SAI 485B QUEST BALANCED VALUE

EX-99 10 sai485bqbalanced.htm SAI-485B QUEST BALANCED VALUE SAI 485B QUEST BALANCED VALUE

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Oppenheimer Quest Balanced Value Fund
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6803 South Tucson Way, Englewood, Colorado 80112
1.800.525.7048

Statement of Additional Information dated February 28, 2002

This Statement of Additional Information is not a Prospectus. This document contains additional
information about the Fund and supplements information in the Prospectus dated February 28, 2002. It should be read
together with the Prospectus, which may be obtained by writing to the Fund's Transfer Agent, OppenheimerFunds
Services, at P.O. Box 5270, Denver, Colorado 80217, or by calling the Transfer Agent at the toll-free number shown
above, or by downloading it from the OppenheimerFunds Internet web site at www.oppenheimerfunds.com.

Contents
Page
About the Fund
Additional Information About the Fund's Investment Policies and Risks...................................
The Fund's Investment Policies.....................................................................
Other Investment Techniques and Strategies.........................................................
Investment Restrictions............................................................................
How the Fund is Managed ................................................................................
Organization and History...........................................................................
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
Independent Auditors Report.............................................................................
Financial Statements....................................................................................

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

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ABOUT THE FUND
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Additional Information About the Fund's Investment Policies and Risks

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

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

In selecting securities for the Fund's portfolio, the Sub-Advisor evaluates the merits of particular
securities primarily through the exercise of its own investment analysis. In the case of corporate issuers, that
process may include, among other things, evaluation of the issuer's historical operations, prospects for the
industry of which the issuer is part, the issuer's financial condition, its pending product developments and
business (and those of competitors), the effect of general market and economic conditions on the issuer's business,
and legislative proposals that might affect the issuer. In the case of foreign securities, the Sub-Advisor may also
consider the conditions of a particular country's economy in relation to the U.S. economy or other foreign
economies, general political conditions in a country or region, the effect of taxes, the efficiencies and costs of
particular markets and other factors when evaluating the securities of issuers in a particular country.

|X| Investments in Equity Securities. The Fund does not limit its investments in equity securities to
issuers having a market capitalization of a specified size or range, and therefore the Fund can invest in securities
of small-, mid- and large-capitalization issuers. At times, the Fund may increase the relative emphasis of its
equity investments in securities of one or more capitalization ranges, based upon the Sub-Advisor's judgment of
where the best market opportunities are to seek the Fund's objectives. At times, the market may favor or disfavor
securities of issuers of a particular capitalization range, and securities of small-capitalization issuers may be
subject to greater price volatility in general than securities of larger companies. Therefore, if the Fund has
substantial investments in smaller-capitalization companies at times of market volatility, the Fund's share price
could fluctuate more than that of funds focusing on larger-capitalization issuers.

|_| Value Investing. In selecting equity investments for the Fund's portfolio, the portfolio
manager currently uses a value investing style. In using a value approach, the portfolio manager seeks stock and
other equity securities that appear to be temporarily undervalued, by various measures, such as price/earnings
ratios. This approach is subject to change and might not necessarily be used in all cases. Value investing seeks
stocks having prices that are low in relation to their real worth or future prospects, in the hope that the Fund
will realize appreciation in the value of its holdings when other investors realize the intrinsic value of the
stock.

Using value investing requires research as to the issuer's underlying financial condition and prospects.
While there are a variety of measures that can be used to identify these securities, the portfolio manager looks
primarily at the issuer's price/earnings ratio, which is the stock's price divided by its earnings per share. A
stock having a price/earnings ratio lower than its historical range, or the market as a whole or that of similar
companies may offer attractive investment opportunities.

|_| Preferred Stocks. 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 on the issuer's common stock.

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 calls or redemptions prior to maturity, which can also have a negative impact on prices 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. Preferred stock may be "participating" stock, which means that it may be entitled to a dividend
exceeding the stated dividend in certain cases.

|_| Rights and Warrants. The Fund can invest up to 5% of its total assets in warrants and
rights. Warrants basically are options to purchase equity securities at specific prices valid for a specific period
of time. Their prices do not necessarily move parallel to the prices of the underlying securities. Rights are
similar to warrants, but normally have a short duration and are distributed directly by the issuer to its
shareholders. Rights and warrants have no voting rights, receive no dividends and have no rights with respect to
the assets of the issuer.

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

The value of a convertible security is a function of its "investment value" and its "conversion value." If
the investment value exceeds the conversion value, the security will behave more like a debt security, and the
security's price will likely increase when interest rates fall and decrease when interest rates rise. If the
conversion value exceeds the investment value, the security will behave more like an equity security: it will likely
sell at a premium over its conversion value, and its price will tend to fluctuate directly with the price of the
underlying security.

While some convertible securities are a form of debt security in many cases, their conversion feature
(allowing conversion into equity securities) may cause them in some cases to be regarded by the Sub-Advisor more as
"equity equivalents." As a result, the rating assigned to the security has less impact on the Sub-Advisor's
investment decision with respect to convertible securities than in the case of non-convertible debt fixed income
securities. To determine whether convertible securities should be regarded as "equity equivalents," the Sub-Advisor
may consider the following factors:
(1) whether, at the option of the investor, the convertible security can be exchanged for a fixed number of
shares of common stock of the issuer,
(2) whether the issuer of the convertible securities has restated its earnings per share of common stock on a
fully diluted basis (considering the effect of conversion of the convertible securities), and
(3) the extent to which the convertible security may be a defensive "equity substitute," providing the ability
to participate in any appreciation in the price of the issuer's common stock.

|X| Investments in Debt Securities. The Fund invests in a variety of domestic and foreign debt
securities, including corporate bonds, debentures and other debt securities, and foreign and U.S. government
securities including mortgage-related securities, to seek investment income as part of its investment objectives.
It might invest in them also to seek capital growth or for liquidity or defensive purposes. Although the Fund will
invest at least 25% of its total assets in fixed-income senior securities, the Fund currently emphasizes investments
in equity securities. Foreign debt securities are subject to the risks of foreign investing described below. In
general, domestic and foreign debt securities are also subject to credit risk and interest rate risk.

|_| Credit Risk. Credit risk relates to the ability of the issuer of a debt security to meet interest
and principal payment obligations as they become due. In making investments in debt securities, the Sub-Advisor may
rely to some extent on the ratings of ratings organizations or it may use its own research to evaluate a security's
creditworthiness. The Fund's debt investments can include investment-grade bonds and non-investment grade bonds
(commonly referred to as "junk bonds"). Investment-grade bonds are bonds rated at least "Baa" by Moody's Investors
Service, Inc., at least "BBB" by Standard & Poor's Rating Services or Fitch, Inc., or that have comparable ratings
by another nationally recognized rating organization. If securities the Fund buys are unrated, to be considered part
of the Fund's holdings of investment-grade securities, they must be judged by the Sub-Advisor to be of comparable
quality to bonds rated as investment grade by a rating organization. The debt securities rating definitions of the
principal ratings organizations are included in Appendix A to this Statement of Additional Information.

|_| Interest Rate Risk. Interest rate risk refers to the fluctuations in value of debt securities
resulting from the inverse relationship between price and yield. For example, an increase in general interest rates
will tend to reduce the market value of already-issued fixed-income investments, and a decline in general interest
rates will tend to increase their value. In addition, debt securities with longer maturities, which tend to have
higher yields, are subject to potentially greater fluctuations in value from changes in interest rates than
obligations with shorter maturities.

Fluctuations in the market value of fixed-income securities after the Fund buys them will not affect the
interest income payable on those securities (unless the security pays interest at a variable rate pegged to interest
rate changes). However, those price fluctuations will be reflected in the valuations of the securities, and
therefore the Fund's net asset values will be affected by those fluctuations.

|_| Special Risks of Lower-Grade Securities. The Fund can invest up to 25% of its total assets in
lower-grade debt securities. Because lowergrade securities tend to offer higher yields than investment-grade
securities, the Fund may invest in lowergrade securities if the Sub-Advisor is trying to achieve greater income. In
some cases, the appreciation possibilities of lower-grade securities may be a reason they are selected for the
Fund's portfolio.

"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 Standard & Poor's or Duff & Phelps, or similar ratings by other rating
organizations. If they are unrated, and are determined by the Sub-Advisor to be of comparable quality to debt
securities rated below investment grade, they are included in determining the maximum amount of the Fund's assets
that can be invested in lower-grade securities under the 25% limitation. The Fund can invest in securities rated as
low as "Caa" by Moody's or "CCC" by Standard and Poor's, although currently it does not intend to invest in
securities in those ratings categories.

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

However, the Fund's limitations on these investments may reduce some of the risks to the Fund, as will the
Fund's policy of diversifying its investments. Additionally, 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 & Poor's or Duff & Phelps are investment grade
and are not regarded as junk bonds, those securities may be subject to special risks, and have some speculative
characteristics.

|_| Mortgage-Related Securities. Mortgage-related securities are a form of derivative investment
collateralized by pools of commercial or residential mortgages. Pools of mortgage loans are assembled as securities
for sale to investors by government agencies or entities or by private issuers. These securities include
collateralized mortgage obligations ("CMOs"), mortgage pass-through securities, stripped mortgage pass-through
securities, interests in real estate mortgage investment conduits ("REMICs") and other real estate-related
securities.

Mortgage-related securities that are issued or guaranteed by agencies or instrumentalities of the U.S.
government have relatively little credit risk (depending on the nature of the issuer) but are subject to interest
rate risks and prepayment risks, as described in the Prospectus.

As with other debt securities, the prices of mortgage-related securities tend to move inversely to changes
in interest rates. The Fund can buy mortgage-related securities that have interest rates that move inversely to
changes in general interest rates, based on a multiple of a specific index. Although the value of a mortgage-related
security may decline when interest rates rise, the converse is not always the case.

In periods of declining interest rates, mortgages are more likely to be prepaid. Therefore, a
mortgage-related security's maturity can be shortened by unscheduled prepayments on the underlying mortgages.
Therefore, it is not possible to predict accurately the security's yield. The principal that is returned earlier
than expected may have to be reinvested in other investments having a lower yield than the prepaid security.
Therefore, these securities may be less effective as a means of "locking in" attractive long-term interest rates,
and they may have less potential for appreciation during periods of declining interest rates, than conventional
bonds with comparable stated maturities.

Prepayment risks can lead to substantial fluctuations in the value of a mortgage-related security. In turn,
this can affect the value of the Fund's shares. If a mortgage-related security has been purchased at a premium, all
or part of the premium the Fund paid may be lost if there is a decline in the market value of the security, whether
that results from interest rate changes or prepayments on the underlying mortgages. In the case of stripped
mortgage-related securities, if they experience greater rates of prepayment than were anticipated, the Fund may fail
to recoup its initial investment on the security.

If interest rates rise rapidly, prepayments may occur at a slower rate than expected and the expected
maturity of long-term or medium-term securities could lengthen as a result. That would cause their value and the
prices of the Fund's shares to fluctuate more widely in response to changes in interest rates.

As with other debt securities, the values of mortgage-related securities may be affected by changes in the
market's perception of the creditworthiness of the entity issuing the securities or guaranteeing them. Their values
may also be affected by changes in government regulations and tax policies.

|_| Collateralized Mortgage Obligations. CMOs are multi-class bonds that are backed by pools of
mortgage loans or mortgage pass-through certificates. They may be collateralized by:
(1) pass-through certificates issued or guaranteed by Ginnie Mae, Fannie Mae, or Freddie Mac,
(2) unsecuritized mortgage loans insured by the Federal Housing Administration or guaranteed by the Department
of Veterans' Affairs,
(3) unsecuritized conventional mortgages,
(4) other mortgage-related securities, or
(5) any combination of these.

Each class of CMO, referred to as a "tranche," is issued at a specific coupon rate and has a stated
maturity or final distribution date. Principal prepayments on the underlying mortgages may cause the CMO to be
retired much earlier than the stated maturity or final distribution date. The principal and interest on the
underlying mortgages may be allocated among the several classes of a series of a CMO in different ways. One or more
tranches may have coupon rates that reset periodically at a specified increase over an index. These are floating
rate CMOs, and typically have a cap on the coupon rate. Inverse floating rate CMOs have a coupon rate that moves in
the reverse direction to an applicable index. The coupon rate on these CMOs will increase as general interest rates
decrease. These are usually much more volatile than fixed rate CMOs or floating rate CMOs.

|X| U.S. Government Securities. These are securities issued or guaranteed by the U.S. Treasury or other
U.S. government agencies or federally-chartered corporate entities referred to as "instrumentalities." The
obligations of U.S. Government agencies or instrumentalities in which the Fund may invest may or may not be
guaranteed or supported by the "full faith and credit" of the United States. "Full faith and credit" means
generally that the taxing power of the U.S. government is pledged to the payment of interest and repayment of
principal on a security. If a security is not backed by the full faith and credit of the United States, the owner of
the security must look principally to the agency issuing the obligation for repayment. The owner might be able to
assert a claim against the United States if the issuing agency or instrumentality does not meet its commitment. The
Fund will invest in securities of U.S. government agencies and instrumentalities only if the Sub-Advisor is
satisfied that the credit risk with respect to such instrumentality is minimal.

|_| U.S. Treasury Obligations. These include Treasury bills (which have maturities of one year or
less when issued), Treasury notes (which have maturities of from one to ten years when issued), and Treasury bonds
(maturities of more than ten years when issued). Treasury securities are backed by the full faith and credit of the
United States as to timely payments of interest and repayments of principal. They also can include U. S. Treasury
securities that have been "stripped" by a Federal Reserve Bank, and zero-coupon U.S. Treasury securities.

|_| Obligations Issued or Guaranteed by U.S. Government Agencies or Instrumentalities. These
include direct obligations and mortgage-related securities that have different levels of credit support from the
government. Some are supported by the full faith and credit of the U.S. Government, such as Government National
Mortgage Association pass-through mortgage certificates (called "Ginnie Maes"). Some are supported by the right of
the issuer to borrow from the U.S. Treasury under certain circumstances, such as Federal National Mortgage
Association bonds ("Fannie Maes"). Others are supported only by the credit of the entity that issued them, such as
Federal Home Loan Mortgage Corporation obligations ("Freddie Macs").

|_| U.S. Government Mortgage-Related Securities. The Fund can invest in a variety of
mortgage-related securities that are issued by U.S. Government agencies or instrumentalities, some of which are
described below.

|_| Zero-Coupon U.S. Government Securities. The Fund may buy zero-coupon U.S. government
securities. These will typically be U.S. Treasury Notes and Bonds that have been stripped of their unmatured
interest coupons, the coupons themselves, or certificates representing interests in those stripped debt obligations
and coupons.

Zero-coupon securities do not make periodic interest payments and are sold at a deep discount from their
face value at maturity. The buyer recognizes a rate of return determined by the gradual appreciation of the
security, which is redeemed at face value on a specified maturity date. This discount depends on the time remaining
until maturity, as well as prevailing interest rates, the liquidity of the security and the credit quality of the
issuer. The discount typically decreases as the maturity date approaches.

Because zero-coupon securities pay no interest and compound semi-annually at the rate fixed at the time of
their issuance, their value is generally more volatile than the value of other debt securities that pay interest.
Their value may fall more dramatically than the value of interest-bearing securities when interest rates rise. When
prevailing interest rates fall, zero-coupon securities tend to rise more rapidly in value because they have a fixed
rate of return.

The Fund's investment in zero-coupon securities may cause the Fund to recognize income and make
distributions to shareholders before it receives any cash payments on the zero-coupon investment. To generate cash
to satisfy those distribution requirements, the Fund may have to sell portfolio securities that it otherwise might
have continued to hold or to use cash flows from other sources such as the sale of Fund shares.

|X| Money Market Instruments. The following is a brief description of the types of money market securities
the Fund can invest in. Those money market securities are high-quality, short-term debt instruments that are issued
by the U.S. government, corporations, banks or other entities. They may have fixed, variable or floating interest
rates.

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

|_| Bank Obligations. The Fund can buy time deposits, certificates of deposit and bankers'
acceptances. Time deposits, other than overnight deposits, may be subject to withdrawal penalties and, if so, they
are deemed "illiquid" investments.

The Fund can purchase bank obligations that are fully insured by the Federal Deposit Insurance Corporation.
The FDIC insures the deposits of member banks up to $100,000 per account. Insured bank obligations may have a
limited market and a particular investment of this type may be deemed "illiquid" unless the Board of Trustees of the
Fund determines that a readily-available market exists for that particular obligation, or unless the obligation is
payable at principal amount plus accrued interest on demand or within seven days after demand.

|_| Commercial Paper. The Fund can invest in commercial paper if it is rated within the top two
rating categories of Standard & Poor's and Moody's. If the paper is not rated, it may be purchased if issued by a
company having a credit rating of at least "AA" by Standard & Poor's or "Aa" by Moody's.

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

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

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

The Fund has no limitations on the type of issuer from whom these notes will be purchased. However, in
connection with such purchases and on an ongoing basis, the Sub-Advisor will consider the earning power, cash flow
and other liquidity ratios of the issuer, and its ability to pay principal and interest on demand, including a
situation in which all holders of such notes made demand simultaneously. Investments in master demand notes are
subject to the limitation on investments by the Fund in illiquid securities, described in the Prospectus. The Fund
does not intend that its investments in variable amount master demand notes will exceed 5% of its total assets.

|X| Portfolio Turnover. "Portfolio turnover" describes the rate at which the Fund traded its portfolio
securities during its last fiscal year. For example, if a fund sold all of its securities during the year, its
portfolio turnover rate would have been 100% annually. The Fund's portfolio turnover rate will fluctuate from year
to year, and may be in excess of 100% annually. Increased portfolio turnover creates higher brokerage and
transaction costs for the Fund, which may reduce its overall performance. Additionally, the realization of capital
gains from selling portfolio securities may result in distributions of taxable long-term capital gains to
shareholders, since the Fund will normally distribute all of its capital gains realized each year, to avoid excise
taxes under the Internal Revenue Code.

Other Investment Techniques and Strategies. In seeking its objective, the Fund may from time to time use the types
of investment strategies and investments described below. It is not required to use all of these strategies at all
times, and at times may not use them.

|X| Foreign Securities. The Fund may purchase equity and debt securities issued by foreign companies or
foreign governments or their agencies. "Foreign securities" include equity and debt securities of companies
organized under the laws of countries other than the United States and debt securities of foreign governments and
their agencies and instrumentalities. Those securities may be traded on foreign securities exchanges or in the
foreign over-the-counter markets.

Securities of foreign issuers that are represented by American Depository Receipts or that are listed on a
U.S. securities exchange or traded in the U.S. over-the-counter markets are considered "foreign securities" for the
purpose of the Fund's investment allocations. That is because they are subject to many of the special considerations
and risks, discussed below, that apply to foreign securities traded and held abroad.

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

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

|_| Foreign Debt Obligations. The debt obligations of foreign governments and their agencies and
instrumentalitites may or may not be supported by the full faith and credit of the foreign government. The Fund may
buy securities issued by certain "supra-national" entities, which include entities designated or supported by
governments to promote economic reconstruction or development, international banking organizations and related
government agencies. Examples are the International Bank for Reconstruction and Development (commonly called the
"World Bank"), the Asian Development bank and the Inter-American Development Bank.

The governmental members of these supra-national entities are "stockholders" that typically make capital
contributions and may be committed to make additional capital contributions if the entity is unable to repay its
borrowings. A supra-national entity's lending activities may be limited to a percentage of its total capital,
reserves and net income. There can be no assurance that the constituent foreign governments will continue to be able
or willing to honor their capitalization commitments for those entities.

|_| Risks of Foreign Investing. Investments in foreign securities may offer special opportunities
for investing but also present special additional risks and considerations not typically associated with investments
in domestic securities. Some of these additional risks are:
o reduction of income by foreign taxes;
o fluctuation in value of foreign investments due to changes in currency rates or currency control
regulations (for example, currency blockage);
o transaction charges for currency exchange;
o lack of public information about foreign issuers;
o lack of uniform accounting, auditing and financial reporting standards in foreign countries comparable to
those applicable to domestic issuers;
o less volume on foreign exchanges than on U.S. exchanges;
o greater volatility and less liquidity on foreign markets than in the U.S.;
o less governmental regulation of foreign issuers, stock exchanges and brokers than in the U.S.;
o 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.

|_| Special Risks of Emerging Markets. Emerging and developing markets abroad may also offer
special opportunities for growth 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 Sub-Advisor will consider
these factors when evaluating securities in these markets, because the selection of those securities must be
consistent with the Fund's goals of growth of capital and investment income.

|X| Investing in Small, Unseasoned Companies. The Fund can invest in securities of small, unseasoned
companies. These are companies that have been in operation for less than three years, including the operations of
any predecessors. Securities of these companies may be subject to volatility in their prices. They may have a
limited trading market, which may adversely affect the Fund's ability to dispose of them and can reduce the price
the Fund might be able to obtain for them. Other investors that own a security issued by a small, unseasoned issuer
for which there is limited liquidity might trade the security when the Fund is attempting to dispose of its holdings
of that security. In that case the Fund might receive a lower price for its holdings than might otherwise be
obtained.

|X| "When-Issued" and "Delayed-Delivery" Transactions. The Fund can invest in securities on a
"when-issued" basis and can purchase or sell securities on a "delayed-delivery" or "forward commitment" basis.
When-issued and delayed-delivery are terms that refer to securities whose terms and indenture are available and for
which a market exists, but which are not available for immediate delivery.

When such transactions are negotiated, the price (which is generally expressed in yield terms) is fixed at
the time the commitment is made. Delivery and payment for the securities take place at a later date (generally
within 45 days of the date the offer is accepted). The securities are subject to change in value from market
fluctuations during the period until settlement. The value at delivery may be less than the purchase price. For
example, changes in interest rates in a direction other than that expected by the Sub-Advisor before settlement will
affect the value of such securities and may cause a loss to the Fund. During the period between purchase and
settlement, no payment is made by the Fund to the issuer and no interest accrues to the Fund from the investment.
No income begins to accrue to the Fund on a when-issued security until the Fund receives the security at settlement
of the trade.

The Fund can engage in when-issued transactions to secure what the Sub-Advisor considers to be an
advantageous price and yield at the time of entering into the obligation. When the Fund enters into a when-issued or
delayed-delivery transaction, it relies on the other party to complete the transaction. Its failure to do so may
cause the Fund to lose the opportunity to obtain the security at a price and yield the Sub-Advisor considers to be
advantageous.

When the Fund engages in when-issued and delayed-delivery transactions, it does so for the purpose of
acquiring or selling securities consistent with its investment objective and policies for its portfolio or for
delivery pursuant to options contracts it has entered into, and not for the purpose of investment leverage. Although
the Fund will enter into delayed-delivery or when-issued purchase transactions to acquire securities, it may dispose
of a commitment prior to settlement. If the Fund chooses to dispose of the right to acquire a when-issued security
prior to its acquisition or to dispose of its right to delivery or receive against a forward commitment, it may
incur a gain or loss.

At the time the Fund makes the commitment to purchase or sell a security on a when-issued or
delayed-delivery basis, it records the transaction on its books and reflects the value of the security purchased in
determining the Fund's net asset value. In a sale transaction, it records the proceeds to be received. The Fund
will identify on its books liquid assets at least equal in value to the value of the Fund's purchase commitments
until the Fund pays for the investment. The Fund will not enter into when-issued commitments if more than 15% of the
Fund's net assets would be committed under these transactions.

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

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

In a repurchase transaction, the Fund buys a security from, and simultaneously resells it to, an approved
vendor for delivery on an agreed-upon future date. The resale price exceeds the purchase price by an amount that
reflects an agreed-upon interest rate effective for the period during which the repurchase agreement is in effect.
Approved vendors include U.S. commercial banks, U.S. branches of foreign banks, or broker-dealers that have been
designated as primary dealers in government securities. They must meet credit requirements set by the Manager from
time to time.

The majority of these transactions run from day to day, and delivery pursuant to the resale typically
occurs within one to five days of the purchase. Repurchase agreements having a maturity beyond seven days are
subject to the Fund's limits on holding illiquid investments. There is no limit on the amount of the Fund's net
assets that may be subject to repurchase agreements having maturities of seven days or less.

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

|X| Illiquid and Restricted Securities. To enable the Fund to sell its holdings of a restricted security
not registered under the Securities Act of 1933, 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 may also acquire restricted securities through private placements. Those securities have
contractual restrictions on their public resale. Those restrictions might limit the Fund's ability to dispose of the
securities and might lower the amount the Fund could realize upon the sale.

The Fund has limitations that apply to purchases of restricted securities, as stated in the Prospectus.
Those percentage restrictions do not limit purchases of restricted securities that are eligible for sale to
qualified institutional purchasers under Rule 144A of the Securities Act of 1933, if those securities have been
determined to be liquid by the Manager and the Sub-Advisor 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.

|X| Participation Interests. The Fund can invest in participation interests, subject to the Fund's
limitation on investments in illiquid investments. A participation interest is an undivided interest in a loan made
by the issuing financial institution in the proportion that the buyers participation interest bears to the total
principal amount of the loan. No more than 5% of the Fund's net assets can be invested in participation interests of
the same borrower. The issuing financial institution may have no obligation to the Fund other than to pay the Fund
the proportionate amount of the principal and interest payments it receives.

Participation interests are primarily dependent upon the creditworthiness of the borrowing corporation,
which is obligated to make payments of principal and interest on the loan. There is a risk that a borrower may have
difficulty making payments. If a borrower fails to pay scheduled interest or principal payments, the Fund could
experience a reduction in its income. The value of that participation interest might also decline, which could
affect the net asset value of the Fund's shares. If the issuing financial institution fails to perform its
obligations under the participation agreement, the Fund might incur costs and delays in realizing payment and suffer
a loss of principal and/or interest.

|X| Loans of Portfolio Securities. The Fund can lend its portfolio securities to certain types of eligible
borrowers approved by the Board of Trustees. It may do so to try to provide income or to raise cash for liquidity
purposes. 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. The Fund
presently does not intend to engage in loans of securities.

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 must both 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, 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| Hedging. Although the Fund can use hedging instruments, it is not obligated to use them in seeking its
objectives. It does not currently contemplate using them to any significant degree. To attempt to protect against
declines in the market value of the Fund's portfolio, to permit the Fund to retain unrealized gains in the value of
portfolio securities that have appreciated, or to facilitate selling securities for investment reasons, the Fund
could:
|_| sell futures contracts,
|_| buy puts on such futures or on securities, or
|_| write covered calls on securities or futures. Covered calls could also be used to increase the
Fund's income, but the Sub-Advisor does not expect to engage extensively in that practice.

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

The Fund's strategy of hedging with futures and options on futures will be incidental to the Fund's
activities in the underlying cash market. The particular hedging instruments the Fund can use are described below.
The Fund may employ new hedging instruments and strategies when they are developed, if those investment methods are
consistent with the Fund's investment objectives and are permissible under applicable regulations governing the
Fund.

|_| Futures. The Fund can buy and sell futures contracts that relate to (1) broadly-based stock
indices (these are referred to as "stock index futures"), (2) foreign currencies (these are referred to as "forward
contracts"), and (3) commodities (these are referred to as "commodity futures").

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

The Fund can invest a portion of its assets in commodity futures contracts. Commodity futures may be based
upon commodities within five main commodity groups: (1) energy, which includes crude oil, natural gas, gasoline and
heating oil; (2) livestock, which includes cattle and hogs; (3) agriculture, which includes wheat, corn, soybeans,
cotton, coffee, sugar and cocoa; (4) industrial metals, which includes aluminum, copper, lead, nickel, tin and zinc;
and (5) precious metals, which includes gold, platinum and silver. The Fund may purchase and sell commodity futures
contracts, options on futures contracts and options and futures on commodity indices with respect to these five main
commodity groups and the individual commodities within each group, as well as other types of commodities.

No money is paid or received by the Fund on the purchase or sale of a future. Upon entering into a futures
transaction, the Fund will be required to deposit an initial margin payment with the futures commission merchant
(the "futures broker"). Initial margin payments will be deposited with the Fund's custodian bank in an account
registered in the futures broker's name. However, the futures broker can gain access to that account only under
specified conditions. As the future is marked to market (that is, its value on the Fund's books is changed) to
reflect changes in its market value, subsequent margin payments, called variation margin, will be paid to or by the
futures broker daily.

At any time prior to expiration of the future, the Fund may elect to close out its position by taking an
opposite position, at which time a final determination of variation margin is made and any additional cash must be
paid by or released to the Fund. Any loss or gain on the future is then realized by the Fund for tax purposes. All
futures transactions (except forward contracts) are effected through a clearinghouse associated with the exchange on
which the contracts are traded.

|_| Put and Call Options. The Fund can buy and sell certain kinds of put options ("puts") and
call options ("calls"). The Fund can buy and sell exchange-traded and over-the-counter put and call options,
including options on broadly-based indices, securities, foreign currencies and stock index futures.

|_| Writing Covered Call Options. The Fund can write (that is, sell) covered calls. If the Fund
sells a call option, it must be covered. For options on securities, that means the Fund must own the security
subject to the call while the call is outstanding. For stock index options, that means the call must be covered by
segregating liquid assets to enable the Fund to satisfy its obligations if the call is exercised. The Trustees have
adopted an operating policy that the Fund may not write covered call options (or write put options) with respect to
more than 5% of the value of the Fund's total assets.

When the Fund writes a call on a security, it receives cash (a premium). For calls on securities, the Fund
agrees to sell the underlying security to a purchaser of a corresponding call on the same security during the call
period at a fixed exercise price regardless of market price changes during the call period. The call period is
usually not more than nine months. The exercise price may differ from the market price of the underlying security.
The Fund has the risk of loss that the price of the underlying security may decline during the call period. That
risk may be offset to some extent by the premium the Fund receives. If the value of the investment does not rise
above the call price, it is likely that the call will lapse without being exercised. In that case the Fund would
keep the cash premium and the investment.

When the Funds writes a call on an index, it receives cash (a premium). If the buyer of a call on a stock
index exercises it, the Fund will pay an amount of cash equal to the difference between the closing price of the
call and the exercise price, multiplied by a specified multiple that determines the total value of the call for each
point of difference. If the value of the underlying investment does not rise above the call price, it is likely that
the call will lapse without being exercised. In that case the Fund would keep the cash premium.

Settlement of puts and calls on broadly-based stock indices is in cash. Gain or loss on options on stock
indices depends on changes in the index in question (and thus on price movements in the stock market generally).

The Fund's custodian, or a securities depository acting for the custodian, will act as the Fund's escrow
agent, through the facilities of the Options Clearing Corporation ("OCC"), as to the investments on which the Fund
has written calls traded on exchanges or as to other acceptable escrow securities. In that way, no margin will be
required for such transactions. OCC will release the securities on the expiration of the option or when the Fund
enters into a closing transaction.

When the Fund writes an over-the-counter ("OTC") option, it will enter into an arrangement with a primary
U.S. Government securities dealer which will establish a formula price at which the Fund will have the absolute
right to repurchase that OTC option. The formula price will generally be based on a multiple of the premium
received for the option, plus the amount by which the option is exercisable below the market price of the underlying
security (that is, the option is "in the money"). When the Fund writes an OTC option, it will treat as illiquid (for
purposes of its restriction on holding illiquid securities) the mark-to-market value of any OTC option it holds,
unless the option is subject to a buy-back agreement by the executing broker.

To terminate its obligation on a call it has written, the Fund may purchase a corresponding call in a
"closing purchase transaction." The Fund will then realize a profit or loss, depending upon whether the net of the
amount of the option transaction costs and the premium received on the call the Fund wrote is more or less than the
price of the call the Fund purchases to close out the transaction. The Fund may realize a profit if the call
expires unexercised, because the Fund will retain the premium it received when it wrote the call. Any such profits
are considered short-term capital gains for federal income tax purposes, as are the premiums on lapsed calls. When
distributed by the Fund they are taxable as ordinary income. If the Fund cannot effect a closing purchase
transaction due to the lack of a market, it will have to hold the escrowed assets in escrow until the call expires
or is exercised.

The Fund may also write calls on a futures contract without owning the futures contract or securities
deliverable under the contract. To do so, at the time the call is written, the Fund must cover the call by
segregating an equivalent dollar amount of liquid assets. The Fund will segregate additional liquid assets if the
value of the segregated assets drops below 100% of the current value of the future. Because of this segregation
requirement, in no circumstances would the Fund's receipt of an exercise notice as to that future require the Fund
to deliver a futures contract. It would simply put the Fund in a short futures position, which is permitted by the
Fund's hedging policies.

|_| Writing Put Options. The Fund can sell put options on stock indices, foreign currencies or
stock index futures. A put option on securities gives the purchaser the right to sell, and the writer the obligation
to buy, the underlying investment of the exercise price during the option period. If the Fund writes a put, the put
must be covered by liquid assets identified on the Fund's books in an amount at least equal to the exercise price of
the underlying securities. The Fund therefore forgoes the opportunity of investing the segregated assets or writing
calls against those assets.

The premium the Fund receives from writing a put represents a profit, as long as the price of the
underlying investment remains equal to or above the exercise price of the put. However, the Fund also assumes the
obligation during the option period to settle the transaction in cash with the buyer of the put at the exercise
price, even if the value of the underlying investment falls below the exercise price. If a put the Fund has written
expires unexercised, the Fund realizes a gain in the amount of the premium less the transaction costs incurred. If
the put is exercised, the Fund must fulfill its obligation to settle in cash at the exercise price. That price will
usually exceed the market value of the investment at that time. In that case, the fund might incur a loss if it
sells the underlying investment. That loss will be equal to the sum of the sale price of the underlying investment
and the premium received minus the sum of the exercise price and any transaction costs the Fund incurred.

As long as the Fund's obligation as the put writer continues, it may be assigned an exercise notice by the
broker-dealer through which the put was sold. That notice will require the Fund to settle the transaction in cash at
the exercise price. The Fund has no control over when it may be required to settle the transaction, since it may be
assigned an exercise notice at any time prior to the termination of its obligation as the writer of the put. That
obligation terminates upon expiration of the put. It may also terminate if, before it receives an exercise notice,
the Fund effects a closing purchase transaction by purchasing a put of the same series as it sold. Once the Fund
has been assigned an exercise notice, it cannot effect a closing purchase transaction.

The Fund may decide to effect a closing purchase transaction to realize a profit on an outstanding put
option it has written or to prevent the underlying security from being put. The Fund will realize a profit or loss
from a closing purchase transaction depending on whether the cost of the transaction is less or more than the
premium received from writing the put option. Any profits from writing puts are considered short-term capital gains
for federal tax purposes, and when distributed by the Fund, are taxable as ordinary income.

|_| Purchasing Calls and Puts. The Fund can buy calls to protect against the possibility that
the Fund's portfolio will not participate in an anticipated rise in the securities market.
When the Fund buys a call (other than in a closing purchase transaction), it pays a premium. Buying a call on a
security or future gives the Fund the right to buy the underlying investment from a seller of a corresponding call
on the same investment during the call period at a fixed exercise price. The Fund benefits only if it sells the call
at a profit or if, during the call period, the market price of the underlying investment is above the sum of the
call price plus the transaction costs and the premium paid for the call and the Fund exercises the call. If the
Fund does not exercise the call or sell it (whether or not at a profit), the call will become worthless at its
expiration date. In that case the Fund will have paid the premium but lost the right to purchase the underlying
investment.

In the case of a purchase of a call on a stock index, if the Fund exercises the call during the call
period, a seller of a corresponding call on the same index will pay the Fund an amount of cash to settle the call if
the closing level of the stock index upon which the call is based is greater than the exercise price of the call.
That cash payment is equal to the difference between the closing price of the call and the exercise price of the
call times a specified multiple (the "multiplier") which determines the total dollar value for each point of
difference.
When the Fund buys a put, it pays a premium. It has the right during the put period to require a seller of
a corresponding put, upon the Fund's exercise of its put, to buy the underlying security (in the case of puts on
securities or futures) or in the case of puts on stock indices, to deliver cash to the Fund to settle the put if the
closing level of the stock index upon which the put is based is less than the exercise price of the put. That cash
payment is determined by the multiplier, in the same manner as described above as to calls.

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

Buying a put on an investment the Fund does not own (such as an index or future) permits the Fund either to
resell the put or to buy the underlying investment and sell it at the exercise price. The resale price will vary
inversely to the price of the underlying investment. If the market price of the underlying investment is above the
exercise price and, as a result, the put is not exercised, the put will become worthless on its expiration date.

When the Fund purchases a put on a stock index, the put protects the Fund to the extent that the index
moves in a similar pattern to the securities the Fund holds. The Fund can resell the put. The resale price of the
put will vary inversely with the price of the underlying investment. If the market price of the underlying
investment is above the exercise price, and as a result the put is not exercised, the put will become worthless on
the expiration date. In the event of a decline in price of the underlying investment, the Fund could exercise or
sell the put at a profit to attempt to offset some or all of its loss on its portfolio securities. The Fund may buy
a call or put only if, after the purchase, the value of all call and put options held by the Fund will not exceed 5%
of the Fund's total assets.

|_| Buying and Selling Options on Foreign Currencies. The Fund can buy and sell calls and puts
on foreign currencies. They include puts and calls that trade on a securities or commodities exchange or in the
over-the-counter markets or are quoted by major recognized dealers in such options. The Fund could use these calls
and puts to try to protect against declines in the dollar value of foreign securities and increases in the dollar
cost of foreign securities the Fund wants to acquire.

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

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

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

The Fund's option activities could affect its portfolio turnover rate and brokerage commissions. The
exercise of calls written by the Fund might cause the Fund to sell related portfolio securities, thus increasing its
turnover rate. The exercise by the Fund of puts on securities will cause the sale of underlying investments,
increasing portfolio turnover. Although the decision whether to exercise a put it holds is within the Fund's
control, holding a put might cause the Fund to sell the related investments for reasons that would not exist in the
absence of the put.

The Fund could pay a brokerage commission each time it buys a call or put, sells a call or put, or buys or
sells an underlying investment in connection with the exercise of a call or put. Those commissions could be higher
on a relative basis than the commissions for direct purchases or sales of the underlying investments. Premiums paid
for options are small in relation to the market value of the underlying investments. Consequently, put and call
options offer large amounts of leverage. The leverage offered by trading in options could result in the Fund's net
asset value being more sensitive to changes in the value of the underlying investment.

If a covered call written by the Fund is exercised on an investment that has increased in value, the Fund
will be required to sell the investment at the call price. It will not be able to realize any profit if the
investment has increased in value above the call price.

An option position may be closed out only on a market that provides secondary trading for options of the
same series, and there is no assurance that a liquid secondary market will exist for any particular option. The
Fund might experience losses if it could not close out a position because of an illiquid market for the future or
option.

There is a risk in using short hedging by selling futures or purchasing puts on broadly-based indices or
futures to attempt to protect against declines in the value of the Fund's portfolio securities. The risk is that the
prices of the futures or the applicable index will correlate imperfectly with the behavior of the cash prices of the
Fund's securities. For example, it is possible that while the Fund has used hedging instruments in a short hedge,
the market may advance and the value of the securities held in the Fund's portfolio might decline. If that occurred,
the Fund would lose money on the hedging instruments and also experience a decline in the value of its portfolio
securities. However, while this could occur for a very brief period or to a very small degree, over time the value
of a diversified portfolio of securities will tend to move in the same direction as the indices upon which the
hedging instruments are based.

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

The ordinary spreads between prices in the cash and futures markets are subject to distortions, due to
differences in the nature of those markets. First, all participants in the futures market are subject to margin
deposit and maintenance requirements. Rather than meeting additional margin deposit requirements, investors may
close futures contracts through offsetting transactions which could distort the normal relationship between the cash
and futures markets. Second, the liquidity of the futures market depends on participants entering into offsetting
transactions rather than making or taking delivery. To the extent participants decide to make or take delivery,
liquidity in the futures market could be reduced, thus producing distortion. Third, from the point of view of
speculators, the deposit requirements in the futures market are less onerous than margin requirements in the
securities markets. Therefore, increased participation by speculators in the futures market may cause temporary
price distortions.

The Fund can use hedging instruments to establish a position in the securities markets as a temporary
substitute for the purchase of individual securities (long hedging) by buying futures and/or calls on such futures,
broadly-based indices or on securities. It is possible that when the Fund does so the market might decline. If the
Fund then concludes not to invest in securities because of concerns that the market might decline further or for
other reasons, the Fund will realize a loss on the hedging instruments that is not offset by a reduction in the
price of the securities purchased.

|_| Forward Contracts. Forward contracts are foreign currency exchange contracts. They are used to buy
or sell foreign currency for future delivery at a fixed price. The Fund uses them to "lock in" the U.S. dollar
price of a security denominated in a foreign currency that the Fund has bought or sold, or to protect against
possible losses from changes in the relative values of the U.S. dollar and a foreign currency. The Fund limits its
exposure in foreign currency exchange contracts in a particular foreign currency to the amount of its assets
denominated in that currency or a closely-correlated currency. The Fund may also use "cross-hedging" where the Fund
hedges against changes in currencies other than the currency in which a security it holds is denominated.

Under a forward contract, one party agrees to purchase, and another party agrees to sell, a specific
currency at a future date. That date may be any fixed number of days from the date of the contract agreed upon by
the parties. The transaction price is set at the time the contract is entered into. These contracts are traded in
the inter-bank market conducted directly among currency traders (usually large commercial banks) and their customers.

The Fund may use forward contracts to protect against uncertainty in the level of future exchange rates.
The use of forward contracts does not eliminate the risk of fluctuations in the prices of the underlying securities
the Fund owns or intends to acquire, but it does fix a rate of exchange in advance. Although forward contracts may
reduce the risk of loss from a decline in the value of the hedged currency, at the same time they limit any
potential gain if the value of the hedged currency increases.

When the Fund enters into a contract for the purchase or sale of a security denominated in a foreign
currency, or when it anticipates receiving dividend payments in a foreign currency, the Fund might desire to
"lock-in" the U.S. dollar price of the security or the U.S. dollar equivalent of the dividend payments. To do so,
the Fund could enter into a forward contract for the purchase or sale of the amount of foreign currency involved in
the underlying transaction, in a fixed amount of U.S. dollars per unit of the foreign currency. This is called a
"transaction hedge." The transaction hedge will protect the Fund against a loss from an adverse change in the
currency exchange rates during the period between the date on which the security is purchased or sold or on which
the payment is declared, and the date on which the payments are made or received.

The Fund could also use forward contracts to lock in the U.S. dollar value of portfolio positions. This is
called a "position hedge." When the Fund believes that foreign currency might a substantial decline against the
U.S. dollar, it could into a forward contract to sell an amount of that foreign currency approximating the value of
some or all of the Fund's portfolio securities denominated in that foreign currency. When the Fund believes that
the U.S. dollar might suffer a substantial decline against a foreign currency, it could enter into a forward
contract to buy that foreign currency for a fixed dollar amount. Alternatively, the Fund could enter into a forward
contract to sell a different foreign currency for a fixed U.S. dollar amount if the Fund believes that the U.S.
dollar value of the foreign currency to be sold pursuant to its forward contract will fall whenever there is a
decline in the U.S. dollar value of the currency in which portfolio securities of the Fund are denominated. That is
referred to as a "cross hedge."

The Fund will cover its short positions in these cases by identifying to its custodian bank assets having a
value equal to the aggregate amount of the Fund's commitment under forward contracts. The Fund will not enter into
forward contracts or maintain a net exposure to such contracts if the consummation of the contracts would obligate
the Fund to deliver an amount of foreign currency in excess of the value of the Fund's portfolio securities or other
assets denominated in that currency or another currency that is the subject of the hedge. However, to avoid excess
transactions and transaction costs, the Fund may maintain a net exposure to forward contracts in excess of the value
of the Fund's portfolio securities or other assets denominated in foreign currencies if the excess amount is
"covered" by liquid securities denominated in any currency. The cover must be at least equal at all times to the
amount of that excess.

As one alternative, the Fund may purchase a call option permitting the Fund to purchase the amount of
foreign currency being hedged by a forward sale contract at a price no higher than the forward contract price. As
another alternative, the Fund may purchase a put option permitting the Fund to sell the amount of foreign currency
subject to a forward purchase contract at a price as high or higher than the forward contact price.

The precise matching of the amounts under forward contracts and the value of the securities involved
generally will not be possible because the future value of securities denominated in foreign currencies will change
as a consequence of market movements between the date the forward contract is entered into and the date it is sold.
In some cases, the Sub-Advisor might decide to sell the security and deliver foreign currency to settle the original
purchase obligation. If the market value of the security is less than the amount of foreign currency the Fund is
obligated to deliver, the Fund might have to purchase additional foreign currency on the "spot" (that is, cash)
market to settle the security trade. If the market value of the security instead exceeds the amount of foreign
currency the Fund is obligated to deliver to settle the trade, the Fund might have to sell on the spot market some
of the foreign currency received upon the sale of the security. There will be additional transaction costs on the
spot market in those cases.

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

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

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

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

|_| Regulatory Aspects of Hedging Instruments. When using futures and options on futures, the Fund is
required to operate within certain guidelines and restrictions with respect to the use of futures as established by
the Commodities Futures Trading Commission (the "CFTC"). In particular, the Fund is exempted from registration with
the CFTC as a "commodity pool operator" if the Fund complies with the requirements of Rule 4.5 adopted by the CFTC.
The Rule does not limit the percentage of the Fund's assets that may be used for futures margin and related options
premiums for a bona fide hedging position. However, under the Rule, the Fund must limit its aggregate initial
futures margin and related options premiums to not more than 5% of the Fund's net assets for hedging strategies that
are not considered bona fide hedging strategies under the Rule. Under the Rule, the Fund must also use short futures
and options on futures solely for bona fide hedging purposes within the meaning and intent of the applicable
provisions of the Commodity Exchange Act.

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

Under the Investment Company Act, when the Fund purchases a future, it must maintain cash or readily
marketable short-term debt instruments in an amount equal to the market value of the securities underlying the
future, less the margin deposit applicable to it. The account must be a segregated account or accounts held by the
Fund's custodian bank.

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

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

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

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

Investment Restrictions

|X| What Are "Fundamental Policies"? Fundamental policies are those policies that the Fund has adopted to
govern its investments that can be changed only by the vote of a "majority" of the Fund's outstanding voting
securities. Under the Investment Company Act, a "majority" vote is defined as the vote of the holders of the lesser
of:

|_| 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
|_| more than 50% of the outstanding shares.

The Fund's investment objectives are fundamental policies. 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 most significant 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.

|_| The Fund cannot invest in physical commodities or physical commodity contracts. However, the
Fund may buy and sell hedging instruments to the extent specified in its Prospectus and this Statement of Additional
Information from time to time. The Fund can also buy and sell options, futures, securities or other instruments
backed by, or the investment return from which is linked to changes in the price of, physical commodities.

|_| The Fund cannot invest in real estate or real estate limited partnerships (direct
participation programs). However, the Fund may purchase securities of issuers that engage in real estate operations
and securities that are secured by real estate or interests in real estate.

|_| The Fund cannot underwrite securities of other companies. A permitted exception is in case it
might be deemed to be an underwriter under the Securities Act of 1933 in disposing of a security held its own
portfolio.

|_| The Fund cannot invest in securities of any issuer if, to the knowledge of the Trust, any
officer or trustee of the Trust or any officer or director of the Manager or Sub-Advisor owns more than 1/2 of 1% of
the outstanding securities of that issuer, and who together own more 5% of the outstanding securities of that
issuer;

|_| The Fund cannot pledge its assets or assign or otherwise encumber its assets in amounts in
excess of 10% of its net assets (taken at market value at the time of pledging). The Fund can pledge, assign or
encumber its assets only to secure borrowings made within the limitations set forth in the Prospectus or this
Statement of Additional Information.

|_| The Fund cannot invest for the purpose of exercising control or management of another company.

|_| The Fund cannot issue senior securities as defined in the Investment Company Act of 1940.
However, the Fund may enter into any repurchase agreement; borrow money in accordance with restrictions described
above, and lend portfolio securities.

|_| The Fund cannot make loans to any person or individual. However, portfolio securities may be
loaned by the Fund within the limitations set forth in the Prospectus or this Statement of Additional Information.

|_| The Fund cannot invest more than 5% of the value of its total assets in the securities of any
one issuer. This restriction applies to 75% of its total assets.

|_| The Fund cannot purchase more than 10% of the voting securities of any one issuer (other than
the U.S. government or any of its agencies or instrumentalities). This restriction applies to 75% of the Fund's
total assets.

|_| The Fund cannot concentrate its investments in any particular industry. However, if it is
deemed appropriate to help the Fund attain its investment objective, the Fund may invest up to but less than 25% of
its total assets (valued at the time of investment) in any one industry classification used by the Fund for
investment purposes. For this purpose, a foreign government is considered to be an industry.

|_| The Fund cannot borrow money in excess of 33-1/3% of the value of the Fund's total assets. The
Fund may borrow only from banks and only as a temporary measure for extraordinary or emergency purposes. The Fund
will make no additional investments while borrowings exceed 5% of the Fund's total assets. With respect to this
fundamental policy, the Fund can borrow only if it maintains a 300% ratio of assets to borrowings at all times in
the manner set forth in the Investment Company Act.

|X| 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.

|_| The Fund cannot make short sales or purchase securities on margin. However, the Fund can
mark short-term borrowings when necessary for the clearance of purchases of portfolio securities. Collateral
arrangements in connection with futures and options transactions are not deemed to be margin transactions under this
restriction.

|_| The Fund cannot invest in interests in oil, gas or other mineral exploration or development
programs or leases.

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

For purposes of the Fund's policy not to concentrate its assets as described in the Prospectus, the Fund
has adopted, as a matter of non-fundamental policy, the corporate industry classifications set forth in Appendix B
to this Statement of Additional Information. The percentage restrictions described above and in the Prospectus
apply only at the time of investment and require no action by the Fund as a result of subsequent changes in relative
values.

How the Fund is Managed

Organization and History. The Fund is an open-end, diversified management investment company. The Fund is one of
three series of Oppenheimer Quest For Value Funds, an open-end management investment company organized as a
Massachusetts business trust in April 1987 (and which is referred to as the "Trust").

|X| Classes of Shares. The Trustees are authorized without shareholders approval, to create new series of
the Trust and new classes of shares of the Fund. 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 N and Class Y. All classes
invest in the same investment portfolio. Each class of shares:
o has its own dividends and distributions,
o pays certain expenses which may be different for the different classes,
o may have a different net asset value,
o may have separate voting rights on matters in which interests of one class are different from interests of
another class, and
o votes as a class on matters that affect that class alone.

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

|X| Meetings of Shareholders. As a Massachusetts business trust, the Fund is not required to hold, and
does not plan to hold, regular annual meetings of shareholders. The Fund will hold meetings when required to do so
by the Investment Company Act or other applicable law. It will also do so when a shareholder meeting is called by
the Trustees or upon proper request of the shareholders.

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. 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, whichever is less. The
Trustees may also take other action as permitted by the Investment Company Act.

|X| Shareholder and Trustee Liability. The Trust'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. 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. Although the Fund will not normally hold
annual meetings of its shareholders, it may hold shareholder meetings from time to time on important matters, and
shareholders have the right to call a meeting to remove a Trustee or to take other action described in the Funds'
Declaration of Trust.

The Board of Trustees has an Audit Committee. 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. The members of
the Audit Committee are Paul Clinton (Chairman), Thomas Courtney, Robert Galli, Lacy Herrmann and Brian Wruble. The
Audit Committee met three times during the Fund's fiscal year ended October 31, 2001.

Trustees and Officers of the Fund. The Fund's Trustees and officers and their positions held with the Fund and
length of service in such position(s) and the principal occupations and business affiliations during the past five
years are listed below. Each of the Trustees are independent trustees, which means that they have no affiliation
with the Manager as defined in the Investment Company Act. The information for the Trustees also includes the
dollar range of shares of the Fund as well as the aggregate dollar range of shares of the Board III Funds
beneficially owned by the Trustee. All information is as of December 31, 2001. All of the Trustees are also
trustees or directors of the following Oppenheimer funds (referred to as "Board III Funds"):

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

In addition to being a director or trustee of the Board III Funds, Mr. Galli is also a director or trustee
of 33 other portfolios in the Oppenheimer Funds complex.

Messrs. Murphy, Bishop, Farrar, Molleur, Wixted, Zack and Mses. Feld and Ives who are officers of the Fund,
respectively hold the same offices of the other Board III Funds. As of January 15, 2002, 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 officers of the Fund listed
above. In addition, each Independent Trustee, and his or her 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.


Independent Trustees


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

                                                                                                     Aggregate Dollar
Name, Address,1 Age,                                                                                 Range of Shares
Position(s) Held with       Principal Occupation(s) During Past 5 Years / Other   Dollar Range of    Owned in any of
Fund and Length of Time     Trusteeships Held by Trustee / Number of Portfolios   Shares Owned in     the Board III
Served2                     in Fund Complex Overseen by Trustee                       the Fund            Funds

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

Thomas W. Courtney,         Principal  of  Courtney  Associates,  Inc.  (venture         $0         $10,001 - $50,000
Chairman of the Board of    capital  firm);  former  General  Partner of Trivest
Trustees, Trustee since     Venture Fund (private venture capital fund);  former
April, 1987                 President   of   Investment   Counseling   Federated
Age: 68                     Investors,  Inc.;  Trustee of Cash Assets  Trust,  a
                            money  market fund;  Director of OCC Cash  Reserves,
                            Inc., and Trustee of OCC  Accumulation  Trust,  both
                            of which are open-end investment companies;  Trustee
                            of  Hawaiian  Tax-Free  Trust and Tax Free  Trust of
                            Arizona,  tax-exempt bond funds;  former Director of
                            Financial Analysts  Federation.  Director/trustee of
                            10  investment  companies  in  the  OppenheimerFunds
                            complex.

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

Paul Y. Clinton, Trustee,   Principal of Clinton Management Associates, a                $0           Over $100,000
since April, 1987           financial and venture capital consulting firm;
Age: 70.                    Trustee of Capital Cash Management Trust, a
                            money-market fund and Narragansett Tax-Free Fund, a
                            tax-exempt bond fund; Director of OCC Cash
                            Reserves, Inc. and Trustee of OCC Accumulation
                            Trust, both of which are open-end investment
                            companies. Formerly: Director, External Affairs,
                            Kravco Corporation, a national real estate owner
                            and property management corporation; President of
                            Essex Management Corporation, a management
                            consulting company; a general partner of Capital
                            Growth Fund, a venture capital partnership; a
                            general partner of Essex Limited Partnership, an
                            investment partnership; President of Geneve Corp.,
                            a venture capital fund; Chairman of Woodland
                            Capital Corp., a small business investment company;
                            and Vice President of W.R. Grace & Co.
                            Director/trustee of 10 investment companies in the
                            OppenheimerFunds complex.

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

Robert G. Galli,            A Trustee or Director of other Oppenheimer funds.            $0         Over $100,0003
Trustee since June, 1998    Formerly Vice Chairman of the Manager (October 1995
Age: 68                     - December 1997). Director/trustee of 41 investment
                            companies in the OppenheimerFunds complex.

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

Lacy B. Herrmann,           Chairman and Chief Executive Officer of Aquila               $0         $10,001 - $50,000
Trustee since April, 1987   Management Corporation, the sponsoring organization
Age: 72                     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, Pacific Capital Cash Assets
                            Trust, Pacific Capital U.S. Treasuries Cash Assets
                            Trust, Pacific Capital Tax-Free 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; 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; Director of OCC Cash Reserves,
                            Inc., and Trustee of OCC Accumulation Trust, both
                            of which are open-end investment companies; Trustee
                            Emeritus of Brown University. Director/trustee of
                            10 investment companies in the OppenheimerFunds
                            complex.

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

Brian Wruble, Trustee       Special Limited Partner (since January 1999) of         $1 - $10,000    $50,001 - $100,000
since April, 2001           Odyssey Investment Partners, LLC (private equity
Age: 58                     investment); General Partner (since September 1996)
                            of Odyssey Partners, L.P. (hedge fund in
                            distribution since 1/1/97); Director (since May
                            2000) of Ray & Berendston, Inc. (executive search);
                            Board of Incorporators (since August 1990) The
                            Jackson Laboratory; Trustee (since May 1992) of
                            Institute for Advanced Study (educational
                            institute); Trustee (since May 2000) of Research
                            Foundation of AIMR (investment research); Governor,
                            Jerome Levy Economics Institute of Bard College
                            (August 1990 - September 2001) (economics
                            research). Director/trustee of 10 investment
                            companies in the OppenheimerFunds complex.

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


Officers of the Fund


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

Name, Address,4 Age, Position(s) Held with      Principal Occupation(s) During Past 5 Years
Fund and Length of Time Served

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

John V. Murphy,                                 Chairman, Chief Executive Officer and director (since June 30, 2001)
President (since October 2001)                  and President (since September 2000) of the Manager; President and a
Age: 52                                         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.
                                                (since July 2001), a holding company 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 (since November 1, 2001) and
                                                a director (since July 2001) of Oppenheimer Real Asset Management,
                                                Inc., an investment advisor subsidiary of the Manager; President and
                                                a director (since July 2001) of OppenheimerFunds Legacy Program, a
                                                charitable trust program established by the Manager; a director
                                                (since November 2001) of Trinity Investment Management Corp. and
                                                Tremont Advisers, Inc., investment advisory affiliates of the
                                                Manager, and of OAM Institutional, Inc. (since November 2001), an
                                                investment advisory subsidiary of the Manager, and of HarbourView
                                                Asset Management Corporation and OFI Private Investments, Inc.
                                                (since July 2001), investment advisor subsidiaries of the Manager;
                                                formerly President and trustee (from November 1999 to November 2001)
                                                of MML Series Investment Fund and MassMutual Institutional Funds,
                                                open-end investment companies; Chief Operating Officer (from
                                                September 2000 to July 2001) of the Manager; Executive Vice
                                                President of Massachusetts Mutual Life Insurance Company (from
                                                February 1997 to August 2000); a director (from 1999 to 2000) of
                                                C.M. Life Insurance Company; President, Chief Executive Officer and
                                                a director (from 1999 to 2000) of MML Bay State Life Insurance
                                                Company; Executive Vice President, director and Chief Operating
                                                Officer (from 1995 to 1997) of David L. Babson & Company, Inc., an
                                                investment advisor; Senior Vice President and director (from 1995 to
                                                1997) of Potomac Babson Inc., an investment advisor subsidiary of
                                                David L. Babson & Company, Inc.; Senior Vice President (from 1995 to
                                                1997) and director (from 1995 to 1999) of DBL Acquisition
                                                Corporation, a holding company for investment advisers; a director
                                                (from 1989 to 1998) of Emerald Isle Bancorp and Hibernia Savings
                                                Bank, wholly-owned subsidiary of Emerald Isle Bancorp; and Chief
                                                Operating Officer (from 1993 to 1996) of Concert Capital Management,
                                                Inc., an investment advisor.

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

Brian W. Wixted, Treasurer, Principal           Senior Vice President and Treasurer (since March 1999) of the
Financial and Accounting Officer (since March   Manager; Treasurer (since March 1999) of HarbourView Asset
1999) Age: 42                                   Management Corporation, Shareholder Services, Inc., Oppenheimer Real
                                                Asset Management Corporation, Shareholder Financial Services, Inc.
                                                and Oppenheimer Partnership Holdings, Inc., of OFI Private
                                                Investments, Inc. (since March 2000) and of OppenheimerFunds
                                                International Ltd. and Oppenheimer Millennium Funds plc (since May
                                                2000); Treasurer and Chief Financial Officer (since May 2000) of
                                                Oppenheimer Trust Company; Assistant Treasurer (since March 1999) of
                                                Oppenheimer Acquisition Corp.; an officer of other Oppenheimer
                                                funds; formerly Principal and Chief Operating Officer, Bankers Trust
                                                Company - Mutual Fund Services Division (March 1995 - March 1999);
                                                Vice President and Chief Financial Officer of CS First Boston
                                                Investment Management Corp. (September 1991 - March 1995).

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

Robert J. Bishop, Assistant Treasurer           Vice President of the Manager/Mutual Fund Accounting (since May
(since May 1996)                                1996); an officer of other
Age: 42                                         Oppenheimer funds; formerly an Assistant Vice President of the
                                                Manager/Mutual Fund Accounting (April 1994 - May 1996) and a Fund
                                                Controller of the Manager.

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

Adele A. Campbell, Assistant Treasurer          Assistant Vice President of the Manager (1996-Present); Formerly
(since 1996)                                    Assistant Vice President of Rochester Fund Services, Inc. (1994 -
Age: 38                                         1996).

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

Scott T. Farrar, Assistant Treasurer            Vice President of the Manager/Mutual Fund Accounting (since May
(since May 1996)                                1996); Assistant Treasurer of Oppenheimer Millennium Funds plc
Age: 36                                         (since October 1997); an officer of other Oppenheimer Funds;
                                                formerly an Assistant Vice President of the Manager/Mutual Fund
                                                Accounting (April 1994 - May 1996), and a Fund Controller of the
                                                Manager.

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

Robert G. Zack, Secretary (since October 2001)  Senior Vice President (since May 1985) and Acting General Counsel
Age: 53                                         (since November 2001) of the Manager; Assistant Secretary of
                                                Shareholder Services, Inc. (since May 1985), Shareholder Financial
                                                Services, Inc. (since November 1989); OppenheimerFunds International
                                                Ltd. and Oppenheimer Millennium Funds plc (since October 1997); an
                                                officer of other Oppenheimer funds.

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

Denis R. Molleur, Assistant Secretary           Vice President and Senior Counsel of the Manager (since July 1999);
(since October 2001)                            an officer of other Oppenheimer funds; formerly a Vice President and
Age: 44                                         Associate Counsel of the Manager (September 1995 - July 1999).

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

Katherine P. Feld, Assistant Secretary          Vice President and Senior Counsel of the Manager (since July 1999);
(since October 2001)                            an officer of other Oppenheimer funds; formerly a Vice President and
Age: 43                                         Associate Counsel of the Manager (June 1990 - July 1999).

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

Kathleen T. Ives, Assistant Secretary           Vice President and Assistant Counsel of the Manager (since June
(since October 2001)                            1998); an officer of other Oppenheimer funds; formerly an Assistant
Age: 36                                         Vice President and Assistant Counsel of the Manager (August 1997 -
                                                June 1998); and Assistant Counsel of the Manager (August 1994-August
                                                1997).

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

|X| Remuneration of Trustees. The officers of the Fund are affiliated with the Manager and receive no salary
or fee from the Fund. The remaining Trustees received the compensation shown below. The compensation from the Fund
was paid during its fiscal year ended October 31, 2001. The table below also shows the total compensation from all
of the Oppenheimer funds listed above, including the compensation from the Fund, and from two other funds that are
not Oppenheimer funds but for which the Sub-Advisor acts as investment advisor. That amount represents compensation
received as a director, trustee, or member of a committee of the Board during the calendar year 2001.

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

Trustee's Name Aggregate Compensation Retirement Benefits Total Compensation
From the Fund 1 Accrued as Part of Fund From all Board III Funds
Expenses (10 Funds)2

Paul Y. Clinton4 $35,479 $18,852 $157,326

Thomas W. Courtney4 $33,403 $16,776 $157,326

Robert G. Galli3 $20,332 $3,705 $202,886

Lacy B. Herrmann4 $40,526 $23,899 $157,326

Brian Wruble5 $10,332 $703 $59,250

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

1. Aggregate Compensation includes fees and retirement plan benefits accrued for a Trustee. For the fiscal
year-ended 10/31/01.
2. For the 2001 calendar year.
3. Total compensation for the 2001 calendar year includes $105,760 compensation received for serving as a Trustee
or Director of 33 other Oppenheimer funds.
4. Total compensation for the 2001 calendar year also includes $60,200 compensation paid by two funds (OCC
Cash Reserve and OCC Accumulated Trust) for which the Sub-Advisor acts as the investment advisor.
5. Elected to the board on 4/01/01

|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 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. Therefore the amount of those
benefits cannot be determined at this time, nor can we estimate the number of years of credited service that will be
used to determine those benefits.

|X| Major Shareholders. As of February 1, 2002 the only persons who owned of record or were known by the
Fund to own beneficially 5% or more of any class of the Fund's outstanding shares were:

Merrill Lynch Pierce Fenner & Smith, Inc., Attn: Fund Admin./#97143, 4800 Deer Lake Drive East, Floor 3,
Jacksonville, Florida 32246-6484, which owned for the benefit of its clients 12,440,222.269 Class A shares
(representing 9.44% of the Class A shares then outstanding);

Charles Schwab & Co. Inc., Attn: Mutual Funds, 101 Montgomery Street, San Francisco, CA 94104-4122, which
owned for the benefit of its clients 10,408,665.980 Class A Shares (representing 7.90% of the Class A Shares then

outstanding);

Merrill Lynch Pierce Fenner & Smith, Inc., Attn: Fund Admin./ #97CK8, 4800 Deer Lake Drive East, Floor 3,
Jacksonville, Florida 32246-6484, which owned for the benefit of its clients 19,134,575.358 Class B shares
(representing 13.64% of the Class B shares then outstanding);

Merrill Lynch Pierce Fenner & Smith, Inc., Attn: Fund Admin./ #97HX9, 4800 Deer Lake Drive East, Floor 3,
Jacksonville, Florida 32246-6484, which owned for the benefit of its clients 11,154,323.623 Class C shares
(representing 18.46% of the Class C shares then outstanding);

Trustlynx & Co., c/o Datalynx Recon, 717 17th Street, Suite 2600, Denver, CO 80202-3326, which owned for the
benefit of its clients 600,366.536 Class N shares (representing 15.14% the Class N shares then outstanding);

Mass Mutual Life Insurance Co., Attn: Monica Margeson N-328, 1295 State Street, Springfield Massachusetts
0111-0001, which owned 3,706,963.074 Class Y shares (representing 39.11% of the Class Y shares then outstanding); and

Vanguard Fiduciary Trust Company, Attn: Outside Funds, Oppenheimer Quest Balanced Fund Y, P.O. Box 2600,
Valley Forge, PA 19482-2600, which owned for the benefit of its clients 5,583,076.297 Class Y shares (representing
58.90% of the Class Y shares then outstanding).

The Manager. The Manager is wholly-owned by Oppenheimer Acquisition Corp., a holding company controlled by
Massachusetts Mutual Life Insurance Company.

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

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

|X| The Investment Advisory Agreement. The Manager provides investment advisory and management services
to the Fund under an investment advisory agreement between the Manager and the Fund's parent Trust. The Manager
handles the Fund's day-to-day business, and the agreement permits the Manager to enter into sub-advisory agreements
with other registered investment advisors to obtain specialized services for the Fund, as long as the Fund is not
obligated to pay any additional fees for those services. The Manager has retained the Sub-Advisor pursuant to a
separate Sub-Advisory Agreement, described below, under which the Sub-Advisor buys and sells portfolio securities
for the Fund. The portfolio manager of the Fund is employed by the Sub-Advisor and is the person who is principally
responsible for the day-to-day management of the Fund's portfolio, as described below.

The investment advisory agreement between the Fund and the Manager 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. Expenses for the
Trust's three series are allocated to the series in proportion to their net assets, unless allocations of expenses
can be made directly to a series. The advisory agreement lists examples of expenses paid by the Fund. The major
categories relate to calculation of the Fund's net asset values per share, 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.

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

Management Fees Paid to OppenheimerFunds,
Fiscal Year ended 10/31: Inc. 1

1999 $8,029,613

------------------------------------------------------ ----------------------------------------------
------------------------------------------------------ ----------------------------------------------
2000 $18,958,482
------------------------------------------------------ ----------------------------------------------
------------------------------------------------------ ----------------------------------------------

2001 $27,514,492

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

1. The Manager, not the Fund, pays the Sub-Advisor an annual sub-advisory fee. For fiscal 2001, this sub-advisory
fee was $7,867,001.

The investment advisory agreement states that in the absence of willful misfeasance, bad faith, gross
negligence in the performance of its duties or reckless disregard of its obligations and duties under the investment
advisory agreement, the Manager is not liable for any loss resulting from a good faith error or omission on its part
with respect to any of its duties under the agreement.

The agreement permits the Manager to act as investment advisor for any other person, firm or corporation and
to use the names "Oppenheimer" and "Quest for Value" 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 names "Oppenheimer" or "Quest for Value" as part of
its name.

|X| Annual Approval of Investment Advisory Agreement and Sub-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 and the Sub-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 agreements. 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
agreements. 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 and the Sub-Advisor;
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 receives from its relationship with the Fund. These include
services provided by the General 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 and the Sub-Advisor 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 and the Sub-Advisor is important so that they 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
deliberating, the Board determined that the addition of breakpoints to the management fee schedule was warranted.

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
Agreement, including the investment advisory fee, in light of all of the surrounding circumstances.

The Sub-Advisor. The Sub-Advisor is a wholly-owned subsidiary of Oppenheimer Capital, a registered investment
advisor. From the Fund's inception on November 1, 1991 until November 22, 1995, the Sub-Advisor (which was then
named Quest for Value Advisors) or the Sub-Advisor's parent served as the Fund's investment advisor. The Sub-Advisor
acts as investment advisor to other investment companies and for individual investors.

The Sub-Advisor is a Delaware limited liability company which is wholly-owned by Oppenheimer Capital LLC a
wholly-owned subsidiary of Allianz Dresdner Asset Management U.S. Equities LLC, which is wholly-owned by Allianz
Dresdner Asset Management of America L.P. (formerly PIMCO Advisors L.P.). Allianz Dresdner Asset Management of
America L.P. ("ADAM") is a Delaware limited partnership whose sole general partner is Allianz-PacLife Partners LLC.
Allianz PacLife Partners LLC is a Delaware limited liability company with two members, Allianz Dresdner Asset
Management of America LLC, a Delaware limited liability company, and Pacific Asset Management LLC, a Delaware
limited liability company. Allianz Dresdner Asset Management of America LLC is a wholly-owned subsidiary of Allianz
of America, Inc., which is wholly-owned subsidiary of Pacific Life Insurance Company which is a wholly-owned
subsidiary of Pacific Mutual Holding Company. Allianz A.G. indirectly holds a controlling interest in ADAM. Allianz
AG is a European-based, multinational insurance and financial services holding company. Pacific Life Insurance
Company owns an indirect minority equity interest in ADAM and is a California-based insurance company.

Allianz Dresdner Asset Management of America, L.P. is a direct or indirect parent company of the following
SEC-registered investment advisors, all of which are affiliated: Cadence Capital Management; NFJ Investment Group;
Pacific Investment Management Company LLC; the Sub-Advisor, Oppenheimer Capital LLC, PIMCO Allianz Advisors LLC and
PIMCO Funds Advisors LLC.

|X| The Sub-Advisory Agreement. Under the Sub-Advisory Agreement between the Manager and the Sub-Advisor,
the Sub-Advisor shall regularly provide investment advice with respect to the Fund and invest and reinvest cash,
securities and the property comprising the assets of the Fund. Under the Sub-Advisory Agreement, the Sub-Advisor
agrees not to change the portfolio manager of the Fund without the written approval of the Manager. The Sub-Advisor
also agrees to provide assistance in the distribution and marketing of the Fund.

Under the Sub-Advisory Agreement, the Manager pays the Sub-Advisor an annual fee in monthly installments,
based on the average daily net assets of the Fund. The fee paid to the Sub-Advisor under the Sub-Advisory agreement
is paid by the Manager, not by the Fund. The fee is equal to 40% of the investment advisory fee collected by the
Manager from the Fund based on the total net assets of the Fund as of November 22, 1995 (the "Base Amount") plus 30%
of the investment advisory fee collected by the Manager based on the total net assets of the Fund that exceed the
Base Amount.

The Sub-Advisory Agreement states that in the absence of willful misfeasance, bad faith, negligence or
reckless disregard of its duties or obligations, the Sub-Advisor shall not be liable to the Manager for any act or
omission in the course of or connected with rendering services under the Sub-Advisory Agreement or for any losses
that may be sustained in the purchase, holding or sale of any security.

Brokerage Policies of the Fund

Brokerage Provisions of the Investment Advisory Agreement and the Sub-Advisory Agreement. One of the duties of the
Sub-Advisor under the Sub-Advisory Agreement is to arrange the portfolio transactions for the Fund. The Fund's
investment advisory agreement with the Manager and the Sub-Advisory Agreement contain provisions relating to the
employment of broker-dealers to effect the Fund's portfolio transactions. The Manager and the Sub-Advisor are
authorized to employ broker-dealers, including "affiliated" brokers, as that term is defined in the Investment
Company Act. They may employ broker-dealers that the Manager or the Sub-Advisor 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 and the Sub-Advisor need not seek competitive commission bidding. However, they are 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.

The Manager and the Sub-Advisor 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, the Sub-Advisor or their respective
affiliates have investment discretion. The concessions paid to such brokers may be higher than another qualified
broker would charge, if the Manager or Sub-Advisor, as applicable, makes a good faith determination that the
concession is fair and reasonable in relation to the services provided. Subject to those considerations, as a
factor in selecting brokers for the Fund's portfolio transactions, the Manager and the Sub-Advisor may also consider
sales of shares of the Fund and other investment companies for which the Manager or an affiliate serves as
investment advisor.

The Sub-Advisory Agreement permits the Sub-Advisor to enter into "soft-dollar" arrangements through the agency
of third parties to obtain services for the Fund. Pursuant to these arrangements, the Sub-Advisor will undertake to
place brokerage business with broker-dealers who pay third parties that provide services. Any such "soft-dollar"
arrangements will be made in accordance with policies adopted by the Board of the Trust and in compliance with
applicable law.

Brokerage Practices. Brokerage for the Fund is allocated subject to the provisions of the investment advisory
agreement and the Sub-Advisory agreement and the procedures and rules described above. Generally, the Sub-Advisor's
portfolio traders allocate brokerage based upon recommendations from the Fund's portfolio manager. In certain
instances, portfolio managers may directly place trades and allocate brokerage. In either case, the Sub-Advisor'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.

The Sub-Advisor serves as investment manager to a number of clients, including other investment companies,
and may in the future act as investment manager or advisor to others. It is the practice of the Sub-Advisor to
allocate purchase or sale transactions among the Fund and other clients whose assets it manages in a manner it deems
equitable. In making those allocations, the Sub-Advisor considers several main factors, including the respective
investment objectives, the relative size of portfolio holdings of the same or comparable securities, the
availability of cash for investment, the size of investment commitments generally held and the opinions of the
persons responsible for managing the portfolios of the Fund and each other client's accounts.

When orders to purchase or sell the same security on identical terms are placed by more than one of the funds
and/or other advisory accounts managed by the Sub-Advisor or its affiliates, the transactions are generally executed
as received, although a fund or advisory account that does not direct trades to a specific broker (these are called
"free trades") usually will have its order executed first. Orders placed by accounts that direct trades to a specific
broker will generally be executed after the free trades. All orders placed on behalf of the Fund are considered
free trades. However, having an order placed first in the market does not necessarily guarantee the most favorable
price. Purchases are combined where possible for the purpose of negotiating brokerage commissions. In some cases
that practice might have a detrimental effect on the price or volume of the security in a particular transaction for
the Fund.

Most purchases of debt obligations are principal transactions at net prices. Instead of using a broker for
those transactions, the Fund normally deals directly with the selling or purchasing principal or market maker unless
the Sub-Advisor determines that a better price or execution can be obtained by using the services of a broker.
Purchases of portfolio securities from underwriters include a commission or concession paid by the issuer to the
underwriter. Purchases from dealers include a spread between the bid and asked prices. The Fund seeks to obtain
prompt execution of these orders at the most favorable net price.

The investment advisory agreement and the Sub-Advisory agreement permit the Manager and the Sub-Advisor 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 Sub-Advisor 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 Sub-Advisor's other
accounts. Investment research may be supplied to the Sub-Advisor 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 Sub-Advisor in
a non-research capacity (such as bookkeeping or other administrative functions), then only the percentage or
component that provides assistance to the Sub-Advisor in the investment decision-making process may be paid in
concession dollars.

The research services provided by brokers broadens the scope and supplements the research activities of the
Sub-Advisor. That research provides additional views and comparisons for consideration, and helps the Sub-Advisor 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 Sub-Advisor provides information to the Manager and the Board about the concessions
paid to brokers furnishing such services, together with the Sub-Advisor's representation that the amount of such
concessions was reasonably related to the value or benefit of such services.

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

                     Fiscal Year Ended:                   Total Brokerage Commissions Paid by the Fund1
     ---------------------------------------------------- -------------------------------------------------------------
     ---------------------------------------------------- -------------------------------------------------------------

     ---------------------------------------------------- -------------------------------------------------------------
     ---------------------------------------------------- -------------------------------------------------------------
                          10/31/99                        $2,075,722
     ---------------------------------------------------- -------------------------------------------------------------
     ---------------------------------------------------- -------------------------------------------------------------

                          10/31/00                        $4,379,578

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

                          10/31/01                        $7,101,0272

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

1.       Amounts do not include spreads or concessions on principal transactions on a net trade basis.
2.   In the fiscal year ended  10/31/01,  the amount of  transactions  directed to brokers for  research  services was
     $1,523,051,805 and the amount of the concessions paid to broker-dealers for those services was $2,357,829.


Distribution and Service Plans


The  Distributor.  Under its  General  Distributor's  Agreement  with the Trust,  the  Distributor  acts as the Fund's
principal  underwriter in the continuous  public  offering of shares 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 then those furnished to existing shareholders.

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


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

                    Aggregate       Class A Front-End
 Fiscal Year     Front-End Sales      Sales Charges
 Ended 10/31:    Charges on Class      Retained by
                     A Shares          Distributor

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

    1999         $8,149,674          $164,302

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

    2000         $6,392,362         $1,302,254

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

    2001         $12,897,720        $3,056,554

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

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

 Fiscal Year   Concessions on Class A     Concessions on     Concessions on    Concessions on
Ended 10/31:     Shares Advanced by       Class B Shares     Class C Shares    Class N Shares
                    Distributor1           Advanced by        Advanced by        Advanced by
                                           Distributor1       Distributor1      Distributor1

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

     1999            $855,903          $20,435,217          $2,322,407              N/A

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

     2000           $2,029,296         $11,994,681          $1,446,469              N/A

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

    2001             $1,428,338            $34,087,489         $4,090,133         $171,698

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

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


                   Class A Contingent Deferred      Class B Contingent Deferred      Class C Contingent Deferred                               Class N Contingent Deferred Sales Charges Retained by Distributor
  Fiscal Year       Sales Charges Retained by        Sales Charges Retained by        Sales Charges Retained by
  Ended 10/31              Distributor                      Distributor                      Distributor

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

      2001                $68,369                   $2,453,996                 $172,014                    $1,182

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

Distribution  and Service  Plans.  The Fund has adopted  Distribution  and Service Plans for Class A, Class B, Class C
and Class N shares  under Rule 12b-1 of the  Investment  Company  Act.  Under  those  plans the Fund  compensates  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.

      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 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 Trustees 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
after six years,  the Fund must obtain the approval of both Class A and Class B shareholders  for a proposed  material
amendment to the Class A plan that would  materially  increase  payments  under the plan.  That  approval must be by a
"majority" (as defined in the Investment Company Act) of the shares of each Class, voting separately by class.

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

      |X| Service Plans.  Under the service plans,  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 shares of a particular Class, A,
B,  C or N.  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 service plans permit  compensation to the Distributor at
a rate of up to 0.25% of  average  annual  net  assets  of the  applicable  class.  The Board has set the rate at that
level.  While the plans permit the Board to authorize  payments to the  Distributor  to reimburse  itself for services
under the plan,  the Board has not yet done so. 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 shares of the  applicable  class held
in the accounts of the recipients or their customers.

      |X| 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 plans  compensate  the  Distributor  at a flat rate for its services and costs in
distributing  shares and  servicing  accounts,  whether the  Distributor's  expenses are more or less than the amounts
paid by the Fund under the plans during the period for which the fee is paid.  The types of services  that  recipients
provide are similar to the services provided under the Class A service plan, described above.

      The 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.


      Under the Class A plan, the  Distributor  pays the  asset-based  sales charge to brokers,  dealers and financial
institutions.  The  Distributor  retains the asset-based  sales charge on Class B and Class N shares.  The Distributor
retains the asset-based  sales charge on Class C shares during the first year the shares are outstanding.  It pays the
asset-based  sales charge it receives on Class C shares as an ongoing  commission  to the  recipient on Class C shares
outstanding for a year or more. If a dealer has a special  agreement with the  Distributor,  the Distributor  will pay
the Class B, Class C and/or Class N service fee and the  asset-based  sales charge to the dealer  quarterly in lieu of
paying the sales commissions 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 A, Class B, Class C
and Class N shares. The payments are made to the Distributor in recognition that the Distributor:
o        pays sales  commissions  to  authorized  brokers  and  dealers at the time of sale and pays  service  fees as
           described above,
o        may finance payment of sales  commissions  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 change 12b-1 fees,
o         may use the payment  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 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  retains the service fee and
asset-based sales charge paid on Class B, Class C and Class N shares.

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

                     Distribution Fees Paid to the Distributor in the Fiscal Year Ended 10/31/01

 --------------------------------------------------------------------------------------------------------------------
 ------------------------ -------------------- -------------------- ------------------------ ------------------------
 Class:                   Total Payments       Amount Retained by   Distributor's            Distributor's
                                                                                             Unreimbursed Expenses
                                                                    Aggregate Unreimbursed   as % of Net Assets of
                          Under Plan1          Distributor          Expenses Under Plan      Class
 ------------------------ -------------------- -------------------- ------------------------ ------------------------
 ------------------------ -------------------- -------------------- ------------------------ ------------------------

 Class A Plan             $5,405,840           $737,019             N/A                                N/A

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

 Class B Plan             $13,044,547          $10,762,613          $59,774,787                       3.26%

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

 Class C Plan             $5,007,656           $1,828,413           $9,855,903                        1.31%

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

 Class N Plan             $16,438              $14,300              $361,112                          1.84%

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

1.       Includes  amounts paid to an affiliate of the  Distributor's  parent  company:  $251,794  (Class A),  $93,489
     (Class B)  $58,530 (Class C)and $0 (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  1.800.525.7048  or by  visiting  the
OppenheimerFunds Internet web site at http://www.oppenheimerfunds.com.

         The Fund's  illustrations of its performance data in advertisements  must comply with rules of the Securities
and  Exchange  Commission.  Those rules  describe the types of  performance  data that may be used and how it is to be
calculated.  In general,  any  advertisement by the Fund of its performance data must include the average annual total
returns  for the  advertised  class of shares  of the Fund.  Those  returns  must be shown for the 1-, 5- and  10-year
periods  (or the life of the class,  if less)  ending as of the most  recently  ended  calendar  quarter  prior to the
publication of the advertisement (or its submission for publication).

         Use of standardized  performance  calculations  enables an investor to compare the Fund's  performance to the
performance of other funds for the same periods.  However,  a number of factors should be considered  before using the
Fund's performance information as a basis for comparison with other investments:

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

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

         |X|  Total  Return  Information.  There  are  different  types of  "total  returns"  to  measure  the  Fund's
performance.  Total  return  is the  change in value of a  hypothetical  investment  in the Fund over a given  period,
assuming  that all  dividends  and capital  gains  distributions  are  reinvested  in  additional  shares and that the
investment  is redeemed at the end of the period.  Because of  differences  in expenses for each class of shares,  the
total returns for each class are separately  measured.  The cumulative  total return measures the change in value over
the entire period (for example,  ten years).  An average annual total return shows the average rate of return for each
year in a period that would  produce the  cumulative  total return over the entire  period.  However,  average  annual
total returns do not show actual  year-by-year  performance.  The Fund uses  standardized  calculations  for its total
returns as prescribed by the SEC. The methodology is discussed below.


         In calculating  total returns for Class A shares,  the current maximum sales charge of 5.75% (as a percentage
of the  offering  price) is deducted  from the initial  investment  ("P")  (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% contingent  deferred sales charge is deducted for returns for the 1-year  period.  For Class N shares,
the 1% contingent deferred sales charge is deducted for returns for the life-of-class  periods as applicable.  Class Y
shares do not have a sales charge.


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


                                                   ERV - 1 = AVERAGE ANNUAL TOTAL RETURN
                                                  -----
                                                    P


                  |_|  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

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

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


                               The Fund's Total Returns for the Periods Ended 10/31/01

----------------------------------------------------------------------------------------------------------------------
-------------- ------------------------- -----------------------------------------------------------------------------
               Cumulative Total                                  Average Annual Total Returns
Class      of  Returns (10 years or
Shares         Life of Class)
-------------- ------------------------- -----------------------------------------------------------------------------
-------------- ------------------------- ------------------------- ------------------------- -------------------------
                                                                            5-Year                   10-Year
                                                  1-Year              (or life-of-class)        (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
-------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
-------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------

Class A1       269.90%      292.46%      -4.20%       1.64 %       14.54%       15.90%       13.97%       14.56%

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

Class B2       213.71%      213.71%      -3.82%       1.03%        14.99%       15.22%       15.03%       15.03%

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

Class C3       208.31 %     208.31%       0.09%       1.05%        15.22%       15.22%       14.78%       14.78%

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

Class N4       -4.66%       -3.71%       N/A          N/A          N/A          N/A          N/A          N/A

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

Class Y5        9.62%        9.62%       2.14%        2.14%        6.31%        6.31%        N/A          N/A

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

1. Inception of Class A:   11/1/91
2. Inception of Class B:   9/1/93
3. Inception of Class C:   9/1/93
4. Inception of Class N:   3/1/01
5.  Inception of Class Y:  5/1/00

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 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 based on stated fund classifications. Lipper currently ranks the Fund's performance against all other
balanced funds. 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.

|X| Morningstar Rankings. From time to time the Fund may publish the ranking and or star rating of the
performance of its classes of shares by Morningstar, Inc., an independent mutual fund monitoring service.
Morningstar ranks mutual funds in broad investment categories: domestic stock funds, international stock funds,
taxable bond funds and municipal bond funds. The Fund is include among domestic stock funds.

Morningstar proprietary star ratings reflect historical risk-adjusted total investment return. Investment
return measures a fund's (or class's) one-, three-, five- and ten-year average annual total returns (depending on
the inception of the fund or class) in excess of 90-day U.S. Treasury bill returns after considering the fund's
sales charges and expenses. Risk is measured by a fund's (or class's) performance below 90-day U.S. Treasury bill
returns. Risk and investment return are combined to produce star rankings reflecting performance relative to the
average fund in a fund's category. Five stars is the "highest" ranking (top 10% of funds in a category), four stars
is "above average" (next 22.5%), three stars is "average" (next 35%), two stars is "below average" (next 22.5%) and
one star is "lowest" (bottom 10%). The current star ranking is the fund's (or class's) 3-year ranking or its
combined 3- and 5-year ranking (weighted 60%/40% respectively), or its combined 3-, 5-, and 10-year ranking
(weighted 40%, 30% and 30%, respectively), depending on the inception date of the fund (or class). Rankings are
subject to change monthly.

The Fund may also compare its total return ranking to that of other funds in its Morningstar category, in
addition to its star ratings. Total return rankings are percentages from one percent to one hundred percent and are
not risk adjusted. For example, if a fund is in the 94th percentile, that means that 94% of the funds in the same
category performed better than it did.

|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 $25. 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 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 3 days after the transfers are initiated. 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, and
o Current purchases of Class A, Class B and Class N 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.


|X|      The Oppenheimer  Funds.  The Oppenheimer  funds are those mutual funds for which the Distributor  acts as the
distributor or the sub-distributor and currently include the following:
Oppenheimer Bond Fund                                         Oppenheimer Municipal Bond Fund
Oppenheimer California Municipal Fund                         Oppenheimer New York Municipal Fund
Oppenheimer Capital Appreciation Fund                         Oppenheimer New Jersey Municipal Fund
Oppenheimer Capital Preservation Fund                         Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Capital Income Fund                               Oppenheimer Quest Balanced Value Fund
Oppenheimer Champion Income Fund                              Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Concentrated Growth Fund                          Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Convertible Securities Fund                       Oppenheimer Quest Opportunity Value Fund
Oppenheimer Developing Markets Fund                           Oppenheimer Quest Value Fund, Inc.
Oppenheimer Disciplined Allocation Fund                       Oppenheimer Real Asset Fund
Oppenheimer Discovery Fund                                    Oppenheimer Rochester National Municipals
Oppenheimer Emerging Growth Fund                              Oppenheimer Senior Floating Rate Fund
Oppenheimer Emerging Technologies Fund                        Oppenheimer Small Cap Value Fund
Oppenheimer Enterprise Fund                                   Oppenheimer Special Value Fund
Oppenheimer Europe Fund                                       Oppenheimer Strategic Income Fund
Oppenheimer Global Fund                                       Oppenheimer Total Return Fund, Inc.
Oppenheimer Global Growth & Income Fund                   Oppenheimer Trinity Core Fund
Oppenheimer Gold & Special Minerals Fund                  Oppenheimer Trinity Large Cap Growth Fund
Oppenheimer Growth Fund                                       Oppenheimer Trinity Value Fund
Oppenheimer High Yield Fund                                   Oppenheimer U.S. Government Trust
Oppenheimer Intermediate Municipal Fund                       Oppenheimer Value Fund
Oppenheimer International Bond Fund                           Limited-Term New York Municipal Fund
Oppenheimer International Growth Fund                         Rochester Fund Municipals
Oppenheimer International Small Company Fund                  OSM1- Gartmore Millennium Growth Fund

Oppenheimer Limited Term Government Fund                      OSM1 - Jennison Growth Fund
Oppenheimer Main Street Growth & Income Fund              OSM1 - Mercury Advisors S&P 500 Index
Oppenheimer Main Street Opportunity Fund                      OSM1 - Mercury Advisors Focus Growth Fund
Oppenheimer Main Street Small Cap Fund                        OSM1 - QM Active Balanced Fund
Oppenheimer MidCap Fund                                       OSM1 - Salomon Brothers Capital Fund
Oppenheimer Multiple Strategies Fund
and the following money market funds:

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

1 - "OSM" stand for Oppenheimer Select Managers

         There is an initial  sales  charge on the  purchase
of Class A shares of each of the  Oppenheimer  funds  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.

         |X|  Letters of  Intent.  Under a Letter of Intent,
if you  purchase  Class A  shares  or  Class  A and  Class B
shares  of the Fund and  other  Oppenheimer  funds  during a
13-month  period,  you can reduce the sales charge rate that
applies  to your  purchases  of Class A  shares.  The  total
amount of your intended  purchases of both Class A and Class
B shares will  determine  the reduced  sales charge rate for
the Class A shares  purchased  during that  period.  You can
include  purchases made up to 90 days before the date of the
Letter.

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

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

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

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

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

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

         |_|  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  thirteen-month
Letter  of  Intent  period,  the  escrowed  shares  will  be
promptly released to the investor.

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

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

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

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

Asset   Builder   Plans.   To  establish  an  Asset  Builder
Plan to buy shares  directly from a bank  account,  you must
enclose  a check  (minimum  $25)  for the  initial  purchase
with your  application.  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   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
automatically  debited,  normally four to five business days
prior   to   the   investment    dates   selected   in   the
Application.  Neither the  Distributor,  the Transfer  Agent
nor  the  Fund  shall  be  responsible  for  any  delays  in
purchasing shares resulting from delays in ACH transmission.

         Before  initiating Asset Builder  payments,  obtain
a prospectus  of the selected  fund(s) from the  Distributor
or your financial  advisor and request an  application  from
the  Distributor,  complete  it and return it. The amount of
the  Asset  Builder   investment   may  be  changed  or  the
automatic  investments  may be  terminated  at any  time  by
writing  to  the  Transfer   Agent.   The   Transfer   Agent
requires a reasonable  period  (approximately 15 days) after
receipt of such  instructions  to implement  them.  The Fund
reserves  the  right  to  amend,   suspend,  or  discontinue
offering  Asset  Builder  plans  at any time  without  prior
notice.

Retirement  Plans.  Certain  types of  retirement  plans are
entitled  to  purchase  shares  of the  Fund  without  sales
charge or at reduced  sales  charge  rates,  as described in
Appendix  C to this  Statement  of  Additional  Information.
Certain special sales charge arrangements  described in that
Appendix  apply  to  retirement   plans  whose  records  are
maintained  on a daily  valuation  basis  by  Merrill  Lynch
Pierce Fenner & Smith, Inc. 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.

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  value 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 a
class of  shares  and the  dividends  payable  on a class of
shares will be reduced by incremental  expenses borne solely
by that class.  Those expenses include the asset-based sales
charges  to which  Class A, Class B, Class C and Class N are
subject.

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

         The  Distributor  will not  accept any order in the
amount of  $500,000 or more for Class B shares or $1 million
or more for Class C shares  on  behalf of a single  investor
(not including  dealer  "street name" or omnibus  accounts).
That is because  generally it will be more  advantageous for
that investor to purchase Class A shares of the Fund.


|X|      Class A Shares  Subject  to a  Contingent  Deferred
                  Sales Charge. For purchases of
Class  A  shares  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  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 shares by a  retirement  plan made with the
redemption  proceeds  of  Class  N  shares  of one  or  more
Oppenheimer funds held by the plan for more than 18 months.


             |X|   Class   B   Conversion.   Under   current
interpretations  of applicable federal income tax law by the
Internal Revenue  Service,  the conversion of Class B shares
to Class A  shares  after  six  years  is not  treated  as a
taxable  event  for the  shareholder.  If those  laws or the
IRS   interpretation  of  those  laws  should  change,   the
automatic  conversion  feature  may be  suspended.  In  that
event, no further  conversions of Class B shares would occur
while that suspension  remained in effect.  Although Class B
shares  could  then be  exchanged  for Class A shares on the
basis  of  relative  net  asset  value  of the two  classed,
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. 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
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.


         |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  value 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).

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 New  York
Stock  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.,  New York 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).  The
Exchange's  most  recent  annual   announcement   (which  is
subject to change)  states  that it will close on New Year's
Day,  Presidents'  Day,  Martin  Luther King,  Jr. Day, Good
Friday,   Memorial  Day,   Independence   Day,   Labor  Day,
Thanksgiving  Day and  Christmas  Day.  It may also close on
other days.


         Dealers  other than  Exchange  members  may conduct
trading in certain  securities on days on which the Exchange
is closed  (including  weekends and U.S.  holidays) or after
4:00 P.M.  on a regular  business  day.  Because  the fund's
net asset value will not be  calculated  on those days,  the
Fund's  net  asset  value  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 New York Stock 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 New York  Stock  Exchange,  will
not be reflected in the Fund's  calculation of its net asset
values  that day  unless  the Board of  Trustees  determines
that the event is likely to effect a material  change in the
value of the security.  If such  determination  is made, the
Manager  acting  through an  internal  valuation  committee,
will  establish a  valuation  for such  security  subject to
approval,  ratification and confirmation by the Board at its
nest 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:

         |_| Equity securities  traded on a U.S.  securities
exchange or on NASDAQ 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.

         |_|   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.
         |_| 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.
         |_| 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.
         |_| 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.
         |_| 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

         Information  on how to sell  shares  of the Fund is
stated in the  Prospectus.  The  information  below provides
additional  information  about the procedures and conditions
for redeeming shares.

Reinvestment  Privilege.  Within six months of a redemption,
a  shareholder  may reinvest  all or part of the  redemption
proceeds of:
         |_|  Class  A  shares   purchased   subject  to  an
initial   sales   charge  or  Class  A  shares  on  which  a
contingent deferred sales charge was paid, or
         |_| 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 Y shares.  The Fund may
amend,   suspend  or  cease   offering   this   reinvestment
privilege at any time as to shares  redeemed  after the date
of such amendment, suspension or cessation.

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

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

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

Selling  Shares  by Wire.  The 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 wire.


Distributions   From   Retirement   Plans.    Requests   for
distributions    from    OppenheimerFunds-sponsored    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  persons) 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 New  York  Stock  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
withdrawal   plans,   because  of  the   imposition  of  the
contingent   deferred  sales  charge  on  such   withdrawals
(except  where  the  contingent  deferred  sales  charge  is
waived as described in Appendix C below).

         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 $25.  Instructions  should be
provided   on   the    OppenheimerFunds    Application    or
signature-guaranteed  instructions.   Exchanges  made  under
these  plans are subject to the  restrictions  that apply to
exchanges  as set forth in "How to  Exchange  Shares" in the
Prospectus   and  below  in  this  Statement  of  Additional
Information.

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

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

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

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

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

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

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

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

How to Exchange Shares

         As stated in the Prospectus, shares of a
particular class of Oppenheimer funds having more than one
class of shares may be exchanged only for shares of the
same class of other Oppenheimer funds.  Shares of
Oppenheimer funds that have a single class without a class
designation are deemed "Class A" shares for this purpose.
You can obtain a current list showing which funds offer
which classes by calling the Distributor at
1.800.525.7048.
o        All of the Oppenheimer funds currently offer Class
     A, B and C shares except Oppenheimer Money Market
     Fund, Inc., Centennial Money Market Trust, Centennial
     Tax Exempt Trust, Centennial Government Trust,
     Centennial New York Tax Exempt Trust, Centennial
     California Tax Exempt Trust, and Centennial America
     Fund, L.P., which only offer Class A shares.
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        Only certain Oppenheimer funds currently offer
     Class Y shares. Class Y shares of Oppenheimer Real
     Asset Fund may not be exchanged for shares of any
     other fund.
o        Only certain Oppenheimer funds currently offer
     Class N shares, which are only offered to retirement
     plans as described in the Prospectus. Class N shares
     can be exchanged only for Class N shares of other
     Oppenheimer funds.
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
     can be exchanged only for Class B shares of other
     Oppenheimer funds and no exchanges may be made to
     Class X shares.
o        Shares of Oppenheimer Capital Preservation Fund
     may not be exchanged for shares of Oppenheimer Money
     Market Fund, Inc., Oppenheimer Cash Reserves or
     Oppenheimer Limited-Term Government Fund.  Only
     participants in certain retirement plans may purchase
     shares of Oppenheimer Capital Preservation Fund, and
     only those participants may exchange shares of other
     Oppenheimer funds for shares of Oppenheimer Capital
     Preservation Fund.
o        Class A shares of Oppenheimer Senior Floating Rate
     Fund are not available by exchange of shares of
     Oppenheimer Money Market Fund or Class A shares of
     Oppenheimer Cash Reserves. 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        Class A, Class B, Class C and Class Y Shares of
     Oppenheimer Select Managers Mercury Advisors S&P Index
     Fund and Oppenheimer Select Managers QM Active
     Balanced Fund are only available to retirement plans
     and are available only by exchange from the same class
     of shares of other Oppenheimer funds held by
     retirement plans.

Class A shares of Oppenheimer  funds may be exchanged at net
asset value for shares of any money  market fund  offered by
the  Distributor.  Shares of any money market fund purchased
without  a sales  charge  may be  exchanged  for  shares  of
Oppenheimer  funds  offered with a sales charge upon payment
of the  sales  charge.  They  may  also be used to  purchase
shares of Oppenheimer  funds subject to an early  withdrawal
charge or contingent deferred sales charge.

         Shares of Oppenheimer Money Market Fund, Inc.
purchased with the redemption proceeds of shares of other
mutual funds (other than funds managed by the Manager or
its subsidiaries) redeemed within the 30 days prior to that
purchase may subsequently be exchanged for shares of other
Oppenheimer funds without being subject to an initial sales
charge or contingent deferred sales charge. To qualify for
that privilege, the investor or the investor's dealer must
notify the Distributor of eligibility for this privilege at
the time the shares of Oppenheimer Money Market Fund, Inc.
are purchased.  If requested, they must supply proof of
entitlement to this privilege.

         Shares of the Fund acquired by reinvestment of
dividends or distributions from any of the other
Oppenheimer funds or from any unit investment trust for
which reinvestment arrangements have been made with the
Distributor may be exchanged at net asset value for shares
of any of the Oppenheimer funds.

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

         |X|  How  Exchanges  Affect   Contingent   Deferred
Sales  Charges.  No  contingent  deferred  sales  charge  is
imposed  on  exchanges  of  shares  of any  class  purchased
subject to a  contingent  deferred  sales  charge.  However,
when Class A shares  acquired  by exchange of Class A shares
of other  Oppenheimer  funds purchased  subject to a Class A
contingent  deferred  sales  charge are  redeemed  within 18
months  of the  end 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. The
Class B  contingent  deferred  sales  charge is  imposed  on
Class B shares acquired by exchange if they
are redeemed  within 6 years of the initial  purchase of the
exchanged  Class B 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.  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.

When  Class B or Class C 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 or the  Class C  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.  If Class B shares of an Oppenheimer fund
are   exchanged   for   Class  B   shares   of   Oppenheimer
Limited-Term   Government  Fund  or  Limited-Term  New  York
Municipal  Fund and those  shares  acquired by exchange  are
subsequently   redeemed,   they  will  be   subject  to  the
contingent  deferred  sales charge of the  Oppenheimer  fund
from  which they were  exchanged.  The  contingent  deferred
sales  charge  rates of Class B shares of other  Oppenheimer
funds are typically  higher for the same holding period than
for Class B shares of  Oppenheimer  Limited-Term  Government
Fund and  Limited-Term  New York Municipal  Fund.  They will
not be subject to the  contingent  deferred  sales charge of
Oppenheimer  Limited-Term  Government  Fund or  Limited-Term
New York Municipal Fund.

         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.  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 your tell the Transfer Agent
not to do so. If all  telephone  lines are busy (which might
occur,  for example,  during periods of  substantial  market
fluctuations),  shareholders  might  not be able to  request
exchanges  by  telephone  and would  have to submit  written
exchange requests.

         |X|  Processing  Exchange  Requests.  Shares  to be
exchanged  are  redeemed  on the  regular  business  day the
Transfer Agent  receives an exchange  request in proper form
(the  "Redemption  Date").  Normally,  shares of the fund to
be acquired are purchased on the  Redemption  Date, but such
purchases  may be delayed by either fund up to five business
days if it determines that it would be  disadvantaged  by an
immediate  transfer  of the  redemption  proceeds.  The Fund
reserves  the  right,  in  its  discretion,  to  refuse  any
exchange request that may  disadvantage it. For example,  if
the  receipt of  multiple  exchange  requests  from a dealer
might require the  disposition of portfolio  securities at a
time or at a price  that  might  be  disadvantageous  to the
Fund,  the Fund may refuse the request.  For full or partial
exchanges  of an  account  made by  telephone,  any  special
account  features  such as Asset Builder Plans and Automatic
Withdrawal  Plans will be switched to the new account unless
the Transfer Agent is instructed otherwise.

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

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

Dividends, Capital Gains and Taxes

Dividends and Distributions.  The Fund has no fixed dividend
rate and there can be no  assurance as to the payment of any
dividends  or the  realization  of any  capital  gains.  The
dividends and  distributions  paid by a class of shares will
vary from time to time depending on market  conditions,  the
composition of the Fund's  portfolio,  and expenses borne by
the  Fund or borne  separately  by a  class.  Dividends  are
calculated in the same manner,  at the same time, and on the
same day for each class of  shares.  However,  dividends  on
Class B,  Class C and  Class N  shares  are  expected  to be
lower than dividends on Class A and Class Y shares.  That is
because  of the  effect  of  the  higher  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 each  class 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 investment company taxable
income (that is, taxable interest, dividends, other taxable
ordinary income net of expenses, and net short-term capital
gain in excess of long-term capital loss) 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 twelve 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, 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. Since it is anticipated that most of the Fund's
income will be derived from interest it receives on its
investments, the Fund does not anticipate that its
distributions will qualify for this 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 long-term capital gain. It does
not 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, it is expected that the Fund also will elect to have
shareholders of record on the last day of its taxable year
treated as if each received a distribution of their pro
rata share of such gain. 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 and remit to the U.S. Treasury 31% of ordinary
income dividends and capital gains distributions and the
proceeds of the redemption of shares, paid to any
shareholder (1) who has failed to provide a correct,
certified taxpayer identification number, (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).


         |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.  Taxation of a
shareholder who under United States law is a nonresident
alien individual, foreign trust or estate, foreign
corporation, or foreign partnership depends on whether the
shareholder's income from the Fund is effectively connected
with a U.S. trade or business carried on by such
shareholder.

         If the income from the Fund is not effectively
connected with a U.S. trade or business carried on by a
foreign shareholder, ordinary income dividends paid to such
foreign shareholder will be subject to U.S. withholding
tax. The rate of the tax depends on a number of factors. If
the income from the Fund is effectively connected with a
U.S. trade or business carried on by a foreign shareholder,
then ordinary income dividends, capital gain dividends, and
any gains realized upon the sale of shares of the Fund will
be subject to U.S. federal income tax at the rates
applicable to U.S. citizens or domestic corporations.

         In the case of a foreign non-corporate
shareholder, the Fund may be required to withhold U.S.
federal income tax at a rate of 31% on distributions that
are otherwise exempt from withholding tax (or taxable at a
reduced treaty rate) unless the shareholder furnishes the
Fund with proper notification of their foreign status.

         The  tax  consequences  to  a  foreign  shareholder
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  advisers
with respect to the particular tax  consequences  to them of
an investment in the Fund,  including the  applicability  of
foreign taxes.


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.
The Fund pays the Transfer Agent a fixed annual  maintenance
fee  for  each   shareholder   account  and  reimburses  the
Transfer  Agent  for  its  out-of-pocket  expenses.  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.

         |X|   Shareholder   Servicing   Agent  for  Certain
Shareholders.       Unified      Management      Corporation
(1.800.346.4601)  is the  shareholder  servicing  agent  for
shareholders  of the Fund who were  former  shareholders  of
the AMA  Family  of  Funds  and  clients  of AMA  Investment
Advisors,  Inc.  (which had been the  investment  advisor of
AMA Family of  Funds).  It is also the  servicing  agent for
Fund shareholders who are:
(i)      former   shareholders  of  the  Unified  Funds  and
                  Liquid Green Trusts,
(ii)     accounts  that  participated  or  participate  in a
                  retirement    plan   for   which   Unified
                  Investment Advisors,  Inc. or an affiliate
                  acts as custodian or trustee,
(iii)    accounts  that  have  a  Money  Manager   brokerage
                  account, and
(iv)     other   accounts  for  which   Unified   Management
                  Corporation is the dealer of record.

The Custodian.  Citibank,  N.A. is the custodian bank 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 will be 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  independent  auditors  for certain  other funds
advised by the Manager.

INDEPENDENT AUDITORS' REPORT
-------------------------------------------------------------------------------

===============================================================================
THE BOARD OF TRUSTEES AND SHAREHOLDERS OF
OPPENHEIMER QUEST BALANCED VALUE FUND:


 We have audited the accompanying statement of assets and liabilities of
 Oppenheimer Quest Balanced Value Fund, including the statement of investments,
 as of October 31, 2001, and the related statement of operations for the year
 then ended, the statements of changes in net assets and the financial
 highlights for each of the two 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 each of the three years in the period ended October 31, 1999,
 were audited by other auditors whose report dated November 19, 1999, 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 October 31, 2001, 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 Quest Balanced Value Fund as of October 31, 2001, the results of
 its operations for the year then ended, the changes in its net assets and the
 financial highlights for each of the two years in the period then ended, in
 conformity with accounting principles generally accepted in the United States
 of America.



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


 Denver, Colorado
 November 21, 2001

                  32 OPPENHEIMER QUEST BALANCED VALUE FUND(SM)

STATEMENT OF INVESTMENTS  OCTOBER 31, 2001
--------------------------------------------------------------------------------




                                                                                    MARKET VALUE
                                                                        SHARES        SEE NOTE 1
=====================================================================================================

 COMMON STOCKS--61.7%
-----------------------------------------------------------------------------------------------------
 BASIC MATERIALS--3.6%
-----------------------------------------------------------------------------------------------------
 METALS--2.0%
 Alcan, Inc.                                                         3,000,000      $ 91,650,000
-----------------------------------------------------------------------------------------------------
 PAPER--1.6%
 Willamette Industries, Inc.                                         1,580,000        74,023,000
-----------------------------------------------------------------------------------------------------
 COMMUNICATION SERVICES--10.7%
-----------------------------------------------------------------------------------------------------
 TELECOMMUNICATIONS: LONG DISTANCE--7.5%
 Sprint Corp. (Fon Group)                                              457,300         9,146,000
-----------------------------------------------------------------------------------------------------
 WorldCom, Inc./MCI Group                                              355,600         4,213,860
-----------------------------------------------------------------------------------------------------
 WorldCom, Inc./WorldCom Group(1)                                   24,000,000       322,800,000
                                                                                    -----------------
                                                                                     336,159,860

-----------------------------------------------------------------------------------------------------
 TELEPHONE UTILITIES--3.2%
 SBC Communications, Inc.                                            3,800,000       144,818,000
-----------------------------------------------------------------------------------------------------
 Consumer Cyclicals--1.1%
-----------------------------------------------------------------------------------------------------
 RETAIL: GENERAL--0.8%
 Dollar General Corp.                                                2,500,000        35,725,000
-----------------------------------------------------------------------------------------------------
 RETAIL: SPECIALTY--0.3%
 Gap, Inc.                                                           1,000,000        13,070,000
-----------------------------------------------------------------------------------------------------
 CONSUMER STAPLES--9.8%
-----------------------------------------------------------------------------------------------------
 BROADCASTING--1.8%
 Clear Channel Communications, Inc.(1)                               1,200,000        45,744,000
-----------------------------------------------------------------------------------------------------
 EchoStar Communications Corp., Cl. A(1)                             1,500,000        34,785,000
                                                                                    -----------------
                                                                                      80,529,000

-----------------------------------------------------------------------------------------------------
 ENTERTAINMENT--2.7%
 McDonald's Corp.                                                    4,700,000       122,529,000
-----------------------------------------------------------------------------------------------------
 FOOD & DRUG RETAILERS--5.3%
 CVS Corp.                                                           7,400,000       176,860,000
-----------------------------------------------------------------------------------------------------
 Kroger Co. (The)(1)                                                 2,500,000        61,150,000
                                                                                    -----------------
                                                                                     238,010,000

-----------------------------------------------------------------------------------------------------
 ENERGY--5.3%
-----------------------------------------------------------------------------------------------------
 ENERGY SERVICES--3.8%
 Halliburton Co.                                                     2,000,000        49,380,000
-----------------------------------------------------------------------------------------------------
 Transocean Sedco Forex, Inc.                                        4,000,000       120,600,000
                                                                                    -----------------
                                                                                     169,980,000



                  12 OPPENHEIMER QUEST BALANCED VALUE FUND(SM)





                                                                                    MARKET VALUE
                                                                        SHARES        SEE NOTE 1
=====================================================================================================

 OIL: DOMESTIC--1.5%
 Anadarko Petroleum Corp.                                            1,200,000      $ 68,460,000
-----------------------------------------------------------------------------------------------------
 FINANCIAL--14.7%
-----------------------------------------------------------------------------------------------------
 BANKS--7.7%
 FleetBoston Financial Corp.                                         2,000,000        65,720,000
-----------------------------------------------------------------------------------------------------
 J.P. Morgan Chase & Co.                                             4,569,700       161,584,592
-----------------------------------------------------------------------------------------------------
 Wells Fargo Co.                                                     3,000,000       118,500,000
                                                                                    -----------------
                                                                                     345,804,592

-----------------------------------------------------------------------------------------------------
 DIVERSIFIED FINANCIAL--6.5%
 Freddie Mac                                                         3,200,000       217,024,000
-----------------------------------------------------------------------------------------------------
 John Hancock Financial Services, Inc.                               1,814,100        61,824,528
-----------------------------------------------------------------------------------------------------
 Providian Financial Corp.                                           3,735,800        14,532,262
                                                                                    -----------------
                                                                                     293,380,790

-----------------------------------------------------------------------------------------------------
 INSURANCE--0.5%
 Conseco, Inc.(1)                                                    3,000,000         8,970,000
-----------------------------------------------------------------------------------------------------
 Principal Financial Group (The)(1)                                    660,800        14,868,000
                                                                                    -----------------
                                                                                      23,838,000

-----------------------------------------------------------------------------------------------------
 TECHNOLOGY--11.1%
-----------------------------------------------------------------------------------------------------
 COMPUTER HARDWARE--5.6%
 Dell Computer Corp.(1)                                              2,500,000        59,950,000
-----------------------------------------------------------------------------------------------------
 EMC Corp.(1)                                                       10,000,000       123,200,000
-----------------------------------------------------------------------------------------------------
 Sun Microsystems, Inc.(1)                                           7,000,000        71,050,000
                                                                                    -----------------
                                                                                     254,200,000

-----------------------------------------------------------------------------------------------------
 COMMUNICATIONS EQUIPMENT--3.6%
 Agere Systems, Inc.(1)                                              7,568,000        34,812,800
-----------------------------------------------------------------------------------------------------
 Cisco Systems, Inc.(1)                                              5,000,000        84,600,000
-----------------------------------------------------------------------------------------------------
 Nortel Networks Corp.                                               7,000,000        40,670,000
                                                                                    -----------------
                                                                                     160,082,800

-----------------------------------------------------------------------------------------------------
 ELECTRONICS--1.9%
 Analog Devices, Inc.(1)                                             1,250,000        47,500,000
-----------------------------------------------------------------------------------------------------
 General Motors Corp., Cl. H(1)                                      2,600,000        35,750,000

                                                                                      83,250,000



                  13 OPPENHEIMER QUEST BALANCED VALUE FUND(SM)



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




                                                                                    MARKET VALUE
                                                                        SHARES        SEE NOTE 1
=====================================================================================================

 UTILITIES--5.4%
-----------------------------------------------------------------------------------------------------
 ELECTRIC UTILITIES--3.7%
 Exelon Corp.                                                        4,000,000    $  168,280,000
-----------------------------------------------------------------------------------------------------
 GAS UTILITIES--1.7%
 Enron Corp.                                                         1,500,000        20,850,000
-----------------------------------------------------------------------------------------------------
 NiSource, Inc.                                                      2,344,200        55,674,750
                                                                                  -------------------
                                                                                      76,524,750
                                                                                  -------------------
 Total Common Stocks (Cost $3,011,631,511)                                         2,780,314,792

=====================================================================================================
 PREFERRED STOCKS--0.2%

 Freeport-McMoRan Copper & Gold, Inc., 7% Cum. Cv., Non-Vtg.
 (Depository shares each representing 0.05 shares of step-up)
 (Cost $8,173,336)                                                     506,400         7,216,200

                                                                     PRINCIPAL
                                                                        AMOUNT
=====================================================================================================
 U.S. GOVERNMENT OBLIGATIONS--17.9%

 Tennessee Valley Authority Inflationary Index Bonds,
   3.375%, 1/15/07(2)                                             $ 59,377,490        59,886,949
-----------------------------------------------------------------------------------------------------
 U.S. Treasury Bonds:
 3.375%, 4/15/32                                                    95,875,000        99,680,087
 5.25%, 2/15/29                                                     51,500,000        53,097,324
 6.25%, 8/15/23-5/15/30                                             35,000,000        41,069,310
 10.375%, 11/15/12                                                  50,000,000        66,976,600
 10.625%, 8/15/15                                                   18,000,000        28,548,288
 12.75%, 11/15/10                                                   34,500,000        46,476,641
-----------------------------------------------------------------------------------------------------
 U.S. Treasury Inflationary Index Bonds, 3.875%, 4/15/29(2)        161,959,500       181,546,558
-----------------------------------------------------------------------------------------------------
 U.S. Treasury Inflationary Index Nts., 3.875%, 1/15/09(2)         185,076,720       196,412,854
-----------------------------------------------------------------------------------------------------
 U.S. Treasury Nts.:
 5.875%, 11/15/04                                                   17,050,000        18,481,944
 6.75%, 5/15/05                                                     15,000,000        16,771,290
                                                                                  -------------------
 Total U.S. Government Obligations (Cost $760,549,734)                               808,947,845

=====================================================================================================
 NON-CONVERTIBLE CORPORATE BONDS AND NOTES--8.8%

 AES Corp. (The), 8.75% Sr. Unsec. Unsub. Nts., 6/15/08             28,000,000        26,320,000
-----------------------------------------------------------------------------------------------------
 AFLAC, Inc., 6.50% Sr. Unsec. Nts., 4/15/09                        26,900,000        28,008,119
-----------------------------------------------------------------------------------------------------
 Conseco Financing Trust II, 8.70% Unsec. Capital Securities,
   11/15/26                                                         51,155,000        11,509,875
-----------------------------------------------------------------------------------------------------
 Conseco Financing Trust III, 8.796% Bonds, 4/1/27                  41,990,000         9,447,750
-----------------------------------------------------------------------------------------------------
 Conseco, Inc., 6.80% Unsec. Nts., 6/15/05                           8,000,000         3,640,000
-----------------------------------------------------------------------------------------------------
 Duke Capital Corp., 7.50% Bonds, 10/1/09                           11,500,000        12,786,321
-----------------------------------------------------------------------------------------------------
 Duke Energy Field Services LLC, 7.875% Unsec. Nts., 8/16/10        15,325,000        17,028,159
-----------------------------------------------------------------------------------------------------
 Enron Corp.:
 6.40% Unsec. Nts., 7/15/06                                         16,385,000        12,744,237
 6.95% Unsec. Nts., 7/15/28                                         14,500,000        10,747,748
-----------------------------------------------------------------------------------------------------
 Federal National Mortgage Assn., 6.50% Unsec. Nts., 4/29/09        40,000,000        40,859,000
-----------------------------------------------------------------------------------------------------
 Ford Motor Co., 7.45% Bonds, 7/16/31                               17,000,000        15,940,237
-----------------------------------------------------------------------------------------------------
 Freddie Mac, 5.875% Unsec. Sub. Nts., 3/21/11                      41,000,000        43,242,741


                  14 OPPENHEIMER QUEST BALANCED VALUE FUND(SM)





                                                                               PRINCIPAL               MARKET
VALUE
                                                                                  AMOUNT                 SEE NOTE
1
======================================================================================================================

 NON-CONVERTIBLE CORPORATE BONDS AND NOTES Continued

 General Motors Acceptance Corp., 6.75% Nts., 1/15/06                        $33,775,000            $
34,638,559
----------------------------------------------------------------------------------------------------------------------
 J. C. Penney Co., Inc.:
 7.375% Nts., 6/15/04                                                         10,975,000
10,814,073
 7.40% Nts., 4/1/37                                                           34,000,000
32,817,072
----------------------------------------------------------------------------------------------------------------------
 Textron Financial Corp., 7.125% Nts., 12/9/04                                12,300,000
13,181,541
----------------------------------------------------------------------------------------------------------------------
 Tyco International Group SA, 5.80% Nts., 8/1/06                              26,800,000
27,577,709
----------------------------------------------------------------------------------------------------------------------
 Williams Communications Group, Inc. Trust, 8.25% Sr. Unsec. Nts.,
 3/15/04(3)                                                                   42,575,000
43,795,923

------------------
 Total Non-Convertible Corporate Bonds and Notes (Cost $447,442,001)
395,099,064

======================================================================================================================
 SHORT-TERM NOTES--11.6%

 American Express Credit Corp., 2.44%, 11/6/01                               124,609,000
124,566,525
----------------------------------------------------------------------------------------------------------------------
 Federal Home Loan Bank:
 2.15%, 12/3/01                                                              125,000,000
124,761,111
 2.33%, 11/19/01                                                              27,746,000
27,713,676
 2.46%, 11/1/01                                                               19,904,000
19,904,000
----------------------------------------------------------------------------------------------------------------------
 Federal National Mortgage Assn.:
 2.20%, 12/3/01                                                               50,000,000
49,902,222
 2.29%, 11/26/01                                                              20,505,000
20,472,315
----------------------------------------------------------------------------------------------------------------------
 General Electric Capital Services:
 2.25%, 11/19/01                                                              10,000,000
9,988,750
 2.27%, 12/10/01                                                             100,000,000
99,754,083
----------------------------------------------------------------------------------------------------------------------
 Prudential Funding LLC, 2.44%, 11/13/01                                      43,877,000
43,842,518

------------------
 Total Short-Term Notes (Cost $520,905,200)
520,905,200
----------------------------------------------------------------------------------------------------------------------
 TOTAL INVESTMENTS, AT VALUE (COST $4,748,701,782)                                 100.2%
4,512,483,101
----------------------------------------------------------------------------------------------------------------------
 LIABILITIES IN EXCESS OF OTHER ASSETS                                              (0.2)
(7,418,065)

----------------------------------------------
 NET ASSETS                                                                        100.0%           $
4,505,065,036

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


FOOTNOTES TO STATEMENTS OF INVESTMENTS

1. Non-income-producing security.
2. Denotes an inflation-indexed security: coupon and principal are indexed to
the consumer price index.
3. 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 $43,795,923 or 0.97% of the Fund's net
assets as of October 31, 2001.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.




                  15 OPPENHEIMER QUEST BALANCED VALUE FUND(SM)


 STATEMENT OF ASSETS AND LIABILITIES October 31, 2001
--------------------------------------------------------------------------------




======================================================================================================================
 ASSETS

 Investments, at value (cost $4,748,701,782)--see accompanying statement                            $
4,512,483,101
----------------------------------------------------------------------------------------------------------------------
 Cash
31,355
----------------------------------------------------------------------------------------------------------------------
 Receivables and other assets:
 Shares of beneficial interest sold
40,647,230
 Investments sold
33,154,948
 Interest and dividends
20,125,041
 Other
210,953

------------------
 Total assets
4,606,652,628

======================================================================================================================
 LIABILITIES

 Payables and other liabilities:
 Investments purchased
89,730,217
 Shares of beneficial interest redeemed
9,692,868
 Distribution and service plan fees
910,009
 Trustees' compensation
298,526
 Shareholder reports
214,053
 Transfer and shareholder servicing agent fees
23,486
 Other
718,433

------------------
 Total Liabilities
101,587,592

======================================================================================================================
 NET ASSETS                                                                                         $
4,505,065,036

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

======================================================================================================================
 COMPOSITION OF NET ASSETS

 Par value of shares of beneficial interest                                                         $
2,809,423
----------------------------------------------------------------------------------------------------------------------
 Additional paid-in capital
4,618,463,759
----------------------------------------------------------------------------------------------------------------------
 Undistributed (overdistributed) net investment income
21,584,428
----------------------------------------------------------------------------------------------------------------------
 Accumulated net realized gain (loss) on investment transactions
98,426,107
----------------------------------------------------------------------------------------------------------------------
 Net unrealized appreciation (depreciation) on investments
(236,218,681)

------------------
 NET ASSETS                                                                                         $
4,505,065,036

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



                  16 OPPENHEIMER QUEST BALANCED VALUE FUND(SM)





=======================================================================================================================
 NET ASSET VALUE PER SHARE

 Class A Shares:
 Net asset value and redemption price per share (based on net assets
 of $1,763,404,000 and 109,626,950 shares of beneficial interest outstanding)
$16.09
 Maximum offering price per share (net asset value plus sales charge
 of 5.75% of offering price)
$17.07
-----------------------------------------------------------------------------------------------------------------------
 Class B Shares:
 Net asset value, redemption price (excludes applicable contingent deferred
 sales charge) and offering price per share (based on net assets of
 $1,836,129,639 and 114,748,927 shares of beneficial interest outstanding)
$16.00
-----------------------------------------------------------------------------------------------------------------------
 Class C Shares:
 Net asset value, redemption price (excludes applicable contingent deferred
 sales charge) and offering price per share (based on net assets of
 $751,228,920 and 46,952,688 shares of beneficial interest outstanding)
$16.00
-----------------------------------------------------------------------------------------------------------------------
 Class N Shares:
 Net asset value, redemption price (excludes applicable contingent deferred
 sales charge) and offering price per share (based on net assets of
 $19,648,678 and 1,224,137 shares of beneficial interest outstanding)
$16.05
-----------------------------------------------------------------------------------------------------------------------
 Class Y Shares:
 Net asset value, redemption price and offering price per share
 (based on net assets of $134,653,799 and 8,389,611 shares of
 beneficial interest outstanding)
$16.05




SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.



                  17 OPPENHEIMER QUEST BALANCED VALUE FUND(SM)


 STATEMENT OF OPERATIONS For the Year Ended October 31, 2001
--------------------------------------------------------------------------------




======================================================================================================================
 INVESTMENT INCOME

 Interest                                                                                           $
107,411,916
----------------------------------------------------------------------------------------------------------------------
 Dividends (net of foreign withholding taxes of $86,067)
24,788,310

------------------
 Total income
132,200,226

======================================================================================================================
 EXPENSES

 Management fees
27,514,492
----------------------------------------------------------------------------------------------------------------------
 Distribution and service plan fees:
 Class A
5,405,840
 Class B
13,044,547
 Class C
5,007,656
 Class N
16,438
----------------------------------------------------------------------------------------------------------------------
 Transfer and shareholder servicing agent fees:
 Class A
2,002,996
 Class B
1,945,601
 Class C
750,370
 Class N
5,689
 Class Y
60,441
----------------------------------------------------------------------------------------------------------------------
 Shareholder reports
848,664
----------------------------------------------------------------------------------------------------------------------
 Custodian fees and expenses
168,580
----------------------------------------------------------------------------------------------------------------------
 Trustees' compensation
162,984
----------------------------------------------------------------------------------------------------------------------
 Other
1,397,161

------------------
 Total expenses
58,331,459
 Less reduction to custodian expenses
(40,934)

------------------
 Net expenses
58,290,525

======================================================================================================================
 NET INVESTMENT INCOME
73,909,701

======================================================================================================================
 REALIZED AND UNREALIZED GAIN (LOSS)

 Net realized gain (loss) on:
 Investments
134,086,514

------------------
 Net realized gain (loss)
134,086,514

----------------------------------------------------------------------------------------------------------------------
 Net change in unrealized appreciation (depreciation) on investments
(287,851,709)

------------------
 Net realized and unrealized gain (loss)
(153,765,195)

======================================================================================================================
 NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS                                               $
(79,855,494)

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





SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.



                  18 OPPENHEIMER QUEST BALANCED VALUE FUND(SM)


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




 YEAR ENDED OCTOBER 31,                                                           2001
2000
======================================================================================================================

 OPERATIONS

 Net investment income (loss)                                            $   73,909,701              $
42,735,244
----------------------------------------------------------------------------------------------------------------------
 Net realized gain (loss)                                                   134,086,514
57,872,248
----------------------------------------------------------------------------------------------------------------------
 Net change in unrealized appreciation (depreciation)                      (287,851,709)
13,242,015

---------------------------------------------
 Net increase (decrease) in net assets resulting from operations            (79,855,494)
113,849,507

======================================================================================================================
 DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS

 Dividends from net investment income:
 Class A                                                                    (36,055,747)
(17,543,827)
 Class B                                                                    (23,546,689)
(10,102,062)
 Class C                                                                     (8,682,006)
(3,988,979)
 Class N                                                                        (36,119)
--
 Class Y                                                                     (1,361,483)
(153)
----------------------------------------------------------------------------------------------------------------------
 Distributions from net realized gain:
 Class A                                                                    (18,817,048)
(22,769,050)
 Class B                                                                    (17,273,729)
(19,818,961)
 Class C                                                                     (6,317,572)
(7,666,158)
 Class N                                                                             --
--
 Class Y                                                                         (5,528)
--

======================================================================================================================
 BENEFICIAL INTEREST TRANSACTIONS

 Net increase (decrease) in net assets resulting from
 beneficial interest transactions:
 Class A                                                                    810,674,363
112,910,940
 Class B                                                                    988,096,602
111,351,592
 Class C                                                                    441,840,859
24,570,641
 Class N                                                                     20,339,051
--
 Class Y                                                                    141,061,324
136,170

======================================================================================================================
 NET ASSETS

 Total increase                                                           2,210,060,784
280,929,660
----------------------------------------------------------------------------------------------------------------------
 Beginning of period                                                      2,295,004,252
2,014,074,592

---------------------------------------------
 End of period [including undistributed (overdistributed)
 net investment income of $21,584,428
 and $16,372,655, respectively]                                          $4,505,065,036
$2,295,004,252

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





SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.



                  19 OPPENHEIMER QUEST BALANCED VALUE FUND(SM)


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




 CLASS A       YEAR ENDED OCTOBER 31,                        2001             2000         1999
1998          1997
================================================================================================================================

 PER SHARE OPERATING
DATA

 Net asset value, beginning of period                  $    16.66       $    16.41     $  15.50     $
13.99       $ 12.48
--------------------------------------------------------------------------------------------------------------------------------
 Income (loss) from investment
operations:
 Net investment income                                        .46(1)           .36          .21
 .26           .20
 Net realized and unrealized gain (loss)                     (.20)(1)          .55         2.88
3.24          2.65

-------------------------------------------------------------------------
 Total income (loss)
from
 investment operations                                        .26              .91         3.09
3.50          2.85
--------------------------------------------------------------------------------------------------------------------------------
 Dividends and/or distributions to
shareholders:
 Dividends from net investment income                        (.53)            (.28)        (.26)
(.20)         (.19)
 Distributions from net realized gain                        (.30)            (.38)       (1.92)
(1.79)        (1.15)

-------------------------------------------------------------------------
 Total dividends and/or
distributions
 to shareholders                                             (.83)            (.66)       (2.18)
(1.99)        (1.34)
--------------------------------------------------------------------------------------------------------------------------------
 Net asset value, end of period                        $    16.09       $    16.66     $  16.41     $
15.50       $ 13.99

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

================================================================================================================================
 TOTAL RETURN, AT NET ASSET VALUE(2)                         1.64%            5.78%       21.48%
27.91%        25.18%

================================================================================================================================
 RATIOS/SUPPLEMENTAL
DATA

 Net assets, end of period (in thousands)              $1,763,404       $1,027,560     $899,084
$135,821       $79,751
--------------------------------------------------------------------------------------------------------------------------------
 Average net assets (in thousands)                     $1,353,860       $1,020,483     $454,409
$103,244       $61,618
--------------------------------------------------------------------------------------------------------------------------------
 Ratios to average net
assets:(3)
 Net investment income                                       2.61%(1)         2.24%        1.81%
2.07%         1.68%
 Expenses                                                    1.47%            1.45%        1.51%
1.55%(4)      1.58%(4)
--------------------------------------------------------------------------------------------------------------------------------
 Portfolio turnover rate                                       88%             105%          58%
165%           89%




1. Without the adoption of the change in amortization method as discussed in
Note 1 in the Notes to Financial Statements, these amounts would have been:
Net investment income                     $ .34
Net realized and unrealized gain (loss)   $(.08)
Net investment income ratio                1.64%
2. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at the
net asset value calculated on the last business day of the fiscal period. Sales
charges are not reflected in the total returns. Total returns are not annualized
for periods of less than one full year.
3. Annualized for periods of less than one full year.
4. Expense ratio has been calculated without adjustment for the reduction to
custodian expenses.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.



                  20 OPPENHEIMER QUEST BALANCED VALUE FUND(SM)





 CLASS B                YEAR ENDED OCTOBER 31,               2001         2000         1999         1998
1997
============================================================================================================================

 PER SHARE OPERATING DATA

 Net asset value, beginning of period                  $    16.52     $  16.28     $  15.40     $  13.92       $
12.42
----------------------------------------------------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment income                                        .35(1)       .25          .14
 .19           .15
 Net realized and unrealized gain (loss)                     (.19)(1)      .55         2.84         3.20
2.62

---------------------------------------------------------------------
 Total income (loss) from
 investment operations                                        .16          .80         2.98         3.39
2.77
----------------------------------------------------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income                        (.38)        (.18)        (.18)        (.12)
(.12)
 Distributions from net realized gain                        (.30)        (.38)       (1.92)       (1.79)
(1.15)

---------------------------------------------------------------------
 Total dividends and/or distributions
 to shareholders                                             (.68)        (.56)       (2.10)       (1.91)
(1.27)
----------------------------------------------------------------------------------------------------------------------------
 NET ASSET VALUE, END OF PERIOD                        $    16.00     $  16.52     $  16.28     $  15.40       $
13.92

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

============================================================================================================================
 TOTAL RETURN, AT NET ASSET VALUE(2)                         1.03%        5.10%       20.84%       27.08%
24.55%

============================================================================================================================
 RATIOS/SUPPLEMENTAL DATA

 Net assets, end of period (in thousands)              $1,836,130     $925,476     $801,485      $60,807
$25,609
----------------------------------------------------------------------------------------------------------------------------
 Average net assets (in thousands)                     $1,307,367     $873,470     $355,797      $39,165
$19,230
----------------------------------------------------------------------------------------------------------------------------
 Ratios to average net assets:(3)
 Net investment income                                       2.00%(1)     1.64%        1.21%        1.53%
1.09%
 Expenses                                                    2.07%        2.06%        2.10%        2.15%(4)
2.17%(4)
----------------------------------------------------------------------------------------------------------------------------
 Portfolio turnover rate                                       88%         105%          58%
165%           89%




1. Without the adoption of the change in amortization method as discussed in
Note 1 in the Notes to Financial Statements, these amounts would have been:
Net investment income                       $ .23
Net realized and unrealized gain (loss)     $(.07)
Net investment income ratio                  1.03%
2. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at the
net asset value calculated on the last business day of the fiscal period. Sales
charges are not reflected in the total returns. Total returns are not annualized
for periods of less than one full year.
3. Annualized for periods of less than one full year.
4. Expense ratio has been calculated without adjustment for the reduction to
custodian expenses.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.



                  21 OPPENHEIMER QUEST BALANCED VALUE FUND(SM)


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




 CLASS C       YEAR ENDED OCTOBER 31,                        2001         2000         1999         1998
1997
============================================================================================================================

 PER SHARE OPERATING DATA

 Net asset value, beginning of period                    $  16.51     $  16.27     $  15.40      $ 13.92
$12.43
----------------------------------------------------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment income                                        .34(1)       .25          .15
 .18           .15
 Net realized and unrealized gain (loss)                     (.18)(1)      .55         2.83         3.21
2.62

-------------------------------------------------------------------
 Total income (loss) from
 investment operations                                        .16          .80         2.98         3.39
2.77
----------------------------------------------------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income                        (.37)        (.18)        (.19)        (.12)
(.13)
 Distributions from net realized gain                        (.30)        (.38)       (1.92)       (1.79)
(1.15)

-------------------------------------------------------------------
 Total dividends and/or distributions
 to shareholders                                             (.67)        (.56)       (2.11)       (1.91)
(1.28)
----------------------------------------------------------------------------------------------------------------------------

 Net asset value, end of period                          $  16.00     $  16.51     $  16.27      $ 15.40
$13.92

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

============================================================================================================================
 TOTAL RETURN, AT NET ASSET VALUE(2)                         1.05%        5.10%       20.80%       27.12%
24.51%

============================================================================================================================
 RATIOS/SUPPLEMENTAL DATA

 Net assets, end of period (in thousands)                $751,229     $341,824     $313,506      $20,910
$6,687
----------------------------------------------------------------------------------------------------------------------------
 Average net assets (in thousands)                       $502,037     $336,336     $139,356      $11,598
$4,724
----------------------------------------------------------------------------------------------------------------------------
 Ratios to average net assets:(3)
 Net investment income                                       2.00%(1)     1.64%        1.21%        1.60%
1.09%
 Expenses                                                    2.07%        2.06%        2.10%        2.15%(4)
2.17%(4)
----------------------------------------------------------------------------------------------------------------------------
 Portfolio turnover rate                                       88%         105%          58%
165%           89%




1. Without the adoption of the change in amortization method as discussed in
Note 1 in the Notes to Financial Statements, these amounts would have been:
Net investment income                           $ .24
Net realized and unrealized gain (loss)         $(.08)
Net investment income ratio                      1.03%
2. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at the
net asset value calculated on the last business day of the fiscal period. Sales
charges are not reflected in the total returns. Total returns are not annualized
for periods of less than one full year.
3. Annualized for periods of less than one full year.
4. Expense ratio has been calculated without adjustment for the reduction to
custodian expenses.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.



                  22 OPPENHEIMER QUEST BALANCED VALUE FUND(SM)





                                                                                                          PERIOD
ENDED
 CLASS N                                                                                             OCTOBER
31,2001(1)
============================================================================================================================

 PER SHARE OPERATING DATA

 Net asset value, beginning of period                                                                          $
16.84
----------------------------------------------------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment
income                                                                                             .22(2)
 Net realized and unrealized gain (loss)
(.83)(2)

-------------
 Total income (loss) from investment operations
(.61)
----------------------------------------------------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income
(.18)
 Distributions from net realized
gain                                                                               --

-------------
 Total dividends and/or distributions to shareholders
(.18)
----------------------------------------------------------------------------------------------------------------------------
 Net asset value, end of period                                                                                $
16.05

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

============================================================================================================================
 TOTAL RETURN, AT NET ASSET VALUE(3)
(3.71)%

============================================================================================================================
 RATIOS/SUPPLEMENTAL DATA

 Net assets, end of period (in thousands)
$19,649
----------------------------------------------------------------------------------------------------------------------------
 Average net assets (in thousands)                                                                             $
4,977
----------------------------------------------------------------------------------------------------------------------------
 Ratios to average net assets:(4)
 Net investment income
2.75%(2)
 Expenses
1.58%
----------------------------------------------------------------------------------------------------------------------------
 Portfolio turnover
rate                                                                                            88%




1. For the period from March 1, 2001 (inception of offering) to October 31,
2001.
2. Without the adoption of the change in amortization method as discussed in
Note 1 in the Notes to Financial Statements, these amounts would have been:
Net investment income                       $  .18
Net realized and unrealized gain (loss)     $ (.79)
Net investment income ratio                   1.78%
3. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or inception of offering), with all
dividends and distributions reinvested in additional shares on the reinvestment
date, and redemption at the net asset value calculated on the last business day
of the fiscal period. Sales charges are not reflected in the total returns.
Total returns are not annualized for periods of less than one full year.
4. Annualized for periods of less than one full year.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                  23 OPPENHEIMER QUEST BALANCED VALUE FUND(SM)



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





 CLASS Y       YEAR ENDED OCTOBER 31,                                                           2001
2000(1)
============================================================================================================================

 PER SHARE OPERATING DATA

 Net asset value, beginning of period                                                         $16.67
$15.65
----------------------------------------------------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment income
 .74(2)            .15
 Net realized and unrealized gain (loss)
(.40)(2)           .99

------------------------------
 Total income (loss) from investment operations                                                  .34
1.14
----------------------------------------------------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income                                                           (.66)
(.12)
 Distributions from net realized gain
(.30)               --

------------------------------
 Total dividends and/or distributions to shareholders                                           (.96)
(.12)
----------------------------------------------------------------------------------------------------------------------------
 Net asset value, end of period                                                               $16.05
$16.67

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

============================================================================================================================
 TOTAL RETURN, AT NET ASSET VALUE(3)                                                            2.14%
7.32%

============================================================================================================================
 RATIOS/SUPPLEMENTAL DATA

 Net assets, end of period (in thousands)                                                   $134,654
$144
----------------------------------------------------------------------------------------------------------------------------
 Average net assets (in thousands)                                                          $ 77,394
$ 32
----------------------------------------------------------------------------------------------------------------------------
 Ratios to average net assets:(4)
 Net investment income                                                                          2.97%(2)
2.46%
 Expenses                                                                                       1.00%
0.98%
----------------------------------------------------------------------------------------------------------------------------
 Portfolio turnover rate
88%              105%




1. For the period from May 1, 2000 (inception of offering) to October 31, 2000.
2. Without the adoption of the change in amortization method as discussed in
Note 1 in the Notes to Financial Statements, these amounts would have been:
Net investment income                        $ .65
Net realized and unrealized gain (loss)      $(.31)
Net investment income ratio                   2.00%
3. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or inception of offering), with all
dividends and distributions reinvested in additional shares on the reinvestment
date, and redemption at the net asset value calculated on the last business day
of the fiscal period. Sales charges are not reflected in the total returns.
Total returns are not annualized for periods of less than one full year.
4. Annualized for periods of less than one full year.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.



                  24 OPPENHEIMER QUEST BALANCED VALUE FUND(SM)



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

================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES

Oppenheimer Quest Balanced Value Fund (the Fund), a series of Oppenheimer Quest
for Value Funds, is an open-end management investment company registered under
the Investment Company Act of 1940, as amended. The Fund's investment objective
is to seek a combination of growth of capital and investment income. The Fund's
investment advisor is OppenheimerFunds, Inc. (the Manager). The Manager has
entered into a sub-advisory agreement with OpCap Advisors.

     The Fund offers Class A, Class B, Class C, Class N and Class Y shares.
Class A shares are sold at their offering price, which is normally net asset
value plus a front-end sales charge. Class B, Class C and Class N shares are
sold without a front-end sales charge but may be subject to a contingent
deferred sales charge (CDSC). Class N shares are sold only through retirement
plans. Retirement plans that offer Class N shares may impose charges on those
accounts. Class Y shares are sold to certain institutional investors without
either a front-end sales charge or a CDSC. All classes of shares have identical
rights to earnings, assets and voting privileges, except that each class has its
own expenses directly attributable to that class and exclusive voting rights
with respect to matters affecting that class. Classes A, B, C and N have
separate distribution and/or service plans. No such plan has been adopted for
Class Y shares. Class B shares will automatically convert to Class A shares six
years after the date of purchase. The following is a summary of significant
accounting policies consistently followed by the Fund.
--------------------------------------------------------------------------------
SECURITIES VALUATION. Securities listed or traded on National Stock Exchanges or
other domestic or foreign exchanges are valued based on the last sale price of
the security traded on that exchange prior to the time when the Fund's assets
are valued. In the absence of a sale, the security is valued at the last sale
price on the prior trading day, if it is within the spread of the closing bid
and asked prices, and if not, at the closing bid price. Securities (including
restricted securities) for which quotations are not readily available are valued
primarily using dealer-supplied valuations, a portfolio pricing service
authorized by the Board of Trustees, or at their fair value. Fair value is
determined in good faith under 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).
--------------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated daily to
each class of shares based upon the relative proportion of net assets
represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.


                  25 OPPENHEIMER QUEST BALANCED VALUE FUND(SM)

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

===============================================================================
 1. SIGNIFICANT ACCOUNTING POLICIES Continued

 FEDERAL TAXES. The Fund intends to continue to comply with provisions of the
 Internal Revenue Code applicable to regulated investment companies and to
 distribute all of its taxable income, including any net realized gain on
 investments not offset by loss carryovers, to shareholders. Therefore, no
 federal income or excise tax provision is required.

-------------------------------------------------------------------------------
 TRUSTEES' COMPENSATION. The Fund has adopted an unfunded retirement plan for
 the Fund's independent Board of Trustees. Benefits are based on years of
 service and fees paid to each trustee during the years of service. During the
 year ended October 31, 2001, the Fund's projected benefit obligations were
 increased by $79,850 and payments of $6,482 were made to retired trustees,
 resulting in an accumulated liability of $297,528 as of October 31, 2001.

    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 annual compensation they are entitled to receive from the Fund.
 Under the plan, the compensation deferred is periodically adjusted as though an
 equivalent amount had been invested for the Board of Trustees in shares of one
 or more Oppenheimer funds selected by the trustee. The amount paid to the Board
 of Trustees under the plan will be determined based upon the performance of the
 selected funds. 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.

-------------------------------------------------------------------------------
 DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
 shareholders, which are determined in accordance with income tax regulations,
 are recorded on the ex-dividend date.

-------------------------------------------------------------------------------
 CLASSIFICATION OF DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Net investment
 income (loss) and net realized gain (loss) may differ for financial statement
 and tax purposes. 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 realized
 gain was recorded by the Fund.



                  26 OPPENHEIMER QUEST BALANCED VALUE FUND(SM)




    The Fund adjusts the classification of distributions to shareholders to
 reflect the differences between financial statement amounts and distributions
 determined in accordance with income tax regulations. Accordingly, during the
 year ended October 31, 2001, amounts have been reclassified to reflect an
 increase in paid-in capital of $32,060,567, a decrease in overdistributed net
 investment income of $984,116, and a decrease in accumulated net realized gain
 on investments of $33,044,683. This reclassification includes $32,060,567
 distributed in connection with Fund share redemptions which increased paid-in
 capital and reduced accumulated net realized gain. Net assets of the Fund were
 unaffected by the reclassifications.

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

-------------------------------------------------------------------------------
 SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
 date. 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.

    The Fund adopted the provisions of the AICPA Audit and Accounting Guide
 for Investment Companies, as revised, effective for fiscal years beginning
 after December 15, 2000. The Fund elected to begin amortizing premiums on debt
 securities effective January 1, 2001. Prior to this date, the Fund did not
 amortize premiums on debt securities. The cumulative effect of this accounting
 change had no impact on the total net assets of the Fund, but resulted in a
 $984,116 decrease to cost of securities and a corresponding $984,116 decrease
 in net unrealized depreciation, based on securities held as of December 31,
 2000. For the year ended October 31, 2001, interest income increased by
 $31,453,889, net realized gain on investments decreased by $1,011,402, and the
 change in net unrealized depreciation on investments increased by $30,442,487.

                  27 OPPENHEIMER QUEST BALANCED VALUE FUND(SM)


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

================================================================================
2. SHARES OF BENEFICIAL INTEREST

The Fund has authorized an unlimited number of $.01 par value shares of
beneficial interest of each class. Transactions in shares of beneficial interest
were as follows:



                           YEAR ENDED OCTOBER 31, 2001(1) YEAR ENDED OCTOBER 31, 2000(2)
                                SHARES        AMOUNT          SHARES         AMOUNT
----------------------------------------------------------------------------------------

 CLASS A
 Sold                       64,338,039   $1,086,739,570    43,943,603  $ 691,390,182
 Dividends and/or
 distributions reinvested    2,914,348       46,783,526     2,250,576     35,496,341
 Redeemed                  (19,320,599)    (322,848,733)  (39,287,912)  (613,975,583)
                          ----------------------------------------------------------------
 Net increase (decrease)    47,931,788   $  810,674,363     6,906,267  $ 112,910,940
                          ================================================================

------------------------------------------------------------------------------------------
 CLASS B
 Sold                       67,633,037   $1,137,736,227    26,123,757  $ 408,575,609
 Dividends and/or
 distributions reinvested    2,193,098       34,890,525     1,767,287     27,770,767
 Redeemed                  (11,102,212)    (184,530,150)  (21,108,052)  (324,994,784)
                          ----------------------------------------------------------------
 Net increase (decrease)    58,723,923   $  988,096,602     6,782,992  $ 111,351,592
                          ================================================================

------------------------------------------------------------------------------------------
 CLASS C
 Sold                       30,430,120   $  511,658,741    10,628,869  $ 165,996,553
 Dividends and/or
 distributions reinvested      781,514       12,445,845       684,150     10,744,678
 Redeemed                   (4,960,353)     (82,263,727)   (9,881,441)  (152,170,590)
                          ----------------------------------------------------------------
 Net increase (decrease)    26,251,281   $  441,840,859     1,431,578  $  24,570,641
                          ================================================================

------------------------------------------------------------------------------------------
 CLASS N

 Sold                        1,303,598   $   21,674,792            --  $          --
 Dividends and/or
 distributions reinvested        2,179           36,108            --             --
 Redeemed                      (81,640)      (1,371,849)           --             --
                          ----------------------------------------------------------------
 Net increase (decrease)     1,224,137   $   20,339,051            --  $          --
                          ================================================================
------------------------------------------------------------------------------------------

 CLASS Y
 Sold                        9,750,120   $  164,240,847        10,078  $     159,209
 Dividends and/or
 distributions reinvested       80,494        1,366,949             9            145
 Redeemed                   (1,449,611)     (24,546,472)       (1,479)       (23,184)
                          ----------------------------------------------------------------
 Net increase (decrease)     8,381,003   $  141,061,324         8,608  $     136,170
                          ================================================================


1. For the year ended October 31, 2001, for Class A, B, C and Y shares and for
the period from March 1, 2001 (inception of offering) to October 31, 2001, for
Class N shares.
2. For the year ended October 31, 2000, for Class A, B and C shares and for the
period from May 1, 2000 (inception of offering) to October 31, 2000, for Class Y
shares.


                  28 OPPENHEIMER QUEST BALANCED VALUE FUND(SM)


===============================================================================
 3. PURCHASES AND SALES OF SECURITIES

 The aggregate cost of purchases and proceeds from sales of securities, other
 than short-term obligations, for the year ended October 31, 2001, were
 $4,572,798,154 and $2,588,401,817, respectively.

 As of October 31, 2001, unrealized appreciation (depreciation) based on cost of
 securities for federal income tax purposes of $4,782,983,197 was:



            Gross unrealized appreciation                $ 181,233,085
            Gross unrealized depreciation                 (451,733,181)
                                                         --------------
            Net unrealized appreciation (depreciation)   $(270,500,096)
                                                         ==============


===============================================================================
 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES

 MANAGEMENT FEES. Management fees paid to the Manager were in accordance with
 the investment advisory agreement with the Fund which provides for a fee of
 0.85% of average annual net assets. The Fund's management fee for the year
 ended October 31, 2001, was an annualized rate of 0.85%.

-------------------------------------------------------------------------------
 SUB-ADVISOR FEES. The Manager pays OpCap Advisors (the Sub-Advisor) a monthly
 fee based on the fee schedule set forth in the Prospectus. For the year ended
 October 31, 2001, the Manager paid $7,867,001 to the Sub-Advisor.

-------------------------------------------------------------------------------
 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 an agreed upon per account fee. OFS has voluntarily undertaken to
 waive a portion of its transfer agent fee for Classes A, B, C, N and Y shares.
 This voluntary waiver of expenses limits transfer agent fees to 0.35% of
 average net assets for Classes A, B, C and N shares effective October 1, 2001
 and to 0.25% of average net assets for Class Y shares effective January 1,
 2001.

-------------------------------------------------------------------------------
 DISTRIBUTION AND SERVICE PLAN FEES. Under its General Distributor's Agreement
 with the Manager, the Distributor acts as the Fund's principal underwriter in
 the continuous public offering of the different classes of shares of the Fund.


                  29 OPPENHEIMER QUEST BALANCED VALUE FUND(SM)



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

===============================================================================
 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued

 The compensation paid to (or retained by) the Distributor from the sale of
 shares or on the redemption of shares is shown in the table below for the
 period indicated.



                         AGGREGATE            CLASS A       COMMISSIONS       COMMISSIONS       COMMISSIONS
COMMISSIONS
                         FRONT-END          FRONT-END        ON CLASS A        ON CLASS B        ON CLASS
C        ON CLASS N
                     SALES CHARGES      SALES CHARGES            SHARES            SHARES
SHARES            SHARES
                        ON CLASS A        RETAINED BY       ADVANCED BY       ADVANCED BY       ADVANCED BY
ADVANCED BY
 YEAR ENDED                 SHARES        DISTRIBUTOR     DISTRIBUTOR(1)    DISTRIBUTOR(1)    DISTRIBUTOR(1)
DISTRIBUTOR(1)
------------------------------------------------------------------------------------------------------------------------------

 October 31, 2001      $12,897,720         $3,056,554        $1,428,338       $34,087,489
$4,090,133          $171,698


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



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

 October 31, 2001                   $68,369                    $2,453,996
$172,014                    $1,182


    The Fund has adopted Distribution and Service Plans for Class A, 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.

-------------------------------------------------------------------------------
 CLASS A DISTRIBUTION AND SERVICE PLAN FEES. Under the plan the Fund pays an
 asset-based sales charge to the Distributor at an annual rate of 0.15% of
 average annual net assets of Class A shares of the Fund (the Board of Trustees
 can set this rate up to 0.25%). Effective January 1, 2001, the asset-based
 sales charge rate for Class A shares was voluntarily reduced from 0.20% to
 0.15% of average annual net assets representing Class A shares. 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. The Class A
 service plan permits compensation to the Distributor at a rate up to a
 specified percent of average annual net assets of Class A shares purchased. The
 Distributor makes payments to plan recipients quarterly at an annual rate not
 to exceed a specified percent of the average annual net assets consisting of
 Class A shares of the Fund. For the year ended October 31, 2001, payments under
 the Class A Plan totaled $5,405,840, all of which was paid by the Distributor
 to recipients. That included $251,794 paid to an affiliate of the Manager. Any
 unreimbursed expenses the Distributor incurs with respect to Class A shares in
 any fiscal year cannot be recovered in subsequent years.

-------------------------------------------------------------------------------
 CLASS B, CLASS C AND CLASS N DISTRIBUTION AND SERVICE 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, whether the
 Distributor's distribution expenses are more or less than the amounts paid by
 the Fund under the plan during the period for which the fee is paid.




                  30 OPPENHEIMER QUEST BALANCED VALUE FUND(SM)




    The Distributor retains the asset-based sales charge on Class B shares.
The Distributor retains the asset-based sales charge on Class C shares during
the first year the shares are outstanding. The Distributor retains the
asset-based sales charge on Class N shares. The asset-based sales charges on
Class B, Class C and Class N shares allow investors to buy shares without a
front-end sales charge while allowing the Distributor to compensate dealers that
sell those shares.

    The Distributor's actual expenses in selling Class B, Class C and Class N
shares may be more than the payments it receives from the contingent deferred
sales charges collected on redeemed shares and asset-based sales charges 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. The
plans allow for the carryforward of distribution expenses, to be recovered from
asset-based sales charges in subsequent fiscal periods.

Distribution fees paid to the Distributor for the year ended October 31, 2001,
were as follows:



                                                                                        DISTRIBUTOR'S
                                                                   DISTRIBUTOR'S            AGGREGATE
                                                                       AGGREGATE         UNREIMBURSED
                                                                    UNREIMBURSED        EXPENSES AS %
                        TOTAL PAYMENTS       AMOUNT RETAINED            EXPENSES        OF NET ASSETS
                            UNDER PLAN        BY DISTRIBUTOR          UNDER PLAN             OF CLASS
------------------------------------------------------------------------------------------------------

 Class B Plan              $13,044,547           $10,762,613         $59,774,787                3.26%
 Class C Plan                5,007,656             1,828,413           9,855,903                1.31
 Class N Plan                   16,438                14,300             361,112                1.84


===============================================================================
5. BANK BORROWINGS

The Fund may borrow from a bank for temporary or emergency purposes including,
without limitation, funding of shareholder redemptions provided asset coverage
for borrowings exceeds 300%. The Fund has entered into an agreement which
enables it to participate with other Oppenheimer funds in an unsecured line of
credit with a bank, which permits borrowings up to $400 million, collectively.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the Federal Funds Rate plus 0.45%. Borrowings are payable 30 days after such
loan is executed. The Fund also pays a commitment fee equal to its pro rata
share of the average unutilized amount of the credit facility at a rate of 0.08%
per annum.

    The Fund had no borrowings outstanding during the year ended or at
October 31, 2001.


                  31 OPPENHEIMER QUEST BALANCED VALUE FUND(SM)

                         Appendix A

                    RATINGS DEFINITIONS

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

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

Long-Term (Taxable) Bond Ratings

Aaa: Bonds rated "Aaa" are judged to be the best quality.
They carry the smallest degree of investment risk.
Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure.  While
the various protective elements are likely to change, the
changes that can be expected are most unlikely to impair
the fundamentally strong position of such issues.

Aa: Bonds rated "Aa" are judged to be of high quality by
all standards. Together with the "Aaa" group, they comprise
what are generally known as high-grade bonds.  They are
rated lower than the best bonds because margins of
protection may not be as large as with "Aaa" securities or
fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make
the long-term risk appear somewhat larger than that of
"Aaa" securities.

A: Bonds rated "A" possess many favorable investment
attributes and are to be considered as upper-medium grade
obligations.  Factors giving security to principal and
interest are considered adequate but elements may be
present which suggest a susceptibility to impairment some
time in the future.

Baa: Bonds rated "Baa" are considered medium-grade
obligations; that is, they are neither highly protected nor
poorly secured.  Interest payments and principal security
appear adequate for the present but certain protective
elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack
outstanding investment characteristics and have speculative
characteristics as well.

Ba: Bonds rated "Ba" are judged to have speculative
elements. Their future cannot be considered well-assured.
Often the protection of interest and principal payments may
be very moderate and thereby not well safeguarded during
both good and bad times over the future.  Uncertainty of
position characterizes bonds in this class.

B: Bonds rated "B" generally lack characteristics of the
desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract
over any long period of time may be small.

Caa: Bonds rated "Caa" are of poor standing. Such issues
may be in default or there may be present elements of
danger with respect to principal or interest.

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

C:  Bonds rated "C" are the lowest class of rated bonds and
can be regarded as having extremely poor prospects of ever
attaining any real investment standing.

Con.  (...):  Bonds  for  which the  security  depends  on the
completion of some act or the  fulfillment of some condition
are rated  conditionally.  These  bonds are  secured  by (a)
earnings of projects  under  construction,  (b)  earnings of
projects  unseasoned  in operating  experience,  (c) rentals
that begin when  facilities are  completed,  or (d) payments
to  which  some  other  limiting  condition  attaches.   The
parenthetical  rating denotes  probable  credit stature upon
completion of  construction  or  elimination of the basis of
the condition.

Moody's applies numerical modifiers 1, 2, and 3 in each
generic rating classification from "Aa" through "Caa." The
modifier "1" indicates that the obligation ranks in the
higher end of its generic rating category; the modifier "2"
indicates a mid-range ranking; and the modifier "3"
indicates a ranking in the lower end of that generic rating
category. Advanced refunded issues that are secured by
certain assets are identified with a # symbol.

Short-Term Ratings - Taxable Debt

These ratings apply to the ability of issuers to honor
senior debt obligations having an original maturity not
exceeding one year:

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

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

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

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

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

Long-Term Credit Ratings

AAA: Bonds rated "AAA" have the highest  rating  assigned by
Standard  &  Poor's.  The  obligor's  capacity  to meet  its
financial commitment on the obligation is extremely strong.

AA:   Bonds  rated  "AA"  differ  from  the  highest   rated
obligations only in small degree.  The obligor's capacity to
meet its  financial  commitment  on the  obligation  is very
strong.

A: Bonds  rated "A" are  somewhat  more  susceptible  to the
adverse  effects of changes in  circumstances  and  economic
conditions  than  obligations  in  higher-rated  categories.
However,  the  obligor's  capacity  to  meet  its  financial
commitment on the obligation is still strong.

BBB:   Bonds  rated  "BBB"   exhibit   adequate   protection
parameters.   However,   adverse   economic   conditions  or
changing   circumstances  are  more  likely  to  lead  to  a
weakened  capacity  of the  obligor  to meet  its  financial
commitment on the obligation.

BB, B, CCC, CC, and C

Bonds rated "BB", "B",  "CCC",  "CC" and "C" are regarded as
having   significant   speculative   characteristics.   "BB"
indicates  the  least  degree  of  speculation,  and "C" the
highest.  While  such  obligations  will  likely  have  some
quality  and  protective   characteristics,   these  may  be
outweighed  by large  uncertainties  or major  exposures  to
adverse conditions.
BB:  Bonds  rated  "BB" are less  vulnerable  to  nonpayment
than other  speculative  issues.  However,  these face major
ongoing  uncertainties  or  exposure  to  adverse  business,
financial,  or economic  conditions  which could lead to the
obligor's   inadequate   capacity  to  meet  its   financial
commitment on the obligation.

B: Bonds rated "B" are more  vulnerable to  nonpayment  than
obligations  rated "BB",  but the obligor  currently has the
capacity   to  meet   its   financial   commitment   on  the
obligation.   Adverse  business,   financial,   or  economic
conditions  will  likely  impair the  obligor's  capacity or
willingness   to  meet  its  financial   commitment  on  the
obligation.

CCC:   Bonds  rated  "CCC"  are   currently   vulnerable  to
nonpayment,  and  are  dependent  upon  favorable  business,
financial,  and economic  conditions for the obligor to meet
its financial commitment on the obligation.  In the event of
adverse  business,  financial  or economic  conditions,  the
obligor  is not  likely  to have  the  capacity  to meet its
financial commitment on the obligation.

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

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

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

The ratings from "AA" to "CCC" may be modified by the
addition of a plus (+) or minus (-) sign to show relative
standing within the major rating categories. The "r" symbol
is attached to the ratings of instruments with significant
noncredit risks.

Short-Term Issue Credit Ratings

A-1: Obligation is rated in the highest category. The
obligor's capacity to meet its financial commitment on the
obligation is strong. Within this category, a plus (+) sign
designation indicates the obligor's capacity to meet its
financial obligation is extremely strong.

A-2:  Obligation is somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than obligations in higher rating categories.
However, the obligor's capacity to meet its financial
commitment on the obligation is satisfactory.

A-3: Obligation exhibits adequate protection parameters.
However, adverse economic conditions or changing
circumstances are more likely to lead to a weakened
capacity of the obligor to meet its financial commitment on
the obligation.

B: Obligation is regarded as having significant speculative
characteristics. The obligor currently has the capacity to
meet its financial commitment on the obligation. However,
it faces major ongoing uncertainties which could lead to
the obligor's inadequate capacity to meet its financial
commitment on the obligation.

C: Obligation is currently vulnerable to nonpayment and is
dependent upon favorable business, financial, and economic
conditions for the obligor to meet its financial commitment
on the obligation.

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

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

International Long-Term Credit Ratings

Investment Grade:
AAA: Highest Credit Quality. "AAA" ratings denote the
lowest expectation of credit risk. They are assigned only
in the case of exceptionally strong capacity for timely
payment of financial commitments. This capacity is highly
unlikely to be adversely affected by foreseeable events.

AA: Very High Credit Quality. "AA" ratings denote a very
low expectation of credit risk. They indicate a very strong
capacity for timely payment of financial commitments. This
capacity is not significantly vulnerable to foreseeable
events.

A: High Credit Quality. "A" ratings denote a low
expectation of credit risk. The capacity for timely payment
of financial commitments is considered strong. This
capacity may, nevertheless, be more vulnerable to changes
in circumstances or in economic conditions than is the case
for higher ratings.

BBB: Good Credit Quality. "BBB" ratings indicate that there
is currently a low expectation of credit risk. The capacity
for timely payment of financial commitments is considered
adequate, but adverse changes in circumstances and in
economic conditions are more likely to impair this
capacity. This is the lowest investment-grade category.

Speculative Grade:

BB: Speculative. "BB" ratings indicate that there is a
possibility of credit risk developing, particularly as the
result of adverse economic change over time. However,
business or financial alternatives may be available to
allow financial commitments to be met. Securities rated in
this category are not investment grade.

B: Highly Speculative. "B" ratings indicate that
significant credit risk is present, but a limited margin of
safety remains. Financial commitments are currently being
met. However, capacity for continued payment is contingent
upon a sustained, favorable business and economic
environment.

CCC, CC C: High Default Risk.  Default is a real
possibility. Capacity for meeting financial commitments is
solely reliant upon sustained, favorable business or
economic developments. A "CC" rating indicates that default
of some kind appears probable. "C" ratings signal imminent
default.

DDD, DD, and D: Default. The ratings of obligations in this
category are based on their prospects for achieving partial
or full recovery in a reorganization or liquidation of the
obligor. While expected recovery values are highly
speculative and cannot be estimated with any precision, the
following serve as general guidelines. "DDD" obligations
have the highest potential for recovery, around 90%-100% of
outstanding amounts and accrued interest. "DD" indicates
potential recoveries in the range of 50%-90%, and "D" the
lowest recovery potential, i.e., below 50%.

Entities rated in this category have defaulted on some or
all of their obligations. Entities rated "DDD" have the
highest prospect for resumption of performance or continued
operation with or without a formal reorganization process.
Entities rated "DD" and "D" are generally undergoing a
formal reorganization or liquidation process; those rated
"DD" are likely to satisfy a higher portion of their
outstanding obligations, while entities rated "D" have a
poor prospect for repaying all obligations.
Plus (+) and minus (-) signs may be appended to a rating
symbol to denote relative status within the major rating
categories.  Plus and minus signs are not added to the
"AAA" category or to categories below "CCC," nor to
short-term ratings other than "F1" (see below).

International Short-Term Credit Ratings

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

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

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

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

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

D:     Default. Denotes actual or imminent payment default.

                         Appendix B
                   Food and Drug Retailers
------------------------------------------------------------
                  Industry Classifications
------------------------------------------------------------

Aerospace/Defense
Air Transportation                                           Gas Utilities
Asset-Backed                                                 Health Care/Drugs
Auto Parts and Equipment                                     Health Care/Supplies & Services
Automotive                                                   Homebuilders/Real Estate
Bank Holding Companies                                       Hotel/Gaming
Banks                                                        Industrial Services
Beverages                                                    Information Technology
Broadcasting                                                 Insurance
Broker-Dealers                                               Leasing & Factoring
Building Materials                                           Leisure
Cable Television                                             Manufacturing
Chemicals                                                    Metals/Mining
Commercial Finance                                           Nondurable Household Goods
Communication Equipment                                      Office Equipment
Computer Hardware                                            Oil - Domestic
Computer Software                                            Oil - International
Conglomerates                                                Paper
Consumer Finance                                             Photography
Consumer Services                                            Publishing
Containers                                                   Railroads & Truckers
Convenience Stores                                           Restaurants
Department Stores                                            Savings & Loans
Diversified Financial                                        Shipping
Diversified Media                                            Special Purpose Financial
Drug Wholesalers                                             Specialty Printing
Durable Household Goods                                      Specialty Retailing
Education                                                    Steel
Electric Utilities                                           Telecommunications - Long Distance
Electrical Equipment                                         Telephone - Utility
Electronics                                                  Textile, Apparel & Home Furnishings
Energy Services                                              Tobacco
Entertainment/Film                                           Trucks and Parts
Environmental                                                Wireless Services
Food

                                                      Appendix C

                            OppenheimerFunds Special Sales Charge Arrangements and Waivers

In certain cases, the initial sales charge that applies to purchases of Class A shares5 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.6  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 plans7
(4)      Group Retirement Plans8
(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 of the end 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."9 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.
-        Purchases by an OppenheimerFunds-sponsored Rollover IRA, if the purchases are made:
(1)      through a broker, dealer, bank or registered investment adviser that has made special arrangements with the
              Distributor for those purchases, or
(2)      by a direct rollover of a distribution from a qualified Retirement Plan if the administrator of that Plan
              has made special arrangements with the Distributor for those purchases.
-        Purchases of Class A shares by Retirement Plans that have any of the following record-keeping arrangements:
(1)      The record keeping is performed by Merrill Lynch Pierce Fenner & Smith, Inc. ("Merrill Lynch") on a daily
              valuation basis for the Retirement Plan. On the date the plan sponsor signs the record-keeping service
              agreement with Merrill Lynch, the Plan must have $3 million or more of its assets invested in (a)
              mutual funds, other than those advised or managed by Merrill Lynch Investment Management, L.P.
              ("MLIM"), that are made available under a Service Agreement between Merrill Lynch and the mutual fund's
              principal underwriter or distributor, and  (b)  funds advised or managed by MLIM (the funds described
              in (a) and (b) are referred to as "Applicable Investments").
(2)      The record keeping for the Retirement Plan is performed on a daily valuation basis by a record keeper whose
              services are provided under a contract or arrangement between the Retirement Plan and Merrill Lynch.
              On the date the plan sponsor signs the record keeping service agreement with Merrill Lynch, the Plan
              must have $3 million or more of its assets (excluding assets invested in money market funds) invested
              in Applicable Investments.
(3)      The record keeping for a Retirement Plan is handled under a service agreement with Merrill Lynch and on the
              date the plan sponsor signs that agreement, the Plan has 500 or more eligible employees (as determined
              by the Merrill Lynch plan conversion manager).
-        Purchases by a Retirement  Plan whose record keeper had a  cost-allocation  agreement with the Transfer Agent
on or before March 1, 2001.

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.10
(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.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) 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 Retirement Plans having 500 or more eligible employees, except distributions due to
         termination of all of the Oppenheimer funds as an investment option under the Plan.
-        For distributions  from 401(k) plans sponsored by  broker-dealers  that have entered into a special agreement
with the Distributor allowing this waiver.

                   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, including a 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 million or more held by the Retirement Plan for more than one year, if the redemption
         proceeds are invested in Class A shares of one or more Oppenheimer funds.
-        Distributions12 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.13
(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.14
(9)      On account of the participant's separation from service.15
(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)     Distributions from Retirement Plans having 500 or more eligible employees, except distributions made
                because of the elimination of all of the Oppenheimer funds as an investment option under the Plan.
(13)     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.
         (14)   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.
         (15)   For distributions from 401(k) plans sponsored by broker-dealers that have entered into a special
                arrangement with the Distributor allowing this waiver.
         -    Redemptions  of Class B shares or Class C shares  under an  Automatic  Withdrawal  Plan from an  account
other than a  Retirement  Plan if the  aggregate  value of the  redeemed  shares does not exceed 10% of the  account's
value annually.

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

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

IV.        Special Sales Charge Arrangements for Shareholders of Certain Oppenheimer Funds Who Were Shareholders of
                                                 Former Quest for Value Funds

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

    Oppenheimer Quest Value Fund, Inc.                     Oppenheimer Small Cap Value Fund
    Oppenheimer Quest Balanced Value Fund                  Oppenheimer Quest Global Value Fund, Inc.
    Oppenheimer Quest Opportunity Value Fund

         These arrangements also apply to shareholders of the following funds when they merged (were reorganized)
into various Oppenheimer funds on November 24, 1995:

  Quest for Value U.S. Government Income Fund               Quest for Value New York Tax-Exempt Fund
  Quest for Value Investment Quality Income Fund            Quest for Value National Tax-Exempt Fund
  Quest for Value Global Income Fund                        Quest for Value California Tax-Exempt Fund

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

A.  Reductions or Waivers of Class A Sales Charges.

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

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

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

         - -  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.
         - -  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.

         - -  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.

         - -  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.

         -    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.


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

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

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

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

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

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

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

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

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

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Oppenheimer Quest Balanced Value Fund
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Internet Web Site:
         WWW.OPPENHEIMERFUNDS.COM
         ------------------------


Investment Advisor
         OppenheimerFunds, Inc.
         498 Seventh Avenue
         New York, New York 10018


Sub-Advisor
         OpCap Advisors
         1345 Avenue of the Americas, 49th Floor
         New York, New York 10105-4800

Distributor

         OppenheimerFunds Distributor, Inc.
         498 Seventh Avenue
         New York, New York 10018


Transfer Agent
         OppenheimerFunds Services
         P.O. Box 5270
         Denver, Colorado 80217
         1.800.525.7048

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

Independent Accountants
         KPMG LLP
         707 Seventeenth Street
         Denver, Colorado 80202

Legal Counsel

         Mayer Brown, Rowe & Maw
         1675 Broadway
         New York, New York 10019-5820