OPPENHEIMER INTEGRITY FUNDS, 485BPOS, 1999-04-28

OPPENHEIMER INTEGRITY FUNDS
485BPOS, 1999-04-28

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Registration No. 2-76547
File No. 811-3420

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. 35 /X /

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / X /

AMENDMENT NO. 33 / X /

OPPENHEIMER INTEGRITY FUNDS
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(Exact Name of Registrant as Specified in Charter)

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

1-303-768-3200
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(Registrant's Telephone Number)

ANDREW J. DONOHUE, ESQ.
OppenheimerFunds, Inc.
Two World Trade Center - Suite 3400
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)
/ X/ On April 28, 1999, pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / On _______________, pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / On ________________, pursuant to paragraph (a)(2) of Rule 485

If appropriate, check the following box

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

<PAGE>

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(OppenheimerFunds logo)

Oppenheimer
Bond Fund

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Prospectus dated April 28, 1999

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Oppenheimer Bond Fund is a mutual fund that seeks a high level of
current income as its goal. It invests primarily in investment-grade debt
securities and U.S. government securities.

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.

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.

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Contents

About the Fund

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The Fund's Objective and Investment Strategies

Main Risks of Investing in the Fund

The Fund's Past Performance

Fees and Expenses of the Fund

About the Fund's Investments

How the Fund is Managed

About Your Account

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How to Buy Shares

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

Special Investor Services

AccountLink
PhoneLink

OppenheimerFunds Web Site
Retirement Plans

How to Sell Shares

By Mail
By Telephone
By Checkwriting

How to Exchange Shares

Shareholder Account Rules and Policies

Dividends, Capital Gains and Taxes

Financial Highlights

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

The Fund's Objective and Investment Strategies

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What Is the Fund's Investment Objective? The Fund seeks a high level of
current income by investing mainly in debt instruments.

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What Does the Fund Invest In? The Fund invests at least 65% of its total
assets in investment-grade debt securities, U.S. government securities and
money market instruments, under normal market conditions. Those
investment-grade debt securities can include domestic and foreign corporate
debt obligations, domestic and foreign government bonds, as well as
participation interests in loans, asset-backed securities, mortgage-related
securities (including collateralized mortgage obligations, or "CMOs") issued
by private issuers, and other debt obligations. In general, these debt
securities are referred to as "bonds."

The Fund's investments in U.S. government securities include securities
issued or guaranteed by the U.S. government or its agencies or
federally-chartered corporate entities referred to as "instrumentalities."
These include mortgage-related U.S. government securities and CMOs.

There is no set allocation of the Fund's assets among the classes of
securities the Fund buys to meet the 65% investment-grade securities
requirement, but currently the Fund focuses mainly on U.S. government
securities and investment-grade debt securities to do so because they
currently offer higher yields than money market instruments. However, if
market conditions change, the Fund's portfolio managers might change the
relative allocation of the Fund's assets.

The Fund has no limitations on the range of maturities of the debt
securities in which it can invest and therefore may hold bonds with short-,
medium- or long-term maturities. The Fund can invest up to 35% of its total
assets in high-yield debt securities that are below investment grade
(commonly referred to as "junk bonds"). These investments are more fully
explained in "About the Fund's Investments," below.

n How Do the Portfolio Managers Decide What Securities to Buy or Sell? In
selecting securities for the Fund, the Fund's portfolio managers analyze the
overall investment opportunities and risks in different sectors of the debt
securities markets by focusing on business cycle analysis and relative values
between the corporate and government sectors. The portfolio managers' overall
strategy is to build a broadly diversified portfolio of corporate and
government bonds. The portfolio managers currently focus on the factors below
(which may vary in particular cases and may change over time), looking for:

o Debt securities in market sectors that offer attractive relative
value,
o Investment-grade securities primarily to help reduce credit risk,

o High income potential from different types of corporate and government
securities, and

o Broad portfolio diversification to help reduce the volatility of the
Fund's share prices.

Who Is the Fund Designed For? The Fund is designed for investors seeking high
current income from a fund that invests primarily in investment-grade debt
securities but which can also hold high-yield debt securities below
investment-grade to seek higher income. Those investors should be willing to
assume the credit risks of a fund that typically invests a significant amount
of its assets in corporate debt securities, and the changes in share prices
that can occur when interest rates change. The Fund is intended as a
long-term investment, not a short-term trading vehicle, and may be
appropriate for a part of an investor's retirement plan portfolio. However,
the Fund is not a complete investment program.

Main Risks of Investing in the Fund

All investments carry risks to some degree. The Fund's investments in
debt securities are subject to changes in their value from a number of
factors. They include changes in general bond market movements in the U.S.
and abroad (this is referred to as "market risk"), or the change in value of
particular bonds because of an event affecting the issuer (this is known as
"credit risk"). Changes in interest rates can also affect debt securities
prices (this is known as "interest rate risk").

These risks collectively form the risk profile of the Fund, and can
affect the value of the Fund's investments, its investment performance and
its price per share. 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 Fund's investment Manager, OppenheimerFunds, Inc., 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 percentage of the securities of any one issuer and by
not investing too great a percentage of the Fund's assets in any one issuer.
Also, the Fund does not concentrate 25% or more of its investments in the
securities of issuers in any one industry.

However, changes in the overall market prices of securities and the
income they 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. There is no assurance
that the Fund will achieve its investment objective.

|X| 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 bond and of the Fund's shares might be
reduced. Securities issued or guaranteed by the U.S. Treasury and certain
agencies that are backed by the full faith and credit of the U.S. government
have little credit risk, and securities issued or guaranteed by other U.S.
government agencies have low credit risks. However, debt securities issued by
domestic and foreign corporations and by foreign governments are subject to
risks of default.

o Special Risks of Lower-Grade Securities. Because the Fund can
invest up to 35% of its total assets in securities (including convertible
securities) below investment-grade to seek higher income, the Fund's credit
risks are greater than those of funds that buy only investment-grade
securities. 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. Those risks can
reduce the Fund's share prices and the income it earns.

n Interest Rate Risks. The values of debt securities (including U.S.
government securities prior to their maturity) 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 the securities
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. However, interest rate changes may have
different effects on the values of mortgage-related securities because of
prepayment risks, discussed below. The Fund's share prices can go up or down
when interest rates change because of the effect of interest rate changes on
the value of the Fund's investments in debt securities.

The Fund can buy zero-coupon or "stripped" securities, which are
particularly sensitive to interest rate changes and the rate of principal
payments (and prepayments). Their prices may go up or down more than the
prices of other types of debt securities in response to interest rate changes.

n Prepayment Risk. Prepayment risk occurs when the mortgages
underlying a mortgage-related security are prepaid at a rate faster than
anticipated (usually when interest rates fall) and the issuer of the security
can prepay the principal prior to the maturity of the security.
Mortgage-related securities that are subject to prepayment risk, including
the mortgage-related securities that the Fund buys, generally have greater
potential for loss than other debt securities when interest rates change.

The impact of prepayments on the price of a security may be difficult
to predict and may increase the volatility of the price. The Fund might have
to reinvest the proceeds of prepaid securities in new securities offering
lower yields. Additionally, the Fund can buy mortgage-related securities at a
premium. Accelerated prepayments on those securities could cause the Fund to
lose the portion of its principal investment represented by the premium the
Fund paid.

If interest rates rise rapidly, prepayments might occur at slower rates
than expected, which could have the effect of lengthening the expected
maturity of a short- or medium-term security. That could cause the security's
value to fluctuate more widely in response to changes in interest rates. In
turn, this could cause the value of the Fund's shares to fluctuate more.

n There are Special Risks in Using Derivative Investments. The Fund
can use derivatives to seek increased income or to try to hedge investment
risks. In general terms, a derivative investment is an investment contract
whose value depends on (or is derived from) the value of an underlying asset,
interest rate or index. Options, futures, interest-only and principal-only
securities, structured notes, interest-rate swap agreements and
mortgage-related securities are examples of derivatives the Fund can use.

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

How Risky is the Fund Overall? Debt securities are subject to credit and
interest rate risks that can affect their values and the share prices of the
Fund. Prepayment risks of mortgage-backed securities can cause the Fund to
reinvest proceeds of its investments in lower-yielding securities. In the
OppenheimerFunds spectrum, the Fund generally has more risks than bond funds
that focus primarily on U. S. government securities, but the Fund's emphasis
on investment-grade securities may make its share prices less volatile than
high-yield bond funds or funds that focus on foreign bonds.

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

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 past ten calendar years and by
showing how the average annual total returns of the Fund's shares compare 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]

For the period from 1/1/99 through 3/31/99, the cumulative return (not
annualized) of Class A shares was -0.46%. 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 covered by the bar chart, the highest return (not
annualized) for a calendar quarter was 6.24% (2Q'95) and the lowest return
(not annualized) for a calendar quarter was -3.16% (1Q'94).

<PAGE>

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Average Annual Total 1 Year 5 Years 10 Years
Returns for the periods (or life of (or life of (or life of
ended December 31, 1998 class, if less) class, if less) class, if less)

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Class A Shares (inception 0.59% 5.48% 7.81%
4/15/88)
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Lehman Bros. Corporate 8.57% 7.74% 9.86%
Bond Index
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Class B Shares (inception -0.14% 5.41% 5.56%
5/3/93)
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Lehman Bros. Corporate 8.57% 7.74% 7.88%*
Bond Index
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Class C Shares (inception 3.82% 6.32% N/A
7/11/95)
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Lehman Bros. Corporate 8.57% 8.42%* N/A
Bond Index
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* Life-of-Class index performance is measured from 4/30/93 for Class B and
6/30/95 for Class C.

The table shows the average annual total return for Class A, Class B and
Class C shares and includes the applicable sales charge for each class of
shares: for Class A, the current maximum initial sales charge of 4.75%; for
Class B, the contingent deferred sales charge of 5% (1-year), 2% (5 years)
and 1% (life-of-class); and for Class C, the 1% contingent deferred sales
charge for the 1-year period. Data is not shown for Class Y shares because
they were not offered for a full calendar year.

The returns measure the performance of a hypothetical account and assume that
all dividends and capital gains distributions have been reinvested in
additional shares. Because the Fund invests in debt securities, the Fund's
performance is compared to the Lehman Brothers Corporate Bond Index, which
measures the performance of non-convertible investment-grade domestic
corporate debt securities. However, it must be remembered that the index
performance reflects the reinvestment of income but does not consider the
effects of transaction costs. Also, the index does not include government
securities in which the Fund invests.

Fees and Expenses 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 value per share. All shareholders therefore pay those expenses
indirectly. Shareholders pay other expenses directly, such as sales charges
and account transaction charges. 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 numbers below are based on the Fund's expenses during its
fiscal year ended December 31, 1998.

<PAGE>

Shareholder Fees (charges paid directly from your investment):

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

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Maximum Sales Charge
(Load) on purchases 4.75% None None None
(as % of offering price)
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Maximum Deferred Sales
Charge (Load) (as % of
the lower of the None1 5%2 1%3 None
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.

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

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

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

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

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If shares are redeemed: 1 Year 3 Years 5 Years 10 Years1
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Class A Shares $593 $844 $1,113 $1,882
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Class B Shares $700 $918 $1,262 $1,924
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Class C Shares $299 $615 $1,057 $2,285
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Class Y Shares $ 76 $237 $ 411 $ 918
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<PAGE>

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If shares are not
redeemed: 1 Year 3 Years 5 Years 10 Years1
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Class A Shares $593 $844 $1,113 $1,882
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Class B Shares $200 $618 $1,062 $1,924
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Class C Shares $199 $615 $1,057 $2,285
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Class Y Shares $ 76 $237 $ 411 $ 918
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In the first example, expenses include the initial sales charge for Class A
and the applicable Class B or Class C contingent deferred sales charges. In
the second example, the Class A expenses include the sales charge, but Class
B and Class C expenses do not include the contingent deferred sales charges.
1. Class B expenses for years 7 through 10 are based on Class A expenses,

since Class B shares automatically convert to Class A 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 permitted 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.

In selecting debt securities and evaluating their yield potential and
credit risk, the Manager does not rely solely on ratings by rating
organizations but evaluates business and economic factors affecting an issuer
as well. The debt securities the Fund buys may be rated by nationally
recognized rating organizations such as Moody's Investors Service or Standard
& Poor's, or they may be unrated securities assigned an equivalent rating by
the Manager. "Investment-grade" rated securities are those in the four
highest rating categories of national ratings organizations. A description of
those ratings definitions is included in Appendix A to the Statement of
Additional Information.

U.S. Government Securities. The Fund can invest in securities issued or
guaranteed by the U.S. Treasury or other agencies or instrumentalities of the
U.S. government. These are referred to as "U.S. government securities" in

this Prospectus.

n U.S. Treasury Obligations. These include Treasury bills (which have
maturities of one year or less when issued), Treasury notes (which have
maturities of from one to ten years when issued), and Treasury bonds (which
have maturities of more than ten years when issued). U.S. 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 can also buy U. S.
Treasury securities that have been "stripped" of their coupons by a Federal
Reserve Bank, zero-coupon U.S. Treasury securities described below, and
Treasury Inflation-Protection Securities ("TIPS").

n 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, some are supported by the right of the issuer to borrow from the
U.S. Treasury under certain circumstances, and others are supported only by
the credit of the entity that issued them.

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

Other Debt Securities. While the Fund invests primarily in investment-grade
debt securities, it is not required to dispose of debt securities that fall
below investment-grade after the Fund buys them. However, the portfolio
managers will monitor those holdings to determine whether the Fund should
sell them. While securities rated "Baa" by Moody's or "BBB" by S&P are
considered "investment-grade," they have some speculative characteristics.

While investment-grade securities are subject to risks of non-payment
of interest and principal, in general, higher-yielding lower-grade bonds,
whether rated or unrated, have greater risks than investment-grade
securities. There may be less of a market for them and therefore they may be
harder to sell at an acceptable price. These risks can reduce the Fund's
share prices and the income it earns.

n Private-Issuer Mortgage-Backed Securities. The Fund can invest in
mortgage-backed securities issued by private issuers, such as banks, savings
and loans, mortgage bankers and other non-governmental issuers, that do not
offer the credit backing of U.S. government securities. These include
multi-class debt or pass-through certificates secured by mortgage loans.
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 the
CMOs discussed above), although in some cases they may be supported by
insurance or guarantees.

n 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 typically 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 prepayment risks
and the risk of default by the issuer as well as by the borrowers of the
underlying loans in the pool.

Short-Term Debt Securities. The Fund can buy high-quality, short-term money
market instruments, including obligations of the U.S. Government and its
agencies, short-term corporate debt obligations, bank certificates of deposit
and bankers' acceptances, and commercial paper, which are short-term,
negotiable promissory notes of companies. Because these instruments tend to
offer lower yields than other debt securities, the Fund ordinarily does not
invest in them to seek high current income, and uses them more for liquidity
and cash management purposes or for defensive purposes when market conditions
are unstable.

n Can the Fund's Investment Objective and Policies Change? The Fund's
Board of Trustees can change non-fundamental investment policies without
shareholder approval, although significant changes will be described in
amendments to this Prospectus. Fundamental policies are those that cannot be
changed without the approval of a majority of the Fund's outstanding voting
shares. The Fund's objective is a fundamental policy. Other 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.

n Portfolio Turnover. The Fund may engage in short-term trading to try
to achieve its objective. It does not expect to have a portfolio turnover
rate in excess of 100% annually. Portfolio turnover affects brokerage costs
the Fund pays. 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 the
Fund's five most recent fiscal years.

Other Investment Strategies. To seek its objective, the Fund can also use
the investment techniques and strategies described below. The Manager might
not always use all of the different types of techniques and investments
described below. These techniques involve certain risks, although some are
meant to help reduce investment or market risks.

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

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

n Foreign Securities. The Fund typically invests a portion of its
assets in foreign debt securities, and it has no limit on the amount of its
assets that can be invested in foreign securities that are investment-grade.
The Fund can buy debt securities issued by foreign governments or companies.
The Fund can buy securities of governments and companies in both developed
markets and emerging markets. Debt securities issued or guaranteed by a
foreign government or its agencies might not be backed by the "full faith and
credit" of the government.

The Fund's foreign debt investments can be denominated in U.S. dollars
or in foreign currencies. The Fund will buy foreign currency only in
connection with the purchase and sale of foreign securities and not for
speculation.

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

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

n Zero-Coupon and "Stripped" Securities. Some of the government and
corporate debt securities the Fund buys are zero-coupon bonds that pay no
interest and 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 (these are called
"interest-only" securities) and the other all the principal payments (these
are "principal-only" securities).

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. The prices of 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. When underlying mortgages
are prepaid at faster-than-anticipated rates, the Fund loses the anticipated
cash flow from the interest on those mortgages. Principal-only securities may
also be volatile when interest rates fall and prepayments tend to rise. The
timing of the cash flows to these securities increases, increasing their
fluctuations in value. 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 when it wants to sell them.

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

n Illiquid and Restricted Securities. Investments may be illiquid
because there is no active trading market for them, making it difficult to
value them or dispose of them promptly at an acceptable price. A restricted
security is one that has a contractual restriction on its resale or which
cannot be sold publicly until it is registered under the Securities Act of
1933. The Fund will not invest more than 10% of its net assets in illiquid or
restricted securities (the Fund's Board of Trustees can increase that limit
to 15%). Certain restricted securities that are eligible for resale to
qualified institutional purchasers may not be subject to that limit. The
Manager monitors holdings of illiquid securities on an ongoing basis to
determine whether to sell any holdings to maintain adequate liquidity.

n Hedging. The Fund can buy and sell certain kinds of futures
contracts, put and call options, interest rate swaps and forward contracts.
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, and has limits on its use of
them.

The Fund could buy and sell options, interest rate swaps, futures and
forward contracts for a number of purposes. It might do so to try to manage
its exposure to the possibility that the prices of its portfolio securities
may fall, or to establish a position in the securities market as a temporary
substitute for purchasing individual securities. It might do so to try to
manage its exposure to changing interest rates. Forward contracts can be
used to try to manage foreign currency risks on the Fund's foreign
investments. Foreign currency options could be used to try to protect
against declines in the dollar value of foreign securities the Fund owns, or
to protect against an increase in the dollar cost of buying foreign
securities.

Options trading involves the payment of premiums and has special tax
effects on the Fund. There are also special risks in particular hedging
strategies. 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.

Year 2000 Risks. Because many computer software systems in use today cannot
distinguish the year 2000 from the year 1900, the markets for securities in
which the Fund invests could be detrimentally affected by computer failures
beginning January 1, 2000. Failure of computer systems used for securities
trading could result in settlement and liquidity problems for the Fund and
other investors. That failure could have a negative impact on handling
securities trades, pricing and accounting services. Data processing errors by
government issuers of securities could result in economic uncertainties, and
those issuers might incur substantial costs in attempting to prevent or fix
such errors, all of which could have a negative effect on the Fund's
investments and returns.

The Manager, the Distributor and the Transfer Agent have been working
on necessary changes to their computer systems to deal with the year 2000 and
expect that their systems will be adapted in time for that event, although
there cannot be assurance of success. Additionally, the services they
provide depend on the interaction of their computer systems with those of
brokers, information services, the Fund's Custodian and other parties.
Therefore, any failure of the computer systems of those parties to deal with
the year 2000 might also have a negative effect on the services they provide
to the Fund. The extent of that risk cannot be ascertained at this time.

How the Fund Is Managed

The Manager. The Fund's investment Manager, OppenheimerFunds, Inc., 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 Board of
Trustees, under an Investment Advisory Agreement that states the Manager's
responsibilities. The Agreement sets the fees the Fund pays to the Manager
and describes the expenses that the Fund is responsible to pay to conduct its
business.

The Manager has operated as an investment adviser since 1959. The
Manager (including subsidiaries) currently manages investment companies,
including other Oppenheimer funds, with assets of more than $100 billion as
of March 31, 1999, and with more than 4 million shareholder accounts. The
Manager is located at Two World Trade Center, 34th Floor, New York, New York
10048-0203.

n Portfolio Managers. The portfolio managers of the Fund are David P.
Negri and John Kowalik. Each is a Vice President of the Fund, a Senior Vice
President of the Manager and an officer and portfolio manager of other
Oppenheimer funds. They are the persons principally responsible for the
day-to-day management of the Fund's portfolio, in Mr. Negri's case since July
10, 1995, and in Mr. Kowalik's case since July 1, 1998. Mr. Negri has been
employed as a portfolio manager by the Manager since July 1988. Mr. Kowalik
joined the Manager in July 1998 and was previously Managing Director and
Senior Portfolio Manager of Prudential Global Advisers (from 1989 to June
1998).

n 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: 0.75% of the first $200 million of
average annual net assets of the Fund, 0.72% of the next $200 million, 0.69%
of the next $200 million, 0.66% of the next $200 million, 0.60% of the next
$200 million and 0.50% of average annual net assets in excess of $1 billion.
The Fund's management fee for its last fiscal year ended December 31, 1998
was 0.74% 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 Are Shares Purchased? You can buy shares several ways -- through any
dealer, broker or financial institution that has a sales agreement with the
Fund's Distributor, or directly through the Distributor, or automatically
through an Asset Builder Plan under the OppenheimerFunds AccountLink
service. The Distributor may appoint certain servicing agents to accept
purchase (and redemption) orders. The Distributor, in its sole discretion,
may reject any purchase order for the Fund's shares.

|X| Buying Shares Through Your Dealer. Your dealer will place your
order with the Distributor on your behalf.

|X| Buying Shares Through the Distributor. Complete an OppenheimerFunds
New Account Application and return it with a check payable to
"OppenheimerFunds Distributor, Inc." Mail it to P.O. Box 5270, Denver,
Colorado 80217. If you don't list a dealer on the application, the
Distributor will act as your agent in buying the shares. However, we
recommend that you discuss your investment with a financial advisor before
you make a purchase to be sure that the Fund is appropriate for you.

|X| Buying Shares 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.

|X| Buying Shares Through OppenheimerFunds AccountLink. With
AccountLink, shares are purchased for your account on the regular business
day the Distributor is instructed by you to initiate the Automated Clearing
House (ACH) transfer to buy the shares. 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.

|X| 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 open a Fund account 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.

|_| 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. Subsequent purchases of at least $25 can be made by
telephone 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 under an Asset Builder Plan, the $25 minimum applies.

Additional purchases may be as little as $25.

|_| 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 (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 Denver, Colorado,
or after any agent appointed by the Distributor receives the order and sends
it to the Distributor.

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

|_| 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.

|_| 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.

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

- ------------------------------------------------------------------------------
|X| 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 I Buy Class A Shares?" below.

|X| 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,

and 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 I Buy Class B Shares?" below.

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

- ------------------------------------------------------------------------------
|X| 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,
and 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 I Buy Class C 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. You should review these factors with your financial advisor. The
discussion below assumes that you will purchase only one class of shares, and
not a combination of shares of different classes.

|X| 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.

|_| Investing for the Shorter Term. 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 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.

|_| 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.

Of course, these examples are based on approximations of the effect 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.

|X| Are There Differences in Account Features That Matter to You? Some
account features may not be available to Class B or Class C shareholders.
Other features (such as Automatic Withdrawal Plans) may not be advisable
(because of the effect of the contingent deferred sales charge) for Class B
or Class C 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 and Class C shareholders
will be reduced by the additional expenses borne by those classes that are
not borne by Class A shares, such as the Class B and Class C asset-based
sales charge described below and in the Statement of Additional Information.
Share certificates are not available for Class B and Class C shares, and if
you are considering using your shares as collateral for a loan, that may be a
factor to consider.

|X| How Does It Affect Payments to My Broker? A salesperson, such as a
broker, may receive different compensation for selling one class of shares
than for selling another class. It is important to remember that Class B and
Class C 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 commissions 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.

How Can I 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 commission. The Distributor reserves the right to reallow
the entire commission to dealers. The current sales charge rates and
commissions paid to dealers and brokers are as follows:

- -----------------------------------------------------------------------------
Front-End Sales Front-End Sales
Charge As a Charge As a Commission As
Percentage of Percentage of Net Percentage of

Amount of Purchase Offering Price Amount Invested Offering Price

- --------------------------------------------------------------------------
- -------------------------------------------------------------------------
$00,000 or more

but less than $1 2.00% 2.04% 1.60%
million

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

|X| 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
commissions in an amount equal to 1.0% of purchases of $1 million or more
other than by those retirement accounts. For those retirement plan accounts,
the commission 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, calculated on a calendar
year basis. In either case, the commission will be paid only on purchases
that were not previously subject to a front-end sales charge and dealer
commission.1

If you redeem any of those shares within 18 months of 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. However, the Class A contingent deferred sales charge will
not exceed the aggregate amount of the commissions 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.

In determining whether a contingent deferred sales charge is payable
when shares are redeemed, the Fund will first redeem shares that are not
subject to the sales charge, including shares purchased by reinvestment of
dividends and capital gains. Then the Fund will redeem other shares in the
order in which you purchased them. The Class A contingent deferred sales
charge is waived in certain cases described in Appendix C to the Statement of
Additional Information.

The Class A contingent deferred sales charge is not charged on
exchanges of shares under the Fund's exchange privilege (described below).
However, if the shares acquired by exchange are redeemed within 18 calendar
months of the end of the calendar month in which the exchanged shares were
originally purchased, then the sales charge will apply.

How Can I Reduce Sales Charges for Class A Share Purchases? 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:

|X| Waivers of Class A Sales Charges. The Class A initial and
contingent deferred sales charges are not imposed in the circumstances
described in Appendix C to the Statement of Additional Information. In order
to receive a waiver of the Class A contingent deferred sales charge, you must
notify the Transfer Agent when purchasing shares whether any of the special
conditions apply.

How Can I 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 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 contingent deferred sales charge will be based on the lesser of the
net asset value of the redeemed shares at the time of redemption or the
original net asset value. The contingent deferred sales charge is not
imposed on:

|_| the amount of your account value represented by an increase in
net asset value over the initial purchase price,
|_| shares purchased by the reinvestment of dividends or capital
gains distributions, or
|_| shares redeemed in the special circumstances described in
Appendix C to the Statement of Additional Information.

To determine whether the 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 over 6 years, and

3. shares held the longest during the 6-year period.

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:

- ------------------------------------------------------------------------------
Contingent Deferred Sales Charge on
Years Since Beginning of Month in Which Redemptions in That Year
Purchase Order was Accepted (As % of Amount Subject to Charge)

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

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.

|X| 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 Class B shares convert, any other Class B shares that were
acquired by the reinvestment of dividends and distributions on the converted
shares will also convert to Class A shares. The conversion feature is subject
to the continued availability of a tax ruling described in the Statement of
Additional Information.

How Can I 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 12 months 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.

|_| the amount of your account value represented by the increase in
net asset value over the initial purchase price,

o shares purchased by the reinvestment of dividends or capital gains
distributions, or

o shares redeemed in the special circumstances described in Appendix C to
the Statement of Additional Information.

To determine whether the 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 over 12 months, and

3. shares held the longest during the 12-month period.

Who Can Buy Class Y Shares? Class Y shares are sold at net asset value per
share without sales charge directly to certain 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 are
not able to 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 and
the special account features available to investors buying those other
classes of shares do not apply to Class Y shares. An exception is that the
time those orders must be received by the Distributor or its agents or by the
Transfer Agent is the same for Class Y as for other share classes. However,
those instructions must be submitted by the institutional investor, not by
its customers for whose benefit the shares are held.

Distribution and Service (12b-1) Plans.

|X| 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.

|X| Distribution and Service Plans for Class B and Class C Shares. The
Fund has adopted Distribution and Service Plans for Class B and Class C
shares to pay the Distributor for its services in distributing Class B and
Class C 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. 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 1.00% of the net assets per year of the respective class.
Because these fees are paid out of the Fund's assets on an on-going basis,
over time these fees will increase the cost of your investment and may cost
you more than other types of sales charges.

The Distributor uses the service fees to compensate dealers for
providing personal services for accounts that hold Class B or Class C
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 sales commission 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 sales commissions 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 commission to the dealer on Class C
shares that have been outstanding for a year or more.

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:

|_| transmit funds electronically to purchase shares by telephone
(through a service representative or by PhoneLink) or automatically
under Asset Builder Plans, or
|_| 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.

|X| 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.

|X| 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.

|X| 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 I 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.

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 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 can be
used by individuals and employers:

|X| Individual Retirement Accounts (IRAs), including regular IRAs, Roth
IRAs, SIMPLE IRAs, rollover and Education IRAs.

|X| SEP-IRAs, which are Simplified Employee Pensions Plan IRAs for
small business owners or self-employed individuals.

|X| 403(b)(7) Custodial Plans, that are tax deferred plans for
employees of eligible tax-exempt organizations, such as schools, hospitals
and charitable organizations.

|X| 401(k) Plans, which are special retirement plans for businesses.
|X| Pension and Profit-Sharing Plans, 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
using the Fund's checkwriting privilege 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.

|X| 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):

|_| You wish to redeem $50,000 or more and receive a check
|_| The redemption check is not payable to all shareholders listed on

the account statement

|_| The redemption check is not sent to the address of record on your
account statement

|_| Shares are being transferred to a Fund account with a different
owner or name

|_| Shares are being redeemed by someone (such as an Executor) other
than the owners

|X| Where Can I Have My Signature Guaranteed? The Transfer Agent will
accept a guarantee of your signature by a number of financial institutions,
including: a U.S. bank, trust company, credit union or savings association,
or by a foreign bank that has a U.S. correspondent bank, or by a U.S.
registered dealer or broker in securities, municipal securities or government
securities, or by 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.

|X| 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.

How Do I Sell Shares by Mail? Write a letter of instructions that includes:
|_| Your name
|_| The Fund's name
|_| Your Fund account number (from your account statement)
|_| The dollar amount or number of shares to be redeemed
|_| Any special payment instructions
|_| Any share certificates for the shares you are selling
|_| The signatures of all registered owners exactly as the account is

registered,

|_| 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 requests by mail:

- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
OppenheimerFunds Services

- ------------------------------------------------------------------------------
P.O. Box 5270
Denver, Colorado 80217-5270

- ------------------------------------------------------------------------------
Send courier or express mail requests to:

- ------------------------------------------------------------------------------
OppenheimerFunds Services
10200 E. Girard Avenue, Building D

Denver, Colorado 80231

How Do I Sell Shares by Telephone? You and your dealer representative of
record may also sell your shares by telephone. To receive the redemption
price on a 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.

|_| To redeem shares through a service representative, call
1-800-852-8457

|_| 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.

<PAGE>

Are There Limits on Amounts Redeemed by Telephone?

|X| Telephone Redemptions Paid by Check. Up to $50,000 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.

|X| Telephone Redemptions Through AccountLink. 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.

How Do I Write Checks Against My Account? To write checks against your Fund
account, request that privilege on your account Application, or contact the
Transfer Agent for signature cards. They must be signed (with a signature
guarantee) by all owners of the account and returned to the Transfer Agent so
that checks can be sent to you to use. Shareholders with joint accounts can
elect in writing to have checks paid over the signature of one owner. If you
previously signed a signature card to establish checkwriting in another
Oppenheimer fund, simply call 1-800-525-7048 to request checkwriting for an
account in this Fund with the same registration as the other account.

o Checks can be written to the order of whomever you wish, but may not
be cashed at the bank through which they are payable or the Fund's custodian
bank.

o Checkwriting privileges are not available for accounts holding
shares that are subject to a contingent deferred sales charge.

o Checks must be written for at least $100.

o Checks cannot be paid if they are written for more than your account
value.

o You may not write a check that would require the Fund to redeem
shares that were purchased by check or Asset Builder Plan payments within the
prior 10 days.

o Don't use your checks if you changed your Fund account number, until
you receive new checks.

Can I Sell Shares Through My 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 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. To exchange shares, you must meet several conditions:

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

|_| The prospectuses of this Fund and the fund whose shares you want to
buy must offer the exchange privilege.

|_| 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.

|_| You must meet the minimum purchase requirements for the fund you
purchase by exchange.

|_| Before exchanging into a fund, you should 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.

How Do I Submit Exchange Requests? Exchanges may be requested in writing or
by telephone:

n 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.

|X| 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.

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.

Are There Limitations on Exchanges? There are certain exchange policies you
should be aware of:

|_| 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 and/or price.

|_| 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.

|_| The Fund may amend, suspend or terminate the exchange privilege at
any time. Although the Fund will attempt to provide you notice whenever it
is reasonably able to do so, it may impose these changes at any time.

|_| 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, and
selling and exchanging shares is contained in the Statement of Additional
Information.

|X| The offering of shares may be suspended during any period in which
the determination of net asset value is suspended, and the offering may be
suspended by the Board of Trustees at any time the Board believes it is in
the Fund's best interest to do so.

|X| 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.

|X| 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.

|X| 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.

|X| Dealers that can 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.

|X| 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.

|X| Payment for redeemed shares ordinarily is made in cash. It is
forwarded by check or through AccountLink (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.

|X| 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.

|X| Involuntary redemptions of small accounts may be made by the Fund
if the account value has fallen below $1,000 for reasons other than the fact
that the market value of shares has dropped. In some cases involuntary
redemptions may be made to repay the Distributor for losses from the
cancellation of share purchase orders.

|X| Shares may be "redeemed in kind" under unusual circumstances (such
as a lack of liquidity in the Fund's portfolio to meet redemptions). This
means that the redemption proceeds will be paid with liquid securities from
the Fund's portfolio.

|X| "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.

|X| To avoid sending duplicate copies of materials to households, the
Fund will mail only one copy of each annual and semi-annual report to
shareholders having the same last name and address on the Fund's records.
However, each shareholder may call the Transfer Agent at 1-800-525-7048 to
ask that copies of those materials be sent personally to that shareholder.

Dividends, Capital Gains and Taxes

Dividends. The Fund intends to declare dividends separately for each class of
shares from net investment income on each regular business day and to pay
those dividends to shareholders monthly on a date selected by the Board of
Trustees. Daily dividends will not be declared or paid on newly-purchased
shares until Federal Funds are available to the Fund from the purchase
payment for the shares.

The Fund attempts to pay dividends on Class A shares at a constant
level. There is no assurance that it will be able to do so. The Board of
Trustees may change the targeted dividend rate at any time without prior
notice to shareholders. Additionally, the amount of those dividends and the
dividends paid on Class B and Class C shares may vary over time, depending on
market conditions, the composition of the Fund's portfolio, and expenses
borne by the particular class of shares. Dividends and other distributions
paid on Class A and Class Y shares will generally be higher than dividends
for Class B and Class C shares, which normally have higher expenses than
Class A or Class Y. The Fund cannot guarantee that it will pay any dividends
or other distributions.

<PAGE>

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 I 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:

|X| Reinvest All Distributions in the Fund. You can elect to reinvest
all dividends and long-term capital gains distributions in additional shares

of the Fund.

|X| Reinvest Long-Term Capital Gains Only. You can elect to reinvest
long-term capital gains distributions in the Fund while receiving dividends
by check or having them sent to your bank account through AccountLink.

|X| Receive All Distributions in Cash. You can elect to receive a
check for all dividends and long-term capital gains distributions or have

them sent to your bank through AccountLink.

|X| 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.

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

|X| 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.

<PAGE>

|X| 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 adviser
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 Deloitte & Touche 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.

<PAGE>

<TABLE>
<CAPTION>
Class A
------------------------------------------------
Year Ended December 31,
1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning
of period $10.97 $10.70 $10.98 $10.01 $11.12
- -------------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income .71 .77 .78 .69 .65
Net realized and unrealized
gain (loss) (.11) .27 (.28) .96 (1.08)
------ ------ ------ ------ ------
Total income (loss) from
investment operations .60 1.04 .50 1.65 (.43)
- -------------------------------------------------------------------------------
Dividends and distributions
to shareholders:
Dividends from net
investment income (.71) (.77) (.75) (.68) (.65)
Dividends in excess of net
investment income -- -- -- -- (.03)
Tax return of capital -- -- (.03) -- --
---- ---- ------ ---- ----
Total dividends and
distributions to
shareholders (.71) (.77) (.78) (.68) (.68)
- -------------------------------------------------------------------------------
Net asset value, end of
period $10.86 $10.97 $10.70 $10.98 $10.01
====== ====== ====== ====== ======
Financial Highlights

- -------------------------------------------------------------------------------
Total Return, at Net Asset
Value(/3/) 5.61% 10.13% 4.87% 16.94% (3.87)%

- -------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period
(in thousands) $246,668 $190,706 $193,515 $169,059 $ 96,640
- -------------------------------------------------------------------------------
Average net assets (in
thousands) $217,944 $187,458 $178,130 $116,940 $102,168
- -------------------------------------------------------------------------------
Ratios to average net
assets:
Net investment income 6.46% 7.20% 7.35% 6.47% 6.25%
Expenses, before voluntary
reimbursement
by the Manager 1.22% 1.27% 1.30% 1.27% 1.06%
Expenses, net of voluntary
reimbursement
by the Manager N/A N/A N/A 1.26% N/A
- -------------------------------------------------------------------------------
Portfolio turnover
rate(/5/) 67.3% 50.5% 53.7% 175.4% 70.3%
</TABLE>

1. For the period from April 27, 1998 (inception of offering) to December 31,
1998
2. For the period from July 11, 1995 (inception of offering) to December 31,
1995.
3. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
4. Annualized.
5. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at the
time of acquisition of one year or less are excluded from the calculation.
Purchases and sales of investment securities (excluding short-term securities)
for the period ended December 31, 1998 were $263,925,338 and $208,096,512,
respectively. For the period ended December 31, 1995, purchases and sales of
investment securities included mortgage dollar-rolls.

<TABLE>
<CAPTION>
Class B
------------------------------------------
Year Ended December 31,
1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Data
Financial Highlights (continued)

Net asset value, beginning of
period $10.97 $10.69 $10.98 $10.01 $11.11
- -------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income .62 .69 .70 .63 .58
Net realized and unrealized gain
(loss) (.10) .28 (.29) .94 (1.08)
------ ------ ------ ------ ------
Total income (loss) from
investment operations .52 .97 .41 1.57 (.50)
- -------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income (.63) (.69) (.67) (.60) (.57)
Dividends in excess of net
investment income -- -- -- -- (.03)
Tax return of capital -- -- (.03) -- --
---- ---- ------ ---- ----
Total dividends and distributions
to shareholders (.63) (.69) (.70) (.60) (.60)
- -------------------------------------------------------------------------------
Net asset value, end of period $10.86 $10.97 $10.69 $10.98 $10.01
====== ====== ====== ====== ======

- -------------------------------------------------------------------------------
Total Return, at Net Asset
Value(/3/) 4.81% 9.41% 3.99% 16.06% (4.53)%

- -------------------------------------------------------------------------------
Ratios/Supplemental Data

Net assets, end of period (in
thousands) $88,061 $48,255 $38,826 $39,187 $3,451
- -------------------------------------------------------------------------------
Average net assets (in thousands) $64,330 $41,439 $38,068 $12,823 $2,747
- -------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.68% 6.42% 6.59% 5.84% 5.53%
Expenses, before voluntary
reimbursement
by the Manager 1.97% 2.02% 2.05% 2.12% 1.78%
Expenses, net of voluntary
reimbursement
by the Manager N/A N/A N/A 2.08% N/A
- -------------------------------------------------------------------------------
Portfolio turnover rate(/5/) 67.3% 50.5% 53.7% 175.4% 70.3%
</TABLE>

<TABLE>
<CAPTION>
Class C Class Y
------------------------------- ------------
Period Ended
Year Ended December 31, December 31,
1998 1997 1996 1995(/2/) 1998(/1/)
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Data
Financial Highlights (continued)

Net asset value,
beginning of period $10.98 $10.70 $10.99 $10.89 $10.88
- ---------------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income .62 .69 .70 .28 .49
Net realized and
unrealized gain (loss) (.10) .28 (.29) .10 (.02)
------ ------ ------ ------ ------
Total income (loss) from
investment operations .52 .97 .41 .38 .47
- ---------------------------------------------------------------------------------
Dividends and
distributions to
shareholders:
Dividends from net
investment income (.63) (.69) (.67) (.28) (.49)
Dividends in excess of
net investment income -- -- -- -- --
Tax return of capital -- -- (.03) -- --
---- ---- ------ ---- ----
Total dividends and
distributions to
shareholders (.63) (.69) (.70) (.28) (.49)
- ---------------------------------------------------------------------------------
Net asset value, end of
period $10.87 $10.98 $10.70 $10.99 $10.86
====== ====== ====== ====== ======

- ---------------------------------------------------------------------------------
Total Return, at Net
Asset Value(/3/) 4.81% 9.39% 4.00% 3.76% 4.40%

- ---------------------------------------------------------------------------------
Ratios/Supplemental Data

Net assets, end of
period (in thousands) $21,796 $9,188 $4,322 $3,971 $1
- ---------------------------------------------------------------------------------
Average net assets (in
thousands) $15,198 $6,134 $3,404 $ 979 $1
- ---------------------------------------------------------------------------------
Ratios to average net
assets:
Net investment income 5.66% 6.36% 6.60% 6.32%(/4/) 6.84%(/4/)
Expenses, before
voluntary reimbursement
by the Manager 1.96% 2.02% 2.05% 2.25%(/4/) 0.74%(/4/)
Expenses, net of
voluntary reimbursement
by the Manager N/A N/A N/A 1.96%(/4/) N/A
- ---------------------------------------------------------------------------------
Portfolio turnover
rate(/5/) 67.3% 50.5% 53.7% 175.4% 67.3%
</TABLE>

<PAGE>

For More Information About Oppenheimer Bond 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 read or down-load documents on the OppenheimerFunds web site:
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 1-800-SEC-0330) or the SEC's Internet web
site at http://www.sec.gov. Copies may be obtained upon payment of a
duplicating fee by writing to the SEC's Public Reference Section,
Washington, D.C. 20549-6009.

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:

SEC File No. 811-3420

PR0705.001.0299 Printed on recycled paper.

<PAGE>

Appendix to Prospectus of
Oppenheimer Bond Fund

Graphic material included in the Prospectus of Oppenheimer Bond Fund
(the "Fund") under the heading "Annual Total Return (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

Year Annual

Ended: Total Return:

12/31/89 11.31%
12/31/90 4.74%
12/31/91 18.28%
12/31/92 6.77%
12/31/93 10.30%
12/31/94 -3.87%
12/31/95 16.94%
12/31/96 4.87%
12/31/97 10.13%
12/31/98 5.61%

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Oppenheimer Bond Fund

6803 South Tucson Way, Englewood, Colorado 80112

1-800-525-7048

Statement of Additional Information dated April 28, 1999

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This Statement of Additional Information is not a Prospectus. This
document contains additional information about the Fund and supplements
information in the Prospectus dated April 28, 1999. It should be read
together with the Prospectus. You can obtain the Prospectus 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

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Page

About the Fund

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Additional Information About the Fund's Investment Policies and Risks.. 2
The Fund's Investment Policies..................................... 2
Other Investment Techniques and Strategies......................... 7
Investment Restrictions............................................ 29

How the Fund is Managed ............................................... 31
Organization and History........................................... 31
Trustees and Officers.............................................. 33
The Manager........................................................ 38

Brokerage Policies of the Fund......................................... 39
Distribution and Service Plans......................................... 41
Performance of the Fund................................................ 44

About Your Account

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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

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Independent Auditors' Report........................................... 69
Financial Statements................................................... 70

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

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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 objectives.

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

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

n Debt Securities. The Fund can invest in a variety of debt
securities to seek its objective. Foreign debt securities are subject to the
risks of foreign securities described below. In general, debt securities are
also subject to two additional types of risk: credit risk and interest rate
risk.

|_| Credit Risk. Credit risk relates to the ability of the
issuer to meet interest or principal payments or both as they become due. In
general, lower-grade, higher-yield bonds are subject to credit risk to a
greater extent than lower-yield, higher-quality bonds.

The Fund's investments primarily are investment-grade debt securities
and U.S. government securities. U.S. government securities, although unrated,
are generally considered to be equivalent to securities in the highest rating
categories. 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. The Fund can also buy
non-investment-grade debt securities (commonly referred to as "junk bonds").

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 securities the Fund buys are
unrated, to be considered part of the Fund's holdings of investment-grade
securities, they must be judged by the Manager to be of comparable quality to
bonds rated as investment grade by a rating organization.

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

Fluctuations in the market value of debt 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.

o Special Risks of Lower-Grade Securities. The Fund can invest
in lower-grade debt securities. Because lower-grade securities tend to offer
higher yields than investment-grade securities, the Fund might invest in
lower-grade securities if the Manager is trying to achieve higher income.

"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 considered part of the Fund's portfolio of lower-grade securities.

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

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

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

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

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

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

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

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

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
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. Collateralized
mortgage obligations or "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 Government National

Mortgage Association (Ginnie Mae), Federal National Mortgage
Association (Fannie Mae), or Federal Home Loan Mortgage

Corporation (Freddie Mac),

(2) unsecuritized mortgage loans insured by the Federal Housing
Administration or guaranteed by the Department of Veterans'
Affairs,

(3) unsecuritized conventional mortgages,
(4) other mortgage-related securities, or
(5) any combination of these.

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

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

o U.S. Treasury Obligations. These include Treasury bills (which
have maturities of one year or less when issued), Treasury notes (which have
maturities of from one to ten years when issued), and Treasury bonds (which
have 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. Other U.S. Treasury
obligations the Fund can buy include U. S. Treasury securities that have been
"stripped" by a Federal Reserve Bank, zero-coupon U.S. Treasury securities
described below, and Treasury Inflation-Protection Securities ("TIPS").

o Obligations Issued or Guaranteed by U.S. Government Agencies or
Instrumentalities. These include direct obligations and mortgage-related
securities that have different levels of credit support from the government.
Some are supported by the full faith and credit of the U.S. government, such
as Government National Mortgage Association 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. Others are supported only by the
credit of the entity that issued them, such as Federal Home Loan Mortgage
Corporation obligations.

o Mortgage-Related U.S. Government Securities. These include
interests in pools of residential or commercial mortgages, in the form of
collateralized mortgage obligations 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 with 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 significant 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 interest rates rise.

If prepayments of mortgages underlying a CMO occur faster than expected
when interest rates fall, the market value and yield of the CMO will be
reduced. Additionally, the Fund may have to reinvest the prepayment proceeds
in other securities paying interest at lower rates, which could reduce the
Fund's yield.

When interest rates rise rapidly, if prepayments occur more slowly than
expected, a short- or medium-term CMO can in effect become a long-term
security, subject to greater fluctuations in value. These are the prepayment
risks described above and can make the prices of CMOs very volatile when
interest rates change. The prices of longer-term debt securities tend to
fluctuate more than those of shorter-term debt securities. That volatility
will affect the Fund's share prices.

n 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.

n 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.

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.

n Participation Interests. The Fund can invest in participation
interests, subject to the Fund's limitation on investments in illiquid
investments. A participation interest is an undivided interest in a loan
made by the issuing financial institution in the proportion that the buyer's
participation interest bears to the total principal amount of the loan. Not
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.

n 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, but the Fund does not expect to have a
portfolio turnover rate of more than 100% annually.

Increased portfolio turnover may result in 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.

n Foreign Securities. "Foreign securities" include equity and debt
securities issued or guaranteed by companies organized under the laws of
countries other than the United States and debt securities issued or
guaranteed by governments other than the U.S. government or by foreign
supra-national entities, such as the World Bank. Those securities may be
traded on foreign securities exchanges or in the foreign over-the-counter
markets. Securities denominated in foreign currencies issued by U.S.
companies are also considered to be "foreign securities." The Fund expects
to have investments in foreign securities as part of its normal investment
strategy.

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

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 income
potential, or in foreign countries with economic policies or business cycles
different from those of the U.S., or to reduce fluctuations in portfolio
value by taking advantage of foreign securities markets that do not move in a
manner parallel to U.S. markets. The Fund will hold foreign currency only in
connection with the purchase or sale of foreign securities.

o Foreign Debt Obligations. The debt obligations of a foreign
government and its agencies and instrumentalities may or may not be supported
by the full faith and credit of the foreign government. The Fund can 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.

The Fund can invest in U.S. dollar-denominated "Brady Bonds." These
foreign debt obligations may be fixed-rate par bonds or floating-rate
discount bonds. They are generally collateralized in full as to repayment of
principal at maturity by U.S. Treasury zero-coupon obligations that have the
same maturity as the Brady Bonds. Brady Bonds can be viewed as having three
or four valuation components: (i) the collateralized repayment of principal
at final maturity; (ii) the collateralized interest payments; (iii) the
uncollateralized interest payments; and (iv) any uncollateralized repayment
of principal at maturity. Those uncollateralized amounts constitute what is
called the "residual risk."

If there is a default on collateralized Brady Bonds resulting in
acceleration of the payment obligations of the issuer, the zero-coupon U.S.
Treasury securities held as collateral for the payment of principal will not
be distributed to investors, nor will those obligations be sold to distribute
the proceeds. The collateral will be held by the collateral agent to the
scheduled maturity of the defaulted Brady Bonds. The defaulted bonds will
continue to remain outstanding, and the face amount of the collateral will
equal the principal payments which would have then been due on the Brady
Bonds in the normal course. Because of the residual risk of Brady Bonds and
the history of defaults with respect to commercial bank loans by public and
private entities of countries issuing Brady Bonds, Brady Bonds are considered
speculative investments.

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.

o Risks of Foreign Investing. Investments in foreign securities
may offer special opportunities for investing but also present special
additional risks and considerations not typically associated with investments
in domestic securities. Some of these additional risks are:

o reduction of income by foreign taxes;

o fluctuation in value of foreign investments due to changes in currency
rates or currency control regulations (for example, currency
blockage);

o transaction charges for currency exchange;
o lack of public information about foreign issuers;

o lack of uniform accounting, auditing and financial reporting standards
in foreign countries comparable to those applicable to domestic
issuers;

o less volume on foreign exchanges than on U.S. exchanges;
o greater volatility and less liquidity on foreign markets than in the

U.S.;

o less governmental regulation of foreign issuers, securities exchanges
and brokers than in the U.S.;

o greater difficulties in commencing lawsuits;
o higher brokerage commission rates than in the U.S.;

o increased risks of delays in settlement of portfolio transactions or
loss of certificates for portfolio securities;

o possibilities in some countries of expropriation, confiscatory
taxation, political, financial or social instability or adverse
diplomatic developments; and

o unfavorable differences between the U.S. economy and foreign
economies.

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

o Special Risks of Emerging Markets. Emerging and developing
markets abroad may also offer special opportunities for investing but have
greater risks than more developed foreign markets, such as those in Europe,
Canada, Australia, New Zealand and Japan. There may be even less liquidity in
their securities markets, and settlements of purchases and sales of
securities may be subject to additional delays. They are subject to greater
risks of limitations on the repatriation of income and profits because of
currency restrictions imposed by local governments. Those countries may also
be subject to the risk of greater political and economic instability, which
can greatly affect the volatility of prices of securities in those countries.
The Manager will consider these factors when evaluating securities in these
markets, and the Fund currently does not expect to invest a substantial
portion of its assets in emerging markets.

o Risks of Conversion to Euro. On January 1, 1999, eleven
countries in the European Union adopted the euro as their official currency.
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 securities values.

o vendors the Fund depends on to carry out its business, such
as its custodian bank (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 Manager has upgraded (at its expense) its computer and bookkeeping
systems to deal with the conversion. The Fund's custodian bank 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 manager 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.

n Zero-Coupon Securities. The Fund can buy zero-coupon and
delayed-interest securities, and "stripped" securities. Stripped securities
are debt securities whose interest coupons are separated from the security
and sold separately. The Fund can buy different types of zero-coupon or
stripped securities, including, among others, foreign debt securities and
U.S. Treasury notes or bonds that have been stripped of their interest
coupons, U.S. Treasury bills issued without interest coupons, and
certificates representing interests in stripped securities.

Zero-coupon securities do not make periodic interest payments and are
sold at a deep discount from their face value. 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. In the
absence of threats to the issuer's credit quality, the discount typically
decreases as the maturity date approaches. Some zero-coupon securities are
convertible, in that they are zero-coupon securities until a predetermined
date, at which time they convert to a security with a specified coupon rate.

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. 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.

n "Stripped" Mortgage-Related Securities. The Fund can 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| Floating Rate and Variable Rate Obligations. Variable rate
obligations may 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 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. 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 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.

Step-coupon bonds have a coupon interest rate that changes periodically
during the life of the security on predetermined dates that are set when the
security is issued.

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

When such transactions are negotiated, the price (which is generally
expressed in yield terms) is fixed at the time the commitment is made.
Delivery and payment for the securities take place at a later date. 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, no payment is made by the Fund to the issuer and no
interest accrues to the Fund from the investment until it receives the
security at settlement.

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

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

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.

n 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 temporary 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 Trustees from time to
time.

The majority of these transactions run from day to day, and delivery
pursuant to the resale typically occurs within one to five days of the
purchase. Repurchase agreements having a maturity beyond seven days are
subject to the Fund's limits on holding illiquid investments. The Fund will
not 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.

n Illiquid and Restricted Securities. Under the policies and
procedures established by the Fund's Board of Trustees, 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.

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.

n Forward Rolls. The Fund can enter into "forward roll" transactions
with respect to mortgage-related securities. In this type of transaction, the
Fund sells a mortgage-related security to a buyer and simultaneously agrees
to repurchase a similar security (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 might decline below the
price at which the Fund is obligated to repurchase securities.

n Investments in Equity Securities. Under normal market conditions the
Fund can invest a portion of assets in common stocks, preferred stocks,
warrants (which might be acquired as part of a "unit" of securities that
includes debt securities) and convertible debt securities, which in some
cases are considered "equity equivalents." However, it does not currently
anticipate investing significant amounts of its assets in equity securities
as part of its normal investment strategy. Certain equity securities may be
selected because they may provide dividend income.

o Risks of Investing in Stocks. Stocks fluctuate in price, and
their short-term volatility at times may be great. To the extent that the
Fund invests in equity securities, the value of the Fund's portfolio will be
affected by changes in the stock markets. Market risk can affect the Fund's
net asset value per share, which will fluctuate as the values of the Fund's
portfolio securities change. 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.

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

o Convertible Securities. While some convertible securities are
a form of debt security, in certain 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 might have less impact on the Manager's investment decision with
respect to convertible securities than in the case of non-convertible
fixed-income securities. Convertible debt securities are subject to the
credit risks and interest rate risks described above in "Debt Securities."

The value of a convertible security is a function of its "investment
value" and its "conversion value." If the investment value exceeds the
conversion value, the security will behave more like a debt security and the
security's price will likely increase when 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.

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 stock, unlike common stock, has a stated
dividend rate payable from the corporation's earnings. Preferred stock
dividends may be cumulative or non-cumulative, participating, or auction
rate. "Cumulative" dividend provisions require all or a portion

of prior unpaid dividends to be paid before dividends can be paid on the
issuer's common stock. Preferred stock may be "participating" stock, which
means that it may be entitled to a dividend exceeding the stated dividend in
certain cases.

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

n Loans of Portfolio Securities. To raise cash for income or liquidity
purposes, the Fund can lend its portfolio securities to brokers, dealers and
other types of financial institutions approved by the Fund's Board of
Trustees. These loans are limited to not more than 25% of the value of the
Fund's total assets. The Fund currently does not intend to engage in loans of
securities, but if it does so, such loans will not likely exceed 5% of the
Fund's total assets.

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 or securities of the U.S.
government or its agencies or instrumentalities, or other cash equivalents in
which the Fund is permitted to invest. To be acceptable as collateral,
letters of credit must obligate a bank to pay amounts demanded by the Fund if
the demand meets the terms of the letter. The terms of the letter of credit
and the issuing bank both must be satisfactory to the Fund.

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

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

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

instrumentalities, described above.

|_| 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 bank
(including a foreign branch of a domestic bank) having total
assets of at least U.S. $1 billion, or

o obligations of a foreign bank with total assets of at least U.S. $1
billion.

"Banks" include commercial banks, savings banks and savings and loan
associations, which may or may not be members of the Federal Deposit
Insurance Corporation.

|_| Commercial Paper. The Fund can invest in commercial paper if
it is rated within the top three rating categories of Standard & Poor's and
Moody's or other rating organizations. If the paper is not rated, it may be
purchased if the Manager determines that it is comparable to rated commercial
paper in the top three rating categories of national rating organizations.

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

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

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

The Fund has no limitations on the type of issuer from whom these notes
will be purchased. However, in connection with such purchases and on an
ongoing basis, the 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.

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

Among the derivative investments the Fund can invest in are
"index-linked" or "currency-linked" notes. Principal and/or interest payments
on index-linked notes depend on the performance of an underlying index.
Currency-indexed securities are typically 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.

Other 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
might not be as high as the Manager expected.

n Hedging. The Fund can use hedging instruments although it is not
obligated to use them in seeking its objective. To attempt to protect against
declines in the market value of the Fund's portfolio, to permit the Fund to
retain unrealized gains in the value of portfolio securities which have
appreciated, or to facilitate selling securities for investment reasons, the
Fund could:

o sell futures contracts,
|_| buy puts on futures or on securities, 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:

o buy futures, or

o buy calls on futures or on securities.

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

<PAGE>

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

A broadly-based stock index is used as the basis for trading stock
index futures. In some cases, these futures may be based on stocks of
issuers in a particular industry or group of industries. A stock index
assigns relative values to the securities included in the index and its value
fluctuates in response to the changes in value of the underlying securities.
A stock index cannot be purchased or sold directly. Bond index 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.

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

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

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

<PAGE>

o Put and Call Options. The Fund can buy and sell certain
kinds of put options ("puts") and call options ("calls"). The Fund can buy
and sell exchange-traded and over-the-counter put and call options, including
index options, securities options, currency options, commodities options, and
options on the other types of futures described above.

o Writing Covered Call Options. The Fund can write

(that is, sell) covered calls. If the Fund sells a call option, it must be
covered. That means the Fund must own the security subject to the call while
the call is outstanding, or, for 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 50% of the Fund's total assets
may be subject to calls.

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 a specified multiple that determines the total
value of the call for each point of difference. If the value of the
underlying investment does not rise above the call price, it is likely that
the call will lapse without being exercised. In that case the Fund would
keep the cash premium.

The Fund's custodian bank, or a securities depository acting for the
custodian bank, will act as the Fund's escrow agent, through the facilities
of the Options Clearing Corporation ("OCC"), as to the investments on which
the Fund has written calls traded on exchanges or as to other acceptable
escrow securities. In that way, no margin will be required for such
transactions. OCC will release the securities on the expiration of the
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
it books an equivalent dollar amount of liquid assets. The Fund will
identify additional liquid assets on its books to cover the call if the value
of the identified assets drops below 100% of the current value of the
future. Because of this asset coverage requirement, in no circumstances
would the Fund's receipt of an exercise notice as to that future require the
Fund to deliver a futures contract. It would simply put the Fund in a short
futures position, which is permitted by the Fund's hedging policies.

o Writing Put Options. The Fund can sell put options

on securities, broadly-based securities indices, foreign currencies and
futures. A put option on securities gives the purchaser the right to sell,
and the writer the obligation to buy, the underlying investment at the
exercise price during the option period. The Fund will not write puts if, as
a result, more than 50% of the Fund's net assets would be required to be
segregated to cover such put options.

If the Fund writes a put, the put must be covered by liquid assets
identified on the Fund's books. The premium the Fund receives from writing a
put represents a profit, as long as the price of the underlying investment
remains equal to or above the exercise price of the put. However, the Fund
also assumes the obligation during the option period to buy the underlying
investment from the buyer of the put at the exercise price, even if the value
of the investment falls below the exercise price.

If a put the Fund has written expires unexercised, the Fund realizes a
gain in the amount of the premium less the transaction costs incurred. If
the put is exercised, the Fund must fulfill its obligation to purchase the
underlying investment at the exercise price. That price will usually exceed
the market value of the investment at that time. In that case, the Fund may
incur a loss if it sells the underlying investment. That loss will be equal
to the sum of the sale price of the underlying investment and the premium
received minus the sum of the exercise price and any transaction costs the
Fund incurred.

When writing a put option on a security, to secure its obligation to
pay for the underlying security the Fund will deposit in escrow liquid assets
with a value equal to or greater than the exercise price of the underlying
securities. The Fund therefore forgoes the opportunity of investing the
segregated assets or writing calls against those assets.

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

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

o Purchasing Calls and Puts. The Fund can purchase

calls on securities, broadly-based securities indices, foreign currencies and
futures. It may do so to protect against the possibility that the Fund's
portfolio will not participate in an anticipated rise in the securities
market. When the Fund buys a call (other than in a closing purchase
transaction), it pays a premium. The Fund then has the right to buy the
underlying investment from a seller of a corresponding call on the same
investment during the call period at a fixed exercise price.

The Fund benefits only if it sells the call at a profit or if, during
the call period, the market price of the underlying investment is above the
sum of the call price plus the transaction costs and the premium paid for the
call and the Fund exercises the call. If the Fund does not exercise the call
or sell it (whether or not at a profit), the call will become worthless at
its expiration date. In that case the Fund will have paid the premium but
lost the right to purchase the underlying investment.

The Fund can buy puts on securities, broadly-based securities indices,
foreign currencies and futures, whether or not it owns the underlying
investment. When the Fund purchases a put, it pays a premium and, except as
to puts on indices, has the right to sell the underlying investment to a
seller of a put on a corresponding investment during the put period at a
fixed exercise price.

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

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

<PAGE>

When the Fund purchases a call or put on an index or future, it pays a
premium, but settlement is in cash rather than by delivery of the underlying
investment to the Fund. Gain or loss depends on changes in the index in
question (and thus on price movements in the securities market generally)
rather than on price movements in individual securities or futures contracts.

The Fund may buy a call or put only if, after the purchase, the value
of all call and put options held by the Fund will not exceed 5% of the Fund's
total assets.

o Buying and Selling Options on Foreign Currencies.

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

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

A call the Fund writes on a foreign currency is "covered" if the Fund
owns the underlying foreign currency covered by the call or has an absolute
and immediate right to acquire that foreign currency without additional cash
consideration (or it can do so for additional cash consideration 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 liquid assets on its books having a value equal to its
obligation under the option.

o Risks of Hedging with Options and Futures. The use

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Fund will cover its short positions in these cases by identifying
to its custodian bank assets having a value equal to the aggregate amount of
the Fund's commitment under forward contracts. The Fund will not enter into
forward contracts or maintain a net exposure to such contracts if the
consummation of the contracts would obligate the Fund to deliver an amount of
foreign currency in excess of the value of the Fund's portfolio securities or
other assets denominated in that currency or another currency that is the
subject of the hedge.

However, to avoid excess transactions and transaction costs, the Fund
may maintain a net exposure to forward contracts in excess of the value of
the Fund's portfolio securities or other assets denominated in foreign
currencies if the excess amount is "covered" by liquid securities denominated
in any currency. The cover must be at least equal at all times to the amount
of that excess. As one alternative, the Fund may purchase a call option
permitting the Fund to purchase the amount of foreign currency being hedged
by a forward sale contract at a price no higher than the forward contract
price. As another alternative, the Fund may purchase a put option permitting
the Fund to sell the amount of foreign currency subject to a forward purchase
contract at a price as high or higher than the forward contact price.

The precise matching of the amounts under forward contracts and the
value of the securities involved generally will not be possible because the
future value of securities denominated in foreign currencies will change as a
consequence of market movements between the date the forward contract is
entered into and the date it is sold. In some cases the 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 book
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 may 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 adviser as the Fund (or
an adviser that is an affiliate of the Fund's adviser). 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 liquid assets 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.

<PAGE>

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

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

n 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.

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

<PAGE>

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

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

|_| The Fund cannot concentrate its investments (that means it cannot
invest 25% or more of its total assets) in any one industry. Gas, water,
electric and telephone utilities are considered to be separate industries for
this purpose.

o The Fund cannot make loans. However, the Fund can invest in
obligations that it can buy consistent with its investment objective and
policies and can enter into repurchase agreements. The Fund may also lend its
portfolio securities.

o The Fund cannot invest in oil, gas or other mineral leases, rights,
royalty contracts or exploration or development programs, real estate or real
estate mortgage loans. However, the Fund can purchase and sell securities
issued or secured by companies that invest in or deal in real estate and by
companies that are not principally engaged in the business of buying and
selling the leases, rights, contracts or programs described above.

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

o The Fund cannot invest in or hold securities of any issuer if, to
the knowledge of the Fund or its parent Trust, officers and Directors or
Trustees of the Fund, its parent Trust or Massachusetts Mutual Life Insurance
Company individually beneficially own more than 1/2 of 1% of the securities
of that issuer and together own more than 5% of the securities of that
issuer.

o The Fund cannot mortgage, pledge or hypothecate its assets.
However, to secure permitted borrowings, the Fund can pledge securities
having a market value (at the time of the pledge) not exceeding 15% of the
cost of the Fund's total assets. This restriction does not prohibit the Fund
from permitted transactions in options, futures contracts and options on
futures or from entering into reverse repurchase agreements and lending its
portfolio securities.

o The Fund cannot make loans to an officer, trustee or employee of the
Fund's parent Trust or to any officer, director or employee of Massachusetts
Mutual Life Insurance Company, or to that company.

o The Fund cannot borrow money or enter into reverse repurchase
agreements for investment purposes but can borrow money from banks or enter
into reverse repurchase agreements as a temporary measure for extraordinary
or emergency purposes. The aggregate amount of borrowings and commitments
under reverse repurchase agreements must not exceed 10% of the market value
of the Fund's total assets at the time of borrowing or entering into a
reverse repurchase agreement. The Fund cannot purchase additional portfolio
securities while the aggregate amount of its borrowings and reverse
repurchase agreement commitments exceed 5% of its net assets. Portfolio
lending is not considered to be "borrowing money" under this restriction.

|_| The Fund cannot issue "senior securities," but this does not
prohibit certain investment activities for which assets of the Fund are
designated as segregated, or margin, collateral or escrow arrangements are
established, to cover the related obligations. Examples of those activities
include borrowing money, reverse repurchase agreements, delayed-delivery and
when-issued arrangements for portfolio securities transactions, and contracts
to buy or sell derivatives, hedging instruments, options or futures.

|_| The Fund cannot make short sales except for transactions referred
to as "short-sales-against-the-box." (Because changes in federal income tax
laws would not enable the Fund to defer realization of gain or loss for
federal income tax purposes, these transactions are not likely to be used by
the Fund).

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

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.

n Does the Fund Have Additional Restrictions That Are Not
"Fundamental" Policies?

The Fund has additional operating policies that are not "fundamental,"
and which can be changed by the Board of Trustees without shareholder
approval:

o The Fund cannot invest in any company for the purpose of exercising
control or management of that company.

o The Fund cannot buy the securities of any company that has a history
(including that of any predecessor, controlling person, guarantor
or general partner) of less than three years of continuous
operations or relevant business experience if that purchase would
cause more than 5% of the Fund's assets to be invested in those
types of companies.

How the Fund is Managed

Organization and History. The Fund is a series of Oppenheimer Integrity
Funds (referred to as the Fund's parent Trust in this document). The Fund's
parent Trust was established in 1982 as MassMutual Liquid Assets Trust, an
open-end diversified management investment company, with an unlimited number
of authorized shares of beneficial interest. The Fund was reorganized from a
closed-end investment company called MassMutual Income Investors, Inc. into a
series of the Trust on April 15, 1988. The Fund and the Trust were originally
managed by Massachusetts Mutual Life Insurance Company, the Manager's
indirect parent company. On March 29, 1991, the Manager became the Fund's
investment advisor, and the Trust changed its name to Oppenheimer Integrity
Funds. The Fund was then called Oppenheimer Investment Grade Bond Fund and
changed its name to Oppenheimer Bond Fund on July 10, 1995.

The Fund is governed by the Board of Trustees of

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

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

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

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

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

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

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

Oppenheimer Cash Reserves Oppenheimer Total Return Fund, Inc.
Oppenheimer Champion Income Fund Oppenheimer Variable Account Funds
Oppenheimer Capital Income Fund Panorama Series Fund, Inc.
Oppenheimer High Yield Fund Centennial America Fund, L. P.
Oppenheimer International Bond Fund Centennial California Tax Exempt Trust
Oppenheimer Integrity Funds Centennial Government Trust
Oppenheimer Limited-Term Government
Fund Centennial Money Market Trust
Oppenheimer Main Street Funds, Inc. Centennial New York Tax Exempt Trust
Oppenheimer Municipal Fund Centennial Tax Exempt Trust
Oppenheimer Real Asset Fund
Oppenheimer Strategic Income Fund

Ms. Macaskill and Messrs. Swain, Bishop, Bowen, Donohue, Farrar and Zack,
who are officers of the Fund, respectively hold the same offices with the
other Denver-based Oppenheimer funds. As of April 1, 1999, the Trustees and
officers of the Fund as a group owned less than 1% of the outstanding shares
of the Fund. The foregoing statement does not reflect shares held of record
by an employee benefit plan for employees of the Manager other than shares
beneficially owned under that plan by the officers of the Fund listed below.
Ms. Macaskill and Mr. Donohue, are trustees of that plan.

Robert G. Avis,* Trustee; Age: 67
One North Jefferson Ave., St. Louis, Missouri 63103

Vice Chairman of A.G. Edwards & Sons, Inc. (a broker-dealer) and A.G.
Edwards, Inc. (its parent holding company); Chairman of A.G.E. Asset
Management and A.G. Edwards Trust Company (its affiliated investment adviser
and trust company, respectively).

William A. Baker, Trustee; Age: 84
197 Desert Lakes Drive, Palm Springs, California 92264

Management Consultant.

Charles Conrad, Jr., Trustee; Age: 68
1501 Quail Street, Newport , Beach, CA 92660

Chairman and CEO of Universal Space Lines, Inc. (a space services management
company); formerly Vice President of McDonnell Douglas Space Systems Co.,
prior to which he was associated with the National Aeronautics and Space
Administration.

Jon S. Fossel, Trustee; Age: 56
P.O. Box 44, Mead Street, Waccabuc, New York 10597

Formerly Chairman and a director of the Manager, President and a director of
Oppenheimer Acquisition Corp. ("OAC"), the Manager's parent holding company,
and Shareholder Services, Inc. ("SSI") and Shareholder Financial Services,
Inc. ("SFSI"), transfer agent subsidiaries of the Manager.

Sam Freedman, Trustee; Age: 58
4975 Lakeshore Drive, Littleton, Colorado 80123

Formerly Chairman and Chief Executive Officer of OppenheimerFunds Services,
Chairman, Chief Executive Officer and a director of SSI, Chairman, Chief
Executive and Officer and director of SFSI, Vice President and director of
OAC and a director of OppenheimerFunds, Inc.

Raymond J. Kalinowski, Trustee; Age: 69
44 Portland Drive, St. Louis, Missouri 63131

Director of Wave Technologies International, Inc. (a computer products
training company), self-employed consultant (securities matters).

C. Howard Kast, Trustee; Age: 77
2552 East Alameda, Denver, Colorado 80209

Formerly Managing Partner of Deloitte, Haskins & Sells (an accounting firm).

Robert M. Kirchner, Trustee; Age: 77
7500 E. Arapahoe Road, Englewood, Colorado 80112
President of The Kirchner Company (management consultants).

<PAGE>

Ned M. Steel, Trustee; Age: 83
3416 South Race Street, Englewood, Colorado 80110

Chartered Property and Casualty Underwriter; a director of Visiting Nurse
Corporation of Colorado.

James C. Swain, Chairman, Chief Executive Officer and Trustee*; Age: 65
6803 South Tucson Way, Englewood, Colorado 80112
Vice Chairman of the Manager (since September 1988); formerly President and a
director of Centennial Asset Management Corporation, an investment adviser
subsidiary of the Manager ("Centennial"), and Chairman of the Board of SSI.

Bridget A. Macaskill, President; Age: 50
Two World Trade Center, 34th Floor, New York, New York 10048
President (since June 1991), Chief Executive Officer (since September 1995)
and a Director (since December 1994) of the Manager; President and director
(since June 1991) of HarbourView Asset Management Corp., an investment
advisor subsidiary of the Manager ("HarbourView"); Chairman and a director of
SSI (since August 1994), and SFSI (September 1995); President (since
September 1995) and a director (since October 1990) of OAC; President (since
September 1995) and a director (since November 1989) of Oppenheimer
Partnership Holdings, Inc., a holding company subsidiary of the Manager; a
director of Oppenheimer Real Asset Management, Inc. (since July 1996);
President and a director (since October 1997) of OppenheimerFunds
International Ltd., an offshore fund manager subsidiary of the Manager
("OFIL"); Chairman, President and a director of Oppenheimer Millennium Funds
plc (since October 1997); President and a director of other Oppenheimer
funds; a director of Hillsdown Holdings plc (a U.K. food company).

George C. Bowen, Vice President and Assistant Secretary; Age: 62
6803 South Tucson Way, Englewood, Colorado 80112
Senior Vice President (since September 1987) of the Manager; Vice President
(since June 1983) and Treasurer (since March 1985) of the Distributor; Vice
President (since October 1989) and Treasurer (since April 1986) of
HarbourView Asset Management Corp., an investment adviser subsidiary of the
Manager; Senior Vice President (since February 1992), Treasurer (since July
1991) and a director (since December 1991) of Centennial Asset Management
Corporation, an investment adviser subsidiary of the Manager; Vice President
and Treasurer (since August 1978) and Secretary (since April 1981) of
Shareholder Services Inc., a transfer agent subsidiary of the Manager; Vice
President, Treasurer and Secretary (since November 1989) of Shareholder
Financial Services, Inc., a transfer agent subsidiary of the Manager;
Assistant Treasurer (since March 1998) of Oppenheimer Acquisition Corp., the
parent company of the Manager; Treasurer of Oppenheimer Partnership Holdings,
Inc. (since November 1989); Vice President and Treasurer of Oppenheimer Real
Asset Management, Inc. (since July 1996), an investment adviser subsidiary of
the Manager; an officer of other Oppenheimer funds; formerly Treasurer (March
1985 - April 1999) of the Manager and (June 1990 - March 1998) of Oppenheimer
Acquisition Corp.

Brian W. Wixted, Treasurer; Age: 39

6803 South Tuscon Way, Englewood, Colorado 80112

Senior Vice President and Treasurer (since April 1999) of the Manager;
formerly Principal and Chief Operating Officer, Bankers Trust Company -
Mutual Fund Services Division (1995-1999); Vice President and Chief Financial
Officer of CS First Boston Investment Management Corp. (1991-1995); and Vice
President and Accounting Manager, Merrill Lynch Asset Management (1987-1991).

David P. Negri, Vice President and Portfolio Manager; Age: 44.
Two World Trade Center, 34th Floor, New York, New York 10048-0203
Senior Vice President of the Manager (since June 1989); a portfolio manager
and officer of other Oppenheimer funds.

John S. Kowalik, Vice President and Portfolio Manager; Age: 42
Two World Trade Center, 34th Floor, New York, New York 10048-0203
Senior Vice President of the Manager (since July 1998); a portfolio manager
and officer of other Oppenheimer funds; formerly Managing Director and Senior
Portfolio Manager of Prudential Global Advisors (1989-1998).

Andrew J. Donohue, Vice President and Secretary; Age: 48
Two World Trade Center, 34th Floor, New York, New York 10048
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 the Distributor; Executive Vice President, General Counsel
and a director of HarbourView, SSI, SFSI and Oppenheimer Partnership
Holdings, Inc. (since September 1995) and a director of Centennial (since
September 1995); President, General Counsel and a director of Oppenheimer
Real Asset Management, Inc. (since July 1996); General Counsel (since May
1996) and Secretary (since April 1997) of OAC; Vice President and a director
of OFIL and Oppenheimer Millennium Funds plc (since October 1997); an officer
of other Oppenheimer funds.

Robert J. Bishop, Assistant Treasurer; Age: 40
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 for the Manager.

Scott Farrar, Assistant Treasurer; Age: 33
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 for the Manager.

Robert G. Zack, Assistant Secretary; Age: 50

Two World Trade Center, 34th Floor, 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 SSI (since May 1985), and
SFSI (since November 1989); Assistant Secretary (since October 1997) of OFIL
and Oppenheimer Millennium Funds plc; an officer of other Oppenheimer funds.

n Remuneration of Trustees. The officers of the Fund and one of the
Trustees of the Fund (Mr. Swain) are affiliated with the Manager and receive
no salary or fee from the Fund. The remaining Trustees of the Fund received
the compensation shown below. The compensation from the Fund was paid during
its fiscal year ended December 31, 1998. The compensation from all of the
Denver-based Oppenheimer funds includes the compensation from the Fund and
represents compensation received as a director, trustee, managing general
partner or member of a committee of the Board during the calendar year 1998.

<PAGE>

- --------------------------------------------------------------------------
Total Compensation

Trustee's Name and Other Aggregate Compensation from all Denver-Based
Positions From Fund Oppenheimer Funds1

- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Robert G. Avis $774 $67,998
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
William A. Baker $797 $69,998
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Charles Conrad, Jr. $774 $67,998
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Jon. S. Fossel $768 $67,496
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Sam Freedman
Audit and Review Committee $842 $73,998
Member
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Raymond J. Kalinowski
Audit and Review $842 $73,998
Committee Member
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
C. Howard Kast
Audit and Review $878 $76,998
Committee Chairman
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Robert M. Kirchner $774 $67,998
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Ned M. Steel $774 $67,998
- --------------------------------------------------------------------------
1. For the 1998 calendar year.

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

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

n Major Shareholders. As of April 1, 1999, 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 securities were:

Mass Mutual Life Insurance Company, 1295 State Street, Springfield,
Massachusetts 01111-0001 which owned 2,615,242.011 Class A shares
(approximately 10.79% of the Class A shares then outstanding). Merrill
Lynch Pierce Fenner & Smith Inc., 4800 Deer Lake Drive East, Floor 3,
Jacksonville, Florida 32246 which owned 976,522.137 Class B shares
(approximately 10.92% of the Class B shares then outstanding),
602,316.270 Class C shares (approximately 26.29% of the Class C shares
then outstanding).

<PAGE>

The Manager. The Manager is wholly-owned by Oppenheimer Acquisition Corp., a
holding company controlled by Massachusetts Mutual Life Insurance Company.
The Manager and the Fund 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. Compliance with the Code of Ethics is carefully monitored and
enforced by the Manager.

n 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 Fixed-Income Portfolio Team 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 advisory agreement lists examples of expenses paid by the Fund. The
major categories relate to interest, taxes, brokerage commissions, fees to
certain Trustees, legal and audit expenses, custodian and transfer agent
expenses, share issuance costs, certain printing and registration costs and
non-recurring expenses, including litigation costs. The management fees paid
by the Fund to the Manager are calculated at the rates described in the
Prospectus, which are applied to the assets of the Fund as a whole. The fees
are allocated to each class of shares based upon the relative proportion of
the Fund's net assets represented by that class.

- -------------------------------------------------------------------------------
Fiscal Year ended 12/31: Management Fees Paid to OppenheimerFunds, Inc.

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 to use the name "Oppenheimer" as part of its name.

Until March 1991, Massachusetts Mutual Life Insurance Company was the Fund's
investment advisor. The Manager became the Fund's investment advisor March 28,
1991, and the Manager engaged MassMutual as sub-advisor from March 28, 1991
until July 10, 1995.

Brokerage Policies of the Fund

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

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

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 effecting 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.

<PAGE>

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

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

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

<PAGE>

- ------------------------------------------------------------------------------
Fiscal Year Ended 12/31: Total Brokerage Commissions Paid by the Fund1

Distribution and Service Plans

The Distributor. Under its General Distributor's Agreement with the Fund,
the Distributor acts as the Fund's principal underwriter in the continuous
public offering of the 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 most recent fiscal year
is shown in the table below.

- -------------------------------------------------------------------------------
Aggregate Class A
Front-End Front-End Commissions Commissions Commissions

Fiscal 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

12/31: Shares Distributor Distributor1 Distributor1 Distributor1

- -------------------------------------------------------------------------------
Class A Contingent Class B Contingent Class C Contingent
Fiscal Deferred Sales Deferred Sales Deferred Sales
Year Ended Charges Retained by Charges Retained by Charges Retained by
12/31 Distributor Distributor Distributor

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

Each plan has been approved by a vote of the Board of Trustees, including
a majority of the Independent Trustees3, cast in person at a meeting called
for the purpose of voting on that plan. Each plan has also been approved by
the holders of a "majority" (as defined in the Investment Company Act) of the
shares of the applicable class. The shareholder votes for the plan for Class
C shares were cast by the Manager as the sole initial holder of that class of
shares of the Fund.

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

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

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

While the Plans are in effect, the Treasurer of the Fund shall provide
separate written reports on the plans to the Board of Trustees at least
quarterly for its review. The reports shall detail the amount of all payments
made under a plan and the purpose for which the payments were made. The
reports on the Class B Plan and Class C Plan shall also include the
Distributor's distribution costs for that quarter. Those reports are subject
to the review and approval of the Independent Trustees.

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

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

<PAGE>

|X| Class A Service Plan. 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. 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 December 31, 1998, payments under the Class A
Plan totaled $538,337, all of which was paid by the Distributor to
recipients. An affiliate of the Distributor received $186,566. 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 and Class C Service and Distribution Plan. Under each plan,
service fees and distribution fees are computed on the average of the net
asset value of shares in the respective class, determined as of the close of
each regular business day during the period. The Class B and Class C plans
provide for the Distributor to be compensated at a flat rate, whether the
Distributor's distribution expenses are more or less than the amounts paid by
the Fund under the plan during the period for which the fee is paid. The
types of services that recipients provide are similar to the services
provided under the Class A service plan, described above.

The Class B and the Class C plans permit the Distributor to retain both
the asset-based sales charges and the service fees or to pay recipients the
service fee on a quarterly basis, without payment in advance. However, the
Distributor currently intends to pay the service fee to recipients in advance
for the first year after the shares are purchased. After the first year
shares are outstanding, the Distributor makes service fee payments quarterly
on those shares. The advance payment is based on the net asset value of
shares sold. Shares purchased by exchange do not qualify for the advance
service fee payment. If Class B or Class C 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 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 commission to the recipient on Class C shares
outstanding for a year or more. If a dealer has a special agreement with the
Distributor, the Distributor will pay the Class B and/or Class C service fee
and the asset-based sales charge to the dealer quarterly in lieu of paying
the sales commissions and service fee in advance at the time of purchase.

<PAGE>

The asset-based sales charges on Class B and Class C shares allow
investors to buy shares without a front-end sales charge while allowing the
Distributor to compensate dealers that sell those shares. The Fund pays the
asset-based sales charges to the Distributor for its services rendered in
distributing Class B and Class C shares. The payments are made to the
Distributor in recognition that the Distributor:
o pays sales commissions to authorized brokers and dealers at the time of

sale and pays service fees as described above,

o may finance payment of sales commissions and/or the advance of the
service fee payment to recipients under the plans, or may provide such
financing from its own resources or from the resources of an
affiliate,

o employs personnel to support distribution of Class B and Class C
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 and Class C 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 or the Class C plan is terminated by the Fund, the Board
of Trustees may allow the Fund to continue payments of the asset-based sales
charge to the Distributor to compensate it for its expenses incurred for
distributing shares before the plan was terminated. All payments under the
Class B and the Class C 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.

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

Distribution Fees Paid to the Distributor in the Fiscal Year Ended
12/31/98

Total Amount Unreimbursed Expenses as % of
Class: Payments Retained by Expenses Under Net Assets of

Under Plan Distributor Plan Class

Performance of the Fund

Explanation of Performance Terminology. The Fund uses a variety of terms to
illustrate its performance. These terms include "standardized yield,"
"dividend yield," "average annual total return," "cumulative total return,"
"average annual total return at net asset value" and "total return at net
asset value." An explanation of how yields and 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.

<PAGE>

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). Certain types of yields may also be shown,
provided that they are accompanied by standardized average annual total
returns.

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:

|_| Yields and total returns measure the performance of a hypothetical
account in the Fund over various periods and do not show the performance of
each shareholder's account. Your account's performance will vary from the
model performance data if your dividends are received in cash, or you buy or
sell shares during the period, or you bought your shares at a different time
and price than the shares used in the model.

o The Fund's performance returns do not reflect the effect of taxes on
dividends and capital gains distributions.

|_| An investment in the Fund is not insured by the FDIC or any other
government agency.

|_| The principal value of the Fund's shares, and its yields and total
returns are not guaranteed and normally will fluctuate on a daily basis.

|_| When an investor's shares are redeemed, they may be worth more or
less than their original cost.

|_| Yields and total returns for any given past period represent
historical performance information and are not, and should not be considered,
a prediction of future yields or returns.

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

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

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

<PAGE>

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

- ------------------------------------------------------------------------------
[OBJECT OMITTED]

- ------------------------------------------------------------------------------
The symbols above represent the following factors:

a = dividends and interest earned during the 30-day period.

b = expenses accrued for the period (net of any expense assumptions).

c = the average daily number of shares of that class outstanding
during the 30-day period that were entitled to receive dividends.

d = the maximum offering price per share of that class on the last day
of the period, adjusted for undistributed net investment income.

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

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

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

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

-----------------------------------------------------------------------------
The Fund's Yields for the 30-Day Periods Ended 12/31/98

|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 4.75% (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. There is no sales
charge for Class Y shares.

|_| 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:

- ------------------------------------------------------------------------------
[OBJECT OMITTED]

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

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:

- ------------------------------------------------------------------------------
[OBJECT OMITTED]

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

|_| 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 or Class
C shares. Each is based on the difference in net asset value per share at
the beginning and the end of the period for a hypothetical investment in that
class of shares (without considering front-end or contingent deferred sales
charges) and takes into consideration the
reinvestment of dividends and capital gains distributions.

- --------------------------------------------------------------------------------
The Fund's Total Returns for the Periods Ended 12/31/98

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Cumulative Total

Class Returns (10

of years or Life of

Shares Class) Average Annual Total Returns

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5-Year 10-Year
(or (or

1-Year life-of-class) 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

- --------------------------------------------------------------------------------
1. Inception of Class A: 4/15/88.
2. Inception of Class B: 5/3/93.
3. Inception of Class C: 7/11/95.
4. Inception of Class Y: 4/27/98.

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 objectives. Lipper
currently ranks the Fund's performance against all other corporate debt
(A-rated) fixed-income funds. The Lipper performance rankings are based on
total returns that include the reinvestment of capital gain distributions and
income dividends but do not take sales charges or taxes into consideration.
Lipper also publishes "peer-group" indices of the performance of all mutual
funds in a category that it monitors and averages of the performance of the
funds in particular categories.

|X| Morningstar Ratings and Rankings. From time to time the Fund may
publish the star 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 taxable bond
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 rating
(weighted 60%/40% respectively), or its combined 3-, 5-, and 10-year rating
(weighted 40%, 30% and 30%, respectively), depending on the inception date of
the fund (or class). Rankings are subject to change monthly.

The Fund may also compare its total return ranking to that of other
funds in its Morningstar category, in addition to its star ratings. 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.

<PAGE>

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

n 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.

n 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 Large Cap Growth Fund
Oppenheimer Capital Appreciation Fund Oppenheimer Limited-Term Government Fund

Oppenheimer Main Street California

Oppenheimer California Municipal Fund Municipal Fund

Oppenheimer Main Street Growth & Income

Oppenheimer Champion Income Fund Fund
Oppenheimer Convertible Securities Fund Oppenheimer MidCap Fund
Oppenheimer Developing Markets Fund Oppenheimer Multiple Strategies Fund
Oppenheimer Disciplined Allocation Fund Oppenheimer Municipal Bond Fund
Oppenheimer Disciplined Value Fund Oppenheimer New York Municipal Fund
Oppenheimer Discovery Fund Oppenheimer New Jersey Municipal Fund
Oppenheimer Enterprise Fund Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Capital Income Fund Oppenheimer Quest Balanced Value Fund
Oppenheimer Quest Capital Value Fund,

Oppenheimer Europe Fund Inc.

Oppenheimer Quest Global Value Fund,

Oppenheimer Florida Municipal Fund Inc.

Oppenheimer Global Fund Oppenheimer Quest Opportunity Value Fund
Oppenheimer Global Growth & Income Fund Oppenheimer Quest Small Cap Value Fund
Oppenheimer Gold & Special Minerals Fund Oppenheimer Quest Value Fund, Inc.
Oppenheimer Growth Fund Oppenheimer Real Asset Fund
Oppenheimer High Yield Fund Oppenheimer Strategic Income Fund
Oppenheimer Insured Municipal Fund Oppenheimer Total Return Fund, Inc.
Oppenheimer Intermediate Municipal Fund Oppenheimer U.S. Government Trust
Oppenheimer International Bond Fund Oppenheimer World Bond Fund
Oppenheimer International Growth Fund Limited-Term New York Municipal Fund
Oppenheimer International Small Company
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.

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

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

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

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

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

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

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

o Terms of Escrow That Apply to Letters of Intent.

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

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

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

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

5. The shares eligible for purchase under the Letter (or the holding of
which may be counted toward completion of a Letter) include:
(a) Class A shares sold with a front-end sales charge or subject to a Class

A contingent deferred sales charge,

(b) Class B shares of other Oppenheimer funds acquired subject to a
contingent deferred sales charge, and

(c) Class A or Class B shares acquired by exchange of either (1) Class A
shares of one of the other Oppenheimer funds that were acquired
subject to a Class A initial or contingent deferred sales charge
or (2) Class B shares of one of the other Oppenheimer funds that
were acquired subject to a contingent deferred sales charge.

<PAGE>

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

Asset Builder Plans. To establish an Asset Builder Plan to buy shares
directly from a bank account, you must enclose a check (minimum $25) for the
initial purchase with your application. Shares purchased by Asset Builder
Plan payments from bank accounts are subject to the redemption restrictions
for recent purchases described in the Prospectus. Asset Builder Plans also
enable shareholders of Oppenheimer Cash Reserves to use their fund account to
make monthly automatic purchases of shares of up to four other Oppenheimer
funds.

If you make payments from your bank account to purchase shares of the
Fund, your bank account will be automatically debited, normally four to five
business days prior to the investment dates selected in the Application.
Neither the Distributor, the Transfer Agent nor the Fund shall be responsible
for any delays in purchasing shares resulting from delays in ACH
transmissions.

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

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

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

<PAGE>

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 or Class C shares and the dividends payable on Class B or Class C
shares will be reduced by incremental expenses borne solely by that class.
Those expenses include the asset-based sales charges to which Class B and
Class C 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
and Class C shares have no initial sales charge, the purpose of the deferred
sales charge and asset-based sales charge on Class B and Class C 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. The conversion of Class B shares to Class A
shares after six years is subject to the continuing availability of a private
letter ruling from the Internal Revenue Service, or an opinion of counsel or
tax adviser, to the effect that the conversion of Class B shares does not
constitute a taxable event for the shareholder under federal income tax law.
If such a revenue ruling or opinion is no longer available, the automatic
conversion feature may be suspended, in which event no further conversions of
Class B shares would occur while such 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 bank fees, Trustees' fees, transfer
agency fees, legal fees and auditing costs. Those expenses are paid out of
the Fund's assets and are not paid directly by shareholders. However, those
expenses reduce the net asset value of shares, and therefore are indirectly
borne by shareholders through their investment.

The methodology for calculating the net asset value, dividends and
distributions of the Fund's share classes recognizes two types of expenses.
General expenses that do not pertain specifically to any one class are
allocated pro rata to the shares of all classes. The allocation is based on
the percentage of the Fund's total assets that is represented by the assets
of each class, and then equally to each outstanding share within a given
class. Such general expenses include management fees, legal, bookkeeping and
audit fees, printing and mailing costs of shareholder reports,

<PAGE>

Prospectuses, Statements of Additional Information and other materials for
current shareholders, fees to unaffiliated Trustees, custodian bank 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.

n Securities Valuation. The Fund's Board of Trustees has established
procedures for the valuation of the Fund's securities. In general those
procedures are as follows:

o Equity securities traded on a U.S. securities exchange or on NASDAQ
are valued as follows:
(1) if last sale information is regularly reported, they are valued at the

last reported sale price on the principal exchange on which they are
traded or on NASDAQ, as applicable, on that day, or

(2) if last sale information is not available on a valuation date, they are
valued at the last reported sale price preceding the valuation date if
it is within the spread of the closing "bid" and "asked" prices on the
valuation date or, if not, at the closing "bid" price on the valuation
date.
o Equity securities traded on a foreign securities exchange generally

are valued in one of the following ways:

(1) at the last sale price available to the pricing service approved by the
Board of Trustees, or

(2) at the last sale price obtained by the Manager from the report of the
principal exchange on which the security is traded at its last trading
session on or immediately before the valuation date, or

(3) at the mean between the "bid" and "asked" prices obtained from the
principal exchange on which the security is traded or, on the basis of
reasonable inquiry, from two market makers in the security.
o Long-term debt securities having a remaining maturity in excess of

60 days are valued based on the mean between the "bid" and "asked" prices
determined by a portfolio pricing service approved by the Fund's Board of
Trustees or obtained by the Manager from two active market makers in the
security on the basis of reasonable inquiry.

o The following securities are valued at the mean between the "bid"
and "asked" prices determined by a pricing service approved by the Fund's
Board of Trustees or obtained by the Manager from two active market makers in
the security on the basis of reasonable inquiry:
(1) debt instruments that have a maturity of more than 397 days when

issued,

(2) debt instruments that had a maturity of 397 days or less when issued
and have a remaining maturity of more than 60 days, and

(3) non-money market debt instruments that had a maturity of 397 days or
less when issued and which have a remaining maturity of 60 days or
less.

o The following securities are valued at cost, adjusted for
amortization of premiums and accretion of discounts:
(1) money market debt securities held by a non-money market fund that had a

maturity of less than 397 days when issued that have a remaining
maturity of 60 days or less, and

(2) debt instruments held by a money market fund that have a remaining
maturity of 397 days or less.

o Securities (including restricted securities) not having
readily-available market quotations are valued at fair value determined under
the Board's procedures. If the Manager is unable to locate two market makers
willing to give quotes, a security may be priced at the mean between the
"bid" and "asked" prices provided by a single active market maker (which in
certain cases may be the "bid" price if no "asked" price is available).

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

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

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

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

How to Sell Shares

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

Checkwriting. When a check is presented to the Bank for clearance, the Bank
will ask the Fund to redeem a sufficient number of full and fractional shares
in the shareholder's account to cover the amount of the check. This enables
the shareholder to continue receiving dividends on those shares until the
check is presented to the Fund. Checks may not be presented for payment at
the offices of the Bank or the Fund's custodian bank. This limitation does
not affect the use of checks for the payment of bills or to obtain cash at
other banks. The Fund reserves the right to amend, suspend or discontinue
offering checkwriting privileges at any time without prior notice.

In choosing to take advantage of the Checkwriting privilege, by signing
the Account Application or by completing a Checkwriting card, each individual
who signs:
(1) for individual accounts, represents that they are the registered

owner(s) of the shares of the Fund in that account;
(2) for accounts for corporations, partnerships, trusts and other entities,

represents that they are an officer, general partner, trustee or
other fiduciary or agent, as applicable, duly authorized to act on
behalf of the registered owner(s);

(3)

<PAGE>

authorizes the Fund, its Transfer Agent and any bank through which the
Fund's drafts (checks) are payable to pay all checks drawn on the
Fund account of such person(s) and to redeem a sufficient amount of
shares from that account to cover payment of each check;

(4) specifically acknowledges that if they choose to permit checks to be
honored if there is a single signature on checks drawn against joint
accounts, or accounts for corporations, partnerships, trusts or
other entities, the signature of any one signatory on a check will
be sufficient to authorize payment of that check and redemption from
the account, even if that account is registered in the names of more
than one person or more than one authorized signature appears on the
Checkwriting card or the Application, as applicable;

(5) understands that the Checkwriting privilege may be terminated or
amended at any time by the Fund and/or the Fund's bank; and

(6) acknowledges and agrees that neither the Fund nor its bank shall incur
any liability for that amendment or termination of checkwriting
privileges or for redeeming shares to pay checks reasonably believed
by them to be genuine, or for returning or not paying checks that
have not been accepted for any reason.

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. 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.

<PAGE>

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

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

Involuntary Redemptions. The Fund's Board of Trustees has the right to cause
the involuntary redemption of the shares held in any account if the aggregate
net asset value of those shares is less than $1,000 or such lesser amount as
the Board may fix. The Board will not cause the involuntary redemption of
shares in an account if the aggregate net asset value of such shares has
fallen below the stated minimum solely as a result of market fluctuations.
If the Board exercises this right, it may also fix the requirements for any
notice to be given to the shareholders in question (not less than 30 days).
The Board may alternatively set requirements for the shareholder to increase
the investment, or set other terms and conditions so that the shares would
not be involuntarily redeemed.

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

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

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 and Class C 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.

n 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.

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

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

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

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

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

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

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

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

How to Exchange Shares

As stated in the Prospectus, shares of a particular class of
Oppenheimer funds having more than one class of shares may be exchanged only
for shares of the same class of other Oppenheimer funds. Shares of
Oppenheimer funds that have a single class without a class designation are
deemed "Class A" shares for this purpose. You can obtain a current list
showing which funds offer which classes by calling the Distributor at
1-800-525-7048.

o All of the Oppenheimer funds currently offer Class A, B and C shares
except Oppenheimer Money Market Fund, Inc., Centennial Money Market Trust,
Centennial Tax Exempt Trust, Centennial Government Trust, Centennial New York
Tax Exempt Trust, Centennial California Tax Exempt Trust, and Centennial
America Fund, L.P., which only offer Class A shares.

o Oppenheimer Main Street California Municipal Fund currently offers
only Class A and Class B shares.

o Class B and Class C shares of Oppenheimer Cash Reserves are
generally available only by exchange from the same class of shares of other
Oppenheimer funds or through OppenheimerFunds-sponsored 401 (k) plans.

o Class Y shares of Oppenheimer Real Asset Fund may not be exchanged
for shares of any other Fund.

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 a 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 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.

For accounts established on or before March 8, 1996 holding Class M
shares of Oppenheimer Convertible Securities Fund, Class M shares can be
exchanged only for Class A shares of other Oppenheimer funds. Exchanges to
Class M shares of Oppenheimer Convertible Securities Fund are permitted from
Class A shares of Oppenheimer Money Market Fund, Inc. or Oppenheimer Cash
Reserves that were acquired by exchange of Class M shares. No other
exchanges may be made to Class M shares.

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.

|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

<PAGE>

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.

When Class B or Class C shares are redeemed to effect an exchange, the
priorities described in "How To Buy Shares" in the Prospectus for the
imposition of the Class B or the Class C contingent deferred sales charge
will be followed in determining the order in which the shares are exchanged.
Before exchanging shares, shareholders should take into account how the
exchange may affect any contingent deferred sales charge that might be
imposed in the subsequent redemption of remaining shares. 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. For full or partial exchanges
of an account made by telephone, any special account features such as Asset
Builder Plans and Automatic Withdrawal Plans will be switched to the new
account unless the Transfer Agent is instructed otherwise. 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.

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. Dividends will be payable on shares held of
record at the time of the previous determination of net asset value, or as
otherwise described in "How to Buy Shares." Daily dividends will not be
declared or paid on newly purchased shares until such time as Federal Funds
(funds credited to a member bank's account at the Federal Reserve Bank) are
available from the purchase payment for such shares. Normally, purchase
checks received from investors are converted to Federal Funds on the next
business day. Shares purchased through dealers or brokers normally are paid
for by the third business day following the placement of the purchase order.

Shares redeemed through the regular redemption procedure will be paid
dividends through and including the day on which the redemption request is
received by the Transfer Agent in proper form. Dividends will be declared on
shares repurchased by a dealer or broker for three business days following
the trade date (that is, up to and including the day prior to settlement of
the repurchase). If all shares in an account are redeemed, all dividends
accrued on shares of the same class in the account will be paid together with
the redemption proceeds.

The Fund's practice of attempting to pay dividends on Class A shares at
a constant level requires the Manager to monitor the Fund's portfolio and, if
necessary, to select higher-yielding securities when it is deemed appropriate
to seek income at the level needed to meet the target. Those securities must
be within the Fund's investment parameters, however. The Fund expects to pay
dividends at a targeted level from its net investment income and other
distributable income without any impact on the net asset values per share.

The Fund has no fixed dividend rate for Class B, Class C or Class Y
shares, and the rate can change for Class A shares. 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 and Class C
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 and
Class C 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 Trustees and the Manager might determine
in a particular year that it would be in the best interests of shareholders
for the Fund not to make such distributions at the required levels and to pay
the excise tax on the undistributed amounts. That would reduce the amount of
income or capital gains available for distribution to shareholders.

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

<PAGE>

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 bank'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 bank in a manner uninfluenced by any banking relationship the
custodian bank may have with the Manager and its affiliates. The Fund's cash
balances with the custodian bank in excess of $100,000 are not protected by
Federal deposit insurance. Those uninsured balances at times may be
substantial.

Independent Auditors. Deloitte & Touche 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 the Manager and
certain other funds advised by the Manager and its affiliates.

<PAGE>

INDEPENDENT AUDITORS' REPORT

================================================================================
The Board of Trustees and Shareholders of
Oppenheimer Bond Fund:

We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppenheimer Bond Fund as of December 31, 1998,
the related statement of operations for the year then ended, the statements of
changes in net assets for the years ended December 31, 1998 and 1997, and the
financial highlights for the period January 1, 1994, to December 31, 1998. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.

We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1998, by correspondence with the custodian and
brokers; where replies were not received from brokers, we performed other
auditing procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such financial statements and financial
highlights present fairly, in all material respects, the financial position of
Oppenheimer Bond Fund as of December 31, 1998, the results of its operations,
the changes in its net assets, and the financial highlights for the respective
stated periods, in conformity with generally accepted accounting principles.

DELOITTE & TOUCHE LLP

Denver, Colorado
January 25, 1999

45 Oppenheimer Bond Fund

<PAGE>

STATEMENT OF INVESTMENTS December 31, 1998

FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
=================================================================================================
<S> <C> <C>
ASSET-BACKED SECURITIES--0.6%
- -------------------------------------------------------------------------------------------------
CS First Boston Mortgage Securities Corp., Mtg. Pass-Through
Certificates, Series 1998-C1, Cl. F, 6%, 5/17/40(2) $2,500,000 $1,685,157
- -------------------------------------------------------------------------------------------------
Dayton Hudson Credit Card Master Trust, Asset-Backed
Certificates, Series 1997-1, Cl. A, 6.25%, 8/25/05 125,000 127,695
- -------------------------------------------------------------------------------------------------
IROQUOIS Trust, Asset-Backed Amortizing Nts.,
Series 1997-2, Cl. A, 6.752%, 6/25/07(2) 175,000 175,820
- -------------------------------------------------------------------------------------------------
Olympic Automobile Receivables Trust, Automobile
Receivables-Backed Nts.:
Series 1996-A, Cl. A-4, 5.85%, 7/15/01 97,569 97,524
Series 1997-A, Cl. A-5, 6.80%, 2/15/05 150,000 152,250
---------
Total Asset-Backed Securities (Cost $2,565,556) 2,238,446

=================================================================================================
MORTGAGE-BACKED OBLIGATIONS--43.6%
- -------------------------------------------------------------------------------------------------
GOVERNMENT AGENCY--28.2%
- -------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED--16.1%
Federal Home Loan Mortgage Corp., Certificates of Participation:
9%, 3/1/17 317,939 338,390
Series 17-039, 13.50%, 11/1/10 34,012 39,768
Series 17-094, 12.50%, 4/1/14 19,704 22,784
- -------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Collateralized Mtg
Obligations, Gtd. Multiclass Mtg. Participation Certificates:
Series 1343, Cl. LA, 8%, 8/15/22 1,600,000 1,719,008
Series 151, Cl. F, 9%, 5/15/21 866,526 912,825
Series 1711, Cl. EA, 7%, 3/15/24 200,000 204,562
Series 1712, Cl. B, 6%, 3/15/09 1,000,000 995,930
Series 1714, Cl. M, 7%, 8/15/23 1,000,000 1,019,060
- -------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Gtd. Multiclass Mtg
Participation Certificates:
6%, 3/1/09 249,375 250,976
Series 1460, Cl. H, 7%, 5/15/07 1,500,000 1,520,625
Series 1843, Cl. VB, 7%, 4/15/03 85,000 86,806
Series 1849, Cl. VA, 6%, 12/15/10 195,514 197,225
Series G056, Cl. H, 9%, 7/20/24 2,493,000 2,679,196
- -------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Gtd. Real Estate Mtg
Investment Conduit Pass-Through Certificates:
Series 1914, Cl. G, 6.50%, 2/15/24 3,000,000 3,036,540
Series 2054, Cl. TE, 6.25%, 4/15/24 850,000 858,228
- -------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Interest-Only Stripped
Mtg.-Backed Security:
Series 1583, Cl. IC, 0.312%, 1/15/20(3) 433,807 42,567
Series 1661, Cl. PK, 15.01%, 11/15/06(3) 455,645 29,332
Series 197, Cl. IO, 12.103%, 4/1/28(3) 8,297,692 2,157,400

</TABLE>

13 Oppenheimer Bond Fund

<PAGE>
Statement of Investments (Continued)
<TABLE>
<CAPTION>

FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
FHLMC/FNMA/SPONSORED (CONTINUED)
Federal National Mortgage Assn.:
6%, 12/1/03 $ 162,688 $ 163,203
6.50%, 4/1/26-11/1/28 4,381,601 4,411,667
6.50%, 1/25/28(4) 8,500,000 8,557,120
7%, 1/25/28(4) 8,000,000 8,161,280
7%, 4/1/00-11/1/25 795,613 811,364
7.50%, 2/1/08-3/1/08 438,455 451,167
11%, 7/1/16 3,242,413 3,712,564
- -------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Collateralized Mtg
Obligations, Gtd. Real Estate Mtg. Investment Conduit
Pass-Through Certificates:
Trust 1992-34, Cl. G, 8%, 3/25/22 540,000 566,325
Trust 1993-181, Cl. C, 5.40%, 10/25/02 5,057 5,038
Trust 1993-190, Cl. Z, 5.85%, 7/25/08 153,137 152,850
- -------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Gtd. Mtg. Pass-Through
Certificates, 8%, 8/1/17 292,656 300,257
- -------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates:
Trust 1991-170, Cl. E, 8%, 12/25/06 2,186,008 2,260,464
Trust 1992-162, Cl. C, 7%, 10/25/21 8,400,000 8,583,708
Trust 1995-4, Cl. PC, 8%, 5/25/25 869,210 940,642
Trust 1997-25, Cl. B, 7%, 12/18/22 510,000 517,808
- -------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Principal-Only
Stripped Mtg.-Backed Security:
Trust 277-C1, 36.333%, 4/1/27(5) 243,354 213,772
Trust 294, Cl. 1, 10.749%, 2/1/28(5) 1,694,264 1,440,125
----------
57,360,576
- -------------------------------------------------------------------------------------------------
GNMA/GUARANTEED--12.1%
Government National Mortgage Assn.:
6%, 7/20/27 179,727 181,945
6.50%, 9/15/24 7,814,056 7,902,746
7%, 7/15/09-8/15/28 5,992,611 6,129,286
7%, 1/1/28(4) 8,000,000 8,185,040
7.50%, 1/15/28-9/15/28 13,720,355 14,157,276
8%, 6/15/05-8/15/28 4,812,670 4,999,816
9%, 2/15/09-6/15/09 350,604 375,347
10%, 11/15/09 172,729 189,813
10.50%, 12/15/17-5/15/21 218,905 239,909
11%, 10/20/19 595,709 678,364
12%, 1/15/99-5/15/14 907 1,018
13%, 12/15/14 26,874 30,897
----------
43,071,457
</TABLE>

14 Oppenheimer Bond Fund

<PAGE>

FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
PRIVATE--15.4%
- -------------------------------------------------------------------------------------------------
COMMERCIAL--11.0%
AMRESCO Commercial Mortgage Funding I Corp., Multiclass Mtg
Pass-Through Certificates, Series 1997-C1, Cl. G, 7%, 6/17/29(2) $ 150,000 $ 119,766
- -------------------------------------------------------------------------------------------------
Asset Securitization Corp., Commercial Mtg. Pass-Through
Certificates:
Series 1996-D3, Cl. A5, 8.142%, 10/13/26(6) 800,000 813,250
Series 1996-MD6, Cl. A5, 7.164%, 11/13/26(6) 2,000,000 2,045,000
Series 1997-D4, Cl. B1, 7.525%, 4/14/29(6) 333,000 267,024
Series 1997-D4, Cl. B2, 7.525%, 4/14/29 333,000 258,179
Series 1997-D4, Cl. B3, 7.525%, 4/14/29(6) 334,000 235,783
Series 1997-D5, Cl. A6, 7.185%, 2/14/41(6) 1,500,000 1,373,203
Series 1997-D5, Cl. B1, 6.93%, 2/14/41 2,000,000 1,505,937
- -------------------------------------------------------------------------------------------------
Asset Securitization Corp., Interest-Only Stripped Mtg.-Backed
Security, Series 1997-D5, Cl. PS1, 8.185%, 2/14/41(3) 6,165,761 596,345
- -------------------------------------------------------------------------------------------------
Capital Lease Funding Securitization LP, Interest-Only
Corporate-Backed Pass-Through Certificates,
Series 1997-CTL1, 9.55%, 6/22/24(2)(3) 13,286,717 547,413
- -------------------------------------------------------------------------------------------------
CBA Mortgage Corp., Mtg. Pass-Through Certificates,
Series 1993-C1, Cl. E, 7.76%, 12/25/03(2)(6) 250,000 232,969
- -------------------------------------------------------------------------------------------------
CMC Securities Corp. I, Collateralized Mtg. Obligations,
Series 1993-D, Cl. D-3, 10%, 7/25/23 294,615 297,654
- -------------------------------------------------------------------------------------------------
Commercial Mortgage Acceptance Corp., Interest-Only
Stripped Mtg.-Backed Security, Series 1996-C1,
Cl. X-2, 26.592%, 12/25/20(2)(3) 18,624,900 384,139
- -------------------------------------------------------------------------------------------------
FDIC Trust, Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates:
Series 1994-C1, Cl. 2-D, 8.70%, 9/25/25 1,000,000 1,020,000
Series 1994-C1, Cl. 2-E, 8.70%, 9/25/25 1,000,000 996,250
- -------------------------------------------------------------------------------------------------
First Union-Lehman Brothers Commercial Mortgage
Trust, Commercial Mtg. Pass-Through Certificates,
Series 1998-C2, Cl. E, 6.778%, 5/18/13 2,000,000 1,731,250
- -------------------------------------------------------------------------------------------------
First Union-Lehman Brothers Commercial Mortgage Trust,
Interest-Only Stripped Mtg.-Backed Security,
Series 1997-C1, 10.019%, 4/18/27(3) 16,359,075 1,136,189
- -------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., Collateralized
Mtg. Obligations:
Series 1997-C2, Cl. D, 7.192%, 1/15/08 1,500,000 1,486,875
Series 1997-C2, Cl. F, 6.75%, 4/16/29 1,000,000 680,937
Series 1998-C1, Cl. E, 7.086%, 3/15/11(6) 1,500,000 1,508,906
- -------------------------------------------------------------------------------------------------
GS Mortgage Securities Corp. II, Commercial Mtg
Pass-Through Certificates:
Series 1997-CL1, Cl. F, 7.154%, 7/13/30(6) 1,000,000 1,007,187
Series 1997-CL1, Cl. F, 7.624%, 7/13/30(6) 1,000,000 936,250
- -------------------------------------------------------------------------------------------------
Merrill Lynch Mortgage Investors, Inc., Mtg
Pass-Through Certificates:
Series 1996-C1, Cl. D, 7.42%, 4/25/28 1,500,000 1,535,625
Series 1997-C2, Cl. D, 7.072%, 12/10/29(6) 1,000,000 969,375

</TABLE>

15 Oppenheimer Bond Fund

<PAGE>

STATEMENT OF INVESTMENTS (Continued)

<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMERCIAL (CONTINUED)
Morgan Stanley Capital I, Inc., Commercial Mtg
Pass-Through Certificates:
Series 1996-C1, Cl. D-1, 7.436%, 2/15/28(2)(6) $ 1,000,000 $ 1,028,125
Series 1996-C1, Cl. E, 7.436%, 3/15/06(2)(6) 1,100,000 1,029,187
Series 1997-HF1, Cl. F, 6.86%, 2/15/10(2) 225,000 201,938
Series 1997-RR, Cl. E, 7.762%, 4/30/39(2)(6) 400,000 362,500
Series 1997-RR, Cl. F, 7.762%, 4/30/39(2) 400,000 290,500
- -------------------------------------------------------------------------------------------------
NationsCommercial Corp., NB Commercial Mtg. Pass-Through
Certificates, Series-DMC, Cl. B, 8.562%, 8/12/11(2) 3,000,000 3,185,625
- -------------------------------------------------------------------------------------------------
PNC Mortgage Securities Corp., Commercial Mtg
Pass-Through Certificates, Series 1995-2, Cl. A3, 6.50%, 2/25/12 74,000 74,035
- -------------------------------------------------------------------------------------------------
Potomac Gurnee Financial Corp., Commercial Mtg
Pass-Through Certificates, Series 1, Cl. D, 7.68%, 12/21/26(2) 1,500,000 1,504,688
- -------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates:
Series 1994-C1, Cl. C, 8%, 6/25/26 1,500,000 1,505,391
Series 1995-C1, Cl. D, 6.90%, 2/25/27 2,500,000 2,484,961
- -------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VII, Series 1996-C1, Cl. E,
9.184%, 1/20/06 700,000 715,750
- -------------------------------------------------------------------------------------------------
Structured Asset Securities Corp., Commercial Mtg. Pass-Through
Certificates, Series 1997-LLI, Cl. D, 7.15%, 4/12/12 2,500,000 2,495,313
- -------------------------------------------------------------------------------------------------
Structured Asset Securities Corp., Multiclass Pass-Through
Certificates, Series 1996-C3, Cl. D, 8%, 6/25/30(2) 2,500,000 2,514,063
-----------
39,077,582

- -------------------------------------------------------------------------------------------------
MULTI-FAMILY--0.7%
Countrywide Funding Corp., Mtg. Pass-Through
Certificates, Series 1994-10, Cl. A3, 6%, 5/25/09 250,000 248,358
- -------------------------------------------------------------------------------------------------
Mortgage Capital Funding, Inc., Commercial Mtg. Pass-Through
Certificates, Series 1997-MC1, Cl. F, 7.452%, 5/20/07(2)` 254,890 211,768
- -------------------------------------------------------------------------------------------------
Mortgage Capital Funding, Inc., Multifamily Mtg. Pass-Through
Certificates, Series 1996-MC1, Cl. G, 7.15%, 6/15/06(7) 2,250,000 1,854,492
- -------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through
Certificates, Series 1991-M5, Cl. A, 9%, 3/25/17(2) 60,453 60,000
-----------
2,374,618
- -------------------------------------------------------------------------------------------------
OTHER--0.4%
JHM Mtg. Acceptance Corp., Collateralized Mtg. Obligation
Bonds, Series E, Cl. 5, 8.96%, 4/1/19 1,181,467 1,208,783
- -------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VI, Interest-Only Stripped
Mtg.-Backed Security, Series 1987-3, Cl. B, 15.68%, 10/23/17(3) 74,645 20,154
- -------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VI, Principal-Only Stripped
Mtg.-Backed Security, Series 1987-3, Cl. A, 1.401%, 10/23/17(4)(5) 110,462 95,170
---------
1,324,107
</TABLE>

16 Oppenheimer Bond Fund

<PAGE>

<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
RESIDENTIAL--3.3%
CS First Boston Mortgage Securities Corp., Mtg.
Pass-Through Certificates:
Series 1997-C1, Cl. E, 7.50%, 3/1/11(2) $1,000,000 $ 956,875
Series 1997-C1, Cl. F, 7.50%, 6/20/13(2) 150,000 116,953
Series 1997-C1, Cl. G, 7.50%, 6/20/14(2) 150,000 107,391
Series 1997-C1, Cl. H, 7.50%, 8/20/14(2) 105,000 72,056
- -------------------------------------------------------------------------------------------------
First Chicago/Lennar Trust 1, Commercial Mtg.
Pass-Through Certificates:
Series 1997-CHL1, 8.098%, 2/25/11(2)(6) 750,000 582,891
Series 1997-CHL1, 8.098%, 5/25/08(2)(6) 750,000 644,297
- -------------------------------------------------------------------------------------------------
GE Capital Mortgage Services, Inc., Gtd. Real Estate
Mtg. Investment Conduit Pass-Through Certificates,
Series 1994-7, Cl. A18, 6%, 2/25/09 198,885 189,997
- -------------------------------------------------------------------------------------------------
NationsBank Trust, Lease Pass-Through Certificates,
Series 1997A-1, 7.442%, 1/10/11(6) 500,000 531,328
- -------------------------------------------------------------------------------------------------
Residential Accredit Loans, Inc., Mtg. Asset-Backed
Pass-Through Certificates:
Series 1997-QS11, 7%, 10/25/12 6,479,342 6,588,681
Series 1997-QS9, Cl. 2, 6.75%, 9/25/27 119,763 119,389
- -------------------------------------------------------------------------------------------------
Residential Funding Mortgage Securities I, Inc., Mtg. Pass-Through
Certificates, Series 1993-S10, Cl. A9, 8.50%, 2/25/23 264,483 272,169
- -------------------------------------------------------------------------------------------------
Ryland Mortgage Securities Corp. III Sub. Bonds,
Series 1992-A, Cl. 1A, 8.256%, 3/29/30(6) 310,291 314,073
- -------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VII,
Series 1996-B, Cl. 1, 7.132%, 4/25/26(2) 1,937,218 1,429,910
------------
11,926,010
------------
Total Mortgage-Backed Obligations (Cost $154,585,683) 155,134,350

=================================================================================================
U.S. GOVERNMENT OBLIGATIONS--3.2%
- -------------------------------------------------------------------------------------------------
U.S. Treasury Bonds:
6%, 2/15/26 200,000 218,313
7.50%, 11/15/16 1,645,000 2,045,969
- -------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
5.50%, 5/31/00 4,500,000 4,553,437
5.625%, 2/15/06 550,000 580,250
5.75%, 8/15/03 325,000 339,320
6.50%, 8/15/05 650,000 714,391
7.50%, 11/15/01(8)(9) 2,625,000 2,821,875
-----------
Total U.S. Government Obligations (Cost $10,811,004) 11,273,555

</TABLE>
17 Oppenheimer Bond Fund

<PAGE>
Statement of Investments (Continued)

<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS AND NOTES--51.8%
AEROSPACE/DEFENSE--2.2%
Amtran, Inc., 9.625% Nts., 12/15/05 $ 200,000 $ 201,000
- -------------------------------------------------------------------------------------------------
Atlas Air, Inc.:
10.75% Sr. Nts., 8/1/05 125,000 131,875
12.25% Pass-Through Certificates, 12/1/02 1,950,000 2,106,000
8.01% Nts., 1/2/10 1,000,000 1,007,444
9.375% Sr. Nts., 11/15/06(7) 1,000,000 1,025,000
- -------------------------------------------------------------------------------------------------
Boeing Co., 7.50% Debs., 8/15/42 2,000,000 2,271,774
- -------------------------------------------------------------------------------------------------
Rolls-Royce Capital, Inc., 7.125% Gtd. Nts., 7/29/03 1,000,000 1,046,250
- -------------------------------------------------------------------------------------------------
SC International Services, Inc., 9.25% Sr. Sub. Nts., Series B, 9/1/07 100,000 100,500
----------
7,889,843

- -------------------------------------------------------------------------------------------------
CHEMICALS--1.8%
FMC Corp., 8.75% Sr. Nts., 4/1/99 250,000 251,379
- -------------------------------------------------------------------------------------------------
IMC Global, Inc., 7.625% Bonds, 11/1/05 5,000,000 5,123,360
- -------------------------------------------------------------------------------------------------
Morton International, Inc., 9.25% Credit Sensitive Nts., 6/1/20 85,000 115,698
- -------------------------------------------------------------------------------------------------
NL Industries, Inc., 11.75% Sr. Sec. Nts., 10/15/03 492,000 525,210
- -------------------------------------------------------------------------------------------------
Pioneer Americas Acquisition Corp., 9.25% Sr. Nts., 6/15/07 100,000 80,500
- -------------------------------------------------------------------------------------------------
PPG Industries, Inc., 9% Debs., 5/1/21 85,000 108,730
- -------------------------------------------------------------------------------------------------
Sovereign Specialty Chemicals, Inc., 9.50% Sr. Unsec. Sub. Nts.,
Series B, 8/1/07 175,000 178,500
---------
6,383,377

- -------------------------------------------------------------------------------------------------
CONSUMER DURABLES--0.2%
Black & Decker Corp., 6.625% Nts., 11/15/00 145,000 147,479
- -------------------------------------------------------------------------------------------------
Icon Health & Fitness, Inc., 13% Sr. Sub. Nts., Series B, 7/15/02 250,000 151,250
- -------------------------------------------------------------------------------------------------
TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05(2) 370,000 429,574
---------
728,303

- -------------------------------------------------------------------------------------------------
CONSUMER NON-DURABLES--0.3%
Bell Sports, Inc., 11% Sr. Sub. Nts., 8/15/08(7) 125,000 127,500
- -------------------------------------------------------------------------------------------------
Fruit of the Loom, Inc., 7% Debs., 3/15/11 500,000 450,476
- -------------------------------------------------------------------------------------------------
Kimberly-Clark Corp., 7.875% Debs., 2/1/23 85,000 94,483
- -------------------------------------------------------------------------------------------------
Phillips-Van Heusen Corp., 9.50% Sr. Unsec. Sub. Nts., 5/1/08 250,000 251,250
- -------------------------------------------------------------------------------------------------
Styling Technology Corp., 10.875% Sr. Sub. Nts., 7/1/08 145,000 138,475
----------
1,062,184

- -------------------------------------------------------------------------------------------------
ENERGY--4.0%
Coastal Corp.:
8.125% Sr. Nts., 9/15/02 85,000 91,106
8.75% Sr. Nts., 5/15/99 380,000 383,985
- -------------------------------------------------------------------------------------------------
Eastern Energy Ltd., 6.75% Sr. Nts., 12/1/06(7) 2,000,000 2,104,710

</TABLE>

18 Oppenheimer Bond Fund

<PAGE>

<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
ENERGY (CONTINUED)
ENSCO International, Inc.:
6.75% Nts., 11/15/07 $1,000,000 $ 1,019,222
7.20% Debs., 11/15/27 1,000,000 1,015,785
- -------------------------------------------------------------------------------------------------
Enterprise Oil plc, 6.70% Sr. Nts., 9/15/07 1,000,000 995,325
- -------------------------------------------------------------------------------------------------
Global Marine, Inc., 7.125% Nts., 9/1/07 2,000,000 2,032,056
- -------------------------------------------------------------------------------------------------
Gulf Canada Resources Ltd.:
8.25% Sr. Nts., 3/15/17 75,000 67,828
9% Debs., 8/15/99 75,000 75,375
- -------------------------------------------------------------------------------------------------
Louisiana Land & Exploration Co., 7.65% Debs., 12/1/23 100,000 108,135
- -------------------------------------------------------------------------------------------------
McDermott, Inc., 9.375% Nts., 3/15/02 100,000 106,819
- -------------------------------------------------------------------------------------------------
Occidental Petroleum Corp., 11.125% Sr. Debs., 6/1/19 2,000,000 2,156,442
- -------------------------------------------------------------------------------------------------
Ocean Rig Norway AS, 10.25% Sr. Sec. Nts., 6/1/08 200,000 161,000
- -------------------------------------------------------------------------------------------------
P&L Coal Holdings Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 400,000 406,000
- -------------------------------------------------------------------------------------------------
Petroleum Geo-Services ASA, 7.50% Nts., 3/31/07 75,000 79,910
- -------------------------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc., 9.375% Sr. Sub. Debs., 2/1/06 750,000 705,000
- -------------------------------------------------------------------------------------------------
Standard Oil, 9% Gtd. Debs., 6/1/19 85,000 85,924
- -------------------------------------------------------------------------------------------------
Stone Energy Corp., 8.75% Sr. Sub. Nts., 9/15/07 300,000 291,000
- -------------------------------------------------------------------------------------------------
Talisman Energy, Inc., 7.25% Debs., 10/15/27 500,000 482,251
- -------------------------------------------------------------------------------------------------
TransCanada PipeLines Ltd., 9.875% Debs., 1/1/21 1,500,000 1,923,855
- -------------------------------------------------------------------------------------------------
Williams Holdings of Delaware, Inc., 6.25% Sr. Unsec. Debs., 2/1/06 100,000 102,899
----------
14,394,627

- -------------------------------------------------------------------------------------------------
FINANCIAL--11.9%
Aetna Services, Inc., 8% Debs., 1/15/17 697,000 718,877
- -------------------------------------------------------------------------------------------------
Allmerica Capital I, 8.207% Debs., 2/3/27 2,000,000 2,241,142
- -------------------------------------------------------------------------------------------------
American General Institutional Capital B, 8.125% Bonds,
Series B, 3/15/46(7) 75,000 86,572
- -------------------------------------------------------------------------------------------------
Associates Corp. of North America, 7.40% Medium-Term Nts., 7/7/99 300,000 303,149
- -------------------------------------------------------------------------------------------------
BankAmerica Corp. (New), 8.50% Exchangeable Sub. Capital
Nts., 3/1/99 (exchangeable for common, perpetual preferred
stock or other capital securities) 60,000 60,230
- -------------------------------------------------------------------------------------------------
BHP Finance (USA) Ltd., 8.50% Gtd. Debs., 12/1/12 1,500,000 1,829,280
- -------------------------------------------------------------------------------------------------
Capital One Financial Corp., 7.25% Nts., 12/1/03 50,000 49,212
- -------------------------------------------------------------------------------------------------
CB Richard Ellis Services, Inc., 8.875% Sr. Unsec. Sub. Nts., 6/1/06 250,000 246,250
- -------------------------------------------------------------------------------------------------
Chelsea GCA Realty Partner, Inc., 7.75% Unsec. Nts., 1/26/01 60,000 59,616
- -------------------------------------------------------------------------------------------------
Citicorp Capital I, 7.933% Gtd. Bonds, 2/15/27 1,000,000 1,096,786
- -------------------------------------------------------------------------------------------------
Citicorp, 5.625% Sr. Nts., 2/15/01 90,000 90,268
- -------------------------------------------------------------------------------------------------
Commercial Credit Co., 5.55% Unsec. Nts., 2/15/01 145,000 145,161
- -------------------------------------------------------------------------------------------------
Conseco Financing Trust III, 8.796% Bonds, 4/1/27 100,000 95,931
- -------------------------------------------------------------------------------------------------
Countrywide Home Loans, Inc., 6.05% Medium-Term
Nts., Series D, 3/1/01 90,000 90,374
- -------------------------------------------------------------------------------------------------
Farmers Exchange Capital, 7.05% Trust Surplus Nts., 7/15/28(7) 2,000,000 2,018,508

</TABLE>

19 Oppenheimer Bond Fund

<PAGE>
Statement of Investments (Continued)

<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
FINANCIAL (CONTINUED)
Fleet Mtg./Norstar Group, Inc., 9.90% Sub. Nts., 6/15/01 $ 145,000 $ 159,017
- -------------------------------------------------------------------------------------------------
Ford Motor Credit Co., 6.75% Nts., 8/15/08 1,000,000 1,064,037
- -------------------------------------------------------------------------------------------------
Franchise Finance Corp. of America, 8.25% Sr. Unsec. Nts., 10/30/03 3,950,000 4,017,450
- -------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., 5.625% Nts., 2/15/01 175,000 175,625
- -------------------------------------------------------------------------------------------------
Integra Financial Corp., 6.50% Sub. Nts., 4/15/00 145,000 146,924
- -------------------------------------------------------------------------------------------------
Lehman Brothers, Inc., 6.625% Sr. Sub. Nts., 2/15/08 1,000,000 1,000,076
- -------------------------------------------------------------------------------------------------
Liberty Mutual Insurance Co., 7.697% Unsec. Nts., 10/15/2097(7) 1,000,000 1,009,920
- -------------------------------------------------------------------------------------------------
Long Island Savings Bank, 6.20% Nts., 4/2/01 1,000,000 1,009,648
- -------------------------------------------------------------------------------------------------
Lumbermens Mutual Casualty Co., 8.30% Surplus Nts., 12/1/37(7) 2,000,000 2,242,676
- -------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc.:
6.50% Nts., 4/1/01 150,000 152,784
6.875% Nts., 11/15/18 3,300,000 3,444,289
6.875% Nts., 3/1/03 750,000 781,622
- -------------------------------------------------------------------------------------------------
Metropolitan Life Insurance Co., 6.30% Nts., 11/1/03(7) 1,000,000 1,005,652
- -------------------------------------------------------------------------------------------------
National Westminster Bank plc, 9.375% Gtd. Capital Nts., 11/15/03 70,000 80,300
- -------------------------------------------------------------------------------------------------
NationsBank Corp., 10.20% Sub. Nts., 7/15/15 1,300,000 1,761,717
- -------------------------------------------------------------------------------------------------
Ocwen Capital Trust I, 10.875% Capital Nts., 8/1/27 300,000 241,500
- -------------------------------------------------------------------------------------------------
Penske Truck Leasing Co. LP, 7.75% Sr. Nts., 5/15/99 1,825,000 1,841,642
- -------------------------------------------------------------------------------------------------
Rank Group Finance plc, 6.75% Gtd. Nts., 11/30/04 1,000,000 1,006,178
- -------------------------------------------------------------------------------------------------
Royal Bank of Scotland Group (The) plc, 10.125% Gtd.
Sub. Capital Nts., 3/1/04 500,000 593,841
- -------------------------------------------------------------------------------------------------
Ryder System, Inc., 8.75% Debs., Series J, 3/15/17 1,447,000 1,508,419
- -------------------------------------------------------------------------------------------------
Salomon Smith Barney Holdings, Inc., 6.25% Bonds, 1/15/05 2,000,000 2,024,712
- -------------------------------------------------------------------------------------------------
Salomon, Inc., 7.30% Nts., 5/15/02 1,000,000 1,044,339
- -------------------------------------------------------------------------------------------------
Saul (B.F.) Real Estate Investment Trust, 9.75% Sr. Sec. Nts.,
Series B, 4/1/08 400,000 374,000
- -------------------------------------------------------------------------------------------------
Source One Mortgage Services Corp., 9% Debs., 6/1/12 1,250,000 1,258,395
- -------------------------------------------------------------------------------------------------
Travelers Group, Inc.:
6.875% Debs., 2/15/2098 1,000,000 1,018,395
7.25% Sr. Unsec. Nts., 5/1/01 1,700,000 1,758,788
- -------------------------------------------------------------------------------------------------
Travelers Property Casualty Corp., 6.75% Nts., 4/15/01 145,000 148,489
- -------------------------------------------------------------------------------------------------
Veritas Holdings, Inc., 9.625% Sr. Nts., 12/15/03 135,000 135,000
- -------------------------------------------------------------------------------------------------
Washington Mutual Capital I, 8.375% Sub. Capital
Income Nts., 6/1/27 2,000,000 2,209,340
----------
42,346,131

- -------------------------------------------------------------------------------------------------
FOOD & DRUG--0.0%
Ameriking, Inc., 10.75% Sr. Nts., 12/1/06 160,000 167,600
- -------------------------------------------------------------------------------------------------
FOOD/TOBACCO--0.8%
B.A.T. Capital Corp., 6.66% Medium-Term Nts., 3/22/00(7) 250,000 254,405
- -------------------------------------------------------------------------------------------------
Coca-Cola Enterprises, Inc., 6.95% Debs., 11/15/26 2,000,000 2,134,210
- -------------------------------------------------------------------------------------------------
Dole Food Distributing, Inc., 6.75% Nts., 7/15/00 150,000 151,459

</TABLE>
20 Oppenheimer Bond Fund

<PAGE>

- -------------------------------------------------------------------------------------------------
FOREST PRODUCTS/CONTAINERS--0.2%
Mail-Well I Corp., 8.75% Sr. Sub. Nts., 12/15/08(7) 200,000 201,000
- -------------------------------------------------------------------------------------------------
Riverwood International Corp., 10.625% Sr. Unsec. Nts., 8/1/07 200,000 199,000
- -------------------------------------------------------------------------------------------------
U.S. Can Corp., 10.125% Sr. Sub. Nts., Series B, 10/15/06 250,000 257,500
---------
657,500

- -------------------------------------------------------------------------------------------------
GAMING/LEISURE--2.4%
Capstar Hotel Co., 8.75% Sr. Sub. Nts., 8/15/07 150,000 147,000
- -------------------------------------------------------------------------------------------------
Casino Magic of Louisiana Corp., 13% First Mtg. Nts., Series B, 8/15/03 235,000 266,725
- -------------------------------------------------------------------------------------------------
Empress Entertainment, Inc., 8.125% Sr. Sub. Nts., 7/1/06 200,000 200,000
- -------------------------------------------------------------------------------------------------
Hilton Hotels Corp.:
7.375% Nts., 6/1/02 75,000 75,622
7.95% Sr. Nts., 4/15/07 1,000,000 1,037,716
- -------------------------------------------------------------------------------------------------
HMH Properties, Inc., 8.45% Sr. Nts., Series C, 12/1/08 900,000 904,500
- -------------------------------------------------------------------------------------------------
Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07 100,000 103,750
- -------------------------------------------------------------------------------------------------
Intrawest Corp., 9.75% Sr. Nts., 8/15/08 250,000 257,500
- -------------------------------------------------------------------------------------------------
Marriott International, Inc., 6.875% Nts., 11/15/05(7) 4,500,000 4,522,433
- -------------------------------------------------------------------------------------------------
Mohegan Tribal Gaming Authority (Connecticut), 13.50%
Sr. Sec. Nts., Series B, 11/15/02 310,000 373,550
- -------------------------------------------------------------------------------------------------
Park Place Entertainment Corp., 7.875% Sr. Sub. Nts., 12/15/05(7) 150,000 150,938
- -------------------------------------------------------------------------------------------------
Rio Hotel & Casino, Inc.:
10.625% Sr. Sub. Nts., 7/15/05 100,000 109,500
9.50% Sr. Sub. Nts., 4/15/07 50,000 55,500
- -------------------------------------------------------------------------------------------------
Station Casinos, Inc.:
8.875% Sr. Sub. Nts., 12/1/08(7) 100,000 102,000
9.75% Sr. Sub. Nts., 4/15/07 150,000 157,500
---------
8,464,234

- -------------------------------------------------------------------------------------------------
HEALTHCARE--0.6%
Columbia/HCA Healthcare Corp., 6.875% Nts., 7/15/01 160,000 158,855
- -------------------------------------------------------------------------------------------------
Fresenius Medical Care Capital Trust II, 7.875% Nts., 2/1/08 150,000 148,500
- -------------------------------------------------------------------------------------------------
HEALTHSOUTH Corp., 9.50% Sr. Sub. Nts., 4/1/01 500,000 515,000
- -------------------------------------------------------------------------------------------------
ICN Pharmaceutical, Inc., 8.75% Sr. Nts., 11/15/08(7) 140,000 142,100
- -------------------------------------------------------------------------------------------------
Imcera Group, Inc., 6% Nts., 10/15/03 500,000 512,520
- -------------------------------------------------------------------------------------------------
Integrated Health Services, Inc., 9.50% Sr. Sub. Nts., 9/15/07 20,000 19,100
- -------------------------------------------------------------------------------------------------
Oxford Health Plans, Inc., 11% Sr. Nts., 5/15/05(7) 350,000 330,750
- -------------------------------------------------------------------------------------------------
Sun Healthcare Group, Inc., 9.50% Sr. Sub. Nts., 7/1/07 205,000 167,075
---------
1,993,900

</TABLE>

21 Oppenheimer Bond Fund

<PAGE>
Statement of Investments (Continued)

- -------------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--2.1%
Details, Inc., 10% Sr. Sub. Nts., Series B, 11/15/05 200,000 191,000
- -------------------------------------------------------------------------------------------------
Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07 250,000 251,250
- -------------------------------------------------------------------------------------------------
General Electric Capital Corp., 8.75% Debs., 5/21/07 1,000,000 1,216,122
- -------------------------------------------------------------------------------------------------
Motorola, Inc., 6.50% Unsec. Debs., 11/15/28 5,000,000 5,092,985
- -------------------------------------------------------------------------------------------------
Unisys Corp., 11.75% Sr. Nts., 10/15/04 300,000 349,500
- -------------------------------------------------------------------------------------------------
WAM!NET, Inc., 0%/13.25% Sr. Unsec. Disc. Nts., Series B, 3/1/05(11) 400,000 220,000
---------
7,320,857

- -------------------------------------------------------------------------------------------------
MANUFACTURING--1.2%
Caterpillar, Inc., 9.75% Debs., 6/1/19 1,750,000 1,861,003
- -------------------------------------------------------------------------------------------------
Communications & Power Industries, Inc., 12% Sr. Sub. Nts.,
Series B, 8/1/05 500,000 523,750
- -------------------------------------------------------------------------------------------------
Grove Worldwide LLC, 9.25% Sr. Sub. Nts., 5/1/08 200,000 181,000
- -------------------------------------------------------------------------------------------------
Hydrochem Industrial Services, Inc., 10.375% Sr. Sub. Nts., 8/1/07 325,000 310,375
- -------------------------------------------------------------------------------------------------
Polymer Group, Inc., 9% Sr. Sub. Nts., 7/1/07 150,000 149,250
- -------------------------------------------------------------------------------------------------
Roller Bearing Co. of America, Inc., 9.625% Sr. Sub. Nts.,
Series B, 6/15/07 200,000 195,000
- -------------------------------------------------------------------------------------------------
Westinghouse Electric Corp., 8.375% Nts., 6/15/02 1,000,000 1,065,219
---------
4,285,597

- -------------------------------------------------------------------------------------------------
MEDIA/ENTERTAINMENT: BROADCASTING--1.4%
Capstar Broadcasting Partners, Inc., 9.25% Sr. Sub. Nts., 7/1/07 175,000 182,000
- -------------------------------------------------------------------------------------------------
Chancellor Media Corp.:
8.75% Sr. Unsec. Sub. Nts., Series B, 6/15/07 1,200,000 1,236,000
9% Sr. Sub. Nts., 10/1/08(7) 800,000 848,000
- -------------------------------------------------------------------------------------------------
Clear Channel Communications, Inc., 6.625% Nts., 6/15/08 2,000,000 2,030,552
- -------------------------------------------------------------------------------------------------
Young Broadcasting, Inc.:
8.75% Sr. Sub. Debs., 6/15/07 300,000 306,000
Series B, 1/15/06 400,000 406,000
---------
5,008,552

</TABLE>

22 Oppenheimer Bond Fund

<PAGE>

<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
MEDIA/ENTERTAINMENT: CABLE/WIRELESS VIDEO--0.7%
Adelphia Communications Corp., 9.25% Sr. Nts., 10/1/02 $ 150,000 $ 159,000
- -------------------------------------------------------------------------------------------------
CSC Holdings, Inc., 7.625% Sr. Unsec. Debs., 7/15/18 500,000 492,800
- -------------------------------------------------------------------------------------------------
EchoStar Communications Corp., 0%/12.875% Sr. Disc. Nts., 6/1/04(11) 250,000 257,500
- -------------------------------------------------------------------------------------------------
EchoStar DBS Corp., 12.50% Sr. Sec. Nts., 7/1/02 200,000 231,000
- -------------------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 1,125,000 1,224,896
---------
2,365,196

- -------------------------------------------------------------------------------------------------
MEDIA/ENTERTAINMENT: DIVERSIFIED MEDIA--0.2%
Hollywood Theaters, Inc., 10.625% Sr. Sub. Nts., 8/1/07 100,000 74,250
- -------------------------------------------------------------------------------------------------
Imax Corp., 7.875% Sr. Nts., 12/1/05 400,000 406,000
- -------------------------------------------------------------------------------------------------
SFX Entertainment, Inc.:
9.125% Sr. Sub. Nts., 12/1/08(7) 150,000 150,938
9.125% Sr. Unsec. Sub. Nts., Series B, 2/1/08 125,000 124,375
--------
755,563

- -------------------------------------------------------------------------------------------------
MEDIA/ENTERTAINMENT: TELECOMMUNICATIONS--1.6%
COLT Telecom Group plc, Units (each unit consists of $1,000
principal amount of 0%/12% sr. disc. nts., 12/15/06 and one
warrant to purchase 7.8 common shares)(11)(12) 350,000 295,750
- -------------------------------------------------------------------------------------------------
Diamond Holdings plc, 9.125% Sr. Nts., 2/1/08 100,000 96,000
- -------------------------------------------------------------------------------------------------
Focal Communications Corp., 0%/12.125% Sr.
Unsec. Disc. Nts., 2/15/08(11) 160,000 85,600
- -------------------------------------------------------------------------------------------------
Globix Corp., 13% Sr. Unsec. Nts., 5/1/05 200,000 165,000
- -------------------------------------------------------------------------------------------------
GST Telecommunications, Inc., 0%/13.875% Cv.
Sr. Sub. Disc. Nts., 12/15/05(7)(11) 100,000 79,375
- -------------------------------------------------------------------------------------------------
Intermedia Communications, Inc., 8.60% Sr. Unsec. Nts.,
Series B, 6/1/08 450,000 429,750
- -------------------------------------------------------------------------------------------------
Long Distance International, Inc., 12.25% Sr. Nts., 4/15/08(7) 150,000 125,250
- -------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc.:
0%/9.45% Sr. Disc. Unsec. Nts., 4/15/08(11) 230,000 132,250
9.625% Sr. Nts., 10/1/07 900,000 864,000
- -------------------------------------------------------------------------------------------------
NTL, Inc.:
10% Sr. Nts., Series B, 2/15/07 100,000 103,000
11.50% Sr. Nts., 10/1/08(7) 250,000 274,375
- -------------------------------------------------------------------------------------------------
PSINet, Inc.:
10% Sr. Unsec. Nts., Series B, 2/15/05 350,000 348,250
11.50% Sr. Nts., 11/1/08(7) 500,000 526,250
- -------------------------------------------------------------------------------------------------
Qwest Communications International, Inc.:
0%/8.29% Sr. Unsec. Disc. Nts., Series B, 2/1/08(11) 400,000 304,000
0%/9.47% Sr. Disc. Nts., 10/15/07(11) 340,000 264,350
- -------------------------------------------------------------------------------------------------
TCI Communications, Inc., 6.875% Sr. Unsec. Nts., 2/15/06 1,400,000 1,505,517
- -------------------------------------------------------------------------------------------------
Viatel, Inc., 11.25% Sr. Sec. Nts., 4/15/08 200,000 205,500
---------
5,804,217
</TABLE>

23 Oppenheimer Bond Fund

<PAGE>
Statement of Investments (Continued)

<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
MEDIA/ENTERTAINMENT: WIRELESS COMMUNICATIONS--1.4%
Arch Communications, Inc., 12.75% Sr. Nts., 7/1/07(7) $ 100,000 $ 100,500
- -------------------------------------------------------------------------------------------------
Cellular Communications International, Inc., 0%/9.50%
Bonds, 4/1/05(11)XEU 600,000 595,347
- -------------------------------------------------------------------------------------------------
Geotek Communications, Inc., 12% Cv. Sr. Sub. Nts., 2/15/01(10) 25,000 --
- -------------------------------------------------------------------------------------------------
Nextel Communications, Inc., 0%/10.65% Sr. Disc. Nts., 9/15/07(11) 30,000 19,275
- -------------------------------------------------------------------------------------------------
Omnipoint Corp., 11.625% Sr. Nts., 8/15/06 70,000 49,000
- -------------------------------------------------------------------------------------------------
Orion Network Systems, Inc., 0%/12.50% Sr. Disc. Nts., 1/15/07(11) 200,000 126,000
- -------------------------------------------------------------------------------------------------
Pinnacle Holdings, Inc., 0%/10% Sr. Unsec. Disc. Nts., 3/15/08(11) 200,000 117,500
- -------------------------------------------------------------------------------------------------
Price Communications Wireless, Inc., 9.125% Sr. Sec. Nts.,
12/15/06(7) 500,000 507,500
- -------------------------------------------------------------------------------------------------
Real Time Data, Inc., Units (each unit consists of $1,000
principal amount of 0%/13.50% sub. disc. nts., 8/15/06 and
one warrant to purchase six common shares)(7)(11)(12) 1,000,000 465,000
- -------------------------------------------------------------------------------------------------
Rural Cellular Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 500,000 503,750
- -------------------------------------------------------------------------------------------------
SBA Communications Corp., 0%/12% Sr. Unsec. Disc. Nts., 3/1/08(11) 800,000 464,000
- -------------------------------------------------------------------------------------------------
Spectrasite Holdings, Inc., 0%/12% Sr. Disc. Nts., 7/15/08(7)(11) 300,000 151,500
- -------------------------------------------------------------------------------------------------
Sprint Spectrum LP/Sprint Spectrum Finance
Corp., 0%/12.50% Sr. Disc. Nts., 8/15/06(11) 2,000,000 1,810,000
- -------------------------------------------------------------------------------------------------
USA Mobile Communications, Inc. II, 9.50% Sr. Nts., 2/1/04 100,000 90,500
---------
4,999,872

- -------------------------------------------------------------------------------------------------
METALS/MINERALS--0.2%
AK Steel Corp., 9.125% Sr. Nts., 12/15/06 90,000 94,050
- -------------------------------------------------------------------------------------------------
Alcan Aluminum Ltd., 9.625% Debs., 7/15/19 165,000 176,355
- -------------------------------------------------------------------------------------------------
Great Lakes Carbon Corp., 10.25% Sr. Sub. Nts., Series B, 5/15/08 250,000 253,125
- -------------------------------------------------------------------------------------------------
International Utility Structures, Inc., 10.75% Sr. Sub. Nts., 2/1/08 175,000 165,375
- -------------------------------------------------------------------------------------------------
Keystone Consolidated Industries, Inc., 9.625% Sr. Sec. Nts., 8/1/07 200,000 192,000
---------
880,905

- -------------------------------------------------------------------------------------------------
RETAIL--1.4%
Boyds Collection Ltd., 9% Sr. Sub. Nts., 5/15/08(7) 650,000 666,250
- -------------------------------------------------------------------------------------------------
Eye Care Centers of America, Inc., 9.125% Sr. Sub. Nts., 5/1/08(7) 150,000 143,250
- -------------------------------------------------------------------------------------------------
Finlay Enterprises, Inc., 9% Debs., 5/1/08 100,000 88,500
- -------------------------------------------------------------------------------------------------
Finlay Fine Jewelry Corp., 8.375% Sr. Nts., 5/1/08 200,000 185,000
- -------------------------------------------------------------------------------------------------
Home Interiors & Gifts, Inc., 10.125% Sr. Sub. Nts., 6/1/08(7) 400,000 398,000
- -------------------------------------------------------------------------------------------------
May Department Stores Cos., 10.625% Debs., 11/1/10 405,000 567,239
- -------------------------------------------------------------------------------------------------
Neiman Marcus Group, Inc., 6.65% Sr. Nts., 6/1/08 2,000,000 2,009,992
- -------------------------------------------------------------------------------------------------
Price/Costco Cos., Inc., 7.125% Sr. Nts., 6/15/05 120,000 129,181
- -------------------------------------------------------------------------------------------------
Sears Canada, Inc., 11.70% Debs., 7/10/00CAD 500,000 356,461
- -------------------------------------------------------------------------------------------------
Sears Roebuck & Co., 8.39% Medium-Term Nts., 3/23/99 300,000 301,628
---------
4,845,501

</TABLE>

24 Oppenheimer Bond Fund

<PAGE>

- -------------------------------------------------------------------------------------------------
TRANSPORTATION--6.0%
Cambridge Industries, Inc., 10.25% Sr. Sub. Nts., Series B, 7/15/07 100,000 86,500
- -------------------------------------------------------------------------------------------------
Canadian Pacific Ltd., 9.45% Debs., 8/1/21 1,000,000 1,285,440
- -------------------------------------------------------------------------------------------------
Chrysler Corp., 7.40% Debs., 8/1/2097 3,000,000 3,393,558
- -------------------------------------------------------------------------------------------------
Coach USA, Inc., 9.375% Sr. Sub. Nts., Series B, 7/1/07 40,000 41,000
- -------------------------------------------------------------------------------------------------
CSX Corp.:
6.80% Fixed Nts., 12/1/28 1,300,000 1,298,944
7.05% Debs., 5/1/02 85,000 88,813
7.25% Sr. Unsec. Debs., 5/1/27 2,410,000 2,572,740
- -------------------------------------------------------------------------------------------------
Ford Motor Co., 8.875% Debs., 11/15/22 2,000,000 2,259,324
- -------------------------------------------------------------------------------------------------
Hayes Wheels International, Inc., 11% Sr. Sub. Nts., 7/15/06 200,000 223,000
- -------------------------------------------------------------------------------------------------
Johnson Controls, Inc., 7.70% Debs., 3/1/15 500,000 574,979
- -------------------------------------------------------------------------------------------------
Kansas City Southern Industries, Inc., 6.625% Nts., 3/1/05 750,000 777,202
- -------------------------------------------------------------------------------------------------
Key Plastics, Inc., 10.25% Sr. Sub. Nts., Series B, 3/15/07 200,000 188,000
- -------------------------------------------------------------------------------------------------
Navigator Gas Transport plc:
10.50% First Priority Ship Mtg. Nts., 6/30/07(7) 400,000 354,000
Units (each unit consists of $1,000 principal amount of 12%
second priority ship mtg. nts., 6/30/07 and 7.66 warrants)(7)(12) 100,000 90,500
- -------------------------------------------------------------------------------------------------
Norfolk Southern Corp., 7.35% Nts., 5/15/07 75,000 82,769
- -------------------------------------------------------------------------------------------------
Oxford Automotive, Inc., 10.125% Sr. Unsec. Sub. Nts., 6/15/07 200,000 208,000
- -------------------------------------------------------------------------------------------------
Trans World Airlines, Inc., 11.50% Sr. Sec. Nts., 12/15/04 250,000 211,250
- -------------------------------------------------------------------------------------------------
Transtar Holdings LP/Transtar Capital Corp., 0%/13.375%
Sr. Disc. Nts., Series B, 12/15/03(11) 1,100,000 1,061,500

</TABLE>

25 Oppenheimer Bond Fund

<PAGE>
Statement of Investments (Continued)

<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION (CONTINUED)
Union Pacific Corp.:
6.39% Medium-Term Nts., Series E, 11/1/04 $6,400,000 $ 6,475,187
7% Nts., 6/15/00 150,000 152,883
9.65% Nts., 4/17/00 100,000 104,575
----------
21,530,164

- -------------------------------------------------------------------------------------------------
UTILITY--5.6%
AES Corp., 8% Sr. Nts., 12/31/08 3,400,000 3,367,938
- -------------------------------------------------------------------------------------------------
Ameritech Capital Funding Corp., 5.65% Unsec. Nts., 1/15/01 100,000 101,227
- -------------------------------------------------------------------------------------------------
California Energy, Inc., 10.25% Sr. Disc. Nts., 1/15/04 300,000 315,375
- -------------------------------------------------------------------------------------------------
Calpine Corp., 8.75% Sr. Nts., 7/15/07 185,000 187,775
- -------------------------------------------------------------------------------------------------
Cincinnati Bell Telephone Co., 6.30% Sr. Unsec. Bonds, 12/1/28 500,000 502,862
- -------------------------------------------------------------------------------------------------
Laclede Gas Co., 8.50% First Mtg. Bonds, 11/15/04 500,000 568,165
- -------------------------------------------------------------------------------------------------
Long Island Lighting Co., 8.20% Debs., 3/15/23 1,700,000 1,841,280
- -------------------------------------------------------------------------------------------------
National Fuel Gas Co., 7.75% Debs., 2/1/04 500,000 546,822
- -------------------------------------------------------------------------------------------------
New York Telephone Co., 9.375% Debs., 7/15/31 2,500,000 2,834,295
- -------------------------------------------------------------------------------------------------
Niagara Mohawk Power Corp.:
0%/8.50% Sr. Unsec. Nts., Series H, 7/1/10(11) 3,000,000 2,338,164
7.75% Sr. Unsec. Nts., Series G, 10/1/08 2,000,000 2,197,676
- -------------------------------------------------------------------------------------------------
Northern Illinois Gas Co., 6.45% First Mtg. Bonds, 8/1/01 220,000 223,439
- -------------------------------------------------------------------------------------------------
Public Service Co. of Colorado, 8.75% First Mtg. Bonds, 3/1/22 250,000 275,580
- -------------------------------------------------------------------------------------------------
South Carolina Electric & Gas Co., 9% Mtg. Bonds, 7/15/06 500,000 601,390
- -------------------------------------------------------------------------------------------------
Sprint Capital Corp., 6.875% Sr. Unsec. Nts., 11/15/28 3,400,000 3,541,916
- -------------------------------------------------------------------------------------------------
Tennessee Gas Pipeline Co., 7.50% Bonds, 4/1/17 100,000 106,743
- -------------------------------------------------------------------------------------------------
Texas Gas Transmission Corp., 8.625% Nts., 4/1/04 500,000 565,720
-----------
20,116,367
-----------
Total Corporate Bonds and Notes (Cost $180,297,085) 184,953,099

SHARES
=================================================================================================
PREFERRED STOCKS--2.2%
- -------------------------------------------------------------------------------------------------
Allstate Financing I, 7.95% Gtd. Quarterly Income Preferred
Securities, Series A 80,000 2,080,000
- -------------------------------------------------------------------------------------------------
Centaur Funding Corp., 9.08%, Cum. Preferred
Shares, 4/21/20(2)(13) 3,400 3,563,625
- -------------------------------------------------------------------------------------------------
CRIIMI MAE, Inc., 10.875% Cum. Cv., Series B, Non-Vtg. 13,000 182,000

</TABLE>

26 Oppenheimer Bond Fund

<PAGE>

<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
=================================================================================================
<S> <C> <C>
PREFERRED STOCKS (CONTINUED)
- -------------------------------------------------------------------------------------------------
EchoStar Communications Corp., 12.125% Sr. Redeemable
Exchangeable, Series B, Non-Vtg.(14) 115 $ 133,687
- -------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc., 14% Cum. Exchangeable, Vtg.(14) 2,171 115,606
- -------------------------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc., Jr. Cv. Preferred Stock(13) 2,530 4,428
- -------------------------------------------------------------------------------------------------
SFX Broadcasting, Inc./Capstar Broadcasting Corp., 12.625% Cum.,
Series E, Non-Vtg.(14) 213 25,773
- -------------------------------------------------------------------------------------------------
United Dominion Realty Trust, Inc., 8.50% Unsec.
Unsub. Preferred Nts. 65,000 1,681,875
- -------------------------------------------------------------------------------------------------
Viatel, Inc., 10% Cv., Series A(14) 99 10,915
---------
Total Preferred Stocks (Cost $7,611,584) 7,797,909

=================================================================================================
COMMON STOCKS--0.0%
- -------------------------------------------------------------------------------------------------
Optel, Inc. (13) (Cost $0) 100 --

UNITS
=================================================================================================
RIGHTS, WARRANTS AND CERTIFICATES--0.0%
- -------------------------------------------------------------------------------------------------
Concentric Network Corp. Wts., Exp. 12/07 (2) 50 7,445
- -------------------------------------------------------------------------------------------------
Dairy Mart Convenience Stores, Inc. Wts., Exp. 12/01(2) 333 93
- -------------------------------------------------------------------------------------------------
e.spire Communications, Inc. Wts., Exp. 11/05 300 7,241
- -------------------------------------------------------------------------------------------------
Globix Corp. Wts., Exp. 5/05 (2) 200 2,000
- -------------------------------------------------------------------------------------------------
Gothic Energy Corp. Wts.:
Exp. 1/03(7) 2,621 26
Exp. 9/04(2) 2,800 3,150
- -------------------------------------------------------------------------------------------------
Intermedia Communications, Inc. Wts., Exp. 6/00(2) 50 3,052
- -------------------------------------------------------------------------------------------------
Long Distance International, Inc. Wts., 4/08(2) 150 375
- -------------------------------------------------------------------------------------------------
Price Communications Corp. Wts., Exp. 8/07(2) 258 12,321
- -------------------------------------------------------------------------------------------------
Signature Brands, Inc. Wts., Exp. 12/49(2) 50 1,006
- -------------------------------------------------------------------------------------------------
WAM!NET, Inc. Wts., Exp. 3/05(2) 1,200 9,600
- -------------------------------------------------------------------------------------------------
ICG Communications, Inc. Wts., Exp. 9/05(2) 1,980 27,137
- -------------------------------------------------------------------------------------------------
Orion Network Systems, Inc. Wts., Exp. 1/07(2) 200 2,500
--------
Total Rights, Warrants and Certificates (Cost $3,971) 75,946

</TABLE>

27 Oppenheimer Bond Fund

<PAGE>
Statement of Investments (Continued)

<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
=================================================================================================
<S> <C> <C>
STRUCTURED INSTRUMENTS--1.0%
- -------------------------------------------------------------------------------------------------
Bayerische Landesbank Girozentrale (New York Branch),
Lehman High Yield Index Nts., 8.50%, 3/8/99 $1,100,000 $ 1,036,750
- -------------------------------------------------------------------------------------------------
Bear Stearns High Yield Composite Index Linked Nts.:
8.50%, 4/9/99 1,000,000 929,380
9%, 2/16/99 900,000 828,594
- -------------------------------------------------------------------------------------------------
Shoshone Partners Loan Trust Sr. Nts., 6.97%, 4/28/02
(representing a basket of reference loans and a total return
swap between Chase Manhattan Bank and the Trust)(2)(6) 750,000 672,606
---------
Total Structured Instruments (Cost $3,750,000) 3,467,330

=================================================================================================
REPURCHASE AGREEMENTS--4.0%
- -------------------------------------------------------------------------------------------------
Repurchase agreement with First Chicago Capital Markets,
4.75%, dated 12/31/98, to be repurchased at $14,407,600 on
1/4/99, collateralized by U.S. Treasury Nts., 4%-8.875%, 2/15/99-
7/15/06, with a value of $14,693,818 (Cost $14,400,000) 4,400,000 14,400,000
- -------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $374,024,883) 106.4% 379,340,635
- -------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (6.4) (22,814,936)
------- -------------
NET ASSETS 100.0% $356,525,699
======== ============
</TABLE>

1. Face amount is reported in U.S. Dollars, except for those denoted in the
following currencies:

CAD--Canadian Dollar

XEU--European Currency Units

2.Identifies issues considered to be illiquid or restricted--See Note 7 of Notes
to Financial Statements.

3. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline. Most other fixed income securities
increase in price when interest rates decline. The principal amount of the
underlying pool represents the notional amount on which current interest is
calculated. The price of these securities is typically more sensitive to
changes in prepayment rates than traditional mortgage-backed securities (for
example, GNMA pass-throughs). Interest rates disclosed represent current yields
based upon the current cost basis and estimated timing and amount of future
cash flows.

4. When-issued security to be delivered and settled after December 31, 1998.

5. Principal-Only Strips represent the right to receive the monthly principal
payments on an underlying pool of mortgage loans. The value of these securities
generally increases as interest rates decline and prepayment rates rise. The
price of these securities is typically more volatile than that of
coupon-bearing bonds of the same maturity. Interest rates disclosed represent
current yields based upon the current cost basis and estimated timing of future
cash flows.

28 Oppenheimer Bond Fund

<PAGE>

- --------------------------------------------------------------------------------
6. Represents the current interest rate for a variable rate security.

7. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities
have been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $29,100,374 or 8.16% of the Fund's net
assets as of December 31, 1998.

8. Securities with an aggregate market value of $537,500 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 6 of Notes to Financial Statements.

9. A sufficient amount of securities has been designated to cover outstanding
forward foreign currency exchange contracts. See Note 5 of Notes to Financial
Statements.

10. Non-income producing--issuer is in default.

11.Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.

12. Units may be comprised of several components, such as debt and equity
and/or warrants to purchase equity at some point in the future. For units which
represent debt securities, face amount disclosed represents total underlying
principal.

13. Non-income producing security.

14. Interest or dividend is paid-in-kind.

See accompanying Notes to Financial Statements.

29 Oppenheimer Bond Fund

<PAGE>

STATEMENT OF ASSETS AND LIABILITIES December 31, 1998

<TABLE>
<CAPTION>
=========================================================================================================
<S> <C>
ASSETS
Investments, at value (cost $374,024,883)--see accompanying statement $379,340,635
- ---------------------------------------------------------------------------------------------------------
Receivables and other assets:
Interest, dividends and principal paydowns 4,015,982
Shares of beneficial interest sold 758,617

Other 6,524
-----------
Total assets 384,121,758

=========================================================================================================
LIABILITIES
Bank overdraft 30,118
- ---------------------------------------------------------------------------------------------------------
Unrealized depreciation on forward foreign currency exchange contracts--Note 5 11,075
- ---------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased on a when-issued basis--Note 1 24,995,035
Shares of beneficial interest redeemed 1,703,153
Dividends 480,664
Distribution and service plan fees 215,295
Transfer and shareholder servicing agent fees 35,804
Daily variation on futures contracts--Note 6 20,515
Other 104,400
----------
Total liabilities 27,596,059

=========================================================================================================
NET ASSETS $356,525,699
============

=========================================================================================================
COMPOSITION OF NET ASSETS
Paid-in capital $353,474,626
- ---------------------------------------------------------------------------------------------------------
Overdistributed net investment income (4,077)
- ---------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and
foreign currency transactions (2,327,236)
- ---------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of
assets and liabilities denominated in foreign currencies 5,382,386
------------
Net assets $356,525,699
============
</TABLE>

30 Oppenheimer Bond Fund

<PAGE>

<TABLE>
=========================================================================================================
<S> <C>
NET ASSET VALUE PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$246,668,278 and 22,711,225 shares of beneficial interest outstanding) $10.86
Maximum offering price per share (net asset value plus sales charge
of 4.75% of offering price) $11.40

- ---------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $88,060,713 and
8,111,764 shares of beneficial interest outstanding) $10.86

- ---------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $21,795,709 and
2,005,876 shares of beneficial interest outstanding) $10.87

- ---------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $999 and 92 shares of beneficial interest outstanding) $10.86

</TABLE>

See accompanying Notes to Financial Statements.

31 Oppenheimer Bond Fund

<PAGE>

STATEMENT OF OPERATIONS For the Year Ended December 31, 1998

<TABLE>
=========================================================================================================
<S> <C>
INVESTMENT INCOME
Interest $22,500,912
- ---------------------------------------------------------------------------------------------------------
Dividends 313,421
----------
Total income 22,814,333

=========================================================================================================
EXPENSES
Management fees--Note 4 2,199,637
- ---------------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 538,337
Class B 642,192
Class C 151,634
- ---------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 464,206
- ---------------------------------------------------------------------------------------------------------
Shareholder reports 134,503
- ---------------------------------------------------------------------------------------------------------
Legal, auditing and other professional fees 19,103
- ---------------------------------------------------------------------------------------------------------
Custodian fees and expenses 16,323
- ---------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 7,223
- ---------------------------------------------------------------------------------------------------------
Other 49,286
---------
Total expenses 4,222,444

=========================================================================================================
NET INVESTMENT INCOME 18,591,889

=========================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments 1,492,426
Closing of futures contracts--Note 6 (1,250,774)
Foreign currency transactions 72,639
----------
Net realized gain 314,291

- ---------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments (3,003,865)
Translation of assets and liabilities denominated in foreign currencies (72,467)
-----------
Net change (3,076,332)

-----------
Net realized and unrealized loss (2,762,041)

=========================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $15,829,848
===========

</TABLE>

See accompanying Notes to Financial Statements.

32 Oppenheimer Bond Fund

<PAGE>

STATEMENTS OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1998 1997
=========================================================================================================
<S> <C> <C>
OPERATIONS
Net investment income $ 18,591,889 $ 16,543,377
- ---------------------------------------------------------------------------------------------------------
Net realized gain 314,291 2,197,371
- ---------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (3,076,332) 3,665,014
----------- ----------
Net increase in net assets resulting from operations 15,829,848 22,405,762

=========================================================================================================
DIVIDENDS TO SHAREHOLDERS
Dividends from net investment income:
Class A (14,076,402) (13,459,796)
Class B (3,655,574) (2,655,088)
Class C (859,704) (389,245)
Class Y (47) ---

=========================================================================================================
BENEFICIAL INTEREST TRANSACTIONS
Net increase (decrease) in net assets resulting
from beneficial interest transactions--Note 2:
Class A 57,901,460 (7,491,024)
Class B 40,449,784 8,379,500
Class C 12,786,693 4,696,745
Class Y 999 --

=========================================================================================================
NET ASSETS
Total increase 108,377,057 11,486,854
- ---------------------------------------------------------------------------------------------------------
Beginning of period 248,148,642 236,661,788
----------- -----------
End of period [including undistributed (overdistributed) net
investment income of $(4,077) and $6,579, respectively] $356,525,699 $248,148,642
============ ============
</TABLE>

See accompanying Notes to Financial Statements.

33 Oppenheimer Bond Fund

<PAGE>

FINANCIAL HIGHLIGHTS

CLASS A
--------------------------------------------------

YEAR ENDED DECEMBER 31,
1998 1997 1996 1995 1994
=============================================================================================
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $10.97 $10.70 $10.98 $10.01 $11.12
- ---------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .71 .77 .78 .69 .65
Net realized and
unrealized gain (loss) (.11) .27 (.28) .96 (1.08)
-------- -------- -------- -------- --------
Total income (loss) from
investment operations .60 1.04 .50 1.65 (.43)

- ----------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net
investment income (.71) (.77) (.75) (.68) (.65)
Dividends in excess of net
investment income -- -- -- -- (.03)
Tax return of capital -- -- (.03) -- --
-------- -------- -------- -------- --------
Total dividends and distributions
to shareholders (.71) (.77) (.78) (.68) (.68)
- ----------------------------------------------------------------------------------------------
Net asset value, end of period $10.86 $10.97 $10.70 $10.98 $10.01
======== ======== ======== ======== ========

==============================================================================================
TOTAL RETURN, AT NET ASSET VALUE(3) 5.61% 10.13% 4.87% 16.94% (3.87)%

==============================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in thousands) $246,668 $190,706 $193,515 $169,059 $ 96,640
- ----------------------------------------------------------------------------------------------
Average net assets (in thousands) $217,944 $187,458 $178,130 $116,940 $102,168
- ----------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 6.46% 7.20% 7.35% 6.47% 6.25%
Expenses, before voluntary
reimbursement by the Manager 1.22% 1.27% 1.30% 1.27% 1.06%
Expenses, net of voluntary
reimbursement by the Manager N/A N/A N/A 1.26% N/A
- ----------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 67.3% 50.5% 53.7% 175.4% 70.3%

</TABLE>

1. For the period from April 27, 1998 (inception of offering), to December 31,
1998.

2. For the period from July 11, 1995 (inception of offering), to December
31, 1995.

3. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.

34 Oppenheimer Bond Fund

<PAGE>

CLASS B CLASS C CLASS Y
- ------------------------------------------------- -------------------------------------- ---------
PERIOD
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, ENDED DEC. 31,
1998 1997 1996 1995 1994 1998 1997 1996 1995(2) 1998(1)
=============================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$10.97 $10.69 $10.98 $10.01 $11.11 $10.98 $10.70 $10.99 $10.89 $10.88
- -------------------------------------------------------------------------------------------------------------

.62 .69 .70 .63 .58 .62 .69 .70 .28 .49

(.10) .28 (.29) .94 (1.08) (.10) .28 (.29) .10 (.02)
--------- -------- --------- -------- -------- -------- --------- -------- -------- ---------

.52 .97 .41 1.57 (.50) .52 .97 .41 .38 .47

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

(.63) (.69) (.67) (.60) (.57) (.63) (.69) (.67) (.28) (.49)

-- -- -- -- (.03) -- -- -- -- --
-- -- (.03) -- -- -- -- (.03) -- --
--------- -------- --------- -------- -------- -------- --------- -------- -------- ---------

(.63) (.69) (.70) (.60) (.60) (.63) (.69) (.70) (.28) (.49)
- -------------------------------------------------------------------------------------------------------------

$10.86 $10.97 $10.69 $10.98 $10.01 $10.87 $10.98 $10.70 $10.99 $10.86
======= ======== ======== ======= ======= ======== ======== ======== ======== =======

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

4.81% 9.41% 3.99% 16.06% (4.53)% 4.81% 9.39% 4.00% 3.76% 4.40%

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

$88,061 $48,255 $38,826 $39,187 $3,451 $21,796 $9,188 $4,322 $3,971 $1
- -------------------------------------------------------------------------------------------------------------
$64,330 $41,439 $38,068 $12,823 $2,747 $15,198 $6,134 $3,404 $ 979 $1
- -------------------------------------------------------------------------------------------------------------

5.68% 6.42% 6.59% 5.84% 5.53% 5.66% 6.36% 6.60% 6.32%(4) 6.84%(4)

1.97% 2.02% 2.05% 2.12% 1.78% 1.96% 2.02% 2.05% 2.25%(4) 0.74%(4)

N/A N/A N/A 2.08% N/A N/A N/A N/A 1.96%(4) N/A
- -------------------------------------------------------------------------------------------------------------
67.3% 50.5% 53.7% 175.4% 70.3% 67.3% 50.5% 53.7% 175.4% 67.3%

</TABLE>

4. Annualized.

5. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended December 31, 1998, were $263,925,338 and $208,096,512, respectively. For
the period ended December 31, 1995, purchases and sales of investment securities
included mortgage dollar-rolls.

See accompanying Notes to Financial Statements.

35 Oppenheimer Bond Fund

<PAGE>

NOTES TO FINANCIAL STATEMENTS

===============================================================================
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Bond Fund (the Fund) is a separate fund of Oppenheimer Integrity
Funds, a diversified, open-end management investment company registered under
the Investment Company Act of 1940, as amended. The Fund's investment objective
is to seek a high level of current income by investing mainly in debt
instruments. The Fund will, under normal market conditions, invest at least 65%
of its total assets in a diversified portfolio of investment grade debt
securities. The Fund's investment advisor is OppenheimerFunds, Inc. (the
Manager). The Fund offers Class A, Class B, Class C and Class Y shares. Class A
shares are sold with a front-end sales charge. Class B and Class C shares may be
subject to a contingent deferred sales charge. All classes of shares have
identical rights to earnings, assets and voting privileges, except that each
class has its own expenses directly attributable to that class and exclusive
voting rights with respect to matters affecting that class. Class A, B and C
have separate distribution and/or service plans. No such plan has been adopted
for Class Y shares. Class B shares will automatically convert to Class A shares
six years after the date of purchase. The following is a summary of significant
accounting policies consistently followed by the Fund.

- --------------------------------------------------------------------------------
INVESTMENT VALUATION. Portfolio securities are valued at the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
the last sale price on the prior trading day. Long-term and short-term
"non-money market" debt securities are valued by a portfolio pricing service
approved by the Board of Trustees. Such securities which cannot be valued by an
approved portfolio pricing service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering the quotes is reliable
and that the quotes reflect current market value, or are valued under
consistently applied procedures established by the Board of Trustees to
determine fair value in good faith. Short-term "money market type" debt
securities having a remaining maturity of 60 days or less are valued at cost (or
last determined market value) adjusted for amortization to maturity of any
premium or discount. Forward foreign currency contracts are valued based on the
closing prices of the forward currency contract rates in the London foreign
exchange markets on a daily basis as provided by a reliable bank or dealer.
Options are valued based upon the last sale price on the principal exchange on
which the option is traded or, in the absence of any transactions that day, the
value is based upon the last sale price on the prior trading date if it is
within the spread between the closing bid and asked prices. If the last sale
price is outside the spread, the closing bid is used.

36 Oppenheimer Bond Fund

<PAGE>

================================================================================
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS. Delivery and payment for securities
that have been purchased by the Fund on a forward commitment or when-issued
basis can take place a month or more after the transaction date. During this
period, such securities do not earn interest, are subject to market fluctuation
and may increase or decrease in value prior to their delivery. The Fund
maintains, in a segregated account with its custodian, assets with a market
value equal to the amount of its purchase commitments. The purchase of
securities on a when-issued or forward commitment basis may increase the
volatility of the Fund's net asset value to the extent the Fund makes such
purchases while remaining substantially fully invested. As of December 31, 1998,
the Fund had entered into outstanding when-issued or forward commitments of
$24,995,035.

In connection with its ability to purchase securities on a
when-issued or forward commitment basis, the Fund may enter into mortgage
dollar-rolls in which the Fund sells securities for delivery in the current
month and simultaneously contracts with the same counterparty to repurchase
similar (same type, coupon and maturity) but not identical securities on a
specified future date. The Fund records each dollar-roll as a sale and a new
purchase transaction.

- --------------------------------------------------------------------------------
FOREIGN CURRENCY TRANSLATION. The accounting records of the Fund are maintained
in U.S. dollars. Prices of securities denominated in foreign currencies are
translated into U.S. dollars at the closing rates of exchange. Amounts related
to the purchase and sale of foreign securities and investment income are
translated at the rates of exchange prevailing on the respective dates of such
transactions.

The effect of changes in foreign currency exchange rates on
investments is separately identified from the fluctuations arising from changes
in market values of securities held and reported with all other foreign
currency gains and losses in the Fund's Statement of Operations.

- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.

- --------------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated daily
to each class of shares based upon the relative proportion of net assets
represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.

37 Oppenheimer Bond Fund

<PAGE>

NOTES TO FINANCIAL STATEMENTS (Continued)

================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

FEDERAL TAXES. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required. As of December 31, 1998, the
Fund had available for federal income tax purposes an unused capital loss
carryover of $6,236,000, which expires between 2002 and 2004.

- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS. The Fund intends to declare dividends separately
for Class A, Class B, Class C, and Class Y shares from net investment income
each day the New York Stock Exchange is open for business and pay such dividends
monthly. Distributions from net realized gains on investments, if any, will be
declared at least once each year.

- --------------------------------------------------------------------------------
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax purposes
primarily because of paydown gains and losses and the recognition of certain
foreign currency gains (losses) as ordinary income (loss) for tax purposes. The
character of the distributions made during the year from net investment income
or net realized gains may differ from its ultimate characterization for federal
income tax purposes. Also, due to timing of dividend distributions, the fiscal
year in which amounts are distributed may differ from the fiscal year in which
the income or realized gain was recorded by the Fund.

The Fund adjusts the classification of distributions to
shareholders to reflect the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, during the year ended December 31, 1998, amounts have been
reclassified to reflect a decrease in paid-in capital of $166,931, a decrease
in undistributed net investment income of $10,818, and a decrease in
accumulated net realized loss on investments of $177,749.

- --------------------------------------------------------------------------------
OTHER. Investment transactions are accounted for on the date the investments are
purchased or sold (trade date). Discount on securities purchased is amortized
over the life of the respective securities, in accordance with federal income
tax requirements. Realized gains and losses on investments and unrealized
appreciation and depreciation are determined on an identified cost basis, which
is the same basis used for federal income tax purposes. Dividends-in-kind are
recognized as income on the ex-dividend date, at the current market value of the
underlying security. Interest on payment-in-kind debt instruments is accrued as
income at the coupon rate and a market adjustment is made periodically.

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

38 Oppenheimer Bond Fund

<PAGE>

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

The Fund has authorized an unlimited number of no par value shares of beneficial
interest of each class. Transactions in shares of beneficial interest were as
follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998(1) YEAR ENDED DECEMBER 31, 1997
-------------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 6,327,132 $ 68,506,645 2,678,397 $ 28,887,221
Dividends reinvested 929,158 10,176,270 831,219 8,947,815
Issued in connection with the
acquisition of Oppenheimer
LifeSpan Income Fund--Note 9 2,792,886 30,889,321 -- --
Redeemed (4,721,024) (51,670,776) (4,216,384) (45,326,060)
----------- ------------ ----------- -------------
Net increase (decrease) 5,328,152 $ 57,901,460 (706,768) $ (7,491,024)
=========== ============ =========== =============

- -----------------------------------------------------------------------------------------------
Class B:
Sold 5,173,605 $ 56,405,052 1,711,754 $ 18,512,789
Dividends reinvested 235,563 2,578,186 168,332 1,813,048
Issued in connection with the
acquisition of Oppenheimer
LifeSpan Income Fund--Note 9 85,738 947,405 -- --
Redeemed (1,783,066) (19,480,859) (1,110,660) (11,946,337)
----------- ------------ ----------- ------------
Net increase 3,711,840 $ 40,449,784 769,426 $ 8,379,500
=========== ============ =========== ============

- -----------------------------------------------------------------------------------------------
Class C:
Sold 1,595,718 $ 17,436,546 536,735 $ 5,809,737
Dividends reinvested 58,558 641,296 25,947 280,265
Issued in connection with the
acquisition of Oppenheimer
LifeSpan Income Fund--Note 9 8,740 96,665 -- --
Redeemed (494,157) (5,387,814) (129,410) (1,393,257)
----------- ------------ ----------- ------------
Net increase 1,168,859 $ 12,786,693 433,272 $ 4,696,745
=========== ============ =========== ============

- -----------------------------------------------------------------------------------------------
Class Y:
Sold 92 $ 999 -- $ --
Dividends reinvested -- -- -- --
Redeemed -- -- -- --
--------- ------------- ------------ ------------
Net increase 92 $ $999 -- $ --
========= ============= ============ ============

</TABLE>

1. For the year ended December 31, 1998, for Class A, Class B, and Class C
shares, and for the period from April 27, 1998 (inception of offering) to
December 31, 1998 for Class Y shares.

39 Oppenheimer Bond Fund

<PAGE>

NOTES TO FINANCIAL STATEMENTS (Continued)

================================================================================
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS

As of December 31, 1998, net unrealized appreciation on investments of
$5,315,752 was composed of gross appreciation of $10,177,934, and gross
depreciation of $4,862,182.

- --------------------------------------------------------------------------------
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES

Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for a fee of 0.75% of the first
$200 million of the Fund's average annual net assets, 0.72% of the next $200
million, 0.69% of the next $200 million, 0.66% of the next $200 million, 0.60%
of the next $200 million, and 0.50% of net assets in excess of $1 billion. The
Fund's management fee for the year ended December 31, 1998 was 0.74% of the
average annual net assets for Class A, Class B, Class C and Class Y shares.

For the year ended December 31, 1998, commissions (sales
charges paid by investors) on sales of Class A shares totaled $751,085, of
which $221,787 was retained by OppenheimerFunds Distributor, Inc. (OFDI), a
subsidiary of the Manager, as general distributor, and by an affiliated
broker/dealer. Sales charges advanced to broker/dealers by OFDI on sales of the
Fund's Class A, Class B and Class C shares totaled $112,467, $1,420,342 and
$117,997, respectively. Amounts paid to an affiliated broker/dealer for Class B
and Class C shares were $93,828 and $3,459, respectively. During the year ended
December 31, 1998, OFDI received contingent deferred sales charges of $186,638
and $7,397, respectively, upon redemption of Class B and Class C shares as
reimbursement for sales commissions advanced by OFDI at the time of sale of
such shares.

OppenheimerFunds Services (OFS), a division of the Manager,
is the transfer and shareholder servicing agent for the Fund and other
Oppenheimer funds. OFS's total costs of providing such services are allocated
ratably to these funds.

The Fund has adopted a Service Plan for Class A shares to
reimburse OFDI for a portion of its costs incurred in connection with the
personal service and maintenance of shareholder accounts that hold Class A
shares. Reimbursement is made quarterly at an annual rate that may not exceed
0.25% of the average annual net assets of Class A shares of the Fund. OFDI uses
the service fee to reimburse brokers, dealers, banks and other financial
institutions quarterly for providing personal service and maintenance of
accounts of their customers that hold Class A shares. During the year ended
December 31, 1998, OFDI paid $186,566 to an affiliated broker/dealer as
reimbursement for Class A personal service and maintenance expenses.

40 Oppenheimer Bond Fund

<PAGE>

================================================================================
The Fund has adopted Distribution and Service Plans for Class B and Class C
shares to compensate OFDI for its costs in distributing Class B and Class C
shares and servicing accounts. Under the Plans, the Fund pays OFDI an annual
asset-based sales charge of 0.75% per year on Class B and Class C shares for
its services rendered in distributing Class B and Class C shares. OFDI also
receives a service fee of 0.25% per year to compensate dealers for providing
personal services for accounts that hold Class B and Class C shares. Each fee
is computed on the average annual net assets of Class B or Class C shares,
determined as of the close of each regular business day. During the year ended
December 31, 1998, OFDI paid $7,125 to an affiliated broker/dealer as
compensation for Class B personal service and maintenance expenses and retained
$541,252 and $118,222, respectively, as compensation for Class B and Class C
sales commissions and service fee advances, as well as financing costs. If
either Plan is terminated by the Fund, the Board of Trustees may allow the Fund
to continue payments of the asset-based sales charge to OFDI for distributing
shares before the Plan was terminated. As of December 31, 1998, OFDI had
incurred excess distribution and servicing costs of $2,413,027 for Class B and
$253,281 for Class C.

- --------------------------------------------------------------------------------
5. FORWARD CONTRACTS

A forward foreign currency exchange contract (forward contract) is a commitment
to purchase or sell a foreign currency at a future date, at a negotiated rate.

The Fund uses forward contracts to seek to manage foreign
currency risks. They may also be used to tactically shift portfolio currency
risk. The Fund generally enters into forward contracts as a hedge upon the
purchase or sale of a security denominated in a foreign currency. In addition,
the Fund may enter into such contracts as a hedge against changes in foreign
currency exchange rates on portfolio positions.

Forward contracts are valued based on the closing prices of
the forward currency contract rates in the London foreign exchange markets on a
daily basis as provided by a reliable bank or dealer. The Fund will realize a
gain or loss upon the closing or settlement of the forward transaction.

Securities held in segregated accounts to cover net exposure
on outstanding forward contracts are noted in the Statement of Investments
where applicable. Unrealized appreciation or depreciation on forward contracts
is reported in the Statement of Assets and Liabilities. Realized gains and
losses are reported with all other foreign currency gains and losses in the
Fund's Statement of Operations.

Risks include the potential inability of the counterparty to
meet the terms of the contract and unanticipated movements in the value of a
foreign currency relative to the U.S. dollar.

41 Oppenheimer Bond Fund

<PAGE>

NOTES TO FINANCIAL STATEMENTS (Continued)

================================================================================
5. FORWARD CONTRACTS(CONTINUED)

As of December 31, 1998, the Fund had outstanding forward contracts as follows:

<TABLE>
<CAPTION>
EXPIRATION CONTRACT VALUATION AS OF UNREALIZED
CONTRACT DESCRIPTION DATE AMOUNT (000s) DECEMBER 31, 1998 DEPRECIATION
- ---------------------------------------------------------------------------------------------
CONTRACTS TO SELL
- ------------------
<S> <C> <C> <C> <C>
Canadian Dollar (CAD) 3/15/99 2,970 CAD $1,939,647 $11,075

</TABLE>

================================================================================
6. FUTURES CONTRACTS

The Fund may buy and sell interest rate futures contracts in order to gain
exposure to or protect against changes in interest rates. The Fund may also buy
or write put or call options on these futures contracts.

The Fund generally sells futures contracts to hedge against
increases in interest rates and the resulting negative effect on the value of
fixed rate portfolio securities. The Fund may also purchase futures contracts
to gain exposure to changes in interest rates as it may be more efficient or
cost effective than actually buying fixed income securities.

Upon entering into a futures contract, the Fund is required
to deposit either cash or securities (initial margin) in an amount equal to a
certain percentage of the contract value. Subsequent payments (variation
margin) are made or received by the Fund each day. The variation margin
payments are equal to the daily changes in the contract value and are recorded
as unrealized gains and losses. The Fund recognizes a realized gain or loss
when the contract is closed or expires.

Securities held in collateralized accounts to cover initial
margin requirements on open futures contracts are noted in the Statement of
Investments. The Statement of Assets and Liabilities reflects a receivable or
payable for the daily mark to market for variation margin.

Risks of entering into futures contracts (and related
options) include the possibility that there may be an illiquid market and that
a change in the value of the contract or option may not correlate with changes
in the value of the underlying securities.

42 Oppenheimer Bond Fund

<PAGE>

================================================================================
As of December 31, 1998, the Fund had outstanding futures contracts as follows:

<TABLE>
<CAPTION>
UNREALIZED
EXPIRATION NUMBER OF VALUATION AS OF APPRECIATION
CONTRACT DESCRIPTION DATE CONTRACTS DECEMBER 31, 1998 (DEPRECIATION)
- ---------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
- ----------------------
<S> <C> <C> <C> <C>
U.S. Treasury Nts., 5 yr. 3/99 236 $26,749,125 $71,359
U.S. Treasury Nts., 20 yr. 3/99 77 9,839,156 8,625
--------
79,984
--------
CONTRACTS TO SELL
- ------------------
U.S. Treasury Nts., 10 yr. 3/99 18 2,144,813 (2,313)
-------
$77,671
=======
</TABLE>

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

7. ILLIQUID AND RESTRICTED SECURITIES

As of December 31, 1998, investments in securities included issues that are
illiquid or restricted. Restricted securities are often purchased in private
placement transactions, are not registered under the Securities Act of 1933, may
have contractual restrictions on resale, and are valued under methods approved
by the Board of Trustees as reflecting fair value. A security may be considered
illiquid if it lacks a readily available market or if its valuation has not
changed for a certain period of time. The Fund intends to invest no more than
10% of its net assets (determined at the time of purchase and reviewed
periodically) in illiquid or restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors, are not
subject to that limit. The aggregate value of illiquid or restricted securities
subject to this limitation as of December 31, 1998 was $22,178,514, which
represents 6.22% of the Fund's net assets.

================================================================================
8. ACQUISITION OF OPPENHEIMER LIFESPAN INCOME FUND

On June 12, 1998, the Fund acquired all the net assets of Oppenheimer LifeSpan
Income Fund, pursuant to an agreement and plan of reorganization approved by the
Oppenheimer LifeSpan Income Fund shareholders on June 9, 1998. The Fund issued
(at an exchange ratio of 0.936419 for Class A, 0.940145 for Class B and 0.939042
for Class C of the Fund to one share of Oppenheimer LifeSpan Income Fund)
2,792,886, 85,738 and 8,740 shares of beneficial interest for Class A, Class B,
and Class C, respectively, valued at $30,889,321, $947,405 and $96,665,
respectively, in exchange for the net assets, resulting in combined Class A net
assets of $230,808,283, Class B net assets of $59,193,669 and Class C net assets
of $13,957,428 on June 12, 1998. The net assets acquired included net unrealized
appreciation of $514,326. The exchange qualified as a tax-free reorganization
for federal income tax purposes.

43 Oppenheimer Bond Fund

<PAGE>

NOTES TO FINANCIAL STATEMENTS (continued)

================================================================================
9. BANK BORROWINGS

The Fund may borrow from a bank for temporary or emergency purposes including,
without limitation, funding of shareholder redemptions provided asset coverage
for borrowings exceeds 300%. The Fund has entered into an agreement which
enables it to participate with other Oppenheimer funds in an unsecured line of
credit with a bank, which permits borrowings up to $400 million, collectively.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the Federal Funds Rate plus 0.35%. Borrowings are payable 30 days after such
loan is executed. The Fund also pays a commitment fee equal to its pro rata
share of the average unutilized amount of the credit facility at a rate of
0.0575% per annum.

The Fund had no borrowings outstanding during the year ended
December 31, 1998.

44 Oppenheimer Bond Fund

<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 risks appear somewhat larger than
those 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 sometime 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 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 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 and 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 and 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.

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 category; the modifier "2"
indicates a mid-range ranking and the modifier "3" indicates a ranking in the
lower end of the category.

Short-Term Ratings - Taxable Debt

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

These ratings apply to the ability of issuers to repay punctually 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, while sound, may be 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 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.

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 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: A bond rated B is more vulnerable to nonpayment than an obligation rated
BB, but the obligor currently has the capacity to meet its financial
commitment on the obligation.

CCC: A bond rated CCC 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. In the event of adverse
business, financial or economic conditions, the obligor is not likely to have
the capacity to meet its financial commitment on the obligation.
CC: An obligation rated CC is currently highly vulnerable to nonpayment.

C: The C rating may used where a bankruptcy petition has been filed or
similar action has been taken, but payments on this obligation are being
continued.

D: Bonds rated D are in default. Payments on the obligation are not being
made on the date due.

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: 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 issuer's capacity to meet its
financial obligation is very 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: 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: 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: 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: In payment default. Payments on the obligation have not been made on the
due date. The rating may also be used if a bankruptcy petition has been filed
or similar actions jeopardize payments on the obligation.

- ------------------------------------------------------------------------------
Fitch IBCA, 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.

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. Securities are not meeting current obligations and
are extremely speculative. "DDD" designates the highest potential for
recovery of amounts outstanding on any securities involved.

Plus (+) and minus (-) signs may be appended to a rating symbol to denote
relative status within the rating category. Plus and minus signs are not
added to the "AAA" category or to categories below "CCC."

International Short-Term Credit Ratings

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

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

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

B: Speculative. Minimal capacity for timely payment, 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.

Duff & Phelps Credit Rating Co. Ratings

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

Long-Term Debt and Preferred Stock

AAA: Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.

AA+, AA, AA-: High credit quality. Protection factors are strong. Risk is
modest but may vary slightly from time to time because of economic conditions.

A+, A & A-: Protection factors are average but adequate. However, risk
factors are more variable in periods of greater economic stress.

BBB+, BBB & BBB-: Below average protection factors but still considered
sufficient for prudent investment. Considerable variability in risk during
economic cycles.

BB+, BB & BB-: Below investment grade but deemed likely to meet obligations
when due. Present or prospective financial protection factors fluctuate
according to industry conditions. Overall quality may move up or down
frequently within the category.

B+, B & B-: Below investment grade and possessing risk that obligations will
not be met when due. Financial protection factors will fluctuate widely
according to economic cycles, industry conditions and/or company fortunes.
Potential exists for frequent changes in the rating within this category or
into a higher of lower rating grade.

CCC: Well below investment-grade securities. Considerable uncertainty
exists as to timely payment of principal, interest or preferred dividends.
Protection factors are narrow and risk can be substantial with unfavorable
economic/industry conditions, and/or with unfavorable company developments.

DD: Defaulted debt obligations. Issuer failed to meet scheduled principal
and/or interest payments.

DP: Preferred stock with dividend arrearages.

Short-Term Debt:

High Grade:

D-1+: Highest certainty of timely payment. Safety is just below risk-free
U.S. Treasury short-term debt.

D-1: Very high certainty of timely payment. Risk factors are minor.

D-1-: High certainty of timely payment. Risk factors are very small.

Good Grade:

D-2: Good certainty of timely payment. Risk factors are small.

Satisfactory Grade:

D-3: Satisfactory liquidity and other protection factors qualify issues as to
investment grade. Risk factors are larger and subject to more variation.

Nevertheless, timely payment is expected.

Non-Investment Grade:

D-4: Speculative investment characteristics. Liquidity is not sufficient to
insure against disruption in debt service.

Default:

D-5: Issuer failed to meet scheduled principal and/or interest payments.

<PAGE>

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
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 - Technology
Electrical Equipment Telephone - Utility
Electronics Textile/Apparel
Energy Services & Producers Tobacco
Entertainment/Film Trucks and Parts
Environmental Wireless Services
Food

<PAGE>

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.
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 that were
merged into or became Oppenheimer 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 plans2
(4) Group Retirement Plans3
(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 the
applicable 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. 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.

3. 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.

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

<PAGE>

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:
o Purchases of Class A shares aggregating $1 million or more.
o 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.

o Purchases by an OppenheimerFunds-sponsored Rollover IRA, if the
purchases are made:

(1) through a broker, dealer, bank or registered investment adviser that
has made special arrangements with the Distributor for those
purchases, or

(2) by a direct rollover of a distribution from a qualified Retirement Plan
if the administrator of that Plan has made special arrangements
with the Distributor for those purchases.

o 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).

o Purchases by a Retirement Plan whose record keeper had a
cost-allocation agreement with the Transfer Agent on or before May
1, 1999.

- ------------------------------------------------------------------------------
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):
o The Manager or its affiliates.
o 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.

o Registered management investment companies, or separate accounts of
insurance companies having an agreement with the Manager or the
Distributor for that purpose.

o 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.

o 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).
o 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.

o 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.

o "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.

o 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.
o 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.

o 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.

o A unit investment trust that has entered into an appropriate agreement
with the Distributor.

o Dealers, brokers, banks, or registered investment advisers that have
entered into an agreement with the Distributor to sell shares to
defined contribution employee retirement plans for which the dealer,
broker or investment adviser provides administration services.

o 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.

o 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.

o 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):
o Shares issued in plans of reorganization, such as mergers, asset

acquisitions and exchange offers, to which the Fund is a party.
o 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.

o Shares purchased and paid for with 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.
o Shares purchased with the proceeds of maturing principal units of any
Qualified Unit Investment Liquid Trust Series.

o 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:
o To make Automatic Withdrawal Plan payments that are limited annually to

no more than 12% of the account value measured at the time the Plan
is established, adjusted annually.

o 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).

o For distributions from Retirement Plans, deferred compensation plans or
other employee benefit plans for any of the following purposes:

(1) Following the death or disability (as defined in the Internal Revenue
Code) of the participant or beneficiary. The death or disability
must occur after the participant's account was established.

(2) To return excess contributions.

(3) To return contributions made due to a mistake of fact.
(4) Hardship withdrawals, as defined in the plan.5
(5) Under a Qualified Domestic Relations Order, as defined in the Internal

Revenue Code, or, in the case of an IRA or 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

(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.

o For distributions from Retirement Plans having 500 or more eligible
participants, except distributions due to termination of all of the
Oppenheimer funds as an investment option under the Plan.

o 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:
o Shares redeemed involuntarily, as described in "Shareholder Account

Rules and Policies," in the applicable Prospectus.
o 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.

o Distributions from accounts for which the broker-dealer of record has
entered into a special agreement with the Distributor allowing this
waiver.

o 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.

o 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.

o 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.

o 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
(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
(9) On account of the participant's separation from service.9
(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
participants, 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,
as long as the aggregate value of the distributions does not
exceed 10% of the account's value annually (measured from the
establishment of the Automatic Withdrawal Plan).

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:

o Shares sold to the Manager or its affiliates.

o 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.

o Shares issued in plans of reorganization to which the Fund is a party.

<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:

Oppenheimer Quest Value Fund, Inc. Oppenheimer Quest Small Cap Value
Fund

Oppenheimer Quest Balanced Value Oppenheimer Quest Global Value Fund
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:
o 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
o purchased by such shareholder by exchange of shares of another

Oppenheimer fund that were acquired pursuant to the merger of any of
the Former Quest for Value Funds into that other Oppenheimer fund on
November 24, 1995.

A. Reductions or Waivers of Class A Sales Charges.

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

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

- -----------------------------------------------------------------------------
Number of Eligible Initial Sales

Employees or Initial Sales Charge as a % of Commission as % of
Members Charge as a % of Net Amount Invested Offering Price

Offering Price

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

9 or Fewer 2.50% 2.56% 2.00%
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------

At least 10 but

not more than 49 2.00% 2.04% 1.60%
- ------------------------------------------------------------------------------

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

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

|X| Waiver of Class A Sales Charges for Certain Shareholders. Class A
shares purchased by the following investors are not subject to any Class A
initial or contingent deferred sales charges:
o Shareholders who were shareholders of the AMA Family of Funds on

February 28, 1991 and who acquired shares of any of the Former Quest
for Value Funds by merger of a portfolio of the AMA Family of Funds.

o Shareholders who acquired shares of any Former Quest for Value Fund by
merger of any of the portfolios of the Unified Funds.

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

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

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

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

Class B or Class C shares if the annual withdrawal does not exceed
10% of the initial value of the account, and

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

|X| Waivers for Redemptions of Shares Purchased on or After March 6,
1995 but Prior to November 24, 1995. In the following cases, the contingent
deferred sales charge will be waived for redemptions of Class A, Class B or
Class C shares of an Oppenheimer fund. The shares must have been acquired by
the merger of a Former Quest for Value Fund into the fund or by exchange from
an Oppenheimer fund that was a Former Quest For Value Fund or into which such
Former Quest for Value Fund merged. Those shares must have been purchased on
or after March 6, 1995, but prior to November 24, 1995:
o redemptions following the death or disability of the shareholder(s) (as

evidenced by a determination of total disability by the U.S. Social
Security Administration);

o withdrawals under an automatic withdrawal plan (but only for Class B or
Class C shares) where the annual withdrawals do not exceed 10% of
the initial value of the account; and

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

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

V. Special Sales Charge Arrangements for Shareholders of Certain

- ------------------------------------------------------------------------------
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 adviser 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.

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

Those shareholders who are eligible for the prior Class A CDSC are:
(1) persons whose purchases of Class A shares of a Fund and other Former

Connecticut Mutual Funds were $500,000 prior to March 18, 1996, as a
result of direct purchases or purchases pursuant to the Fund's
policies on Combined Purchases or Rights of Accumulation, who still
hold those shares in that Fund or other Former Connecticut Mutual
Funds, and

(2) persons whose intended purchases under a Statement of Intention entered
into prior to March 18, 1996, with the former general distributor of
the Former Connecticut Mutual Funds to purchase shares valued at
$500,000 or more over a 13-month period entitled those persons to
purchase shares at net asset value without being subject to the
Class A initial sales charge.

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

n 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

- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
AdvanceAmerica 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:

o the Manager and its affiliates,

o 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,

o 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,

o 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,

o 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,

o 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

o 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-20

- ------------------------------------------------------------------------------
Oppenheimer Bond Fund

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

Internet Web Site:

www.oppenheimerfunds.com

Investment Adviser
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

Deloitte & Touche LLP
555 Seventeenth Street
Denver, Colorado 80202

Legal Counsel

Myer, Swanson, Adams & Wolfe, P.C.
1600 Broadway
Denver, Colorado 80202

67890

PX285.0499

- --------
1 No commission 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.
2. Ms. Macaskill and Mr. Bowen are not Trustees or Directors of Oppenheimer
Integrity Funds, Oppenheimer Strategic Income Fund, Panorama Series Fund,
Inc. or Oppenheimer Variable Account Funds. Mr. Fossel and Mr. Bowen are not
Trustees of Centennial New York Tax Exempt Trust or Managing General Partners
of Centennial America Fund, L.P.
3. In accordance with Rule 12b-1 of the Investment Company Act, the term
"Independent Trustees" in this Statement of Additional Information refers to
those Trustees who are not "interested persons" of the Fund and who do not
have any direct or indirect financial interest in the operation of the
distribution plan or any agreement under the plan.
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.
5 This provision does not apply to non-qualified retirement plans, such as
IRAs and 403(b)(7) custodial plans.
6 This provision does not apply to IRAs and 403(b)(7) custodial plans if the
participant is less than age 55.
7 This provision does not apply to non-qualified retirement plans, such as
IRAs and 403(b)(7) custodial plans.
8 This provision does not apply to loans from 403(b)(7) custodial plans.
9 This provision does not apply to IRAs and 403(b)(7) custodial plans if the
participant is less than age 55.

<PAGE>

OPPENHEIMER INTEGRITY FUNDS

FORM N-1A

PART C

OTHER INFORMATION

Item 23. Exhibits

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

(a) (i) Amended and Restated Declaration of Trust dated June
26, 1995 as amended through April 17, 1998: Previously filed with
Registrant's Post-Effective Amendment No. 25, 7/10/95, and incorporated

herein by reference.

(ii) Amendment dated 4/17/98 to Amended and Restated
Declaration of Trust: Filed with Post-Effective Amendment No. 33, 4/27/98,
and incorporated herein by reference.

(b) Registrant's By-Laws dated 6/25/91: Previously filed with
Registrant's Post-Effective Amendment No. 16, 5/1/92, and refiled pursuant to
Item 102 of Regulation S-T with Registrant's Post-Effective Amendment No. 23,
4/28/95, and incorporated herein by reference.

(ii) Specimen Class B Share Certificate for Oppenheimer
Bond Fund: Filed herewith.

(iii) Specimen Class C Share Certificate for Oppenheimer
Bond Fund: Filed herewith.

(iv) Specimen Class Y Share Certificate for Oppenheimer
Bond Fund: Filed herewith.

(d) Investment Advisory Agreement dated 7/10/95 for Oppenheimer
Bond Fund: Previously filed with Registrant's Post-Effective Amendment No.

25, 7/10/95, and incorporated herein by reference.

(e) (i) General Distributor's Agreement dated 10/13/92:
Previously filed with Registrant's Post-Effective Amendment No. 17, 2/26/93,
and refiled pursuant to Item 102 of Regulation S-T with Registrant's
Post-Effective Amendment No. 23, 4/28/95, and incorporated herein by
reference.

(ii) Form of Oppenheimer Funds Distributor, Inc. Dealer
Agreement: Filed with Post-Effective Amendment No. 14 to the Registration
Statement of Oppenheimer Main Street Funds, Inc. (Reg. No. 33-17850),

9/30/94, and incorporated herein by reference.

(iii) Form of Oppenheimer Funds Distributor, Inc. Broker
Agreement: Filed with Post-Effective Amendment No. 14 to the Registration
Statement of Oppenheimer Main Street Funds, Inc. (Reg. No. 33-17850),

9/30/94, and incorporated herein by reference.

(iv) Form of Oppenheimer Funds Distributor, Inc. Agency
Agreement: Filed with Post-Effective Amendment No. 14 to the Registration
Statement of Oppenheimer Main Street Funds, Inc. (Reg. No. 33-17850),

9/30/94, and incorporated herein by reference.

(f) Form of Deferred Compensation Plan for Disinterested
Trustees/Directors: Filed with Post-Effective Amendment No. 40 to the
Registration Statement of Oppenheimer High Yield Fund (Reg. No. 2-62076),

10/27/98, and incorporated herein by reference.

(g) (i) Custody Agreement dated 11/12/92, between the
Registrant and The Bank of New York: Filed with Registrant's Post-Effective
Amendment No. 17, 2/26/93, and refiled with Post-Effective Amendment No. 23,
4/28/95 pursuant to Item 102 of Regulation S-T, and incorporated herein by
reference.

(ii) Form of Foreign Custody Manager Agreement dated
October 9, 1997: Filed with Pre-Effective Amendment No. 2 to the
Registration Statement of Oppenheimer World Bond Fund (Reg. No. 333-48973),
4/23/98, and incorporated herein by reference.

(h) Not applicable.

(i) Opinion and Consent of Counsel dated 2/11/91: Incorporated
herein by reference to Registrant's Rule 24f-2 Notice filed on 2/19/91 and
refiled pursuant to Item 102 of Regulation S-T with Registrant's
Post-Effective Amendment No. 23, 4/28/95, and incorporated herein by
reference.

(j) Independent Auditors' Consent: Filed herewith.

(k) Not applicable.

(l) Not applicable.

(m) (i) Service Plan and Agreement under Rule 12b-1 of the
Investment Company Act of 1940 for Class A shares of Oppenheimer Bond Fund
dated 6/22/93: Filed with Registrant's Post-Effective Amendment No. 19,
3/1/94, and incorporated herein by reference.

(ii) Distribution and Service Plan and Agreement under
Rule 12b-1 of the Investment Company Act of 1940 for Class B shares of
Oppenheimer Bond Fund dated 2/24/98: Previously filed with Post-Effective
Amendment No. 34 to Registrant's Registration Statement, 2/24/99, and

incorporated herein by reference.

(iii) Distribution and Service Plan and Agreement under
Rule 12b-1 of the Investment Company Act of 1940 for Class C Shares of
Oppenheimer Bond Fund dated 2/24/98: Previously filed with Post-Effective
Amendment No. 34 to Registrant's Registration Statement, 2/24/99, and
incorporated herein by reference.

(n) (i) Financial Data Schedule for Class A Shares of
Oppenheimer Bond Fund: Filed herewith.

(ii) Financial Data Schedule for Class B Shares of
Oppenheimer Bond Fund: Filed herewith.

(iii) Financial Data Schedule for Class C Shares of
Oppenheimer Bond Fund: Filed herewith.

(iv) Financial Data Schedule for Class Y Shares of
Oppenheimer Bond Fund: Filed herewith.

(o). Oppenheimer Funds Multiple Class Plan under Rule
18f-3 updated through 8/25/98: Filed with Post-Effective Amendment No. 70 to
the Registration Statement of Oppenheimer Global Fund (2-31661), 9/14/98, and

incorporated herein by reference.

-- Powers of Attorney: For all Trustees except, Sam
Freedman, their respective Power of Attorney and Certified Board Resolution
were previously filed with Registrant's Post-Effective Amendment No. 19,
3/1/94, and incorporated herein by reference. For Sam Freedmen, previously
filed with Registrant=s Post-Effective Amendment No. 30, 4/29/97, and
incorporated herein by reference. For George Bowen, previously filed with
Registrant=s Post-Effective Amendment No. 32, 2/26/98, and incorporated
herein by reference. Power of Attorney for Brian W. Wixted, as Treasurer:

Filed herewith.

Item 24. Persons Controlled by or Under Common Control with Registrant

- ----------
- --------------------------------------------------------------------------------
None

Item 25. Indemnification

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

Article IV of Registrant's Declaration of Trust filed as Exhibit 23(a)
to this Registration Statement,
generally provides, among other things, for the indemnification of
Registrant's Trustees and officers in a manner consistent with Securities and
Exchange Commission Release No. IC-11330.

Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to trustees, 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 trustee, officer or controlling
person of Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, 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 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 registered investment companies as described in Parts A and
B hereof and listed in Item 26(b) below.

(a)(i) The directors and executive officers of Massachusetts Mutual
Life Insurance Company ("MassMutual") and David L. Babson Co., Inc. Capital
Management, Inc. ("David L. Babson"), their positions and their other
business affiliations and business experience for the past two years are
listed in Item 28(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.

<PAGE>

Charles E. Albers,

Senior Vice President An officer and/or portfolio manager of certain
Oppenheimer funds (since April 1998);
a Chartered Financial Analyst;
formerly, a Vice President and
portfolio manager for Guardian
Investor Services, the investment
management subsidiary of The Guardian
Life Insurance Company (since 1972).

Edward Amberger,

Assistant Vice President Formerly Assistant Vice President,
Securities Analyst for Morgan Stanley
Dean Witter (May 1997 - April 1998); and
Research Analyst (July 1996 - May 1997),
Portfolio Manager (February 1992 - July
1996) and Department Manager (June 1988
to February 1992) for The Bank of New
York.

Mark J.P. Anson,

Vice President Vice President of Oppenheimer Real Asset

Management, Inc. ("ORAMI"); formerly,

Vice President of Equity Derivatives at

Salomon Brothers, Inc.

Peter M. Antos,

Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; a Chartered
Financial Analyst; Senior Vice President
of HarbourView Asset Management
Corporation ("HarbourView"); prior to
March, 1996 he was the senior equity
portfolio manager for the Panorama Series
Fund, Inc. (the "Company") and other
mutual funds and pension funds managed by
G.R. Phelps & Co. Inc. ("G.R. Phelps"),
the Company's former investment adviser,
which was a subsidiary of Connecticut
Mutual Life Insurance Company; he was
also responsible for managing the common
stock department and common stock
investments of Connecticut Mutual Life
Insurance Co.

Lawrence Apolito,

Vice President None.

Victor Babin,

Senior Vice President None.

Bruce Bartlett,

Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds. Formerly, a
Vice President and Senior Portfolio
Manager at First of America Investment

Corp.

George Batejan,
Executive Vice President,

Chief Information Officer Formerly Senior Vice President, Group
Executive, and Senior Systems Officer for
American International Group (October

1994 - May, 1998).

John R. Blomfield,

Vice President Formerly Senior Product Manager
(November, 1995 - August, 1997) of
International Home Foods and American
Home Products (March, 1994 - October,

1996).

Connie Bechtolt,

Assistant Vice President None.

Kathleen Beichert,

Vice President None.

Rajeev Bhaman,

Vice President Formerly, Vice President (January 1992 -
February, 1996) of Asian Equities for
Barclays de Zoete Wedd, Inc.

Robert J. Bishop,

Vice President Vice President of Mutual Fund Accounting
(since May 1996); an officer of other
Oppenheimer funds; formerly, an
Assistant Vice President of OFI/Mutual
Fund Accounting (April 1994-May 1996),
and a Fund Controller for OFI.

Chad Boll,

Assistant Vice President None

George C. Bowen,
Senior Vice President, Treasurer

and Director Vice President (since June 1983) and
Treasurer (since March 1985) of
OppenheimerFunds Distributor, Inc. (the
"Distributor"); Vice President (since
October 1989) and Treasurer (since April
1986) of HarbourView; Senior Vice
President (since February 1992),
Treasurer (since July 1991)and a director
(since December 1991) of Centennial;
President, Treasurer and a director of
Centennial Capital Corporation (since
June 1989); Vice President and Treasurer
(since August 1978) and Secretary (since
April 1981) of Shareholder Services, Inc.
("SSI"); Vice President, Treasurer and
Secretary of Shareholder Financial
Services, Inc. ("SFSI") (since November
1989); Assistant Treasurer of Oppenheimer
Acquisition Corp. ("OAC") (since March,
1998); Treasurer of Oppenheimer
Partnership Holdings, Inc. (since
November 1989); Vice President and
Treasurer of ORAMI (since July 1996);
an officer of other Oppenheimer funds.

Scott Brooks,

Vice President None.

Kevin Brosmith,

Vice President None.

Nancy Bush,

Assistant Vice President None.

Adele Campbell,

Assistant Vice President & Assistant

Treasurer: Rochester Division Formerly, Assistant Vice President of
Rochester Fund Services, Inc.

Michael Carbuto,

Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; Vice President

of Centennial.

John Cardillo,

Assistant Vice President None.

Mark Curry,

Assistant Vice President None.

H.C. Digby Clements,
Vice President:

Rochester Division None.

O. Leonard Darling,

Executive Vice President Chief Executive Officer and Senior
Manager of HarbourView Asset Management
Corporation; Trustee (1993 - present) of
Awhtolia College - Greece.

William DeJianne, None.
Assistant Vice President

Robert A. Densen,

Senior Vice President None.

Sheri Devereux,

Assistant Vice President None.

Craig P. Dinsell

Executive Vice President Formerly, Senior Vice President of Human
Resources for Fidelity Investments-Retail
Division (January, 1995 - January, 1996),
Fidelity Investments FMR Co. (January,
1996 - June, 1997) and Fidelity
Investments FTPG (June, 1997 - January,
1998).

Robert Doll, Jr.,
Executive Vice President and
Chief Investment Officer and

Director An officer and/or portfolio manager of
certain Oppenheimer funds.

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 and a director
of HarbourView, SSI, SFSI and
Oppenheimer Partnership Holdings, Inc.
since (September 1995); President and a
director of Centennial (since September
1995); President and a director of ORAMI
(since July 1996); General Counsel
(since May 1996) and Secretary (since
April 1997) of OAC; Vice President and
Director of OppenheimerFunds
International, Ltd. ("OFIL") and
Oppenheimer Millennium Funds plc (since
October 1997); an officer of other
Oppenheimer funds.

Patrick Dougherty, None.
Assistant Vice President

Bruce Dunbar, None.
Vice President

Daniel Engstrom,

Assistant Vice President None.

George Evans,

Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.

Edward Everett,

Assistant Vice President None.

George Fahey,

Vice President None.

Scott Farrar,

Vice President Assistant Treasurer of Oppenheimer
Millennium Funds plc (since October
1997); an officer of other Oppenheimer
funds; formerly, an Assistant Vice
President of OFI/Mutual Fund Accounting
(April 1994-May 1996), and a Fund
Controller for OFI.

Leslie A. Falconio,

Assistant Vice President None.

Katherine P. Feld,

Vice President and Secretary Vice President and Secretary of the
Distributor; Secretary of HarbourView,
and Centennial; Secretary, Vice President
and Director of Centennial Capital
Corporation; Vice President and Secretary

of ORAMI.

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. Formerly, he held the following
positions: formerly, Chairman of the
Board and Director of Rochester Fund
Distributors, Inc. ("RFD"); President and
Director of Fielding Management Company,
Inc. ("FMC"); President and Director of
Rochester Capital Advisors, Inc.
("RCAI"); Managing Partner of Rochester
Capital Advisors, L.P., President and
Director of Rochester Fund Services, Inc.
("RFS"); President and Director of
Rochester Tax Managed Fund, Inc.;
Director (1993 - 1997) of VehiCare Corp.;
Director (1993 - 1996) of VoiceMode.

Patricia Foster,

Vice President Formerly, she held the following
positions: An officer of certain former
Rochester funds (May, 1993 - January,
1996); Secretary of Rochester Capital
Advisors, Inc. and General Counsel (June,
1993 - January 1996) of Rochester Capital
Advisors, L.P.

David Foxhoven,

Assistant Vice President Formerly Manager, Banking Operations
Department (July 1996-November 1998).

Jennifer Foxson,

Vice President None.

Erin Gardiner,

Assistant Vice President None.

Linda Gardner,

Vice President None.

Alan Gilston,

Vice President Formerly, Vice President (1987-1997) for
Schroder Capital Management International.

Jill Glazerman,

Vice President None.

Robyn Goldstein-Liebler
Assistant Vice President None.

Mikhail Goldverg

Assistant Vice President None.

Jeremy Griffiths,
Executive Vice President and

Chief Financial Officer Chief Financial Officer and Treasurer
(since March, 1998) of Oppenheimer
Acquisition Corp.; a Member and Fellow of
the Institute of Chartered Accountants;
formerly, an accountant for Arthur Young
(London, U.K.).

Robert Grill,

Senior Vice President Formerly, Marketing Vice President for
Bankers Trust Company (1993-1996);
Steering Committee Member, Subcommittee
Chairman for American Savings Education
Council (1995-1996).

Caryn Halbrecht,

Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.

Elaine T. Hamann,

Vice President Formerly, Vice President (September, 1989
- January, 1997) of Bankers Trust Company.

Robert Haley

Assistant Vice President Formerly, Vice President of Information
Services for Bankers Trust Company
(January, 1991 - November, 1997).

Thomas B. Hayes,

Vice President None.

Barbara Hennigar,
Executive Vice President and
Chief Executive Officer of
OppenheimerFunds Services,

a division of the Manager President and Director of SFSI; President
and Chief executive Officer of SSI.

Dorothy Hirshman, None.
Assistant Vice President

Merryl Hoffman,

Vice President None.

Nicholas Horsley,

Vice President Formerly, a Senior Vice President and
Portfolio Manager for Warburg, Pincus
Counsellors, Inc. (1993-1997), Co-manager
of Warburg, Pincus Emerging Markets Fund
(12/94 - 10/97), Co-manager Warburg,
Pincus Institutional Emerging Markets
Fund - Emerging Markets Portfolio (8/96 -
10/97), Warburg Pincus Japan OTC Fund,
Associate Portfolio Manager of Warburg
Pincus International Equity Fund, Warburg
Pincus Institutional Fund - Intermediate
Equity Portfolio, and Warburg Pincus EAFE
Fund.

Scott T. Huebl,

Vice President None.

Richard Hymes,

Vice President None.

Jane Ingalls,

Vice President None.

Kathleen T. Ives,

Vice President None.

Christopher Jacobs,

Assistant Vice President None.

William Jaume,

Vice President None.

Frank Jennings,

Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.

Susan Katz,

Vice President None.

Thomas W. Keffer,

Senior Vice President None.

Erica Klein,

Assistant Vice President None.

Avram Kornberg,

Vice President None.

John Kowalik,

Senior Vice President An officer and/or portfolio manager for
certain OppenheimerFunds; formerly,
Managing Director and Senior Portfolio
Manager at Prudential Global Advisors

(1989 - 1998).

Joseph Krist,

Assistant Vice President None.

Michael Levine,

Vice President None.

Shanquan Li,

Vice President None.

Stephen F. Libera,

Vice President An officer and/or portfolio manager for
certain Oppenheimer funds; a Chartered
Financial Analyst; a Vice President of
HarbourView; prior to March 1996, the
senior bond portfolio manager for
Panorama Series Fund Inc., other mutual
funds and pension accounts managed by
G.R. Phelps; also responsible for
managing the public fixed-income
securities department at Connecticut
Mutual Life Insurance Co.

Mitchell J. Lindauer,
Vice President None.

Dan Loughran,
Assistant Vice President:

Rochester Division None.

David Mabry,

Vice President None.

Steve Macchia,

Vice President None.

Bridget Macaskill,
President, Chief Executive Officer

and Director Chief Executive Officer (since September
1995); President and director (since June
1991) of HarbourView; Chairman and a
director of SSI (since August 1994), and
SFSI (September 1995); President (since
September 1995) and a director (since
October 1990) of OAC; President (since
September 1995) and a director (since
November 1989) of Oppenheimer
Partnership Holdings, Inc., a holding
company subsidiary of OFI; a director of
ORAMI (since July 1996) ; President and a
director (since October 1997) of OFIL, an
offshore fund manager subsidiary of OFI
and Oppenheimer Millennium Funds plc
(since October 1997); President and a
director of other Oppenheimer funds; a
director of Hillsdown Holdings plc (a
U.K. food company); formerly, an
Executive Vice President of OFI.

Philip T. Masterson,

Vice President Formerly an Associate at Davis, Graham, &
Stubbs (January 1998-July 1998);
Associate; Myer, Swanson, Adams & Wolf,
P.C. (May 1996-June 1998).

Loretta McCarthy,

Executive Vice President None.

Kelley A. McCarthy-Kane

Assistant Vice President Formerly, Product Manager, Assistant Vice
President (June 1995- October, 1997) of
Merrill Lynch Pierce Fenner & Smith.

Beth Michnowski,

Assistant Vice President Formerly Senior Marketing Manager May,
1996 - June, 1997) and Director of
Product Marketing (August, 1992 - May,
1996) with Fidelity Investments.

Lisa Migan,

Assistant Vice President None.

Denis R. Molleur,

Vice President None.

Nikolaos Monoyios,

Vice President A Vice President and/or portfolio manager
of certain Oppenheimer funds (since April
1998); a Certified Financial Analyst;
formerly, a Vice President and portfolio
manager for Guardian Investor Services,
the management subsidiary of The Guardian
Life Insurance Company (since 1979).

Linda Moore,

Vice President Formerly, Marketing Manager (July
1995-November 1996) for Chase Investment

Services Corp.

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.

Richard M. O'Shaugnessy,
Assistant Vice President:

Rochester Division None.

Gina M. Palmieri,

Assistant Vice President None.

Robert E. Patterson,

Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.

James Phillips

Assistant Vice President None.

Stephen Puckett,

Vice President None.

Jane Putnam,

Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.

Michael Quinn,

Assistant Vice President Formerly, Assistant Vice President
(April, 1995 - January, 1998) of Van
Kampen American Capital.

Julie Radtke,

Vice President Formerly Assistant Vice President and
Business Analyst for Pershing, Jersey
City (August 1997-November 1997); Senior
Business Consultant, American
International Group (January 1996-July

1997)

Russell Read,

Senior Vice President Vice President of Oppenheimer Real Asset
Management, Inc. (since March, 1995).

Thomas Reedy,

Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; formerly, a
Securities Analyst for the Manager.

John Reinhardt,

Vice President: Rochester Division None
Ruxandra Risko,
Vice President None.

Michael S. Rosen,

Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.

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 & Director None.

Valerie Sanders,

Vice President None.

Ellen Schoenfeld,

Assistant Vice President None.

Martha Shapiro,

Assistant Vice President None

Stephanie Seminara,

Vice President None.

Michelle Simone,

Assistant Vice President None.

Richard Soper,

Vice President None.

Cathleen Stahl,

Vice President Assistant Vice President & Manager of
Women & Investing Program

Nancy Sperte,

Executive Vice President Executive Vice President, Corporate
Developement.

Donald W. Spiro,

Chairman Emeritus and Director Vice Chairman and Trustee of the New
York-based Oppenheimer Funds; formerly,
Chairman of the Manager and the

Distributor.

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.

Ralph Stellmacher,

Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.

John Stoma,

Senior Vice President None.

Michael C. Strathearn,

Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; a Chartered
Financial Analyst; a Vice President of

HarbourView.

Wayne Strauss,

Assistant Vice President: Rochester

Division Formerly Senior Editor, West Publishing
Company (January 1997-March 1997).

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 OAMC, CAMC and Chairman
of the Board of SSI.

Susan Switzer,

Assistant Vice President None.

Anthony A. Tanner,

Vice President: Rochester Division None.

Jay Tracey,

Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.

James Turner,

Assistant Vice President None.

Maureen VanNorstrand,
Assistant Vice President None.

Ashwin Vasan,

Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.

Annette Von Brandis,

Assistant Vice President None.

Teresa Ward,

Assistant Vice President None.

Jerry Webman,

Senior Vice President Director of New York-based tax-exempt
fixed income Oppenheimer funds.

Christine Wells,

Vice President None.

Joseph Welsh,

Assistant Vice President None.

Kenneth B. White,

Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; a Chartered
Financial Analyst; Vice President of

HarbourView.

Brian W. Wixted, Formerly Principal and Chief Operating Officer,
Senior Vice President and Bankers Trust
Company - Mutual Fund Services
Treasurer Division (March 1995 - March 1999); Vice

President and Chief Financial
Officer of CS First Boston
Investment Management Corp.
(September 1991 - March 1995); and
Vice President and Accounting
Manager, Merrill Lynch Asset
Management (November 1987 -
September 1991).

William L. Wilby,

Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; Vice President
of HarbourView.

Carol Wolf,

Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; Vice President of
Centennial; Vice President, Finance
and Accounting; Point of Contact:
Finance Supporters of Children;
Member of the Oncology Advisory Board
of the Childrens Hospital.

Caleb Wong,

Assistant Vice President None.

Robert G. Zack,
Senior Vice President and
Assistant Secretary, Associate

General Counsel Assistant Secretary of SSI (since May
1985), SFSI (since November 1989), OFIL
(since 1998), Oppenheimer Millennium
Funds plc (since October 1997); an
officer of other Oppenheimer funds.

Jill Zachman,
Assistant Vice President:

Rochester Division None.

Arthur J. Zimmer,

Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; Vice President
of Centennial.

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 Developing Markets Fund
Oppenheimer Discovery 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 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 Equity Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer International Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Municipal Fund
Oppenheimer Real Asset Fund
Oppenheimer Strategic Income Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
Panorama Series Fund, Inc.

The address of OppenheimerFunds, Inc., the New York-based Oppenheimer Funds,
the Quest Funds, OppenheimerFunds Distributor, Inc., HarbourView Asset
Management Corp., Oppenheimer Partnership Holdings, Inc., and Oppenheimer
Acquisition Corp. is Two World Trade Center, New York, New York 10048-0203.

The address of 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.

The address of the Rochester-based funds is 350 Linden Oaks, Rochester, New
York 14625-2807.

Directors and Executive Officers of Massachusetts Mutual Life Insurance
Company

Roger G. Ackerman,

Director Corning Inc. - Chairman and Chief
Executive Officer (since 1996).
President and Chief Operating Officer

(1990 - 1996).

James R. Birle,

Director Resolute Partners, LLC - Chairman (since
1997), Founder (1994). President
(1994-197). Blackstone Group - General
Partner (1988 - 1994).

Gene Chao,

Director Computer Projections, Inc. - Chairman,
President and CEO (since 1991).

Patricia Diaz Dennis,

Director SBC Communications, Inc. - Senior Vice
President and Assistant General Counsel
(since 1995). Sullivan and Cromwell -
Special Counsel (1993-1995). U.S.
Department of State - Asst. Secretary of
State for Human Rights and Human Affairs

(1992-1993).

Anthony Downs,

Director The Brookings Institution - Senior Fellow
(since 1977).

James L. Dunlap,

Director Ocean Energy, Inc. - Vice Chairman (since
1998). United Meridian Corporation -
President and Chief Operating Officer
(1996-1998). Texaco, Inc. Senior Vice
President (1987-1996).

William B. Ellis,

Director Yale University School of Forestry and
Environmental Studies - Senior Fellow
(since 1995). Northeast Utilities -
Chairman of the Board (1993-1995) and
Chief Executive Officer (1983-1993).

Robert M. Furek,

Director Resolute Partners LLC - Partner (since
1997). State Board of Trustees for the
Hartford School System - Chairman (since
1997). Hueblein, Inc. - President and
Chief Executive Officer (since 1995),
President (1989-1996).

Charles K. Gifford,

Director BankBoston, NA - Chairman and Chief
Executive Officer (since 1996), President
(19890-1996). BankBoston Corporation -
Chairman (since 1998) and Chief Executive
Officer (since 1995), President
(1989-1996).

William A. Griggs,

Director Griggs & Santow, Inc. - Managing Director
(since 1983).

George B. Harvey,

Director Pitney Bowes - Chairman, President and
CEO (1983-1996).

Barbara B. Hauptfuhrer,

Director Director of various corporations (since
1972).

Sheldon B. Lubar,

Director Lubar & Co. Incorporated - Chairman
(since 1977).

William B. Marx, Jr.,

Director Lucent Technologies - Senior Executive
Vice President (1996-1996). AT&T
Multimedia Products Group - Executive
Vice President and CEO (1994-1996). AT&T
Network Systems Group - Executive Vice
President and CEO (1993-1994), Group
Executive and President (1989-1993).

John F. Maypole,

Director Peach State Real Estate Holding Company -
Managing Partner (since 1984).

John J. Pajak,
Director, President and Chief

Operating Officer MassMutual - President and Chief
Operating Officer (since 1996), Vice
Chairman and Chief Administrative Officer
(1996-1996), ExecutiveVice President

(1987-1996).

Thomas B. Wheeler,
Director, Chairman and Chief

Executive Officer MassMutual - Chairman and Chief Executive
Officer (since 1996), President and Chief
Executive Officer (1988-1996).

Alfred M. Zeien,

Director The Gillette Company - Chairman and Chief
Executive Officer (since 1991).

Lawrence V. Burkett, Jr.,

Executive Vice President MassMutual - Executive Vice President and
General Counsel (since 1993), Senior Vice
President and Deputy General Counsel

(1992-1993).

Peter J. Daboul,

Executive Vice President MassMutual - Executive Vice President and
Chief Information Officer (since 1997),
Senior Vice President (1990-1997).

John B. Davies,

Executive Vice President MassMutual - Executive Vice President
(since 1994), Associate Executive Vice
President (1994-1994), General Agent

(1982-1993).

Daniel J. Fitzgerald,

Executive Vice President MassMutual - Executive Vice President
(since 1994), Corporate Financial
Operations (1994-1997), Senior Vice
President (1991-1994).

James E. Miller,

Executive Vice President MassMutual - Executive Vice President
(since 1997 and 1987-1996). UniCare Life
& Health - Senior Vice President

(1996-1997).

John V. Murphy,

Executive Vice President MassMutual - Executive Vice President
(since 1997). David L. Babson & Co.,
Inc. - Executive Vice President and Chief
Operating Officer (1995-1997). Concert
Capital Management, Inc. - Chief
Operating Officer (1993-1995). Liberty
Financial Companies - Senior Vice
President and Chief Financial Officer
(1977-1993).

Gary E. Wendlandt,

Executive Vice President MassMutual - Executive Vice President and
Chief Investment Officer (since 1993),
Executive Vice President (1992-1993).

Joseph M. Zubretsky,

Executive Vice President MassMutual - Executive Vice President and
Chief Financial Officer (since 1997).
HealthSource - Chief Financial Officer
(1996). Coopers & Lybrand - Partner
(1990-1996).

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 Racquel Drive

Marietta, GA 30364

Peter Beebe Vice President None
876 Foxdale Avenue

Winnetka, IL 60093

Douglas S. Blankenship Vice President None
17011 Woodbank

Spring, TX 77379

Peter W. Brennan Vice President None
1940 Cotswold Drive

Orlando, FL 32825

Susan Burton(2) Vice President None

Erin Cawley(2) Assistant Vice President None

Robert Coli Vice President None
12 White Tail Lane

Bedminster, NJ 07921

William Coughlin Vice President None
542 West Surf - #2N

Chicago, IL 60657

Mary Crooks(1)

Daniel Deckman Vice President None
12252 Rockledge Circle

Boca Raton, FL 33428

Christopher DeSimone Vice President None
5105 Aldrich Avenue South

Minneapolis, MN 55403

Joseph DiMauro Vice President None
244 McKinley Avenue

Grosse Pointe Farms, MI 48236

Rhonda Dixon-Gunner(1) Assistant Vice President None

Andrew John Donohue(2) Executive Vice Secretary of the
President & Director Oppenheimer funds.
And General Counsel

John Donovan Vice President None
868 Washington Road

Woodbury, CT 06798

Kenneth Dorris Vice President None
4104 Harlanwood Drive

Fort Worth, TX 76109

Eric Edstrom(2) Vice President None

Wendy H. Ehrlich Vice President None
4 Craig Street

Jericho, NY 11753

Kent Elwell Vice President None
35 Crown Terrace

Yardley, PA 19067

Todd Ermenio Vice President None
11011 South Darlington

Tulsa, OK 74137

John Ewalt Vice President None
2301 Overview Dr. NE

Tacoma, WA 98422

George Fahey Vice President None
412 Commons Way

Doylestown, PA 18901

Eric Fallon Vice President None
10 Worth Circle

Newton, MA 02158

Katherine P. Feld(2) Vice President None
& Secretary

Mark Ferro Vice President None
43 Market Street

Breezy Point, NY 11697

Ronald H. Fielding(3) Vice President None

John ("J") Fortuna(2) Vice President None

Ronald R. Foster Senior Vice President None
11339 Avant Lane

Cincinnati, OH 45249

Patricia Gadecki-Wells Vice President None
950 First St., S.

Suite 204
Winter Haven, FL 33880

Luiggino Galleto Vice President None
10239 Rougemont Lane

Charlotte, NC 28277

Michelle Gans Vice President None
8327 Kimball Drive

Eden Prairie, MN 55347

L. Daniel Garrity Vice President None
2120 Brookhaven View, N.E.

Atlanta, GA 30319

Mark Giles Vice President None
5506 Bryn Mawr

Dallas, TX 75209

Ralph Grant(2) Vice President/National None
Sales Manager

Michael Guman Vice President None
3913 Pleasent Avenue

Allentown, PA 18103

Allen Hamilton Vice President None
5 Giovanni

Aliso Viejo, CA 92656

C. Webb Heidinger Vice President None
138 Gales Street

Portsmouth, NH 03801

Byron Ingram(1) Assistant Vice President None

Kathleen T. Ives(1) Vice President None

Eric K. Johnson Vice President None
3665 Clay Street

San Francisco, CA 94118

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

Michael Keogh(2) Vice President None

Brian Kelly Vice President None
60 Larkspur Road

Fairfield, CT 06430

John Kennedy Vice President None
799 Paine Drive

Westchester, PA 19382

Richard Klein Vice President None
4820 Fremont Avenue So.

Minneapolis, MN 55409

Daniel Krause Vice President None
560 Beacon Hill Drive

Orange Village, OH 44022

Ilene Kutno(2) Vice President/ None
Director of Sales

Oren Lane Vice President None
5286 Timber Bend Drive

Brighton, MI 48116

Todd Lawson Vice President None
3333 E. Bayaud Avenue

Unit 714
Denver, CO 80209

Dawn Lind Vice President None
7 Maize Court

Melville, NY 11747

James Loehle Vice President None
2714 Orchard Terrace

Linden, NJ 07036

Steve Manns Vice President None
1941 W. Wolfram Street

Chicago, IL 60657

Todd Marion Vice President None
39 Coleman Avenue

Chatham, N.J. 07928

Marie Masters Vice President None
8384 Glen Eagle Drive

Manlius, NY 13104

LuAnn Mascia(2) Assistant Vice President None

Wesley Mayer(2) Vice President None

Theresa-Marie Maynier Vice President None
2421 Charlotte Drive

Charlotte, NC 28203

Anthony Mazzariello Vice President None
100 Anderson Street, #427

Pittsburgh, PA 15212

John McDonough Vice President None
3812 Leland Street

Chevey Chase, MD 20815

Wayne Meyer Vice President None
2617 Sun Meadow Drive

Chesterfield, MO 63005

Tanya Mrva(2) Assistant Vice President None

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-Marke Nakamura Vice President None
2870 White Ridge Place, #24

Thousand Oaks, CA 91362

Chad V. Noel Vice President None
2408 Eagleridge Dr.

Henderson, NV 89014

Joseph Norton Vice President None
2518 Fillmore Street

San Francisco, CA 94115

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

Charles K. Pettit Vice President None
22 Fall Meadow Dr.

Pittsford, NY 14534

Bill Presutti Vice President None
130 E. 63rd Street, #10E

New York, NY 10021

Steve Puckett Vice President None
5297 Soledad Mountain Road

San Diego, CA 92109

Elaine Puleo(2) Senior Vice President None

Minnie Ra Vice President None
100 Delores Street, #203

Carmel, CA 93923

Dustin Raring Vice President None
378 Elm Street

Denver, CO 80220

Michael Raso Vice President None
16 N. Chatsworth Ave.

Apt. 301
Larchmont, NY 10538

John C. Reinhardt(3) Vice President None

Douglas Rentschler Vice President None
677 Middlesex Road

Grosse Pointe Park, MI 48230

Ruxandra Risko(2) Vice President None

Ian Robertson Vice President None
4204 Summit Wa

Marietta, GA 30066

Michael S. Rosen(2) Vice President None

Kenneth Rosenson Vice President None
3505 Malibu Country Drive

Malibu, CA 90265

James Ruff(2) President None

Alfredo Scalzo Vice President None
19401 Via Del Mar, #303

Tampa, FL 33647

Timothy Schoeffler Vice President None
1717 Fox Hall Road

Washington, DC 77479

Michael Sciortino Vice President None
785 Beau Chene Drive

Mandeville, LA 70471

Eric Sharp Vice President None
862 McNeill Circle

Woodland, CA 95695

Michelle Simone(2) Assistant Vice President None

Stuart Speckman(2) Vice President None

Timothy Stegner Vice President None
794 Jackson Street

Denver, CO 80206

Peter Sullivan Vice President None
21445 S. E 35th Street

Issaquah, WA 98029

David Sturgis Vice President None
44 Abington Road

Danvers, MA 01923

Scott Such(1) Senior Vice President None

Brian Summe Vice President None
239 N. Colony Drive

Edgewood, KY 41017

George Sweeney Vice President None
5 Smokehouse Lane

Hummelstown, PA 17036

Andrew Sweeny Vice President None
5967 Bayberry Drive

Cincinnati, OH 45242

Scott McGregor Tatum Vice President None
704 Inwood

Southlake, TX 76092

David G. Thomas Vice President None
7009 Metropolitan Place, #300

Falls Church, VA 22043

Susan Torrisi(2) Assistant Vice President None

Sarah Turpin Vice President None
2201 Wolf Street, #5202

Dallas, TX 75201

Mark Vandehey(1) Vice President None

Andrea Walsh(1) Vice President None

Suzanne Walters(1) Assistant Vice President None

James Wiaduck Vice President None
29900 Meridian Place

#22303

Farmington Hills, MI 48331

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

Brian W. Wixted (1) Senior Vice President Vice President and
and Treasurer Treasurer of the

Oppenheimer funds.

(1) 6803 South Tucson Way, Englewood, CO 80112
(2) Two World Trade Center, New York, NY 10048
(3) 350 Linden Oaks, Rochester, NY 14623

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>

C-64

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and/or the
Investment Company Act of 1940, the Registrant certifies that it meets all
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the County of Arapahoe and State of Colorado on
the 27th day of April, 1999.

OPPENHEIMER INTEGRITY FUNDS

By: /s/ James C. Swain*

---------------------------
James C. Swain, Chairman

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/ James C. Swain* Chairman of the April 27, 1999
- ---------------------- Board of Trustees
James C. Swain

/s/ George C. Bowen*

- -------------------------- Trustee April 27, 1999
George C. Bowen

/s/ Brian W. Wixted* Treasurer April 27, 1999
- ---------------------------
Brian W. Wixted

/s/ Bridget A. Macaskill* President and April 27, 1999
- ----------------------------- Principal
Bridget A. Macaskill Executive Officer

/s/ Robert G. Avis* Trustee April 27, 1999
- ----------------------
Robert G. Avis

/s/ William A. Baker* Trustee April 27, 1999
- ----------------------
William A. Baker

/s/ Charles Conrad Jr.* Trustee April 27, 1999
- ----------------------
Charles Conrad, Jr.

/s/ Sam Freedman * Trustee April 27, 1999
- ------------------
Sam Freedman

/s/ Raymond J. Kalinowski* Trustee April 27, 1999
- -------------------------
Raymond J. Kalinowski

/s/ Howard Kast* Trustee April 27, 1999

- ------------------------
C. Howard Kast

/s/ Robert M. Kirchner* Trustee April 27, 1999
- ------------------------
Robert M. Kirchner

/s/ Ned M. Steel* Trustee April 27, 1999
- ------------------------
Ned M. Steel

*By: /s/ Robert G. Zack

- --------------------------------
Robert G. Zack, Attorney-in-Fact

<PAGE>

OPPENHEIMER INTEGRITY FUNDS

Registration NO. 2-76547

POST-EFFECTIVE AMENDMENT NO. 34

EXHIBIT INDEX

Form N-1A

Item No. Description

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

23(c)(i) Specimen Class A Share Certificate
23(c)(ii) Specimen Class B Share Certificate
23(c)(iii) Specimen Class C Share Certificate
23(c)(iv) Specimen Class Y Share Certificate

23(j) Independent Auditor's Consent

23(n)(i) Financial Data Schedule for Class A shares
23(n)(ii) Financial Data Schedule for Class B shares
23(n)(iii) Financial Data Schedule for Class C shares
23(n)(iv) Financial Data Schedule for Class Y shares

- --- Power of Attorney for Brian W. Wixted as
Treasurer

OPPENHEIMER INTEGRITY FUNDS

Class A Share Certificate (8-1/2" x 11")

I. FACE OF CERTIFICATE (All text and other matter lies within
8-1/4" x 10-3/4" decorative border, 5/16" wide)

(upper left corner, box with heading: NUMBER [of shares]

(upper right corner) [share certificate no.]

XX-000000

(upper right box, CLASS A SHARES below cert.
no.)

(centered below boxes)

OPPENHEIMER INTEGRITY FUNDS

Series: Oppenheimer BOND Fund

A MASSACHUSETTS BUSINESS TRUST

(at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR

CERTAIN DEFINITIONS
(box with number) CUSIP 683946 10 7

(at left) is the owner of

(centered) FULLY PAID CLASS A SHARES OF BENEFICIAL INTEREST
OF OPPENHEIMER BOND FUND, a series of OPPENHEIMER INTEGRITY FUNDS
(hereinafter called the "Fund"), transferable only on the books of the
Fund by the holder hereof in person or by duly authorized attorney,
upon surrender of this certificate properly endorsed. This certificate
and the shares represented hereby are issued and shall be held subject
to all of the provisions of the Declaration of Trust of the Fund to all
of which the holder by acceptance hereof assents. This certificate is
not valid until countersigned by the Transfer Agent.

WITNESS the facsimile seal of the Fund and the signatures of its duly
authorized officers.

(signature Dated: (signature
at left of seal) at right of seal)
/s/ Brian W. Wixted /s/ Bridget A. Macaskill

TREASURER PRESIDENT

(centered at bottom)
1-1/2" diameter facsimile seal with legend

OPPENHEIMER INTEGRITY FUNDS

SEAL
1982

COMMONWEALTH OF MASSACHUSETTS

(at lower right, printed vertically) Countersigned

OPPENHEIMERFUNDS SERVICES

[A DIVISION OF OPPENHEIMERFUNDS, INC.]

Denver (CO.) Transfer Agent

By ____________________________
Authorized Signature

II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension)

The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in
full according to applicable laws or regulations.

TEN COM - as tenants in common
TEN ENT - as tenants by the entirety
JT TEN WROS NOT TC - as joint tenants with

rights of survivorship and not as tenants in common

UNIF GIFT/TRANSFER MIN ACT - __________________ Custodian _______________
(Cust) (Minor)

UNDER UGMA/UTMA ___________________

(State)

Additional abbreviations may also be used though not on above list.

For Value Received ................ hereby sell(s), assign(s) and transfer(s)

unto

PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
AND PROVIDE CERTIFICATION BY TRANSFEREE
(box for identifying number)

(Please print or type name and address of assignee)

________________________________________________Class A Shares of beneficial
interest represented by the within certificate, and do hereby irrevocably
constitute and appoint ___________________________ Attorney to transfer the
said shares on the books of the within named Fund with full power of
substitution in the premises.

Dated: ______________________

Signed: __________________________

-----------------------------------
(Both must sign if joint owners)

<PAGE>

Signature(s) __________________________
guaranteed Name of Guarantor

by:
Signature of
Officer/Title

(text printed NOTICE: The signature(s) to this assignment
must correspond
vertically to right correspond with the name(s) as written upon the
face of the
of above paragraph certificate in every particular without
alteration or enlargement

or any change whatever.

(text printed in Signatures must be guaranteed by a financial

box to left of institution of the type described in the

current

signature(s)) prospectus of the Fund.

PLEASE NOTE: This document contains a watermark OppenheimerFunds when viewed
at an angle. It is invalid without this "four hands" watermark: logotype

THIS SPACE MUST NOT BE COVERED IN ANY WAY

OPPENHEIMER INTEGRITY FUNDS

Class B Share Certificate (8-1/2" x 11")

I. FACE OF CERTIFICATE (All text and other matter lies within
8-1/4" x 10-3/4" decorative border, 5/16" wide)

(upper left corner, box with heading: NUMBER [of shares]

(upper right corner) [share certificate no.]

XX-000000

(upper right box, CLASS B SHARES below cert.
no.)

(centered below boxes)

OPPENHEIMER INTEGRITY FUNDS

Series: Oppenheimer BOND Fund

A MASSACHUSETTS BUSINESS TRUST

(at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR

CERTAIN DEFINITIONS
(box with number) CUSIP 683946 10 7

(at left) is the owner of

(centered) FULLY PAID CLASS B SHARES OF BENEFICIAL INTEREST
OF OPPENHEIMER BOND FUND, a series of OPPENHEIMER INTEGRITY FUNDS
(hereinafter called the "Fund"), transferable only on the books of the
Fund by the holder hereof in person or by duly authorized attorney,
upon surrender of this certificate properly endorsed. This certificate
and the shares represented hereby are issued and shall be held subject
to all of the provisions of the Declaration of Trust of the Fund to all
of which the holder by acceptance hereof assents. This certificate is
not valid until countersigned by the Transfer Agent.

WITNESS the facsimile seal of the Fund and the signatures of its duly
authorized officers.

(signature Dated: (signature
at left of seal) at right of seal)
/s/ Brian W. Wixted /s/ Bridget A. Macaskill

TREASURER PRESIDENT

(centered at bottom)
1-1/2" diameter facsimile seal with legend

OPPENHEIMER INTEGRITY FUNDS

SEAL
1982

COMMONWEALTH OF MASSACHUSETTS

(at lower right, printed vertically) Countersigned

OPPENHEIMERFUNDS SERVICES

[A DIVISION OF OPPENHEIMERFUNDS, INC.]

Denver (CO.) Transfer Agent

By ____________________________
Authorized Signature

II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension)

The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in
full according to applicable laws or regulations.

TEN COM - as tenants in common
TEN ENT - as tenants by the entirety
JT TEN WROS NOT TC - as joint tenants with

rights of survivorship and not as tenants in common

UNIF GIFT/TRANSFER MIN ACT - __________________ Custodian _______________
(Cust) (Minor)

UNDER UGMA/UTMA ___________________

(State)

Additional abbreviations may also be used though not on above list.

For Value Received ................ hereby sell(s), assign(s) and transfer(s)

unto

PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
AND PROVIDE CERTIFICATION BY TRANSFEREE
(box for identifying number)

(Please print or type name and address of assignee)

________________________________________________Class B Shares of beneficial
interest represented by the within certificate, and do hereby irrevocably
constitute and appoint ___________________________ Attorney to transfer the
said shares on the books of the within named Fund with full power of
substitution in the premises.

Dated: ______________________

Signed: __________________________

-----------------------------------
(Both must sign if joint owners)

<PAGE>

Signature(s) __________________________
guaranteed Name of Guarantor

by:
Signature of
Officer/Title

or any change whatever.

(text printed in Signatures must be guaranteed by a financial

box to left of institution of the type described in the

current

signature(s)) prospectus of the Fund.

PLEASE NOTE: This document contains a watermark OppenheimerFunds when viewed
at an angle. It is invalid without this "four hands" watermark: logotype

THIS SPACE MUST NOT BE COVERED IN ANY WAY

OPPENHEIMER INTEGRITY FUNDS

Class C Share Certificate (8-1/2" x 11")

I. FACE OF CERTIFICATE (All text and other matter lies within
8-1/4" x 10-3/4" decorative border, 5/16" wide)

(upper left corner, box with heading: NUMBER [of shares]

(upper right corner) [share certificate no.]

XX-000000

(upper right box, CLASS C SHARES below cert.
no.)

(centered below boxes)

OPPENHEIMER INTEGRITY FUNDS

Series: Oppenheimer BOND Fund

A MASSACHUSETTS BUSINESS TRUST

(at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR

CERTAIN DEFINITIONS
(box with number) CUSIP 683946 10 7

(at left) is the owner of

(centered) FULLY PAID CLASS C SHARES OF BENEFICIAL INTEREST
OF OPPENHEIMER BOND FUND, a series of OPPENHEIMER INTEGRITY FUNDS
(hereinafter called the "Fund"), transferable only on the books of the
Fund by the holder hereof in person or by duly authorized attorney,
upon surrender of this certificate properly endorsed. This certificate
and the shares represented hereby are issued and shall be held subject
to all of the provisions of the Declaration of Trust of the Fund to all
of which the holder by acceptance hereof assents. This certificate is
not valid until countersigned by the Transfer Agent.

WITNESS the facsimile seal of the Fund and the signatures of its duly
authorized officers.

(signature Dated: (signature
at left of seal) at right of seal)
/s/ Brian W. Wixted /s/ Bridget A. Macaskill

TREASURER PRESIDENT

(centered at bottom)
1-1/2" diameter facsimile seal with legend

OPPENHEIMER INTEGRITY FUNDS

SEAL
1982

COMMONWEALTH OF MASSACHUSETTS

(at lower right, printed vertically) Countersigned

OPPENHEIMERFUNDS SERVICES

[A DIVISION OF OPPENHEIMERFUNDS, INC.]

Denver (CO.) Transfer Agent

By ____________________________
Authorized Signature

II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension)

The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in
full according to applicable laws or regulations.

TEN COM - as tenants in common
TEN ENT - as tenants by the entirety
JT TEN WROS NOT TC - as joint tenants with

rights of survivorship and not as tenants in common

UNIF GIFT/TRANSFER MIN ACT - __________________ Custodian _______________
(Cust) (Minor)

UNDER UGMA/UTMA ___________________

(State)

Additional abbreviations may also be used though not on above list.

For Value Received ................ hereby sell(s), assign(s) and transfer(s)

unto

PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
AND PROVIDE CERTIFICATION BY TRANSFEREE
(box for identifying number)

(Please print or type name and address of assignee)

________________________________________________Class C Shares of beneficial
interest represented by the within certificate, and do hereby irrevocably
constitute and appoint ___________________________ Attorney to transfer the
said shares on the books of the within named Fund with full power of
substitution in the premises.

Dated: ______________________

Signed: __________________________

-----------------------------------
(Both must sign if joint owners)

<PAGE>

Signature(s) __________________________
guaranteed Name of Guarantor

by:
Signature of
Officer/Title

or any change whatever.

(text printed in Signatures must be guaranteed by a financial

box to left of institution of the type described in the

current

signature(s)) prospectus of the Fund.

PLEASE NOTE: This document contains a watermark OppenheimerFunds when viewed
at an angle. It is invalid without this "four hands" watermark: logotype

THIS SPACE MUST NOT BE COVERED IN ANY WAY

OPPENHEIMER INTEGRITY FUNDS

Class Y Share Certificate (8-1/2" x 11")

I. FACE OF CERTIFICATE (All text and other matter lies within
8-1/4" x 10-3/4" decorative border, 5/16" wide)

(upper left corner, box with heading: NUMBER [of shares]

(upper right corner) [share certificate no.]

XX-000000

(upper right box, CLASS Y SHARES below cert.
no.)

(centered below boxes)

OPPENHEIMER INTEGRITY FUNDS

Series: Oppenheimer BOND Fund

A MASSACHUSETTS BUSINESS TRUST

(at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR

CERTAIN DEFINITIONS
(box with number) CUSIP 683969604

(at left) is the owner of

(centered) FULLY PAID CLASS Y SHARES OF BENEFICIAL INTEREST
OF OPPENHEIMER BOND FUND, a series of OPPENHEIMER INTEGRITY FUNDS
(hereinafter called the "Fund"), transferable only on the books of the
Fund by the holder hereof in person or by duly authorized attorney,
upon surrender of this certificate properly endorsed. This certificate
and the shares represented hereby are issued and shall be held subject
to all of the provisions of the Declaration of Trust of the Fund to all
of which the holder by acceptance hereof assents. This certificate is
not valid until countersigned by the Transfer Agent.

WITNESS the facsimile seal of the Fund and the signatures of its duly
authorized officers.

(signature Dated: (signature
at left of seal) at right of seal)
/s/ Brian W. Wixted /s/ Bridget A. Macaskill

TREASURER PRESIDENT

(centered at bottom)
1-1/2" diameter facsimile seal with legend

OPPENHEIMER INTEGRITY FUNDS

SEAL
1982

COMMONWEALTH OF MASSACHUSETTS

(at lower right, printed vertically) Countersigned

OPPENHEIMERFUNDS SERVICES

[A DIVISION OF OPPENHEIMERFUNDS, INC.]

Denver (CO.) Transfer Agent

By ____________________________
Authorized Signature

II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension)

The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in
full according to applicable laws or regulations.

TEN COM - as tenants in common
TEN ENT - as tenants by the entirety
JT TEN WROS NOT TC - as joint tenants with

rights of survivorship and not as tenants in common

UNIF GIFT/TRANSFER MIN ACT - __________________ Custodian _______________
(Cust) (Minor)

UNDER UGMA/UTMA ___________________

(State)

Additional abbreviations may also be used though not on above list.

For Value Received ................ hereby sell(s), assign(s) and transfer(s)

unto

PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
AND PROVIDE CERTIFICATION BY TRANSFEREE
(box for identifying number)

(Please print or type name and address of assignee)

________________________________________________Class Y Shares of beneficial
interest represented by the within certificate, and do hereby irrevocably
constitute and appoint ___________________________ Attorney to transfer the
said shares on the books of the within named Fund with full power of
substitution in the premises.

Dated: ______________________

Signed: __________________________

-----------------------------------
(Both must sign if joint owners)

<PAGE>

Signature(s) __________________________
guaranteed Name of Guarantor

by:
Signature of
Officer/Title

or any change whatever.

(text printed in Signatures must be guaranteed by a financial

box to left of institution of the type described in the

current

signature(s)) prospectus of the Fund.

PLEASE NOTE: This document contains a watermark OppenheimerFunds when viewed
at an angle. It is invalid without this "four hands" watermark: logotype

THIS SPACE MUST NOT BE COVERED IN ANY WAY

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Post-Effective Amendment No. 35 to Registration
Statement No. 2-76547 on Form N-1A of Oppenheimer Integrity Fund of our
report dated January 25, 1999, appearing in the Statement of Additional
Information, which is a part of such Registration Statement, and to the
references to us under the headings "Financial Highlights" appearing in the
Prospectus, which is also a part of such Registration Statement and
"Independent Auditors" appearing in the Statement of Additional Information.

/s/ DELOITTE & TOUCHE LLP

DELOITTE & TOUCHE LLP

Denver, Colorado
April 27, 1999

WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<CIK> 701265
<NAME> Oppenheimer Bond Fund - A
<SERIES>
<NUMBER> 5
<NAME> Convertible Integrity Funds

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 374,024,883
<INVESTMENTS-AT-VALUE> 379,340,635
<RECEIVABLES> 4,774,599
<ASSETS-OTHER> 6,524
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 384,121,758
<PAYABLE-FOR-SECURITIES> 24,995,035
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,601,024
<TOTAL-LIABILITIES> 27,596,059
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 353,474,626
<SHARES-COMMON-STOCK> 22,711,225
<SHARES-COMMON-PRIOR> 17,383,073
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 4,077
<ACCUMULATED-NET-GAINS> (2,327,236)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,382,386
<NET-ASSETS> 246,668,278
<DIVIDEND-INCOME> 313,421
<INTEREST-INCOME> 22,500,912
<OTHER-INCOME> 0
<EXPENSES-NET> 4,222,444
<NET-INVESTMENT-INCOME> 18,591,889
<REALIZED-GAINS-CURRENT> 314,291
<APPREC-INCREASE-CURRENT> (3,076,332)
<NET-CHANGE-FROM-OPS> 15,829,848
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 14,076,402
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9,120,018
<NUMBER-OF-SHARES-REDEEMED> 4,721,024
<SHARES-REINVESTED> 929,158
<NET-CHANGE-IN-ASSETS> 108,377,057
<ACCUMULATED-NII-PRIOR> 6,579
<ACCUMULATED-GAINS-PRIOR> (2,819,276)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,199,637
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,222,444
<AVERAGE-NET-ASSETS> 217,943,700
<PER-SHARE-NAV-BEGIN> 10.97
<PER-SHARE-NII> 0.71
<PER-SHARE-GAIN-APPREC> (0.11)
<PER-SHARE-DIVIDEND> 0.71
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.86
<EXPENSE-RATIO> 1.22
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<CIK> 701265
<NAME> Oppenheimer Bond Fund - B
<SERIES>
<NUMBER> 5
<NAME> Convertible Integrity Funds

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 374,024,883
<INVESTMENTS-AT-VALUE> 379,340,635
<RECEIVABLES> 4,774,599
<ASSETS-OTHER> 6,524
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 384,121,758
<PAYABLE-FOR-SECURITIES> 24,995,035
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,601,024
<TOTAL-LIABILITIES> 27,596,059
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 353,474,626
<SHARES-COMMON-STOCK> 8,111,764
<SHARES-COMMON-PRIOR> 4,399,924
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 4,077
<ACCUMULATED-NET-GAINS> (2,327,236)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,382,386
<NET-ASSETS> 88,060,713
<DIVIDEND-INCOME> 313,421
<INTEREST-INCOME> 22,500,912
<OTHER-INCOME> 0
<EXPENSES-NET> 4,222,444
<NET-INVESTMENT-INCOME> 18,591,889
<REALIZED-GAINS-CURRENT> 314,291
<APPREC-INCREASE-CURRENT> (3,076,332)
<NET-CHANGE-FROM-OPS> 15,829,848
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,655,574
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,259,343
<NUMBER-OF-SHARES-REDEEMED> 1,783,066
<SHARES-REINVESTED> 235,563
<NET-CHANGE-IN-ASSETS> 108,377,057
<ACCUMULATED-NII-PRIOR> 6,579
<ACCUMULATED-GAINS-PRIOR> (2,819,276)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,199,637
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,222,444
<AVERAGE-NET-ASSETS> 64,329,887
<PER-SHARE-NAV-BEGIN> 10.97
<PER-SHARE-NII> 0.62
<PER-SHARE-GAIN-APPREC> (0.10)
<PER-SHARE-DIVIDEND> 0.63
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.86
<EXPENSE-RATIO> 1.97
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<CIK> 701265
<NAME> Oppenheimer Bond Fund - C
<SERIES>
<NUMBER> 5
<NAME> Convertible Integrity Funds

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 374,024,883
<INVESTMENTS-AT-VALUE> 379,340,635
<RECEIVABLES> 4,774,599
<ASSETS-OTHER> 6,524
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 384,121,758
<PAYABLE-FOR-SECURITIES> 24,995,035
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,601,024
<TOTAL-LIABILITIES> 27,596,059
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 353,474,626
<SHARES-COMMON-STOCK> 2,005,876
<SHARES-COMMON-PRIOR> 837,017
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 4,077
<ACCUMULATED-NET-GAINS> (2,327,236)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,382,386
<NET-ASSETS> 21,795,709
<DIVIDEND-INCOME> 313,421
<INTEREST-INCOME> 22,500,912
<OTHER-INCOME> 0
<EXPENSES-NET> 4,222,444
<NET-INVESTMENT-INCOME> 18,591,889
<REALIZED-GAINS-CURRENT> 314,291
<APPREC-INCREASE-CURRENT> (3,076,332)
<NET-CHANGE-FROM-OPS> 15,829,848
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 859,704
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,604,458
<NUMBER-OF-SHARES-REDEEMED> 494,157
<SHARES-REINVESTED> 58,558
<NET-CHANGE-IN-ASSETS> 108,377,057
<ACCUMULATED-NII-PRIOR> 6,579
<ACCUMULATED-GAINS-PRIOR> (2,819,276)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,199,637
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,222,444
<AVERAGE-NET-ASSETS> 15,197,869
<PER-SHARE-NAV-BEGIN> 10.98
<PER-SHARE-NII> 0.62
<PER-SHARE-GAIN-APPREC> (0.10)
<PER-SHARE-DIVIDEND> 0.63
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.87
<EXPENSE-RATIO> 1.96
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00

</TABLE>

<ARTICLE> 6
<CIK> 701265
<NAME> Oppenheimer Bond Fund - Y
<SERIES>
<NUMBER> 5
<NAME> Convertible Integrity Funds

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 374,024,883
<INVESTMENTS-AT-VALUE> 379,340,635
<RECEIVABLES> 4,774,599
<ASSETS-OTHER> 6,524
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 384,121,758
<PAYABLE-FOR-SECURITIES> 24,995,035
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,601,024
<TOTAL-LIABILITIES> 27,596,059
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 353,474,626
<SHARES-COMMON-STOCK> 92
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 4,077
<ACCUMULATED-NET-GAINS> (2,327,236)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,382,386
<NET-ASSETS> 99
<DIVIDEND-INCOME> 313,421
<INTEREST-INCOME> 22,500,912
<OTHER-INCOME> 0
<EXPENSES-NET> 4,222,444
<NET-INVESTMENT-INCOME> 18,591,889
<REALIZED-GAINS-CURRENT> 314,291
<APPREC-INCREASE-CURRENT> (3,076,332)
<NET-CHANGE-FROM-OPS> 15,829,848
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 47
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 92
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 108,377,057
<ACCUMULATED-NII-PRIOR> 6,579
<ACCUMULATED-GAINS-PRIOR> (2,819,276)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,199,637
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,222,444
<AVERAGE-NET-ASSETS> 1,005
<PER-SHARE-NAV-BEGIN> 10.88
<PER-SHARE-NII> 0.49
<PER-SHARE-GAIN-APPREC> (0.02)
<PER-SHARE-DIVIDEND> 0.49
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.86
<EXPENSE-RATIO> 0.74
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00

</TABLE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes
and appoints Andrew J. Donohue or Robert G. Zack, and each of them, his true
and lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his capacity as Treasurer of ROCHESTER FUND
MUNICIPALS, OPPENHEIMER CONVERTIBLE SECURITIES FUND, and OPPENHEIMER LIMITED
TERM NEW YORK MUNICIPAL FUND (the "Funds"), to sign on his behalf any and all
Registration Statements (including any post-effective amendments to
Registration Statements) under the Securities Act of 1933, the Investment
Company Act of 1940 and any amendments and supplements thereto, and other
documents in connection thereunder, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the premises, as
fully as to all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents,
and each of them, may lawfully do or cause to be done by virtue hereof.

Dated this 27th day of April, 1999.

/s/ Brian W. Wixted

- ------------------------
Brian W. Wixted