485-b Filing

497 1 pspsai.htm PROSPECTUS AND SAI 485-b Filing

Oppenheimer
Convertible Securities Fund

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Prospectus dated February 24, 2004

Oppenheimer Convertible Securities
Fund is a mutual fund that seeks a
high level of total return as its
objective, through a combination of
current income and capital
appreciation. It invests primarily
in securities that are convertible
into common stock.

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

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

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

The Fund's Investment Objective and Principal Investment
Strategies

Main Risks of Investing in the Fund

The Fund's Past Performance

Fees and Expenses of the Fund

About the Fund's Investments

How the Fund is Managed

A B O U T Y O U R A C C O U N T

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

Special Investor Services
AccountLink
PhoneLink
OppenheimerFunds Internet Web Site
Retirement Plans

How to Sell Shares
By Wire
By Mail
By Telephone

How to Exchange Shares

Shareholder Account Rules and Policies

Dividends, Capital Gains and Taxes

Financial Highlights

ABOUT THE FUND

The Fund's Investment Objective and Principal Investment Strategies

WHAT IS THE FUND'S INVESTMENT OBJECTIVE? The Fund seeks a high level of total
return on its assets through a combination of current income and capital
appreciation.

WHAT DOES THE FUND MAINLY INVEST IN? As a matter of non-fundamental policy that
shall not be changed without 60 days advance notice to shareholders, the Fund
invests, under normal market conditions, at least 80% of its net assets (plus
borrowings for investment purposes) in convertible securities. Those convertible
securities include domestic and (to a limited extent) foreign corporate bonds,
notes, warrants and preferred stocks that can be exchanged for (converted into)
common stock of the issuer. The Fund can invest without limit in lower-grade,
high-yield convertible debt securities, sometimes called "junk bonds," and many
of the convertible bonds the Fund buys are below investment grade.

The Fund has no limitations on the range of maturities of the debt
securities in which it can invest and therefore may hold bonds with short-,
medium- or long-term maturities. In addition, the Fund does not limit its
investments to securities of issuers in a particular market capitalization range
and can hold securities of small-cap, medium-cap and large-cap issuers.

While the Fund can also invest up to 20% of its net assets in
non-convertible debt securities and common stocks, not more than 15% of its net
assets can be invested in common stocks that do not pay dividends. These
investments are more fully explained in "About the Fund's Investments," below.

HOW DOES THE PORTFOLIO MANAGER DECIDE WHAT SECURITIES TO BUY OR SELL? In
selecting securities for the Fund, the Fund's portfolio manager uses a
disciplined, value-oriented investment approach based on a fundamental
"bottom-up" analysis of the financial condition of individual issuers rather
than overall market or industry conditions or trends. The portfolio manager
currently focuses on the factors below (which may vary in particular cases and
may change over time):

o The portfolio manager analyzes the balance sheet strength of individual
issuers, including current and historic financial condition, trading
activity in their securities, present and anticipated cash flows,
estimated values in relation to historic cost, the issuer's managerial
expertise, debt maturity schedules, current and future borrowing
requirements and any change in its condition that might affect its ability
to meet future obligations.
o The portfolio manager searches for convertible debt securities that might
offer participation in equity-like returns without excessive price
volatility.
o To avoid the volatility of owning stocks directly, the portfolio manager
generally sells stocks after they are obtained by converting securities
the Fund held.
o While the Fund is not required to sell securities to maintain 80% of its
net assets in convertible securities, if its investments in
non-convertible securities, cash and common stock exceed 20% of net assets
it will make new investments only in convertible securities until the 80%
standard is met.

WHO IS THE FUND DESIGNED FOR? The Fund is designed primarily for investors
seeking high total return over the long term from a fund that invests for both
current income and capital appreciation in convertible securities. Those
investors should be willing to assume the credit risks of a fund that typically
invests a significant amount of its assets in lower-grade bonds and the changes
in share prices that can occur when interest rates change. The Fund is intended
as a long-term investment, not a short-term trading vehicle, and may be
appropriate as part of an investor's retirement plan portfolio. However, the
Fund is not a complete investment program.

Main Risks of Investing in the Fund

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

CREDIT RISK. Debt securities are subject to credit risk. Credit risk relates to
the ability of the issuer of a security to make interest and principal payments
on the security as they become due. If the issuer fails to pay interest, the
Fund's income might be reduced, and if the issuer fails to repay principal, the
value of that security and of the Fund's shares might be reduced. Debt
securities and preferred stocks issued by domestic and foreign corporations are
subject to risks of default. A downgrade in an issuer's credit rating or other
adverse news about an issuer can reduce the market value of that issuer's
securities.

Special Risks of Lower-Grade Securities. Because the Fund can invest without
limit in securities rated below investment grade to seek high income, the
Fund's credit risks are greater than those of funds that buy only
investment-grade bonds. Lower-grade debt securities may be subject to
greater market fluctuations and greater risks of loss of income and
principal than investment-grade debt securities. Securities that are (or
that have fallen) below investment grade are exposed to a greater risk
that the issuers of those securities might not meet their debt
obligations. The market for these securities may be less liquid, making it
difficult for the Fund to sell them quickly at an acceptable price. These
risks can reduce the Fund's share prices and the income it earns.

Special Risks of Small-Cap Issuers. While the Fund can buy convertible
securities of companies of small, medium or large market capitalizations,
to the extent the Fund invests in small-capitalization companies, they may
offer greater potential for high total return than securities of larger
issuers. However, Small-cap issuers may have less of a trading market for
their securities and may be subject to greater risks of default than
securities of larger issuers. These factors increase the potential for
losses to the Fund.

INTEREST RATE RISKS. The values of debt securities are subject to change when
prevailing interest rates change. When prevailing interest rates fall, the
values of already-issued debt securities generally rise. When prevailing
interest rates rise, the values of already-issued debt securities generally
fall, and they may sell at a discount from their face amount. The magnitude of
these fluctuations will often be greater for debt securities having longer
maturities than for shorter-term debt securities. The Fund's share prices can go
up or down when interest rates change because of the effect of the changes on
the value of the Fund's investments in debt securities. Also, if interest rates
fall, the Fund's investments in new securities at lower yields will reduce the
Fund's income.

STOCK MARKET RISKS. Because most of the Fund's investments are convertible into
common stock, the prices of the Fund's investments in convertible securities are
sensitive to events that affect the values of the issuer's common stock. Those
can include broad stock market events as well as events affecting the particular
issuer, such as poor earnings reports, loss of major customers, major
litigation, or regulatory changes affecting the issuer or its industry. The
income offered by fixed-income securities can help reduce the effect of that
volatility on the Fund's total return to some degree, but the prices of the
Fund's convertible securities will be affected by those events.

THERE ARE SPECIAL RISKS IN USING DERIVATIVE INVESTMENTS. The Fund can use
derivatives to seek increased income or to try to hedge investment risks. In
general terms, a derivative investment is an investment contract whose value
depends on (or is derived from) the value of an underlying asset, interest rate
or index. Options, structured notes, and equity-linked debt securities are
examples of derivatives the Fund can use.

If the issuer of the derivative does not pay the amount due, the Fund can
lose money on the investment. Also, the underlying security or investment on
which the derivative is based, and the derivative itself, might not perform the
way the Manager expected it to perform. If that happens, the Fund's share prices
could fall or the Fund could get less income than expected. The Fund has limits
on the amount of particular types of derivatives it can hold and is not required
to use them to seek its objective. Using derivatives can cause the Fund to lose
money on its investments and/or increase the volatility of its share prices.

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

The values of debt securities, particularly lower-grade securities, can be
affected by a number of factors, such as interest rate changes and other market
factors, and the prices of the Fund's shares can go up and down. The income from
the Fund's investments may help cushion the Fund's total return from changes in
prices, but debt securities are subject to credit risks that can also affect
their values and income and the share prices of the Fund. In the
OppenheimerFunds spectrum, the Fund generally has more risks than bond funds
that focus primarily on U. S. government securities and investment-grade bonds
but may be less volatile than funds that focus solely on investments in stocks.

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

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

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

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

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

Sales charges and taxes are not included in the calculations of return in this
bar chart, and if those charges and taxes were included, the returns may be less
than those shown.
During the period shown in the bar chart, the highest return (not annualized)
before taxes for a calendar quarter was 16.47% (4th Qtr 99) and the lowest
return (not annualized) before taxes for a calendar quarter was -10.70% (3rd Qtr
98).

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Average Annual Total Returns 1 Year 5 Years 10 Years
(or life of (or life of

for the periods ended December 31, class, if class,
2003 less) if less)

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Class M Shares (inception 6/3/86)

Return Before Taxes 18.61% 4.27% 7.49%
Return After Taxes on Distributions 16.92% 1.73% 4.68%
Return After Taxes on
Distributions and 12.00% 2.14% 4.75%
Sale of Fund Shares

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Lehman Bros. Aggregate Bond Index
(reflects no deduction for fees,

expenses or taxes) 4.10% 6.62% 6.95%1

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Goldman Sachs Convertible Bond 100
Index
(reflects no deduction for fees,
expenses or taxes) 23.28% 4.87% 8.46%1

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Standard &amp; Poor's 500 Index 28.67% -0.57% 11.06%1
(reflects no deduction for fees,
expenses or taxes)

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Class A Shares (inception 5/1/95) 15.88% 4.22% 7.90%

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Class B Shares (inception 5/1/95) 17.07% 4.33% 8.08%

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Class C Shares (inception 3/11/96) 21.14% 4.66% 6.61%

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Class N Shares (inception 3/1/01) 21.45% 3.60% N/A

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1 From 12/31/93.

Class M shares were first publicly offered 6/3/86 as Class A shares and were
re-designated as Class M shares on 3/11/96. The Fund's Class Y shares, which had
been offered since 5/1/95, were re-designated as Class A shares on 3/11/96.

The Fund's average annual total returns include the current maximum initial
sales charges of 5.75% for Class A and 3.25% for Class M; the contingent
deferred sales charge of 5% (1-year) and 2% (5 year) for Class B; and the 1%
contingent deferred sales charge for the 1-year period for Class C and the
1-year period for Class N. Because Class B shares automatically convert to Class
A shares 72 months after purchase, Class B "life of class" performance does not
include any contingent deferred sales charge and uses Class A performance for
the period after conversion.
The returns measure the performance of a hypothetical account and assume that
all dividends and capital gains distributions have been reinvested in additional
shares. The performance of the Fund's shares is compared to the Goldman Sachs
Convertible Bond 100 Index, an unmanaged index of convertible securities and the
Lehman Brothers Aggregate Bond Index, an unmanaged index of U.S. corporate and
government bonds. The Fund also compares its performance to that of the S&amp;P 500
Index, an unmanaged index of common stocks. The indices' performance includes
reinvestment of income but does not reflect transaction costs or taxes. The
Fund's investments vary from the securities in the indices.

Fees and Expenses of the Fund

The following tables are provided to help you understand the fees and expenses
you may pay if you buy and hold shares of the Fund. The Fund pays a variety of
expenses directly for management of its assets, administration, distribution of
its shares and other services. Those expenses are subtracted from the Fund's
assets to calculate the Fund's net asset values per share. All shareholders
therefore pay those expenses indirectly. Shareholders pay other transaction
expenses directly, such as sales charges. The numbers below are based on the
Fund's expenses during its fiscal year ended December 31, 2003.

Shareholder Fees (charges paid directly from your investment):

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Class A Class B Class C Class M Class N
Shares Shares Shares Shares Shares
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Maximum Sales Charge 5.75% None None 3.25% None
(Load) on purchases (as %
of offering price)
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Maximum Deferred Sales
Charge (Load) (as % of
the lower of the original
offering price or
redemption proceeds) None1 5%2 1%3 None 1%4
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Annual Fund Operating Expenses (deducted from Fund assets):
(% of average daily net assets)

Distribution and/or 0.24% 1.00% 1.00% 0.25% 0.50%
Service (12b-1) Fees

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Other Expenses 0.22% 0.26% 0.22% 0.15% 0.39%

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Total Annual Operating 0.94% 1.74% 1.70% 0.88% 1.37%
Expenses

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Expenses may vary in future years. "Other expenses" include transfer agent fees,
custodial expenses, and accounting and legal expenses the Fund pays. The "Other
Expenses" in the table are based on, among other things, the fees the Fund would
have paid if the transfer agent had not waived a portion of its fee under a
voluntary undertaking to the Fund to limit these fees to 0.35% per annum for
each class of shares. That undertaking may be amended or withdrawn at any time.
After the waiver, the actual "Other Expenses" and "Total Annual Operating
Expense" were 0.37% and 1.35% for Class N shares. The Distribution and/or
Service (12b-1) Fees for Class M shares in the table above does not reflect the
0.25% asset based sales charge which the Board set at zero effective 2/11/04.
Actual Distribution and/or Service (12b-1) Fees for Class M shares for fiscal
year 12/31/03 were 0.69%. The transfer agent fees for the other classes of
shares did not exceed the expense limitation described above, therefore Class A,
Class B, Class C and Class M expenses were the same as shown above.

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

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

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

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If shares are redeemed: 1 Year 3 Years 5 Years 10 Years
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Class A Shares $665 $857 $1,065 $1,663

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Class B Shares $677 $848 $1,144 $1,6461

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Class C Shares $273 $536 $923 $2,009

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Class M Shares $412 $597 $797 $1,374

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Class N Shares $239 $434 $750 $1,646

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If shares are not 1 Year 3 Years 5 Years 10 Years
redeemed:
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Class A Shares $665 $857 $1,065 $1,663

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Class B Shares $177 $548 $944 $1,6461

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Class C Shares $173 $536 $923 $2,009

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Class M Shares $412 $597 $797 $1,374

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Class N Shares $139 $434 $750 $1,646

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In the first example, expenses include the initial sales charge for Class A and
Class M and the applicable Class B, Class C or Class N contingent deferred sales
charges. In the second example, the Class A and Class M expenses include the
sales charge, but Class B, Class C and Class N expenses do not include the
contingent deferred sales charges. 1. Class B expenses for years 7 through 10
are based on Class A expenses because Class B shares automatically convert to
Class A shares 72 months after purchase.

About the Fund's Investments

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

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

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

Convertible Securities. Convertible debt securities pay interest and convertible
preferred stocks pay dividends until they mature or are converted,
exchanged or redeemed. Because of the conversion feature, the price of a
convertible security will normally vary in some proportion to changes in
the price of the underlying common stock. In general, convertible
securities:

o have higher yields than common stocks but lower yields than comparable
non-convertible securities,
o may be subject to less fluctuation in value than the underlying stock
because of their income, and
o provide potential for capital appreciation if the market price of the
underlying common stock increases (and in those cases may be thought of as
"equity substitutes").

The Fund does not invest only in securities of issuers in a particular
market capitalization range, and at times the Manager might increase the
relative emphasis of securities of issuers in a particular capitalization
range if the Manager believes they offer greater opportunities for total
return.

Securities of smaller, newer companies may offer greater potential for
higher returns, but they are also subject to greater risks of default than
larger, more established issuers. They may have unseasoned management,
they may lack established markets for their products or services and may
be dependent on only a few customers or suppliers for a greater amount of
their business. Also, they may not have the financial strength to sustain
them through business downturns or adverse market conditions. These
securities may have less of a trading market than securities of larger
issuers, and it might be harder for the Fund to dispose of its holdings at
an acceptable price when it wants to sell them. As a result, to the extent
the Fund invests in securities of these issuers, they have greater risks.
The Fund might not achieve its expected returns from these securities and
its share price may fluctuate more to the extent that it holds these
investments.

In selecting securities for the Fund's portfolio and evaluating their
yield potential and credit risk, the Manager does not rely solely on
ratings by rating organizations but evaluates business and economic
factors affecting an issuer as well. The debt securities the Fund buys may
be rated by nationally-recognized rating organizations such as Moody's
Investors Service, Inc. or Standard &amp; Poor's Rating Service, or they may
be unrated securities assigned an equivalent rating by the Manager. Credit
ratings evaluate the expectation of scheduled payments of interest and
principal, not market risks. Rating agencies might not always change their
credit ratings of an issuer in a timely manner to reflect the events that
could affect an issuer's ability to make timely payments on its
obligations.

The Fund can invest in debt securities that are investment grade or below
investment grade in credit quality and at times will invest substantial
amounts of its assets in securities below investment grade to seek higher
income as part of its goal. "Investment-grade" rated securities are those
in the four highest rating categories of national ratings organizations.
The ratings definitions of the principal ratings organizations are
included in Appendix A to the Statement of Additional Information.

Convertible Preferred Stock. Unlike common stock, preferred stock typically has
a stated dividend rate. When prevailing interest rates rise, the value of
preferred stock having a fixed dividend rate tends to fall. The right to
payment of dividends on preferred stock generally is subordinate to the
rights of the company's debt securities. Preferred stock dividends may be
cumulative (they remain a liability of the company until paid) or
non-cumulative.

Some convertible preferred stock with a mandatory conversion feature has a
set call price to buy the underlying common stock. If the underlying
common stock price is less than the call price, the holder will pay more
for the common stock than its market price. The issuer might also be able
to redeem the stock prior to the mandatory conversion date, which could
diminish the potential for capital appreciation on the investment.

"Mandatory-Conversion" Securities. These securities may combine features of both
equity and debt securities. Normally they have a mandatory conversion
feature and an adjustable conversion ratio. One type of mandatory
conversion security is the convertible preferred stock discussed above.
Another is the "equity-linked" debt security, having a principal amount at
maturity that depends on the performance of a specified equity security,
such as the issuer's common stock. Their values can also be affected by
interest rate changes and credit risks of the issuer. They may be
structured in a way that limits their potential for capital appreciation
and the entire value of the security may be at risk of loss depending on
the performance of the underlying equity security. Since the market for
these securities is still relatively new, they may be less liquid than
other convertible securities.

Lower-Grade Securities. Lower-grade convertible securities may offer greater
opportunities for higher returns than higher-grade securities. Lower-grade
securities are those rated below "Baa" by Moody's or lower than "BBB" by
Standard &amp; Poor's or similar ratings by other nationally-recognized rating
organizations. The Fund does not invest in securities rated below "C" or
which are in default. While securities rated "Baa" by Moody's or "BBB" by
S&amp;P are considered "investment grade," they have some speculative
characteristics.

o Special Risks of Lower-Grade Securities. While investment-grade
securities are subject to risks of non-payment of interest and
principal, in general, higher-yielding lower-grade bonds, whether rated
or unrated, have greater risks than investment-grade securities as
stated in "Main Risks of Investing in the Fund." There may be less of
a market for them and therefore they may be harder to sell at an
acceptable price. These risks mean that the Fund might not achieve the
expected income from lower-grade securities, and that the Fund's net
asset value per share could be affected by declines in value of these
securities.

The Fund also invests in investment-grade debt securities. It is not
required to dispose of debt securities whose ratings fall after the Fund
buys them. However, the portfolio manager will monitor those holdings of
issuers whose credit quality falls to determine whether the Fund should
sell them.

Derivative Investments. In addition to using hedging instruments such as
options, the Fund can use other derivative investments, such as structured
notes and "mandatory-conversion" securities, including "equity-linked"
debt securities, because they offer the potential for increased income and
principal value.

Markets underlying securities and indices may move in a direction not
anticipated by the Manager. Interest rate and stock market changes in the
U.S. and abroad may also influence the performance of derivatives. As a
result of these risks the Fund could realize less principal or income from
the investment than expected. Certain derivative investments held by the
Fund may be illiquid.

o "Structured" Notes. Structured notes are specially-designed derivative
debt investments. Payments of principal or interest on those notes are
linked to the value of an index (such as a currency or securities index),
an individual stock, or a 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. 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. Therefore, the Fund could receive more or less than it originally
invested when the notes mature. 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.

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

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

Foreign Securities. The Fund can invest up to 15% of its net assets in foreign
securities. The Fund can buy securities of companies in both developed
markets and emerging markets. The Fund's foreign debt investments can be
denominated in U.S. dollars or in foreign currencies. The Fund will buy
foreign currency only in connection with the purchase and sale of foreign
securities and not for speculation.

o Risks of Foreign Investing. While foreign securities offer special
investment opportunities, there are also special risks that can reduce
the Fund's share prices and returns. The change in value of a foreign
currency against the U.S. dollar will result in a change in the U.S.
dollar value of securities denominated in that foreign currency.
Currency rate changes can also affect the distributions the Fund makes
from the income it receives from foreign securities as foreign currency
values change against the U.S. dollar. Foreign investing can result in
higher transaction and operating costs for the Fund. Foreign issuers
are not subject to the same accounting and disclosure requirements that
U.S. companies are subject to.

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

Zero-Coupon Securities. Some of the debt securities the Fund can buy are
zero-coupon bonds that pay no interest and are issued at a substantial
discount from their face value. Zero-coupon securities are subject to
greater fluctuations in price from interest rate changes than
interest-bearing securities. The Fund may have to pay out the imputed
income on zero-coupon securities without receiving the actual cash
currently.

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

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

The Fund could write covered call options on stocks, purchase put options
on stocks and enter into closing transactions on these options for a
number of purposes. It might do so to try to manage its exposure to the
possibility that the prices of its portfolio securities may fall or to try
to increase its income.

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

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

Temporary Defensive and Interim Investments. For cash management purposes the
Fund can hold cash equivalents such as commercial paper, repurchase
agreements, U.S. Treasury bills and other short-term U.S. government
securities. In times of adverse or unstable market, economic or political
conditions, the Fund can invest up to 100% of its assets in temporary
investments that are inconsistent with the Fund's principal investment
strategies. These would ordinarily be short-term U.S. government
securities, commercial paper in the top two rating categories of a
national rating organization, bank obligations of domestic banks having
assets of at least $500 million or repurchase agreements. The Fund can
also hold these securities pending the investment of proceeds from the
sale of Fund shares or portfolio securities or to meet anticipated
redemption requests. To the extent the Fund invests defensively in these
securities, it might not achieve its investment objective.

Portfolio Turnover. The Fund's investment process may cause the Fund to engage
in active and frequent trading. Therefore, the Fund may engage in
short-term trading while trying to achieve its objective. Increased
portfolio turnover creates higher brokerage and transaction costs for the
Fund (and may reduce performance). Additionally, securities trading can
cause the Fund to realize capital gains that are distributed to
shareholders as taxable distributions. The Financial Highlights table at
the end of this Prospectus shows the Fund's portfolio turnover rate for
each of the past five fiscal years.

How the Fund Is Managed

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

The Manager has been an investment advisor since January 1960. The Manager
and its subsidiaries and controlled affiliates managed more than $150 billion in
assets as of December 31, 2003, including other Oppenheimer funds with more than
7 million shareholder accounts. The Manager is located at Two World Financial
Center, 225 Liberty Street, 11th Floor, New York, New York 10281-1008.

Portfolio Manager. The portfolio manager of the Fund is Edward Everett. Mr.
Everett has been a portfolio manager of the Fund since July 12, 1993
and he is the person principally responsible for the day-to-day
management of the Fund's portfolio. Mr. Everett is a Vice President of
the Manager and of the Fund. Prior to joining the Manager in January
1996, he was a portfolio manager of Fielding Management Company, Inc.,
an investment advisor.

Advisory Fees. Under the investment advisory agreement, the Fund pays the
Manager an advisory fee at an annual rate that declines on additional
assets as the Fund grows: 0.625% of the first $50 million of average
annual net assets of the Fund, 0.50% of the next $250 million, and 0.4375%
of average annual net assets over $300 million. The Fund's advisory fee
for its last fiscal year ended December 31, 2003 was 0.48 % of average
annual net assets for each class of shares.

ABOUT YOUR ACCOUNT

How to Buy Shares

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

Buying Shares Through Your Dealer. You can buy shares through any dealer, broker
or financial institution that has a sales agreement with the Distributor.
Your dealer will place your order with the Distributor on your behalf.
Buying Shares Through the Distributor. Complete an OppenheimerFunds New Account
Application and return it with a check payable to "OppenheimerFunds
Distributor, Inc." Mail it to P.O. Box 5270, Denver, Colorado 80217. If
you don't list a dealer on the application, the Distributor will act as
your agent in buying the shares. However, we recommend that you discuss
your investment with a financial advisor before you make a purchase to be
sure that the Fund is appropriate for you.
o Paying by Federal Funds Wire. Shares purchased through the Distributor may
be paid for by Federal Funds wire. The minimum investment is $2,500.
Before sending a wire, call the Distributor's Wire Department at
1.800.225.5677 to notify the Distributor of the wire and to receive
further instructions.
o Buying Shares Through OppenheimerFunds AccountLink. With AccountLink,
you pay for shares by electronic funds transfers from your bank
account. Shares are purchased for your account by a transfer of money
from your bank account through the Automated Clearing House (ACH)
system. You can provide those instructions automatically, under an
Asset Builder Plan, described below, or by telephone instructions using
OppenheimerFunds PhoneLink, also described below. Please refer to
"AccountLink," below for more details.
o Buying Shares Through Asset Builder Plans. You may purchase shares of the
Fund automatically each month from your account at a bank or other
financial institution under an Asset Builder Plan with AccountLink.
Details are in the Asset Builder Application and the Statement of
Additional Information.

WHAT IS THE MINIMUM AMOUNT YOU MUST INVEST? In most cases, you can buy Fund
shares with a minimum initial investment of $1,000 and make additional
investments at any time with as little as $50. There are reduced minimums
available under the following special investment plans: o If you establish one
of the many types of retirement plan accounts that
OppenheimerFunds offers, more fully described below under "Special Investor
Services," you can start your account with as little as $500.
o By using an Asset Builder Plan or Automatic Exchange Plan (details are in the
Statement of Additional Information), or government allotment plan, you can
make subsequent investments (after making the initial investment of $500) for
as little as $50. For any type of account established under one of these
plans prior to November 1, 2002, the minimum additional investment will
remain $25.
o The minimum investment requirement does not apply to reinvesting dividends
from the Fund or other Oppenheimer funds (a list of them appears in the
Statement of Additional Information, or you can ask your dealer or call the
Transfer Agent), or reinvesting distributions from unit investment trusts
that have made arrangements with the Distributor.

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

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

The net asset value per share is determined by dividing the value of the
Fund's net assets attributable to a class by the number of shares of that
class that are outstanding. To determine net asset value, the Fund's Board
of Trustees has established procedures to value the Fund's securities, in
general, based on market value. The Board has adopted special procedures
for valuing illiquid and restricted securities and obligations for which
market values cannot be readily obtained. Because some foreign securities
trade in markets and on exchanges that operate on weekends and U.S.
holidays, the values of some of the Fund's foreign investments may change
on days when investors cannot buy or redeem Fund shares.

If, after the close of the principal market on which a security held by
the Fund is traded, and before the time the Fund's securities are priced
that day, an event occurs that the Manager deems likely to cause a
material change in the value of such security, the Fund's Board of
Trustees has authorized the Manager, subject to the Board's review, to
ascertain a fair value for such security. A security's valuation may
differ depending on the method used for determining value.

The Offering Price. To receive the offering price for a particular day, the
Distributor or its designated agent must receive your order by the time
the Exchange closes that day. If your order is received on a day when the
Exchange is closed or after it has closed, the order will receive the next
offering price that is determined after your order is received.
Buying Through a Dealer. If you buy shares through a dealer, your dealer must
receive the order by the close of the Exchange and transmit it to the
Distributor so that it is received before the Distributor's close of
business on a regular business day (normally 5:00 P.M.) to receive that
day's offering price, unless your dealer has made alternative arrangements
with the Distributor. Otherwise, the order will receive the next offering
price that is determined.

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

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

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

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

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

And for non-retirement plan investors who invest $1 million or more, in
most cases Class A shares will be the most advantageous choice, no matter
how long you intend to hold your shares. For that reason, the Distributor
normally will not accept purchase orders of $250,000 or more of Class B
shares or $1 million or more of Class C or Class M shares from a single
investor.

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

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

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

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

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

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

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

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

Can You Reduce Class A Sales Charges? You may be eligible to buy Class A
shares at reduced sales charge rates under the Fund's "Right of
Accumulation" or a Letter of Intent, as described in "Reduced Sales
Charges" in the Statement of Additional Information.

Class A Contingent Deferred Sales Charge. There is no initial sales charge on
purchases of Class A shares of any one or more of the Oppenheimer funds
aggregating $1 million or more, or on purchases of Class A shares of any
one or more of the Oppenheimer funds by certain retirement plans that
satisfied certain requirements prior to March 1, 2001 ("grandfathered
retirement accounts"). However, those Class A shares may be subject to a
Class A contingent deferred sales charge, as described below. Qualified
retirement plans (other than grandfathered retirement accounts, single
401(k) plans, SEP IRAs and SIMPLE IRAs) are not permitted to purchase
Class A shares without an initial sales charge but are subject to the
Class A contingent deferred sales charge. The Distributor pays dealers of
record concessions in an amount equal to 1.0% of purchases of $1 million
or more other than by grandfathered retirement accounts. For grandfathered
retirement accounts, the concession is 0.75% of the first $2.5 million of
purchases plus 0.25% of purchases in excess of $2.5 million. In either
case, the concession will not be paid on purchases of shares by exchange
or that were previously subject to a front-end sales charge and dealer
concession.

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

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

Purchases by Certain Retirement Plans. There is no initial sales charge on
purchases of Class A shares of any one or more Oppenheimer funds by
retirement plans that have $10 million or more in plan assets and that
have entered into a special agreement with the Distributor and by
retirement plans which are part of a retirement plan product or platform
offered by certain banks, broker-dealers, financial advisors, insurance
companies or recordkeepers which have entered into a special agreement
with the Distributor. The Distributor currently pays dealers of record
concessions in an amount equal to 0.25% of the purchase price of Class A
shares by those retirement plans from its own resources at the time of
sale, subject to certain exceptions as described in the Statement of
Additional Information. There is no contingent deferred sales charge upon
the redemption of such shares.

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

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

------------------------------------------------------------------------------
Years Since Beginning of Month in Contingent Deferred Sales Charge on
Redemptions
Which Purchase Order was Accepted in That Year(As % of Amount Subject to
Charge)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
0 - 1 5.0%
------------------------------------------------------------------------------
------------------------------------------------------------------------------
1 - 2 4.0%
------------------------------------------------------------------------------
------------------------------------------------------------------------------
2 - 3 3.0%
------------------------------------------------------------------------------
------------------------------------------------------------------------------
3 - 4 3.0%
------------------------------------------------------------------------------
------------------------------------------------------------------------------
4 - 5 2.0%
------------------------------------------------------------------------------
------------------------------------------------------------------------------
5 - 6 1.0%
------------------------------------------------------------------------------
------------------------------------------------------------------------------
More than 6 None
------------------------------------------------------------------------------

In the table, a "year" is a 12-month period. In applying the contingent deferred
sales charge, all purchases are considered to have been made on the first
regular business day of the month in which the purchase was made.

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

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

HOW CAN YOU BUY CLASS M SHARES? Class M shares are sold at their offering price,
which is normally net asset value plus an initial sales charge.1 In other cases,
reduced sales charges may be available under the Fund's "Right of Accumulation"
or Letter of Intent, as described under "Can You Reduce Class A Sales Charges,"
above. Out of the amount you invest, the Fund receives the net asset value to
invest for your account.

The sales charge varies depending on the amount you purchase. A portion of
the sales charge may be retained by the Distributor or allocated to your dealer
as a concession. The Distributor reserves the right to reallow the entire
concession to dealers. The Distributor does not accept purchases of Class M
shares in amounts of $1 million or more. The current sales charge rates and
concession paid to dealers are as follows:

---------------------------------------------------------------------------------
Amount of Purchase Front-End Front-End Concession
Sales Charge Sales Charge
As a As a As
Percentage of Percentage of Percentage
Offering Net Amount of Offering
Price Invested Price
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Less than $250,000 3.25% 3.36% 3.00%
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
$250,000 or more but less than 2.25% 2.30% 2.00%
$500,000
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
$500,000 or more but less than $1 1.25% 1.27% 1.00%
million
---------------------------------------------------------------------------------

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

Class N shares are sold at net asset value without an initial sales
charge. A contingent deferred sales charge of 1.0% will be imposed upon the
redemption of Class N shares, if:

o The group retirement plan is terminated or Class N shares of all
Oppenheimer funds are terminated as an investment option of the plan and
Class N shares are redeemed within 18 months after the plan's first
purchase of Class N shares of any Oppenheimer fund, or
o With respect to an IRA or 403(b) plan, Class N shares are redeemed within
18 months of the plan's first purchase of Class N shares of any
Oppenheimer fund.

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

DISTRIBUTION AND SERVICE (12b-1) PLANS.

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

Distribution and Service Plans for Class B, Class C, Class M and Class N Shares.
The Fund has adopted Distribution and Service Plans for Class B, Class C,
Class M and Class N shares to pay the Distributor for its services and
costs in distributing Class B, Class C, Class M and Class N shares and
servicing accounts. Under the plans, the Fund pays the Distributor an
annual asset-based sales charge of 0.75% on Class B and Class C shares and
0.25% on Class N shares. While the Class M plan permits an annual
asset-based sales charge payment of 0.50%, the Board has set that payment
at zero effective February 11, 2004, The Distributor also receives a
service fee of 0.25% per year under the Class B, Class C Class M and Class
N plans.

The asset-based sales charge and service fees increase Class B and Class C
expenses by 1.0%, and increase Class N expenses by 0.50% of the net assets
per year of the respective class. The service fee increases Class M
expenses by 0.25% of net assets per year. Because these fees are paid out
of the Fund's assets on an on-going basis, over time these fees will
increase the cost of your investment and may cost you more than other
types of sales charges.

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

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

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

Under certain circumstances, the Distributor will pay the full Class B,
Class C or Class N asset-based sales charge and service fee to the dealer
beginning in the first year after purchase of such shares in lieu of
paying the dealer the sales concession and the advance of the first year's
service fee at the time of purchase.

Special Investor Services

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

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

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

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

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

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

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

REINVESTMENT PRIVILEGE. If you redeem some or all of your Class A, Class B or
Class M shares of the Fund, you have up to six months to reinvest all or part of
the redemption proceeds in Class A shares of the Fund or other Oppenheimer funds
without paying a sales charge. This privilege applies only to Class A or Class M
shares that you purchased subject to an initial sales charge and to Class A or
Class B shares on which you paid a contingent deferred sales charge when you
redeemed them. This privilege does not apply to Class C or Class N shares. You
must be sure to ask the Distributor for this privilege when you send your
payment.

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

How to Sell Shares

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

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

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

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

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

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

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

HOW DO you SELL SHARES BY TELEPHONE? You and your dealer representative of
record may also sell your shares by telephone. To receive the redemption price
calculated on a particular regular business day, your call must be received by
the Transfer Agent by the close of the Exchange that day, which is normally 4:00
P.M., but may be earlier on some days. You may not redeem shares held in an
OppenheimerFunds-sponsored qualified retirement plan account or under a share
certificate by telephone.

o To redeem shares through a service representative or automatically on
PhoneLink, call 1.800.225.5677. Whichever method you use, you may have a
check sent to the address on
the account statement, or, if you have linked your Fund account to your bank
account on AccountLink, you may have the proceeds sent to that bank account.

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

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

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

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

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

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

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

How to Exchange Shares

Shares of the Fund may be exchanged for shares of certain Oppenheimer funds at
net asset value per share at the time of exchange, without sales charge. Shares
of the Fund can be purchased by exchange of shares of other Oppenheimer funds on
the same basis. To exchange shares, you must meet several conditions:
o Shares of the fund selected for exchange must be available for sale in
your state of residence.
o The prospectuses of both funds must offer the exchange privilege. o You
must hold the shares you buy when you establish your account for at
least seven days before you can exchange them. After the account is open
seven days, you can exchange shares every regular business day.
o You must meet the minimum purchase requirements for the fund whose shares
you purchase by exchange.
o Before exchanging into a fund, you must obtain and read its prospectus.
Shares of a particular class of the Fund may be exchanged only for
shares of the same class in the other Oppenheimer funds. For example, you can
exchange Class A shares of this Fund only for Class A shares of another fund. In
some cases, sales charges may be imposed on exchange transactions. Additionally,
you can exchange Class M shares of this Fund for Class A shares of another fund.
You cannot exchange shares of other Oppenheimer funds for Class M shares of this
Fund (except for shares of money market funds acquired by exchange from Class M
shares of this Fund). In some cases, sales charges may be imposed on exchange
transactions. For tax purposes, exchanges of shares involve a sale of the shares
of the fund you own and a purchase of the shares of the other fund, which may
result in a capital gain or loss. Please refer to "How to Exchange Shares" in
the Statement of Additional Information for more details.

You can find a list of Oppenheimer funds currently available for exchanges
in the Statement of Additional Information or obtain one by calling a service
representative at 1.800.225.5677. That list can change from time to time.

HOW DO you SUBMIT EXCHANGE REQUESTS? Exchanges may be requested in writing or
by telephone:
Written Exchange Requests. Submit an OppenheimerFunds Exchange Request form,
signed by all owners of the account. Send it to the Transfer Agent at the
address on the back cover. Exchanges of shares held under certificates
cannot be processed unless the Transfer Agent receives the certificates
with the request.
Telephone Exchange Requests. Telephone exchange requests may be made either by
calling a service representative or by using PhoneLink for automated
exchanges by calling 1.800.225.5677. Telephone exchanges may be made only
between accounts that are registered with the same name(s) and address.
Shares held under certificates may not be exchanged by telephone.

ARE THERE LIMITATIONS ON EXCHANGES? There are certain exchange policies you
should be aware of:
o Shares are redeemed from one fund and purchased from the other fund in
the exchange transaction on the same regular business day on which the
Transfer Agent receives an exchange request that conforms to the policies
described above. It must be received by the close of the Exchange that
day, which is normally 4:00 P.M. but may be earlier on some days.

o The interests of the Fund's shareholders and its ability to manage its
investments may be adversely affected when its shares are repeatedly
bought and sold in response to short-term market fluctuations. When
large dollar amounts are involved, the Fund may have difficulty
implementing long-term investment strategies, because it cannot predict
how much cash it will have to invest. Frequent trading of Fund shares
also may force the Fund to sell portfolio securities at disadvantageous
times to raise the cash needed to buy a market timer's Fund shares.
These factors may hurt the Fund's performance and its shareholders.
When the Manager believes frequent trading would have a disruptive
effect on the Fund's ability to manage its investments, the Manager and
the Fund may reject purchase orders and exchanges into the Fund by any
person, group or account whether shareholders are involved in frequent
trading. Nevertheless, the Manager and the Fund may permit certain
exchanges under certain controlled or limited circumstances. Because
the Fund may not be able to detect market timing activity conducted by
the underlying beneficiaries of shares held by various financial
institutions in omnibus accounts, it may not be able to effectively
prevent market timing activity in these accounts. All accounts under
common ownership or control within the Oppenheimer funds complex may be
counted together for purposes of determining whether shareholders are
involved in frequent trading with respect to any exchange involving
this Fund.
o The Fund may amend, suspend or terminate the exchange privilege at any
time. The Fund may refuse any exchange order and is currently not
obligated to provide notice before rejecting an exchange order.

o If the Transfer Agent cannot exchange all the shares you request because
of a restriction cited above, only the shares eligible for exchange will
be exchanged.

Shareholder Account Rules and Policies

More information about the Fund's policies and procedures for buying, selling
and exchanging shares is contained in the Statement of Additional Information. A
$12 annual fee is assessed on any account valued at less than $500. The fee

is automatically deducted from accounts annually on or about the second to
last business day of September. See the Statement of Additional
Information, or existing shareholders may visit the OppenheimerFunds
website, to learn how you can avoid this fee and for circumstances when
this fee will not be assessed.

The offering of shares may be suspended during any period in which the
determination of net asset value is suspended, and the offering may be
suspended by the Board of Trustees at any time the Board believes it is in
the Fund's best interest to do so.
Telephone transaction privileges for purchases, redemptions or exchanges may be
modified, suspended or terminated by the Fund at any time. The Fund will
provide you notice whenever it is required to do so by applicable law. If
an account has more than one owner, the Fund and the Transfer Agent may
rely on the instructions of any one owner. Telephone privileges apply to
each owner of the account and the dealer representative of record for the
account unless the Transfer Agent receives cancellation instructions from
an owner of the account.
The Transfer Agent will record any telephone calls to verify data concerning
transactions and has adopted other procedures to confirm that telephone
instructions are genuine, by requiring callers to provide tax
identification numbers and other account data or by using PINs, and by
confirming such transactions in writing. The Transfer Agent and the Fund
will not be liable for losses or expenses arising out of telephone
instructions reasonably believed to be genuine.
Redemption or transfer requests will not be honored until the Transfer Agent
receives all required documents in proper form. From time to time, the
Transfer Agent in its discretion may waive certain of the requirements for
redemptions stated in this Prospectus.
Dealers that perform account transactions for their clients by participating in
NETWORKING through the National Securities Clearing Corporation are
responsible for obtaining their clients' permission to perform those
transactions, and are responsible to their clients who are shareholders of
the Fund if the dealer performs any transaction erroneously or improperly.
The redemption price for shares will vary from day to day because the value of
the securities in the Fund's portfolio fluctuates. The redemption price,
which is the net asset value per share, will normally differ for each
class of shares. The redemption value of your shares may be more or less
than their original cost.
Payment for redeemed shares ordinarily is made in cash. It is forwarded by
check, or through AccountLink or by Federal Funds wire (as elected by the
shareholder) within seven days after the Transfer Agent receives
redemption instructions in proper form. However, under unusual
circumstances determined by the Securities and Exchange Commission,
payment may be delayed or suspended. For accounts registered in the name
of a broker-dealer, payment will normally be forwarded within three
business days after redemption.
The Transfer Agent may delay processing any type of redemption payment as
described under "How to Sell Shares" for recently purchased shares, but
only until the purchase payment has cleared. That delay may be as much as
10 days from the date the shares were purchased. That delay may be avoided
if you purchase shares by Federal Funds wire or certified check, or
arrange with your bank to provide telephone or written assurance to the
Transfer Agent that your purchase payment has cleared.
Involuntary redemptions of small accounts may be made by the Fund if the account
value has fallen below $200 for reasons other than the fact that the
market value of shares has dropped. In some cases, involuntary redemptions
may be made to repay the Distributor for losses from the cancellation of
share purchase orders.

Sharesmay be "redeemed in kind" under unusual circumstances (such as a lack of
liquidity in the Fund's portfolio to meet redemptions). This means that
the redemption proceeds will be paid with liquid securities from the
Fund's portfolio. If the Fund redeems your shares in kind, you may bear
transaction costs and will bear market risks until such time as such
securities are converted into cash.
Federal regulations may require the Fund to obtain your name, your date of birth
(for a natural person), your residential street address or principal place
of business and your Social Security Number, Employer Identification
Number or other government issued identification when you open an account.
Additional information may be required in certain circumstances or to open
corporate accounts. The Fund or the Transfer Agent may use this
information to attempt to verify your identity. The Fund may not be able
to establish an account if the necessary information is not received. The
Fund may also place limits on account transactions while it is in the
process of attempting to verify your identity. Additionally, if the Fund
is unable to verify your identity after your account is established, the
Fund may be required to redeem your shares and close your account.

"Backup withholding" of federal income tax may be applied against taxable
dividends, distributions and redemption proceeds (including exchanges) if
you fail to furnish the Fund your correct, certified Social Security or
Employer Identification Number when you sign your application, or if you
under-report your income to the Internal Revenue Service.
To avoid sending duplicate copies of materials to households, the Fund will
mail only one copy of each prospectus, annual and semi-annual report and
annual notice of the Fund's privacy policy to shareholders having the same
last name and address on the Fund's records. The consolidation of these
mailings, called householding, benefits the Fund through reduced mailing
expense.
If you want to receive multiple copies of these materials, you may call
the Transfer Agent at 1.800.225.5677. You may also notify the Transfer
Agent in writing. Individual copies of prospectuses, reports and privacy
notices will be sent to you commencing within 30 days after the Transfer
Agent receives your request to stop householding.

Dividends, Capital Gains and Taxes

Dividends. The Fund intends to declare dividends separately for each class of
shares from net investment income on each regular business day and to pay those
dividends to shareholders quarterly in March, June, September and December on a
date selected by the Board of Trustees. Daily dividends will not be declared or
paid on newly-purchased shares until Federal Funds are available to the Fund
from the purchase payment for the shares. Dividends and other distributions paid
on Class A and Class M shares will generally be higher than dividends for Class
B, Class C or Class N shares, which normally have higher expenses than Class A
and Class M shares. The Fund cannot guarantee that it will pay any dividends or
other distributions.

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

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

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

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

Avoid "Buying a Distribution." If you buy shares on or just before the Fund
declares a capital gains distribution, you will pay the full price for the
shares and then receive a portion of the price back as a taxable capital
gain.

Remember, There May be Taxes on Transactions. Because the Fund's share prices
fluctuate, you may have a capital gain or loss when you sell or exchange
your shares. A capital gain or loss is the difference between the price
you paid for the shares and the price you received when you sold them. Any
capital gain is subject to capital gains tax.
Returns of Capital Can Occur. In certain cases, distributions made by the Fund
may be considered a non-taxable return of capital to shareholders. If that
occurs, it will be identified in notices to shareholders.

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

Financial Highlights

The Financial Highlights Table is presented to help you understand the Fund's
financial performance for the past five fiscal years. Certain information
reflects financial results for a single Fund share. The total returns in the
table represent the rate that an investor would have earned (or lost) on an
investment in the Fund (assuming reinvestment of all dividends and
distributions). This information for fiscal years 2003, 2002, 2001 and 2000 has
been audited by KPMG LLP, the Fund's independent auditors, whose report, along
with the Fund's financial statements, is included in the Statement of Additional
Information, which is available on request. Another accounting firm audited the
information for fiscal years prior to 2000.

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

CLASS A YEAR ENDED DECEMBER 31, 2003 2002 2001 2000 1999
----------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.29 $12.76 $13.85 $16.36 $14.84
----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .56 .57 .48 .72 .70
Net realized and unrealized gain (loss) 1.98 (1.41) (.94) (1.45) 2.66
-------------------------------------------------------------------
Total from investment operations 2.54 (.84) (.46) (.73) 3.36
----------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.56) (.63) (.63) (.72) (.70)
Distributions from net realized gain -- -- -- (1.06) (1.14)
-------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.56) (.63) (.63) (1.78) (1.84)
----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.27 $11.29 $12.76 $13.85 $16.36
===================================================================

----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 1 22.95% (6.59)% (3.30)% (4.81)% 23.37%
----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $310,641 $202,968 $187,458 $210,903 $220,671
----------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $252,347 $190,677 $197,514 $225,938 $207,008
----------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 4.48% 4.77% 3.58% 4.42% 4.55%
Total expenses 0.94% 3,4 0.99% 3 0.95% 3 0.90% 3 0.95% 3
----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 61% 52% 69% 127% 95%

1. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods less than one full
year. Returns do not reflect the deduction of taxes that a shareholder would pay
on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year.
3. Reduction to custodian expenses less than 0.01%.
4. Voluntary waiver of transfer agent fees less than 0.01%.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

28 | OPPENHEIMER CONVERTIBLE SECURITIES FUND

CLASS B YEAR ENDED DECEMBER 31, 2003 2002 2001 2000 1999
----------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.30 $12.79 $13.87 $16.38 $14.87
----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .43 .43 .38 .59 .59
Net realized and unrealized gain (loss) 2.02 (1.38) (.93) (1.45) 2.65
-------------------------------------------------------------------
Total from investment operations 2.45 (.95) (.55) (.86) 3.24
----------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.46) (.54) (.53) (.59) (.59)
Distributions from net realized gain -- -- -- (1.06) (1.14)
-------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.46) (.54) (.53) (1.65) (1.73)
----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.29 $11.30 $12.79 $13.87 $16.38
===================================================================

----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 1 22.07% (7.44)% (3.97)% (5.55)% 22.35%
----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $133,058 $154,350 $286,829 $373,860 $431,370
----------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $139,757 $213,259 $330,806 $418,592 $414,611
----------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 3.79% 3.95% 2.75% 3.62% 3.79%
Total expenses 1.74% 3,4 1.77% 3 1.71% 3 1.70% 3 1.71% 3
----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 61% 52% 69% 127% 95%

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

29 | OPPENHEIMER CONVERTIBLE SECURITIES FUND

FINANCIAL HIGHLIGHTS CONTINUED
--------------------------------------------------------------------------------

CLASS C YEAR ENDED DECEMBER 31, 2003 2002 2001 2000 1999
----------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.28 $12.76 $13.84 $16.35 $14.84
----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .46 .46 .38 .59 .59
Net realized and unrealized gain (loss) 1.99 (1.40) (.93) (1.45) 2.65
-------------------------------------------------------------------
Total from investment operations 2.45 (.94) (.55) (.86) 3.24
----------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.46) (.54) (.53) (.59) (.59)
Distributions from net realized gain -- -- -- (1.06) (1.14)
-------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.46) (.54) (.53) (1.65) (1.73)
----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.27 $11.28 $12.76 $13.84 $16.35
===================================================================

----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 1 22.14% (7.39)% (3.98)% (5.56)% 22.41%
----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $82,149 $61,031 $76,846 $91,567 $94,352
----------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $69,787 $66,391 $85,774 $96,574 $94,329
Ratios to average net assets: 2
Net investment income 3.73% 3.97% 2.80% 3.62% 3.80%
Total expenses 1.70% 3,4 1.76% 3 1.71% 3 1.70% 3 1.70% 3
----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 61% 52% 69% 127% 95%

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

30 | OPPENHEIMER CONVERTIBLE SECURITIES FUND

CLASS M YEAR ENDED DECEMBER 31, 2003 2002 2001 2000 1999
----------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.28 $12.76 $13.84 $16.35 $14.84
----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .50 .49 .41 .64 .63
Net realized and unrealized gain (loss) 2.00 (1.40) (.93) (1.45) 2.65
-------------------------------------------------------------------
Total from investment operations 2.50 (.91) (.52) (.81) 3.28
----------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.51) (.57) (.56) (.64) (.63)
Distributions from net realized gain -- -- -- (1.06) (1.14)
-------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.51) (.57) (.56) (1.70) (1.77)
----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.27 $11.28 $12.76 $13.84 $16.35
===================================================================

----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 1 22.59% (7.16)% (3.72)% (5.30)% 22.74%
----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $114,600 $108,426 $144,612 $181,521 $234,023
----------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $110,337 $122,897 $160,919 $213,617 $235,419
Ratios to average net assets: 2
Net investment income 4.16% 4.24% 3.04% 3.90% 4.06%
Total expenses 1.32% 3,4 1.51% 3 1.45% 3 1.42% 3 1.45% 3
----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 61% 52% 69% 127% 95%

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

31 | OPPENHEIMER CONVERTIBLE SECURITIES FUND

FINANCIAL HIGHLIGHTS CONTINUED
--------------------------------------------------------------------------------

CLASS N YEAR ENDED DECEMBER 31, 2003 2002 2001 1
--------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
--------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.29 $12.76 $13.68
--------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .49 .55 .42
Net realized and unrealized gain (loss) 2.00 (1.43) (.84)
---------------------------------------
Total from investment operations 2.49 (.88) (.42)
--------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.51) (.59) (.50)
Distributions from net realized gain -- -- --
---------------------------------------
Total dividends and/or distributions to shareholders (.51) (.59) (.50)
--------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.27 $11.29 $12.76
=======================================

--------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 22.45% (6.92)% (3.02)%
--------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $1,458 $388 $36
--------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 743 $205 $10
--------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 3.87% 4.38% 5.45%
Total expenses 1.37% 1.43% 1.22%
Expenses after expense reimbursement or fee waiver
and reduction to custodian expenses 1.35% 1.38% N/A 4
--------------------------------------------------------------------------------------------------------
Portfolio turnover rate 61% 52% 69%

1. For the period from March 1, 2001 (inception of offering) to December 31,
2001.
2. Assumes an investment on the business day before the first day of the fiscal
period, 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.

INFORMATION AND SERVICES

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

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

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

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

------------------------------------------------------------------------------
By Telephone: Call OppenheimerFunds Services toll-free:

1.800.CALL OPP (225.5677)

------------------------------------------------------------------------------
------------------------------------------------------------------------------
By Mail: Write to:
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217-5270
------------------------------------------------------------------------------
------------------------------------------------------------------------------
On the Internet: You can send us a request by e-mail or read or
download documents on the OppenheimerFunds
website: WWW.OPPENHEIMERFUNDS.COM
------------------------
------------------------------------------------------------------------------

Information about the Fund including the Statement of Additional Information can
be reviewed and copied at the SEC's Public Reference Room in Washington, D.C.
Information on the operation of the Public Reference Room may be obtained by
calling the SEC at 1.202.942.8090. Reports and other information about the Fund
are available on the EDGAR database on the SEC's Internet website at
WWW.SEC.GOV. Copies may be obtained after payment of a duplicating fee by
electronic request at the SEC's e-mail address: publicinfo@sec.gov or by writing
to the SEC's Public Reference Section, Washington, D.C. 20549-0102.

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

The Fund's SEC File No. 811-4576 The Fund's shares are
distributed by:

PR0345.001.0204 [logo] OppenheimerFunds
Printed on recycled paper Distributor, Inc.

Appendix to Prospectus of
Oppenheimer Convertible Securities Fund

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

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

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

Year Ended: Annual Total Return

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

12/31/94 -1.19%

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

12/31/95 26.00%

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

12/31/96 9.58%

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

12/31/97 18.19%

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

12/31/98 3.58%

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

12/31/99 22.74%

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

12/31/00 -5.30%

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

12/31/01 -3.72%

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

12/31/02 -7.16%

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

12/31/03 22.59%

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

--------
1 Accounts holding Class M shares established prior to March 11, 1996, can
purchase additional Class M shares without sales charge, at the offering price
equal to the net asset value per share.

Oppenheimer Convertible Securities Fund

6803 South Tucson Way, Centennial, CO 80112
1.800.225.5677

Statement of Additional Information dated February 24, 2004

This Statement of Additional Information is not a Prospectus. This document
contains additional information about the Fund and supplements information in
the Prospectus dated February 24, 2004. It should be read together with the
Prospectus, which may be obtained by writing to the Fund's Transfer Agent,
OppenheimerFunds Services, at P.O. Box 5270, Denver, Colorado 80217 or by
calling the Transfer Agent at the toll-free number shown above or by downloading
it from the OppenheimerFunds Internet website at www.oppenheimerfunds.com.

Contents Page

About the Fund
Additional Information About the Fund's Investment Policies and Risks.......2
The Fund's Investment Policies.........................................2
Other Investment Techniques and Strategies..............................
Other Investment Restrictions............................................
How the Fund is Managed.......................................................
Organization and History.................................................
Board of Trustees and Oversight Committees...............................
Trustees and Officers of the Fund........................................
The Manager .............................................................
Brokerage Policies of the Fund................................................
Distribution and Service Plans................................................
Performance of the Fund.......................................................
About Your Account
How to Buy Shares.............................................................
How to Sell Shares............................................................
How to Exchange Shares........................................................
Dividends, Capital Gains and Taxes............................................
Additional Information About the Fund.........................................

Financial Information About the Fund
Report of Independent Accountants.............................................
Financial Statements .........................................................

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

ABOUT THE FUND

Additional Information About the Fund's Investment Policies and Risks

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

The Fund's Investment Policies. The allocation 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 all of the
investment techniques and strategies described below in seeking its objective.
It may use some of the special investment techniques and strategies at some
times or not at all.

|X| Convertible Securities. Convertible securities are fixed-income
securities that may be exchanged for or converted into the underlying common
stock of the issuer at the option of the holder during a specified period of
time. Convertible securities may take the form of convertible preferred stock,
convertible bonds or notes, or other fixed-income securities with stock purchase
warrants. They may have a combination of the features of several of these
securities.

Because of the conversion feature, the price of a convertible security
normally will vary in proportion to changes in the price of the underlying
common stock. Convertible securities in general are subject to less price
volatility than the common stocks into which they are convertible because of
their comparatively higher yields. The investment characteristics of each
convertible security vary, and that variety enables the Fund to use convertible
securities in different ways to pursue its investment objective of high total
return. For example, the Fund can invest in: o convertible securities that
provide a relatively high level of income,
with less appreciation potential,
o convertible securities that have high appreciation potential and a
relatively low level of income, and
o convertible securities that provide some combination of both income and
appreciation potential.

Convertible bonds and convertible preferred stocks are fixed-income
securities that retain the investment characteristics of fixed-income securities
until they have been converted. The holder is entitled to receive the fixed
income of a bond or the dividend preference of a preferred stock until the
holder elects to exercise the conversion privilege. Convertible securities are
senior securities and therefore have a claim against the assets of the issuing
corporation that is superior to the claims of holders of the issuer's common
stock upon liquidation of the corporation. Convertible securities, however, are
generally subordinated to similar non-convertible securities of the same
company. The interest income and dividends from convertible bonds and preferred
stocks provide income potential and yields that are generally higher than common
stocks, but which are generally lower than non-convertible securities of similar
credit quality.

As with all fixed-income securities, convertible securities are subject to
changes in value from changes in the level of prevailing interest rates.
However, the conversion feature of convertible securities, giving the owner the
right to exchange them for the issuer's common stock, in general causes the
market value of convertible securities to increase when the value of the
underlying common stock increases, and to fall when the stock price falls. Since
securities prices fluctuate, however, there can be no assurance that the market
value of convertible securities will increase. Convertible securities generally
do not have the same potential for capital appreciation as the underlying stock.
When the value of the underlying common stock is falling, the value of the
convertible security may not experience the same decline as the underlying
common stock. It tends to decline to a level (often called investment value)
approximating the yield-to-maturity basis of non-convertible debt of similar
credit quality.

Many convertible securities sell at a premium over their conversion
values. Conversion value is the number of shares of common stock to be received
upon conversion multiplied by the current market price of the stock. That
premium represents the price investors are willing to pay for the privilege of
purchasing a fixed-income security having capital appreciation potential because
of the conversion privilege. If the Fund buys a convertible security at a
premium, there can be no assurance that the underlying common stock will
appreciate enough for the Fund to recover the premium on the convertible
security.

While some convertible securities are a form of debt security, in many
cases their conversion feature (allowing conversion into equity securities)
causes them to be regarded by the Manager more as "equity equivalents." As a
result, the 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.

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

|X| Convertible Preferred Stock. Preferred stock, unlike common stock, has
a stated dividend rate payable from the corporation's earnings. Preferred stock
dividends may be cumulative or non-cumulative, participating, or auction rate.
"Cumulative" dividend provisions require all or a portion of prior unpaid
dividends to be paid before dividends can be paid to the issuer's common stock.
"Participating" preferred stock may be entitled to a dividend exceeding the
stated dividend in certain cases.

If interest rates rise, the fixed dividend on preferred stocks may be less
attractive, causing the price of preferred stocks to decline. Preferred stock
may have mandatory sinking fund provisions, as well as provisions allowing the
stock to be called or redeemed prior to its maturity, which can have a negative
impact on the stock's price when interest rates decline. Preferred stock
generally has a preference over common stock on the distribution of a
corporation's assets in the event of liquidation of the corporation. The rights
of preferred stock on distribution of a corporation's assets in the event of a
liquidation are generally subordinate to the rights associated with a
corporation's debt securities.

While preferred stock is an equity security, some convertible preferred
stock has characteristics of both a debt security and a call option. These
securities can be considered derivative securities because of their call option
component, described below. Typically these stocks are convertible to common
stock after a three-year period (although they are callable by the issuer prior
to conversion). They pay a cumulative, fixed dividend that is senior to, and
expected to be in excess of, the dividends paid on the common stock of the same
issuer.

o Mandatory-Conversion Securities. The Fund can also invest in a
more recently-developed variety of convertible securities referred to as
"mandatory-conversion securities." These securities may combine several of the
features of debt securities and equity securities, including both preferred
stock and common stock. Unlike more traditional convertible securities, however,
many of these securities have a mandatory conversion feature and an adjustable
conversion ratio. As a result, many of these securities offer limited potential
for capital appreciation and, in some instances, are subject to unlimited
potential for loss of capital.

These securities are designed and marketed by major investment banking
firms and trade in the marketplace under various acronyms that are proprietary
to the investment banking firm. The Fund may be exposed to counter-party risk to
the extent it invests in synthetic mandatory conversion securities which are
issued by investment banking firms. Those are unsecured obligations of the
issuing firm. Should the firm that issued the security experience financial
difficulty, its ability to perform according to the terms of the security might
become impaired. The mandatory conversion securities which may be purchased by
the Fund include, among others, "equity-linked debt securities," discussed
below, and certain varieties of convertible preferred stock.

At any time prior to the mandatory conversion date, the issuer can redeem
the preferred stock. At its mandatory conversion date, the preferred stock is
converted into a share (or a fraction of a share) of the issuer's common stock
at the call price that was established at the time the preferred stock was
issued. Generally, the call price is 30% to 45% above the price of the issuer's
common stock at the time the preferred stock is issued and may be subject to
downward adjustment over time. If the share price of the related common stock on
the mandatory conversion date is less than the call price, the holder of the
preferred stock will nonetheless receive only one share of common stock for each
share of preferred stock (plus cash in the amount of any accrued but unpaid
dividends).

The issuer must issue to the holder of the preferred stock the number of
shares of common stock equal to the call price of the preferred stock in effect
on the date of redemption divided by the market value of the common stock. That
market value typically is determined one or two trading days prior to the date
notice of redemption is given. The issuer must also pay the holder of the
preferred stock cash in an amount equal to any accrued but unpaid dividends on
the preferred stock.

Convertible preferred stock is subject to the same market risk as the
common stock of the issuer. However that risk may be mitigated by the higher
dividend paid on the preferred stock. This convertible preferred stock offers
limited opportunity for appreciation, however, because of the call feature. If
the market value of the issuer's common stock increases to the call price or
above the call price of the preferred stock, the issuer can (and would be
expected to) call the preferred stock for redemption at the call price. This
convertible preferred stock is also subject to credit risk of the issuer as to
its ability to pay the dividend. Generally, convertible preferred stock is less
volatile than the related common stock of the issuer, in part because of the
fixed dividend.

o Equity-Linked Debt Securities. The Fund can purchase mandatory
conversion debt securities whose principal amount at maturity depends upon the
performance of a specified equity security. These "equity-linked debt
securities" are a form of derivative security and differ from ordinary debt
securities in that the principal amount received at maturity is not fixed.
Instead, their principal value is based on the price of the linked equity
security at the time the debt security matures. These debt securities usually
mature in three to four years, and during the years to maturity pay interest at
a fixed rate.

Although these debt securities are typically adjusted for events such as
stock splits, stock dividends and certain other events that affect the market
value of the linked equity security, the debt securities are not adjusted if
additional equity securities are issued for cash. An additional issuance of
equity securities of the type to which the debt security is linked could
adversely affect the price of the debt security. In general, however, these debt
securities are less volatile than the equity securities to which they are
linked.

|X| 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.

While the changes in value of the Fund's portfolio securities after they
are purchased will be reflected in the net asset value of the Fund's shares,
those changes normally do not affect the interest income paid by those
securities (unless the security's interest is paid at a variable rate pegged to
particular 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| Credit Risk. Credit risk relates to the ability of the issuer to meet
interest or principal payments or both as they become due. In general,
lower-grade, higher-yield bonds are subject to credit risk to a greater extent
than lower-yield, higher-quality bonds.

The Fund's debt investments can include high-yield, 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), at least
"BBB" by Standard &amp; Poor's Rating Services ("S&amp;P") or Fitch,
Inc., 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 creditworthiness. If securities the Fund buys are unrated,
they are assigned a rating by the Manager of comparable quality to bonds having
similar yield and risk characteristics within a rating category of a rating
organization.

The Fund does not have investment policies establishing specific maturity
ranges for the Fund's investments, and they may be within any maturity range
(short, medium or long) depending on the Manager's evaluation of investment
opportunities available within the debt securities markets. Generally, however,
it is expected that the Fund's average portfolio maturity will be of a longer
average maturity. The Fund may shift its investment focus to securities of
longer maturity as interest rates decline and to securities of shorter maturity
as interest rates rise.

o Special Risks of Lower-Grade Securities. The Fund can invest
without limit in lower-grade debt securities, and the Fund will normally invest
its assets primarily in these securities to seek its objective. Lower-grade
securities tend to offer higher yields than investment-grade securities, but
also are subject to greater risks of default by the issuer in its obligations
to pay interest and/or repay principal on the maturity of the security.

"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 &amp; P or Fitch, Inc., or similar ratings by other rating
organizations. If they are unrated, and are determined by the Manager to be of
comparable quality to debt securities rated below investment grade, they are
considered part of the Fund's portfolio of lower-grade securities. The Fund will
not invest in securities rated below "C" or which are in default at the time the
Fund buys them.

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

To the extent they can be converted into stock, convertible securities may
be less subject to some of these risks than non-convertible high-yield bonds,
since stock may be more liquid and less affected by some of these risk factors.

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

Other Investment Techniques and Strategies. In seeking its objective, the Fund
may from time to time employ 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 some of them.

|X| Portfolio Turnover. "Portfolio turnover" describes the rate at which
the Fund trades its portfolio securities during its 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, and the Fund does not expect to have a portfolio turnover rate in
excess of 150% 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.

|X| Foreign Securities. The Fund can invest up to 15% of its net assets in
foreign securities. These primarily will be fixed-income debt securities issued
or guaranteed by foreign companies. "Foreign securities" include equity and debt
securities of companies organized under the laws of countries other than the
United States. They may be traded on foreign securities exchanges or in the
foreign over-the-counter markets.

The percentage of the Fund's assets that will be allocated to foreign
securities will vary over time depending on a number of factors. Those factors
may include the Manager's analysis of relative yields of foreign and U.S.
securities, the economies of foreign countries, the condition of a country's
financial markets, the interest rate climate of particular foreign countries and
the relationship of particular foreign currencies to the U.S. dollar. The
Manager analyzes fundamental economic criteria (for example, relative inflation
levels and trends, growth rate forecasts, balance of payments status, and
economic policies) as well as technical and political data.

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

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

Investing in foreign securities offers potential benefits not available
from investing solely in securities of domestic issuers. They include the
opportunity to invest in foreign issuers that appear to offer high income
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 securities markets that do not move in a manner
parallel to U.S. markets. The Fund will hold foreign currency only in connection
with the purchase or sale of foreign securities.

o Risks of Foreign Investing. Investments in foreign securities may offer
special opportunities for investing but also present special additional risks
and considerations not typically associated with investments in domestic
securities. Some of these additional risks are: o reduction of income by foreign
taxes; o fluctuation in value of foreign investments due to changes in currency
rates or currency control regulations (for example, currency blockage);

o transaction charges for currency exchange;
o lack of public information about foreign issuers;
o lack of uniform accounting, auditing and financial reporting standards
in foreign countries comparable to those applicable to
domestic issuers;
o less volume on foreign exchanges than on U.S. exchanges;
o greater volatility and less liquidity on foreign markets than in the
U.S.;
o less governmental regulation of foreign issuers, securities exchanges
and brokers than in the U.S.;
o greater difficulties in commencing lawsuits;
o higher brokerage commission rates than in the U.S.;
o increased risks of delays in settlement of portfolio transactions or
loss of certificates for portfolio securities;
o possibilities in some countries of expropriation, confiscatory
taxation, political, financial or social instability or
adverse diplomatic developments; and
o unfavorable differences between the U.S. economy and foreign economies.
In the past, U.S. government policies have discouraged certain
investments abroad by U.S. investors, through taxation or other restrictions,
and it is possible that such restrictions could be re-imposed.

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.

|X| Warrants. As a fundamental policy, the Fund cannot invest more than
15% of the value of its net assets in warrants, and not more than 5% of the
Fund's net assets may be invested in warrants that are not listed on The New
York Stock Exchange or The American Stock Exchange. That policy does not limit
the Fund's acquisition of warrants that have been acquired in units or attached
to other securities. This fundamental policy is currently limited by an
operational policy under which the Fund will not invest more than 5% of the
value of its net assets in warrants, and not more than 2% of the Fund's net
assets may be invested in warrants that are not listed on the New York or
American Stock Exchanges. Warrants acquired by the Fund in units or attached to
securities are deemed to be without value for purposes of the limitation imposed
by the operational policy.

A warrant basically is an option to purchase common stock at a specific
price valid for a specific period of time. Usually the price is at a premium
above the market value of the applicable common stock at its issuance. Warrants
may have a life ranging from less than a year to twenty years or may be
perpetual. However, many warrants have expiration dates after which they are
worthless unless the warrants are exercised or sold before they expire. In
addition, if the market price of the common stock does not exceed the exercise
price of the warrant during the life of the warrant, the warrant will expire
worthless. Warrants have no voting rights, pay no dividends and have no rights
with respect to the assets of the corporation issuing them. The market price of
a warrant may increase or decrease more than the market price of the optioned
common stock.

|X| Repurchase Agreements. The Fund can acquire securities subject to
repurchase agreements. It might do so for temporary defensive purposes or 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.

In a repurchase transaction, the Fund acquires 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 a primary dealer in government securities, which meet the credit
requirements set by the Fund's Manager from time to time.

The majority of these transactions run from day to day. Delivery pursuant
to resale typically will occur within one to five days of the purchase.
Repurchase agreements having a maturity beyond seven days are subject to the
Fund's limits on holding illiquid investments.

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
collateral's value must equal or exceed the repurchase price to fully
collateralize the repayment obligation. Additionally, the Manager will monitor
the vendor's creditworthiness to confirm that the vendor is financially sound
and will continuously monitor the collateral's value. 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.

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.

|X| Illiquid and Restricted Securities. Under policies established by the
Fund's Board of Trustees, the Manager determines the liquidity of some of the
Fund's securities. The Manager monitors holdings of illiquid and restricted
securities on an ongoing basis to determine whether to sell any holdings to
maintain adequate liquidity.

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 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.

|X| Borrowing for Leverage. The Fund has a fundamental policy that permits
it to borrow from banks on an unsecured basis, to invest the borrowed funds in
portfolio securities. This technique is known as "leverage." Under applicable
law, borrowings can be made only to the extent that the value of the Fund's
assets, less its liabilities other than borrowings, is equal to at least 300% of
all borrowings (including the proposed borrowing). If the value of the Fund's
assets fails to meet this 300% asset coverage requirement, the Fund is required
to reduce its bank debt within 3 days to meet the requirement. To do so, the
Fund might have to sell a portion of its investments at a disadvantageous time.

The Fund will pay interest on these loans, and that interest expense will
raise the overall expenses of the Fund and reduce its returns. If it does
borrow, its expenses will be greater than comparable funds that do not borrow
for leverage. The interest on a loan might be more (or less) than the yield on
the securities purchased with the loan proceeds. Additionally, the Fund's net
asset value per share might fluctuate more than that of funds that do not
borrow.

|X| Loans of Portfolio Securities. To raise cash for liquidity or income
purposes, the Fund can lend its portfolio securities to brokers, dealers and
other types of financial institutions approved by the Fund's Board of Trustees.
These loans are limited to not more than 10% of the value of the Fund's net
assets under guidelines established by the Board of Trustees. The Fund currently
does not intend to lend its securities.

There are some risks in connection with securities lending. The Fund might
experience a delay in receiving additional collateral to secure a loan, or a
delay in recovery of the loaned securities if the borrower defaults. The Fund
must receive collateral for a loan. Under current applicable regulatory
requirements (which are subject to change), on each business day the loan
collateral must be at least equal to the value of the loaned securities. It must
consist of cash, bank letters of credit, securities of the U.S. government or
its agencies or instrumentalities, or other cash equivalents in which the Fund
is permitted to invest. To be acceptable as collateral, letters of credit must
obligate a bank to pay amounts demanded by the Fund if the demand meets the
terms of the letter. The terms of the letter of credit and the issuing bank both
must be satisfactory to the Fund.

When it lends securities, the Fund receives amounts equal to the dividends
or interest on loaned securities. It also receives one or more of (a) negotiated
loan fees, (b) interest on securities used as collateral, and (c) interest on
any short-term debt securities purchased with such loan collateral. Either type
of interest may be shared with the borrower. The Fund may also pay reasonable
finder's, custodian and administrative fees in connection with these loans. The
terms of the Fund's loans must meet applicable tests under the Internal Revenue
Code and must permit the Fund to reacquire loaned securities on five days'
notice or in time to vote on any important matter.

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

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

|X| Hedging. The Fund can use hedging to attempt to protect against
declines in the market value of its portfolio, to permit the Fund to retain
unrealized gains in the value of portfolio securities that have appreciated, or
to facilitate selling securities for investment reasons. To do so the Fund
could:
o buy puts on securities, or
o write covered calls on securities. Covered calls can also be written on
debt securities to attempt to increase the Fund's income.

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
particular options the Fund can use are described below. The Fund may employ
other hedging instruments and strategies in the future, if those investment
methods are consistent with the Fund's investment objective and fundamental
policies, are permissible under applicable regulations governing the Fund and
are approved by the Fund's Board of Trustees.

The Fund can buy and sell only certain kinds of put options (puts) and
call options (calls). The Fund limits its options trading activity to writing
covered calls on stocks (including the stock underlying a convertible security
the Fund owns), purchasing put options on stocks, and entering into closing
transactions. These strategies are described below.

o Writing Covered Call Options. The Fund can write (that is, sell)
call options on stocks. The Fund's call writing is subject to a number of
restrictions:
(1) Calls the Fund sells must be listed on a national securities exchange.
(2) Each call the Fund writes must be "covered" while it is outstanding.
That means the Fund must own the stock on which the call was
written or must own a security convertible into the stock on
which the option is written.
(3) As a fundamental policy, the Fund cannot write a call that would
cause the value of its securities underlying call options (valued
at the lower of the option price or market value) to exceed 25%
of its net assets.

When the Fund writes a call on a security, it receives cash (a premium).
The Fund agrees to sell the underlying investment 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 retained the risk
of loss that the price of the underlying security may decline during the call
period. That risk may be offset to some extent by the premium the Fund receives.
If the value of the investment does not rise above the call price, it is likely
that the call will lapse without being exercised. In that case the Fund would
keep the cash premium and the investment.

The Fund's custodian bank, or a securities depository acting for the
custodian bank, 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 calls or upon the Fund's
entering into a closing purchase transaction.

The Fund may buy calls only to close out a call it has written, as
discussed above. Calls the Fund buys must be listed on a securities exchange. 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 was
more or less than the price of the call the Fund purchased to close out the
transaction. A profit may also be realized if the call lapses unexercised,
because the Fund retains the underlying investment and the premium received. 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.

o Purchasing Puts. The Fund may buy only those puts that relate to
stocks, including stocks underlying the convertible securities that the Fund
owns. The Fund may not sell puts other than puts it has previously purchased, to
close out a position.

When the Fund purchases a put, it pays a premium. The Fund then has the
right to sell the underlying investment to a seller of a corresponding put on
the same investment during the put period at a fixed exercise price. Buying a
put on a stock enables the Fund to protect itself during the put period against
a decline in the value of the underlying investment below the exercise price. 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 lose its premium
payment and the right to sell the underlying investment. A put may be sold prior
to expiration (whether or not at a profit).

o Risks of Hedging with Options. 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 returns.

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 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. Such commissions might 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. There is no assurance that a
liquid secondary market will exist for a particular option.

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.

|X| Temporary Defensive and Interim Investments. When market, economic or
political conditions are unstable, or the Manager believes it is otherwise
appropriate to reduce holdings in stocks, the Fund can invest in a variety of
debt securities for defensive purposes. The Fund can also purchase these
securities for liquidity purposes to meet cash needs due to the redemption of
Fund shares, or to hold while waiting to reinvest cash received from the sale of
other portfolio securities. The Fund can buy:

o high-quality, (rated in the top two rating categories of
nationally-recognized rating organizations or deemed by the Manager
to be of comparable quality) short-term money market instruments,
including those issued by the U. S. Treasury or other government
agencies,
o commercial paper (rated in the top two rating categories of a
nationally-recognized rating organization) short-term, unsecured,
promissory notes of domestic or foreign companies,
o debt obligations of corporate issuers, rated investment grade (rated at
least Baa by Moody's or at least BBB by S&amp;P, or a comparable rating by
another rating organization) or unrated securities judged by the
Manager to be of a quality comparable to rated securities in those
categories,
o certificates of deposit and bankers' acceptances of domestic and
foreign banks and savings and loan associations, and
o repurchase agreements.

Short-term debt securities would normally be selected for defensive or
cash management purposes because they can normally be disposed of quickly, are
not generally subject to significant fluctuations in principal value and their
value will be less subject to interest rate risk than longer-term debt
securities.

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

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

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, such a "majority" vote is defined as the vote
of the holders of the lesser of:
o 67% or more of the shares present or represented by proxy at a
shareholder meeting, if the holders of more than 50% of the outstanding
shares are present or represented by proxy, or
o more than 50% of the outstanding shares.

The Fund's investment objective is not a fundamental policy, but will not
be changed without approval by the Fund's Board of Trustees and prior notice to
shareholders. Other policies described in the Prospectus or this Statement of
Additional Information are "fundamental" only if they are identified as such.
The Fund's Board of Trustees can change non-fundamental policies without
shareholder approval. However, significant changes to investment policies will
be described in supplements or updates to the Prospectus or this Statement of
Additional Information, as appropriate. The Fund's 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 may not invest more than 25% of the value of the Fund's total
assets in the securities of any one issuer or any group of issuers in the same
industry. However, this restriction does not prevent the Fund from investing
more than 25% of its total assets in securities of the United States government,
or its agencies or instrumentalities.

o With respect to 50% of its total assets, the Fund must limit its
investments to cash, cash items, U.S. government securities and securities of
issuers in which its investments are limited to not more than 5% of the value of
its total assets in the securities of any one issuer and not more than 10% of
its total assets in the outstanding voting securities of any one issuer.

o The Fund may not purchase securities on margin. However, the Fund can
obtain unsecured loans to purchase securities. The aggregate of all unsecured
loans, however, may not exceed 50% of the Fund's total assets. It can also
borrow amounts equivalent to up to 5% of the Fund's net assets for temporary,
extraordinary or emergency purposes.

o The Fund may not make short sales on securities or maintain a short
position. An exception the Fund can do so if at all times when a short position
is open, the Fund owns an equal amount of the securities sold short or the Fund
owns securities that are convertible into or exchangeable for securities of the
same issue as, and equal in amount to, the securities sold short, without
payment of further consideration. Not more than 10% of the Fund's total assets
may be held as collateral for these short sales at any one time.

o The Fund may not purchase or sell put and call options nor write put or
call options, except as set forth in the Prospectus or this Statement of
Additional Information.

o The Fund may not invest in warrants in amounts in excess of 15% of the
value of its net assets. The valuation of warrants for the purpose of that
limitation shall be determined at the lower of cost or market value. Warrants
acquired by the Fund as part of a unit or attached to securities at the time of
purchase do not count against that percentage limitation. Not more than 5% of
the Fund's net assets may be invested in warrants that are not listed on The New
York Stock Exchange or The American Stock Exchange.

o The Fund may not make loans. However, this policy does not prohibit the
Fund from (1) making loans of its portfolio securities, (2) purchasing notes,
bonds or other evidences of indebtedness, (3) making deposits with banks and
other financial institutions, or (4) entering into repurchase agreements.

o The Fund may not purchase or sell real estate or real estate mortgage
loans. However, the Fund may invest not more than 5% of its total assets in
marketable securities of real estate investment trusts.

o The Fund may not deal in commodities or commodities contracts.

o The Fund may not purchase or retain securities of any issuer if any of
its officers and trustees, or any of the officers and directors of the Manager
or the Distributor own individually beneficially more than 0.5% of the
outstanding securities of that issuer, or if all of those persons together own
more than 5% of that issuer's securities.

o The Fund may not invest more than 5% of the value of its total assets in
securities of any company (including its predecessors) that has not been in
business for at least three consecutive years.

o The Fund may not issue any securities that are senior to shares of the
Fund.

o The Fund may not underwrite securities of other issuers.

o The Fund may not acquire securities of any other investment company, if
as a result of that acquisition, the Fund would own in the aggregate: (1) more
than 3% of the voting stock of that investment company; (2) securities of that
investment company having an aggregate value in excess of 5% of the value of the
total assets of the Fund; or (3) securities of that investment company and of
any other investment companies (but excluding treasury stock of those funds)
having an aggregate value in excess of 10% of the total assets of the Fund.
However, none of these limitations applies to a security received as a dividend
or as a result of an offer of exchange, a merger or plan of reorganization.

o With respect to 75% of its total assets, the Fund cannot buy securities
issued or guaranteed by any one issuer if more than 5% of the Fund's total
assets would be invested in securities of that issuer or if the Fund would then
own more than 10% of that issuer's voting securities. That restriction does not
apply to cash or cash items or securities issued or guaranteed by the U.S.
government or its agencies or instrumentalities.

Does the Fund Have Any Restrictions That Are Not Fundamental? The Fund has a
number of other investment restrictions that are not fundamental policies, which
means that they can be changed by the Board of Trustees without shareholder
approval. While these investment policies do not require shareholder approval to
be changed, as a matter of operating policy, the Fund has agreed not to change
these policies without prior notice to its shareholders. These operating
policies provide that the Fund may not do any of the following:

o The Fund may not invest in any issuer for the purpose of exercising
control or management of that issuer, unless approved by the Fund's Board of
Trustees.

o The Fund may not invest any part of its total assets in interests in
oil, gas, or other mineral exploration or development programs, although it may
invest in securities of companies which invest in or sponsor such programs. The
Fund may not invest in oil, gas or other mineral leases.

o The Fund may not invest more than 5% of the value of its net assets in
warrants, valued at the lower of cost or market value. The Fund can buy warrants
that are not listed on The New York Stock Exchange or The American Stock
Exchange, but they count toward the 5% limit on warrants described above and may
not exceed 2% of the value of the Fund's net assets. Warrants acquired by the
Fund in units or attached to securities are not covered by this restriction.

Unless the Prospectus or 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). In that case 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.

In carrying out its policy with respect to concentration of investments,
the Fund applies that policy to prohibit the Fund from making an investment in
the securities of any one issuer or group of issuers in the same industry if
that investment would cause 25% or more of the value of the Fund's total assets
to be invested in that industry. In applying its policy not to concentrate its
investments, the Fund has adopted the industry classifications set forth in
Appendix B to this Statement of Additional Information. This is not a
fundamental policy.

In carrying out its policy prohibiting the issuance of senior securities,
the Fund interprets that policy not to prohibit certain investment activities
for which assets of the Fund are designated as segregated to cover the related
obligations. Examples of those activities include borrowing money, repurchase
agreements, and contracts to buy or sell derivatives.

How the Fund is Managed

Organization and History. The Fund is a series of Bond Fund Series, a
Massachusetts business trust organized in 1986 as an open-end, diversified
management investment company with an unlimited number of authorized shares of
beneficial interest (that trust is referred to in this section as the "Fund's
parent Trust" or the "Trust"). The Trust was originally named Rochester
Convertible Fund and was renamed Rochester Fund Series, which was its name until
it was renamed Bond Fund Series in 1997. The Fund is currently the only series
of the Trust and is a diversified fund. It was called The Bond Fund for Growth
until 1997. In 1997 it was re-named Oppenheimer Bond Fund for Growth. The Fund's
name was changed to Oppenheimer Convertible Securities Fund in 1998.

The Fund and its parent Trust are governed by a Board of Trustees, which
is responsible for protecting the interests of shareholders under Massachusetts
law. The Trustees meet periodically throughout the year to oversee the Fund's
(and the Trust's) activities, review its performance, and review the actions of
the Manager.

Classes of Shares. The Trustees are authorized, without shareholder
approval, to create new series and classes of shares. The Trustees may
reclassify unissued shares of the Fund into additional series or classes of
shares. The Trustees also may divide or combine the shares of a class into a
greater or lesser number of shares without changing the proportionate beneficial
interest of a shareholder in the Fund. Shares do not have cumulative voting
rights or preemptive or subscription rights. Shares may be voted in person or by
proxy at shareholder meetings.

The Fund currently has five classes of shares: Class A, Class B, Class C,
Class M and Class N. All classes invest in the same investment portfolio. Only
retirement plans may purchase Class N shares. Each class of shares: o has its
own dividends and distributions, o pays certain expenses which may be different
for the different classes, o may have a different net asset value, o may have
separate voting rights on matters in which interests of one class are different
from interests of another class, and o votes as a class on matters that affect
that class alone.

Shares are freely transferable, and each share of each class has one vote
at shareholder meetings, with fractional shares voting proportionally on matters
submitted to the vote of shareholders. Each share of the Fund represents an
interest in the Fund proportionately equal to the interest of each other share
of the same class.

Meetings of Shareholders. As a Massachusetts business trust, the Fund is
not required to hold, and does not plan to hold, regular annual meetings of
shareholders, but may do so from time to time on important matters or when
required to do so by the Investment Company Act or other applicable law.
Shareholders have the right, upon the declaration in writing or vote of
two-thirds of the outstanding shares of the Fund, to remove a Trustee or to take
other action described in the Fund's Declaration of Trust.

The Trustees will call a meeting of shareholders to vote on the removal of
a Trustee upon the written request of the record holders of 10% of its
outstanding shares. If the Trustees receive a request from at least 10
shareholders stating that they wish to communicate with other shareholders to
request a meeting to remove a Trustee, the Trustees will then either make the
Fund's shareholder list available to the applicants or mail their communication
to all other shareholders at the applicants' expense. The shareholders making
the request must have been shareholders for at least six months and must hold
shares of the Fund valued at $25,000 or more or constituting at least 1% of the
Fund's outstanding shares. The Trustees may also take other action as permitted
by the Investment Company Act.

|X| Shareholder and Trustee Liability. The Fund's Declaration of Trust
contains an express disclaimer of shareholder or Trustee liability for the
Fund's obligations. It also provides for indemnification and reimbursement of
expenses out of the Fund's property for any shareholder held personally liable
for its obligations. The Declaration of Trust also states that upon request, the
Fund shall assume the defense of any claim made against a shareholder for any
act or obligation of the Fund and shall satisfy any judgment on that claim.
Massachusetts law permits a shareholder of a business trust (such as the Fund)
to be held personally liable as a "partner" under certain circumstances.
However, the risk that a Fund shareholder will incur financial loss from being
held liable as a "partner" of the Fund is limited to the relatively remote
circumstances in which the Fund would be unable to meet its obligations.

The Fund's contractual arrangements state that any person doing business
with the Fund (and each shareholder of the Fund) agrees under its Declaration of
Trust to look solely to the assets of the Fund for satisfaction of any claim or
demand that may arise out of any dealings with the Fund. Additionally, the
Trustees shall have no personal liability to any such person, to the extent
permitted by law.

Board of Trustees and Oversight Committees. The Fund is governed by a Board of
Trustees, which is responsible for protecting the interests of shareholders
under Massachusetts law. The Trustees meet periodically throughout the year to
oversee the Fund's activities, review its performance, and review the actions of
the Manager.

The Board of Trustees has an Audit Committee which is comprised solely of
Independent Trustees. The Audit Committee provides the Board with
recommendations regarding the selection of the Fund's independent auditor. The
Audit Committee also reviews the scope and results of audits and the audit fees
charged, reviews reports from the Fund's independent auditors concerning the
Fund's internal accounting procedures and controls, and reviews reports of the
Manager's internal auditor among other duties as set forth in the Committee's
charter. The members of the Audit Committee are Paul Clinton (Chairman), Thomas
Courtney, Robert Galli, Lacy Herrmann and Brian Wruble. The Audit Committee met
6 times during the Fund's fiscal year ended December 31, 2003.

Trustees and Officers of the Fund. Each of the Trustees is an "Independent
Trustee" under the Investment Company Act. The Fund's Trustees and officers and
their positions held with the Fund and length of service in such position(s) and
their principal occupations and business affiliations during the past five years
are listed in the chart below. The information for the Trustees also includes
the dollar range of shares of the Fund as well as the aggregate dollar range of
shares beneficially owned in any of the Oppenheimer funds overseen by the
Trustees. All of the Trustees are also trustees or directors of the following
Oppenheimer funds (except for Mr. Cannon who is only a Trustee of Rochester Fund
Municipals, Limited-Term New York Municipal Fund and Convertible Securities
Fund) (referred to as "Board III Funds"):

Oppenheimer Quest Capital Value Fund, Bond Fund Series, a series fund having
Inc. one series:
Oppenheimer Quest For Value Funds, a Oppenheimer Convertible
series Securities Fund
fund having the following three Oppenheimer MidCap Fund
series: Rochester Fund Municipals
Oppenheimer Small Cap Value Fund, Rochester Portfolio Series, a series
Oppenheimer Quest Balanced Fund and fund having
Oppenheimer Quest Opportunity one series: Limited-Term New
Value Fund York Municipal
Oppenheimer Quest International Value Fund
Fund, Inc.
Oppenheimer Quest Value Fund, Inc.

In addition to being a trustee or director of the Board III Funds, Mr.
Galli is also a director or trustee of 25 other portfolios in the
OppenheimerFunds complex. Present or former officers, directors, trustees and
employees (and their immediate family members) of the Fund, the Manager and its
affiliates, and retirement plans established by them for their employees are
permitted to purchase Class A shares of the Fund and the other Oppenheimer funds
at net asset value without sales charge. The sales charge on Class A shares is
waived for that group because of the economies of sales efforts realized by the
Distributor.

Messrs. Everett, Murphy, Molleur, Vottiero, Wixted and Zack, and Mses.
Bechtolt and Ives who are officers of the Fund, respectively hold the same
offices of one or more of the other Board III Funds as with the Fund. As of
January 28, 2004, the Trustees and officers of the Fund, as a group, owned of
record or beneficially less than 1% of each class of shares of the Fund. The
foregoing statement does not reflect ownership of shares of the Fund held of
record by an employee benefit plan for employees of the Manager, other than the
shares beneficially owned under the plan by the officers of the Fund listed
above. In addition, each Independent Trustee, and his family members, do not own
securities of either the Manager or Distributor of the Board III Funds or any
person directly or indirectly controlling, controlled by or under common control
with the Manager or Distributor.

The address of each Trustee in the chart below is 6803 S. Tucson Way,
Centennial, CO 80112-3924. Each Trustee serves for an indefinite term, until his
or her resignation, retirement, death or removal.

-------------------------------------------------------------------------------------
Independent Trustees
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Name, Principal Occupation(s) During Past 5 Dollar Aggregate
Dollar
Range Of
Shares
Beneficially
Owned in
Years; Range of Any of the
Other Trusteeships/Directorships Held by Shares Oppenheimer
Position(s) Held Trustee; BeneficiallFunds with Fund, Length Number of
Portfolios in Fund Complex Owned in Overseen of Service, Age Currently Overseen
by Trustee the Fund by Trustee
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
As of December 31,
2003
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Thomas W. Principal of Courtney Associates, Inc. $10,001-$50$50,001-$100,000
Courtney, (venture capital firm); former General
Chairman of the Partner of Trivest Venture Fund (private
Board of Trustees, venture capital fund); former President
Trustee since 1995 of Investment Counseling Federated
Age: 70 Investors, Inc.; Trustee of the following
open-end investment companies: Cash
Assets Trust, Pimco Advisors VIT, Tax
Free Trust of Arizona and 4 funds for the
Hawaiian Tax Free Trust. Oversees 10
portfolios in the OppenheimerFunds
complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
John Cannon, Director, Neuberger Berman Income $10,001-$50$10,001-$50,000
Trustee, since Managers Trust, Neuberger &amp; Berman Income
1992 Funds and Neuberger Berman Trust,
Age: 74 (1995-present); Neuberger Berman Equity
Funds (November 2000-present); Trustee, Neuberger Berman
Mutual Funds (October 1994-present); formerly Chairman and
Treasurer, CDC Associates, a registered investment adviser
(December 1993-February 1996); Independent Consultant; Chief
Investment Officer, CDC Associates (1996-June 2000);
Consultant and director, CDC Associates (December
1993-February 1999). Oversees 3 portfolios in the
OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Paul Y. Clinton, Principal of Clinton Management None Over
Trustee, since Associates, a financial and venture $100,000
1995 capital consulting firm; Trustee of the
Age: 72 following open-end investment companies:
Trustee of Capital Cash Management Trust,
Prime Cash Fund, Pimco Advisors VIT and
Narragansett Insured Tax-Free Income
Fund. Oversees 10 portfolios in the
OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Robert G. Galli, A trustee or director of other None Over
Trustee since 1998 Oppenheimer funds. Oversees 35 portfolios $100,000
Age: 70 in the OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Lacy B. Herrmann, Chairman and Chief Executive Officer of None $10,001-$50,000
Trustee since 1995 Aquila Management Corporation, the
Age: 74 sponsoring organization and manager,
administrator and/or sub-adviser to the following open-end
investment companies, and Chairman of the Board of Trustees
and President of each: Churchill Cash Reserves Trust,
Aquila-Cascadia Equity Fund, Cash Assets Trust, Prime Cash
Fund, Narragansett Insured Tax-Free Income Fund, Tax-Free
Fund For Utah, Churchill Tax-Free Fund of Kentucky, Tax-Free
Fund of Colorado, Tax-Free Trust of Oregon, Tax-Free Trust of
Arizona, Hawaiian Tax-Free Trust, and Aquila Rocky Mountain
Equity Fund and Pimco Advisors VIT; Vice President, Director,
Secretary, and formerly Treasurer of Aquila Distributors,
Inc., distributor of the above funds; President and Chairman
of the Board of Trustees of Capital Cash Management Trust
("CCMT"), and an Officer and Trustee/Director of its
predecessors; President and Director of STCM Management
Company, Inc., sponsor and adviser to CCMT; Chairman,
President and a Director of InCap Management Corporation,
formerly sub-adviser and administrator of Prime Cash Fund and
Short Term Asset Reserves; Trustee Emeritus of Brown
University. Oversees 10 portfolios in the OppenheimerFunds
complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Brian Wruble, Special Limited Partner (since January $10,001-$50Over
Trustee since 2001 1999) of Odyssey Investment Partners, LLC $100,000
Age: 60 (private equity investment); General
Partner (since September 1996) of Odyssey Partners, L.P.
(hedge fund in distribution since 1/1/97); Board of Governing
Trustees (since August 1990) of The Jackson Laboratory
(non-profit); Trustee (since May 1992) of Institute for
Advanced Study (educational institute); formerly Trustee (May
2000 - 2002) of Research Foundation of AIMR (investment
research, non-profit); Governor, Jerome Levy Economics
Institute of Bard College (economics research) (August
1990-September 2001); Director of Ray &amp; Berendtson, Inc.
(executive search firm) (May 2000-April 2002). Oversees 10
portfolios in the OppenheimerFunds complex.
-------------------------------------------------------------------------------------

The address of the Officers in the chart below is as follows: for
Messrs. Everett, Molleur, Murphy and Zack, Two World Financial Center, 225
Liberty Street, New York, NY 10281-1008, for Messrs. Vottiero and Wixted and
Mses. Bechtolt and Ives, 6803 S. Tucson Way, Centennial, CO 80112-3924. Each
Officer serves for an annual term or until his or her earlier resignation,
death or removal.

-------------------------------------------------------------------------------------
Officers of the Fund
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Name, Principal Occupation(s) During Past 5 Years
Position(s) Held with
Fund,
Length of Service,
Age
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Edward Everett, Vice Vice President of the Manager (since January 2000); an
President and officer of 1 portfolio in the OppenheimerFunds complex;
Portfolio Manager formerly Assistant Vice President of the Manager (January
since 1993 1996 - January 2000).
Age: 37
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
John V. Murphy, Chairman, Chief Executive Officer and director (since June
President since 2001 2001) and President (since September 2000) of the Manager;
Age: 54 President and a director or trustee of other Oppenheimer
funds; President and a director (since July 2001) of
Oppenheimer Acquisition Corp. (the Manager's parent
holding company) and of Oppenheimer Partnership
Holdings, Inc. (a holding company subsidiary of the
Manager); a director (since November 2001) of
OppenheimerFunds Distributor, Inc. (a subsidiary of the
Manager); Chairman and a director (since July 2001) of
Shareholder Services, Inc. and of Shareholder Financial
Services, Inc. (transfer agent subsidiaries of the
Manager); President and a director (since July 2001) of
OppenheimerFunds Legacy Program (a charitable trust
program established by the Manager); a director of the
investment advisory subsidiaries of the Manager: OFI
Institutional Asset Management, Inc. and Centennial
Asset Management Corporation (since November 2001),
HarbourView Asset Management Corporation and OFI Private
Investments, Inc. (since July 2001); President (since
November 1, 2001) and a director (since July 2001) of
Oppenheimer Real Asset Management, Inc.; a director
(since November 2001) of Trinity Investment Management
Corp. and Tremont Advisers, Inc. (Investment advisory
affiliates of the Manager); Executive Vice President
(since February 1997) of Massachusetts Mutual Life
Insurance Company (the Manager's parent company); a
director (since June 1995) of DLB Acquisition
Corporation (a holding company that owns the shares of
David L. Babson &amp; Company, Inc.); formerly, Chief
Operating Officer (September 2000-June 2001) of the
Manager; President and trustee (November 1999-November
2001) of MML Series Investment Fund and MassMutual
Institutional Funds (open-end investment companies); a
director (September 1999-August 2000) of C.M. Life
Insurance Company; President, Chief Executive Officer
and director (September 1999-August 2000) of MML Bay
State Life Insurance Company; a director (June 1989-June
1998) of Emerald Isle Bancorp and Hibernia Savings Bank
(a wholly-owned subsidiary of Emerald Isle Bancorp).
Oversees 72 portfolios as Trustee/Officer and 10
portfolios as Officer in the OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Brian W. Wixted, Senior Vice President and Treasurer (since March 1999) of
Treasurer since 1999 the Manager; Treasurer (since March 1999) of HarbourView
Age: 44 Asset Management Corporation, Shareholder Services, Inc.,
Oppenheimer Real Asset Management Corporation, Shareholder
Financial Services, Inc., Oppenheimer Partnership Holdings,
Inc., OFI Private Investments, Inc. (since March 2000),
OppenheimerFunds International Ltd. and OppenheimerFunds
plc (since May 2000) and OFI Institutional Asset
Management, Inc. (since November 2000) (offshore fund
management subsidiaries of the Manager); Treasurer and
Chief Financial Officer (since May 2000) of Oppenheimer
Trust Company (a trust company subsidiary of the Manager);
Assistant Treasurer (since March 1999) of Oppenheimer
Acquisition Corp. and OppenheimerFunds Legacy Program
(since April 2000); formerly Principal and Chief Operating
Officer (March 1995-March 1999), Bankers Trust
Company-Mutual Fund Services Division. An officer of 82 in
the OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Connie Bechtolt, Assistant Vice President of the Manager (since September
Assistant Treasurer 1998); formerly Manager/Fund Accounting (September
since 2002 1994-September 1998) of the Manager. An officer of 82 in
Age: 40 the OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Philip Vottiero, Vice President/Fund Accounting of the Manager (since March
Assistant Treasurer 2002); formerly Vice President/Corporate Accounting of the
since 2002 Manager (July 1999-March 2002) prior to which he was Chief
Age: 40 Financial Officer at Sovlink Corporation (April 1996-June
1999). An officer of 82 in the OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Robert G. Zack, Executive Vice President (since January 2004) and General
Secretary since 2001 Counsel (since February 2002) of the Manager; General
Age: 55 Counsel and a director (since November 2001) of
OppenheimerFunds Distributor, Inc.; Senior Vice President
and General Counsel (since November 2001) of HarbourView
Asset Management Corporation; Vice President and a director
(since November 2000) of Oppenheimer Partnership Holdings,
Inc.; Senior Vice President, General Counsel and a director
(since November 2001) of Shareholder Services, Inc.,
Shareholder Financial Services, Inc., OFI Private
Investments, Inc., Oppenheimer Trust Company and OFI
Institutional Asset Management, Inc.; General Counsel
(since November 2001) of Centennial Asset Management
Corporation; a director (since November 2001) of
Oppenheimer Real Asset Management, Inc.; Assistant
Secretary and a director (since November 2001) of
OppenheimerFunds International Ltd.; Vice President (since
November 2001) of OppenheimerFunds Legacy Program;
Secretary (since November 2001) of Oppenheimer Acquisition
Corp.; formerly Senior Vice President (May 1985 - December
2003), Acting General Counsel (November 2001-February 2002)
and Associate General Counsel (May 1981-October 2001) of
the Manager; Assistant Secretary of Shareholder Services,
Inc. (May 1985-November 2001), Shareholder Financial
Services, Inc. (November 1989-November 2001);
OppenheimerFunds International Ltd. and OppenheimerFunds
plc (October 1997-November 2001). An officer of 82 in the
OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Kathleen T. Ives, Vice President (since June 1998) and Senior Counsel (since
Assistant Secretary October 2003) of the Manager; Vice President (since 1999)
since 2001 of OppenheimerFunds Distributor, Inc.; Vice President and
Age: 38 Assistant Secretary (since 1999) of Shareholder Services,
Inc.; Assistant Secretary (since December 2001) of
OppenheimerFunds Legacy Program and Shareholder Financial
Services, Inc.; formerly an Assistant Counsel (August
1994-October 2003) and Assistant Vice President of the
Manager (August 1997-June 1998). An officer of 82
portfolios in the OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Denis R. Molleur, Vice President and Senior Counsel of the Manager (since
Assistant Secretary July 1999); formerly a Vice President and Associate Counsel
since 2001 of the Manager (September 1995-July 1999). An officer of 73
Age: 46 portfolios in the OppenheimerFunds complex.
-------------------------------------------------------------------------------------

|X| Remuneration of Trustees. The officers of the Fund who are affiliated
with the Manager receive no salary or fee from the Fund. The Trustees of the
Fund received the compensation shown below from the Fund during the Fund's
fiscal year ended December 31, 2003. The compensation from all 10 of the Board
III Funds (including the Fund) represents compensation received for serving as a
director or trustee and member of a committee (if applicable) of the boards of
those funds during the calendar year ended December 31, 2003.

---------------------------------------------------------------------------------
Trustee Name and Other Fund Aggregate RetirementEstimated Total
Compensation
From All
Oppenheimer
Funds
Benefits Annual For Which
Accrued Retirement Individual
as Part Benefits Serves
Compensationof Fund Paid Upon As
Position(s) (as applicable) From Fund1 Expenses Retirement2Trustee/Director
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Thomas W. Courtney $6,519 $4,000 $72,174 $106,000
Chairman of the Board;
Audit Committee Member
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
John Cannon3 $2,621 $1,712 $21,158 $42,617
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Paul Y. Clinton $6,212 $4,081 $71,108 $101,000
Audit Committee Chairman
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Robert G. Galli $5,905 $3,277 $67,1044 $213,5365
Audit Committee Member
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Lacy B. Herrmann $5,905 $2,550 $69,561 $96,000
Audit Committee Member
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Brian Wruble $5,9056 $477 $7,527 $96,000
Audit Committee Member
---------------------------------------------------------------------------------
1. Aggregate Compensation From Fund includes fees and deferred compensation, if
any, for a Trustee. 2. Estimated Annual Retirement Benefits to be Paid Upon
Retirement is based on a straight life payment plan election with the assumption
that a Trustee 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 Trustees." 3. Compensation for Mr. Cannon was paid by
Rochester Fund Municipals, Limited Term New York Municipal Fund and Oppenheimer
Convertible Securities Fund only. 4. Includes $38,050 estimated to be paid to
Mr. Galli for serving as a trustee or director of 25 other Oppenheimer funds (at
December 31, 2003) that are not Board III Funds. 5. Includes $117,536 paid to
Mr. Galli for serving as trustee or director of 25 other Oppenheimer funds (at
December 31, 2003) that are not Board III Funds. 6. Includes $5,905 deferred by
Mr. Wruble under the Deferred Compensation Plan described below.

|X| Retirement Plan for Trustees. The Fund has adopted a retirement plan
that provides for payments to retired Trustees. Payments are up to 80% of the
average compensation paid during a Trustee's five years of service in which the
highest compensation was received. A Trustee must serve as Trustee for any of
the Board III Oppenheimer funds listed above for at least 15 years to be
eligible for the maximum payment. Each Trustee's retirement benefits will depend
on the amount of the Trustee's future compensation and length of service.

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

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

|X| Major Shareholders. As of January 28, 2004, the only people 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&amp;S for the sole benefit of its customers, Attn Fund Admn/#97JRO, 4800
Deer Lake Dr E Fl 3, Jacksonville, FL 32246-6484, which owned
2,432,016.008 Class A shares (approximately 10.19% of the Class A shares
then outstanding).

Citigroup Global Mkts Inc, 109801250, Attn Cindy Tempesta, 7th Fl, 333
West 34th Street, New York, NY 10001-2483, which owned 1,381,774.328 Class
A shares (approximately 5.79% of the Class A shares then outstanding).

Citigroup Global Mkts Inc, 109801250, Attn Cindy Tempesta, 7th Fl, 333
West 34th Street, New York, NY 10001-2483, which owned 507,203.860 Class B
shares (approximately 5.29% of the Class B shares then outstanding).

MLPF&amp;S for the sole benefit of its customers, Attn Fund Admn/#97GF7, 4800
Deer Lake Dr E Fl 3, Jacksonville, FL 32246-6484, which owned
1,750,675.670 Class B shares (approximately 18.28% of the Class B shares
then outstanding).

Citigroup Global Mkts Inc, 109801250, Attn Cindy Tempesta, 7th Fl, 333
West 34th Street, New York, NY 10001-2483, which owned 394,753.919 Class C
shares (approximately 6.31% of the Class C shares then outstanding).

MLPF&amp;S for the sole benefit of its customers, Attn Fund Admn/#97JR1, 4800
Deer Lake Dr E Fl 3, Jacksonville, FL 32246-6484, which owned
1,241,358.562 Class C shares (approximately 19.85% of the Class C shares
then outstanding).

Citigroup Global Mkts Inc, 109801250, Attn Cindy Tempesta, 7th Fl, 333
West 34th Street, New York, NY 10001-2483, which owned 1,312,296.928 Class
M shares (approximately 15.42% of the Class M shares then outstanding).

MLPF&amp;S for the sole benefit of its customers, Attn Fund Admn, 4800 Deer
Lake Dr E Fl 3, Jacksonville, FL 32246-6484, which owned 1,269,676.332
Class M shares (approximately 14.92% of the Class M shares then
outstanding).

LPL Financial Services, AC7160-9422, 9785 Towne Centre Drive, San Diego,
CA 92121-1968, which owned 7,844.849 Class N shares (approximately 6.92%
of the Class N shares then outstanding).

Michael Shane TR Michael Share PA PSP, 19 W Flagler St, Ste 607, Miami, FL
33130-4408, who owned 6,610.445 Class N shares (approximately 5.83% of the
Class N shares then outstanding).

LPL Financial Services, AC7160-9422, 9683 Towne Centre Drive, San Diego,
CA 92121-1968, which owned 7,844.849 Class N shares (approximately 6.92%
of the Class N shares then outstanding).

RPSS TR Rollover IRA FBO Philip E Bares, 2321 N Lafayette St, Arlington
Heights, IL 60004-290, who owned 8,522.714 Class N shares (approximately
7.51% of the Class N shares then outstanding).

James Mellon Daniel McCarthy, Mellon &amp; McCarthy PC401K, 2301 W Big Beaver
Rd Ste 500, Troy, MI 48084-3328, who owned 7,510.271 Class N shares
(approximately 6.62% of the Class N shares then outstanding).

The Manager. The Manager is wholly-owned by Oppenheimer Acquisition Corp., a
holding company controlled by Massachusetts Mutual Life Insurance Company, a
global, diversified insurance and financial services organization.

|X| Code of Ethics. The Fund, the Manager and the Distributor have a Code
of Ethics. It is designed to detect and prevent improper personal trading by
certain employees, including portfolio managers, that would compete with or take
advantage of the Fund's portfolio transactions. Covered persons include persons
with knowledge of the investments and investment intentions of the Fund and
other funds advised by the Manager. The Code of Ethics does permit personnel
subject to the Code to invest in securities, including securities that may be
purchased or held by the Fund, subject to a number of restrictions and controls.
Compliance with the Code of Ethics is carefully monitored and enforced by the
Manager.

The Code of Ethics is an exhibit to the Fund's registration statement
filed with the SEC and can be reviewed and copied at the SEC's Public Reference
Room in Washington, D.C. You can obtain information about the hours of operation
of the Public Reference Room by calling the SEC at 1.202.942.8090. The Code of
Ethics can also be viewed as part of the Fund's registration statement on the
SEC's EDGAR database at the SEC's Internet website at WWW.SEC.GOV. Copies may be
obtained, after paying a duplicating fee, by electronic request at the following
E-mail address: PUBLICINFO@SEC.GOV., or by writing to the SEC's Public Reference
Section, Washington, D.C. 20549-0102.

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

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

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

|X| The Investment Advisory Agreement. The Manager provides investment
advisory and management services to the Fund under an investment advisory
agreement between the Manager and the Fund. The Manager selects securities for
the Fund's portfolio and handles its day-to-day business. The portfolio manager
of the Fund is employed by the Manager and is the person who is principally
responsible for the day-to-day management of the Fund's portfolio.

The agreement requires the Manager, at its expense, to provide the Fund
with adequate office space, facilities and equipment. It also requires the
Manager to provide and supervise the activities of all administrative and
clerical personnel required to provide effective administration for the Fund.
Those responsibilities include the compilation and maintenance of records with
respect to its operations, the preparation and filing of specified reports, and
composition of proxy materials and registration statements for continuous public
sale of shares of the Fund.

The Fund pays expenses not expressly assumed by the Manager under the
advisory agreement. The advisory agreement lists examples of expenses paid by
the Fund. The major categories relate to interest, taxes, brokerage commissions,
fees to certain Trustees, legal and audit expenses, custodian and transfer agent
expenses, share issuance costs, certain printing and registration costs and
non-recurring expenses, including litigation costs. The management fees paid by
the Fund to the Manager are calculated at the rates described in the Prospectus,
which are applied to the assets of the Fund as a whole. The fees are allocated
to each class of shares based upon the relative proportion of the Fund's net
assets represented by that class. The management fees paid by the Fund to the
Manager during its last three fiscal years are listed below.

o Accounting and Administrative Services. The Manager provides
accounting and record-keeping services to the Fund pursuant to an Accounting and
Administration Agreement approved by the Board of Trustees. Under that
agreement, the Manager maintains the general ledger accounts and records
relating to the Fund's business and calculates the daily net asset values of the
Fund's shares. The fee is $12,000 for the first $30 million of the Fund's net
assets and $9,000 for each additional $30 million of net assets. The accounting
and administrative services fees paid by the Fund to the Manager during its last
three fiscal years are listed below.

-------------------------------------------------------------------------------
Fiscal Year Ended Management Fee Paid to Accounting and
Administrative Services
Fee Paid to
12/31 OppenheimerFunds, Inc. OppenheimerFunds, Inc.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
2001 $3,642,672 $235,637
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
2002 $2,848,275 $181,165
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
2003 $2,755,382 $174,795
-------------------------------------------------------------------------------

The investment advisory agreement states that in the absence of willful
misfeasance, bad faith, gross negligence in the performance of its duties or
reckless disregard of its obligations and duties under the investment advisory
agreement, the Manager is not liable for any loss the Fund sustains for any
investment, adoption of any investment policy, or the purchase, sale or
retention of any security.

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

|X| Annual Approval of Investment Advisory Agreement. Each year, the Board
of Trustees, including a majority of the Independent Trustees, is required to
approve the renewal of the investment advisory agreement. The Investment Company
Act requires that the Board request and evaluate and the Manager provide such
information as may be reasonably necessary to evaluate the terms of the
investment advisory agreement. The Board employs an independent consultant to
prepare a report that provides such information as the Board requests for this
purpose.

The Board also receives information about the 12b-1 distribution fees the
Fund pays. These distribution fees are reviewed and approved at a different time
of the year.

The Board reviewed the foregoing information in arriving at its decision
to renew the investment advisory agreement. Among other factors, the Board
considered:
o The nature, cost, and quality of the services provided to the Fund and
its shareholders;
o The profitability of the Fund to the Manager;
o The investment performance of the Fund in comparison to regular market
indices;
o Economies of scale that may be available to the Fund from the Manager; o Fees
paid by other mutual funds for similar services; o The value and quality of any
other benefits or services received by the
Fund from its relationship with the Manager; and
o The direct and indirect benefits the Manager received from its
relationship with the Fund. These included services provided by the
Distributor and the Transfer Agent, and brokerage and soft dollar
arrangements permissible under Section 28(e) of the Securities Exchange
Act.

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

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

After careful deliberation, the Board, including the Independent Trustees,
concluded that it was in the best interest of shareholders to continue the
investment advisory agreement for another year and that the fees charged
thereunder are fair and reasonable. In arriving at a decision, the Board did not
single out any one factor or group of factors as being more important than other
factors, but considered all factors together. The Board judged the terms and
conditions of the investment advisory agreement, including the investment
advisory fee, in light of all of the surrounding circumstances.

Brokerage Policies of the Fund

Brokerage Provisions of the Investment Advisory Agreement. One of the duties of
the Manager under the investment advisory agreement is to arrange the portfolio
transactions for the Fund. The advisory agreement contains provisions relating
to the employment of broker-dealers to effect the Fund's portfolio transactions.
The Manager is authorized by the advisory agreement to employ broker-dealers,
including "affiliated" brokers, as that term is defined in the Investment
Company Act. The Manager may employ broker-dealers that the Manager thinks, in
its best judgment based on all relevant factors, will implement the policy of
the Fund to obtain, at reasonable expense, the "best execution" of the Fund's
portfolio transactions. "Best execution" means prompt and reliable execution at
the most favorable price obtainable. The Manager need not seek competitive
commission bidding. However, it is expected to be aware of the current rates of
eligible brokers and to minimize the commissions paid to the extent consistent
with the interests and policies of the Fund as established by its Board of
Trustees.

Under the investment advisory agreement, the Manager may select brokers
(other than affiliates) that provide brokerage and/or research services for the
Fund and/or the other accounts over which the Manager or its affiliates have
investment discretion. The commissions paid to such brokers may be higher than
another qualified broker would charge, if the Manager makes a good faith
determination that the commission is fair and reasonable in relation to the
services provided.

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 Trustees permits the Manager to use stated commissions on
secondary fixed-income agency trades to obtain research if the broker represents
to the Manager that: (i) the trade is not from or for the broker's own
inventory, (ii) the trade was executed by the broker on an agency basis at the
stated commission, and (iii) the trade is not a riskless principal transaction.
The Board of Trustees permits the Manager to use commissions on fixed-price
offerings to obtain research, in the same manner as is permitted for agency
transactions.

The research services provided by brokers broadens the scope and
supplements the research activities of the Manager. That research provides
additional views and comparisons for consideration, and helps the Manager to
obtain market information for the valuation of securities that are either held
in the Fund's portfolio or are being considered for purchase. The Manager
provides information to the Board about the commissions paid to brokers
furnishing such services, together with the Manager's representation that the
amount of such commissions was reasonably related to the value or benefit of
such services.

-------------------------------------------------------------------------------
Fiscal Year Ended 12/31: Total Brokerage Commissions Paid by the Fund1
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
2001 $284,842
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
2002 $273,558
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
2003 $200,2482
-------------------------------------------------------------------------------
1. Amounts do not include spreads or commissions on principal transactions on a
net trade basis.
2. During the fiscal year ended 12/31/03, the amount of
transactions directed to brokers for research services was $400,813 and the
amount of the commissions paid to broker-dealers for those services was $465.

Distribution and Service Plans

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

The sales charges and concessions paid to, or retained by, the Distributor
from the sale of shares and the contingent deferred sales charges retained by
the Distributor on the redemption of shares during the Fund's three most recent
fiscal years are shown in the tables below.

--------------------------------------------------------------------------------
Fiscal Aggregate Class A Aggregate Class M
Front-End Sales Front-End
Year Front-End Sales Charges Front-End Sales Sales Charges
Ended Charges on Retained by Charges on Retained by
12/31: Class A Shares Distributor1 Class M Shares Distributor1
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2001 $342,426 $89,216 $48,900 $6,024
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2002 $245,040 $62,691 $26,914 $5,185
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2003 $496,856 $248,513 $33,315 $7,400
--------------------------------------------------------------------------------
1. Includes amounts retained by a broker-dealer that is an affiliate of the
parent of the Distributor.

--------------------------------------------------------------------------------
Fiscal Concessions Concessions Concessions Concessions Concessions
on Class M
on Class A on Class B on Class C Shares on Class N
Shares Shares Shares Advanced Shares
Year Advanced by Advanced by Advanced by by Advanced by
Ended 12/31: Distributor1 Distributor1 Distributor1 Distributor1Distributor1
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2001 $43,302 $625,374 $82,640 $-6 $1232
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2002 $24,972 $367,794 $48,707 $0 $2,617
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2003 $32,195 $689,693 $121,293 $108 $7,358
--------------------------------------------------------------------------------
1. Includes amounts retained by a broker-dealer that is an affiliate of the
parent of the Distributor. 2. The inception of Class N shares was March 1, 2001.

---------------------------------------------------------------------------------
Fiscal Class A Class B Class C Class M Class N
Contingent Contingent
Deferred Contingent Deferred Contingent Contingent
Sales Deferred Sales Deferred Deferred
Year Charges Sales Charges Charges Sales Charge Sales Charge
Ended Retained by Retained by Retained by Retained by Retained by
12/31: Distributor Distributor Distributor Distributor Distributor
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
2001 $11,865 $742,690 $13,957 $89 $0
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
2002 $2,677 $878,780 $8,296 $0 $24
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
2003 $6,904 $325,658 $5,278 $0 $889
---------------------------------------------------------------------------------

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
Trustees, including a majority of the Independent Trustees1, cast in person at a
meeting called for the purpose of voting on that plan.

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

Unless a plan is terminated as described below, the plan continues in
effect from year to year but only if the Fund's Board of Directors and its
Independent Trustees specifically vote annually to approve its continuance.
Approval must be by a vote cast in person at a meeting called for the purpose of
voting on continuing the plan. A plan may be terminated at any time by the vote
of a majority of the Independent Trustees or by the vote of the holders of a
"majority" (as defined in the Investment Company Act) of the outstanding shares
of that class.

The Board of Trustees and the Independent Trustees must approve all
material amendments to a plan. An amendment to increase materially the amount of
payments to be made under a plan must be approved by shareholders of the class
affected by the amendment. Because Class B shares of the Fund automatically
convert into Class A shares 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 the plan that would materially increase payments under
the plan. That approval must be by a "majority" (as defined in the Investment
Company Act) of the shares of each class, voting separately by class.

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

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

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

|X| Class A Service Plan Fees. Under the Class A service plan, the
Distributor currently uses the fees it receives from the Fund to pay brokers,
dealers and other financial institutions (they are referred to as "recipients")
for personal services and account maintenance services they provide for their
customers who hold Class A shares. The services include, among others, answering
customer inquiries about the Fund, assisting in establishing and maintaining
accounts in the Fund, making the Fund's investment plans available and providing
other services at the request of the Fund or the Distributor. The Class A
service plan permits reimbursements to the Distributor at a rate of up to 0.25%
of average annual net assets of Class A shares. The Board has set the rate at
that level. While the plan permits the Board to authorize payments to the
Distributor to reimburse itself for services under the plan, the Board has not
yet done so, except in the case of the special arrangement described below,
regarding grandfathered retirement accounts. The Distributor makes payments to
plan recipients quarterly at an annual rate not to exceed 0.25% of the average
annual net assets consisting of Class A shares held in the accounts of the
recipients or their customers.

With respect to purchases of Class A shares subject to a contingent
deferred sales charge by certain retirement plans that purchased such shares
prior to March 1, 2001 ("grandfathered retirement accounts"), the Distributor
currently intends to pay the service fee to recipients in advance for the first
year after the shares are purchased. During the first year the shares are sold,
the Distributor retains the service fee to reimburse itself for the costs of
distributing the shares. After the first year shares are outstanding, the
Distributor makes service fee payments to recipients quarterly on those shares.
The advance payment is based on the net asset value of shares sold. Shares
purchased by exchange do not qualify for the advance service fee payment. If
Class A shares purchased by grandfathered retirement accounts are redeemed
during the first year after their purchase, the recipient of the service fees on
those shares will be obligated to repay the Distributor a pro rata portion of
the advance payment of the service fee made on those shares.

For the fiscal year ended December 31, 2003 payments under the Class A
plan totaled $599,232 , of which $4,119 was retained by the Distributor under
the arrangement described above, regarding grandfathered retirement accounts,
and included $23,312 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, Class M and Class N Service and Distribution Plan
Fees. Under each plan, service fees and distribution fees are computed on the
average of the net asset value of shares in the respective class, determined as
of the close of each regular business day during the period. The Class B, Class
C and Class N plans provide for the Distributor to be compensated at a flat rate
for its services, whether its costs in distributing Class B, Class C and Class N
shares and servicing accounts are more or less than the amounts paid by the Fund
under the plan for the period for which the fee is paid. The Class M plan allows
the Distributor to be reimbursed for its services and costs in distributing
Class M shares and servicing accounts. The types of services that recipients
provide are similar to the services provided under the Class A service plan,
described above.

The Class B, Class C and Class N plans permit the Distributor to retain
both the asset-based sales charges and the service fees or to pay recipients the
service fee on a quarterly basis, without payment in advance. However, the
Distributor currently intends to pay the service fee to recipients in advance
for the first year after the shares are purchased. After the first year shares
are outstanding, the Distributor makes service fee payments quarterly on those
shares. The advance payment is based on the net asset value of shares sold.
Shares purchased by exchange do not qualify for the advance service fee payment.
If shares are redeemed during the first year after their purchase, the recipient
of the service fees on those shares will be obligated to repay the Distributor a
pro rata portion of the advance payment of the service fee made on those shares.

The Distributor normally 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. Although the Class M Plan permits the
Fund to pay the Distributor a 0.50% asset-based sales charge annually, the Board
has set that payment at zero, effective February 11, 2004. If a dealer has a
special agreement with the Distributor, the Distributor will pay the Class B,
Class C and/or Class N service fee and the asset-based sales charge to the
dealer quarterly in lieu of paying the sales concessions and service fee in
advance at the time of purchase.

The asset-based sales charges on Class B, Class C and Class N shares allow
investors to buy shares without a front-end sales charge while allowing the
Distributor to compensate dealers that sell those shares. The Fund pays the
asset-based sales charges to the Distributor for its services rendered in
distributing Class B, Class C and Class N shares. The payments are made to the
Distributor in recognition that the Distributor:
o pays sales concessions to authorized brokers and dealers at the time of
sale and pays service fees as described above,
o may finance payment of sales concessions and/or the advance of the
service fee payment to recipients under the plans, or may provide such
financing from its own resources or from the resources of an affiliate,
o employs personnel to support distribution of shares, and
o bears the costs of sales literature, advertising and prospectuses
(other than those furnished to current shareholders) and state "blue
sky" registration fees and certain other distribution expenses.
o may not be able to adequately compensate dealers that sell Class B,
Class C and Class N shares without receiving payment under the plans
and therefore may not be able to offer such Classes for sale absent the
plans,
o receives payments under the plans consistent with the service fees and
asset-based sales charges paid by other non-proprietary funds that
charge 12b-1 fees,
o may use the payments under the plan to include the Fund in various
third-party distribution programs that may increase sales of Fund
shares,
o may experience increased difficulty selling the Fund's shares if
payments under the plan are discontinued because most competitor funds
have plans that pay dealers for rendering distribution services as much
or more than the amounts currently being paid by the Fund, and
o may not be able to continue providing, at the same or at a lesser cost,
the same quality distribution sales efforts and services, or to obtain
such services from brokers and dealers, if the plan payments were to be
discontinued.

When Class B, Class C, or Class N shares are sold without the designation
of a broker-dealer, the Distributor is automatically designated as the
broker-dealer of record. In those cases, the Distributor will not retain any
portion of the service fee or asset-based sales charge.

The Distributor's actual expenses in selling Class B, Class C, Class M and
Class N shares may be more than the payments it receives from the contingent
deferred sales charges collected on redeemed shares and from the Fund under the
plans. If any plan is terminated by the Fund, the Board of Trustees may allow
the Fund to continue payments of the asset-based sales charge to the Distributor
for distributing shares before the plan was terminated.

--------------------------------------------------------------------------------
Distribution Fees Paid to the Distributor for the Year Ended 12/31/03
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class: Total Amount Distributor's Distributor's
Unreimbursed
Aggregate Expenses as %
Payments Retained by Unreimbursed of Net Assets
Under Plan1 Distributor Expenses Under Plan of Class
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class B Plan $1,398,157 $903,688 $3,330,469 2.50%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class C Plan $697,297 $80,340 $2,068,728 2.52%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class M Plan $766,119 $240,624 None None
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class N Plan $3,698 $2,618 $21,760 1.49%
--------------------------------------------------------------------------------
1. Includes amounts paid to an affiliate of the Distributor's parent company:
$8,940 (Class B), $11,861 (Class C), $8,371 (Class M) and $212 (Class N).

All payments under the plans are subject to the limitations imposed by the
Conduct Rules of the National Association of Securities Dealers, Inc. on
payments of asset-based sales charges and service fees.

Performance of the Fund

Explanation of Performance Terminology. The Fund uses a variety of terms to
illustrate its investment performance. Those terms include "cumulative total
return," "average annual total return," "average annual total return at net
asset value" and "total return at net asset value." An explanation of how total
returns are calculated is set forth below. The charts below show the Fund's
performance as of the Fund's most recent fiscal year end. You can obtain current
performance information by calling the Fund's Transfer Agent at 1.800.225.5677
or by visiting the OppenheimerFunds Internet website at
www.oppenheimerfunds.com.

The Fund's illustrations of its performance data in advertisements must
comply with rules of the SEC. Those rules describe the types of performance data
that may be used and how it is to be calculated. In general, any advertisement
by the Fund of its performance data must include the average annual total
returns for the advertised class of shares of the Fund.

Use of standardized performance calculations enables an investor to
compare the Fund's performance to the performance of other funds for the same
periods. However, a number of factors should be considered before using the
Fund's performance information as a basis for comparison with other investments:
o Yields and 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, its yields 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 Yields and total returns for any given past period represent historical
performance information and are not, and should not be considered, a
prediction of future yields or 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 yields and total
returns of each class of shares of the Fund are affected by market conditions,
the quality of the Fund's investments, the maturity of debt investments, the
types of investments the Fund holds, and its operating expenses that are
allocated to the particular class.

|X| Yields. The Fund uses a variety of different yields to illustrate its
current returns. Each class of shares calculates its yield separately because of
the different expenses that affect each class.

o Standardized Yield. The "standardized yield" (sometimes referred
to just as "yield") is shown for a class of shares for a stated 30-day period.
It is not based on actual distributions paid by the Fund to shareholders in the
30-day period, but is a hypothetical yield based upon the net investment income
from the Fund's portfolio investments for that period. It may therefore differ
from the "dividend yield" for the same class of shares, described below.

Standardized yield is calculated using the following formula set forth in
rules adopted by the SEC, designed to assure uniformity in the way that all
funds calculate their yields:

Standardized Yield = 2[( a - b +1)6 -1 ]
------
cd

The symbols above represent the following factors:
a = dividends and interest earned during the 30-day period.
b = expenses accrued for the period (net of any expense assumptions).
c = the average daily number of shares of that class outstanding
during the 30-day period that were entitled to receive dividends.
d = the maximum offering price per share of that class on the last day
of the period, adjusted for undistributed net investment income.

The standardized yield for a particular 30-day period may differ from the
yield for other periods. The SEC formula assumes that the standardized yield for
a 30-day period occurs at a constant rate for a six-month period and is
annualized at the end of the six-month period. Additionally, because each class
of shares is subject to different expenses, it is likely that the standardized
yields of the Fund's classes of shares will differ for any 30-day period.

o Dividend Yield. The Fund may quote a "dividend yield" for each
class of its shares. Dividend yield is based on the dividends paid on a class of
shares during the actual dividend period. To calculate dividend yield, the
dividends of a class declared during a stated period are added together, and the
sum is multiplied by 12 (to annualize the yield) and divided by the maximum
offering price on the last day of the dividend period. The formula is shown
below:

Dividend Yield = dividends paid x 12/maximum offering price (payment date)

The maximum offering price for Class A shares includes the current maximum
initial sales charge. The maximum offering price for Class B, Class C and Class
N shares is the net asset value per share, without considering the effect of
contingent deferred sales charges. The Class A dividend yield may also be quoted
without deducting the maximum initial sales charge.

-------------------------------------------------------------------------------
The Fund's Yields for the 30-Day Periods Ended 12/31/03
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class of Standardized Yield Dividend Yield
Shares
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Without After Without After
Sales Charge Sales Charge Sales Charge Sales Charge
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class A 3.53% 3.33% 3.63% 3.42%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class B 2.74% N/A 2.84% N/A
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class C 2.77% N/A 2.88% N/A
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class M 3.06% 2.96% 3.23% 3.14%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class N 3.18% N/A 3.24% N/A
-------------------------------------------------------------------------------

|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%, and for Class M, the current maximum initial sales charge of
3.25% (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) is based on the Fund's Class A returns, adjusted to reflect
the higher Class N 12b-1 fees.

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

ERV l/n - 1 Average Annual Total
Return
P

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

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

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

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

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

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

o Total Returns at Net Asset Value. From time to time the Fund may
also quote a cumulative or an average annual total return "at net asset value"
(without deducting sales charges) for each class of shares 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 12/31/03
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class of Cumulative Total Average Annual Total Returns
Returns (10 years
Shares or life of class)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
1-Year 5-Years 10-Years
(or life of
class)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
After Without After Without After Without After Without
Sales Sales Sales Sales Sales Sales Sales Sales
Charge Charge Charge Charge Charge Charge Charge Charge (MOP)* (NAV)
(MOP) (NAV) (MOP) (NAV) (MOP) (NAV)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class A 93.36%1 105.16%1 15.88% 22.95% 4.22% 5.46% 7.90%1 8.65%1
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class B 96.13%2 96.13%2 17.07% 22.07% 4.33% 4.63% 8.08%2 8.08%2
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class C 64.75%3 64.75%3 21.14% 22.14% 4.66%3 4.66% 6.61%3 6.61%3
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class M 105.84% 112.76% 18.61% 22.59% 4.27% 4.96% 7.49% 7.84%
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class N 10.54%5 10.54%5 21.45% 22.45% 3.60%5 3.60%5 N/A N/A
---------------------------------------------------------------------------------
1. Inception of Class A: 5/1/95. 2. Inception of Class B: 5/1/95. 3. Inception
of Class C: 3/11/96. 4. Inception of Class M: 6/3/86. 5. Inception of Class N:
3/1/01. * The maximum offering price

--------------------------------------------------------------------------------
Average Annual Total Returns for Class M Shares (After Sales Charge)
For the Periods Ended December 31, 2003
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1-Year 5-Year 10-Year
(or life of
class)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
After Taxes on Distributions 16.92% 1.73%1 4.68%1
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
After Taxes on Distributions 12.00% 2.14%1 4.75%1
and Redemption of Fund Shares
--------------------------------------------------------------------------------
1. Inception of Class A: 5/1/95

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 convertibles.

Morningstar proprietary star ratings reflect historical risk-adjusted
total investment return. For each fund with at least a three-year history,
Morningstar calculates a Morningstar Rating(TM) based on a Morningstar
Risk-Adjusted Return measure that accounts for variation in a fund's monthly
performance (including the effects of sales charges, loads, and redemption
fees), placing more emphasis on downward variations and rewarding consistent
performance. The top 10% of funds in each category receive 5 stars, the next
22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2
stars, and the bottom 10% receive 1 star. (Each share class is counted as a
fraction of one fund within this scale and rated separately, which may cause
slight variations in the distribution percentages.) The Overall Morningstar
Rating for a fund is derived from a weighted average of the performance figures
associated with its three-, five-and ten-year (if applicable) Morningstar Rating
metrics.

|X| Performance Rankings and Comparisons by Other Entities and
Publications. From time to time the Fund may include in its advertisements and
sales literature performance information about the Fund cited in newspapers and
other periodicals such as The New York Times, The Wall Street Journal, Barron's,
or similar publications. That information may include performance quotations
from other sources, including Lipper and Morningstar. The performance of the
Fund's classes of shares may be compared in publications to the performance of
various market indices or other investments, and averages, performance rankings
or other benchmarks prepared by recognized mutual fund statistical services.

Investors may also wish to compare the returns on the Fund's share classes
to the return on fixed-income investments available from banks and thrift
institutions. Those include certificates of deposit, ordinary interest-paying
checking and savings accounts, and other forms of fixed or variable time
deposits, and various other instruments such as Treasury bills. However, the
Fund's returns and share price are not guaranteed or insured by the FDIC or any
other agency and will fluctuate daily, while bank depository obligations may be
insured by the FDIC and may provide fixed rates of return. Repayment of
principal and payment of interest on Treasury securities is backed by the full
faith and credit of the U.S. government.

From time to time, the Fund may publish rankings or ratings of the Manager
or Transfer Agent, and of the investor services provided by them to shareholders
of the Oppenheimer funds, other than performance rankings of the Oppenheimer
funds themselves. Those ratings or rankings of shareholder and investor services
by third parties may include comparisons of their services to those provided by
other mutual fund families selected by the rating or ranking services. They may
be based upon the opinions of the rating or ranking service itself, using its
research or judgment, or based upon surveys of investors, brokers, shareholders
or others.

From time to time the Fund may include in its advertisements and sales
literature the total return performance of a hypothetical investment account
that includes shares of the Fund and other Oppenheimer funds. The combined
account may be part of an illustration of an asset allocation model or similar
presentation. The account performance may combine total return performance of
the Fund and the total return performance of other Oppenheimer funds included in
the account. Additionally, from time to time, the Fund's advertisements and
sales literature may include, for illustrative or comparative purposes,
statistical data or other information about general or specific market and
economic conditions. That may include, for example, o information about the
performance of certain securities or commodities markets or segments of those
markets,
o information about the performance of the economies of particular
countries or regions,
o the earnings of companies included in segments of particular
industries, sectors, securities markets, countries or regions,
o the availability of different types of securities or offerings of
securities,
o information relating to the gross national or gross domestic product of
the United States or other countries or regions,
o comparisons of various market sectors or indices to demonstrate
performance, risk, or other characteristics of the Fund.

ABOUT YOUR ACCOUNT

How to Buy Shares

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

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

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

|X| Right of Accumulation. To qualify for the lower sales charge rates
that apply to larger purchases of Class A shares, you and your spouse can add
together:
o Class A and Class B shares you purchase for your individual accounts
(including IRAs and 403(b) plans), or for your joint accounts, or
for trust or custodial accounts on behalf of your children who are
minors,
o Current purchases of Class A and Class B shares of the Fund and
other Oppenheimer funds to reduce the sales charge rate that applies
to current purchases of Class A shares, and
o Class A and Class B shares of Oppenheimer funds you previously
purchased subject to an initial or contingent deferred sales charge
to reduce the sales charge rate for current purchases of Class A
shares, provided that you still hold your investment in one of the
Oppenheimer funds.

A fiduciary can count all shares purchased for a trust, estate or other
fiduciary account (including one or more employee benefit plans of the same
employer) that has multiple accounts. The Distributor will add the value, at
current offering price, of the shares you previously purchased and currently own
to the value of current purchases to determine the sales charge rate that
applies. The reduced sales charge will apply only to current purchases. You must
request it when you buy shares.

The Oppenheimer Funds. The Oppenheimer funds are those mutual funds for which
the Distributor acts as the distributor and currently include the following:

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

And the following money market funds:
Centennial Government Trust
Oppenheimer Cash Reserves Centennial Money Market Trust
Oppenheimer Money Market Fund, Inc. Centennial New York Tax Exempt Trust
Centennial America Fund, L. P. Centennial Tax Exempt Trust
Centennial California Tax Exempt Trust

There is an initial sales charge on the purchase of Class A shares of each
of the Oppenheimer funds described above except the money market funds. Under
certain circumstances described in this Statement of Additional Information,
redemption proceeds of certain money market fund shares may be subject to a
contingent deferred sales charge.

Letters of Intent. Under a Letter of Intent ("Letter"), if you purchase Class A
shares or Class A and Class B shares of the Fund and other Oppenheimer funds
during a 13-month period, you can reduce the sales charge rate that applies to
your purchases of Class A shares. The total amount of your intended purchases of
both Class A and Class B shares will determine the reduced sales charge rate for
the Class A shares purchased during that period. You can include purchases made
up to 90 days before the date of the Letter. Letters do not consider Class C or
Class N shares you purchase or may have purchased.

A Letter is an investor's statement in writing to the Distributor of the
intention to purchase Class A shares or Class A and Class B shares of the Fund
(and other Oppenheimer funds) during a 13-month period (the "Letter period"). At
the investor's request, this may include purchases made up to 90 days prior to
the date of the Letter. The Letter states the investor's intention to make the
aggregate amount of purchases of shares which, when added to the investor's
holdings of shares of those funds, will equal or exceed the amount specified in
the Letter. Purchases made by reinvestment of dividends or distributions of
capital gains and purchases made at net asset value without sales charge do not
count toward satisfying the amount of the Letter.

A Letter enables an investor to count the Class A and Class B shares
purchased under the Letter to obtain the reduced sales charge rate on purchases
of Class A shares of the Fund (and other Oppenheimer funds) that applies under
the Right of Accumulation to current purchases of Class A shares. Each purchase
of Class A shares under the Letter will be made at the offering price (including
the sales charge) that applies to a single lump-sum purchase of shares in the
amount intended to be purchased under the Letter.

In submitting a Letter, the investor makes no commitment to purchase
shares. However, if the investor's purchases of shares within the Letter period,
when added to the value (at offering price) of the investor's holdings of shares
on the last day of that period, do not equal or exceed the intended purchase
amount, the investor agrees to pay the additional amount of sales charge
applicable to such purchases. That amount is described in "Terms of Escrow,"
below (those terms may be amended by the Distributor from time to time). The
investor agrees that shares equal in value to 5% of the intended purchase amount
will be held in escrow by the Transfer Agent subject to the Terms of Escrow.
Also, the investor agrees to be bound by the terms of the Prospectus, this
Statement of Additional Information and the application used for a Letter. If
those terms are amended, as they may be from time to time by the Fund, the
investor agrees to be bound by the amended terms and that those amendments will
apply automatically to existing Letters.

If the total eligible purchases made during the Letter period do not equal
or exceed the intended purchase amount, the concessions previously paid to the
dealer of record for the account and the amount of sales charge retained by the
Distributor will be adjusted to the rates applicable to actual total purchases.
If total eligible purchases during the Letter period exceed the intended
purchase amount and exceed the amount needed to qualify for the next sales
charge rate reduction set forth in the Prospectus, the sales charges paid will
be adjusted to the lower rate. That adjustment will be made only if and when the
dealer returns to the Distributor the excess of the amount of concessions
allowed or paid to the dealer over the amount of concessions that apply to the
actual amount of purchases. The excess concessions returned to the Distributor
will be used to purchase additional shares for the investor's account at the net
asset value per share in effect on the date of such purchase, promptly after the
Distributor's receipt thereof.

The Transfer Agent will not hold shares in escrow for purchases of shares
of the Fund and other Oppenheimer funds by OppenheimerFunds prototype 401(k)
plans under a Letter. If the intended purchase amount under a Letter entered
into by an OppenheimerFunds prototype 401(k) plan is not purchased by the plan
by the end of the Letter period, there will be no adjustment of concessions paid
to the broker-dealer or financial institution of record for accounts held in the
name of that plan.

In determining the total amount of purchases made under a Letter, shares
redeemed by the investor prior to the termination of the Letter period will be
deducted. It is the responsibility of the dealer of record and/or the investor
to advise the Distributor about the Letter when placing any purchase orders for
the investor during the Letter period. All of such purchases must be made
through the Distributor.

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

1. Out of the initial purchase (or subsequent purchases if necessary) made
pursuant to a Letter, shares of the Fund equal in value up to 5% of the intended
purchase amount specified in the Letter shall be held in escrow by the Transfer
Agent. For example, if the intended purchase amount is $50,000, the escrow shall
be shares valued in the amount of $2,500 (computed at the offering price
adjusted for a $50,000 purchase). Any dividends and capital gains distributions
on the escrowed shares will be credited to the investor's account.

2. If the total minimum investment specified under the Letter is completed
within the 13-month Letter period, the escrowed shares will be promptly released
to the investor.

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

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

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

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

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

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

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

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

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

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

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

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

The Distributor will not accept any order in the amount of $250,000 or
more for Class B shares or $1 million or more for Class C shares on behalf of a
single investor (not including dealer "street name" or omnibus accounts). That
is because generally it will be more advantageous for that investor to purchase
Class A shares of the Fund.

Class A Shares Subject to a Contingent Deferred Sales Charge. For purchases of
Class A shares at net asset value whether or not subject to a contingent
deferred sales charge as described in the Prospectus, no sales concessions will
be paid to the broker-dealer of record, as described in the Prospectus, on sales
of Class A shares purchased with the redemption proceeds of shares of another
mutual fund offered as an investment option in a retirement plan in which
Oppenheimer funds are also offered as investment options under a special
arrangement with the Distributor, if the purchase occurs more than 30 days after
the Oppenheimer funds are added as an investment option under that plan.
Additionally, that concession will not be paid on purchases of Class A shares by
a retirement plan made with the redemption proceeds of Class N shares of one or
more Oppenheimer funds held by the plan for more than 18 months.

|X| Class B Conversion. Under current interpretations of applicable
federal income tax law by the Internal Revenue Service, the conversion of Class
B shares to Class A shares 72 months after purchase is not treated as a taxable
event for the shareholder. If those laws or the IRS interpretation of those laws
should change, the automatic conversion feature may be suspended. In that event,
no further conversions of Class B shares would occur while that suspension
remained in effect. Although Class B shares could then be exchanged for Class A
shares on the basis of relative net asset value of the two classes, without the
imposition of a sales charge or fee, such exchange could constitute a taxable
event for the shareholder, and absent such exchange, Class B shares might
continue to be subject to the asset-based sales charge for longer than six
years.

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

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

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

|X| Allocation of Expenses. The Fund pays expenses related to its daily
operations, such as custodian fees, Trustees' fees, transfer agency fees, legal
fees and auditing costs. Those expenses are paid out of the Fund's assets and
are not paid directly by shareholders. However, those expenses reduce the net
asset values of shares, and therefore are indirectly borne by shareholders
through their investment.

The methodology for calculating the net asset value, dividends and
distributions of the Fund's share classes recognizes two types of expenses.
General expenses that do not pertain specifically to any one class are allocated
pro rata to the shares of all classes. The allocation is based on the percentage
of the Fund's total assets that is represented by the assets of each class, and
then equally to each outstanding share within a given class. Such general
expenses include management fees, legal, bookkeeping and audit fees, printing
and mailing costs of shareholder reports, Prospectuses, Statements of Additional
Information and other materials for current shareholders, fees to unaffiliated
Trustees, custodian expenses, share issuance costs, organization and start-up
costs, interest, taxes and brokerage commissions, and non-recurring expenses,
such as litigation costs.

Other expenses that are directly attributable to a particular class are
allocated equally to each outstanding share within that class. Examples of such
expenses include distribution and service plan (12b-1) fees, transfer and
shareholder servicing agent fees and expenses, and shareholder meeting expenses
(to the extent that such expenses pertain only to a specific class).

Account Fees. As stated in the Prospectus, a $12 annual fee is assessed on
any account valued at less than $500. This fee will not be assessed on the
following accounts:
o Accounts that have balances below $500 due to the automatic conversion
of shares from Class B to Class A shares;
o Accounts with an active Asset Builder Plan, payroll deduction plan or a
military allotment plan;
o OppenheimerFunds-sponsored group retirement accounts that are making
continuing purchases;
o Certain accounts held by broker-dealers through the National Securities
Clearing Corporation; and
o Accounts that fall below the $500 threshold due solely to market
fluctuations within the 12-month period preceding the date the fee is
deducted.

The fee is automatically deducted from qualifying accounts annually on or
about the second to last business day of September. This annual fee is waived
for any shareholders who elect to access their account documents through
electronic document delivery rather than in paper copy and who elect to utilize
the Internet or PhoneLink as their primary source for their general servicing
needs. To sign up to access account documents electronically via eDocs Direct,
please visit the Service Center on our website at WWW.OPPENHEIMERFUNDS.COM or
call 1.888.470.0862 for instructions.

Determination of Net Asset Values Per Share. The net asset values per share of
each class of shares of the Fund are determined as of the close of business of
the Exchange on each day that the Exchange is open. The calculation is done by
dividing the value of the Fund's net assets attributable to a class by the
number of shares of that class that are outstanding. The Exchange normally
closes at 4:00 P.M., Eastern time, but may close earlier on some other days (for
example, in case of weather emergencies or on days falling before a U.S.
holiday). All references to time in this Statement of Additional Information
mean "Eastern time." The Exchange's most recent annual announcement (which is
subject to change) states that it will close on New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day. It may also close on other days.

Dealers other than Exchange members may conduct trading in certain
securities on days on which the Exchange is closed (including weekends and
holidays) or after 4:00 P.M. on a regular business day. Because the Fund's net
asset values will not be calculated on those days, the Fund's net asset values
per share may be significantly affected on such days when shareholders may not
purchase or redeem shares. Additionally, trading on European and Asian stock
exchanges and over-the-counter markets normally is completed before the close of
the Exchange.

Changes in the values of securities traded on foreign exchanges or markets
as a result of events that occur after the prices of those securities are
determined, but before the close of the Exchange, will not be reflected in the
Fund's calculation of its net asset values that day unless the Manager
determines that the event is likely to effect a material change in the value of
the security. The Manager, or an internal valuation committee established by the
Manager, as applicable, may establish a valuation, under procedures established
by the Board and subject to the approval, ratification and confirmation by the
Board at its next ensuing meeting.

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

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

The closing prices in the London foreign exchange market on a particular
business day that are provided to the Manager by a bank, dealer or pricing
service that the Manager has determined to be reliable are used to value foreign
currency, including forward contracts, and to convert to U.S. dollars securities
that are denominated in foreign currency.

Puts, calls, and futures are valued at the last sale price on the
principal exchange on which they are traded or on Nasdaq, as applicable, as
determined by a pricing service approved by the Board of Trustees or by the
Manager. If there were no sales that day, they shall be valued at the last sale
price on the preceding trading day if it is within the spread of the closing
"bid" and "asked" prices on the principal exchange or on Nasdaq on the valuation
date. If not, the value shall be the closing bid price on the principal exchange
or on Nasdaq on the valuation date. If the put, call or future is not traded on
an exchange or on Nasdaq, it shall be valued by the mean between "bid" and
"asked" prices obtained by the Manager from two active market makers. In certain
cases that may be at the "bid" price if no "asked" price is available.

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

How to Sell Shares

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

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 Trustees of the Fund may determine that it would be detrimental to the
best interests of the remaining shareholders of the Fund to make payment of a
redemption order wholly or partly in cash. In that case, the Fund may pay the
redemption proceeds in whole or in part by a distribution "in kind" of liquid
securities from the portfolio of the Fund, in lieu of cash.

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

Involuntary Redemptions. The Fund's Board of Trustees has the right to cause the
involuntary redemption of the shares held in any account if the aggregate net
asset value of those shares is less than $200 or such lesser amount as the Board
may fix. The Board will not cause the involuntary redemption of shares in an
account if the aggregate net asset value of such shares has fallen below the
stated minimum solely as a result of market fluctuations. If the Board exercises
this right, it may also fix the requirements for any notice to be given to the
shareholders in question (not less than 30 days). The Board may alternatively
set requirements for the shareholder to increase the investment, or set other
terms and conditions so that the shares would not be involuntarily redeemed.

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

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

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

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

Distributions from pension and profit sharing plans are subject to special
requirements under the Internal Revenue Code and certain documents (available
from the Transfer Agent) must be completed and submitted to the Transfer Agent
before the distribution may be made. Distributions from retirement plans are
subject to withholding requirements under the Internal Revenue Code, and IRS
Form W-4P (available from the Transfer Agent) must be submitted to the Transfer
Agent with the distribution request, or the distribution may be delayed. Unless
the shareholder has provided the Transfer Agent with a certified tax
identification number, the Internal Revenue Code requires that tax be withheld
from any distribution even if the shareholder elects not to have tax withheld.
The Fund, the Manager, the Distributor, and the Transfer Agent assume no
responsibility to determine whether a distribution satisfies the conditions of
applicable tax laws and will not be responsible for any tax penalties assessed
in connection with a distribution.

Special Arrangements for Repurchase of Shares from Dealers and Brokers. The
Distributor is the Fund's agent to repurchase its shares from authorized dealers
or brokers on behalf of their customers. Shareholders should contact their
broker or dealer to arrange this type of redemption. The repurchase price per
share will be the net asset value next computed after the Distributor receives
an order placed by the dealer or broker. However, if the Distributor receives a
repurchase order from a dealer or broker after the close of the Exchange on a
regular business day, it will be processed at that day's net asset value if the
order was received by the dealer or broker from its customers prior to the time
the Exchange closes. Normally, the Exchange closes at 4:00 P.M., but may do so
earlier on some days. Additionally, the order must have been transmitted to and
received by the Distributor prior to its close of business that day (normally
5:00 P.M.).

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

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

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

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

By requesting an Automatic Withdrawal or Exchange Plan, the shareholder
agrees to the terms and conditions that apply to such plans, as stated below.
These provisions may be amended from time to time by the Fund and/or the
Distributor. When adopted, any amendments will automatically apply to existing
Plans.

|X| Automatic Exchange Plans. Shareholders can authorize the Transfer
Agent to exchange a pre-determined amount of shares of the Fund for shares (of
the same class) of other Oppenheimer funds automatically on a monthly,
quarterly, semi-annual or annual basis under an Automatic Exchange Plan. The
minimum amount that may be exchanged to each other fund account is $50.
Instructions should be provided on the OppenheimerFunds Application or
signature-guaranteed instructions. Exchanges made under these plans are subject
to the restrictions that apply to exchanges as set forth in "How to Exchange
Shares" in the Prospectus and below in this Statement of Additional Information.

Automatic Withdrawal Plans. Fund shares will be redeemed as necessary to meet
withdrawal payments. Shares acquired without a sales charge will be redeemed
first. Shares acquired with reinvested dividends and capital gains distributions
will be redeemed next, followed by shares acquired with a sales charge, to the
extent necessary to make withdrawal payments. Depending upon the amount
withdrawn, the investor's principal may be depleted. Payments made under these
plans should not be considered as a yield or income on your investment.

The Transfer Agent will administer the investor's Automatic Withdrawal
Plan as agent for the shareholder(s) (the "Planholder") who executed the plan
authorization and application submitted to the Transfer Agent. Neither the Fund
nor the Transfer Agent shall incur any liability to the Planholder for any
action taken or not taken by the Transfer Agent in good faith to administer the
plan. Share certificates will not be issued for shares of the Fund purchased for
and held under the plan, but the Transfer Agent will credit all such shares to
the account of the Planholder on the records of the Fund. Any share certificates
held by a Planholder may be surrendered unendorsed to the Transfer Agent with
the plan application so that the shares represented by the certificate may be
held under the plan.

For accounts subject to Automatic Withdrawal Plans, distributions of
capital gains must be reinvested in shares of the Fund, which will be done at
net asset value without a sales charge. Dividends on shares held in the account
may be paid in cash or reinvested.

Shares will be redeemed to make withdrawal payments at the net asset value
per share determined on the redemption date. Checks or AccountLink payments
representing the proceeds of Plan withdrawals will normally be transmitted three
business days prior to the date selected for receipt of the payment, according
to the choice specified in writing by the Planholder. Receipt of payment on the
date selected cannot be guaranteed.

The amount and the interval of disbursement payments and the address to
which checks are to be mailed or AccountLink payments are to be sent may be
changed at any time by the Planholder by writing to the Transfer Agent. The
Planholder should allow at least two weeks' time after mailing such notification
for the requested change to be put in effect. The Planholder may, at any time,
instruct the Transfer Agent by written notice to redeem all, or any part of, the
shares held under the plan. That notice must be in proper form in accordance
with the requirements of the then-current Prospectus of the Fund. In that case,
the Transfer Agent will redeem the number of shares requested at the net asset
value per share in effect and will mail a check for the proceeds to the
Planholder.

The Planholder may terminate a plan at any time by writing to the Transfer
Agent. The Fund may also give directions to the Transfer Agent to terminate a
plan. The Transfer Agent will also terminate a plan upon its receipt of evidence
satisfactory to it that the Planholder has died or is legally incapacitated.
Upon termination of a plan by the Transfer Agent or the Fund, shares that have
not been redeemed will be held in uncertificated form in the name of the
Planholder. The account will continue as a dividend-reinvestment, uncertificated
account unless and until proper instructions are received from the Planholder,
his or her executor or guardian, or another authorized person.

To use Class A shares held under the plan as collateral for a debt, the
Planholder may request issuance of a portion of the shares in certificated form.
Upon written request from the Planholder, the Transfer Agent will determine the
number of shares for which a certificate may be issued without causing the
withdrawal checks to stop. However, should such uncertificated shares become
exhausted, Plan withdrawals will terminate.

If the Transfer Agent ceases to act as transfer agent for the Fund, the
Planholder will be deemed to have appointed any successor transfer agent to act
as agent in administering the plan.

How to Exchange Shares

As stated in the Prospectus, shares of a particular class of Oppenheimer funds
having more than one class of shares may be exchanged only for shares of the
same class of other Oppenheimer funds. Shares of Oppenheimer funds that have a
single class without a class designation are deemed "Class A" shares for this
purpose. You can obtain a current list showing which funds offer which classes
of shares by calling the Distributor.

o All of the Oppenheimer funds currently offer Class A, B, C, N and Y shares
with the following exceptions:

The following funds only offer Class A shares:
Centennial America Fund, L.P. Centennial New York Tax Exempt
Trust
Centennial California Tax Exempt Trust Centennial Tax Exempt Trust
Centennial Government Trust Oppenheimer Money Market Fund,
Inc.
Centennial Money Market Trust

The following funds do not offer Class N shares:
Oppenheimer AMT-Free Municipals Oppenheimer Pennsylvania Municipal
Fund
Oppenheimer AMT-Free New York Oppenheimer Rochester National
Municipals Municipals
Oppenheimer California Municipal Fund Limited Term New York Municipal Fund
Oppenheimer Limited Term Municipal Oppenheimer Senior Floating Rate Fund
Fund
Oppenheimer New Jersey Municipal Fund Rochester Fund Municipals

The following funds do not offer Class Y shares:
Oppenheimer AMT-Free Municipals Oppenheimer International Small Company
Fund
Oppenheimer AMT-Free New York Municipals Oppenheimer Limited Term Municipal Fund
Oppenheimer Balanced Fund Oppenheimer New Jersey Municipal Fund
Oppenheimer California Municipal Fund Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Capital Income Fund Oppenheimer Principal Protected Main
Street Fund
Oppenheimer Cash Reserves Oppenheimer Principal Protected Main
Street Fund II
Oppenheimer Champion Income Fund Oppenheimer Quest Capital Value Fund,
Inc.
Oppenheimer Convertible Securities Fund Oppenheimer Quest International Value
Fund, Inc.
Oppenheimer Disciplined Allocation Fund Oppenheimer Rochester National
Municipals Oppenheimer Developing Markets Fund Oppenheimer Senior Floating
Rate Fund Oppenheimer Gold &amp; Special Minerals Fund Oppenheimer Small Cap
Value Fund Oppenheimer International Bond Fund Oppenheimer Total Return Bond
Fund Oppenheimer International Growth Fund Limited Term New York Municipal
Fund

o Class Y shares of Oppenheimer Real Asset Fund may not be exchanged for
shares of any other fund.
o Class B, Class C and Class N shares of Oppenheimer Cash Reserves are
generally available only by exchange from the same class of shares of
other Oppenheimer funds or through OppenheimerFunds-sponsored 401(k)
plans.
o Class M shares of Oppenheimer Convertible Securities Fund may be exchanged
only for Class A shares of other Oppenheimer funds. They may not be
acquired by exchange of shares of any class of any other Oppenheimer funds
except Class A shares of Oppenheimer Money Market Fund or Oppenheimer Cash
Reserves acquired by exchange of Class M shares.
o Class X shares of Limited Term New York Municipal Fund may be exchanged
only for Class B shares of other Oppenheimer funds and no exchanges may be
made to Class X shares.
o Shares of Oppenheimer Capital Preservation Fund may not be exchanged for
shares of Oppenheimer Money Market Fund, Inc., Oppenheimer Cash Reserves
or Oppenheimer Limited-Term Government Fund. Only participants in certain
retirement plans may purchase shares of Oppenheimer Capital Preservation
Fund, and only those participants may exchange shares of other Oppenheimer
funds for shares of Oppenheimer Capital Preservation Fund.
o Class A shares of Oppenheimer funds may be exchanged at net asset value
for shares of any money market fund offered by the Distributor. Shares of
any money market fund purchased without a sales charge may be exchanged
for shares of Oppenheimer funds offered with a sales charge upon payment
of the sales charge. They may also be used to purchase shares of
Oppenheimer funds subject to an early withdrawal charge or contingent
deferred sales charge.
o Shares of Oppenheimer Money Market Fund, Inc. purchased with the
redemption proceeds of shares of other mutual funds (other than funds
managed by the Manager or its subsidiaries) redeemed within the 30 days
prior to that purchase may subsequently be exchanged for shares of
other Oppenheimer funds without being subject to an initial sales
charge or contingent deferred sales charge. To qualify for that
privilege, the investor or the investor's dealer must notify the
Distributor of eligibility for this privilege at the time the shares of
Oppenheimer Money Market Fund, Inc. are purchased. If requested, they
must supply proof of entitlement to this privilege.
o Shares of the Fund acquired by reinvestment of dividends or distributions
from any of the other Oppenheimer funds or from any unit investment trust
for which reinvestment arrangements have been made with the Distributor
may be exchanged at net asset value for shares of any of the Oppenheimer
funds.
o Shares of Oppenheimer Principal Protected Main Street Fund may be
exchanged at net asset value for shares of any of the Oppenheimer funds.
However, shareholders are not permitted to exchange shares of other
Oppenheimer funds for shares of Oppenheimer Principal Protected Main
Street Fund until after the expiration of the warranty period (8/5/2010).
o Shares of Oppenheimer Principal Protected Main Street Fund II may be
exchanged at net asset value for shares of any of the Oppenheimer funds.
However, shareholders are not permitted to exchange shares of other
Oppenheimer funds for shares of Oppenheimer Principal Protected Main
Street Fund II until after the expiration of the warranty period
(3/3/2011).

The Fund may amend, suspend or terminate the exchange privilege at any
time. Although the Fund may impose these changes at any time, it will provide
you with notice of those changes whenever it is required to do so by applicable
law. It may be required to provide 60 days' notice prior to materially amending
or terminating the exchange privilege. That 60 day notice is not required in
extraordinary circumstances.

|X| How Exchanges Affect Contingent Deferred Sales Charges. No contingent
deferred sales charge is imposed on exchanges of shares of any class purchased
subject to a contingent deferred sales charge, with the following exceptions:

o When Class A shares of any Oppenheimer fund (other than Rochester
National Municipals and Rochester Fund Municipals) acquired by exchange of Class
A shares of any Oppenheimer fund purchased subject to a Class A contingent
deferred sales charge are redeemed within 18 months measured from the beginning
of the calendar month of the initial purchase of the exchanged Class A shares,
the Class A contingent deferred sales charge is imposed on the redeemed shares.

o When Class A shares of Rochester National Municipals and Rochester
Fund Municipals acquired by exchange of Class A shares of any Oppenheimer fund
purchased subject to a Class A contingent deferred sales charge are redeemed
within 24 months of the beginning of the calendar month of the initial purchase
of the exchanged Class A shares, the Class A contingent deferred sales charge is
imposed on the redeemed shares.

o If any Class A shares of another Oppenheimer fund that are
exchanged for Class A shares of Oppenheimer Senior Floating Rate Fund are
subject to the Class A contingent deferred sales charge of the other Oppenheimer
fund at the time of exchange, the holding period for that Class A contingent
deferred sales charge will carry over to the Class A shares of Oppenheimer
Senior Floating Rate Fund acquired in the exchange. The Class A shares of
Oppenheimer Senior Floating Rate Fund acquired in that exchange will be subject
to the Class A Early Withdrawal Charge of Oppenheimer Senior Floating Rate Fund
if they are repurchased before the expiration of the holding period.

o When Class A shares of Oppenheimer Cash Reserves and Oppenheimer
Money Market Fund, Inc. acquired by exchange of Class A shares of any
Oppenheimer fund purchased subject to a Class A contingent deferred sales charge
are redeemed within the Class A holding period of the fund from which the shares
were exchanged, the Class A contingent deferred sales charge of the fund from
which the shares were exchanged is imposed on the redeemed shares.

o With respect to Class B shares, the Class B contingent deferred
sales charge is imposed on Class B shares acquired by exchange if they are
redeemed within six years of the initial purchase of the exchanged Class B
shares.

o With respect to Class C shares, the Class C contingent deferred
sales charge is imposed on Class C shares acquired by exchange if they are
redeemed within 12 months of the initial purchase of the exchanged Class C
shares.

o With respect to Class N shares, a 1% contingent deferred sales
charge will be imposed if the retirement plan (not including IRAs and 403(b)
plans) is terminated or Class N shares of all Oppenheimer funds are terminated
as an investment option of the plan and Class N shares are redeemed within 18
months after the plan's first purchase of Class N shares of any Oppenheimer fund
or with respect to an individual retirement plan or 403(b) plan, Class N shares
are redeemed within 18 months of the plan's first purchase of Class N shares of
any Oppenheimer fund.

o When Class B, Class C or Class N shares are redeemed to effect an
exchange, the priorities described in "How To Buy Shares" in the Prospectus for
the imposition of the Class B, Class C or Class N contingent deferred sales
charge will be followed in determining the order in which the shares are
exchanged. Before exchanging shares, shareholders should take into account how
the exchange may affect any contingent deferred sales charge that might be
imposed in the subsequent redemption of remaining shares.

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

|X| Limits on Multiple Exchange Orders. The Fund reserves the right to
reject telephone or written exchange requests submitted in bulk by anyone on
behalf of more than one account. The Fund may accept requests for exchanges of
up to 50 accounts per day from representatives of authorized dealers that
qualify for this privilege.

|X| Telephone Exchange Requests. When exchanging shares by telephone, a
shareholder must have an existing account in the fund to which the exchange is
to be made. Otherwise, the investors must obtain a prospectus of that fund
before the exchange request may be submitted. If all telephone lines are busy
(which might occur, for example, during periods of substantial market
fluctuations), shareholders might not be able to request exchanges by telephone
and would have to submit written exchange requests.

Processing Exchange Requests. Shares to be exchanged are redeemed on the regular
business day the Transfer Agent receives an exchange request in proper form (the
"Redemption Date"). Normally, shares of the fund to be acquired are purchased on
the Redemption Date, but such purchases may be delayed by either fund up to five
business days if it determines that it would be disadvantaged by an immediate
transfer of the redemption proceeds. The Fund reserves the right, in its
discretion, to refuse any exchange request that may disadvantage it. For
example, if the receipt of multiple exchange requests from a dealer might
require the disposition of portfolio securities at a time or at a price that
might be disadvantageous to the Fund, the Fund may refuse the request.

When you exchange some or all of your shares from one fund to another, any
special account feature such as an Asset Builder Plan or Automatic Withdrawal
Plan, will be switched to the new fund account unless you tell the Transfer
Agent not to do so. However, special redemption and exchange features such as
Automatic Exchange Plans and Automatic Withdrawal Plans cannot be switched to an
account in Oppenheimer Senior Floating Rate Fund.

In connection with any exchange request, the number of shares exchanged
may be less than the number requested if the exchange or the number requested
would include shares subject to a restriction cited in the Prospectus or this
Statement of Additional Information, or would include shares covered by a share
certificate that is not tendered with the request. In those cases, only the
shares available for exchange without restriction will be exchanged.

The different Oppenheimer funds available for exchange have different
investment objectives, policies and risks. A shareholder should assure that the
fund selected is appropriate for his or her investment and should be aware of
the tax consequences of an exchange. For federal income tax purposes, an
exchange transaction is treated as a redemption of shares of one fund and a
purchase of shares of another. "Reinvestment Privilege," above, discusses some
of the tax consequences of reinvestment of redemption proceeds in such cases.
The Fund, the Distributor, and the Transfer Agent are unable to provide
investment, tax or legal advice to a shareholder in connection with an exchange
request or any other investment transaction.

Dividends, Capital Gains and Taxes

Dividends and Distributions. The Fund has no fixed dividend rate and there can
be no assurance as to the payment of any dividends or the realization of any
capital gains. The dividends and distributions paid by a class of shares will
vary from time to time depending on market conditions, the composition of the
Fund's portfolio, and expenses borne by the Fund or borne separately by a class.
Dividends are calculated in the same manner, at the same time, and on the same
day for each class of shares. However, dividends on Class B, Class C and Class N
shares are expected to be lower than dividends on Class A shares. That is
because of the effect of the asset-based sales charge on Class B, Class C and
Class N shares. Those dividends will also differ in amount as a consequence of
any difference in the net asset values of the different classes of shares.

Dividends, distributions and proceeds of the redemption of Fund shares
represented by checks returned to the Transfer Agent by the Postal Service as
undeliverable will be invested in shares of Oppenheimer Money Market Fund, Inc.
Reinvestment will be made as promptly as possible after the return of such
checks to the Transfer Agent, to enable the investor to earn a return on
otherwise idle funds. Unclaimed accounts may be subject to state escheatment
laws, and the Fund and the Transfer Agent will not be liable to shareholders or
their representatives for compliance with those laws in good faith.

Tax Status of the Fund's Dividends, Distributions and Redemptions of Shares. The
federal tax treatment of the Fund's dividends and capital gains distributions is
briefly highlighted in the Prospectus. The following is only a summary of
certain additional tax considerations generally affecting the Fund and its
shareholders.

The tax discussion in the Prospectus and this Statement of Additional
Information is based on tax law in effect on the date of the Prospectus and this
Statement of Additional Information. Those laws and regulations may be changed
by legislative, judicial, or administrative action, sometimes with retroactive
effect. State and local tax treatment of ordinary income dividends and capital
gain dividends from regulated investment companies may differ from the treatment
under the Internal Revenue Code described below. Potential purchasers of shares
of the Fund are urged to consult their tax advisers with specific reference to
their own tax circumstances as well as the consequences of federal, state and
local tax rules affecting an investment in the Fund.

|X| Qualification as a Regulated Investment Company. The Fund has elected
to be taxed as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended. As a regulated investment company, the Fund is
not subject to federal income tax on the portion of its net investment income
(that is, taxable interest, dividends, and other taxable ordinary income, net of
expenses) and capital gain net income (that is, the excess of net long-term
capital gains over net short-term capital losses) that it distributes to
shareholders. That qualification enables the Fund to "pass through" its income
and realized capital gains to shareholders without having to pay tax on them.
This avoids a "double tax" on that income and capital gains, since shareholders
normally will be taxed on the dividends and capital gains they receive from the
Fund (unless their Fund shares are held in a retirement account or the
shareholder is otherwise exempt from tax).

The Internal Revenue Code contains a number of complex tests relating to
qualification that the Fund might not meet in a particular year. If it did not
qualify as a regulated investment company, the Fund would be treated for tax
purposes as an ordinary corporation and would receive no tax deduction for
payments made to shareholders.

To qualify as a regulated investment company, the Fund must distribute at
least 90% of its investment company taxable income (in brief, net investment
income and the excess of net short-term capital gain over net long-term capital
loss) for the taxable year. The Fund must also satisfy certain other
requirements of the Internal Revenue Code, some of which are described below.
Distributions by the Fund made during the taxable year or, under specified
circumstances, within 12 months after the close of the taxable year, will be
considered distributions of income and gains for the taxable year and will
therefore count toward satisfaction of the above-mentioned requirement.

To qualify as a regulated investment company, the Fund must derive at
least 90% of its gross income from dividends, interest, certain payments with
respect to securities loans, gains from the sale or other disposition of stock
or securities or foreign currencies (to the extent such currency gains are
directly related to the regulated investment company's principal business of
investing in stock or securities) and certain other income.

In addition to satisfying the requirements described above, the Fund must
satisfy an asset diversification test in order to qualify as a regulated
investment company. Under that test, at the close of each quarter of the Fund's
taxable year, at least 50% of the value of the Fund's assets must consist of
cash and cash items (including receivables), U.S. government securities,
securities of other regulated investment companies, and securities of other
issuers. As to each of those issuers, the Fund must not have invested more than
5% of the value of the Fund's total assets in securities of each such issuer and
the Fund must not hold more than 10% of the outstanding voting securities of
each such issuer. No more than 25% of the value of its total assets may be
invested in the securities of any one issuer (other than U.S. government
securities and securities of other regulated investment companies), or in two or
more issuers which the Fund controls and which are engaged in the same or
similar trades or businesses. For purposes of this test, obligations issued or
guaranteed by certain agencies or instrumentalities of the U.S. government are
treated as U.S. government securities.

|X| Excise Tax on Regulated Investment Companies. Under the Internal
Revenue Code, by December 31 each year, the Fund must distribute 98% of its
taxable investment income earned from January 1 through December 31 of that year
and 98% of its capital gains realized in the period from November 1 of the prior
year through October 31 of the current year. If it does not, the Fund must pay
an excise tax on the amounts not distributed. It is presently anticipated that
the Fund will meet those requirements. To meet this requirement, in certain
circumstances the Fund might be required to liquidate portfolio investments to
make sufficient distributions to avoid excise tax liability. However, the Board
of Trustees and the Manager might determine in a particular year that it would
be in the best interests of shareholders for the Fund not to make such
distributions at the required levels and to pay the excise tax on the
undistributed amounts. That would reduce the amount of income or capital gains
available for distribution to shareholders.

|X| Taxation of Fund Distributions. The Fund anticipates distributing
substantially all of its investment company taxable income for each taxable
year. Those distributions will be taxable to shareholders as ordinary income and
treated as dividends for federal income tax purposes.

Special provisions of the Internal Revenue Code govern the eligibility of
the Fund's dividends for the dividends-received deduction for corporate
shareholders. Long-term capital gains distributions are not eligible for the
deduction. The amount of dividends paid by the Fund that may qualify for the
deduction is limited to the aggregate amount of qualifying dividends that the
Fund derives from portfolio investments that the Fund has held for a minimum
period, usually 46 days. A corporate shareholder will not be eligible for the
deduction on dividends paid on Fund shares held for 45 days or less. To the
extent the Fund's dividends are derived from gross income from option premiums,
interest income or short-term gains from the sale of securities or dividends
from foreign corporations, those dividends will not qualify for the deduction.

The Fund may either retain or distribute to shareholders its net capital
gain for each taxable year. The Fund currently intends to distribute any such
amounts. If net long term capital gains are distributed and designated as a
capital gain distribution, it will be taxable to shareholders as a long-term
capital gain and will be properly identified in reports sent to shareholders in
January of each year. Such treatment will apply no matter how long the
shareholder has held his or her shares or whether that gain was recognized by
the Fund before the shareholder acquired his or her shares.

If the Fund elects to retain its net capital gain, the Fund will be
subject to tax on it at the 35% corporate tax rate. If the Fund elects to retain
its net capital gain, the Fund will provide to shareholders of record on the
last day of its taxable year information regarding their pro rata share of the
gain and tax paid. As a result, each shareholder will be required to report his
or her pro rata share of such gain on their tax return as long-term capital
gain, will receive a refundable tax credit for his/her pro rata share of tax
paid by the Fund on the gain, and will increase the tax basis for his/her shares
by an amount equal to the deemed distribution less the tax credit.

Investment income that may be received by the Fund from sources within
foreign countries may be subject to foreign taxes withheld at the source. The
United States has entered into tax treaties with many foreign countries which
entitle the Fund to a reduced rate of, or exemption from, taxes on such income.

Distributions by the Fund that do not constitute ordinary income dividends
or capital gain distributions will be treated as a return of capital to the
extent of the shareholder's tax basis in their shares. Any excess will be
treated as gain from the sale of those shares, as discussed below. Shareholders
will be advised annually as to the U.S. federal income tax consequences of
distributions made (or deemed made) during the year. If prior distributions made
by the Fund must be re-characterized as a non-taxable return of capital at the
end of the fiscal year as a result of the effect of the Fund's investment
policies, they will be identified as such in notices sent to shareholders.

Distributions by the Fund will be treated in the manner described above
regardless of whether the distributions are paid in cash or reinvested in
additional shares of the Fund (or of another fund). Shareholders receiving a
distribution in the form of additional shares will be treated as receiving a
distribution in an amount equal to the fair market value of the shares received,
determined as of the reinvestment date.

The Fund will be required in certain cases to withhold 28% of ordinary
income dividends, capital gains distributions and the proceeds of the redemption
of shares, paid to any shareholder (1) who has failed to provide a correct
taxpayer identification number or to properly certify that number when required,
(2) who is subject to backup withholding for failure to report the receipt of
interest or dividend income properly, or (3) who has failed to certify to the
Fund that the shareholder is not subject to backup withholding or is an "exempt
recipient" (such as a corporation). All income and any tax withheld by the Fund
is remitted by the Fund to the U.S. Treasury and is identified in reports mailed
to shareholders in January of each year.

|X| Tax Effects of Redemptions of Shares. If a shareholder redeems all or
a portion of his/her shares, the shareholder will recognize a gain or loss on
the redeemed shares in an amount equal to the difference between the proceeds of
the redeemed shares and the shareholder's adjusted tax basis in the shares. All
or a portion of any loss recognized in that manner may be disallowed if the
shareholder purchases other shares of the Fund within 30 days before or after
the redemption.

In general, any gain or loss arising from the redemption of shares of the
Fund will be considered capital gain or loss, if the shares were held as a
capital asset. It will be long-term capital gain or loss if the shares were held
for more than one year. However, any capital loss arising from the redemption of
shares held for six months or less will be treated as a long-term capital loss
to the extent of the amount of capital gain dividends received on those shares.
Special holding period rules under the Internal Revenue Code apply in this case
to determine the holding period of shares and there are limits on the
deductibility of capital losses in any year.

|X| Foreign Shareholders. Under U.S. tax law, taxation of a shareholder
who is a foreign person (to include, but not limited to, a nonresident alien
individual, a foreign trust, a foreign estate, a foreign corporation, or a
foreign partnership) primarily depends on whether the foreign person's income
from the Fund is effectively connected with the conduct of a U.S. trade or
business. Typically, ordinary income dividends paid from a mutual fund are not
considered "effectively connected" income.

Ordinary income dividends that are paid by the Fund (and are deemed not
"effectively connected income") to foreign persons will be subject to a U.S. tax
withheld by the Fund at a rate of 30%, provided the Fund obtains a properly
completed and signed Certificate of Foreign Status. The tax rate may be reduced
if the foreign person's country of residence has a tax treaty with the U.S.
allowing for a reduced tax rate on ordinary income dividends paid by the Fund.
All income and any tax withheld by the Fund is remitted by the Fund to the U.S.
Treasury and is identified in reports mailed to shareholders in March of each
year.

If the ordinary income dividends from the Fund are effectively connected
with the conduct of a U.S. trade or business, then the foreign person may claim
an exemption from the U.S. tax described above provided the Fund obtains a
properly completed and signed Certificate of Foreign Status. If the foreign
person fails to provide a certification of his/her foreign status, the Fund will
be required to withhold U.S. tax at a rate of 28% on ordinary income dividends,
capital gains distributions and the proceeds of the redemption of shares, paid
to any foreign person. All income and any tax withheld (in this situation) by
the Fund is remitted by the Fund to the U.S. Treasury and is identified in
reports mailed to shareholders in January of each year.

The tax consequences to foreign persons entitled to claim the benefits of
an applicable tax treaty may be different from those described herein. Foreign
shareholders are urged to consult their own tax advisors or the U.S. Internal
Revenue Service with respect to the particular tax consequences to them of an
investment in the Fund, including the applicability of the U.S. withholding
taxes described above.

Dividend Reinvestment in Another Fund. Shareholders of the Fund may elect to
reinvest all dividends and/or capital gains distributions in shares of the same
class of any of the other Oppenheimer funds listed above. Reinvestment will be
made without sales charge at the net asset value per share in effect at the
close of business on the payable date of the dividend or distribution. To elect
this option, the shareholder must notify the Transfer Agent in writing and must
have an existing account in the fund selected for reinvestment. Otherwise the
shareholder first must obtain a prospectus for that fund and an application from
the Distributor to establish an account. Dividends and/or distributions from
shares of certain other Oppenheimer funds (other than Oppenheimer Cash Reserves)
may be invested in shares of this Fund on the same basis.

Additional Information About the Fund

The Distributor. The Fund's shares are sold through dealers, brokers and other
financial institutions that have a sales agreement with OppenheimerFunds
Distributor, Inc., a subsidiary of the Manager that acts as the Fund's
Distributor. The Distributor also distributes shares of the other Oppenheimer
funds and is sub-distributor for funds managed by a subsidiary of the Manager.

The Transfer Agent. OppenheimerFunds Services, the Fund's Transfer Agent, is a
division of the Manager. It is responsible for maintaining the Fund's
shareholder registry and shareholder accounting records, and for paying
dividends and distributions to shareholders. It also handles shareholder
servicing and administrative functions. It serves as the Transfer Agent for an
annual per account fee. It also acts as shareholder servicing agent for the
other Oppenheimer funds. Shareholders should direct inquiries about their
accounts to the Transfer Agent at the address and toll-free numbers shown on the
back cover.

The Custodian. Citibank, N.A. is the custodian of the Fund's assets. The
custodian's responsibilities include safeguarding and controlling the Fund's
portfolio securities and handling the delivery of such securities to and from
the Fund. It is the practice of the Fund to deal with the custodian in a manner
uninfluenced by any banking relationship the custodian may have with the Manager
and its affiliates. The Fund's cash balances with the custodian in excess of
$100,000 are not protected by federal deposit insurance. Those uninsured
balances at times may be substantial.

Independent Auditors. KPMG LLP are the independent auditors of the Fund. They
audit the Fund's financial statements and perform other related audit services.
They also act as auditors for certain other funds advised by the Manager and its
affiliates.

INDEPENDENT AUDITORS' REPORT
--------------------------------------------------------------------------------
THE BOARD OF TRUSTEES AND SHAREHOLDERS OF
OPPENHEIMER BOND FUND SERIES:
We have audited the accompanying statement of assets and liabilities of
Oppenheimer Convertible Securities Fund (a portfolio of the Bond Fund Series)
including the statement of investments, as of December 31, 2003, and the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the four 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. The
financial highlights for the period ended December 31, 1999, were audited by
other auditors whose report dated January 24, 2000, expressed an unqualified
opinion on this information.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures
included confirmation of securities owned as of December 31, 2003, by
correspondence with the custodian and brokers or by other appropriate auditing
procedures where replies from brokers were not received. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer Convertible Securities Fund as of December 31, 2003, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended, and the financial highlights for
each of the four years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America.

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

Denver, Colorado
January 23, 2004

41 | OPPENHEIMER CONVERTIBLE SECURITIES FUND

STATEMENT OF INVESTMENTS DECEMBER 31, 2003
--------------------------------------------------------------------------------

PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1

--------------------------------------------------------------------------------------------------------------------------------
CONVERTIBLE CORPORATE BONDS AND NOTES--58.9%
--------------------------------------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--14.1%
--------------------------------------------------------------------------------------------------------------------------------
HOTELS, RESTAURANTS &amp; LEISURE--3.8%
Brinker International, Inc., Zero Coupon Cv. Sr. Unsec. Debs., 10/10/21 1 $ 6,500,000 $ 4,411,875
--------------------------------------------------------------------------------------------------------------------------------
Carnival Corp., 2% Cv. Sr. Unsec. Unsub. Debs., 4/15/21 5,000,000 5,906,250
--------------------------------------------------------------------------------------------------------------------------------
Hilton Hotels Corp.:
3.375% Cv. Sr. Unsec. Unsub. Nts., 4/15/23 2 4,000,000 4,345,000
3.375% Cv. Sr. Unsec. Unsub. Nts., 4/15/23 1,000,000 1,086,250
--------------------------------------------------------------------------------------------------------------------------------
International Game Technology,
Zero Coupon Cv. Sr. Unsec. Unsub. Debs., 1/29/33 1,2 5,000,000 4,006,250
--------------------------------------------------------------------------------------------------------------------------------
Royal Caribbean Cruises Ltd.,
Zero Coupon Cv. Sr. Unsec. Unsub. Bonds, 5/18/21 1 7,500,000 4,406,250
------------
24,161,875

--------------------------------------------------------------------------------------------------------------------------------
INTERNET &amp; CATALOG RETAIL--0.7%
Amazon.com, Inc.:
4.75% Cv. Sub. Debs., 2/1/09 840,000 853,650
4.75% Cv. Unsec. Sub. Debs., 2/1/09 2 3,360,000 3,414,600
------------
4,268,250

--------------------------------------------------------------------------------------------------------------------------------
LEISURE EQUIPMENT &amp; PRODUCTS--0.5%
Eastman Kodak Co., 3.375% Cv. Sr. Nts., 10/15/33 2 3,000,000 3,345,000
--------------------------------------------------------------------------------------------------------------------------------
MEDIA--6.8%
Charter Communications, Inc., 5.75% Cv. Sr. Unsec. Nts., 10/15/05 4,000,000 3,800,000
--------------------------------------------------------------------------------------------------------------------------------
Interpublic Group of Cos., Inc. (The):
1.80% Cv. Unsec. Sub. Nts., 9/16/04 2,000,000 1,965,000
4.50% Cv. Sr. Unsec. Nts., 3/15/23 500,000 766,250
4.50% Cv. Sr. Unsec. Nts., 3/15/23 2 3,000,000 4,597,500
--------------------------------------------------------------------------------------------------------------------------------
Liberty Media Corp.:
0.75% Exchangeable Sr. Unsec. Debs., 3/30/23
(exchangeable for Time Warner, Inc. common stock) 2 8,000,000 9,480,000
3.25% Exchangeable Sr. Sec. Debs., 3/15/31
(exchangeable for Viacom, Inc. Cl. B common stock) 2 5,000,000 5,225,000
4% Exchangeable Sr. Unsec. Debs., 11/15/29
(exchangeable for Sprint Corp.
PCS, Series 1 common stock or cash based on the value of that stock) 5,000,000 3,531,250
--------------------------------------------------------------------------------------------------------------------------------
Omnicom Group, Inc., Zero Coupon Cv. Sr. Nts., 6/15/33 1,2 5,000,000 5,106,250
--------------------------------------------------------------------------------------------------------------------------------
Time Warner, Inc., Zero Coupon Cv. Nts., 12/6/19 1 5,000,000 3,156,250
--------------------------------------------------------------------------------------------------------------------------------
Walt Disney Co. (The), 2.125% Cv. Sr. Unsec. Nts., 4/15/23 6,000,000 6,382,500
------------
44,010,000

--------------------------------------------------------------------------------------------------------------------------------
SPECIALTY RETAIL--2.3%
Gap, Inc. (The), 5.75% Cv. Sr. Unsec. Nts., 3/15/09 2 4,000,000 6,155,000
--------------------------------------------------------------------------------------------------------------------------------
Lowe's Cos., Inc., 0.861% Cv. Sr. Nts., 10/19/21 3 3,500,000 3,736,250
--------------------------------------------------------------------------------------------------------------------------------
TJX Cos., Inc. (The):
Zero Coupon Cv. Unsec. Sub. Liquid Yield Option Nts., 2/13/21 1 2,000,000 1,685,000
Zero Coupon Cv. Unsec. Sub. Liquid Yield Option Nts., 2/13/21 1,2 4,000,000 3,370,000
------------
14,946,250

14 | OPPENHEIMER CONVERTIBLE SECURITIES FUND

PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1

--------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES--0.5%
--------------------------------------------------------------------------------------------------------------------------------
FOOD &amp; STAPLES RETAILING--0.5%
Costco Cos., Inc., Zero Coupon Cv. Sub. Nts., 8/19/17 1 $ 4,000,000 $ 3,405,000
--------------------------------------------------------------------------------------------------------------------------------
ENERGY--4.6%
--------------------------------------------------------------------------------------------------------------------------------
ENERGY EQUIPMENT &amp; SERVICES--3.0% Grey Wolf, Inc.:
3.75% Cv. Contingent Sr. Unsec. Nts., 5/7/23 500,000 473,125
3.75% Cv. Sr. Unsec. Nts, 5/7/23 2 3,500,000 3,311,875
--------------------------------------------------------------------------------------------------------------------------------
Halliburton Co., 3.125% Cv. Sr. Nts., 7/15/23 2 5,000,000 5,206,250
--------------------------------------------------------------------------------------------------------------------------------
Pride International, Inc., 3.25% Cv. Sr. Nts., 5/1/33 2 5,000,000 5,318,750
--------------------------------------------------------------------------------------------------------------------------------
Schlumberger Ltd., 2.125% Cv. Sr. Unsec. Debs., Series B, 6/1/23 2 5,000,000 4,968,750
------------
19,278,750

--------------------------------------------------------------------------------------------------------------------------------
OIL &amp; GAS--1.6%
Devon Energy Corp., 4.95% Cv. Sr. Unsec. Debs., 8/15/08
(cv. into Chevron Corp. common stock) 5,000,000 5,131,250
--------------------------------------------------------------------------------------------------------------------------------
Kerr-McGee Corp., 5.25% Cv. Jr. Unsec. Sub. Debs., 2/15/10 5,000,000 5,293,750
------------
10,425,000

--------------------------------------------------------------------------------------------------------------------------------
FINANCIALS--3.2%
--------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIALS--2.2%
E*TRADE Group, Inc., 6% Cv. Unsec. Sub. Nts., 2/1/07 6,000,000 6,165,000
--------------------------------------------------------------------------------------------------------------------------------
GATX Corp.:
7.50% Cv. Sr. Unsec. Nts., 2/1/07 2 2,000,000 2,342,500
7.50% Cv. Sr. Unsec. Nts., 2/1/07 1,000,000 1,171,250
--------------------------------------------------------------------------------------------------------------------------------
Providian Financial Corp., 3.25% Cv. Sr. Unsec. Nts., 8/15/05 5,000,000 4,762,500
------------
14,441,250

--------------------------------------------------------------------------------------------------------------------------------
REAL ESTATE--1.0%
EOP Operating LP, 7.25% Cv. Sr. Nts., 11/15/08 2 6,000,000 6,375,000
--------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE--9.5%
--------------------------------------------------------------------------------------------------------------------------------
BIOTECHNOLOGY--4.1%
Amgen, Inc., Zero Coupon Cv. Sr. Unsec. Unsub. Liquid Yield
Option Nts., 3/1/32 1 9,500,000 7,208,125
--------------------------------------------------------------------------------------------------------------------------------
Celgene Corp., 1.75% Cv. Sr. Nts., 6/1/08 2 2,500,000 3,000,000
--------------------------------------------------------------------------------------------------------------------------------
Genzyme Corp., 3% Cv. Unsec. Sub. Debs., 5/15/21 4,000,000 4,070,000
--------------------------------------------------------------------------------------------------------------------------------
Gilead Sciences, Inc., 2% Cv. Sr. Unsec. Nts., 12/15/07 2,500,000 3,425,000
--------------------------------------------------------------------------------------------------------------------------------
Invitrogen Corp., 5.50% Cv. Unsec. Sub. Nts., 3/1/07 5,000,000 5,187,500
--------------------------------------------------------------------------------------------------------------------------------
Sepracor, Inc., 5.75% Cv. Unsec. Sub. Nts., 11/15/06 3,500,000 3,521,875
------------
26,412,500

--------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT &amp; SUPPLIES--0.8%
Medtronic, Inc., 1.25% Unsec. Debs., 9/15/21 2 5,000,000 5,143,750
--------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE PROVIDERS &amp; SERVICES--2.1%
Health Management Associates, Inc., 1.50% Cv. Sr. Sub. Nts., 8/1/23 2 5,000,000 5,525,000
--------------------------------------------------------------------------------------------------------------------------------
Quest Diagnostics, Inc., 1.75% Cv. Sr. Unsec. Debs., 11/30/21 4,000,000 4,125,000

15 | OPPENHEIMER CONVERTIBLE SECURITIES FUND

STATEMENT OF INVESTMENTS CONTINUED
-------------------------------------------------------------------------------

PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1

--------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE PROVIDERS &amp; SERVICES Continued
WebMD Corp., 1.75% Cv. Sub. Nts., 6/15/23 2 $ 4,000,000 $ 3,585,000
------------
13,235,000

--------------------------------------------------------------------------------------------------------------------------------
PHARMACEUTICALS--2.5%

IVAX Corp., 5.50% Cv. Sr. Unsec. Sub. Nts., 5/15/07 3,500,000 3,644,375
--------------------------------------------------------------------------------------------------------------------------------
Roche Holdings, Inc., Zero Coupon Cv. Nts., 7/25/21 1 5,000,000 3,093,750
--------------------------------------------------------------------------------------------------------------------------------
Teva Pharmaceuticals Finance Netherlands BV,
0.75% Cv. Sr. Unsec. Nts., 8/15/21 3,000,000 4,035,000
--------------------------------------------------------------------------------------------------------------------------------
Watson Pharmaceuticals, Inc., 1.75% Cv. Sr. Unsec. Debs., 3/15/23 2 4,000,000 5,285,000
------------
16,058,125

--------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS--4.4%
--------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES--2.8% Tyco International Group SA:
2.75% Cv. Sr. Unsec. Unsub. Debs., 1/15/18 11,000,000 14,093,750
2.75% Cv. Sr. Unsec. Unsub. Debs., Series A, 1/15/18 2 3,000,000 3,843,750
------------
17,937,500

--------------------------------------------------------------------------------------------------------------------------------
MACHINERY--1.6%
Danaher Corp., Zero Coupon Cv. Sr. Unsec. Unsub. Liquid
Yield Option Nts., 1/22/21 1 5,000,000 3,512,500
--------------------------------------------------------------------------------------------------------------------------------
Navistar Financial Corp., 4.75% Cv. Unsec. Sub. Nts., 4/1/09 4,000,000 4,325,000
--------------------------------------------------------------------------------------------------------------------------------
SystemOne Technologies, Inc.:
8.25% Cv. Sub. Nts., 12/31/05 4 3,084,881 1,079,708
8.25% Cv. Sub. Nts., 12/31/05 4 2,962,671 1,036,935
------------
9,954,143

--------------------------------------------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--17.4%
--------------------------------------------------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT--3.5%
Commscope, Inc., 4% Cv. Jr. Unsec. Sub. Nts., 12/15/06 4,000,000 3,850,000
--------------------------------------------------------------------------------------------------------------------------------
Comverse Technology, Inc., Zero Coupon Cv. Sr. Unsec. Zero Yield
Puttable Securities, 5/15/23 1 4,500,000 5,310,000
--------------------------------------------------------------------------------------------------------------------------------
Corning, Inc., 3.50% Cv. Sr. Unsec. Debs., 11/1/08 3,000,000 3,731,250
--------------------------------------------------------------------------------------------------------------------------------
Juniper Networks, Inc., 4.75% Cv. Unsec. Sub. Nts., 3/15/07 1,037,000 1,062,925
--------------------------------------------------------------------------------------------------------------------------------
Lucent Technologies, Inc., 2.75% Cv. Sr. Unsec. Debs., Series B, 6/15/25 4,000,000 4,745,000
--------------------------------------------------------------------------------------------------------------------------------
Nortel Networks Corp.:
4.25% Cv. Sr. Unsec. Nts., 9/1/08 2 2,000,000 1,902,500
4.25% Cv. Sr. Unsec. Nts., 9/1/08 2,000,000 1,902,500
------------
22,504,175

--------------------------------------------------------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT &amp; INSTRUMENTS--3.6% Agilent Technologies, Inc.:
3% Cv. Sr. Unsec. Debs., 12/1/21 3 2,500,000 2,743,750
3% Cv. Sr. Unsec. Nts., 12/1/21 2,3 3,000,000 3,292,500
--------------------------------------------------------------------------------------------------------------------------------
Celestica, Inc., Zero Coupon Cv. Liquid Yield Option Nts., 8/1/20 1 8,000,000 4,270,000
--------------------------------------------------------------------------------------------------------------------------------
Flextronics International Ltd., 1% Cv. Unsec. Nts., 8/1/10 2 3,500,000 4,204,375

16 | OPPENHEIMER CONVERTIBLE SECURITIES FUND

PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1

--------------------------------------------------------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT &amp; INSTRUMENTS Continued
Solectron Corp., Zero Coupon Cv. Sr. Unsec. Unsub. Liquid Yield
Option Nts., 11/20/20 1 $ 7,000,000 $ 4,007,500
--------------------------------------------------------------------------------------------------------------------------------
Vishay Intertechnology, Inc., 3.625% Cv. Sub. Nts., 8/1/23 2 3,000,000 4,245,000
------------
22,763,125

--------------------------------------------------------------------------------------------------------------------------------
IT CONSULTING &amp; SERVICES--1.8%
DST Systems, Inc., 4.125% Cv. Sr. Unsec. Debs., Series A, 8/15/23 2 5,500,000 6,586,250
--------------------------------------------------------------------------------------------------------------------------------
Electronic Data Systems Corp., 3.875% Cv. Sr. Nts., 7/15/23 2 5,000,000 5,243,750
------------
11,830,000

--------------------------------------------------------------------------------------------------------------------------------
SEMICONDUCTOR EQUIPMENT &amp; PRODUCTS--4.1%
Advanced Micro Devices, Inc., 4.75% Cv. Sr. Unsec. Debs., 2/1/22 3 4,000,000 4,100,000
--------------------------------------------------------------------------------------------------------------------------------
Agere Systems, Inc., 6.50% Cv. Unsec. Unsub. Nts., 12/15/09
(cv. into Agere Systems, Inc., Cl. A common stock) 3,000,000 4,125,000
--------------------------------------------------------------------------------------------------------------------------------
International Rectifier Corp., 4.25% Cv. Sub. Nts., 7/15/07 2 4,000,000 4,020,000
--------------------------------------------------------------------------------------------------------------------------------
Lam Research Corp., 4% Cv. Unsec. Sub. Nts., 6/1/06 4,500,000 4,635,000
--------------------------------------------------------------------------------------------------------------------------------
LSI Logic Corp., 4% Cv. Sub. Nts., 5/15/10 2 5,000,000 5,581,250
--------------------------------------------------------------------------------------------------------------------------------
Micron Technology, Inc., 2.50% Cv. Unsec. Sub. Nts., 2/1/10 2 3,000,000 3,982,500
------------
26,443,750

--------------------------------------------------------------------------------------------------------------------------------
SOFTWARE--4.4%
BEA Systems, Inc., 4% Cv. Unsub. Nts., 12/15/06 4,000,000 4,035,000
--------------------------------------------------------------------------------------------------------------------------------
Computer Associates International, Inc.:
5% Cv. Sr. Nts., 3/15/07 2 4,000,000 5,180,000
5% Cv. Sr. Unsec. Nts., 3/15/07 1,500,000 1,942,500
--------------------------------------------------------------------------------------------------------------------------------
Fair Issac Corp., 1.50% Cv. Sr. Nts., 8/15/23 2 4,500,000 4,663,125
--------------------------------------------------------------------------------------------------------------------------------
Mentor Graphics Corp.:
6.875% Cv. Sub. Nts., 6/15/07 2 2,000,000 2,137,500
6.875% Cv. Unsec. Sub. Nts., 6/15/07 1,000,000 1,068,750
--------------------------------------------------------------------------------------------------------------------------------
Mercury Interactive Corp.:
4.75% Cv. Nts., 7/1/07 2 4,000,000 3,985,000
4.75% Cv. Unsec. Sub. Nts., 7/1/07 1,000,000 996,250
--------------------------------------------------------------------------------------------------------------------------------
Veritas Software Corp., 0.25% Cv. Sub. Nts., 8/1/13 2 4,000,000 4,380,000
------------
28,388,125

--------------------------------------------------------------------------------------------------------------------------------
MATERIALS--2.0%
--------------------------------------------------------------------------------------------------------------------------------
CONTAINERS &amp; PACKAGING--0.8%
Sealed Air Corp., 3% Cv. Nts., 6/30/33 2 5,000,000 5,312,500
--------------------------------------------------------------------------------------------------------------------------------
METALS &amp; MINING--1.2% Freeport-McMoRan Cooper &amp; Gold, Inc.,
7% Cv. Sr. Unsec. Unsub. Nts., 2/11/11 2,000,000 3,300,000
--------------------------------------------------------------------------------------------------------------------------------
Inco Ltd., 1% Cv. Unsec. Unsub. Debs., 3/14/23 3,000,000 4,181,250
------------
7,481,250

17 | OPPENHEIMER CONVERTIBLE SECURITIES FUND

STATEMENT OF INVESTMENTS CONTINUED
-------------------------------------------------------------------------------

PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1

--------------------------------------------------------------------------------------------------------------------------------
UTILITIES--3.2%
--------------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--2.2%
Calpine Corp., 4.75% Cv. Sr. Unsec. Nts., 11/15/23 2 $ 4,000,000 $ 4,135,000
--------------------------------------------------------------------------------------------------------------------------------
CenterPoint Energy, Inc., 3.75% Cv. Sr. Nts., 5/15/23 2 5,000,000 5,337,500
--------------------------------------------------------------------------------------------------------------------------------
Duke Energy Corp., 1.75% Cv. Sr. Bonds, 5/15/23 4,500,000 4,668,750
------------
14,141,250

--------------------------------------------------------------------------------------------------------------------------------
GAS UTILITIES--1.0%
El Paso Corp., Zero Coupon Cv. Debs., 2/28/21 1 13,000,000 6,045,000
------------
Total Convertible Corporate Bonds and Notes (Cost $349,041,628) 378,306,568

SHARES
--------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS--30.6%
--------------------------------------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--4.2%
--------------------------------------------------------------------------------------------------------------------------------
AUTOMOBILES--3.0%
Ford Motor Co. Capital Trust II, 6.50% Cum. Cv. Trust
Preferred Securities, Non-Vtg. 165,000 9,215,250
--------------------------------------------------------------------------------------------------------------------------------
General Motors Corp., 5.25% Cv. Sr. Unsec. Debs., Series B 375,000 10,076,250
------------
19,291,500

--------------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD DURABLES--0.5%
Newell Financial Trust I, 5.25% Cum. Cv. Quarterly Income
Preferred Securities, Non-Vtg. 70,000 3,220,000
--------------------------------------------------------------------------------------------------------------------------------
MEDIA--0.7%
Equity Securities Trust I/Cablevision Systems Corp., 6.50% Cv., Series CVC
(exchangeable into Cablevision NY Group, Cl. A common stock) 175,000 4,369,750
--------------------------------------------------------------------------------------------------------------------------------
ENERGY--0.7%
--------------------------------------------------------------------------------------------------------------------------------
OIL &amp; GAS--0.7%
Unocal Corp./Unocal Capital Trust, 6.25% Cum. Cv., Non-Vtg. 80,000 4,340,000
--------------------------------------------------------------------------------------------------------------------------------
FINANCIALS--8.1%
--------------------------------------------------------------------------------------------------------------------------------
BANKS--1.2%
Household International, Inc., 8.875% Cv. Adjustable Conversion-Rate
Equity Security Units (each unit has a stated amount of $25 and consists
of a contract to purchase Household International, Inc. common stock and
$25 principal amount of Household Finance Corp., 8.875% sr. unsec. nts.,
2/15/08), Non-Vtg. 5 70,000 3,185,000
--------------------------------------------------------------------------------------------------------------------------------
Washington Mutual Capital Trust I, 5.375% Cum. Cv. Units (each unit
consists of one preferred stock and one warrant to purchase shares of
Washington Mutual, Inc.), Non-Vtg. 2,5 75,000 4,174,500
--------------------------------------------------------------------------------------------------------------------------------
Washington Mutual, Inc., 5.375% Cum. Cv. Units (each unit consists of
one preferred stock and one warrant to purchase shares of
Washington Mutual, Inc.), Non-Vtg. 5 10,000 556,600
------------
7,916,100

--------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIALS--0.5%
Capital One Financial Corp., 6.25% Cv. Upper DECS (each upper DECS
has a stated amount of $50 and consists of a forward purchase contract
to purchase Capital One Financial Corp. common stock and $50 principal
amount of Capital One Financial Corp., 6.25% sr. nts., 5/17/07) 5 70,000 3,355,800

18 | OPPENHEIMER CONVERTIBLE SECURITIES FUND

MARKET VALUE
SHARES SEE NOTE 1

--------------------------------------------------------------------------------------------------------------------------------
INSURANCE--4.9%
Chubb Corp. (The), 7% Cv. Equity Units (each unit consists of one
warrant to purchase Chubb Corp. (The) common stock and $25 principal
amount of Chubb Corp. (The), 4% sr. nts., 11/16/07) 5 170,000 $ 4,855,200
--------------------------------------------------------------------------------------------------------------------------------
Hartford Financial Services Group, Inc. (The), 7% Cv. Equity Units
(each unit has a stated amount of $50 and consists of a purchase contract
to purchase Hartford Financial Services Group, Inc. (The) common stock and
a normal unit which consists of $1,000 principal amount of Hartford Financial
Services Group, Inc. (The), 2.56% sr. nts., 8/16/08) 5 90,000 5,459,400
--------------------------------------------------------------------------------------------------------------------------------
PMI Group, Inc. (The), 5.875% Cv. Hybrid Income Term Security Units
(each unit has a stated value of $25 and consists of a purchase contract
to purchase PMI Group, Inc. (The) common stock and a corporate unit
which consists of PMI Group, Inc. (The), 3% sr. nts., 11/15/08) 5,6 140,000 3,603,600
--------------------------------------------------------------------------------------------------------------------------------
Prudential Financial, Inc./Prudential Financial Capital Trust I, 6.75% Cum. Cv.
Equity Security Units (each unit has a stated amount of $50 and consists of
a contract to purchase Prudential Financial, Inc. common stock and a
redeemable capital security of Prudential Financial Capital Trust I), Non-Vtg. 5 100,000 6,510,000
--------------------------------------------------------------------------------------------------------------------------------
Travelers Property Casualty Corp., 4.50% Cv. Jr. Unsec. Sub. Nts. 300,000 7,350,000
--------------------------------------------------------------------------------------------------------------------------------
UnumProvident Corp., 8.25% Cv. 100,000 3,386,000
------------
31,164,200

--------------------------------------------------------------------------------------------------------------------------------
REAL ESTATE--1.5%
Host Marriott Financial Trust, 6.75% Cv. Quarterly
Income Preferred Securities 100,000 5,200,000
--------------------------------------------------------------------------------------------------------------------------------
Regency Centers Corp., 2% Cv. 120,000 4,612,560
------------
9,812,560

--------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE--2.7%
--------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT &amp; SUPPLIES--0.9%
Baxter International, Inc., 7% Cv. Equity Units (each equity unit has
a stated value of $50 and consists of a purchase contract to purchase
Baxter International, Inc. common stock and $50 principal amount of
Baxter International, Inc., 3.60% sr. nts., 2/16/08), Non-Vtg. 5 100,000 5,525,000
--------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE PROVIDERS &amp; SERVICES--1.8%
Anthem, Inc., 6% Cv. Equity Security Units (each unit has a stated amount
of $50 and consists of a contract to purchase Anthem, Inc. common stock
and $50 principal amount of Anthem, Inc., 5.95% sub. debs., 11/15/04) 5 25,000 2,205,750
--------------------------------------------------------------------------------------------------------------------------------
McKesson Financing Trust, 5% Cum. Cv., Non-Vtg. 90,000 4,567,500
--------------------------------------------------------------------------------------------------------------------------------
Omnicare, Inc., 4% Cv. 80,000 5,100,000
------------
11,873,250

--------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS--3.5%
--------------------------------------------------------------------------------------------------------------------------------
AEROSPACE &amp; DEFENSE--1.8%
Coltec Capital Trust, 5.25% Cv. Term Income Deferrable Equity Securities
(cv. into Goodrich Corp. common stock and EnProIndustries, Inc.
common stock) 80,000 3,188,400
--------------------------------------------------------------------------------------------------------------------------------
Northrop Grumman Corp., 7.25% Cv. Equity Security Units (each unit has
a stated amount of $100 and consists of a contract to purchase Northrop
Grumman Corp. common stock and $100 principal amount of Northrop
Grumman Corp., 5.25% sr. unsec. nts., 11/16/04), Non-Vtg. 5 40,000 4,148,000

19 | OPPENHEIMER CONVERTIBLE SECURITIES FUND

STATEMENT OF INVESTMENTS CONTINUED
-------------------------------------------------------------------------------

MARKET VALUE
SHARES SEE NOTE 1

--------------------------------------------------------------------------------------------------------------------------------
AEROSPACE &amp; DEFENSE Continued
Raytheon Co./RC Trust I, 8.25% Cum. Cv. Equity Security Units (each unit
consists of a contract to purchase Raytheon Co., Cl. B common stock and
a trust preferred security of RC Trust I), Non-Vtg. 5 75,000 $ 4,071,000
------------
11,407,400

--------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES &amp; SUPPLIES--1.7%
Allied Waste Industries, Inc., 6.25% Cv. Sr., Non-Vtg. 50,000 3,825,000
--------------------------------------------------------------------------------------------------------------------------------
Cendant Corp., 7.75% Cv. Upper DECS (each upper DECS has a stated
value of $50 and consists of a forward purchase contract to purchase
Cendant Corp. common stock and $50 principal amount of Cendant
Corp., 6.75% sr. nts., 8/17/07), Non-Vtg. 5 70,000 3,504,200
--------------------------------------------------------------------------------------------------------------------------------
United Rentals Trust I, 6.50% Cv. Quarterly Income Preferred Securities 85,000 3,793,125
------------
11,122,325

--------------------------------------------------------------------------------------------------------------------------------
OFFICE ELECTRONICS--0.9%
Xerox Corp., 6.25% Cv. 45,000 5,838,750
--------------------------------------------------------------------------------------------------------------------------------
MATERIALS--1.9%
--------------------------------------------------------------------------------------------------------------------------------
PAPER &amp; FOREST PRODUCTS--1.9%
Boise Cascade Corp., 7.50% Adjustable Conversion-Rate Equity
Security Units (each unit consists of a contract to purchase Boise
Cascade Corp. common stock and a preferred security of Boise
Cascade Trust I), Non-Vtg. 5 90,000 4,607,100
--------------------------------------------------------------------------------------------------------------------------------
International Paper Capital Trust, 5.25% Cum. Cv. (cv. into International
Paper Co. common stock), Non-Vtg. 150,000 7,612,500
------------
12,219,600

--------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--1.8%
--------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--1.8%
Alltel Corp., 7.75% Cv. Equity Units (each unit consists of corporate units,
each with a stated value of $50 and includes a purchase contract to purchase
Alltel Corp. common stock and $50 principal amount of Alltel Corp.,
6.25% sr. nts., 5/17/07), Non-Vtg. 5 100,000 4,970,000
--------------------------------------------------------------------------------------------------------------------------------
CenturyTel, Inc., 6.875% Cv. Equity Units (each unit consists of units referred to
as corporate units, each with a stated amount of $25 and includes a purchase
contract to purchase CenteryTel, Inc. common stock and $25 principal amount
of CenturyTel, Inc., 6.02% sr. nts., series j, due 2007), Non-Vtg. 5 170,000 4,590,000

20 | OPPENHEIMER CONVERTIBLE SECURITIES FUND

MARKET VALUE
SHARES SEE NOTE 1

--------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES Continued
Sprint Corp., 7.125% Cv. Unsec. Equity Units (each unit consists of units referred
to as corporate units each with a stated amount of $25 and consist of $25
principal amount of Sprint Capital Corp., 6% sr. nts., 8/17/06 and a purchase
contract to purchase Sprint Corp. (PCS Group) common stock) 5 250,000 $ 1,775,000
------------
11,335,000

--------------------------------------------------------------------------------------------------------------------------------
UTILITIES--5.2%
--------------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--3.1%
Cinergy Corp., 9.50% Cv. Flexible Equity Linked Exchangeable Preferred
Redeemable Increased Dividend Equity Securities (each feline prides
consists of units referred to as income prides, each with a stated
amount of $50 and includes a purchase contract for Cinergy Corp.
common stock, and a 6.90% preferred trust security, 6.90% due 2007
issued by Cinergy Corp. Funding Trust I) 5 70,000 4,459,000
--------------------------------------------------------------------------------------------------------------------------------
DTE Energy Co., 8.75% Cv. Equity Units (each unit has a stated value
of $25 and consists of a contract to purchase DTE Energy Co. common
stock and $25 principal amount of DTE Energy Co.,
4.15% sr. unsec. nts., 8/16/07) 5 135,000 3,458,700
--------------------------------------------------------------------------------------------------------------------------------
Duke Energy Corp., 8.25% Cv. Equity Units (each equity unit consists of
units referred to as corporate units which consist of $25 principal amount
of 5.87% sr. nts., due 2006 and a contract to purchase Duke Energy Corp.
common stock), Non-Vtg. 5 100,000 1,384,000
--------------------------------------------------------------------------------------------------------------------------------
FPL Group, Inc., 8.50% Cv. Equity Units (each unit consists of corporate
units, each with a stated amount of $50 and includes a purchase contract
to purchase FPL Group, Inc. common stock and $50 principal amount of
FPL Group Capital, Inc., 4.75% debs., series a, 2/16/07) 5 120,000 6,927,600
--------------------------------------------------------------------------------------------------------------------------------
TXU Corp., 8.125% Cv. Feline Prides Units (each unit consists of units
referred to as Income Prides with a stated amount of $50, which includes
$50 principal amount of TXU Corp., 5.80% sr. nts., 5/16/08 and a purchase
contract to purchase TXU Corp. common stock with attached preference
stock purchase rights, 5/16/06), Non-Vtg. 5 100,000 3,361,000
------------
19,590,300

--------------------------------------------------------------------------------------------------------------------------------
GAS UTILITIES--0.7%
Sempra Energy, 8.50% Cv. Equity Units (each equity unit consists of income
equity units, each has a stated value of $25 and consists of a purchase
contract to purchase Sempra Energy common stock and $25 principal
mount of Sempra Energy, 5.60% sr. nts., 5/17/07) 5 160,000 4,553,600
--------------------------------------------------------------------------------------------------------------------------------
MULTI-UTILITIES--1.4%
AES Trust III, 6.75% Cv. 60,000 2,595,000
--------------------------------------------------------------------------------------------------------------------------------
Williams Cos., Inc. (The):
5.50% Cv. Jr. Unsec. Sub. Debs. 2 80,000 5,210,000
5.50% Cv. Jr. Unsec. Sub. Debs. 20,000 1,302,500
------------
9,107,500
------------
Total Preferred Stocks (Cost $172,145,006) 196,625,350

21 | OPPENHEIMER CONVERTIBLE SECURITIES FUND

STATEMENT OF INVESTMENTS CONTINUED

MARKET VALUE
SHARES SEE NOTE 1

--------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--1.1%
--------------------------------------------------------------------------------------------------------------------------------
Danskin, Inc., Restricted Common Shares 4,6,7 2,015,119 $ --
--------------------------------------------------------------------------------------------------------------------------------
Johnson &amp; Johnson 50,000 2,583,000
--------------------------------------------------------------------------------------------------------------------------------
Pfizer, Inc. 120,000 4,239,600
--------------------------------------------------------------------------------------------------------------------------------
SystemOne Technologies, Inc. 6 197,142 49,286
------------
Total Common Stocks (Cost $6,946,526) 6,871,886

UNITS
--------------------------------------------------------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES--0.0%
--------------------------------------------------------------------------------------------------------------------------------
Danskin, Inc. Wts., Exp. 10/8/04 4,6,7 367,801 --
--------------------------------------------------------------------------------------------------------------------------------
Portion of Danskin, Inc. Promissory Nt. to be used to purchase 53,309
shares of restricted common stock in rights offering 4,6,7 -- 15,993
------------
Total Rights, Warrants and Certificates (Cost $15,993) 15,993

PRINCIPAL
AMOUNT
--------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--3.9%
--------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 3.625%, 3/31/04 (Cost $25,003,143) $25,000,000 25,169,925

--------------------------------------------------------------------------------------------------------------------------------
STRUCTURED NOTES--2.7%
--------------------------------------------------------------------------------------------------------------------------------
Bank of America Corp., Linked Sr. Nts., Series RTY, 7%, 3/3/04
(redemption linked to the Russell 2000 Index) 6,500,000 7,221,700
--------------------------------------------------------------------------------------------------------------------------------
Credit Suisse First Boston Corp. (New York Branch),
6% Equity Linked Nts., 12/23/04 (redemption linked to
Comcast Corp., Cl. A Special common stock) 165,800 5,098,349
--------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch &amp; Co., Inc., Capped Appreciation Linked Nts.,
5%, 12/30/04 (linked to the performance of Wyeth) 2 5,000,000 5,018,500
------------
Total Structured Notes (Cost $16,495,551) 17,338,549

--------------------------------------------------------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--3.0%
--------------------------------------------------------------------------------------------------------------------------------
Undivided interest of 10% in joint repurchase agreement (Principal
Amount/Market Value $190,001,000, with a maturity value of $190,009,444) with
Banc One Capital Markets, Inc., 0.80%, dated 12/31/03, to be repurchased at
$19,009,845 on 1/2/04, collateralized by U.S. Treasury Bonds, 4.25%, 11/30/13,
with a value of $194,000,862 (Cost $19,009,000) 19,009,000 19,009,000

--------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $588,656,847) 100.2% 643,337,271
--------------------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (0.2) (1,431,113)
--------------------------
NET ASSETS 100.0% $641,906,158
==========================

22 | OPPENHEIMER CONVERTIBLE SECURITIES FUND

FOOTNOTES TO STATEMENT OF INVESTMENTS

1. Represents a zero coupon bond.
2. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $191,541,975 or 29.84% of the Fund's net
assets as of December 31, 2003.
3. Represents the current interest rate for a variable or increasing rate
security. 4. Identifies issues considered to be illiquid or restricted. See Note
6 of Notes to Financial Statements.
5. Units may be comprised of several components, such as debt and equity and/or
warrants to purchase equity at some point in the future. For units, which
represent debt securities, principal amount disclosed represents total
underlying principal.
6. Non-income producing security.
7. Received as the result of issuer reorganization. Currently has minimal market
value.

Affiliated company. Represents ownership of at least 5% of the voting securities
of the issuer, and is or was an affiliate, as defined in the Investment Company
Act of 1940, at or during the period ended December 31, 2003. There were no
affiliate securities held by the Fund as of December 31, 2003. Transactions
during the period in which the issuer was an affiliate are as follows:

SHARES/UNITS SHARES/UNITS
DECEMBER 31, GROSS GROSS DECEMBER 31, REALIZED
2002 ADDITIONS REDUCTIONS 2003 LOSS
---------------------------------------------------------------------------------------------------------------

STOCKS AND/OR WARRANTS
Danskin, Inc. 2,610,710 -- 2,610,710 -- $ 3,047,417
Danskin, Inc. Restricted
Common Shares* 2,015,119 -- -- 2,015,119 --
Danskin, Inc. Wts., Exp. 10/8/04* 367,801 -- -- 367,801 --
Portion of Danskin, Inc.
Promissory Nt. to be used to
purchase 53,309 shares of
restricted common stock
in rights offering* -- -- -- -- --
-----------
$ 3,047,417
===========

*No longer an affiliate as of December 31, 2003.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

23 | OPPENHEIMER CONVERTIBLE SECURITIES FUND

STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2003
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------
ASSETS
--------------------------------------------------------------------------------------------
Investments, at value (cost $588,656,847)--see accompanying statement $ 643,337,271
--------------------------------------------------------------------------------------------
Cash 614,518
--------------------------------------------------------------------------------------------
Receivables and other assets:
Interest, dividends and principal paydowns 3,447,429
Shares of beneficial interest sold 1,389,451
Investments sold 954,799
Other 27,799
-------------
Total assets 649,771,267

--------------------------------------------------------------------------------------------
LIABILITIES
--------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 5,763,425
Shares of beneficial interest redeemed 1,444,604
Distribution and service plan fees 378,802
Trustees' compensation 111,692
Transfer and shareholder servicing agent fees 81,654
Shareholder reports 55,328
Other 29,604
-------------
Total liabilities 7,865,109

--------------------------------------------------------------------------------------------
NET ASSETS $ 641,906,158
=============

--------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
--------------------------------------------------------------------------------------------
Paid-in capital $ 721,365,236
--------------------------------------------------------------------------------------------
Accumulated net investment loss (970,782)
--------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (133,168,720)
--------------------------------------------------------------------------------------------
Net unrealized appreciation on investments 54,680,424
-------------
NET ASSETS $ 641,906,158
=============

24 | OPPENHEIMER CONVERTIBLE SECURITIES FUND

--------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
--------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$310,641,497 and 23,401,073 shares of beneficial interest outstanding) $13.27
Maximum offering price per share (net asset value plus sales charge of 5.75% of
offering price) $14.08
--------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $133,057,612
and 10,008,143 shares of beneficial interest outstanding) $13.29
--------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $82,148,554
and 6,191,814 shares of beneficial interest outstanding) $13.27
--------------------------------------------------------------------------------------------
Class M Shares:
Net asset value and redemption price per share (based on net assets of
$114,600,010 and 8,638,207 shares of beneficial interest outstanding) $13.27
Maximum offering price per share (net asset value plus sales charge of 3.25% of
offering price) $13.72
--------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $1,458,485
and 109,875 shares of beneficial interest outstanding) $13.27

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

25 | OPPENHEIMER CONVERTIBLE SECURITIES FUND

STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2003
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------
INVESTMENT INCOME
--------------------------------------------------------------------------------------------
Interest $ 19,024,873
--------------------------------------------------------------------------------------------
Dividends 12,211,024
------------
Total investment income 31,235,897

--------------------------------------------------------------------------------------------
EXPENSES
--------------------------------------------------------------------------------------------
Management fees 2,755,382
--------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 599,232
Class B 1,398,157
Class C 697,297
Class M 766,119
Class N 3,698
--------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 423,353
Class B 288,769
Class C 121,800
Class M 114,152
Class N 2,492
--------------------------------------------------------------------------------------------
Accounting service fees 174,795
--------------------------------------------------------------------------------------------
Trustees' compensation 49,164
--------------------------------------------------------------------------------------------
Custodian fees and expenses 11,191
--------------------------------------------------------------------------------------------
Other 18,729
------------
Total expenses 7,424,330
Less reduction to custodian expenses (2,914)
Less voluntary waiver of transfer and shareholder servicing agent fees--Class A (1,975)
Less voluntary waiver of transfer and shareholder servicing agent fees--Class B (1,366)
Less voluntary waiver of transfer and shareholder servicing agent fees--Class C (530)
Less voluntary waiver of transfer and shareholder servicing agent fees--Class M (581)
Less voluntary waiver of transfer and shareholder servicing agent fees--Class N (174)
------------
Net expenses 7,416,790

--------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 23,819,107

--------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
--------------------------------------------------------------------------------------------
Net realized gain (loss) on:
Investments:
Unaffiliated companies 32,229,419
Affiliated companies (3,047,417)
Closing and expiration of option contracts written 96,305
------------
Net realized gain 29,278,307
--------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments 64,594,391

--------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $117,691,805
============

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

26 | OPPENHEIMER CONVERTIBLE SECURITIES FUND

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

YEAR ENDED DECEMBER 31, 2003 2002
-------------------------------------------------------------------------------------------------
OPERATIONS
-------------------------------------------------------------------------------------------------
Net investment income $ 23,819,107 $ 25,383,283
-------------------------------------------------------------------------------------------------
Net realized gain (loss) 29,278,307 (85,635,374)
-------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 64,594,391 12,007,604
-----------------------------
Net increase (decrease) in net assets resulting from operations 117,691,805 (48,244,487)

-------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
-------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (11,367,661) (10,356,782)
Class B (5,345,568) (9,416,327)
Class C (2,624,294) (3,014,487)
Class M (4,627,938) (5,875,935)
Class N (28,916) (11,341)

-------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
-------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from beneficial interest
transactions:
Class A 66,001,751 38,583,437
Class B (43,825,244) (103,076,509)
Class C 9,713,833 (7,317,685)
Class M (11,782,752) (20,269,990)
Class N 938,567 381,879

-------------------------------------------------------------------------------------------------
NET ASSETS
-------------------------------------------------------------------------------------------------
Total increase (decrease) 114,743,583 (168,618,227)
-------------------------------------------------------------------------------------------------
Beginning of period 527,162,575 695,780,802
-----------------------------
End of period [including accumulated net investment loss of
$970,782 and $1,934,293, respectively] $641,906,158 $ 527,162,575
=============================

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

27 | OPPENHEIMER CONVERTIBLE SECURITIES FUND

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

1. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods less than one full
year. Returns do not reflect the deduction of taxes that a shareholder would pay
on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year. 3. Reduction to custodian
expenses less than 0.01%. 4. Voluntary waiver of transfer agent fees less than
0.01%.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

28 | OPPENHEIMER CONVERTIBLE SECURITIES FUND

----------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $133,058 $154,350 $286,829 $373,860 $431,370
----------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $139,757 $213,259 $330,806 $418,592 $414,611
----------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 3.79% 3.95% 2.75% 3.62% 3.79%
Total expenses 1.74% 3,4 1.77% 3 1.71% 3 1.70% 3 1.71% 3
----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 61% 52% 69% 127% 95%

1. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods less than one full
year. Returns do not reflect the deduction of taxes that a shareholder would pay
on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year. 3. Reduction to custodian
expenses less than 0.01%. 4. Voluntary waiver of transfer agent fees less than
0.01%.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

29 | OPPENHEIMER CONVERTIBLE SECURITIES FUND

FINANCIAL HIGHLIGHTS CONTINUED
--------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $82,149 $61,031 $76,846 $91,567 $94,352
----------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $69,787 $66,391 $85,774 $96,574 $94,329
Ratios to average net assets: 2
Net investment income 3.73% 3.97% 2.80% 3.62% 3.80%
Total expenses 1.70% 3,4 1.76% 3 1.71% 3 1.70% 3 1.70% 3
----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 61% 52% 69% 127% 95%

1. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods less than one full
year. Returns do not reflect the deduction of taxes that a shareholder would pay
on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year. 3. Reduction to custodian
expenses less than 0.01%. 4. Voluntary waiver of transfer agent fees less than
0.01%.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

30 | OPPENHEIMER CONVERTIBLE SECURITIES FUND

----------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $114,600 $108,426 $144,612 $181,521 $234,023
----------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $110,337 $122,897 $160,919 $213,617 $235,419
Ratios to average net assets: 2
Net investment income 4.16% 4.24% 3.04% 3.90% 4.06%
Total expenses 1.32% 3,4 1.51% 3 1.45% 3 1.42% 3 1.45% 3
----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 61% 52% 69% 127% 95%

1. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods less than one full
year. Returns do not reflect the deduction of taxes that a shareholder would pay
on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year. 3. Reduction to custodian
expenses less than 0.01%. 4. Voluntary waiver of transfer agent fees less than
0.01%.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

31 | OPPENHEIMER CONVERTIBLE SECURITIES FUND

FINANCIAL HIGHLIGHTS CONTINUED
--------------------------------------------------------------------------------

1. For the period from March 1, 2001 (inception of offering) to December 31,
2001. 2. Assumes an investment on the business day before the first day of the
fiscal period, 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.

32 | OPPENHEIMER CONVERTIBLE SECURITIES FUND

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

-------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Convertible Securities Fund (the Fund), a portfolio of the Bond
Fund Series, 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 a high level of total return on its assets through a
combination of current income and capital appreciation. The Fund's investment
advisor is OppenheimerFunds, Inc. (the Manager).
The Fund offers Class A, Class B, Class C, Class M 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 M shares are sold with a reduced front-end sales
charge. 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 by minor amounts
due to each class having its own expenses directly attributable to that class.
Classes A, B, C, M and N have separate distribution and/or service plans. Class
B shares will automatically convert to Class A shares six years after the date
of purchase.
The following is a summary of significant accounting policies consistently
followed by the Fund.

-------------------------------------------------------------------------------
SECURITIES VALUATION. Securities listed or traded on National Stock Exchanges
or other domestic or foreign exchanges are valued based on the last sale price
of the security traded on that exchange prior to the time when the Fund's
assets are valued. Securities traded on NASDAQ are valued based on the closing
price provided by NASDAQ prior to the time when the Fund's assets are valued.
In the absence of a sale, the security is valued at the last sale price on the
prior trading day, if it is within the spread of the closing bid and asked
prices, and if not, at the closing bid price. Securities (including restricted
securities) for which quotations are not readily available are valued primarily
using dealer-supplied valuations, a portfolio pricing service authorized by the
Board of Trustees, or at their fair value. 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 foreign exchanges will be fair valued. Fair value is determined in
good faith using consistently applied procedures under the supervision of the
Board of Trustees. Short-term "money market type" debt securities with
remaining maturities of sixty days or less are valued at amortized cost (which
approximates market value).
-------------------------------------------------------------------------------
STRUCTURED NOTES. The Fund invests in structured notes whose market values and
redemption prices are linked to the market value of specific securities. The
structured notes are leveraged, which increases the Fund's exposure to changes
in prices of the underlying securities and increases the volatility of each
note's market value relative to the change in the underlying security prices.
Fluctuations in value of these securities are recorded as unrealized gains and
losses in the accompanying financial statements. The

33 | OPPENHEIMER CONVERTIBLE SECURITIES FUND

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

-------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
Fund records a realized gain or loss when a structured note is sold or matures.
As of December 31, 2003, the market value of these securities comprised 2.7% of
the Fund's net assets, and resulted in unrealized gains of $842,998.

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

-------------------------------------------------------------------------------
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
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED SECURITIES AND OTHER
NET INVESTMENT LONG-TERM LOSS INVESTMENTS FOR FEDERAL
INCOME GAIN CARRYFORWARD 1,2 INCOME TAX PURPOSES
---------------------------------------------------------------------------------

$1,184,025 $-- $131,926,100 $51,387,836

1. As of December 31, 2003, the Fund had $131,926,100 of net capital loss
carryforwards available to offset future realized capital gains, if any, and
thereby reduce future taxable gain distributions. As of December 31, 2003,
details of the capital loss carryforwards were as follows:

EXPIRING
----------------------
2009 $ 41,459,104
2010 90,466,996
------------
Total $131,926,100
=============

2. During the fiscal year December 31, 2003, the Fund utilized $21,570,184 of
capital loss carryforward to offset capital gains realized in that fiscal year.
During the fiscal year December 31, 2002, the Fund did not utilize any capital
loss carryforwards.

34 | OPPENHEIMER CONVERTIBLE SECURITIES 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 December 31, 2003. Net assets
of the Fund were unaffected by the reclassifications.

REDUCTION TO INCREASE TO
ACCUMULATED ACCUMULATED NET
NET INVESTMENT REALIZED LOSS ON
LOSS INVESTMENTS
------------------------------------
$1,138,781 $1,138,781

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

YEAR ENDED YEAR ENDED
DECEMBER 31, 2003 DECEMBER 31, 2002
---------------------------------------------------------------
Distributions paid from:
Ordinary income $23,994,377 $28,674,872

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 December 31, 2003 are noted below. The
primary difference between book and tax appreciation or depreciation of
securities and other investments, if applicable, is attributable to the tax
deferral of losses or tax realization of financial statement unrealized gain or
loss.

Federal tax cost of securities $591,949,435
============

Gross unrealized appreciation $ 59,480,921
Gross unrealized depreciation (8,093,085)
------------
Net unrealized appreciation $ 51,387,836
============

--------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Fund has adopted an unfunded retirement plan for
the Fund's independent trustees. Benefits are based on years of service and
fees paid to each trustee during the years of service. During the year ended
December 31, 2003, the Fund's projected benefit obligations were increased by
$16,097 and payments of $2,372 were made to retired trustees, resulting in an
accumulated liability of $104,840 as of December 31, 2003.
The Board of Trustees has adopted a deferred compensation plan for
independent trustees that enables trustees to elect to defer receipt of all or
a portion of the annual compensation they are entitled to receive from the
Fund. Under the plan, deferred amounts are treated as though equal dollar
amounts had been invested in shares of the Fund or are invested in other
Oppenheimer funds selected by the Trustee. Deferral of trustees' fees under the
plan will not affect the net assets of the Fund, and will not materially affect
the Fund's assets, liabilities or net investment income per share. Amounts will
be deferred until distributed in accordance to the Plan.

35 | OPPENHEIMER CONVERTIBLE SECURITIES FUND

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

-------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date. Income distributions, if any, are
declared and paid quarterly. Capital gain distributions, if any, are declared
and paid annually.

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

-------------------------------------------------------------------------------
EXPENSE OFFSET ARRANGEMENT. The reduction of custodian fees, if applicable,
represents earnings on cash balances maintained by the Fund.

-------------------------------------------------------------------------------
SECURITY TRANSACTIONS. Security transactions are recorded on the trade date.
Realized gains and losses on securities sold are determined on the basis of
identified cost.

-------------------------------------------------------------------------------
OTHER. The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates.

--------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of no par value shares of
beneficial interest of each class. Transactions in shares of beneficial
interest were as follows:

YEAR ENDED DECEMBER 31, 2003 YEAR ENDED DECEMBER 31, 2002
SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------------------------------

CLASS A
Sold 10,293,699 $125,272,357 8,236,543 $ 96,210,339
Dividends and/or
distributions reinvested 717,012 8,840,852 712,104 8,199,709
Redeemed (5,594,158) (68,111,458) (5,651,194) (65,826,611)
-------------------------------------------------------------
Net increase 5,416,553 $ 66,001,751 3,297,453 $ 38,583,437
=============================================================

------------------------------------------------------------------------------------------
CLASS B
Sold 2,802,713 $ 34,182,973 1,455,217 $ 17,209,549
Dividends and/or
distributions reinvested 300,964 3,678,039 550,830 6,406,897
Redeemed (6,750,493) (81,686,256) (10,784,316) (126,692,955)
-------------------------------------------------------------
Net decrease (3,646,816) $(43,825,244) (8,778,269) $(103,076,509)
=============================================================

36 | OPPENHEIMER CONVERTIBLE SECURITIES FUND

YEAR ENDED DECEMBER 31, 2003 YEAR ENDED DECEMBER 31, 2002
SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------------------------------

CLASS C
Sold 1,914,058 $ 23,378,006 947,643 $ 10,925,314
Dividends and/or
distributions reinvested 144,706 1,777,170 173,843 2,006,345
Redeemed (1,277,679) (15,441,343) (1,734,724) (20,249,344)
------------------------------------------------------------
Net increase (decrease) 781,085 $ 9,713,833 (613,238) $ (7,317,685)
=============================================================

------------------------------------------------------------------------------------------
CLASS M
Sold 223,208 $ 2,730,862 169,391 $ 1,991,974
Dividends and/or
distributions reinvested 264,332 3,234,301 344,816 3,977,838
Redeemed (1,462,362) (17,747,915) (2,237,918) (26,239,802)
-------------------------------------------------------------
Net decrease (974,822) $(11,782,752) (1,723,711) $(20,269,990)
=============================================================

-------------------------------------------------------------------------------------------
CLASS N
Sold 89,088 $ 1,101,574 37,735 $ 451,651
Dividends and/or
distributions reinvested 2,161 27,095 855 9,599
Redeemed (15,713) (190,102) (7,108) (79,371)
-------------------------------------------------------------
Net increase 75,536 $ 938,567 31,482 $ 381,879
=============================================================

-------------------------------------------------------------------------------
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 December 31, 2003, were
$346,402,469 and $299,537,010, 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 $50 million of average annual net assets of
the Fund, 0.50% of the next $250 million and 0.4375% of average annual net
assets over $300 million.

-------------------------------------------------------------------------------
ACCOUNTING FEES. Accounting fees paid to the Manager were in accordance with
the accounting services agreement with the Fund which provides for an annual
fee of $12,000 for the first $30 million of net assets and $9,000 for each
additional $30 million of net assets. During the year ended, the Fund paid
$174,795 to the Manager for accounting and pricing services.

-------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the
Manager, acts as the transfer and shareholder servicing agent for the Fund. The
Fund pays OFS a per account fee. For the year ended December 31, 2003, the Fund
paid $944,910 to OFS for services to the Fund.

37 | OPPENHEIMER CONVERTIBLE SECURITIES FUND

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, up to an annual rate of 0.35% of average net assets per
class. This undertaking may be amended or withdrawn at any time.

-------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN (12B-1) FEES. Under its General Distributor's
Agreement with the 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 the fees it receives
from the Fund to pay brokers, dealers and other financial institutions for
personal services and account maintenance services they provide for their
customers who 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, CLASS M AND CLASS N
SHARES. The Fund has adopted Distribution and Service Plans for Class B, Class
C, Class M and Class N shares to compensate the Distributor for its services in
connection with the distribution of these 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 shares and on Class C shares, 0.50% per year on Class
M 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, Class M or Class N plan is terminated by the Fund or by the
shareholders of a class, the Board of Trustees and its independent trustees
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 December 31,
2003 for Class B, Class C and Class N shares was $3,330,489, $2,068,728 and
$21,760, 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.

38 | OPPENHEIMER CONVERTIBLE SECURITIES FUND

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

December 31, 2003 $248,513 $7,400 $6,904 $325,658 $5,278 $889

-------------------------------------------------------------------------------
5. OPTION ACTIVITY
The Fund may buy and sell put and call options, or write put and covered call
options on portfolio securities in order to produce incremental earnings or
protect against changes in the value of portfolio securities.
The Fund generally purchases put options or writes covered call options to
hedge against adverse movements in the value of portfolio holdings. When an
option is written, the Fund receives a premium and becomes obligated to sell or
purchase the underlying security at a fixed price, upon exercise of the option.
Options are valued daily based upon the last sale price on the principal
exchange on which the option is traded and unrealized appreciation or
depreciation is recorded. The Fund will realize a gain or loss upon the
expiration or closing of the option transaction. When an option is exercised,
the proceeds on sales for a written call option, the purchase cost for a
written put option, or the cost of the security for a purchased put or call
option is adjusted by the amount of premium received or paid.
Securities designated to cover outstanding call options are noted in the
Statement of Investments where applicable. Shares subject to call, expiration
date, exercise price, premium received and market value are detailed in a note
to the Statement of Investments. Options written are reported as a liability in
the Statement of Assets and Liabilities. Realized gains and losses are reported
in the Statement of Operations.
The risk in writing a call option is that the Fund gives up the opportunity
for profit if the market price of the security increases and the option is
exercised. The risk in writing a put option is that the Fund may incur a loss
if the market price of the security decreases and the option is exercised. The
risk in buying an option is that the Fund pays a premium whether or not the
option is exercised. The Fund also has the additional risk of not being able to
enter into a closing transaction if a liquid secondary market does not exist.

Written option activity for the year ended December 31, 2003 was as follows:

CALL OPTIONS
-------------------------------
NUMBER OF AMOUNT OF
CONTRACTS PREMIUMS
--------------------------------------------------------------------
Options outstanding as of
December 31, 2002 -- $ --
Options written 1,800 446,093
Options closed or expired (1,800) (446,093)
-------------------------------
Options outstanding as of
December 31, 2003 -- $ --
==============================

39 | OPPENHEIMER CONVERTIBLE SECURITIES FUND

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

-------------------------------------------------------------------------------
6. ILLIQUID OR RESTRICTED SECURITIES
As of December 31, 2003, investments in securities included issues that are
illiquid or restricted. Restricted securities are purchased in private
placement transactions, are not registered under the Securities Act of 1933,
may have contractual restrictions on resale, and are valued under methods
approved by the Board of Trustees as reflecting fair value. A security may also
be considered illiquid if it lacks a readily available market or if its
valuation has not changed for a certain period of time. The Fund intends to
invest no more than 15% 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 December 31, 2003 was
$2,132,636, which represents 0.33% of the Fund's net assets, of which $15,993
is considered restricted. Information concerning restricted securities is as
follows:

ACQUISITION VALUATION AS OF UNREALIZED
SECURITY DATES COST DEC. 31, 2003 DEPRECIATION
----------------------------------------------------------------------------------------------

STOCKS AND/OR WARRANTS
Danskin, Inc. Restricted Common Shares 8/14/95 $528,136 $ -- $528,136
Danskin, Inc. Wts., Exp. 10/8/04 8/14/95 -- -- --
Portion of Danskin, Inc. Promissory Nt.
to be used to purchase 53,309 shares
of restricted common stock in
rights offering 8/14/95 15,993 15,993 --

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

40 | OPPENHEIMER CONVERTIBLE SECURITIES FUND

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 &amp; Poor's Ratings Services ("Standard &amp; 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 &amp;
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 &amp; 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 &amp; 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 &amp; 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 &amp; 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 &amp; 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 &amp; 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.

Appendix B

Industry Classifications

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

Appendix C

OppenheimerFunds Special Sales Charge Arrangements and Waivers

In certain cases, the initial sales charge that applies to purchases of Class A
shares1 of the Oppenheimer funds or the contingent deferred sales charge that
may apply to Class A, Class B or Class C shares may be waived.2 That is because
of the economies of sales efforts realized by OppenheimerFunds Distributor,
Inc., (referred to in this document as the "Distributor"), or by dealers or
other financial institutions that offer those shares to certain classes of
investors.

Not all waivers apply to all funds. For example, waivers relating to Retirement
Plans do not apply to Oppenheimer municipal funds, because shares of those funds
are not available for purchase by or on behalf of retirement plans. Other
waivers apply only to shareholders of certain funds.

For the purposes of some of the waivers described below and in the Prospectus
and Statement of Additional Information of the applicable Oppenheimer funds, the
term "Retirement Plan" refers to the following types of plans:
1) plans qualified under Sections 401(a) or 401(k) of the Internal
Revenue Code,
2) non-qualified deferred compensation plans, 3) employee benefit
plans3
4) Group Retirement Plans4 5) 403(b)(7) custodial plan accounts
6) Individual Retirement Accounts ("IRAs"), including traditional IRAs,
Roth IRAs, SEP-IRAs, SARSEPs or SIMPLE plans

The interpretation of these provisions as to the applicability of a special
arrangement or waiver in a particular case is in the sole discretion of the
Distributor or the transfer agent (referred to in this document as the "Transfer
Agent") of the particular Oppenheimer fund. These waivers and special
arrangements may be amended or terminated at any time by a particular fund, the
Distributor, and/or OppenheimerFunds, Inc. (referred to in this document as the
"Manager").

Waivers that apply at the time shares are redeemed must be requested by the
shareholder and/or dealer in the redemption request.

I. Applicability of Class A Contingent Deferred Sales Charges in Certain Cases
------------------------------------------------------------------------------

Purchases of Class A Shares of Oppenheimer Funds That Are Not Subject to Initial
Sales Charge but May Be Subject to the Class A Contingent Deferred Sales Charge
(unless a waiver applies).

There is no initial sales charge on purchases of Class A shares of any of the
Oppenheimer funds in the cases listed below. However, these purchases may be
subject to the Class A contingent deferred sales charge if redeemed within 18
months (24 months in the case of Oppenheimer Rochester National Municipals and
Rochester Fund Municipals) of the beginning of the calendar month of their
purchase, as described in the Prospectus (unless a waiver described elsewhere in
this Appendix applies to the redemption). Additionally, on shares purchased
under these waivers that are subject to the Class A contingent deferred sales
charge, the Distributor will pay the applicable concession described in the
Prospectus under "Class A Contingent Deferred Sales Charge."5 This waiver
provision applies to:
|_| Purchases of Class A shares aggregating $1 million or more. |_|
Purchases of Class A shares by a Retirement Plan that was
permitted to purchase such shares at net asset value but subject to a
contingent deferred sales charge prior to March 1, 2001. That included
plans (other than IRA or 403(b)(7) Custodial Plans) that: 1) bought
shares costing $500,000 or more, 2) had at the time of purchase 100 or
more eligible employees or total plan assets of $500,000 or more, or 3)
certified to the Distributor that it projects to have annual plan
purchases of $200,000 or more.
|_| Purchases by an OppenheimerFunds-sponsored Rollover IRA, if the
purchases are made:
1) through a broker, dealer, bank or registered investment adviser
that has made special arrangements with the Distributor for those
purchases, or
2) by a direct rollover of a distribution from a qualified Retirement
Plan if the administrator of that Plan has made special arrangements
with the Distributor for those purchases.
|_|Purchases of Class A shares by Retirement Plans that have any of the
following record-keeping arrangements: 1) The record keeping is
performed by Merrill Lynch Pierce Fenner &amp;
Smith, Inc. ("Merrill Lynch") on a daily valuation basis for the
Retirement Plan. On the date the plan sponsor signs the
record-keeping service agreement with Merrill Lynch, the Plan must
have $3 million or more of its assets invested in (a) mutual funds,
other than those advised or managed by Merrill Lynch Investment
Management, L.P. ("MLIM"), that are made available under a Service
Agreement between Merrill Lynch and the mutual fund's principal
underwriter or distributor, and (b) funds advised or managed by MLIM
(the funds described in (a) and (b) are referred to as "Applicable
Investments").
2) The record keeping for the Retirement Plan is performed on a daily
valuation basis by a record keeper whose services are provided under
a contract or arrangement between the Retirement Plan and Merrill
Lynch. On the date the plan sponsor signs the record keeping service
agreement with Merrill Lynch, the Plan must have $3 million or more
of its assets (excluding assets invested in money market funds)
invested in Applicable Investments.
3) The record keeping for a Retirement Plan is handled under a service
agreement with Merrill Lynch and on the date the plan sponsor signs
that agreement, the Plan has 500 or more eligible employees (as
determined by the Merrill Lynch plan conversion manager).

II. Waivers of Class A Sales Charges of Oppenheimer Funds
------------------------------------------------------------------------------

A. Waivers of Initial and Contingent Deferred Sales Charges for Certain
Purchasers.

Class A shares purchased by the following investors are not subject to any Class
A sales charges (and no concessions are paid by the Distributor on such
purchases):
|_| The Manager or its affiliates.
|_|Present or former officers, directors, trustees and employees (and
their "immediate families") of the Fund, the Manager and its
affiliates, and retirement plans established by them for their
employees. The term "immediate family" refers to one's spouse,
children, grandchildren, grandparents, parents, parents-in-law,
brothers and sisters, sons- and daughters-in-law, a sibling's spouse, a
spouse's siblings, aunts, uncles, nieces and nephews; relatives by
virtue of a remarriage (step-children, step-parents, etc.) are
included.
|_|Registered management investment companies, or separate accounts of
insurance companies having an agreement with the Manager or the
Distributor for that purpose.
|_|Dealers or brokers that have a sales agreement with the Distributor,
if they purchase shares for their own accounts or for retirement plans
for their employees.
|_|Employees and registered representatives (and their spouses) of
dealers or brokers described above or financial institutions that have
entered into sales arrangements with such dealers or brokers (and which
are identified as such to the Distributor) or with the Distributor. The
purchaser must certify to the Distributor at the time of purchase that
the purchase is for the purchaser's own account (or for the benefit of
such employee's spouse or minor children).
|_|Dealers, brokers, banks or registered investment advisors that have
entered into an agreement with the Distributor providing specifically
for the use of shares of the Fund in particular investment products
made available to their clients. Those clients may be charged a
transaction fee by their dealer, broker, bank or advisor for the
purchase or sale of Fund shares.
|_|Investment advisors and financial planners who have entered into an
agreement for this purpose with the Distributor and who charge an
advisory, consulting or other fee for their services and buy shares for
their own accounts or the accounts of their clients.
|_|"Rabbi trusts" that buy shares for their own accounts, if the
purchases are made through a broker or agent or other financial
intermediary that has made special arrangements with the Distributor
for those purchases.
|_|Clients of investment advisors or financial planners (that have
entered into an agreement for this purpose with the Distributor) who
buy shares for their own accounts may also purchase shares without
sales charge but only if their accounts are linked to a master account
of their investment advisor or financial planner on the books and
records of the broker, agent or financial intermediary with which the
Distributor has made such special arrangements . Each of these
investors may be charged a fee by the broker, agent or financial
intermediary for purchasing shares.
|_|Directors, trustees, officers or full-time employees of OpCap Advisors
or its affiliates, their relatives or any trust, pension, profit
sharing or other benefit plan which beneficially owns shares for those
persons.
|_|Accounts for which Oppenheimer Capital (or its successor) is the
investment advisor (the Distributor must be advised of this
arrangement) and persons who are directors or trustees of the company
or trust which is the beneficial owner of such accounts.
|_|A unit investment trust that has entered into an appropriate agreement
with the Distributor.
|_|Dealers, brokers, banks, or registered investment advisers that have
entered into an agreement with the Distributor to sell shares to
defined contribution employee retirement plans for which the dealer,
broker or investment adviser provides administration services.
|_|Retirement Plans and deferred compensation plans and trusts used to
fund those plans (including, for example, plans qualified or created
under sections 401(a), 401(k), 403(b) or 457 of the Internal Revenue
Code), in each case if those purchases are made through a broker, agent
or other financial intermediary that has made special arrangements with
the Distributor for those purchases.
|_|A TRAC-2000 401(k) plan (sponsored by the former Quest for Value
Advisors) whose Class B or Class C shares of a Former Quest for Value
Fund were exchanged for Class A shares of that Fund due to the
termination of the Class B and Class C TRAC-2000 program on November
24, 1995.
|_|A qualified Retirement Plan that had agreed with the former Quest for
Value Advisors to purchase shares of any of the Former Quest for Value
Funds at net asset value, with such shares to be held through
DCXchange, a sub-transfer agency mutual fund clearinghouse, if that
arrangement was consummated and share purchases commenced by December
31, 1996.

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

Class A shares issued or purchased in the following transactions are not subject
to sales charges (and no concessions are paid by the Distributor on such
purchases):
|_|Shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which the Fund is a party.
|_|Shares purchased by the reinvestment of dividends or other
distributions reinvested from the Fund or other Oppenheimer funds
(other than Oppenheimer Cash Reserves) or unit investment trusts for
which reinvestment arrangements have been made with the Distributor.
|_|Shares purchased through a broker-dealer that has entered into a
special agreement with the Distributor to allow the broker's customers
to purchase and pay for shares of Oppenheimer funds using the proceeds
of shares redeemed in the prior 30 days from a mutual fund (other than
a fund managed by the Manager or any of its subsidiaries) on which an
initial sales charge or contingent deferred sales charge was paid. This
waiver also applies to shares purchased by exchange of shares of
Oppenheimer Money Market Fund, Inc. that were purchased and paid for in
this manner. This waiver must be requested when the purchase order is
placed for shares of the Fund, and the Distributor may require evidence
of qualification for this waiver.
|_|Shares purchased with the proceeds of maturing principal units of any
Qualified Unit Investment Liquid Trust Series.
|_|Shares purchased by the reinvestment of loan repayments by a
participant in a Retirement Plan for which the Manager or an affiliate
acts as sponsor.

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

The Class A contingent deferred sales charge is also waived if shares that would
otherwise be subject to the contingent deferred sales charge are redeemed in the
following cases:
|_|To make Automatic Withdrawal Plan payments that are limited annually
to no more than 12% of the account value adjusted annually.
|_|Involuntary redemptions of shares by operation of law or involuntary
redemptions of small accounts (please refer to "Shareholder Account
Rules and Policies," in the applicable fund Prospectus).
|_|For distributions from Retirement Plans, deferred compensation plans
or other employee benefit plans for any of the following purposes:
1) Following the death or disability (as defined in the Internal
Revenue Code) of the participant or beneficiary. The death or
disability must occur after the participant's account was established.
2) To return excess contributions.
3) To return contributions made due to a mistake of fact. 4) Hardship
withdrawals, as defined in the plan.6 5) Under a Qualified Domestic
Relations Order, as defined in the
Internal Revenue Code, or, in the case of an IRA, a divorce or
separation agreement described in Section 71(b) of the Internal
Revenue Code.
6) To meet the minimum distribution requirements of the Internal
Revenue Code.
7) To make "substantially equal periodic payments" as described in
Section 72(t) of the Internal Revenue Code.
8) For loans to participants or beneficiaries. 9) Separation from
service.7
10)Participant-directed redemptions to purchase shares of a mutual
fund (other than a fund managed by the Manager or a subsidiary of
the Manager) if the plan has made special arrangements with the
Distributor.
11)Plan termination or "in-service distributions," if the redemption
proceeds are rolled over directly to an OppenheimerFunds-sponsored
IRA.
|_|For distributions from 401(k) plans sponsored by broker-dealers that
have entered into a special agreement with the Distributor allowing
this waiver.
|_|For distributions from retirement plans that have $10 million or more
in plan assets and that have entered into a special agreement with the
Distributor.
|_|For distributions from retirement plans which are part of a retirement
plan product or platform offered by certain banks, broker-dealers,
financial advisors, insurance companies or record keepers which have
entered into a special agreement with the Distributor.

III. Waivers of Class B, Class C and Class N Sales Charges of Oppenheimer Funds
--------------------------------------------------------------------------------

The Class B, Class C and Class N contingent deferred sales charges will not be
applied to shares purchased in certain types of transactions or redeemed in
certain circumstances described below.

A. Waivers for Redemptions in Certain Cases.

The Class B, Class C and Class N contingent deferred sales charges will be
waived for redemptions of shares in the following cases:
|_|Shares redeemed involuntarily, as described in "Shareholder Account
Rules and Policies," in the applicable Prospectus.
|_|Redemptions from accounts other than Retirement Plans following the
death or disability of the last surviving shareholder. The death or
disability must have occurred after the account was established, and
for disability you must provide evidence of a determination of
disability by the Social Security Administration.
|_|The contingent deferred sales charges are generally not waived
following the death or disability of a grantor or trustee for a trust
account. The contingent deferred sales charges will only be waived in
the limited case of the death of the trustee of a grantor trust or
revocable living trust for which the trustee is also the sole
beneficiary. The death or disability must have occurred after the
account was established, and for disability you must provide evidence
of a determination of disability by the Social Security Administration.
|_|Distributions from accounts for which the broker-dealer of record has
entered into a special agreement with the Distributor allowing this
waiver.
|_|Redemptions of Class B shares held by Retirement Plans whose records
are maintained on a daily valuation basis by Merrill Lynch or an
independent record keeper under a contract with Merrill Lynch.
|_|Redemptions of Class C shares of Oppenheimer U.S. Government Trust
from accounts of clients of financial institutions that have entered
into a special arrangement with the Distributor for this purpose.
|_|Redemptions requested in writing by a Retirement Plan sponsor of Class
C shares of an Oppenheimer fund in amounts of $1,000,000 or more and
made more than 12 months after the Retirement Plan's first purchase of
Class C shares, if the redemption proceeds are invested in Class N
shares of one or more Oppenheimer funds.
|_|Distributions8 from Retirement Plans or other employee benefit plans
for any of the following purposes: 1) Following the death or disability
(as defined in the Internal
Revenue Code) of the participant or beneficiary. The death or
disability must occur after the participant's account was
established in an Oppenheimer fund.
2) To return excess contributions made to a participant's account. 3)
To return contributions made due to a mistake of fact. 4) To make
hardship withdrawals, as defined in the plan.9 5) To make distributions
required under a Qualified Domestic
Relations Order or, in the case of an IRA, a divorce or separation
agreement described in Section 71(b) of the Internal Revenue Code.
6) To meet the minimum distribution requirements of the Internal
Revenue Code.
7) To make "substantially equal periodic payments" as described in
Section 72(t) of the Internal Revenue Code.
8) For loans to participants or beneficiaries.10 9) On account of the
participant's separation from service.11 10) Participant-directed
redemptions to purchase shares of a
mutual fund (other than a fund managed by the Manager or a
subsidiary of the Manager) offered as an investment option in a
Retirement Plan if the plan has made special arrangements with the
Distributor.
11)Distributions made on account of a plan termination or "in-service"
distributions, if the redemption proceeds are rolled over directly
to an OppenheimerFunds-sponsored IRA.
12)For distributions from a participant's account under an Automatic
Withdrawal Plan after the participant reaches age 59 1/2, as long as
the aggregate value of the distributions does not exceed 10% of the
account's value, adjusted annually.
13)Redemptions of Class B shares under an Automatic Withdrawal Plan
for an account other than a Retirement Plan, if the aggregate value
of the redeemed shares does not exceed 10% of the account's value,
adjusted annually.
14)For distributions from 401(k) plans sponsored by broker-dealers
that have entered into a special arrangement with the Distributor
allowing this waiver.
|_|Redemptions of Class B shares or Class C shares under an Automatic
Withdrawal Plan from an account other than a Retirement Plan if the
aggregate value of the redeemed shares does not exceed 10% of the
account's value annually.

B. Waivers for Shares Sold or Issued in Certain Transactions.

The contingent deferred sales charge is also waived on Class B and Class C
shares sold or issued in the following cases:
|_| Shares sold to the Manager or its affiliates.
|_| Shares sold to registered management investment companies or
separate accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose.
|_| Shares issued in plans of reorganization to which the Fund is a party.
|_|Shares sold to present or former officers, directors, trustees or
employees (and their "immediate families" as defined above in Section
I.A.) of the Fund, the Manager and its affiliates and retirement plans
established by them for their employees.
IV. Special Sales Charge Arrangements for Shareholders of Certain
------------------------------------------------------------------------------
Oppenheimer Funds Who Were Shareholders of Former Quest for Value Funds

The initial and contingent deferred sales charge rates and waivers for Class A,
Class B and Class C shares described in the Prospectus or Statement of
Additional Information of the Oppenheimer funds are modified as described below
for certain persons who were shareholders of the former Quest for Value Funds.
To be eligible, those persons must have been shareholders on November 24, 1995,
when OppenheimerFunds, Inc. became the investment advisor to those former Quest
for Value Funds. Those funds include:
Oppenheimer Quest Value Fund, Inc. Oppenheimer Small Cap Value Fund
Oppenheimer Quest Balanced Value Fund Oppenheimer Quest International
Value Fund, Inc.
Oppenheimer Quest Opportunity Value Fund

These arrangements also apply to shareholders of the following funds when
they merged (were reorganized) into various Oppenheimer funds on November 24,
1995:
Quest for Value U.S. Government Income Fund Quest for Value New York
Tax-Exempt Fund Quest for Value Investment Quality Income Fund Quest for
Value National Tax-Exempt Fund Quest for Value Global Income Fund Quest for
Value California Tax-Exempt Fund

All of the funds listed above are referred to in this Appendix as the "Former
Quest for Value Funds." The waivers of initial and contingent deferred sales
charges described in this Appendix apply to shares of an Oppenheimer fund that
are either:
|_|acquired by such shareholder pursuant to an exchange of shares of an
Oppenheimer fund that was one of the Former Quest for Value Funds, or
|_|purchased by such shareholder by exchange of shares of another
Oppenheimer fund that were acquired pursuant to the merger of any of
the Former Quest for Value Funds into that other Oppenheimer fund on
November 24, 1995.

A. Reductions or Waivers of Class A Sales Charges.

|X| Reduced Class A Initial Sales Charge Rates for Certain Former Quest
for Value Funds Shareholders.

Purchases by Groups and Associations. The following table sets forth the initial
sales charge rates for Class A shares purchased by members of "Associations"
formed for any purpose other than the purchase of securities. The rates in the
table apply if that Association purchased shares of any of the Former Quest for
Value Funds or received a proposal to purchase such shares from OCC Distributors
prior to November 24, 1995.

--------------------------------------------------------------------------------
Initial Sales Initial Sales Charge Concession as
Number of Eligible Charge as a % of as a % of Net Amount % of Offering
Employees or Members Offering Price Invested Price
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
9 or Fewer 2.50% 2.56% 2.00%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
At least 10 but not 2.00% 2.04% 1.60%
more than 49
--------------------------------------------------------------------------------

------------------------------------------------------------------------------
For purchases by Associations having 50 or more eligible employees or
members, there is no initial sales charge on purchases of Class A shares, but
those shares are subject to the Class A contingent deferred sales charge
described in the applicable fund's Prospectus.

Purchases made under this arrangement qualify for the lower of either the
sales charge rate in the table based on the number of members of an Association,
or the sales charge rate that applies under the Right of Accumulation described
in the applicable fund's Prospectus and Statement of Additional Information.
Individuals who qualify under this arrangement for reduced sales charge rates as
members of Associations also may purchase shares for their individual or
custodial accounts at these reduced sales charge rates, upon request to the
Distributor.

|X| Waiver of Class A Sales Charges for Certain Shareholders. Class A
shares purchased by the following investors are not subject to any Class A
initial or contingent deferred sales charges:
|_|Shareholders who were shareholders of the AMA Family of Funds on
February 28, 1991 and who acquired shares of any of the Former Quest
for Value Funds by merger of a portfolio of the AMA Family of Funds.
|_|Shareholders who acquired shares of any Former Quest for Value Fund
by merger of any of the portfolios of the Unified Funds.

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

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

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

|X| Waivers for Redemptions of Shares Purchased Prior to March 6, 1995. In
the following cases, the contingent deferred sales charge will be waived for
redemptions of Class A, Class B or Class C shares of an Oppenheimer fund. The
shares must have been acquired by the merger of a Former Quest for Value Fund
into the fund or by exchange from an Oppenheimer fund that was a Former Quest
for Value Fund or into which such fund merged. Those shares must have been
purchased prior to March 6, 1995 in connection with:
|_|withdrawals under an automatic withdrawal plan holding only either
Class B or Class C shares if the annual withdrawal does not exceed
10% of the initial value of the account value, adjusted annually,
and
|_|liquidation of a shareholder's account if the aggregate net asset
value of shares held in the account is less than the required
minimum value of such accounts.

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

A shareholder's account will be credited with the amount of any contingent
deferred sales charge paid on the redemption of any Class A, Class B or Class C
shares of the Oppenheimer fund described in this section if the proceeds are
invested in the same Class of shares in that fund or another Oppenheimer fund
within 90 days after redemption.

V. Special Sales Charge Arrangements for Shareholders of Certain Oppenheimer
Funds Who Were Shareholders of Connecticut Mutual Investment Accounts, Inc.
------------------------------------------------------------------------------

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

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

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

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

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

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

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

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

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

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

VI. Special Reduced Sales Charge for Former Shareholders of Advance
------------------------------------------------------------------------------
America Funds, Inc.

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

VII. Sales Charge Waivers on Purchases of Class M Shares of Oppenheimer
Convertible Securities Fund
------------------------------------------------------------------------------

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

Oppenheimer Convertible Securities Fund

Internet Website
WWW.OPPENHEIMERFUNDS.COM

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

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

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

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

Independent Auditors
KPMG LLP
707 Seventeenth Street
Denver, Colorado 80202

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

PX0345.001.0204

1 In accordance with Rule 12b-1 of the Investment Company Act, the term
"Independent Trustees" in this Statement of Additional Information refers to
those Trustees who are not "interested persons" of the Fund and who do not have
any direct or indirect financial interest in the operation of the distribution
plan or any agreement under the plan.
2 Certain waivers also apply to Class M shares of Oppenheimer Convertible
Securities Fund. 2 In the case of Oppenheimer Senior Floating Rate Fund, a
continuously-offered closed-end fund, references to contingent deferred sales
charges mean the Fund's Early Withdrawal Charges and references to "redemptions"
mean "repurchases" of shares.
3 An "employee benefit plan" means any plan or arrangement, whether or not it is
"qualified" under the Internal Revenue Code, under which Class N shares of an
Oppenheimer fund or funds are purchased by a fiduciary or other administrator
for the account of participants who are employees of a single employer or of
affiliated employers. These may include, for example, medical savings accounts,
payroll deduction plans or similar plans. The fund accounts must be registered
in the name of the fiduciary or administrator purchasing the shares for the
benefit of participants in the plan.
4 The term "Group Retirement Plan" means
any qualified or non-qualified retirement plan for employees of a corporation or
sole proprietorship, members and employees of a partnership or association or
other organized group of persons (the members of which may include other
groups), if the group has made special arrangements with the Distributor and all
members of the group participating in (or who are eligible to participate in)
the plan purchase shares of an Oppenheimer fund or funds through a single
investment dealer, broker or other financial institution designated by the
group. Such plans include 457 plans, SEP-IRAs, SARSEPs, SIMPLE plans and 403(b)
plans other than plans for public school employees. The term "Group Retirement
Plan" also includes qualified retirement plans and non-qualified deferred
compensation plans and IRAs that purchase shares of an Oppenheimer fund or funds
through a single investment dealer, broker or other financial institution that
has made special arrangements with the Distributor.
5 However, that concession
will not be paid on purchases of shares in amounts of $1 million or more
(including any right of accumulation) by a Retirement Plan that pays for the
purchase with the redemption proceeds of Class C shares of one or more
Oppenheimer funds held by the Plan for more than one year.
6 This provision does not apply to IRAs.
7 This provision does not apply to 403(b)(7) custodial plans if the participant
is less than age 55, nor to IRAs.
8 The distribution must be requested prior to
Plan termination or the elimination of the Oppenheimer funds as an investment
option under the Plan.
9 This provision does not apply to IRAs.
10 This provision does not apply to loans from 403(b)(7) custodial plans and
loans from the OppenheimerFunds-sponsored Single K retirement plan.
11 This provision does not apply to 403(b)(7) custodial plans if the participant
is less than age 55, nor to IRAs.