OPPENHEIMER SERIES FUND INC
485APOS, 2000-12-21
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                                                      Registration No. 2-75276
                                                             File No. 811-3346

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933           [X]

      Pre-Effective Amendment No. __
[   ]

      Post-Effective Amendment No. 37
                                   --
[X]

                                     and/or

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

      Amendment No. 38                                                     [X]
                    --

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                          Oppenheimer Series Fund, Inc.
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              (Exact Name of Registrant as Specified in Charter)

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

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                                  212-323-0200
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             (Registrant's Telephone Number, including Area Code)

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                             Andrew J. Donohue, Esq.
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                             OppenheimerFunds, Inc.
              Two World Trade Center, New York, New York 10048-0203
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                   (Name and Address of Agent for Service)

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

[ ] Immediately  upon filing  pursuant to paragraph  (b) [ ] On  _______________
pursuant to paragraph (b) [ ] 60 days after filing pursuant to paragraph  (a)(1)
[X] On February 23, 2000  pursuant to paragraph  (a)(1) [ ] 75 days after filing
pursuant to paragraph (a)(2) [ ] On _______________ pursuant to paragraph (a)(2)
of Rule 485

If appropriate, check the following box:

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


<PAGE>


Oppenheimer
                           Disciplined Allocation Fund



Prospectus dated February 28, 2001




















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






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

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









                             (logo) OppenheimerFunds
                             The Right Way to Invest




<PAGE>


Contents

                                 About the Fund

            The Fund's Investment Objective and Strategies

            Main Risks of Investing in the Fund

            The Fund's Past Performance

            Fees and Expenses of the Fund

            About the Fund's Investments

            How the Fund is Managed


                               About Your Account

                                How to Buy Shares

            Class A Shares
            Class B Shares
            Class C Shares
            Class N Shares


            Special Investor Services
            AccountLink
            PhoneLink
            OppenheimerFunds Internet Web Site
            Retirement Plans

            How to Sell Shares

            By Mail
            By Telephone
            By Wire


            How to Exchange Shares

            Shareholder Account Rules and Policies

            Dividends, Capital Gains and Taxes

                              Financial Highlights





<PAGE>


ABOUT THE FUND

The Fund's Investment Objective and Strategies

WHAT IS THE  FUND'S  INVESTMENT  OBJECTIVE?  The Fund  seeks to  maximize  total
investment return  (including  capital  appreciation and income)  principally by
allocating its assets among stocks,  corporate bonds, U.S. government securities
and money market instruments, according to changing market conditions.

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

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

EquitySecurities.  The Fund can buy a variety of  domestic  and  foreign  equity
      investments,   including  common  and  preferred   stocks,   warrants  and
      convertible securities (many of which are debt securities that the Manager
      considers to be "equity substitutes" because of their conversion feature).
      The Fund can buy  securities  of  companies  in  different  capitalization
      ranges.

Debt  Securities. The Fund can invest in a variety of debt securities (including
      convertible  securities),  such as securities  issued or guaranteed by the
      U.S.  government  and  its  agencies  and   instrumentalities,   including
      mortgage-related   securities  and  collateralized   mortgage  obligations
      ("CMOs").  It  also  can  buy  municipal  securities,  foreign  government
      securities, and domestic and foreign corporate debt obligations.  The Fund
      can buy debt securities  rated below  investment grade (these are commonly
      called "junk bonds"),  but has limits on those  investments,  as discussed
      below.

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

HOW DO THE  PORTFOLIO  MANAGERS  DECIDE  WHAT  SECURITIES  TO  BUY OR  SELL?  In
selecting  securities  for  purchase or sale by the Fund,  the Fund's  portfolio
managers follow an investment  process that uses  quantitative  tools to analyze
market dynamics and economic  trends,  to determine the allocation of the Fund's
portfolio among different asset classes.  In selecting stocks for the portfolio,
the portfolio  managers use a disciplined  value  investment  style.  While this
process and the  inter-relationship of the factors used may change over time and
its  implementation  may vary in  particular  cases,  in general the  investment
selection process currently includes the strategies described below:
o     The portfolio managers use a quantitative  analysis of the equity and debt
      securities  markets in  combination  with their  individual  analysis  and
      judgment to determine  the  allocation of the Fund's  portfolio  among the
      asset  classes.  They analyze  market  trends,  general  economic data and
      relative  performance  of the asset  classes in which the Fund can invest.
      For example,  during periods of slowing corporate growth rates, they might
      shift more assets to bonds and other fixed-income securities.

o     In selecting stocks,  the utilize  fundamental  research to seek companies
      whose  securities  the  managers  believe  to be both  undervalued  and to
      possess attractive  business  prospects.  Some of the factors the managers
      may  consider  when  assessing   business   prospects,   include:   Future
      supply/demand conditions for key products,
o     Product cycles,
o     Quality of management,
o     Competitive positioning, and
o     Reinvestment plans for cash generated.
      Not all factors are relevant for every individual security.
o     If the P/E ratio of a stock held by the Fund moves  significantly  above

      the P/E ratio of the broad market benchmark the portfolio managers use, or
      if the issuer's business fundamentals deteriorate,  the portfolio managers
      will consider selling the stock.

      In selecting bonds, the portfolio managers normally expect that portion of
the Fund's portfolio to have an average maturity  (measured on a dollar-weighted
basis) of between 6 and 14 years.

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


Main Risks of Investing in the Fund

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

Risks of Investing in Stocks.  Stocks  fluctuate in price,  and their short-term
volatility at times may be great.  Because the Fund  currently  has  substantial
investments  in stocks,  the value of the Fund's  portfolio  will be affected by
changes  in the stock  markets.  Market  risk will  affect  the Fund's per share
prices,  which will fluctuate as the values of the Fund's  portfolio  securities
change.
       A variety of factors can affect the price of a  particular  stock and the
prices of individual  stocks do not all move in the same direction  uniformly or
at the same time.  Different  stock  markets  may behave  differently  from each
other.  In  particular,  because the Fund  currently  emphasizes  investments in
stocks of U.S. issuers,  it will be affected  primarily by changes in U.S. stock
markets.

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

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


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


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

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

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




The Fund's Past Performance

The bar chart and table below show one measure of the risks of  investing in the
Fund, by showing changes in the Fund's performance (for its Class A shares) from
year to year for the last ten  calendar  years and by  showing  how the  average
annual  total  returns  of the  Fund's  Class A  shares  compare  to  those of a
broad-based  market  index and a secondary  index.  The Fund's  past  investment
performance is not necessarily an indication of how the Fund will perform in the
future.

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

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


Sales charges are not included in the  calculations of return in this bar chart,
and if those charges were included,  the returns would be less than those shown.
During the period shown in the bar chart,  the highest  return (not  annualized)
for a calendar  quarter was ____% (_Q'__) and the lowest return (not annualized)
for a calendar quarter was _____% (_Q'__).


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                                                     5 Years
Average     Annual     Total                    -----------------
Returns   for  the   periods                       (or life of
ended December 31, 2000            1 Year        class, if less)       10 Years

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Class  A  Shares  (inception         %                  %                 %
9/16/85)

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S & P 500 Index                      %                  %                 %1

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 Merrill Lynch Gov't/Corp.           %                  %                 %1
        Master Index

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 Class B Shares (inception           %                  %                N/A
         10/02/95)

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

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1. From 12/31/90.

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



Fees and Expenses of the Fund


The following  tables are provided to help you  understand the fees and expenses
you may pay if you buy and hold  shares of the Fund.  The Fund pays a variety of
expenses directly for management of its assets, administration,  distribution of
its shares and other  services.  Those expenses are  subtracted  from the Fund's
assets to  calculate  the Fund's net asset  values per share.  All  shareholders
therefore pay those  expenses  indirectly.  Shareholders  pay other  transaction
expenses  directly,  such as sales  charges.  The numbers below are based on the
Fund's expenses  during its fiscal year ended October 31, 2000,  except that the
numbers  for  Class N shares,  which is a new  class,  are  based on the  Fund's
anticipated expenses for Class N shares during the upcoming year.


Shareholder Fees (charges paid directly from your investment):



<PAGE>


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                            Class A      Class B      Class C     Class N Shares
                             Shares       Shares       Shares

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Maximum Sales Charge         5.75%         None         None         None
(Load) on purchases
-------------------------
(as % of offering price)

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Maximum Deferred Sales       None1         5%2          1%3          1%4
Charge (Load) (as % of
the lower of the
original offering price
or redemption proceeds)

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1. A contingent deferred sales charge may apply to redemptions of investments of
   $1 million or more ($500,000 for retirement plan accounts) of Class A shares.
   See "How to Buy Shares" for details.
2. Applies to redemptions in first year after purchase.  The contingent deferred
   sales charge declines to 1% in the sixth year and is eliminated after that.

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


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

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                             Class A      Class B      Class C      Class N
                             Shares        Shares       Shares       Shares

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Management Fees                 %            %            %            ______%

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

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Other Expenses                  %            %            %             ______%

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

Total  Annual   Operating       %            %            %             ______%
Expenses

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Expenses may vary in future years. "Other expenses" include transfer agent fees,
custodial expenses, and accounting and legal expenses the Fund pays.

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

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


<PAGE>



--------------------------------------------------------------------------------
If shares are redeemed:     1 Year        3 Years       5 Years     10 Years1
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

Class A Shares                       $             $             $            $

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

Class B Shares                       $             $             $            $

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

Class C Shares                       $             $             $            $

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

Class N Shares                       $             $             $            $

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

--------------------------------------------------------------------------------
If shares are not           1 Year        3 Years       5 Years     10 Years1
redeemed:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

Class A Shares                       $             $             $            $

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

Class B Shares                       $             $             $            $

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

Class C Shares                       $             $             $            $

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

Class N Shares                       $             $             $            $

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

In the first example,  expenses include the initial sales charge for Class A and
the applicable Class B, Class C or Class N contingent deferred sales charges. In
the second example,  the Class A expenses include the sales charge, but Class B,
Class C or  Class N  expenses  do not  include  the  contingent  deferred  sales
charges.
1 Class B expenses for years 7 through 10 are based on Class A expenses, because
Class B shares automatically convert to Class A shares after 6 years.


About the Fund's Investments

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

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

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

Stock and Other Equity Investments.  The Fund can invest in equity securities of
      issuers  that may be of  small,  medium or large  capitalization,  to seek
      total  investment  return.  The Fund can invest in common stock as well as
      other equity securities,  including preferred stocks, rights and warrants,
      and securities  convertible into common stock. The Fund can buy securities
      issued by domestic or foreign companies.  However,  the Fund's investments
      in stocks are currently focused on those of U.S. issuers.

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

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

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

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

o     Obligations Issued or Guaranteed by U.S. Government Agencies or
      Instrumentalities. These include direct obligations and
      mortgage-related securities that have different levels of credit
      support from the U.S. government. Some are supported by the full faith
      and credit of the U.S. government, such as Government National Mortgage
      Association pass-through mortgage certificates (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").

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

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

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

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

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

Money Market  Instruments  and Short-Term Debt  Securities.  Under normal market
      conditions the Fund can invest in a variety of short-term debt obligations
      having a maturity of one year or less. These include:
o     Money market  instruments.  Generally,  these are debt obligations  having
      ratings in the top two rating categories of national rating  organizations
      (or  equivalent  ratings  assigned  by  the  Manager).   Examples  include
      commercial paper of domestic issuers or foreign companies (foreign issuers
      must have assets of $1 billion or more).
o     Short-term debt obligations of the U.S. government or corporations.
o     Obligations of domestic or foreign banks or savings and loan
      associations,  such as certificates  of deposit and bankers'  acceptances.
      Under normal market  conditions  this strategy would be used primarily for
      cash management or liquidity  purposes.  The yields on  shorter-term  debt
      obligations tend to be less than on longer-term  debt.  Therefore,  to the
      extent that the Fund uses this strategy,  it might help preserve principal
      but might  reduce  opportunities  to seek growth of capital as part of its
      objective of total return.

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

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

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

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

      The  values of  interest-only  mortgage-related  securities  are also very
      sensitive  to   prepayments   of  underlying   mortgages.   Principal-only
      securities  are  also  sensitive  to  changes  in  interest  rates.   When
      prepayments tend to fall, the timing of the cash flows to these securities
      increases,  making them more sensitive to changes in interest  rates.  The
      market for some of these  securities  may be limited,  making it difficult
      for the Fund to dispose of its holdings at an acceptable  price.  The Fund
      can invest up to 50% of its total assets in zero-coupon  securities issued
      by either the U.S. government or U.S. companies.

Foreign Securities.  The Fund can buy equity or debt securities of companies and
      debt   securities   of   governments   in  any   country,   developed   or
      underdeveloped.  As a fundamental policy, the Fund cannot invest more than
      10% of its total  assets in foreign  securities.  As an  exception to that
      restriction  the Fund can invest up to 25% of its total  assets in foreign
      equity or debt securities that are:
o     issued, assumed or guaranteed by foreign governments or their political
      subdivisions or instrumentalities,
o     assumed or guaranteed by domestic issuers (including Eurodollar
      securities), or
o     issued,  assumed or  guaranteed  by foreign  issuers  that have a class of
      securities listed for trading on The New York Stock Exchange.


      While foreign securities offer special investment opportunities, there are
      also  special  risks,  such  as  foreign  taxation,  risks  of  delays  in
      settlements  of  securities  transactions,  and the effects of a change in
      value of a foreign currency against the U.S. dollar,  which will result in
      a  change  in the U.S.  dollar  value of  securities  denominated  in that
      foreign currency.

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

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

o     Hedging. The Fund can buy and sell certain kinds of futures contracts, put
      and  call   options,   forward   contracts  and  options  on  futures  and
      broadly-based  securities  indices.  These are all referred to as "hedging
      instruments." The Fund is not required to use hedging  instruments to seek
      its objective.  The Fund does not use hedging  instruments for speculative
      purposes.

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

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

Temporary Defensive Investments. When market or economic conditions are unstable
      or  adverse,  the Fund can  invest up to 100% of its  assets in  defensive
      securities.   Generally,   they  would  be  short-term   U.S.   government
      securities,  high-grade  commercial  paper, bank obligations or repurchase
      agreements.   To  the  extent  the  Fund  invests   defensively  in  these
      securities, it might not achieve its investment objective.

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

Asset-Backed  Securities.  The Fund can buy asset-backed  securities,  which are
      fractional  interests  in pools of loans  collateralized  by the  loans or
      other assets or receivables. They are issued by trusts and special purpose
      corporations that pass the income from the underlying pool to the buyer of
      the interest.  These  securities are subject to the risk of default by the
      issuer as well as by the borrowers of the underlying loans in the pool.

Portfolio Turnover.  The Fund may engage in short-term trading to try to achieve
      its objective.  Portfolio  turnover affects brokerage costs the Fund pays,
      and the Fund's  performance.  If the Fund  realizes  capital gains when it
      sells its portfolio investments,  it must generally pay those gains out to
      shareholders,   increasing  their  taxable  distributions.  The  Financial
      Highlights  table at the end of this Prospectus shows the Fund's portfolio
      turnover rates during prior fiscal years.


How the Fund Is Managed

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


      The Manager has been as an investment  advisor  since  January  1960.  The
Manager (including  subsidiaries) managed more than $125 billion in assets as of
December 31, 2000,  including other Oppenheimer  funds, with more than 5 million
shareholder  accounts.  The Manager is located at Two World Trade  Center,  34th
Floor, New York, New York 10048-0203.

   Portfolio Managers. , the Fund is managed by a team of portfolio
      managers consisting of Bruce Bartlett, John Kowalik, and
      Christopher Leavy. Messrs. Kowalik, Bartlett and Leavy are Senior
      Vice Presidents of the Manager, Vice Presidents of the Fund and
      all serve as officers and portfolio managers of other Oppenheimer
      funds.

Prior to joining the Manager in April 1995,  Mr.  Bartlett was a Vice  President
      and  Senior  Portfolio  Manager  at  First  of  America  Investment  Corp.
      (September  1986 - April 1995).  Before  joining the Manager in July 1998,
      Mr.  Kowalik  was  managing  director  and senior  portfolio  manager  for
      Prudential  Investments  Global  Advisors  (1989 - June  1998).  Prior  to
      joining the Manager in September  2000, Mr. Leavy was a portfolio  manager
      of Morgan Stanley Dean Witter  Investment  (from 1997),  prior to which he
      was a portfolio  manager and equity  analyst of Crestar  Asset  Management
      (from 1995).

Advisory Fees.  Under  the  Investment  Advisory  Agreement,  the Fund  pays the
      Manager an  advisory  fee at an annual  rate that  declines  as the Fund's
      assets grow: 0.625% of the first $300 million of average annual net assets
      of the Fund, 0.500% of the next $100 million, and 0.450% of average annual
      net assets in excess of $400 million.  The Fund's  management  fee for its
      last fiscal year ended October 31, 2000,  was ____% of average  annual net
      assets for each class of shares.


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


How to Buy Shares

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

BuyingShares  Through  Your  Dealer.  You can buy  shares  through  any  dealer,
      broker,  or  financial  institution  that has a sales  agreement  with the
      Distributor.  Your  dealer will place your order with the  Distributor  on
      your behalf.

BuyingShares Through the Distributor.  Complete an OppenheimerFunds  New Account
      Application  and  return  it with a  check  payable  to  "OppenheimerFunds
      Distributor,  Inc." Mail it to P.O. Box 5270,  Denver,  Colorado 80217. If
      you don't list a dealer on the  application,  the Distributor  will act as
      your agent in buying the shares.  However,  we recommend  that you discuss
      your investment with a financial  advisor before you make a purchase to be
      sure that the Fund is appropriate for you.
   o  Paying by Federal Funds Wire. Shares purchased through the Distributor may
      be paid for by Federal  Funds  wire.  The  minimum  investment  is $2,500.
      Before  sending  a  wire,  call  the  Distributor's   Wire  Department  at
      1.800.525.7048  to  notify  the  Distributor  of the wire  and to  receive
      further instructions.
   o  Buying Shares Through OppenheimerFunds  AccountLink. With AccountLink, you
      pay for  shares by  electronic  funds  transfers  from your bank  account.
      Shares are  purchased  for your  account by a transfer  of money from your
      bank account  through the Automated  Clearing House (ACH) system.  You can
      provide  those  instructions  automatically,  under an Asset Builder Plan,
      described  below,  or by  telephone  instructions  using  OppenheimerFunds
      PhoneLink,  also described below. Please refer to "AccountLink," below for
      more details.
   o  Buying Shares Through Asset Builder Plans.  You may purchase shares of the
      Fund (and up to four other  Oppenheimer  funds)  automatically  each month
      from your account at a bank or other financial  institution under an Asset
      Builder  Plan  with   AccountLink.   Details  are  in  the  Asset  Builder
      Application and the Statement of Additional Information.

How Much  Must  You  Invest?  You can buy Fund  shares  with a  minimum  initial
investment of $1,000 and make additional  investments at any time with as little
as $25. There are reduced minimum investments under special investment plans.
   o  With Asset Builder  Plans,  403(b)  plans,  Automatic  Exchange  Plans and
      military allotment plans, you can make initial and subsequent  investments
      for as little as $25.  You can make  additional  purchases of at least $25
      through AccountLink.
   o  Under retirement plans, such as IRAs, pension and profit-sharing plans and
      401(k)  plans,  you can start your account with as little as $250. If your
      IRA is  started  as an  Asset  Builder  Plan,  the  $25  minimum  applies.
      Additional purchases may be for as little as $25.
   o  The minimum investment requirement does not apply to reinvesting dividends
      from the Fund or other  Oppenheimer  funds (a list of them  appears in the
      Statement of  Additional  Information,  or you can ask your dealer or call
      the Transfer  Agent),  or reinvesting  distributions  from unit investment
      trusts that have made arrangements with the Distributor.

At What Price Are Shares Sold? Shares are sold at their offering price, which is
the net asset value per share plus any initial  sales charge that  applies.  The
offering price that applies to a purchase order is based on the next calculation
of the net asset value per share that is made after the Distributor receives the
purchase order at its offices in Colorado,  or after any agent  appointed by the
Distributor receives the order and sends it to the Distributor.

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

      The net asset value per share is  determined  by dividing the value of the
      Fund's net assets  attributable to a class by the number of shares of that
      class that are outstanding. To determine net asset value, the Fund's Board
      of Directors has established procedures to value the Fund's securities, in
      general,  based on market value. The Board has adopted special  procedures
      for valuing  illiquid  securities and  obligations for which market values
      cannot be readily obtained.

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


WHAT  CLASSES OF SHARES DOES THE FUND  OFFER?  The Fund  offers  investors  four
different  classes  of  shares.   The  different  classes  of  shares  represent
investments in the same portfolio of securities,  but the classes are subject to
different  expenses and will likely have  different  share prices.  When you buy
shares,  be sure to specify  the class of shares.  If you do not choose a class,
your investment will be made in Class A shares. Class A Shares. If you buy Class
A shares, you pay an initial sales charge
      (on  investments  up to $1 million  for regular  accounts or $500,000  for
      certain  retirement  plans).  The  amount of that sales  charge  will vary
      depending  on the amount you invest.  The sales charge rates are listed in
      "How Can You Buy Class A Shares?" below.
Class B Shares.  If you buy Class B shares,  you pay no sales charge at the time
      of purchase,  but you will pay an annual  asset-based sales charge. If you
      sell your shares within six years of buying them,  you will normally pay a
      contingent  deferred sales charge.  That contingent  deferred sales charge
      varies depending on how long you own your shares, as described in "How Can
      You Buy Class B Shares?" below.
Class C Shares.  If you buy Class C shares,  you pay no sales charge at the time
      of purchase,  but you will pay an annual  asset-based sales charge. If you
      sell your shares within 12 months of buying them,  you will normally pay a
      contingent  deferred  sales charge of 1%, as described in "How Can You Buy
      Class C Shares?" below.

Class N  Shares.  Class N shares  are  offered  only  through  retirement  plans
      (including IRAs and 403(b) plans) that purchase  $500,000 or more of Class
      N shares of one or more  Oppenheimer  funds, or through  retirement  plans
      (not including IRAs and 403(b) plans) that have assets of $500,000 or more
      or 100 or more eligible plan participants.  Non-retirement  plan investors
      cannot buy Class N shares directly.  If you buy Class N shares, you pay no
      sales  charge  at the  time  of  purchase,  but  you  will  pay an  annual
      asset-based  sales charge.  If you sell your shares  within  eighteen (18)
      months of the retirement plan's first purchase of Class N shares,  you may
      pay a contingent deferred sales charge of 1%, as described in "How Can You
      Buy Class N Shares?" below.



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

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

      cannot be predicted  with  certainty,  knowing how long you expect to hold
      your  investment  will assist you in selecting  the  appropriate  class of
      shares.  Because of the effect of class-based  expenses,  your choice will
      also depend on how much you plan to invest. For example, the reduced sales
      charges  available for larger  purchases of Class A shares may, over time,
      offset the effect of paying an initial  sales  charge on your  investment,
      compared to the effect over time of higher class-based  expenses on shares
      of Class B or Class C . For  retirement  plans that  qualify  to  purchase
      Class N shares,  Class N shares will generally be more  advantageous  than
      Class C shares;  Class B shares are not  available  for  purchase  by such
      retirement plans.


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

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


      And for  non-retirement  plan  investors who invest $1 million or more, in
      most cases Class A shares will be the most advantageous  choice, no matter
      how long you intend to hold your shares.  For that reason, the Distributor
      normally  will not accept  purchase  orders of $500,000 or more of Class B
      shares or $1 million or more of Class C shares from a single investor.


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


Are   There  Differences in Account  Features That Matter to You? ? Some account
      features   may  not  be  available  to  Class  B,  Class  C  and  Class  N
      shareholders.  Other features may not be advisable  (because of the effect
      of the contingent  deferred sales charge) for Class B, Class C and Class N
      shareholders.  Therefore,  you should carefully review how you plan to use
      your investment account before deciding which class of shares to buy.
      Additionally,  the  dividends  payable  to  Class B,  Class C and  Class N
      shareholders  will be reduced by the  additional  expenses  borne by those
      classes  that are not borne by Class A,  such as the Class B,  Class C and
      Class N asset-based  sales charge  described below and in the Statement of
      Additional Information.  Share certificates are not available for Class B,
      Class C and Class N shares,  and if you are considering  using your shares
      as collateral for a loan, that may be a factor to consider.

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


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

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


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


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

 Amount of Purchase       Front-End Sales  Front-End Sales   Concession As
                                           Charge As a
                            Charge As a Percentage of
                          Percentage of    Net               Percentage of
                          Offering Price   Amount Invested   Offering Price

 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Less than $25,000             5.75%             6.10%             4.75%
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 $25,000 or more but           5.50%             5.82%             4.75%
 less than $50,000
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 $50,000 or more but           4.75%             4.99%             4.00%
 less than $100,000
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 $100,000 or more but          3.75%             3.90%             3.00%
 less than $250,000
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 $250,000 or more but          2.50%             2.56%             2.00%
 less than $500,000
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 $500,000 or more but          2.00%             2.04%             1.60%
 less than $1 million
 ------------------------------------------------------------------------------


Class A Contingent  Deferred  Sales Charge.  There is no initial sales charge on
      purchases  of Class A shares of any one or more of the  Oppenheimer  funds
      aggregating  $1 million or more or for  certain  purchases  by  particular
      types of  retirement  plans  described  in Appendix C to the  Statement of
      Additional Information. The Distributor pays dealers of record concessions
      in an amount  equal to 1.0% of purchases of $1 million or more (other than
      purchases  by  those  retirement  accounts).  For  those  retirement  plan
      accounts,  the concession is 1.0% of the first $2.5 million, plus 0.50% of
      the next $2.5 million,  plus 0.25% of purchases over $5 million,  based on
      the  cumulative  purchases  during  the  prior 12 months  ending  with the
      current  purchase.  In either case,  the  concession  will be paid only on
      purchases that were not previously subject to a front-end sales charge and
      dealer  concession.1  That  concession  will not be paid on  purchases  of
      shares  in  amounts  of  $1  million  or  more  (including  any  right  of
      accumulation)  by a retirement  plan that pays for the  purchase  with the
      redemption of Class C shares of one or more Oppenheimer  funds held by the
      plan for more than one year.

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


      If you redeem any of those  shares  within an  18-month  "holding  period"
      measured  from  the  end  of the  calendar  month  of  their  purchase,  a
      contingent  deferred sales charge (called the "Class A contingent deferred
      sales  charge") may be deducted from the redemption  proceeds.  That sales
      charge will be equal to 1.0% of the lesser of (1) the  aggregate net asset
      value of the redeemed shares at the time of redemption  (excluding  shares
      purchased by reinvestment of dividends or capital gain  distributions)  or
      (2) the  original  net asset  value of the  redeemed  shares.  The Class A
      contingent  deferred sales charge will not exceed the aggregate  amount of
      the concessions  the  Distributor  paid to your dealer on all purchases of
      Class A shares of all Oppenheimer  funds you made that were subject to the
      Class A contingent deferred sales charge.


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

HOW CAN you BUY CLASS B SHARES?  Class B shares are sold at net asset  value per
share without an initial sales charge.  However,  if Class B shares are redeemed
within 6 years of the end of the calendar month of their purchase,  a contingent
deferred sales charge will be deducted from the redemption proceeds. The Class B
contingent  deferred sales charge is paid to compensate the  Distributor for its
expenses of providing  distribution-related  services to the Fund in  connection
with the sale of Class B shares.

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




<PAGE>




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

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

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


WHO CAN BUY CLASS N SHARES?  Class N shares are offered only through  retirement
plans  that  purchase  $500,000  or  more  of  Class  N  shares  of one or  more
Oppenheimer  funds  or  that  have  assets  of  $500,000  or more or 100 or more
eligible  plan  participants.  Individual  investors  cannot  buy Class N shares
directly.
      A contingent deferred sales charge of 1.00% will be imposed if:
o     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
o     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.
      Retirement  plans  that offer  Class N shares  may impose  charges on plan
participant  accounts.  The  procedures  for  buying,  selling,  exchanging  and
transferring  the  Fund's  other  classes of shares  (other  than the time those
orders must be received by the  Distributor  or Transfer  Agent in Colorado) and
the special account features  applicable to purchasers of those other classes of
shares  described  elsewhere in this  prospectus  do not apply to Class N shares
offered through a group retirement plan.  Instructions for purchasing redeeming,
exchanging or  transferring  Class N shares offered  through a group  retirement
plan must be submitted by the plan, not by plan  participants  for whose benefit
the shares are held.


Distribution and Service (12b-1) Plans.

Service Plan for Class A Shares. The Fund has adopted a Service Plan for Class A
      shares.  It reimburses the Distributor for a portion of its costs incurred
      for services provided to accounts that hold Class A shares.  Reimbursement
      is made  quarterly at an annual rate of up to 0.25% of the average  annual
      net assets of Class A shares of the Fund. The  Distributor  currently uses
      all of those  fees to pay  dealers,  brokers,  banks and  other  financial
      institutions  quarterly for providing  personal service and maintenance of
      accounts of their customers that hold Class A shares.


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

      The asset-based sales charge and service fees increase Class B and Class C
      expenses  by up to 1.00% and  increase  Class N expenses by up to 0.50% of
      the net assets per year of the  respective  class.  Because these fees are
      paid out of the Fund's  assets on an ongoing  basis,  over time these fees
      will increase the cost of your investment and may cost you more than other
      types of sales charges.

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


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


      The Distributor currently pays a sales concession of 0.75% of the purchase
      price of Class C shares to dealers  from its own  resources at the time of
      sale.  Including  the advance of the service fee, the total amount paid by
      the  Distributor  to the  dealer  at the time of sale of Class C shares is
      therefore  1.00%  of  the  purchase  price.   The  Distributor   pays  the
      asset-based sales charge as an ongoing concession to the dealer on Class C
      shares that have been outstanding for a year or more.

      The Distributor currently pays a sales concession of 0.75% of the purchase
      price of Class N shares to dealers  from its own  resources at the time of
      sale.  Including  the advance of the service fee, the total amount paid by
      the  Distributor  to the  dealer  at the time of sale of Class N shares is
      therefore  1.00%  of the  purchase  price.  The  Distributor  retains  the
      asset-based sales charge on Class N shares.



Special Investor Services

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

      You may  purchase  shares by  telephone  only after your  account has been
established.  To purchase  shares in amounts up to $250,000  through a telephone
representative,  call the Distributor at  1.800.852.8457.  The purchase  payment
will be debited from your bank account.

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

PHONELINK.  PhoneLink is the OppenheimerFunds automated telephone system that
enables shareholders to perform a number of account transactions
automatically using a touch-tone phone. PhoneLink may be used on
already-established Fund accounts after you obtain a Personal Identification
Number (PIN), by calling the special PhoneLink number, 1.800.533.3310.
Purchasing Shares. You may purchase shares in amounts up to $100,000 by
      phone, by calling  1.800.533.3310.  You must have established  AccountLink
      privileges  to link  your  bank  account  with the  Fund to pay for  these
      purchases.
Exchanging  Shares.  With the  OppenheimerFunds  Exchange  Privilege,  described
      below,  you can  exchange  shares  automatically  by phone  from your Fund
      account to another  OppenheimerFunds  account you have already established
      by calling the special PhoneLink number.
Selling Shares. You can redeem shares by telephone  automatically by calling the
      PhoneLink  number  and the Fund will send the  proceeds  directly  to your
      AccountLink bank account.  Please refer to "How to Sell Shares," below for
      details.

CAN YOU SUBMIT  TRANSACTION  REQUESTS BY FAX? You may send  requests for certain
types of account transactions to the Transfer Agent by fax (telecopier).  Please
call 1.800.525.7048 for information about which transactions may be handled this
way.  Transaction  requests  submitted  by fax are subject to the same rules and
restrictions as written and telephone requests described in this Prospectus.


OPPENHEIMERFUNDS  INTERNET WEB SITE. You can obtain  information about the Fund,
as well as your account balance, on the  OppenheimerFunds  Internet web site, at
http://www.oppenheimerfunds.com.   Additionally,   shareholders  listed  in  the
account  registration  (and the dealer of record)  may request  certain  account
transactions  through a special  section of that web site.  To  perform  account
transactions,  you must first obtain a personal  identification  number (PIN) by
calling  the  Transfer  Agent  at  1.800.533.3310.  If you do not  want  to have
Internet  account  transaction  capability  for your  account,  please  call the
Transfer Agent at 1.800.525.7048.  At times, the web site may be inaccessible or
its transaction features may be unavailable.


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


REINVESTMENT  PRIVILEGE.  If you  redeem  some or all of your Class A or Class B
shares of the Fund that were purchased by reinvesting dividends or distributions
from another  Oppenheimer fund or by exchanging shares from another  Oppenheimer
fund on which you paid a sales  charge,  you have up to 6 months to reinvest all
or part of the redemption  proceeds in Class A shares of other Oppenheimer funds
without paying a sales charge. This privilege does not apply to Class C or Class
N shares.  You must be sure to ask the  Distributor  for this privilege when you
send your payment.


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

How to Sell Shares


You can sell  (redeem)  some or all of your shares on any regular  business day.
Your shares will be sold at the next net asset value calculated after your order
is received in proper form (which means that it must comply with the  procedures
described  below) and is accepted by the Transfer Agent.  The Fund lets you sell
your shares by writing a letter,  by wire or by  telephone.  You can also set up
Automatic  Withdrawal  Plans to redeem  shares on a regular  basis.  If you have
questions  about any of these  procedures,  and  especially if you are redeeming
shares in a special  situation,  such as due to the death of the owner or from a
retirement   plan   account,   please  call  the  Transfer   Agent   first,   at
1.800.525.7048, for assistance.


Certain Requests Require a Signature Guarantee. To protect you and the Fund from
      fraud,  the  following  redemption  requests  must be in writing  and must
      include a signature guarantee (although there may be other situations that
      also require a signature guarantee):

   o You wish to redeem more than $100,000 and receive a check o The  redemption
   check is not payable to all shareholders listed on the

      account statement
   o  The redemption check is not sent to the address of record on your
      account statement
   o  Shares are being transferred to a Fund account with a different owner
      or name
   o  Shares are being redeemed by someone (such as an Executor)  other than the
      owners.

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

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

Sending Redemption Proceeds by Wire. While the Fund normally sends your money by
      check, you can arrange to have the proceeds of the shares you sell sent by
      Federal  Funds  wire  to a  bank  account  you  designate.  It  must  be a
      commercial bank that is a member of the Federal  Reserve wire system.  The
      minimum redemption you can have sent by wire is $2,500. There is a $10 fee
      for each wire.  To find out how to set up this  feature on your account or
      to arrange a wire, call the Transfer Agent at 1.800.852.8457.

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

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

HOW DO you SELL  SHARES BY  TELEPHONE?  You and your  dealer  representative  of
record may also sell your shares by telephone.  To receive the redemption  price
calculated on a particular  regular  business day, your call must be received by
the Transfer  Agent by the close of The New York Stock  Exchange that day, which
is  normally  4:00 P.M.,  but may be  earlier  on some days.  You may not redeem
shares  held in an  OppenheimerFunds  retirement  plan  account or under a share
certificate by telephone.
   o To redeem shares through a service representative, call 1.800.852.8457 o To
   redeem shares automatically on PhoneLink, call 1.800.533.3310
      Whichever  method you use, you may have a check sent to the address on the
account statement, or, if you have linked your Fund account to your bank account
on AccountLink, you may have the proceeds sent to that bank account.

Are There Limits on Amounts Redeemed by Telephone?
Telephone Redemptions Paid by Check. Up to $100,000 may be redeemed by
      telephone in any 7-day period.  The check must be payable to all owners of
      record  of the  shares  and  must be sent to the  address  on the  account
      statement.  This service is not  available  within 30 days of changing the
      address on an account.


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


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

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


how contingent deferred sales charges affect redemptions. If you purchase shares
subject  to a Class A,  Class B, Class C or Class N  contingent  deferred  sales
charge and redeem any of those shares during the  applicable  holding period for
the class of shares, the contingent  deferred sales charge will be deducted from
the  redemption  proceeds,  unless you are  eligible  for a waiver of that sales
charge  based  on the  categories  listed  in  Appendix  C to the  Statement  of
Additional Information and you advise the Transfer Agent of your eligibility for
the waiver when you place your redemption request.
      With respect to Class N shares, a 1% contingent deferred sales charge will
be imposed if:
   Theretirement  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,

o      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.


      To determine  whether a  contingent  deferred  sales  charge  applies to a
redemption, the Fund redeems shares in the following order:
   1. shares acquired by reinvestment of dividends and capital gains
      distributions,
   2. shares held for the holding period that applies to the class, and
   3. shares held the longest during the holding period.

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


How to Exchange Shares

Shares of the Fund may be exchanged for shares of certain  Oppenheimer  funds at
net asset value per share at the time of exchange,  without sales charge. Shares
of the Fund can be purchased by exchange of shares of other Oppenheimer funds on
the same basis. To exchange shares, you must meet several conditions:
   o  Shares of the fund  selected  for exchange  must be available  for sale in
      your state of residence.
   o The  prospectuses  of both funds must offer the exchange  privilege.  o You
   must hold the shares you buy when you establish your account for at
      least 7 days  before you can  exchange  them.  After the account is open 7
      days, you can exchange shares every regular business day.
   o  You must meet the minimum purchase  requirements for the fund whose shares
      you purchase by exchange.
   o  Before  exchanging  into a fund, you must obtain and read its  prospectus.
      Shares of a particular  class of the Fund may be exchanged only for shares
      of the same class in the other  Oppenheimer  funds.  For example,  you can
      exchange  Class A shares of this  Fund only for Class A shares of  another
      fund.   In  some  cases,   sales   charges  may  be  imposed  on  exchange
      transactions.  For tax purposes, exchanges of shares involve a sale of the
      shares of the fund you own and a purchase of the shares of the other fund,
      which  may  result  in a  capital  gain or loss.  Please  refer to "How to
      Exchange  Shares" in the  Statement  of  Additional  Information  for more
      details.

      You can find a list of Oppenheimer funds currently available for exchanges
      in the  Statement  of  Additional  Information  or obtain one by calling a
      service  representative at 1.800.525.7048.  That list can change from time
      to time.

HOW DO you SUBMIT EXCHANGE REQUESTS? Exchanges may be requested in writing or
by telephone:

Written Exchange  Requests.  Submit an  OppenheimerFunds  Exchange Request form,
      signed by all owners of the account.  Send it to the Transfer Agent at the
      address on the back cover.  Exchanges  of shares  held under  certificates
      cannot be processed  unless the Transfer Agent  receives the  certificates
      with the request.

Telephone Exchange  Requests.  Telephone exchange requests may be made either by
      calling a service representative at 1.800.852.8457,  or by using PhoneLink
      for automated exchanges by calling 1.800.533.3310. Telephone exchanges may
      be made only between  accounts that are  registered  with the same name(s)
      and  address.  Shares  held under  certificates  may not be  exchanged  by
      telephone.

ARE THERE LIMITATIONS ON EXCHANGES? There are certain exchange policies you
should be aware of:
   o  Shares are normally  redeemed from one fund and  purchased  from the other
      fund in the exchange transaction on the same regular business day on which
      the  Transfer  Agent  receives an exchange  request  that  conforms to the
      policies described above. It must be received by the close of The New York
      Stock Exchange that day, which is normally 4:00 P.M. but may be earlier on
      some days.  However,  either fund may delay the  purchase of shares of the
      fund you are exchanging into up to seven days if it determines it would be
      disadvantaged by a same-day exchange. For example, the receipt of multiple
      exchange  requests  from a "market  timer" might  require the Fund to sell
      securities at a disadvantageous time or price.
   o  Because excessive trading can hurt fund performance and harm shareholders,
      the Fund  reserves  the  right to  refuse  any  exchange  request  that it
      believes will  disadvantage  it, or to refuse multiple  exchange  requests
      submitted by a shareholder or dealer.
   o  The Fund may amend,  suspend or terminate  the  exchange  privilege at any
      time. The Fund will provide you notice whenever it is required to do so by
      applicable  law,  but it may  impose  changes  at any time  for  emergency
      purposes.
   o  If the Transfer Agent cannot  exchange all the shares you request  because
      of a restriction  cited above,  only the shares eligible for exchange will
      be exchanged.

Shareholder Account Rules and Policies

More information  about the Fund's policies and procedures for buying,  selling,
and exchanging shares is contained in the Statement of Additional Information.

The   offering  of  shares  may be  suspended  during  any  period  in which the
      determination  of net asset value is  suspended,  and the  offering may be
      suspended by the Board of  Directors at any time the Board  believes it is
      in the Fund's best interest to do so.
Telephone transaction privileges for purchases,  redemptions or exchanges may be
      modified,  suspended or  terminated by the Fund at any time. If an account
      has more than one owner,  the Fund and the Transfer  Agent may rely on the
      instructions of any one owner. Telephone privileges apply to each owner of
      the account and the dealer representative of record for the account unless
      the Transfer Agent receives cancellation instructions from an owner of the
      account.
The   Transfer Agent will record any telephone  calls to verify data  concerning
      transactions  and has adopted other  procedures to confirm that  telephone
      instructions   are   genuine,   by   requiring   callers  to  provide  tax
      identification  numbers and other  account  data or by using PINs,  and by
      confirming such  transactions in writing.  The Transfer Agent and the Fund
      will not be  liable  for  losses  or  expenses  arising  out of  telephone
      instructions reasonably believed to be genuine.
Redemption or transfer  requests  will not be honored  until the Transfer  Agent
      receives all required  documents  in proper form.  From time to time,  the
      Transfer Agent in its discretion may waive certain of the requirements for
      redemptions stated in this Prospectus.
Dealers that perform account  transactions for their clients by participating in
      NETWORKING  through  the  National  Securities  Clearing  Corporation  are
      responsible  for  obtaining  their  clients'  permission  to perform those
      transactions, and are responsible to their clients who are shareholders of
      the Fund if the dealer performs any transaction erroneously or improperly.
The   redemption price for shares will vary from day to day because the value of
      the securities in the Fund's portfolio  fluctuates.  The redemption price,
      which is the net asset  value per  share,  will  normally  differ for each
      class of shares.  The redemption  value of your shares may be more or less
      than their original cost.
Payment for redeemed shares ordinarily is made in cash. It is forwarded by check
      or  through  AccountLink  or by  Federal  Funds  wire (as  elected  by the
      shareholder)   within  seven  days  after  the  Transfer   Agent  receives
      redemption   instructions   in  proper  form.   However,   under   unusual
      circumstances  determined  by  the  Securities  and  Exchange  Commission,
      payment may be delayed or suspended.  For accounts  registered in the name
      of a  broker-dealer,  payment  will  normally be  forwarded  within  three
      business days after redemption.
The   Transfer  Agent may delay  forwarding a check or  processing a payment via
      AccountLink  for recently  purchased  shares,  but only until the purchase
      payment  has  cleared.  That delay may be as much as 10 days from the date
      the shares  were  purchased.  That  delay may be  avoided if you  purchase
      shares by Federal Funds wire or certified check, or arrange with your bank
      to provide  telephone or written assurance to the Transfer Agent that your
      purchase payment has cleared.
Involuntary redemptions of small accounts may be made by the Fund if the account
      has fewer than 100 shares.  In some cases  involuntary  redemptions may be
      made to repay the  Distributor  for losses from the  cancellation of share
      purchase orders.
Sharesmay be "redeemed in kind" under unusual  circumstances  (such as a lack of
      liquidity in the Fund's  portfolio to meet  redemptions).  This means that
      the  redemption  proceeds  will be paid with  liquid  securities  from the
      Fund's portfolio.
"Backup  withholding"  of  federal  income tax may be  applied  against  taxable
      dividends,  distributions and redemption proceeds (including exchanges) if
      you fail to furnish the Fund your correct,  certified  Social  Security or
      Employer  Identification Number when you sign your application,  or if you
      under-report your income to the Internal Revenue Service.

To    avoid sending  duplicate copies of materials to households,  the Fund will
      mail only one copy of each  prospectus,  annual and semi-annual  report to
      shareholders  having the same last name and address on the Fund's records.
      The  consolidation of these mailings,  called  householding,  benefits the
      Fund through reduced mailing expense.

      If you want to receive  multiple copies of these  materials,  you may call
      the  Transfer  Agent at  1.800.525.7048.  You may also notify the Transfer
      Agent in writing.  Individual  copies of prospectuses  and reports will be
      sent to you within 30 days after the Transfer  Agent receives your request
      to stop householding.



Dividends, Capital Gains and Taxes


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


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

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

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

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


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

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

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




<PAGE>


Financial Highlights


The Financial  Highlights  Table is presented to help you  understand the Fund's
financial  performance for the past 5 fiscal years. Certain information reflects
financial  results  for a single  Fund  share.  The total  returns  in the table
represent the rate that an investor would have earned (or lost) on an investment
in the Fund (assuming  reinvestment  of all dividends and  distributions).  This
information has been audited by KPMG LLP the Fund's independent auditors,  whose
report, along with the Fund's financial statements, is included in the Statement
of Additional  Information,  which is available on request.  Class N shares were
not publicly offered during any of the periods shown. Therefore,  information on
Class N shares is not  included in the  following  tables or in the Fund's other
financial statements.


<PAGE>


INFORMATION AND SERVICES

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

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

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

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

----------------------------------------------------------------------------
By Telephone:                 Call OppenheimerFunds Services toll-free:
                                 1.800.525.7048
----------------------------------------------------------------------------
----------------------------------------------------------------------------
By Mail:                      Write to:
                              OppenheimerFunds Services
                              P.O. Box 5270
                              Denver, Colorado 80217-5270
----------------------------------------------------------------------------
----------------------------------------------------------------------------
On the Internet:              You can send us a request by e-mail or
                              read or down-load documents on the
                              OppenheimerFunds website:
                              http://www.oppenheimerfunds.com
----------------------------------------------------------------------------

You can also obtain copies of the Statement of Additional  Information and other
Fund  documents  and  reports by visiting  the SEC's  Public  Reference  Room in
Washington,  D.C.  (Phone  1.202.942.8090)  or the EDGAR  database  on the SEC's
Internet web site at http://www.sec.gov. Copies may be obtained after payment of
a  duplicating   fee  by  electronic   request  at  the  SEC's  e-mail  address:
[email protected],  or by  writing  to  the  SEC's  Public  Reference  Section,
Washington, D.C. 20549-0102.


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

                                          The Fund's shares are distributed
by:

The Fund's SEC File No. 811-3346
PR0205.001.0201 Printed on recycled paper.      [logo] OppenheimerFunds
Distributor, Inc.



<PAGE>


                            Appendix to Prospectus of
                   Oppenheimer Disciplined Allocation Fund


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

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

Calendar                Annual
Year                    Total
                                  Ended Returns

1991                    28.21%
1992                      9.90%
1993                    15.89%
1994                     -2.11%
1995                    23.95%
1996                      9.59%
1997                    17.90%
1998                    10.85%

-1.78%
2000



<PAGE>


Oppenheimer Disciplined Allocation Fund


6803 S. Tucson Way, Englewood, CO 80112
1.800.525.7048

Statement of Additional Information dated February 28, 2001

      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,  2001.  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.. 2
    The Fund's Investment Policies..................................... 2
    Other Investment Techniques and Strategies......................... 13
    Investment Restrictions............................................ 29
How the Fund is Managed ............................................... 32
    Organization and History........................................... 32
    Directors and Officers............................................. 33
    The Manager........................................................ 39
Brokerage Policies of the Fund......................................... 40
Distribution and Service Plans......................................... 42
Performance of the Fund................................................ 46

About Your Account
How To Buy Shares...................................................... 50
How To Sell Shares..................................................... 58
How To Exchange Shares................................................. 63
Dividends, Capital Gains and Taxes..................................... 66
Additional Information About the Fund.................................. 68

Financial Information About the Fund
Independent Auditors' Report........................................... 69
Financial Statements................................................... 70

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

<PAGE>


                                       80
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A B O U T  T H E  F U N D
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      Additional Information About the Fund's Investment Policies and Risks

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

The Fund's Investment Policies.  The composition of the Fund's portfolio and the
techniques and strategies that the Fund's Manger 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.

      |X| Value  Investing.  In  selecting  equity  investments  for the  Fund's
portfolio,  the portfolio managers currently use a value investing style coupled
with fundamental  analysis of issuers.  In using a value approach,  the managers
look for  stocks  and other  equity  securities  that  appear to be  temporarily
undervalued, by various measures, such as price/earnings ratios. Value investing
seeks  stocks  having  prices  that are low in  relation  to their real worth or
future prospects,  with the expectation that the Fund will realize  appreciation
in the value of its holdings when other investors realize the intrinsic value of
the stock.

      Using value  investing  requires  research as to the  issuer's  underlying
financial  condition and prospects.  Some of the measures used to identify these
securities include, among others:
o Price/Earnings  ratio,  which is the stock's price divided by its earnings per
share. A stock having a price/earnings ratio lower than its historical range, or
lower  than  the  market  as a whole  or that of  similar  companies  may  offer
attractive  investment  opportunities.  o Price/book  value ratio,  which is the
stock price divided by the book value of the company per share.  It measures the
company's stock price in relation to its asset value.
o Dividend Yield, which is measured by dividing the annual dividend by the stock
price per share.  o Valuation  of Assets  which  compares the stock price to the
value of the company's underlying assets, including their projected value in the
marketplace and liquidation value.

      |X| Portfolio Turnover.  "Portfolio  turnover" describes the rate at which
the Fund  traded its  portfolio  securities  during its last  fiscal  year.  For
example,  if a fund sold all of its  securities  during the year,  its portfolio
turnover  rate would have been 100%.  The Fund's  portfolio  turnover  rate will
fluctuate  from  year to  year.  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.



<PAGE>


      |X| Investments in Stocks and Other Equity  Securities.  The Fund does not
limit  its  investments  in  equity   securities  to  issuers  having  a  market
capitalization  of a  specified  size or  range,  and  therefore  may  invest in
securities of small-, mid- and large-capitalization  issuers. At times, the Fund
may have substantial  amounts of its assets invested in securities of issuers in
one  or  more  capitalization  ranges,  based  upon  the  Manager's  use  of its
investment  strategies  and its judgment of where the best market  opportunities
are to seek the Fund's objective.

      At times,  the market  may favor or  disfavor  securities  of issuers of a
particular  capitalization range. Securities of small capitalization issuers may
be subject to greater  price  volatility  in general than  securities  of larger
companies.  Therefore,  if the  Fund  has  substantial  investments  in  smaller
capitalization  companies at times of market volatility,  the Fund's share price
may fluctuate more than that of funds focusing on larger capitalization issuers.

      At times,  the Fund may  increase  the  emphasis of its  investments  in a
particular  industry.  Therefore,  it may be subject to the risks that economic,
political or other events can have a negative effect on the values of issuers in
that  particular  industry (this is referred to as "industry  risk").  Stocks of
issuers  in a  particular  industry  may be  affected  by  changes  in  economic
conditions that affect that industry more than others,  or changes in government
regulations,  availability of basic resources or supplies,  or other events.  To
the extent that the Fund is emphasizing  investments  in a particular  industry,
its share values may fluctuate in response to events affecting that industry.

o Rights  and  Warrants.  The Fund can  invest up to 5% of its  total  assets in
warrants or rights.  That limit does not apply to  warrants  and rights that the
Fund has acquired as part of units of  securities  or that are attached to other
securities.  Warrants  basically  are options to purchase  equity  securities at
specific  prices  valid  for a  specific  period  of time.  Their  prices do not
necessarily move parallel to the prices of the underlying securities. Rights are
similar to warrants,  but  normally  have a short  duration and are  distributed
directly by the issuer to its  shareholders.  Rights and warrants have no voting
rights,  receive no  dividends  and have no rights with respect to the assets of
the issuer.

o Convertible  Securities.  While some convertible securities are a form of debt
security,  in many cases their  conversion  feature  (allowing  conversion  into
equity  securities)  causes them to be  regarded by the Manager  more as "equity
equivalents."  As a result,  the rating assigned to the security has less impact
on the Manager's investment decision with respect to convertible securities than
in  the  case  of  non-convertible  debt  fixed-income  securities.  Convertible
securities  are subject to the credit  risks and interest  rate risks  described
above.

      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.  In that case, it will likely
sell at a premium over its conversion value and its price will tend to fluctuate
directly with the price of the underlying security.



<PAGE>


      To determine whether convertible  securities should be regarded as "equity
equivalents," the Manager examines 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.

o Preferred  Stocks.  Preferred  stocks are equity  securities  but have certain
attributes of debt  securities.  Preferred  stock,  unlike  common stock,  has a
stated dividend rate payable from the  corporation's  earnings.  Preferred stock
dividends may be cumulative or non-cumulative,  participating,  or auction rate.
"Cumulative"  dividend  provisions  require  all or a  portion  of prior  unpaid
dividends to be paid before the issuer can pay dividends on common shares.

      If interest rates rise, the fixed dividend on preferred stocks may be less
attractive,  causing the price of preferred  stocks to decline.  Preferred stock
may have mandatory sinking fund provisions, as well as provisions for their call
or redemption prior to maturity which can have a negative effect on their prices
when  interest  prior  to  maturity  rates  decline.   Preferred  stock  may  be
"participating"  stock,  which  means  that  it may be  entitled  to a  dividend
exceeding the stated dividend in certain cases.

      Preferred  stocks are equity  securities  because they do not constitute a
liability of the issuer and therefore do not offer the same degree of protection
of capital as debt  securities and may not offer the same degree of assurance of
continued  income  as  debt  securities.   The  rights  of  preferred  stock  on
distribution  of a  corporation's  assets  in the event of its  liquidation  are
generally  subordinate  to  the  rights  associated  with a  corporation's  debt
securities.  Preferred stock generally has a preference over common stock on the
distribution of a corporation's assets in the event of its liquidation.

      |X| Investments in Bonds and Other Debt Securities. The Fund can invest in
a variety of bonds,  debentures and other debt securities to seek its objective.
It will invest at least 25% of its assets in fixed-income  senior securities and
could have a larger portion of its assets in debt investments.

      The   Fund's   debt   investments   can   include   investment-grade   and
non-investment-grade   bonds   (commonly   referred   to   as   "junk   bonds").
Investment-grade  bonds  are bonds  rated at least  "Baa" by  Moody's  Investors
Service,  Inc., or at least "BBB" by Standard & Poor's Rating  Service or Duff &
Phelps,  Inc., or that have comparable ratings by another  nationally-recognized
rating organization.  In making investments in debt securities,  the Manager may
rely to some  extent on the ratings of ratings  organizations  or it may use its
own research to evaluate a security's credit-worthiness.  If the securities that
the Fund buys are  unrated,  to be  considered  part of the Fund's  holdings  of
investment-grade  securities,  they  must  be  judged  by the  Manager  to be of
comparable quality to bonds rated as investment grade by a rating organization.

      |X| Special Risks of Lower-Grade  Securities.  It is not anticipated  that
the Fund will normally invest a substantial portion of its assets in lower-grade
debt securities. Because lower-grade securities tend to offer higher yields than
investment-grade  securities,  the Fund may invest in lower grade  securities if
the  Manager  is trying to achieve  greater  income  (and,  in some  cases,  the
appreciation  possibilities of lower-grade securities might be a reason they are
selected for the Fund's portfolio). High-yield convertible debt securities might
be selected as "equity substitutes," as described above.

      "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 Manager to be of
comparable  quality to debt securities  rated below investment  grade,  they are
included in the  limitation  on the  percentage of the Fund's assets that can be
invested in lower-grade  securities.  The Fund can invest in securities rated as
low as "B" at the time the Fund buys them.

      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 buying these investments may reduce 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  greater  risks  than  other   investment-grade
securities, and have some speculative  characteristics.  Definitions of the debt
security  ratings  categories of Moody's,  S&P, Fitch IBCA and Duff & Phelps are
included in Appendix A to this Statement of Additional Information.

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



<PAGE>


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

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

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

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

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

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

      During  periods  of  rapidly  rising   interest   rates,   prepayments  of
mortgage-related  securities  may occur at slower than  expected  rates.  Slower
prepayments  effectively  may lengthen a  mortgage-related  security's  expected
maturity.  Generally,  that would cause the value of the  security to  fluctuate
more widely in response to changes in interest  rates. If the prepayments on the
Fund's  mortgage-related   securities  were  to  decrease  broadly,  the  Fund's
effective  duration,  and  therefore its  sensitivity  to interest rate changes,
would increase.


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

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

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

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

o U.S.  Treasury  Obligations.  These include Treasury bills  (maturities of one
year or less when issued),  Treasury notes (maturities of one to ten years), and
Treasury  bonds  (maturities  of more than ten years).  Treasury  securities are
backed by the full faith and credit of the United  States as to timely  payments
of interest and  repayments of  principal.  They also can include U. S. Treasury
securities that have been "stripped" by a Federal Reserve Bank, zero-coupon U.S.
Treasury   securities   described  below,   and  Treasury   Inflation-Protection
Securities ("TIPS").
            Treasury  Inflation-Protection  Securities.  The Fund can buy  these
TIPS, which are designed to provide an investment vehicle that is not vulnerable
to inflation. The interest rate paid by TIPS is fixed. The principal value rises
or falls  semi-annually  based on changes in the published Consumer Price Index.
If inflation occurs, the principal and interest payments on TIPS are adjusted to
protect investors from inflationary loss. If deflation occurs, the principal and
interest  payments will be adjusted  downward,  although the principal  will not
fall below its face amount at maturity.

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

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

o  GNMA  Certificates.   The  Government  National  Mortgage  Association  is  a
wholly-owned  corporate  instrumentality  of the United  States  within the U.S.
Department of Housing and Urban  Development.  GNMA's principal programs involve
its  guarantees  of  privately-issued  securities  backed by pools of mortgages.
Ginnie Maes are debt  securities  representing  an interest in one mortgage or a
pool of mortgages that are insured by the Federal Housing  Administration or the
Farmers Home Administration or guaranteed by the Veterans Administration.

      The  Ginnie  Maes in which the Fund  invests  are of the  "fully  modified
pass-through"  type. They provide that the registered holders of the Ginnie Maes
will receive  timely  monthly  payments of the pro-rata  share of the  scheduled
principal payments on the underlying mortgages, whether or not those amounts are
collected  by the  issuers.  Amounts  paid  include,  on a pro rata  basis,  any
prepayment  of principal of such  mortgages  and interest  (net of servicing and
other  charges) on the aggregate  unpaid  principal  balance of the Ginnie Maes,
whether or not the interest on the  underlying  mortgages has been  collected by
the issuers.

      The Ginnie Maes  purchased by the Fund are guaranteed as to timely payment
of principal  and interest by GNMA. In giving that  guaranty,  GNMA expects that
payments  received  by the  issuers of Ginnie  Maes on account of the  mortgages
backing  the Ginnie Maes will be  sufficient  to make the  required  payments of
principal of and interest on those Ginnie Maes.  However,  if those payments are
insufficient, the guaranty agreements between the issuers of the Ginnie Maes and
GNMA require the issuers to make advances  sufficient  for the payments.  If the
issuers fail to make those payments, GNMA will do so.


      Under  federal  law,  the full faith and  credit of the  United  States is
pledged to the payment of all amounts  that may be required to be paid under any
guaranty  issued by GNMA as to such mortgage  pools.  An opinion of an Assistant
Attorney General of the United States,  dated December 9, 1969, states that such
guaranties  "constitute  general  obligations of the United States backed by its
full faith and  credit."  GNMA is  empowered  to borrow  from the United  States
Treasury to the extent  necessary to make any payments of principal and interest
required under those guaranties.


      Ginnie  Maes are  backed  by the  aggregate  indebtedness  secured  by the
underlying FHA-insured,  FMHA-insured or VA-guaranteed mortgages.  Except to the
extent of payments received by the issuers on account of such mortgages,  Ginnie
Maes do not  constitute a liability of those  issuers,  nor do they evidence any
recourse  against those  issuers.  Recourse is solely  against GNMA.  Holders of
Ginnie  Maes  (such as the Fund)  have no  security  interest  in or lien on the
underlying mortgages.

      Monthly payments of principal will be made, and additional  prepayments of
principal may be made, to the Fund with respect to the mortgages  underlying the
Ginnie Maes owned by the Fund. All of the mortgages in the pools relating to the
Ginnie  Maes in the Fund are  subject  to  prepayment  without  any  significant
premium or penalty,  at the option of the  mortgagors.  While the  mortgages  on
1-to-4-family dwellings underlying certain Ginnie Maes have a stated maturity of
up to 30 years,  it has been the  experience  of the mortgage  industry that the
average life of comparable  mortgages,  as a result of prepayments,  refinancing
and payments from foreclosures, is considerably less.

o Federal  Home Loan  Mortgage  Corporation  ("FHLMC")  Certificates.  FHLMC,  a
corporate  instrumentality  of the  United  States,  issues  FHLMC  Certificates
representing  interests in mortgage loans.  FHLMC  guarantees to each registered
holder of a FHLMC  Certificate  timely  payment of the  amounts  representing  a
holder's proportionate share in:
(i)  interest  payments  less  servicing  and  guarantee  fees,  (ii)  principal
prepayments,  and (iii) the  ultimate  collection  of amounts  representing  the
holder's
                    proportionate interest in principal payments on the mortgage
                    loans in the pool represented by the FHLMC  Certificate,  in
                    each case whether or not such amounts are actually received.

         The obligations of FHLMC under its guarantees are obligations solely of
FHLMC and are not backed by the full faith and credit of the United States.

o Federal National Mortgage Association (Fannie Mae) Certificates. Fannie Mae, a
federally-chartered   and   privately-owned   corporation,   issues  Fannie  Mae
Certificates which are backed by a pool of mortgage loans. Fannie Mae guarantees
to each  registered  holder of a Fannie Mae  Certificate  that the  holder  will
receive amounts  representing the holder's  proportionate  interest in scheduled
principal and interest payments, and any principal prepayments,  on the mortgage
loans in the pool represented by such Certificate,  less servicing and guarantee
fees, and the holder's  proportionate  interest in the full principal  amount of
any  foreclosed or other  liquidated  mortgage  loan. In each case the guarantee
applies whether or not those amounts are actually  received.  The obligations of
Fannie Mae under its guarantees are obligations solely of Fannie Mae and are not
backed by the full faith and credit of the United  States or any of its agencies
or instrumentalities other than Fannie Mae.
|X|   Zero-Coupon U.S. Government Securities.  The Fund may buy zero-coupon
U.S. government securities. These will typically be U.S. Treasury Notes and
Bonds that have been stripped of their unmatured interest coupons, the
coupons themselves, or certificates representing interests in those stripped
debt obligations and coupons.

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

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

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

      |X| Commercial  (Privately-Issued)  Mortgage Related Securities.  The Fund
can invest in commercial mortgage related securities issued by private entities.
Generally these are  multi-class  debt or pass through  certificates  secured by
mortgage loans on commercial properties.  They are subject to the credit risk of
the issuer.  These securities  typically are structured to provide protection to
investors in senior classes from possible losses on the underlying  loans.  They
do so by having holders of subordinated classes take the first loss if there are
defaults on the underlying  loans.  They may also be protected to some extent by
guarantees, reserve funds or additional collateralization mechanisms.

      |X|  Asset-Backed  Securities.   Asset-backed  securities  are  fractional
interests in pools of assets,  typically accounts  receivable or consumer loans.
They are issued by trusts or special-purpose  corporations.  They are similar to
mortgage-backed securities,  described above, and are backed by a pool of assets
that consist of obligations of individual borrowers. The income from the pool is
passed through to the holders of participation  interest in the pools. The pools
may  offer a credit  enhancement,  such as a bank  letter of  credit,  to try to
reduce the risks that the underlying debtors will not pay their obligations when
due.  However,  the enhancement,  if any, might not be for the full par value of
the  security.  If the  enhancement  is exhausted  and any required  payments of
interest or repayments  of principal are not made,  the Fund could suffer losses
on its investment or delays in receiving payment.

      The value of an  asset-backed  security  is  affected  by  changes  in the
market's perception of the asset backing the security,  the  creditworthiness of
the  servicing  agent for the loan pool,  the  originator  of the loans,  or the
financial institution providing any credit enhancement,  and is also affected if
any  credit   enhancement  has  been  exhausted.   The  risks  of  investing  in
asset-backed  securities are ultimately  related to payment of consumer loans by
the individual borrowers.  As a purchaser of an asset-backed  security, the Fund
would  generally have no recourse to the entity that originated the loans in the
event of default by a borrower. The underlying loans are subject to prepayments,
which may shorten the weighted  average life of asset-backed  securities and may
lower  their  return,  in the  same  manner  as in the  case of  mortgage-backed
securities  and  CMOs,  described  above.  Unlike  mortgage-backed   securities,
asset-backed securities typically do not have the benefit of a security interest
in the underlying collateral.

      |X|  Municipal  Securities.  The Fund can buy  municipal  bonds and notes,
tax-exempt  commercial paper,  certificates of participation in municipal leases
and other debt obligations. These debt obligations are issued by the governments
of states, as well as their political  subdivisions  (such as cities,  towns and
counties),  or by the District of Columbia and their  agencies and  authorities.
The Fund can also buy  securities  issued by any  commonwealths,  territories or
possessions   of   the   United   States,   or   their   respective    agencies,
instrumentalities or authorities.  The Fund would invest in municipal securities
because of the income and portfolio  diversification  they offer rather than for
the tax-exempt nature of the income they pay.

      The Fund can buy  both  long-term  and  short-term  municipal  securities.
Long-term  securities  have a  maturity  of more  than one  year.  In  selecting
municipal securities the Fund would normally focus on longer-term securities, to
seek  higher  income.  In  general,  the  values of  longer-term  bonds are more
affected by changes in interest rates than are short-term bonds.

                          Municipal securities are issued to raise money for
a variety  of public or private  purposes,  including  financing  state or local
governments,  financing  specific  projects or public  facilities.  The Fund can
invest in municipal  securities that are "general  obligations,"  secured by the
issuer's  pledge of its full faith,  credit and taxing  power for the payment of
principal and interest.

      The Fund  can  also  buy  "revenue  obligations,"  payable  only  from the
revenues  derived  from a  particular  facility  or  class of  facilities,  or a
specific excise tax or other revenue source.  Some of these revenue  obligations
are private  activity  bonds that pay interest that may be a tax  preference for
investors subject to alternative minimum tax.

o  Municipal  Lease  Obligations.  Municipal  leases are used by state and local
government authorities to obtain funds to acquire land, equipment or facilities.
The  Fund  may  invest  in  certificates  of  participation   that  represent  a
proportionate  interest in payments made under municipal lease  obligations.  If
the government  stops making payments or transfers its payment  obligations to a
private entity, the obligation could lose value or become taxable.

      |X| Money Market Instruments and Short-Term Debt Obligations. The Fund can
invest in a variety of high quality money market instruments and short-term debt
obligations, both under normal market conditions and for defensive purposes. The
following is a brief  description  of the types of money market  securities  and
short-term  debt  obligations  the  Fund  can  invest  in.  Those  money  market
securities are high-quality,  short-term debt instruments that are issued by the
U.S.  government,  corporations,  banks or other entities.  They may have fixed,
variable or floating  interest  rates.  The Fund's  investments in foreign money
market  instruments and short-term debt obligations are subject to its limits on
investing in foreign  securities and the risks of foreign  investing,  described
above.

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

o     Bank Obligations. The Fund can buy time deposits, certificates of
deposit and bankers' acceptances. They must be :
o     obligations issued or guaranteed by a domestic or foreign bank
                  (including a foreign branch of a domestic bank) having
                  total assets of at least U.S. $1 billion,
o     banker's acceptances (which may or may not be supported by letters of
                  credit) only if guaranteed by a U.S. commercial bank with
                  total assets of at least U.S. $1 billion.

      The Fund can make time deposits.  These are  non-negotiable  deposits in a
bank for a  specified  period of time.  They may be subject to early  withdrawal
penalties.  Time  deposits  that are subject to early  withdrawal  penalties are
subject to the Fund's  limits on illiquid  investments,  unless the time deposit
matures in seven days or less. "Banks" include  commercial banks,  savings banks
and savings and loan associations.

o  Commercial  Paper.  The Fund can  invest in  commercial  paper if it is rated
within the top two rating  categories  of 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.

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

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

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

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

      |X| Foreign  Securities.  The Fund can purchase equity and debt securities
issued  or  guaranteed  by  foreign  companies  or debt  securities  of  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 not considered "foreign securities" for the purpose
of the Fund's  investment  allocations.  That is because they are not subject to
many of the special  considerations  and risks,  discussed below,  that apply to
foreign securities traded and held abroad.

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

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

o     Risks of Foreign Investing.  Investments in foreign securities may
offer special opportunities for investing but also present special additional
risks and considerations not typically associated with investments in
domestic securities. Some of these additional risks are:
o     reduction of income by foreign taxes;
o     fluctuation in value of foreign investments due to changes in currency
                  rates or currency control regulations (for example,
                  currency blockage);
o     transaction charges for currency exchange;
o     lack of public information about foreign issuers;
o     lack of uniform accounting, auditing and financial reporting standards
                  in foreign countries comparable to those applicable to
                  domestic issuers;
o     less volume on foreign exchanges than on U.S. exchanges;
o     greater volatility and less liquidity on foreign markets than in the
                  U.S.;
o     less governmental regulation of foreign issuers, stock exchanges and
                  brokers than in the U.S.;
o     foreign exchange contracts;
o     greater difficulties in commencing lawsuits;
o     higher brokerage commission rates than in the U.S.;
o     increased risks of delays in settlement of portfolio transactions or
                  loss of certificates for portfolio securities;
o     foreign withholding taxes on interest and dividends;
o     possibilities in some countries of expropriation, nationalization,
                  confiscatory taxation, political, financial or social
                  instability or adverse diplomatic developments; and
o     unfavorable differences between the U.S. economy and foreign economies.
      In the past, U.S. government policies have discouraged certain
investments abroad by U.S. investors, through taxation or other restrictions,
and it is possible that such restrictions could be re-imposed.

o Special Risks of Emerging Markets.  Emerging and developing markets abroad may
also offer special  opportunities for investing but have greater risks than more
developed  foreign  markets,  such as those in Europe,  Canada,  Australia,  New
Zealand and Japan. There may be even less liquidity in their securities markets,
and  settlements  of  purchases  and  sales  of  securities  may be  subject  to
additional  delays.  They are  subject to greater  risks of  limitations  on the
repatriation of income and profits because of currency  restrictions  imposed by
local  governments.  Those  countries may also be subject to the risk of greater
political and economic  instability,  which can greatly affect the volatility of
prices of securities in those countries. The Manager will consider these factors
when  evaluating  securities  in these  markets,  because the selection of those
securities must be consistent with the Fund's investment objective.

o Risks of Conversion to Euro. There may be transaction costs and risks relating
to the conversion of certain  European  currencies to the Euro that commenced in
January 1, 1999. However,  their current currencies (for example, the franc, the
mark, and the lira) will also continue in use until January 1, 2002.  After that
date,  it is  expected  that  only the euro will be used in those  countries.  A
common  currency  is  expected to confer  some  benefits  in those  markets,  by
consolidating  the government  debt market for those countries and reducing some
currency risks and costs. But the conversion to the new currency will affect the
Fund operationally and also has potential risks, some of which are listed below.
Among other things, the conversion will affect:
               o  issuers in which the Fund  invests,  because of changes in the
                  competitive  environment  from a consolidated  currency market
                  and  greater  operational  costs  from  converting  to the new
                  currency. This might depress stock values.
               o  vendors the Fund depends on to carry out its business, such as
                  its  custodian  (which holds the foreign  securities  the Fund
                  buys), the Manager (which must price the Fund's investments to
                  deal with the  conversion  to the euro) and  brokers,  foreign
                  markets and securities depositories. If they are not prepared,
                  there could be delays in settlements  and additional  costs to
                  the Fund.
               o  exchange contracts and derivatives that are outstanding during
                  the  transition  to  the  euro.  The  lack  of  currency  rate
                  calculations  between the affected  currencies and the need to
                  update the  Fund's  contracts  could  pose extra  costs to the
                  Fund.

      The lack of currency rate calculations between the affected currencies and
the need to update the Fund's contracts could pose extra costs to the Fund.

      The Manager has upgraded  (at its  expense)  its computer and  bookkeeping
systems  to deal with the  conversion.  The Fund's  custodian  has  advised  the
Manager of its plans to deal with the  conversion,  including how it will update
its record keeping systems and handle the redenomination of outstanding  foreign
debt.  The  Fund's  portfolio  managers  will also  monitor  the  effects of the
conversion  on the issuers in which the Fund  invests.  The  possible  effect of
these factors on the Fund's  investments  cannot be determined with certainty at
this time,  but they may reduce  the value of some of the  Fund's  holdings  and
increase its operational costs.

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

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

      |X| Floating Rate and Variable Rate Obligations.  Some securities the Fund
can  purchase  have  variable or floating  interest  rates.  Variable  rates are
adjusted at stated  periodic  intervals.  Variable rate  obligations  can have a
demand  feature that allows the Fund to tender the obligation to the issuer or a
third party prior to its  maturity.  The tender may be at par value plus accrued
interest, according to the terms of the obligations.

      The interest rate on a floating rate demand note is adjusted automatically
according to a stated  prevailing  market rate, such as a bank's prime rate, the
91-day U.S. Treasury Bill rate, or some other standard. The instrument's rate is
adjusted automatically each time the base rate is adjusted. The interest rate on
a variable  rate note is also based on a stated  prevailing  market  rate but is
adjusted  automatically  at  specified  intervals  of not less  than  one  year.
Generally,  the  changes  in the  interest  rate on such  securities  reduce the
fluctuation in their market value.  As interest rates decrease or increase,  the
potential  for  capital  appreciation  or  depreciation  is less  than  that for
fixed-rate  obligations of the same maturity.  The Manager may determine that an
unrated  floating  rate or  variable  rate  demand  obligation  meets the Fund's
quality  standards  by reason of being backed by a letter of credit or guarantee
issued by a bank that meets those quality standards.

      Floating rate and variable  rate demand notes that have a stated  maturity
in excess of one year may have  features  that  permit the holder to recover the
principal amount of the underlying security at specified intervals not exceeding
one year and upon no more than 30 days' notice.  The issuer of that type of note
normally has a corresponding  right in its discretion,  after a given period, to
prepay  the  outstanding  principal  amount of the note plus  accrued  interest.
Generally,  the issuer must  provide a specified  number of days'  notice to the
holder.

      |X|  "Stripped"  Mortgage-Related  Securities.  The  Fund  may  invest  in
stripped  mortgage-related  securities  that are created by segregating the cash
flows from  underlying  mortgage  loans or mortgage  securities to create two or
more  new  securities.  Each  has  a  specified  percentage  of  the  underlying
security's  principal  or  interest  payments.  These  are a form of  derivative
investment.

      Mortgage  securities may be partially stripped so that each class receives
some interest and some principal.  However,  they may be completely stripped. In
that case all of the interest is distributed to holders of one type of security,
known as an  "interest-only"  security,  or "I/O," and all of the  principal  is
distributed to holders of another type of security,  known as a "principal-only"
security or "P/O." Strips can be created for pass-through certificates or CMOs.

      The yields to maturity of I/Os and P/Os are very  sensitive  to  principal
repayments  (including   prepayments)  on  the  underlying  mortgages.   If  the
underlying  mortgages   experience  greater  than  anticipated   prepayments  of
principal,  the Fund might not fully  recoup its  investment  in an I/O based on
those  assets.  If  underlying   mortgages   experience  less  than  anticipated
prepayments  of  principal,  the yield on the P/Os based on them  could  decline
substantially.

      |X|  Participation   Interests.  The  Fund  may  invest  in  participation
interests,   subject  to  the  Fund's  limitation  on  investments  in  illiquid
investments. A participation interest is an undivided interest in a loan made by
the  issuing   financial   institution  in  the   proportion   that  the  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.

      Forward Rolls.  The Fund can enter into "forward roll"  transactions  with
respect to mortgage-related  securities.  These are limited to 10% of the Fund's
total assets.  In this type of  transaction,  the Fund sells a  mortgage-related
security to a buyer and  simultaneously  agrees to repurchase a similar security
(the same type of security,  and having the same coupon and maturity) at a later
date at a set price.  The  securities  that are  repurchased  will have the same
interest  rate  as  the  securities   that  are  sold,  but  typically  will  be
collateralized  by  different  pools of  mortgages  (with  different  prepayment
histories) than the securities  that have been sold.  Proceeds from the sale are
invested in short-term  instruments,  such as repurchase agreements.  The income
from those  investments,  plus the fees from the forward roll  transaction,  are
expected to generate income to the Fund in excess of the yield on the securities
that have been sold.

      The Fund will only  enter  into  "covered"  rolls.  To assure  its  future
payment of the purchase price, the Fund will identify on its books liquid assets
in an amount equal to the payment obligation under the roll.

      These transactions have risks.  During the period between the sale and the
repurchase,  the Fund will not be entitled  to receive  interest  and  principal
payments on the  securities  that have been sold. It is possible that the market
value of the  securities the Fund sells may decline below the price at which the
Fund is obligated to repurchase securities.

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

      When such  transactions  are  negotiated,  the price  (which is  generally
expressed in yield terms) is fixed at the time the commitment is made.  Delivery
and payment for the  securities  take place at a later date.  The securities are
subject  to change in value from  market  fluctuations  during the period  until
settlement.  The value at  delivery  may be less than the  purchase  price.  For
example,  changes in interest  rates in a direction  other than that expected by
the Manager before  settlement  will affect the value of such securities and may
cause a loss to the Fund. During the period between purchase and settlement, the
Fund makes no payment to the issuer and no interest accrues to the Fund from the
investment until it receives the security at settlement. There is a risk of loss
to the Fund if the value of the security  changes prior to the settlement  date,
and there is the risk that the other party may not perform.

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

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

      At the time the Fund makes the  commitment  to purchase or sell a security
on a when-issued or  delayed-delivery  basis,  it records the transaction on its
books and reflects the value of the security purchased in determining the Fund's
net asset value. In a sale transaction,  it records the proceeds to be received.
The Fund will identify on its books liquid assets at least equal in value to the
value of the Fund's purchase commitments until the Fund pays for the investment.

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

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

      In  a  repurchase  transaction,   the  Fund  buys  a  security  from,  and
simultaneously  resells it to, an approved vendor for delivery on an agreed-upon
future  date.  The resale  price  exceeds the  purchase  price by an amount that
reflects an agreed-upon  interest rate effective for the period during which the
repurchase  agreement is in effect.  Approved  vendors  include U.S.  commercial
banks,  U.S.  branches  of  foreign  banks,  or  broker-dealers  that  have been
designated as primary  dealers in government  securities.  They must meet credit
requirements set by the Fund's Board of Directors 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  fundamental  policy  limits on holding  illiquid  investments.  The Fund
cannot  enter into a repurchase  agreement  that causes more than 10% of its net
assets to be subject to  repurchase  agreements  having a maturity  beyond seven
days.  There is no limit on the  amount of the  Fund's  net  assets  that may be
subject to repurchase agreements having maturities of seven days or less.

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

      |X| Illiquid and Restricted Securities.  Under the policies and procedures
established  by the  Fund's  Board of  Directors,  the  Manager  determines  the
liquidity of certain of the Fund's  investments.  To enable the Fund to sell its
holdings of a restricted  security not  registered  under 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.

      As a  fundamental  policy,  the Fund will not invest  more than 10% of its
total  assets  in  illiquid  or  restricted  securities,   including  repurchase
agreements having a maturity beyond seven days,  portfolio  securities for which
market  quotations  are not readily  available  and time deposits that mature in
more than 2 days. Certain restricted  securities that are eligible for resale to
qualified  institutional  purchasers,  as described below, may not be subject to
that limit. The Fund currently applies that limitation to 10% of its net assets,
as  a  non-fundamental   policy.  The  Manager  monitors  holdings  of  illiquid
securities  on an ongoing  basis to  determine  whether to sell any  holdings to
maintain adequate liquidity.

      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 under Board-approved
guidelines.  Those  guidelines  take into account the trading  activity for such
securities and the  availability of reliable  pricing  information,  among other
factors.  If there is a lack of  trading  interest  in a  particular  Rule  144A
security, the Fund's holdings of that security may be considered to be illiquid.

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

      |X|  Loans of  Portfolio  Securities.  The  Fund  can  lend its  portfolio
securities  to certain  types of  eligible  borrowers  approved  by the Board of
Directors.  It may do so to try to provide income or to raise cash for liquidity
purposes.  As a fundamental policy,  these loans are limited to not more than 33
1/3% of the value of the Fund's total assets. The Fund presently does not intend
to engage in loans of securities but may do so in the future.

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

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

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

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

      Other derivative investments the Fund may invest in include "index-linked"
notes.  Principal  and/or  interest  payments  on  these  notes  depend  on  the
performance  of an underlying  index.  Currency-indexed  securities  are another
derivative the Fund may use. Typically these are short-term or intermediate-term
debt  securities.  Their value at maturity or the rates at which they pay income
are  determined  by the change in value of the U.S.  dollar  against one or more
foreign  currencies  or an index.  In some cases,  these  securities  may pay an
amount at maturity  based on a multiple of the amount of the  relative  currency
movements. This type of index security offers the potential for increased income
or principal payments but at a greater risk of loss than a typical debt security
of the same maturity and credit quality.

o  "Structured"   Notes.  The  Fund  can  buy  "structured"   notes,  which  are
specially-designed  derivative  debt  investments  with  principal  payments  or
interest  payments  that are linked to the value of an index (such as a currency
or  securities  index)  or  commodity.  The  terms  of  the  instrument  may  be
"structured" by the purchaser (the Fund) and the borrower issuing the note.

      The principal and/or interest payments depend on the performance of one or
more other  securities or indices,  and the values of these notes will therefore
fall or rise in response to the changes in the values of the underlying security
or index.  They are subject to both credit and interest rate risks and therefore
the Fund could receive more or less than it  originally  invested when the notes
mature,  or it might receive less interest than the stated coupon payment if the
underlying investment or index does not perform as anticipated. There values may
be very volatile and they may have a limited trading market, making it difficult
for the Fund to sell its investment at an acceptable price.

o "Inverse  Floaters."  Certain  types of variable  rate bonds known as "inverse
floaters" pay interest at rates that vary as the yields  generally  available on
short-term tax-exempt bonds change. However, the yields on inverse floaters move
in the opposite  direction of yields on  short-term  bonds in response to market
changes.  As interest rates rise,  inverse floaters produce less current income,
and their  market  value can become  volatile.  Inverse  floaters  are a type of
"derivative  security."  Some have a "cap," so that if interest rates rise above
the "cap," the security pays additional  interest  income.  If rates do not rise
above the "cap," the Fund will have paid an additional amount for a feature that
proves  worthless.  The Fund will not invest more than 5% of its total assets in
inverse floaters.

      |X| Hedging. The Fund can use hedging instruments.  It is not obligated to
use them in seeking its  objective  although it can write  covered calls to seek
high current income if the Manager  believes that it is appropriate to do so. 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: o sell futures contracts, or o write covered
calls on securities or futures. Covered calls may also
            be used to increase  the Fund's  income,  but the  Manager  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.

      The Fund is not  obligated to use hedging  instruments,  even though it is
permitted  to use them in the  Manager's  discretion,  as described  below.  The
Fund's  strategy  of  hedging  with  futures  and  options  on  futures  will be
incidental  to  the  Fund's  activities  in  the  underlying  cash  market.  The
particular  hedging  instruments the Fund can use are described  below. The Fund
may employ new hedging  instruments and strategies  when they are developed,  if
those investment methods are consistent with the Fund's investment objective and
are permissible under applicable regulations governing the Fund.

o Futures.  The Fund can buy and sell  exchange-traded  futures  contracts  that
relate to (1)  broadly-based  stock  indices  ("stock  index  futures") (2) debt
securities  (these  are  referred  to as  "interest  rate  futures"),  (3) other
broadly-based securities indices (these are referred to as "financial futures"),
(4) foreign  currencies (these are referred to as "forward  contracts"),  or (5)
securities.

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

      An interest rate future obligates the seller to deliver (and the purchaser
to take)  cash or a  specified  type of debt  security  to  settle  the  futures
transaction.  Either party could also enter into an offsetting contract to close
out the position.


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


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

o Writing  Covered Call Options.  Under its  fundamental  policies,  the Fund is
permitted to write (that is, sell) covered calls on securities, indices, futures
and forward contracts. If the Fund sells a call option, it must be covered. That
means  the Fund  must own the  security  subject  to the call  while the call is
outstanding,  or,  for  certain  types of  calls,  the call  may be  covered  by
segregating  liquid assets to enable the Fund to satisfy its  obligations if the
call is exercised.  Up to 20% of the Fund's total assets may be subject to calls
the Fund writes.

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

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

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

      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 underlying security and the premium it received
when it wrote the call. Any such profits are considered short-term capital gains
for federal  income tax  purposes,  as are the  premiums on lapsed  calls.  When
distributed by the Fund they are taxable as ordinary income.  If the Fund cannot
effect a closing purchase  transaction due to the lack of a market, it will have
to hold the callable securities until the call expires or is exercised.

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

o Selling Call Options on Foreign Currencies. The Fund can sell calls on foreign
currencies.  They  include  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 to try to  protect
against declines in the dollar value of foreign  securities and increases in the
dollar cost of foreign securities the Fund wants to acquire.

      If the  Manager  anticipates  a 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 on that  foreign
currency.  However, the currency rates could fluctuate in a direction adverse to
the Fund's position.

      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.


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


o Risks of Hedging  with  Options  and  Futures.  The Fund could pay a brokerage
commission  each  time it sells a call,  or sells an  underlying  investment  in
connection with the exercise of a call. 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,  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.

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

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

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

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

o Forward Contracts.  Forward contracts are foreign currency exchange contracts.
They are used to buy or sell  foreign  currency  for future  delivery at a fixed
price.  The Fund  uses  them to "lock in" the U.S.  dollar  price of a  security
denominated  in a  foreign  currency  that the Fund has  bought  or sold,  or to
protect against  possible losses from changes in the relative values of the U.S.
dollar and a foreign currency.  The Fund 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 suffer a substantial  decline  against the
U.S.  dollar,  it could enter into a forward  contract to sell an amount of that
foreign currency  approximating the value of some or all of the Fund's portfolio
securities denominated in that foreign currency. When the Fund believes that the
U.S. dollar might suffer a substantial  decline against a foreign  currency,  it
could enter into a forward  contract to buy that  foreign  currency  for a fixed
dollar amount.  Alternatively,  the Fund could enter into a forward  contract to
sell a different  foreign  currency for a fixed U.S.  dollar  amount if the Fund
believes that the U.S. dollar value of the foreign  currency to be sold pursuant
to its forward contract will fall whenever there is a decline in the U.S. dollar
value of the currency in which portfolio securities of the Fund are denominated.
That is  referred  to as a  "cross  hedge."  Normally,  the  Fund  will  not use
cross-hedging.


      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 contract 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 Manager might decide to sell the
security  and  deliver  foreign   currency  to  settle  the  original   purchase
obligation.  If the  market  value of the  security  is less than the  amount of
foreign  currency  the Fund is  obligated  to  deliver,  the Fund  might have to
purchase  additional  foreign  currency on the "spot"  (that is, cash) market to
settle the security trade.  If the market value of the security  instead exceeds
the amount of foreign  currency  the Fund is  obligated to deliver to settle the
trade,  the Fund  might  have to sell on the  spot  market  some of the  foreign
currency  received  upon  the sale of the  security.  There  will be  additional
transaction costs on the spot market in those cases.

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

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

      The costs to the Fund of engaging in forward contracts 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.

o Interest  Rate Swap  Transactions.  The Fund can enter into interest rate swap
agreements.  In an interest rate swap, the Fund and another party exchange their
right to receive or their obligation to pay interest on a security. For example,
they might  swap the right to  receive  floating  rate  payments  for fixed rate
payments.  The Fund can enter into swaps only on  securities  that it owns.  The
Fund  will not  enter  into  swaps  with  respect  to more than 25% of its total
assets. Also, the Fund will identify on its books liquid assets (such as cash or
U.S.  government  securities) to cover any amounts it could owe under swaps that
exceed the amounts it is  entitled  to  receive,  and it will adjust that amount
daily, as needed.

      Swap agreements entail both interest rate risk and credit risk. There is a
risk that, based on movements of interest rates in the future, the payments made
by the  Fund  under a swap  agreement  will be  greater  than  the  payments  it
received.  Credit risk arises from the possibility  that the  counterparty  will
default. If the counterparty  defaults,  the Fund's loss will consist of the net
amount of contractual interest payments that the Fund has not yet received.  The
Manager  will  monitor  the  creditworthiness  of  counterparties  to the Fund's
interest rate swap transactions on an ongoing basis.

      The Fund can enter  into swap  transactions  with  certain  counterparties
pursuant to master netting agreements.  A master netting agreement provides that
all swaps done between the Fund and that counterparty shall be regarded as parts
of an integral  agreement.  If amounts are payable on a  particular  date in the
same currency in respect of one or more swap transactions, the amount payable on
that date in that  currency  shall be the net amount.  In  addition,  the master
netting  agreement  may provide that if one party  defaults  generally or on one
swap,  the  counterparty  can terminate all of the swaps with that party.  Under
these  agreements,  if a default results in a loss to one party,  the measure of
that  party's  damages is  calculated  by  reference  to the  average  cost of a
replacement  swap for each swap. It is measured by the  mark-to-market  value at
the time of the  termination of each swap. The gains and losses on all swaps are
then netted, and the result is the  counterparty's  gain or loss on termination.
The  termination of all swaps and the netting of gains and losses on termination
is generally referred to as "aggregation."

o 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). 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.


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


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


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

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


Investment Restrictions

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

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

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

o The Fund cannot  issue senior  securities.  However,  it can make  payments or
deposits of margin in connection with options or futures transactions,  lend its
portfolio securities, enter into repurchase agreements,  borrow money and pledge
its assets as permitted by its other fundamental policies.  For purposes of this
restriction,  the  issuance  of shares of common  stock in  multiple  classes or
series,  the  purchase  or sale of  options,  futures  contracts  and options on
futures contracts,  forward commitments,  and repurchase agreements entered into
in accordance with the Fund's investment policies,  and the pledge,  mortgage or
hypothecation of the Fund's assets are not deemed to be senior securities.
o The Fund cannot invest more than 5% of its total assets (taken at market value
at the time of each investment) in the securities  (other than securities of the
U.S.  government  or its  agencies) of any one issuer or invest more than 15% of
its total assets in the obligations of any one bank. This restriction applies to
repurchase agreements with any one bank or dealer. Additionally, the Fund cannot
purchase more than either 10% of the principal  amount of the  outstanding  debt
securities  of an issuer,  or 10% of the  outstanding  voting  securities  of an
issuer.  This restriction  shall not apply to securities issued or guaranteed by
the U.S.  government  or its  agencies,  bank money market  instruments  or bank
repurchase agreements.

o The Fund cannot  invest more than 25% of the value of its total  assets in the
securities of issuers in any single industry. However, this limitation shall not
apply  to  the  purchase  of  obligations  issued  or  guaranteed  by  the  U.S.
government,  its  agencies  or  instrumentalities.   For  the  purpose  of  this
restriction,  each utility that provides a separate  service (for example,  gas,
gas  transmission,  electric or telephone)  shall be considered to be a separate
industry. This test shall be applied on a pro forma basis using the market value
of all  assets  immediately  prior  to  making  any  investment.  The  Fund  has
undertaken as a matter of  non-fundamental  policy to apply this  restriction to
25% or more of its total assets.

o The Fund  cannot,  by itself or  together  with any other fund,  portfolio  or
portfolios,  make  investments  for the purpose of  exercising  control over, or
management of, any issuer.

o The Fund cannot purchase securities of other investment  companies,  except in
connection with a merger, consolidation,  acquisition or reorganization.  It can
also purchase in the open market securities of closed-end  investment  companies
if no  underwriter  or dealer's  commission or profit,  other than the customary
broker's commission is involved and only if immediately thereafter not more than
10% of the Fund's total assets, taken at market value, would be invested in such
securities.

o The Fund  cannot  purchase  or sell  interests  in oil,  gas or other  mineral
exploration or development  programs,  commodities,  commodity contracts or real
estate. However, the Fund can purchase securities of issuers that invest or deal
an any of the above  interests  and can invest for  hedging  purposes in futures
contracts  on  securities,   financial  instruments  and  indices,  and  foreign
currency, as are approved for trading on a registered exchange.

o The Fund  cannot  purchase  any  securities  on margin or make short  sales of
securities  or  maintain a short  position.  However,  the Fund can obtain  such
short- term credits as may be necessary for the clearance of purchases and sales
of  portfolio  securities.  The  deposit  or  payment  by the Fund of initial or
maintenance  margin in  connection  with futures  contracts  or related  options
transactions is not considered to be the purchase of a security on margin.

o The Fund cannot make loans. However, the Fund may lend portfolio securities in
accordance with the Fund's investment policies up to 33 1/3% of the Fund's total
assets  taken  at  market  value.  The  Fund  can  also  enter  into  repurchase
agreements,  and purchase  all or a portion of an issue of publicly  distributed
debt  securities,  bank  loan  participation  interests,  bank  certificates  of
deposit,  bankers' acceptances,  debentures or other securities,  whether or not
the purchase is made upon the original issuance of the securities.

o The Fund cannot borrow amounts in excess of 10% of its total assets,  taken at
market  value at the time of the  borrowing.  It can borrow only from banks as a
temporary  measure  for  extraordinary  or  emergency  purposes.  It cannot make
investments in portfolio securities while such outstanding  borrowings exceed 5%
of its total assets.

o The Fund  cannot  allow  its  current  obligations  under  reverse  repurchase
agreements,  together with  borrowings,  to exceed 1/3 of the value of its total
assets (less all its liabilities other than the obligations under borrowings and
such agreements).

o The Fund cannot mortgage,  pledge,  hypothecate or in any manner transfer,  as
security for  indebtedness,  any securities  owned or held by the Fund except as
may be necessary in connection  with  borrowings as mentioned in its restriction
on borrowing, above. In that case such mortgaging, pledging or hypothecating may
not exceed 10% of the Fund's total assets,  taken at market value at the time of
the borrowing.  The deposit of cash, cash equivalents and liquid debt securities
in a segregated  account with the Fund's  custodian bank and/or with a broker in
connection  with  futures  contracts  or related  options  transactions  and the
purchase of securities on a "when-issued" basis are not deemed to be pledges.

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

o The Fund cannot write,  purchase or sell puts, calls or combinations  thereof,
except that it can write covered call options.

o The Fund  cannot  invest in  securities  of foreign  issuers if at the time of
acquisition more than 10% of its total assets, taken at market value at the time
of the investment,  would be invested in such securities.  However, up to 25% of
the total assets of the Fund may be invested in the aggregate in such securities
that are (i) issued, assumed or guaranteed by foreign governments,  or political
subdivisions  or  instrumentalities  thereof,  (ii)  assumed  or  guaranteed  by
domestic issuers (including Eurodollar securities),  or (iii) issued, assumed or
guaranteed by foreign issuers having a class of securities listed for trading on
The New York Stock Exchange.

o The Fund  cannot  invest  more than 10% in the  aggregate  of the value of its
total assets in  repurchase  agreements  maturing in more than seven days,  time
deposits maturing in more than two days,  portfolio  securities that do not have
readily available market quotations and all other illiquid assets.

      For purposes of the fundamental investment restrictions, the term "borrow"
does not include mortgage dollar rolls, reverse repurchase agreements or lending
portfolio securities.  The terms "illiquid securities" and "portfolio securities
that  do not  have  readily  available  market  quotations"  include  restricted
securities.  However,  reverse repurchase  agreements are treated as borrowings,
master demand notes may be deemed to be illiquid  securities and mortgage dollar
rolls are sales transactions and not financings.

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


How the Fund is Managed


Organization  and  History.  The Fund is one of two  investment  portfolios,  or
"series," of  Oppenheimer  Series Fund,  Inc. That  corporation  is an open-end,
management  investment company organized as a Maryland  corporation in 1981, and
was called  Connecticut Mutual Investment  Accounts,  Inc. until March 18, 1996,
when the Manager became the Fund's investment advisor. The Fund is a diversified
mutual fund, and until March 18, 1996 was called Connecticut Mutual Total Return
Account.


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


      |X|  Classes  of Shares.  The Board of  Directors  has the power,  without
shareholder  approval,  to divide  unissued  shares of the Fund into two or more
classes.  The Board has done so,  and the Fund  currently  has three  classes of
shares:  Class A, Class B, Class C and Class N. 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.

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

      |X|  Meetings  of  Shareholders.  Although  the  Fund is not  required  by
Maryland law to hold annual meetings, it may hold shareholder meetings from time
to time on important matters.  The shareholders of the Fund's parent corporation
have the right to call a meeting to remove a Director or to take  certain  other
action described in the Articles of Incorporation or under Maryland law.

      The Fund will  hold  meetings  when  required  to do so by the  Investment
Company  Act or other  applicable  law.  The Fund will  hold a meeting  when the
Directors call a meeting or upon proper request of  shareholders.  If the Fund's
parent corporation  receives a written request of the record holders of at least
25% of the  outstanding  shares  eligible  to be  voted at a  meeting  to call a
meeting for a specified purpose (which might include the removal of a Director),
the Directors will call a meeting of  shareholders  for that specified  purpose.
The Fund's parent  corporation  has undertaken that it will then either give the
applicants  access  to the  Fund's  shareholder  list  or mail  the  applicants'
communication to all other shareholders at the applicants' expense.

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

Directors  and  Officers  of  the  Fund.  The  Directors  of the  Fund's  parent
corporation and the Fund's officers and their principal occupations and business
affiliations during the past five years are listed below. Directors denoted with
an asterisk (*) below are deemed to be "interested persons" of the Fund's parent
corporation and the Fund under the Investment  Company Act. All of the Directors
are also trustees,  directors or managing  general partners of the following New
York-based Oppenheimer funds2:


Oppenheimer California Municipal Fund   Oppenheimer  International Small Company
                                        Fund
Oppenheimer  Capital   Appreciation  Fund  Oppenheimer  Large  Cap  Growth  Fund
Oppenheimer  Capital  Preservation  Fund  Oppenheimer  Money Market  Fund,  Inc.
Oppenheimer   Developing  Markets  Fund  Oppenheimer  Multiple  Strategies  Fund
Oppenheimer  Discovery Fund Oppenheimer  Multi-Sector  Income Trust  Oppenheimer
Discovery Fund  Oppenheimer  Multi-State  Municipal Trust  Oppenheimer  Emerging
Growth  Fund  Oppenheimer   Multi-State  Municipal  Trust  Oppenheimer  Emerging
Technologies  Fund Oppenheimer  Municipal Bond Fund Oppenheimer  Enterprise Fund
Oppenheimer New York Municipal Fund Oppenheimer  Europe Fund Oppenheimer  Series
Fund, Inc. Oppenheimer Global Fund Oppenheimer U.S. Government Trust Oppenheimer
Global Growth & Income Fund  Oppenheimer  Trinity Core Fund  Oppenheimer  Gold &
Special  Minerals Fund Oppenheimer  Trinity Growth Fund Oppenheimer  Growth Fund
Oppenheimer Trinity Value Fund Oppenheimer International Growth Fund Oppenheimer
World Bond Fund

      Ms. Macaskill and Messrs. Spiro, Donohue,  Wixted, Zack, Bishop and Farrar
respectively  hold the same  offices with the other New  York-based  Oppenheimer
funds as with the Fund. As of February 1, 2001 the Directors and officers of the
Fund as a group  owned of record or  beneficially  less than 1% of each class of
shares of the Fund. The foregoing statement does not reflect ownership of shares
of the Fund held of record by an  employee  benefit  plan for  employees  of the
Manager, other than the shares beneficially owned under the plan by the officers
of the Fund listed above.  Ms.  Macaskill  and Mr.  Donohue are trustees of that
plan.

2 Ms. Macaskill and Mr. Griffiths are not Directors of Oppenheimer Money
Market Fund, Inc.  Mr. Griffiths is not a Trustee of Oppenheimer Discovery
Fund.

Leon Levy, Chairman of the Board of Directors, Age 75
280 Park Avenue, New York, New York 10017

General Partner of Odyssey Partners, L.P. (investment partnership) (since
1982) and Chairman of Avatar Holdings, Inc. (real estate development).


positions:Donald  W. Spiro, Vice  Chairmanof86-  October -October  October19 and
Director,  Age 75 Two  World  Trade  Center,  34th  Floor,  New  York,  New York
10048-0203 PresidentFormerly he held the following positions:  Chairman Emeritus
(August  1991 - August  1999),  Chairman  (November  1987 - January  1991) and a
director (January 1969 - August 1999) of the Manager;  President and Director of
OppenheimerFunds  Distributor,  Inc., a subsidiary of the Manager and the Fund's
Distributor (July 1978 Corporation;- January 1992).

Bridget A.  Macaskill,*  President and Director,  Age 52 Two World Trade Center,
34th Floor,  New York, New York 10048-0203  Chairman (since August 2000),  Chief
Executive Officer (since September 1995) and a director (since December 1994) of
the Manager;  President  (since  September  1995) and a director  (since October
1990) of Oppenheimer  Acquisition  Corp.,  the Manager's parent holding company;
President,  Chief  Executive  Officer and a director  (since  March 2000) of OFI
Private  Investments,  Inc.,  an investment  advisor  subsidiary of the Manager;
Chairman and a director of Shareholder  Services,  Inc.  (since August 1994) and
Shareholder  Financial  Services,  Inc. (since September  1995),  transfer agent
subsidiaries  of the Manager;  President  (since  September 1995) and a director
(since  November  1989) of  Oppenheimer  Partnership  Holdings,  Inc., a holding
company   subsidiary   of  the   Manager;a  of  ofof   Oppenheimer   Real  Asset
Management,Oppenheimer    Real   Asset    Management,Oppenheimer    Real   Asset
Management,directorof    Oppenheimer    Real   of    Oppenheimer    Real   Asset
Management,Asset  Management,  President and a director  (since October 1997) of
OppenheimerFunds  International Ltd., an offshore fund management Ltd.subsidiary
of  the  Manager  and  of  Oppenheimer  Millennium  Funds  plc;  a  director  of
HarbourView  Asset Management  Corporation  (since July 1991) and of Oppenheimer
Real Asset Management,  Inc. (since July 1996),  investment advisor subsidiaries
of the  Manager;  a  director  (since  April  2000) of  OppenheimerFunds  Legacy
Program,  a charitable trust program  established by the Manager;  a director of
Prudential  Corporation plc (a U.K. financial service company);  President and a
trustee of other Oppenheimer funds; formerly President of the Manager (June 1991
- August 2000).

Robert G. Galli, Director, Age 67
19750 Beach Road, Jupiter Island, Florida 33469
A Trustee or Director of other Oppenheimer funds. Formerly he held the following
positions:  Vice  Chairman  (October 1995 - December  1997) and  Executive  Vice
President  (December  1977 -  October  1995)  of  the  Manager;  Executive  Vice
President  and a  director  (April  1986 - October  1995) of  HarbourView  Asset
Management Corporation.

Phillip A. Griffiths, Director, Age 62
97 Olden Lane, Princeton, N. J. 08540
The Director of the Institute for Advanced Study,  Princeton,  N.J. (since 1991)
and a member of the  National  Academy of Sciences  (since  1979);  formerly (in
descending chronological order) a director of Bankers Trust Corporation, Provost
and Professor of Mathematics at Duke University, a director of Research Triangle
Institute, Raleigh, N.C., and a Professor of Mathematics at Harvard University.

Benjamin Lipstein, Director, Age 77
591 Breezy Hill Road, Hillsdale, New York 12529
Professor Emeritus of Marketing, Stern Graduate School of Business
Administration, New York University.

Moynihan, Director, Age 71
801 Pennsylvania Avenue, N.W.,  Washington,  D.C. 20004 Author and architectural
historian;  a  trustee  of the Freer  Gallery  of Art  (Smithsonian  Institute),
Executive  Committee of Board of Trustees of the  National  Building  Museum;  a
member of the Trustees Council, Preservation League of New York State.

Kenneth A. Randall, Director, Age 73
6 Whittaker's Mill, Williamsburg, Virginia 23185
A director of Dominion Resources, Inc. (electric utility holding company),
Dominion Energy, Inc. (electric power and oil & gas producer), and Prime
Retail, Inc. (real estate investment trust); formerly President and Chief
Executive Officer of The Conference Board, Inc. (international economic and
business research) and a director of Lumbermens Mutual Casualty Company,
American Motorists Insurance Company and American Manufacturers Mutual
Insurance Company.

Edward V. Regan, Director, Age 70
40 Park Avenue, New York, New York 10016
Chairman of Municipal  Assistance  Corporation for the City of New York;  Senior
Fellow of Jerome Levy Economics  Institute,  Bard College; a director of RBAsset
(real estate manager);  a director of OffitBank;  Trustee,  Financial Accounting
Foundation (FASB and GASB); President,  Baruch College of the City University of
New York;  formerly New York State  Comptroller and trustee,  New York State and
Local Retirement Fund.

Russell S. Reynolds, Jr., Director, Age 69
8 Sound Shore Drive, Greenwich, Connecticut 06830
Chairman of The Directorship Search Group, Inc. (corporate governance
consulting and executive recruiting); a director of Professional Staff
Limited (a U.K. temporary staffing company); a life trustee of International
House (non-profit educational organization), and a trustee of the Greenwich
Historical Society.

Clayton K. Yeutter, Director, Age 70
10475 E. Laurel Lane, Scottsdale, Arizona 85259
Of Counsel, Hogan & Hartson (a Washington, D.C. law firm). Other
directorships: Allied Zurich Pl.c; ConAgra, Inc.; FMC Corporation; Farmers
Group Inc.; Oppenheimer Funds; Texas Instruments Incorporated; Weyerhaeuser
Co. and Zurich Allied AG.

Bruce Bartlett,  Vice President and Portfolio Manager,  Age: 51. Two World Trade
Center,  New York, New York  10048-0203  Christopher  Leavy,  Vice President and
Portfolio  Manager,  Age: 29 Senior Vice President (since September 2000) of the
Manager;  prior to joining the  Manager in  September  2000,  he was a portfolio
manager of Morgan Stanley Dean Witter Investment Management (from 1997) prior to
which he was a portfolio  manager and equity analyst of Crestar Asset Management
(from 1995).

Andrew J. Donohue, Secretary, Age 50
Two World Trade Center, 34th Floor, New York, New York 10048-0203 Executive Vice
President  (since  January  1993),  General  Counsel  (since October 1991) and a
director  (since  September  1995) of the Manager;  Executive Vice President and
General  Counsel (since  September  1993) and a director (since January 1992) of
OppenheimerFunds  Distributor,  Inc.; Executive Vice President,  General Counsel
and  a  director  (since   September  1995)  of  HarbourView   Asset  Management
Corporation,  Shareholder Services,  Inc., Shareholder Financial Services,  Inc.
and Oppenheimer  Partnership  Holdings,  Inc., of OFI Private Investments,  Inc.
(since March 2000), and of PIMCO Trust Company (since May 2000); President and a
director of Centennial Asset Management  Corporation  (since September 1995) and
of Oppenheimer Real Asset Management, Inc. (since July 1996); Vice President and
a director (since  September 1997) of  OppenheimerFunds  International  Ltd. and
Oppenheimer   Millennium   Funds  plc;  a  director   (since   April   2000)  of
OppenheimerFunds Legacy Program;  General Counsel (since May 1996) and Secretary
(since  April  1997) of  Oppenheimer  Acquisition  Corp.;  an  officer  of other
Oppenheimer funds.

Brian W. Wixted,  Treasurer and Principal  Financial and  Accounting  Officer,
Age: 41.
6803 South Tucson Way, Englewood, Colorado 80112
Senior Vice President and Treasurer (since March 1999) of the Manager; Treasurer
(since March 1999) of  HarbourView  Asset  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 PIMCO Trust Company;
Assistant  Treasurer (since March 1999) of Oppenheimer  Acquisition Corp. and of
Centennial Asset Management Corporation;  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 G. Zack, Assistant Secretary, Age 52
Two World Trade Center,  34th Floor,  New York,  New York  10048-0203  Two World
Trade Center,  New York, New York  10048-0203  Senior Vice President  (since May
1985) and Associate  General Counsel (since May 1981) 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.

Robert J. Bishop, Assistant Treasurer, Age 42
6803 South Tucson Way, Englewood, Colorado 80112
Vice  President  of the  Manager/Mutual  Fund  Accounting  (since May 1996);  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.

Scott T. Farrar, Assistant Treasurer, Age 35
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); Assistant
Treasurer of Oppenheimer  Millennium  Funds plc (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.

      |X| Remuneration of Directors. The officers of the Fund and Ms. Macaskill,
who is affiliated  with the Manager  receive no salary or fee from the Fund. The
remaining  Directors of the Fund  received  the  compensation  shown below.  The
compensation  from the Fund was paid  during its fiscal  year ended  October 31,
2000.  The  compensation  from  all  of the  New  York-based  Oppenheimer  funds
(including  the  Fund)  was  received  as a  director,  trustee  or  member of a
committee of the boards of those funds during the calendar year 2000.



<PAGE>





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

                                                                           Total
                                                                    Compensation
                                             Retirement        From all
                                             Benefits          New York-based
                            Aggregate        Accrued as Part   Oppenheimer
Trustee's Name              Compensation     of Fund           Funds (32
and Position                from Fund1       Expenses          Funds)2

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

         Leon Levy
  Chairman

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

     Robert G. Galli3
  Study Committee Member

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

Phillip Griffiths4

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

     Benjamin Lipstein
  Study Committee Chairman,
  Audit Committee Member

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

   Elizabeth B. Moynihan
  Study Committee Member

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

    Kenneth A. Randall
  Audit Committee Chairman

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

      Edward V. Regan
  Proxy Committee Chairman,
  Audit Committee Member

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

Russell S. Reynolds, Jr.
  Proxy Committee Member

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

Donald W. Spiro

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

    Clayton K. Yeutter5
  Proxy Committee Member

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

1.    Aggregate  compensation  includes fees, deferred  compensation,  if any,
   and retirement plan benefits accrued for a Director.
2. For the 2000 calendar year.
3. Total Compensation for the 2000 calendar year includes  compensation received
   for serving as a Trustee or Director of 10 other Oppenheimer funds.
Includes $____ deferred under the Deferred Compensation Plan as described below.
5.    Includes  $___  deferred  under  the  Deferred   Compensation   Plan  as
   described below.


      |X|  Retirement  Plan for Directors.  The Fund and its parent  corporation
have adopted a retirement plan that provides for payments to retired  Directors.
Payments are up to 80% of the average compensation paid during a Director's five
years of service in which the highest compensation was received. A Director must
serve as director or trustee for any of the New York-based Oppenheimer funds for
at least 15  years to be  eligible  for the  maximum  payment.  Each  Director's
retirement  benefits  will  depend  on  the  amount  of  the  Director'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|  Deferred  Compensation  Plan.  The Board of  Directors  has adopted a
Deferred  Compensation  Plan for  disinterested  directors  that enables them to
elect to defer  receipt of all or a portion of the annual fees they are entitled
to  receive  from the Fund.  Under  the plan,  the  compensation  deferred  by a
Director  is  periodically  adjusted  as though an  equivalent  amount  had been
invested in shares of one or more  Oppenheimer  funds  selected by the Director.
The amount paid to the Director under the plan will be determined based upon the
performance of the selected funds.

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


      |X| Major Shareholders. As of February 1, 2001, 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.,  4800 Deer Lake Drive East,
    Jacksonville,  FL 32246, which owned 28,954.695 Class C shares (representing
    approximately  8.43% of the  outstanding  Class C shares) for the benefit of
    its clients.

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
duplicating  fee,  by  electronic  request  at  the  following  E-mail  address:
[email protected].,  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. The Manager selects  securities for
the Fund's portfolio and handles its day-to-day business. The portfolio managers
of the Fund are employed by the Manager and are the persons who are  principally
responsible for the day-to-day management of the Fund's portfolio. Other members
of the Manager's Equity Portfolio Department provide the portfolio managers with
counsel and support in managing the Fund's portfolio.

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

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

 ------------------------------------------------------------------------------
 Fiscal Year ended 10/31:    Management Fees Paid to OppenheimerFunds, Inc.
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
           1998                                $1,774,240
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
           1999                                $1,994,511
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------

           2000                                     $

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

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



Brokerage Policies of the Fund

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


      Under the investment  advisory  agreement,  the Manager may select brokers
(other than affiliates) that provide  brokerage and/or research services for the
Fund and/or the other  accounts  over which the Manager or its  affiliates  have
investment  discretion.  The commissions paid to such brokers may be higher than
another  qualified  broker  would  charge,  if the  Manager  makes a good  faith
determination  that the  commission  is fair and  reasonable  in relation to the
services  provided.  Subject to those  considerations,  as a factor in selecting
brokers for the Fund's  portfolio  transactions,  the Manager may also  consider
sales of shares of the Fund and other investment companies for which the Manager
or an affiliate serves as investment advisor.


Brokerage Practices Followed by the Manager. The Manager allocates brokerage for
the Fund subject to the provisions of the investment  advisory agreement and the
procedures and rules described above. Generally, the Manager's portfolio traders
allocate  brokerage  based upon  recommendations  from the  Manager's  portfolio
managers. In certain instances, portfolio managers may directly place trades and
allocate  brokerage.  In either case, the Manager's executive officers supervise
the allocation of brokerage.

         Transactions  in  securities  other than those for which an exchange is
the primary  market are  generally  done with  principals or market  makers.  In
transactions  on  foreign  exchanges,  the Fund  may be  required  to pay  fixed
brokerage  commissions  and  therefore  would not have the benefit of negotiated
commissions available in U.S. markets.  Brokerage commissions are paid primarily
for  transactions  in  listed  securities  or for  certain  fixed-income  agency
transactions in the secondary market.  Otherwise brokerage  commissions are paid
only if it appears  likely that a better price or  execution  can be obtained by
doing so. In an option transaction, the Fund ordinarily uses the same broker for
the  purchase or sale of the option and any  transaction  in the  securities  to
which the option relates.

         Other funds advised by the Manager have investment  policies similar to
those of the Fund. Those other funds may purchase or sell the same securities as
the Fund at the same time as the Fund,  which could  affect the supply and price
of the securities. If two or more funds advised by the Manager purchase the same
security  on the same day from the same  dealer,  the  transactions  under those
combined  orders are averaged as to price and allocated in  accordance  with the
purchase or sale orders actually placed for each account.

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

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

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

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

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

-------------------------------------------------------------------------------
 Fiscal Year Ended 10/31:     Total Brokerage Commissions Paid by the Fund1
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
           1998                                 $457,263
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

           1999                                 $717,642

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

           2000                                    $ 2

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

2.    In the fiscal year ended 10/31/00,  the amount of transactions  directed
   to brokers for research services was  $_____________  and the amount of the
   commissions paid to broker-dealers for those services was $_________.



Distribution and Service Plans

The  Distributor.  Under its  General  Distributor's  Agreement  with the Fund's
parent corporation,  the Distributor acts as the Fund's principal underwriter in
the continuous  public offering of the different  classes of shares of the Fund.
The Distributor is not obligated to sell a specific  number of shares.  Expenses
normally attributable to sales are borne by the Distributor.


         The compensation paid to (or retained by) the Distributor from the sale
of shares or on the  redemption  of shares  during the Fund's  three most recent
fiscal  years is shown in the  table  below.  Class N shares  were not  publicly
offered during the Fund's fiscal year's  depicted and therefore are not included
in any of the charts  located in this  section of the  Statement  of  Additional
Information.




<PAGE>




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

Fiscal    Aggregate    Class A       Commissions    Concessions  Concessions
          Front-End    Front-End
          Sales        Sales         on Class A     on Class B   on Class C
Year      Charges on   Charges       Shares         Shares       Shares
Ended     Class A      Retained by   Advanced by    Advanced by  Advanced by
10/31:    Shares       Distributor   Distributor1   Distributor1 Distributor1

-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
  1998      $481,886     $397,054       $27,571       $316,680      $21,560
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
  1999      $400,298     $295,333       $46,607       $250,032      $25,954
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

  2000         $             $             $             $             $

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

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.


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

   2000              $                     $                      $

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


Distribution  and Service Plans. The Fund has adopted a Service Plan for Class A
shares  and  Distribution  and  Service  Plans for Class B,  Class C and Class N
shares under Rule 12b-1 of the  Investment  Company  Act.  Under those plans the
Fund  pays  the  Distributor  for all or a  portion  of its  costs  incurred  in
connection  with  the  distribution  and/or  servicing  of  the  shares  of  the
particular class.


      Each plan has been approved by a vote of the Board of Directors, including
a majority of the Independent Directors3, cast in person at a meeting called for
the purpose of voting on that plan.

3. In  accordance  with Rule  12b-1 of the  Investment  Company  Act,  the term
"Independent  Directors" in this Statement of Additional  Information  refers to
those  Directors  who are not  "interested  persons"  of the Fund (or its parent
corporation)  and who do not have any direct or indirect  financial  interest in
the  operation of the  distribution  plan or any  agreement  under the plan.


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

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

      The Board of  Directors  and the  Independent  Directors  must approve all
material amendments to a plan. An amendment to increase materially the amount of
payments to be made under a plan must be approved by  shareholders  of the class
affected  by the  amendment.  Because  Class B shares of the Fund  automatically
convert into Class A shares  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  Directors  at least
quarterly  for its review.  The Reports  shall detail the amount of all payments
made  under a plan and the  purpose  for which the  payments  were  made.  Those
reports are subject to the review and approval of the Independent Directors.

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

      Under the 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  Directors.  The Board of  Directors  has set no  minimum  amount of
assets to qualify for payments under the plans.

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


      For the fiscal year ended October 31, 2000 payments under the Class A plan
totaled $_________, all of which was paid by the Distributor to recipients. That
included $________ paid to an affiliate of the Distributor's parent company. Any
unreimbursed  expenses the Distributor  incurs with respect to Class A shares in
any fiscal year cannot be recovered in subsequent years. The Distributor may not
use  payments  received  under  the  Class  A plan  to pay  any of its  interest
expenses, carrying charges, or other financial costs, or allocation of overhead.

      |X| Class B, Class C and Class N 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.  Each plan  provides  for the
Distributor  to  be  compensated  at a  flat  rate,  whether  the  Distributor's
distribution  expenses  are more or less than the amounts paid by the Fund under
the plan during the period for which the fee is paid. The types of services that
recipients  provide  are  similar  to the  services  provided  under the Class A
service plan, described above.

      Each plan permits the  Distributor  to retain both the  asset-based  sales
charges and the service fees or to pay recipients the service fee on a quarterly
basis, without payment in advance. However, the Distributor currently intends to
pay the service fee to recipients in advance for the first year after 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 Class B, Class C and Class N
shares are redeemed during the first year after their purchase, the recipient of
the service fees on those shares will be  obligated to repay the  Distributor  a
pro rata portion of the advance payment of the service fee made on those shares.

      The Distributor  retains the asset-based sales charge on Class B and Class
N shares. The Distributor retains the asset-based sales charge on Class C shares
during the first year the shares are outstanding.  It pays the asset-based sales
charge as an ongoing  concession to the recipient on Class C shares  outstanding
for a year or more. If a dealer has a special  agreement  with the  Distributor,
the Distributor will pay the Class B, Class C and/or Class N service fee and the
asset-based  sales  charge to the dealer  quarterly  in lieu of paying the sales
concessions and service fee in advance at the time of purchase.

         The  asset-based  sales  charges on Class B, Class C and Class N shares
allow  investors to buy shares  without a front-end  sales charge while allowing
the Distributor to compensate  dealers that sell those shares. The Fund pays the
asset-based  sales  charges to the  Distributor  for its  services  rendered  in
distributing  each class of shares.  The payments are made to the Distributor in
recognition that the Distributor:
o     pays sales concessions to authorized brokers and dealers at the time of
         sale and pays service fees as described above,
o        may  finance  payment of sales  concessions  and/or the  advance of the
         service fee payment to recipients  under the plans, or may provide such
         financing from its own resources or from the resources of an affiliate,
o     employs personnel to support distribution of Class B, Class C and Class
         N shares, 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.


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




<PAGE>


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

     Distribution Fees Paid to the Distributor for the Year Ended 10/31/00

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

Class B Plan         $               $ 1              $                %

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

Class C Plan         $               $ 2              $                %

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

1.    Includes  $___________ paid to an affiliate of the Distributor's  parent
    company.
2.    Includes  $______  paid  to an  affiliate  of the  Distributor's  parent
    company.

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



Performance of the Fund


Explanation  of  Performance  Terminology.  The Fund uses a variety  of terms to
illustrate its investment  performance.  Those terms include  "cumulative  total
return,"  "average  annual total  return,"  "average  annual total return at net
asset value" and "total return at net asset value." An  explanation of how total
returns are  calculated  is set forth  below.  The charts  below show the Fund's
performance as of the Fund's most recent fiscal year end. You can obtain current
performance  information by calling the Fund's Transfer Agent at  1.800.525.7048
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:
o Total returns  measure the  performance of a hypothetical  account in the Fund
over  various  periods  and do not show the  performance  of each  shareholder's
account. Your account's performance will vary from the model performance data if
your  dividends  are  received  in cash,  or you buy or sell  shares  during the
period,  or you bought your shares at a different time and price than the shares
used in the model.
o The Fund's performance returns do not reflect the effect of taxes on dividends
and capital gains  distributions.  o An investment in the Fund is not insured by
the FDIC or any other government agency.
o The principal value of the Fund's shares, and total returns are not guaranteed
and normally will fluctuate on a daily basis.

o When an investor's  shares are  redeemed,  they may be worth more or less than
their  original  cost.  o Total  returns  for any given  past  period  represent
historical performance information and are not, and should not be considered,  a
prediction of future returns.

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

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


         In calculating  total returns for Class A shares,  the current  maximum
sales charge of 5.75% (as a percentage  of the offering  price) is deducted from
the initial  investment  ("P") (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 1-year and
life-of-class periods, as applicable.


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

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


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

o Total Returns at Net Asset Value.  From time to time the Fund may also quote a
cumulative  or an average  annual  total  return "at net asset  value"  (without
deducting sales charges) for Class A, Class B, Class C and 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 10/31/00

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

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

Class B     %2       %2       %        %        %2       %2      N/A     N/A

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

Class C     %3       %3       %        %        %3       %3      N/A     N/A

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

* Class N shares were not offered for sale during the Fund's  fiscal year ending
10/31/00.


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  Analytical  Services,  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 categories  relating to
investment styles.  The Lipper  performance  rankings are based on total returns
that include the reinvestment of capital gain distributions and income dividends
but do not take sales charges or taxes into consideration. Lipper also publishes
"peer-group"  indices of the  performance of all mutual funds in a category that
it  monitors  and  averages  of the  performance  of  the  funds  in  particular
categories.

o  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 rates and ranks
mutual funds in broad investment categories: domestic stock funds, international
stock funds,  taxable bond funds and municipal bond funds.  The Fund is included
in the domestic stock funds category.


      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  ratings   reflecting
performance  relative to the other funds in the 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
rating is the Fund's (or class's)  overall  rating,  which is the Fund's  3-year
rating or its combined 3- and 5-year ranking (weighted 60%/40% respectively), or
its combined 3-, 5-, and 10-year rating  (weighted  40%/30%/30%,  respectively),
depending on the inception  date of the Fund (or class).  Ratings 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 rating. Those 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.


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

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,  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 and  Class B shares  of the  Fund  and  other
   Oppenheimer  funds to reduce the sales  charge  rate that  applies to current
   purchases of Class A shares, and
o           Class A and  Class B shares  of  Oppenheimer  funds  you  previously
            purchased subject to an initial or contingent  deferred sales charge
            to reduce the sales  charge  rate for current  purchases  of Class A
            shares,  provided that you still hold your  investment in one of the
            Oppenheimer funds.

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

|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   Main   Street   California
                                          Municipal Fund
                                        Oppenheimer  Main Street Growth & Income
Oppenheimer California Municipal Fund     Fund

Oppenheimer Capital Appreciation Fund   Oppenheimer Main Street Opportunity Fund
Oppenheimer Capital Preservation Fund     Oppenheimer Main Street Small Cap Fund
Oppenheimer Capital Income Fund           Oppenheimer MidCap Fund
Oppenheimer Champion Income Fund          Oppenheimer Multiple Strategies Fund
Oppenheimer Convertible Securities Fund   Oppenheimer Municipal Bond Fund
Oppenheimer Developing Markets Fund       Oppenheimer New York Municipal Fund
Oppenheimer Disciplined Allocation Fund   Oppenheimer New Jersey Municipal Fund
Oppenheimer Disciplined Value Fund       Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Discovery Fund                Oppenheimer Quest Balanced Value Fund
                                        Oppenheimer  Quest  Capital  Value Fund,
Oppenheimer Emerging Growth Fund          Inc.
                                        Oppenheimer  Quest  Global  Value  Fund,
Oppenheimer Emerging Technologies Fund    Inc.
Oppenheimer Enterprise Fund
Oppenheimer Quest Opportunity Value Fund
Oppenheimer Europe Fund
Oppenheimer Quest Small Cap Fund
Oppenheimer  Florida Municipal Fund
Oppenheimer  Quest Value Fund, Inc.
Oppenheimer  Global Fund
Oppenheimer  Real Asset Fund
Oppenheimer  Global Growth & Income Fund
Oppenheimer  Senior Floating Rate Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer  Strategic Income Fund
Oppenheimer  Growth Fund
Oppenheimer  Total Return Fund, Inc.
Oppenheimer High Yield Fund
Oppenheimer Trinity Core Fund
Oppenheimer Intermediate Municipal Fund
Oppenheimer  Trinity  Growth  Fund
Oppenheimer  International  Bond  Fund
Oppenheimer Trinity Value Fund
Oppenheimer International Growth Fund
Oppenheimer U.S.  Government Trust
Oppenheimer  International Small Company Fund
Oppenheimer World  Bond  Fund
Oppenheimer  Large  Cap  Growth  Fund
Limited-Term  New York Municipal  Fund
Oppenheimer   Limited-Term   Government  Fund
Rochester  Fund Municipals


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.

      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.

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.

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

         1. Out of the initial  purchase (or subsequent  purchases if necessary)
made  pursuant  to a Letter,  shares of the Fund  equal in value up to 5% of the
intended  purchase amount specified in the Letter shall be held in escrow by the
Transfer Agent.  For example,  if the intended  purchase amount is $50,000,  the
escrow  shall be shares  valued in the amount of $2,500  (computed at the public
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  (the  minimum  is $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 are available
only if your bank is an ACH member.  Asset  Builder Plans may not be used to buy
shares for  OppenheimerFunds  employer-sponsored  qualified retirement accounts.
Asset Builder Plans also enable shareholders of Oppenheimer Cash Reserves to use
their fund account to make monthly  automatic  purchases of shares of up to four
other Oppenheimer funds.

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

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

Retirement  Plans.  Certain types of  Retirement  Plans are entitled to purchase
shares of the Fund without  sales charge or at reduced  sales charge  rates,  as
described in Appendix C to this  Statement of  Additional  Information.  Certain
special sales charge arrangements described in that Appendix apply to retirement
plans whose records are maintained on a daily  valuation  basis by Merrill Lynch
Pierce Fenner & Smith, Inc. 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 Class B,
Class C and Class N shares  and the  dividends  payable  on Class B, Class C and
Class N shares  will be reduced by  incremental  expenses  borne  solely by that
class.  Those expenses  include the asset-based  sales charges to which Class B,
Class C and Class N 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 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 classes, without the imposition
of a sales charge or fee, such exchange could constitute a taxable event for the
shareholder,  and absent  such  exchange,  Class B shares  might  continue to be
subject to the asset-based sales charge for longer than six years.

      |X|  Allocation of Expenses.  The Fund pays expenses  related to its daily
operations, such as custodian fees, Directors' fees, transfer agency fees, legal
fees and auditing  costs.  Those  expenses are paid out of the Fund's assets and
are not paid directly by  shareholders.  However,  those expenses reduce the net
asset  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
Directors,  custodian expenses, share issuance costs,  organization and start-up
costs, interest,  taxes and brokerage commissions,  and non-recurring  expenses,
such as litigation costs.

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

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 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.  The Fund's net asset
values will not be calculated on those days and the values of some of the Fund's
portfolio  securities may change  significantly on those 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
Manager  determines  that the event is likely to effect a material change in the
value of the security. The Manager may make that determination, under procedures
established by the Board.

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

      In the case of U.S.  government  securities,  mortgage-backed  securities,
corporate bonds and foreign government securities, when last sale information is
not generally  available,  the Manager may use pricing services  approved by the
Board of  Directors.  The pricing  service may use "matrix"  comparisons  to the
prices for comparable  instruments on the basis of quality,  yield and maturity.
Other  special  factors may be involved  (such as the  tax-exempt  status of the
interest paid by municipal securities). The Manager will monitor the accuracy of
the pricing  services.  That  monitoring may include  comparing  prices used for
portfolio valuation to actual sales prices of selected securities.
      The closing prices in the London foreign  exchange  market on a particular
business  day that are  provided  to the  Manager  by a bank,  dealer or pricing
service that the Manager has determined to be reliable are used to value foreign
currency, including forward contracts, and to convert to U.S. dollars securities
that are denominated in foreign currency.

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

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


How to Sell Shares

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:
o     Class A shares purchased subject to an initial sales charge or Class A
         shares on which a contingent deferred sales charge was paid, or o Class
B shares that were subject to the Class B contingent deferred
         sales charge when redeemed.


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


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

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

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

Involuntary  Redemptions.  The Fund's Board of Directors  has the right to cause
the  involuntary  redemption  of the shares  held in any  account if the account
holds fewer than 100 shares.  If the Board exercises this right, it may also fix
the requirements for any notice to be given to the shareholders in question (not
less  than 30  days).  The  Board may  alternatively  set  requirements  for the
shareholder  to increase the  investment,  or set other terms and  conditions so
that the shares would not be involuntarily redeemed.

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

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


Sending  Redemption  Proceeds 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
to this Statement of Additional Information.


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

      |X|  Automatic  Exchange  Plans.  Shareholders  can authorize the Transfer
Agent to exchange a  pre-determined  amount of shares of the Fund for shares (of
the  same  class)  of  other  Oppenheimer  funds  automatically  on  a  monthly,
quarterly,  semi-annual  or annual basis under an Automatic  Exchange  Plan. The
minimum  amount  that  may be  exchanged  to each  other  fund  account  is $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 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     Oppenheimer  Main Street  California  Municipal Fund currently offers only
      Class A and Class B 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 A shares of Senior  Floating Rate Fund are not available by exchange
      of Class A shares  of other  Oppenheimer  funds.  Class A shares of Senior
      Floating Rate Fund that are exchanged for shares of the other  Oppenheimer
      funds may not be exchanged back for Class A shares of Senior Floating Rate
      Fund.
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.
   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.


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


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

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

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

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

      In connection with any exchange  request,  the number of shares  exchanged
may be less than the number  requested if the  exchange or the number  requested
would include  shares  subject to a restriction  cited in the Prospectus or this
Statement of Additional Information,  or would include shares covered by a share
certificate  that is not  tendered  with the request.  In those cases,  only the
shares available for exchange without restriction will be exchanged.
      The different  Oppenheimer  funds  available  for exchange have  different
investment objectives,  policies and risks. A shareholder should assure that the
fund selected is  appropriate  for his or her  investment and should be aware of
the tax  consequences  of an  exchange.  For  federal  income tax  purposes,  an
exchange  transaction  is  treated as a  redemption  of shares of one fund and a
purchase of shares of another.  "Reinvestment  Privilege," above, discusses some
of the tax  consequences of  reinvestment of redemption  proceeds in such cases.
The  Fund,  the  Distributor,  and the  Transfer  Agent are  unable  to  provide
investment,  tax or legal advice to a shareholder in connection with an exchange
request or any other investment transaction.


Dividends, Capital Gains and Taxes


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


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


Tax Status of the Fund's Dividends and Distributions.  The federal tax treatment
of the Fund's dividends and capital gains  distributions is briefly  highlighted
in the Prospectus.


          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.

      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.  However, the
Board of Directors and the Manager might  determine in a particular year that it
would be in the best  interests  of  shareholders  for the Fund not to make such
distributions  at  the  required  levels  and  to  pay  the  excise  tax  on the
undistributed  amounts.  That would reduce the amount of income or capital gains
available for distribution to shareholders.

      The Fund intends to qualify as a "regulated  investment company" under the
Internal  Revenue Code  (although  it reserves  the right not to qualify).  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 the Fund's
shares are held in a retirement  account or the shareholder is otherwise  exempt
from tax). If the Fund qualifies as a "regulated  investment  company" under the
Internal Revenue Code, it will not be liable for federal income taxes on amounts
paid by it as dividends  and  distributions.  The Fund  qualified as a regulated
investment company in its last fiscal year. The Internal Revenue Code contains a
number of complex tests relating to qualification  which the Fund might not meet
in any particular year. If it did not so qualify,  the Fund would be treated for
tax  purposes  as an  ordinary  corporation  and  receive no tax  deduction  for
payments made to shareholders.

      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.

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


Additional Information About the Fund

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

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


The Custodian.  The Bank of New York is the custodian of the Fund's assets.  The
custodian's  responsibilities  include  safeguarding  and controlling the Fund's
portfolio  securities  and handling the delivery of such  securities to and from
the Fund.  It 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 auditors for certain other funds advised by the
Manager and its affiliates.



<PAGE>


                                   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.B-1

                                   Appendix B


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

                            Industry Classifications
------------------------------------------------------------------------------

Aerospace/Defense                       Food and Drug Retailers
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




<PAGE>



                                      C-12

                                   Appendix C

        OppenheimerFunds Special Sales Charge Arrangements and Waivers

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

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

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

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

--------------
1.    Certain waivers also apply to Class M shares of Oppenheimer Convertible
   Securities Fund.
2. In the case of Oppenheimer Senior Floating Rate Fund, a  continuously-offered
   closed-end  fund,  references to contingent  deferred  sales charges mean the
   Fund's  Early  Withdrawal   Charges  and  references  to  "redemptions"  mean
   "repurchases" of shares.
3. An "employee  benefit plan" means any plan or arrangement,  whether or not it
   is "qualified" under the Internal Revenue Code, under which Class A shares of
   an  Oppenheimer  fund  or  funds  are  purchased  by  a  fiduciary  or  other
   administrator  for the account of participants  who are employees of a single
   employer or of affiliated employers.  These may include, for example, medical
   savings accounts, payroll deduction plans or similar plans. The fund accounts
   must be registered in the name of the fiduciary or  administrator  purchasing
   the shares for the benefit of participants in the plan.
4. The term  "Group  Retirement  Plan"  means  any  qualified  or  non-qualified
   retirement  plan  for  employees  of a  corporation  or sole  proprietorship,
   members and  employees of a partnership  or  association  or other  organized
   group of persons  (the  members of which may include  other  groups),  if the
   group has made special  arrangements  with the Distributor and all members of
   the group  participating  in (or who are eligible to participate in) the plan
   purchase  Class A shares  of an  Oppenheimer  fund or funds  through a single
   investment dealer,  broker or other financial  institution  designated by the
   group.  Such plans  include 457 plans,  SEP-IRAs,  SARSEPs,  SIMPLE plans and
   403(b) plans other than plans for public  school  employees.  The term "Group
   Retirement Plan" also includes  qualified  retirement plans and non-qualified
   deferred  compensation  plans  and IRAs  that  purchase  Class A shares of an
   Oppenheimer fund or funds through a single investment dealer, broker or other
   financial institution that has made special arrangements with the Distributor
   enabling  those  plans to  purchase  Class A shares  at net  asset  value but
   subject to the Class A contingent deferred sales charge.
 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  commission  described  in the  Prospectus  under  "Class  A
Contingent Deferred Sales Charge."4 This waiver provision applies to:

4 However,  that  commission will not be paid on purchases of shares in amounts
of $1 million or more (including any right of accumulation) by a Retirement Plan
that pays for the purchase with the redemption proceeds of Class C shares of one
or more Oppenheimer funds held by the Plan for more than one year.

|_| Purchases of Class A shares aggregating $1 million or more. |_| Purchases by
a Retirement Plan (other than an IRA or 403(b)(7)
         custodial plan) that:
(1)   buys shares costing $500,000 or more, or
(2)   has, at the time of purchase, 100 or more eligible employees or total
            plan assets of $500,000 or more, or
(3)         certifies  to the  Distributor  that it projects to have annual plan
            purchases of $200,000 or more.
|_|      Purchases  by  an  OppenheimerFunds-sponsored   Rollover  IRA,  if  the
         purchases are made:

(1)         through a broker, dealer, bank or registered investment advisor 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 Asset
            Management, L.P. ("MLAM"), 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 MLAM (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 May 1,
         1999.


<PAGE>


          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  commissions  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 advisors 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 advisor provides administration services.

|-|

<PAGE>


      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  commissions  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)

<PAGE>


         To return  contributions  made due to a mistake of fact.

(4) Hardship withdrawals, as defined in the plan.5

5 This provision does not apply to IRAs.

(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.6

6 This provision does not apply to 403(b)(7) custodial plans if the
participant is less than age 55, nor to IRAs.

         (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 and Class C Sales Charges of Oppenheimer Funds

The Class B and Class C 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 and Class C  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.
|-|

<PAGE>


      Distributions  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.7

7 This provision does not apply to IRAs.

(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.8

8 This  provision does not apply to loans from 403(b)(7)  custodial  plans.

(9) On account of the participant's separation from service.9

9 This provision does not apply to 403(b)(7) custodial plans if the participant
is less than age 55, nor to IRAs.

(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,  but  excluding  distributions  made  because  of the
                Plan's  elimination as investment  options under the Plan of all
                of the Oppenheimer funds that had been offered.
(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.
         |_|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.



<PAGE>



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:



<PAGE>


 Oppenheimer Quest Value Fund, Inc.     Oppenheimer   Quest   Small   Cap
                                        Value Fund
 Oppenheimer Quest Balanced Value Fund  Oppenheimer  Quest  Global  Value
                                        Fund
 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  Quest for Value New York Tax-Exempt
 Fund                                    Fund
 Quest for Value Investment Quality      Quest for Value National Tax-Exempt
 Income Fund                             Fund
 Quest for Value Global Income Fund      Quest for Value California
                                         Tax-Exempt Fund

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

A.  Reductions or Waivers of Class A Sales Charges.

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

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

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



<PAGE>


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

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

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

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

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

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

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

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

<PAGE>


      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):
o     Oppenheimer U. S. Government Trust,
o     Oppenheimer Bond Fund,
o     Oppenheimer Disciplined Value Fund and
o     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 advisor to the Former Connecticut Mutual Funds:


  Connecticut Mutual Liquid Account        Connecticut   Mutual   Total   Return
                                            Account
  Connecticut Mutual Government Securities CMIA  LifeSpan  Capital  Appreciation
Account                                     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.


<PAGE>


      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 commission 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 Equity 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.


<PAGE>




------------------------------------------------------------------------------
Oppenheimer Disciplined Allocation Fund
------------------------------------------------------------------------------

Internet Web Site:
      www.oppenheimerfunds.com


Investment Advisor
      OppenheimerFunds, Inc.
      Two World Trade Center
      New York, New York 10048-0203


Distributor
      OppenheimerFunds Distributor, Inc.
      Two World Trade Center
      New York, New York 10048-0203

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

      1.800.525.7048


Custodian Bank
      The Bank of New York
      One Wall Street
      New York, New York 10015


Independent Auditors
      KPMG LLP

      707 Seventeenth Street
      Denver, Colorado 80202

Legal Counsel
      Mayer, Brown & Platt
      1675 Broadway
      New York, New York 10019




1234


PX205.0201





<PAGE>


Oppenheimer
                             Disciplined Value Fund



Prospectus dated February 28, 2001




















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







Oppenheimer  Disciplined  Value Fund is a mutual fund. It seeks long-term growth
of capital by investing mainly in common stocks with low  price-earnings  ratios
and better-than-anticipated earnings.

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









                             (logo) OppenheimerFunds
The Right Way to Invest



<PAGE>


Contents

                                 About the Fund

            The Fund's Investment Objective and Strategies

            Main Risks of Investing in the Fund

            The Fund's Past Performance

            Fees and Expenses of the Fund

            About the Fund's Investments

            How the Fund is Managed


                               About Your Account


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


            Special Investor Services
            AccountLink
            PhoneLink
            OppenheimerFunds Internet Web Site
            Retirement Plans

            How to Sell Shares

            By Mail
            By Telephone
            By Wire


            How to Exchange Shares

            Shareholder Account Rules and Policies

            Dividends, Capital Gains and Taxes

                              Financial Highlights





<PAGE>


ABOUT THE FUND

The Fund's Investment Objective and Strategies

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

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


HOW DOES  THE  PORTFOLIO  MANAGER  DECIDE  WHAT  SECURITIES  TO BUY OR SELL?  In
selecting  securities  for  purchase or sale by the Fund,  the Fund's  portfolio
manager  uses  a   disciplined   value   style.   While  this  process  and  the
inter-relationship   of  the   factors   used  may  change  over  time  and  its
implementation  may vary in particular  cases, the investment  selection process
currently includes the strategies described below:
o     The  portfolio  manager uses a  valued-oriented  investment  discipline to
      identify stocks considered to be undervalued or out of favor in the market
      that the manager believes to have potential for improved performance.  The
      manager utilizes  fundamental  research to seek companies whose securities
      the manager  believes  to be both  undervalued  and to possess  attractive
      business  prospects.  Some of the factors the  manager may  consider  when
      assessing business prospects, include:
o Future supply/demand  conditions for key products, o Product cycles, o Quality
of management,  o Competitive  positioning,  and o  Reinvestment  plans for cash
generated.
      Not all factors are relevant for every individual security.
o     If the P/E ratio of a stock held by the Fund moves  significantly  above
      the P/E ratio of the broad market benchmark the portfolio manager uses, or
      if there is evidence an issuer's business prospects are deteriorating (for
      example,  the issuer  reports a  material  earnings  disappointment),  the
      portfolio manager will consider selling the stock.


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

Main Risks of Investing in the Fund

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

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

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

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

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

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

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

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





The Fund's Past Performance

The bar chart and table below show one measure of the risks of  investing in the
Fund, by showing changes in the Fund's performance (for its Class A shares) from
year to year for the last ten  calendar  years and by  showing  how the  average
annual  total  returns  of the  Fund's  Class A  shares  compared  to those of a
broad-based  market  index.  The  Fund's  past  investment  performance  is  not
necessarily an indication of how the Fund will perform in the future.

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

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

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

During the period shown in the bar chart,  the highest  return (not  annualized)
for a calendar quarter was _____% (_Q'__) and the lowest return (not annualized)
for a calendar quarter was _____% (_Q'__).


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

Average     Annual     Total                         5 Years           10 Years
Returns   for  the   periods                       (or life of       (or life of
ended December 31, 2000          1 Year        class, if less)   class, if less)

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

Class  A  Shares  (inception         %                  %                 %
9/16/85)

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

S & P 500 Index                      %                  %                 %1

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

 Class B Shares (inception           %                  %                N/A
         10/02/95)

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

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

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

 Class Y Shares (inception           %                  %                N/A
         12/16/96)

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

1. From 12/31/90.

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


The Fund's average annual total returns include the applicable sales charge: for
Class A, the current  maximum  initial  sales charge of 5.75%;  for Class B, the
contingent deferred sales charges of 5% (1-year) and 2% (life of class); and for
Class C, the 1% contingent deferred sales charge for the 1-year period. There is
no sales charge for Class Y shares.  The Fund's returns  measure the performance
of a  hypothetical  account and assume  that all  dividends  and  capital  gains
distributions  have been reinvested in additional shares. The performance of the
Fund's Class A shares is compared to the S & P 500 Index,  an unmanaged index of
common stocks.  The index  performance  reflects the  reinvestment of income but
does not  reflect  transaction  costs.  The  Fund's  investments  vary  from the
securities  in the index.  Class N shares were not publicly  offered  during the
period shown.



Fees and Expenses of the Fund


The following  tables are provided to help you  understand the fees and expenses
you may pay if you buy and hold  shares of the Fund.  The Fund pays a variety of
expenses directly for management of its assets, administration,  distribution of
its shares and other  services.  Those expenses are  subtracted  from the Fund's
assets to  calculate  the Fund's net asset  values per share.  All  shareholders
therefore pay those  expenses  indirectly.  Shareholders  pay other  transaction
expenses  directly,  such as sales  charges.  The numbers below are based on the
Fund's expenses  during its fiscal year ended October 31, 2000,  except that the
numbers  for  Class N shares,  which is a new  class,  are  based on the  Fund's
anticipated expenses for Class N shares during the upcoming year.


Shareholder Fees (charges paid directly from your investment):

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

                            Class A    Class B    Class C     Class N   Class Y
                             Shares     Shares     Shares     Shares    Shares

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

Maximum Sales Charge         5.75%       None       None       None       None
(Load) on purchases
-------------------------
(as % of offering price)

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

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

--------------------------------------------------------------------------------
5. A contingent deferred sales charge may apply to redemptions of investments of
   $1 million or more ($500,000 for retirement plan accounts) of Class A shares.
   See "How to Buy Shares" for details.
6. Applies to redemptions in first year after purchase.  The contingent deferred
   sales charge declines to 1% in the sixth year and is eliminated after that.

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


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

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

                             Class A    Class B    Class C    Class N   Class Y
                             Shares      Shares     Shares     Shares    Shares

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

Management Fees               0.53%      0.53%      0.53%        ______%   0.53%

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

Distribution       and/or     0.25%      1.00%      1.00%          0.25%    None
Service (12b-1) Fees

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

Other Expenses                0.24%      0.24%      0.24%        ______%   0.23%

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

Total  Annual   Operating     1.02%      1.77%      1.77%        ______%   0.76%
Expenses

--------------------------------------------------------------------------------
Expenses may vary in future years. "Other expenses" include transfer agent fees,
custodial expenses, and accounting and legal expenses the Fund pays.

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

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

--------------------------------------------------------------------------------
If shares are redeemed:     1 Year        3 Years       5 Years     10 Years1
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

Class A Shares                       $             $             $            $

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

Class B Shares                       $             $             $            $

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

Class C Shares                       $             $             $            $

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

Class N Shares                       $             $             $            $

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

Class Y Shares                       $             $             $            $

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

--------------------------------------------------------------------------------
If shares are not           1 Year        3 Years       5 Years     10 Years1
redeemed:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

Class A Shares                       $             $             $            $

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

Class B Shares                       $             $             $            $

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

Class C Shares                       $             $             $            $

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

Class N Shares                       $             $             $            $

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

Class Y Shares                       $             $             $            $

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

In the first example,  expenses include the initial sales charge for Class A and
the applicable Class B, Class C or Class N contingent deferred sales charges. In
the second example,  the Class A expenses include the sales charge, but Class B,
Class C or  Class N  expenses  do not  include  the  contingent  deferred  sales
charges.
1 Class B expenses for years 7 through 10 are based on Class A expenses, because
Class B shares automatically convert to Class A shares after 6 years.


About the Fund's Investments

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

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

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

Stock Investments.  The Fund  invests  primarily in a  diversified  portfolio of
      common  stocks  of  issuers  that  may  be  of  small,   medium  or  large
      capitalization,  to seek  capital  growth.  The Fund can  invest  in other
      equity securities,  including preferred stocks,  rights and warrants,  and
      securities  convertible  into common  stock.  The Fund can buy  securities
      issued by  domestic  or foreign  companies.  However,  the Fund  currently
      emphasizes   investments  in  stocks  of  U.S.   issuers.   Although  many
      convertible securities are debt securities,  the Manager considers some of
      them to be "equity  equivalents"  because of their conversion  feature. In
      those cases, their rating has less impact on the investment  decision than
      in the  case of  other  debt  securities.  The  Fund  can buy  convertible
      securities  rated as low as "B" by  Moody's  Investor  Services,  Inc.  or
      Standard & Poor's  Rating  Service or having  comparable  ratings by other
      national  rating  organizations  (or,  if  they  are  unrated,   having  a
      comparable  rating  assigned  by the  Manager).  Those  ratings  are below
      "investment  grade" and the  securities  are  subject  to greater  risk of
      default  by the issuer  than  investment-grade  securities.  Additionally,
      these  investments  are subject to the Fund's policy of not investing more
      than 10% of its net assets in debt securities.

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

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

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

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

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

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

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

Foreign Securities.  The Fund can buy  securities of companies or governments in
      any country,  developed or  underdeveloped.  As a fundamental  policy, the
      Fund  cannot  invest  more  than  10%  of  its  total  assets  in  foreign
      securities.  As an exception to that restriction the Fund can invest up to
      25% of its total assets in foreign equity or debt securities that are:
o     issued,  assumed or guaranteed by foreign governments or their political
      subdivisions or instrumentalities,
o     assumed  or  guaranteed  by  domestic  issuers   (including   Eurodollar
      securities), or
o     issued,  assumed or  guaranteed  by foreign  issuers  that have a class of
      securities listed for trading on The New York Stock Exchange.

      While foreign securities offer special investment opportunities, there are
      also  special  risks,  such  as  foreign  taxation,  risks  of  delays  in
      settlements  of  securities  transactions,  and the effects of a change in
      value of a foreign currency against the U.S. dollar,  which will result in
      a  change  in the U.S.  dollar  value of  securities  denominated  in that
      foreign currency.

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

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

o     Hedging. The Fund can write covered calls on securities, futures and stock
      indices,  and can buy and sell  certain  kinds of  futures  contracts  and
      forward contracts.  The Fund is not required to use hedging instruments to
      seek  its  objective.  The  Fund  does  not use  hedging  instruments  for
      speculative purposes.

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

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

Temporary Defensive Investments. When market or economic conditions are unstable
      or  adverse,  the Fund can  invest up to 100% of its  assets in  defensive
      securities.   Generally,   they  would  be  short-term   U.S.   government
      securities,  high-grade  commercial  paper, bank obligations or repurchase
      agreements.   To  the  extent  the  Fund  invests   defensively  in  these
      securities, it might not achieve its investment objective.

Portfolio  Turnover.  The Fund may  engage  in  short-term  trading  to seek its
      objective.  Portfolio  turnover  increases the Fund's brokerage costs (and
      reduces its performance). Additionally, if the Fund realizes capital gains
      when it sells its portfolio investments, it must generally pay those gains
      out to shareholders, increasing their taxable distributions. The Financial
      Highlights  table at the end of this Prospectus shows the Fund's portfolio
      turnover rates during recent fiscal years.


How the Fund Is Managed

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


      The Manager has been as an investment  advisor  since  January  1960.  The
Manager (including  subsidiaries) managed more than $125 billion in assets as of
December 31, 2000,  including other Oppenheimer  funds, with more than 5 million
shareholder  accounts.  The Manager is located at Two World Trade  Center,  34th
Floor, New York, New York 10048-0203.

Portfolio Managers. The Fund is managed by Christopher Leavy. Mr. Leavy
      is a Senior Vice President of the Manager, Vice President of the
      Fund and serves as an officer and portfolio manager of other
      Oppenheimer funds.

      Prior to joining the Manager in September 2000, he was a portfolio manager
      of Morgan Stanley Dean Witter  Investment  Management (from 1997) prior to
      which he was a  portfolio  manager  and equity  analyst  of Crestar  Asset
      Management (from 1995).

Advisory Fees.  Under  the  Investment  Advisory  Agreement,  the Fund  pays the
      Manager an  advisory  fee at an annual rate that  declines  on  additional
      assets as the Fund  grows:  0.625% of the first  $300  million  of average
      annual net assets of the Fund, 0.500% of the next $100 million, and 0.450%
      of  average  annual  net  assets  in excess of $400  million.  The  Fund's
      management  fee for its last fiscal year ended October 31, 2000, was ____%
      of average annual net assets for each class of shares.


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


How to Buy Shares

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

BuyingShares  Through  Your  Dealer.  You can buy  shares  through  any  dealer,
      broker,  or  financial  institution  that has a sales  agreement  with the
      Distributor.  Your  dealer will place your order with the  Distributor  on
      your behalf.

BuyingShares Through the Distributor.  Complete an OppenheimerFunds  New Account
      Application  and  return  it with a  check  payable  to  "OppenheimerFunds
      Distributor,  Inc." Mail it to P.O. Box 5270,  Denver,  Colorado 80217. If
      you don't list a dealer on the  application,  the Distributor  will act as
      your agent in buying the shares.  However,  we recommend  that you discuss
      your investment with a financial  advisor before you make a purchase to be
      sure that the Fund is appropriate for you.
   o  Paying by Federal Funds Wire. Shares purchased through the Distributor may
      be paid for by Federal  Funds  wire.  The  minimum  investment  is $2,500.
      Before  sending  a  wire,  call  the  Distributor's   Wire  Department  at
      1.800.525.7048  to  notify  the  Distributor  of the wire  and to  receive
      further instructions.
   o  Buying Shares Through OppenheimerFunds  AccountLink. With AccountLink, you
      pay for  shares by  electronic  funds  transfers  from your bank  account.
      Shares are  purchased  for your  account by a transfer  of money from your
      bank account  through the Automated  Clearing House (ACH) system.  You can
      provide  those  instructions  automatically,  under an Asset Builder Plan,
      described  below,  or by  telephone  instructions  using  OppenheimerFunds
      PhoneLink,  also described below. Please refer to "AccountLink," below for
      more details.
   o  Buying Shares Through Asset Builder Plans.  You may purchase shares of the
      Fund (and up to four other  Oppenheimer  funds)  automatically  each month
      from your account at a bank or other financial  institution under an Asset
      Builder  Plan  with   AccountLink.   Details  are  in  the  Asset  Builder
      Application and the Statement of Additional Information.

How Much  Must  You  Invest?  You can buy Fund  shares  with a  minimum  initial
investment of $1,000.  You can make  additional  investments at any time with as
little as $25. There are reduced minimum  investments  under special  investment
plans.
   o  With Asset Builder  Plans,  403(b)  plans,  Automatic  Exchange  Plans and
      military allotment plans, you can make initial and subsequent  investments
      for as little as $25.  You can make  additional  purchases of at least $25
      through AccountLink.
   o  Under retirement plans, such as IRAs, pension and profit-sharing plans and
      401(k)  plans,  you can start your account with as little as $250. If your
      IRA is  started  as an  Asset  Builder  Plan,  the  $25  minimum  applies.
      Additional purchases may be for as little as $25.
   o  The minimum investment requirement does not apply to reinvesting dividends
      from the Fund or other  Oppenheimer  funds (a list of them  appears in the
      Statement of  Additional  Information,  or you can ask your dealer or call
      the Transfer  Agent),  or reinvesting  distributions  from unit investment
      trusts that have made arrangements with the Distributor.

At What Price Are Shares Sold? Shares are sold at their offering price, which is
the net asset value per share plus any initial  sales charge that  applies.  The
offering price that applies to a purchase order is based on the next calculation
of the net asset value per share that is made after the Distributor receives the
purchase order at its offices in Colorado,  or after any agent  appointed by the
Distributor receives the order and sends it to the Distributor.

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

      The net asset value per share is  determined  by dividing the value of the
      Fund's net assets  attributable to a class by the number of shares of that
      class that are outstanding. To determine net asset value, the Fund's Board
      of Directors has established procedures to value the Fund's securities, in
      general,  based on market value. The Board has adopted special  procedures
      for valuing  illiquid  securities and  obligations for which market values
      cannot be readily obtained.

The   Offering  Price.  To receive the offering  price for a particular  day, in
      most cases the Distributor or its designated agent must receive your order
      by the time of day The New York Stock  Exchange  closes  that day. If your
      order is  received  on a day when the  Exchange  is closed or after it has
      closed,  the order will receive the next offering price that is determined
      after your order is received.

BuyingThrough a Dealer.  If you buy shares  through a dealer,  your  dealer must
      receive the order by the close of The New York Stock Exchange and transmit
      it to the  Distributor  so that it is  received  before the  Distributor's
      close of  business  on a regular  business  day  (normally  5:00  P.M.) to
      receive that day's offering price.  Otherwise,  the order will receive the
      next offering price that is determined.


WHAT  CLASSES OF SHARES DOES THE FUND  OFFER?  The Fund  offers  investors  five
different  classes  of  shares.   The  different  classes  of  shares  represent
investments in the same portfolio of securities,  but the classes are subject to
different  expenses and will likely have  different  share prices.  When you buy
shares,  be sure to specify  the class of shares.  If you do not choose a class,
your investment will be made in Class A shares. Class A Shares. If you buy Class
A shares, you pay an initial sales charge

      (on  investments  up to $1 million  for regular  accounts or $500,000  for
      certain  retirement  plans).  The  amount of that sales  charge  will vary
      depending  on the amount you invest.  The sales charge rates are listed in
      "How Can You Buy Class A Shares?" below.
Class B Shares.  If you buy Class B shares,  you pay no sales charge at the time
      of purchase,  but you will pay an annual  asset-based sales charge. If you
      sell your shares within six years of buying them,  you will normally pay a
      contingent  deferred sales charge.  That contingent  deferred sales charge
      varies depending on how long you own your shares, as described in "How Can
      You Buy Class B Shares?" below.
Class C Shares.  If you buy Class C shares,  you pay no sales charge at the time
      of purchase,  but you will pay an annual  asset-based sales charge. If you
      sell your shares within 12 months of buying them,  you will normally pay a
      contingent  deferred  sales charge of 1%, as described in "How Can You Buy
      Class C Shares?" below.

Class N  Shares.  Class N shares  are  offered  only  through  retirement  plans
      (including IRAs and 403(b) plans) that purchase  $500,000 or more of Class
      N shares of one or more  Oppenheimer  funds, or through  retirement  plans
      (not including IRAs and 403(b) plans) that have assets of $500,000 or more
      or 100 or more eligible plan participants.  Non-retirement  plan investors
      cannot buy Class N shares directly.  If you buy Class N shares, you pay no
      sales  charge  at the  time  of  purchase,  but  you  will  pay an  annual
      asset-based  sales charge.  If you sell your shares  within  eighteen (18)
      months of the retirement plan's first purchase of Class N shares,  you may
      pay a contingent deferred sales charge of 1%, as described in "How Can You
      Buy Class N Shares?" below.

Class Y  Shares.  Class Y  shares  are  offered  only to  certain  institutional
      investors that have special agreements with the Distributor.


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

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

      cannot be predicted  with  certainty,  knowing how long you expect to hold
      your  investment  will assist you in selecting  the  appropriate  class of
      shares.  Because of the effect of class-based  expenses,  your choice will
      also depend on how much you plan to invest. For example, the reduced sales
      charges  available for larger  purchases of Class A shares may, over time,
      offset the effect of paying an initial  sales  charge on your  investment,
      compared to the effect over time of higher class-based  expenses on shares
      of Class B or Class C. For retirement plans that qualify to purchase Class
      N shares,  Class N shares will generally be more advantageous than Class C
      shares;  Class B shares are not available for purchase by such  retirement
      plans.


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

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


      And for  non-retirement  plan  investors who invest $1 million or more, in
      most cases Class A shares will be the most advantageous  choice, no matter
      how long you intend to hold your shares.  For that reason, the Distributor
      normally  will not accept  purchase  orders of $500,000 or more of Class B
      shares or $1 million or more of Class C shares from a single investor.


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


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

      Additionally,  the  dividends  payable  to  Class B,  Class C and  Class N
      shareholders  will be reduced by the  additional  expenses  borne by those
      classes that are not borne by Class A or Class Y shares, such as the Class
      B, Class C and Class N asset-based sales charge described below and in the
      Statement of Additional Information.  Share certificates are not available
      for Class B, Class C and Class N shares,  and if you are considering using
      your shares as collateral for a loan, that may be a factor to consider.

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


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

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


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


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

 Amount of Purchase       Front-End Sales  Front-End Sales   Concession As
                                           Charge As a
                            Charge As a Percentage of
                          Percentage of    Net               Percentage of
                          Offering Price   Amount Invested   Offering Price

 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Less than $25,000             5.75%             6.10%             4.75%
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 $25,000 or more but           5.50%             5.82%             4.75%
 less than $50,000
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 $50,000 or more but           4.75%             4.99%             4.00%
 less than $100,000
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 $100,000 or more but          3.75%             3.90%             3.00%
 less than $250,000
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 $250,000 or more but          2.50%             2.56%             2.00%
 less than $500,000
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 $500,000 or more but          2.00%             2.04%             1.60%
 less than $1 million
 ------------------------------------------------------------------------------


Class A Contingent  Deferred  Sales Charge.  There is no initial sales charge on
      purchases  of Class A shares of any one or more of the  Oppenheimer  funds
      aggregating  $1 million or more or for  certain  purchases  by  particular
      types of  retirement  plans  described  in Appendix C to the  Statement of
      Additional Information. The Distributor pays dealers of record concessions
      in an amount  equal to 1.0% of purchases of $1 million or more (other than
      purchases  by  those  retirement  accounts).  For  those  retirement  plan
      accounts,  the concession is 1.0% of the first $2.5 million, plus 0.50% of
      the next $2.5 million,  plus 0.25% of purchases over $5 million,  based on
      the  cumulative  purchases  during  the  prior 12 months  ending  with the
      current  purchase.  In either case,  the  concession  will be paid only on
      purchases that were not previously subject to a front-end sales charge and
      dealer  concession.10  That  concession  will not be paid on  purchases of
      shares  in  amounts  of  $1  million  or  more  (including  any  right  of
      accumulation)  by a retirement  plan that pays for the  purchase  with the
      redemption of Class C shares of one or more Oppenheimer  funds held by the
      plan for more than one year.

10No  concession  will be paid on sales of  Class A  shares  purchased  with the
redemption  proceeds of shares of another  mutual fund offered as an  investment
option in a  retirement  plan in which  Oppenheimer  funds are also  offered  as
investment  options under a special  arrangement  with the  Distributor,  if the
purchase  occurs more than 30 days after the  Oppenheimer  funds are added as an
investment option under that plan.


      If you redeem any of those  shares  within an  18-month  "holding  period"
      measured  from  the  end  of the  calendar  month  of  their  purchase,  a
      contingent  deferred sales charge (called the "Class A contingent deferred
      sales  charge") may be deducted from the redemption  proceeds.  That sales
      charge will be equal to 1.0% of the lesser of (1) the  aggregate net asset
      value of the redeemed shares at the time of redemption  (excluding  shares
      purchased by reinvestment of dividends or capital gain  distributions)  or
      (2) the  original  net asset  value of the  redeemed  shares.  The Class A
      contingent  deferred sales charge will not exceed the aggregate  amount of
      the concessions  the  Distributor  paid to your dealer on all purchases of
      Class A shares of all Oppenheimer  funds you made that were subject to the
      Class A contingent deferred sales charge.


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

HOW CAN you BUY CLASS B SHARES?  Class B shares are sold at net asset  value per
share without an initial sales charge.  However,  if Class B shares are redeemed
within 6 years of the end of the calendar month of their purchase,  a contingent
deferred sales charge will be deducted from the redemption proceeds. The Class B
contingent  deferred sales charge is paid to compensate the  Distributor for its
expenses of providing  distribution-related  services to the Fund in  connection
with the sale of Class B shares.

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



<PAGE>




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

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

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

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


WHO CAN BUY CLASS N SHARES?  Class N shares are offered only through  retirement
plans  that  purchase  $500,000  or  more  of  Class  N  shares  of one or  more
Oppenheimer  funds  or  that  have  assets  of  $500,000  or more or 100 or more
eligible  plan  participants.  Individual  investors  cannot  buy Class N shares
directly.
      A contingent deferred sales charge of 1.00% will be imposed if:
o     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
o     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.

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


Who Can Buy Class Y Shares? Class Y shares are sold at net asset value per share
without a sales charge  directly to  institutional  investors  that have special
agreements  with the Distributor  for this purpose.  They may include  insurance
companies,  registered  investment  companies and employee  benefit  plans.  For
example,  Massachusetts  Mutual Life  Insurance  Company,  an  affiliate  of the
Manager, may purchase Class Y shares of the Fund and other Oppenheimer funds (as
well as Class Y shares of funds  advised  by  MassMutual)  for asset  allocation
programs,  investment  companies or separate investment accounts it sponsors and
offers  to its  customers.  Individual  investors  cannot  buy  Class  Y  shares
directly.

      An  institutional  investor  that buys Class Y shares  for its  customers'
accounts  may impose  charges on those  accounts.  The  procedures  for  buying,
selling,  exchanging and  transferring the Fund's other classes of shares (other
than the time those orders must be received by the Distributor or Transfer Agent
at  their  Colorado  office)  and the  special  account  features  available  to
investors  buying those other  classes of shares do not apply to Class Y shares.
Instructions  for  purchasing,  redeeming,  exchanging or  transferring  Class Y
shares must be submitted by the institutional investor, not by its customers for
whose benefit the shares are held.

Distribution and Service (12b-1) Plans.

Service Plan for Class A Shares. The Fund has adopted a Service Plan for Class A
      shares.  It reimburses the Distributor for a portion of its costs incurred
      for services provided to accounts that hold Class A shares.  Reimbursement
      is made  quarterly at an annual rate of up to 0.25% of the average  annual
      net assets of Class A shares of the Fund. The  Distributor  currently uses
      all of those  fees to pay  dealers,  brokers,  banks and  other  financial
      institutions  quarterly for providing  personal service and maintenance of
      accounts of their customers that hold Class A shares.


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

      The asset-based sales charge and service fees increase Class B and Class C
      expenses  by up to 1.00% and  increase  Class N expenses by up to 0.50% of
      the net assets per year of the  respective  class.  Because these fees are
      paid out of the Fund's  assets on an ongoing  basis,  over time these fees
      will increase the cost of your investment and may cost you more than other
      types of sales charges.

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


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


      The Distributor currently pays a sales concession of 0.75% of the purchase
      price of Class C shares to dealers  from its own  resources at the time of
      sale.  Including  the advance of the service fee, the total amount paid by
      the  Distributor  to the  dealer  at the time of sale of Class C shares is
      therefore  1.00%  of  the  purchase  price.   The  Distributor   pays  the
      asset-based sales charge as an ongoing concession to the dealer on Class C
      shares that have been outstanding for a year or more.

      The Distributor currently pays a sales concession of 0.75% of the purchase
      price of Class N shares to dealers  from its own  resources at the time of
      sale.  Including  the advance of the service fee, the total amount paid by
      the  Distributor  to the  dealer  at the time of sale of Class N shares is
      therefore  1.00%  of the  purchase  price.  The  Distributor  retains  the
      asset-based sales charge on Class N shares.



Special Investor Services

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

      You may  purchase  shares by  telephone  only after your  account has been
established.  To purchase  shares in amounts up to $250,000  through a telephone
representative,  call the Distributor at  1.800.852.8457.  The purchase  payment
will be debited from your bank account.

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

PHONELINK.  PhoneLink is the OppenheimerFunds automated telephone system that
enables shareholders to perform a number of account transactions
automatically using a touch-tone phone. PhoneLink may be used on
already-established Fund accounts after you obtain a Personal Identification
Number (PIN), by calling the special PhoneLink number, 1.800.533.3310.
Purchasing Shares. You may purchase shares in amounts up to $100,000 by
      phone, by calling  1.800.533.3310.  You must have established  AccountLink
      privileges  to link  your  bank  account  with the  Fund to pay for  these
      purchases.
Exchanging  Shares.  With the  OppenheimerFunds  Exchange  Privilege,  described
      below,  you can  exchange  shares  automatically  by phone  from your Fund
      account to another  OppenheimerFunds  account you have already established
      by calling the special PhoneLink number.
Selling Shares. You can redeem shares by telephone  automatically by calling the
      PhoneLink  number  and the Fund will send the  proceeds  directly  to your
      AccountLink bank account.  Please refer to "How to Sell Shares," below for
      details.

CAN YOU SUBMIT  TRANSACTION  REQUESTS BY FAX? You may send  requests for certain
types of account transactions to the Transfer Agent by fax (telecopier).  Please
call 1.800.525.7048 for information about which transactions may be handled this
way.  Transaction  requests  submitted  by fax are subject to the same rules and
restrictions as written and telephone requests described in this Prospectus.


OPPENHEIMERFUNDS  INTERNET WEB SITE. You can obtain  information about the Fund,
as well as your account balance, on the  OppenheimerFunds  Internet web site, at
http://www.oppenheimerfunds.com.   Additionally,   shareholders  listed  in  the
account  registration  (and the dealer of record)  may request  certain  account
transactions  through a special  section of that web site.  To  perform  account
transactions,  you must first obtain a personal  identification  number (PIN) by
calling  the  Transfer  Agent  at  1.800.533.3310.  If you do not  want  to have
Internet  account  transaction  capability  for your  account,  please  call the
Transfer Agent at 1.800.525.7048.  At times, the web site may be inaccessible or
its transaction features may be unavailable.


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


REINVESTMENT  PRIVILEGE.  If you  redeem  some or all of your Class A or Class B
shares  of the  Fund,  you have up to 6 months  to  reinvest  all or part of the
redemption  proceeds  in Class A shares of the Fund or other  Oppenheimer  funds
without  paying a sales charge.  This  privilege  applies only to Class A shares
that you purchased  subject to an initial sales charge and to Class A or Class B
shares on which you paid a  contingent  deferred  sales charge when you redeemed
them.  This privilege does not apply to Class C, Class N or Class Y shares.  You
must be sure to ask the  Distributor  for this  privilege  when  you  send  your
payment.


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


How to Sell Shares


You can sell  (redeem)  some or all of your shares on any regular  business day.
Your shares will be sold at the next net asset value calculated after your order
is received in proper form (which means that it must comply with the  procedures
described  below) and is accepted by the Transfer Agent.  The Fund lets you sell
your shares by writing a letter,  by wire or by  telephone.  You can also set up
Automatic  Withdrawal  Plans to redeem  shares on a regular  basis.  If you have
questions  about any of these  procedures,  and  especially if you are redeeming
shares in a special  situation,  such as due to the death of the owner or from a
retirement   plan   account,   please  call  the  Transfer   Agent   first,   at
1.800.525.7048, for assistance.


Certain Requests Require a Signature Guarantee. To protect you and the Fund from
      fraud,  the  following  redemption  requests  must be in writing  and must
      include a signature guarantee (although there may be other situations that
      also require a signature guarantee):

   o You wish to redeem more than $100,000 and receive a check o The  redemption
   check is not payable to all shareholders listed on the

      account statement
   o  The redemption check is not sent to the address of record on your
      account statement
   o  Shares are being transferred to a Fund account with a different owner
      or name
   o  Shares are being redeemed by someone (such as an Executor)  other than the
      owners.

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

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

Sending Redemption Proceeds by Wire. While the Fund normally sends your money by
      check, you can arrange to have the proceeds of the shares you sell sent by
      Federal  Funds  wire  to a  bank  account  you  designate.  It  must  be a
      commercial bank that is a member of the Federal  Reserve wire system.  The
      minimum redemption you can have sent by wire is $2,500. There is a $10 fee
      for each wire.  To find out how to set up this  feature on your account or
      to arrange a wire, call the Transfer Agent at 1.800.852.8457.

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

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

HOW DO you SELL  SHARES BY  TELEPHONE?  You and your  dealer  representative  of
record may also sell your shares by telephone.  To receive the redemption  price
calculated on a particular  regular  business day, your call must be received by
the Transfer  Agent by the close of The New York Stock  Exchange that day, which
is  normally  4:00 P.M.,  but may be  earlier  on some days.  You may not redeem
shares  held in an  OppenheimerFunds  retirement  plan  account or under a share
certificate by telephone.
   o To redeem shares through a service representative, call 1.800.852.8457 o To
   redeem shares automatically on PhoneLink, call 1.800.533.3310
      Whichever  method you use, you may have a check sent to the address on the
account statement, or, if you have linked your Fund account to your bank account
on AccountLink, you may have the proceeds sent to that bank account.

Are There Limits on Amounts Redeemed by Telephone?
Telephone Redemptions Paid by Check. Up to $100,000 may be redeemed by
      telephone in any 7-day period.  The check must be payable to all owners of
      record  of the  shares  and  must be sent to the  address  on the  account
      statement.  This service is not  available  within 30 days of changing the
      address on an account.

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

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

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


how contingent deferred sales charges affect redemptions.  N contingent deferred
sales charge and redeem any of those shares during the applicable holding period
for the class of shares,  the contingent  deferred sales charge will be deducted
from the redemption proceeds, unless you are eligible for a waiver of that sales
charge  based  on the  categories  listed  in  Appendix  C to the  Statement  of
Additional Information and you advise the Transfer Agent of your eligibility for
the waiver when you place your redemption request.
      With respect to Class N shares, a 1% contingent deferred sales charge will
be imposed if:
   Theretirement  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,

o      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.


      To determine  whether a  contingent  deferred  sales  charge  applies to a
redemption, the Fund redeems shares in the following order:
   1. shares acquired by reinvestment of dividends and capital gains
      distributions,
   2. shares held for the holding period that applies to the class, and
   3. shares held the longest during the holding period.

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


How to Exchange Shares

Shares of the Fund may be exchanged for shares of certain  Oppenheimer  funds at
net asset value per share at the time of exchange,  without sales charge. Shares
of the Fund can be purchased by exchange of shares of other Oppenheimer funds on
the same basis. To exchange shares, you must meet several conditions:
   o  Shares of the fund  selected  for exchange  must be available  for sale in
      your state of residence.
   o The  prospectuses  of both funds must offer the exchange  privilege.  o You
   must hold the shares you buy when you establish your account for at
      least 7 days  before you can  exchange  them.  After the account is open 7
      days, you can exchange shares every regular business day.
   o  You must meet the minimum purchase  requirements for the fund whose shares
      you purchase by exchange.
   o  Before  exchanging  into a fund, you must obtain and read its  prospectus.
      Shares of a particular  class of the Fund may be exchanged only for shares
      of the same class in the other  Oppenheimer  funds.  For example,  you can
      exchange  Class A shares of this  Fund only for Class A shares of  another
      fund.   In  some  cases,   sales   charges  may  be  imposed  on  exchange
      transactions.  For tax purposes, exchanges of shares involve a sale of the
      shares of the fund you own and a purchase of the shares of the other fund,
      which  may  result  in a  capital  gain or loss.  Please  refer to "How to
      Exchange  Shares" in the  Statement  of  Additional  Information  for more
      details.

      You can find a list of Oppenheimer funds currently available for exchanges
      in the  Statement  of  Additional  Information  or obtain one by calling a
      service  representative at 1.800.525.7048.  That list can change from time
      to time.

HOW DO you SUBMIT EXCHANGE REQUESTS? Exchanges may be requested in writing or
by telephone:

Written Exchange  Requests.  Submit an  OppenheimerFunds  Exchange Request form,
      signed by all owners of the account.  Send it to the Transfer Agent at the
      address on the back cover.  Exchanges  of shares  held under  certificates
      cannot be processed  unless the Transfer Agent  receives the  certificates
      with the request.
Telephone Exchange  Requests.  Telephone exchange requests may be made either by
      calling a service representative at 1.800.852.8457,  or by using PhoneLink
      for automated exchanges by calling 1.800.533.3310. Telephone exchanges may
      be made only between  accounts that are  registered  with the same name(s)
      and  address.  Shares  held under  certificates  may not be  exchanged  by
      telephone.

ARE THERE LIMITATIONS ON EXCHANGES? There are certain exchange policies you
should be aware of:
   o  Shares are normally  redeemed from one fund and  purchased  from the other
      fund in the exchange transaction on the same regular business day on which
      the  Transfer  Agent  receives an exchange  request  that  conforms to the
      policies described above. It must be received by the close of The New York
      Stock Exchange that day, which is normally 4:00 P.M. but may be earlier on
      some days.  However,  either fund may delay the  purchase of shares of the
      fund you are exchanging into up to seven days if it determines it would be
      disadvantaged by a same-day exchange. For example, the receipt of multiple
      exchange  requests  from a "market  timer" might  require the Fund to sell
      securities at a disadvantageous time or price.
   o  Because excessive trading can hurt fund performance and harm shareholders,
      the Fund  reserves  the  right to  refuse  any  exchange  request  that it
      believes will  disadvantage  it, or to refuse multiple  exchange  requests
      submitted by a shareholder or dealer.
   o  The Fund may amend,  suspend or terminate  the  exchange  privilege at any
      time. The Fund will provide you notice whenever it is required to do so by
      applicable  law,  but it may  impose  changes  at any time  for  emergency
      purposes.
   o  If the Transfer Agent cannot  exchange all the shares you request  because
      of a restriction  cited above,  only the shares eligible for exchange will
      be exchanged.


Shareholder Account Rules and Policies

More information  about the Fund's policies and procedures for buying,  selling,
and exchanging shares is contained in the Statement of Additional Information.

The   offering  of  shares  may be  suspended  during  any  period  in which the
      determination  of net asset value is  suspended,  and the  offering may be
      suspended by the Board of  Directors at any time the Board  believes it is
      in the Fund's best interest to do so.
Telephone transaction privileges for purchases,  redemptions or exchanges may be
      modified,  suspended or  terminated by the Fund at any time. If an account
      has more than one owner,  the Fund and the Transfer  Agent may rely on the
      instructions of any one owner. Telephone privileges apply to each owner of
      the account and the dealer representative of record for the account unless
      the Transfer Agent receives cancellation instructions from an owner of the
      account.
The   Transfer Agent will record any telephone  calls to verify data  concerning
      transactions  and has adopted other  procedures to confirm that  telephone
      instructions   are   genuine,   by   requiring   callers  to  provide  tax
      identification  numbers and other  account  data or by using PINs,  and by
      confirming such  transactions in writing.  The Transfer Agent and the Fund
      will not be  liable  for  losses  or  expenses  arising  out of  telephone
      instructions reasonably believed to be genuine.
Redemption or transfer  requests  will not be honored  until the Transfer  Agent
      receives all required  documents  in proper form.  From time to time,  the
      Transfer Agent in its discretion may waive certain of the requirements for
      redemptions stated in this Prospectus.
Dealers that perform account  transactions for their clients by participating in
      NETWORKING  through  the  National  Securities  Clearing  Corporation  are
      responsible  for  obtaining  their  clients'  permission  to perform those
      transactions, and are responsible to their clients who are shareholders of
      the Fund if the dealer performs any transaction erroneously or improperly.
The   redemption price for shares will vary from day to day because the value of
      the securities in the Fund's portfolio  fluctuates.  The redemption price,
      which is the net asset  value per  share,  will  normally  differ for each
      class of shares.  The redemption  value of your shares may be more or less
      than their original cost.
Payment for redeemed shares ordinarily is made in cash. It is forwarded by check
      or  through  AccountLink  or by  Federal  Funds  wire (as  elected  by the
      shareholder)   within  seven  days  after  the  Transfer   Agent  receives
      redemption   instructions   in  proper  form.   However,   under   unusual
      circumstances  determined  by  the  Securities  and  Exchange  Commission,
      payment may be delayed or suspended.  For accounts  registered in the name
      of a  broker-dealer,  payment  will  normally be  forwarded  within  three
      business days after redemption.
The   Transfer  Agent may delay  forwarding a check or  processing a payment via
      AccountLink  for recently  purchased  shares,  but only until the purchase
      payment  has  cleared.  That delay may be as much as 10 days from the date
      the shares  were  purchased.  That  delay may be  avoided if you  purchase
      shares by Federal Funds wire or certified check, or arrange with your bank
      to provide  telephone or written assurance to the Transfer Agent that your
      purchase payment has cleared.
Involuntary redemptions of small accounts may be made by the Fund if the account
      has fewer than 100 shares.  In some cases  involuntary  redemptions may be
      made to repay the  Distributor  for losses from the  cancellation of share
      purchase orders.
Sharesmay be "redeemed in kind" under unusual  circumstances  (such as a lack of
      liquidity in the Fund's  portfolio to meet  redemptions).  This means that
      the  redemption  proceeds  will be paid with  liquid  securities  from the
      Fund's portfolio.
"Backup  withholding"  of  federal  income tax may be  applied  against  taxable
      dividends,  distributions and redemption proceeds (including exchanges) if
      you fail to furnish the Fund your correct,  certified  Social  Security or
      Employer  Identification Number when you sign your application,  or if you
      under-report your income to the Internal Revenue Service.

To    avoid sending  duplicate copies of materials to households,  the Fund will
      mail only one copy of each  prospectus,  annual and semi-annual  report to
      shareholders  having the same last name and address on the Fund's records.
      The  consolidation of these mailings,  called  householding,  benefits the
      Fund through reduced mailing expense.

      If you want to receive  multiple copies of these  materials,  you may call
      the  Transfer  Agent at  1.800.525.7048.  You may also notify the Transfer
      Agent in writing.  Individual  copies of prospectuses  and reports will be
      sent to you within 30 days after the Transfer  Agent receives your request
      to stop householding.


Dividends, Capital Gains and Taxes


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


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

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

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

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

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

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

Financial Highlights


The Financial  Highlights  Table is presented to help you  understand the Fund's
financial  performance for the past 5 fiscal years. Certain information reflects
financial  results  for a single  Fund  share.  The total  returns  in the table
represent the rate that an investor would have earned (or lost) on an investment
in the Fund (assuming  reinvestment  of all dividends and  distributions).  This
information has been audited by KPMG LLP, the Fund's independent auditors, whose
report, along with the Fund's financial statements, is included in the Statement
of Additional  Information,  which is available on request.  Class N shares were
not publicly offered during any of the periods shown. Therefore,  information on
Class N shares is not  included in the  following  tables or in the Fund's other
financial statements.



<PAGE>


INFORMATION AND SERVICES

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

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

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

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

----------------------------------------------------------------------------
By Telephone:                 Call OppenheimerFunds Services toll-free:
                                 1.800.525.7048
----------------------------------------------------------------------------
----------------------------------------------------------------------------
By Mail:                      Write to:
                              OppenheimerFunds Services
                              P.O. Box 5270
                              Denver, Colorado 80217-5270
----------------------------------------------------------------------------
----------------------------------------------------------------------------
On the Internet:              You can send us a request by e-mail or
                              read or down-load documents on the
                              OppenheimerFunds website:
                              http://www.oppenheimerfunds.com
----------------------------------------------------------------------------

You can also obtain copies of the Statement of Additional  Information and other
Fund  documents  and  reports by visiting  the SEC's  Public  Reference  Room in
Washington,  D.C.  (Phone  1.202.942.8090)  or the EDGAR  database  on the SEC's
Internet web site at http://www.sec.gov. Copies may be obtained after payment of
a  duplicating   fee  by  electronic   request  at  the  SEC's  e-mail  address:
[email protected],  or by  writing  to  the  SEC's  Public  Reference  Section,
Washington, D.C. 20549-0102.


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

                                          The Fund's shares are distributed
by:

The Fund's SEC File No. 811-3346
PR0375.001.0201 Printed on recycled paper.      [logo] OppenheimerFunds
Distributor, Inc.



<PAGE>


                            Appendix to Prospectus of
                       Oppenheimer Disciplined Value Fund


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

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

Calendar                Annual
Year                    Total
Ended Returns

1991                    36.91%
1992                    11.99%
1993                    20.91%
1994                    -0.65%
1995                    36.40%
1996                    18.38%
1997                    24.00%
1998                    8.54%

-4.71%
2000          %


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


<PAGE>


                       Oppenheimer Disciplined Value Fund
------------------------------------------------------------------------------


6803 S. Tucson Way, Englewood, CO 80112
1.800.525.7048

Statement of Additional Information dated February 28, 2001,

      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,  2001.  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.. 2
    The Fund's Investment Policies..................................... 2
    Other Investment Techniques and Strategies......................... 6
    Investment Restrictions............................................ 25
How the Fund is Managed ............................................... 28
    Organization and History........................................... 28
    Directors and Officers............................................. 29
    The Manager........................................................ 35
Brokerage Policies of the Fund......................................... 36
Distribution and Service Plans......................................... 38
Performance of the Fund................................................ 42

About Your Account
How To Buy Shares...................................................... 46
How To Sell Shares..................................................... 54
How To Exchange Shares................................................. 59
Dividends, Capital Gains and Taxes..................................... 61
Additional Information About the Fund.................................. 63

Financial Information About the Fund
Independent Auditors' Report........................................... 64
Financial Statements................................................... 65

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


<PAGE>


                                       69
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A B O U T  T H E  F U N D
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     Additional Information About the Fund's Investment Policies and Risks

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

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

      In selecting equity  investments for the Fund's  portfolio,  the portfolio
managers currently use a value investing style coupled with fundamental analysis
of issuers.  In using a value  approach,  the managers look for stocks and other
securities that appear to be temporarily undervalued,  by various measures, such
as  price/earnings  ratios.  Value investing seeks stocks having prices that are
low in  relation to their real worth or future  prospects,  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.

      |X| Value  Investing.  In  selecting  equity  investments  for the  Fund's
portfolio,  the portfolio managers currently use a value investing style coupled
with fundamental  analysis of issuers.  In using a value approach,  the managers
look for  stocks  and other  equity  securities  that  appear to be  temporarily
undervalued, by various measures, such as price/earnings ratios. Value investing
seeks  stocks  having  prices  that are low in  relation  to their real worth or
future prospects,  with the expectation that the Fund will realize  appreciation
in the value of its holdings when other investors realize the intrinsic value of
the stock.

      Using value  investing  requires  research as to the  issuer's  underlying
financial  condition and prospects.  Some of the measures used to identify these
securities include, among others:
o Price/Earnings  ratio,  which is the stock's price divided by its earnings per
share. A stock having a price/earnings ratio lower than its historical range, or
lower  than  the  market  as a whole  or that of  similar  companies  may  offer
attractive  investment  opportunities.  o Price/book  value ratio,  which is the
stock price divided by the book value of the company per share.  It measures the
company's stock price in relation to its asset value.
o Dividend Yield, which is measured by dividing the annual dividend by the stock
price per share.  o Valuation  of Assets  which  compares the stock price to the
value of the company's underlying assets, including their projected value in the
marketplace and liquidation value.

      |X|  Investments  in  Equity  Securities.  The  Fund  does not  limit  its
investments in equity securities to issuers having a market  capitalization of a
specified size or range, and therefore may invest in securities of small-,  mid-
and  large-capitalization  issuers.  At  times,  the Fund  may have  substantial
amounts  of its  assets  invested  in  securities  of  issuers  in  one or  more
capitalization ranges, based upon the Manager's use of its investment strategies
and its judgment of where the best market  opportunities  are to seek the Fund's
objective.

      At times,  the market  may favor or  disfavor  securities  of issuers of a
particular  capitalization range. Securities of small capitalization issuers may
be subject to greater  price  volatility  in general than  securities  of larger
companies.  Therefore,  if the  Fund  has  substantial  investments  in  smaller
capitalization  companies at times of market volatility,  the Fund's share price
may fluctuate more than that of funds focusing on larger capitalization issuers.

      |X| Rights and Warrants.  The Fund can invest up to 5% of its total assets
in warrants or rights. That limit does not apply to warrants and rights that the
Fund has acquired as part of units of  securities  or that are attached to other
securities.  No more than 2% of the  Fund's  total  assets  may be  invested  in
warrants  that are not  listed  on either  The New York  Stock  Exchange  or The
American Stock Exchange.

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

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

      |X| Preferred  Stocks.  Preferred  stocks are equity  securities  but have
certain attributes of debt securities. Preferred stock, unlike common stock, has
a stated dividend rate payable from the corporation's earnings.  Preferred stock
dividends may be cumulative or non-cumulative,  participating,  or auction rate.
"Cumulative"  dividend  provisions  require  all or a  portion  of prior  unpaid
dividends to be paid before the issuer can pay dividends on common shares.

      If interest rates rise, the fixed dividend on preferred stocks may be less
attractive,  causing the price of preferred  stocks to decline.  Preferred stock
may have mandatory sinking fund provisions, as well as provisions for their call
or redemption prior to maturity which can have a negative effect on their prices
when  interest  prior  to  maturity  rates  decline.   Preferred  stock  may  be
"participating"  stock,  which  means  that  it may be  entitled  to a  dividend
exceeding the stated dividend in certain cases.

      Preferred  stocks are equity  securities  because they do not constitute a
liability of the issuer and therefore do not offer the same degree of protection
of capital as debt  securities and may not offer the same degree of assurance of
continued  income  as  debt  securities.   The  rights  of  preferred  stock  on
distribution  of a  corporation's  assets  in the event of its  liquidation  are
generally  subordinate  to  the  rights  associated  with a  corporation's  debt
securities.  Preferred stock generally has a preference over common stock on the
distribution of a corporation's assets in the event of its liquidation.

      |X| Foreign  Securities.  The Fund can purchase equity and debt securities
issued or guaranteed  by foreign  companies or of 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 not considered "foreign securities" for the purpose
of the Fund's  investment  allocations.  That is because they are not subject to
many of the special  considerations  and risks,  discussed below,  that apply to
foreign securities traded and held abroad.

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

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

o     Risks of Foreign Investing.  Investments in foreign securities may
offer special opportunities for investing but also present special additional
risks and considerations not typically associated with investments in
domestic securities. Some of these additional risks are:
o     reduction of income by foreign taxes;
o     fluctuation in value of foreign investments due to changes in currency
                  rates or currency control regulations (for example,
                  currency blockage);
o     transaction charges for currency exchange;
o     lack of public information about foreign issuers;
o     lack of uniform accounting, auditing and financial reporting standards
                  in foreign countries comparable to those applicable to
                  domestic issuers;
o     less volume on foreign exchanges than on U.S. exchanges;
o     greater volatility and less liquidity on foreign markets than in the
                  U.S.;
o     less governmental regulation of foreign issuers, stock exchanges and
                  brokers than in the U.S.;
o     foreign exchange contracts;
o     greater difficulties in commencing lawsuits;
o     higher brokerage commission rates than in the U.S.;
o     increased risks of delays in settlement of portfolio transactions or
                  loss of certificates for portfolio securities;
o     foreign withholding taxes on interest and dividends;
o     possibilities in some countries of expropriation, nationalization,
                  confiscatory taxation, political, financial or social
                  instability or adverse diplomatic developments; and
o     unfavorable differences between the U.S. economy and foreign economies.

      In the past, U.S. government policies have discouraged certain
investments abroad by U.S. investors, through taxation or other restrictions,
and it is possible that such restrictions could be re-imposed.

o Risks of Conversion to Euro. There may be transaction costs and risks relating
to the conversion of certain  European  currencies to the Euro that commenced in
January 1, 1999. However,  their current currencies (for example, the franc, the
mark, and the lira) will also continue in use until January 1, 2002.  After that
date,  it is  expected  that  only the euro will be used in those  countries.  A
common  currency  is  expected to confer  some  benefits  in those  markets,  by
consolidating  the government  debt market for those countries and reducing some
currency risks and costs. But the conversion to the new currency will affect the
Fund operationally and also has potential risks, some of which are listed below.
Among other things, the conversion will affect:
               o  issuers in which the Fund  invests,  because of changes in the
                  competitive  environment  from a consolidated  currency market
                  and  greater  operational  costs  from  converting  to the new
                  currency. This might depress stock values.
               o  vendors the Fund depends on to carry out its business, such as
                  its  custodian  (which holds the foreign  securities  the Fund
                  buys), the Manager (which must price the Fund's investments to
                  deal with the  conversion  to the euro) and  brokers,  foreign
                  markets and securities depositories. If they are not prepared,
                  there could be delays in settlements  and additional  costs to
                  the Fund.
               o  exchange contracts and derivatives that are outstanding during
                  the  transition  to  the  euro.  The  lack  of  currency  rate
                  calculations  between the affected  currencies and the need to
                  update the  Fund's  contracts  could  pose extra  costs to the
                  Fund.
      The lack of currency rate calculations between the affected currencies and
the need to update the Fund's contracts could pose extra costs to the Fund.

      The Manager has upgraded  (at its  expense)  its computer and  bookkeeping
systems  to deal with the  conversion.  The Fund's  custodian  has  advised  the
Manager of its plans to deal with the  conversion,  including how it will update
its record keeping systems and handle the redenomination of outstanding  foreign
debt.  The  Fund's  portfolio  managers  will also  monitor  the  effects of the
conversion  on the issuers in which the Fund  invests.  The  possible  effect of
these factors on the Fund's  investments  cannot be determined with certainty at
this time,  but they may reduce  the value of some of the  Fund's  holdings  and
increase its operational costs.

o Special Risks of Emerging Markets.  Emerging and developing markets abroad may
also offer special  opportunities for investing but have greater risks than more
developed  foreign  markets,  such as those in Europe,  Canada,  Australia,  New
Zealand and Japan. There may be even less liquidity in their securities markets,
and  settlements  of  purchases  and  sales  of  securities  may be  subject  to
additional  delays.  They are  subject to greater  risks of  limitations  on the
repatriation of income and profits because of currency  restrictions  imposed by
local  governments.  Those  countries may also be subject to the risk of greater
political and economic  instability,  which can greatly affect the volatility of
prices of securities in those countries. The Manager will consider these factors
when  evaluating  securities  in these  markets,  because the selection of those
securities must be consistent with the Fund's investment objective.

      |X| Portfolio Turnover.  "Portfolio  turnover" describes the rate at which
the Fund  traded its  portfolio  securities  during its last  fiscal  year.  For
example,  if a fund sold all of its  securities  during the year,  its portfolio
turnover  rate would have been 100%.  The Fund's  portfolio  turnover  rate will
fluctuate  from  year to year.  The Fund  does not  expect  to have a  portfolio
turnover rate 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| Investments in Bonds and Other Debt Securities. The Fund can invest in
bonds,  debentures  and other debt  securities  under normal market  conditions.
Because the Fund currently emphasizes investments in equity securities,  such as
stocks, it is not anticipated that significant amounts of the Fund's assets will
be invested in debt securities.  However, if market conditions suggest that debt
securities may offer better growth  opportunities than stocks, or if the Manager
determines  to seek a higher income for  liquidity  purposes,  the Manager might
shift up to 10% of the Fund's net assets into debt securities.

      The   Fund's   debt   investments   can   include   investment-grade   and
non-investment-grade   bonds   (commonly   referred   to   as   "junk   bonds").
Investment-grade  bonds  are bonds  rated at least  "Baa" by  Moody's  Investors
Service,  Inc., or at least "BBB" by Standard & Poor's Rating  Service or Duff &
Phelps,  Inc., or that have comparable ratings by another  nationally-recognized
rating organization.  In making investments in debt securities,  the Manager may
rely to some  extent on the ratings of ratings  organizations  or it may use its
own research to evaluate a security's credit-worthiness.  If the securities that
the Fund buys are  unrated,  to be  considered  part of the Fund's  holdings  of
investment-grade  securities,  they  must  be  judged  by the  Manager  to be of
comparable quality to bonds rated as investment grade by a rating organization.

      |X| Special Risks of Lower-Grade  Securities.  It is not anticipated  that
the Fund will invest a  substantial  portion of its assets in  lower-grade  debt
securities.  Because  lower-grade  securities  tend to offer higher  yields than
investment-grade  securities,  the Fund may invest in lower grade  securities if
the  Manager  is trying to achieve  greater  income  (and,  in some  cases,  the
appreciation  possibilities of lower-grade securities might be a reason they are
selected for the Fund's portfolio). High-yield convertible debt securities might
be selected as "equity substitutes," as described above.

      "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 Manager to be of
comparable  quality to debt securities  rated below investment  grade,  they are
included in the  limitation  on the  percentage of the Fund's assets that can be
invested in lower-grade  securities.  The Fund can invest in securities rated as
low as "B" at the time the Fund buys them.

      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 buying these investments may reduce 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  greater  risks  than  other   investment-grade
securities, and have some speculative  characteristics.  Definitions of the debt
security  ratings  categories of Moody's,  S&P, Fitch IBCA and Duff & Phelps are
included in Appendix A to this Statement of Additional Information.

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

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

      |X| Floating Rate and Variable Rate Obligations.  Some securities the Fund
can  purchase  have  variable or floating  interest  rates.  Variable  rates are
adjusted at stated  periodic  intervals.  Variable rate  obligations  can have a
demand  feature that allows the Fund to tender the obligation to the issuer or a
third party prior to its  maturity.  The tender may be at par value plus accrued
interest, according to the terms of the obligations.

      The interest rate on a floating rate demand note is adjusted automatically
according to a stated  prevailing  market rate, such as a bank's prime rate, the
91-day U.S. Treasury Bill rate, or some other standard. The instrument's rate is
adjusted automatically each time the base rate is adjusted. The interest rate on
a variable  rate note is also based on a stated  prevailing  market  rate but is
adjusted  automatically  at  specified  intervals  of not less  than  one  year.
Generally,  the  changes  in the  interest  rate on such  securities  reduce the
fluctuation in their market value.  As interest rates decrease or increase,  the
potential  for  capital  appreciation  or  depreciation  is less  than  that for
fixed-rate  obligations of the same maturity.  The Manager may determine that an
unrated  floating  rate or  variable  rate  demand  obligation  meets the Fund's
quality  standards  by reason of being backed by a letter of credit or guarantee
issued by a bank that meets those quality standards.

      Floating rate and variable  rate demand notes that have a stated  maturity
in excess of one year may have  features  that  permit the holder to recover the
principal amount of the underlying security at specified intervals not exceeding
one year and upon no more than 30 days' notice.  The issuer of that type of note
normally has a corresponding  right in its discretion,  after a given period, to
prepay  the  outstanding  principal  amount of the note plus  accrued  interest.
Generally,  the issuer must  provide a specified  number of days'  notice to the
holder.

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

      Mortgage-related  securities  that are issued or guaranteed by agencies or
instrumentalities  of the U.S.  government  have  relatively  little credit risk
(depending  on the nature of the issuer) but are subject to interest  rate risks
and  prepayment   risks,  as  described  in  the  Prospectus.   Mortgage-related
securities issued by private issuers have greater credit risk.
      As with other debt securities,  the prices of mortgage-related  securities
tend  to  move  inversely  to  changes  in  interest  rates.  The  Fund  can buy
mortgage-related  securities  that have  interest  rates that move  inversely to
changes in general  interest  rates,  based on a multiple  of a specific  index.
Although the value of a  mortgage-related  security  may decline  when  interest
rates rise, the converse is not always the case.

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

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

      During  periods  of  rapidly  rising   interest   rates,   prepayments  of
mortgage-related  securities  may occur at slower than  expected  rates.  Slower
prepayments  effectively  may lengthen a  mortgage-related  security's  expected
maturity.  Generally,  that would cause the value of the  security to  fluctuate
more widely in responses to changes in interest rates. If the prepayments on the
Fund's  mortgage-related   securities  were  to  decrease  broadly,  the  Fund's
effective  duration,  and  therefore its  sensitivity  to interest rate changes,
would increase.

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

o     Collateralized Mortgage Obligations. CMOs are multi-class bonds that
are backed by pools of mortgage loans or mortgage pass-through certificates.
They may be collateralized by:
(6)   pass-through certificates issued or guaranteed by Ginnie Mae, Fannie
                    Mae, or Freddie Mac,
(7)   unsecuritized mortgage loans insured by the Federal Housing
                    Administration or guaranteed by the Department of
                    Veterans' Affairs,
(8) unsecuritized conventional mortgages, (9) other mortgage-related securities,
or (10) any combination of these.

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

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

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

o Treasury  Inflation-Protection  Securities. The Fund can buy these TIPS, which
are  designed  to  provide  an  investment  vehicle  that is not  vulnerable  to
inflation. The interest rate paid by TIPS is fixed. The principal value rises or
falls  semi-annually  based on changes in the published Consumer Price Index. If
inflation  occurs,  the principal and interest  payments on TIPS are adjusted to
protect investors from inflationary loss. If deflation occurs, the principal and
interest  payments will be adjusted  downward,  although the principal  will not
fall below its face amount at maturity.

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

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

o  GNMA  Certificates.   The  Government  National  Mortgage  Association  is  a
wholly-owned  corporate  instrumentality  of the United  States  within the U.S.
Department of Housing and Urban  Development.  GNMA's principal programs involve
its  guarantees  of  privately-issued  securities  backed by pools of mortgages.
Ginnie Maes are debt  securities  representing  an interest in one mortgage or a
pool of mortgages that are insured by the Federal Housing  Administration or the
Farmers Home Administration or guaranteed by the Veterans Administration

      The  Ginnie  Maes in which the Fund  invests  are of the  "fully  modified
pass-through"  type. They provide that the registered holders of the Ginnie Maes
will receive  timely  monthly  payments of the pro-rata  share of the  scheduled
principal payments on the underlying mortgages, whether or not those amounts are
collected  by the  issuers.  Amounts  paid  include,  on a pro rata  basis,  any
prepayment  of principal of such  mortgages  and interest  (net of servicing and
other  charges) on the aggregate  unpaid  principal  balance of the Ginnie Maes,
whether or not the interest on the  underlying  mortgages has been  collected by
the issuers.

      The Ginnie Maes  purchased by the Fund are guaranteed as to timely payment
of principal  and interest by GNMA. In giving that  guaranty,  GNMA expects that
payments  received  by the  issuers of Ginnie  Maes on account of the  mortgages
backing  the Ginnie Maes will be  sufficient  to make the  required  payments of
principal of and interest on those Ginnie Maes.  However,  if those payments are
insufficient, the guaranty agreements between the issuers of the Ginnie Maes and
GNMA require the issuers to make advances  sufficient  for the payments.  If the
issuers fail to make those payments, GNMA will do so.


      Under  federal  law,  the full faith and  credit of the  United  States is
pledged to the payment of all amounts  that may be required to be paid under any
guaranty  issued by GNMA as to such mortgage  pools.  An opinion of an Assistant
Attorney General of the United States,  dated December 9, 1969, states that such
guaranties  "constitute  general  obligations of the United States backed by its
full faith and  credit."  GNMA is  empowered  to borrow  from the United  States
Treasury to the extent  necessary to make any payments of principal and interest
required under those guaranties.


      Ginnie  Maes are  backed  by the  aggregate  indebtedness  secured  by the
underlying FHA-insured,  FMHA-insured or VA-guaranteed mortgages.  Except to the
extent of payments received by the issuers on account of such mortgages,  Ginnie
Maes do not  constitute a liability of those  issuers,  nor do they evidence any
recourse  against those  issuers.  Recourse is solely  against GNMA.  Holders of
Ginnie  Maes  (such as the Fund)  have no  security  interest  in or lien on the
underlying mortgages.

      Monthly payments of principal will be made, and additional  prepayments of
principal may be made, to the Fund with respect to the mortgages  underlying the
Ginnie Maes owned by the Fund. All of the mortgages in the pools relating to the
Ginnie  Maes in the Fund are  subject  to  prepayment  without  any  significant
premium or penalty,  at the option of the  mortgagors.  While the  mortgages  on
1-to-4-family dwellings underlying certain Ginnie Maes have a stated maturity of
up to 30 years,  it has been the  experience  of the mortgage  industry that the
average life of comparable  mortgages,  as a result of prepayments,  refinancing
and payments from foreclosures, is considerably less.

o Federal  Home Loan  Mortgage  Corporation  ("FHLMC")  Certificates.  FHLMC,  a
corporate  instrumentality  of the  United  States,  issues  FHLMC  Certificates
representing  interests in mortgage loans.  FHLMC  guarantees to each registered
holder of a FHLMC  Certificate  timely  payment of the  amounts  representing  a
holder's proportionate share in:
(iv)  interest  payments  less  servicing  and  guarantee  fees,  (v)  principal
prepayments,  and (vi) the  ultimate  collection  of  amounts  representing  the
holder's
                    proportionate interest in principal payments on the mortgage
                    loans in the pool represented by the FHLMC  Certificate,  in
                    each case whether or not such amounts are actually received.

         The obligations of FHLMC under its guarantees are obligations solely of
FHLMC and are not backed by the full faith and credit of the United States.

o Federal National Mortgage Association (Fannie Mae) Certificates. Fannie Mae, a
federally-chartered   and   privately-owned   corporation,   issues  Fannie  Mae
Certificates which are backed by a pool of mortgage loans. Fannie Mae guarantees
to each  registered  holder of a Fannie Mae  Certificate  that the  holder  will
receive amounts  representing the holder's  proportionate  interest in scheduled
principal and interest payments, and any principal prepayments,  on the mortgage
loans in the pool represented by such Certificate,  less servicing and guarantee
fees, and the holder's  proportionate  interest in the full principal  amount of
any  foreclosed or other  liquidated  mortgage  loan. In each case the guarantee
applies whether or not those amounts are actually  received.  The obligations of
Fannie Mae under its guarantees are obligations solely of Fannie Mae and are not
backed by the full faith and credit of the United  States or any of its agencies
or instrumentalities other than Fannie Mae.

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

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

      Because zero-coupon  securities pay no interest and compound semi-annually
at the rate fixed at the time of their  issuance,  their value is generally more
volatile than the value of other debt securities that pay interest.  Their value
may fall more  dramatically than the value of  interest-bearing  securities when
interest rates rise. When prevailing interest rates fall, zero-coupon securities
tend to rise more rapidly in value because they have a fixed rate of return.
      The Fund's  investment  in  zero-coupon  securities  may cause the Fund to
recognize income and make  distributions to shareholders  before it receives any
cash payments on the zero-coupon  investment.  To generate cash to satisfy those
distribution  requirements,  the Fund may have to sell portfolio securities that
it  otherwise  might  have  continued  to hold or to use cash  flows  from other
sources such as the sale of Fund shares.

      |X|  "Stripped"  Mortgage-Related  Securities.  The  Fund  may  invest  in
stripped  mortgage-related  securities  that are created by segregating the cash
flows from  underlying  mortgage  loans or mortgage  securities to create two or
more  new  securities.  Each  has  a  specified  percentage  of  the  underlying
security's  principal  or  interest  payments.  These  are a form of  derivative
investment.

      Mortgage  securities may be partially stripped so that each class receives
some interest and some principal.  However,  they may be completely stripped. In
that case all of the interest is distributed to holders of one type of security,
known as an  "interest-only"  security,  or "I/O," and all of the  principal  is
distributed to holders of another type of security,  known as a "principal-only"
security or "P/O." Strips can be created for pass-through certificates or CMOs.

      The yields to maturity of I/Os and P/Os are very  sensitive  to  principal
repayments  (including   prepayments)  on  the  underlying  mortgages.   If  the
underlying  mortgages   experience  greater  than  anticipated   prepayments  of
principal,  the Fund might not fully  recoup its  investment  in an I/O based on
those  assets.  If  underlying   mortgages   experience  less  than  anticipated
prepayments  of  principal,  the yield on the P/Os based on them  could  decline
substantially.

      |X| Money Market Instruments and Short-Term Debt Obligations. The Fund can
invest in a variety of high quality money market instruments and short-term debt
obligations, both under normal market conditions and for defensive purposes. The
following is a brief  description  of the types of money market  securities  and
short-term  debt  obligations  the  Fund  can  invest  in.  Those  money  market
securities are high-quality,  short-term debt instruments that are issued by the
U.S.  government,  corporations,  banks or other entities.  They may have fixed,
variable or floating  interest  rates.  The Fund's  investments in foreign money
market  instruments and short-term debt obligations are subject to its limits on
investing in foreign  securities and the risks of foreign  investing,  described
above.

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

o     Bank Obligations. The Fund can buy time deposits, certificates of
deposit and bankers' acceptances. They must be :
o     obligations issued or guaranteed by a domestic or foreign bank
                  (including a foreign branch of a domestic bank) having
                  total assets of at least $1 billion,
o     banker's acceptances (which may or may not be supported by letters of
                  credit) only if guaranteed by a U.S. commercial bank with
                  total assets of at least U.S. $1 billion.

      The Fund can make time deposits.  These are  non-negotiable  deposits in a
bank for a  specified  period of time.  They may be subject to early  withdrawal
penalties.  Time  deposits  that are subject to early  withdrawal  penalties are
subject to the Fund's  limits on illiquid  investments,  unless the time deposit
matures in seven days or less. "Banks" include  commercial banks,  savings banks
and savings and loan associations.

o  Commercial  Paper.  The Fund can  invest in  commercial  paper if it is rated
within the top two rating  categories  of 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.

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

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

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

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

      When such  transactions  are  negotiated,  the price  (which is  generally
expressed in yield terms) is fixed at the time the commitment is made.  Delivery
and payment for the  securities  take place at a later date.  The securities are
subject  to change in value from  market  fluctuations  during the period  until
settlement.  The value at  delivery  may be less than the  purchase  price.  For
example,  changes in interest  rates in a direction  other than that expected by
the Manager before  settlement  will affect the value of such securities and may
cause a loss to the Fund. During the period between purchase and settlement, the
Fund makes no payment to the issuer and no interest accrues to the Fund from the
investment until it receives the security at settlement. There is a risk of loss
to the Fund if the value of the security  changes prior to the settlement  date,
and there is the risk that the other party may not perform.

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

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

      At the time the Fund makes the  commitment  to purchase or sell a security
on a when-issued or  delayed-delivery  basis,  it records the transaction on its
books and reflects the value of the security purchased in determining the Fund's
net asset value. In a sale transaction,  it records the proceeds to be received.
The Fund will identify on its books liquid assets at least equal in value to the
value of the Fund's purchase commitments until the Fund pays for the investment.

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

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

      In  a  repurchase  transaction,   the  Fund  buys  a  security  from,  and
simultaneously  resells it to, an approved vendor for delivery on an agreed-upon
future  date.  The resale  price  exceeds the  purchase  price by an amount that
reflects an agreed-upon  interest rate effective for the period during which the
repurchase  agreement is in effect.  Approved  vendors  include U.S.  commercial
banks,  U.S.  branches  of  foreign  banks,  or  broker-dealers  that  have been
designated as primary  dealers in government  securities.  They must meet credit
requirements set by the Fund's Board of Directors 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  fundamental  policy  limits on holding  illiquid  investments.  The Fund
cannot  enter into a repurchase  agreement  that causes more than 10% of its net
assets to be subject to  repurchase  agreements  having a maturity  beyond seven
days.  There is no limit on the  amount of the  Fund's  net  assets  that may be
subject to repurchase agreements having maturities of seven days or less.

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

      |X| Illiquid and Restricted Securities.  Under the policies and procedures
established  by the  Fund's  Board of  Directors,  the  Manager  determines  the
liquidity of certain of the Fund's  investments.  To enable the Fund to sell its
holdings of a restricted  security not  registered  under 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.

      As a  fundamental  policy,  the Fund will not invest  more than 10% of its
total  assets  in  illiquid  or  restricted  securities,   including  repurchase
agreements having a maturity beyond seven days,  portfolio  securities for which
market  quotations  are not readily  available  and time deposits that mature in
more than 2 days. Certain restricted  securities that are eligible for resale to
qualified  institutional  purchasers,  as described below, may not be subject to
that  limit.  The Fund  currently  does not intend to invest more than 5% of its
total  assets in  illiquid  and  restricted  securities.  The  Manager  monitors
holdings of illiquid securities on an ongoing basis to determine whether to sell
any holdings to maintain adequate liquidity.

      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  above.  Those  percentage  restrictions  do not limit  purchases  of
restricted  securities  that are eligible  for sale to  qualified  institutional
purchasers  under Rule 144A of the Securities  Act of 1933, if those  securities
have  been  determined  to  be  liquid  by  the  Manager  under   Board-approved
guidelines.  Those  guidelines  take into account the trading  activity for such
securities and the  availability of reliable  pricing  information,  among other
factors.  If there is a lack of  trading  interest  in a  particular  Rule  144A
security, the Fund's holdings of that security may be considered to be illiquid.

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

      |X|  Loans of  Portfolio  Securities.  The  Fund  can  lend its  portfolio
securities  to certain  types of  eligible  borrowers  approved  by the Board of
Directors.  It may do so to try to provide income or to raise cash for liquidity
purposes.  As a fundamental policy,  these loans are limited to not more than 33
1/3% of the value of the Fund's total assets. The Fund presently does not intend
to engage in loans of securities but may do so in the future.

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

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

      |X| Hedging. The Fund can use hedging instruments.  It is not obligated to
use them in seeking its  objective  although it can write  covered calls to seek
high current income if the Manager  believes that it is appropriate to do so. 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: o sell futures contracts, or o write covered
calls on securities or futures. Covered calls may also
            be used to increase  the Fund's  income,  but the  Manager  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.
      The Fund is not  obligated to use hedging  instruments,  even though it is
permitted  to use them in the  Manager's  discretion,  as described  below.  The
Fund's  strategy  of  hedging  with  futures  and  options  on  futures  will be
incidental  to  the  Fund's  activities  in  the  underlying  cash  market.  The
particular  hedging  instruments the Fund can use are described  below. The Fund
may employ new hedging  instruments and strategies  when they are developed,  if
those investment methods are consistent with the Fund's investment objective and
are permissible under applicable regulations governing the Fund.

o Futures.  The Fund can buy and sell  exchange-traded  futures  contracts  that
relate to (1)  broadly-based  stock  indices  ("stock  index  futures") (2) debt
securities  (these  are  referred  to as  "interest  rate  futures"),  (3) other
broadly-based securities indices (these are referred to as "financial futures"),
(4) foreign  currencies (these are referred to as "forward  contracts"),  or (5)
securities.

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

      An interest rate future obligates the seller to deliver (and the purchaser
to take)  cash or a  specified  type of debt  security  to  settle  the  futures
transaction.  Either party could also enter into an offsetting contract to close
out the position.


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


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

o Writing  Covered Call Options.  Under its  fundamental  policies,  the Fund is
permitted to write (that is, sell) covered calls on securities, indices, futures
and forward contracts. If the Fund sells a call option, it must be covered. That
means  the Fund  must own the  security  subject  to the call  while the call is
outstanding,  or, for calls on futures and  indices,  the call may be covered by
segregating  liquid assets to enable the Fund to satisfy its  obligations if the
call is exercised.  Up to 20% of the Fund's total assets may be subject to calls
the Fund writes.

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

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

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

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

      The  Fund  may  realize  a  profit  if  a  call  it  has  written  expires
unexercised,  because  the Fund will  retain  the  underlying  security  and the
premium it received  when it wrote the call.  Any such  profits  are  considered
short-term capital gains for federal income tax purposes, as are the premiums on
lapsed calls.  When distributed by the Fund they are taxable as ordinary income.
Because of the Fund's  fundamental  policies  prohibiting  the  purchase of call
options, the Fund cannot effect closing purchase transactions to terminate calls
it has written.

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

o Selling Call Options on Foreign Currencies. The Fund can sell calls on foreign
currencies.  They  include  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 to try to  protect
against declines in the dollar value of foreign  securities and increases in the
dollar cost of foreign securities the Fund wants to acquire.

      If the  Manager  anticipates  a 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 on that  foreign
currency.  However, the currency rates could fluctuate in a direction adverse to
the Fund's position.

      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.

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

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

      The Fund could pay a brokerage  commission  each time it sells a call,  or
sells an underlying  investment in connection with the exercise of a call. 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,  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.

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

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

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

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

o Forward Contracts.  Forward contracts are foreign currency exchange contracts.
They are used to buy or sell  foreign  currency  for future  delivery at a fixed
price.  The Fund  uses  them to "lock in" the U.S.  dollar  price of a  security
denominated  in a  foreign  currency  that the Fund has  bought  or sold,  or to
protect against  possible losses from changes in the relative values of the U.S.
dollar and a foreign currency.  The Fund 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 suffer a substantial  decline  against the
U.S.  dollar,  it could enter into a forward  contract to sell an amount of that
foreign currency  approximating the value of some or all of the Fund's portfolio
securities denominated in that foreign currency. When the Fund believes that the
U.S. dollar might suffer a substantial  decline against a foreign  currency,  it
could enter into a forward  contract to buy that  foreign  currency  for a fixed
dollar amount.  Alternatively,  the Fund could enter into a forward  contract to
sell a different  foreign  currency for a fixed U.S.  dollar  amount if the Fund
believes that the U.S. dollar value of the foreign  currency to be sold pursuant
to its forward contract will fall whenever there is a decline in the U.S. dollar
value of the currency in which portfolio securities of the Fund are denominated.
That is referred to as a "cross hedge."


      The Fund will cover its short  positions in these cases by  identifying 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.

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

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

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

      The costs to the Fund of engaging in forward contracts 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.

o Interest  Rate Swap  Transactions.  The Fund can enter into interest rate swap
agreements.  In an interest rate swap, the Fund and another party exchange their
right to receive or their obligation to pay interest on a security. For example,
they might  swap the right to  receive  floating  rate  payments  for fixed rate
payments.  The Fund can enter into swaps only on securities that it owns.  Also,
the  Fund  will  identify  on its  books  liquid  assets  (such  as cash or U.S.
government securities) to cover any amounts it could owe under swaps that exceed
the amounts it is entitled to receive,  and it will adjust that amount daily, as
needed.

      Swap agreements entail both interest rate risk and credit risk. There is a
risk that, based on movements of interest rates in the future, the payments made
by the  Fund  under a swap  agreement  will be  greater  than  the  payments  it
received.  Credit risk arises from the possibility  that the  counterparty  will
default. If the counterparty  defaults,  the Fund's loss will consist of the net
amount of contractual interest payments that the Fund has not yet received.  The
Manager  will  monitor  the  creditworthiness  of  counterparties  to the Fund's
interest rate swap transactions on an ongoing basis.

      The Fund can enter  into swap  transactions  with  certain  counterparties
pursuant to master netting agreements.  A master netting agreement provides that
all swaps done between the Fund and that counterparty shall be regarded as parts
of an integral  agreement.  If amounts are payable on a  particular  date in the
same currency in respect of one or more swap transactions, the amount payable on
that date in that  currency  shall be the net amount.  In  addition,  the master
netting  agreement  may provide that if one party  defaults  generally or on one
swap,  the  counterparty  can terminate all of the swaps with that party.  Under
these  agreements,  if a default results in a loss to one party,  the measure of
that  party's  damages is  calculated  by  reference  to the  average  cost of a
replacement  swap for each swap. It is measured by the  mark-to-market  value at
the time of the  termination of each swap. The gains and losses on all swaps are
then netted, and the result is the  counterparty's  gain or loss on termination.
The  termination of all swaps and the netting of gains and losses on termination
is generally referred to as "aggregation."

o 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 may be affected by options written
or held by other entities,  including other investment companies having the same
advisor as the Fund (or an advisor that is an affiliate of the Fund's  advisor).
The exchanges also impose position limits on futures  transactions.  An exchange
may order the  liquidation of positions found to be in violation of those limits
and may impose certain other sanctions.

      Under 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.

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


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


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

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


                             Investment Restrictions

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

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

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

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

o The Fund cannot invest more than 5% of its total assets (taken at market value
at the time of each investment) in the securities  (other than securities of the
U.S.  government  or its  agencies) of any one issuer or invest more than 15% of
its total assets in the obligations of any one bank. This restriction applies to
repurchase agreements with any one bank or dealer. Additionally, the Fund cannot
purchase  more  than  either  10%  principal  amount  of  the  outstanding  debt
securities  of an issuer,  or 10% of the  outstanding  voting  securities  of an
issuer.  This restriction  shall not apply to securities issued or guaranteed by
the  U.S.  government  or its  agencies,  bank  instruments  or bank  repurchase
agreements.

o The Fund cannot  invest more than 25% of the value of its total  assets in the
securities of issuers in any single industry. However, this limitation shall not
apply  to  the  purchase  of  obligations  issued  or  guaranteed  by  the  U.S.
government,  its  agencies  or  instrumentalities.   For  the  purpose  of  this
restriction,  each utility that provides a separate  service (for example,  gas,
gas  transmission,  electric or telephone)  shall be considered to be a separate
industry. This test shall be applied on a pro forma basis using the market value
of all  assets  immediately  prior  to  making  any  investment.  The  Fund  has
undertaken as a matter of  non-fundamental  policy to apply this  restriction to
25% or more of its total assets.

o The Fund  cannot,  by itself or  together  with any other fund,  portfolio  or
portfolios,  make  investments  for the purpose of  exercising  control over, or
management of, any issuer.

o The Fund cannot purchase securities of other investment  companies,  except in
connection with a merger, consolidation,  acquisition or reorganization.  It can
also purchase in the open market securities of closed-end  investment  companies
if no  underwriter  or dealer's  commission or profit,  other than the customary
broker's commission is involved and only if immediately thereafter not more than
10% of the Fund's total assets, taken at market value, would be invested in such
securities.  o The Fund cannot  purchase or sell  interests in oil, gas or other
mineral exploration or development programs, commodities, commodity contracts or
real estate. However, the Fund can purchase securities of issuers that invest or
deal an any of the above  interests  and can  invest  for  hedging  purposes  in
futures contracts on securities,  financial instruments and indices, and foreign
currency, as are approved for trading on a registered exchange.

o The Fund  cannot  purchase  any  securities  on margin or make short  sales of
securities  or  maintain a short  position.  However,  the Fund can obtain  such
short- term credits as may be necessary for the clearance of purchases and sales
of  portfolio  securities.  The  deposit  or  payment  by the Fund of initial or
maintenance  margin in  connection  with futures  contracts  or related  options
transactions is not considered to be the purchase of a security on margin.

o The Fund cannot make loans. However, the Fund may lend portfolio securities in
accordance with the Fund's investment policies up to 33 1/3% of the Fund's total
assets  taken  at  market  value.  The  Fund  can  also  enter  into  repurchase
agreements,  and purchase  all or a portion of an issue of publicly  distributed
debt  securities,  bank  loan  participation  interests,  bank  certificates  of
deposit,  bankers' acceptances,  debentures or other securities,  whether or not
the purchase is made upon the original issuance of the securities.

o The Fund cannot borrow amounts in excess of 10% of its total assets,  taken at
market  value at the time of the  borrowing.  It can borrow only from banks as a
temporary  measure  for  extraordinary  or  emergency  purposes.  It cannot make
investments in portfolio securities while such outstanding  borrowings exceed 5%
of its total assets.

o The Fund  cannot  allow  its  current  obligations  under  reverse  repurchase
agreements,  together with  borrowings,  to exceed 1/3 of the value of its total
assets (less all its liabilities other than the obligations under borrowings and
such agreements).

o The Fund cannot mortgage,  pledge,  hypothecate or in any manner transfer,  as
security for  indebtedness,  any securities  owned or held by the Fund except as
may be necessary in connection  with  borrowings as mentioned in its restriction
on borrowing, above. In that case such mortgaging, pledging or hypothecating may
not exceed 10% of the Fund's total assets,  taken at market value at the time of
the borrowing.  The deposit of cash, cash equivalents and liquid debt securities
in a segregated  account with the Fund's  custodian bank and/or with a broker in
connection  with  futures  contracts  or related  options  transactions  and the
purchase of securities on a "when-issued" basis are not deemed to be pledges.

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

o The Fund cannot write,  purchase or sell puts, calls or combinations  thereof,
except that it can write covered call options.

o The Fund  cannot  invest in  securities  of foreign  issuers if at the time of
acquisition more than 10% of its total assets, taken at market value at the time
of the investment,  would be invested in such securities.  However, up to 25% of
the total assets of the Fund may be invested in the aggregate in such securities
that are (i) issued, assumed or guaranteed by foreign governments,  or political
subdivisions  or  instrumentalities  thereof,  (ii)  assumed  or  guaranteed  by
domestic issuers (including Eurodollar securities),  or (iii) issued, assumed or
guaranteed by foreign issuers having a class of securities listed for trading on
The New York Stock Exchange.

o The Fund  cannot  invest  more than 10% in the  aggregate  of the value of its
total assets in  repurchase  agreements  maturing in more than seven days,  time
deposits maturing in more than two days,  portfolio  securities that do not have
readily available market quotations and all other illiquid assets.

      For purposes of the fundamental investment restrictions, the term "borrow"
does not include mortgage dollar rolls, reverse repurchase agreements or lending
portfolio securities.  The terms "illiquid securities" and "portfolio securities
that  do not  have  readily  available  market  quotations"  include  restricted
securities.  However,  reverse repurchase  agreements are treated as borrowings,
master demand notes may be deemed to be illiquid  securities and mortgage dollar
rolls are sales transactions and not financings.

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


How the Fund is Managed


Organization  and  History.  The Fund is one of two  investment  portfolios,  or
"series," of  Oppenheimer  Series Fund,  Inc. That  corporation  is an open-end,
management  investment company organized as a Maryland  corporation in 1981, and
was called  Connecticut Mutual Investment  Accounts,  Inc. until March 18, 1996,
when the Manager became the Fund's investment advisor. The Fund is a diversified
mutual  fund,  and until March 18,  1996 was called  Connecticut  Mutual  Growth
Account.


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



      |X|  Classes  of Shares.  The Board of  Directors  has the power,  without
shareholder  approval,  to divide  unissued  shares of the Fund into two or more
classes.  The Board has done so,  and the Fund  currently  has four  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.

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

      |X|  Meetings  of  Shareholders.  Although  the  Fund is not  required  by
Maryland law to hold annual meetings, it may hold shareholder meetings from time
to time on important matters.  The shareholders of the Fund's parent corporation
have the right to call a meeting to remove a Director or to take  certain  other
action described in the Articles of Incorporation or under Maryland law.

      The Fund will  hold  meetings  when  required  to do so by the  Investment
Company  Act or other  applicable  law.  The Fund will  hold a meeting  when the
Directors call a meeting or upon proper request of  shareholders.  If the Fund's
parent corporation  receives a written request of the record holders of at least
25% of the  outstanding  shares  eligible  to be  voted at a  meeting  to call a
meeting for a specified purpose (which might include the removal of a Director),
the Directors will call a meeting of  shareholders  for that specified  purpose.
The Fund's parent  corporation  has undertaken that it will then either give the
applicants  access  to the  Fund's  shareholder  list  or mail  the  applicants'
communication to all other shareholders at the applicants' expense.

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

Directors  and  Officers  of  the  Fund.  The  Directors  of the  Fund's  parent
corporation and the Fund's officers and their principal occupations and business
affiliations during the past five years are listed below. Directors denoted with
an asterisk (*) below are deemed to be "interested persons" of the Fund's parent
corporation and the Fund under the Investment  Company Act. All of the Directors
are also trustees,  directors or managing  general partners of the following New
York-based Oppenheimer funds11:


Oppenheimer California Municipal Fund   Oppenheimer  International Small Company
                                        Fund
Oppenheimer  Capital   Appreciation  Fund  Oppenheimer  Large  Cap  Growth  Fund
Oppenheimer  Capital  Preservation  Fund  Oppenheimer  Money Market  Fund,  Inc.
Oppenheimer   Developing  Markets  Fund  Oppenheimer  Multiple  Strategies  Fund
Oppenheimer  Discovery Fund Oppenheimer  Multi-Sector  Income Trust  Oppenheimer
Discovery Fund  Oppenheimer  Multi-State  Municipal Trust  Oppenheimer  Emerging
Growth  Fund  Oppenheimer   Multi-State  Municipal  Trust  Oppenheimer  Emerging
Technologies  Fund Oppenheimer  Municipal Bond Fund Oppenheimer  Enterprise Fund
Oppenheimer New York Municipal Fund Oppenheimer  Europe Fund Oppenheimer  Series
Fund, Inc. Oppenheimer Global Fund Oppenheimer U.S. Government Trust Oppenheimer
Global Growth & Income Fund  Oppenheimer  Trinity Core Fund  Oppenheimer  Gold &
Special  Minerals Fund Oppenheimer  Trinity Growth Fund Oppenheimer  Growth Fund
Oppenheimer Trinity Value Fund Oppenheimer International Growth Fund Oppenheimer
World Bond Fund

      Ms. Macaskill and Messrs. Spiro, Donohue,  Wixted, Zack, Bishop and Farrar
respectively  hold the same  offices with the other New  York-based  Oppenheimer
funds as with the Fund. As of February 1, 2001 the Directors and officers of the
Fund as a group  owned of record or  beneficially  less than 1% of each class of
shares of the Fund. The foregoing statement does not reflect ownership of shares
of the Fund held of record by an  employee  benefit  plan for  employees  of the
Manager, other than the shares beneficially owned under the plan by the officers
of the Fund listed above.  Ms.  Macaskill  and Mr.  Donohue are trustees of that
plan.

11 Ms. Macaskill and Mr. Griffiths are not Directors of Oppenheimer Money
Market Fund, Inc.  Mr. Griffiths is not a Trustee of Oppenheimer Discovery
Fund.

Leon Levy, Chairman of the Board of Directors, Age 75
280 Park Avenue, New York, New York 10017

General Partner of Odyssey Partners, L.P. (investment partnership) (since
1982) and Chairman of Avatar Holdings, Inc. (real estate development).


positions:Donald W. Spiro, Vice Chairmanof-October  October and Director, Age 75
Two  World  Trade   Center,   34th  Floor,   New  York,   New  York   10048-0203
PresidentFormerly  he held the following  positions:  Chairman  Emeritus (August
1991 - August  1999),  Chairman  (November  1987 - January  1991) and a director
(January  1969 -  August  1999)  of  the  Manager;  President  and  Director  of
OppenheimerFunds  Distributor,  Inc., a subsidiary of the Manager and the Fund's
Distributor (July 1978 Corporation;- January 1992).

Bridget A.  Macaskill,*  President and Director,  Age 52 Two World Trade Center,
34th Floor,  New York, New York 10048-0203  Chairman (since August 2000),  Chief
Executive Officer (since September 1995) and a director (since December 1994) of
the Manager;  President  (since  September  1995) and a director  (since October
1990) of Oppenheimer  Acquisition  Corp.,  the Manager's parent holding company;
President,  Chief  Executive  Officer and a director  (since  March 2000) of OFI
Private  Investments,  Inc.,  an investment  advisor  subsidiary of the Manager;
Chairman and a director of Shareholder  Services,  Inc.  (since August 1994) and
Shareholder  Financial  Services,  Inc. (since September  1995),  transfer agent
subsidiaries  of the Manager;  President  (since  September 1995) and a director
(since  November  1989) of  Oppenheimer  Partnership  Holdings,  Inc., a holding
company subsidiary of the Manager;a  directorof  Oppenheimer Real of Oppenheimer
Real Asset Management,Asset Management,  President and a director (since October
1997) of  OppenheimerFunds  International  Ltd.,  an  offshore  fund  management
subsidiary of the Manager and of Oppenheimer Millennium Funds plc; a director of
HarbourView  Asset Management  Corporation  (since July 1991) and of Oppenheimer
Real Asset Management,  Inc. (since July 1996),  investment advisor subsidiaries
of the  Manager;  a  director  (since  April  2000) of  OppenheimerFunds  Legacy
Program,  a charitable trust program  established by the Manager;  a director of
Prudential  Corporation plc (a U.K. financial service company);  President and a
trustee of other Oppenheimer funds; formerly President of the Manager (June 1991
- August 2000).

Robert G. Galli, Director, Age 67
19750 Beach Road, Jupiter Island, Florida 33469
A Trustee or Director of other Oppenheimer funds. Formerly he held the following
positions:  Vice  Chairman  (October 1995 - December  1997) and  Executive  Vice
President  (December  1977 -  October  1995)  of  the  Manager;  Executive  Vice
President  and a  director  (April  1986 - October  1995) of  HarbourView  Asset
Management Corporation.

Phillip A. Griffiths, Director, Age 62
97 Olden Lane, Princeton, N. J. 08540
The Director of the Institute for Advanced Study,  Princeton,  N.J. (since 1991)
and a member of the  National  Academy of Sciences  (since  1979);  formerly (in
descending chronological order) a director of Bankers Trust Corporation, Provost
and Professor of Mathematics at Duke University, a director of Research Triangle
Institute, Raleigh, N.C., and a Professor of Mathematics at Harvard University.

Benjamin Lipstein, Director, Age 77
591 Breezy Hill Road, Hillsdale, New York 12529
Professor Emeritus of Marketing, Stern Graduate School of Business
Administration, New York University.

Elizabeth B. Moynihan, Director, Age 71
801 Pennsylvania Avenue, N.W., Washington, D.C. 20004
 Author and  architectural  historian;  a trustee  of the Freer  Gallery  of Art
      (Smithsonian  Institute),  Executive Committee of Board of Trustees of the
      National Building Museum; a member of the Trustees  Council,  Preservation
      League of New York State.

Kenneth A. Randall, Director, Age 73
6 Whittaker's Mill, Williamsburg, Virginia 23185
A director of Dominion Resources, Inc. (electric utility holding company),
Dominion Energy, Inc. (electric power and oil & gas producer), and Prime
Retail, Inc. (real estate investment trust); formerly President and Chief
Executive Officer of The Conference Board, Inc. (international economic and
business research) and a director of Lumbermens Mutual Casualty Company,
American Motorists Insurance Company and American Manufacturers Mutual
Insurance Company.


Edward V. Regan, Director, Age 70
40 Park Avenue, New York, New York 10016
Chairman of Municipal  Assistance  Corporation for the City of New York;  Senior
Fellow of Jerome Levy Economics  Institute,  Bard College; a director of RBAsset
(real estate manager);  a director of OffitBank;  Trustee,  Financial Accounting
Foundation (FASB and GASB); President,  Baruch College of the City University of
New York;  formerly New York State  Comptroller and trustee,  New York State and
Local Retirement Fund.

Russell S. Reynolds, Jr., Director, Age 69
8 Sound Shore Drive, Greenwich, Connecticut 06830
Chairman of The Directorship Search Group, Inc. (corporate governance
consulting and executive recruiting); a director of Professional Staff
Limited (a U.K. temporary staffing company); a life trustee of International
House (non-profit educational organization), and a trustee of the Greenwich
Historical Society.

Clayton K. Yeutter, Director, Age 70
10475 E. Laurel Lane, Scottsdale, Arizona 85259
Of Counsel, Hogan & Hartson (a Washington, D.C. law firm). Other
directorships: Allied Zurich Pl.c; ConAgra, Inc.; FMC Corporation; Farmers
Group Inc.; Oppenheimer Funds; Texas Instruments Incorporated; Weyerhaeuser
Co. and Zurich Allied AG.

Christopher  Leavy,  Vice President and Portfolio  Manager,  Age: 29 Senior Vice
President (since September 2000) of the Manager; prior to joining the Manager in
September  2000,  he was a  portfolio  manager  of Morgan  Stanley  Dean  Witter
Investment  Management (from 1997) prior to which he was a portfolio manager and
equity analyst of Crestar Asset Management (from 1995).

Andrew J. Donohue, Secretary, Age 50
Two World Trade Center, 34th Floor, New York, New York 10048-0203 Executive Vice
President  (since  January  1993),  General  Counsel  (since October 1991) and a
director  (since  September  1995) of the Manager;  Executive Vice President and
General  Counsel (since  September  1993) and a director (since January 1992) of
OppenheimerFunds  Distributor,  Inc.; Executive Vice President,  General Counsel
and  a  director  (since   September  1995)  of  HarbourView   Asset  Management
Corporation,  Shareholder Services,  Inc., Shareholder Financial Services,  Inc.
and Oppenheimer  Partnership  Holdings,  Inc., of OFI Private Investments,  Inc.
(since March 2000), and of PIMCO Trust Company (since May 2000); President and a
director of Centennial Asset Management  Corporation  (since September 1995) and
of Oppenheimer Real Asset Management, Inc. (since July 1996); Vice President and
a director (since  September 1997) of  OppenheimerFunds  International  Ltd. and
Oppenheimer   Millennium   Funds  plc;  a  director   (since   April   2000)  of
OppenheimerFunds Legacy Program;  General Counsel (since May 1996) and Secretary
(since  April  1997) of  Oppenheimer  Acquisition  Corp.;  an  officer  of other
Oppenheimer funds.

Brian W. Wixted,  Treasurer and Principal  Financial and  Accounting  Officer,
Age: 41.
6803 South Tucson Way, Englewood, Colorado 80112
Senior Vice President and Treasurer (since March 1999) of the Manager; Treasurer
(since March 1999) of  HarbourView  Asset  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 PIMCO Trust Company;
Assistant  Treasurer (since March 1999) of Oppenheimer  Acquisition Corp. and of
Centennial Asset Management Corporation;  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 G. Zack, Assistant Secretary, Age 52
Two World Trade Center, 34th Floor, New York, New York 10048-0203
Two World Trade Center, New York, New York 10048-0203
Robert J. Bishop, Assistant Treasurer, Age 42
6803 South Tucson Way, Englewood, Colorado 80112
Vice  President  of the  Manager/Mutual  Fund  Accounting  (since May 1996);  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.

Scott T. Farrar, Assistant Treasurer, Age 35
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); Assistant
Treasurer of Oppenheimer  Millennium  Funds plc (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.

      |X| Remuneration of Directors. The officers of the Fund and Ms. Macaskill,
who is affiliated  with the Manager  receive no salary or fee from the Fund. The
remaining  Directors of the Fund  received  the  compensation  shown below.  The
compensation  from the Fund was paid  during its fiscal  year ended  October 31,
2000.  The  compensation  from  all  of the  New  York-based  Oppenheimer  funds
(including  the  Fund)  was  received  as a  director,  trustee  or  member of a
committee of the boards of those funds during the calendar year 2000.



<PAGE>





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

                                                                           Total
                                           Retirement       Compensation
                                           Benefits         From all
                           Aggregate       Accrued as Part  New York-based
Trustee's Name             Compensation    of Fund          Oppenheimer
and Position               from Fund1      Expenses         Funds (32 Funds)2

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

        Leon Levy
  Chairman

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

     Robert G. Galli3
  Study Committee Member

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

Phillip Griffiths4

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

    Benjamin Lipstein
  Study Committee
  Chairman,
  Audit Committee Member

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

  Elizabeth B. Moynihan
  Study Committee Member

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

    Kenneth A. Randall
  Audit Committee Chairman

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

     Edward V. Regan
  Proxy Committee
  Chairman,
  Audit Committee Member

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

Russell S. Reynolds, Jr.
  Proxy Committee Member

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

Donald W. Spiro

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

   Clayton K. Yeutter5
  Proxy Committee Member

--------------------------------------------------------------------------------
6.    Aggregate  compensation  includes fees, deferred  compensation,  if any,
   and retirement plan benefits accrued for a Director.

7.    For the 2000 calendar year.
8. Total Compensation for the 2000 calendar year includes  compensation received
   for serving as a Trustee or Director of 10 other Oppenheimer funds.
9.    Includes  $____  deferred  under  the  Deferred   Compensation  Plan  as
   described below.
 10.  Includes  $___  deferred  under  the  Deferred   Compensation   Plan  as
   described below.


      |X|  Retirement  Plan for Directors.  The Fund and its parent  corporation
have adopted a retirement plan that provides for payments to retired  Directors.
Payments are up to 80% of the average compensation paid during a Director's five
years of service in which the highest compensation was received. A Director must
serve as director or trustee for any of the New York-based Oppenheimer funds for
at least 15  years to be  eligible  for the  maximum  payment.  Each  Director's
retirement  benefits  will  depend  on  the  amount  of  the  Director'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|  Deferred  Compensation  Plan.  The Board of  Directors  has adopted a
Deferred  Compensation  Plan for  disinterested  directors  that enables them to
elect to defer  receipt of all or a portion of the annual fees they are entitled
to  receive  from the Fund.  Under  the plan,  the  compensation  deferred  by a
Director  is  periodically  adjusted  as though an  equivalent  amount  had been
invested in shares of one or more  Oppenheimer  funds  selected by the Director.
The amount paid to the Director under the plan will be determined based upon the
performance of the selected funds.

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


      |X| Major Shareholders. As of February 1, 2001, 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:


      Mass  Mutual  Life  Insurance  Co.,  1295 State  Street,  Springfield,  MA
      01111-0001,   which  owned  1,543,140.219  Class  Y  shares  (representing
      approximately 35.70% of the outstanding Class Y shares).

      Mass  Mutual  Life  Insurance  Co.,  1295 State  Street,  Springfield,  MA
      01111-0001,   which  owned  1,059,829.254  Class  Y  shares  (representing
      approximately 24.52% of the outstanding Class Y shares).

      Mass  Mutual  Life  Insurance  Co.,  1295 State  Street,  Springfield,  MA
      01111-0001,   which  owned  921,134.732   Class  Y  shares   (representing
      approximately 21.31% of the outstanding Class Y shares).

      Mass  Mutual  Life  Insurance  Co.,  1295 State  Street,  Springfield,  MA
      01111-0001,   which  owned  797,555.655   Class  Y  shares   (representing
      approximately 18.45% of the outstanding Class Y shares).

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
duplicating  fee,  by  electronic  request  at  the  following  E-mail  address:
[email protected].,  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. The Manager selects  securities for
the Fund's portfolio and handles its day-to-day business. The portfolio managers
of the Fund are employed by the Manager and are the persons who are  principally
responsible for the day-to-day management of the Fund's portfolio. Other members
of the Manager's Equity Portfolio Department provide the portfolio managers with
counsel and support in managing the Fund's portfolio.

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

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

 ------------------------------------------------------------------------------
 Fiscal Year ended 10/31:    Management Fees Paid to OppenheimerFunds, Inc.
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
           1998                                $3,658,650
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
           1999                                $3,663,867
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------

           2000                                     $

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

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



Brokerage Policies of the Fund

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


      Under the investment  advisory  agreement,  the Manager may select brokers
(other than affiliates) that provide  brokerage and/or research services for the
Fund and/or the other  accounts  over which the Manager or its  affiliates  have
investment  discretion.  The commissions paid to such brokers may be higher than
another  qualified  broker  would  charge,  if the  Manager  makes a good  faith
determination  that the  commission  is fair and  reasonable  in relation to the
services  provided.  Subject to those  considerations,  as a factor in selecting
brokers for the Fund's  portfolio  transactions,  the Manager may also  consider
sales of shares of the Fund and other investment companies for which the Manager
or an affiliate serves as investment advisor.


Brokerage Practices Followed by the Manager. The Manager allocates brokerage for
the Fund subject to the provisions of the investment  advisory agreement and the
procedures and rules described above. Generally, the Manager's portfolio traders
allocate  brokerage  based upon  recommendations  from the  Manager's  portfolio
managers. In certain instances, portfolio managers may directly place trades and
allocate  brokerage.  In either case, the Manager's executive officers supervise
the allocation of brokerage.

         Transactions  in  securities  other than those for which an exchange is
the primary  market are  generally  done with  principals or market  makers.  In
transactions  on  foreign  exchanges,  the Fund  may be  required  to pay  fixed
brokerage  commissions  and  therefore  would not have the benefit of negotiated
commissions available in U.S. markets.  Brokerage commissions are paid primarily
for  transactions  in  listed  securities  or for  certain  fixed-income  agency
transactions in the secondary market.  Otherwise brokerage  commissions are paid
only if it appears  likely that a better price or  execution  can be obtained by
doing so. In an option transaction, the Fund ordinarily uses the same broker for
the  purchase or sale of the option and any  transaction  in the  securities  to
which the option relates.

         Other funds advised by the Manager have investment  policies similar to
those of the Fund. Those other funds may purchase or sell the same securities as
the Fund at the same time as the Fund,  which could  affect the supply and price
of the securities. If two or more funds advised by the Manager purchase the same
security  on the same day from the same  dealer,  the  transactions  under those
combined  orders are averaged as to price and allocated in  accordance  with the
purchase or sale orders actually placed for each account.

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

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

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

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

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

 ------------------------------------------------------------------------------
 Fiscal Year Ended 10/31:     Total Brokerage Commissions Paid by the Fund1
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
           1998                                $2,003,638
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------

           1999                                $2,227,515

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

           2000                                    $ 2

 ------------------------------------------------------------------------------
3.    Amounts do not include spreads or concessions on principal  transactions
   on a net trade basis.

4.    In the fiscal year ended 10/31/99,  the amount of transactions  directed
   to brokers for  research  services was  $__________  and the amount of the
   commissions paid to broker-dealers for those services was $_________.



Distribution and Service Plans

The  Distributor.  Under its  General  Distributor's  Agreement  with the Fund's
parent corporation,  the Distributor acts as the Fund's principal underwriter in
the continuous  public offering of the different  classes of shares of the Fund.
The Distributor is not obligated to sell a specific  number of shares.  Expenses
normally attributable to sales are borne by the Distributor.


         The compensation paid to (or retained by) the Distributor from the sale
of shares or on the  redemption  of shares  during the Fund's  three most recent
fiscal  years is shown in the  table  below.  Class N shares  were not  publicly
offered during the Fund's fiscal year's  depicted and therefore are not included
in any of the charts  located in this  section of the  Statement  of  Additional
Information.




<PAGE>




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

Fiscal    Aggregate    Class A       Concessions    Concessions  Concessions
          Front-End    Front-End
          Sales        Sales         on Class A     on Class B   on Class C
Year      Charges on   Charges       Shares         Shares       Shares
Ended     Class A      Retained by   Advanced by    Advanced by  Advanced by
10/31:    Shares       Distributor   Distributor1   Distributor1 Distributor1

-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
  1998     $1,667,118    $789,178       $178,820     $1,811,143    $100,603
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
  1999      $715,853     $384,487       $59,831       $688,909      $35,094
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

  2000         $             $             $             $             $

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

2. 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.


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

   2000              $                     $                      $

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


Distribution  and Service Plans. The Fund has adopted a Service Plan for Class A
shares  and  Distribution  and  Service  Plans for Class B,  Class C and Class N
shares under Rule 12b-1 of the  Investment  Company  Act.  Under those plans the
Fund  pays  the  Distributor  for all or a  portion  of its  costs  incurred  in
connection  with  the  distribution  and/or  servicing  of  the  shares  of  the
particular class.


      Each plan has been approved by a vote of the Board of Directors, including
a majority of the  Independent  Directors12,  cast in person at a meeting called
for the purpose of voting on that plan.

12. In  accordance  with Rule  12b-1 of the  Investment  Company  Act,  the term
"Independent  Directors" in this Statement of Additional  Information  refers to
those  Directors  who are not  "interested  persons"  of the Fund (or its parent
corporation)  and who do not have any direct or indirect  financial  interest in
the  operation of the  distribution  plan or any  agreement  under the plan.

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

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

      The Board of  Directors  and the  Independent  Directors  must approve all
material amendments to a plan. An amendment to increase materially the amount of
payments to be made under a plan must be approved by  shareholders  of the class
affected  by the  amendment.  Because  Class B shares of the Fund  automatically
convert into Class A shares  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  Directors  at least
quarterly  for its review.  The Reports  shall detail the amount of all payments
made  under a plan and the  purpose  for which the  payments  were  made.  Those
reports are subject to the review and approval of the Independent Directors.

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

      Under the 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  Directors.  The Board of  Directors  has set no  minimum  amount of
assets to qualify for payments under the plans.

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

      For the fiscal year ended October 31, 1999 payments under the Class A Plan
totaled $1,107,816, all of which was paid by the Distributor to recipients. That
included $686,023 paid to an affiliate of the Distributor's  parent company. Any
unreimbursed  expenses the Distributor  incurs with respect to Class A shares in
any fiscal year cannot be recovered in subsequent years. The Distributor may not
use  payments  received  under  the  Class  A Plan  to pay  any of its  interest
expenses, carrying charges, or other financial costs, or allocation of overhead.


      |X| Class B, Class C and Class N 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.  Each plan  provides  for the
Distributor  to  be  compensated  at a  flat  rate,  whether  the  Distributor's
distribution  expenses  are more or less than the amounts paid by the Fund under
the plan during the period for which the fee is paid. The types of services that
recipients  provide  are  similar  to the  services  provided  under the Class A
service plan, described above.

      Each plan permits the  Distributor  to retain both the  asset-based  sales
charges and the service fees or to pay recipients the service fee on a quarterly
basis, without payment in advance. However, the Distributor currently intends to
pay the service fee to recipients in advance for the first year after 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 Class B, Class C or Class N
shares are redeemed during the first year after their purchase, the recipient of
the service fees on those shares will be  obligated to repay the  Distributor  a
pro rata portion of the advance payment of the service fee made on those shares.

      The Distributor  retains the asset-based sales charge on Class B and Class
N shares. The Distributor retains the asset-based sales charge on Class C shares
during the first year the shares are outstanding.  It pays the asset-based sales
charge as an ongoing  concession to the recipient on Class C shares  outstanding
for a year or more. If a dealer has a special  agreement  with the  Distributor,
the Distributor will pay the Class B, Class C and/or Class N service fee and the
asset-based  sales  charge to the dealer  quarterly  in lieu of paying the sales
concessions and service fee in advance at the time of purchase.

         The  asset-based  sales  charges on Class B, Class C and Class N shares
allow  investors to buy shares  without a front-end  sales charge while allowing
the Distributor to compensate  dealers that sell those shares. The Fund pays the
asset-based  sales  charges to the  Distributor  for its  services  rendered  in
distributing  each class of shares.  The payments are made to the Distributor in
recognition that the Distributor:
o     pays sales concessions to authorized brokers and dealers at the time of
   sale and pays service fees as described above,
o  may finance  payment of sales  concessions  and/or the advance of the service
   fee payment to recipients under the plans, or may provide such financing from
   its own resources or from the resources of an affiliate,
o     employs personnel to support distribution of Class B, Class C and Class
   N shares, 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.


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


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

     Distribution Fees Paid to the Distributor for the Year Ended 10/31/00

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

Class B Plan         $               $ 1              $                %

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

Class C Plan         $               $ 2              $                %

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

3.    Includes  $___________paid  to an affiliate of the Distributor's  parent
    company.
4.    Includes  $__________paid  to an affiliate of the  Distributor's  parent
    company.

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



Performance of the Fund


Explanation  of  Performance  Terminology.  The Fund uses a variety  of terms to
illustrate its investment  performance.  Those terms include  "cumulative  total
return,"  "average  annual total  return,"  "average  annual total return at net
asset value" and "total return at net asset value." An  explanation of how total
returns are  calculated  is set forth  below.  The charts  below show the Fund's
performance as of the Fund's most recent fiscal year end. You can obtain current
performance  information by calling the Fund's Transfer Agent at  1.800.525.7048
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:
o Total returns  measure the  performance of a hypothetical  account in the Fund
over  various  periods  and do not show the  performance  of each  shareholder's
account. Your account's performance will vary from the model performance data if
your  dividends  are  received  in cash,  or you buy or sell  shares  during the
period,  or you bought your shares at a different time and price than the shares
used in the model.
o The Fund's performance returns do not reflect the effect of taxes on dividends
and capital gains  distributions.  o An investment in the Fund is not insured by
the FDIC or any other government agency.
o The principal value of the Fund's shares, and total returns are not guaranteed
and normally will  fluctuate on a daily basis.  o When an investor's  shares are
redeemed, they may be worth more or less than their original cost.
o Total  returns  for any given past  period  represent  historical  performance
information  and are not, and should not be  considered,  a prediction of future
returns.

      The performance of each class of shares is shown  separately,  because the
performance  of each class of shares will usually be different.  That is because
of the different  kinds of expenses each class bears.  The total returns of each
class of shares of the Fund are  affected by market  conditions,  the quality of
the  Fund's  investments,  the  maturity  of  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 1-year and
life-of-class  periods,  as  applicable.  There  is no sales  charge  on Class Y
shares.


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

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

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

o Total Returns at Net Asset Value.  From time to time the Fund may also quote a
cumulative  or an average  annual  total  return "at net asset  value"  (without
deducting sales charges) for Class A, Class B, Class C and 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 10/31/00

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

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

Class B         %2      %2        %        %       %2       %2      N/A     N/A

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

Class C         %3      %3        %        %       %3       %3      N/A     N/A

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

Class Y         %4      %4        %        %       %4       %4      N/A     N/A

--------------------------------------------------------------------------------
1. Inception of Class A:      9/16/85.
2. Inception of Class B:      10/2/95.
3. Inception of Class C:      5/1/96.
4. Inception of Class Y:      12/16/96.

* Class N shares were not offered for sale during the Fund's  fiscal year ending
10/31/00.


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  Analytical  Services,  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 categories  relating to
investment styles.  The Lipper  performance  rankings are based on total returns
that include the reinvestment of capital gain distributions and income dividends
but do not take sales charges or taxes into consideration. Lipper also publishes
"peer-group"  indices of the  performance of all mutual funds in a category that
it  monitors  and  averages  of the  performance  of  the  funds  in  particular
categories.


o  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 rates and ranks
mutual funds in broad investment categories: domestic stock funds, international
stock funds,  taxable bond funds and municipal bond funds.  The Fund is included
in the domestic stock funds category.


      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  ratings   reflecting
performance  relative to the other funds in the 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
rating is the Fund's (or class's)  overall  rating,  which is the Fund's  3-year
rating or its combined 3- and 5-year ranking (weighted 60%/40% respectively), or
its combined 3-, 5-, and 10-year rating  (weighted  40%/30%/30%,  respectively),
depending on the inception  date of the Fund (or class).  Ratings 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 rating. Those 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.


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


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,  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 and  Class B  shares  of the Fund and
            other Oppenheimer funds to reduce the sales charge rate that applies
            to current purchases of Class A shares, and
o           Class A and  Class B shares  of  Oppenheimer  funds  you  previously
            purchased subject to an initial or contingent  deferred sales charge
            to reduce the sales  charge  rate for current  purchases  of Class A
            shares,  provided that you still hold your  investment in one of the
            Oppenheimer funds.

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

|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 Limited-Term Government Fund
                                        Oppenheimer  Main Street Growth & Income

Oppenheimer California Municipal Fund     Fund

Oppenheimer Capital Appreciation Fund   Oppenheimer Main Street Opportunity Fund
Oppenheimer Capital Preservation Fund     Oppenheimer Main Street Small Cap Fund
Oppenheimer Capital Income Fund           Oppenheimer MidCap Fund
Oppenheimer Champion Income Fund          Oppenheimer Multiple Strategies Fund
Oppenheimer Convertible Securities Fund   Oppenheimer Municipal Bond Fund
Oppenheimer Developing Markets Fund       Oppenheimer New York Municipal Fund
Oppenheimer Disciplined Allocation Fund   Oppenheimer New Jersey Municipal Fund
Oppenheimer Disciplined Value Fund       Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Discovery Fund                Oppenheimer Quest Balanced Value Fund
                                        Oppenheimer  Quest  Capital  Value Fund,
Oppenheimer Emerging Growth Fund          Inc.
                                        Oppenheimer  Quest  Global  Value  Fund,
Oppenheimer Emerging Technologies Fund    Inc.
Oppenheimer Enterprise Fund
Oppenheimer Quest Opportunity Value Fund
Oppenheimer Europe Fund
Oppenheimer Quest Small Cap Fund
Oppenheimer  Florida Municipal Fund
Oppenheimer  Quest Value Fund, Inc.
Oppenheimer  Global Fund
Oppenheimer  Real Asset Fund
Oppenheimer  Global Growth & Income Fund
Oppenheimer  Senior Floating Rate Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer  Strategic Income Fund
Oppenheimer  Growth Fund
Oppenheimer  Total Return Fund, Inc.
Oppenheimer High Yield Fund
Oppenheimer Trinity Core Fund
Oppenheimer Intermediate Municipal Fund
Oppenheimer  Trinity  Growth  Fund
Oppenheimer  International  Bond  Fund
Oppenheimer Trinity Value Fund
Oppenheimer International Growth Fund
Oppenheimer U.S.  Government Trust
Oppenheimer  International Small Company Fund
Oppenheimer World  Bond  Fund
Oppenheimer  Large  Cap  Growth  Fund
Limited-Term  New York Municipal Fund
Rochester Fund Municipals

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.


      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.

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.

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

         1. Out of the initial  purchase (or subsequent  purchases if necessary)
made  pursuant  to a Letter,  shares of the Fund  equal in value up to 5% of the
intended  purchase amount specified in the Letter shall be held in escrow by the
Transfer Agent.  For example,  if the intended  purchase amount is $50,000,  the
escrow  shall be shares  valued in the amount of $2,500  (computed at the public
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:
(d)   Class A shares sold with a front-end sales charge or subject to a Class
                 A contingent deferred sales charge, (e) Class B shares of other
Oppenheimer funds acquired subject to a
                 contingent  deferred  sales charge,  and (f) 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  (the  minimum  is $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 are available
only if your bank is an ACH member.  Asset  Builder Plans may not be used to buy
shares for  OppenheimerFunds  employer-sponsored  qualified retirement accounts.
Asset Builder Plans also enable shareholders of Oppenheimer Cash Reserves to use
their fund account to make monthly  automatic  purchases of shares of up to four
other Oppenheimer funds.

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

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

Retirement  Plans.  Certain types of  Retirement  Plans are entitled to purchase
shares of the Fund without  sales charge or at reduced  sales charge  rates,  as
described in Appendix C to this  Statement of  Additional  Information.  Certain
special sales charge arrangements described in that Appendix apply to retirement
plans whose records are maintained on a daily  valuation  basis by Merrill Lynch
Pierce Fenner & Smith, Inc. 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 Class B,
Class C and Class N shares  and the  dividends  payable  on Class B, Class C and
Class N shares  will be reduced by  incremental  expenses  borne  solely by that
class.  Those expenses  include the asset-based  sales charges to which Class B,
Class C and Class N 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 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 classes, without the imposition
of a sales charge or fee, such exchange could constitute a taxable event for the
shareholder,  and absent  such  exchange,  Class B shares  might  continue to be
subject to the asset-based sales charge for longer than six years.

      |X|  Allocation of Expenses.  The Fund pays expenses  related to its daily
operations, such as custodian fees, Directors' fees, transfer agency fees, legal
fees and auditing  costs.  Those  expenses are paid out of the Fund's assets and
are not paid directly by  shareholders.  However,  those expenses reduce the net
asset  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
Directors,  custodian expenses, share issuance costs,  organization and start-up
costs, interest,  taxes and brokerage commissions,  and non-recurring  expenses,
such as litigation costs.

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

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 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.  The Fund's net asset
values will not be calculated on those days and the values of some of the Fund's
portfolio  securities may change  significantly on those 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
Manager  determines  that the event is likely to effect a material change in the
value of the security. The Manager may make that determination, under procedures
established by the Board.

|X|   Securities Valuation.  The Fund's Board of Directors has established
         procedures for the valuation of the Fund's securities. In general
         those procedures are as follows:
o     Equity securities traded on a U.S. securities exchange or on NASDAQ are
valued as follows:
(3)   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
(4)              if last sale  information is not available on a valuation date,
                 they are valued at the last reported  sale price  preceding the
                 valuation  date if it is within the spread of the closing "bid"
                 and  "asked"  prices on the  valuation  date or, if not, at the
                 closing "bid" price on the valuation date.
o     Equity securities traded on a foreign securities exchange generally are
valued in one of the following ways:
(4)   at the last sale price available to the pricing service approved by the
                 Board of Directors, or
(5)              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
(6)              at the mean between the "bid" and "asked" prices  obtained from
                 the  principal  exchange on which the security is traded or, on
                 the basis of reasonable inquiry,  from two market makers in the
                 security.
o Long-term debt securities having a remaining maturity in excess of 60 days are
valued based on the mean between the "bid" and "asked"  prices  determined  by a
portfolio  pricing service approved by the Fund's Board of Directors or obtained
by the Manager  from two active  market  makers in the  security on the basis of
reasonable inquiry.
o The following  securities are valued at the mean between the "bid" and "asked"
prices determined by a pricing service approved by the Fund's Board of Directors
or obtained by the Manager from two active  market makers in the security on the
basis of reasonable inquiry:
(4)   debt instruments that have a maturity of more than 397 days when
                 issued,
(5)              debt  instruments  that had a maturity of 397 days or less when
                 issued and have a remaining maturity of more than 60 days, and
(6)              non-money  market debt  instruments  that had a maturity of 397
                 days or less when issued and which have a remaining maturity of
                 60 days or less.
o The following  securities  are valued at cost,  adjusted for  amortization  of
premiums and accretion of discounts:  (3) 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
(4)              debt  instruments  held  by a money  market  fund  that  have a
                 remaining maturity of 397 days or less.
o Securities  (including  restricted  securities)  not having  readily-available
market  quotations  are  valued  at fair  value  determined  under  the  Board's
procedures. If the Manager is unable to locate two market makers willing to give
quotes,  a  security  may be priced at the mean  between  the "bid" and  "asked"
prices  provided by a single  active market maker (which in certain cases may be
the "bid" price if no "asked" price is available).

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

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

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

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


How to Sell Shares

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:
o     Class A shares purchased subject to an initial sales charge or Class A
   shares on which a contingent  deferred  sales  charge was paid,  or o Class B
shares that were subject to the Class B contingent deferred
   sales charge when redeemed.

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


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

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

Involuntary  Redemptions.  The Fund's Board of Directors  has the right to cause
the  involuntary  redemption  of the shares  held in any  account if the account
holds fewer than 100 shares.  If the Board exercises this right, it may also fix
the requirements for any notice to be given to the shareholders in question (not
less  than 30  days).  The  Board may  alternatively  set  requirements  for the
shareholder  to increase the  investment,  or set other terms and  conditions so
that the shares would not be involuntarily redeemed.

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


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


Sending  Redemption  Proceeds 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 (4)  state the  reason  for the
distribution;   (5)  state  the  owner's  awareness  of  tax  penalties  if  the
distribution is
           premature; and
(6)   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
to this Statement of Additional Information.


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

      |X|  Automatic  Exchange  Plans.  Shareholders  can authorize the Transfer
Agent to exchange a  pre-determined  amount of shares of the Fund for shares (of
the  same  class)  of  other  Oppenheimer  funds  automatically  on  a  monthly,
quarterly,  semi-annual  or annual basis under an Automatic  Exchange  Plan. The
minimum  amount  that  may be  exchanged  to each  other  fund  account  is $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 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     Oppenheimer  Main Street  California  Municipal Fund currently offers only
      Class A and Class B 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 A shares of Senior  Floating Rate Fund are not available by exchange
      of Class A shares  of other  Oppenheimer  funds.  Class A shares of Senior
      Floating Rate Fund that are exchanged for shares of the other  Oppenheimer
      funds may not be exchanged back for Class A shares of Senior Floating Rate
      Fund.
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.


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


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

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

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

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

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

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


Dividends, Capital Gains and Taxes


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


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


Tax Status of the Fund's Dividends and Distributions.  The federal tax treatment
of the Fund's dividends and capital gains  distributions is briefly  highlighted
in the Prospectus.


          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.

      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.  However, the
Board of Directors and the Manager might  determine in a particular year that it
would be in the best  interests  of  shareholders  for the Fund not to make such
distributions  at  the  required  levels  and  to  pay  the  excise  tax  on the
undistributed  amounts.  That would reduce the amount of income or capital gains
available for distribution to shareholders.


      The Fund intends to qualify as a "regulated  investment company" under the
Internal  Revenue Code  (although  it reserves  the right not to qualify).  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 the Fund's
shares are held in a retirement  account or the shareholder is otherwise  exempt
from tax). If the Fund qualifies as a "regulated  investment  company" under the
Internal Revenue Code, it will not be liable for federal income taxes on amounts
paid by it as dividends  and  distributions.  The Fund  qualified as a regulated
investment company in its last fiscal year. The Internal Revenue Code contains a
number of complex tests relating to qualification  which the Fund might not meet
in any particular year. If it did not so qualify,  the Fund would be treated for
tax  purposes  as an  ordinary  corporation  and  receive no tax  deduction  for
payments made to shareholders.


      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.

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.




<PAGE>


Additional Information About the Fund

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

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


The Custodian.  The Bank of New York is the custodian of the Fund's assets.  The
custodian's  responsibilities  include  safeguarding  and controlling the Fund's
portfolio  securities  and handling the delivery of such  securities to and from
the Fund.  It 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 auditors for certain other funds advised by the
Manager and its affiliates.



<PAGE>



                                       A-5

                                   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.


<PAGE>



                                       B-1

                                   Appendix B

------------------------------------------------------------------------------
                            Industry Classifications
------------------------------------------------------------------------------

Aerospace/Defense                       Food and Drug Retailers
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




<PAGE>



                                      C-11

                                   Appendix C

        OppenheimerFunds Special Sales Charge Arrangements and Waivers

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

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

For the purposes of some of the waivers  described  below and in the  Prospectus
and Statement of Additional Information of the applicable Oppenheimer funds, the
term  "Retirement  Plan"  refers  to the  following  types of  plans:  (7) plans
qualified under Sections 401(a) or 401(k) of the Internal
         Revenue Code,
(8) non-qualified  deferred compensation plans, (9) employee benefit plans3 (10)
Group Retirement  Plans4 (11) 403(b)(7)  custodial plan accounts (12) 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.

--------------
5.    Certain waivers also apply to Class M shares of Oppenheimer Convertible
   Securities Fund.
6. In the case of Oppenheimer Senior Floating Rate Fund, a  continuously-offered
   closed-end  fund,  references to contingent  deferred  sales charges mean the
   Fund's  Early  Withdrawal   Charges  and  references  to  "redemptions"  mean
   "repurchases" of shares.
7. An "employee  benefit plan" means any plan or arrangement,  whether or not it
   is "qualified" under the Internal Revenue Code, under which Class A shares of
   an  Oppenheimer  fund  or  funds  are  purchased  by  a  fiduciary  or  other
   administrator  for the account of participants  who are employees of a single
   employer or of affiliated employers.  These may include, for example, medical
   savings accounts, payroll deduction plans or similar plans. The fund accounts
   must be registered in the name of the fiduciary or  administrator  purchasing
   the shares for the benefit of participants in the plan.
8. The term  "Group  Retirement  Plan"  means  any  qualified  or  non-qualified
   retirement  plan  for  employees  of a  corporation  or sole  proprietorship,
   members and  employees of a partnership  or  association  or other  organized
   group of persons  (the  members of which may include  other  groups),  if the
   group has made special  arrangements  with the Distributor and all members of
   the group  participating  in (or who are eligible to participate in) the plan
   purchase  Class A shares  of an  Oppenheimer  fund or funds  through a single
   investment dealer,  broker or other financial  institution  designated by the
   group.  Such plans  include 457 plans,  SEP-IRAs,  SARSEPs,  SIMPLE plans and
   403(b) plans other than plans for public  school  employees.  The term "Group
   Retirement Plan" also includes  qualified  retirement plans and non-qualified
   deferred  compensation  plans  and IRAs  that  purchase  Class A shares of an
   Oppenheimer fund or funds through a single investment dealer, broker or other
   financial institution that has made special arrangements with the Distributor
   enabling  those  plans to  purchase  Class A shares  at net  asset  value but
   subject to the Class A contingent deferred sales charge.
 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  commission  described  in the  Prospectus  under  "Class  A
Contingent Deferred Sales Charge."13 This waiver provision applies to:

13 However,  that  commission will not be paid on purchases of shares in amounts
of $1 million or more (including any right of accumulation) by a Retirement Plan
that pays for the purchase with the redemption proceeds of Class C shares of one
or more Oppenheimer funds held by the Plan for more than one year.

|_| Purchases of Class A shares aggregating $1 million or more. |_| Purchases by
a Retirement Plan (other than an IRA or 403(b)(7)
         custodial plan) that:
(4)   buys shares costing $500,000 or more, or
(5)   has, at the time of purchase, 100 or more eligible employees or total
            plan assets of $500,000 or more, or
(6)         certifies  to the  Distributor  that it projects to have annual plan
            purchases of $200,000 or more.
|_|      Purchases  by  an  OppenheimerFunds-sponsored   Rollover  IRA,  if  the
         purchases are made:

(3)         through a broker, dealer, bank or registered investment advisor that
            has  made  special  arrangements  with  the  Distributor  for  those
            purchases, or

(4)         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:
(4)   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 Asset
            Management, L.P. ("MLAM"), 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 MLAM (the funds described in (a) and (b) are referred
            to as "Applicable Investments").
(5)   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.
(6)         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 May 1,
         1999.


<PAGE>


          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  commissions  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 advisors 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 advisor provides administration services.

|-|

<PAGE>


      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  commissions  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:
(10)        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.
(11)  To return excess contributions.
(12)

<PAGE>


         To return  contributions  made due to a mistake of fact.

(13) Hardship withdrawals, as defined in the plan.14


(14) 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.

(15)  To meet the minimum distribution requirements of the Internal Revenue
            Code.
(16)        To make  "substantially  equal  periodic  payments"  as described in
            Section 72(t) of the Internal Revenue Code.
(17)  For loans to participants or beneficiaries.
(18)  Separation from service.15

15 This provision does not apply to 403(b)(7) custodial plans if the
participant is less than age 55, nor to IRAs.

         (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 and Class C Sales Charges of Oppenheimer Funds

 The  Class B and Class C 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 and Class C  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.
|-|

<PAGE>


      Distributions  from Retirement  Plans or other employee  benefit plans for
         any of the following purposes:
(15)            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.
(16)  To return excess contributions made to a participant's account.
(17)  To return contributions made due to a mistake of fact.
(18)  To make hardship withdrawals, as defined in the plan.16

16 This provision does not apply to IRAs.

(19)  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.
(20)  To meet the minimum distribution requirements of the Internal Revenue
                Code.
(21)            To make "substantially  equal periodic payments" as described in
                Section 72(t) of the Internal Revenue Code.
(22) For  loans to  participants  or  beneficiaries.17

17 This  provision does not apply to loans from 403(b)(7)  custodial  plans.

(23) On account of the participant's separation from service.18

18 This provision does not apply to 403(b)(7) custodial plans if the participant
is less than age 55, nor to IRAs.

(24)  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.
(25)            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.
(26)            Distributions  from Retirement Plans having 500 or more eligible
                employees,  but  excluding  distributions  made  because  of the
                Plan's  elimination as investment  options under the Plan of all
                of the Oppenheimer funds that had been offered.
(27)            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.
(28)            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.
         |_|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.



<PAGE>



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:



<PAGE>


 Oppenheimer Quest Value Fund, Inc.     Oppenheimer   Quest   Small   Cap
                                        Value Fund
 Oppenheimer Quest Balanced Value Fund  Oppenheimer  Quest  Global  Value
                                        Fund
 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  Quest for Value New York Tax-Exempt
 Fund                                    Fund
 Quest for Value Investment Quality      Quest for Value National Tax-Exempt
 Income Fund                             Fund
 Quest for Value Global Income Fund      Quest for Value California
                                         Tax-Exempt Fund

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

A.  Reductions or Waivers of Class A Sales Charges.

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

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

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



<PAGE>


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

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

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

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

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

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

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

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

<PAGE>


      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):
o     Oppenheimer U. S. Government Trust,
o     Oppenheimer Bond Fund,
o     Oppenheimer Disciplined Value Fund and
o     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 advisor to the Former Connecticut Mutual Funds:


  Connecticut Mutual Liquid Account        Connecticut   Mutual   Total   Return
                                            Account
  Connecticut Mutual Government Securities CMIA  LifeSpan  Capital  Appreciation
Account                                     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:

(3)       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
(4)      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.


<PAGE>


      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:
(7)      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;
(8)      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;
(9)   Directors of the Fund or any one or more of the Former Connecticut
         Mutual Funds and members of their immediate families;
(10)  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;
(11)     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
(12)     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:
(10)  by the estate of a deceased shareholder;
(11)  upon the disability of a shareholder, as defined in Section 72(m)(7) of
         the Internal Revenue Code;
(12)     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;
(13)  as tax-free returns of excess contributions to such retirement or
         employee benefit plans;
(14)

<PAGE>


      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 commission in connection with the purchase of shares of
         any registered investment management company;
(15)     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;
(16)  in connection with the Fund's right to involuntarily redeem or
         liquidate the Fund;
(17)     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
(18)     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  Equity 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.


<PAGE>


                                      C-61

------------------------------------------------------------------------------
Oppenheimer Disciplined Value Fund
------------------------------------------------------------------------------

Internet Web Site:
      www.oppenheimerfunds.com


Investment Advisor
      OppenheimerFunds, Inc.
      Two World Trade Center
      New York, New York 10048-0203


Distributor
      OppenheimerFunds Distributor, Inc.
      Two World Trade Center
      New York, New York 10048-0203

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

      1.800.525.7048


Custodian Bank
      The Bank of New York
      One Wall Street
      New York, New York 10015


Independent Auditors
      KPMG LLP

      707 Seventeenth Street
      Denver, Colorado 80202

Legal Counsel
      Mayer, Brown & Platt
      1675 Broadway
      New York, New York 10019



1234


PX375.0201





<PAGE>


                          OPPENHEIMER SERIES FUND, INC.

                                    FORM N-1A

                                     PART C

                                OTHER INFORMATION

Item 23.  Exhibits

(a)   (i)   Amended and Restated  Articles of  Incorporation  dated January 6,
      1995: Filed with Registrant's  Post-Effective  Amendment No. 28, 3/1/96,
      and Incorporated herein by reference.

      (ii)  Articles   Supplementary   dated   September   1995:   Filed  with
      Registrant's  Post-Effective  Amendment No. 28, 3/1/96, and incorporated
      herein by reference.

(iii) Articles   Supplementary   dated  May  1995:  Filed  with   Registrant's
      Post-Effective  Amendment No. 28,  3/1/96,  and  incorporated  herein by
      reference.

(iv)  Articles  Supplementary dated November 15, 1996: Filed with Registrant's
      Post-Effective  Amendment No. 31, 12/16/96,  and incorporated  herein by
      reference.

(v)   Articles of  Amendment  dated  3/15/96,  effective  3/18/96:  Filed with
      Registrant's  Post-Effective Amendment No. 35, 2/26/99, and incorporated
      herein by reference.


(b)   By-Laws,  as  amended  through  December  14,  2000:  To be  filed  with
post-effective amendment.

(c)   (i)   Oppenheimer  Disciplined  Allocation  Fund -Specimen Class A Share
      Certificate:  Filed with Registrant's  Post-Effective  Amendment No. 36,
      2/23/00, and incorporated herein by reference.

      (ii)  Oppenheimer  Disciplined  Allocation  Fund Specimen  Class B Share
      Certificate:  Filed with Registrant's  Post-Effective  Amendment No. 36,
      2/23/00, and incorporated herein by reference.

     (iii)  Oppenheimer  Disciplined  Allocation  Fund  Specimen  Class  C Share
     Certificate:  Filed  with  Registrant's  Post-Effective  Amendment  No. 36,
     2/23/00, and incorporated herein by reference.

     (vi) Oppenheimer  Disciplined  ValueAllocation  Fund Specimen Class N Share
     Certificate: Filed herewith.

(v)   Oppenheimer  Disciplined Value Fund Specimen Class A Share  Certificate:
      Filed with Registrant's  Post-Effective  Amendment No. 36, 2/23/00,  and
      incorporated herein by reference.


(vi)  Oppenheimer  Disciplined Value Fund Specimen Class B Share  Certificate:
      Filed with Registrant's  Post-Effective  Amendment No. 36, 2/23/00,  and
      incorporated herein by reference.

(vii)  Oppenheimer   Disciplined   Value  Fund  Specimen  Class  C  Share
      Certificate:  Filed with Registrant's  Post-Effective  Amendment No. 36,
      2/23/00, and incorporated herein by reference.

(viii)      Oppenheimer   Disciplined   Value  Fund  Specimen  Class  N  Share
      Certificate: Filed herewith.

(ix)   Oppenheimer   Disciplined   Value  Fund  Specimen  Class  Y  Share
      Certificate:  Filed herewith.with Registrant's  Post-Effective Amendment
      No. 36, 2/23/00, and incorporated herein by reference.


(d)   Investment  Advisory  Agreement dated 3/1/96 between the Registrant,  on
behalf of Connecticut Mutual Total Return Account and  OppenheimerFunds,  Inc.
and  schedule  of  omitted   substantially   similar  documents:   Filed  with
Registrant's  Post-Effective  Amendment  No.  29,  4/30/96,  and  incorporated
herein by reference.

(e)   (i)   General  Distributor's  Agreement dated 3/18/96 between Registrant
      on   behalf   of   Oppenheimer    Disciplined    Allocation   Fund   and
      OppenheimerFunds  Distributor,  Inc.  ("OFDI"):  Filed with Registrant's
      Post-Effective  Amendment No. 29, 4/30/96,  and  incorporated  herein by
      reference.

(ii)  General  Distributor's  Agreement  dated 3/18/96  between  Registrant on
      behalf  of  Oppenheimer  Disciplined  Value  Fund and OFDI:  Filed  with
      Registrant's  Post-Effective Amendment No. 31, 12/16/96 and incorporated
      herein by reference.

(iii) Form  of  Dealer  Agreement  of  OppenheimerFunds   Distributor,   Inc.:
      Previously filed with Pre-Effective  Amendment No. 2 to the Registration
      Statement  of  Oppenheimer  Trinity  Value  Fund (Reg.  No.  333-79707),
      8/25/99, and incorporated herein by reference.

(iv)  Form  of  Agency  Agreement  of  OppenheimerFunds   Distributor,   Inc.:
      Previously filed with Pre-Effective  Amendment No. 2 to the Registration
      Statement  of  Oppenheimer  Trinity  Value  Fund (Reg.  No.  333-79707),
      8/25/99, and incorporated herein by reference.

(v)   Form  of  Broker  Agreement  of  OppenheimerFunds   Distributor,   Inc.:
      Previously filed with Pre-Effective  Amendment No. 2 to the Registration
      Statement  of  Oppenheimer  Trinity  Value  Fund (Reg.  No.  333-79707),
      8/25/99, and incorporated herein by reference.


(f)   (i)   Retirement  Plan for  Non-Interested  Directors or Directors dated
      June 7, 1990:  Previously filed with Post-Effective  Amendment No. 97 to
      the  Registration  Statement  of  Oppenheimer  Fund (File No.  2-14586),
      8/30/90,  refiled with  Post-Effective  Amendment No. 45 of  Oppenheimer
      Growth  Fund  (Reg.  No.  2-45272),  8/22/94,  pursuant  to Item  102 of
      Regulation S-T, and incorporated herein by reference.

      (ii)  Form   of   Deferred    Compensation    Plan   for   Disinterested
      Directors/Directors:  Filed with  Post-Effective  Amendment No.26 to the
      Registration  Statement  of  Oppenheimer  Gold & Special  Minerals  Fund
      (Reg. No. 2-82590), 10/28/98, and incorporated by reference.


(g)   (i)    Master Custodian Agreement between Registrant,  on behalf of each
      series of the  Registrant,  and  State  Street  Bank and Trust  Company:
      Filed with  Registrant's  Post-Effective  Amendment No. 28, 3/1/96,  and
      incorporated herein by reference.

(ii)  Custody  Agreement  on behalf of each series of the  Registrant  and The
      Bank  of  New  York  dated  June  11,   1997:   Previously   filed  with
      Registrant's  Post-Effective  Amendment  No: 33,  February  18, 1998 and
      incorporated herein by reference.


(iii) Foreign Custody  Manager  Agreement  between  Registrant and The Bank of
      New York:  Previously  filed with  Pre-Effective  Amendment No. 2 to the
      Registration  Statement of Oppenheimer World Bond Fund (Reg. 333-48973),
      4/23/98, and incorporated herein by reference.


(h)   Not applicable.


(i)   (i)   Opinion and Consent of Counsel dated 2/28/96:  Filed as an exhibit
      to 24f-2 notice.

      (ii) Opinion and Consent of Counsel for Class N shares dated  ___________:
      To be filed with post-effective amendment.

(j)   Independent   Auditors  Consents:   To  be  filed  with   Post-Effective
      Amendment.


(k)   Not applicable.

(l)   Not applicable.

      (m)   (i)   Service   Plan   and   Agreement   dated   3/18/96   between
Oppenheimer  Disciplined  Allocation  Fund and  OppenheimerFunds  Distributor,
Inc.  for  Class A  Shares  and  schedule  of  substantially  similar  omitted
documents:  Filed  with the  Registrant's  Post-Effective  Amendment  No.  29,
4/30/96,  and incorporated herein by reference.


            (ii)  Amended  and  Restated  Distribution  and  Service  Plan and
Agreement dated 2/12/98 with  OppenheimerFunds  Distributor,  Inc. for Class B
Shares of Oppenheimer  Disciplined  Allocation Fund.  Filed with  Registrant's
Post-Effective   Amendment  No.  36,  2/23/00,   and  incorporated  herein  by
reference.


            (iii) Amended  and  Restated  Distribution  and  Service  Plan and

Agreement    between    Oppenheimer    Disciplined    3/18/96Allocation    and
OppenheimerFunds  Distributor,  Inc for Class C Shares  dated  2/12/98.  Filed
with Registrant's  Post-Effective  Amendment No. 36, 2/23/00, and incorporated
herein by reference.

(iv)  Distribution  and  Service  Plan  and  Agreement   between   Oppenheimer
      Disciplined Allocation and OppenheimerFunds  Distributor, Inc. for Class
      N Shares dated ________: To be filed with Post-Effective amendment.

      (v)   Service Plan and Agreement between  Oppenheimer  Disciplined Value
      Fund and  OppenheimerFunds  Distributor,  Inc.  for Class A shares dated
      3/18/96:  Filed with  Post-Effective  Amendment  No. 31,  12/16/96,  and
      incorporated herein by reference.

      (vi)  Amended and Restated  Distribution  and Service Plan and Agreement
      between   Oppenheimer   Disciplined  Value  Fund  and   OppenheimerFunds
      Distributor,   Inc.   for   Class  B  shares   Oppenheimer   Disciplined
      ValueOppenheimer    Disciplined    Valuedated   2/12/98:    Filed   with
      Registrant's  Post-Effective Amendment No. 36, 2/23/00, and incorporated
      herein by reference.

      (vii) Amended and Restated  Distribution  and Service Plan and Agreement
      between   Oppenheimer   Disciplined  Value  Fund  and   OppenheimerFunds
      Distributor,   Inc.  for  Class  C  shares  dated  2/12/98:  Filed  with
      Registrant's  Post-Effective Amendment No. 36, 2/23/00, and incorporated
      herein by reference.

(viii)                  Distribution  and Service Plan and  Agreement  between
      Oppenheimer  Disciplined  Value Fund and  OppenheimerFunds  Distributor,
      Inc. for Class N shares dated ________:  To be filed with Post-Effective
      amendment.

(n)                     Oppenheimer  Funds  Multiple  Class  Plan  under  Rule
18f-3 updated through  8/25/98:8/22/00:  Previously filed with  Post-Effective
Amendment No. 62 to the  Registration  Statement of  Oppenheimer  Money Market
Fund,  Inc.  (Reg.  No.  2-49887),   11/22/00,   and  incorporated  herein  by
reference.

(o)   Powers of Attorney for all  Trustees/Directors  and Officers  (including
Certified Board  Resolutions):  Previously filed with Pre-Effective  Amendment
No. 1 to the Registration  Statement of Oppenheimer Emerging Growth Fund (Reg.
No. 333-44176), 10/5/00, and incorporated herein by reference.

(p)   Amended  and  Restated  Code of Ethics of the  Oppenheimer  Funds  dated
March  1,  2000  under  Rule  17j-1  of the  Investment  Company  Act of 1940:
Previously  filed  with the  Initial  Registration  Statement  of  Oppenheimer
Emerging Growth Fund (Reg. No. 333-44176),  8/21/00,  and incorporated  herein
by reference.


Item 24.  Persons Controlled by or Under Common Control with the Fund
---------------------------------------------------------------------

None.

Item 25.  Indemnification

      Reference  is made to the  provisions  of  paragraph  (b) of  Section 7 or
Article SEVENTH of Registrant's Articles of Incorporation filed as Exhibit 23(a)
to this Registration Statement, and incorporated herein by reference.

      Insofar as  indemnification  for liabilities  arising under the Securities
Act of 1933 may be permitted to Directors,  officers and controlling  persons of
Registrant  pursuant to the foregoing  provisions or otherwise,  Registrant  has
been advised that in the opinion of the Securities and Exchange  Commission such
indemnification  is against  public policy as expressed in the Securities Act of
1933  and  is,  therefore,   unenforceable.  In  the  event  that  a  claim  for
indemnification  against such liabilities  (other than the payment by Registrant
of expenses  incurred or paid by a Director,  officer or  controlling  person of
Registrant  in the  successful  defense of any action,  suit or  proceeding)  is
asserted by such  Director,  officer or  controlling  person,  Registrant  will,
unless in the opinion of its counsel the matter has been settled by  controlling
precedent,  submit to a court of appropriate  jurisdiction  the question whether
such  indemnification  by it is  against  public  policy  as  expressed  in  the
Securities  Act of 1933 and will be governed by the final  adjudication  of such
issue.

Item 26.  Business and Other Connections of the Investment Adviser

(a) OppenheimerFunds,  Inc. is the investment adviser of the Registrant;  it and
certain subsidiaries and affiliates act in the same capacity to other investment
companies, including with limitation those described in Parts A and B hereof and
listed in Item 26(b) below.

(b) There is set forth below  information as to any other business,  profession,
vocation  or  employment  of a  substantial  nature in which  each  officer  and
director of OppenheimerFunds, Inc. is, or at any time during the past two fiscal
years has been,  engaged for his/her own account or in the capacity of director,
officer, employee, partner or trustee.

           Name and Current Position Other Business and Connections
with OppenheimerFunds, Inc.         During the Past Two Years


Amy Adamshick,
Vice President                      Scudder  Kemper  Investments  (July 1998 -
                                    May 2000)


Charles E. Albers,

Senior                              Vice President An officer  and/or  portfolio
                                    manager of certain  Oppenheimer funds (since
                                    April 1998); a Chartered Financial Analyst.


Edward Amberger,

Assistant Vice President            None.

Janette Aprilante,
Assistant Vice President            None.


Victor Babin,
Senior Vice President               None.


Bruce L. Bartlett,

Senior                              Vice President An officer  and/or  portfolio
                                    manager of certain Oppenheimer funds.


George Batejan,
Executive Vice President/
Chief Information Officer           Formerly Senior Vice President  (until May

                                     1998).


Kevin Baum,
Assistant Vice President            None.


Connie Bechtolt,
Assistant Vice President            None.

Kathleen Beichert,
Vice President                      None.

Rajeev Bhaman,

Vice President                      None.

Mark Binning
Assistant Vice President            None.


Robert J. Bishop,
Vice                                President  Vice  President  of  Mutual  Fund
                                    Accounting  (since May 1996);  an officer of
                                    other Oppenheimer funds.


John R. Blomfield,
Vice President                      None.


Chad Boll,
Assistant Vice President            None

Scott Brooks,
Vice President                      None.

Adele Campbell,
Assistant Vice President & Assistant
Treasurer: Rochester Division       Formerly,   Assistant  Vice  President  of
                                    Rochester Fund Services, Inc.


Michael A. Carbuto,

Vice President                      An  officer  and/or  portfolio  manager of
                                    certain  Oppenheimer funds; Vice President
                                    of     Centennial     Asset     Management
                                    Corporation.

John Cardillo,
Assistant Vice President            None.


Elisa Chrysanthis

Assistant Vice President            None.

H.C. Digby Clements,

Vice President: Rochester Division  None.

O. Leonard Darling,
Vice Chairman, Executive Vice
President and Chief Investment
Officer and Director                Chairman  of  the  Board  and  a  director
                                    (since  June  1999)  and  Senior  Managing
                                    Director    (since   December   1998)   of
                                    HarbourView Asset Management  Corporation;
                                    a  director  (since  March  2000)  of  OFI
                                    Private Investments,  Inc.; Trustee (1993)
                                    of  Awhtolia  College -  Greece;  formerly
                                    Chief  Executive  Officer  of  HarbourView
                                    Asset  Management   Corporation  (December
                                    1998 - June 1999).

John Davis
Assistant Vice President            EAB Financial (April 1998-February 1999).


Robert A. Densen,
Senior Vice President               None.


Ruggero de'Rossi
Vice President                      Formerly,  Chief Strategist at ING Barings
(July
                                    1998 - March 2000).


Sheri Devereux,
Vice President                      None.


Max Dietshe
Vice President                      Deloitte & Touche LLP (1989-1999).


Craig P. Dinsell

Executive Vice President            None.


John Doney,
Vice                                President   An  officer   and/or   portfolio
                                    manager of certain Oppenheimer funds.

Andrew J. Donohue,
Executive Vice President,

General Counsel and Director        Executive Vice President  (since September
                                    1993) and a director  (since January 1992)
                                    of   the   Distributor;   Executive   Vice
                                    President,    General    Counsel    (since
                                    September  1995)  and  a  director  (since
                                    August   1994)   of   HarbourView    Asset
                                    Management    Corporation,     Shareholder
                                    Services,   Inc.,   Shareholder  Financial
                                    Services,     Inc.     and     Oppenheimer
                                    Partnership   Holdings,   Inc.,   of   OFI
                                    Private  Investments,  Inc.  (since  March
                                    2000),  and of PIMCO Trust Company  (since
                                    May 2000);  President  and a  director  of
                                    Centennial  Asset  Management  Corporation
                                    (since  September 1995) and of Oppenheimer
                                    Real Asset  Management,  Inc.  (since July
                                    1996);   Vice  President  and  a  director
                                    (since       September       1997)      of
                                    OppenheimerFunds  International  Ltd.  and
                                    Oppenheimer   Millennium   Funds   plc;  a
                                    director    (since    April    2000)    of
                                    OppenheimerFunds    Legacy   Program,    a
                                    charitable  trust program  established  by
                                    the Manager;  General  Counsel  (since May
                                    1996) and Secretary  (since April 1997) of
                                    Oppenheimer    Acquisition    Corp.;p   an
                                    officer of other Oppenheimer funds.

Bruce Dunbar,
Vice President                      None.

John Eiler
Vice President                      None.


Daniel Engstrom,
Assistant Vice President            None.


Armond Erpf
Assistant Vice President            None.


George Evans,
Vice                                President   An  officer   and/or   portfolio
                                    manager of certain Oppenheimer funds.


Edward N. Everett,

Assistant Vice President            None.

George Fahey,
Vice President                      None.


Leslie A. Falconio,
Vice                                President   An  officer   and/or   portfolio
                                    manager of certain  Oppenheimer funds (since
                                    6/99).


Scott Farrar,

Vice                                President Assistant Treasurer of Oppenheimer
                                    Millennium  Funds plc (since  October 1997);
                                    an officer of other Oppenheimer funds.

Katherine P. Feld,
Vice President, Senior Counsel
and Secretary                       Vice   President   and  Secretary  of  the
                                    Distributor;   Secretary   Corporation,and
                                    Director    of     Centennialand     Asset
                                    Management  Corporation;   Vice  President
                                    and  Secretary of  Oppenheimer  Real Asset
                                    Management,     Inc.;     Secretary     of
                                    HarbourView Asset Management  Corporation,
                                    Oppenheimer  Partnership  Holdings,  Inc.,
                                    Shareholder  Financial Services,  Inc. and
                                    Shareholder Services, Inc.


Ronald H. Fielding,
Senior Vice President; Chairman:

Rochester Division                  An  officer,   Director  and/or  portfolio
                                    manager  of  certain   Oppenheimer  funds;
                                    presently  he holds  the  following  other
                                    positions:  Director  (since  1995) of ICI
                                    Mutual Insurance Company;  Governor (since
                                    1994)  of  St.  John's  College;  Director
                                    (since  1994 - present)  of  International
                                    Museum of  Photography  at George  Eastman
                                    House.


David Foxhoven,
Assistant Vice President            Formerly   Manager,   Banking   Operations
                                    Department (July 1996 - November 1998).


Colleen Franca,
Assistant Vice President            None.

Crystal French

Vice President                      None.

Dan Gangemi,
Vice President                      None.


Subrata Ghose
Assistant Vice President            Formerly,   Equity   Analyst  at  Fidelity
                                    Investments (1995 - March 2000).


Charles Gilbert,
Assistant Vice President            None.

Alan Gilston,

Vice President                      None.


Jill Glazerman,
Vice President                      None.


Paul Goldenberg,
Vice President                      Formerly,   President   of   Advantageware
                                    (September 1992 - September 1999).


Mikhail Goldverg
Assistant Vice President            None.


Laura Granger,
Vice President                      Formerly,   Portfolio  Manager  at  Fortis
                                    Advisors (July 1998-October 2000).


Jeremy Griffiths,
Executive Vice President,
Chief Financial Officer and

Director                            Chief  Financial  Officer,  Treasurer  and
                                    director   of   Oppenheimer    Acquisition
                                    Corp.;   Executive   Vice   President   of
                                    HarbourView Asset Management  Corporation;
                                    President.  Chief  Executive  Officer  and
                                    director of PIMCO Trust Company;  director
                                    of   OppenheimerFunds,    Legacy   Program
                                    (charitable    trust    program);     Vice
                                    President  of  OFI  Private   Investments,
                                    Inc.  and  a  Member  and  Fellow  of  the
                                    Institute of Chartered Accountants.


Robert Grill,

Senior Vice President               None.

Robert Guy,
Senior Vice President               None.

Robert Haley,
Assistant Vice President            None.

Kelly Haney,
Assistant Vice President            None.


Thomas B. Hayes,
Vice President                      None.


Dennis Hess,
Assistant Vice President            None.

Dorothy Hirshman,
Assistant Vice President            None.

Merryl Hoffman,
Vice President and
Senior Counsel                      None

Merrell Hora,
Assistant Vice President            None.


Scott T. Huebl,
Vice President                      None.


Margaret Hui
Assistant                           Vice  President  Formerly  Vice  President -
                                    Syndications   of  Sanwa   Bank   California
                                    (January 1998 - September 1999).


James Hyland,
Assistant                           Vice President  Formerly Manager of Customer
                                    Research    for    Prudential    Investments
                                    (February 1998 - July 1999).

David Hyun,
Vice                                President    Formerly   portfolio   manager,
                                    technology analyst and research associate at
                                    Fred Alger  Management,  Inc. (August 1993 -
                                    June 2000).

Steve Ilnitzki,
Senior Vice President               Formerly   Vice   President   of   Product
                                    Management  at  Ameritrade   (until  March
                                    2000).


Kathleen T. Ives,
Vice President                      None.

William Jaume,

Vice President                      Senior Vice  President  (since April 2000)
                                    of    HarbourView     Asset     Management
                                    Corporation.


Frank Jennings,
Vice                                President   An  officer   and/or   portfolio
                                    manager of certain Oppenheimer funds.

Andrew Jordan,
Assistant Vice President            None.


Deborah Kaback,
Vice President and
Senior Counsel                      Senior Vice President and Deputy General
                                    Counsel of Oppenheimer Capital (April
                                    1989-November 1999).


Lewis Kamman
Vice President                      Senior   Consultant   for  Bell   Atlantic
                                    Network     Integration,     Inc.    (June
                                    1997-December 1998).


Jennifer Kane
Assistant Vice President            None.

Lynn Oberist Keeshan
Senior                              Vice President  Formerly  (until March 1999)
                                    Vice  President,  Business  Development  and
                                    Treasury at Liz Claiborne, Inc.


Thomas W. Keffer,
Senior Vice President               None.

Erica Klein,
Assistant Vice President            None.

Walter Konops,

Assistant Vice President            None.
Avram Kornberg,
Senior Vice President               None.


Jimmy Kourkoulakos,
Assistant Vice President.           None.

John Kowalik,
Senior                              Vice President An officer  and/or  portfolio
                                    manager for certain OppenheimerFunds.

Joseph Krist,
Assistant Vice President            None.


Christopher Leavy
Senior                              Vice  President Vice President and Portfolio
                                    Manager   at   Morgan   Stanley   Investment
                                    Management   (1997-September  2000)  and  an
                                    Analyst  and  Portfolio  Manager  at Crestar
                                    Asset Management (1995-1997).


Michael Levine,
Vice President                      None.

Shanquan Li,
Vice President                      None.


Mitchell J. Lindauer,
Vice President and Assistant
General Counsel                     None.

Malissa Lischin
Assistant Vice President            Formerly  Associate  Manager,   Investment
                                    Management  Analyst at Prudential  (1996 -
                                    March 2000).


David Mabry,
Vice President                      None.


Bridget Macaskill,
Chairman, Chief Executive Officer
and Director                        President,  Chief Executive  Officer and a
                                    director   (since   March   2000)  of  OFI
                                    Private  Investments,  Inc., an investment
                                    adviser   subsidiary   of   the   Manager;
                                    Chairman  and a  director  of  Shareholder
                                    Services,  Inc.  (since  August  1994) and
                                    Shareholder   Financial   Services,   Inc.
                                    (since  September  1995),  transfer  agent
                                    subsidiaries  of  the  Manager;  President
                                    (since  September  1995)  and  a  director
                                    (since   October   1990)  of   Oppenheimer
                                    Acquisition  Corp.,  the Manager's  parent
                                    holding    company;    President    (since
                                    September  1995)  and  a  director  (since
                                    November 1989) of Oppenheimer  Partnership
                                    Holdings,    Inc.,   a   holding   company
                                    subsidiary  of the Manager;  President and
                                    a  director   (since   October   1997)  of
                                    OppenheimerFunds  International  Ltd.,  an
                                    offshore  fund  management  subsidiary  of
                                    the Manager and of Oppenheimer  Millennium
                                    Funds  plc;  a  director  of   HarbourView
                                    Asset Management  Corporation  (since July
                                    1991)  and  of   Oppenheimer   Real  Asset
                                    Management,   Inc.   (since   July  1996),
                                    investment  adviser  subsidiaries  of  the
                                    Manager;  a director (since April 2000) of
                                    OppenheimerFunds    Legacy   Program,    a
                                    charitable  trust program  established  by
                                    the  Manager;  a  director  of  Prudential
                                    Corporation plc (a U.K.  financial service
                                    company);   President  and  a  trustee  of
                                    other    Oppenheimer    funds;    formerly
                                    President  of  the  Manager  (June  1991 -
                                    August 2000).

Steve Macchia,
Vice President                      None.

Marianne Manzolillo,
Assistant                           Vice President Formerly,  Vice President for
                                    DLJ High Yield Research Department (February
                                    1993 - July 2000).

Luann Mascia,
Vice President                      None.


Philip T. Masterson,

Vice President                      None.


Loretta McCarthy,
Executive Vice President            None.

Lisa Migan,
Assistant Vice President            None.

Andrew J. Mika
Senior                              Vice   President   Formerly  a  Second  Vice
                                    President  for  Guardian  Investments  (June
                                    1990 - October 1999).


Joy Milan
Assistant Vice President            None.


Denis R. Molleur,
Vice President and
Senior Counsel                      None.

Nikolaos Monoyios,

Vice                                President A Vice President  and/or portfolio
                                    manager of certain Oppenheimer funds.

John Murphy,
President, Chief Operating
Officer                             and   Director   President   of   MassMutual
                                    Institutional Funds and the MML Series Funds
                                    until September 2000.


Kenneth Nadler,
Vice President                      None.

David Negri,
Senior                              Vice President An officer  and/or  portfolio
                                    manager of certain Oppenheimer funds.

Barbara Niederbrach,
Assistant Vice President            None.

Robert A. Nowaczyk,
Vice President                      None.

Ray Olson,
Assistant Vice President            None.

Gina M. Palmieri,

Vice                                President   An  officer   and/or   portfolio
                                    manager of certain  Oppenheimer funds (since
                                    June 1999).


Frank Pavlak,

Vice President                      Formerly.   Branch  Chief  of   Investment
                                    Company  Examinations  at U.S.  Securities
                                    and Exchange  Commission  (January  1981 -
                                    December 1998).


James Phillips
Assistant Vice President            None.

David Pellegrino
Vice President                      None.

Jane Putnam,
Vice                                President   An  officer   and/or   portfolio
                                    manager of certain Oppenheimer funds.

Michael Quinn,

Assistant Vice President            None.

Heather Rabinowitz,
Assistant Vice President            None.
Julie Radtke,
Vice President                      None.


Thomas Reedy,

Vice                                President Vice President  (since April 1999)
                                    of HarbourView Asset Management Corporation;
                                    an  officer  and/or  portfolio   manager  of
                                    certain Oppenheimer funds.


John Reinhardt,
Vice President: Rochester Division  None


David Robertson,
Senior                              Vice President  Formerly,  Director of Sales
                                    and   Marketing   for  Schroder   Investment
                                    Management  of North  America  (March 1998 -
                                    March 2000).


Jeffrey Rosen,
Vice President                      None.

Marci Rossell,
Vice President and                  Corporate Economist     Economist     with
                                    Federal  Reserve  Bank  of  Dallas  (April
                                    1996 - March 1999).

Richard H. Rubinstein,
Senior                              Vice President An officer  and/or  portfolio
                                    manager of certain Oppenheimer funds.

Lawrence Rudnick,
Assistant Vice President            None.

James Ruff,

Executive Vice President            President     and    director    of    the
                                    Distributor;  Vice President  (since March
                                    2000) of OFI Private Investments, Inc.


Andrew Ruotolo

Executive Vice President            President  and  director  of   Shareholder
Services,  Inc.; formerly Chief Operations Officer for American  International
                                    Group (August 1997-September 1999).


Rohit Sah,
Assistant Vice President            None.

Valerie Sanders,
Vice President                      None.


Kenneth Schlupp
Assistant Vice President            Assistant  Vice  President   (since  March
                                    2000) of OFI Private Investments, Inc.


Jeff Schneider,

Vice President                      Formerly   (until   May  1999)   Director,
                                    Personal Decisions International.


Ellen Schoenfeld,

Vice President                      None.

Brooke Schulte,

Assistant Vice President            None.


Allan Sedmak
Assistant Vice President            None.

Jennifer Sexton,

Vice President                      None.

Martha Shapiro,
Assistant Vice President            None.

Connie Song,
Assistant Vice President            None.

Richard Soper,
Vice President                      None.


Keith Spencer,
Vice President                      None.


Cathleen Stahl,

Vice President                      Assistant  Vice  President  &  Manager  of
                                    Women & Investing Program.


Richard A. Stein,
Vice President: Rochester Division  Assistant Vice  President  (since 1995) of
                                    Rochester Capitol Advisors, L.P.

Arthur Steinmetz,
Senior                              Vice President An officer  and/or  portfolio
                                    manager of certain Oppenheimer funds.

Jayne Stevlingson,
Vice President                      None.


Gregg Stitt,
Assistant Vice President            None.


John Stoma,
Senior Vice President               None.


Deborah Sullivan,
Assistant Vice President,
Assistant Counsel                   Formerly,   Associate   General   Counsel,
                                    Chief   Compliance   Officer,    Corporate
                                    Secretary and Vice  President of Winmill &
                                    Co.  Inc.  (formerly  Bull &  Bear  Group,
                                    Inc.), CEF Advisers,  Inc.  (formerly Bull
                                    & Bear Advisers,  Inc.),  Investor Service
                                    Center,    Inc.   and   Midas   Management
                                    Corporation (November 1997 - March 2000).


Kevin Surrett,
Assistant Vice President            Assistant   Vice   President   of  Product
Development
                                    At  Evergreen  Investor   Services,   Inc.
(June 1995 -
                                    May 1999).


Michael Sussman,
Assistant Vice President            None.


James C. Swain,
Vice Chairman of the Board          Chairman,  CEO and  Trustee,  Director  or
                                    Managing   Partner  of  the   Denver-based
                                    Oppenheimer  Funds;  formerly,   President
                                    and   Director   of    Centennial    Asset
                                    Management  Corporation  and  Chairman  of
                                    the Board of Shareholder Services, Inc.

Susan Switzer,
Assistant Vice President            None.

Anthony A. Tanner,
Vice President: Rochester Division  None.


James Taylor,

Assistant Vice President            None.


Paul Temple,
Vice President                      Formerly  (until  May  2000)  Director  of
                                    Product Development at Prudential.


Angela Uttaro,
Assistant Vice President            None.

Mark Vandehey,
Vice President                      None.

Maureen VanNorstrand,
Assistant Vice President            None.

Annette Von Brandis,
Assistant Vice President            None.

Phillip Vottiero,

Vice President                      Chief  Financial  officer  for the Sovlink
Group (April 1996 - June 1999).

Sloan Walker
Vice President


Teresa Ward,
Vice President                      None.

Jerry Webman,

Senior Vice President               Senior  Investment  Officer,  Director  of
                                    Fixed Income.

Barry Weiss,
Assistant Vice President            Fitch IBCA (1996 - January 2000).


Christine Wells,
Vice President                      None.

Joseph Welsh,
Assistant Vice President            None.


Catherine White,
Assistant                           Vice  President  Formerly,   Assistant  Vice
                                    President  with Gruntal & Co. LLC (September
                                    1998 - October 2000); member of the American
                                    Society of Pension  Actuaries  (ASPA)  since
                                    1995.


William L. Wilby,

Senior                              Vice President  Senior  Investment  Officer,
                                    Director of International  Equities;  Senior
                                    Vice   President   of   HarbourView    Asset
                                    Management Corporation.

Donna Winn,
Senior Vice President               Vice  President  (since March 2000) of OFI
                                    Private Investments, Inc.

 Philip Witkower,
Senior Vice President               Formerly  Vice   President  of  Prudential
                                    Investments (1993 - November 2000)

 Brian W. Wixted,
 Senior Vice President and
Treasurer                           Treasurer    (since    March    1999)   of
                                    HarbourView Asset 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 PIMCO  Trust  Company;
                                    Assistant  Treasurer (since March 1999) of
                                    Oppenheimer   Acquisition   Corp.  and  of
                                    Centennial Asset  Management  Corporation;
                                    an  officer  of other  Oppenheimer  funds;
                                    formerly  Principal  and  Chief  Operating
                                    Officer,  Bankers  Trust  Company - Mutual
                                    Fund  Services   Division  (March  1995  -
                                    March 1999).


Carol Wolf,

Senior Vice President               An  officer  and/or  portfolio  manager of
                                    certain  Oppenheimer funds;  serves on the
                                    Board   of   Chinese   Children   Adoption
                                    International Parents Council,  Supporters
                                    of  Children,  and the  Advisory  Board of
                                    Denver   Children's    Hospital   Oncology
                                    Department.

Kurt Wolfgruber
Senior Vice President               Senior  Investment  Officer,  Director  of
                                    Domestic    Equities;    member   of   the
                                    Investment  Product  Review  Committee and
                                    the  Executive  Committee  of  HarbourView
                                    Asset  Management  Corporation;   formerly
                                    (until  April  2000) a  Managing  Director
                                    and  Portfolio   Manager  at  J.P.  Morgan
                                    Investment Management, Inc.


Caleb Wong,

Vice President                      An  officer  and/or  portfolio  manager of
                                    certain   Oppenheimer  funds  (since  June
                                    1999) .


Robert G. Zack,
Senior Vice President and
Assistant Secretary, Associate

General Counsel                     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.


Jill Zachman,
Assistant Vice President:
Rochester Division                  None.


Neal Zamore,
Vice President                      Director  e-Commerce;  formerly (until May
                                    2000) Vice President at GE Capital.


Mark Zavanelli,
Assistant Vice President            None.

Arthur J. Zimmer,

Senior Vice President               Senior Vice  President  (since April 1999)
                                    of    HarbourView     Asset     Management
                                    Corporation;  Vice President of Centennial
                                    Asset Management  Corporation;  an officer
                                    and/or   portfolio   manager   of  certain
                                    Oppenheimer funds.

Susan Zimmerman,
Vice President                      None.


The  Oppenheimer  Funds  include  the  New  York-based  Oppenheimer  Funds,  the
Denver-based  Oppenheimer  Funds and the Oppenheimer  Quest /Rochester Funds, as
set forth below:

            New York-based Oppenheimer Funds


Oppenheimer  California  Municipal Fund
Oppenheimer  Capital  Appreciation  Fund
Oppenheimer  Capital  Preservation  Fund
Oppenheimer  Developing  Markets  Fund
Oppenheimer Discovery Fund
Oppenheimer Emerging Growth Fund
Oppenheimer Emerging Technologies   Fund
Oppenheimer   Enterprise  Fund
Oppenheimer   Europe  Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer International Growth Fund
Oppenheimer  International  Small Company Fund
Oppenheimer Large Cap Growth Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer  Multi-Sector Income Trust
Oppenheimer  Multi-State  Municipal Trust
Oppenheimer  Multiple  Strategies Fund
Oppenheimer  Municipal Bond Fund
Oppenheimer New York Municipal Fund
Oppenheimer Series Fund, Inc.
Oppenheimer Trinity Core Fund
Oppenheimer Trinity Growth Fund
Oppenheimer  Trinity Value Fund
Oppenheimer U.S.  Government Trust
Oppenheimer World Bond Fund


            Quest/Rochester Funds

Limited Term New York Municipal Fund
Oppenheimer  Convertible  Securities  Fund
Oppenheimer  MidCap Fund
Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Quest For Value Funds
Oppenheimer  Quest  Global Value Fund,  Inc.
Oppenheimer Quest Value Fund, Inc.
Rochester Fund Municipals

            Denver-based Oppenheimer Funds


Centennial America Fund, L.P.
Centennial  California Tax Exempt Trust
Centennial Government  Trust
Centennial  Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Oppenheimer Cash Reserves
Oppenheimer Champion Income  Fund
Oppenheimer  Capital  Income  Fund
Oppenheimer  High  Yield  Fund
Oppenheimer  Integrity Funds
Oppenheimer  International  Bond Fund
Oppenheimer Limited-Term   Government  Fund
Oppenheimer   Main  Street   Opportunity  Fund
Oppenheimer  Main Street  Small Cap Fund
Oppenheimer  Main Street  Funds,  Inc.
Oppenheimer  Municipal  Fund
Oppenheimer  Real  Asset Fund
Oppenheimer  Senior Floating Rate Fund
Oppenheimer  Strategic  Income Fund
Oppenheimer  Total Return Fund, Inc.
Oppenheimer Variable Account Funds
Panorama Series Fund, Inc.

The address of OppenheimerFunds,  Inc.,  OppenheimerFunds  Distributor,  Inc.,
HarbourView Asset Management Corp.,  Oppenheimer  Partnership Holdings,  Inc.,
Oppenheimer  Acquisition Corp. and OFI Private Investments,  Inc. is Two World
Trade Center, New York, New York 10048-0203.

The address of the New  York-based  Oppenheimer  Funds,  the Quest Funds,  the
Rochester-based  funds,  the  Denver-based   Oppenheimer  Funds,   Shareholder
Financial  Services,  Inc.,  Shareholder  Services,   Inc.,   OppenheimerFunds
Services,  Centennial Asset Management Corporation,  Centennial Capital Corp.,
and  Oppenheimer  Real  Asset  Management,  Inc.  is 6803  South  Tucson  Way,
Englewood, Colorado 80112.


Item 27. Principal Underwriter

(a)   OppenheimerFunds   Distributor,   Inc.   is  the   Distributor   of  the
Registrant's  shares.  It is  also  the  Distributor  of  each  of  the  other
registered open-end investment companies for which  OppenheimerFunds,  Inc. is
the  investment  adviser,  as described  in Part A and B of this  Registration
Statement  and listed in Item 26(b)  above  (except  Oppenheimer  Multi-Sector
Income Trust and Panorama Series Fund, Inc.) and for MassMutual  Institutional
Funds.

(b)   The directors  and officers of the  Registrant's  principal  underwriter
are:

Name & Principal                 Positions & Offices        Positions        &
Offices
Business Address                 with Underwriter           with Registrant

Jason Bach                       Vice President             None
31 Raquel Drive
Marietta, GA 30064


William Beardsley (2)            Vice President             None


Peter Beebe                      Vice President             None
876 Foxdale Avenue
Winnetka, IL  60093

Douglas S. Blankenship           Vice President             None
17011 Woodbank
Spring, TX  77379


Kevin Brosmith                   Senior Vice President      None.
856 West Fullerton
Chicago, IL  60614


Susan Burton(2)                  Vice President             None

Robert Coli                      Vice President             None
12 White Tail Lane
Bedminster, NJ 07921

William Coughlin                 Vice President             None
1730 N. Clark Street
#3203
Chicago, IL 60614


Jeff Damia(2)                    Vice President             None

Stephen Demetrovits(2)           Vice President             None


Christopher DeSimone             Vice President             None
5105 Aldrich Avenue South
Minneapolis, MN 55419


Michael Dickson                  Vice President             None
21 Trinity Avenue
Glastonburg, CT 06033


Joseph DiMauro                   Vice President             None
244 McKinley Avenue
Grosse Pointe Farms, MI 48236


Steven Dombrowser                Vice President             None


Andrew John Donohue(2)           Executive Vice             Secretary

                             President and Director

G. Patrick Dougherty (2)         Vice President             None

Cliff Dunteman                   Vice President             None
940 Wedgewood Drive
Crystal Lake, IL 60014


Wendy H. Ehrlich                 Vice President             None
4 Craig Street
Jericho, NY 11753

Kent Elwell                      Vice President             None
35 Crown Terrace
Yardley, PA  19067


George Fahey                     Vice President             None
9 Townview Ct.
Flemington, NJ 08822


Eric Fallon                      Vice President             None
10 Worth Circle
Newton, MA  02158


Katherine P. Feld(2)             Vice President and         None
                                 Corporate Secretary


Mark Ferro                       Vice President             None
43 Market Street
Breezy Point, NY 11697

Ronald H. Fielding(3)            Vice President             None


Brian Flahive                    Assistant Vice President   None


John ("J") Fortuna(2)            Vice President             None

Ronald R. Foster                 Senior Vice President      None
11339 Avant Lane
Cincinnati, OH 45249


Victoria Friece(1)               Assistant Vice President   None

Luiggino Galleto                 Vice President             None
10302 Riesling Court

Charlotte, NC 28277


Michelle Gans                    Vice President             None
18771 The Pines

Eden Prairie, MN 55347

L. Daniel Garrity                Vice President             None
27 Covington Road

Avondale Estates, GA 30002

Lucio Giliberti                  Vice President             None
6 Cyndi Court
Flemington, NJ 08822

Ralph Grant(2)                   Senior Vice President/     None
                                 National Sales Manager


Michael Guman                    Vice President             None
3913 Pleasent Avenue
Allentown, PA 18103


Tonya Hammet                     Assistant Vice President   None

Webb Heidinger                   Vice President             None
90 Gates Street

Portsmouth, NH 03801

Phillip Hemery                   Vice President             None
184 Park Avenue
Rochester, NY 14607

Edward Hrybenko (2)              Vice President             None


Brian Husch(2)                   Vice President             None

Richard L. Hymes(2)              Assistant Vice President   None


Byron Ingram(1)                  Assistant Vice President   None

Kathleen T. Ives(1)              Vice President             None


Eric K. Johnson                  Vice President             None
28 Oxford Avenue
Mill Valley, CA 94941


Mark D. Johnson                  Vice President             None
409 Sundowner Ridge Court
Wildwood, MO  63011

Elyse Jurman                     Vice President             None
1194 Hillsboro Mile, #51
Hillsboro Beach, FL  33062


John Kavanaugh                   Vice President             None
2 Cervantes Blvd., Apt. #301
San Francisco, CA 94123

Brian G. Kelly                   Vice President             None
60 Larkspur Road

Fairfield, CT  06430


Michael Keogh(2)                 Vice President             None

Lisa Klassen(1)                  Assistant Vice President   None

Richard Klein                    Senior Vice President      None
4820 Fremont Avenue So.

Minneapolis, MN 55409

Brent Krantz                     Vice President             None
2609 SW 149th Place
Seattle, WA 98166

Oren Lane                        Vice President             None
5286 Timber Bend Drive
Brighton, MI  48116


Dawn Lind                        Vice President             None
21 Meadow Lane
Rockville Centre, NY 11570


James Loehle                     Vice President             None
30 Wesley Hill Lane
Warwick, NY 10990


John Lynch (2)                   Vice President             None

Michael Magee(2)                 Vice President             None


Steve Manns                      Vice President             None
1941 W. Wolfram Street
Chicago, IL  60657

Todd Marion                      Vice President             None
3 St. Marks Place
Cold Spring Harbor, NY 11724

LuAnn Mascia(2)                  Assistant Vice President   None

Theresa-Marie Maynier            Vice President             None
2421 Charlotte Drive
Charlotte, NC  28203

Anthony Mazzariello              Vice President             None
704 Beaver Road
Leetsdale, PA 15056

John McDonough                   Vice President             None
3812 Leland Street
Chevy Chase, MD  20815

Kent McGowan                     Vice President             None
18424 12th Avenue West
Lynnwood, WA 98037

Laura Mulhall(2)                 Senior Vice President      None

Charles Murray                   Vice President             None
18 Spring Lake Drive
Far Hills, NJ 07931

Wendy Murray                     Vice President             None
32 Carolin Road
Upper Montclair, NJ 07043

Denise-Marie Nakamura            Vice President             None
4111 Colony Plaza

Newport Beach, CA 92660

John Nesnay                      Vice President             None
9511 S. Hackberry Street

Highlands Ranch, CO 80126


Kevin Neznek(2)                  Vice President             None


Chad V. Noel                     Vice President             None
2408 Eagleridge Drive
Henderson, NV  89014


Raymond Olson(1)                 Assistant Vice President   None
                                   & Treasurer

Alan Panzer                      Assistant Vice President   None
925 Canterbury Road, Apt. #848
Atlanta, GA 30324


Kevin Parchinski                 Vice President             None
8409 West 116th Terrace
Overland Park, KS 66210

Gayle Pereira                    Vice President             None
2707 Via Arboleda
San Clemente, CA 92672


Brian Perkes                     Vice President             None
8734 Shady Shore Drive
Frisco, TX 75034


Charles K. Pettit                Vice President             None
22 Fall Meadow Drive
Pittsford, NY  14534


Bill Presutti(2)                 Vice President             None


Steve Puckett                    Vice President             None
5297 Soledad Mountain Road
San Diego, CA  92109

Elaine Puleo(2)                  Senior Vice President      None


Christopher Quinson              Vice President             None


Minnie Ra                        Vice President             None

100 Dolores Street, #203
Carmel, CA 93923

Dustin Raring                    Vice President             None
184 South Ulster

Denver, CO 80220

Michael Raso                     Vice President             None
16 N. Chatsworth Ave.
Apt. 301
Larchmont, NY  10538

Douglas Rentschler               Vice President             None
677 Middlesex Road
Grosse Pointe Park, MI 48230


Michelle Simone Richter(2)       Assistant Vice President   None


Ruxandra Risko(2)                Vice President             None


David Robertson(2)               Senior Vice President,     None
                                 Director of Variable
                                    Accounts

Kenneth Rosenson                 Vice President             None
26966 W. Malibu
Cove Colony Drive

Malibu, CA 90265

James Ruff(2)                    President & Director       None


William Rylander (2)             Vice President             None

Alfredo Scalzo                   Vice President             None
9616 Lale Chase Island Way
Tampa, FL  33626


Michael Sciortino                Vice President             None
785 Beau Chene Drive
Mandeville, LA  70471

Eric Sharp                       Vice President             None
862 McNeill Circle
Woodland, CA  95695


Kristen Sims (2)                 Vice President             None

Douglas Smith                    Vice President             None
808 South 194th Street
Seattle,WA 98148


David Sturgis                    Vice President             None
81 Surrey Lane
Boxford, MA 01921

Brian Summe                      Vice President             None
239 N. Colony Drive
Edgewood, KY 41017


Michael Sussman(2)               Vice President             None


Andrew Sweeny                    Vice President             None
5967 Bayberry Drive
Cincinnati, OH 45242


George Sweeney                   Senior Vice President      None
5 Smokehouse Lane
Hummelstown, PA  17036


Scott McGregor Tatum             Vice President             None
704 Inwood
Southlake, TX  76092


Martin Telles(2)                 Senior Vice President      None


David G. Thomas                  Vice President             None
2200 North Wilson Blvd.
Suite 102-176
Arlington, VA 22201


Tanya Valency (2)                Assistant Vice President   None


Mark Vandehey(1)                 Vice President             None

Brian Villec (2)                 Vice President             None

Andrea Walsh(1)                  Vice President             None

Suzanne Walters(1)               Assistant Vice President   None

Michael Weigner                  Vice President             None
5722 Harborside Drive
Tampa, FL 33615

Donn Weise                       Vice President             None
3249 Earlmar Drive
Los Angeles, CA  90064

Marjorie Williams                Vice President             None
6930 East Ranch Road
Cave Creek, AZ  85331


Philip Witkower                  Senior Vice President      None

Cary Wozniak                     Vice President             None
18808 Bravata Court
San Diego, CA 92128

Gregor Yuska(2)                  Vice President             None

(1)6803 South Tucson Way, Englewood, CO 80112
(2)Two World Trade Center, New York, NY 10048
(3)350 Linden Oaks, Rochester, NY 14623

(c)   Not applicable.


Item 28. Location of Accounts and Records

The accounts,  books and other documents required to be maintained by Registrant
pursuant  to  Section  31(a) of the  Investment  Company  Act of 1940 and  rules
promulgated  thereunder are in the possession of  OppenheimerFunds,  Inc. at its
offices at 6803 South Tucson Way, Englewood, Colorado 80112.

Item 29. Management Services

Not applicable

Item 30. Undertakings

Not applicable.


<PAGE>



                                   SIGNATURES


Pursuant to the requirements of the Securities Act of 1933 and/or the Investment
Company Act of 1940, the Registrant has duly caused this Registration  Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of New York and State of New York on the 20th day of December, 2000.


                                          Oppenheimer Series Fund, Inc

                                          By: /s/ Bridget A. Macaskill*
                                                  --------------------
                                                Bridget A. Macaskill,
                                          President

Pursuant to the  requirements of the Securities Act of 1933,  this  Registration
Statement  has been signed below by the following  persons in the  capacities on
the dates indicated:

Signatures                          Title                   Date


/s/ Leon Levy*               Chairman of the
------------------           Board of Directors          December 20, 2000
Leon Levy

/s/ Donald W. Spiro*         Vice Chairman of the        December 20, 2000
-------------------------    Board and Directors
Donald W. Spiro

/s/ Bridget A. Macaskill*    President and
------------------------------                           Chief Executive
December 20, 2000
Bridget A. Macaskill         Officer and Director

/s/ Brian W. Wixted*         Treasurer and Principal     December 20, 2000
-------------------------    Financial and
Brian W. Wixted              Accounting Officer

/s/ Robert G. Galli*         Director                    December 20, 2000

-----------------------
Robert G. Galli


/s/ Phillip A. Griffiths*    Director                    December 20, 2000

---------------------------
Phillip A. Griffiths


/s/ Benjamin Lipstein*       Director                    December 20, 2000

--------------------------
Benjamin Lipstein


/s/ Elizabeth B. Moynihan*   Director                    December 20, 2000

--------------------------------
Elizabeth B. Moynihan


/s/ Kenneth A. Randall*      Director                    December 20, 2000

----------------------------
Kenneth A. Randall


/s/ Edward V. Regan*         Director                    December 20, 2000

-------------------------
Edward V. Regan


/s/ Russell S. Reynolds, Jr.*                            Director December

20, 2000
---------------------------------
Russell S. Reynolds, Jr.


/s/ Clayton K. Yeutter*      Director                    December 20, 2000

----------------------------
Clayton K. Yeutter

*By: /s/ Robert G. Zack
-----------------------------------------
Robert G. Zack, Attorney-in-Fact



<PAGE>


                          OPPENHEIMER SERIES FUND, INC.

                                  EXHIBIT INDEX

                            Registration No. 2-75276


                         Post-Effective Amendment No. 37




Exhibit No.    Description



23(c)(iv)      Oppenheimer  Disciplined  Allocation Fund Specimen Class N Share
               Certificate
     (viii)    Oppenheimer  Disciplined  Value  Fund  Specimen  Class  N Share
               Certificate





SeriesIncPartC-A(Dec00).doc





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