OPPENHEIMER LIMITED TERM GOVERNMENT FUND, 497, 1998-01-22

OPPENHEIMER LIMITED TERM GOVERNMENT FUND
497, 1998-01-22

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Oppenheimer
Limited-Term Government Fund

Prospectus dated January 26, 1998

Oppenheimer Limited-Term Government Fund is a mutual fund with the investment
objective of seeking high current return and safety of principal. The Fund
invests principally in obligations issued or guaranteed by the U.S. Government
or its agencies or instrumentalities, including mortgage-backed securities
issued by Government National Mortgage Association. The Fund also uses "hedging"
instruments to seek to reduce the risks of market and interest rate fluctuations
that affect the value of the securities the Fund holds.

While payments of principal and interest on certain U.S. Government
securities are guaranteed by the U.S. Government or its agencies or
instrumentalities, the net asset values of shares of the Fund and the Fund's
dividends are not guaranteed, and will fluctuate.

Under normal circumstances, the Fund seeks to maintain an average
effective portfolio duration (measured on a dollar-weighted basis) of not more
than three years. Please refer to "Investment Policies and Strategies" and
"Investment Risks" for more information about the types of securities the Fund
invests in and the risks of investing in the Fund.

This Prospectus explains concisely what you should know before investing
in the Fund. Please read this Prospectus carefully and keep it for future
reference. You can find more detailed information about the Fund in the January
26, 1998 Statement of Additional Information. For a free copy, call
OppenheimerFunds Services, the Fund's Transfer Agent, at 1-800-525-7048, or
write to the Transfer Agent at the address on the back cover. The Statement of
Additional Information has been filed with the Securities and Exchange
Commission and is incorporated into this Prospectus by reference (which means
that it is legally part of this Prospectus).

(logo) OppenheimerFunds

Shares of the Fund are not deposits or obligations of any bank, are not
guaranteed by any bank, are not insured by the F.D.I.C. or any other agency, and
involve investment risks, including the possible loss of the principal amount
invested.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<PAGE>

Contents

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

Expenses
A Brief Overview of the Fund
Financial Highlights
Investment Objective and Policies
Investment Techniques and Strategies
Investment Risks
How the Fund is Managed
Performance of the Fund

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

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

Special Investor Services
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans

By Mail
By Telephone
By Checkwriting

How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
A-1 Appendix A: Special Sales Charge Arrangements

<PAGE>

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

Expenses

The Fund pays a variety of expenses directly for management of its assets,
administration, distribution of its shares and other services and those expenses
are subtracted from the Fund's assets to calculate the Fund's net asset value
per share. All shareholders therefore pay those expenses indirectly.
Shareholders pay other expenses directly, such as sales charges and account
transaction charges. The following tables are provided to help you understand
your direct expenses of investing in the Fund and your share of the Fund's
business operating expenses that you will bear indirectly.

o Shareholder Transaction Expenses are charges you pay when you buy or
sell shares of the Fund. Please refer to "About Your Account" starting on page
__ for an explanation of how and when these charges apply.

Class A Class B Class C Class Y
Shares Shares Shares Shares
- -------------------------------------------------------------------------------
Maximum Sales 3.50% None None None
Charge on
Purchases (as a %
of offering price)
- -------------------------------------------------------------------------------
Maximum Sales Charge None None None None
on Reinvested
Dividends
- -------------------------------------------------------------------------------
Maximum Deferred None(1) 4% in the 1% if None
Sales Charge (as a first year, shares are
% of the lower declining redeemed
of the original to 1% in within 12
offering price the fifth months of
or redemption year and purchase(2)
proceeds) eliminated
thereafter(2)
- -------------------------------------------------------------------------------
Exchange Fee None None None None

- -------------------------------------------------------------------------------
Redemption Fee None(3) None(3) None(3) None

(1) If you invest $1 million or more ($500,000 or more for purchases by
"Retirement Plans" as defined in "Class A Contingent Deferred Sales Charge" on
page __) in Class A shares, you may have to pay a sales charge of up to 1% if
you sell your shares within 12 calendar months (18 months for shares purchased
prior to May 1, 1997) from the end of the calendar month during which you
purchased those shares. See "How to Buy Shares - Buying Class A Shares" below.
(2) See "How to Buy Shares - Buying Class B Shares" and "How to Buy Shares -
Buying Class C Shares" below for more information on the contingent deferred
sales charges.
(3) There is a $10 transaction fee for redemption proceeds paid by Federal Funds
wire, but not for redemptions paid by check or ACH transfer through AccountLink,
or with respect to Class A shares only for which checkwriting privileges are
used. See "How to Sell Shares".

o Annual Fund Operating Expenses are paid out of the Fund's assets and
represent the Fund's expenses in operating its business. For example, the Fund
pays management fees to its investment advisor, OppenheimerFunds, Inc. (which is
referred to in this Prospectus as the "Manager"). The rates of the Manager's
fees are set forth in "How the Fund is Managed" below. The Fund has other
regular expenses for services, such as transfer agent fees, custodial fees paid
to the bank that holds the Fund's portfolio securities, audit fees and legal
expenses. Those expenses are detailed in the Fund's Financial Statements in the
Statement of Additional Information.

Annual Fund Operating Expenses
(as a percentage of average net assets)

Class A Class B Class C Class Y
Shares Shares Shares Shares
- -------------------------------------------------------------------
Management Fees 0.43% 0.43% 0.43% 0.43%
- -------------------------------------------------------------------
12b-1 Plan Fees 0.24% 1.00% 1.00% 0.00%
- -------------------------------------------------------------------
Other Expenses 0.20% 0.19% 0.19% 0.15%
- -------------------------------------------------------------------
Total Fund Operating 0.87% 1.62% 1.62% 0.58%
Expenses

The numbers in the chart above with respect to Class A, Class B and Class
C shares are based upon the Fund's expenses in its fiscal year ended September
30, 1997. These amounts are shown as a percentage of the average net assets of
each class of the Fund's shares for that year. The 12b-1 Plan Fees for Class A
shares are the service plan fees (which can be up to a maximum of 0.25% of
average annual net assets of the class) and for Class B and Class C shares are
the service plan fees (which can be up to a maximum of 0.25% of average annual
net assets of that class) and the asset-based sales charges of 0.75% of average
annual net assets of the class. These plans are described in greater detail in
"How to Buy Shares."

The actual expenses for each class of shares in future years may be more
or less than the numbers in the chart, depending on a number of factors,
including changes in the actual amount of the Fund's assets represented by each
class of shares. Class Y shares were not available during the fiscal year ended
September 30, 1997. Therefore, the Annual Fund Operating Expenses shown for
Class Y shares are based on the amount that would have been payable in that
period assuming Y shares were outstanding during such fiscal year.

o Examples. To try to show the effect of these expenses on an investment
over time, we have created the hypothetical examples shown below. Assume that
you make a $1,000 investment in each class of shares of the Fund, and the Fund's
annual return is 5%, and that its operating expenses for each class are the ones
shown in the Annual Fund Operating Expenses table above. If you were to redeem
your shares at the end of each period shown below, your investment would incur
the following expenses by the end of 1, 3, 5 and 10 years:

1 year 3 years 5 years 10 years*
- -----------------------------------------------------------------
Class A Shares $44 $62 $82 $138
- -----------------------------------------------------------------
Class B Shares $56 $71 $98 $154
- -----------------------------------------------------------------
Class C Shares $26 $51 $88 $192
- ------------------------------------------------------------------
Class Y Shares $6 $19 $32 $ 73

If you did not redeem your investment, it would incur the following
expenses:
1 year 3 years 5 years 10 years*
- -------------------------------------------------------------------
Class A Shares $44 $62 $82 $138
- -----------------------------------------------------------------
Class B Shares $16 $51 $88 $154
- -----------------------------------------------------------------
Class C Shares $16 $51 $88 $192
- ------------------------------------------------------------------
Class Y Shares $ 6 $19 $32 $ 73

* In the first example, expenses include the Class A initial sales charge
and the applicable Class B or Class C contingent deferred sales charge. In the
second example, Class A expenses include the initial sales charge, but Class B
and Class C expenses do not include contingent deferred sales charges. The Class
B expenses in years 7 through 10 are based on the Class A expenses shown above,
because the Fund automatically converts your Class B shares into Class A shares
after 6 years. Because of the effect of the asset-based sales charge and the
contingent deferred sales charge on Class B and Class C shares, long-term Class
B and Class C shareholders could pay the economic equivalent of more than the
maximum front-end sales charge allowed under applicable regulations. For Class B
shareholders, the automatic conversion of Class B shares into Class A shares is
designed to minimize the likelihood that this will occur. Please refer to "How
to Buy Shares" for more information.

These examples show the effect of expenses on an investment, but are not
meant to state or predict actual or expected costs or investment returns of the
Fund, all of which may be more or less than those shown.

A Brief Overview of the Fund

Some of the important facts about the Fund are summarized below, with references
to the section of this Prospectus where more complete information can be found.
You should carefully read the entire Prospectus before making a decision about
investing in the Fund. Keep the Prospectus for reference after you invest,
particularly for information about your account, such as how to sell or exchange
shares.

o What is the Fund's Investment Objective? The Fund's investment objective
is to seek high current return and safety of principal.

o What Does the Fund Invest In? The Fund invests only in obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities (these
are called "U.S. Government Securities"), and repurchase agreements on such
securities. The Fund may also use hedging instruments approved by its Board of
Trustees to try to manage its investment risks. The Fund's investments in U.S.
Government Securities may include collateralized mortgage obligations ("CMOs").
The Fund may also invest in "stripped" CMOs or mortgage-backed securities. These
investments are more fully explained in "Investment Objective and Policies,"
starting on page __. The Fund anticipates that under normal circumstances (when
the financial markets are not in an unstable or volatile period), it will
maintain an average effective portfolio duration (measured on a dollar-weighted
basis) of not more than three years. Portfolio duration is explained in
"Investment Policies and Strategies."

o Who Manages the Fund? The Fund's investment advisor is OppenheimerFunds,
Inc., which (including subsidiaries) manages investment company portfolios
having over $75 billion in assets at December 31, 1997. The Manager is paid an
advisory fee by the Fund, based on its net assets. The Fund's portfolio manager,
who is primarily responsible for the selection of the Fund's securities, is
Jerry A. Webman. The Fund's Board of Trustees, elected by shareholders, oversees
the investment advisor and the portfolio manager. Please refer to "How the Fund
is Managed," starting on page __ for more information about the Manager and its
fees.

o How Risky is the Fund? Although U.S. Government Securities involve
little credit risk, their values will fluctuate (until maturity) depending on
prevailing interest rates. The magnitude of these fluctuations will often be
greater for longer-term debt securities than shorter-term securities. While the
Manager tries to reduce that risk by seeking to limit the average portfolio
duration, by diversifying investments, by carefully researching securities
before they are purchased for the portfolio, and in some cases, by using hedging
techniques, there is no guarantee of success in achieving the Fund's objective
and your shares may be worth more or less than their original cost when you
redeem them. Please refer to "Investment Risks" starting on page __ for a more
complete discussion of the Fund's investment risks.

o How Can I Buy Shares? You can buy shares through your broker, dealer or
financial institution, or you can purchase shares directly through the
Distributor by completing an Application or by using an Automatic Investment
Plan under AccountLink. Please refer to "How To Buy Shares" beginning on page __
for more details.

o Will I Pay a Sales Charge to Buy Shares? The Fund has four classes of
shares. Each class of shares has the same investment portfolio, but different
expenses. Class A shares are offered with a front-end sales charge, starting at
3.50% and reduced for larger purchases. Class B and Class C shares are offered
without front- end sales charges, but may be subject to a contingent deferred
sales charge if redeemed within 5 years or 12 months, respectively, of purchase.
There is also an annual asset-based sales charge on Class B and Class C shares.
Please review "How To Buy Shares" starting on page __ for more details,
including a discussion about factors you and your financial advisor should
consider in determining which class may be appropriate for you. The Fund also
offers Class Y shares to certain institutional investors. Such shares are not
available for sale to individual investors.

o How Can I Sell My Shares? Shares can be redeemed by mail or by telephone
call to the Transfer Agent on any business day, or through your dealer, or by
writing a check against your current account (available for Class A shares only
that are not subject to a contingent deferred sales charge). Please refer to
"How To Sell Shares" on page __. The Fund also offers exchange privileges to
other Oppenheimer funds, described in "How to Exchange Shares" on starting on
page __.

o How Has the Fund Performed? The Fund measures its performance by quoting
a yield, dividend yield, average annual total return and cumulative total
return, which measure historical performance. Those returns can be compared to
the yields and total returns (over similar periods) of other mutual funds. Of
course, other funds may have different objectives, investments, and levels of
risk. The Fund's performance can also be compared to U.S. Government bond
indices, which we have done starting on page __. Please remember that past
performance does not guarantee future results.

Financial Highlights

The table on the following pages presents selected financial information about
the Fund, including per share data and expense ratios and other data based on
the Fund's average net assets. The information has been audited by Deloitte &
Touche LLP, the Fund's independent auditors, whose report on the Fund's
financial statements for the fiscal year ended September 30, 1997 is included in
the Statement of Additional Information. Class Y shares were not publicly
offered during any of the periods shown. Therefore, information on Class Y
shares is not included in the tables below or in the Fund's other financial
statements.

-3-

<PAGE>

Financial Highlights

CLASS A
------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
1997 1996 1995 1994
=========================================================================================================
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $10.26 $10.44 $10.40 $11.04
- ---------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .73 .75 .79 .72
Net realized and unrealized gain (loss) .03 (.19) .01 (.64)
-------- -------- -------- --------
Total income (loss) from investment operations .76 .56 .80 .08
- ---------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.71) (.71) (.76) (.71)
Tax return of capital distribution (.01) (.03) -- (.01)
Distributions from net realized gain -- -- -- --
-------- -------- -------- --------
Total dividends and distributions to
shareholders (.72) (.74) (.76) (.72)
- ---------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.30 $10.26 $10.44 $10.40
======== ======== ======== ========
=========================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(4) 7.62% 5.54% 8.03% 0.74%
=========================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $524,508 $436,889 $346,015 $227,858
- ---------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $443,514 $393,727 $274,313 $190,829
- ---------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 7.13% 7.22% 7.64% 6.74%
Expenses 0.87% 0.87% 0.91% 0.99%
- ---------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 68% 71% 261% 226%
</TABLE>

<PAGE>

CLASS B
- ------------------------------------------------------------------------------------ ------------------------
YEAR ENDED SEPTEMBER 30,
1993 1992 1991 1990(3) 1989 1988 1997 1996
==================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>

$10.97 $10.75 $10.18 $10.17 $10.14 $9.72 $10.26 $10.44
--------- -------- -------- -------- -------- -------- -------- --------

.73 .81 .87 .89 .90 .89 .66 .67
.07 .22 .57 .01 .03 .42 .02 (.19)
--------- -------- -------- -------- -------- -------- -------- --------
.80 1.03 1.44 .90 .93 1.31 .68 .48
- ------------------------------------------------------------------------------------------------------------------

(.73) (.81) (.87) (.89) (.90) (.89) (.63) (.63)
-- -- -- -- -- -- (.01) (.03)
-- -- -- -- -- -- -- --
--------- -------- -------- -------- -------- -------- -------- --------

(.73) (.81) (.87) (.89) (.90) (.89) (.64) (.66)
- ------------------------------------------------------------------------------------------------------------------
$11.04 $10.97 $10.75 $10.18 $10.17 $10.14 $10.30 $10.26
========= ======== ======== ======== ======== ======== ======== ========
==================================================================================================================
7.61% 9.88% 14.69% 9.15% 9.65% 13.86% 6.82% 4.74%
==================================================================================================================
$178,944 $158,068 $167,974 $213,391 $237,819 $251,794 $183,476 $160,572
- ------------------------------------------------------------------------------------------------------------------
$161,318 $160,830 $192,404 $218,528 $243,863 $267,557 $171,496 $147,017
- ------------------------------------------------------------------------------------------------------------------

6.70% 7.44% 8.27% 8.77% 8.96% 8.75% 6.39% 6.46%
1.02% 0.97% 0.98% 0.90% 0.93% 0.96% 1.62% 1.62%
- ------------------------------------------------------------------------------------------------------------------
74% 154% 112% 60% 61% 78% 68% 71%
</TABLE>

5. Annualized.
6. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities and mortgage
"dollar-rolls") for the period ended September 30, 1997 were $763,306,417 and
$485,457,078, respectively. For the years ended September 30, 1995 and 1994,
purchases and sales of investment securities included mortgage "dollar-rolls."

<PAGE>

FINANCIAL HIGHLIGHTS (CONTINUED) CLASS B CLASS C
------------------------------------ --------------------------------
YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30,
1995 1994 1993(2) 1997 1996 1995(1)
=======================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $10.41 $11.06 $10.96 $10.25 $10.43 $10.32
- -----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .71 .62 .23 .66 .66 .45
Net realized and unrealized gain (loss) .01 (.64) .10 .02 (.18) .10
------ ------ ------ ------ ----- -------
Total income (loss) from investment operations .72 (.02) .33 .68 .48 .55
- -----------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.69) (.62) (.23) (.63) (.63) (.44)
Tax return of capital distribution -- (.01) -- (.01) (.03) --
Distributions from net realized gain -- -- -- -- -- --
------ ------ ------ ------ ----- -------
Total dividends and distributions to
shareholders (.69) (.63) (.23) (.64) (.66) (.44)
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.44 $10.41 $11.06 $10.29 $10.25 $10.43
=======================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(4) 7.18% (0.17)% 3.02% 6.83% 4.71% 5.47%
=======================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $121,178 $38,877 $5,077 $73,559 $45,356 $14,569
- -----------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 72,131 $15,801 $2,561 $57,506 $32,349 $6,112
- -----------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 6.80% 5.91% 4.81%(5) 6.35% 6.34% 6.51%(5)
Expenses 1.71% 1.79% 1.87%(5) 1.62% 1.64% 1.80%(5)
- -----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 261% 226% 74% 68% 71% 261%
</TABLE>

1. For the period from February 1, 1995 (inception of offering) to September 30,
1995.
2. For the period from May 3, 1993 (inception of offering) to September
30, 1993.
3. On April 7, 1990, OppenheimerFunds, Inc. became the investment
advisor to the Fund.
4. Assumes a hypothetical initial investment on the
business day before the first day of the fiscal period (or inception of
offering), with all dividends and distributions reinvested in additional shares
on the reinvestment date, and redemption at the net asset value calculated on
the last business day of the fiscal period. Sales charges are not reflected in
the total returns. Total returns are not annualized for periods of less than one
full year.
5. Annualized.
6. The lesser of purchases or sales of portfolio
securities for a period, divided by the monthly average of the market value of
portfolio securities owned during the period. Securities with a maturity or
expiration date at the time of acquisition of one year or less are excluded from
the calculation. Purchases and sales of investment securities (excluding
short-term securities and mortgage "dollar-rolls") for the period ended
September 30, 1997 were $763,306,417 and $485,457,078, respectively. For the
years ended September 30, 1995 and 1994, purchases and sales of investment
securities included mortgage "dollar-rolls." 10

<PAGE>

Investment Objective and Policies

Objective. The Fund seeks high current return and safety of principal.

Investment Policies and Strategies. As a matter of fundamental policy the Fund
seeks its objective by investing only in obligations issued or guaranteed by the
U.S. Government or its agencies or instrumentalities ("U.S. Government
Securities"), repurchase agreements on such securities, and hedging instruments
approved by its Board of Trustees.

U.S. Government Securities include the following types of securities:

o U.S. Treasury Obligations. These include Treasury Bills (which have
maturities of one year or less when issued), Treasury Notes (which have
maturities of one to ten years when issued) and Treasury Bonds (which have
maturities generally greater than ten years when issued). The payment of
interest and repayment of principal at the maturity of U.S. Treasury obligations
are backed by the full faith and credit of the United States. That means that
the taxing power of the U.S. government is pledged to the payment of interest
and principal on those securities.

o Obligations Issued or Guaranteed by U.S. Government Agencies or
Instrumentalities. Debt securities issued or guaranteed by U.S. Government
agencies or instrumentalities have different levels of credit protection. Some
are supported by (a) the full faith and credit of the U.S. Government, such as
Government National Mortgage Association ("Ginnie Mae") modified pass-through
certificates (b) the right of the issuer to borrow an amount, limited to a
specific line of credit, from the U.S. Government, such as bonds issued by
Federal National Mortgage Association ("Fannie Mae") (c) the discretionary
authority of the U.S. Government to purchase the obligations of the agency or
instrumentality or (d) the credit of the instrumentality, such as obligations of
Federal Home Loan Mortgage Corporation ("Freddie Mac"). Securities of U.S.
Government agencies and instrumentalities that are supported by the
discretionary authority of the U.S. Government to purchase such securities which
the Fund may purchase under (c) above include: Federal Land Banks, Farmers Home
Administration, Central Bank for Cooperatives, and Federal Intermediate Credit
Banks, Freddie Mac and Fannie Mae.

o Mortgage-Backed Securities. The Fund will invest in Ginnie Mae
certificates only of the "fully-modified pass-through" type. These are
guaranteed as to timely payment of principal and interest by the full faith and
credit of the United States Government. Ginnie Mae certificates are debt
securities that represent an interest in a pool of mortgages that are insured by
the Federal Housing Administration or the Farmers Home Administration, or are
guaranteed by the Veterans Administration. The Fund may also invest in other
mortgage-backed securities that are issued or guaranteed by agencies or
instrumentalities of the U.S. Government, such as Freddie Mac and Fannie Mae.

The Statement of Additional Information contains additional information on
U.S. Government securities. The effective maturity of a mortgage-backed security
may be shortened by unscheduled or early payment of principal and interest on
the underlying mortgages, which may affect the effective yield of these
securities. If principal is returned, it may be invested in instruments having a
higher or lower yield than the prepaid instruments, depending on then-current
market conditions. These securities therefore may not be completely effective as
a means of "locking in" attractive long-term interest rates. They may also have
less potential for appreciation during periods of declining interest rates than
conventional bonds with comparable stated maturities. If the Fund buys
mortgage-backed securities at a premium, prepayments of principal and
foreclosures of mortgages may result in some loss of the Fund's principal
investment to the extent of the premium paid.

Maturity differs from effective duration, which is a volatility measure.
Please refer to "What Does the Duration of the Fund's Portfolio Mean?" on page
___ for an explanation of duration.

o Collateralized Mortgage Obligations. The Fund may invest in
collateralized mortgage obligations ("CMOs") that are issued or guaranteed by
the U.S. Government or its agencies or instrumentalities, or that are
collateralized by a portfolio of mortgages or mortgage-related securities
guaranteed by such an agency or instrumentality. Payment of the interest and
principal generated by the pool of mortgages is passed through to the holders as
the payments are received by the issuer of the CMO.

CMOs may be issued in a variety of classes or series ("tranches") that have
different maturities. The principal value of certain CMO tranches may be more
volatile than other types of mortgage-related securities because of the
possibility that the principal value of the CMO may be prepaid earlier than the
maturity of the CMO as a result of prepayments of the underlying mortgage loans
by the borrowers.

Prepayments on fixed rate mortgage loans generally increase during periods
of falling interest rates and decrease during periods of rising interest rates.
If prepayments of mortgages underlying a short-term or intermediate-term CMO
occur more slowly than anticipated, the CMO effectively may become a long-term
security. The prices of long-term securities generally fluctuate more widely in
response to changes in interest rates.

The Fund may invest in "stripped" mortgage-backed securities, CMOs or
other securities issued by agencies or instrumentalities of the U.S. Government.
Stripped mortgage-backed securities usually have two classes. The classes
receive different proportions of the interest and principal distributions on the
pool of mortgage assets that act as collateral for the security. In certain
cases, one class will receive all of the interest payments (and is known as an
"I/O"), while the other class will receive all of the principal value on
maturity (and is known as a "P/O").

The yield to maturity on the class that receives only interest is
extremely sensitive to the rate of payment of the principal on the underlying
mortgages. Principal prepayments increase that sensitivity. Stripped securities
that pay "interest-only" are therefore subject to greater price volatility when
interest rates change. They have the additional risk that if the underlying
mortgages are prepaid, the Fund will lose the anticipated cash flow from the
interest on the prepaid mortgages and the value of the I/O strip will decline.
That risk is increased when general interest rates fall, and in times of rapidly
falling interest rates, the Fund might receive back less than its investment.

The value of "principal-only" securities generally increases as interest
rates decline and prepayment rates rise. The price of these securities is
typically more volatile than that of traditional bonds of the same maturity that
pay interest and principal at a fixed rate.

Stripped securities are generally purchased and sold by institutional
investors through investment banking firms. At present, established trading
markets have not yet developed for these securities. Therefore, some stripped
securities may be deemed "illiquid." The amount of illiquid stripped securities
the Fund can hold will be subject to the Fund's fundamental investment policy
limiting investments in illiquid securities to 5% of the Fund's assets,
described below.

The value of mortgage-backed securities may be affected by changes in the
market's perception of the creditworthiness of the entity issuing or
guaranteeing them or by changes in government regulations and tax policies, as
well as by interest rate risks, described below. Because the yields on U.S.
Government Securities are generally lower than on corporate debt securities, the
Fund may attempt to increase the income it can earn from U.S. Government
Securities by writing covered call options against them. Writing covered call
options is explained below, under "Investment Techniques and Strategies."

o What Does the "Duration" of the Fund's Portfolio Mean? The Fund
anticipates that under normal market conditions, it will maintain an average
effective portfolio duration of not more than three years. The Fund measures its
portfolio duration on a "dollar-weighted" basis. "Effective portfolio duration"
refers to the expected percentage change in the value of a bond resulting from a
change in general interest rates (measured by each 1% change in the rates on
U.S. Treasury securities). For example, if a bond has an effective duration of
three years, a 1% increase in general interest rates would be expected to cause
the bond to decline in value by about 3%. It is a measure of portfolio
volatility, and is one of the basic tools used by the Manager in selecting
securities for the Fund's portfolio.

However, the calculation of a bond's duration (or the duration of the
entire portfolio of bonds, in the case of the Fund) cannot be relied on as an
exact prediction of future volatility. Duration is calculated by using a number
of variables and assumptions based on the historical performance of similar
bonds, and duration can be affected by unexpected economic changes or other
events affecting a security. For example, in the case of CMOs, duration
calculations are based on historical rates of prepayments of underlying
mortgages, and if these mortgages are prepaid more rapidly or less rapidly than
expected, the calculation of duration for a particular CMO may not be correct.

Because unanticipated events may change the effective duration of
securities after the Fund buys them, there can be no assurance
that the Fund will achieve its targeted effective duration at all times. Even
though the Fund intends that its dollar-weighted average effective portfolio
duration will generally not exceed three years, certain market conditions may
temporarily increase the Fund's duration beyond its target. See "Investment
Risks -Interest Rate Risks". Additionally, the Fund may invest in individual
debt obligations of any maturity. "Investment Objective and Policies" in the
Statement of Additional Information contains more information on the Fund's
calculation of effective portfolio duration.

o Can the Fund's Investment Objective and Policies Change? The Fund has an
investment objective, described above, as well as investment policies it follows
to try to achieve its objective. Additionally, the Fund uses certain investment
techniques and strategies in carrying out those investment policies. The Fund's
investment policies and practices are not "fundamental" unless this Prospectus
or the Statement of Additional Information says that a particular policy is
"fundamental." The Fund's investment objective is a fundamental policy.

Fundamental policies are those that cannot be changed without the approval
of a "majority" of the Fund's outstanding voting shares. The term "majority" is
defined in the Investment Company Act to be a particular percentage of
outstanding voting shares (and this term is explained in the Statement of
Additional Information). The Fund's Board of Trustees may change non-fundamental
policies without shareholder approval, although significant changes will be
described in amendments to this Prospectus.

o 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%. Portfolio turnover affects brokerage costs the Fund
pays. Most of the Fund's portfolio transactions are principal transactions and
the Fund incurs little brokerage commissions. The Fund may sell U.S. Government
Securities without regard to the length of time the Fund has held them. The
Manager may take advantage of short-term differentials in yields when short-term
trading is consistent with the objective of seeking high current return and
safety of principal. The Financial Highlights table above shows the Fund's
portfolio turnover rates during prior fiscal years.

Investment Risks

All investments carry risks to some degree, whether they are risks that market
prices of the investment will fluctuate (this is known as "market risk") or that
the underlying issuer will experience financial difficulties and may default on
its obligation under a fixed-income investment to pay interest and repay
principal (this is referred to as "credit risk"). These general investment risks
and the special risks of certain types of investments that the Fund may hold are
described below. They affect the value of the Fund's investments, its investment
performance and the prices of its shares. These risks collectively form the risk
profile of the Fund.

Because of the types of securities the Fund invests in and the investment
techniques the Fund uses, the Fund is designed for investors who are investing
for the long term. It is not for investors seeking assured income. Although U.S.
Government Securities involve little credit risk, their market values will
fluctuate until they mature, depending upon prevailing interest rates. The
magnitude of those fluctuations generally will be greater when the average
maturity of the Fund's portfolio securities is longer. The Fund has adopted a
policy which seeks to limit its portfolio duration. See "What Does the Duration
of the Fund's Portfolio Mean?" The Fund's investments include mortgage-backed
securities such as Interest Only and Principal Only Strips which are used to
manage the Fund's portfolio duration. These securities may have greater price
sensitivity to changes in interest rates than Treasury bonds and may be subject
to greater price fluctuations. The Fund's share price may decline and there is
no assurance that the Fund will achieve its investment objective. When you
redeem your shares, they may be worth more or less than what you paid for them.

o Interest Rate Risks. Although U.S. Government Securities involve little
credit risk, their market values will fluctuate until they mature, depending on
prevailing interest rates. When prevailing interest rates go up, the market
value of already issued debt securities tends to go down. When interest rates go
down, the market value of already issued debt securities tends to go up. The
magnitude of those fluctuations generally will be greater when the average
maturity of the Fund's portfolio securities is longer. Certain of the Fund's
investments, such as I/Os, P/Os and mortgage-backed securities such as CMOs, can
be very sensitive to interest rate changes and their values can be quite
volatile.

Changes in interest rates may have a greater effect on mortgage-backed
securities than on other fixed income securities because of the potential for
prepayment of the underlying mortgages. Prepayments on fixed rate mortgage loans
generally increase during periods of falling interest rates and decrease during
periods of rising interest rates. Faster than expected mortgage prepayments
during periods of declining interest rates may reduce both the market value and
the yield to maturity of the mortgage-backed securities. Slower than expected
mortgage prepayments during periods of rising interest rates may effectively
change a mortgage-backed security which was considered short or
intermediate-term at the time of purchase into a long-term security. Long-term
securities generally fluctuate more widely in response to changes in interest
rates than short or intermediate- term securities. If the Fund holds significant
amounts of these mortgage-backed securities during periods of rising interest
rates, these securities could cause the Fund's dollar-weighted average effective
duration to exceed three years. These circumstances could increase the risk of
volatility in the Fund's share price. The Fund's share value and yield are not
guaranteed and will fluctuate, and there can be no assurance that the Fund's
objective of seeking high current income and conservation of principal will be
achieved.

o Special Risks of Derivative Investments. One risk of investing in
derivative investments is that the company issuing the instrument might not pay
the amount due on the maturity of the instrument. There is also the risk that
the underlying investment or security on which the derivative is based, and the
derivative itself, may not perform the way the Manager expected it to perform.
The performance of derivative investments may also be influenced by interest
rate changes in the U.S. and abroad. All of these risks can mean that the Fund
will realize less income than expected from its investments, or that it can lose
part of the value of its investments, which will affect the Fund's share price.
Certain derivative investments held by the Fund may trade in the
over-the-counter markets and may be illiquid. If that is the case, the Fund's
investment in them will be limited as discussed in "Illiquid and Restricted
Securities".

o Special Risks of Hedging Instruments. The use of hedging instruments
requires special skills and knowledge of investment techniques that are
different from 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 or if it could not close out a
position because of an illiquid market for the future or option.

Investment Techniques and Strategies

The Fund may also use the investment techniques and strategies described below,
which involve certain risks. The Statement of Additional Information contains
more detailed information about these practices, including limitations on their
use that may help to reduce some of the risks.

o When-Issued and Delayed Delivery Transactions. The Fund may purchase
securities on a "when-issued" basis and may purchase or sell securities on a
"delayed delivery" basis. These terms refer to securities that have been created
and for which a market exists, but which are not available for immediate
delivery. There may be a risk of loss to the Fund if the value of the security
declines prior to the settlement date. As a matter of fundamental policy, the
Fund will not enter into when-issued or delayed delivery transactions unless the
acceptance and delivery of the security to the Fund is mandatory, occurs within
120 days of the trade date, and is settled in cash on the settlement date. As a
matter of non- fundamental policy, when-issued securities may be sold prior to
the settlement date if the Fund determines that the sale is desirable for
investment reasons.

The Fund may also enter into "forward roll" transactions with banks or
other buyers that provide for future delivery of mortgage-backed securities in
which the Fund may invest. The Fund would be required to identify liquid
securities, either debt or equity, with its custodian bank in an amount equal to
its obligation under the roll.

o Repurchase Agreements. The Fund may enter into repurchase agreements. In
a repurchase transaction, the Fund buys a security and simultaneously sells it
to the vendor for delivery at a future date. As a matter of fundamental policy,
the Fund will not enter into repurchase transactions that will cause more than
25% of the Fund's net assets to be subject to repurchase agreements having a
maturity of seven days or less, or that will cause more than 5% of the Fund's
net assets to be subject to repurchase agreements having a maturity beyond seven
days. Also as a matter of fundamental policy, the Fund will not enter into
repurchase agreements unless ownership and control of the securities subject to
the agreement are transferred to the Fund. Repurchase agreements must be fully
collateralized. However, if the vendor fails to pay the resale price on the
delivery date, the Fund may experience costs in disposing of the collateral and
may experience losses if there is any delay in doing so.

o Reverse Repurchase Agreements. Although the Fund currently does not do
so, it may enter into reverse repurchase agreements under which the Fund sells
securities and agrees to repurchase them at an agreed upon time and at an agreed
upon price. The difference between the amount the Fund receives for the
securities and the amount it pays on repurchase is deemed to be a payment of
interest.

o Illiquid and Restricted Securities. Under the policies established by the
Fund's Board of Trustees, the Manager determines the liquidity of certain of the
Fund's investments. Investments may be illiquid because of the absence of an
active trading market, making it difficult to value them or dispose of them
promptly at an acceptable price. A restricted security is one that has a
contractual restriction on its resale or which cannot be sold publicly until it
is registered under the Securities Act of 1933. As a fundamental policy, the
Fund will not invest more than 5% of its total assets in illiquid or restricted
securities. The Manager monitors holdings of illiquid securities on an ongoing
basis to determine whether to sell any holdings to maintain adequate liquidity.
Illiquid securities include repurchase agreements maturing in more than seven
days, and certain participation interests other than those with puts exercisable
within seven days.

o Hedging. As described below, the Fund may purchase and sell certain kinds
of futures contracts, put and call options, and options on futures, or enter
into interest rate swap agreements. These are all referred to as "hedging
instruments." The Fund does not use hedging instruments for speculative
purposes, and has limits on the use of them, described below. The hedging
instruments the Fund may use are described below and in greater detail in "Other
Investment Techniques and Strategies" in the Statement of Additional
Information.

The Fund may buy and sell options and futures for a number of purposes. It
may 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 may do so to try to manage its exposure to changing interest
rates. Some of these strategies, such as selling futures, buying puts and
writing covered calls, hedge the Fund's portfolio against price fluctuations.

Other hedging strategies, such as buying futures and call options and
writing put options, tend to increase the Fund's exposure to the securities
market as a temporary substitute for purchasing securities. However, the Fund
may purchase futures contracts as a hedge with respect to certain assets, such
as I/O strips, whose values decline as interest rates decline. Writing put
options or covered call options may also provide income to the Fund for
liquidity purposes or raise cash for the Fund to distribute to shareholders.
Because the yields on U.S. Government Securities are generally lower than on
corporate debt securities, the Fund may attempt to increase the income it can
earn from U.S. Government Securities by writing covered call options against
them.

o Futures. The Fund may buy and sell futures contracts that relate to
interest rates (these are referred to as Interest Rate Futures) and commodities
(these are referred to as Commodity Futures). Interest Rate Futures are
described in "Hedging" in the Statement of Additional Information.

o Put and Call Options. The Fund may buy and sell certain kinds of put
options (puts) and call options (calls). Calls the Fund buys or sells must be
listed on a securities or commodities exchange, or quoted on the Automated
Quotation System ("NASDAQ") of the Nasdaq Stock Market, Inc., or traded in the
over-the-counter market. A call or put option may not be purchased if the value
of all of the Fund's put and call options would exceed 5% of the Fund's total
assets.

The Fund may buy calls only on securities or Interest Rate Futures, or to
terminate its obligation on a call the Fund previously wrote. The Fund may write
(that is, sell) covered call options.

When the Fund writes a call, it receives cash (called a premium). The call
gives the buyer the ability to buy the investment on which the call was written
from the Fund at the call price during the period in which the call may be
exercised. If the value of the investment does not rise above the call price, it
is likely that the call will lapse without being exercised, while the Fund keeps
the cash premium (and the investment). After the Fund writes a call, not more
than 25% of the Fund's total assets may be subject to calls. Each call the Fund
writes must be "covered" while it is outstanding. That means the Fund owns the
investment on which the call was written or securities that are acceptable for
the escrow requirements. The Fund may write calls on Futures contracts it owns,
but these calls must be covered by securities or other liquid assets the Fund
owns and segregates to enable it to satisfy its obligations if the call is
exercised.

The Fund may purchase put options. Buying a put on an investment gives the
Fund the right to sell the investment at a set price to a seller of a put on
that investment. The Fund can buy puts (whether or not it holds such securities
in its portfolio) or Interest Rate Futures. The Fund can buy a put on an
Interest Rate Future whether or not the Fund owns the particular Future in its
portfolio. The Fund may write puts on securities or Interest Rate Futures in an
amount up to 50% of its total assets only if such puts are covered by segregated
liquid assets. In writing puts, there is a risk that the Fund may be required to
buy the underlying security at a disadvantageous price.

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

Options trading involves the payment of premiums and has special tax
effects on the Fund. There are also special risks in particular hedging
strategies. If a covered call written by the Fund is exercised on an investment
that has increased in value, the Fund will be required to sell the investment at
the call price and will not be able to realize any profit if the investment has
increased in value above the call price. In writing puts, there is a risk that
the Fund may be required to buy the underlying security at a disadvantageous
price. Interest rate swaps are subject to credit risks (if the other party fails
to meet its obligations) and also to interest rate risks. The Fund could be
obligated to pay more under its swap agreements than it receives under them, as
a result of interest rate changes. These risks are described in greater detail
in the Statement of Additional Information.

o Derivative Investments. The Fund can invest in a number of different
kinds of "derivative investments." The Fund may use some types of derivatives
for hedging purposes and may invest in others because they offer the potential
for increased income and principal value. In general, a "derivative investment"
is a specially- designed investment whose performance is linked to the
performance of another investment or security, such as an option, future or
index. In the broadest sense, derivative investments include exchange-traded
options and futures contracts (please refer to "Hedging," above). CMOs, interest
rate swaps, and "interest-only" and "principal-only" securities may also be
considered derivative investments.

Other Investment Restrictions. The Fund has other investment restrictions which
are "fundamental" policies. Under these fundamental policies, the Fund cannot do
any of the following:

o borrow money, except from banks for temporary purposes in amounts not in
excess of 5% of the value of its assets. No assets of the Fund may be pledged,
mortgaged or hypothecated other than to secure a borrowing, and then in amounts
not exceeding 7.5% of the Fund's total assets. Borrowings may not be made for
leverage, but only for liquidity purposes to satisfy redemption requests when
liquidation of portfolio securities is considered inconvenient or
disadvantageous. However, the Fund may enter into reverse repurchase agreements
and when-issued and delayed delivery transactions. The prohibition against
pledging, mortgaging or hypothecating assets does not bar the Fund from escrow
arrangements for options trading or collateral or margin arrangements in
connection with hedging instruments approved by the Fund's Board of Trustees.

o enter into a repurchase transaction that will cause more than 25% of the
Fund's total assets to be subject to such agreements.

o make loans, except that the Fund may purchase or hold debt obligations
and enter into repurchase transactions and may lend its portfolio securities in
amounts not exceeding 25% of the total assets of the Fund. Such loans must be
collateralized by cash or U.S. Government Securities in amounts equal at all
times to at least 100% of the value of the securities loaned, including accrued
interest.

o purchase restricted or illiquid securities (including repurchase
agreements of more than seven days' maturity and other securities that are not
readily marketable) if more than 5% of the Fund's total assets would be invested
in such securities.

o purchase any securities (other than U.S. Government Securities) that
would cause more than 5% of the Fund's total assets to be invested in securities
of a single issuer, or purchase more than 10% of the outstanding voting
securities of an issuer.

o deviate from its other fundamental policies described in "Investment
Objective and Policies" and "Other Investment Techniques and Strategies" in the
Statement of Additional Information.

Unless the Prospectus states that a percentage restriction applies on an
ongoing basis, it applies only at the time the Fund makes the investment, and
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. Additional
investment restrictions are listed in "Other Investment Restrictions" in the
Statement of Additional Information.

How the Fund is Managed

Organization and History. The Fund was organized in 1986 as a Massachusetts
business trust. The Fund is an open-end diversified management investment
company with an unlimited number of authorized shares of beneficial interest.
Organized as a series fund, the Fund presently has only one series.

The Fund is governed by a Board of Trustees, which is responsible under
Massachusetts law for protecting the interests of shareholders. The Trustees
meet periodically throughout the year to oversee the Fund's activities, review
its performance, and review the actions of the Manager. "Trustees and Officers
of the Fund" in the Statement of Additional Information names the Trustees and
officers of the Fund and provides more information about them. 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.

The Board of Trustees has the power, without shareholder approval, to
divide unissued shares of the Fund into two or more classes. The Board has done
so, and the Fund currently has four classes of shares, Class A, Class B, Class C
and Class Y. All classes invest in the same investment portfolio. Each class has
its own dividends and distributions, and pays certain expenses which may be
different for the different classes. Each class may have a different net asset
value. Each share has one vote at shareholder meetings, with fractional shares
voting proportionally on matters submitted to the vote of shareholders. Shares
of each class may have separate voting rights on matters in which interests of
one class are different from interests of another class, and shares of a
particular class vote as a class on matters that affect that class alone. Shares
are freely transferrable. Please refer to "How the Fund is Managed" in the
Statement of Additional Information on voting of shares.

The Manager and Its Affiliates. The Fund is managed by the Manager,
OppenheimerFunds, Inc., which is responsible for selecting the Fund's
investments and handles its day-to-day business. The Manager carries out its
duties, subject to the policies established by the Board of Trustees, under an
Investment Advisory Agreement which states the Manager's responsibilities and
its fees. The Agreement sets forth 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 operated as an investment advisor since 1959. The Manager
(including subsidiaries) currently manages investment companies, including other
Oppenheimer funds, with assets of more than $75 billion as of December 31, 1997,
and with more than 3.5 million shareholder accounts. The Manager is owned by
Oppenheimer Acquisition Corp., a holding company that is owned in part by senior
officers of the Manager and controlled by Massachusetts Mutual Life Insurance
Company.

The management services provided to the Fund by the Manager, and the
services provided by the Distributor and the Transfer Agent to shareholders,
depend on the smooth functioning of their computer systems. Many computer
software systems in use today cannot distinguish the year 2000 from the year
1900 because of the way dates are encoded and calculated. That failure could
have a negative impact on handling securities trades, pricing and account
services. The Manager, the Distributor and Transfer Agent have been actively
working on necessary changes to their computer systems to deal with the year
2000 and expect that their systems will be adapted in time for that event,
although there cannot be assurance of success.

o Portfolio Manager. The Portfolio Manager of the Fund is Jerry A. Webman.
He is a Vice President of the Fund and a Senior Vice President of the Manager
and has been the person principally responsible for the day-to-day management of
the Fund's portfolio since July 15, 1997. Mr. Webman also serves as an officer
and a portfolio manager of other Oppenheimer funds. Previously he was an officer
and analyst with Prudential Mutual Fund - Investment Management, Inc.

o Fees and Expenses. Under the Investment Advisory Agreement, the Fund
pays the Manager the following annual fees, which decline on additional assets
as the Fund grows: 0.500% of the first $100 million of the Fund's average annual
net assets, 0.450% of the next $150 million, 0.425% of the next $250 million and
0.400% of average annual net assets in excess of $500 million. The Fund's
management fee for its fiscal year ended September 30, 1997, was 0.43% of
average annual net assets for Class A, Class B and Class C.

The Fund pays expenses related to its daily operations, such as custodian
fees, certain Trustees' fees, transfer agency fees, legal 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. More
information about the Investment Advisory Agreement and the other expenses paid
by the Fund is contained in the Statement of Additional Information.

There is also information about the Fund's brokerage policies and
practices in "Brokerage Policies of the Fund" in the Statement of Additional
Information. That section discusses how brokers and dealers are selected for the
Fund's portfolio transactions. Because the Fund purchases most of its portfolio
securities directly from the sellers and not through brokers, it therefore
incurs relatively little expenses for brokerage. From time to time it may use
brokers when buying portfolio securities. When deciding which brokers to use,
the Manager is permitted by the Investment Advisory Agreement to consider
whether brokers have sold shares of the Fund or any other funds for which the
Manager serves as investment advisor.

o 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 the shares of the other
Oppenheimer funds and is sub-distributor for funds managed by a subsidiary of
the Manager.

o The Transfer Agent. The Fund's transfer agent is OppenheimerFunds
Services, a division of the Manager, which acts as the shareholder servicing
agent for the Fund on an "at-cost" basis. It also acts as the shareholder
servicing agent for other Oppenheimer funds. Shareholders should direct
inquiries about their accounts, to the Transfer Agent at the address and
toll-free number shown below in this Prospectus and on the back cover.

Performance of the Fund

Explanation of Performance Terminology. The Fund uses the terms "total return"
and "yield" to illustrate its performance. The performance of each class of
shares is shown separately, because the performance of each class of shares will
usually be different as a result of the different kinds of expenses each class
bears. These 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 (which will vary if dividends are received in cash, or shares are sold
or purchased). The Fund's performance data may help you see how well your
investment has done over time and to compare it to other mutual funds or market
indices, as we have done below.

It is important to understand that the Fund's yields and total returns
represent past performance and should not be considered to be predictions of
future returns or performance. This performance data is described below, but
more detailed information about how total returns and yields are calculated is
contained in the Statement of Additional Information, which also contains
information about other ways to measure and compare the Fund's performance. The
Fund's investment performance will vary over time, depending on market
conditions, the composition of the portfolio, expenses and which class of shares
you purchase.

o Total Returns. There are different types of "total returns" used 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.
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
the Fund's actual year-by- year performance.

When total returns are quoted for Class A shares, normally the current
maximum initial sales charge has been deducted. When total returns are shown for
Class B or Class C shares, normally the contingent deferred sales charge that
applies to the period for which total return is shown has been deducted.
However, total returns may also be quoted at "net asset value," without
including the effect of the sales charge and those returns would be less if
sales charges were deducted.

o Yield. Different types of yields may be quoted to show performance. Each
class of shares calculates its standardized yield by dividing the annualized net
investment income per share on the portfolio during a 30-day period by the
maximum offering price on the last day of the period. The yield of each class
will differ because of the different expenses of each class of shares. The yield
data represents a hypothetical investment return on the portfolio, and does not
measure an investment return based on dividends actually paid to shareholders.
To show that return, a dividend yield may be calculated. Dividend yield is
calculated by dividing the dividends of a class paid for a stated period by the
maximum offering price on the last day of the period and annualizing the result.
Yields for Class A shares normally reflect the deduction of the maximum initial
sales charge, but may also be shown without deducting sales charge. Yields for
Class B shares and Class C shares do not reflect the deduction of the contingent
deferred sales charge.

How Has the Fund Performed? Below is a discussion by the Manager of the Fund's
performance during its last fiscal year ended September 30, 1997, followed by a
graphical comparison of the Fund's performance to appropriate an broad-based
market index and a sector index.

o Management's Discussion of Performance. The Fund's strong performance
during the fiscal year ended September 30, 1997, can be attributed primarily to
a favorable interest rate environment during the first nine months and the
Fund's actively managed investments in higher-yielding mortgage-backed
securities throughout the year. During the early part of the fiscal year, the
relative stability of long-term interest rates created a favorable environment
for the Fund, especially in view of the Fund's substantial investments in
mortgage-backed securities. Investors' concerns about the rate of economic
growth and its potentially adverse effects on inflation resulted in uncertainty
in the U.S. government securities market during January through March, causing
yields on U.S. Treasury securities to rise. As these concerns subsided, interest
rates trended lower during the last six months of the Fund's fiscal year though
not consistently so. In anticipation of a continuing decline in interest rates,
the Fund's Manager began to selectively shift more of the Fund's assets to U.S.
Treasury securities, while retaining a substantial weighting in mortgage-backed
securities. Continuing investor demand for the higher-yielding mortgage-backed
securities helped support the value of mortgage-backed securities even as
interest rates fell and the risk of mortgage prepayment increased. Mortgage
prepayment risk is the risk that homeowners will refinance their mortgages to
obtain a lower interest rate and, thus, return principal early to mortgage
holders. The Fund's Manager attempted to mitigate this risk further by selling
securities considered more subject to, and replacing them with securities
believed to be less subject to, this risk. During the fiscal year ended
September 30, 1997, the Fund's practice of attempting to pay dividends on Class
A shres at a constant level did not have a material impact on investment
strategies or the Fund's net asset value per share. The Fund's portfolio
holdings, allocations and its portfolio manager's strategies are subject to
change.

o Comparing the Fund's Performance to the Market. The charts below show
the performance of hypothetical $10,000 investments in Class A, Class B and
Class C shares of the Fund held until September 30, 1997 in the case of Class A
shares, for the ten year period ended September 30, 1997, in the case of Class B
shares, from the inception of the class on May 3, 1993 and in the case of Class
C shares, from the inception of the Class on February 1, 1995. In all cases all
dividends and capital gains distributions were reinvested in additional shares.
Since the Class Y shares are new as of the date of this Prospectus, there are no
comparisons shown for that class.

The Fund had a different investment advisor prior to April 7, 1990. The
Fund's maximum initial sales charge for Class A shares and contingent deferred
sales charges for Class B shares were reduced effective April 1, 1994, so that
actual results for those share classes for prior periods would have been less.
The graph reflects the deduction of the 3.50% current maximum initial sales
charge on Class A shares, the maximum contingent deferred sales charge of 4% on
Class B shares and the 1% contingent deferred sales charge on Class C shares
during the first year.

The graphs on the following pages compare the Fund's performance against
the Lehman Brothers U.S. Government Bond Index, a broad-based unmanaged index of
U.S. Treasury issues, publicly- issued debt of U.S. Government agencies and
quasi-public corporations and corporate debt guaranteed by the U.S. Government.
That index is widely used to measure the performance of the U.S. Government
securities market. The graphs below also compare the Fund's performance against
the Lehman Brothers 1 - 3 Year Government Bond Index, an unmanaged sector index
of U.S. Treasury issues, publicly-issued debt of U.S. Government agencies and
quasi-public corporations and corporate debt guaranteed by the U.S. Government
with maturities of one to three years. This secondary index comparison is
included to reflect the adoption by the Fund, effective May 1, 1994, of the
investment policy that the Fund will, under normal circumstances, seek to
maintain a dollar-weighted average portfolio effective duration of not more than
three years.

Index performance reflects the reinvestment of dividends but does not
consider the effect of capital gains or transaction costs, and none of the data
below shows the effect of taxes. Also, the Fund's performance reflects the
effect of Fund business and operating expenses. While index comparisons may be
useful to provide a benchmark for the Fund's performance, it must be noted that
the Fund's investments are not limited to the securities in any one index and
the index data does not reflect any assessment of the risk of the investments
included in the index.

Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Limited-Term Government Fund (Class A), Lehman Brothers U.S.
Government Bond Index and Lehman Brothers 1-3 Year Government Bond Index

[Graph]

Average Annual Total Return of Class A Shares of the Fund at 9/30/97(1)

1 Year 5 Year 10 Year
- ------ ------ ----
3.85% 5.12% 8.22%

Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Limited-Term Government Fund(Class B), Lehman Brothers U.S.
Government Bond Index and Lehman Brothers 1-3 Year Government Bond Index

[Graph]

Average Annual Total Return of Class B Shares of the Fund at 9/30/97(2)

1 Year Life
- ------ -----
2.82% 4.64%

Total returns and the ending account values in the graphs show change in share
value and include reinvestment of all dividends and capital gains distributions.
The performance information in the graphs for the Lehman Brothers U.S.
Government Bond Index and the Lehman Brothers 1-3 Year Government Bond Index
begins on 9/30/87 for the Class A shares and on 4/30/93 for the Class B shares.

(1) The inception date of the Fund (Class A shares) was 3/10/86. The average
annual total returns and the ending account value are shown net of the current
3.50% maximum initial sales charge.
(2) Class B shares of the Fund were first publicly offered on 5/3/93. The
average annual total returns reflect reinvestment of all dividends and capital
gains distributions and are shown net of the applicable 4% and 1% contingent
deferred sales charges, respectively, for the one year period and life of the
class. The ending account value for Class B shares in the graph is net of the
applicable 1% contingent deferred sales charge.

Past performance is not predictive of future performance. Graphs are not drawn
to same scale.

Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Limited-Term Government Fund (Class C), Lehman Brothers U.S.
Government Bond Index and Lehman Brothers 1-3 Year Government Bond Index

[Graph]

Average Annual Total Return of Class C Shares of the Fund at 9/30/97(3)

1 Year Life
- ------ -----
5.83% 6.40%

Total returns and ending account values in the graphs show change in share value
and include reinvestment of all dividends and capital gains distributions. The
performance information for the Lehman Brothers U.S. Government Bond Index and
the Lehman Brothers 1-3 Year Government Bond Index begins on 1/31/95.

(3) Class C shares of the Fund were first publicly offered on 2/1/95. The return
for the one year result is shown net of the 1% contingent deferred sales charge
for the period.

Past performance is not predictive of future performance.

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

How to Buy Shares

Classes of Shares. The Fund offers investors four different classes of shares.
The different classes of shares represent investments in the same portfolio of
securities but are subject to different expenses and will likely have different
share prices.

o Class A Shares. If you buy Class A shares, you pay an initial sales
charge on investments up to $1 million (up to $500,000 for purchases by
"Retirement Plans" as defined in "Class A Contingent Deferred Sales Charge" on
page __). If you purchase Class A shares as part of an investment of at least $1
million ($500,000 for Retirement Plans) in shares of one or more Oppenheimer
funds, you will not pay an initial sales charge, but if you sell any of those
shares within 12 months of buying them (18 months if the shares were purchased
prior to May 1, 1997), you may pay a contingent deferred sales charge. The
amount of that sales charge will vary depending on the amount you invested.
Sales charge rates are described in "Buying Class A Shares" below.

o Class B Shares. If you buy Class B shares, you pay no sales charge at
the time of purchase, but if you sell your shares within five years of buying
them, you will normally pay a contingent deferred sales charge. That sales
charge varies depending on how long you owned your shares as described in
"Buying Class B Shares" below.

o Class C Shares. If you buy Class C shares, you pay no sales charge at
the time of purchase, but if you sell your shares within 12 months of buying
them, you will normally pay a contingent deferred sales charge of 1%, as
discussed in "Buying Class C Shares" below.

o Class Y Shares. Class Y shares are offered only to certain institutional
investors that have special agreements with the Distributor. See "Buying Class Y
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
better suited to your needs depends on a number of factors which you should
discuss with your financial advisor. 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 most important
factors 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.

In the following discussion, to help provide you and your financial
advisor with a framework in which to choose a class, we have made some
assumptions using a hypothetical investment in the Fund. We assumed you are an
individual investor, and therefore ineligible to purchase Class Y shares. We
used the sales charge rates that apply to each class, and considered the effect
of the asset-based sales charge on Class B and Class C expenses (which, like all
expenses, will affect your investment return). For the sake of comparison, we
have assumed that there is a 10% rate of appreciation in your investment each
year. Of course, the actual performance of your investment cannot be predicted
and will vary, based on the Fund's actual investment returns, and the operating
expenses borne by each class of shares, and which class of shares you invest in.

The factors discussed below are not intended to be investment advice,
guidelines or recommendations, because each investor's financial considerations
are different. The discussion below of the factors to consider in purchasing a
particular class of shares assumes that you will purchase only one class of
shares and not a combination of shares of different classes.

o 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 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 (which reduces the amount of your
investment dollars used to buy shares for your account), compared to the effect
over time or higher class-based expenses on the shares of Class B or Class C for
which no initial sales charge is paid.

o Investing for the Short Term. If you have a short term investment
horizon (that is, you plan to hold your shares for not more than five years),
you should probably consider purchasing Class A or Class C shares rather Class B
shares. Because of the effect of the Class B contingent deferred sales charge if
you redeem in less than five 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 the more you invest and the more your investment horizon increases toward
five 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 economic impact on your account over the longer term than the reduced
front-end sales charge available for larger purchases of Class A shares. For
example, Class A might be more advantageous than Class C (as well as Class B)
for investments of more than $100,000 expected to be held for 5 or 6 years (or
more), Class A shares may become more advantageous than class C (and B). If
investing $500,000 or more, Class A may be more advantageous as your investment
horizon approaches 3 years or more.

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

o Investing for the Longer Term. If you are investing for the longer term,
for example, for retirement, and do not expect to need access to your money for
five years or more, Class B shares may be an appropriate consideration if you
plan to invest less than $100,000. If you plan to invest more than $100,000 over
the long term, Class A shares will likely be more advantageous than Class B
shares or Class C shares, as discussed above, because of the effect of the
expected lower expenses for Class A shares and the reduced initial sales charge
available for larger investments in Class A shares under the Fund's Right of
Accumulation.

Of course all of these examples are based on approximations of the effect
of current sales charges and expenses on a hypothetical investment over time,
using the assumed annual performance return stated above, and therefore you
should analyze your options carefully.

o Are There Differences in Account Features that Matter to You? Because
some features (such as checkwriting) may not be available to Class B or C
shareholders, or other features (such as Automatic Withdrawal Plans) may not be
advisable (because of the effect of the contingent deferred sales charge in
non-retirement accounts) for Class B or Class C shareholders, you should
carefully review how you plan to use your investment account before deciding
which class of shares to buy. For example, share certificates are not available
for Class B or Class C shares and if you are considering using your shares as
collateral for a loan, this may be a factor to consider. Additionally, dividends
payable to Class B and Class C shareholders will be reduced by the additional
expenses borne by those classes that are not borne by Class A, such as the Class
B and Class C asset-based sales charges described below and in the Statement of
Additional Information.

o How Does It Affect Payments to My Broker? A salesperson, such as a
broker, or any other person who is entitled to receive compensation for selling
Fund shares, may receive different compensation for selling one class than for
selling another class. It is important that investors understand that the
purpose of the Class B and Class C contingent deferred sales charges and
asset-based sales charges are the same as the purpose of the front-end sales
charge on sales of Class A shares: to compensate the Distributor for commissions
it pays to dealers and financial institutions for selling shares. The
Distributor may pay additional periodic 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.

How Much Must You Invest? You can open a Fund account with a minimum initial
investment of $1,000 and make additional investments at any time with as little
as $25. There are reduced minimum investments under special investment plans:

o With Asset Builder Plans, Automatic Exchange Plans, 403(b)(7) custodial
plans and military allotment plans, you can make initial and subsequent
investments for as little as $25; and subsequent purchases of at least $25 can
be made by telephone through AccountLink.

o Under pension and profit-sharing plans, 401(k)plans and Individual
Retirement Accounts (IRAs), you can make an initial investment of as little as
$250 (if your IRA is established under an Asset Builder Plan, the $25 minimum
applies), and subsequent investments may be as little as $25.

o There is no minimum investment requirement if you are buying shares by
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 by reinvesting distributions from unit
investment trusts that have made arrangements with the Distributor.

o How Are Shares Purchased? You can buy shares several ways -- through any
dealer, broker or financial institution that has a sales agreement with the
Distributor, directly through the Distributor, or automatically from your bank
account through an Asset Builder Plan under the OppenheimerFunds AccountLink
service. The Distributor may appoint certain servicing agents as the
Distributor's agent to accept purchase and redemption orders. When you buy
shares, be sure to specify Class A, Class B or Class C shares. If you do not
choose, your investment will be made in Class A shares.

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

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

Shares may be purchased by Federal Funds Wire. The minimum investment is
$2,500. You must first call the Distributor's Wire Department at 1-800-525-7041
to notify the Distributor of the wire and receive further instructions.

o Buying Shares Through OppenheimerFunds AccountLink. You can use
AccountLink to link your Fund account with an account at a U.S. bank or other
financial institution that is an Automated Clearing House (ACH) member to
transmit funds electronically to purchase shares, to have the Transfer Agent
send redemption proceeds, or to transmit dividends and distributions.

Shares are purchased for your account on AccountLink on the regular
business day the Distributor is instructed by you to initiate the ACH transfer
to buy shares. You can provide those instructions automatically, under an Asset
Builder Plan, described below, or by telephone instructions using
OppenheimerFunds PhoneLink, also described below. You should request AccountLink
privileges on the application or dealer settlement instructions used to
establish your account. Please refer to "AccountLink" below for more details.

o 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 Statement of Additional Information.

o At What Prices Are Shares Sold? Shares are sold at the public offering
price based on the net asset value (and any initial sales charge that applies)
that is next determined after the Distributor receives the purchase order in
Denver, Colorado. In most cases, to enable you to receive that day's offering
price, the Distributor or its designated agent must receive your order by the
time of day The New York Stock Exchange closes, which is normally 4:00 P.M., New
York time, but may be earlier on some days (all references to time in this
Prospectus mean "New York time"). The net asset value of each class of shares is
determined as of that time on each day The New York Stock Exchange is open
(which is a "regular business day").

If you buy shares through a dealer, the dealer must receive your order by
the close of The New York Stock Exchange on a regular business day and transmit
it to the Distributor so that it is received before the Distributor's close of
business that day, which is normally 5:00 P.M. The Distributor, in its sole
discretion, may reject any purchase order for the Fund's shares.

Special Sales Charge Arrangements for Certain Persons. Appendix A to this
Prospectus sets forth conditions for the waiver of, or exemption from, sales
charges or the special sales charge rates that apply to purchases of shares of
the Fund (including purchases by exchange) by a person who was a shareholder of
one of the Former Quest for Value Funds (as defined in that Appendix).

Buying Class A Shares. Class A shares are sold at their offering price, which is
normally the net asset value plus an initial sales charge. However, in some
cases, described below, where purchases are not subject to an initial sales
charge, the offering price may be net asset value. In some cases, reduced sales
charges may be available, as described below. 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 and allocated to your dealer as commission.
Different sales charge rates and commissions applied to sales of Class A shares
prior to April 1, 1994. The current sales charge rates and commissions paid to
dealers and brokers are as follows:

Front-End Front-End
Sales Charge Sales Charge Commission as
As Percentage of As Percentage of As Percentage of
Amount of Purchase Offering Price Amount Invested Offering Price
- ---------------------------------------------------------------------------
Less than $100,000 3.50% 3.63% 3.00%
- ---------------------------------------------------------------------------
$100,000 or more but
less than $250,000 3.00% 3.09% 2.50%
- ---------------------------------------------------------------------------
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
- ---------------------------------------------------------------------------
$500,000 or more but
less than $1 million 2.00% 2.04% 1.50%

The Distributor reserves the right to reallow the entire commission to
dealers. If that occurs, the dealer may be considered an "underwriter" under
Federal securities laws.

o 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 in the following cases:

o purchases aggregating $1 million or more;

o purchases by a retirement plan qualified under sections 401(a) or 401(k)
of the Internal Revenue Code, by a non-qualified deferred compensation plan,
employee benefit plan, group retirement plan, an employee's 403(b)(7) custodial
plan, SEP IRA, SARSEP, or SIMPLE plan (all of these plans are collectively
referred to as "Retirement Plans"), that: (1) buys shares costing $500,000 or
more or (2) has, at the time of purchase, 100 or more eligible participants, or
(3) certifies that it projects to have annual plan purchases of $200,000 or
more;

o purchases by an OppenheimerFunds Rollover IRA if the purchases are made
(1) through a broker, dealer, bank or registered investment advisor that has
made special arrangements with the Distributor for these 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; or

o purchases by a retirement plan qualified under Section 401(a) if the
retirement plan has total assets of $500,000 or more.

The Distributor pays dealers of record commissions on those purchases in an
amount equal to (i) 1.0% for non-Retirement Plan accounts; and (ii) for
Retirement Plan accounts, 1.0% of the first $2.5 million, plus 0.50% of the next
$2.5 million, plus 0.25% of purchases over $5 million calculated on a calendar
year basis. That commission will be paid only on those purchases that were not
previously subject to a front-end sales charge and dealer commission. No sales
commission will be paid to the dealer, broker or financial institution on sales
of Class A shares purchased with the redemption proceeds of shares of a 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 addition of
the Oppenheimer funds as an investment option to the Retirement Plan.

If you redeem any of those shares purchased prior to May 1, 1997 within 18
months of the end of the calendar month of their purchase, a contingent deferred
sales charge (called the "Class A contingent deferred sales charge") may be
deducted from the redemption proceeds. A Class A contingent deferred sales
charge may be deducted from the redemption proceeds of any of those shares
purchased on or after May 1, 1997 that are redeemed within 12 months of the end
of the calendar month of their purchase. That sales charge may be equal to 1.0%
of the lesser of (1) the aggregate net asset value of the redeemed shares (not
including shares purchased by reinvestment of dividends or capital gain
distributions) or (2) the original offering price(which is the original net
asset value) of the redeemed shares. However, the Class A contingent deferred
sales charge will not exceed the aggregate commissions the Distributor paid to
your dealer on all Class A shares of all Oppenheimer funds you purchased subject
to the Class A contingent deferred sales charge.

In determining whether a contingent deferred sales charge is payable, the
Fund will first redeem shares that are not subject to the sales charge,
including shares purchased by reinvestment of dividends and capital gains, and
then will redeem other shares in the order that you purchased them. The Class A
contingent deferred sales charge is waived in certain cases described in
"Waivers of Class A Sales Charges" below.

No Class A contingent deferred sales charge is charged on exchanges of
shares under the Fund's Exchange Privilege (described below). However, if the
shares acquired by exchange are redeemed within 12 calendar months (18 months
for shares purchased prior to May 1, 1997) of the end of the calendar month of
the purchase of the exchanged shares, the contingent deferred sales charge will
apply.

o Special Arrangements With Dealers. The Distributor may advance up to 13
months' commissions to dealers that have established special arrangements with
the Distributor for Asset Builder Plans for their clients.

Reduced Sales Charges for Class A Share Purchases. You may be eligible to buy
Class A shares at reduced sales charge rates in one or more of the following
ways:

o 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 jointly, or for trust or custodial accounts on behalf of your children who
are minors. 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.

Additionally, you can add together current purchases of Class A and Class
B shares of the Fund and other Oppenheimer funds to reduce the sales charge rate
for current purchases of Class A shares. You can also include 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. 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
Oppenheimer funds are listed in "Reduced Sales Charges" in the Statement of
Additional Information, or a list can be obtained from the Distributor. The
reduced sales charge will apply only to current purchases and must be requested
when you buy your shares.

o Letter 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. More information is contained
in the Application and in "Reduced Sales Charges" in the Statement of Additional
Information.

o Waivers of Class A Sales Charges. The Class A sales charges are not
imposed in the circumstances described below. There is an explanation of this
policy in "Reduced Sales Charges" in the Statement of Additional Information. In
order to receive a waiver of the Class A contingent deferred sales charge, you
must notify the Transfer Agent which conditions apply.

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:

o the Manager or its affiliates;

o present or former officers, directors, trustees and employees (and their
"immediate families" as defined in "Reduced Sales Charges" in the Statement of
Additional Information) of the Fund, the Manager and its affiliates, and
retirement plans established by them for their employees;

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

o dealers or brokers that have a sales agreement with the Distributor, if
they purchase shares for their own accounts or for retirement plans for their
employees;

o employees and registered representatives (and their spouses) of dealers
or brokers described above or financial institutions that have entered into
sales arrangements with such dealers or brokers (and are identified to the
Distributor) or with the Distributor; the purchaser must certify to the
Distributor at the time of purchase that the purchase is for the purchaser's own
account (or for the benefit of such employee's spouse or minor children);

o dealers, brokers 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 or employee benefit plans
made available to their clients (those clients may be charged a transaction fee
by their dealer, broker, bank or advisor for the purchase or sale of Fund
shares);

o (1) 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, (2) Retirement Plans and deferred compensation
plans and trusts used to fund those Plans (including, for example, plans
qualified or created under sections 401(a), 403(b) or 457 of the Internal
Revenue Code), and "rabbi trusts" that buy shares for their own accounts, in
each case if those purchases are made through a broker or agent or other
financial intermediary that has made special arrangements with the Distributor
for those purchases; and (3) clients of investment advisors or financial
planners (who have entered into an agreement for this purpose with the
Distributor) who buy shares for their own accounts may also purchase shares
without sales charge but only if their accounts are linked to a master account
of their investment advisor or financial planner on the books and records of the
broker, agent or financial intermediary with which the Distributor has made such
special arrangements (each of these investors may be charged a fee by the
broker, agent or financial intermediary for purchasing shares);

o directors, trustees, officers or full-time employees of OpCap Advisors
or its affiliates, their relatives or any trust, pension, profit sharing or
other benefit plan which beneficially owns shares for those persons;

o accounts for which Oppenheimer Capital is the investment advisor (the
Distributor must be advised of this arrangement) and persons who are directors
or trustees of the company or trust which is the beneficial owner of such
accounts;

o any unit investment trust that has entered into an appropriate agreement
with the Distributor; or

o qualified retirement plans 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, provided that such arrangements were
consummated and share purchases commenced by December 31, 1996.

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 Class A sales charges:

o shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which the Fund is a party;

o shares purchased by the reinvestment of loan repayments by a participant
in a retirement plan for which the Manager or one of its affiliates acts as
sponsor;

o shares purchased by the reinvestment of dividends or other distributions
reinvested from the Fund or other Oppenheimer funds (other than Oppenheimer Cash
Reserves) or unit investment trusts for which reinvestment arrangements have
been made with the Distributor;

o shares purchased and paid for with the proceeds of shares redeemed in
the prior 30 days from a mutual fund (other than a fund managed by the Manager
or any of its subsidiaries) on which an initial sales charge or contingent
deferred sales charge was paid (this waiver also applies to shares purchased by
exchange of shares of Oppenheimer Money Market Fund, Inc. that were purchased
and paid for in this manner); this waiver must be requested when the purchase
order is placed for your shares of the Fund, and the Distributor may require
evidence of your qualification for this waiver; or

o shares purchased with the proceeds of maturing principal of units of any
Qualified Unit Investment Liquid Trust Series.

Waivers of the Class A Contingent Deferred Sales Charge for Certain
Redemptions. The Class A contingent deferred sales charge is also waived if
shares that would otherwise be subject to the contingent deferred sales charge
are redeemed in the following cases:

o to make Automatic Withdrawal Plan payments that are limited annually to
no more than 12% of the original account value;

o involuntary redemptions of shares by operation of law or involuntary
redemptions of small accounts (see "Shareholder Account Rules and Policies,"
below);

o if, at the time a purchase of shares (prior to May 1, 1997) the dealer
agreed in writing to accept the dealer's portion of the sales commission in
installments of 1/18th of the commission per month (and no further commission
will be payable if the shares are redeemed within 18 months of purchase);

o if at the time of purchase of shares (if purchased during the period May
1, 1997 through December 31, 1997) the dealer agrees in writing to accept the
dealer's portion of the sales commission in installments of 1/12th of the
commission per month ( and no further commission will be payable if the shares
are redeemed within 12 months of purchase);

o for distributions from TRAC-2000 401(k) plan sponsored by the Distributor
due to the termination of the TRAC-2000 program;

o for distributions from Retirement Plans, deferred compensation plans or
other employee benefit plans for any of the following purposes: (1) following
the death or disability (as defined in the Internal Revenue Code) of the
participant or beneficiary (the death or disability must occur after the
participant's account was established); (2) to return excess contributions; (3)
to return contributions made due to a mistake of fact; (4) hardship withdrawals,
as defined in the plan; (5) under a Qualified Domestic Relations Order, as
defined in the Internal Revenue Code; (6) to meet the minimum distribution
requirements of the Internal Revenue Code; (7) to establish "substantially equal
periodic payments" as described in Section 72(t) of the Internal Revenue Code;
(8) for retirement distributions or loans to participants or beneficiaries; (9)
separation from service; (10) participant-directed redemptions to purchase
shares of a mutual fund (other than a fund managed by the Manger or its
subsidiary) 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; or (11) plan termination or "in-service
distributions", if the redemption proceeds are rolled over directly to an
OppenheimerFunds IRA;

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

o for distribution from 401(k) plans sponsored by broker-dealers that have
entered into a special agreement with the Distributor allowing this waiver.

o Service Plan for Class A Shares. The Fund has adopted a Service Plan for
Class A shares to reimburse the Distributor for a portion of its costs incurred
in connection with the personal service and maintenance of accounts that hold
Class A shares. Reimbursement is made quarterly at an annual rate that may not
exceed 0.25% of the average annual net assets of Class A shares of the Fund. The
Distributor uses all of those fees to compensate dealers, brokers, banks and
other financial institutions quarterly for providing personal service and
maintenance of accounts of their customers that hold Class A shares and to
reimburse itself (if the Fund's Board of Trustees authorizes such
reimbursements, which it has not yet done) for its other expenditures under the
Plan.

Services to be provided 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. Payments are made by the
Distributor quarterly at an annual rate not to exceed 0.25% of the average
annual net assets of Class A shares held in accounts of the dealer or its
customers. The payments under the Plan increase the annual expenses of Class A
shares. For more details, please refer to "Distribution and Service Plans" in
the Statement of Additional Information.

Buying 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
five years of their purchase, a contingent deferred sales charge will be
deducted from the redemption proceeds. That sales charge will not apply to
shares purchased by the reinvestment of dividends or capital gains
distributions. The contingent deferred sales charge will be based on the lesser
of the net asset value of the redeemed shares at the time of redemption or the
original offering price which is the original net asset value). The contingent
deferred sales charge is not imposed on the amount of your account value
represented by the increase in net asset value over the initial purchase price.
The Class B contingent deferred sales charge is paid to the Distributor to
compensate it for providing distribution-related services to the Fund in
connection with the sale of Class B shares.

To determine whether the contingent deferred sales charge applies to a
redemption, the Fund redeems shares in the following order: (1) shares acquired
by reinvestment of dividends and capital gains distributions, (2) shares held
for over 5 years, and (3) shares held the longest during the 5-year period. The
contingent deferred sales charge is not imposed in the circumstances described
in "Waivers of Class B and Class C Sales Charges" below.

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:

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

In the table, a "year" is a 12-month period. All purchases are considered
to have been made on the first regular business day of the month in which the
purchase was made. Different contingent deferred sales charges applied to
redemptions of Class B shares prior to April 1, 1994.

o Automatic Conversion of Class B Shares. 72 months after you purchase
Class B shares, those shares will automatically convert to Class A shares. This
conversion feature relieves Class B shareholders of the asset-based sales charge
that applies to Class B shares under the Class B Distribution and Service Plan,
described below. The conversion is based on the relative net asset value of the
two classes, and no sales load or other charge is imposed. When Class B shares
convert, any other Class B shares that were acquired by the reinvestment of
dividends and distributions on the converted shares will also convert to Class A
shares. The conversion feature is subject to the continued availability of a tax
ruling described in "Alternative Sales Arrangements - Class A, Class B and Class
C Shares" in the Statement of Additional Information.

Buying Class C Shares. Class C shares are sold at net asset value per share
without an initial sales charge. However, if Class C shares are redeemed within
12 months of their purchase, a contingent deferred sales charge of 1.00% will be
deducted from the redemption proceeds. That sales charge will not apply to
shares purchased by the reinvestment of dividends or capital gains
distributions. The contingent deferred sales charge will be based on the lesser
of the net asset value of the redeemed shares at the time of redemption or the
original offering price (which is the original net asset value). The contingent
deferred sales charge is not imposed on the amount of your account value
represented by the increase in net asset value over the initial purchase price.
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.

To determine whether the contingent deferred sales charge applies to a
redemption, the Fund redeems shares in the following order: (1) shares acquired
by reinvestment of dividends and capital gains distributions, (2) shares held
for over 12 months, and (3) shares held the longest during the 12-month period.
All purchases are considered to have been made on the first regular business day
of the month in which the purchase was made.

o Distribution and Service Plans for Class B and Class C Shares. The Fund
has adopted Distribution and Service Plans for Class B and Class C shares to
compensate the Distributor for distributing Class B and C shares and servicing
accounts. Under the Plans, the Fund pays the Distributor an annual "asset-based
sales charge" of 0.75% per year on Class B shares that are outstanding for 6
years or less and on Class C shares. The Distributor also receives a service fee
of 0.25% per year under each plan.

Under each Plan, both 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 asset-based sales charge and service
fees increase Class B and Class C expenses by up to 1.00% of the net assets per
year of the respective class.

The Distributor uses the service fees to compensate dealers for providing
personal and account maintenance services for accounts that hold Class B or C
shares. Those services are similar to those provided under the Class A Service
Plan, described above. The Distributor pays the 0.25% service fees to dealers in
advance for the first year after Class B or Class C shares have been sold by the
dealer and retains the service fee paid by the Fund in that year. After the
shares have been held for a year, the Distributor pays the service fees to
dealers on a quarterly basis.

The asset-based sales charge allows investors to buy Class B or C shares
without a front-end sales charge while allowing the Distributor to compensate
dealers that sell those shares. The Fund pays the asset-based sales charges to
the Distributor for its services rendered in distributing Class B and Class C
shares. Those payments are at a fixed rate that is not related to the
Distributor's expenses. The services rendered by the Distributor include paying
and financing the payment of sales commissions, service fees and other costs of
distributing and selling Class B and Class C shares.

The Distributor currently pays sales commissions of 2.75% 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 3.00% of the
purchase price. The Distributor retains the Class B asset-based sales charge.
The Distributor may also pay the Class B service fee and the asset-based sales
charge to the dealer quarterly in lieu of paying the sales commission and
service fee advance at the time of purchase.

The Distributor currently pays sales commissions of 0.75% of the purchase
price of Class C shares to dealers from its own resources at the time of sale.
Including the advance of the service fee, the total amount paid by the
Distributor to the dealer at the time of sale of Class C shares is therefore
1.00% of the purchase price. The Distributor may also pay the Class C service
fee and asset-based sales charge to the dealer quarterly in lieu of paying the
sales commission and service fee advance at the time of purchase. The
Distributor plans to pay 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's actual expenses in selling Class B and C shares may be
more than the payments it receives from contingent deferred sales charges
collected on redeemed shares and from the Fund under the Distribution and
Service Plans for Class B and C shares. Therefore, those expenses may be carried
over and paid in future years. At September 30, 1997, the end of the Class B and
Class C Plan year, the Distributor had incurred unreimbursed expenses under the
Class B Plan of $4,697,177(equal to 2.56% of the Fund's net assets represented
by Class B shares on that date), and unreimbursed expenses under the Class C
Plan of $1,134,939(equal to 1.54% of the Fund's net assets represented by Class
C shares on that date) which have been carried over into the present Plan year.
If either Plan is terminated by the Fund, the Board of Trustees may allow the
Fund to continue payments of the service fee and asset-based sales charge to the
Distributor for distributing shares before the Plan was terminated.

o Waivers of Class B and Class C Sales Charges. The Class B and Class C
contingent deferred sales charges will not be applied to shares purchased in
certain types of transactions nor will they apply to Class B and Class C shares
redeemed in certain circumstances as described below. The reasons for this
policy are in "Reduced Sales Charges" in the Statement of Additional
Information. In order to receive a waiver of the Class B or Class C contingent
deferred sales charge, you must notify the Transfer Agent which conditions
apply.

Waivers for Redemptions in Certain Cases. The Class B and Class C
contingent deferred sales charges will be waived for redemptions of shares in
the following cases:

o distributions to participants or beneficiaries from Retirement Plans, if
the distributions are made (a) under an Automatic Withdrawal Plan after the
participant reaches age 59-1/2, as long as the payments are no more than 10% of
the account value annually (measured from the date the Transfer Agent receives
the request), or (b) following the death or disability (as defined in the
Internal Revenue Code) of the participant or beneficiary (the death or
disability must have occurred after the account was established);

o redemptions from accounts other than Retirement Plans following the
death or disability of the last surviving shareholder including a trustee of a
"grantor" trust or revocable living trust for which the trustee is also the sole
beneficiary (the death or disability must have occurred after the account was
established, and for disability you must provide evidence of a determination of
disability by the Social Security Administration);

o returns of excess contributions to Retirement Plans;

o distributions from retirement plans to make "substantially equal
periodic payments" as permitted in Section 72(t) of the Internal Revenue Code
that do not exceed 10% of the account value annually, measured from the date the
Transfer Agent receives the request; or

o distributions from OppenheimerFunds prototype 401(k) plans and from
certain Massachusetts Mutual Life Insurance Company prototype 401(k) plans (1)
for hardship withdrawals; (2) under a Qualified Domestic Relations Order, as
defined in the Internal Revenue Code; (3) to meet minimum distribution
requirements as defined in the Internal Revenue Code; (4) to make "substantially
equal periodic payments" as described in Section 72(t) of the Internal Revenue
Code; (5) for separation from service; or (6) for loans to participants of
beneficiaries.

Waivers for Shares Sold or Issued in Certain Transactions. The contingent
deferred sales charge is also waived on Class B and Class C shares sold or
issued in the following cases:

o shares sold to the Manager or its affiliates;

o shares sold to registered management investment companies or separate
accounts of insurance companies having an agreement with the Manager or the
Distributor for that purpose;

o shares issued in plans of reorganization to which the Fund is a party;

o shares redeemed involuntarily, as described in "Shareholder Account Rules
and Policies" below; or

o Distributions from 401(k) plans sponsored by broker-dealers that have
entered into a special agreement with the Distributor allowing this waiver.

Buying Class Y Shares. Class Y shares are sold at net asset value per share
without sales charge directly to certain institutional investors, such as
insurance companies, registered investment companies and employee benefit plans
that have special agreements with the Distributor for this purpose. These
include Massachusetts Mutual Life Insurance Company, an affiliate of the
Manager, which may purchase Class Y shares of the Fund and other Oppenheimer
funds for asset allocation programs, investment companies or separate investment
accounts it sponsors and offers to its customers. Individual investors are not
able to invest in Class Y shares directly.

While Class Y shares are not subject to initial or contingent deferred sales
charges or asset-based sales charges, an institutional investor buying the
shares for its customers' accounts may impose charges on those accounts . The
procedures for purchasing, redeeming, exchanging, or transferring the Fund's
other classes of shares and the special account features that apply to those
shares described elsewhere in this Prospectus (other that provisions as to the
timing of the Fund's receipt of purchase, redemption and exchange orders) in
general do not apply to Class Y shares.

Special Investor Services

AccountLink. OppenheimerFunds AccountLink links your Fund account to your
account at your bank or other financial institution to enable you to send money
electronically between those accounts to perform a number of types of account
transactions. These include purchases of shares by telephone (either through a
service representative or by PhoneLink, described below), automatic investments
under Asset Builder Plans, and sending dividends and distributions or Automatic
Withdrawal Plan payments directly to your bank account. Please call the Transfer
Agent for more information.

AccountLink privileges should be requested on your dealer's settlement
instructions if you buy your shares through your 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.

o Using AccountLink to Buy Shares. Purchases may be made 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.

o 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.

o 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.

o Exchanging Shares. With the OppenheimerFunds Exchange Privilege,
described below, you can exchange shares automatically by phone from your Fund
account to another Oppenheimer funds account you have already established by
calling the special PhoneLink number. Please refer to "How to Exchange Shares"
below for details.

o 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.

Shareholder Transactions by Fax. Requests for certain account transactions may
be sent to the Transfer Agent by fax (telecopier). Please call 1-800-525-7048
for information about which transactions are included. 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. Information about the Fund, including your
account balance, daily share prices, market and Fund portfolio information, may
be obtained by visiting the OppenheimerFunds Internet Web Site, at the following
Internet address: http://www.oppenheimerfunds.com. In 1998, the Transfer Agent
anticipates offering certain account transactions through the Internet Web Site.
To find out more information about those transactions and procedures, please
visit the Web Site.

Automatic Withdrawal and Exchange Plans. The Fund has several plans that enable
you to sell shares automatically or exchange them to another Oppenheimer funds
account on a regular basis:

o Automatic Withdrawal Plans. If your Fund account is worth $5,000 or
more, you can establish an Automatic Withdrawal Plan to receive payments of at
least $50 on a monthly, quarterly, semi-annual or annual basis. The checks may
be sent to you or sent automatically to your bank account on AccountLink. You
may even set up certain types of withdrawals of up to $1,500 per month by
telephone. You should consult the Statement of Additional Information for more
details.

o Automatic Exchange Plans. You can authorize the Transfer Agent to
exchange an amount you establish in advance automatically for shares of up to
five other Oppenheimer funds on a monthly, quarterly, semi-annual or annual
basis under an Automatic Exchange Plan. The minimum purchase for each other
Oppenheimer funds account is $25. These exchanges are subject to the terms of
the Exchange Privilege, described below.

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 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 shares. You must be sure to ask the
Distributor for this privilege when you send your payment. Please consult the
Statement of Additional Information for more details.

Retirement Plans. Fund shares are available as an investment for your retirement
plans. If you participate in a plan sponsored by your employer, the plan trustee
or administrator must make the purchase of shares for your retirement plan
account. The Distributor offers a number of different retirement plans that can
be used by individuals and employers:

o Individual Retirement Accounts including rollover IRAs, for individuals
and their spouses

o 403(b)(7) Custodial Plans for employees of eligible tax-exempt
organizations, such as schools, hospitals and charitable organizations

o SEP-IRAs (Simplified Employee Pension Plans) for small business owners
or people with income from self-employment

o Pension and Profit-Sharing Plans for self-employed persons and other
employers

o 401(k) prototype retirement plans for businesses

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

How to Sell Shares

You can arrange to take money out of your account by selling (redeeming) 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 and accepted by the
Transfer Agent. The Fund offers you a number of ways to sell your shares: in
writing, or by using the Fund's checkwriting privilege, or by telephone. You can
also set up Automatic Withdrawal Plans to redeem shares on a regular basis, as
described above. 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, please call the Transfer
Agent first, at 1-800-525-7048, for assistance.

o Retirement Accounts. To sell shares in an OppenheimerFunds retirement
account in your name, call the Transfer Agent for a distribution request form.
There are special income tax withholding requirements for distributions from
retirement plans and you must submit a withholding form with your request to
avoid delay. If your retirement plan account is held for you by your employer,
you must arrange for the distribution request to be sent by the plan
administrator or trustee. There are additional details in the Statement of
Additional Information.

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

o You wish to redeem more than $50,000 worth of shares 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 redeemed by someone other than the owners (such as an
Executor)

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

Selling 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 requirements or documents requested by the Transfer Agent to
assure proper authorization of the person asking to sell shares.

Use the following address for requests by mail:
OppenheimerFunds Services
P.O. Box 5270, Denver, Colorado 80217

Send courier or Express Mail requests to:
OppenheimerFunds Services
10200 E. Girard Avenue, Building D
Denver, Colorado 80231

Selling Shares by Telephone. You and your dealer representative of record may
also sell your shares by telephone. To receive the redemption price on a regular
business day, your call must be received by the Transfer Agent by the close of
The New York Stock Exchange that day, which is normally 4:00 P.M., but may be
earlier on some days. You may not redeem shares held in an OppenheimerFunds
retirement plan 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 wired to that bank account.

o Telephone Redemptions Paid by Check. Up to $50,000 may be redeemed by
telephone, once 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.

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

Shareholders may also have the Transfer Agent send redemption proceeds of
$2,500 or more by Federal Funds wire to a designated commercial bank account if
the bank is a member of the Federal Reserve wire system. There is a $10 fee for
each Federal Funds wire. To place a wire redemption request, call the Transfer
Agent at 1-800-852-8457. The wire will normally be transmitted on the next bank
business day after the shares are redeemed. There is a possibility that the wire
may be delayed up to seven days to enable the Fund to sell securities to pay the
redemption proceeds. No dividends are accrued or paid on the proceeds of shares
that have been redeemed and are awaiting transmittal by wire. To establish wire
redemption privileges on an account that is already established, please contact
the Transfer Agent for instructions.

Checkwriting. To be able to write checks against your Fund account, you may
request that privilege on your account Application or you can contact the
Transfer Agent for signature cards, which must be signed (with a signature
guarantee) by all owners of the account and returned to the Transfer Agent so
that checks can be sent to you to use. Shareholders with joint accounts can
elect in writing to have checks paid over the signature of one owner.

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

o Checkwriting privileges are not available for accounts holding Class B
shares or Class C shares, or Class A shares that are subject to a contingent
deferred sales charge.

o Checks must be written for at least $100.

o Checks cannot be paid if they are written for more than your account
value. Remember: your shares fluctuate in value and you should not write a check
close to the total account value.

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

o Don't use your checks if you changed your Fund account number.

Selling 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. Please call your dealer for more
information about this procedure and refer to "Special Arrangements for
Repurchase of Shares from Dealers and Brokers" in the Statement of Additional
Information for more details.

How to Exchange Shares

Shares of the Fund may be exchanged for shares of certain Oppenheimer funds at
net asset value per share at the time of exchange, without sales charge. To
exchange shares, you must meet several conditions:

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

o The prospectuses of this Fund and the fund whose shares you want to buy
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 you
purchase by exchange.

o Before exchanging into a fund, you should obtain and read its prospectus.

Shares of a particular class of the Fund may be exchanged only for shares
of the same class in the other Oppenheimer funds. For example, you can exchange
Class A shares of this Fund only for Class A shares of another fund. At present,
Oppenheimer Money Market Fund, Inc. offers only one class of shares, which are
considered to be Class A shares for this purpose. In some cases, sales charges
may be imposed on exchange transactions. Please refer to "How to Exchange
Shares" in the Statement of Additional Information for more details.

Exchanges may be requested in writing or by telephone:

o Written Exchange Requests. Submit an OppenheimerFunds Exchange Request
form, signed by all owners of the account. Send it to the Transfer Agent at the
addresses listed in "How to Sell Shares."

o 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
names and address. Shares held under certificates may not be exchanged by
telephone.

You can find a list of Oppenheimer funds currently available for exchanges
in the Statement of Additional Information or obtain one by calling a service
representative at 1-800-525-7048. That list can change from time to time.

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 is in proper form 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 7 days if it determines it would be
disadvantaged by a same-day transfer of the proceeds to buy shares. For example,
the receipt of multiple exchange requests from a dealer in a "market-timing"
strategy might require the disposition of securities at a time or price
disadvantageous to the Fund.

o Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange request that
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. Although the Fund will attempt to provide you notice whenever it is
reasonably able to do so, it may impose these changes at any time.

o For tax purposes, exchanges of shares involve a redemption 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. For more information about taxes affecting
exchanges, please refer to "How to Exchange Shares" in the Statement of
Additional Information.

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

o Net asset value per share is determined for each class of shares as of
the close of The New York Stock Exchange which is normally 4:00 P.M., but may be
earlier on some days, on each day the Exchange is open 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 Fund's Board of Trustees has established
procedures to value the Fund's securities to determine net asset value. In
general, securities values are based on market value. There are special
procedures for valuing illiquid and restricted securities and obligations for
which market values cannot be readily obtained. These procedures are described
more completely in the Statement of Additional Information.

o 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.

o 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 and until
the Transfer Agent receives cancellation instructions from an owner of the
account.

o 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. If the Transfer Agent does not use
reasonable procedures it may be liable for losses due to unauthorized
transactions, but otherwise neither the Transfer Agent nor the Fund will be
liable for losses or expenses arising out of telephone instructions reasonably
believed to be genuine. If you are unable to reach the Transfer Agent during
periods of unusual market activity, you may not be able to complete a telephone
transaction and should consider placing your order by mail.

o 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.

o 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.

o The redemption price for shares will vary from day to day because the
value of the securities in the Fund's portfolio fluctuates, and the redemption
price, which is the net asset value per share, will normally be different for
Class A, Class B, Class C and Class Y shares. Therefore, the redemption value of
your shares may be more or less than their original cost.

o Payment for redeemed shares is made ordinarily in cash and forwarded by
check or through AccountLink (as elected by the shareholder under the redemption
procedures described above) within seven days after the Transfer Agent receives
redemption instructions in proper form, except under unusual circumstances
determined by the Securities and Exchange Commission delaying or suspending such
payments. For accounts registered in the name of a broker-dealer, payment will
be forwarded within three business days. 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
ten days from the date the shares were purchased. That delay may be avoided if
you purchase shares by federal funds wire, certified check or arrange with your
bank to provide telephone or written assurance to the Transfer Agent that your
purchase payment has cleared.

o Involuntary redemptions of small accounts may be made by the Fund if the
account value has fallen below $200 for any reason other than the market value
of shares has dropped, and in some cases involuntary redemptions may be made to
repay the Distributor for losses from the cancellation of share purchase orders.

o Under unusual circumstances, shares of the Fund may be redeemed "in
kind," which means that the redemption proceeds will be paid with securities
from the Fund's portfolio. Please refer to "How to Sell Shares" in the Statement
of Additional Information for more details.

o "Backup Withholding" of Federal income tax may be applied at the rate of
31% from dividends, distributions and redemption proceeds (including exchanges)
if you fail to furnish the Fund a correct and properly certified Social Security
or Employer Identification Number when you sign your application, or if you
underreport your income to the Internal Revenue Service regulations on tax
reporting of income.

o The Fund does not charge a redemption fee, but if your dealer or broker
handles your redemption, they may charge a fee. That fee can be avoided by
redeeming your Fund shares directly through the Transfer Agent. Under the
circumstances described in "How to Buy Shares," you may be subject to a
contingent deferred sales charges when redeeming certain Class A, Class B and
Class C shares.

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

Dividends, Capital Gains and Taxes

Dividends. The Fund declares dividends separately for Class A, Class B, Class C
and Class Y shares from net investment income each regular business day and pays
those dividends to shareholders monthly. Normally, dividends are paid on the
last business day every month, but the Board of Trustees can change that date.
Distributions may be made monthly from any net short-term capital gains the Fund
realizes in selling securities. Dividends paid on Class A and Class Y shares
generally are expected to be higher than for Class B and Class C shares because
expenses allocable to Class B and Class C shares will generally be higher.

Commencing with the Fund's fiscal quarter beginning July 1, 1994, the Fund
adopted the practice, to the extent consistent with the amount of the Fund's net
investment income and other distributable income, of attempting to pay dividends
on Class A shares at a constant level, although the amount of such dividends are
subject to change 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 that class.

The practice of attempting to pay dividends on Class A shares at a
constant level requires the Manager, consistent with the Fund's investment
objective and investment restrictions, to monitor the Fund's portfolio and
select higher yielding securities when deemed appropriate to maintain necessary
net investment income levels. The Fund anticipates paying dividends at the
targeted dividend level from net investment income and other distributable
income without any material impact on the Fund's net asset value per share.

The Board of Trustees may change the Fund's targeted dividend level at any
time, without prior notice to shareholders. The Fund does not otherwise have a
fixed dividend rate and there can be no assurance as to the payment of any
dividends or the realization of any capital gains.

Capital Gains. The Fund may make distributions annually in December out of any
net short-term or long-term capital gains, and the Fund may make supplemental
distributions of dividends and capital gains following the end of its fiscal
year, which is September 30th. Long-term capital gains will be separately
identified in the tax information the Fund sends you after the end of the year.
Short- term capital gains are treated as dividends for tax purposes. There can
be no assurance that the Fund will pay any capital gains distributions in a
particular year.

Distribution Options. When you open your account, specify on your application
how you want to receive your distributions. For OppenheimerFunds retirement
accounts, all distributions are reinvested. For other accounts, you have four
options:

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

o Reinvest Capital Gains Only. You can elect to reinvest long- term capital
gains in the Fund while receiving dividends by check or sent to your bank
account on AccountLink.

o Receive All Distributions in Cash. You can elect to receive a check for
all dividends and long-term capital gains distributions or have them sent to
your bank on AccountLink.

o Reinvest Your Distributions in Another Oppenheimer Fund Account. You can
reinvest all distributions in the same class of shares of another Oppenheimer
fund account you have established.

Taxes. If your account is not a tax-deferred retirement account, you should be
aware of the following tax implications of investing in the Fund. Long-term
capital gains are taxable as long-term capital gains when distributed to
shareholders. It does not matter how long you held your shares. Dividends paid
from short-term capital gains and net investment income are taxable as ordinary
income. Distributions are subject to Federal income tax and may be subject to
state or local taxes. Your distributions are taxable when paid, whether you
reinvest them in additional shares or take them in cash. Every year the Fund
will send you and the IRS a statement showing the amount of each taxable
distribution you received in the previous year. So that the Fund will not have
to pay taxes on the amounts it distributes to shareholders as dividends and
capital gains, the Fund intends to manage its investments so that it will
qualify as a "regulated investment company" under the Internal Revenue Code,
although it reserves the right not to qualify in a particular year.

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

o Taxes on Transactions. Share redemptions, including redemptions for
exchanges, are subject to capital gains tax. 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.

o Returns of Capital. 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. A non-taxable return of
capital may reduce your tax basis in your Fund shares.

This information is only a summary of certain federal tax information
about your investment. More information is contained in the Statement of
Additional Information, and in addition you should consult with your tax advisor
about the effect of an investment in the Fund on your particular tax situation.

-4-

<PAGE>

APPENDIX A

Special Sales Charge Arrangements for Shareholders of the Fund
Who Were Shareholders of the Former Quest for Value Funds

The initial and contingent sales charge rates and waivers for Class A, Class B
and Class C shares of the Fund described elsewhere in this Prospectus are
modified as described below for those shareholders of (i) Oppenheimer Quest
Value Fund, Inc., Oppenheimer Quest Growth and Income Fund, Oppenheimer Quest
Opportunity Value Fund, Oppenheimer Quest Small Cap Fund and Oppenheimer Quest
Global Value Fund, Inc. on November 24, 1995, when OppenheimerFunds, Inc. became
the investment advisor to those funds, and (ii) Quest for Value U.S. Government
Income Fund, Quest for Value Investment Quality Income Fund, Quest for Value
Global Income Fund, Quest for Value New York Tax-Exempt Fund, Quest for Value
National Tax-Exempt Fund and Quest for Value California Tax-Exempt Fund when
those funds merged into various Oppenheimer funds on November 24, 1995. The
funds listed above are referred to in this Prospectus as the "Former Quest for
Value Funds." The waivers of initial and contingent deferred sales charges
described in this Appendix apply to shares of the Fund (i) acquired by such
shareholder pursuant to an exchange of shares of one of the Oppenheimer funds
that was one of the Former Quest for Value Funds or (ii) purchased by such
shareholder by exchange of shares of other Oppenheimer fund that were acquired
pursuant to the merger of any of the Former Quest for Value Funds into an
Oppenheimer fund on November 24, 1995.

Class A Sales Charges

o Reduced Class A Initial Sales Charge Rates for Certain Former Quest
Shareholders

o Purchases by Groups, Associations and Certain Qualified Retirement
Plans. The following table sets forth the initial sales charge rates for Class A
shares purchased by a "Qualified Retirement Plan" through a single broker,
dealer or financial institution, or by members of "Associations" formed for any
purpose other than the purchase of securities if that Qualified Retirement Plan
or 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. For this purpose only, a "Qualified Retirement Plan" includes
any 401(k) plan, 403(b) plan, and SEP/IRA or IRA plan for employees of a single
employer.

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

For purchases by Qualified Retirement plans and 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 on pages __ to __ of this Prospectus.

Purchases made under this arrangement qualify for the lower of the sales
charge rate in the table based on the number of eligible employees in a
Qualified Retirement Plan or members of an Association or the sales charge rate
that applies under the Rights of Accumulation described above in the Prospectus.
In addition, purchases by 401(k) plans that are Qualified Retirement Plans
qualify for the waiver of the Class A initial sales charge if they qualified to
purchase shares of any of the Former Quest For Value Funds by virtue of
projected contributions or investments of $1 million or more each year.
Individuals who qualify under this arrangement for reduced sales charge rates as
members of Associations, or as eligible employees in Qualified Retirement Plans
also may purchase shares for their individual or custodial accounts at these
reduced sales charge rates, upon request to the Fund's Distributor.

o Waiver of Class A Sales Charges for Certain Shareholders. Class A shares
of the Fund purchased by the following investors are not subject to any Class A
initial or contingent deferred sales charges:

o Shareholders of the Fund who were shareholders of the AMA Family of
Funds on February 28, 1991 and who acquired shares of any of the Former Quest
for Value Funds by merger of a portfolio of the AMA Family of Funds.

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

o 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 of the Fund purchased by the following investors
who were shareholders of any Former Quest for Value Fund:

o 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.

o Participants in Qualified Retirement Plans that purchased shares of any
of the Former Quest For Value Funds pursuant to a special "strategic alliance"
with the distributor of those funds.

The Fund's Distributor will pay a commission to the dealer for purchases of Fund
shares as described above in "Class A Contingent Deferred Sales Charge."

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

o 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, B or C shares of the Fund acquired by 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, if those
shares were purchased prior to March 6, 1995: in connection with (i)
distributions to participants or beneficiaries of plans qualified under Section
401(a) of the Internal Revenue Code or from custodial accounts under Section
403(b)(7) of the Code, Individual Retirement Accounts, deferred compensation
plans under Section 457 of the Code, and other employee benefit plans, and
returns of excess contributions made to each type of plan, (ii) withdrawals
under an automatic withdrawal plan holding only either Class B or C shares if
the annual withdrawal does not exceed 10% of the initial value of the account,
and (iii) 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.

o 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, B or C shares of the
Fund acquired by 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, if those shares were purchased on or after March 6,
1995, but prior to November 24, 1995: (1) distributions to participants or
beneficiaries from Individual Retirement Accounts under Section 408(a) of the
Internal Revenue Code or retirement plans under Section 401(a), 401(k), 403(b)
and 457 of the Code, if those distributions are made either (a) to an individual
participant as a result of separation from service or (b) following the death or
disability (as defined in the Code) of the participant or beneficiary; (2)
returns of excess contributions to such retirement plans; (3) redemptions other
than from retirement plans following the death or disability of the
shareholder(s) (as evidenced by a determination of total disability by the U.S.
Social Security Administration); (4) withdrawals under an automatic withdrawal
plan (but only for Class B or C shares) where the annual withdrawals do not
exceed 10% of the initial value of the account; and (5) 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, B or C shares of the Fund described in this
section if within 90 days after that redemption, the proceeds are invested in
the same Class of shares in this Fund or another Oppenheimer fund.

A-1

<PAGE>

Oppenheimer Limited-Term Government Fund
6803 South Tucson Way
Englewood, Colorado 80112
1-800-525-7048

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

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

Transfer and Shareholder Servicing Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048

OppenheimerFunds Internet Web Site
http://www.oppenheimerfunds.com

Custodian of Portfolio Securities
Citibank, N.A.
399 Park Avenue
New York, New York 10043

Independent Auditors
Deloitte & Touche LLP
555 Seventeenth Street
Denver, Colorado 80202

Legal Counsel
Myer, Swanson, Adams & Wolf, P.C.
1600 Broadway
Denver, Colorado 80202

No dealer, broker, salesperson or any other person has been authorized to give
any information or to make any representations other than those contained in
this Prospectus or the Statement of Additional Information, and if given or
made, such information and representations must not be relied upon as having
been authorized by the Fund, OppenheimerFunds, Inc., OppenheimerFunds
Distributor, Inc. or any affiliate thereof. This Prospectus does not constitute
an offer to sell or a solicitation of an offer to buy any of the securities
offered hereby in any state to any person to whom it is unlawful to make such an
offer in such state. PS0855.001.0198 *Printed on recycled paper

<PAGE>

APPENDIX TO PROSPECTUS OF
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND

Graphic material included in Prospectus of Oppenheimer Limited- Term
Government Fund: "Comparison of Total Return of Oppenheimer Limited-Term
Government Fund with Lehman Brothers U.S. Government Bond Index and Lehman
Brothers 1-3 Year Government Bond Index - Change in Value of a $10,000
Hypothetical Investment."

Linear graphs will be included in the Prospectus of Oppenheimer
Limited-Term Government Fund (the "Fund") depicting the initial account value
and subsequent account value of a hypothetical $10,000 investment in (i) Class A
shares of the Fund from September 30, 1987 to fiscal year-end September 30,
1997, (ii) Class B shares of the Fund during the period May 3, 1993 (inception
date for Class B shares) to September 30, 1997 and (iii) Class C shares of the
Fund during the period February 1, 1995 (inception date for Class C shares) to
September 30, 1997, in each case comparing such values with the same investments
over the same time periods with the Lehman Brothers U.S. Government Bond Index
and the Lehman Brothers 1-3 Year Government Bond Index. Set forth below are the
relevant data points that will appear on the linear graphs. Additional
information with respect to the foregoing, including a description of the Lehman
Brothers U.S. Government Bond Index and the Lehman Brothers 1-3 Year Government
Bond Index, is set forth in the Prospectus under "Comparing the Fund's
Performance to the Market."

Oppenheimer Lehman Bros. Lehman Bros.
Limited-Term U.S. Govt. 1-3 Yr. Govt.
Government: A Bond Index Bond Index

09/30/87 $ 9,650 $10,000 $10,000
09/30/88 $10,988 $11,202 $10,875
09/30/89 $12,048 $12,449 $11,841
09/30/90 $13,151 $13,311 $12,945
09/30/91 $15,082 $15,369 $14,402
09/30/92 $16,571 $17,355 $15,831
09/30/93 $17,832 $19,279 $16,612
09/30/94 $17,965 $18,501 $16,803
09/30/95 $19,408 $21,011 $18,179
09/30/96 $20,482 $21,939 $19,208
09/30/97 $22,043 $23,949 $20,530

Oppenheimer Lehman Bros. Lehman Bros.
Limited-Term U.S. Govt. 1-3 Yr. Govt.
Government: B Bond Index Bond Index

05/03/93(1) $10,000 $10,000 $10,000
09/30/93 $10,283 $10,542 $10,188
09/30/94 $10,265 $10,117 $10,305
09/30/95 $11,001 $11,489 $11,149
09/30/96 $11,523 $11,997 $11,780
09/30/97 $12,216 $13,096 $12,591

Oppenheimer Lehman Bros. Lehman Bros.
Limited-Term U.S. Govt. 1-3 Yr. Govt.
Government: C Bond Index Bond Index

02/01/95(2) $10,000 $10,000 $10,000
09/30/95 $10,547 $11,110 $10,673
09/30/96 $11,044 $11,601 $11,277
09/30/97 $11,798 $12,664 $12,053
- ---------------------

(1) The inception date for Class B shares is 5/3/93. (2) For the period from
2/1/95 (commencement of operations) to 9/30/97.

A-1

<PAGE>

Oppenheimer Limited-Term Government Fund

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

Statement of Additional Information dated January 26, 1998

This Statement of Additional Information of Oppenheimer Limited-Term
Government Fund is not a Prospectus. This document contains additional
information about the Fund and supplements information in the Prospectus dated
January 26, 1998. It should be read together with the Prospectus which may be
obtained by writing to the Fund's Transfer Agent, OppenheimerFunds Services, at
P.O. Box 5270, Denver, Colorado 80217 or by calling the Transfer Agent at the
toll-free number shown above.

Contents Page

About the Fund
Investment Objective and Policies.............................................

Investment Policies and Strategies.........................................

Other Investment Techniques and Strategies.................................
Other Investment Restrictions..............................................
How the Fund is Managed.......................................................
Organization and History...................................................
Trustees and Officers of the Fund..........................................
The Manager and Its Affiliates.............................................
Brokerage Policies of the Fund................................................
Performance of the Fund.......................................................
Distribution and Service Plans................................................

About Your Account
How to Buy Shares.............................................................
How to Sell Share.............................................................
How to Exchange Shares........................................................
Dividends, Capital Gains and Taxes............................................
Additional Information about the Fund.........................................

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

Appendix
Industry Classifications...................................................A-1

<PAGE>

ABOUT THE FUND

Investment Objective And Policies

Investment Policies and Strategies. The investment objective and policies of the
Fund are described in the Prospectus. Set forth below is supplemental
information about those policies and the types of securities in which the Fund
may invest, as well as the strategies the Fund may use to try to achieve its
objective. Certain capitalized terms used in this Statement of Additional
Information have the same meaning as those terms have in the Prospectus.

o U.S. Government Securities. 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. Some are
backed by the right of the issuer to borrow from the U.S. Treasury; others, by
discretionary authority of the U.S. Government to purchase the agencies'
obligations; while others are supported only by the credit of the
instrumentality. All U.S. Treasury obligations are backed by the full faith and
credit of the United States. If the securities are not backed by the full faith
and credit of the United States, the owner of the securities must look
principally to the agency issuing the obligation for repayment and may not be
able to assert a claim against the United States in the event that the agency or
instrumentality does not meet its commitment. The Fund will invest in U.S.
Government Securities of such agencies and instrumentalities only when the
Fund's investment manager, OppenheimerFunds, Inc. (the "Manager") is satisfied
that the credit risk with respect to such instrumentality is minimal.

General changes in prevailing interest rates will affect the values of the
Fund's portfolio securities. The value will vary inversely to changes in such
rates. For example, if such rates go up after a security is purchased, the value
of the security will generally decline. A decrease in interest rates may affect
the maturity and duration, and yield of mortgage-backed securities by increasing
unscheduled prepayments of the underlying mortgages. With its objective of
seeking high current return and safety of principal, the Fund may purchase or
sell securities without regard to the length of time the security has been held,
to take advantage of short-term differentials in yields. While short-term
trading increases the portfolio turnover, the execution cost for U.S. Government
Securities is substantially less than for equivalent dollar values of equity
securities (see "Brokerage Provisions of the Investment Advisory Agreement,"
below).

Under normal circumstances, the Fund anticipates that it will maintain a
dollar-weighted average portfolio effective duration of not more than three
years. However, because unanticipated events may change the effective duration
of securities after the Fund purchases them, there can be no assurance that the
Fund will achieve its targeted duration at all times. Additionally, the Fund may
invest in individual debt obligations of any maturity or duration. The Manager
will in good faith determine the effective duration of debt obligations
purchased by the Fund and will consider various factors applicable to each type
of debt obligation, including those set forth below. Duration incorporates a
bond's yield, coupon interest payments, final maturity and call features into
one measure. For generic fixed-income securities, duration is calculated as the
average time of present- value-weighted cash flows divided by a small adjustment
factor, pursuant to a calculation known as modified Macaulay duration. Thus, for
any generic fixed-income security with interest payments occurring prior to the
payment of principal, duration is also less than maturity. Also, all other
factors being equal, the lower the stated or coupon rate of interest of a
fixed-income security, the longer the duration of the security; conversely, the
higher the stated or coupon rate of interest of a fixed-income security, the
shorter the duration of the security.

Futures, options and options on futures have durations which, in general,
are closely related to the duration of the securities which underlie them.
Holding long futures or call option positions (backed by segregated liquid
assets) will lengthen the portfolio's duration. There are some situations,
however, where the standard modified Macaulay duration calculation does not
properly reflect the interest rate exposure of a security. For example, the
interest rate exposure is not properly captured by modified Macaulay duration in
the case of mortgage pass-though securities. The stated final maturity of such
securities is generally 30 years, but changes in prepayment rates are more
critical in determining the securities' price exposure to interest rates.
Indeed, the modified Macaulay calculation even falls short in calculating the
price sensitivity of callable bonds to interest rates. In these and other
similar situations, the Manager will use more sophisticated analytical
techniques that incorporate the economic life of a security as well as relevant
macroeconomic factors (e.g., mortgage prepayment rates) into the determination
of the Fund's effective duration.

The U.S. Government Securities in which the Fund may invest include the
following:

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

The Ginnie Mae Certificates in which the Fund invests are of the "fully
modified pass-through" type, that is, 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 such
Ginnie Mae Certificates, whether or not the interest on the underlying mortgages
has been collected by the issuers.

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

Under Federal law, the full faith and credit of the United States is
pledged to the payment of all amounts which may be required to be paid under any
guaranty issued by Ginnie Mae 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." Ginnie Mae is empowered to borrow from the United
States Treasury to the extent necessary to make any payments of principal and
interest required under such guaranties.

Ginnie Mae Certificates are backed by the aggregate indebtedness secured
by the underlying FHA-insured, FMHA-insured or VA-guaranteed mortgages and,
except to the extent of payments received by the issuers on account of such
mortgages, Ginnie Mae Certificates do not constitute a liability of, nor
evidence any recourse against, such issuers, but recourse is solely against
Ginnie Mae. Holders of Ginnie Mae Certificates (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 Mae Certificates held by the Fund. All of the mortgages in the pools
relating to the Ginnie Mae Certificates in the Fund are subject to prepayment
without any significant premium or penalty, at the option of the mortgagors.
While the mortgages on 1-to-4-family dwellings underlying certain Ginnie Mae
Certificates 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. Periods of dropping interest rates may spur
refinancing of existing mortgages, accelerating the rate of prepayments.
Prepayments on such mortgages received by the Fund will be reinvested in
additional Ginnie Mae Certificates or other U.S. Government Securities. The
yields on such additional securities may not necessarily be the same as (and may
be lower than) the yields on the prepaid securities, which will affect the
income the Fund receives and pays to its shareholders.

o Federal Home Loan Mortgage Corporation ("Freddie Mac") Certificates.
Freddie Mac, a corporate instrumentality of the United States, issues Freddie
Mac Certificates representing interests in mortgage loans. Freddie Mac
guarantees to each registered holder of a Freddie Mac 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 such holder's proportionate
interest in principal payments on the mortgage loans in the pool represented by
such Freddie Mac Certificate, in each case whether or not such amounts are
actually received. The obligations of Freddie Mac under its guarantees are
obligations solely of Freddie Mac and are not backed by the full faith and
credit of the United States.

o Federal National Mortgage Association ("Fannie Mae") Certificates.
Fannie Mae, a federally-chartered and privately-owned corporation, issues Fannie
Mae Certificates which are backed by a pool of mortgage loans. Fannie Mae
guarantees to each registered holder of a Fannie Mae Certificate that the holder
will receive amounts representing such holder's proportionate interest in
scheduled principal and interest payments, and any principal prepayments, on the
mortgage loans in the pool represented by such Fannie Mae Certificate, less
servicing and guarantee fees, and such holder's proportionate interest in the
full principal amount of any foreclosed or other liquidated mortgage loan, in
each case whether or not such 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 agency or
instrumentality thereof other than Fannie Mae.

Other Investment Techniques And Strategies

o Repurchase Agreements. The Fund may acquire securities that are subject
to repurchase agreements, in order to generate income while providing liquidity.
In a repurchase transaction, the Fund acquires a security from, and
simultaneously resells it to, an approved vendor for delivery on an agreed-upon
future date. An "approved vendor" is a U.S. commercial bank, the U.S. branch of
a foreign bank or a broker-dealer which has been designated a primary dealer in
government securities, which must meet the credit requirements set by the Fund's
Board of Trustees from time to time. The sale 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. The majority of these
transactions run from day to day, and delivery pursuant to resale typically will
occur within one to five days of the purchase. Repurchase agreements are
considered "loans" under the Investment Company Act of 1940 (the "Investment
Company Act"), collateralized by the underlying security. The Fund's repurchase
agreements will require that at all times while the repurchase agreement is in
effect, the collateral's value must equal or exceed the repurchase price to
fully collateralize the repayment obligation. Additionally, the Manager will
impose creditworthiness requirements to confirm that the vendor is financially
sound and will continuously monitor the collateral's value. If the vendor of a
repurchase agreement fails to pay the agreed-upon resale price on the delivery
date, the Fund's risks in such event may include any costs of disposing of the
collateral, and any loss from any delay in foreclosing on the collateral.

o Reverse Repurchase Agreements. The Fund does not intend to invest in
Reverse Repurchase Agreements. If it does, the Fund will identify to its
Custodian, cash, Treasury bills or other U.S. Government Securities having an
aggregate value equal to the amount of such commitment to repurchase, including
accrued interest, until payment is made. The Fund may use reverse repurchase
agreements as a source of funds on a short-term basis (and not for leverage). As
a fundamental policy, the Fund will not enter into reverse repurchase agreements
in amounts exceeding 25% of the total assets of the Fund. In determining whether
to enter into a reverse repurchase agreement with a bank or broker-dealer, the
Fund will take into account the creditworthiness of such party. As a matter of
fundamental policy, the Fund will not enter into a reverse repurchase
transaction unless the securities collateralizing the transaction have a
maturity date not later than the settlement date for the transaction.

o Restricted and Illiquid Securities. To enable the Fund to sell
restricted securities not registered under the Securities Act of 1933, the Fund
may have to cause those securities to be registered. The expenses of
registration of restricted securities may be negotiated by the Fund with the
issuer at the time such securities are purchased by the Fund, if such
registration is required before such securities may be sold publicly. When
registration must be arranged because the Fund wishes to sell the security, a
considerable period may elapse between the time the decision is made to sell the
securities and the time the Fund would be permitted to sell them. The Fund would
bear the risks of any downward price fluctuation during that period. The Fund
may also acquire, through private placements, securities having contractual
restrictions on their resale, which might limit the Fund's ability to dispose of
such securities and might lower the amount realizable upon the sale of such
securities.

o Loans of Portfolio Securities. The Fund may lend its portfolio securities
(other than in repurchase transactions) to brokers, dealers and other financial
institutions. These loans are limited to not more than 25% of the Fund's total
assets. Under applicable regulatory requirements (which are subject to change),
the loan collateral must, on each business day, at least equal the market value
of the loaned securities and must consist of cash, bank letters of credit, U.S.
Government Securities, 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. Such terms and the issuing bank must be satisfactory to the Fund. In a
portfolio securities lending transaction, the Fund receives from the borrower an
amount equal to the interest paid or the dividends declared on the loaned
securities during the term of the loan as well as the interest on the collateral
securities, less any finders', administrative or other fees the Fund pays in
connection with the loan. The Fund may share the interest it receives on the
collateral securities with the borrower as long as it realizes at least a
minimum amount of interest required by the lending guidelines established by its
Board of Trustees. In connection with securities lending, the Fund might
experience risks of delay in receiving additional collateral, or risks of delay
in recovery of the securities, or loss of rights in the collateral should the
borrower fail financially. The Fund will not lend its portfolio securities to
any officer, trustee, employee or affiliate of the Fund or its Manager. The
terms of the Fund's loans must meet certain tests under the Internal Revenue
Code and permit the Fund to reacquire loaned securities on five business days'
notice or in time to vote on any important matter. The value of the securities
loaned is not expected to exceed 5% of the Fund's total assets in the coming
year.

o Mortgage-Backed Security Rolls. The Fund may enter into "forward roll"
transactions with respect to mortgage-backed securities in which it can invest.
In a forward roll transaction, which is considered to be a borrowing by the
Fund, the Fund will sell a mortgage security to selected banks or other entities
and simultaneously agree to repurchase a similar security (same type, coupon and
maturity) from the institution at a specified later date at an agreed upon
price. The mortgage securities that are repurchased will bear the same interest
rate as those sold, but generally will be collateralized by different pools of
mortgages with different prepayment histories than those sold. Risks of
mortgage-backed security rolls include: (1) the risk of prepayment prior to
maturity, (ii) the possibility that the Fund may not be entitled to receive
interest and principal payments on the securities sold and that the proceeds of
the sale may have to be invested in money market instruments (typically
repurchase agreements) maturing not later than the expiration of the roll, and
(iii) the possibility that the market value of the securities sold by the Fund
may decline below the price at which the Fund is obligated to purchase
securities. The Fund will enter into only "covered" rolls. Upon entering into a
mortgage-backed security roll, the Fund will be required to identify liquid
securities, either debt or equity, with its Custodian in amount equal to its
obligation under the roll.

o "When-Issued" and Delayed Delivery Transactions. The Fund may purchase
securities on a "when-issued" basis, and may purchase or sell such securities on
a "delayed delivery" basis. Although the Fund will enter into such transactions
for the purpose of acquiring securities for its portfolio or for delivery
pursuant to options contracts it has entered into, the Fund may dispose of a
commitment prior to settlement. "When-issued" or "delayed delivery" refers to
securities whose terms and indenture are available and for which a market
exists, but which are not available for immediate delivery. When such
transactions are negotiated, the price (which is generally expressed in yield
terms) is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. The Fund does not intend to make such
purchases for speculative purposes. Such securities may bear interest at a lower
rate than longer-term securities. The commitment to purchase a security for
which payment will be made on a future date may be deemed a separate security
and involve a risk of loss if the value of the security declines prior to the
settlement date. During the period between commitment by the Fund and settlement
(generally within 120 days), no payment is made for the securities purchased by
the purchaser, and no interest accrues to the purchaser from the transaction.
Such securities are subject to market fluctuation; the value at delivery may be
less than the purchase price. The Fund will a segregate or identify with its
Custodian liquid assets consisting of cash, U.S. Government securities or other
high grade debt obligations at least equal to the value of purchase commitments
until payment is made.

The Fund will engage in when-issued transactions in order to secure what
is considered to be an advantageous price and yield at the time of entering into
the obligation. When the Fund engages in when-issued or delayed delivery
transactions, it relies on the buyer or seller, as the case may be, to
consummate the transaction. Failure of the buyer or seller to do so may result
in the Fund losing the opportunity to obtain a price and yield considered to be
advantageous. At the time the Fund makes a commitment to purchase or sell a
security on a when-issued or forward commitment basis, it records the
transaction and reflects the value of the security purchased, or if a sale, the
proceeds to be received, in determining its net asset value. If the Fund chooses
to (i) dispose of the right to acquire a when-issued security prior to its
acquisition or (ii) dispose of its right to deliver or receive against a forward
commitment, it may incur a gain or loss.

To the extent the Fund engages in when-issued and delayed delivery
transactions, it will do so for the purpose of acquiring or selling securities
consistent with its investment objective and policies and not for the purposes
of investment leverage. Although the Fund enters into such transactions with the
intention of actually receiving or delivering the securities, when-issued
securities and forward commitments may be sold prior to settlement date. In
addition, changes in interest rates before settlement in a direction other than
that expected by the Manager will affect the value of such securities and may
cause a loss to the Fund.

When-issued transactions and forward commitments allow the Fund a
technique to use 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 forward commitment basis,
thereby obtaining the benefit of currently higher cash yields.

o Hedging. As described in the Prospectus, the Fund may employ one or more
types of Hedging Instruments to manage its exposure to changing interest rates
and securities prices. 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. Puts and covered calls may also be written on U.S. Government Securities
to attempt to increase the Fund's income. For hedging purposes, the Fund may use
Interest Rate Futures and call and put options on debt securities and Interest
Rate Futures (all of the foregoing are referred to as "Hedging Instruments").
Hedging Instruments may be used to attempt to do the following: (i) protect
against possible declines in the market value of the Fund's portfolio resulting
from downward trends in the debt securities markets (generally due to a rise in
interest rates), (ii) protect unrealized gains in the value of the Fund's debt
securities which have appreciated, (iii) facilitate selling debt securities for
investment reasons, and (iv) establish a position in the debt securities markets
as a temporary substitute for purchasing particular debt securities. A call or
put may be purchased only if, after such purchase, the value of all call and put
options held by the Fund would not exceed 5% of the Fund's total assets. The
Fund will not use Futures and options on Futures for speculation. The Hedging
Instruments the Fund may use are described below.

The Fund may use hedging to attempt to protect against declines in the
market value of the Fund's portfolio, to permit the Fund to retain unrealized
gains in the value of portfolio securities which have appreciated, or to
facilitate selling securities for investment reasons. To do so the Fund may: (i)
sell Interest Rate Futures, (ii) purchase puts on such Futures or U.S.
Government Securities, or (iii) write covered calls on securities held by it or
on Futures. When hedging to attempt to protect against the possibility that
portfolio securities are not fully included in a rise in value of the debt
securities market, or to protect the value of certain assets in the Fund, such
as Interest Only strips, whose values decline as interest rates decline, the
Fund may: (i) purchase Futures, or (ii) purchase calls on such Futures or on
U.S. Government Securities. Covered calls and puts may also be written on debt
securities to attempt to increase the Fund's income.

Additional Information about the Hedging Instruments the Fund may use is
provided below. At present, the Fund does not intend to enter into Futures and
options on Futures (other than in connection with a bona fide hedging strategy)
if, after any such purchase, the sum of margin deposits on Futures and premiums
paid on Futures options exceeds 5% of the value of the Fund's total assets. In
the future, the Fund may employ Hedging Instruments and strategies that are not
presently contemplated but which may be developed, to the extent such investment
methods are consistent with the Fund's investment objective, legally permissible
and adequately disclosed.

o Writing Covered Calls. The Fund may write (i.e. sell) call options
("calls") on U.S. Government Securities to enhance income through the receipt of
premiums from expired calls and any net profits from closing purchase
transactions, subject to the limitations stated in the Prospectus. All such
calls written by the Fund must be "covered" while the call is outstanding (i.e.
the Fund must own the securities subject to the call or other securities
acceptable for applicable escrow requirements). Calls on Futures (discussed
below) must be covered by deliverable securities or by liquid assets segregated
to satisfy the Futures contract. When the Fund writes a call on a security, it
receives a premium and agrees to sell the callable investment to a purchaser of
a corresponding call on the same security during the call period at a fixed
exercise price (which may differ from the market price of the underlying
security), regardless of market price changes during the call period. The Fund
has retained the risk of loss should the price of the underlying security
decline during the call period, which may be offset to some extent by the
premium.

To terminate its obligation on a call it has written, the Fund may
purchase a corresponding call in a "closing purchase transaction." A profit or
loss will be realized, depending upon whether the net of the amount of the
option transaction costs and the premium received on the call written was more
or less than the price of the call subsequently purchased. A profit may also be
realized if the call expires unexercised, because the Fund retains the
underlying investment and the premium received. Any such profits are considered
short-term capital gains for Federal income tax purposes, and when distributed
by the Fund are taxable as ordinary income. If the Fund could not effect a
closing purchase transaction due to lack of a market, it would have to hold the
callable investments until the call lapsed or was exercised.

The Fund may also write calls on Futures without owning a futures contract
or a deliverable bond, provided that at the time the call is written, the Fund
covers the call by segregating in escrow an equivalent dollar amount of liquid
assets. The Fund will segregate additional liquid assets if the value of the
escrowed assets drops below 100% of the current value of the Future. In no
circumstances would an exercise notice require the Fund to deliver a futures
contract; it would simply put the Fund in a short futures position, which is
permitted by the Fund's hedging policies.

o Writing Put Options. The Fund may write put options on U.S. Government
securities or Interest Rate Futures but only if such puts are covered by
segregated liquid assets. The Fund will not write puts if, as a result, more
than 50% of the Fund's net assets would be required to be segregated to cover
such put obligations. In writing puts, there is the risk that the Fund may be
required to buy the underlying security at a disadvantageous price. 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. Similar to writing covered calls where the Fund must own the
security subject to the call or other securities acceptable for applicable for
escrow requirements, puts must be covered by segregated liquid assets equal to
exercise price of the put. The premium the Fund receives from writing a put
option represents a profit, as long as the price of the underlying investment
remains above the exercise price. However, the Fund has also assumed the
obligation during the option period to buy the underlying investment from the
buyer of the put at the exercise price, even though the value of the investment
may fall below the exercise price. If the put expires unexercised, the Fund (as
the writer of the put) realizes a gain in the amount of the premium less
transaction costs. If the put is exercised, the Fund must fulfill its obligation
to purchase the underlying investment at the exercise price, which will usually
exceed the market value of the investment at that time. In that case, the Fund
may incur a loss, equal to the sum of the current market value of the underlying
investment and the premium received minus the sum of the exercise price and any
transaction costs incurred.

When writing put options on securities, 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 put option. The Fund
therefore foregoes the opportunity of investing the segregated assets or writing
calls against those assets. As long as the obligation of the Fund as the put
writer continues, it may be assigned an exercise notice by the broker-dealer
through whom such option was sold, requiring the Fund to take delivery of the
underlying security against payment of 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. This obligation terminates upon
expiration of the put, or such earlier time at which the Fund effects a closing
purchase transaction by purchasing a put of the same series as that previously
sold. Once the Fund has been assigned an exercise notice, it is thereafter not
allowed to effect a closing purchase transaction.

The Fund may effect a closing purchase transaction to realize a profit on
an outstanding put option it has written or to prevent an underlying security
from being put. Furthermore, effecting such a closing purchase transaction will
permit the Fund to write another put option to the extent that the exercise
price thereof is secured by the deposited assets, or to utilize the proceeds
from the sale of such assets for other investments by the Fund. The Fund will
realize a profit or loss from a closing purchase transaction if the cost of the
transaction is less or more than the premium received from writing the option.
As above for writing covered calls, any and all such profits described herein
from writing puts are considered short-term gains for Federal tax purposes, and
when distributed by the Fund, are taxable as ordinary income.

o Purchasing Calls and Puts. The Fund may purchase calls on U.S.
Government Securities or on Interest Rate Futures, in order to protect against
the possibility that the Fund's portfolio will not fully participate in an
anticipated rise in value of the long-term debt securities market. The value of
U.S. Government Securities underlying calls purchased by the Fund will not
exceed the value of the portion of the Fund's portfolio invested in cash or cash
equivalents (i.e. securities with maturities of no more than 13 months). When
the Fund purchases a call (other than in a closing purchase transaction), it
pays a premium and, except as to calls on indices or Futures, 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. When the Fund
purchases a call on a Future, it pays a premium, but settlement is in cash
rather than by delivery of the underlying investment to the Fund. In purchasing
a call, the Fund benefits only if the call is sold at a profit or if, during the
call period, the market price of the underlying investment is above the sum of
the exercise price, transaction costs and the premium paid, and the call is
exercised. If the call is not exercised or sold (whether or not at a profit), it
will become worthless at its expiration date and the Fund will lose its premium
payment and the right to purchase the underlying investment.

The Fund may purchase put options ("puts") which relate to U.S. Government
Securities (whether or not it holds such securities in its portfolio) or
Futures. 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
corresponding put on the same investment during the put period at a fixed
exercise price. Buying a put on an investment the Fund owns enables the Fund to
protect itself during the put period against a decline in the value of the
underlying investment below the exercise price by selling such 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, and the Fund will lose its premium payment and
the right to sell the underlying investment. The put may, however, be sold prior
to expiration (whether or not at a profit.)

Buying a put on Interest Rate Futures or U.S. Government Securities permits
the Fund either to resell the put or buy the underlying investment and sell it
at the exercise price. The resale price of the put will vary inversely with the
price of the underlying investment. If the market price of the underlying
investment is above the exercise price and as a result the put is not exercised,
the put will become worthless on its expiration date. In the event of a decline
in the bond market, the Fund could exercise or sell the put at a profit to
attempt to offset some or all of its loss on its portfolio securities. When the
Fund purchases a put on Interest Rate Futures or U.S. Government Securities not
held by it, the put protects the Fund to the extent that the prices of the
underlying Future or U.S. Government Security move in a similar pattern to the
prices of the U.S. Government Securities in the Fund's portfolio.

An option position may be closed out only on a market which 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's
option activities may affect its turnover rate and brokerage commissions. The
exercise by the Fund of puts on securities will cause the sale of related
investments, increasing portfolio turnover. Although such exercise is within the
Fund's control, holding a put might cause the Fund to sell the related
investments for reasons which would not exist in the absence of the put. The
Fund may pay a brokerage commission each time it buys a put or call, sells a
call, or buys or sells an underlying investment in connection with the exercise
of a put or call. Such commissions may be higher than those which would apply to
direct purchases or sales of such underlying investments. Premiums paid for
options are small in relation to the market value of the related investments,
and 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
investments.

o Interest Rate Futures. The Fund may buy and sell Interest Rate Futures.
No price is paid or received upon the purchase or sale of an Interest Rate
Future. An Interest Rate Future obligates the seller to deliver and the
purchaser to take a specific type of debt security at a specific future date for
a fixed price. That obligation may be satisfied by actual delivery of the debt
security or by entering into an offsetting contract.

Upon entering into a Futures transaction, the Fund will be required to
deposit an initial margin payment in cash or U.S. Treasury bills with the
futures commission merchant (the "futures broker"). The initial margin will be
deposited with the Fund's Custodian 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 to reflect changes
in its market value, subsequent margin payments, called variation margin, will
be made to or by the futures broker on a daily basis. Prior to expiration of the
Future, if the Fund elects to close out its position by taking an opposite
position, a final determination of variation margin is made, additional cash is
required to be paid by or released to the Fund, and any loss or gain is realized
for tax purposes. Although Interest Rate Futures by their terms call for
settlement by delivery or acquisition of debt securities, in most cases the
obligation is fulfilled by entering into an offsetting position. All futures
transactions are effected through a clearinghouse associated with the exchange
on which the contracts are traded.

o Interest Rate Swap Transactions. Swap agreements entail both interest
rate risk and credit risk. There is a risk that, based on movements of interest
rates in the future, the payments made by the Fund under a swap agreement will
have been greater than those received by it. Credit risk arises from the
possibility that the counterparty will default. If the counterparty to an
interest rate swap defaults, the Fund's loss will consist of the net amount of
contractual interest payments that the Fund has not yet received. The Manager
will monitor the creditworthiness of counterparties to the Fund's interest rate
swap transactions on an ongoing basis. The Fund may engage in interest rate
swaps only with respect to securities it holds, and not in excess of 25% of its
total assets.

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

o Additional Information About Hedging Instruments and Their Use. 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 options
traded on exchanges or as to other acceptable escrow securities, so that no
margin will be required for such transactions. OCC will release the securities
covering a call on the expiration of the option or upon the Fund entering into a
closing purchase transaction. An option position may be closed out only on a
market which 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.

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
would establish a formula price at which the Fund would have the absolute right
to repurchase that OTC option. That formula price would 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 extent to which the option "is in-the-money"). When the Fund writes an
OTC option, it will treat as illiquid (for purposes of the limit on its assets
that may be invested in illiquid securities, stated in the Prospectus) the
mark-to-market value of any OTC option held by it unless the option is subject
to a buy-back agreement by the executing broker. The Securities and Exchange
Commission ("SEC") is evaluating whether OTC options should be considered liquid
securities, and the procedure described above could be affected by the outcome
of that evaluation.

o Regulatory Aspects of Hedging Instruments. The Fund is required to
operate within certain guidelines and restrictions with respect to its use of
futures and options thereon as established by the Commodities Futures Trading
Commission ("CFTC"). In particular, the Fund is excluded from registration as a
"commodity pool operator" if it 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 option premiums to no more than 5% of the
Fund's net assets for hedging strategies that are not considered bona fide
hedging strategies. Under the Rule, the Fund also must use short futures and
options on futures positions 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 each of the exchanges governing the maximum number of options which may be
written or held by a single investor or group of investors acting in concert,
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 through one or more or brokers. Thus, the number of options
which the Fund may write or hold may be affected by options written or held by
other entities, including other investment companies having the same or an
affiliated investment advisor. Position limits also apply to Futures. An
exchange may order the liquidation of positions found to be in violation of
those limits and may impose certain other sanctions. Due to requirements under
the Investment Company Act, when the Fund purchases a Future, the Fund will
maintain, in a segregated account or accounts with its Custodian, cash or
readily-marketable, short-term (maturing in one year or less) debt instruments
in an amount equal to the market value of the securities underlying such Future,
less the margin deposit applicable to it.

o Tax Aspects of Covered Calls and Hedging Instruments. 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 the Fund having to pay tax on them. This avoids a "double tax" on that
income and capital gains, since shareholders 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)

o Risks Of Hedging With Options and Futures. In addition to the risks with
respect to hedging discussed in the Prospectus and above, there is a risk in
using short hedging by selling Futures to attempt to protect against decline in
value of the Fund's portfolio securities (due to an increase in interest rates)
that the prices of such Futures will correlate imperfectly with the behavior of
the cash (i.e., market value) prices of the Fund's securities. The ordinary
spreads between prices in the cash and futures markets are subject to
distortions due to differences in the natures of those markets. First, all
participants in the futures markets are subject to margin deposit and
maintenance requirements. Rather than meeting additional margin deposit
requirements, investors may close out futures contracts through offsetting
transactions which could distort the normal relationship between the cash and
futures markets. Second, the liquidity of the futures markets 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 markets could be reduced, thus producing distortion. Third, from
the point of view of speculators, the deposit requirements in the futures
markets are less onerous than margin requirements in the securities markets.
Therefore, increased participation by speculators in the futures markets may
cause temporary price distortions.

If the Fund uses Hedging Instruments to establish a position in the U.S.
Government Securities markets as a temporary substitute for the purchase of
individual U.S. Government Securities (long hedging) by buying Interest Rate
Futures and/or calls on such Futures or on U.S. Government Securities, it is
possible that the market may decline; if the Fund then concludes not to invest
in such securities at that time because of concerns as to possible further
market decline 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 U.S.
Government Securities purchased.

Other Investment Restrictions

The Fund's most significant investment restrictions are set forth in the
Prospectus. There are additional investment restrictions that the Fund must
follow that are also fundamental policies. Fundamental policies and the Fund's
investment objective, cannot be changed without the vote of a "majority" of the
Fund's outstanding voting securities. Under the Investment Company Act, such a
"majority" vote is defined as the vote of the holders of the lesser of (i) 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 (ii)
more than 50% of the outstanding shares.

Under these additional restrictions, the Fund cannot:

(1) purchase or sell real estate, commodities or commodity contracts;
however, the Fund may use hedging instruments approved by its Board whether or
not such hedging instruments are considered commodities or commodity contracts;

(2) invest in interests in oil, gas, or other mineral exploration or
development programs;

(3) purchase securities on margin or make short sales of securities;
however the Fund may make margin deposits in connection with its use of hedging
instruments approved by its Board;

(4) underwrite securities except to the extent the Fund may be deemed to
be an underwriter in connection with the sale of securities held in its
portfolio;

(5) invest in securities of other investment companies, except as they may
be acquired as part of a merger, consolidation or other acquisition;

(6) enter into reverse repurchase agreements that will cause more than 25%
of the Fund's total assets to be subject to such agreements;

(7) make investments for the purpose of exercising control of management;

(8) purchase or retain securities of any company if, to the knowledge of
the Fund, its officers and trustees and officers and directors of the Manager
who individually own more than 0.5% of the securities of such company together
own beneficially more than 5% of such securities;
(9) purchase or retain securities of issuers having a record of less than
three years' continuous operation (such period may include the operation of
predecessor companies or enterprises if the issuer came into existence as a
result of a merger, consolidation or reorganization, or the purchase of
substantially all of the assets of the predecessor companies or enterprises);

(10) purchase or sell standby commitments; or

(11) invest more than 25% of its assets in a single industry (neither the
U.S. Government nor any of its agencies or instrumentalities are considered an
industry for the purposes of this restriction).

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

The percentage restrictions described above and in the Prospectus are
applicable only at the time of investment and require no action by the Fund as a
result of subsequent changes in value of the investments or the size of the
Fund.

How the Fund is Managed

Organization and History. The Fund was established in 1986 as First Trust
Fund-U.S. Government Series and changed its name to Oppenheimer Government
Securities Fund on July 10, 1992, and on May 1, 1994 to Oppenheimer Limited-Term
Government Fund.

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, or 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 at least 10% of its outstanding shares. In addition, if the Trustees receive
a request from at least 10 shareholders (who have been shareholders for at least
six months) holding shares of the Fund valued at $25,000 or more or holding at
least 1% of the Fund's outstanding shares, whichever is less, 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, or the Trustees may take such other
action as set forth under Section 16(c) of the Investment Company Act.

Each share of the Fund represents an interest in the Fund proportionately
equal to the interest of each other share of the same class and entitles the
holder to one vote per share (and a fractional vote for a fractional share) on
matters submitted to their vote at shareholders' meetings. Shareholders of the
Fund vote together in the aggregate on certain matters at shareholders'
meetings, such as the election of Trustees and ratification of appointment of
auditors for the Trust. Shareholders of a particular class vote separately on
proposals which affect that class, and shareholders of a class which is not
affected by that matter are not entitled to vote on the proposal. Shareholders
of a class vote on certain amendments to the Distribution and/or Service Plans
if the amendments affect that class.

The Trustees are authorized to create new series and classes of series.
The Trustees may classify and reclassify unissued shares of the Trust or its
series or classes into additional series or classes of shares. The Trustees may
also divide or combine the shares of a class into a greater or lesser number of
shares provided that the proportionate beneficial interest of a shareholder in
the Fund is not changed. Shares do not have cumulative voting rights or
preemptive or subscription rights. Shares may be voted in person or by proxy.

The Fund's Declaration of Trust contains an express disclaimer of
shareholder or Trustee liability for the Fund's obligations, and provides for
indemnification and reimbursement of expenses out of its property for any
shareholder held personally liable for its obligations. The Declaration of Trust
also provides that the Fund shall, upon request, assume the defense of any claim
made against any shareholder for any act or obligation of the Fund and satisfy
any judgment thereon. Thus, while Massachusetts law permits a shareholder of a
business trust (such as the Fund) to be held personally liable as a "partner"
under certain circumstances, the risk of a Fund shareholder incurring financial
loss on account of shareholder liability is limited to the relatively remote
circumstances in which the Fund would be unable to meet its obligations
described above. Any person doing business with the Fund, and any shareholder of
the Fund, agrees under the Fund's Declaration of Trust to look solely to the
assets of the Fund for satisfaction of any claim or demand which may arise out
of any dealings with the Fund, and the Trustees shall have no personal liability
to any such person, to the extent permitted by law.

Trustees And Officers Of The Fund. The Fund's Trustees and officers and their
principal occupations and business affiliations during the past five years are
set forth below. George Bowen became a Trustee on December 16, 1997. All
Trustees are also trustees, directors, or managing general partners of
Centennial America Fund, L.P., Centennial California Tax Exempt Trust,
Centennial New York Tax Exempt Trust, Centennial Government Trust, Centennial
Tax Exempt Trust, Centennial Money Market Trust, Oppenheimer Champion Income
Fund, Oppenheimer Equity Income Fund, Oppenheimer High Yield Fund, Oppenheimer
Integrity Funds, Oppenheimer International Bond Fund, Oppenheimer Limited-Term
Government Fund, Oppenheimer Main Street Funds, Inc., Oppenheimer Municipal
Fund, Oppenheimer Real Asset Fund, Oppenheimer Strategic Income Fund,
Oppenheimer Total Return Fund, Inc., Oppenheimer Variable Account Funds,
Panorama Series Fund, Inc. and The New York Tax Exempt Income Fund, Inc. (all of
the foregoing funds are collectively referred to as the "Denver Oppenheimer
funds") except for (i) Mr. Fossel who is a Trustee, Director or Managing General
Partner of all the Denver-based Oppenheimer funds except Centennial New York Tax
Exempt Trust and Centennial America Fund L.P., (ii) Ms. Macaskill who is a
Trustee, Director or Managing General Partner of all the Denver-based
Oppenheimer funds except Oppenheimer Integrity Funds, Panorama Series Fund,
Inc., Oppenheimer Strategic Income Fund and Oppenheimer Variable Account Funds,
and (iii) Mr. Bowen who is a Trustee, Director or Managing General Partner of
all the Denver-based Oppenheimer funds except Oppenheimer Integrity Funds,
Panorama Series Fund, Inc., Oppenheimer Strategic Income Fund, Oppenheimer
Variable Account Funds, Centennial New York Tax Exempt Trust and Centennial
America Fund L.P. Ms. Macaskill is President and Mr. Swain is Chairman and Chief
Executive Officer of the Denver Oppenheimer funds. All of the officers except
Mr. Webman hold similar positions with each of the Denver Oppenheimer funds. As
of January 1, 1998, the Trustees and Officers of the Fund as a group owned less
than 1% of the Fund's issued and outstanding shares. The foregoing statement
does not reflect ownership of shares held of record by an employee benefit plan
for employees of the Manager (for which plan two of the Trustees and officers
listed below, Ms. Macaskill and Mr. Donohue, are trustees), other than the
shares beneficially owned under that plan by the officers of the Fund listed
below.

ROBERT G. AVIS, Trustee*, Age 66
One North Jefferson Ave., St. Louis, Missouri 63103
Vice Chairman of A.G. Edwards & Sons, Inc. (a broker-dealer) and A.G. Edwards,
Inc. (its parent holding company); Chairman of A.G.E. Asset Management and A.G.
Edwards Trust Company (its affiliated investment adviser and trust company,
respectively).

WILLIAM A. BAKER, Trustee, Age 82
197 Desert Lakes Drive, Palm Springs, California 92264
Management Consultant.

GEORGE C. BOWEN, Vice President, Treasurer, Assistant Secretary and Trustee*,
Age 61 6803 South Tucson Way, Englewood, Colorado 80112 Senior Vice President
(since September 1987) and Treasurer (since March 1985) of the Manager; Vice
President (since June 1983) and Treasurer (since March 1985) of the Distributor;
Vice President (since October 1989) and Treasurer (since April 1986) of
HarbourView; Senior Vice President (since February 1992), Treasurer (since July
1991)and a director (since December 1991) of Centennial; President, Treasurer
and a director of Centennial Capital Corporation (since June 1989); Vice
President and Treasurer (since August 1978) and Secretary (since April 1981) of
SSI; Vice President, Treasurer and Secretary of SFSI (since November 1989);
Treasurer of OAC (since June 1990); Treasurer of Oppenheimer Partnership
Holdings, Inc. (since November 1989); Vice President and Treasurer of
Oppenheimer Real Asset Management, Inc. (since July 1996); Chief Executive
Officer, Treasurer and a director of MultiSource Services, Inc., a broker-dealer
(since December 1995); an officer of other Oppenheimer funds.

CHARLES CONRAD, JR., Trustee, Age 67
1501 Quail Street, Newport Beach, CA 92660
Chairman and CEO of Universal Space Lines, Inc. (a space services management
company); formerly Vice President of McDonnell Douglas Space Systems Co. and
associated with the National Aeronautics and Space Administration.

JON S. FOSSEL, Trustee, Age 55
P.O. Box 44, Mead Street, Waccabuc, New York 10597
Member of the Board of Governors of the Investment Company Institute (a national
trade association of investment companies), Chairman of the Investment Company
Institute Education Foundation; formerly Chairman and a director of the Manager,
President and a director of Oppenheimer Acquisition Corp. ("OAC"), the Manager's
parent holding company, and Shareholder Services, Inc. ("SSI") and Shareholder
Financial Services, Inc. ("SFSI"), transfer agent subsidiaries of the Manager.

SAM FREEDMAN, Trustee, Age 57
4975 Lakeshore Drive, Littleton, Colorado 80123
Formerly Chairman and Chief Executive Officer of OppenheimerFunds Services,
Chairman, Chief Executive Officer and a director of SSI, Chairman, Chief
Executive and Officer and director of SFSI, Vice President and director of OAC
and a director of OppenheimerFunds, Inc.

RAYMOND J. KALINOWSKI, Trustee, Age 68
44 Portland Drive, St. Louis, Missouri 63131
Director of Wave Technologies International, Inc. (a computer products training
company).

C. HOWARD KAST, Trustee, Age 76
2552 East Alameda, Denver, Colorado 80209
Formerly Managing Partner of Deloitte, Haskins & Sells (an accounting firm).

ROBERT M. KIRCHNER, Trustee, Age 76
7500 E. Arapahoe Road, Englewood, Colorado 80112
President of The Kirchner Company (management consultants).

BRIDGET A. MACASKILL, President and Trustee*, Age 49
Two World Trade Center, New York, New York 10048-0203
President (since June 1991), Chief Executive Officer (since September 1995) and
a Director (since December 1994) of the Manager and Chief Executive Officer
(since September 1995); President and director (since June 1991) of HarbourView;
Chairman and a director of SSI (since August 1994), and SFSI (September 1995);
President (since September 1995) and a director (since October 1990) of OAC;
President (since September 1995) and a director (since November 1989) of
Oppenheimer Partnership Holdings, Inc., a holding company subsidiary of the
Manager; a director of Oppenheimer Real Asset Management, Inc. (since July 1996)
; President and a director (since October 1997) of OppenheimerFunds
International Ltd., an offshore fund manager subsidiary of the Manager ("OFIL")
and Oppenheimer Millennium Funds plc (since October 1997); President and a
director of other Oppenheimer funds; a director of the NASDAQ Stock Market, Inc.
and of Hillsdown Holdings plc (a U.K. food company); formerly an Executive Vice
President of the Manager.

NED M. STEEL, Trustee, Age 82
3416 South Race Street, Englewood, Colorado 80110
Chartered Property and Casualty Underwriter; a director of Visiting Nurse
Corporation of Colorado.

JAMES C. SWAIN, Chairman, Chief Executive Officer and Trustee*, Age 64
6803 South Tucson Way, Englewood, Colorado 80112
Vice Chairman of the Manager (since September 1988); formerly President and a
director of Centennial Asset Management Corporation, an investment adviser
subsidiary of the Manager ("Centennial"), and Chairman of the Board of SSI.
ANDREW J. DONOHUE, Vice President and Secretary, Age 47 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 (since September 1993), and a director
(since January 1992) of the Distributor; Executive Vice President, General
Counsel and a director of HarbourView, SSI, SFSI and Oppenheimer Partnership
Holdings, Inc. since (September 1995) and MultiSource Services, Inc. (a
broker-dealer) (since December 1995); President and a director of Centennial
(since September 1995); President and a director of Oppenheimer Real Asset
Management, Inc. (since July 1996); General Counsel (since May 1996) and
Secretary (since April 1997) of OAC; Vice President of OFIL and Oppenheimer
Millennium Funds plc (since October 1997); an officer of other Oppenheimer
funds.

JERRY A. WEBMAN, Vice President and Portfolio Manager, Age 49
Senior Vice President of the Manager (since February, 1996); an officer of other
Oppenheimer funds; previously an officer and analyst with Prudential Mutual Fund
- - Investment Management, Inc.

ROBERT J. BISHOP, Assistant Treasurer, age 39
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); an
officer of other Oppenheimer funds; formerly an Assistant Vice President of the
Manager/Mutual Fund Accounting (April 1994-May 1996), and a Fund Controller for
the Manager.

SCOTT T. FARRAR, Assistant Treasurer, Age 33
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); Assistant
Treasurer of Oppenheimer Millennium Funds plc (since October 1997); an officer
of other Oppenheimer funds; formerly an Assistant Vice President of the
Manager/Mutual Fund Accounting (April 1994-May 1996), and a Fund Controller for
the Manager.

ROBERT G. ZACK, Assistant Secretary, Age 49
Senior Vice President (since May 1985) and Associate General Counsel (since May
1981) of the Manager, Assistant Secretary of SSI (since May 1985), and SFSI
(since November 1989); Assistant Secretary of Oppenheimer Millennium Funds plc
(since October 1997); an officer of other Oppenheimer funds.
- ---------------------
*A Trustee who is an "interested person" of the Fund as defined in the
Investment Company Act.

o Remuneration of Trustees. The officers of the Fund and certain Trustees
of the Fund (Ms. Macaskill, Mr. Bowen and Mr. Swain) 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 fiscal year ended September 30, 1997.
The compensation from all of the other Denver-based Oppenheimer funds includes
the Fund and is compensation received as a director, trustee, managing general
partner or member of a committee of the Board during the calendar year 1997.

Total Compensation
Aggregate From All
Compensation Denver-based
Name and Position from the Fund Oppenheimer funds(1)

Robert G. Avis $225 $63,501
Trustee

William A. Baker $273 $77,502
Audit and Review
Committee Ex-Officio
Member(2) and Trustee

Charles Conrad, Jr. $255 $72,000
Trustee(3)

Jon S. Fossel $224 $63,277
Trustee

Sam Freedman $235 $66,501
Audit and Review
Committee Member(2)
and Trustee

Raymond J. Kalinowski $253 $71,561
Audit and Review
Committee Member(2)
and Trustee

C. Howard Kast $270 $76,503
Audit and Review
Committee Chairman(2)
and Trustee

Robert M. Kirchner $255 $72,000
Trustee(3)

Ned M. Steel $225 $63,501
Trustee
- -------------------------------------
(1) For the 1997 calendar year.
(2) Committee positions effective July 1, 1997
(3) Prior to July 1, 1997, Messrs. Conrad and Kirchner were also members of the
Audit and Review Committee.

Deferred Compensation Plan. The Board of Trustees has adopted a Deferred
Compensation Plan for disinterested Trustees that enables Trustees to elect to
defer receipt of all or a portion of the annual fees they are entitled to
receive from the Fund. Under this 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 this plan will not
materially affect the Fund's assets, liabilities or net income per share. The
plan does 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, without shareholder
approval and notwithstanding its fundamental investment policy restricting
investments in other investment companies, as described on page 14, invest in
the funds selected by the Trustee under the plan for the limited purpose of
determining the value of the Trustees' deferred fee accounts.

Major Shareholders. As January 1, 1998, no person owned of record or was known
by the Fund to own beneficially 5% or more of the Fund's outstanding Class A,
Class B, Class C shares or Class Y shares except Merrill Lynch Pierce Fenner &
Smith Inc., 4800 Deer Lake Drive East, Floor 3, Jacksonville, Florida 32246,
which was the record owner of 5,155,178.273 Class A shares (approximately 9.47%
of Class A shares outstanding) and 1,342,776.318 Class C shares (approximately
16.38% of the Class C shares then outstanding). .

The Manager and Its Affiliates. The Manager is wholly-owned by Oppenheimer
Acquisition Corporation ("OAC"), a holding company controlled by Massachusetts
Mutual Life Insurance Company. OAC is also owned in part by certain of the
Manager's directors and officers, some of whom also serve as officers of the
Fund, and three of whom (Ms. Macaskill, Mr. Bowen and Mr. Swain) serve as
Trustees of the Fund.

The Manager and the Fund have a Code of Ethics. It is designed to detect
and prevent improper personal trading by certain employees, including portfolio
managers, that would compete with or take advantage of the Fund's portfolio
transactions. Compliance with the Code of Ethics is carefully monitored and
strictly enforced by the Manager.

o Portfolio Management. The Portfolio Manager of the Fund is Jerry A.
Webman, who is principally responsible for the day-to-day management of the
Fund's portfolio. Mr. Webman's background is described in the Prospectus under
"Portfolio Management." Other members of the Manger's fixed-income portfolio
department, portfolio analysts, traders and other portfolio managers having
broad experience with domestic and international government and corporate
fixed-income securities, provide the Fund's portfolio managers with support in
managing the Fund's portfolio.

o The Investment Advisory Agreement. The Investment Advisory Agreement
between the Manager and the Fund requires the Manager, at its expense, to
provide the Fund with adequate office space, facilities and equipment, and to
provide and supervise the activities of all administrative and clerical
personnel required to provide effective corporate administration for the Fund,
including 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.

Expenses not expressly assumed by the Manager under the Investment
Advisory Agreement or by the Distributor under the Distribution Agreement are
paid by the Fund. The Investment Advisory Agreement lists examples of expenses
paid by the Fund, the major categories of which 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. For the
Fund's fiscal years ended September 30, 1995, 1996, and 1997 the management fees
paid by the Fund to the Manager were $1,599,989, $2,529,645 and $2,924,120,
respectively.

There is no currently applicable expense limitation in the Investment
Advisory Agreement between the Fund and the Manager. The Investment Advisory
Agreement provides that the Manager's compensation for any fiscal year of the
Fund shall be reduced by the amount, if any, by which expenses for such fiscal
year exceed the most stringent applicable expense limitation prescribed by any
statute or regulatory authority of any jurisdiction in which the Fund's shares
are qualified for sale. As a result of changes in federal securities laws, state
regulations no longer apply and the contractual provision relating to expense
limitations is, therefore, not applicable.

The Investment Advisory Agreement provides 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 any good faith
errors or omissions in connection with any matters to which the Agreement
relates. The Investment Advisory Agreement permits the Manager to act as
investment advisor to any other person, firm or corporation.

o The Distributor. Under its Distribution Agreement with the Fund, the
Distributor acts as the Fund's principal underwriter in the continuous public
offering of the Fund's Class A, Class B, Class C and Class Y shares but is not
obligated to sell a specific number of shares. Expenses normally attributable to
sales (other than those paid under the Distribution and Service Plans, but
including advertising and the cost of printing and mailing prospectuses other
than those furnished to existing shareholders), are borne by the Distributor.
For the fiscal years ended September 30, 1995, 1996, and 1997, the aggregate
amount of sales charges on sales of the Fund's Class A shares were $2,605,966,
$2,342,696 and $2,369,751, respectively, of which $681,961, $631,567 and
$649,017 was retained by the Distributor and an affiliated broker-dealer during
each of those respective years. Contingent deferred sales charge collected by
the Distributor on the Fund's Class B shares for fiscal years ended September
30, 1995, September 30, 1996 and September 30, 1997, totaled $170,089, $395,003
and $450,299, respectively. Contingent deferred sales charges collected by the
Distributor on the Fund's Class C shares for the period February 1, 1995
(commencement of the offering of those shares) through September 30, 1995 and
for fiscal years ended September 30, 1996 and September 30, 1997, totaled
$6,307, $49,546 and $47,488, respectively. The Distributor retained all of the
contingent deferred sales charges on Class B and Class C shares. For additional
information about distribution of the Fund's shares and the expenses connected
with such activities, please refer to "Distribution and Service Plans" below.

o The Transfer Agent. OppenheimerFunds Services, the Fund's transfer agent,
is responsible for maintaining the Fund's shareholder registry and shareholder
accounting records, and for shareholder servicing and administrative functions.

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 Investment Advisory Agreement contains provisions
relating to the employment of broker-dealers ("brokers") to effect the Fund's
portfolio transactions. In doing so, the Manager is authorized by the Investment
Advisory Agreement to employ such broker-dealers, including "affiliated"
brokers, as that term is defined in the Investment Company Act, as may, in its
best judgment based on all relevant factors, implement the policy of the Fund to
obtain, at reasonable expense, the "best execution" (prompt and reliable
execution at the most favorable price obtainable) of such transactions. The
Manager need not seek competitive commission bidding, but is expected to
minimize the commissions paid to the extent consistent with the interest and
policies of the Fund as established by its Board of Trustees.

Under the Investment Advisory Agreement, the Manager is authorized to
select brokers that provide brokerage and/or research services for the Fund
and/or the other accounts over which the Manager or its affiliates have
investment discretion. The commissions paid to such brokers may be higher than
another qualified broker would have charged, if a good faith determination is
made by the Manager and the commission is fair and reasonable in relation to the
services provided. Subject to the foregoing considerations, the Manager may also
consider sales of shares of the Fund and other investment companies managed by
the Manager or its affiliates as a factor in the selection of brokers for the
Fund's portfolio transactions.

Description of Brokerage Practices Followed by the Manager. Most purchases made
by the Fund are principal transactions at net prices, and the Fund incurs little
or no brokerage costs. Subject to the provisions of the Advisory Agreement, the
procedures and rules described above, allocations of brokerage are generally
made by the Manager's portfolio traders based upon recommendations from the
Manager's portfolio manager. In certain instances, portfolio managers may
directly place trades and allocate brokerage, also subject to the provisions of
the Investment Advisory Agreement and the procedures and rules described above.
In either case, brokerage is allocated under the supervision of the Manager's
executive officers. Transactions in securities other than those for which an
exchange is the primary market are generally done with principals or market
makers. Brokerage commissions are paid primarily for effecting transactions in
listed securities or for certain fixed income agency transactions in the
secondary market and otherwise only if it appears likely that a better price or
execution can be obtained.

When the Fund engages in an option transaction, ordinarily the same broker
will be used for the purchase or sale of the option and any transaction in the
securities to which the option relates. When possible, concurrent orders to
purchase or sell the same security by more than one of the accounts managed by
the Manager and its affiliates are combined. The transactions effected pursuant
to such combined orders are averaged as to price and allocated in accordance
with the purchase or sale orders actually placed for each account.

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, and
investment research received for the commissions of those other accounts may be
useful both to the Fund and one or more of such other accounts. Such research,
which may be supplied by a third party at the instance of a broker, includes
information and analyses on particular companies and industries as well as
market or economic trends and portfolio strategy, receipt of 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 concessions on fixed price
offerings to obtain research, in the same manner as is permitted for agency
transactions. The Board also permits the Manager to use stated commissions on
secondary fixed-income trades to obtain research where the broker has
represented to the Manager that (i) the trade is not from 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 research services provided by brokers broaden the scope and supplement
the research activities of the Manager, by making available additional views for
consideration and comparisons, and enabling the Manager to obtain market
information for the valuation of securities held in the Fund's portfolio or
being considered for purchase. The Manager provides information as to the
commissions paid to brokers furnishing such services together with the Manager's
representation that the amount of such commissions was reasonably related to the
value or benefit of such services.

During the Fund's fiscal years ended September 30, 1995, September 30, 1996
and September 30, 1997, total brokerage commissions paid by the Fund (not
including any spreads or concessions on principal transactions on a net trade
basis) was $91,129 paid to brokers during fiscal 1997, $1,945 was paid to
brokers as commission sin return for research services. The aggregate dollar
amount of these transactions was $8,418,664. None of the commissions paid to
brokers during fiscal 1995 or fiscal 1996 were paid in return for research
services. The transactions giving rise to these commissions were allocated in
accordance with the Manager's internal allocation procedures.

Performance of the Fund

Yield and Total Return Information. From time to time the "standardized yield,"
"dividend yield," "average annual total return", "total return," and "total
return at net asset value" of an investment in a class of the Fund may be
advertised. An explanation of how yields and total returns are calculated for
each class and the components of those calculations is set forth below. The
Fund's maximum sales charge rate on Class A shares was higher prior to April 1,
1994, and actual investment performance would be affected by that change. No
performance information is presented below for Class Y shares since no Class Y
shares were publicly offered during fiscal year ended September 30, 1997.

The Fund's advertisement of its performance must, under applicable rules
of the Securities and Exchange Commission, include the average annual total
returns for each advertised class of shares of the Fund for the 1, 5 and 10-year
periods (or the life of the class, if less) as of the most recently ended
calendar quarter prior to the publication of the advertisement. This 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
such information as a basis for comparison with other investments. An investment
in the Fund is not insured; its yields and total returns and share prices are
not guaranteed and normally will fluctuate on a daily basis. When redeemed, an
investor's shares may be worth more or less than their original cost. Yields and
total returns for any given past period are not a prediction or representation
by the Fund of future yields or rates of return on its shares. The yields and
total returns of Class A, Class B, Class C and Class Y shares of the Fund are
affected by portfolio quality, the type of investments the Fund holds and its
operating expenses allocated to a particular class.

o Yields

o Standardized Yield. The "standardized yield" (referred to as "yield") is
shown for a class of shares for a stated 30-day period. It is not based on
actual distributions paid by the Fund to shareholders in the 30-day period, but
is a hypothetical yield based upon the net investment income from the Fund's
portfolio investments for that period. It may therefore differ from the
"dividend yield" for the same class of shares described below. It is calculated
using the following formula set forth in rules adopted by the Securities and
Exchange Commission designed to assure uniformity in the way that all funds
calculate their yields:

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

The symbols above represent the following factors:

a = dividends and interest earned during the 30-day period.
b = expenses accrued for the period (net of any expense reimbursements).
c = the average daily number of shares of that class outstanding during
the 30-day period that were entitled to receive dividends.
d = the maximum offering price per share of the class on the last day of
the period, using the current maximum sales charge rate adjusted for
undistributed net investment income.

The standardized yield for a 30-day period may differ from the yield for
other periods. The SEC formula assumes that the standardized yield for a 30-day
period occurs at a constant rate for a six-month period and is annualized at the
end of the six-month period. Additionally, because each class of shares is
subject to different expenses, it is likely that the standardized yields of the
Fund's classes of shares will differ for any 30-day period. For the 30-day
period ended September 30, 1997, the standardized yields for the Fund's Class A,
Class B and Class C shares were as follows:

Without Deducting With Sales
Sales Charge Charge Deducted
Class A 5.73% 5.53%
Class B 4.97% N/A
Class C 4.96% N/A

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

Dividend Yield = Dividends paid x 12
---------------------------------------------
Maximum Offering Price (payment date)

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

The dividend yields for the 30-day dividend period ended September 30,
1997, were as follows:

Without Deducting With Sales
Sales Charge Charge Deducted
Class A 6.96% 6.72%
Class B 6.25% N/A
Class C 6.25% N/A

o Total Return Information

o Average Annual Total Returns. 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") to achieve an Ending Redeemable Value ("ERV") of
that investment according to the following formula:

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

o Cumulative Total Returns. 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

In calculating total returns for Class A shares, the current maximum sales
charge of 3.50% (as a percentage of the offering price) is deducted from the
initial investment ("P") (unless the return is shown at net asset value, as
discussed below). For Class B shares, the payment of the current contingent
deferred sales charge (4.0% for the first year, 3.0% for the second year, 2.0%
for the third and fourth years, 1.0% in the fifth year and none thereafter) is
applied to the investment result for the time period shown (unless the total
return is shown at net asset value, as described below). For Class C shares, the
1.0% contingent deferred sales charge is applied to the investment result for
the one-year period (or less). Class Y shares are not subject to a sales charge.
Total returns also assume that all dividends and capital gains distributions
during the period are reinvested to buy additional shares at net asset value per
share, and that the investment is redeemed at the end of the period.

The average annual total returns on an investment in Class A shares of the
Fund for the one year, five year and ten year periods ended September 30, 1997
were 3.86%, 5.12% and 8.22%, respectively. The cumulative total return on Class
A shares for the ten year period ended September 30, 1997 was 120.43%. For the
fiscal year ended September 30, 1997 and the period from May 3, 1993 (the date
Class B shares were first publicly offered) through September 30, 1997, the
average annual total returns on an investment in Class B shares of the Fund were
2.83% and 4.64%, respectively. The cumulative total return on an investment in
Class B shares of the Fund for the period from May 3, 1993 through September 30,
1997 was 22.16%. For the fiscal year ended September 30, 1997 and the period
from February 1, 1995 (the date Class C shares were first publicly offered)
through September 30, 1997, the average annual total returns on an investment in
Class C shares of the Fund were 5.83% and 6.40%, respectively. The cumulative
total return on an investment in Class C shares of the Fund for the period from
February 1, 1995 to September 30, 1997 was 17.98%.

o Total Returns at Net Asset Value. From time to time the Fund may also
quote an "average annual total return at net asset value" or a cumulative "total
return at net asset value" for Class A, Class B, Class C or Class Y 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 average annual total returns at net asset value on an investment in
Class A shares of the Fund for the one, five and ten-year periods ended
September 30, 1997 were 7.62%, 5.87% and 8.61%, respectively. The average annual
total returns at net asset value on an investment in Class B shares of the Fund
for the fiscal year ended September 30, 1997 and for the period from May 3, 1993
to September 30, 1997 were 6.83% and 4.83%, respectively. The average annual
total returns at net asset value on an investment in Class C shares of the Fund
for the fiscal year ended September 30, 1997 and for the period from February 1,
1995 to September 30, 1997 were 6.83% and 6.40%, respectively.

The cumulative total returns at net asset value on the Fund's Class A
shares for the ten year period ended September 30, 1997, was 128.42%. The
cumulative total return at net asset value on the Fund's Class B shares for the
period from May 3, 1993 through September 30, 1997 was 23.10%. The cumulative
total return at net asset value on the Fund's Class C shares for the period from
February 1, 1995 through September 30, 1997 was 17.98%.

Total return information may be useful to investors in reviewing the
performance of the Fund's Class A, Class B, Class C or Class Y shares. However,
when comparing total return of an investment in each class of shares of the Fund
with that of other alternatives, investors should understand that as the Fund
invests in collateralized mortgage obligations, its shares are subject to
greater market risks than shares of funds having more conservative investment
policies and that the Fund is designed for investors who are willing to accept a
degree of risk of loss in hopes of realizing greater gains.

Other Performance Comparisons. From time to time the Fund may publish the
ranking of its Class A, Class B, Class C or Class Y shares by Lipper Analytical
Services, Inc. ("Lipper"), a widely- recognized independent mutual fund
monitoring service. Lipper monitors the performance of regulated investment
companies, including the Fund, and ranks their performance for various periods
based on categories relating to investment objectives. The performance of the
Fund's classes are ranked against (i) all other funds, excluding money market
funds, (ii) all other short-term U.S. Government funds, and (iii) all other U.S.
Government funds in a specific size category. The Lipper performance rankings
are based on total returns that include the reinvestment of capital gains
distributions and income dividends but do not take sales charges or taxes into
consideration.

From time to time the Fund may publish the star ranking of the performance
of its Class A, Class B, Class C or Class Y 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, municipal bond funds, based on risk-adjusted total
investment returns. The Fund is ranked among taxable bond funds. 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%), 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 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.

The total return on an investment made in Class A, Class B, Class C or
Class Y shares of the Fund may also be compared with the performance for the
same period of: (1) the Lehman Brothers U.S. Government Bond Index, an unmanaged
index including all U.S. Treasury issues, publicly-issued debt of U.S.
Government agencies and quasi-public corporations and U.S. Government-
guaranteed corporate debt that is widely regarded as a measure of the
performance of the U.S. Government bond market, (2) the Lehman Brothers 1-3 Year
Government Bond Index, an unmanaged sector index of U.S. Treasury issues,
publicly-issued debt of U.S. Government agencies and quasi-public corporations
and U.S. Government-guaranteed corporate debt with maturities of one to three
years, and (3) the Consumer Price Index, which is generally considered to be a
measure of inflation. The foregoing bond indices include a factor for the
reinvestment of interest but do not reflect expenses or taxes. Other indices may
provide useful comparisons. The performance of the Fund's Class A, Class B,
Class C or Class Y shares may also be compared in publications to (i) the
performance of various market indices or other investments for which reliable
performance data is available, and (ii) to averages, performance rankings or
other benchmarks prepared by recognized mutual fund statistical services.
Effective May 1, 1994, the Fund adopted an investment policy that it will, under
normal circumstances, seek to maintain a dollar-weighted average portfolio
effective duration of not more than three years.

From time to time the Fund may also include in its advertisements and sales
literature performance information about the Fund or rankings of the Fund's
performance cited in newspapers or periodicals, such as The New York Times.
These articles may include quotations of performance from other sources, such as
Lipper or Morningstar.

From time to time, the Fund's Manager may publish rankings or ratings of
the Manager (or the Transfer Agent), by independent third-parties, on the
investor services provided by them to shareholders of the Oppenheimer funds,
other than the performance rankings of the Oppenheimer funds themselves. These
ratings or rankings of shareholder/investor services by third parties may
compare the Oppenheimer funds services to those of other mutual fund families
selected by the rating or ranking services, and may be based upon the opinions
of the rating or ranking service itself, using its own research or judgment, or
based upon surveys of investors, brokers, shareholders or others. in relation to
other equity funds.

When comparing yield, total return and investment risk of an investment in
Class A, Class B, Class C or Class Y shares of the Fund with other investments,
investors should understand that certain other investments have different risk
characteristics than an investment in shares of the Fund. For example,
certificates of deposit may have fixed rates of return and may be insured as to
principal and interest by the FDIC, while the Fund's returns will fluctuate and
its share values and returns are not guaranteed. U.S. Treasury securities are
guaranteed as to principal and interest by the full faith and credit of the U.S.
government.

Distribution and Service Plans

The Fund has adopted a Service Plan for Class A Shares and Distribution and
Service Plans for Class B and Class C shares of the Fund under Rule 12b-1 of the
Investment Company Act, pursuant to which the Fund will compensate the
Distributor in connection with the distribution and/or servicing of the shares
of that class, as described in the Prospectus. No such Plan has been adopted for
Class Y shares. Each Plan has been approved by a vote of (i) the Board of
Trustees of the Fund, including a majority of the Independent Trustees, cast in
person at a meeting called for the purpose of voting on that Plan, and (ii) the
holders of a "majority" (as defined in the Investment Company Act) of the shares
of each class.

In addition, under the Plans, the Manager and the Distributor, in their
sole discretion, from time to time may use their own resources (which, in the
case of the Manager, may include profits from the advisory fee it receives from
the Fund) to make payments to brokers, dealers or other financial institutions
(each is referred to as a "Recipient" under the Plans) for distribution and
administrative services they perform, and those payments are at no cost to the
Fund. The Distributor and the Manager may, in their sole discretion increase or
decrease the amount of payments they make to Recipients from their own
resources.

Unless terminated as described below, each Plan continues in effect from
year to year but only as long as such continuance is specifically approved at
least annually by the Fund's Board of Trustees including its Independent
Trustees by a vote cast in person at a meeting called for the purpose of voting
on such continuance. Each 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. No Plan may be amended to increase materially the amount of
payments to be made unless such amendment is approved by shareholders of the
class affected by the amendment. In addition, because Class B shares of the Fund
automatically convert into Class A shares after six years, the Fund is required
by a Securities and Exchange Commission rule to obtain the approval of Class B
as well as Class A shareholders for a proposed amendment to the Class A Plan
that would materially increase payments under the Class A Plan. Such approval
must be by a "majority" of the Class A and Class B shares (as defined in the
Investment Company Act), voting separately by class. All material amendments
must be approved by the Board and the Independent Trustees.

While the Plans are in effect, the Treasurer of the Fund is to provide
separate written reports to the Fund's Board of Trustees at least quarterly for
its review, detailing the amount of all payments made pursuant to each Plan, the
purpose for which the payments were made and the services rendered in connection
with the distribution of the Fund's shares. Those reports will be subject to the
review and approval of the Independent Trustees in the exercise of their
fiduciary duty. Each Plan further provides 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 such selection and nomination
if the final decision on any such selection or nomination is approved by a
majority of the Independent Trustees.

Under the Plans, no payment will be made to any Recipient in any quarter
if the aggregate net asset value of all Fund shares held by the Recipient for
itself and its customers did not exceed a minimum amount, if any, that may be
determined from time to time by a majority of the Fund's Independent Trustees.
The Board of Trustees has set the fee at the maximum rate and set no minimum
amount. Any unreimbursed expenses incurred by the Distributor with respect to
Class A shares for any fiscal quarter by the Distributor may not be recovered
under the Class A Plan in subsequent fiscal quarters. Payments received by the
Distributor under the Plan for Class A shares will not be used to pay any
interest expense, carrying charges, or other financial costs, or allocation of
overhead by the Distributor.

For the fiscal year ended September 30, 1997, payments under the Class A
Plan totaled $1,078,579, all of which was paid by the Distributor to Recipients,
including $81,789 paid to an affiliate of the Distributor.

The Class B and Class C Plans allow the service fee payments to be paid by
the Distributor to Recipients in advance for the first year Class B and Class C
shares are outstanding, and thereafter on a quarterly basis, as described in the
Prospectus. The advance payment is based on the net asset value of the Class B
and Class C shares sold. An exchange of shares does not entitle the Recipient to
an advance payment of the service fee. In the event Class B or Class C shares
are redeemed during the first year such shares are outstanding, the Recipient
will be obligated to repay a pro rata portion of the advance of the service fee
payment to the Distributor.

Although the Class B and the Class C Plans permit the Distributor to
retain both the asset-based sales charges and the service fee, or to pay
Recipients the service fee on a quarterly basis, without payment in advance, the
Distributor presently intends to pay the service fee to Recipients in the manner
described above. A minimum holding period may be established from time to time
under the Class B Plan and the Class C Plan by the Board. The Board has set no
minimum holding period. All payments under the Class B Plan and the Class C Plan
are subject to the limitations imposed by the Conduct Rules of the National
Association of Securities Dealers, Inc. The Distributor anticipates that it will
take a number of years for it to recoup (from the Fund's payments to the
Distributor under the Class B or Class C Plan and from contingent deferred sales
charges collected on redeemed Class B or Class C shares) the sales commissions
paid to authorized brokers or dealers. Payments under the Class B Plan during
the fiscal year ended September 30, 1997 totaled $1,713,202 of which the
Distributor paid $12,731 to an affiliated broker-dealer. Payments made under the
Class C Plan for fiscal year ended September 30, 1997 totaled $573,966 of which
the Distributor paid $10,271 to an affiliated broker-dealer.

Asset-based sales charge payments are designed to permit an investor to
purchase shares of the Fund without the assessment of a front-end sales load and
at the same time permit the Distributor to compensate brokers and dealers in
connection with the sale of Class B and Class C shares of the Fund. 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 during that period. Such payments are made in
recognition that the Distributor (i) pays sales commissions to authorized
brokers and dealers at the time of sale, (ii) may finance such commissions
and/or the advance of the service fee payment to Recipients under those Plans or
provide such financing from its own resources, or from an affiliate, (iii)
employs personnel to support distribution of shares, and (iv) 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.

ABOUT YOUR ACCOUNT

How To Buy Shares

Alternative Sales Arrangements - Class A, Class B and Class C Shares. The
availability of three classes of shares permits an investor to choose the method
of purchasing shares that is more beneficial to the investor depending on the
amount of the purchase, the length of time the investor expects to hold shares
and other relevant circumstances. Investors should understand that the purpose
and function of the deferred sales charge and asset-based sales charge with
respect to Class B and Class C shares are the same as those of the initial sales
charge with respect to Class A shares. Any salesperson or other person entitled
to receive compensation for selling Fund shares may receive different
compensation with respect to one class of shares than the other. The Distributor
will not accept any order for $500,000 or $1 million or more of Class B or Class
C shares, respectively, on behalf of a single investor (not including dealer
"street name" or omnibus accounts) because generally it will be more
advantageous for that investor to purchase Class A shares of the Fund instead. A
fourth Class of shares may be purchased only by certain institutional investors
at net asset value per share (the "Class Y shares").

The four classes of shares each represent an interest in the same
portfolio investments of the Fund. However, each class has different shareholder
privileges and features. The net income attributable to Class B and Class C
shares and the dividends payable on Class B and Class C shares will be reduced
by incremental expenses borne solely by that class, including the asset-based
sales charge to which Class B and Class C shares are subject.

The conversion of Class B shares to Class A shares after six years is
subject to the continuing availability of a private letter ruling from the
Internal Revenue Service, or an opinion of counsel or tax advisor, to the effect
that the conversion of Class B shares does not constitute a taxable event for
the holder under Federal income tax law. If such a revenue ruling or opinion is
no longer available, the automatic conversion feature may be suspended, in which
event no further conversions of Class B shares would occur while such suspension
remained in effect. Although Class B shares could then be exchanged for Class A
shares on the basis of relative net asset value of the two classes, without the
imposition of a sales charge or fee, such exchange could constitute a taxable
event for the holder, and absent such exchange, Class B shares might continue to
be subject to the asset-based sales charge for longer than six years.

The methodology for calculating the net asset value, dividends and
distributions of the Fund's Class A, Class B, Class C and Class Y shares
recognizes two types of expenses. General expenses that do not pertain
specifically to any class are allocated pro rata to the shares of each class,
based on the percentage of the net assets of such class to the Fund's total net
assets, and then equally to each outstanding share within a given class. Such
general expenses include (i) management fees, (ii) legal, bookkeeping and audit
fees, (iii) printing and mailing costs of shareholder reports, Prospectuses,
Statements of Additional Information and other materials for current
shareholders, (iv) fees to unaffiliated Trustees, (v) custodian expenses, (vi)
share issuance costs, (vii) organization and start-up costs, (viii) interest,
taxes and brokerage commissions, and (ix) non-recurring expenses, such as
litigation costs. Other expenses that are directly attributable to a class are
allocated equally to each outstanding share within that class. Such expenses
include (i) Distribution and/or Service Plan fees, (ii) transfer and shareholder
servicing agent fees and expenses, (iii) registration fees and (iv) shareholder
meeting expenses, to the extent that such expenses pertain to a specific class
rather than to the Fund as a whole.

Determination of Net Asset Values Per Share. The net asset values per share of
Class A, Class B, Class C and Class Y shares of the Fund are determined as of
the close of business of The New York Stock Exchange on each day the Exchange is
open by dividing the value of the Fund's net assets attributable to that class
by the number of shares of that class outstanding. The Exchange normally closes
at 4:00 P.M., New York time, but may close earlier on some days (for example, in
case of weather emergencies or on days falling before or after a holiday). The
Exchange's most recent annual holiday schedule (which is subject to change)
states that it will close New Year's Day, Martin Luther King Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day; it may also close on other days. Trading may
occur in U.S. Government Securities at times when the Exchange is closed
(including weekends and holidays or after 4:00 P.M., on a regular business day).
Because the net asset values of the Fund will not be calculated at such times,
if securities held in the Fund's portfolio are traded at such times, the net
asset values per share of Class A, Class B, Class C and Class Y shares of the
Fund may be significantly affected on such days when shareholders do not have
the ability to purchase or redeem shares.

The Fund's Board of Trustees has established procedures for the valuation
of the Fund's securities, generally as follows:

(i) equity securities traded on a U.S. securities exchange or on the
Automated Quotation System ("NASDAQ") of the Nasdaq Stock Market, Inc. for which
last sale information is regularly reported are valued at the last reported sale
price on their primary exchange for such security or NASDAQ that day (the
"Valuation Date") or, in the absence of sales that day, at the last reported
sale price preceding the Valuation Date if it is within the spread of the
closing "bid" and "asked" price or the Valuation Date, or, if not, the closing
"bid" price on the Valuation Date;

(ii) equity securities traded on a foreign securities exchange are valued
generally at the last sales price available to the pricing service approved by
the Fund's Board of Trustees or to the Manager as reported by the principal
exchange on which the security is traded at its last trading session on or
immediately preceding the Valuation Date, or if unavailable, at the mean between
"bid" and "asked" prices obtained from the principal exchange or two active
market makers in the security on the basis of reasonable inquiry;

(iii) a non-money market fund will value (x) debt instruments that had a
maturity of more than 397 days when issued, (y) debt instruments that had a
maturity of 397 days or less when issued and have a remaining maturity in excess
of 60 days, and (z) non-money market type debt instruments that had a maturity
of 397 days or less when issued and have a remaining maturity of sixty days or
less, at the mean between "bid" and "asked" prices determined by a pricing
service approved by the Fun's Board of Trustees or, if unavailable, obtained by
the Manager from two active market makers in the security on the basis of
reasonable inquiry;

(iv) money market-type debt securities held by a non-money market fund
that had a maturity of less than 397 days when issued and having a remaining
maturity of 60 days or less, and debt instruments held by a money market fund
that have a remaining maturity of 397 days or less, shall be valued at cost,
adjusted for amortization of premiums and accretion of discount; and

(v) 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 (see (ii), (iii) above), the 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) provided
that the Manager is satisfied that the firm rendering the quotes is reliable and
that the quotes reflect the current market value.

In the case of U.S. Government Securities and mortgage-backed securities,
where last sale information is not generally available, such pricing procedures
may include "matrix" comparisons to the prices for comparable instruments on the
basis of quality, yield, maturity and other special factors involved. The
Manager may use pricing services approved by the Board of Trustees to price U.S.
Government Securities or mortgage-backed securities for which last sale
information is not generally available. The Manager will monitor the accuracy of
such pricing services, which may include comparing prices used for portfolio
evaluation to actual sales prices of selected securities.

Puts, calls and Futures are valued at the last sales 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, value shall be the last sale price on
the preceding trading day if it is within the spread of the closing "bid" and
"ask" prices on the principal exchange or on NASDAQ on the valuation date, or,
if not, 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 at the mean between "bid" and "ask"
prices obtained by the Manager from two active market makers (which in certain
cases may be the "bid" price if no "ask" price is available).

AccountLink. When shares are purchased through AccountLink, each purchase must
be at least $25.00. Shares will be purchased on the regular business day the
Distributor is instructed to initiate the Automated Clearing House transfer to
buy the shares. Dividends will begin to accrue on shares purchased by the
proceeds of ACH transfers on the business day the Fund receives Federal Funds
for such purchase through the ACH system before the close of The New York Stock
Exchange. The Exchange normally closes at 4:00 P.M., but may close earlier on
certain days. If the Federal Funds are received on a business day after the
close of the Exchange, the shares will be purchased and dividends will begin to
accrue on the next regular business day. The proceeds of ACH transfers are
normally received by the Fund three days after the transfers are initiated. 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 the Prospectus
because the Distributor or broker-dealer incurs little or no selling expenses.
The term "immediate family" refers to one's spouse, children, grandchildren,
grandparents, parents, parents-in- law, siblings, sons- and daughters-in-law, a
sibling's spouse, a spouse's siblings, aunts, uncles, nieces and nephews.
Relations by virtue of a remarriage (step-children, step-parents, etc.) are
included.

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

Limited Term New York Municipal Fund
Oppenheimer Bond Fund for Growth
Oppenheimer California Municipal Fund
Oppenheimer Champion Income Fund
Oppenheimer Developing Markets Fund
Oppenheimer Disciplined Allocation Fund
Oppenheimer Disciplined Value Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Equity Income Fund
Oppenheimer Florida Municipal Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
ppenheimer High Income Fund
Oppenheimer Insured Municipal Fund
Oppenheimer Intermediate Municipal Fund
Oppenheimer International Bond Fund
Oppenheimer International Growth Fund
Oppenheimer International Small Company Fund
Oppenheimer LifeSpan Balanced Fund
Oppenheimer LifeSpan Growth Fund
Oppenheimer LifeSpan Income Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street California Municipal Fund
Oppenheimer Main Street Income & Growth Fund
Oppenheimer MidCap Fund
Oppenheimer Municipal Bond Fund
Oppenheimer New Jersey Municipal Fund
Oppenheimer New York Municipal Fund
Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Growth & Income Value Fund
Oppenheimer Quest Officers Value Fund
Oppenheimer Quest Opportunity Value Fund
Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Real Asset Fund
Oppenheimer Strategic Income Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer U.S. Government Trust
Panorama Series Fund Inc.
Rochester Fund Municipals

the following "Money Market Funds":

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

There is an initial sales charge on the purchase of Class A shares of each
of the Oppenheimer funds except Money Market Funds (under certain circumstances
described herein, redemption proceeds of Money Market Fund shares may be subject
to a CDSC).

o Letters of Intent. A Letter of Intent (referred to as a "Letter") is an
investor's statement in writing to the Distributor of the intention to purchase
Class A shares of the Fund or Class A and Class B shares of the Fund and other
Oppenheimer funds during a 13-month period (the "Letter of Intent period"),
which may, at the investor's request, 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 public offering price applicable to a single lump-sum
purchase of shares in the intended purchase amount as described in the
Prospectus.

In submitting a Letter, the investor makes no commitment to purchase
shares, but 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, as set forth in "Terms of Escrow," below
(as those terms may be amended 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 such Letter of Intent, and if such
terms are amended, as they may be from time to time by the Fund, that those
amendments will apply automatically to existing Letters of Intent.

For purchases of shares of the Fund and other Oppenheimer funds by
OppenheimerFunds prototype 401(k) plans under a Letter of Intent, the Transfer
Agent will not hold shares in escrow. If the intended purchase amount under the
Letter 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.

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 amount and exceed the amount needed to qualify for the next
sales charge rate reduction set forth in the applicable prospectus, the sales
charges paid will be adjusted to the lower rate, but 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.

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

o Terms of Escrow That Apply to Letters of Intent

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

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

(3) If, at the end of the thirteen-month Letter of Intent period the total
purchases pursuant to the Letter are less than the intended 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. Such sales charge adjustment will apply to any
shares redeemed prior to the completion of the Letter. If such 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 acquired subject to a contingent deferred sales
charge, and (c) Class A shares or Class B shares acquired in exchange for either
(i) 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 (ii) 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 from a bank account, a
check (minimum $25) for the initial purchase must accompany the application.
Shares purchased by Asset Builder Plan payments from bank accounts are subject
to the redemption restrictions for recent purchases described in "How To Sell
Shares," in the Prospectus. Asset Builder Plans also enable shareholders of
Oppenheimer Cash Reserves to use those accounts for monthly automatic purchases
of shares of up to four other Oppenheimer funds. If you make payments from your
bank account to purchase shares of the Fund, your bank account will be
automatically debited normally four to five business days prior to the
investment dates selected in the Account Application. Neither the Distributor,
the Transfer Agent nor the Fund shall be responsible for any delays in
purchasing shares resulting from delays in ACH transmission

There is a front-end sales charge on the purchase of Class A shares of
certain Oppenheimer funds, or a contingent deferred sales charge may apply to
shares purchased by Asset Builder payments. An application should be obtained
from the Transfer Agent, completed and returned, and a prospectus of the
selected fund(s) should be obtained from the Distributor or your financial
advisor before initiating Asset Builder payments. The amount of the Asset
Builder investment may be changed or the automatic investments may be terminated
at any time by writing to the Transfer Agent. A reasonable period (approximately
15 days) is required after the Transfer Agent's receipt of such instructions to
implement them. The Fund reserves the right to amend, suspend, or discontinue
offering such plans at any time without prior notice.

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.

Retirement Plans. In describing certain types of employee benefit plans that may
purchase Class A shares without being subject to the Class A contingent deferred
sales charge, the term "employee benefit plan" means any plan or arrangement,
whether or not "qualified" under the Internal Revenue Code, including, medical
savings accounts, payroll deduction plans or similar plans in which Class A
shares are purchased by a fiduciary or other person for the account of
participants who are employees of a single employer or of affiliated employers,
if the Fund account is registered in the name of the fiduciary or other person
for the benefit of participants in the plan.

The term "group retirement plan" means any qualified or non-qualified
retirement plan (including 457 plans, SEPs, SARSEPs, 403(b) plans other than
public school 403(b) plans, and SIMPLE plans) for employees of a corporation or
a 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 or association has made special arrangements with the
Distributor and all members of the group or association participating in or who
are eligible to participate in the plan(s) purchase Class A shares of the Fund
through a single investment dealer, broker or other financial institution
designated by the group. "Group retirement plan" also includes qualified
retirement plans and non-qualified deferred compensation plans and IRAs that
purchase Class A shares of the Fund through a single investment dealer, broker,
or other financial institution, if that broker-dealer has made special
arrangements with the Distributor enabling those plans to purchase Class A
shares of the Fund at net asset value but subject to a contingent deferred sales
charge.

In addition to the discussion in the Prospectus relating to the ability
of Retirement Plans to purchase class A shares at net asset value in certain
circumstances, there is no initial sales charge on purchases of Class A shares
of any one or more of the Oppenheimer funds by a Retirement Plan in the
following cases:

(i) the recordkeeping for the Retirement Plan is performed on a daily
valuation basis by Merrill Lynch Pierce Fenner & Smith, Inc. ("Merrill Lynch")
and, on the date the plan sponsor signs the Merrill Lynch recordkeeping service
agreement, the Retirement Plan has $3 million or more in assets invested in
mutual funds other than those advised or managed by Merrill Lynch Asset
Management, L.P. ("MLAM") that are made available pursuant to a Service
Agreement between Merrill Lynch and the mutual fund's principal underwriter or
distributor and in funds advised or managed by MLAM (collectively, the
"Applicable Investments"); or

(ii) the recordkeeping for the Retirement Plan is performed on a daily
valuation basis by an independent 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 Merrill Lynch record keeping service
agreement, the Plan must have $3 million or more in assets, excluding assets
held in money market funds, invested in Applicable Investments; or

(iii) the Plan has 500 or more eligible employees, as determined by the
Merrill Lynch plan conversion manager on the date the plan sponsor signs the
Merrill Lynch record keeping service agreement.

If a Retirement Plan's records are maintained on a daily valuation basis
by Merrill Lynch or an independent record keeper under a contract or alliance
arrangement with Merrill Lynch, and if on the date the plan sponsor signs the
Merrill Lynch record keeping service agreement the Retirement Plan has less than
$3 million in assets, excluding money market funds, invested in Applicable
Investments, then the Retirement Plan may purchase only Class B shares of one or
more of the Oppenheimer funds. Otherwise, the Retirement Plan will be permitted
to purchase Class A shares of one or more of the Oppenheimer funds. Any of those
Retirement Plans that currently invest in Class B shares of the Fund will have
their Class B shares be converted to Class A shares of the Fund once the Plan's
Applicable Investments have reached $5 million.

Any redemptions of shares of the Fund 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 that are currently
invested in Class B shares of the Fund shall not be subject to the Class B CDSC.

How to Sell Shares

Information on how to sell shares of the Fund is stated in the Prospectus. The
information below supplements the terms and conditions for redemptions set forth
in the Prospectus.

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

By choosing the Checkwriting privilege, whether you do so by signing the
Account Application or by completing a Checkwriting card, the individuals
signing (1) represent that they are either the registered owner(s) of the shares
of the Fund, or are an officer, general partner, trustee or other fiduciary or
agent, as applicable, duly authorized to act on behalf of such registered
owner(s); (2) authorize the Fund, its Transfer Agent and any bank through which
the Fund's drafts ("checks") are payable (the"Bank"), to pay all checks drawn on
the Fund account of such person(s) and to effect a redemption of sufficient
shares in that account to cover payment of such checks; (3) specifically
acknowledge(s) that if you choose to permit a single signature on checks drawn
against joint accounts, or accounts for corporations, partnerships, trusts or
other entities, the signature of any one signatory on a check will be sufficient
to authorize payment of that check and redemption from an account even if that
account is registered in the names of more than one person or even if more than
one authorized signature appears on the Checkwriting card or the Application, as
applicable; and (4) understand(s) that Checkwriting privileges may be terminated
or amended at any time by the Fund and/or the Bank and neither shall incur any
liability for such amendment or termination or for effecting redemptions to pay
checks reasonably believed to be genuine, or for returning or not paying checks
which have not been accepted for any reason.

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

o Selling Shares by Wire. The wire of redemption proceeds may be delayed
if the Fund's Custodian bank is not open for business on a day when the Fund
would normally authorize the wire to be made, which is usually the Fund's next
regular business day following the redemption. In those circumstances, the wire
will not be transmitted until the next bank business day on which the Bank and
the Fund is open for business. No dividends will be paid on the proceeds of
redeemed shares awaiting transfer by wire.

o Payments "In Kind." The Prospectus states that payment for shares
tendered for redemption is ordinarily made in cash. However, if the Board of
Trustees of the Fund determines 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, the Fund may pay the redemption
proceeds in whole or in part by a distribution "in kind" of securities from the
portfolio of the Fund, in lieu of cash, in conformity with applicable rules of
the Securities and Exchange Commission. The Fund has elected to be governed by
Rule 18f-1 under the Investment Company Act, pursuant to which 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 method of valuing securities
used to make redemptions in kind will be the same as the method the Fund uses to
value its portfolio securities described above under "Determination of Net Asset
Values Per Share" and such valuation will be made as of the time the redemption
price is determined.

Reinvestment Privilege. Within six months of a redemption, a shareholder may
reinvest all or part of the redemption proceeds of (i) Class A shares that you
purchased subject to an initial sales charge, or (ii) Class B shares on which
you paid a contingent deferred sales charge when you redeemed them, without
sales charge. This privilege does not apply to Class C shares or Class Y shares.
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 below, at the net asset value next computed after the
Transfer Agent receives the reinvestment order. The shareholder must ask the
Distributor for that privilege at the time of reinvestment. 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. 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.

Transfers of Shares. Shares are not subject to the payment of a contingent
deferred sales charge of either class at the time of transfer to the name of
another person or entity (whether the transfer occurs by absolute assignment,
gift or bequest, not involving, directly or indirectly, a sale). The transferred
shares will remain subject to the contingent deferred sales charge, 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 A, Class B and Class C contingent
deferred sales charge will be followed in determining the order in which shares
are transferred.

Distributions From Retirement Plans. Requests for distributions from
OppenheimerFunds- sponsored IRAs, 403(b)(7) custodial plans, 401(k) plans or
pension or profit-sharing plans should be addressed to "Trustee,
OppenheimerFunds Retirement Plans," c/o the Transfer Agent at its address listed
in "How To Sell Shares" in the Prospectus or on the back cover of this Statement
of Additional Information. The request must: (i) state the reason for the
distribution; (ii) state the owner's awareness of tax penalties if the
distribution is premature; and (iii) conform to the requirements of the plan and
the Fund's other redemption requirements. Participants (other than self-employed
persons maintaining a plan account in their own name) in
OppenheimerFunds-sponsored prototype pension or profit-sharing or 401(k) plans
may not directly redeem or exchange shares held for their account under those
plans. The employer or plan administrator 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 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, the
Trustee 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. The shareholder should contact the
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
the order placed by the dealer or broker, except that 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
customer prior to the time the Exchange closes (normally, that is 4:00 P.M., but
may be earlier on some days) and the order was 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, with the signature(s) of the registered owners guaranteed on the
redemption document 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
(minimum $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 and sent
to the address of record for the account (and if the address has not 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 OppenheimerFunds
New Account Application or signature-guaranteed instructions. Shares are
normally redeemed pursuant to an Automatic Withdrawal Plan three business days
before the date you select in the Account Application. IF a contingent deferred
sales charge applies to the redemptions, the amount of the check or payment will
be reduces accordingly. The Fund cannot guarantee receipt of the payment on the
date requested and reserves the right to amend, suspend or discontinue offering
such 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 Class B and Class C
contingent deferred sales charges on such withdrawals (except where the Class B
and Class C contingent deferred sales charge is waived as described in the
Prospectus under "Class B Contingent Deferred Sales Charge" or in "Class C
Contingent Deferred Sales Charge").

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

o Automatic Exchange Plans. Shareholders can authorize the Transfer Agent
(on the OppenheimerFunds Application or signature-guaranteed instructions) 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. 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.

o Automatic Withdrawal Plans. Fund shares will be redeemed as necessary to
meet withdrawal payments. Shares acquired without a sales charge will be
redeemed first and thereafter 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 withdrawal plans should not be considered as a yield or
income on your investment.

The Transfer Agent will administer the investor's Automatic Withdrawal
Plan (the "Plan") as agent for the investor (the "Planholder") who executed the
Plan authorization and application submitted to the Transfer Agent. The Transfer
Agent and the Fund shall incur no liability to the Planholder for any action
taken or omitted by the Transfer Agent and the Fund in good faith to administer
the Plan. 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.

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

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 in 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 (in proper form in accordance with
the requirements of the then-current Prospectus of the Fund) to redeem all, or
any part of, the shares held under the Plan. In that case, the Transfer Agent
will redeem the number of shares requested at the net asset value per share in
effect in accordance with the Fund's usual redemption procedures and will mail a
check for the proceeds to the Planholder.

The Plan may be terminated at any time by the Planholder by writing to the
Transfer Agent. A Plan may also be terminated at any time by the Transfer Agent
upon receiving directions to that effect from the Fund. The Transfer Agent will
also terminate a Plan upon receipt of evidence satisfactory to it of the death
or legal incapacity of the Planholder. Upon termination of a Plan by the
Transfer Agent or the Fund, shares that have not been redeemed from the account
will be held in uncertificated form in the name of the Planholder, and the
account will continue as a dividend- reinvestment, uncertificated account unless
and until proper instructions are received from the Planholder or his or her
executor or guardian, or other authorized person.

To use Class A shares held under the Plan as collateral for a debt, the
Planholder may request issuance of a portion of the shares in certificated form.
Upon written request from the Planholder, the Transfer Agent will determine the
number of shares for which a certificate may be issued without causing the
withdrawal checks to stop because of exhaustion of uncertificated shares needed
to continue payments. 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 the Oppenheimer funds that have
a single class without a class designation are deemed "Class A" shares for this
purpose. All of the Oppenheimer funds offer Class A, B and C shares except
Oppenheimer Money Market Fund, Inc., Centennial Tax Exempt Trust, Centennial
Government Trust, Centennial New York Tax Exempt Trust, Centennial California
Tax Exempt Trust, Centennial America Fund, L.P. and Daily Cash Accumulation Fund
Inc., which only offer Class A shares and Oppenheimer Main Street California Tax
Exempt Fund which only offers Class A and Class B shares (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). A current list showing which funds
offer which class can be obtained by calling the Distributor at 1-800-525-7048.

For accounts established on or before March 8, 1996 holding Class M shares
of Oppenheimer Bond Fund for Growth, Class M shares can be exchanged only for
Class A shares of other Oppenheimer funds. Exchanges to Class M shares of
Oppenheimer Bond Fund for Growth are permitted from Class A shares of
Oppenheimer Money Market Fund, Inc. or Oppenheimer Cash Reserves that were
acquired by exchange from Class M shares. Otherwise no exchanges of any class of
any Oppenheimer fund into Class M shares are permitted.

Class A shares of Oppenheimer funds may be exchanged at net asset value
for shares of any Money Market Fund. 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 (or, if applicable, may be
used to purchase shares of Oppenheimer funds subject to a contingent deferred
sales charge).

Shares of this Fund acquired by reinvestment of dividends or distributions
from any other of the Oppenheimer funds (except Oppenheimer Cash Reserves) 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.

No contingent deferred sales charge is imposed on exchanges of shares of
any class purchased subject to a contingent deferred sales charge. However,
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 12 months 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,
whichever is applicable. 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,
and, if requested, must supply proof of entitlement to this privilege. The Class
C contingent deferred sales charge is imposed on Class C shares acquired by
exchange if they are redeemed within 12 months of the initial purchase of the
exchanged Class C shares.

When Class B or Class C shares are redeemed to effect an exchange, the
priorities described in "How To Buy Shares" in the Prospectus for the imposition
of the Class B and Class C contingent deferred sales charge will be followed in
determining the order in which the shares are exchanged. Shareholders should
take into account the effect of any exchange on the applicability and rate of
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 whether they intend to exchange Class A, Class B or Class C
shares.

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. 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.

When exchanging shares by telephone, the shareholder must either have an
existing account in, or obtain and acknowledge receipt of a prospectus of, the
fund to which the exchange is to be made. For full or partial exchanges of an
account made by telephone, any special account features such as Asset Builder
Plans, Automatic Withdrawal Plans and retirement plan contributions will be
switched to the new account unless the Transfer Agent is instructed otherwise.
If all telephone lines are busy (which might occur, for example, during periods
of substantial market fluctuations), shareholders might not be able to request
exchanges by telephone and would have to submit written exchange requests.

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

Dividends, Capital Gains and Taxes

Dividends and Distributions. Dividends will be payable on shares held of record
at the time of the previous determination of net asset value, or as otherwise
described in "How to Buy Shares." Daily dividends on newly purchased shares will
not be declared or paid until such time as Federal Funds (funds credited to a
member bank's account at the Federal Reserve Bank) are available from the
purchase payment for such shares. Normally, purchase checks received from
investors are converted to Federal Funds on the next business day. Dividends
will be declared on shares repurchased by a dealer or broker for three business
days following the trade date (i.e., to and including the day prior to
settlement of the repurchase). If all shares in an account are redeemed, all
dividends accrued on shares of the same class in the account will be paid
together with the redemption proceeds.

Dividends, distributions and the 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.,
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.

The amount of a class' distributions may 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, as described in "Alternative
Sales Arrangements -- Class A, Class B, Class C and Class Y Shares" above.
Dividends are calculated in the same manner, at the same time and on the same
day for shares of each class. However, dividends on Class B and Class C shares
are expected to be lower than dividends on Class A and Class Y shares as a
result of the asset-based sales charges on Class B and Class C shares, and will
also differ in amount as a consequence of any difference in net asset value
between the classes.

If prior distributions must be re-characterized at the end of the fiscal
year as a result of the effect of the Fund's investment policies, shareholders
may have a non-taxable return of capital, which will be identified in notices to
shareholders. A return of capital is a return of a shareholder's original
investment and is therefore not to be considered a taxable distribution. There
is no fixed dividend rate and there can be no assurance as to the payment of any
dividends or the realization of any capital gains.

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 and intends to qualify in future
years, but reserves the right not to qualify. The Internal Revenue Code contains
a number of complex tests to determine whether the Fund will qualify, and the
Fund might not meet those tests in a particular year. If it does not qualify,
the Fund will be treated for tax purposes as an ordinary corporation and will
receive no tax deduction for payments of dividends and distributions made to
shareholders.

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, or
else the Fund must pay an excise tax on the amounts not distributed. While it is
presently anticipated that the Fund will meet those requirements, the Fund's
Board and the Manager might determine in a particular year that it would be in
the best interest 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.

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 in "Reduced Sales Charges"
above, at net asset value without sales charge. To elect this option, the
shareholder must notify the Transfer Agent in writing and either have an
existing account in the fund selected for reinvestment or must obtain a
prospectus for that fund and an application from the Transfer Agent to establish
an account. The investment will be made at net asset value per share in effect
at the close of business on the payable date of the dividend or distribution.
Dividends and/or distributions from certain of the Oppenheimer funds may be
invested in shares of this Fund on the same basis.

Additional Information About The Fund

The Custodian. Citibank, N.A. is the Custodian of the Fund's assets. The
Custodian's responsibilities include safeguarding and controlling the Fund's
portfolio securities, collecting income on the portfolio securities and handling
the delivery of such securities to and from the Fund. The Manager has
represented to the Fund that the banking relationships between the Manager and
with the Custodian have been and will continue to be unrelated to and unaffected
by the relationship between the Fund and the Custodian. 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. The independent auditors of the Fund 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.

-2-
<PAGE>

- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
The Board of Trustees and Shareholders of
Oppenheimer Limited-Term Government Fund:

We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppenheimer Limited-Term Government Fund as of
September 30, 1997, the related statement of operations for the year then ended,
the statements of changes in net assets for the years ended September 30, 1997
and 1996, and the financial highlights for the period October 1, 1992 to
September 30, 1997. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.

We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned at September 30, 1997 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, such financial statements and financial highlights
present fairly, in all material respects, the financial position of Oppenheimer
Limited-Term Government Fund at September 30, 1997, the results of its
operations, the changes in its net assets, and the financial highlights for the
respective stated periods, in conformity with generally accepted accounting
principles.

/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP

Denver, Colorado
October 21, 1997

<PAGE>

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

Financials

10 Oppenheimer Limited-Term Government Fund
<PAGE>

- ---------------------------------------------------------------------
Statement of Investments September 30, 1997
- ---------------------------------------------------------------------

<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Mortgage-Backed Obligations--62.9%
- ----------------------------------------------------------------------------------------------------
Government Agency--62.9%
- ----------------------------------------------------------------------------------------------------
FHLMC/FNMA/Sponsored--50.5%
Federal Home Loan Mortgage Corp.:
Collateralized Mtg. Obligations, Gtd. Multiclass Mtg.
Participation Certificates:
Series 1060, Cl. D, 8.20%, 7/15/19(1) $ 37,223 $ 37,154
Series 1065, Cl. H, 8.50%, 10/15/19 3,419,877 3,446,587
Series 1092, Cl. K, 8.50%, 6/15/21 16,000,000 17,310,538
Series 1097, Cl. L, 8.60%, 2/15/06 1,720,315 1,746,121
Series 1252, Cl. J, 8%, 5/15/22 7,000,000 7,541,608
Series 1343, Cl. LA, 8%, 8/15/22 9,100,000 9,788,499
Series 1455, Cl. J, 7.50%, 12/15/22 6,375,000 6,694,822
Series 151, Cl. F, 9%, 5/15/21 2,500,000 2,717,207
Series 1914, Cl. H, 6.50%, 8/15/24 2,500,000 2,384,375
Series 1920, Cl. M, 6.50%, 6/15/23 5,000,000 4,889,093
10%, 8/1/21 3,262,038 3,612,137
11.50%, 6/1/20 1,754,182 2,056,779
11.75%, 1/1/16 2,546,494 2,957,914
13%, 8/1/15 3,347,827 4,062,380
9.25%, 11/1/08 400,607 426,355
Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates,
Series 1610, Cl. PM, 6.25%, 4/15/22 7,500,000 7,387,500
Interest-Only Stripped Mtg.-Backed Security, Series 177, Cl. B,
10.424%-12.786%, 7/1/26(2) 111,052,167 36,230,771
Principal-Only Stripped Mtg.-Backed Security, Series 179, 4.959%,
9/1/26(3) 16,569,538 12,693,820
- ----------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
7%, 8/1/25-2/1/27 7,855,896 7,827,256
7%, 11/1/12-10/25/27(4) 20,710,000 20,765,828
7.50%, 6/1/25-8/1/25 10,811,032 11,014,498
7.50%, 11/25/12-10/1/27(4) 114,275,000 116,295,509
9%, 8/1/19 653,278 703,333
9.50%, 11/1/21 400,278 433,697
11%, 11/1/15-5/15/19 14,696,231 16,846,755
11.25%, 6/1/14 1,348,572 1,530,208
11.50%, 8/15/13 1,402,715 1,637,232
11.75%, 9/1/03-11/1/15 494,119 565,620
12%, 1/1/16-4/15/19 6,693,286 7,900,497
13%, 8/1/10-12/1/15 4,937,561 5,989,045
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg.
Investment Conduit Pass-Through Certificates, Series 1992-34,
Cl. G, 8%, 3/25/22 2,940,000 3,150,386
Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates:
12.50%, 12/1/15 2,966,676 3,588,752
8%, 1/1/23 241,271 250,259
Trust 1990-18, Cl. K, 9.60%, 3/25/20 5,000,000 5,706,007

11 Oppenheimer Limited-Term Government Fund
<PAGE>

- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------

Face Market Value
Amount See Note 1
- ----------------------------------------------------------------------------------------------------
FHLMC/FNMA/Sponsored (continued)
Federal National Mortgage Assn.:
Trust 1991-169, Cl. PK, 8%, 10/25/21 $ 595,000 $ 630,510
Trust 1991-170, Cl. E, 8%, 12/25/06 2,500,000 2,626,335
Trust 1992-169, Cl. L, 7%, 9/25/22 5,500,000 5,427,903
Trust 1994-51, Cl. PH, 6.50%, 1/25/23 5,000,000 4,976,550
Trust 1995-4, Cl. PC, 8%, 5/25/25 4,806,220 5,201,341
Trust 1996-64, Cl. PB, 6.50%, 1/18/19 1,500,000 1,509,236
Trust 1997-25, Cl. B, 7%, 12/18/22 3,420,000 3,434,426
Trust 1997-27, Cl. J, 7.50%, 4/18/27 7,095,360 7,400,184
Trust 1997-5, Cl. B, 7%, 9/18/17 9,191,000 9,239,354
Trust G93-31, Cl. PN, 7%, 9/25/23 5,000,000 5,008,721
Principal-Only Stripped Mtg.-Backed Security:
Trust 148, Cl. G, 0.443%, 8/25/23(3) 8,891,258 5,351,426
Trust 1997-7, Cl. GA, 6.889%, 7/25/23(3) 2,980,588 1,628,146
Trust 277-C1, 5.346%, 4/1/27(3) 13,423,756 9,723,834
STRIPS, Pass-Through Certificates, Trust 6, Cl. IP, 11.50%, 3/1/09 2,014,854 2,281,178
-------------
394,627,686

- ----------------------------------------------------------------------------------------------------
GNMA/Guaranteed--12.4%
Government National Mortgage Assn.:
6%, 11/1/27(4) 19,500,000 19,621,875
6%, 8/20/27 5,000,000 5,043,750
7.50%, 10/1/27(4) 15,000,000 15,257,850
7.50%, 10/15/25-9/15/27 37,665,229 38,345,519
8%, 9/15/07 125,427 130,946
8.50%, 9/15/21 59,224 62,739
9.50%, 9/15/17 125,276 136,634
10.50%, 1/15/16-7/15/21 2,629,618 2,951,065
11%, 2/15/98-10/20/19 6,399,215 7,263,869
11.50%, 1/15/13-5/15/13 619,704 689,454
13%, 2/15/11-9/15/14 54,289 64,692
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Series 1994-5, Cl. PQ, 7.493%,
7/16/24 6,900,000 7,231,491
-------------
96,799,884
-------------
Total Mortgage-Backed Obligations (Cost $489,117,019) 491,427,570

- ----------------------------------------------------------------------------------------------------
U.S. Government Obligations--56.2%
- ----------------------------------------------------------------------------------------------------
U.S. Treasury Bonds:
8.125%, 8/15/19 218,000 259,488
STRIPS, Zero Coupon, 7.14%, 8/15/22(5) 19,400,000 3,876,913

12 Oppenheimer Limited-Term Government Fund
<PAGE>

Face Market Value
Amount See Note 1
- --------------------------------------------------------------------------------
U.S. Government Obligations (continued)
U.S. Treasury Nts.:
6%, 8/15/00 $91,000,000 $ 91,341,333
6.875%, 3/31/00 50,140,000 51,315,179
7.25%, 2/15/98 83,100,000 83,645,382
7.50%, 10/31/99 6,100,000 6,296,347
7.75%, 12/31/99 74,280,000 77,228,022
8.25%, 7/15/98 62,500,000 63,769,560
8.875%, 11/15/97(6) 57,000,000 57,249,427
9.125%, 5/15/99 2,765,000 2,905,843
9.25%, 8/15/98 1,500,000 1,545,469
-------------
Total U.S. Government Obligations (Cost $441,125,185) 439,432,963
</TABLE>

<TABLE>
<CAPTION>
Date Strike Contracts
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Call Options Purchased--0.0%
- -------------------------------------------------------------------------------
U.S. Treasury Nts. 6.625%
5/15/07 Call Opt. (Cost $175,359) 10/97 105.188% 25,800 24,187
</TABLE>

<TABLE>
<CAPTION>
Face
Amount
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreements--1.1%
- ----------------------------------------------------------------------------------------------------
Repurchase agreement with Goldman, Sachs & Co., 6.125%, dated 9/30/97, to be
repurchased at $8,401,429 on 10/1/97, collateralized by U.S. Treasury Nts.,
5.75%, 8/15/03, with a value of $8,571,047
(Cost $8,400,000) $ 8,400,000 8,400,000
- ----------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $938,817,563) 120.2% 939,284,720
- ----------------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (20.2) (157,741,776)
------------ --------------
Net Assets 100.0% $ 781,542,944
============ ==============
</TABLE>

1. Identifies issues considered to be illiquid--See Note 7 of Notes to Financial
Statements.

2. 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.

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

4. When-issued security to be delivered and settled after September 30, 1997.

5. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.

6. Securities with an aggregate market value of $2,008,752 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 5 of Notes to Financial Statements.

See accompanying Notes to Financial Statements.

13 Oppenheimer Limited-Term Government Fund
<PAGE>

- --------------------------------------------------------------------------------
Statement of Assets and Liabilities September 30, 1997
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
- ----------------------------------------------------------------------------------------
Assets
Investments, at value (cost $938,817,563)--see accompanying statement $ 939,284,720
- ----------------------------------------------------------------------------------------
Cash 235,449
- ----------------------------------------------------------------------------------------
Receivables:
Investments sold 97,080,335
Interest and principal paydowns 9,171,488
Shares of beneficial interest sold 6,092,989
Daily variation on futures contracts--Note 5 50,641
- ----------------------------------------------------------------------------------------
Other 13,829
--------------
Total assets 1,051,929,451
- ----------------------------------------------------------------------------------------
Liabilities Payables and other liabilities:
Investments purchased on a when-issued basis--Note 1 266,798,217
Shares of beneficial interest redeemed 1,713,177
Dividends 1,138,246
Distribution and service plan fees 455,235
Transfer and shareholder servicing agent fees 71,678
Daily variation on futures contracts--Note 5 3,644
Other 206,310
--------------
Total liabilities 270,386,507
- ----------------------------------------------------------------------------------------
Net Assets $ 781,542,944
==============
- ----------------------------------------------------------------------------------------
Composition of Net Assets
Paid-in capital $ 792,268,602
- ----------------------------------------------------------------------------------------
Overdistributed net investment income (189)
- ----------------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (10,729,954)
- ----------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Notes 3 and 5 4,485
--------------
Net assets $ 781,542,944
==============
</TABLE>

14 Oppenheimer Limited-Term Government Fund
<PAGE>

<TABLE>
<S> <C>
- --------------------------------------------------------------------------------------
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$524,507,808 and 50,926,979 shares of beneficial interest outstanding) $10.30
Maximum offering price per share (net asset value plus sales charge of
3.50% of offering price) $10.67

- --------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $183,475,666 and
17,816,755 shares of beneficial interest outstanding) $10.30

- --------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $73,559,470 and
7,151,819 shares of beneficial interest outstanding) $10.29 </TABLE>

See accompanying Notes to Financial Statements.

15 Oppenheimer Limited-Term Government Fund
<PAGE>

- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended September 30, 1997
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
- --------------------------------------------------------------------------------------
Investment Income
Interest $53,794,323

- --------------------------------------------------------------------------------------
Expenses
Distribution and service plan fees--Note 4:
Class A 1,078,579
Class B 1,713,202
Class C 573,966
- --------------------------------------------------------------------------------------
Management fees--Note 4 2,924,120
- --------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 716,765
- --------------------------------------------------------------------------------------
Shareholder reports 238,319
- --------------------------------------------------------------------------------------
Registration and filing fees 140,036
- --------------------------------------------------------------------------------------
Custodian fees and expenses 118,902
- --------------------------------------------------------------------------------------
Legal and auditing fees 39,642
- --------------------------------------------------------------------------------------
Trustees' fees and expenses 2,215
- --------------------------------------------------------------------------------------
Other 23,506
------------
Total expenses 7,569,252

- --------------------------------------------------------------------------------------
Net Investment Income 46,225,071

- --------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
Net realized loss on:
Investments (81,142)
Closing of futures contracts (3,902,026)
Closing of options written (166,766)
------------
Net realized loss (4,149,934)
- --------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments 5,545,271
------------
Net realized and unrealized gain 1,395,337

- --------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations $47,620,408
============
</TABLE>

See accompanying Notes to Financial Statements.

16 Oppenheimer Limited-Term Government Fund
<PAGE>

- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Year Ended September 30,
1997 1996
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income $ 46,225,071 $ 39,979,280
- --------------------------------------------------------------------------------------------------
Net realized loss (4,149,934) (8,479,349)
- --------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 5,545,271 (2,255,816)
------------- -------------
Net increase in net assets resulting from operations 47,620,408 29,244,115

- --------------------------------------------------------------------------------------------------
Dividends and Distributions to Shareholders Dividends from net investment
income:
Class A (30,141,730) (26,704,976)
Class B (10,420,608) (8,852,431)
Class C (3,475,469) (1,884,621)
- --------------------------------------------------------------------------------------------------
Tax return of capital distribution:
Class A (700,992) (1,369,245)
Class B (245,211) (503,246)
Class C (98,310) (142,148)

- --------------------------------------------------------------------------------------------------
Beneficial Interest Transactions
Net increase in net assets resulting from beneficial interest transactions--Note
2:
Class A 85,939,817 97,751,994
Class B 22,254,728 42,090,398
Class C 27,993,027 31,425,681

- --------------------------------------------------------------------------------------------------
Net Assets
Total increase 138,725,660 161,055,521
- --------------------------------------------------------------------------------------------------
Beginning of period 642,817,284 481,761,763
------------- -------------
End of period (including overdistributed net investment income
of $189 and $186, respectively) $ 781,542,944 $642,817,284
============= =============
</TABLE>

See accompanying Notes to Financial Statements.

17 Oppenheimer Limited-Term Government Fund
<PAGE>

Financial Highlights

<TABLE>
<CAPTION>
Class A
-------------------------------------------------------------------
Year Ended September 30,
1997 1996 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning of period $10.26 $10.44 $10.40 $11.04 $10.97
- ------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .73 .75 .79 .72 .73
Net realized and unrealized gain (loss) .03 (.19) .01 (.64) .07
------ ------ ------ ------ ------
Total income (loss) from investment
operations .76 .56 .80 .08 .80
- ------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.71) (.71) (.76) (.71) (.73)
Tax return of capital distribution (.01) (.03) -- (.01) --
------ ------ ------ ------ ------
Total dividends and distributions
to shareholders (.72) (.74) (.76) (.72) (.73)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.30 $10.26 $10.44 $10.40 $11.04
====== ====== ====== ====== ======
- ------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value(3) 7.62% 5.54% 8.03% 0.74% 7.61%
- ------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $524,508 $436,889 $346,015 $227,858 $178,944
- ------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $443,514 $393,727 $274,313 $190,829 $161,318
- ------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 7.13% 7.22% 7.64% 6.74% 6.70%
Expenses 0.87% 0.87% 0.91% 0.99% 1.02%
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 68% 71% 261% 226% 74%
</TABLE>

1. For the period from February 1, 1995 (inception of offering) to September 30,
1995.

2. For the period from May 3, 1993 (inception of offering) to September 30,
1993.

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

4. Annualized.

18 Oppenheimer Limited-Term Government Fund
<PAGE>

<TABLE>
<CAPTION>
Class B Class C
- ----------------------------------------------------------------------- ---------------------------------------------
Year Ended September 30, Year Ended September 30,
1997 1996 1995 1994 1993(2) 1997 1996 1995(1)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$10.26 $10.44 $10.41 $11.06 $10.96 $10.25 $10.43 $10.32
- ----------------------------------------------------------------------------------------------------------------
.66 .67 .71 .62 .23 .66 .66 .45
.02 (.19) .01 (.64) .10 .02 (.18) .10
------ ------ ------ ------ ------ ------ ------ ------
.68 .48 .72 (.02) .33 .68 .48 .55
- ----------------------------------------------------------------------------------------------------------------
(.63) (.63) (.69) (.62) (.23) (.63) (.63) (.44)
(.01) (.03) -- (.01) -- (.01) (.03) --
------ ------ ------ ------ ------ ------ ------ ------
(.64) (.66) (.69) (.63) (.23) (.64) (.66) (.44)
- ----------------------------------------------------------------------------------------------------------------
$10.30 $10.26 $10.44 $10.41 $11.06 $10.29 $10.25 $10.43
====== ====== ====== ====== ====== ====== ====== ======
- ----------------------------------------------------------------------------------------------------------------
6.82% 4.74% 7.18% ( 0.17)% 3.02% 6.83% 4.71% 5.47%
- ----------------------------------------------------------------------------------------------------------------
$183,476 $160,572 $121,178 $38,877 $5,077 $73,559 $45,356 $14,569
- ----------------------------------------------------------------------------------------------------------------
$171,496 $147,017 $ 72,131 $15,801 $2,561 $57,506 $32,349 $ 6,112
- ----------------------------------------------------------------------------------------------------------------
6.39% 6.46% 6.80% 5.91% 4.81%(4) 6.35% 6.34% 6.51%(4)
1.62% 1.62% 1.71% 1.79% 1.87%(4) 1.62% 1.64% 1.80%(4)
- ----------------------------------------------------------------------------------------------------------------
68% 71% 261% 226% 74% 68% 71% 261%
</TABLE>

5. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities and mortgage
"dollar-rolls") for the period ended September 30, 1997 were $763,306,417 and
$485,457,078, respectively. For the years ended September 30, 1995 and 1994,
purchases and sales of investment securities included mortgage "dollar-rolls."

See accompanying Notes to Financial Statements.

19 Oppenheimer Limited-Term Government Fund
<PAGE>

- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
1. Significant Accounting Policies
Oppenheimer Limited-Term Government Fund (the Fund) is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Fund's investment objective is to seek high
current return and safety of principal primarily through investments in U.S.
Government and agency securities. 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 with a front-end sales charge. Class B
and Class C shares may be subject to a contingent deferred sales charge. All
classes of shares have identical rights to earnings, assets and voting
privileges, except that each class has its own distribution and/or service
plan, expenses directly attributable to that class and exclusive voting rights
with respect to matters affecting that class. Class B shares will automatically
convert to Class A shares six years after the date of purchase. The following
is a summary of significant accounting policies consistently followed by the
Fund.
- --------------------------------------------------------------------------------
Investment Valuation. Portfolio securities are valued at the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
the last sale price on the prior trading day. Long-term and short-term
"non-money market" debt securities are valued by a portfolio pricing service
approved by the Board of Trustees. Such securities which cannot be valued by an
approved portfolio pricing service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering the quotes is reliable
and that the quotes reflect current market value, or are valued under
consistently applied procedures established by the Board of Trustees to
determine fair value in good faith. Short-term "money market type" debt
securities having a remaining maturity of 60 days or less are valued at cost (or
last determined market value) adjusted for amortization to maturity of any
premium or discount. Options are valued based upon the last sale price on the
principal exchange on which the option is traded or, in the absence of any
transactions that day, the value is based upon the last sale price on the prior
trading date if it is within the spread between the closing bid and asked
prices. If the last sale price is outside the spread, the closing bid is used.

20 Oppenheimer Limited-Term Government Fund
<PAGE>

- --------------------------------------------------------------------------------
Securities Purchased on a When-Issued Basis. Delivery and payment for securities
that have been purchased by the Fund on a forward commitment or when-issued
basis can take place a month or more after the transaction date. During the
period, such securities do not earn interest, are subject to market fluctuation
and may increase or decrease in value prior to their delivery. The Fund
maintains, in a segregated account with its custodian, assets with a market
value equal to the amount of its purchase commitments. The purchase of
securities on a when-issued or forward commitment basis may increase the
volatility of the Fund's net asset value to the extent the Fund makes such
purchases while remaining substantially fully invested. As of September 30,
1997, the Fund had entered into outstanding when-issued or forward commitments
of $266,798,217.

In connection with its ability to purchase securities on a
when-issued or forward commitment basis, the Fund may enter into mortgage
"dollar-rolls" in which the Fund sells securities for delivery in the current
month and simultaneously contracts with the same counterparty to repurchase
similar (same type, coupon and maturity) but not identical securities on a
specified future date. The Fund records each dollar-roll as a sale and a new
purchase transaction.
- --------------------------------------------------------------------------------
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, and Gains and Losses. Income, expenses (other
than those attributable to a specific class) and 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. At September 30, 1997, the
Fund had available for federal tax purposes an unused capital loss carryover of
approximately $9,648,000, expiring between 2001 and 2005.

21 Oppenheimer Limited-Term Government Fund
<PAGE>

- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
1. Significant Accounting Policies (continued)
Distributions to Shareholders. The Fund intends to declare dividends separately
for Class A, Class B and Class C shares from net investment income each day the
New York Stock Exchange is open for business and pay such dividends monthly.
Distributions from net realized gains on investments, if any, will be declared
at least once each year.
- --------------------------------------------------------------------------------
Classification of Distributions to Shareholders. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax purposes
primarily because of paydown gains and losses. The character of the
distributions made during the year from net investment income or net realized
gains may differ from its ultimate characterization for federal income tax
purposes. Also, due to timing of dividend distributions, the fiscal year in
which amounts are distributed may differ from the fiscal year in which the
income or realized gain was recorded by the Fund.

The Fund adjusts the classification of distributions to
shareholders to reflect the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, during the year ended September 30, 1997, amounts have been
reclassified to reflect a decrease in undistributed net investment income of
$1,142,754, a decrease in accumulated net realized loss on investments of
$5,226,655, and a decrease in paid-in capital of $4,083,901, of which $1,044,513
is considered a tax return of capital.
- --------------------------------------------------------------------------------
Other. Investment transactions are accounted for on the date the investments are
purchased or sold (trade date). Discount on securities purchased is amortized
over the life of the respective securities, in accordance with federal income
tax requirements. Realized gains and losses on investments and 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.

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.

22 Oppenheimer Limited-Term Government Fund
<PAGE>

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

<TABLE>
<CAPTION>
Year Ended September 30, 1997 Year Ended September 30, 1996
---------------------------------- --------------------------------
Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 33,021,129 $ 339,328,054 21,513,142 $ 222,573,075
Dividends reinvested 2,266,710 23,303,389 2,005,298 20,746,018
Redeemed (26,940,608) (276,691,626) (14,074,194) (145,567,099)
------------ -------------- ------------ --------------
Net increase 8,347,231 $ 85,939,817 9,444,246 $ 97,751,994
============ ============== ============ ==============
- ------------------------------------------------------------------------------------------
Class B:
Sold 6,061,213 $ 62,284,400 7,184,124 $ 74,533,887
Dividends reinvested 722,567 7,426,989 612,492 6,335,732
Redeemed (4,618,172) (47,456,661) (3,752,397) (38,779,221)
------------ -------------- ------------ --------------
Net increase 2,165,608 $ 22,254,728 4,044,219 $ 42,090,398
============ ============== ============ ==============
- ------------------------------------------------------------------------------------------
Class C:
Sold 4,851,238 $ 49,789,058 3,837,630 $ 39,749,107
Dividends reinvested 274,536 2,818,476 153,531 1,583,682
Redeemed (2,399,494) (24,614,507) (962,267) (9,907,108)
------------ -------------- ------------ --------------
Net increase 2,726,280 $ 27,993,027 3,028,894 $ 31,425,681
============ ============== ============ ==============

- -----------------------------------------------------------------------------------------
</TABLE>

3. Unrealized Gains and Losses on Investments

At September 30, 1997, net unrealized appreciation on investments of $467,157
was composed of gross appreciation of $10,657,312, and gross depreciation of
$10,190,155.

23 Oppenheimer Limited-Term Government Fund
<PAGE>

- --------------------------------------------------------------------------------
4. Management Fees and Other Transactions with Affiliates Management fees paid
to the Manager were in accordance with the investment advisory agreement with
the Fund which provides for a fee of 0.50% on the first $100 million of average
annual net assets, 0.45% on the next $150 million, 0.425% on the next $250
million and 0.40% on net assets in excess of $500 million.

The Manager acts as the accounting agent for the Fund at an annual
fee of $12,000, plus out-of-pocket costs and expenses reasonably incurred.

For the year ended September 30, 1997, commissions (sales charges
paid by investors) on sales of Class A shares totaled $2,369,751, of which
$649,017 was retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary
of the Manager, as general distributor, and by an affiliated broker/dealer.
Sales charges advanced to broker/dealers by OFDI on sales of the Fund's Class B
and Class C shares totaled $1,610,869 and $462,593, respectively, of which
$113,899 and $19,576, respectively, were paid to an affiliated broker/dealer.
During the year ended September 30, 1997, OFDI received contingent deferred
sales charges of $450,299 and $47,488, respectively, upon redemption of Class B
and Class C shares as compensation for sales commissions advanced by OFDI at the
time of sale of such shares.

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

The Fund has adopted a Service Plan for Class A shares to
reimburse OFDI for a portion of its costs incurred in connection with the
personal service and maintenance of shareholder accounts that hold Class A
shares. Reimbursement is made quarterly at an annual rate that may not exceed
0.25% of the average annual net assets of Class A shares of the Fund. OFDI uses
the service fee to reimburse brokers, dealers, banks and other financial
institutions quarterly for providing personal service and maintaining accounts
of their customers that hold Class A shares. During the year ended September 30,
1997, OFDI paid $81,789 to an affiliated broker/dealer as reimbursement for
Class A personal service and maintenance expenses.

24 Oppenheimer Limited-Term Government Fund
<PAGE>

- --------------------------------------------------------------------------------
The Fund has adopted Distribution and Service Plans for Class B and Class C
shares to compensate OFDI for its services and costs in distributing Class B and
Class C shares and servicing accounts. Under the Plans, the Fund pays OFDI an
annual asset-based sales charge of 0.75% per year on Class B shares and Class C
shares, as compensation for sales commissions paid from its own resources at the
time of sale and associated financing costs. OFDI also receives a service fee of
0.25% per year as compensation for costs incurred in connection with the
personal service and maintenance of accounts that hold shares of the Fund,
including amounts paid to brokers, dealers, banks and other financial
institutions. Both fees are computed on the average annual net assets of Class B
and Class C shares, determined as of the close of each regular business day.
During the year ended September 30, 1997, OFDI paid $12,731 and $10,271,
respectively, to an affiliated broker/dealer as compensation for Class B and
Class C personal service and maintenance expenses and retained $1,409,224 and
$351,116, respectively, as compensation for Class B and Class C sales
commissions and service fee advances, as well as financing costs. If either Plan
is terminated by the Fund, the Board of Trustees may allow the Fund to continue
payments of the asset-based sales charge to OFDI for distributing shares before
the Plan was terminated. At September 30, 1997, OFDI had incurred unreimbursed
expenses of $4,697,177 for Class B and $1,134,939 for Class C.
- --------------------------------------------------------------------------------
5. Futures Contracts

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

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

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

25 Oppenheimer Limited-Term Government Fund
<PAGE>

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

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

At September 30, 1997, the Fund had outstanding futures contracts as follows:

<TABLE>
<CAPTION>
Valuation as of
Expiration Number of September 30, Unrealized
Date Contracts 1997 Depreciation
- ----------------------------------------------------------------------------------------
Contracts to Purchase
- ---------------------
<S> <C> <C> <C> <C>
U.S. Treasury Bonds, 30 yr. 12/97 12 $ 1,383,375 $ 3,750
---------
Contracts to Sell
- ---------------------
U.S. Treasury Nts., 5 yr. 12/97 179 19,225,719 95,172
U.S. Treasury Nts., 10 yr. 12/97 355 39,094,375 363,750
---------
458,922
---------
$462,672
=========

- --------------------------------------------------------------------------------------
</TABLE>

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.

26 Oppenheimer Limited-Term Government Fund
<PAGE>

- --------------------------------------------------------------------------------
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
footnote to the Statement of Investments. Options written are reported as a
liability in the Statement of Assets and Liabilities. 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, 1997 was as follows:

<TABLE>
<CAPTION>
Call Options Put Options
-------------------------- -------------------------
Number of Amount of Number of Amount of
Options Premiums Options Premiums
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Options outstanding at
September 30, 1996 -- $ -- -- $ --
Options written 31,000 217,969 56 16,289
Options closed or expired (31,000) (217,969) (56) (16,289)
-------- ---------- ---- ---------
Options outstanding at
September 30, 1997 -- $ -- -- $ --
======== ========== ==== =========

- ----------------------------------------------------------------------------------
</TABLE>

7. Illiquid Securities

At September 30, 1997, 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 5% 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 at September 30, 1997
was $37,154, which represents 0.01% of the Fund's net assets.

27 Oppenheimer Limited-Term Government Fund
<PAGE>

- --------------------------------------------------------------------------------
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 OppenheimerFunds in an unsecured line of
credit with a bank, which permits borrowings up to $400 million, collectively.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the Federal Funds Rate plus 0.35%. Borrowings are payable 30 days after such
loan is executed. The Fund also pays a commitment fee equal to its pro rata
share of the average unutilized amount of the credit facility at a rate of
0.0575% per annum.

The Fund had no borrowings outstanding during the year ended
September 30, 1997.
- --------------------------------------------------------------------------------
9. Other Matters

At a meeting held on July 25, 1997, the Board of Trustees approved the addition
of Class Y shares for Oppenheimer Limited-Term Government Fund, to be offered at
a future date.

28 Oppenheimer Limited-Term Government Fund
<PAGE>

Appendix A

Industry Classifications

Corporate Industry Classifications

Aerospace/Defense
Air Transportation
Auto Parts Distribution
Automotive
Bank Holding Companies
Banks
Beverages
Broadcasting
Broker-Dealers
Building Materials
Cable Television
Chemicals
Commercial Finance
Computer Hardware
Computer Software
Conglomerates
Consumer Finance
Containers
Convenience Stores
Department Stores
Diversified Financial
Diversified Media
Drug Stores
Drug Wholesalers
Durable Household Goods
Education
Electric Utilities
Electrical Equipment
Electronics
Energy Services & Producers
Entertainment/Film
Environmental
<PAGE>
Food
Gas Utilities
Gold
Health Care/Drugs
Health Care/Supplies & Services
Homebuilders/Real Estate
Hotel/Gaming
Industrial Services
Information Technology
Insurance
Leasing & Factoring
Leisure
Manufacturing
Metals/Mining
Nondurable Household Goods
Oil - Integrated
Paper
Publishing/Printing
Railroads
Restaurants
Savings & Loans
Shipping
Special Purpose Financial
Specialty Retailing
Steel
Supermarkets
Telecommunications - Technology
Telephone - Utility
Textile/Apparel
Tobacco
Toys
Trucking
Wireless Services

A-1

<PAGE>

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

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

Transfer and Shareholder Servicing Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048

Custodian of Portfolio Securities
Citibank, N.A.
399 Park Avenue
New York, New York 10043

Independent Auditors
Deloitte & Touche LLP
555 Seventeenth Street
Denver, Colorado 80202

Legal Counsel
Myer, Swanson, Adams & Wolf, P.C.
1600 Broadway
Denver, Colorado 80202

PX0855.001.0198

A-2