OPPENHEIMER MULTIPLE STRATEGIES FUND
497, 2001-01-17
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                      OPPENHEIMER MULTIPLE STRATEGIES FUND
                   Supplement dated January 16, 2001 to the
                        Prospectus dated January 16, 2001



      Class N shares of Oppenheimer  Multiple  Strategies Fund are not currently
being offered for sale.









January 16, 2001                                            PS0240.015
                                   Oppenheimer
                            Multiple Strategies Fund


Prospectus dated January 16, 2001



                                          Oppenheimer  Multiple  Strategies Fund
                                          is a  mutual  fund  that  seeks  total
                                          return consistent with preservation of
                                          principal as its goal. It invests in a
                                          variety of equity and debt  securities
                                          of U.S. and foreign  issuers,  as well
                                          as money market instruments.
                                             This Prospectus  contains important
                                          information     about    the    Fund's
                                          objective,  its  investment  policies,
                                          strategies and risks. It also contains
                                          important information about how to buy
                                          and sell  shares of the Fund and other
                                          account  features.  Please  read  this
                                          Prospectus
As with all mutual funds,  the carefully  before you invest and keep  Securities
and Exchange  Commission it for future  reference about your has not approved or
disapproved the account.
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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<PAGE>


CONTENTS


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


                    ABOUT THE FUND

                    The Fund's Investment Objective and Strategies
                    Main Risks of Investing in the Fund
                    The Fund's Performance
                    Fees and Expenses of the Fund
                    About the Fund's Investments
                    How the Fund is Managed


                    ABOUT YOUR ACCOUNT

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

                    Special Investor Services
                    AccountLink
                    PhoneLink
                       OppenheimerFunds Internet Web Site
                    Retirement Plans

                    How to Sell Shares
                    By Mail
                    By Telephone

                    How to Exchange Shares
                     Shareholder Account Rules and Policies
                       Dividends, Capital Gains and Taxes
                    Financial Highlights

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




<PAGE>


ABOUT THE FUND

The Fund's Investment Objective and Strategies
WHAT IS THE FUND'S INVESTMENT OBJECTIVE? The Fund seeks high total investment
return consistent with preservation of principal.

WHAT DOES THE FUND MAINLY INVEST IN? The Fund buys a variety of different
types of securities to seek its objective. Mainly, these include:
o     Equity securities. Primarily common stocks of U.S. and foreign
      companies.
o     Debt securities.  Including bonds and notes issued by domestic and foreign
      companies  (which  can  include   lower-grade,   high-yield   securities),
      securities  issued or guaranteed by the U.S.  Government  and its agencies
      and instrumentalities,  including  mortgage-related  securities (these are
      referred to as "U.S.  Government  securities"),  and debt  obligations  of
      foreign governments.
o     Money market instruments, which are obligations that have a maturity of 13
      months or less, including short-term U.S. Government securities, corporate
      and bank debt obligations and commercial paper.

      These   investments   are  more  fully  explained  in  "About  the  Fund's
Investments," below.

HOW DO THE  PORTFOLIO  MANAGERS  DECIDE  WHAT  SECURITIES  TO  BUY OR  SELL?  In
selecting  securities for the Fund, the Fund's portfolio  managers use different
investment  styles to carry out an asset  allocation  strategy  that seeks broad
diversification  across asset classes.  They normally maintain a balanced mix of
stocks,  debt  securities  and cash,  although the Fund has no  requirements  to
weight the portfolio holdings in a fixed proportion.  Therefore, the portfolio's
mix of  equity  and  debt  securities  and cash  will  change  over  time as the
portfolio  managers seek relative  values and  opportunities  in different asset
classes.

      Because  the goal of total  return  looks for an  increase  in the overall
portfolio  value from a  combination  of capital  growth  and  income,  the Fund
invests in stocks mainly for their growth  potential and in debt  securities for
income.  The income from debt  securities and money market  instruments can also
help the Fund preserve principal when stock markets are volatile.

      The  portfolio  managers  employ  both  "growth"  and  "value"  styles  in
selecting  stocks.  They employ  fundamental  analysis of a company's  financial
statements and management structure, operations and product development, as well
as the industry of which the company is part.  Value investing seeks stocks that
are temporarily  out of favor or undervalued in the market by various  measures,
such as the stock's price/earnings ratio. Growth investing seeks stocks that the
manager  believes  have  possibilities  for  increases in stock price because of
strong earnings  growth compared to the market,  the development of new products
or services or other favorable economic factors.

WHO IS THE FUND  DESIGNED  FOR?  The Fund is designed  primarily  for  investors
seeking high total return from their  investment over the long term, from a fund
employing  different  investment styles in allocating its assets among a variety
of types of securities.  While the Fund selects investments  consistent with the
goal of  preservation  of principal,  investors  should be willing to assume the
risks of short-term  share price  fluctuations  that are typical for a fund with
significant  investments  in stocks  and  foreign  securities.  Since the Fund's
income level will fluctuate, it is not designed for investors needing an assured
level of current  income.  Because of its focus on seeking total return over the
long-term,  the Fund 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 have risks to some degree. The Fund's investments are subject to
changes in their value from a number of factors  described below.  There is also
the  risk  that  poor  security  selection  by the  Fund's  investment  Manager,
OppenheimerFunds,  Inc., will cause the Fund to underperform  other funds having
similar objectives.

RISKS OF INVESTING IN STOCKS.  Stocks  fluctuate in price,  and their short-term
volatility at times may be great.  The Fund will normally invest at least 25% of
its total  assets in stocks and other  equity  securities,  and the value of the
Fund's  portfolio  therefore  will be affected by changes in the stock  markets.
Market  risk will  affect  the Fund's  net asset  values  per share,  which will
fluctuate as the values of the Fund's portfolio  securities change. A variety of
factors can affect the price of a particular  stock and the prices of individual
stocks  do not all move in the same  direction  uniformly  or at the same  time.
Different stock markets may behave differently from each other.

      Other factors can affect a particular stock's price, such as poor earnings
reports by the issuer,  loss of major customers,  major  litigation  against the
issuer, or changes in government  regulations affecting the issuer. The Fund has
no requirements to invest in companies in any particular  capitalization  range,
and can invest in securities of large  companies and also small and  medium-size
companies, which may have more volatile stock prices than large companies.

RISKS OF FOREIGN  INVESTING.  The Fund can buy securities issued by companies or
governments in any country,  developed and emerging markets.  While the Fund has
no limits on the  amounts  it can  invest in  foreign  securities,  it  normally
expects to invest not more than 50% of its assets in foreign securities. Foreign
securities  may  offer  special  investment  opportunities,  but  there are also
special risks. 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 foreign securities.  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.

Special Risks of Emerging and  Developing  Markets.  Securities  in emerging and
      developing  markets present risks not found in more mature markets.  Those
      securities may be more difficult to sell at an acceptable  price and their
      prices may be more volatile than  securities of issuers in more  developed
      markets.  Settlements  of trades may be subject to greater  delays so that
      the Fund might not  receive  the  proceeds  of a sale of a  security  on a
      timely basis.

      Emerging markets might have less developed  trading markets and exchanges,
      and legal and accounting  systems.  Investments  may be subject to greater
      risks of government  restrictions  on  withdrawing  the sales  proceeds of
      securities from the country. Economies of developing countries may be more
      dependent on relatively  few industries  that may be highly  vulnerable to
      local and global  changes.  Governments  may be more  unstable and present
      greater risks of  nationalization  or restrictions on foreign ownership of
      stocks of local companies. These investments may be very speculative.

CREDIT RISK. Debt securities are subject to credit risk. Credit risk is the risk
that the issuer of a security might not make interest and principal  payments on
the security as they become due. If the issuer fails to pay interest, the Fund's
income might be reduced and if the issuer fails to repay principal, the value of
that  security  and of the Fund's  shares might fall. A downgrade in an issuer's
credit  rating or other  adverse news about an issuer can cause the market value
of that  issuer's  securities  to fall.  While the  Fund's  investments  in U.S.
Government  securities  are  subject to little  credit  risk,  the Fund's  other
investments  in  debt  securities,   particularly  high-yield  lower-grade  debt
securities, are subject to risks of default.

Special Risks of  Lower-Grade  Securities.  The Fund can invest up to 35% of its
      total  assets  in  securities  below   investment-grade  to  seek  income.
      Therefore,  the Fund's  credit  risks are greater than those of funds that
      buy only  investment-grade  bonds.  Lower-grade debt securities  (commonly
      called "junk  bonds") may be subject to greater  market  fluctuations  and
      greater risks of loss of income and principal than  investment-grade  debt
      securities.  Securities  that are (or that have fallen)  below  investment
      grade are exposed to a greater  risk that the issuers of those  securities
      might  not  meet  their  debt  obligations.  The  market  for  lower-grade
      securities may be less liquid, especially during times of general economic
      distress, 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.

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

PREPAYMENT RISK. Prepayment risk occurs when the issuer of a security can prepay
the principal prior to the security's maturity. Securities subject to prepayment
risk,  including  the  mortgage-related  securities  that the Fund can buy, have
greater  potential for loss when interest  rates rise. The impact of prepayments
on the price of a security  may be  difficult  to predict and may  increase  the
volatility  of the  price.  Additionally,  the Fund  might buy  mortgage-related
securities at a premium. Accelerated prepayments on those securities could cause
the  Fund to lose a  portion  of its  principal  investment  represented  by the
premium the Fund paid.

      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 could 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.
      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 its 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.

ASSET ALLOCATION  RISKS.  Because the Fund typically invests in a combination of
stocks,  bonds and money market  instruments to seek total return,  it might not
achieve  growth in its  share  prices to the same  degree as funds  focusing  on
stocks during periods of rapidly rising prices.  Also, the Fund's investments in
stocks may make it more  difficult  for the  Manager to  preserve  principal  in
volatile stock  markets.  The Fund's use of value and growth styles in selecting
stocks  might  not be  successful,  particularly  if  stocks  selected  as value
investments fail to appreciate in price to the extent the Manager expected.

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

      In the short term, domestic and foreign stock markets can be volatile, and
the price of the Fund's shares will go up and down in response to those changes.
The Fund's income-oriented  investments may help cushion the Fund's total return
from  changes  in stock  prices,  but debt  securities  are  subject  to credit,
prepayment and interest rate risks. In the OppenheimerFunds  spectrum,  the Fund
may be less  volatile than funds that focus only on stock  investments,  but has
less  opportunities  for capital growth and more risks than the funds that focus
solely on investment grade 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 Performance

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

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

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

Sales charges are not included in the  calculations of return in this bar chart,
and if those charges were included, the returns would be less than those shown.
During the  10-year  period  shown in the bar chart,  the  highest  return  (not
annualized) for a calendar  quarter was 11.15% (4th Q '98) and the lowest return
(not annualized) for a calendar quarter was -10.39% (3rd Q '98).


                                                    5 Years        10 Years
 Average Annual Total Returns                     (or life of    (or life of
 for the  periods  ended  December    1 Year         class,         class,
 31, 2000                                           if less)       if less)
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Class A Shares (inception             0.45%         10.42%         11.02%
 4/24/87)
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 S&P 500 Index (1)                    -9.10%         18.33%         17.44%
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Lehman Bros. Aggregate Bond          11.63%         6.46%          7.96%
 Index(1)
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Class B Shares (inception             0.84%         10.52%         10.84%
 8/29/95)
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Class   C    Shares    (inception     4.74%         10.83%         10.49%
 12/1/93)
 ----------------------------------

  1. From 12/31/90.
  The Fund's  average  annual total returns in the table include the  applicable
  sales charge:  for Class A, the current maximum initial sales charge of 5.75%;
  for Class B, the contingent deferred sales charges of 5% (1-year) and 1% (life
  of class);  and for Class C, the 1% contingent  deferred  sales charge for the
  1-year  period.  Because Class N shares were not offered during the year ended
  December 31, 2000, no performance information is included in the table above.

  The Fund's  returns  measure the  performance  of a  hypothetical  account and
  assume that all dividends and capital gains distributions have been reinvested
  in additional shares. The performance of the Fund's Class A shares is compared
  to the  Standard  & Poor's  500  Index,  an  unmanaged  index  of U.S.  equity
  securities,  and to the Lehman  Brothers  Aggregate  Bond Index,  an unmanaged
  index of U.S. corporate,  government and mortgage-backed securities. The index
  performance   includes  the  reinvestment  of  income  but  does  not  reflect
  transaction  costs.  Also, the Fund's  investments vary from the securities in
  the indices.

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 values
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
September 30, 2000,  except that the numbers for Class N shares,  which is a new
class of shares, are based on the Fund's anticipated expenses for Class N shares
during the upcoming year.


Shareholder Fees (charges paid directly from your investment):

 ---------------------------------
                                  Class A    Class B   Class C   Class N
                                   Shares    Shares     Shares    Shares
 --------------------------------------------------------------------------
 --------------------------------------------------------------------------
 Maximum Sales Charge (Load) on
 purchases (as % of offering       5.75%      None       None      None
 price)
 --------------------------------------------------------------------------
 --------------------------------------------------------------------------
 Maximum Deferred Sales Charge
 (Load) (as % of the lower of
 the original offering             None1       5%2        1%3       1%4
 price or redemption proceeds)
 ---------------------------------

1. A contingent deferred sales charge may apply to redemptions of investments of
   $1 million or more ($500,000 for retirement plan accounts) of Class A shares.
   See "How to Buy Shares" for details.
2. Applies to redemptions in first year after purchase.  The contingent deferred
   sales charge declines to 1% in the sixth year and is eliminated after that.
3. Applies to shares redeemed within 12 months of purchase.
4. Applies to shares redeemed within 18 months of retirement plan's first
   purchase.

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

 -----------------------------------
                                    Class A    Class B    Class C     Class N
                                      Shares     Shares     Shares    Shares
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
          Management Fees             0.71%      0.71%      0.71%      0.71%
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Distribution     and/or    Service   0.19%      1.00%      1.00%      0.50%
 (12b-1) Fees
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Other Expenses                       0.23%      0.23%      0.23%      0.23%
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Total Annual Operating Expenses      1.13%      1.94%      1.94%      1.44%
 -----------------------------------

Expenses may vary in future years. "Other Expenses" include transfer agent fees,
custodial  expenses,  and accounting  and legal expenses the Fund pays.  Class N
shares  were not  offered  for sale  during the Fund's  last  fiscal  year.  The
expenses  above for Class N shares are based on the  expected  expenses for that
class of shares for the current fiscal year.

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

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

 --------------------------
 If shares are redeemed:      1 Year      3 Years       5 Years     10 Years1
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Class A Shares                $684         $913        $1,161       $1,871
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Class B Shares                $697         $909        $1,247       $1,861
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Class C Shares                $297         $609        $1,047       $2,264
 --------------------------             -------------              ------------
 ------------------------------------------------------------------------------
 Class N Shares                $247         $456         $787        $1,724
 --------------------------

 --------------------------
 If shares are not            1 Year      3 Years       5 Years     10 Years1
 redeemed:
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Class A Shares                $684         $913        $1,161       $1,871
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Class B Shares                $197         $609        $1,047       $1,861
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Class C Shares                $197         $609        $1,047       $2,264
 --------------------------             -------------              ------------
 ------------------------------------------------------------------------------
 Class N Shares                $147         $456         $787        $1,724
 --------------------------

In the first example,  expenses include the initial sales charge for Class A and
the applicable Class B, Class C or Class N contingent deferred sales charges. In
the second example,  the Class A expenses include the sales charge, but Class B,
Class C and Class N  expenses  do not  include  the  contingent  deferred  sales
charges.
1. Class B expenses for years 7 through 10 are based on Class A expenses,  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  different  investments  will  vary  over time  based  upon the  Manager's
evaluation of economic and market trends.  The Fund's portfolio might not always
include all of the different types of investments described below. The Statement
of Additional  Information  contains more detailed  information about the Fund's
investment policies and risks.

      At times the Fund may focus more on  investing  for  capital  appreciation
with less emphasis on seeking income,  while seeking to preserve  principal.  At
other times, for example when stock markets are less stable, the Fund might have
greater  relative  emphasis on  income-seeking  investments,  such as government
securities and money market instruments.

      The Manager  tries to reduce  risks by  carefully  researching  securities
before they are  purchased.  The Fund  attempts to reduce its exposure to market
risks by  diversifying  its  investments,  that is, by not holding a substantial
amount of stock of any one company 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 total assets in investments 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  prices of the Fund will  change  daily based on changes in
market  prices of  securities  and market  conditions  and in  response to other
economic events.

      In  seeking  broad  diversification  of the  Fund's  portfolio  over asset
classes,  issuers and economies,  the portfolio  managers  consider  overall and
relative  economic  conditions  in U.S.  and  foreign  markets.  They seek broad
diversification by investing in different countries to help moderate the special
risks of  investing  in foreign  securities  and  lower-grade,  high-yield  debt
securities.

Stock Investments.  The  Fund's  stock  investments  may be  exchange-traded  or
      over-the-counter  securities.  Over-the-counter  securities  may have less
      liquidity than exchange-traded  securities.  Stocks represent an ownership
      interest in a company and common  stocks rank below  preferred  stocks and
      bonds in their claim for  dividends and assets if the issuer is liquidated
      or becomes bankrupt.

Debt  Securities.  The Fund will  normally  invest at least 25% of its assets in
      fixed-income  senior  securities,  such  as  bonds  and  notes.  The  debt
      securities  the Fund  buys may be rated by  nationally  recognized  rating
      organizations or they may be unrated  securities  assigned a rating by the
      Manager.   The  Fund's  investments  may  be  investment  grade  or  below
      investment  grade in credit  quality.  The Manager does not rely solely on
      ratings by rating organizations in selecting debt securities but evaluates
      business and economic factors affecting an issuer as well.

      The Fund's foreign debt  investments can be denominated in U.S. dollars or
      in foreign currencies.  Foreign government  securities might not be backed
      by the government's full faith and credit. The Fund can buy "Brady Bonds."
      Those  are  U.S.  dollar-denominated  debt  securities  collateralized  by
      zero-coupon  U.S.  Treasury  securities.  They  are  typically  issued  by
      governments of emerging  market  countries and are considered  speculative
      securities  with  higher  risks  of  default.  The Fund  will buy  foreign
      currency  only in  connection  with  the  purchase  and  sale  of  foreign
      securities and not for speculation.

   o  U.S. Government Securities. The Fund can invest in securities issued or
      guaranteed by the U.S. Treasury or other U.S. Government agencies or
      federally-chartered corporate entities referred to as
      "instrumentalities". These are referred to as "U.S. Government
      securities" in this Prospectus. They can include collateralized
      mortgage obligations (CMOs) and other mortgage-related securities.

   o  U.S. Treasury Obligations. These include Treasury bills (having maturities
      of one year or less when issued),  Treasury  notes  (having  maturities of
      more than one and up to ten years when issued), and Treasury bonds (having
      maturities of more than ten years when issued).  Treasury  securities  are
      backed by the full  faith and  credit  of the  United  States as to timely
      payments of interest  and  repayment  of  principal.  Although  not rated,
      Treasury  obligations  have little credit risk but prior to their maturity
      are subject to interest rate risk.
   o  Obligations  of  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.  These have
      relatively  little  credit risk.  Some are supported by the full faith and
      credit  of the  U.S.  Government,  such as  Government  National  Mortgage
      Association  pass-through  mortgage  certificates  (called "Ginnie Maes").
      Some are  supported  by the right of the  issuer  to borrow  from the U.S.
      Treasury under certain  circumstances,  such as Federal National  Mortgage
      Association bonds ("Fannie Maes"). Others are supported only by the credit
      of the  entity  that  issued  them,  such as  Federal  Home Loan  Mortgage
      Corporation obligations ("Freddie Macs").

   o  Mortgage-Related U.S. Government Securities. The Fund can buy interests in
      pools  of   residential   or   commercial   mortgages,   in  the  form  of
      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.

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

   ?  High-Yield,  Lower-Grade Debt Securities.  The Fund can purchase a variety
      of lower-grade,  high-yield debt securities, to seek current income. These
      securities are sometimes called "junk bonds." The Fund has no requirements
      as to the maturity of the debt  securities it can buy, or as to the market
      capitalization  range of the issuers of those securities.  The Fund limits
      these investments to not more than 35% of its assets.

      Lower-grade  debt  securities  are  those  rated  below  "Baa" by  Moody's
      Investors  Service or lower  than "BBB" by  Standard & Poor's or that have
      comparable ratings by other  nationally-recognized  rating  organizations.
      They  include  unrated  securities  assigned  a  comparable  rating by the
      Manager.  The Fund can invest in securities  rated as low as "C" or "D" or
      which are in  default  at the time the Fund buys  them.  While  securities
      rated "Baa" by Moody's or "BBB" by S&P are considered  "investment grade,"
      they have some speculative characteristics.

   o  Money Market Instruments. The Fund can invest in money market instruments,
      which include short-term  certificates of deposit,  bankers'  acceptances,
      commercial paper, U.S. Government obligations,  and other debt instruments
      (including  bonds)  issued  by  corporations.  These  securities  may have
      variable or floating interest rates. The Fund's  investments in commercial
      paper in general will be limited to paper in the top two rating categories
      of Standard & Poor's or Moody's.

CAN THE FUND'S  INVESTMENT  OBJECTIVE AND POLICIES  CHANGE?  The Fund's Board of
Trustees can change  non-fundamental  investment  policies  without  shareholder
approval,  although  significant changes will be described in amendments to this
Prospectus.  Fundamental  policies  cannot be changed  without the approval of a
majority of the Fund's  outstanding  voting  shares.  The Fund's  objective is a
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.

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

Other Equity  Investments.  The Fund's  equity  investments  are  mainly  common
      stocks, but also include preferred stocks and securities  convertible into
      common stock.  The Manager  considers  some  convertible  securities to be
      "equity  equivalents"  because of the conversion  feature and in that case
      their rating has less impact on the  investment  decision than in the case
      of other debt securities.

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

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

      The values of  interest-only  mortgage  related  securities  are also very
      sensitive to prepayments of underlying mortgages. When prepayments tend to
      fall, the timing of the cash flows to these securities  increases,  making
      them more sensitive to changes in interest  rates.  The market for some of
      these  securities  may be  limited,  making it  difficult  for the Fund to
      dispose of its holdings quickly at an acceptable price.

Illiquid and Restricted Securities.  Investments may be illiquid because they do
      not have an active  trading  market,  making it difficult to value them or
      dispose of them promptly at an acceptable price. Restricted securities may
      have terms that  limit  their  resale to other  investors  or may  require
      registration  under  federal  securities  laws before they can be publicly
      sold. The Fund will not invest more than 10% of its net assets in illiquid
      or  restricted  securities.  The Board  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.

Derivative  Investments.  The Fund can invest in a number of different  kinds of
      "derivative" investments.  In general terms, a derivative investment is an
      investment  contract whose value depends on (or is derived from) the value
      of an underlying  asset,  interest rate or index.  In the broadest  sense,
      options,  futures contracts,  and other hedging instruments the Fund might
      use may be  considered  "derivative"  investments.  In  addition  to using
      derivatives for hedging,  the Fund might use other derivative  investments
      because they offer the potential for increased  value.  The Fund currently
      does not use  derivatives  to a substantial  degree and is not required to
      use them in seeking its objective.

      Derivatives  have risks.  If the issuer of the derivative  investment does
      not pay the amount  due,  the Fund can lose money on the  investment.  The
      underlying  security or investment on which a derivative is based, and the
      derivative  itself, may not perform the way the Manager expected it to. As
      a result of these risks the Fund could  realize  less  principal or income
      from the investment than expected or its hedge might be unsuccessful. As a
      result, the Fund's share prices could fall. Certain derivative investments
      held by the Fund might be illiquid.

   o  Hedging.  The  Fund  can buy and  sell  futures  contracts,  put and  call
      options,  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,  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 decline, 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.

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

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


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

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

Portfolio Managers. The Fund's management team includes four portfolio managers.
      Each is a Vice  President  of the Fund.  They are the persons  principally
      responsible for the day-to-day management of the Fund's portfolio. Richard
      H.  Rubinstein,  a  Senior  Vice  President  of the  Manager,  has  been a
      portfolio manager of the Fund since April 15, 1991. Since August 21, 1998,
      David Negri,  a Senior Vice  President  of the  Manager,  George Evans and
      Michael  Levine,  who are both Vice  Presidents of the Manager,  have been
      portfolio  managers of the Fund.  Each serves as an officer and manager of
      other Oppenheimer funds.

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
      $700  million  and 0.58% of  average  annual  net assets in excess of $1.5
      billion.  The  Fund's  management  fee  for its  last  fiscal  year  ended
      September  30, 2000 was 0.71% of average  annual net assets for each class
      of shares.


ABOUT YOUR ACCOUNT

How to Buy Shares
HOW DO YOU BUY SHARES? You can buy shares several ways, as described below.
The Fund's Distributor, OppenheimerFunds Distributor, Inc., may appoint
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.

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

HOW MUCH  MUST  YOU  INVEST?  You can buy Fund  shares  with a  minimum  initial
investment of $1,000.  You can make  additional  investments at any time with as
little as $25. There are reduced minimum  investments  under special  investment
plans.
   o  With Asset Builder  Plans,  403(b)  plans,  Automatic  Exchange  Plans and
      military allotment plans, you can make initial and subsequent  investments
      for as little as $25. You can make additional purchases of at least $25 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.
   o  The minimum investment requirement does not apply to reinvesting dividends
      from the Fund or other  Oppenheimer  funds (a list of them  appears in the
      Statement of  Additional  Information,  or you can ask your dealer or call
      the Transfer  Agent),  or reinvesting  distributions  from unit investment
      trusts that have made arrangements with the Distributor.

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

Net   Asset Value.  The 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 and restricted  securities and obligations for which
      market values cannot be readily obtained.  Because some foreign securities
      trade in markets and exchanges that operate on weekends and U.S. holidays,
      the  values  of  some  of  the  Fund's  foreign   investments  may  change
      significantly on days when investors cannot buy or redeem Fund shares.

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

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

-------------------------------------------------------------------------------
What  Classes of Shares Does the Fund  Offer?  The Fund  offers  investors  four
different  classes  of  shares.   The  different  classes  of  shares  represent
investments in the same portfolio of securities,  but the classes are subject to
different  expenses and will likely have  different  share prices.  When you buy
shares,  be sure to specify  the class of shares.  If you do not choose a class,
your investment will be made in Class A shares.
Class A Shares. If you buy Class A shares, you pay an initial sales charge (on
investments up to
      $1 million). 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.
Class B Shares.  If you buy Class B shares,  you pay no sales charge at the time
      of purchase,  but you will pay an annual  asset-based sales charge. If you
      sell your shares within six years of buying them,  you will normally pay a
      contingent  deferred sales charge.  That contingent  deferred sales charge
      varies depending on how long you own your shares, as described in "How Can
      I Buy Class B Shares?" below.
Class C Shares.  If you buy Class C shares,  you pay no sales charge at the time
      of purchase,  but you will pay an annual  asset-based sales charge. If you
      sell your shares within 12 months of buying them,  you will normally pay a
      contingent  deferred  sales  charge of 1%, as  described in "How Can I Buy
      Class C Shares?" below.
Class N  Shares.  Class N shares  are  offered  only  through  retirement  plans
      (including IRAs and 403(b) plans) that purchase  $500,000 or more of Class
      N shares of one or more Oppenheimer funds or through retirement plans (not
      including  IRAs and 403(b)  plans) that have assets of $500,000 or more or
      100 eligible plan participants.  Non-retirement  plan investors cannot buy
      Class N  shares  directly.  If you buy  Class N  shares,  you pay no sales
      charge at the time of  purchase,  but you will pay an  annual  asset-based
      sales charge.  If you sell your shares within  eighteen (18) months of the
      retirement  plan's  first  purchase  of  Class  N  shares,  you  may pay a
      contingent  deferred  sales charge of 1%, as described in "How Can You Buy
      Class N Shares?" below.
-------------------------------------------------------------------------------

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

      The  discussion  below  is  not  intended  to be  investment  advice  or a
recommendation,  because each investor's financial considerations are different.
The  discussion  below  assumes that you will purchase only one class of shares,
and not a combination of shares of different classes. Of course,  these examples
are based on  approximations of the 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.

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 or Class N. For  retirement  plans  that  qualify to
      purchase   Class  N  shares,   Class  N  shares  will  generally  be  more
      advantageous  than Class C shares;  Class B shares are not  available  for
      purchase by such retirement plans.

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

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

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

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

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

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

How   Do Share Classes Affect Payments to Your Broker?  A financial  advisor may
      receive  different  compensation  for selling one class of shares than for
      selling  another class.  It is important to remember that Class B, Class C
      and Class N  contingent  deferred  sales  charges  and  asset-based  sales
      charges  have the same purpose as the  front-end  sales charge on sales of
      Class A 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. To receive a waiver
or special sales charge rate, you must advise the  Distributor  when  purchasing
shares or the Transfer Agent when redeeming  shares that the special  conditions
apply.

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

      The sales  charge  varies  depending  on the  amount of your  purchase.  A
portion of the sales charge may be retained by the  Distributor  or allocated to
your dealer as  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   Commission
                                  Charge As a     Charge As a         As
                                 Percentage of   Percentage of  Percentage of
 Amount of Purchase             Offering Price        Net       Offering Price
                                                Amount Invested
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Less than $25,000                   5.75%           6.10%          4.75%
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 $25,000 or more but less than       5.50%           5.82%          4.75%
 $50,000
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 $50,000 or more but less than       4.75%           4.99%          4.00%
 $100,000
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 $100,000 or more but less           3.75%           3.90%          3.00%
 than $250,000
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 $250,000 or more but less           2.50%           2.56%          2.00%
 than $500,000
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 $500,000 or more but less           2.00%           2.04%          1.60%
 than $1 million
 ------------------------------------------------------------------------------

Class A Contingent  Deferred  Sales Charge.  There is no initial sales charge on
      purchases  of Class A shares of any one or more of the  Oppenheimer  funds
      aggregating  $1 million or more or for  certain  purchases  by  particular
      types of  retirement  plans  described  in Appendix C to the  Statement of
      Additional Information. The Distributor pays dealers of record 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,  based on the cumulative
      purchases during the prior 12 months ending with the current purchase.  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
      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.

      If you redeem any of those  shares  within an  18-month  "holding  period"
      measured  from  the  end  of the  calendar  month  of  their  purchase,  a
      contingent  deferred sales charge (called the "Class A contingent deferred
      sales  charge") may be deducted from the redemption  proceeds.  That sales
      charge will be equal to 1.0% of the lesser of (1) the  aggregate net asset
      value of the redeemed shares at the time of redemption  (excluding  shares
      purchased by reinvestment of dividends or capital gain  distributions)  or
      (2) the  original  net asset value of the redeemed  shares.  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.

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

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

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

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

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

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

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

HOW CAN YOU BUY CLASS N SHARES?  As discussed above,  Class N shares are offered
only through  retirement  plans  (including IRAs and 403(b) plans) that purchase
$500,000 or more of Class N shares of one or more  Oppenheimer  funds or through
retirement  plans (not  including  IRAs and 403(b)  plans)  that have  assets of
$500,000  or more  or 100 or more  eligible  participants.  Non-retirement  plan
investors cannot buy Class N shares directly.

A contingent deferred sales charge of 1.00% will be imposed if:

o  The  retirement  plan (not  including IRAs and 403(b) plans) is terminated or
   Class N shares of all  Oppenheimer  funds  are  terminated  as an  investment
   option of the plan and Class N shares are redeemed within 18 months after the
   plan's first purchase of Class N shares of any Oppenheimer fund, or

o  With respect to an  individual  retirement  plan or 403(b)  plan,  you redeem
   Class N shares  within 18  months of the  plan's  first  purchase  of Class N
   shares of any Oppenheimer fund.

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

DISTRIBUTION AND SERVICE (12b-1) PLANS.
Service Plan for Class A Shares. The Fund has adopted a Service Plan for Class A
shares.  It reimburses the  Distributor  for a portion of its costs incurred for
services  provided to accounts that hold Class A shares.  Reimbursement  is made
quarterly  at an annual rate of up to 0.25% of the average  annual net assets of
Class A shares of the Fund. The Distributor  currently uses all of those fees to
pay dealers,  brokers,  banks and other  financial  institutions  quarterly  for
providing  personal  service and maintenance of accounts of their customers that
hold Class A shares.

Distribution and Service Plans for Class B, Class C and Class N Shares. The Fund
      has adopted  Distribution and Service Plans for Class B, Class C and Class
      N shares to pay the Distributor for its services and costs in distributing
      Class B,  Class C and Class N shares  and  servicing  accounts.  Under the
      plans, the Fund pays the Distributor an annual asset-based sales charge of
      0.75% per year on Class B shares  and on Class C shares  and the Fund pays
      the  Distributor  an annual  asset-based  sales charge of 0.25% on Class N
      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% and increase  Class N expense by 0.50% of the net assets
      per year of the respective  class.  Because these fees are paid out of the
      Fund's assets on an ongoing basis,  over time these fees will increase the
      cost of your  investment  and may cost you more than other  types of sales
      charges.

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

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

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

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


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

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

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

PHONELINK.  PhoneLink is the  OppenheimerFunds  automated  telephone system that
enables shareholders to perform a number of account  transactions  automatically
using a touch-tone  phone.  PhoneLink  may be used on  already-established  Fund
accounts after you obtain a Personal Identification Number (PIN), by calling the
special PhoneLink number, 1.800.533.3310.

Purchasing Shares.  You may purchase  shares in amounts up to $100,000 by phone,
      by  calling   1.800.533.3310.   You  must  have  established   AccountLink
      privileges  to link  your  bank  account  with the  Fund to pay for  these
      purchases.
Exchanging  Shares.  With the  OppenheimerFunds  Exchange  Privilege,  described
      below,  you can  exchange  shares  automatically  by phone  from your Fund
      account to another  OppenheimerFunds  account you have already established
      by calling the special PhoneLink number.
Selling Shares. You can redeem shares by telephone  automatically by calling the
      PhoneLink  number  and the Fund will send the  proceeds  directly  to your
      AccountLink bank account.  Please refer to "How to Sell Shares," below for
      details.

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

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

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

REINVESTMENT  PRIVILEGE.  If you  redeem  some or all of your Class A 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 and Class N shares.  You must be
sure to ask the Distributor for this privilege when you send your payment.

RETIREMENT  PLANS.  You may buy  shares  of the Fund for  your  retirement  plan
account.  If you  participate  in a plan  sponsored by your  employer,  the plan
trustee  or  administrator  must buy the  shares  for  your  plan  account.  The
Distributor also offers a number of different  retirement plans that individuals
and employers can use:

   o  Individual  Retirement  Accounts (IRAs).  These include regular IRAs, Roth
      IRAs, SIMPLE IRAs, rollover IRAs and Education IRAs.
   o  SEP-IRAs.  These  are  Simplified  Employee  Pensions  Plan IRAs for small
      business owners or self-employed individuals.
   o  403(b)(7)  Custodial Plans.  These are tax deferred plans for employees of
      eligible  tax-exempt  organizations,   such  as  schools,   hospitals  and
      charitable organizations.
   o  401(k) Plans. These are special retirement plans for businesses.
   o  Pension and Profit-Sharing Plans. These plans are designed for
      businesses and self-employed individuals.

Please call the  Distributor  for  OppenheimerFunds  retirement  plan documents,
which include applications and important plan information.

How to Sell Shares

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

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

   o You wish to redeem more than $100,000 and receive a check o The  redemption
   check is not payable to all shareholders listed on the
      account statement
   o  The redemption check is not sent to the address of record on your
      account statement
   o  Shares are being transferred to a Fund account with a different owner
      or name
   o  Shares are being redeemed by someone (such as an Executor) other than
      the owners

Where Can You Have Your Signature Guaranteed? The Transfer Agent will accept
      a guarantee of your signature by a number of financial institutions.
      Including:

   o  a U.S. bank, trust company, credit union or savings association,
   o  a foreign bank that has a U.S. correspondent bank,
   o  a U.S. registered dealer or broker in securities, municipal securities
      or government securities, or
   o  a U.S. national securities exchange, a registered securities
      association or a clearing agency.

      If you are  signing  on  behalf  of a  corporation,  partnership  or other
business or as a fiduciary, you must also include your title in the signature.

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

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

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

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

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

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

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

      A contingent  deferred sales charge will be based on the lesser of the net
asset value of the redeemed shares at the time of redemption or the original net
asset value. A contingent deferred sales charge is not imposed on:
   o  the amount of your account value represented by an increase in net
      asset value over the initial purchase price,
   o  shares purchased by the reinvestment of dividends or capital gains
      distributions, or
   o  shares  redeemed in the special  circumstances  described in Appendix C to
      the Statement of Additional Information.

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

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

How to Exchange Shares

      Shares of the Fund may be  exchanged  for  shares of  certain  Oppenheimer
funds at net  asset  value  per  share at the time of  exchange,  without  sales
charge.  Shares  of the Fund can be  purchased  by  exchange  of shares of other
Oppenheimer  funds on the same basis. To exchange shares,  you must meet several
conditions:
   o  Shares of the fund  selected  for exchange  must be available  for sale in
      your state of residence.
   o The  prospectuses  of both funds must offer the exchange  privilege.  o You
   must hold the shares you buy when you establish your account for at
      least 7 days  before you can  exchange  them.  After the account is open 7
      days, you can exchange shares every regular business day.
   o  You must meet the minimum purchase  requirements for the fund whose shares
      you purchase by exchange.
   o Before exchanging into a fund, you must obtain and read its prospectus.

Shares of a particular class of the Fund may be exchanged only for shares of the
same class in the other Oppenheimer funds. For example, you can exchange Class A
shares of this Fund only for Class A shares  of  another  fund.  In some  cases,
sales  charges  may be  imposed  on  exchange  transactions.  For tax  purposes,
exchanges  of  shares  involve  a sale of the  shares  of the fund you own and a
purchase of the shares of the other fund,  which may result in a capital gain or
loss.  Please refer to "How to Exchange  Shares" in the  Statement of Additional
Information for more details.

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

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

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


Shareholder Account Rules and Policies

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

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

Telephone transaction privileges for purchases,  redemptions or exchanges may be
      modified,  suspended or  terminated by the Fund at any time. If an account
      has more than one owner,  the Fund and the Transfer  Agent may rely on the
      instructions of any one owner. Telephone privileges apply to each owner of
      the account and the dealer representative of record for the account unless
      the Transfer Agent receives cancellation instructions from an owner of the
      account.

The   Transfer Agent will record any telephone  calls to verify data  concerning
      transactions  and has adopted other  procedures to confirm that  telephone
      instructions   are   genuine,   by   requiring   callers  to  provide  tax
      identification  numbers and other  account  data or by using PINs,  and by
      confirming such  transactions in writing.  The Transfer Agent and the Fund
      will not be  liable  for  losses  or  expenses  arising  out of  telephone
      instructions reasonably believed to be genuine.

Redemption or transfer  requests  will not be honored  until the Transfer  Agent
      receives all required  documents  in proper form.  From time to time,  the
      Transfer Agent in its discretion may waive certain of the requirements for
      redemptions stated in this Prospectus.

Dealers that 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.

The   redemption price for shares will vary from day to day because the value of
      the securities in the Fund's portfolio  fluctuates.  The redemption price,
      which is the net asset  value per  share,  will  normally  differ for each
      class of shares.  The redemption  value of your shares may be more or less
      than their original cost.

Payment for redeemed shares ordinarily is made in cash. It is forwarded by check
      or through  AccountLink (as elected by the shareholder)  within seven days
      after the Transfer Agent receives redemption  instructions in proper form.
      However,  under unusual  circumstances  determined by the  Securities  and
      Exchange  Commission,  payment may be delayed or  suspended.  For accounts
      registered  in the  name of a  broker-dealer,  payment  will  normally  be
      forwarded within three business days after redemption.

The   Transfer  Agent may delay  forwarding a check or  processing a payment via
      AccountLink  for recently  purchased  shares,  but only until the purchase
      payment  has  cleared.  That delay may be as much as 10 days from the date
      the shares  were  purchased.  That  delay may be  avoided if you  purchase
      shares by Federal Funds wire or certified check, or arrange with your bank
      to provide  telephone or written assurance to the Transfer Agent that your
      purchase payment has cleared.

Involuntary redemptions of small accounts may be made by the Fund if the account
      value has  fallen  below  $500 for  reasons  other  than the fact that the
      market value of shares has dropped. In some cases involuntary  redemptions
      may be made to repay the Distributor  for losses from the  cancellation of
      share purchase orders.

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

"Backup  Withholding"  of  Federal  income tax may be  applied  against  taxable
      dividends,  distributions and redemption proceeds (including exchanges) if
      you fail to furnish the Fund your correct,  certified  Social  Security or
      Employer  Identification Number when you sign your application,  or if you
      under-report your income to the Internal Revenue Service.

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

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



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

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

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

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

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

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

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


Financial Highlights

The Financial  Highlights  Table is presented to help you  understand the Fund's
financial  performance  for  the  past 6  fiscal  periods.  Certain  information
reflects  financial  results for a single Fund share.  The total  returns in the
table  represent  the rate that an  investor  would have  earned (or lost) on an
investment   in  the  Fund   (assuming   reinvestment   of  all   dividends  and
distributions).  This  information  has been  audited  by KPMG LLP,  the  Fund's
independent auditors,  whose report, along with the Fund's financial statements,
is included in the  Statement of Additional  information,  which is available on
request.  Class N shares were not  publicly  offered  during the  periods  shown
below. Therefore, information on Class N shares is not included in the following
tables or in the Fund's other financial statements.

<PAGE>

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

<TABLE>
<CAPTION>
                                                                                                             Year           Year
                                                                                                            Ended          Ended
                                                                                                         Sept. 30,      Dec. 31,
Class A                                           2000         1999          1998            1997            1996/1/        1995
=================================================================================================================================
Per Share Operating Data
---------------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>          <C>          <C>             <C>             <C>             <C>
Net asset value, beginning of period         $   14.06    $   13.69    $    16.17      $    14.09      $    13.07      $   11.52
---------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                              .53          .54           .51             .50             .49            .52
Net realized and unrealized gain (loss)           1.21         1.59         (1.22)           2.88             .96           2.08
                                             ------------------------------------------------------------------------------------
Total income (loss) from
investment operations                             1.74         2.13          (.71)           3.38            1.45           2.60
---------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income              (.48)        (.54)         (.49)           (.51)           (.43)          (.49)
Distributions from net realized gain             (1.09)       (1.22)        (1.28)           (.79)             --           (.56)
                                             ------------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders                                  (1.57)       (1.76)        (1.77)          (1.30)           (.43)         (1.05)
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period               $   14.23    $   14.06    $    13.69      $    16.17      $    14.09      $   13.07
                                             ====================================================================================

=================================================================================================================================
Total Return, at Net Asset Value/2/              13.31%       16.29%        (4.71)%         25.46%          11.22%         22.79%

=================================================================================================================================
Ratios/Supplemental Data
---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands)                               $ 639,648    $ 635,603    $  624,895      $  712,470      $  264,359      $ 251,353
---------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)            $ 644,356    $ 660,113    $  699,665      $  395,436      $  256,765      $ 249,660
---------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:/3/
Net investment income                             3.71%        3.70%         3.34%           3.30%           4.73%          3.97%
Expenses                                          1.13%        1.09%         1.08%/4/        1.16%/4/        1.21%/4/       1.15%/4/
---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                             33%          15%           59%             51%             32%            29%
</TABLE>


1. For the nine months ended  September  30,  1996.  The Fund changed its fiscal
year end from  December 31 to  September  30. 2.  Assumes a $1,000  hypothetical
initial investment on the business day before the first day of the fiscal period
(or inception of offering),  with all dividends and distributions  reinvested in
additional  shares on the  reinvestment  date,  and  redemption at the net asset
value  calculated on the last business day of the fiscal  period.  Sales charges
are not reflected in the total  returns.  Total returns are not  annualized  for
periods of less than one full year. 3.  Annualized  for periods of less than one
full year.
4. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.



   OPPENHEIMER MULTIPLE STRATEGIES FUND
<PAGE>

<TABLE>
<CAPTION>
                                                                                                              Year          Year
                                                                                                             Ended         Ended
                                                                                                          Sept. 30,      Dec. 31,
Class B                                           2000           1999           1998           1997           1996/1/       1995/2/
===================================================================================================================================
Per Share Operating Data
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>            <C>            <C>            <C>            <C>           <C>
Net asset value, beginning of period        $    13.93     $    13.57     $    16.04     $    14.01     $    13.03    $    13.28
-----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                              .41            .41            .38            .45            .41           .17
Net realized and unrealized gain (loss)           1.19           1.58          (1.20)          2.78            .93           .41
                                            ---------------------------------------------------------------------------------------
Total income (loss) from
investment operations                             1.60           1.99           (.82)          3.23           1.34           .58
-----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income              (.36)          (.41)          (.37)          (.41)          (.36)         (.27)
Distributions from net realized gain             (1.09)         (1.22)         (1.28)          (.79)            --          (.56)
                                            ---------------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders                                  (1.45)         (1.63)         (1.65)         (1.20)          (.36)         (.83)
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period              $    14.08     $    13.93     $    13.57     $    16.04     $    14.01    $    13.03


===================================================================================================================================
Total Return, at Net Asset Value/3/              12.30%         15.35%         (5.49)%        24.34%         10.37%         4.44%
-----------------------------------------------------------------------------------------------------------------------------------

===================================================================================================================================
Ratios/Supplemental Data
-----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands)                              $   66,777     $   68,875     $   73,036     $   67,916     $    5,996    $    1,265
-----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)           $   66,956     $   73,673     $   74,442     $   25,113     $    3,546    $      520
-----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:/4/
Net investment income                             2.92%          2.85%          2.53%          2.26%          3.69%         2.62%
Expenses                                          1.94%          1.93%          1.91%/5/       1.96%/5/       2.12%/5/      2.27%/5/
-----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                             33%            15%            59%            51%            32%           29%
</TABLE>


1. For the nine months ended September 30, 1996. The Fund changed its fiscal
year end from December 31 to September 30.
2. For the period from August 29, 1995 (inception of offering) to December 31,
1995.
3. Assumes a $1,000  hypothetical  initial investment on the business day before
the  first  day of the  fiscal  period  (or  inception  of  offering),  with all
dividends and distributions  reinvested in additional shares on the reinvestment
date, and redemption at the net asset value  calculated on the last business day
of the fiscal  period.  Sales  charges are not  reflected in the total  returns.
Total  returns are not  annualized  for  periods of less than one full year.  4.
Annualized for periods of less than one full year.
5. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.



   OPPENHEIMER MULTIPLE STRATEGIES FUND
<PAGE>

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


<TABLE>
<CAPTION>
                                                                                                               Year         Year
                                                                                                              Ended        Ended
                                                                                                          Sept. 30,      Dec. 31,
Class C                                         2000           1999           1998           1997           1996/1/        1995
=================================================================================================================================
Per Share Operating Data
<S>                                       <C>            <C>            <C>            <C>            <C>            <C>
Net asset value, beginning of period      $    13.97     $    13.61     $    16.07     $    14.02     $    13.01     $    11.49
---------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                            .41            .42            .38            .41            .40            .40
Net realized and unrealized gain (loss)         1.20           1.57          (1.20)          2.83            .96           2.07
                                          ---------------------------------------------------------------------------------------
Total income (loss) from
investment operations                           1.61           1.99           (.82)          3.24           1.36           2.47
---------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income            (.36)          (.41)          (.36)          (.40)          (.35)          (.39)
Distributions from net realized gain           (1.09)         (1.22)         (1.28)          (.79)            --           (.56)
                                          ---------------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders                                (1.45)         (1.63)         (1.64)         (1.19)          (.35)          (.95)
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period            $    14.13     $    13.97     $    13.61     $    16.07     $    14.02     $    13.01
                                          =======================================================================================

=================================================================================================================================
Total Return, at Net Asset Value/2/            12.35%         15.28%         (5.43)%        24.42%         10.55%         21.69%
---------------------------------------------------------------------------------------------------------------------------------

=================================================================================================================================
Ratios/Supplemental Data
---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands)                            $   38,522     $   38,978     $   48,417     $   49,539     $   21,087     $   15,405
---------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)         $   38,597     $   43,701     $   52,325     $   33,813     $   17,898     $   11,827
---------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:/3/
Net investment income                           2.92%          2.85%          2.51%          2.61%          3.84%          3.08%
Expenses                                        1.94%          1.93%          1.91%/4/       1.97%/4/       2.07%/4/       1.99%/4/
---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                           33%            15%            59%            51%            32%            29%
</TABLE>


1. For the nine months ended  September  30,  1996.  The Fund changed its fiscal
year end from  December 31 to  September  30. 2.  Assumes a $1,000  hypothetical
initial investment on the business day before the first day of the fiscal period
(or inception of offering),  with all dividends and distributions  reinvested in
additional  shares on the  reinvestment  date,  and  redemption at the net asset
value  calculated on the last business day of the fiscal  period.  Sales charges
are not reflected in the total  returns.  Total returns are not  annualized  for
periods of less than one full year. 3.  Annualized  for periods of less than one
full year.
4. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.


   OPPENHEIMER MULTIPLE STRATEGIES FUND



<PAGE>


INFORMATION AND SERVICES

Oppenheimer Multiple Strategies Fund:
The following additional  information about the Fund is available without charge
upon request:

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

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


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

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

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

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

                                      The Fund's shares are distributed by:
                                                  [logo] OppenheimerFunds(R)
                                                          Distributor, Inc.

SEC File No. 811-3864
PR0240.001.0101
Printed on recycled paper.



                      OPPENHEIMER MULTIPLE STRATEGIES FUND
                   Supplement dated January 16, 2001 to the
          Statement of Additional Information dated January 16, 2001



      Class N shares of Oppenheimer  Multiple  Strategies Fund are not currently
being offered for sale.









January 16, 2001                                            PX0240.008
Oppenheimer Multiple Strategies Fund

6803 South Tucson Way, Englewood, Colorado  80112
1-800-525-7048

Statement of Additional Information dated January 16, 2001

      This  Statement  of  Additional  Information  is  not a  Prospectus.  This
document  contains  additional   information  about  the  Fund  and  supplements
information in the Prospectus dated January 16, 2001. 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
                                                                            Page
About the Fund
Additional Information About the Fund's Investment Policies and Risks.. 2
    The Fund's Investment Policies..................................... 2
    Other Investment Techniques and Strategies......................... 11
    Investment Restrictions............................................ 29
How the Fund is Managed ............................................... 31
    Organization and History........................................... 31
    Trustees and Officers.............................................. 32
    The Manager........................................................ 38
Brokerage Policies of the Fund......................................... 39
Distribution and Service Plans......................................... 41
Performance of the Fund................................................ 44

About Your Account
How To Buy Shares...................................................... 48
How To Sell Shares..................................................... 56
How To Exchange Shares................................................. 61
Dividends, Capital Gains and Taxes..................................... 63
Additional Information About the Fund.................................. 65

Financial Information About the Fund
Independent Auditors' Report........................................... 66
Financial Statements................................................... 67

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




<PAGE>


                                       51
ABOUT THE FUND

    Additional Information About the Fund's Investment Policies and Risks

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

The Fund's Investment Policies.

The  composition of the Fund's  portfolio and the techniques and strategies that
the Manager will use 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. 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.

      |X|  Investments in Equity  Securities.  The Fund's  investments in equity
securities can include those of foreign and U.S.  companies.  Equity  securities
include common stocks,  preferred  stocks,  rights and warrants,  and securities
convertible  into common stock.  The Fund's  investments  can include  stocks of
companies  in any market  capitalization  range,  if the  Manager  believes  the
investment is consistent with the Fund's  objective,  including the preservation
of principal.  Certain  equity  securities  might be selected not only for their
appreciation possibilities but because they may provide dividend income.

      Small-cap  growth  companies may offer greater  opportunities  for capital
appreciation  than securities of large,  more  established  companies.  However,
these securities also involve greater risks than securities of larger companies.
Securities  of small  capitalization  issuers  may be subject  to greater  price
volatility  in general  than  securities  of  large-cap  and mid-cap  companies.
Therefore, to the degree that the Fund has investments in smaller capitalization
companies at times of market  volatility,  the Fund's share price may  fluctuate
more.  Those  investments may be limited to the extent the Manager believes that
such  investments  would  be  inconsistent  with  the  goal of  preservation  of
principal.  As noted below, the Fund limits investments in unseasoned  small-cap
issuers.

            |_| Preferred  Stocks.  Preferred stock,  unlike common stock, has a
stated dividend rate payable from the  corporation's  earnings.  Preferred stock
dividends may be cumulative or non-cumulative,  participating,  or auction rate.
"Cumulative"  dividend  provisions  require  all or a  portion  of prior  unpaid
dividends to be paid before dividends can be paid on the issuer's common stock.

      If interest rates rise, the fixed dividend on preferred stocks may be less
attractive,  causing the price of preferred  stocks to decline.  Preferred stock
may have mandatory sinking fund provisions, as well as provisions allowing calls
or redemptions  prior to maturity,  which 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.  Preferred
stock may be  "participating"  stock,  which  means that it may be entitled to a
dividend exceeding the stated dividend in certain cases.

            |_| Growth Companies.  The Fund may invest in securities of "growth"
companies.  Growth  companies are those companies that the Manager  believes are
entering into a growth cycle in their business,  with the expectation that their
stock will increase in value. They may be established companies as well as newer
companies in the development stage.

      Growth  companies  may  have a  variety  of  characteristics  that  in the
Manager's  view define  them as  "growth"  issuers.  They may be  generating  or
applying  new  technologies,  new or  improved  distribution  techniques  or new
services. They may own or develop natural resources.  They may be companies that
can benefit from changing consumer demands or lifestyles, or companies that have
projected  earnings in excess of the average for their  sector or  industry.  In
each case,  they have prospects that the Manager  believes are favorable for the
long term.  The portfolio  managers of the Fund look for growth  companies  with
strong, capable management, sound financial and accounting policies,  successful
product development and marketing and other factors.

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

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

(1)   whether, at the option of the investor,  the convertible security can be
         exchanged  for a fixed  number  of  shares  of  common  stock  of the
         issuer,
(2)      whether  the issuer of the  convertible  securities  has  restated  its
         earnings  per  share  of  common  stock  on  a  fully   diluted   basis
         (considering  the effect of conversion of the convertible  securities),
         and
(3)      the extent to which the convertible security may be a defensive "equity
         substitute,"  providing the ability to participate in any  appreciation
         in the price of the issuer's common stock.

      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.

            |_| Rights and Warrants.  As a fundamental  policy,  the Fund cannot
invest  more than 5% of its total  assets in  warrants  nor more than 2% of that
amount  in  warrants  that  are not  listed  on the New York or  American  Stock
Exchanges.  That  limit  does not  apply to  warrants  and  rights  the Fund has
acquired as part of units of securities or that are attached to other securities
that the Fund buys.

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

      |X| Debt  Securities.  The Fund can  invest in a variety of  domestic  and
foreign debt securities for current income.  Foreign debt securities are subject
to the risks of foreign  securities  described  above. In general,  domestic and
foreign  fixed-income  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   debt   investments   can   include   investment-grade   and
non-investment-grade   bonds   (commonly   referred   to   as   "junk   bonds").
Investment-grade  bonds  are bonds  rated at least  "Baa" by  Moody's  Investors
Service,  Inc.,  at least  "BBB" by Standard & Poor's  Rating  Service or Duff &
Phelps,  Inc.,  or have  comparable  ratings  by another  nationally  recognized
statistical rating organization.

      In making  investments  in debt  securities,  the Manager may rely to some
extent on the ratings of ratings organizations or it may use its own research to
evaluate a security's  credit-worthiness.  If the securities 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.

         |_|  Special  Risks of  Lower-Grade  Securities.  The Fund can invest a
substantial  portion  of its  assets in  lower-grade  debt  securities.  Because
lower-grade  securities  tend to  offer  higher  yields  than  investment  grade
securities,  the Fund may invest in  lower-grade  securities  if the  Manager is
trying to achieve greater income. In some cases, the appreciation  possibilities
of  lower-grade  securities  may be a reason  they are  selected  for the Fund's
portfolio. However, these investments will be made only when consistent with the
Fund's goal of preservation of principal that is part of the Fund's objective.

      The Fund may invest up to 35% of its total  assets in "lower  grade"  debt
securities.  "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 similar ratings by other rating organizations.  If
they are unrated,  and are determined by the Manager to be of comparable quality
to debt  securities  rated  below  investment  grade,  they are  included in the
limitation  on the  percentage  of the Fund's  assets  that can be  invested  in
lower-grade securities. The Fund can invest in securities rated as low as "C" or
"D" or which are in default at the time the Fund buys them.
      Some of the special credit risks of  lower-grade  securities are discussed
below.  There is a greater risk that the issuer may default on its obligation to
pay  interest  or to  repay  principal  than  in the  case of  investment  grade
securities. The issuer's low creditworthiness may increase the potential for its
insolvency.  An overall  decline in values in the high yield bond market is also
more likely during a period of a general economic downturn. An economic downturn
or an  increase in interest  rates  could  severely  disrupt the market for high
yield bonds,  adversely affecting the values of outstanding bonds as well as the
ability of issuers to pay  interest or repay  principal.  In the case of foreign
high yield  bonds,  these risks are in addition to the special  risks of foreign
investing  discussed  in the  Prospectus  and in this  Statement  of  Additional
Information.

      However,  the Fund's  limitations on these  investments may reduce some of
the  risks  to  the  Fund,  as  will  the  Fund's  policy  of  diversifying  its
investments.  Additionally,  to the extent  they can be  converted  into  stock,
convertible  securities  may be  less  subject  to  some  of  these  risks  than
non-convertible  high  yield  bonds,  since  stock may be more  liquid  and less
affected by some of these risk factors.

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

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

      Fluctuations in the market value of fixed-income securities after the Fund
buys them will not affect the interest payable on those securities, nor the cash
income from them.  However,  those price  fluctuations  will be reflected in the
valuations of the securities,  and therefore the Fund's net asset values will be
affected by those fluctuations.

      |X| Mortgage-Related Securities. Mortgage-related securities are a form of
derivative  investment  collateralized  by pools of  commercial  or  residential
mortgages.  Pools of mortgage  loans are  assembled  as  securities  for sale to
investors  by  government  agencies  or 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 response to changes in interest  rates. If the prepayments on the
Fund's  mortgage-related   securities  were  to  decrease  broadly,  the  Fund's
effective  duration,  and  therefore its  sensitivity  to interest rate changes,
would increase.

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

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

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

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

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

         |_| Treasury  Inflation-Protection  Securities.  The Fund can buy these
U.S.  Treasury  securities,  called  "TIPS,"  that are  designed  to  provide an
investment  vehicle that is not vulnerable to inflation.  The interest rate paid
by TIPS is fixed.  The  principal  value rises or falls  semi-annually  based on
changes  in the  published  Consumer  Price  Index.  If  inflation  occurs,  the
principal and interest  payments on TIPS are adjusted to protect  investors from
inflationary loss. If deflation occurs, the principal and interest payments will
be adjusted downward, although the principal will not fall below its face amount
at maturity.

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

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

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

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

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

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

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

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

            |_| Federal Home Loan Mortgage  Corporation  Certificates.  FHLMC, a
corporate  instrumentality  of the  United  States,  issues  FHLMC  Certificates
representing  interests in mortgage loans.  FHLMC  guarantees to each registered
holder of a FHLMC  Certificate  timely  payment of the  amounts  representing  a
holder's proportionate share in:

(i)   interest payments less servicing and guarantee fees,
(ii)  principal prepayments and
(iii)             the ultimate  collection of amounts  representing the holder's
                  proportionate  interest in principal  payments on the mortgage
                  loans in the pool  represented  by the FHLMC  Certificate,  in
                  each case whether or not such amounts are actually received.
      The  obligations of FHLMC under its guarantees are  obligations  solely of
FHLMC and are not backed by the full faith and credit of the United States.

            |_| Federal National Mortgage Association (Fannie Mae) Certificates.
Fannie Mae, a federally-chartered and privately-owned corporation, issues Fannie
Mae  Certificates  which are  backed by a pool of  mortgage  loans.  Fannie  Mae
guarantees to each registered holder of a Fannie Mae Certificate that the holder
will  receive  amounts  representing  the  holder's  proportionate  interest  in
scheduled principal and interest payments, and any principal prepayments, on the
mortgage loans in the pool represented by such  Certificate,  less servicing and
guarantee  fees, and the holder's  proportionate  interest in the full principal
amount of any  foreclosed or other  liquidated  mortgage  loan. In each case the
guarantee  applies  whether or not those  amounts  are  actually  received.  The
obligations of Fannie Mae under its guarantees are obligations  solely of Fannie
Mae and are not backed by the full faith and credit of the United  States or any
of its agencies or instrumentalities other than Fannie Mae.

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

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

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

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

      |X| Money Market Instruments.  The following is a brief description of the
types of money market securities the Fund can invest in. 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 $500 million, or
               o banker's  acceptances  (which may or may not be  supported by
                 letters  of  credit)  but  only  if   guaranteed  by  a  U.S.
                 commercial  bank  with  total  assets of at least  U.S.  $500
                 million.

      The Fund can  purchase  certificates  of deposit of  $100,000 or less of a
domestic  bank even if that bank has  assets of less than $500  million,  if the
certificate  of deposit is fully insured as to principal by the Federal  Deposit
Insurance  Corporation.  The Fund can buy only one such  certificate  of deposit
from any one bank with that amount of assets and limits its investments in those
certificates of deposit to 10% of its assets.  "Banks"  include U.S.  commercial
banks, savings banks and savings and loan associations.

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

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

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

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

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

      |X| 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.  Currently,  the Fund  does not  expect to have a
portfolio turnover rate of more than 100% annually.

      The Fund can engage in short-term trading to try to achieve its objective.
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.

      Increased  portfolio  turnover  creates higher  brokerage and  transaction
costs for the Fund, which may reduce its overall performance.  Additionally, the
realization  of capital gains from selling  portfolio  securities  may result in
distributions of taxable long-term capital gains to shareholders, since the Fund
will normally  distribute  all of its capital gains realized each year, to avoid
excise taxes under the Internal Revenue Code.

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

      |X| Foreign Securities.  The Fund expects to have substantial  investments
in  foreign  securities.  These  include  equity  securities  issued by  foreign
companies  and debt  securities  issued by  foreign  companies  or  governments,
including supra-national entities.  "Foreign securities" include equity and debt
securities  of 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.  They also include
securities  of  companies  (including  those  that are  located  in the U.S.  or
organized under U.S. law) that derive a significant  portion of their revenue or
profits  from  foreign  businesses,   investments  or  sales,  or  that  have  a
significant  portion  of their  assets  abroad.  They may be traded  on  foreign
securities exchanges or in the foreign over-the-counter markets.

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

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

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

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

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

      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.

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

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

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

      |X|  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, 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.

      The  Fund  may  buy  zero-coupon  and  delayed  interest  securities,  and
"stripped"  securities of corporations and of foreign government issuers.  These
are  similar  in  structure  to  zero-coupon  and  "stripped"  U.S.   government
securities,  but in the case of foreign government  securities may or may not be
backed by the "full faith and credit" of the issuing  foreign  government.  Zero
coupon  securities  issued by foreign  governments and by  corporations  will be
subject to greater credit risks than U.S. government zero-coupon 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.

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

      |X|  "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 demand
obligations  have a demand feature that allows the Fund to tender the obligation
to the issuer or a third party prior to its  maturity.  The tender may be at par
value plus accrued interest, according to the terms of the obligations.

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

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

      |X|  Investing  in Small,  Unseasoned  Companies.  The Fund can  invest in
securities of small, unseasoned companies. These are companies that have been in
operation  for  less  than  three  years,   including  the   operations  of  any
predecessors.  Securities  of these  companies  may be subject to  volatility in
their prices. They may have a limited trading market, which may adversely affect
the Fund's ability to dispose of them and can reduce the price the Fund might be
able to obtain for them.  Other investors that own a security issued by a small,
unseasoned  issuer for which there is limited liquidity might trade the security
when the Fund is attempting to dispose of its holdings of that security. In that
case the Fund might receive a lower price for its holdings than might  otherwise
be obtained.  The Fund  currently  does not intend to invest more than 5% of its
net assets in those securities.

      |X| 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"    or   "forward    commitment"   basis.    When-issued   and
delayed-delivery  are terms that refer to  securities  whose terms and indenture
are  available  and for which a market  exists,  but which are not available for
immediate delivery.

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

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

      When the Fund engages in when-issued and delayed-delivery transactions, it
does so for the purpose of acquiring or selling  securities  consistent with its
investment  objective and policies for its portfolio or for delivery pursuant to
options  contracts it has entered  into,  and not for the purpose of  investment
leverage.  Although  the Fund will enter into  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.

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

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

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

      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.

      |X| 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.

      |X| 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 may decline below the price at which the
Fund is obligated to repurchase securities.

      |X| Loans of Portfolio Securities. To raise cash for liquidity purposes or
income, the Fund can lend its portfolio securities to brokers, dealers and other
types of financial  institutions  approved by the Fund's Board of Trustees. As a
fundamental policy, these loans are limited to not more than 25% of the value of
the Fund's net 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,  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|  Asset-Backed  Securities.   Asset-backed  securities  are  fractional
interests in pools of assets,  typically accounts  receivable or consumer loans.
They are issued by trusts or special-purpose  corporations.  They are similar to
mortgage-backed securities,  described above, and are backed by a pool of assets
that consist of obligations of individual borrowers. The income from the pool is
passed through to the holders of participation  interest in the pools. The pools
may  offer a credit  enhancement,  such as a bank  letter of  credit,  to try to
reduce the risks that the underlying debtors will not pay their obligations when
due.  However,  the enhancement,  if any, might not be for the full par value of
the security.  If the  enhancement  is exhausted  and only required  payments of
principal are not made, the Fund could suffer a loss on its investment or delays
in receiving payment.

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

      |X|  Derivatives.   The  Fund  can  invest  in  a  variety  of  derivative
investments to seek income or for hedging purposes.  Some derivative investments
the Fund can use are the hedging  instruments  described below in this Statement
of Additional Information. However, the Fund is not obligated to use derivatives
in seeking its objective.

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

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

      |X|  Hedging.  Although  the Fund can use hedging  instruments,  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  that  have
appreciated,  or to facilitate  selling securities for investment  reasons,  the
Fund could:
      |_|   sell futures contracts,
      |_|   buy puts on such futures or on securities, or
|_|      write covered calls on securities or futures. Covered calls may also be
         used to increase the Fund's income,  but the Manager does not expect to
         engage extensively in that practice.

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

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

      |_| Futures.  The Fund can buy and sell futures  contracts  that relate to
(1)  broadly-based  stock  indices  (these  are  referred  to  as  "stock  index
futures"), (2) bond indices (these are referred to as "bond index futures"), (3)
debt securities (these are referred to as "interest rate futures"),  (4) foreign
currencies (these are referred to as "forward contracts") and (5) commodities.

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

      |_| 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.

            |_| 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  certain  types of  calls,  the call  may be  covered  by
segregating  liquid assets to enable the Fund to satisfy its  obligations if the
call is exercised.  Up to 35% of the Fund's total assets may be subject to calls
the Fund writes.

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

      When the Fund writes a call on an index, it receives cash (a premium).  If
the buyer of the call exercises it, the Fund will pay an amount of cash equal to
the  difference  between the closing  price of the call and the exercise  price,
multiplied by 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, or a securities depository acting for the Custodian,
will act as the Fund's  escrow  agent,  through  the  facilities  of the Options
Clearing  Corporation  ("OCC"),  as to the  investments  on  which  the Fund has
written calls traded on exchanges or as to other acceptable  escrow  securities.
In that way, no margin will be required for such transactions.  OCC will release
the  securities  on the  expiration of the option or when the Fund enters into a
closing transaction.

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

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

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

            |_| Writing Put Options. The Fund can sell put options. 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 25% 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  segregated  liquid
assets. The premium the Fund receives from writing a put represents a profit, as
long as the price of the  underlying  investment  remains  equal to or above the
exercise price of the put. However,  the Fund also assumes the obligation during
the option period to 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.

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

      The Fund can buy puts whether or not it holds the underlying investment in
its portfolio.  When the Fund purchases a put, it pays a premium and,  except as
to puts on indices, has the right to sell the underlying  investment to a seller
of a put on a corresponding investment during the put period at a fixed exercise
price.

      Buying a put on 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.

      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.

      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.

            |_| 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 maintaining cash, U.S.  government
securities or other liquid, high grade debt securities in an amount equal to the
exercise price of the option, in a segregated  account with the Fund's Custodian
bank.

      |_|  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 may
advance  and the value of the  securities  held in the  Fund's  portfolio  might
decline. If that occurred,  the Fund would lose money on the hedging instruments
and also experience a decline in the value of its portfolio securities. However,
while this could occur for a very brief period or to a very small  degree,  over
time the value of a diversified portfolio of securities will tend to move in the
same direction as the indices upon which the hedging instruments are based.

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

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

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

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

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

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

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

      The Fund could also use forward contracts to lock in the U.S. dollar value
of  portfolio  positions.  This is  called  a  "position  hedge."  When the Fund
believes that foreign  currency might 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 may have to purchase
additional  foreign  currency on the "spot" (that is, cash) market to settle the
security trade.  If the market value of the security  instead exceeds the amount
of foreign  currency the Fund is  obligated to deliver to settle the trade,  the
Fund might have to sell on the spot market some of the foreign currency received
upon the sale of the security. There will be additional transaction costs on the
spot market in those cases.

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

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

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

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

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

      Transactions in options by the Fund are subject to limitations established
by the option exchanges.  The exchanges limit the maximum number of options that
may be  written or held by a single  investor  or group of  investors  acting in
concert.  Those limits apply  regardless  of whether the options were written or
purchased on the same or different exchanges or are held in one or more accounts
or through one or more different exchanges or through one or more brokers. Thus,
the number of options that the Fund may write or hold may be affected by options
written or held by other entities,  including other investment  companies having
the same  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  cash or readily  marketable  short-term  debt  instruments  in an
amount equal to the market value of the securities  underlying the future,  less
the margin deposit applicable to it. The account must be a segregated account or
accounts held by the Fund's Custodian bank.

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

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

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

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

Investment Restrictions

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

      The Fund's investment  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.

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

      |_| 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 lend money.  However,  it can buy debt securities that
its investment  policies and  restrictions  permit it to purchase.  The Fund may
also lend its portfolio  securities  subject to the percentage  restrictions set
forth in this Statement of Additional  Information and may enter into repurchase
agreements.

      |_| The Fund cannot concentrate  investments.  That means it cannot invest
25% or more of its total assets in companies in any one industry. Obligations of
the U.S. government, its agencies and instrumentalities are not considered to be
part of an "industry" for the purposes of this restriction.

      |_| The Fund cannot buy or sell real estate,  including futures contracts.
However,  the Fund can  purchase  debt  securities  secured  by real  estate  or
interests in real estate.

      |_| The Fund cannot underwrite securities of other companies.  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.

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

      |_| The Fund cannot invest in the securities issued by any company for the
purpose of acquiring control or management of that company, except in connection
with a merger, reorganization, consolidation or acquisition of assets.

      |_| The Fund cannot invest in or hold securities of any issuer if officers
and Trustees of the Fund or the Manager 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.

      |_| The Fund  cannot  buy  securities  on margin.  However,  this does not
prohibit  the Fund from making  margin  deposits in  connection  with any of the
hedging instruments permitted by any of its other investment policies.

      |_| The Fund cannot borrow money in excess of 5% of the value of its total
assets. It can borrow only as a temporary measure for extraordinary or emergency
purposes.

      |_| The Fund cannot  mortgage,  hypothecate or pledge any of its assets to
secure a debt.  However,  the escrow  arrangements  in  connection  with hedging
instruments are not considered to involve a mortgage, hypothecation or pledge.

      |_| 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.

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

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

                             How the Fund is Managed

Organization  and  History.  The  Fund is an  open-end,  diversified  management
investment  company with an unlimited number of authorized  shares of beneficial
interest. The Fund was organized as a Massachusetts business trust in 1987.

                          The Fund is governed by a Board of  Trustees,  which
is responsible for protecting the interests of shareholders under  Massachusetts
law. The Trustees meet  periodically  throughout  the year to oversee the Fund's
activities,  review its  performance,  and review  the  actions of the  Manager.
Although the Fund will not normally hold annual meetings of its shareholders, it
may hold  shareholder  meetings  from  time to time on  important  matters,  and
shareholders  have the  right to call a meeting  to remove a Trustee  or to take
other action described in the Fund's Declaration of Trust.

      |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 N. All  classes  invest in the same
investment portfolio. Each class of shares:
      o  has its own dividends and distributions,
      o pays certain expenses which may be different for the different  classes,
      o may have a different net asset value, o may have separate  voting rights
      on matters in which interests of one
         class are different from  interests of another class,  and o votes as a
      class on matters that affect that class alone.

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

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

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

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

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

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

Trustees  and Officers of the Fund.  The Fund's  Trustees and officers and their
principal  occupations and business affiliations and occupations 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 Trustees or Directors of the  following  New  York-based
Oppenheimer funds2:

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

      Ms. Macaskill and Messrs. Spiro, Donohue,  Wixted, Zack, Bishop and Farrar
respectively  hold the same  offices with the other New  York-based  Oppenheimer
funds as with the Fund. As of January 5, 2001,  the Trustees and officers of the
Fund as a group  owned of record or  beneficially  less than 1% of each class of
shares of the Fund. The foregoing statement does not reflect ownership of shares
of the Fund held of record by an  employee  benefit  plan for  employees  of the
Manager, other than the shares beneficially owned under the plan by the officers
of the Fund listed above.  Ms.  Macaskill  and Mr.  Donohue are trustees of that
plan.

Leon Levy, Chairman of the Board of Trustees, Age: 75.
280 Park Avenue, New York, NY 10017
General Partner of Odyssey  Partners,  L.P.  (investment  partnership)  (since
1982) and Chairman of Avatar Holdings, Inc. (real estate development).

Donald W. Spiro, Vice Chairman of the Board of Trustees, Age: 75. 399 Ski Trail,
Smoke Rise, New Jersey 07405 Formerly he held the following positions:  Chairman
Emeritus  (August 1991 - August 1999),  Chairman  (November 1987 - January 1991)
and a  director  (January  1969 - August  1999) of the  Manager;  President  and
Director of OppenheimerFunds Distributor,  Inc., a subsidiary of the Manager and
the Fund's Distributor (July 1978 - January 1992).

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

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

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

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

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

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

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

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

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

Richard H. Rubinstein,  Vice President and Portfolio Manager,  Age: 52 Two World
Trade Center, New York, New York 10048-0203 Senior Vice President (since October
1995) of the Manager;  an officer and portfolio  manager of another  Oppenheimer
fund; formerly a Vice President of the Manager (June 1990 - October 1995).

David P. Negri, Vice President and Portfolio  Manager,  Age: 46. Two World Trade
Center,  New York,  New York  10048-0203  Senior Vice  President  of the Manager
(since May 1998) and of HarbourView  Asset Management  Corporation  (since April
1999); an officer and portfolio  manager of other  Oppenheimer  funds;  formerly
Vice President of the Manager (July 1988 - May 1998)

George Evans,  Vice  President and Portfolio  Manager,  Age: 41. Two World Trade
Center,  New York,  New York  10048-0203  Vice  President of the Manager  (since
October 1993) and of HarbourView Asset Management Corporation (since July 1994);
an officer and portfolio manager of other Oppenheimer funds.

Michael S. Levine,  Vice  President  and Portfolio  Manager,  Age: 35. Two World
Trade Center,  New York, New York 10048-0203 Vice President (since June 1998) of
the  Manager;  an officer  and  portfolio  manager of other  Oppenheimer  funds;
formerly  Assistant Vice  President and Portfolio  Manager of the Manager (April
1996 - June 1998); prior to joining the Manager in June 1994, he was a portfolio
manager and  research  associate  for Amas  Securities,  Inc.  (February  1990 -
February 1994).

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

Brian W. Wixted,  Treasurer and Principal  Financial and  Accounting  Officer,
Age: 41.
6803 South Tucson Way, Englewood, Colorado 80112
Senior Vice President and Treasurer (since March 1999) of the Manager; Treasurer
(since March 1999) of  HarbourView  Asset  Management  Corporation,  Shareholder
Services,  Inc.,  Oppenheimer  Real Asset  Management  Corporation,  Shareholder
Financial  Services,  Inc. and Oppenheimer  Partnership  Holdings,  Inc., of OFI
Private   Investments,   Inc.   (since  March  2000)  and  of   OppenheimerFunds
International  Ltd.  and  Oppenheimer  Millennium  Funds plc  (since  May 2000);
Treasurer and Chief  Financial  Officer (since May 2000) of PIMCO Trust Company;
Assistant  Treasurer (since March 1999) of Oppenheimer  Acquisition Corp. and of
Centennial Asset Management Corporation;  an officer of other Oppenheimer funds;
formerly Principal and Chief Operating  Officer,  Bankers Trust Company - Mutual
Fund  Services  Division  (March 1995 - March 1999);  Vice  President  and Chief
Financial Officer of CS First Boston Investment Management Corp. (September 1991
- March 1995).

Robert G. Zack, Assistant Secretary, Age: 52.
Two World Trade Center, New York, New York 10048-0203
Senior Vice President  (since May 1985) and Associate  General  Counsel (since
May 1981) of the Manager;  Assistant Secretary of Shareholder  Services,  Inc.
(since May 1985),  Shareholder Financial Services, Inc. (since November 1989);
OppenheimerFunds  International  Ltd.  and  Oppenheimer  Millennium  Funds plc
(since October 1997); an officer of other Oppenheimer funds.

Robert J. Bishop, Assistant Treasurer, Age: 42.
6803 South Tucson Way, Englewood, Colorado 80112
Vice  President  of the  Manager/Mutual  Fund  Accounting  (since May 1996);  an
officer of other Oppenheimer funds;  formerly an Assistant Vice President of the
Manager/Mutual  Fund Accounting (April 1994 - May 1996) and a Fund Controller of
the Manager.

Scott T. Farrar, Assistant Treasurer, Age: 35.
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); Assistant
Treasurer of Oppenheimer  Millennium  Funds plc (since October 1997); an officer
of  other  Oppenheimer  Funds;  formerly  an  Assistant  Vice  President  of the
Manager/Mutual Fund Accounting (April 1994 - May 1996), and a Fund Controller of
the Manager.


      |X|  Remuneration  of  Trustees.  The  officers  of the Fund  and  certain
Trustees of the Fund (Ms.  Macaskill  and prior to July 31, 1999 Mr.  Spiro) who
are  affiliated  with the  Manager  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 period ended September 30,
2000.  The  compensation  from  all  of the  New  York-based  Oppenheimer  funds
(including  the  Fund)  was  received  as a  director,  trustee  or  member of a
committee of the boards of those funds during the calendar year 2000.



<PAGE>


 ------------------------------------------------------------------------------
                                                                           Total
                                              Retirement       Compensation
                                               Benefits          from all
                             Aggregate     Accrued as Part    New York based
      Trustee's Name        Compensation       of Fund         Oppenheimer
   and Other Positions       From Fund1        Expenses     Funds (30 Funds)2
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
        Leon Levy             $22,348          $19,016           $171,950
 Chairman
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
     Robert G. Galli3          $2,028             $0             $191,134
 Study Committee Member
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
  Phillip A. Griffiths4         $819              $0             $59,529

 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
    Benjamin Lipstein         $24,775          $21,896           $148,639
 Study Committee
 Chairman,
 Audit Committee Member
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
  Elizabeth B. Moynihan        $3,430           $1,461           $104,695
 Study Committee Member
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
    Kenneth A. Randall        $13,531          $11,738           $96,034
 Audit Committee Chairman
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
     Edward V. Regan           $1,786             $0             $94,995
 Proxy Committee
 Chairman,
 Audit Committee Member
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Russell S. Reynolds, Jr.      $4,887           $3,551           $71,069
 Proxy Committee Member
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Donald W. Spiro                $950              $0             $63,435

 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
   Clayton K. Yeutter5         $1,243             $0             $71,069
 Proxy Committee Member
 ------------------------------------------------------------------------------

 1Aggregate  compensation includes fees, deferred  compensation,  if any, and
 retirement plan benefits accrued for a Trustee or Director.
 2For the 2000 calendar year.
 3Calendar year 2000 figures include compensation from the Oppenheimer New York,
 Quest and Rochester Funds.  4Includes $819 deferred under Deferred Compensation
 Plan described below.  5Includes $311 deferred under Deferred Compensation Plan
 described below.


      |X| Retirement  Plan for Trustees.  The Fund has adopted a retirement plan
that  provides for payments to retired  Trustees.  Payments are up to 80% of the
average  compensation paid during a Trustee's five years of service in which the
highest  compensation  was received.  A Trustee must serve as trustee for any of
the New  York-based  Oppenheimer  funds for at least 15 years to be eligible for
the maximum  payment.  Each  Trustee's  retirement  benefits  will depend on the
amount of the Trustee's future compensation and length of service. Therefore the
amount of those benefits  cannot be determined at this time, nor can we estimate
the number of years of credited  service  that will be used to  determine  those
benefits.

      |X| 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.

      |X| Major  Shareholders.  As of January 5, 2001, there were no persons who
owned of  record  or were  known by the Fund to own of  record 5% or more of any
class of the Fund's outstanding shares.

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

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

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

      |X| The Investment  Advisory  Agreement.  The Manager provides  investment
advisory  and  management  services  to the Fund  under an  investment  advisory
agreement  between the Manager and the Fund. The Manager selects  securities for
the Fund's portfolio and handles its day-to-day business. The portfolio managers
of the Fund are employed by the Manager and are the persons who are  principally
responsible for the day-to-day management of the Fund's portfolio. Other members
of the  Manager's  Equity  Portfolio  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 Fund pays expenses not  expressly  assumed by the Manager under the advisory
agreement.  The advisory  agreement lists examples of expenses paid by the Fund.
The major categories relate to interest,  taxes, brokerage commissions,  fees to
certain  Trustees,  legal and  audit  expenses,  custodian  and  transfer  agent
expenses,  share issuance costs,  certain  printing and  registration  costs and
non-recurring expenses,  including litigation costs. The management fees paid by
the Fund to the Manager are calculated at the rates described in the Prospectus,
which are applied to the assets of the Fund as a whole.  The fees are  allocated
to each class of shares  based upon the  relative  proportion  of the Fund's net
assets represented by that class.

      --------------------------------------------------------------------
      Fiscal Year ended 9/30:  Management Fees Paid to OppenheimerFunds,
                                                 Inc.
      --------------------------------------------------------------------
      --------------------------------------------------------------------
               1998                           $5,796,545
      --------------------------------------------------------------------
      --------------------------------------------------------------------
               1999                           $5,491,251
      --------------------------------------------------------------------
      --------------------------------------------------------------------
               2000                           $5,313,004
      --------------------------------------------------------------------

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  adviser 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 adviser or general
distributor.  If the Manager  shall no longer act as  investment  adviser to the
Fund,  the  Manager  may  withdraw  the  right  of  the  Fund  to use  the  name
"Oppenheimer" as part of its name.

                         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, it
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 concessions paid to such brokers may be higher than
another  qualified  broker  would  charge,  if the  Manager  makes a good  faith
determination  that the  concession  is fair and  reasonable  in relation to the
services  provided.  Subject to those  considerations,  as a factor in selecting
brokers for the Fund's  portfolio  transactions,  the Manager 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  transactions  in  listed  securities  or for  certain  fixed-income  agency
transactions in the secondary market.  Otherwise brokerage  commissions are paid
only if it appears  likely that a better price or  execution  can be obtained by
doing so. In an option transaction, the Fund ordinarily uses the same broker for
the  purchase or sale of the option and any  transaction  in the  securities  to
which the option  relates.  Other funds  advised by the Manager have  investment
policies  similar to those of the Fund.  Those other funds may  purchase or sell
the same securities as the Fund at the same time as the Fund, which could affect
the supply  and price of the  securities.  If two or more  funds  advised by the
Manager  purchase the same  security on the same day from the same  dealer,  the
transactions  under those combined orders are averaged as to price and allocated
in accordance with the purchase or sale orders actually placed for each account.

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

      The  investment   advisory  agreement  permits  the  Manager  to  allocate
brokerage for research services.  The 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 concessions
was reasonably related to the value or benefit of such services.

 ------------------------------------------------------------------------------
  Fiscal Year Ended 9/30:     Total Brokerage Concessions Paid by the Fund1
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
           1998                                 $748,323
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
           1999                                 $374,665
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
           2000                                 $720,3402
 ------------------------------------------------------------------------------

1.    Amounts do not include spreads or concessions on principal  transactions
   on a net trade basis.
2. In the fiscal  year ended  9/30/00,  the amount of  transactions  directed to
   brokers for research  services was $122,602 and the amount of the concessions
   paid to broker-dealers for those services was $53,735,033.


                         Distribution and Service Plans

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

The  compensation  paid to (or  retained  by) the  Distributor  from the sale of
shares or on the redemption of shares during the Fund's three most recent fiscal
years is shown in the table below.

-------------------------------------------------------------------------------
           Aggregate      Class A     Concessions   Concessions   Concessions
 Fiscal    Front-End      Front-       on Class A    on Class B   on Class C
  Year       Sales       End Sales       Shares        Shares       Shares
  Ended     Charges       Charges     Advanced by   Advanced by   Advanced by
  9/30:    on Class A   Retained by   Distributor1  Distributor2 Distributor1
             Shares    Distributor1
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
  1998      $910,294     $288,141       $88,505       $878,710     $134,394
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
  1999      $407,315     $141,422       $20,257       $381,434      $50,023
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
  2000      $392,339     $144,549       $14,825       $348,915      $48,291
-------------------------------------------------------------------------------
1. Includes  amounts  retained by a  broker-dealer  that is an  affiliate or a
   parent of the distributor.
2. The Distributor  advances concession payments to dealers for certain sales of
   Class A  shares  and for  sales of  Class B and  Class C shares  from its own
   resources at the time of sale.

-------------------------------------------------------------------------------
                Class A Contingent   Class B Contingent    Class C Contingent
                  Deferred Sales       Deferred Sales        Deferred Sales
  Fiscal Year    Charges Retained     Charges Retained      Charges Retained
  Ended 9/30      by Distributor       by Distributor        by Distributor
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
     2000             $4,472              $151,138               $4,114
-------------------------------------------------------------------------------

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

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.

      |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.

For the fiscal period ended  September 30, 2000 payments  under the Class A Plan
totaled $1,249,743 all of which was paid by the Distributor to recipients.  That
included $74,786 paid to an affiliate of the Distributor's  parent company.  Any
unreimbursed  expenses the Distributor  incurs with respect to Class A shares in
any fiscal year cannot be recovered in subsequent years. The Distributor may not
use  payments  received  the Class A Plan to pay any of its  interest  expenses,
carrying charges, or other financial costs, or allocation of overhead.

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

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

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

The  asset-based  sales  charges  on Class B,  Class C and Class N shares  allow
investors to buy shares  without a front-end  sales  charge  while  allowing the
Distributor  to  compensate  dealers that sell those  shares.  The Fund pays the
asset-based  sales  charges to the  Distributor  for its  services  rendered  in
distributing  Class B, Class C and Class N shares.  The payments are made to the
Distributor in recognition  that the  Distributor:  o pays sales  concessions to
authorized  brokers  and  dealers at the time of sale and pays  service  fees as
described above, o may finance payment of sales  concessions  and/or the advance
of the service fee payment to  recipients  under the plans,  or may provide such
financing  from its own  resources  or from the  resources  of an  affiliate,  o
employs  personnel  to  support  distribution  of Class B,  Class C and  Class N
shares, and o bears the costs of sales literature,  advertising and prospectuses
(other  than those  furnished  to  current  shareholders)  and state  "blue sky"
registration fees and certain other distribution expenses.

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

-------------------------------------------------------------------------------
  Distribution Fees Paid to the Distributor in the Fiscal Year Ended 9/30/00
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
                                                Distributor's   Distributor's
                                                  Aggregate      Unreimbursed
                     Total         Amount       Unreimbursed    Expenses as %
                   Payments     Retained by       Expenses      of Net Assets
     Class        Under Plan    Distributor      Under Plan        of Class
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class B Plan       $670,083       $528,605       $2,511,958         3.76%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class C Plan       $386,245       $52,369         $667,881          1.73%
-------------------------------------------------------------------------------

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

                             Performance of the Fund

Explanation  of  Performance  Terminology.  The Fund uses a variety  of terms to
illustrate its investment  performance.  Those terms include  "cumulative  total
return,"  "average  annual total  return,"  "average  annual total return at net
asset value" and "total return at net asset value." An  explanation of how total
returns are  calculated  is set forth  below.  The charts  below show the Fund's
performance as of the Fund's most recent fiscal year end. You can obtain current
performance  information by calling the Fund's Transfer Agent at  1-800-525-7048
or    by    visiting    the    OppenheimerFunds    Internet    web    site    at
http://www.oppenheimerfunds.com.

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

      Use of  standardized  performance  calculations  enables  an  investor  to
compare the Fund's  performance  to the  performance of other funds for the same
periods.  However,  a number of factors  should be  considered  before using the
Fund's performance information as a basis for comparison with other investments:
      |_| 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.
      |_| An  investment  in the Fund is not  insured  by the FDIC or any  other
government agency.
      |_| The Fund's  performance  returns do not reflect the effect of taxes on
dividends and capital gains distributions.
      |_| The  principal  value of the Fund's  shares and total  returns are not
guaranteed and normally will fluctuate on a daily basis.
      |_| When an investor's shares are redeemed, they may be worth more or less
than their original cost.
      |_|  Total  returns  for  any  given  past  period  represent   historical
performance information and are not, and should not be considered,  a prediction
of future returns.

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

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

      In calculating total returns for Class A shares, the current maximum sales
charge of 5.75% (as a  percentage  of the offering  price) is deducted  from the
initial  investment  ("P") (unless the return is shown without sales charge,  as
described  below).  For Class B shares,  payment  of the  applicable  contingent
deferred  sales charge is applied,  depending on the period for which the return
is shown: 5.0% in the first year, 4.0% in the second year, 3.0% in the third and
fourth  years,  2.0%  in the  fifth  year,  1.0%  in the  sixth  year  and  none
thereafter.  For Class C shares,  the 1%  contingent  deferred  sales  charge is
deducted for returns for the 1-year period.

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


                1/n
            (ERV)
            (---)   -1 = Average Annual Total Return
            ( P )



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


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


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

 ------------------------------------------------------------------------------
             The Fund's Total Returns for the Periods Ended 9/30/004
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
          Cumulative Total                Average Annual Total Returns
          Returns (10 years
 Class    or Life of Class)
 of
 Shares
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
                                                   5-Year           10-Year
                                  1-Year            (or               (or
                                               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
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Class A  193.99%(1)211.93%(1) 6.80%  13.31%   11.04%  12.36% 11.39%(1)12.05%(1)
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Class B  74.45%(2) 75.45%(2)  7.30%  12.30%   11.11%  11.37% 11.56%(2)11.69%(2)
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Class C  104.24%(3)104.24%(3)11.35%  12.35%   11.42%  11.42% 11.02%(3)11.02%(3)
 ------------------------------------------------------------------------------

 1. Inception of Class A:     4/24/87
 2. Inception of Class B:     8/29/95
 3. Inception of Class C:     12/1/93
 4. Class N shares were not offered during the Fund's fiscal year ended 9/30/00.
Therefore,  this  Statement  of  Additional  Information  does not  contain  any
performance information for that class.

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 in categories  based on
investment  styles.  Lipper currently ranks the Fund's  performance  against all
other balanced funds. The Lipper performance rankings are based on total returns
that include the reinvestment of capital gain distributions and income dividends
but do not take sales charges or taxes into consideration. 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 Rankings.  From time to time the Fund may publish the star
ranking of the  performance  of its classes of shares by  Morningstar,  Inc., an
independent  mutual fund monitoring  service.  Morningstar ranks mutual funds in
broad investment  categories:  domestic stock funds,  international stock funds,
taxable bond funds and municipal  bond funds.  The Fund is ranked among domestic
stock funds.

      Morningstar  star  rankings are based on  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  measures  a  fund's  (or  class's)
performance below 90-day U.S. Treasury bill returns.  Risk and investment return
are combined to produce star  rankings  reflecting  performance  relative to the
average fund in a fund's category.  Five stars is the "highest" ranking (top 10%
of funds in a category), four stars is "above average" (next 22.5%), three stars
is "average"  (next 35%), two stars is "below average" (next 22.5%) and one star
is "lowest"  (bottom  10%).  The current star ranking is the fund's (or class's)
3-year  ranking  or  its  combined  3-  and  5-year  ranking  (weighted  60%/40%
respectively),  or its combined 3-, 5-, and 10-year  ranking  (weighted 40%, 30%
and 30%, respectively),  depending on the inception date of the fund (or class).
Rankings are subject to change monthly.

      The Fund may also  compare its  performance  to that of other funds in its
Morningstar  category.  In  addition  to its  star  rankings,  Morningstar  also
categorizes  and compares a fund's  3-year  performance  based on  Morningstar's
classification of the fund's investments and investment style, rather than how a
fund  defines its  investment  objective.  Morningstar's  four broad  categories
(domestic  equity,  international  equity,  municipal bond and taxable bond) are
each  further  subdivided  into  categories  based on types of  investments  and
investment  styles.  Those comparisons by Morningstar are based on the same risk
and return  measurements  as its star rankings but do not consider the effect of
sales charges..

      |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.

                               ABOUT YOUR ACCOUNT

            How to Buy Shares

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

AccountLink.  When shares are purchased through AccountLink,  each purchase must
be at least $25.  Shares  will be  purchased  on the  regular  business  day the
Distributor  is  instructed  to initiate the  Automated  Clearing  House ("ACH")
transfer to buy the shares.  Dividends will begin to accrue on shares  purchased
with the proceeds of ACH transfers on the business day the Fund received 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. The proceeds of ACH transfers are normally received by the Fund
3 days after the  transfers are  initiated.  If the proceeds of the ACH transfer
are not received on a timely basis, the Distributor reserves the right to cancel
the purchase  order.  The  Distributor  and the Fund are not responsible for any
delays in purchasing shares resulting from delays in ACH transmissions.

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

      |X| Right of  Accumulation.  To qualify for the lower sales  charge  rates
that apply to larger  purchases  of Class A shares,  you and your spouse can add
together:
         |_|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
         |_|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
         |_|Class A and  Class B shares  of  Oppenheimer  funds  you  previously
            purchased subject to an initial or contingent  deferred sales charge
            to reduce the sales  charge  rate for current  purchases  of Class A
            shares,  provided that you still hold your  investment in one of the
            Oppenheimer funds.

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

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

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

Oppenheimer Insured Municipal Fund        Oppenheimer Trinity Growth Fund
Oppenheimer Intermediate Municipal Fund   Oppenheimer Trinity Value Fund
Oppenheimer International Bond Fund       Oppenheimer U.S. Government Trust
Oppenheimer International Growth Fund     Oppenheimer World Bond Fund
Oppenheimer     International     Small
Company Fund                              Limited-Term New York Municipal Fund
Oppenheimer Large Cap Growth Fund         Rochester Fund Municipals



And the following money market funds:

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

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

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

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

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

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

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

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


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

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

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

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

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

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

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

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

Asset Builder Plans.  To establish an Asset Builder Plan to buy shares  directly
from a bank  account,  you must  enclose a check  (the  minimum  is $25) for the
initial purchase with your  application.  Shares purchased by Asset Builder Plan
payments  from bank  accounts  are subject to the  redemption  restrictions  for
recent purchases described in the Prospectus.  Asset Builder Plans are available
only if your bank is an ACH member.  Asset  Builder Plans may not be used to buy
shares for  OppenheimerFunds  employer-sponsored  qualified  retirement accounts
offered by  employers  to their  employees.  Asset  Builder  Plans  also  enable
shareholders  of Oppenheimer  Cash Reserves to use their account in that fund to
make  monthly  automatic  purchases  of shares of up to four  other  Oppenheimer
funds.

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

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

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

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

Classes of Shares.  Each class of shares of the Fund  represents  an interest in
the same portfolio of investments of the Fund. However, each class has different
shareholder  privileges and features.  The net income  attributable  to Class B,
Class C or Class N shares and the dividends payable on Class B, Class C or Class
N shares will be reduced by  incremental  expenses  borne  solely by that class.
Those expenses include the asset-based  sales charges to which Class B 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,
Class C and Class N shares  have no initial  sales  charge,  the  purpose of the
deferred sales charge and asset-based sales charge on Class B, Class C and Class
N shares is the same as that of the initial  sales charge on Class A shares - to
compensate the Distributor and brokers,  dealers and financial institutions that
sell shares of the Fund. A salesperson  who is entitled to receive  compensation
from his or her firm for selling  Fund shares may  receive  different  levels of
compensation for selling one class of shares than another.

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

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

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

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

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

Determination  of Net Asset Values Per Share.  The net asset values per share of
each class of shares of the Fund are  determined  as of the close of business of
The New  York  Stock  Exchange  on each  day that  the  Exchange  is  open.  The
calculation is done by dividing the value of the Fund's net assets  attributable
to a class by the  number of  shares of that  class  that are  outstanding.  The
Exchange  normally  closes at 4:00 P.M., New York time, but may close earlier on
some other days (for example,  in case of weather emergencies or on days falling
before a 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
Board of  Trustees  determines  that the event is  likely  to effect a  material
change in the value of the  security.  The Manager may make that  determination,
under procedures established by the Board.

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

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

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

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

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

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

How to Sell Shares

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

Reinvestment Privilege.  Within six months of a redemption,  a shareholder may
reinvest all or part of the redemption proceeds of:

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

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

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

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

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

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

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

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

Distributions   From  Retirement   Plans.   Requests  for   distributions   from
OppenheimerFunds-sponsored  IRAs,  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 below).

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

      |X|  Automatic  Exchange  Plans.  Shareholders  can authorize the Transfer
Agent to exchange a  pre-determined  amount of shares of the Fund for shares (of
the  same  class)  of  other  Oppenheimer  funds  automatically  on  a  monthly,
quarterly,  semi-annual  or annual basis under an Automatic  Exchange  Plan. The
minimum  amount  that  may be  exchanged  to each  other  fund  account  is $25.
Instructions  should  be  provided  on  the   OppenheimerFunds   Application  or
signature-guaranteed instructions.  Exchanges made under these plans are subject
to the  restrictions  that apply to  exchanges  as set forth in "How to Exchange
Shares" in the Prospectus and below in this Statement of Additional Information.

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

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

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

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

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

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

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

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

            How to Exchange Shares

      As stated in the Prospectus,  shares of a particular  class of Oppenheimer
funds having more than one class of shares may be  exchanged  only for shares of
the same class of other Oppenheimer funds. Shares of Oppenheimer funds that have
a single class without a class  designation are deemed "Class A" shares for this
purpose.  You can obtain a current list showing  which funds offer which classes
by calling the Distributor at 1.800.525.7048.
      o  All of the  Oppenheimer  funds  currently offer Class A, B and C shares
         except  Oppenheimer  Money Market Fund,  Inc.,  Centennial Money Market
         Trust,  Centennial  Tax  Exempt  Trust,  Centennial  Government  Trust,
         Centennial New York Tax Exempt Trust,  Centennial California Tax Exempt
         Trust,  and  Centennial  America Fund,  L.P.,  which only offer Class A
         shares.
         o 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  Only certain Oppenheimer funds currently offer Class Y shares.  Class Y
         shares of  Oppenheimer  Real Asset Fund may not be exchanged for shares
         of any other fund.
      o  Class M  shares  of  Oppenheimer  Convertible  Securities  Fund  may be
         exchanged only for Class A shares of other Oppenheimer  funds. They may
         not be  acquired  by  exchange  of  shares  of any  class of any  other
         Oppenheimer  funds  except Class A shares of  Oppenheimer  Money Market
         Fund or  Oppenheimer  Cash  Reserves  acquired  by  exchange of Class M
         shares.
      o  Class A  shares  of  Oppenheimer  Senior  Floating  Rate  Fund  are not
         available  by exchange of shares of  Oppenheimer  Money  Market Fund or
         Class A shares of Oppenheimer  Cash Reserves.  If any Class A shares of
         another  Oppenheimer  fund  that are  exchanged  for  Class A shares of
         Oppenheimer  Senior  Floating  Rate  Fund are  subject  to the  Class A
         contingent  deferred sales charge of the other  Oppenheimer fund at the
         time of  exchange,  the  holding  period  for that  Class A  contingent
         deferred  sales  charge  will  carry  over  to the  Class A  shares  of
         Oppenheimer  Senior  Floating Rate Fund  acquired in the exchange.  The
         Class A shares of  Oppenheimer  Senior  Floating  Rate Fund acquired in
         that exchange will be subject to the Class A Early Withdrawal Charge of
         Oppenheimer  Senior Floating Rate Fund if they are  repurchased  before
         the expiration of the holding period.
      o  Class X shares of Limited Term New York Municipal Fund can be exchanged
         only for Class B shares of other Oppenheimer funds and no exchanges may
         be made to Class X shares.
      o  Shares of Oppenheimer  Capital  Preservation  Fund may not be exchanged
         for shares of Oppenheimer  Money Market Fund,  Inc.,  Oppenheimer  Cash
         Reserves or Oppenheimer Limited-Term Government Fund. Only participants
         in certain retirement plans may purchase shares of Oppenheimer  Capital
         Preservation  Fund, and only those  participants may exchange shares of
         other Oppenheimer funds for shares of Oppenheimer Capital  Preservation
         Fund.

      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.

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

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

|X| How  Exchanges  Affect  Contingent  Deferred  Sales  Charges.  No contingent
deferred  sales charge is imposed on exchanges of shares of any class  purchased
subject to a contingent  deferred  sales  charge.  However,  when Class A shares
acquired  by  exchange of Class A shares of other  Oppenheimer  funds  purchased
subject to a Class A contingent  deferred  sales  charge are redeemed  within 18
months of the end of the calendar month of the initial purchase of the exchanged
Class A shares,  the Class A contingent  deferred sales charge is imposed on the
redeemed  shares.  The Class B  contingent  deferred  sales charge is imposed on
Class B shares  acquired by exchange if they are redeemed  within 6 years of the
initial  purchase  of the  exchanged  Class B  shares.  The  Class C  contingent
deferred sales charge is imposed on Class C shares  acquired by exchange if they
are redeemed  within 12 months of the initial  purchase of the exchanged Class C
shares.  With respect to Class N shares,  a 1% contingent  deferred sales charge
will be imposed if the retirement  plan (not including IRAs and 403(b) plans) is
terminated  or Class N shares  of all  Oppenheimer  funds are  terminated  as an
investment  option of the plan and Class N shares are redeemed  within 18 months
after the plan's  first  purchase of Class N shares of any  Oppenheimer  fund or
with respect to an individual retirement plan or 403(b) plan, Class N shares are
redeemed  within 18 months of the plan's first purchase of Class N shares of any
Oppenheimer fund.


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

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

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

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

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

                       Dividends, Capital Gains and Taxes

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

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

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

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

      Under the Internal  Revenue Code, by December 31 each year,  the Fund must
distribute  98% of its taxable  investment  income earned from January 1 through
December  31 of that year and 98% of its  capital  gains  realized in the period
from November 1 of the prior year through  October 31 of the current year. If it
does not, the Fund must pay an excise tax on the amounts not distributed.  It is
presently  anticipated that the Fund will meet those requirements.  However, the
Board of 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 a prospectus for that fund and an application from
the Distributor to establish an account.  Dividends  and/or  distributions  from
shares of certain other Oppenheimer funds (other than Oppenheimer Cash Reserves)
may be invested in shares of this Fund on the same basis.

                      Additional Information About the Fund

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

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

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

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

40   OPPENHEIMER MULTIPLE STRATEGIES FUND
<PAGE>

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


================================================================================
The Board of Trustees and Shareholders of
Oppenheimer Multiple Strategies Fund:

We have audited the accompanying statement of assets and liabilities,  including
the statement of  investments,  of Oppenheimer  Multiple  Strategies  Fund as of
September 30, 2000,  and the related  statement of operations  for the year then
ended,  the  statements  of  changes  in net assets for each of the years in the
two-year period then ended and the financial highlights for each of the years in
the four-year period then ended, the nine-month period ended September 30, 1996,
and the year ended December 31, 1995.  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  auditing  standards  generally
accepted in the United States of America.  Those standards  require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of September 30, 2000, by correspondence  with the custodian
and  brokers;  and  where  confirmations  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,  the financial  statements and financial highlights referred
to above present fairly,  in all material  respects,  the financial  position of
Oppenheimer  Multiple  Strategies  Fund as of September 30, 2000, the results of
its operations  for the year then ended,  the changes in its net assets for each
of the years in the two-year period then ended, and the financial highlights for
each of the years in the  four-year  period then ended,  the  nine-month  period
ended  September 30, 1996,  and the year ended  December 31, 1995, in conformity
with accounting principles generally accepted in the United States of America.


KPMG LLP

Denver, Colorado
October 20, 2000


Financials

[GRAPHIC]


11   OPPENHEIMER MULTIPLE STRATEGIES FUND
<PAGE>

--------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS                                      September 30, 2000
--------------------------------------------------------------------------------

                                                                  Market Value
                                                       Shares       See Note 1
================================================================================
   Common Stocks--54.3%
--------------------------------------------------------------------------------
   Basic Materials--2.3%
--------------------------------------------------------------------------------
   Chemicals--1.6%
   Bayer AG, Sponsored ADR                              72,000       $ 2,662,099
--------------------------------------------------------------------------------
   Dow Chemical Co.                                     54,000         1,346,625
--------------------------------------------------------------------------------
   Engelhard Corp.                                     173,000         2,811,250
--------------------------------------------------------------------------------
   Goodrich (B.F.) Co./1/                               87,000         3,409,312
--------------------------------------------------------------------------------
   Hercules, Inc.                                       95,000         1,341,875
                                                                     -----------
                                                                      11,571,161

--------------------------------------------------------------------------------
   Metals--0.1%
--------------------------------------------------------------------------------
   Aluminum--0.1%
   Alcoa, Inc.                                          40,500         1,025,156
--------------------------------------------------------------------------------
   Paper--0.6%
   Sonoco Products Co.                                 110,000         1,986,875
--------------------------------------------------------------------------------
   UPM-Kymmene Oyj                                      45,000         1,150,471
--------------------------------------------------------------------------------
   Weyerhaeuser Co.                                     40,000         1,615,000
                                                                     -----------
                                                                       4,752,346

--------------------------------------------------------------------------------
   Capital Goods--2.6%
--------------------------------------------------------------------------------
   Industrial Services--0.9%
   National Data Corp.                                  67,200         2,205,000
--------------------------------------------------------------------------------
   Pittston Brink's Group                              219,000         3,394,500
--------------------------------------------------------------------------------
   Service Corp. International                         345,000           840,937
                                                                     -----------
                                                                       6,440,437

--------------------------------------------------------------------------------
   Manufacturing--1.7%
   Coherent, Inc.1,2                                    61,000         4,148,000
--------------------------------------------------------------------------------
   Equitable Bag, Inc./2/,/3/                            1,861             1,861
--------------------------------------------------------------------------------
   Pall Corp.                                          165,000         3,289,687
--------------------------------------------------------------------------------
   Swift Transportation Co., Inc./2/                    80,900         1,056,756
--------------------------------------------------------------------------------
   Trinity Industries, Inc.                             58,000         1,355,750
--------------------------------------------------------------------------------
   Tyco International Ltd.                              47,500         2,464,062
                                                                     -----------
                                                                      12,316,116

--------------------------------------------------------------------------------
   Communication Services--2.7%
--------------------------------------------------------------------------------
   Telecommunications: Long Distance--1.3%
   Brocade Communications Systems, Inc./1/,/2/           2,750           649,000
--------------------------------------------------------------------------------
   ECI Telecommunications Ltd.                          30,400           931,000
--------------------------------------------------------------------------------
   Intermedia Communications, Inc./2/                      393            11,593
--------------------------------------------------------------------------------
   NTL, Inc./2/                                         49,000         2,269,312
--------------------------------------------------------------------------------
   Verizon Communications                               71,000         3,439,062
--------------------------------------------------------------------------------
   WorldCom, Inc./2/                                    81,000         2,460,375
                                                                     -----------
                                                                       9,760,342

 12   OPPENHEIMER MULTIPLE STRATEGIES FUND
<PAGE>

<TABLE>
<CAPTION>

                                                                                            Market Value
                                                                               Shares         See Note 1
--------------------------------------------------------------------------------------------------------
<S>                                                                          <C>                  <C>
Telephone Utilities--0.8%
SBC Communications, Inc.                                                       105,000       $ 5,250,000
--------------------------------------------------------------------------------------------------------
Tele Norte Leste Participacoes SA (Telemar)                                 26,283,402           460,138
--------------------------------------------------------------------------------------------------------
Tele Norte Leste Participacoes SA (Telemar), Preference                      3,077,499            69,890
--------------------------------------------------------------------------------------------------------
Telefonica SA, BDR/2/                                                           15,026           297,262
                                                                                             -----------
                                                                                               6,077,290

Telecommunications: Wireless--0.6%
AT&T Wireless Group/2/                                                          50,000         1,043,750
--------------------------------------------------------------------------------------------------------
Millicom International Cellular SA/2/                                           75,600         2,688,525
--------------------------------------------------------------------------------------------------------
Telesp Celular Participacoes SA                                             49,153,261           402,284
                                                                                             -----------
                                                                                               4,134,559

--------------------------------------------------------------------------------------------------------
Consumer Cyclicals--7.3%
--------------------------------------------------------------------------------------------------------
Autos & Housing--1.5%
Borg-Warner Automotive, Inc.                                                    64,000         2,120,000
--------------------------------------------------------------------------------------------------------
General Motors Corp., Cl. H/2/                                                 100,000         3,718,000
--------------------------------------------------------------------------------------------------------
IRSA Inversiones y Representaciones SA                                         598,233         1,376,762
--------------------------------------------------------------------------------------------------------
Owens Corning                                                                  402,000         1,055,250
--------------------------------------------------------------------------------------------------------
Southdown, Inc.                                                                 40,300         2,871,375
--------------------------------------------------------------------------------------------------------
Toll Brothers, Inc./1/,/2/                                                       5,200           178,750
                                                                                             -----------
                                                                                              11,320,137

--------------------------------------------------------------------------------------------------------
Leisure & Entertainment--2.7%
Berjaya Sports Toto Berhad                                                     190,000           247,000
--------------------------------------------------------------------------------------------------------
Brunswick Corp.                                                                 88,000         1,606,000
--------------------------------------------------------------------------------------------------------
Callaway Golf Co./1/                                                           225,000         3,459,375
--------------------------------------------------------------------------------------------------------
Carnival Corp.                                                                  90,000         2,216,250
--------------------------------------------------------------------------------------------------------
Host Marriott Corp.                                                            112,500         1,265,625
--------------------------------------------------------------------------------------------------------
International Game Technology/1/,/2/                                           172,100         5,786,862
--------------------------------------------------------------------------------------------------------
Mattel, Inc.                                                                   237,000         2,651,437
--------------------------------------------------------------------------------------------------------
Shimano, Inc.                                                                  165,000         3,183,648
                                                                                             -----------
                                                                                              20,416,197

--------------------------------------------------------------------------------------------------------
Media--1.3%
Donnelley (R.R.) & Sons Co.                                                     92,000         2,259,750
--------------------------------------------------------------------------------------------------------
Reed International plc                                                         225,000         1,786,398
--------------------------------------------------------------------------------------------------------
South China Morning Post Holdings Ltd.                                       2,356,000         1,797,920
--------------------------------------------------------------------------------------------------------
Time Warner, Inc.                                                               46,000         3,599,500
                                                                                             -----------
                                                                                               9,443,568

--------------------------------------------------------------------------------------------------------
Retail: General--0.3%
Federated Department Stores, Inc./2/                                            85,000         2,220,625
</TABLE>


 13   OPPENHEIMER MULTIPLE STRATEGIES FUND
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                            Market Value
                                                                                Shares        See Note 1
  ----------------------------------------------------------------------------------------------------------
<S>                                                                            <C>           <C>
   Retail: Specialty--1.0%
   Borders Group, Inc./2/                                                      155,000       $ 2,160,312
  ----------------------------------------------------------------------------------------------------------
   Gap, Inc.                                                                   132,000         2,656,500
  ----------------------------------------------------------------------------------------------------------
   Pacific Sunware of California, Inc./2/                                      130,000         2,437,500
                                                                                            ----------------
                                                                                               7,254,312

   Textile/Apparel & Home Furnishings--0.5%
  ----------------------------------------------------------------------------------------------------------
   Jones Apparel Group, Inc./1/,/2/                                            130,000         3,445,000
   Consumer Staples--4.5%
  ----------------------------------------------------------------------------------------------------------
   Broadcasting--1.4%
  ----------------------------------------------------------------------------------------------------------
   Clear Channel Communications, Inc./1/,/2/                                    50,000         2,825,000
  ----------------------------------------------------------------------------------------------------------
   Cox Radio, Inc., Cl. A/2                                                    114,300         1,993,106
  ----------------------------------------------------------------------------------------------------------
   Emmis Communications Corp., Cl. A/2/                                         73,200         1,811,700
  ----------------------------------------------------------------------------------------------------------
   Infinity Broadcasting Corp., Cl. A/2/                                        82,500         2,722,500
  ----------------------------------------------------------------------------------------------------------
   Societe Europeenne des Satellites                                             8,600         1,305,394
                                                                                            ----------------
                                                                                              10,657,700
  ----------------------------------------------------------------------------------------------------------
   Entertainment--2.1%
   News Corp. Ltd. (The), Sponsored ADR, Preference                             47,000         2,203,125
  ----------------------------------------------------------------------------------------------------------
   Nintendo Co. Ltd.                                                            22,700         4,144,651
  ----------------------------------------------------------------------------------------------------------
   Viacom, Inc., Cl. B/1/,/2/                                                  164,920         9,647,820
                                                                                            ----------------
                                                                                              15,995,596

  ----------------------------------------------------------------------------------------------------------
   Household Goods--0.4%
   Wella AG                                                                     93,210         2,796,766
  ----------------------------------------------------------------------------------------------------------
   Wella AG, Preference, Non-Vtg.                                                9,100           323,238
                                                                                            ----------------
                                                                                               3,120,004

  ----------------------------------------------------------------------------------------------------------
   Tobacco--0.6%
  ----------------------------------------------------------------------------------------------------------
   Philip Morris Cos., Inc.                                                    147,500         4,342,031
  ----------------------------------------------------------------------------------------------------------
   Energy--5.3%
   Energy Services--2.2%
   Cooper Cameron Corp./1/,/2/                                                  22,500         1,657,969
  ----------------------------------------------------------------------------------------------------------
   Core Laboratories NV/2/                                                      90,000         2,210,625
  ----------------------------------------------------------------------------------------------------------
   Input/Output, Inc./1/,/2/                                                   238,000         2,290,750
  ----------------------------------------------------------------------------------------------------------
   Petroleum Geo-Services ASA, Sponsored ADR2                                  100,000         1,725,000
  ----------------------------------------------------------------------------------------------------------
   Santa Fe International Corp./1/                                             105,000         4,731,562

   Southern Energy, Inc./2/                                                     17,500           549,062
  ----------------------------------------------------------------------------------------------------------
   Transocean Sedco Forex, Inc./1/                                              58,000         3,400,250

                                                                                              16,565,218
                                                                                            ----------------
   Oil: Domestic--1.6%
  ----------------------------------------------------------------------------------------------------------
   Devon Energy Corp.                                                           59,422         3,574,233
  ----------------------------------------------------------------------------------------------------------
   Exxon Mobil Corp.                                                            34,501         3,074,902
</TABLE>



 14   OPPENHEIMER MULTIPLE STRATEGIES FUND
<PAGE>

                                                              Market Value
                                                 Shares         See Note 1
--------------------------------------------------------------------------------
Oil: Domestic Continued
Kerr-McGee Corp.                                 20,000        $ 1,325,000
--------------------------------------------------------------------------------
Unocal Corp.                                    105,000          3,720,937
                                                              ------------------
                                                                      11,695,072

--------------------------------------------------------------------------------
Oil: International--1.5%
Anderson Exploration Ltd./2/                    105,600          2,309,079
--------------------------------------------------------------------------------
Berkley Petroleum Corp./2/                      208,900          1,187,090
--------------------------------------------------------------------------------
Petroleo Brasileiro SA, Preference               33,300            952,976
--------------------------------------------------------------------------------
Talisman Energy, Inc./2/                        121,090          4,245,313
--------------------------------------------------------------------------------
Total Fina Elf SA, Sponsored ADR                 33,000          2,423,437
                                                              ------------------
                                                                      11,117,895

--------------------------------------------------------------------------------
Financial--11.0%
--------------------------------------------------------------------------------
Banks--4.8%
ABN Amro Holding NV                              77,000          1,793,946
--------------------------------------------------------------------------------
Banco Frances del Rio de la Plata SA            150,000          1,040,124
--------------------------------------------------------------------------------
Bank of America Corp.                           213,000         11,155,875
--------------------------------------------------------------------------------
Chase Manhattan Corp./1/                        230,000         10,623,125
--------------------------------------------------------------------------------
Knight Trading Group, Inc./1/,/2/                53,600          1,929,600
--------------------------------------------------------------------------------
Societe Generale, Cl. A                          78,000          4,360,697
--------------------------------------------------------------------------------
UBS AG                                           11,200          1,490,396
--------------------------------------------------------------------------------
UniCredito Italiano SpA                         620,000          3,233,657
                                                              ------------------
                                                                      35,627,420

--------------------------------------------------------------------------------
Diversified Financial--1.2%
C.I.T. Group, Inc., Cl. A                       126,000          2,205,000
--------------------------------------------------------------------------------
Equifax, Inc.                                    76,600          2,063,412
--------------------------------------------------------------------------------
Freddie Mac                                      43,800          2,367,937
--------------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co.                 29,000          2,651,687
                                                              ------------------
                                                                       9,288,036

--------------------------------------------------------------------------------
Insurance--2.1%
ACE Ltd./1/                                     158,000          6,201,500
--------------------------------------------------------------------------------
Aetna, Inc./1/                                   27,500          1,596,719
--------------------------------------------------------------------------------
Aon Corp.                                        50,000          1,962,500
--------------------------------------------------------------------------------
Skandia Forsakrings AB                          100,000          1,982,768
--------------------------------------------------------------------------------
XL Capital Ltd., Cl. A                           49,700          3,652,950
                                                              ------------------
                                                                      15,396,437

--------------------------------------------------------------------------------
Real Estate Investment Trusts--2.5%
Archstone Communities Trust                      95,000          2,333,438
--------------------------------------------------------------------------------
Avalonbay Communities, Inc.                      60,000          2,861,250
--------------------------------------------------------------------------------
Brandywine Realty Trust                         105,000          2,126,250
--------------------------------------------------------------------------------
Camden Property Trust                            65,000          2,015,000


 15    OPPENHEIMER MULTIPLE STRATEGIES FUND
<PAGE>

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

<TABLE>
<CAPTION>
                                                                      Market Value
                                                         Shares         See Note 1
-------------------------------------------------------------------------------------
Real Estate Investment Trusts Continued
<S>                                                      <C>           <C>
CarrAmerica Realty Corp.                                 75,000        $ 2,268,750
-------------------------------------------------------------------------------------
Chelsea GCA Realty, Inc.                                 65,000          2,283,125
-------------------------------------------------------------------------------------
Developers Diversified Realty Corp.                     100,000          1,287,500
-------------------------------------------------------------------------------------
Equity Office Properties Trust                           43,441          1,349,386
-------------------------------------------------------------------------------------
Post Properties, Inc.                                    50,000          2,178,125
                                                                     ----------------
                                                                        18,702,824

-------------------------------------------------------------------------------------
Savings & Loans--0.4%
Washington Mutual, Inc.                                  70,000          2,786,875
-------------------------------------------------------------------------------------
Healthcare--5.5%
-------------------------------------------------------------------------------------
Healthcare/Drugs--4.1%
Abbott Laboratories/1/                                   54,000          2,568,375
-------------------------------------------------------------------------------------
Alkermes, Inc./2/                                        25,000            965,625
-------------------------------------------------------------------------------------
American Home Products Corp./1/                          64,000          3,620,000
-------------------------------------------------------------------------------------
AstraZeneca Group plc                                    61,300          3,213,589
-------------------------------------------------------------------------------------
Human Genome Sciences, Inc. /1/,/2/                      10,500          1,817,813
-------------------------------------------------------------------------------------
Johnson & Johnson/1/                                     44,730          4,201,824
-------------------------------------------------------------------------------------
Merck & Co., Inc./1/                                     40,000          2,977,500
-------------------------------------------------------------------------------------
Mylan Laboratories, Inc.                                 90,000          2,424,375
-------------------------------------------------------------------------------------
Novartis AG                                               2,500          3,833,025
-------------------------------------------------------------------------------------
Pliva d.d., Sponsored GDR4                               20,000            215,500
-------------------------------------------------------------------------------------
SmithKline Beecham plc, Cl. A, Sponsored ADR             37,000          2,539,125
-------------------------------------------------------------------------------------
UnitedHealth Group, Inc./1/                              20,500          2,024,375
                                                                     ----------------
                                                                        30,401,126

-------------------------------------------------------------------------------------
Healthcare/Supplies & Services--1.4%
Acuson Corp./2/                                         250,000          5,687,500
-------------------------------------------------------------------------------------
Affymetrix, Inc./1/,/2/                                   4,800            239,400
-------------------------------------------------------------------------------------
Covance, Inc./2/                                        145,000          1,187,188
-------------------------------------------------------------------------------------
Quintiles Transnational Corp./2/                         72,500          1,155,469
-------------------------------------------------------------------------------------
St. Jude Medical, Inc./1/,/2/                            38,000          1,938,000
                                                                     ----------------
                                                                        10,207,557

-------------------------------------------------------------------------------------
Technology--11.9%
-------------------------------------------------------------------------------------
Computer Hardware--3.1%
-------------------------------------------------------------------------------------
Canon, Inc.                                              77,000          3,413,196
-------------------------------------------------------------------------------------
Compaq Computer Corp.                                    48,000          1,323,840
-------------------------------------------------------------------------------------
International Business Machines Corp.                   162,000         18,225,000
                                                                        22,962,036
                                                                     ----------------

-------------------------------------------------------------------------------------
Computer Software--1.5%
Computer Associates International, Inc./1/               73,000          1,838,688
-------------------------------------------------------------------------------------
i2 Technologies, Inc./1/,/2/                              4,500            841,781
</TABLE>


 16    OPPENHEIMER MULTIPLE STRATEGIES FUND
<PAGE>

<TABLE>
<CAPTION>
                                                                     Market Value
                                                        Shares         See Note 1
-----------------------------------------------------------------------------------
Computer Software Continued
<S>                                                     <C>           <C>
Microsoft Corp./2/                                      15,500        $   934,844
-----------------------------------------------------------------------------------
Peoplesoft, Inc./2/                                    105,000          2,933,438
-----------------------------------------------------------------------------------
Red Hat, Inc./2/                                        20,000            341,250
-----------------------------------------------------------------------------------
Sabre Holdings Corp.                                    60,000          1,736,250
-----------------------------------------------------------------------------------
Synopsys, Inc./2/                                       45,000          1,704,375
-----------------------------------------------------------------------------------
Veritas Software Corp./1/,/2/                            4,000            568,000
-----------------------------------------------------------------------------------
Yahoo!, Inc./1/,/2/                                      7,200            655,200
                                                                      -------------
                                                                       11,553,826

-----------------------------------------------------------------------------------
Communications Equipment--0.5%
Cisco Systems, Inc./1/,/2/                              38,000          2,099,500
-----------------------------------------------------------------------------------
Lucent Technologies, Inc.                               57,500          1,757,344
                                                                      -------------
                                                                        3,856,844

-----------------------------------------------------------------------------------
Electronics--6.2%
Analog Devices, Inc./1/,/2/                            105,000          8,669,063
-----------------------------------------------------------------------------------
ASM Lithography Holding NV/1/,/2/                       55,000          1,777,188
-----------------------------------------------------------------------------------
Intel Corp./1/                                         330,000         13,715,625
-----------------------------------------------------------------------------------
JDS Uniphase Corp./1/,/2/                                5,000            473,438
-----------------------------------------------------------------------------------
Keyence Corp.                                           13,530          4,682,787
-----------------------------------------------------------------------------------
KLA Instruments Corp./2/                                55,000          2,265,313
-----------------------------------------------------------------------------------
Lam Research Corp./2/                                   57,000          1,193,438
-----------------------------------------------------------------------------------
Loral Space & Communications Ltd./2/                   135,600            830,550
-----------------------------------------------------------------------------------
Methode Electronics, Inc., Cl. A/1/                     90,000          3,988,125
-----------------------------------------------------------------------------------
Motorola, Inc.                                          80,000          2,260,000
-----------------------------------------------------------------------------------
QLogic Corp./1/,/2/                                      6,000            528,000
-----------------------------------------------------------------------------------
RF Micro Devices, Inc./2/                               17,500            560,000
-----------------------------------------------------------------------------------
STMicroelectronics NV, NY Registered Shares             73,500          3,500,438
-----------------------------------------------------------------------------------
Teradyne, Inc./1/,/2/                                   45,000          1,575,000
                                                                      -------------
                                                                       46,018,965

-----------------------------------------------------------------------------------
Photography--0.6%
Concord Camera Corp./2/                                 42,000          1,076,250
-----------------------------------------------------------------------------------
Eastman Kodak Co.                                       40,000          1,635,000
-----------------------------------------------------------------------------------
Xerox Corp./2/                                          97,500          1,468,594
                                                                      -------------
                                                                        4,179,844

-----------------------------------------------------------------------------------
Transportation--0.5%
-----------------------------------------------------------------------------------
Railroads & Truckers--0.5%
Burlington Northern Santa Fe Corp.                      81,000          1,746,563
-----------------------------------------------------------------------------------
Werner Enterprises, Inc.                               184,200          2,164,350
                                                                      -------------
                                                                        3,910,913
</TABLE>


 17    OPPENHEIMER MULTIPLE STRATEGIES FUND
<PAGE>

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


<TABLE>
<CAPTION>
                                                                                                         Market Value
                                                                                           Shares          See Note 1
-----------------------------------------------------------------------------------------------------------------------
Utilities--0.7%
-----------------------------------------------------------------------------------------------------------------------
Electric Utilities--0.4%
<S>                                                                                       <C>            <C>
Southern Co.                                                                              100,000        $  3,243,750
-----------------------------------------------------------------------------------------------------------------------
Gas Utilities--0.3%
Dynegy, Inc./1/                                                                            46,000           2,622,000
                                                                                                         --------------
Total Common Stocks (Cost $264,093,854)                                                                   404,429,215


=======================================================================================================================
Preferred Stocks--1.3%
MediaOne Group, Inc., 7% Cv. Premium Income Exchangeable
Securities for Vodafone Airtouch plc common stock                                          17,500             651,875
-----------------------------------------------------------------------------------------------------------------------
Qwest Trends Trust, 5.75% Cv./4/                                                          105,000           8,268,750
-----------------------------------------------------------------------------------------------------------------------
Sovereign Capital Trust II, 7.50% Cv. Preferred Income Equity
Redeemable Stock, Units (each unit consists of one preferred plus one
warrant to purchase 5.3355 shares of Sovereign Bancorp common stock)/5/                    12,500             717,969
                                                                                                         --------------
Total Preferred Stocks (Cost $7,155,180)                                                                    9,638,594

                                                                                            Units
=======================================================================================================================
Rights, Warrants and Certificates--0.0%
-----------------------------------------------------------------------------------------------------------------------
Adelphia Business Solutions, Inc. Wts., Exp. 4/15/01                                          550              39,806
-----------------------------------------------------------------------------------------------------------------------
Comunicacion Celular SA Wts., Exp. 11/15/033                                                  300               4,537
-----------------------------------------------------------------------------------------------------------------------
Covergent Communications, Inc. Wts., Exp. 4/1/083                                           1,000              12,250
-----------------------------------------------------------------------------------------------------------------------
Telesp Celular Participacoes SA Rts., Exp. 10/5/00                                      4,915,326                  27
-----------------------------------------------------------------------------------------------------------------------
In-Flight Phone Corp. Wts., Exp. 8/31/02                                                      300                  --
                                                                                                         --------------
Total Rights, Warrants and Certificates (Cost $0)                                                              56,620


                                                                                        Principal
                                                                                           Amount
=======================================================================================================================
Mortgage-Backed Obligations--4.1%
-----------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Collateralized Mtg. Obligations,
Gtd. Multiclass Mtg. Participation Certificates, Series 151, Cl. F, 9%, 5/15/21      $    447,603             467,043
-----------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Gtd. Multiclass Mtg
Participation Certificates, 7%, 5/1/29                                                  6,266,913           6,151,352
-----------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Interest-Only Stripped Mtg.-Backed
Security, Series 199, Cl. IO, 24.10%, 8/1/28 /6/                                        1,331,529             421,928
-----------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., 6.50%, 12/1/27-2/1/28                                  8,102,199           7,793,994
-----------------------------------------------------------------------------------------------------------------------
Government National Mortgage Assn.:
7%, 4/15/26                                                                             2,722,330           2,685,008

7.375%, 3/20/26                                                                           312,528             314,679
7.50%, 5/15/27                                                                         11,196,905          11,235,870
-----------------------------------------------------------------------------------------------------------------------
Mortgage Capital Funding, Inc., Multifamily Mtg. Pass-Through
Certificates, Series 1996-MC1, Cl. G, 7.15%, 6/15/06 /4/                                  400,000             340,148
-----------------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates:
Series 1993-C1, Cl. D, 9.45%, 5/25/24                                                      18,388              18,293
Series 1994-C2, Cl. E, 8%, 4/25/25                                                        715,837             705,883
Series 1994-C2, Cl. G, 8%, 4/25/25                                                        161,862             155,185
</TABLE>

 18    OPPENHEIMER MULTIPLE STRATEGIES FUND
<PAGE>

<TABLE>
<CAPTION>
                                                                          Principal       Market Value
                                                                             Amount         See Note 1
========================================================================================================
Mortgage-Backed Obligations Continued
Salomon Brothers Mortgage Securities VII,
Commercial Mtg. Pass-Through Certificates:
<S>                                                                     <C>                <C>
Series 1996-B, Cl. 1, 7.136%, 4/25/26 /3/                               $   279,352        $   184,547
Series 1996-C1, Cl. F, 8.875%, 1/20/06 /7/                                  250,000            189,219
                                                                                            ------------
Total Mortgage-Backed Obligations (Cost $30,775,271)                                        30,663,149

========================================================================================================
U.S. Government Obligations--11.1%
--------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn. Nts., 7.125%, 1/15/30                       500,000            517,679
--------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds:
6%, 2/15/26                                                                 500,000            495,469
6.50%, 11/15/26                                                             360,000            380,138
8.875%, 8/15/17                                                           3,650,000          4,695,955
10.75%, 5/15/03                                                           1,190,000          1,325,363
STRIPS, 6.30%, 8/15/25 /8/                                               15,300,000          3,491,613
STRIPS, 6.53%, 8/15/15 /8/                                                8,500,000          3,433,592
STRIPS, 7.10%, 11/15/18 /8/                                               9,350,000          3,098,038
STRIPS, 7.31%, 8/15/19 /8/                                               10,200,000          3,234,614
--------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
5.875%, 9/30/02-2/15/04                                                  30,000,000         29,948,445
6.125%, 12/31/01                                                         15,000,000         14,985,945
6.25%, 2/15/03-2/15/07                                                   12,130,000         12,265,628
6.50%, 10/15/06                                                           4,640,000          4,769,052
7.50%, 5/15/02                                                              327,000            334,255
                                                                                            ------------
Total U.S. Government Obligations (Cost $82,112,806)                                        82,975,786

========================================================================================================
Foreign Government Obligations--15.7%
--------------------------------------------------------------------------------------------------------
Argentina--3.9%
Argentina (Republic of) Bonds, Bonos de Consolidacion de Deudas:
Series FRB, 7.375%, 3/31/05 /7/                                           6,848,000          6,269,344
Series PRE2, 6.62%, 4/1/01 /7/                                               77,813             76,957
--------------------------------------------------------------------------------------------------------
Argentina (Republic of) Nts.:
11.75%, 2/12/07 /4/[ARP]                                                    150,000            135,081
14.25%, 11/30/02 /3/,/7/                                                 13,125,000         13,125,000
--------------------------------------------------------------------------------------------------------
Argentina (Republic of) Par Bonds, 6%, 3/31/23 /7/                       14,000,000          9,520,000
                                                                                            ------------
                                                                                            29,126,382

--------------------------------------------------------------------------------------------------------
Australia--0.4%
New South Wales Treasury Corp. Gtd. Bonds, 7%, 4/1/04[AUD]                1,570,000            863,163
--------------------------------------------------------------------------------------------------------
Queensland Treasury Corp. Exchangeable
Gtd. Nts., 10.50%, 5/15/03[AUD]                                           2,590,000          1,539,011
--------------------------------------------------------------------------------------------------------
Queensland Treasury Corp. Global Exchangeable
Gtd. Nts., 8%, 8/14/01[AUD]                                                 615,000            337,181
                                                                                            ------------
                                                                                             2,739,355
</TABLE>


 19   OPPENHEIMER MULTIPLE STRATEGIES FUND
<PAGE>

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

<TABLE>
<CAPTION>
                                                                      Principal       Market Value
                                                                         Amount         See Note 1
----------------------------------------------------------------------------------------------------
Brazil--3.5%
Brazil (Federal Republic of) Debt Capitalization
<S>                                                                <C>                 <C>
Bonds, Series 20 yr., 8%, 4/15/14                                  $ 21,180,252        $ 16,255,843
----------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Eligible
Interest Bonds, 7.375%, 4/15/06 /7/                                  10,555,500           9,961,753
                                                                                      --------------
                                                                                         26,217,596

----------------------------------------------------------------------------------------------------
Canada--2.8%
Canada (Government of) Bonds:
6.50%, 6/1/04[CAD]                                                   13,320,000           9,073,907
8.75%, 12/1/05[CAD]                                                     495,000             372,428
9.75%, 6/1/01[CAD]                                                    9,630,000           6,578,623
11.75%, 2/1/03[CAD]                                                     290,000             217,729
Series WL43, 5.75%, 6/1/29[CAD]                                       7,130,000           4,821,730
                                                                                      --------------
                                                                                         21,064,417

----------------------------------------------------------------------------------------------------
Denmark--0.4%
Denmark (Kingdom of) Bonds, 8%, 3/15/06[DKK]                         21,900,000           2,864,755
----------------------------------------------------------------------------------------------------
Finland--0.1%
Finland (Republic of) Bonds, Series RG, 9.50%, 3/15/04[EUR]             672,751             670,867
----------------------------------------------------------------------------------------------------
Germany--0.2%
Germany (Republic of) Bonds, Series 94, 6.25%, 1/4/24[EUR]            1,362,592           1,289,308
----------------------------------------------------------------------------------------------------
Great Britain--1.1%
United Kingdom Treasury Bonds:
7%, 6/7/02[GBP]                                                       2,415,000           3,635,852
7.25%, 12/7/07[GBP]                                                   2,400,000           3,920,982
10%, 9/8/03[GBP]                                                        325,000             533,033
                                                                                      --------------
                                                                                          8,089,867

----------------------------------------------------------------------------------------------------
Italy--0.0%
Italy (Republic of) Treasury Bonds, Buoni del
Tesoro Poliennali, 9.50%, 2/1/01[EUR]                                   209,164             187,172
----------------------------------------------------------------------------------------------------
Mexico--0.0%
United Mexican States Bonds, Series RG, 16.50%, 9/1/08 /3/ [GBP]         35,000              72,317
----------------------------------------------------------------------------------------------------
New Zealand--2.4%
New Zealand (Government of) Bonds, 10%, 3/15/02[NZD]                 42,705,000          18,124,882
----------------------------------------------------------------------------------------------------
Philippines--0.2%
Philippines (Republic of) Bonds, 8.60%, 6/15/27                       1,500,000           1,023,750
----------------------------------------------------------------------------------------------------
Poland--0.5%
Poland (Republic of) Bonds,12%, 6/12/01[PLZ]                         18,000,000           3,792,358
----------------------------------------------------------------------------------------------------
South Africa--0.2%
Eskom Depositary Receipts, Series E168, 11%, 6/1/08[ZAR]              6,430,000             769,890
----------------------------------------------------------------------------------------------------
Eskom Sec. Bonds, Series E168, 11%, 6/1/08[ZAR]                       3,000,000             359,202
                                                                                      --------------
                                                                                          1,129,092

----------------------------------------------------------------------------------------------------
Spain--0.0%
Spain (Kingdom of) Gtd. Bonds, Bonos y
Obligacion del Estado, 10.30%, 6/15/02[EUR]                             235,296             224,410
                                                                                      --------------
Total Foreign Government Obligations (Cost $122,284,891)                                116,616,528
</TABLE>


 20    OPPENHEIMER MULTIPLE STRATEGIES FUND
<PAGE>

<TABLE>
<CAPTION>
                                                                                          Principal      Market Value
                                                                                             Amount        See Note 1
=========================================================================================================================
Loan Participations--0.1%
-------------------------------------------------------------------------------------------------------------------------
Morocco (Kingdom of) Loan Participation Agreement,
<S>                                                                                     <C>                <C>
Tranche A, 7.75%, 1/1/09/3,/7/ (Cost $495,679)                                          $   538,333        $   485,846
=========================================================================================================================
Non-Convertible Corporate Bonds and Notes--6.8%
-------------------------------------------------------------------------------------------------------------------------
ABN Amro Bank NV (NY Branch), 7.125% Sub. Nts.,
Series B, 10/15/93                                                                          500,000            436,063
-------------------------------------------------------------------------------------------------------------------------
Adelphia Communications Corp.:
9.375% Sr. Nts., 11/15/09                                                                   750,000            683,437
10.50% Sr. Unsec. Nts., Series B, 7/15/04                                                   500,000            503,125
-------------------------------------------------------------------------------------------------------------------------
AK Steel Corp., 9.125% Sr. Nts., 12/15/06                                                   795,000            775,125
-------------------------------------------------------------------------------------------------------------------------
Allied Waste North America, Inc., 10% Sr. Unsec
Sub. Nts., Series B, 8/1/09                                                                 750,000            658,125
-------------------------------------------------------------------------------------------------------------------------
AMC Entertainment, Inc., 9.50% Sr. Unsec. Sub. Nts., 2/1/11                                 600,000            279,000
-------------------------------------------------------------------------------------------------------------------------
American International Group, Inc., 11.70%
Unsec. Unsub. Bonds, 12/4/01[ITL]                                                        95,000,000             46,280
-------------------------------------------------------------------------------------------------------------------------
Amgen, Inc., 8.125% Unsec. Debs., 4/1/97                                                    110,000            111,515
-------------------------------------------------------------------------------------------------------------------------
Amkor Technologies, Inc., 9.25% Sr. Unsec. Nts., 5/1/06                                     500,000            498,750
-------------------------------------------------------------------------------------------------------------------------
AMRESCO, Inc., 10% Sr. Sub. Nts., Series 97-A, 3/15/04                                      200,000             89,000
-------------------------------------------------------------------------------------------------------------------------
Amtran, Inc., 10.50% Sr. Nts., 8/1/04                                                       500,000            467,500
-------------------------------------------------------------------------------------------------------------------------
Aracruz Celulose SA, 10.375% Debs., 1/31/02 /4/                                             320,000            327,200
-------------------------------------------------------------------------------------------------------------------------
Aurora Foods, Inc., 8.75% Sr. Sub. Nts., Series B, 7/1/08                                   400,000            308,000
-------------------------------------------------------------------------------------------------------------------------
Bank of America Corp., 7.80% Jr. Unsec. Sub. Nts., 2/15/10                                  500,000            515,461
-------------------------------------------------------------------------------------------------------------------------
Blount, Inc., 13% Sr. Sub. Nts., 8/1/09                                                     700,000            717,500
-------------------------------------------------------------------------------------------------------------------------
Building Materials Corp. of America, 8.625% Sr.
Nts., Series B, 12/15/06                                                                    200,000            133,000
-------------------------------------------------------------------------------------------------------------------------
Calpine Corp., 8.75% Sr. Nts., 7/15/07                                                      650,000            644,451
-------------------------------------------------------------------------------------------------------------------------
Canandaigua Brands, Inc., 8.625% Sr. Unsec. Nts., 8/1/06                                    750,000            761,250
-------------------------------------------------------------------------------------------------------------------------
Caterpillar, Inc., 7.375% Unsec. Debs., 3/1/97                                              500,000            453,279
-------------------------------------------------------------------------------------------------------------------------
Celcaribe SA, 14.50% Sr. Sec. Nts., 3/15/04 /3/                                             350,000            275,625
-------------------------------------------------------------------------------------------------------------------------
Charter Communications Holdings LLC/Charter
Communications Holdings Capital Corp.:
0%/9.92% Sr. Unsec. Disc. Nts., 4/1/11 /9/                                                  500,000            293,750
8.625% Sr. Unsec. Nts., 4/1/09                                                              750,000            676,875
-------------------------------------------------------------------------------------------------------------------------
Chesapeake Energy Corp., 9.625% Sr. Unsec. Nts., Series B, 5/1/05                           500,000            498,750
-------------------------------------------------------------------------------------------------------------------------
Coca-Cola Co., 7.375% Debs., 7/29/93                                                        440,000            419,740
-------------------------------------------------------------------------------------------------------------------------
Comcast UK Cable Partner Ltd., 0%/11.20% Sr. Disc. Debs., 11/15/07 /9/                      850,000            820,250
-------------------------------------------------------------------------------------------------------------------------
Communications & Power Industries, Inc., 12% Sr. Sub. Nts., Series B, 8/1/05 /3/          1,300,000            890,500
-------------------------------------------------------------------------------------------------------------------------
Conoco, Inc., 6.95% Sr. Unsec. Nts., 4/15/29                                                500,000            462,823
-------------------------------------------------------------------------------------------------------------------------
Crown Castle International Corp.:
9% Sr. Nts., 5/15/11                                                                        500,000            477,500
10.75% Sr. Nts., 8/1/11                                                                     500,000            516,250
-------------------------------------------------------------------------------------------------------------------------
CSC Holdings, Inc.:
9.875% Sr. Sub. Debs., 2/15/13                                                              250,000            256,875
10.50% Sr. Sub. Debs., 5/15/16                                                              250,000            269,375
-------------------------------------------------------------------------------------------------------------------------
Cumulus Media, Inc., 10.375% Sr. Unsec. Sub. Nts., 7/1/08                                   400,000            342,000
</TABLE>


 21   OPPENHEIMER MULTIPLE STRATEGIES FUND
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                 Principal      Market Value
                                                                                    Amount        See Note 1
===============================================================================================================
Non-Convertible Corporate Bonds and Notes Continued
<S>                                                                             <C>               <C>
D.R. Horton, Inc., 9.75% Sr. Sub. Nts., 9/15/10                                 $  600,000        $  585,000
---------------------------------------------------------------------------------------------------------------
Diamond Cable Communications plc, 0%/11.75% Sr. Disc. Nts., 12/15/05 /9/           300,000           283,500
---------------------------------------------------------------------------------------------------------------
Doman Industries Ltd., 8.75% Sr. Nts., 3/15/04                                     700,000           472,500
---------------------------------------------------------------------------------------------------------------
Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07                                         100,000            77,375
---------------------------------------------------------------------------------------------------------------
EchoStar Broadband Corp., 10.375% Sr. Nts., 10/1/07 /4/                            600,000           600,000
---------------------------------------------------------------------------------------------------------------
EchoStar DBS Corp., 9.375% Sr. Unsec. Nts., 2/1/09                                 700,000           689,500
---------------------------------------------------------------------------------------------------------------
El Paso Electric Co., 9.40% First Mtg. Sec. Nts., Series E, 5/1/11                 250,000           266,043
---------------------------------------------------------------------------------------------------------------
Empresas ICA Sociedad Controladora SA de CV, 11.875% Nts., 5/30/01 /3/              30,000            29,175
---------------------------------------------------------------------------------------------------------------
Exodus Communications, Inc.:
11.25% Sr. Nts., 7/1/08                                                            500,000           498,750
11.25% Sr. Nts., 7/15/10/4                                                         400,000           403,000
---------------------------------------------------------------------------------------------------------------
Fleming Cos., Inc., 10.625% Sr. Sub. Nts., Series B, 7/31/07                       600,000           483,000
---------------------------------------------------------------------------------------------------------------
Fletcher Challenge Ltd.:
8.05% Cv. Nts., 6/15/03[NZD]                                                        35,000            14,107
10% Cv. Unsec. Sub. Nts., 4/30/05[NZD]                                              35,000            14,903
---------------------------------------------------------------------------------------------------------------
Ford Motor Co., 7.70% Unsec. Debs., 5/15/97                                        500,000           452,353
---------------------------------------------------------------------------------------------------------------
Frontier Oil Corp., 11.75% Sr. Nts., 11/15/09                                      250,000           255,000
---------------------------------------------------------------------------------------------------------------
Global Crossing Holdings Ltd., 9.625% Sr. Unsec. Nts., 5/15/08                     750,000           753,750
---------------------------------------------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The), 7.80% Sr. Unsec
Unsub. Nts., Series B, 1/28/10                                                     500,000           510,361
---------------------------------------------------------------------------------------------------------------
Gothic Production Corp., 11.125% Sr. Sec. Nts., Series B, 5/1/05                   950,000           999,875
---------------------------------------------------------------------------------------------------------------
Grupo Posadas SA de CV, 10.375% Unsec. Unsub. Bonds, 2/13/02                        25,000            23,944
---------------------------------------------------------------------------------------------------------------
Hayes Wheels International, Inc., 11% Sr. Sub. Nts., 7/15/06                       200,000           192,000
---------------------------------------------------------------------------------------------------------------
Huntsman Corp./ICI Chemical Co. plc, Zero Coupon
Sr. Unsec. Disc. Nts., 13.08%, 12/31/09 /8/                                      1,000,000           325,000
---------------------------------------------------------------------------------------------------------------
IBM Corp., 7.125% Sr. Unsec. Unsub. Debs., 12/1/96                                 500,000           469,541
---------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc., 8.50% Sr. Nts., Series B, 1/15/08                 500,000           481,250
---------------------------------------------------------------------------------------------------------------
International Wire Group, Inc., 11.75% Sr. Sub. Nts., Series B, 6/1/05             500,000           505,000
---------------------------------------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp., 12.75% Sr. Sub. Nts., 2/1/03                     500,000           462,500
---------------------------------------------------------------------------------------------------------------
Kaufman & Broad Home Corp., 7.75% Sr. Nts., 10/15/04                               400,000           382,500
---------------------------------------------------------------------------------------------------------------
Lamar Media Corp., 9.625% Sr. Unsec. Sub. Nts., 12/1/06                            100,000           102,875
---------------------------------------------------------------------------------------------------------------
Lear Corp., 9.50% Sub. Nts., 7/15/06                                               900,000           891,000
---------------------------------------------------------------------------------------------------------------
Level 3 Communications, Inc., 11% Sr. Unsec. Nts., 3/15/08                         300,000           288,000
---------------------------------------------------------------------------------------------------------------
Loral Space & Communications Ltd., 9.50% Sr. Nts., 1/15/06                         300,000           216,000
---------------------------------------------------------------------------------------------------------------
Lyondell Chemical Co.:
9.625% Sr. Sec. Nts., Series A, 5/1/07                                             300,000           293,625
9.875% Sec. Nts., Series B, 5/1/07                                                 300,000           293,625
---------------------------------------------------------------------------------------------------------------
Meristar Hospitality Corp., 8.75% Sr. Unsec. Sub. Nts., 8/15/07                    500,000           471,250
---------------------------------------------------------------------------------------------------------------
Metromedia Fiber Network, Inc.:
10% Sr. Nts., 12/15/09                                                             250,000           235,000
10% Sr. Unsec. Nts., Series B, 11/15/08                                            750,000           705,000
---------------------------------------------------------------------------------------------------------------
Millicom International Cellular SA, 0%/13.50% Sr. Disc. Nts., 6/1/06 /9/           750,000           648,750
---------------------------------------------------------------------------------------------------------------
Motorola, Inc., 5.22% Unsec. Debs., 10/1/97                                        170,000           111,054
</TABLE>


 22    OPPENHEIMER MULTIPLE STRATEGIES FUND
<PAGE>

<TABLE>
<CAPTION>
                                                                                  Principal      Market Value
                                                                                     Amount        See Note 1
==============================================================================================================
Non-Convertible Corporate Bonds and Notes Continued
<S>                                                                              <C>               <C>
News America Holdings, Inc., 8.50% Sr. Nts., 2/15/05                             $1,000,000        $1,044,669
--------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc.:
0%/9.95% Sr. Disc. Nts., 2/15/08 /9/                                                300,000           230,250
9.375% Sr. Unsec. Nts., 11/15/09                                                    500,000           490,000
--------------------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc., 10.75% Sr. Unsec. Nts., 6/1/09                       500,000           465,000
--------------------------------------------------------------------------------------------------------------
NL Industries, Inc., 11.75% Sr. Sec. Nts., 10/15/03                                 183,000           185,745
--------------------------------------------------------------------------------------------------------------
Norfolk Southern Corp., 7.90% Sr. Bonds, 5/15/97                                    500,000           471,101
--------------------------------------------------------------------------------------------------------------
NTL, Inc., 0%/9.75% Sr. Deferred Coupon Nts., Series B, 4/1/08/9/                   500,000           306,250
--------------------------------------------------------------------------------------------------------------
Ocwen Financial Corp., 11.875% Nts., 10/1/03 /3/                                    325,000           287,625
--------------------------------------------------------------------------------------------------------------
Omnipoint Corp., 11.50% Sr. Nts., 9/15/09 /4/                                       250,000           280,000
--------------------------------------------------------------------------------------------------------------
ORBCOMM Global LP/ORBCOMM Capital Corp., 14% Sr. Nts., 8/15/04 /3/,/10/             155,000            24,025
--------------------------------------------------------------------------------------------------------------
Oxford Automotive, Inc., 10.125% Sr. Unsec. Sub. Nts., Series D, 6/15/07            900,000           796,500
--------------------------------------------------------------------------------------------------------------
Polymer Group, Inc., 9% Sr. Unsec. Sub. Nts., Series B, 7/1/07                    1,000,000           775,000
--------------------------------------------------------------------------------------------------------------
PSINet, Inc., 10% Sr. Unsec. Nts., Series B, 2/15/05                                750,000           491,250
--------------------------------------------------------------------------------------------------------------
R&B Falcon Corp., 9.50% Sr. Unsec. Nts., 12/15/08                                   750,000           811,875
--------------------------------------------------------------------------------------------------------------
Repap New Brunswick, Inc.:
10.625% Second Priority Sr. Sec. Nts., 4/15/05                                      300,000           310,500
11.50% Sr. Sec. Nts., 6/1/04                                                        300,000           334,500
--------------------------------------------------------------------------------------------------------------
Revlon Consumer Products Corp., 9% Sr. Nts., 11/1/06                                200,000           146,000
--------------------------------------------------------------------------------------------------------------
Riverwood International Corp.:
10.625% Sr. Unsec. Nts., 8/1/07                                                     500,000           503,125
10.875% Sr. Sub. Nts., 4/1/08                                                       250,000           230,000
--------------------------------------------------------------------------------------------------------------
Rogers Cablesystems Ltd., 10% Second Priority Sr. Sec. Debs., 12/1/07 /3/         1,300,000         1,365,000
--------------------------------------------------------------------------------------------------------------
Rohm & Haas Co., 7.85% Unsec. Debs., 7/15/29                                        500,000           493,841
--------------------------------------------------------------------------------------------------------------
Rural Cellular Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08                       750,000           720,000
--------------------------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc.:
8.75% Sr. Sub. Nts., 12/15/07                                                       500,000           466,250
9% Sr. Unsec. Sub. Nts., 7/15/07                                                    375,000           356,250
--------------------------------------------------------------------------------------------------------------
Spectrasite Holdings, Inc., 10.75% Sr. Nts., 3/15/10 /4/                            500,000           475,000
--------------------------------------------------------------------------------------------------------------
Sterling Chemicals, Inc.:
11.75% Sr. Unsec. Sub. Nts., 8/15/06                                                670,000           472,350
12.375% Sr. Sec. Nts., Series B, 7/15/06                                            400,000           406,000
--------------------------------------------------------------------------------------------------------------
Subic Power Corp., 9.50% Sr. Sec. Nts., 12/28/08 /3/                                275,862           251,034
--------------------------------------------------------------------------------------------------------------
Subic Power Corp., 9.50% Sr. Sec. Nts., 12/28/08 /3/                                 55,172            50,207
--------------------------------------------------------------------------------------------------------------
Sun Healthcare Group, Inc., 9.375% Sr. Sub. Nts., 5/1/08 /2/,/3/,/10/               400,000            14,000
--------------------------------------------------------------------------------------------------------------
Telewest Communications plc, 0%/11% Sr. Disc. Debs., 10/1/07 /9/                  1,000,000           962,500
--------------------------------------------------------------------------------------------------------------
Tenet Healthcare Corp.:
8.125% Sr. Unsec. Sub. Nts., Series B, 12/1/08                                      300,000           288,750
9.25% Sr. Nts., 9/1/10 /4/                                                          300,000           315,000
--------------------------------------------------------------------------------------------------------------
Tenneco, Inc., 11.625% Sr. Unsec. Sub. Nts., Series B, 10/15/09                     475,000           306,375
--------------------------------------------------------------------------------------------------------------
Trans World Airlines, Inc., 11.50% Sr. Sec. Nts., 12/15/04                          950,000           665,000
--------------------------------------------------------------------------------------------------------------
Transtar Holdings LP/Transtar Capital Corp., 13.375%
Sr. Disc. Nts., Series B, 12/15/03                                                1,000,000         1,015,000
--------------------------------------------------------------------------------------------------------------
Travelers Group, Inc., 6.875% Unsec. Nts., 2/15/98                                  550,000           485,364
</TABLE>

 23   OPPENHEIMER MULTIPLE STRATEGIES FUND
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                      Principal         Market Value
                                                                                         Amount           See Note 1
======================================================================================================================
Non-Convertible Corporate Bonds and Notes Continued
<S>                                                                                <C>                  <C>
TV Azteca SA de CV, 10.50% Sr. Nts., Series B, 2/15/07                             $    200,000         $    186,000
----------------------------------------------------------------------------------------------------------------------
Unifrax Investment Corp., 10.50% Sr. Nts., 11/1/03 /3/                                  500,000              472,500
----------------------------------------------------------------------------------------------------------------------
United Pan-Europe Communications NV, 10.875%
Sr. Unsec. Nts., Series B, 8/1/09                                                       400,000              342,000
----------------------------------------------------------------------------------------------------------------------
United Rentals, Inc., 9% Sr. Unsec. Sub. Nts., Series B, 4/1/09                         500,000              450,000
----------------------------------------------------------------------------------------------------------------------
Vodafone AirTouch plc, 7.75% Unsec. Unsub. Nts., 2/15/10 /4/                            500,000              510,448
----------------------------------------------------------------------------------------------------------------------
VoiceStream Wireless Corp., 10.375% Sr. Unsec. Nts., 11/15/09                         1,082,364            1,174,366
----------------------------------------------------------------------------------------------------------------------
Wal-Mart Stores, Inc., 7.55% Sr. Unsec. Nts., 2/15/30                                   500,000              517,445
----------------------------------------------------------------------------------------------------------------------
WorldCom, Inc., 6.95% Sr. Unsec. Nts., 8/15/28                                          500,000              453,935
----------------------------------------------------------------------------------------------------------------------
Young Broadcasting, Inc., 8.75% Sr. Sub. Debs., 6/15/07                                 700,000              665,000
                                                                                                        --------------
Total Non-Convertible Corporate Bonds and Notes (Cost $54,264,525)                                        51,157,510

======================================================================================================================
Convertible Corporate Bonds and Notes--0.6%
----------------------------------------------------------------------------------------------------------------------
Affymetrix, Inc., 4.75% Cv. Sub. Nts., 2/15/07 /4/                                    1,000,000              597,500
----------------------------------------------------------------------------------------------------------------------
Amkor Technologies, Inc., 5% Cv. Nts., 3/15/07 /4/                                      750,000              600,000
----------------------------------------------------------------------------------------------------------------------
Juniper Networks, Inc., 4.75% Cv. Unsec. Sub. Nts., 3/15/07                             600,000              913,500
----------------------------------------------------------------------------------------------------------------------
Level 3 Communications, Inc., 6% Cv. Unsec. Sub. Nts., 3/15/10                          500,000              425,625
----------------------------------------------------------------------------------------------------------------------
LSI Logic Corp., 4% Cv. Unsec. Sub. Nts., 2/15/05                                       500,000              405,625
----------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., 5.25% Cv. Sr. Nts., 1/15/10 /4/                            700,000              659,750
----------------------------------------------------------------------------------------------------------------------
Photronics, Inc., 6% Cv. Sub. Nts., 6/1/04                                              750,000              725,625
                                                                                                        --------------
Total Convertible Corporate Bonds and Notes (Cost $4,208,188)                                              4,327,625

======================================================================================================================
Structured Instruments--0.0%
Credit Suisse First Boston Corp. (New York Branch), Carnival
Corp. Equity Linked Nts., 7%, 7/17/023 (Cost $249,487)                                  255,000              283,050


                                              Date         Strike                     Contracts
======================================================================================================================
Options Purchased--0.0%
Philip Morris Cos., Inc. Call (Cost $79,800) 1/22/01        $35                             350               41,562

                                                                                      Principal
                                                                                         Amount
======================================================================================================================
Repurchase Agreements--5.5%
Repurchase agreement with Zion First National Bank, 6.50%, dated
9/29/00, to be repurchased at $40,925,156 on 10/2/00, collateralized
by U.S. Treasury Bonds, 10.75%, 2/15/03, with a value of $4,561,234
and U.S. Treasury Nts., 5.75%-6.375%, 6/30/01-10/31/02, with a
value of $37,190,007 (Cost $40,903,000)                                            $ 40,903,000           40,903,000
----------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $606,622,681)                                            99.5%         741,578,485
----------------------------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities                                                             0.5            3,369,243
                                                                                --------------------------------------
Net Assets                                                                                100.0%        $744,947,728
                                                                                ======================================
</TABLE>


 24    OPPENHEIMER MULTIPLE STRATEGIES FUND
<PAGE>

Footnotes to Statement of Investments

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

ARP       Argentine Peso            GBP            British Pound Sterling
AUD       Australian Dollar         ITL            Italian Lira
CAD       Canadian Dollar           NZD            New Zealand Dollar
DKK       Danish Krone              PLZ            Polish Zloty
EUR       Euro                      ZAR            South African Rand

1.   A  sufficient  amount  of  liquid  assets  has  been  designated  to  cover
     outstanding written call options, as follows:

<TABLE>
<CAPTION>
                                              Contracts      Expiration        Exercise         Premium    Market Value
                                        Subject to Call            Date           Price        Received      See Note 1
------------------------------------------------------------------------------------------------------------------------
<S>                                                 <C>        <C>             <C>             <C>             <C>
ACE Ltd.                                            500        11/20/00        $  30.00        $129,750        $456,250
------------------------------------------------------------------------------------------------------------------------
ASM Lithography Holding NV                           80        10/23/00           50.00          27,760              --
------------------------------------------------------------------------------------------------------------------------
Abbott Laboratories                                 120        11/20/00           45.00          34,140          45,000
------------------------------------------------------------------------------------------------------------------------
Aetna, Inc.                                         275         1/22/01           80.00          74,800              --
------------------------------------------------------------------------------------------------------------------------
Affymetrix, Inc.                                     48        11/20/00          120.00          56,628             300
------------------------------------------------------------------------------------------------------------------------
American Home Products Corp.                        140        10/23/00           70.00          59,080             875
------------------------------------------------------------------------------------------------------------------------
Analog Devices, Inc.                                360        12/18/00           95.00         435,420         211,500
------------------------------------------------------------------------------------------------------------------------
Brocade Communications Systems, Inc.                 27         1/22/01          200.00          32,993         148,500
------------------------------------------------------------------------------------------------------------------------
Callaway Golf Co.                                   440        11/20/00           22.50          66,035              --
------------------------------------------------------------------------------------------------------------------------
Chase Manhattan Corp.                               210        12/18/00           70.00          49,243              --
------------------------------------------------------------------------------------------------------------------------
Cisco Systems, Inc.                                  96         1/22/01           85.00          34,511           7,200
------------------------------------------------------------------------------------------------------------------------
Clear Channel Communications, Inc.                   40         1/22/01           90.00          29,880           1,750
------------------------------------------------------------------------------------------------------------------------
Coherent, Inc.                                      160        11/20/00           85.00          80,317          36,000
------------------------------------------------------------------------------------------------------------------------
Computer Associates International, Inc.             150        11/20/00           80.00          30,488              --
------------------------------------------------------------------------------------------------------------------------
Cooper Cameron Corp.                                 11         2/19/01           85.00           9,867           8,113
------------------------------------------------------------------------------------------------------------------------
Dynegy, Inc.                                         75         3/19/01           55.00          38,211          75,000
------------------------------------------------------------------------------------------------------------------------
Dynegy, Inc.                                         50         3/19/01           60.00          34,224          37,500
------------------------------------------------------------------------------------------------------------------------
Goodrich (B.F.) Co.                                 300        11/20/00           45.00          29,099          13,125
------------------------------------------------------------------------------------------------------------------------
Human Genome Sciences, Inc.                          38        10/23/00         160.000          51,186          77,900
------------------------------------------------------------------------------------------------------------------------
Human Genome Sciences, Inc.                          37        10/23/00          220.00          24,864           8,788
------------------------------------------------------------------------------------------------------------------------
Human Genome Sciences, Inc.                          30         4/21/01          210.00          99,282          99,750
------------------------------------------------------------------------------------------------------------------------
i2 Technologies, Inc.                                45        11/20/00          210.00          33,614          68,063
------------------------------------------------------------------------------------------------------------------------
Input/Output, Inc.                                2,380        11/20/00            7.50         349,860         520,625
------------------------------------------------------------------------------------------------------------------------
Intel Corp.                                         500         1/22/01           90.00         158,625           6,250
------------------------------------------------------------------------------------------------------------------------
International Game Technology                       321        10/23/00           30.00          63,235         148,463
------------------------------------------------------------------------------------------------------------------------
JDS Uniphase Corp.                                   50        12/18/00          140.00          46,723          14,375
------------------------------------------------------------------------------------------------------------------------
Johnson & Johnson                                    80         1/22/01          115.00          20,760           6,500
------------------------------------------------------------------------------------------------------------------------
Jones Apparel Group, Inc.                           400        11/20/00           30.00         163,800          22,500
------------------------------------------------------------------------------------------------------------------------
Knight Trading Group, Inc.                            6         1/22/01           45.00           1,782           1,088
------------------------------------------------------------------------------------------------------------------------
Knight Trading Group, Inc.                           14         1/22/01           50.00           2,758           1,488
------------------------------------------------------------------------------------------------------------------------
Merck & Co., Inc.                                    84         1/22/01          100.00          15,497           1,575
------------------------------------------------------------------------------------------------------------------------
Methode Electronics, Inc., Cl. A                    230        10/23/00           65.00          88,432           1,438
------------------------------------------------------------------------------------------------------------------------
QLogic Corp.                                         60        10/23/00          120.00          50,818           4,500
------------------------------------------------------------------------------------------------------------------------
Santa Fe International Corp.                        115         1/22/01           50.00          25,530          29,469
------------------------------------------------------------------------------------------------------------------------
St. Jude Medical, Inc.                               80        10/23/00           40.00          20,760          88,000
------------------------------------------------------------------------------------------------------------------------
Teradyne, Inc.                                       33        10/23/00          105.00          63,426              --
------------------------------------------------------------------------------------------------------------------------
Teradyne, Inc.                                       33        10/23/00          120.00          39,500              --
</TABLE>


25   OPPENHEIMER MULTIPLE STRATEGIES FUND
<PAGE>

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

Footnotes to Statement of Investments Continued

1.   Outstanding written call options:

<TABLE>
<CAPTION>
                                   Contracts      Expiration        Exercise        Premium    Market Value
                             Subject to Call            Date           Price       Received      See Note 1
------------------------------------------------------------------------------------------------------------
<S>                                       <C>       <C>             <C>            <C>             <C>
Toll Brothers, Inc.                       52        12/18/00        $  20.00       $ 19,344        $ 74,100
------------------------------------------------------------------------------------------------------------
Transocean Sedco Forex, Inc.             116        11/20/00           60.00         64,670          42,050
------------------------------------------------------------------------------------------------------------
UnitedHealth Group, Inc.                 205        12/18/00           80.00        213,133         466,375
------------------------------------------------------------------------------------------------------------
Veritas Software Corp.                    40        11/20/00          220.00         45,878           3,750
------------------------------------------------------------------------------------------------------------
Viacom, Inc., Cl. B                      240         1/22/01           80.00         74,280          10,500
------------------------------------------------------------------------------------------------------------
Yahoo!, Inc.                               9         1/22/01          270.00          4,698             109
------------------------------------------------------------------------------------------------------------
Yahoo!, Inc.                               9        10/23/00          270.00         19,323              --
                                                                               -----------------------------
                                                                                 $3,014,224      $2,738,769
                                                                               =============================
</TABLE>


2. Non-income-producing security.
3.  Identifies  issues  considered to be illiquid or  restricted--see  Note 7 of
Notes to Financial  Statements.  4. 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 $13,727,377 or 1.84% of the
Fund's net assets as of September 30, 2000.
5. Units may be comprised of several components,  such as debt and equity and/or
warrants  to  purchase  equity at some  point in the  future.  For  units  which
represent  debt  securities,   principal   amount  disclosed   represents  total
underlying principal.
6.  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.
7. Represents the current interest rate for a variable or increasing rate
security.
8. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
9. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
10. Issuer is in default.

See accompanying Notes to Financial Statements.


26   OPPENHEIMER MULTIPLE STRATEGIES FUND
<PAGE>

--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES September 30, 2000
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
=========================================================================================================
Assets
---------------------------------------------------------------------------------------------------------
<S>                                                                                         <C>
Investments, at value (cost $606,622,681)--see accompanying statement                       $741,578,485
---------------------------------------------------------------------------------------------------------
Cash                                                                                           1,042,496
---------------------------------------------------------------------------------------------------------
Cash--foreign currencies (cost $15,259)                                                           15,259
---------------------------------------------------------------------------------------------------------
Receivables and other assets:
Interest, dividends and principal paydowns                                                     6,118,130
Investments sold                                                                               2,956,418
Shares of beneficial interest sold                                                               176,056
Other                                                                                              1,008
                                                                                            ------------
Total assets                                                                                 751,887,852

=========================================================================================================
Liabilities
---------------------------------------------------------------------------------------------------------
Options written, at value (premiums received $3,014,224)--see accompanying statement           2,738,769
---------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased                                                                          2,451,326
Shares of beneficial interest redeemed                                                           464,637
Distribution and service plan fees                                                               385,117
Shareholder reports                                                                              318,734
Transfer and shareholder servicing agent fees                                                    258,928
Trustees' compensation                                                                           247,683
Other                                                                                             74,930
                                                                                            ------------
Total liabilities                                                                              6,940,124
=========================================================================================================
Net Assets                                                                                  $744,947,728
                                                                                            ============

=========================================================================================================
Composition of Net Assets
---------------------------------------------------------------------------------------------------------
Paid-in capital                                                                             $577,699,547
---------------------------------------------------------------------------------------------------------
Undistributed net investment income                                                            3,544,970
---------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency transactions                28,509,692
---------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of
assets and liabilities denominated in foreign currencies                                     135,193,519
                                                                                            ------------
Net Assets                                                                                  $744,947,728
                                                                                            ============

=========================================================================================================
Net Asset Value Per Share
---------------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$639,647,994 and 44,965,084 shares of beneficial interest outstanding)                            $14.23
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price)                                                                       $15.10
---------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $66,777,351
and 4,741,712 shares of beneficial interest outstanding)                                          $14.08
---------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $38,522,383
and 2,726,101 shares of beneficial interest outstanding)                                          $14.13
</TABLE>

See accompanying Notes to Financial Statements.

27   OPPENHEIMER MULTIPLE STRATEGIES FUND
<PAGE>

--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS                   For the Year Ended September 30, 2000
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
=====================================================================================
Investment Income
-------------------------------------------------------------------------------------
<S>                                                                     <C>
Interest (net of foreign withholding taxes of $2,041)                   $ 29,285,297
-------------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $89,046)                    7,054,745
                                                                        ------------
Total income                                                              36,340,042

=====================================================================================
Expenses
-------------------------------------------------------------------------------------
Management fees                                                            5,313,004
-------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A                                                                    1,249,743
Class B                                                                      670,083
Class C                                                                      386,245
-------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees                                972,854
-------------------------------------------------------------------------------------
Shareholder reports                                                          462,811
-------------------------------------------------------------------------------------
Custodian fees and expenses                                                  117,942
-------------------------------------------------------------------------------------
Trustees' compensation                                                        75,797
-------------------------------------------------------------------------------------
Other                                                                        108,510
                                                                        ------------
Total expenses                                                             9,356,989
Less expenses paid indirectly                                                 (8,431)
                                                                        ------------
Net expenses                                                               9,348,558

=====================================================================================
Net Investment Income                                                     26,991,484

=====================================================================================
Realized and Unrealized Gain (Loss) Net realized gain (loss) on:
-------------------------------------------------------------------------------------
Investments (including premiums on options exercised)                     39,858,318
Closing and expiration of option contracts written                         2,476,784
Foreign currency transactions                                             (7,214,861)
                                                                        ------------
Net realized gain                                                         35,120,241

-------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on:
Investments                                                               34,232,845
Translation of assets and liabilities denominated in foreign currencies   (4,320,024)
                                                                        ------------
Net change                                                                29,912,821
                                                                        ------------
Net realized and unrealized gain                                          65,033,062

=====================================================================================
Net Increase in Net Assets Resulting from Operations                    $ 92,024,546
-------------------------------------------------------------------------------------
</TABLE>


See accompanying Notes to Financial Statements.

28   OPPENHEIMER MULTIPLE STRATEGIES FUND
<PAGE>

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

<TABLE>
<CAPTION>
Year Ended September 30,                                              2000                  1999
==================================================================================================
Operations
--------------------------------------------------------------------------------------------------
<S>                                                          <C>                   <C>
Net investment income                                        $  26,991,484         $  27,747,152
--------------------------------------------------------------------------------------------------
Net realized gain                                               35,120,241            64,301,098
--------------------------------------------------------------------------------------------------
Net change in unrealized appreciation                           29,912,821            24,384,903
                                                             -------------------------------------
Net increase in net assets resulting from operations            92,024,546           116,433,153

==================================================================================================
Dividends and/or Distributions to Shareholders
--------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A                                                        (21,779,999)          (24,477,711)
Class B                                                         (1,694,849)           (2,100,116)
Class C                                                           (978,026)           (1,206,196)
--------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A                                                        (48,515,731)          (54,659,946)
Class B                                                         (5,165,726)           (6,391,151)
Class C                                                         (2,993,063)           (3,772,922)

==================================================================================================
Beneficial Interest Transactions
--------------------------------------------------------------------------------------------------
Net  increase  (decrease)  in net  assets  resulting  from  beneficial  interest
transactions:
Class A                                                         (5,424,882)           (9,204,354)
Class B                                                         (3,023,844)           (6,385,889)
Class C                                                           (956,723)          (11,126,627)

==================================================================================================
Net Assets
--------------------------------------------------------------------------------------------------
Total increase (decrease)                                        1,491,703            (2,891,759)
--------------------------------------------------------------------------------------------------
Beginning of period                                            743,456,025           746,347,784
                                                             -------------------------------------
End of period (including undistributed net investment
income of $3,544,970 and $1,169,787, respectively)           $ 744,947,728         $ 743,456,025
                                                             =====================================
</TABLE>

See accompanying Notes to Financial Statements.

29   OPPENHEIMER MULTIPLE STRATEGIES FUND
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                                             Year           Year
                                                                                                            Ended          Ended
                                                                                                         Sept. 30,      Dec. 31,
Class A                                           2000         1999          1998            1997            1996/1/        1995
=================================================================================================================================
Per Share Operating Data
---------------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>          <C>          <C>             <C>             <C>             <C>
Net asset value, beginning of period         $   14.06    $   13.69    $    16.17      $    14.09      $    13.07      $   11.52
---------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                              .53          .54           .51             .50             .49            .52
Net realized and unrealized gain (loss)           1.21         1.59         (1.22)           2.88             .96           2.08
                                             ------------------------------------------------------------------------------------
Total income (loss) from
investment operations                             1.74         2.13          (.71)           3.38            1.45           2.60
---------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income              (.48)        (.54)         (.49)           (.51)           (.43)          (.49)
Distributions from net realized gain             (1.09)       (1.22)        (1.28)           (.79)             --           (.56)
                                             ------------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders                                  (1.57)       (1.76)        (1.77)          (1.30)           (.43)         (1.05)
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period               $   14.23    $   14.06    $    13.69      $    16.17      $    14.09      $   13.07
                                             ====================================================================================

=================================================================================================================================
Total Return, at Net Asset Value/2/              13.31%       16.29%        (4.71)%         25.46%          11.22%         22.79%

=================================================================================================================================
Ratios/Supplemental Data
---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands)                               $ 639,648    $ 635,603    $  624,895      $  712,470      $  264,359      $ 251,353
---------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)            $ 644,356    $ 660,113    $  699,665      $  395,436      $  256,765      $ 249,660
---------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:/3/
Net investment income                             3.71%        3.70%         3.34%           3.30%           4.73%          3.97%
Expenses                                          1.13%        1.09%         1.08%/4/        1.16%/4/        1.21%/4/       1.15%/4/
---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                             33%          15%           59%             51%             32%            29%
</TABLE>


1. For the nine months ended  September  30,  1996.  The Fund changed its fiscal
year end from  December 31 to  September  30. 2.  Assumes a $1,000  hypothetical
initial investment on the business day before the first day of the fiscal period
(or inception of offering),  with all dividends and distributions  reinvested in
additional  shares on the  reinvestment  date,  and  redemption at the net asset
value  calculated on the last business day of the fiscal  period.  Sales charges
are not reflected in the total  returns.  Total returns are not  annualized  for
periods of less than one full year. 3.  Annualized  for periods of less than one
full year.
4. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.

See accompanying Notes to Financial Statements.

30   OPPENHEIMER MULTIPLE STRATEGIES FUND
<PAGE>

<TABLE>
<CAPTION>
                                                                                                              Year          Year
                                                                                                             Ended         Ended
                                                                                                          Sept. 30,      Dec. 31,
Class B                                           2000           1999           1998           1997           1996/1/       1995/2/
===================================================================================================================================
Per Share Operating Data
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>            <C>            <C>            <C>            <C>           <C>
Net asset value, beginning of period        $    13.93     $    13.57     $    16.04     $    14.01     $    13.03    $    13.28
-----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                              .41            .41            .38            .45            .41           .17
Net realized and unrealized gain (loss)           1.19           1.58          (1.20)          2.78            .93           .41
                                            ---------------------------------------------------------------------------------------
Total income (loss) from
investment operations                             1.60           1.99           (.82)          3.23           1.34           .58
-----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income              (.36)          (.41)          (.37)          (.41)          (.36)         (.27)
Distributions from net realized gain             (1.09)         (1.22)         (1.28)          (.79)            --          (.56)
                                            ---------------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders                                  (1.45)         (1.63)         (1.65)         (1.20)          (.36)         (.83)
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period              $    14.08     $    13.93     $    13.57     $    16.04     $    14.01    $    13.03


===================================================================================================================================
Total Return, at Net Asset Value/3/              12.30%         15.35%         (5.49)%        24.34%         10.37%         4.44%
-----------------------------------------------------------------------------------------------------------------------------------

===================================================================================================================================
Ratios/Supplemental Data
-----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands)                              $   66,777     $   68,875     $   73,036     $   67,916     $    5,996    $    1,265
-----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)           $   66,956     $   73,673     $   74,442     $   25,113     $    3,546    $      520
-----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:/4/
Net investment income                             2.92%          2.85%          2.53%          2.26%          3.69%         2.62%
Expenses                                          1.94%          1.93%          1.91%/5/       1.96%/5/       2.12%/5/      2.27%/5/
-----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                             33%            15%            59%            51%            32%           29%
</TABLE>


1. For the nine months ended September 30, 1996. The Fund changed its fiscal
year end from December 31 to September 30.
2. For the period from August 29, 1995 (inception of offering) to December 31,
1995.
3. Assumes a $1,000  hypothetical  initial investment on the business day before
the  first  day of the  fiscal  period  (or  inception  of  offering),  with all
dividends and distributions  reinvested in additional shares on the reinvestment
date, and redemption at the net asset value  calculated on the last business day
of the fiscal  period.  Sales  charges are not  reflected in the total  returns.
Total  returns are not  annualized  for  periods of less than one full year.  4.
Annualized for periods of less than one full year.
5. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.

See accompanying Notes to Financial Statements.

31   OPPENHEIMER MULTIPLE STRATEGIES FUND
<PAGE>

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


<TABLE>
<CAPTION>
                                                                                                               Year         Year
                                                                                                              Ended        Ended
                                                                                                          Sept. 30,      Dec. 31,
Class C                                         2000           1999           1998           1997           1996/1/        1995
=================================================================================================================================
Per Share Operating Data
<S>                                       <C>            <C>            <C>            <C>            <C>            <C>
Net asset value, beginning of period      $    13.97     $    13.61     $    16.07     $    14.02     $    13.01     $    11.49
---------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                            .41            .42            .38            .41            .40            .40
Net realized and unrealized gain (loss)         1.20           1.57          (1.20)          2.83            .96           2.07
                                          ---------------------------------------------------------------------------------------
Total income (loss) from
investment operations                           1.61           1.99           (.82)          3.24           1.36           2.47
---------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income            (.36)          (.41)          (.36)          (.40)          (.35)          (.39)
Distributions from net realized gain           (1.09)         (1.22)         (1.28)          (.79)            --           (.56)
                                          ---------------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders                                (1.45)         (1.63)         (1.64)         (1.19)          (.35)          (.95)
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period            $    14.13     $    13.97     $    13.61     $    16.07     $    14.02     $    13.01
                                          =======================================================================================

=================================================================================================================================
Total Return, at Net Asset Value/2/            12.35%         15.28%         (5.43)%        24.42%         10.55%         21.69%
---------------------------------------------------------------------------------------------------------------------------------

=================================================================================================================================
Ratios/Supplemental Data
---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands)                            $   38,522     $   38,978     $   48,417     $   49,539     $   21,087     $   15,405
---------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)         $   38,597     $   43,701     $   52,325     $   33,813     $   17,898     $   11,827
---------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:/3/
Net investment income                           2.92%          2.85%          2.51%          2.61%          3.84%          3.08%
Expenses                                        1.94%          1.93%          1.91%/4/       1.97%/4/       2.07%/4/       1.99%/4/
---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                           33%            15%            59%            51%            32%            29%
</TABLE>


1. For the nine months ended  September  30,  1996.  The Fund changed its fiscal
year end from  December 31 to  September  30. 2.  Assumes a $1,000  hypothetical
initial investment on the business day before the first day of the fiscal period
(or inception of offering),  with all dividends and distributions  reinvested in
additional  shares on the  reinvestment  date,  and  redemption at the net asset
value  calculated on the last business day of the fiscal  period.  Sales charges
are not reflected in the total  returns.  Total returns are not  annualized  for
periods of less than one full year. 3.  Annualized  for periods of less than one
full year.
4. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.

See accompanying Notes to Financial Statements.

32   OPPENHEIMER MULTIPLE STRATEGIES FUND
<PAGE>

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

1.Significant Accounting Policies
Oppenheimer  Multiple  Strategies  Fund  (the  Fund)  is  registered  under  the
Investment Company Act of 1940, as amended, as an open-end management investment
company. The Fund's investment objective is to seek high total investment return
consistent with  preservation  of principal.  The Fund's  investment  advisor is
OppenheimerFunds, Inc. (the Manager).

    The Fund offers Class A, Class B and Class C shares. Class A shares are sold
at their  offering  price,  which is  normally  net asset value plus a front-end
sales  charge.  Class B and Class C shares are sold  without a  front-end  sales
charge but may be subject to a  contingent  deferred  sales charge  (CDSC).  All
classes  of  shares  have  identical  rights  to  earnings,  assets  and  voting
privileges, except that each class has its own expenses directly attributable to
that class and exclusive  voting rights with respect to matters  affecting  that
class. Classes A, B and C have separate distribution and/or service plans. Class
B shares will  automatically  convert to Class A shares six years after the date
of purchase.  The  following  is a summary of  significant  accounting  policies
consistently followed by the Fund.
--------------------------------------------------------------------------------
Securities Valuation. Securities listed or traded on National Stock Exchanges or
other  domestic or foreign  exchanges are valued based on the last sale price of
the security  traded on that  exchange  prior to the time when the Fund's assets
are valued.  In the absence of a sale,  the  security is valued at the last sale
price on the prior  trading  day,  if it is within the spread of the closing bid
and asked prices,  and if not, at the closing bid price.  Securities  (including
restricted securities) for which quotations are not readily available are valued
primarily  using  dealer-supplied   valuations,   a  portfolio  pricing  service
authorized  by the Board of  Trustees,  or at their  fair  value.  Fair value is
determined  in good  faith  under  consistently  applied  procedures  under  the
supervision  of the Board of  Trustees.  Short-term  "money  market  type"  debt
securities  with  remaining  maturities  of  sixty  days or less are  valued  at
amortized cost (which approximates market value).
--------------------------------------------------------------------------------
Structured Notes. The Fund invests in foreign  currency-linked  structured notes
whose market value and redemption price are linked to foreign currency  exchange
rates. The structured notes are leveraged, which increases the notes' volatility
relative  to the  principal  of the  security.  Fluctuations  in  value of these
securities  are  recorded  as  unrealized  gains and losses in the  accompanying
financial  statements.  As of September 30, 2000, these  securities  resulted in
unrealized  gains of  $33,563.  The Fund may also hedge a portion of the foreign
currency exposure generated by these securities, as discussed in Note 5.
--------------------------------------------------------------------------------
Security  Credit Risk. The Fund invests in high yield  securities,  which may be
subject to a greater degree of credit risk, greater market fluctuations and risk
of  loss  of  income  and  principal,  and may be  more  sensitive  to  economic
conditions than lower yielding,  higher rated fixed income securities.  The Fund
may acquire securities in default, and is not obligated to dispose of securities
whose issuers subsequently default. As of September 30, 2000, securities with an
aggregate market value of $38,025,  representing 0.01% of the Fund's net assets,
were in default.

33   OPPENHEIMER MULTIPLE STRATEGIES FUND
<PAGE>

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

1. Significant Accounting Policies Continued
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.
--------------------------------------------------------------------------------
Federal  Taxes.  The Fund intends to continue to comply with  provisions  of the
Internal  Revenue Code  applicable  to  regulated  investment  companies  and to
distribute  all of its  taxable  income,  including  any  net  realized  gain on
investments  not  offset by loss  carryovers,  to  shareholders.  Therefore,  no
federal income or excise tax provision is required.
--------------------------------------------------------------------------------
Trustees' Compensation. The Fund has adopted an unfunded retirement plan for the
Fund's independent Board of Trustees. Benefits are based on years of service and
fees paid to each  trustee  during the years of  service.  During the year ended
September  30, 2000,  a provision  of $57,662 was made for the Fund's  projected
benefit  obligations  and  payments  of $13,035  were made to retired  trustees,
resulting in an accumulated liability of $236,807 as of September 30, 2000.
    The  Board  of  Trustees  has  adopted  a  deferred  compensation  plan  for
independent trustees that enables trustees to elect to defer receipt of all or a
portion of annual compensation they are entitled to receive from the Fund. Under
the plan,  the  compensation  deferred  is  periodically  adjusted  as though an
equivalent  amount had been  invested for the Board of Trustees in shares of one
or more Oppenheimer funds selected by the

34   OPPENHEIMER MULTIPLE STRATEGIES FUND
<PAGE>

trustee.  The  amount  paid to the  Board of  Trustees  under  the plan  will be
determined  based  upon the  performance  of the  selected  funds.  Deferral  of
trustees'  fees under the plan will not  affect the net assets of the Fund,  and
will not  materially  affect the Fund's  assets,  liabilities  or net investment
income per share.
--------------------------------------------------------------------------------
Dividends and  Distributions  to  Shareholders.  Dividends and  distributions to
shareholders,  which are determined in accordance  with income tax  regulations,
are recorded on the ex-dividend date.
--------------------------------------------------------------------------------
Classification  of Dividends and  Distributions to Shareholders.  Net investment
income (loss) and net realized  gain (loss) may differ for  financial  statement
and tax purposes.  The character of dividends and distributions  made during the
fiscal year from net investment income or net realized gains may differ from its
ultimate  characterization for federal income tax purposes.  Also, due to timing
of dividends and distributions, the fiscal year in which amounts are distributed
may  differ  from the  fiscal  year in which  the  income or  realized  gain was
recorded by the Fund.
    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  September  30, 2000,  amounts have been  reclassified  to reflect an
increase  in paid-in  capital of  $3,131,265,  a decrease in  undistributed  net
investment  income of $163,427,  and a decrease in accumulated net realized gain
on  investments  of  $2,967,838.   This  reclassification   includes  $3,136,404
distributed in connection with Fund share  redemptions  which increased  paid-in
capital and reduced  accumulated  net realized gain. Net assets of the Fund were
unaffected by the reclassifications.
--------------------------------------------------------------------------------
Expense Offset Arrangements. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Fund.
--------------------------------------------------------------------------------
Other.  Investment  transactions are accounted for as of trade date and dividend
income is recorded on the ex-dividend date. Discount on securities  purchased is
accreted over the life of the respective securities,  in accordance with federal
income tax  requirements.  Realized gains and losses on investments  and options
written 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.

35   OPPENHEIMER MULTIPLE STRATEGIES FUND
<PAGE>

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

================================================================================
2.Shares of Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of beneficial
interest for each class.  Transactions in shares of beneficial  interest were as
follows:

<TABLE>
<CAPTION>
                                Year Ended September 30, 2000               Year Ended September 30, 1999
                                  Shares           Amount                       Shares          Amount
-------------------------------------------------------------------------------------------------------------
Class A
<S>                            <C>          <C>                              <C>           <C>
Sold                           2,399,891    $  33,730,252                    1,797,693    $  25,595,843
Dividends and/or
distributions reinvested       4,751,781       63,935,355                    5,300,198       72,227,515
Redeemed                      (7,377,559)    (103,090,489)                  (7,538,361)    (107,027,712)
                               ------------------------------------------------------------------------------
Net decrease                    (225,887)   $  (5,424,882)                    (440,470)   $  (9,204,354)
                               ==============================================================================


-------------------------------------------------------------------------------------------------------------
Class B
Sold                             887,243    $  12,369,666                    1,006,931    $  14,207,626
Dividends and/or
distributions reinvested         473,833        6,297,177                      577,898        7,782,999
Redeemed                      (1,563,882)     (21,690,687)                  (2,021,277)     (28,376,514)
                               ------------------------------------------------------------------------------
Net decrease                    (202,806)   $  (3,023,844)                    (436,448)   $  (6,385,889)
                               ==============================================================================

-------------------------------------------------------------------------------------------------------------
Class C
Sold                             428,935    $   5,997,482                      411,845    $   5,825,212
Dividends and/or
distributions reinvested         272,821        3,635,733                      337,524        4,555,422
Redeemed                        (765,156)     (10,589,938)                  (1,518,503)     (21,507,261)
                               ------------------------------------------------------------------------------
Net decrease                     (63,400)   $    (956,723)                    (769,134)   $ (11,126,627)
                               ==============================================================================
</TABLE>


================================================================================
3.Purchases and Sales of Securities
The aggregate  cost of purchases and proceeds  from sales of  securities,  other
than  short-term  obligations,  for the year  ended  September  30,  2000,  were
$229,639,832 and $274,081,210, respectively.

    As of September 30, 2000,  unrealized  appreciation  (depreciation) based on
cost of securities for federal income tax purposes of $609,101,733 was:
Gross unrealized appreciation      $ 167,948,683
Gross unrealized depreciation        (35,471,931)
Net unrealized appreciation        $ 132,476,752

================================================================================
4.Fees and Other Transactions with Affiliates
Management Fees.  Management fees paid to the Manager are in accordance with the
investment advisory agreement with the Fund which provides for a fee of 0.75% on
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 $700 million and 0.58% of average  annual net assets
in  excess  of $1.5  billion.  The  Fund's  management  fee for the  year  ended
September 30, 2000,  was an annualized  rate of 0.71%,  before any waiver by the
Manager if applicable.

36   OPPENHEIMER MULTIPLE STRATEGIES FUND
<PAGE>

--------------------------------------------------------------------------------
Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the Manager,
acts  as the  transfer  and  shareholder  servicing  agent  for  the  Fund on an
"at-cost" basis.  OFS also acts as the transfer and shareholder  servicing agent
for the other Oppenheimer funds.
--------------------------------------------------------------------------------
Distribution  and Service Plan Fees. Under its General  Distributor's  Agreement
with the Manager,  the Distributor acts as the Fund's  principal  underwriter in
the continuous public offering of the different classes of shares of the Fund.

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

<TABLE>
<CAPTION>
                               Aggregate           Class A    Commissions      Commissions       Commissions
                               Front-End         Front-End     on Class A       on Class B        on Class C
                           Sales Charges     Sales Charges         Shares           Shares            Shares
                              on Class A       Retained by    Advanced by      Advanced by       Advanced by
Year Ended                        Shares       Distributor    Distributor/1/   Distributor/1/     Distributor/1/
------------------------------------------------------------------------------------------------------------------
<S>                             <C>               <C>             <C>             <C>                 <C>
September 30, 2000              $392,339          $144,549        $14,825         $348,915            $48,291
</TABLE>

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

<TABLE>
<CAPTION>
                                         Class A                      Class B                      Class C
                             Contingent Deferred          Contingent Deferred          Contingent Deferred
                                   Sales Charges                Sales Charges                Sales Charges
Year Ended               Retained by Distributor      Retained by Distributor      Retained by Distributor
-------------------------------------------------------------------------------------------------------------
<S>                                       <C>                        <C>                            <C>
September 30, 2000                        $4,472                     $151,138                       $4,114
</TABLE>


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.
--------------------------------------------------------------------------------
Class A Service  Plan  Fees.  Under the Class A service  plan,  the  Distributor
currently  uses the fees it receives  from the Fund to pay brokers,  dealers and
other financial institutions. The Class A service plan permits reimbursements to
the Distributor at a rate of up to 0.25% of average annual net assets of Class A
shares purchased. 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 of the Fund. For the year ended  September 30, 2000,  payments
under the Class A plan totaled $1,249,743 prior to Manager waiver if applicable,
all of which were paid by the  Distributor to recipients,  and included  $74,786
paid to an affiliate of the Manager.  Any unreimbursed  expenses the Distributor
incurs with  respect to Class A shares in any fiscal year cannot be recovered in
subsequent years.

37   OPPENHEIMER MULTIPLE STRATEGIES FUND
<PAGE>

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

================================================================================
4.Fees and Other Transactions with Affiliates Continued
Class B and Class C Distribution and Service Plan Fees. Under each plan, service
fees and distribution fees are computed on the average of the net asset value of
shares in the  respective  class,  determined  as of the  close of each  regular
business  day during the period.  The Class B 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 Distributor  retains the asset-based sales charge on Class B shares. The
Distributor  retains the  asset-based  sales charge on Class C shares during the
first year the shares are outstanding.  The 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 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  asset-based  sales charges from the Fund under
the plans.  If any plan is  terminated  by the Fund,  the Board of Trustees  may
allow the Fund to  continue  payments  of the  asset-based  sales  charge to the
Distributor for  distributing  shares before the plan was terminated.  The plans
allow for the  carryforward  of  distribution  expenses,  to be  recovered  from
asset-based sales charges in subsequent  fiscal periods.  Distribution fees paid
to the Distributor for the year ended September 30, 2000, were as follows:

<TABLE>
<CAPTION>
                                                                     Distributor's       Distributor's
                                                                         Aggregate        Unreimbursed
                                                                      Unreimbursed       Expenses as %
                         Total Payments          Amount Retained          Expenses       of Net Assets
                             Under Plan           by Distributor        Under Plan            of Class
--------------------------------------------------------------------------------------------------------
<S>                             <C>                     <C>             <C>                       <C>
Class B Plan                    $670,083                $528,605        $2,511,958                3.76%
Class C Plan                     386,245                  52,369           667,881                1.73
</TABLE>


================================================================================
5.Foreign Currency Contracts
A foreign  currency  contract  is a  commitment  to  purchase  or sell a foreign
currency at a future date, at a negotiated rate. The Fund may enter into foreign
currency  contracts  for  operational  purposes  and to seek to protect  against
adverse  exchange  rate  fluctuations.  Risks to the Fund include the  potential
inability of the counterparty to meet the terms of the contract.

    The net U.S.  dollar value of foreign  currency  underlying all  contractual
commitments  held by the  Fund  and the  resulting  unrealized  appreciation  or
depreciation are determined using foreign currency exchange rates as provided by
a  reliable  bank,  dealer  or  pricing  service.  Unrealized  appreciation  and
depreciation  on foreign  currency  contracts  are reported in the  Statement of
Assets and Liabilities.

38   OPPENHEIMER MULTIPLE STRATEGIES FUND
<PAGE>

The Fund may  realize  a gain or loss  upon the  closing  or  settlement  of the
foreign currency  transactions.  Realized gains and losses are reported with all
other foreign currency gains and losses in the Statement of Operations.

    Securities  denominated  in  foreign  currency  to  cover  net  exposure  on
outstanding foreign currency contracts are noted in the Statement of Investments
where applicable.

================================================================================
6.Option Activity
The Fund may buy and sell put and call  options,  or write put and covered  call
options on  portfolio  securities  in order to produce  incremental  earnings or
protect against changes in the value of portfolio securities.

    The Fund  generally  purchases put options or writes covered call options to
hedge  against  adverse  movements in the value of portfolio  holdings.  When an
option is written,  the Fund receives a premium and becomes obligated to sell or
purchase the underlying security at a fixed price, upon exercise of the option.

    Options  are valued  daily  based upon the last sale price on the  principal
exchange  on  which  the  option  is  traded  and  unrealized   appreciation  or
depreciation  is  recorded.  The  Fund  will  realize  a gain or loss  upon  the
expiration  or closing of the option  transaction.  When an option is exercised,
the proceeds on sales for a written call option, the purchase cost for a written
put option,  or the cost of the security  for a purchased  put or call option is
adjusted by the amount of premium received or paid.

    Securities  designated  to cover  outstanding  call options are noted in the
Statement of Investments  where applicable.  Shares subject to call,  expiration
date,  exercise price,  premium received and market value are detailed in a note
to the Statement of Investments.  Options written are reported as a liability in
the Statement of Assets and Liabilities.  Realized gains and losses are reported
in the Statement of Operations.

    The risk in writing a call option is that the Fund gives up the  opportunity
for  profit if the  market  price of the  security  increases  and the option is
exercised. The risk in writing a put option is that the Fund may incur a loss if
the market price of the security decreases and the option is exercised. The risk
in buying an option is that the Fund pays a premium whether or not the option is
exercised. The Fund also has the additional risk of not being able to enter into
a closing transaction if a liquid secondary market does not exist.

Written option activity for the year ended September 30, 2000, was as follows:

<TABLE>
<CAPTION>
                                                                                Call Options
                                                           -----------------------------------
                                                           Number of             Amount of
                                                           Contracts              Premiums
----------------------------------------------------------------------------------------------
<S>                                                        <C>                  <C>
Options outstanding as of September 30, 1999                  5,141             $ 2,350,634
Options written                                              14,207               5,821,804
Options closed or expired                                    (9,169)             (4,311,284)
Options exercised                                            (1,890)               (846,930)
                                                           -----------------------------------
Options outstanding as of September 30, 2000                  8,289             $ 3,014,224
                                                           ===================================
</TABLE>


39   OPPENHEIMER MULTIPLE STRATEGIES FUND
<PAGE>

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

================================================================================
7.Illiquid Securities
As of September 30, 2000,  investments  in securities  included  issues that are
illiquid.  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  securities.  The
aggregate  value  of  illiquid  securities  subject  to  this  limitation  as of
September 30, 2000, was  $17,829,099,  which  represents 2.39% of the Fund's net
assets.  Certain  restricted  securities,   eligible  for  resale  to  qualified
institutional investors, are not subject to that limit.


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

    The Fund had no borrowings  outstanding  during the year ended September 30,
2000.


--------
1No  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. Griffith are not Directors of Oppenheimer Money
Market Fund, Inc.; Mr. Griffiths is also not a Trustee of Oppenheimer
Discovery Fund.
3 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.
4 This provision does not apply to IRAs.
5 This provision does not apply to 403(b)(7) custodial plans if the
participant is less than age 55, nor to IRAs.
6 This provision does not apply to IRAs.
7 This provision does not apply to loans from 403(b)(7)  custodial plans. 8 This
provision does not apply to 403(b)(7) custodial plans if the participant is less
than age 55, nor to IRAs.


<PAGE>


                                       A-5
                                   Appendix A

                               RATINGS DEFINITIONS

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

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

Long-Term (Taxable) Bond Ratings

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

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

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

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

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

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

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

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

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

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

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

Short-Term Ratings - Taxable Debt

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

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

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

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

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


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

                            Long-Term Credit Ratings

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

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

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

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

BB, B, CCC, CC, and C

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

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

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

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

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

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

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

Short-Term Issue Credit Ratings

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

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

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

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

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

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

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

International Long-Term Credit Ratings

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

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

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

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

Speculative Grade:

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

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

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

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

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

International Short-Term Credit Ratings

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

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

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

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

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

D:     Default. Denotes actual or imminent payment default.



<PAGE>


                                       B-1
                                   Appendix B

                            Industry Classifications


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




<PAGE>


                                      C-12
                                   Appendix C

        OppenheimerFunds Special Sales Charge Arrangements and Waivers

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

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

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

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

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

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

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

      There is no initial  sales charge on purchases of Class A shares of any of
the Oppenheimer funds in the cases listed below. However, these purchases may be
subject to the Class A contingent  deferred  sales charge if redeemed  within 18
months of the end of the calendar month of their  purchase,  as described in the
Prospectus (unless a waiver described  elsewhere in this Appendix applies to the
redemption).  Additionally,  on shares  purchased  under these  waivers that are
subject to the Class A contingent  deferred sales charge,  the Distributor  will
pay the  applicable  commission  described  in the  Prospectus  under  "Class  A
Contingent Deferred Sales Charge."3 This waiver provision applies to:
|_| Purchases of Class A shares aggregating $1 million or more. |_| Purchases by
a Retirement Plan (other than an IRA or 403(b)(7)
         custodial plan) that:
(1)   buys shares costing $500,000 or more, or
(2)   has, at the time of purchase, 100 or more eligible employees or total
              plan assets of $500,000 or more, or
(3)           certifies to the Distributor  that it projects to have annual plan
              purchases of $200,000 or more.
|_|      Purchases  by  an  OppenheimerFunds-sponsored   Rollover  IRA,  if  the
         purchases are made:
(1)           through a broker,  dealer,  bank or registered  investment adviser
              that has made special  arrangements with the Distributor for those
              purchases, or
(2)           by a direct rollover of a distribution from a qualified Retirement
              Plan  if  the   administrator   of  that  Plan  has  made  special
              arrangements with the Distributor for those purchases.
|_|      Purchases  of Class A shares by  Retirement  Plans that have any of the
         following record-keeping arrangements:
(1)   The record keeping is performed by Merrill Lynch Pierce Fenner & Smith,
              Inc. ("Merrill Lynch") on a daily valuation basis for the
              Retirement Plan. On the date the plan sponsor signs the
              record-keeping service agreement with Merrill Lynch, the Plan
              must have $3 million or more of its assets invested in (a)
              mutual funds, other than those advised or managed by Merrill
              Lynch Asset Management, L.P. ("MLAM"), that are made available
              under a Service Agreement between Merrill Lynch and the mutual
              fund's principal underwriter or distributor, and  (b)  funds
              advised or managed by MLAM (the funds described in (a) and (b)
              are referred to as "Applicable Investments").
(2)   The record keeping for the Retirement Plan is performed on a daily
              valuation basis by a record keeper whose services are provided
              under a contract or arrangement between the Retirement Plan and
              Merrill Lynch. On the date the plan sponsor signs the record
              keeping service agreement with Merrill Lynch, the Plan must
              have $3 million or more of its assets (excluding assets
              invested in money market funds) invested in Applicable
              Investments.
(3)           The  record  keeping  for a  Retirement  Plan is  handled  under a
              service  agreement  with  Merrill  Lynch  and on the date the plan
              sponsor  signs that  agreement,  the Plan has 500 or more eligible
              employees  (as  determined  by the Merrill  Lynch plan  conversion
              manager).
|_|      Purchases   by  a   Retirement   Plan   whose   record   keeper  had  a
         cost-allocation  agreement  with the Transfer Agent on or before May 1,
         1999.


II.  Waivers of Class A Sales Charges of Oppenheimer Funds

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

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

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

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

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

The Class A contingent deferred sales charge is also waived if shares that would
otherwise be subject to the contingent deferred sales charge are redeemed in the
following cases:
|_|      To make Automatic Withdrawal Plan payments that are limited annually to
         no more than 12% of the account value adjusted annually.
|_|      Involuntary  redemptions  of shares by operation of law or  involuntary
         redemptions of small  accounts  (please refer to  "Shareholder  Account
         Rules and Policies," in the applicable fund Prospectus).
|_|      For distributions from Retirement Plans, deferred compensation plans or
         other employee benefit plans for any of the following purposes:
(1)           Following  the death or  disability  (as  defined in the  Internal
              Revenue  Code) of the  participant  or  beneficiary.  The death or
              disability  must  occur  after  the   participant's   account  was
              established.
(2)   To return excess contributions.
(3)   To return contributions made due to a mistake of fact.
(4)   Hardship withdrawals, as defined in the plan.4
(5)   Under a Qualified Domestic Relations Order, as defined in the Internal
              Revenue  Code,  or, in the case of an IRA, a divorce or separation
              agreement described in Section 71(b) of the Internal Revenue Code.
(6)   To meet the minimum distribution requirements of the Internal Revenue
              Code.
(7)           To make  "substantially  equal periodic  payments" as described in
              Section 72(t) of the Internal Revenue Code.
(8)   For loans to participants or beneficiaries.
(9)   Separation from service.5
         (10) Participant-directed  redemptions  to purchase  shares of a mutual
              fund (other than a fund managed by the Manager or a subsidiary  of
              the  Manager) if the plan has made special  arrangements  with the
              Distributor.
         (11) Plan termination or "in-service  distributions," if the redemption
              proceeds are rolled over directly to an OppenheimerFunds-sponsored
              IRA.
|_|      For  distributions  from  Retirement  Plans having 500 or more eligible
         employees,  except  distributions  due  to  termination  of  all of the
         Oppenheimer funds as an investment option under the Plan.
|_|      For distributions  from 401(k) plans sponsored by  broker-dealers  that
         have entered into a special  agreement  with the  Distributor  allowing
         this waiver.


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

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

A.  Waivers for Redemptions in Certain Cases.

The Class B,  Class C and Class N  contingent  deferred  sales  charges  will be
waived for  redemptions of shares in the following  cases:  |_| Shares  redeemed
involuntarily, as described in "Shareholder Account
         Rules and Policies," in the applicable Prospectus.
|_|   Redemptions from accounts other than Retirement Plans following the
         death or  disability  of the last  surviving  shareholder,  including a
         trustee  of a grantor  trust or  revocable  living  trust for which the
         trustee is also the sole beneficiary. The death or disability must have
         occurred after the account was established, and for disability you must
         provide  evidence  of a  determination  of  disability  by  the  Social
         Security Administration.
|_|      Distributions  from accounts for which the  broker-dealer of record has
         entered into a special  agreement  with the  Distributor  allowing this
         waiver.
|_|      Redemptions  of Class B shares held by  Retirement  Plans whose records
         are  maintained  on a daily  valuation  basis  by  Merrill  Lynch or an
         independent record keeper under a contract with Merrill Lynch.
|_|      Redemptions of Class C shares of Oppenheimer U.S. Government Trust from
         accounts of clients of financial  institutions that have entered into a
         special arrangement with the Distributor for this purpose.
|_|      Redemptions  requested in writing by a Retirement Plan sponsor of Class
         C shares of an  Oppenheimer  fund in amounts of $1 million or more held
         by the  Retirement  Plan for  more  than one  year,  if the  redemption
         proceeds  are  invested  in Class A shares  of one or more  Oppenheimer
         funds.
|_|      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.6
(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.7  (9)  On  account  of the
participant's separation from service.8 (10) Participant-directed redemptions to
purchase shares of a mutual fund
              (other than a fund managed by the Manager or a  subsidiary  of the
              Manager)  offered as an investment  option in a Retirement Plan if
              the plan has made special arrangements with the Distributor.
(11)          Distributions   made  on   account  of  a  plan   termination   or
              "in-service" distributions,  if the redemption proceeds are rolled
              over directly to an OppenheimerFunds-sponsored IRA.
(12)          Distributions  from  Retirement  Plans having 500 or more eligible
              employees,  but excluding distributions made because of the Plan's
              elimination  as  investment  options  under the Plan of all of the
              Oppenheimer funds that had been offered.
(13)          For distributions from a participant's  account under an Automatic
              Withdrawal Plan after the participant reaches age 59 1/2 , as long
              as the aggregate value of the distributions does not exceed 10% of
              the account's value, adjusted annually.
(14)          Redemptions of Class B shares under an Automatic  Withdrawal  Plan
              for an account  other than a  Retirement  Plan,  if the  aggregate
              value of the redeemed  shares does not exceed 10% of the account's
              value, adjusted annually.
      |_|Redemptions  of Class B shares  or  Class C shares  under an  Automatic
         Withdrawal  Plan from an account  other than a  Retirement  Plan if the
         aggregate  value of the  redeemed  shares  does not  exceed  10% of the
         account's value annually.

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

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



<PAGE>



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

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



<PAGE>


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

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

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

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

A.  Reductions or Waivers of Class A Sales Charges.

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

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

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

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


<PAGE>


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

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

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

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

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

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

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

      |X| Waivers for Redemptions of Shares  Purchased on or After March 6, 1995
but Prior to November 24, 1995. In the following cases, the contingent  deferred
sales  charge  will be waived  for  redemptions  of Class A,  Class B or Class C
shares of an Oppenheimer  fund. The shares must have been acquired by the merger
of a  Former  Quest  for  Value  Fund  into  the  fund  or by  exchange  from an
Oppenheimer  fund  that was a Former  Quest For Value  Fund or into  which  such
Former Quest for Value Fund merged.  Those shares must have been purchased on or
after March 6, 1995, but prior to November 24, 1995: |_|  redemptions  following
the death or disability of the shareholder(s) (as
            evidenced by a determination of total disability by the U.S.
            Social Security Administration);
|_|         withdrawals under an automatic withdrawal plan (but only for Class B
            or Class C shares) where the annual withdrawals do not exceed 10% of
            the initial value of the account value; adjusted annually, and
|_|         liquidation  of a  shareholder's  account if the aggregate net asset
            value of  shares  held in the  account  is less  than  the  required
            minimum account value.
      A shareholder's account will be credited with the amount of any contingent
deferred  sales charge paid on the redemption of any Class A, Class B or Class C
shares of the  Oppenheimer  fund  described  in this section if the proceeds are
invested  in the same Class of shares in that fund or another  Oppenheimer  fund
within 90 days after redemption.


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

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

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

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

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

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

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

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

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

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


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

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


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

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








<PAGE>



Oppenheimer Multiple Strategies 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
      KPMG LLP
      707 Seventeenth Street
      Denver, Colorado 80202

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

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