additionally, Class Y shares are subject to minimum fees of $10,000 for
assets of $10 million or more. The Class Y shares are subject to the minimum
fees in the event that the per account fee does not equal or exceed the
applicable minimum fees. OFS may voluntarily waive the minimum fees.

--------------------------------------------------------------------------------
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 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 $2,650,135, $954,749 and
$408,066, 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         $ 515,449         $ 2,362       $ 142,868        $ 14,466       $ 13,039


--------------------------------------------------------------------------------
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 $126,396, an amount equivalent to certain of such
commissions incurred in prior years.

NOTES TO FINANCIAL STATEMENTS  Continued
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued

      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 $1,801, $535, and $1,403 for
Class A, Class C and Class N shares, respectively. This undertaking may be
amended or withdrawn at any time.

--------------------------------------------------------------------------------
5. ACQUISITION OF OPPENHEIMER TRINITY VALUE FUND AND OPPENHEIMER SELECT MANAGERS
SALOMON BROTHERS ALL CAP FUND

OPPENHEIMER TRINITY VALUE FUND. On September 18, 2003, the Fund acquired all of
the net assets of Oppenheimer Trinity Value Fund, pursuant to an Agreement and
Plan of Reorganization approved by the Oppenheimer Trinity Value Fund
shareholders on September 12, 2003. The Fund issued (at an exchange ratio of
0.462030 for Class A, 0.454702 for Class B, 0.467218 for Class C, 0.462387 for
Class N and 0.458575 for Class Y of the Fund to one share of Oppenheimer Value
Fund 248,058; 113,904; 101,608; 31,233 and 33,446 shares of capital stock for
Class A, Class B, Class C, Class N and Class Y, respectively, valued at
$4,532,025, $2,051,415, $1,804,555, $564,383 and $621,753 in exchange for the
net assets, resulting in combined Class A net assets of $199,379,468, Class B
net assets of $59,597,524, Class C net assets $31,165,757, Class N net assets of
$6,114,820 and Class Y net assets of $2,499,533 on September 18, 2003. The net
assets acquired included net unrealized appreciation of $721,866 and an unused
capital loss carryforward of $2,018,832, potential utilization subject to tax
limitations. The exchange qualified as a tax-free reorganization for federal
income tax purposes.

--------------------------------------------------------------------------------
OPPENHEIMER SELECT MANAGERS SALOMON BROTHERS ALL CAP FUND. On November 6, 2003,
the Fund acquired all of the net assets of Oppenheimer Select Managers Salomon
Brothers All Cap Fund, pursuant to an Agreement and Plan of Reorganization
approved by the Oppenheimer Select Managers Salomon Brothers All Cap Fund
shareholders on October 31, 2003. The Fund issued (at an exchange ratio of
0.516576 for Class A, 0.514763 for Class B, 0.521451 for Class C, 0.517683 for
Class N and 0.511551 for Class Y of the Fund to one share of Oppenheimer Value
Fund) 393,950; 286,209; 440,763; 452,633 and 51 shares of beneficial interest
for Class A, Class B, Class C, Class N and Class Y, respectively, valued at
$7,335,351, $5,246,208, $7,968,992, $8,332,974 and $969 in exchange for the net
assets, resulting in combined Class A net assets of $227,060,486, Class B net
assets of $66,085,206, Class C net assets of $41,217,738, Class N net assets of
$15,907,953 and Class Y net assets of $2,648,868 on November 6, 2003. The net
assets acquired included net unrealized appreciation of $2,862,951 and an unused
capital loss carryforward of $2,523,977, potential utilization subject to tax
limitation. The exchange qualified as a tax-free reorganization for federal
income tax purposes.
--------------------------------------------------------------------------------
6. 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.

Appendix A

RATINGS DEFINITIONS

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

LONG-TERM RATINGS: BONDS AND PREFERRED STOCK ISSUER RATINGS

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.

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

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

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

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.

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

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.

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.

N.R. Not rated.

Bond Investment Quality Standards

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.

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.

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.

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.

(1) In accordance with Rule 12b-1 of the Investment Company Act, the term
"Independent Directors" in this Statement of Additional Information refers to
those Directors who are not "interested persons" of the Fund and who do not have
any direct or indirect financial interest in the operation of the distribution
plan or any agreement under the plan.
(2) Certain waivers also apply to Class M shares of Oppenheimer Convertible
Securities Fund. (3) In the case of Oppenheimer Senior Floating Rate Fund, a
continuously-offered closed-end fund, references to contingent deferred sales
charges mean the Fund's Early Withdrawal Charges and references to "redemptions"
mean "repurchases" of shares.
(4) An "employee benefit plan" means any plan or arrangement, whether or not it
is "qualified" under the Internal Revenue Code, under which Class N shares of an
Oppenheimer fund or funds are purchased by a fiduciary or other administrator
for the account of participants who are employees of a single employer or of
affiliated employers. These may include, for example, medical savings accounts,
payroll deduction plans or similar plans. The fund accounts must be registered
in the name of the fiduciary or administrator purchasing the shares for the
benefit of participants in the plan.
(5) The term "Group Retirement Plan" means any qualified or non-qualified
retirement plan for employees of a corporation or sole proprietorship, members
and employees of a partnership or association or other organized group of
persons (the members of which may include other groups), if the group has made
special arrangements with the Distributor and all members of the group
participating in (or who are eligible to participate in) the plan purchase
shares of an Oppenheimer fund or funds through a single investment dealer,
broker or other financial institution designated by the group. Such plans
include 457 plans, SEP-IRAs, SARSEPs, SIMPLE plans and 403(b) plans other than
plans for public school employees. The term "Group Retirement Plan" also
includes qualified retirement plans and non-qualified deferred compensation
plans and IRAs that purchase shares of an Oppenheimer fund or funds through a
single investment dealer, broker or other financial institution that has made
special arrangements with the Distributor.
(6) However, that concession will not be paid on purchases of shares in amounts
of $1 million or more (including any right of accumulation) by a Retirement Plan
that pays for the purchase with the redemption proceeds of Class C shares of one
or more Oppenheimer funds held by the Plan for more than one year. (7) This
provision does not apply to IRAs.
(8) This provision 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.


                                   Appendix B

                            Industry Classifications

Aerospace & Defense                                   Household Products
Air Freight & Couriers                                Industrial Conglomerates
Airlines                                              Insurance
Auto Components                                       Internet & Catalog Retail
Automobiles                                           Internet Software & Services
Beverages                                             IT Services
Biotechnology                                         Leisure Equipment & Products
Building Products                                     Machinery
Chemicals                                             Marine
Consumer Finance                                      Media
Commercial Banks                                      Metals & Mining
Commercial Services & Supplies                        Multiline Retail
Communications Equipment                              Multi-Utilities
Computers & Peripherals                               Office Electronics
Construction & Engineering                            Oil & Gas
Construction Materials                                Paper & Forest Products
Containers & Packaging                                Personal Products
Distributors                                          Pharmaceuticals
Diversified Financial Services                        Real Estate
Diversified Telecommunication Services                Road & Rail
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

                                   Appendix C

                          OppenheimerFunds Special Sales Charge Arrangements and Waivers

In certain cases, the initial sales charge that applies to purchases of Class A
shares(2) 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 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 created or qualified under Sections 401(a) or 401(k) of
              the Internal Revenue Code, 2) non-qualified deferred compensation
              plans, 3) employee benefit plans(4) 4) Group Retirement Plans(5)
              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 $5 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.
|_|           Effective October 1, 2005, taxable accounts established with the
              proceeds of Required Minimum Distributions from Retirement Plans.

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

1.   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
              or unit investment trusts for which reinvestment arrangements have
              been made with the Distributor.
|_|           Shares purchased by certain Retirement Plans that are part of a
              retirement plan or platform offered by banks, broker-dealers,
              financial advisors or insurance companies, or serviced by
              recordkeepers.
|_|           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.
2.   Class A shares issued and purchased in the following transactions are not
     subject to sales charges (a dealer concession at the annual rate of 0.25%
     is paid by the Distributor on purchases made within the first 6 months of
     plan establishment):
|_| Retirement Plans that have $5 million or more in plan assets.
|_|      Retirement Plans with a single plan sponsor that have $5 million or more in aggregate assets invested in
              Oppenheimer funds.

C. Waivers of the Class A Contingent Deferred Sales Charge for Certain
Redemptions.

The Class A contingent deferred sales charge is also waived if shares that would
otherwise be subject to the contingent deferred sales charge are redeemed in the
following cases: |_| To make Automatic Withdrawal Plan payments that are limited
annually to no more than 12% of the account
              value adjusted annually.
|_|           Involuntary redemptions of shares by operation of law or
              involuntary redemptions of small accounts (please refer to
              "Shareholder Account Rules and Policies," in the applicable fund
              Prospectus).
|_|           For distributions from Retirement Plans, deferred compensation
              plans or other employee benefit plans for any of the following
              purposes: 1) Following the death or disability (as defined in the
              Internal Revenue Code) of the participant
                  or beneficiary. The death or disability must occur after the
                  participant's account was established.
              2) To return excess contributions.
              3) To return contributions made due to a mistake of fact. 4)
              Hardship withdrawals, as defined in the plan.(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 (as defined
              in the Internal Revenue Code).
|_|           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.
|_|           Distributions(9) 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- & Mid- 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.

-------------------------------- ---------------------------- --------------------------------- ---------------------
Number of Eligible Employees     Initial Sales Charge as a    Initial Sales Charge as a % of    Concession as % of
or Members                       % of Offering Price          Net Amount Invested               Offering Price
-------------------------------- ---------------------------- --------------------------------- ---------------------
-------------------------------- ---------------------------- --------------------------------- ---------------------
9 or Fewer                                  2.50%                          2.56%                       2.00%
-------------------------------- ---------------------------- --------------------------------- ---------------------
-------------------------------- ---------------------------- --------------------------------- ---------------------
At least  10 but not more  than             2.00%                          2.04%                       1.60%
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 Core Bond Fund,
     Oppenheimer Value Fund and
     Oppenheimer Disciplined Allocation Fund
are modified as described below for those Fund shareholders who were
shareholders of the following funds (referred to as the "Former Connecticut
Mutual Funds") on March 1, 1996, when OppenheimerFunds, Inc. became the
investment adviser to the Former Connecticut Mutual Funds:
     Connecticut Mutual Liquid Account                            Connecticut Mutual Total Return Account
     Connecticut Mutual Government Securities Account             CMIA LifeSpan Capital Appreciation Account
     Connecticut Mutual Income Account                            CMIA LifeSpan Balanced Account
     Connecticut Mutual Growth Account                            CMIA Diversified Income Account

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

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

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

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

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

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

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

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

In addition to the waivers set forth in the Prospectus and in this Appendix,
above, the contingent deferred sales charge will be waived for redemptions of
Class A and Class B shares of a Fund and exchanges of Class A or Class B shares
of a Fund into Class A or Class B shares of a Former Connecticut Mutual Fund
provided that the Class A or Class B shares of the Fund to be redeemed or
exchanged were (i) acquired prior to March 18, 1996 or (ii) were acquired by
exchange from an Oppenheimer fund that was a Former Connecticut Mutual Fund.
Additionally, the shares of such Former Connecticut Mutual Fund must have been
purchased prior to March 18, 1996:
     1) by the estate of a deceased shareholder;
     2) upon the disability of a shareholder, as defined in Section 72(m)(7) of
     the Internal Revenue Code; 3) for retirement distributions (or loans) to
     participants or beneficiaries from retirement plans qualified
         under Sections 401(a) or 403(b)(7)of the Code, or from IRAs, deferred
         compensation plans created under Section 457 of the Code, or other
         employee benefit plans;
4)       as tax-free returns of excess contributions to such retirement or employee benefit plans;
     5)  in whole or in part, in connection with shares sold to any state, county, or city, or any
         instrumentality, department, authority, or agency thereof, that is
         prohibited by applicable investment laws from paying a sales charge or
         concession in connection with the purchase of shares of any registered
         investment management company;
     6)  in connection with the redemption of shares of the Fund due to a
         combination with another investment company by virtue of a merger,
         acquisition or similar reorganization transaction;
     7)  in connection with the Fund's right to involuntarily redeem or
         liquidate the Fund;
     8)  in connection with automatic redemptions of Class A shares and Class B
         shares in certain retirement plan accounts pursuant to an Automatic
         Withdrawal Plan but limited to no more than 12% of the original value
         annually; or
     9)  as involuntary redemptions of shares by operation of law, or under
         procedures set forth in the Fund's Articles of Incorporation, or as
         adopted by the Board of Directors of the Fund.
VI.                 Special Reduced Sales Charge for Former Shareholders of Advance America Funds, Inc.
-------------------------------------------------------------------------------------------------------------------

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

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

Oppenheimer Value 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

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