OPPENHEIMER CHAMPION HIGH YIELD FUND
485APOS, 1998-11-30
Previous: INSURED MUNICIPALS INCOME TRUST MULTI SERIES 37, 24F-2NT, 1998-11-30
Next: INSURED MUNICIPALS INCOME TR & IN QU TAX EX TRUST MUL SER 65, 24F-2NT, 1998-11-30




                                                      Registration No. 33-16494
                                                              File No. 811-5281

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933                                                  [ X ]

Pre-Effective Amendment No. _____                             [   ]

Post-Effective Amendment No. 19                               [ X ]

                                     and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940                                                   [   ]

Amendment No. 19                                              [ X ]
                        Oppenheimer Champion Income Fund
- -------------------------------------------------------------------------------
              (Exact Name of Registrant as Specified in Charter)

- -------------------------------------------------------------------------------
                              6803 South Tucson Way
- -------------------------------------------------------------------------------
                               Englewood, CO 80122
               (Address of Principal Executive Offices) (Zip Code)

- -------------------------------------------------------------------------------
                                1-800-525-7048
- -------------------------------------------------------------------------------
             (Registrant's Telephone Number, including Area Code)

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

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

[ ] Immediately  upon filing  pursuant to paragraph  (b) [ ] On  _______________
pursuant to paragraph (b) [ ] 60 days after filing pursuant to paragraph  (a)(1)
[X ] On January 29, 1999  pursuant to paragraph  (a)(1) [ ] 75 days after filing
pursuant to paragraph (a)(2) [ ] On _______________ pursuant to paragraph (a)(2)
of Rule 485

If appropriate, check the following box:

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

<PAGE>



- -------------------------------------------------------------------------------
Oppenheimer Champion Income Fund
- -------------------------------------------------------------------------------


Prospectus dated January 29, 1999

      Oppenheimer  Champion Income Fund is a mutual fund that seeks high current
income by investing mainly in high-yield,  lower rated securities as its primary
goal. As a secondary  objective,  the Fund seeks capital growth when  consistent
with it main goal.

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




                                            (OppenheimerFunds logo)










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


<PAGE>



Contents

           About the Fund
- -------------------------------------------------------------------------------

           The Fund's Objectives and Investment Strategies

           Main Risks of Investing in the Fund

           The Fund's Past Performance

           Fees and Expenses of the Fund

           About the Fund's Investments

           How the Fund is Managed


           About Your Account
- -------------------------------------------------------------------------------

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

           Special Investor Services
           AccountLink
           Phone Link
           OppenheimerFunds Web Site
           Retirement Plans

           How to Sell Shares
           By Mail
           By Telephone
           By Checkwriting

           How to Exchange Shares

           Shareholder Account Rules and Policies

           Dividends, Capital Gains and Taxes

           Financial Highlights


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


<PAGE>


About the Fund
- -------------------------------------------------------------------------------

The Fund's Objectives and Investment Strategies

- -------------------------------------------------------------------------------
What Are the Fund's  Investment  Objectives?  The Fund's main  objective  is to
seek a high  level  of  current  income  primarily  by  investing  in a
diversified  portfolio  of  high-yield,   lower-rated  fixed-income  securities
believed  by the Fund's  investment  Manager,  OppenheimerFunds,  Inc.,  not to
involve undue risk.
- -------------------------------------------------------------------------------

The Fund's  secondary  objective is to seek capital growth when  consistent with
its primary objective.

What Does the Fund  Invest  In?  The Fund  invests  mainly in a variety of high
yield  debt  securities  of  domestic  and  foreign  issuers  for high  current
income. These securities typically include:
o     Lower-grade bonds and notes of corporate issuers
o     Foreign government bonds,
o     mortgage-related securities and other asset-backed securities,
o     participation interests in loans
o     "structured" notes
o     preferred stock

      Under normal market conditions, the Fund invests at least 60% of its total
assets in high-yield,  lower grade fixed-income securities. The remainder of the
Fund's assets can be invested in common stocks or other equity securities,  such
as  warrants  and  rights,  or in cash and  cash  equivalents  when the  Manager
believes those  investments are consistent with the Fund's  objectives.  In some
cases,  equity securities may be acquired as part of a "unit" of securities that
includes a combination of  fixed-income  and equity  securities.  Investments in
high yield securities and equity  securities may also provide  opportunities for
capital growth while also providing income to the Fund.

      The Fund's foreign  investments  can include debt securities of issuers in
emerging  markets,  which  have  special  risks.  The Fund can also use  hedging
instruments and certain derivative investments, primarily "structured notes," to
try to enhance income or to try to manage  investment  risks.  These investments
are more fully explained in "About the Fund's Investments," below.

|X| How Does the Manager  Decide What  Securities  to Buy or Sell?  In selecting
securities  for the Fund,  the Fund's  portfolio  manager  analyzes  the overall
investment  opportunities and risks in different market sectors,  industries and
countries.  The  manager's  overall  strategy is to build a broadly  diversified
portfolio of debt  securities to help moderate the special risks of investing in
high yield debt instruments.  The portfolio manager currently uses a "bottom up"
approach to issuer  analysis  to  evaluate  the  issuer's  liquidity,  financial
strength and earnings power.  The portfolio  manager also focuses on the factors
below  (which may vary in  particular  cases and may change over time),  looking
for: |_| Changes in the business cycle that might affect corporate profits,  |_|
Corporate sectors that in the manager's view are currently undervalued
        in the marketplace,
|_|   Issuers with  earnings  growth rates that are faster than the growth rate
        of the overall economy,
      |_| Securities or sectors that will help the overall  diversification  of
the portfolio,
      |_| Issuers with improvements in relative cash flows and liquidity to help
      them meet their obligations.

Who Is the Fund  Designed  For?  The Fund is designed  primarily  for  investors
seeking high current income from a fund that can have significant investments in
lower-grade  domestic and foreign debt  securities.  Those  investors  should be
willing to assume the risks of  short-term  share  price  fluctuations  that are
typical  for a fund  that  invests  in  high-yield  domestic  and  foreign  debt
securities,  which  have  special  risks.  Since the  Fund's  income  level will
fluctuate,  it is not designed for investors needing an assured level of current
income. The Fund is designed as a long-term investment and may be appropriate as
a part of an investor's  retirement plan portfolio.  However,  the Fund is not a
complete investment program.

Main Risks of Investing in the Fund

      All investments carry risks to some degree. The Fund's investments in debt
and equity  securities  are  subject to changes in their  value from a number of
factors.  They include changes in general bond and stock market movements in the
U.S. and abroad (this is referred to as "market  risk"),  or the change in value
of particular  bonds or stocks because of an event affecting the issuer (this is
known  as  "credit  risk").  The  Fund  can  focus  significant  amounts  of its
investments  in foreign  securities.  Therefore,  it may be subject to the risks
that  economic,  political  or other  events can have a  negative  effect on the
values of issuers in particular foreign countries. These risks are heightened in
the case of emerging market debt securities.  Changes in interest rates can also
affect bond prices (this is known as "interest rate risk").

      These risks collectively form the risk profile of the Fund, and can affect
the value of the Fund's  investments,  its investment  performance and its price
per share.  These risks mean that you can lose money by  investing  in the Fund.
When you redeem your  shares,  they may be worth more or less than what you paid
for them.

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

      However, changes in the overall market prices of securities and the income
they pay can  occur at any  time.  The  share  price  and yield of the Fund will
change  daily  based on  changes  in market  prices  of  securities  and  market
conditions, and in response to other economic events. There is no assurance that
the Fund will achieve its investment objectives.

      |X| Credit Risk. Debt  securities are subject to credit risk.  Credit risk
relates  to the  ability  of the  issuer  of a  security  to make  interest  and
principal  payments on the  security as they become due. If the issuer  fails to
pay interest,  the Fund's income may be reduced and if the issuer fails to repay
principal,  the value of that bond and of the Fund's shares may be reduced.  The
Fund's  investments in high-yield,  lower-grade debt securities,  are especially
subject to risks of default.


           |_| Special  Risks of  Lower-Grade  Securities.  Because the Fund can
invest without limit in securities  below  investment grade to seek high income,
the Fund's credit risks are greater than those of funds that buy only investment
grade  bonds.  Lower-grade  debt  securities  may be subject  to greater  market
fluctuations and greater risks of loss of income and principal than higher-rated
debt  securities.  Securities  that are (or that have fallen)  below  investment
grade are exposed to a greater risk that the issuers of those  securities  might
not meet their debt obligations.  These risks can reduce the Fund's share prices
and the income it earns.

      |X|  Risks of  Foreign  Investing.  The Fund can  invest up to 100% of its
assets in foreign debt  securities  and may buy  securities of  governments  and
companies  in both  developed  markets and emerging  markets.  The Fund does not
currently intend to invest more than 25% of its assets in foreign securities but
may invest significant amounts of its assets in those securities.  While foreign
securities offer special investment opportunities,  there are also special risks
that can reduce the Fund's share prices and returns.

      The change in value of a foreign  currency  against  the U.S.  dollar will
result in a change in the U.S.  dollar value of securities  denominated  in that
foreign  currency.  Currency rate changes can also affect the  distributions the
Fund  makes from the  income it  receives  from  foreign  securities  as foreign
currency values change against the U.S. dollar.  Foreign investing can result in
higher  transaction  and operating  costs for the Fund.  Foreign issuers are not
subject to the same accounting and disclosure  requirements that U.S.  companies
are  subject  to. The value of foreign  investments  may be affected by exchange
control  regulations,  expropriation or  nationalization  of a company's assets,
foreign taxes,  delays in settlement of  transactions,  changes in  governmental
economic  or  monetary  policy in the U.S.  or abroad,  or other  political  and
economic  factors.  There may be transaction costs and risks from the conversion
of certain European currencies to the Euro in January 1999.

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

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

      |X|  Interest  Rate Risks.  The values of debt  securities  are subject to
change when  prevailing  interest  rates change.  When interest  rates fall, the
values of  already-issued  debt  securities  generally rise. When interest rates
rise, the values of already-issued debt securities  generally decline,  and they
may  sell  at a  discount  from  their  face  amount.  The  magnitude  of  these
fluctuations  will  often  be  greater  for  longer-term  debt  securities  than
shorter-term  debt securities.  The Fund generally  anticipates that the average
maturity of its portfolio  investments  will be between 7 and 15 years,  but can
vary.  The Fund's  share  prices can go up or down when  interest  rates  change
because of the effect of the changes on the value of the Fund's  investments  in
debt securities.

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

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

      |X| Risks in Using Derivative Investments. The Fund can use derivatives to
seek increased income or to try to hedge  investment  risks. In general terms, a
derivative  investment  is one whose value  depends on (or is derived  from) the
value  of an  underlying  asset,  interest  rate  or  index.  Options,  futures,
structured notes and forward contracts are examples of derivatives.

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

How Risky is the Fund Overall?  In the short term, the values of high yield debt
securities  can  fluctuate  substantially  because of interest  rate changes and
perceptions   about  the  high  yield  market  among  investors.   Foreign  debt
securities,  particularly those of issuers in emerging markets, can be volatile,
and the price of the Fund's shares can go up and down  substantially  because of
events affecting foreign markets or issuers. The Fund's diversification strategy
and the income from the Fund's  investments  may help  cushion the Fund's  share
prices  from that  volatility,  but debt  securities  are  subject to credit and
interest  rate risks that can affect  their  values and the share  prices of the
Fund. In the Oppenheimer  funds spectrum,  the Fund is generally more aggressive
and has more risks than bond funds that focus on U. S. government securities and
investment  grade bonds but may be less  aggressive than funds that focus solely
on investments in foreign markets.

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


The Fund's Past Performance

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

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

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

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


- ----------------------------------------------------------------------
Average     Annual
Total  Returns for   Past 1 Year      Past 5 Years    Past 10 Years
the        periods                    (or life of      (or life of
ending    December                  class, if less)  class, if less)
31, 1998
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Class A Shares            %                %                %
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Class B Shares            %                %*              N/A
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Class C Shares            %                %                %*
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Lehman Bros.
Corporate Bond            %                %                %*
Index
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Merrill Lynch
High Yield Master         %                %                %*
Index
- ----------------------------------------------------------------------

* Inception  dates of classes:  Class A: 11/16/87.  Class B: 10/2/95.  Class C:
12/1/93. The index performance is shown from 1/1/89.

The Fund's  average  annual total  returns in the table  include the  applicable
sales  charge for Classes A, B and C shares:  for Class A, the  current  maximum
initial  sales  charge of  4.75%;  for Class B, the  contingent  deferred  sales
charges  of 5%  (1-year)  and 3%  (life  of  class);  and for  Class  C,  the 1%
contingent deferred sales charge for the 1-year period.

The returns  measure the  performance of a hypothetical  account and assume that
all dividends and capital gains distributions have been reinvested in additional
shares.  Because the Fund  invests in a variety of debt  securities,  the Fund's
performance  is  compared  to the  Lehman  Brothers  Corporate  Bond  Index,  an
unmanaged index of nonconvertible U.S. investment grade corporate bonds, and the
Merrill   Lynch   High   Yield   Master   Index,    an   unmanaged    index   of
below-investment-grade  debt securities of U.S. corporate issuers.  However,  it
must be  remembered  that the index  performance  reflects the  reinvestment  of
income but does not consider the effects of capital gains or transaction  costs.
Also, the Fund may have investments that vary from both indices.

Fees and Expenses of the Fund

      The Fund pays a variety of expenses directly for management of its assets,
administration,  distribution of its shares and other  services.  Those expenses
are  subtracted  from the Fund's  assets to calculate the Fund's net asset value
per  share.   All   shareholders   therefore  pay  those  expenses   indirectly.
Shareholders  pay other  expenses  directly,  such as sales  charges and account
transaction  charges.  The following  tables are provided to help you understand
the fees and  expenses  you may pay if you buy and hold shares of the Fund.  The
numbers  below are based on the Fund's  expenses  during  its fiscal  year ended
September 30, 1998.

Shareholder Fees (charges paid directly from your investment):

- --------------------------------------------------------------------
                          Class A    Class B Shares Class C Shares
                          Shares
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Maximum Sales Charge
(Load) on purchases        4.75%          None           None
(as % of offering
price)
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Maximum Deferred
Sales Charge (Load)
(as % of the lower of      None1          5%2             1%3
the original offering
price or redemption
proceeds)
- --------------------------------------------------------------------
1. A contingent deferred sales charge may apply to redemptions of investments of
   $1 million or more ($500,000 for retirement plan accounts) of Class A shares.
   See "How to Buy Shares" for details.
2. Applies to redemptions in first year after purchase.  The contingent deferred
   sales charge declines to 1% in the sixth year and is eliminated after that.
3. Applies to shares redeemed within 12 months of purchase.


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

- --------------------------------------------------------------------
                       Class A Shares    Class B    Class C Shares
                                         Shares
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Management Fees                     %             %               %
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Distribution    and/or              %         1.00%           1.00%
Service (12b-1) Fees
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Other Expenses                      %             %               %
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Total           Annual              %             %               %
Operating Expenses
- --------------------------------------------------------------------
Numbers in the chart are based on the Fund's  expenses in the last fiscal  year,
ended  9/30/98.  Expenses may vary in future  years.  "Other  expenses"  include
transfer agent fees,  custodial expenses,  and accounting and legal expenses the
Fund pays.

Examples.  These examples are intended to help you compare the cost of investing
in the Fund with the cost of  investing  in other  mutual  funds.  The  examples
assume  that you  invest  $10,000  in a class of shares of the Fund for the time
periods  indicated and reinvest  your  dividends  and  distributions.  The first
example  assumes that you redeem all of your shares at the end of those periods.
The second example assumes that you keep your shares.  Both examples also assume
that your  investment  has a 5% return each year and that the class's  operating
expenses  remain  the same.  Your  actual  costs may be higher or lower  because
expenses will vary over time. Based on these  assumptions your expenses would be
as follows:

- ----------------------------------------------------------------------
If shares are           1 Year      3 Years     5 Years    10 Years1
redeemed:
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Class A Shares               $578         $796     $1,032      $1,708
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Class B Shares               $684         $869     $1,180      $1,749
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Class C Shares               $284         $569       $980      $2,127
- ----------------------------------------------------------------------


- ----------------------------------------------------------------------
If shares are not       1 Year      3 Years     5 Years    10 Years1
redeemed:
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Class A Shares               $578         $796       $980      $1,708
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Class B Shares               $184         $569       $980      $1,749
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Class C Shares               $184         $569       $989      $2,127
- ----------------------------------------------------------------------

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


About the Fund's Investments

The  Fund's  Principal  Investment  Policies.  The  composition  of  the  Fund's
portfolio among the different types of permitted investments will vary over time
based upon the evaluation of economic and market trends by the Manager. However,
under  normal  market  conditions,   investments  in  high-yield,   lower  grade
fixed-income securities will be emphasized.

      Debt  securities are  essentially a loan by the buyer to the issuer of the
debt  security,  who promises to pay back the  principal  amount of the loan and
normally  pays  interest,  at a fixed or variable  rate, on the debt while it is
outstanding.  The Fund can  invest in  different  types of debt  securities,  as
described  above.  The debt  securities the Fund buys may be rated by nationally
recognized rating  organizations or they may be unrated  securities  assigned an
equivalent rating by the Manager. The Fund's investments primarily will be below
investment  grade in credit  quality  and the Fund can invest  without  limit in
those securities, commonly called "junk bonds."

      The Fund can invest some of its assets in other types of debt  securities,
as well as common  stocks  and  other  equity  securities  of  foreign  and U.S.
companies when consistent with the Fund's main goal. The Statement of Additional
Information  contains  more  detailed  information  about the Fund's  investment
policies and risks.

      |X|  High-Yield,  Lower-Grade  Debt  Securities.  The Fund can  purchase a
variety of lower-grade,  high yield debt securities of U.S.  issuers,  including
bonds,  debentures,  notes,  preferred  stocks,  loan  participation  interests,
structured notes,  asset-backed  securities,  among others, to seek high current
income.  The Fund has no  requirements as to the maturity of the debt securities
it can buy,  or as to the market  capitalization  range of the  issuers of those
securities.  There are no limits on the amount of the Fund's  assets that can be
invested in debt securities below investment grade.

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

      The Manager does not rely solely on ratings issued by rating organizations
when selecting  investments  for the Fund.  The Fund can buy unrated  securities
that the Manager believes offer high current income.  In those cases the Manager
may assign an equivalent  rating to securities the Manager believes offer yields
and risks comparable to rated securities.

      While  investment  grade securities are subject to risks of non-payment of
interest and principal,  generally,  higher yielding  lower-grade bonds, whether
rated or unrated, have greater risks than investment grade securities.  They may
be  subject  to  greater  market  fluctuations  and risk of loss of  income  and
principal than investment  grade  securities.  There may be less of a market for
them and therefore they may be harder to sell at an acceptable price. There is a
relatively greater possibility that the issuer's earnings may be insufficient to
make the payments of interest and principal  due on the bonds.  These risks mean
that the Fund may not achieve the expected income from  lower-grade  securities,
and that the Fund's net asset  value per share may be  affected  by  declines in
value of these securities.

      |X|  Mortgage-Related  Securities.  These  include  interests in pools of
residential or commercial  mortgages,  in the form of  collateralized  mortgage
obligations  ("CMOs") and other "pass-through"  mortgage  securities.  They may
be  issued  or  guaranteed   by  the  U.S.   government  or  its  agencies  and
instrumentalities,  or by  private  issuers.  CMOs  that  are  U.S.  government
securities  have  collateral to secure payment of interest and principal.  They
may  be  issued  in  different   series  with  different   interest  rates  and
maturities.  The  collateral  is  either in the form of  mortgage  pass-through
certificates  issued  or  guaranteed  by a U.S.  agency or  instrumentality  or
mortgage loans insured by a U.S. government agency.

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

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

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

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

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

      |X| Foreign Debt Securities. The Fund can buy a variety of debt securities
issued  by  foreign  governments  and  companies,  as well  as  "supra-national"
entities, such as the World Bank. They can include bonds, debentures, and notes,
including derivative investments called "structured notes," described below. The
Fund will not invest 25% or more of its total assets in debt  securities  of any
one foreign government or in debt securities of governments and companies in any
one foreign company.

      The  Fund has no  requirements  as to the  maturity  of the  foreign  debt
securities it can buy, or as to the market  capitalization  range of the issuers
of those securities.  The Fund will buy foreign currency only in connection with
the purchase and sale of foreign securities and not for speculation.

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

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

      |X|  Stocks.  The Fund  can  invest  in  common  stock  and  other  equity
securities,  including  warrants  and rights,  preferred  stock and  convertible
securities, when consistent with the Fund's primary objective.

           |_| Risks of Investing  in Stocks.  Stocks  fluctuate  in price,  and
their  short-term  volatility at times may be great. To the extent that the Fund
invests in equity securities, the value of the Fund's portfolio will be affected
by changes  in the stock  markets.  Market  risk can affect the Fund's net asset
value per share,  which  will  fluctuate  as the values of the Fund's  portfolio
securities  change.  The prices of individual stocks do not all move in the same
direction  uniformly  or at the same time.  Different  stock  markets may behave
differently from each other.

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

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

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

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

Other Investment  Strategies.  To seek its objective,  the Fund may also use the
investment  techniques and strategies  described below. These techniques involve
certain  risks,  although some are designed to help reduce  investment or market
risks.

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

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

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

      |X|  Participation  Interests  in Loans.  These  securities  represent  an
undivided  fractional  interest in a loan  obligation  by a  borrower.  They are
typically purchased from banks or dealers that have made the loan or are members
of the loan syndicate.  The loans may be to foreign or U.S. companies.  The Fund
does not invest more than 5% of its assets in participation interests of any one
borrower.  They are  subject  to the risk of  default  by the  borrower.  If the
borrower  fails to pay interest or repay  principal,  the Fund can lose money on
its investment.

      |X| "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.

      |X| Illiquid and Restricted Securities.  Under the policies and procedures
established  by the  Fund's  Board  of  Trustees,  the  Manager  determines  the
liquidity  of certain of the Fund's  investments.  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. The Fund will
not invest more than 10% of its net assets in illiquid or restricted  securities
(the Board may increase that limit to 15%). Certain  restricted  securities that
are eligible for resale to qualified institutional purchasers are not subject to
that limit. The Manager monitors  holdings of illiquid  securities on an ongoing
basis to determine whether to sell any holdings to maintain adequate liquidity.

      |X| Derivative  Investments.  The Fund can invest in a number of different
kinds  of  "derivative"  investments.  In the  broadest  sense,  exchange-traded
options, futures contracts, and other hedging instruments the Fund might use may
be   considered   "derivative   investments."   In  addition  to  using  hedging
instruments,  the Fund may use other derivative  investments  because they offer
the potential for increased income and principal value.

      Markets  underlying  securities  and indices  may move in a direction  not
anticipated  by the Manager.  Interest rate and stock market changes in the U.S.
and abroad may also  influence the  performance of  derivatives.  As a result of
these risks the Fund could realize less  principal or income from the investment
than expected. Certain derivative investments held by the Fund may be illiquid.
      |X| Hedging.  The Fund can buy and sell interest  rate futures  contracts,
put and call  options,  forward  contracts  and call  options on  interest  rate
futures.  These are all referred to as "hedging  instruments." The Fund does not
use hedging instruments for speculative  purposes,  and has limits on its use of
them.

      The Fund may buy and sell  options,  futures and forward  contracts  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. As a fundamental policy, the Fund can buy and sell puts
and  calls  only if they are  listed on a  domestic  securities  or  commodities
exchange or NASDAQ.

      Some of these strategies can be used to hedge the Fund's portfolio against
price fluctuations.  Other hedging  strategies,  such as buying futures and call
options,  would increase the Fund's exposure to the securities  market.  Forward
contracts  can be used to try to manage  foreign  currency  risks on the  Fund's
foreign  investments.  Foreign  currency  options  may be used to try to protect
against declines in the dollar value of foreign  securities the Fund owns, or to
protect  against an increase in the dollar  cost of buying  foreign  securities.
Writing  covered  call  options  may be used to  provide  income to the Fund for
liquidity purposes or to raise cash to distribute to shareholders.

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

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

Temporary Defensive Investments.  For cash management purposes the Fund may hold
cash equivalents such as commercial paper, repurchase agreements, Treasury bills
and other short-term U.S. government securities.  In times of unstable market or
economic  conditions,  the Fund may invest up to 100% of its assets in temporary
defensive  investments.  These would  ordinarily be short-term U. S.  government
securities,  highly-rated  commercial  paper,  bank  obligations  or  repurchase
agreements.  To the extent the Fund invests defensively in these securities,  it
may not achieve its primary investment objective of high current income.

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

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


How the Fund Is Managed

The Manager.  The Fund's  investment  adviser is the Manager,  OppenheimerFunds,
Inc., which chooses the Fund's investments and handles its day-to-day  business.
The Manager carries out its duties,  subject to the policies  established by the
Board of  Trustees,  under an  Investment  Advisory  Agreement  that  states the
Manager's  responsibilities.  The Agreement sets 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  adviser since 1959. The Manager
(including subsidiaries) currently manages investment companies, including other
Oppenheimer funds, with assets of more than $90 billion as of December 31, 1998,
and with more than 4 million shareholder accounts. The Manager is located at Two
World Trade Center, 34th Floor, New York, New York 10048-0203.

      |X|  Portfolio  Managers.  The  portfolio  managers of the Fund are David
P. Negri,  Thomas  Reedy and Ralph  Stellmacher.  Each is a Vice  President  of
the Fund.  Messrs.  Negri and  Stellmacher  are Senior Vice  Presidents  of the
Manager.  Mr. Reedy is a Vice  President  of the Manager.  Mr. Negri has been a
portfolio  manager  since  December  1997.  Messrs. Reedy and Stellmacher
became portfolio managers in October 1998.  Each is an  officer  and  portfolio
manager for other Oppenheimer funds.

      |X| Advisory Fees. Under the Investment Advisory Agreement,  the Fund pays
the Manager an advisory fee at an annual rate that declines on additional assets
as the Fund grows:  0.70% of the first $250 million of average annual net assets
of the Fund, 0.65% of the next $250 million, 0.60% of the next $500 million, and
0.55% of  average  annual  net  assets  in  excess  of $1  billion.  The  Fund's
management  fee for its last fiscal year ended  September  30, 1998 was 0.__% of
average annual net assets for each class of shares.


- -------------------------------------------------------------------------------
About Your Account
- -------------------------------------------------------------------------------

How to Buy Shares

How Are Shares Purchased? You can buy shares several ways -- through any dealer,
broker or  financial  institution  that has a sales  agreement  with the  Fund's
Distributor, directly through the Distributor, or automatically through an Asset
Builder Plan under the OppenheimerFunds AccountLink service. The Distributor may
appoint certain servicing agents to accept purchase (and redemption) orders. The
Distributor,  in its sole  discretion,  may  reject any  purchase  order for the
Fund's shares.

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

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

     |X| Buying  Shares by Federal  Funds  Wire.  Shares  purchased  through the
Distributor  may be paid for by Federal  Funds wire.  The minimum  investment is
$2,500.  Before  sending  a wire,  call the  Distributor's  Wire  Department  at
1-800-525-7048  to notify the  Distributor of the wire,  and to receive  further
instructions.

     |X| Buying Shares Through OppenheimerFunds  AccountLink.  With AccountLink,
shares  are  purchased  for  your  account  on  the  regular  business  day  the
Distributor  is  instructed  by you to initiate  the  Automated  Clearing  House
transfer to buy the shares.  You can provide those  instructions  automatically,
under an Asset Builder Plan, described below, or by telephone instructions using
OppenheimerFunds PhoneLink, also described below. Please refer to "AccountLink,"
below for more details.

     |X| Buying Shares Through Asset Builder Plans.  You may purchase  shares of
the Fund (and up to four other Oppenheimer funds)  automatically each month from
your account at a bank or other  financial  institution  under an Asset  Builder
Plan with  AccountLink.  Details are in the Asset  Builder  Application  and the
Statement of Additional Information.

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

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

     |_| Under retirement plans, such as IRAs, pension and profit-sharing  plans
and 401(k) plans, you can start your account with as little as $250. If your IRA
is started under an Asset Builder Plan, the $25 minimum applies.
Additional purchases may be as little as $25.

     |_| The  minimum  investment  requirement  does not  apply  to  reinvesting
dividends  from the Fund or other  Oppenheimer  funds (a list of them appears in
the Statement of Additional Information,  or you can ask your dealer or call the
Transfer Agent), or reinvesting  distributions  from unit investment trusts that
have made arrangements with the Distributor.

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

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

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

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

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

- -------------------------------------------------------------------------------
What  Classes of Shares Does the Fund Offer?  The Fund offers  investors  three
different  classes  of  shares.  The  different  classes  of  shares  represent
investments in the same  portfolio of  securities,  but the classes are subject
to different  expenses and will likely have  different  share prices.  When you
buy  shares,  be sure to  specify  the class of  shares.  If you do not choose a
class, your investment will be made in Class A shares.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
      |X| Class A Shares.  If you buy Class A shares,  you pay an initial  sales
charge (on  investments  up to $1 million for regular  accounts or $500,000  for
certain  retirement  plans). The amount of that sales charge will vary depending
on the amount you invest.  The sales  charge  rates are listed in "How Can I Buy
Class A Shares?" below.

      |X| Class B Shares.  If you buy Class B shares,  you pay no sales  charge
at the time of purchase,  but you will pay an annual  asset-based  sales charge
and if you  sell  your  shares  within  six  years  of  buying  them,  you will
normally  pay a contingent  deferred  sales  charge.  The  contingent  deferred
sales charge varies  depending on how long you own your shares,  as described in
"How Can I Buy Class B Shares?" below.
- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
     |X| Class C Shares.  If you buy Class C shares,  you pay no sales charge at
the time of purchase, but you will pay an annual asset-based sales charge and if
you sell your shares  within 12 months of buying them,  you will  normally pay a
contingent  deferred  sales charge of 1%, as described in "How Can I Buy Class C
Shares?" below.


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

     The  discussion  below  is  not  intended  to  be  investment  advice  or a
recommendation,  because each investor's financial considerations are different.
You should  review these factors with your  financial  advisor.  The  discussion
below  assumes  that  you will  purchase  only one  class of  shares,  and not a
combination of shares of different classes.

     |X| How Long Do You Expect to Hold Your Investment?  While future financial
needs cannot be predicted  with  certainty,  knowing how long you expect to hold
your investment  will assist you in selecting the  appropriate  class of shares.
Because of the effect of class-based  expenses,  your choice will also depend on
how much you plan to invest.  For example,  the reduced sales charges  available
for larger  purchases  of Class A shares  may,  over time,  offset the effect of
paying an initial sales charge on your  investment,  compared to the effect over
time of higher class-based expenses on shares of Class B or Class C .

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

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

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

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

     Of course,  these  examples  are based on  approximations  of the effect of
current sales charges and expenses projected over time, and do not detail all of
the  considerations  in  selecting a class of shares.  You should  analyze  your
options carefully with your financial advisor before making that choice.

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

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

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

Special  Sales Charge  Arrangements  and Waivers.  The  Statement of  Additional
Information details the conditions for the waiver of sales charges that apply in
certain  cases,  and the special  sales  charge rates that apply to purchases of
shares  of the Fund by  certain  groups,  or  under  specified  retirement  plan
arrangements or in other special types of transactions.

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

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


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

Less than $50,000       4.75%            4.98%            4.00%
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------

$50,000 or more
but less than           4.50%            4.71%            3.75%
$100,000
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------

$100,000 or more
but less than           3.50%            3.63%            2.75%
$250,000
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------

$250,000 or more
but less than           2.50%            2.56%            2.00%
$500,000
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------

$500,000 or more
but less than $1        2.00%            2.04%            1.60%
million
- ----------------------------------------------------------------------

      |X| Class A Contingent  Deferred  Sales Charge.  There is no initial sales
charge  on  purchases  of Class A shares  of any one or more of the  Oppenheimer
funds  aggregating  $1 million or more or for certain  purchases  by  particular
types  of  retirement  plans  described  in the  Appendix  to the  Statement  of
Additional Information. The Distributor pays dealers of record commissions in an
amount  equal to 1.0% of  purchases  of $1  million  or more other than by those
retirement accounts.  For those retirement plan accounts, the commission is 1.0%
of the first $2.5 million,  plus 0.50% of the next $2.5  million,  plus 0.25% of
purchases over $5 million,  calculated on a calendar year basis. In either case,
the commission  will be paid only on purchases that were not previously  subject
to a front-end sales charge and dealer commission.1

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

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

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

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

      |X| Waivers of Class A Sales Charges.  The initial and contingent  Class A
sales charges are not imposed in the  circumstances  described 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 when  purchasing  shares  whether any of the special  conditions
apply.

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

      The  contingent  deferred sales charge will be based on the lesser of the
net  asset  value  of the  redeemed  shares  at the time of  redemption  or the
original  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 an increase in net
      asset value over the initial purchase price or |_| shares purchased by the
      reinvestment  of  dividends  or capital  gains  distributions.  |_| shares
      redeemed in the special circumstances described in Appendix C to the
      Statement of Additional Information.

      To determine  whether the  contingent  deferred  sales charge applies to a
redemption,  the Fund redeems shares in the following order: (1) shares acquired
by reinvestment of dividends and capital gains
        distributions,
(2)   shares held for over 6 years, and
(3) shares held the longest during the 6-year period.

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

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

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

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

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

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

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

      To determine  whether the  contingent  deferred  sales charge applies to a
redemption,  the Fund redeems shares in the following order: (1) shares acquired
by reinvestment of dividends and capital gains
        distributions,
(2)   shares held for over 12 months, and
(3) shares held the longest during the 12-month period.

Distribution and Service (12b-1) Plans.

      |X| Service  Plan for Class A Shares.  The Fund has adopted a Service Plan
for Class A shares.  It reimburses  the  Distributor  for a portion of its costs
incurred  for  services   provided  to  accounts   that  hold  Class  A  shares.
Reimbursement  is made quarterly at an annual rate of up to 0.25% of the average
annual net assets of Class A shares of the Fund. The Distributor  currently uses
all of those fees to  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.

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

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

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

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

      The Distributor  currently pays sales commissions of 0.75% of the purchase
price of Class C shares to dealers  from its own  resources at the time of sale.
Including  the  advance  of the  service  fee,  the  total  amount  paid  by the
Distributor  to the  dealer at the time of sale of Class C shares  is  therefore
1.00% of the purchase price. The Distributor  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.


Special Investor Services

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

      You may  purchase  shares by  telephone  only after your  account has been
established.  To purchase  shares in amounts up to $250,000  through a telephone
representative,  call the Distributor at  1-800-852-8457.  The purchase  payment
will be debited from your bank account.

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

PhoneLink.  PhoneLink is the  OppenheimerFunds  automated  telephone system that
enables shareholders to perform a number of account  transactions  automatically
using a touch-tone  phone.  PhoneLink  may be used on  already-established  Fund
accounts after you obtain a Personal Identification Number (PIN), by calling the
special PhoneLink number, 1-800-533-3310.

      |_| Purchasing  Shares.  You may purchase shares in amounts up to $100,000
by phone,  by  calling  1-800-533-3310.  You must have  established  AccountLink
privileges to link your bank account with the Fund to pay for these purchases.

      |_|  Exchanging  Shares.  With the  OppenheimerFunds  Exchange  Privilege,
described below,  you can exchange shares  automatically by phone from your Fund
account to another  Oppenheimer  funds account you have already  established  by
calling the special PhoneLink number.

      |_| Selling Shares.  You can redeem shares by telephone  automatically  by
calling the  PhoneLink  number and the Fund will send the  proceeds  directly to
your AccountLink  bank account.  Please refer to "How to Sell Shares," below for
details.

Can I Submit  Transaction  Requests by Fax?  You may send  requests  for certain
types of account transactions to the Transfer Agent by fax (telecopier).  Please
call 1-800-525-7048 for information about which transactions may be handled this
way.  Transaction  requests  submitted  by fax are subject to the same rules and
restrictions as written and telephone requests described in this Prospectus.

OppenheimerFunds  Internet Web Site. You can obtain  information about the Fund,
as well as your account balance, on the  OppenheimerFunds  Internet web site, at
http://www.oppenheimerfunds.com.   Additionally,   shareholders  listed  in  the
account  registration  (and the dealer of record)  may request  certain  account
transactions  through a special  section of that web site.  To  perform  account
transactions,  you must first obtain a personal  identification  number (PIN) by
calling  the  Transfer  Agent  at  1-800-533-3310.  If you do not  want  to have
Internet  account  transaction  capability  for your  account,  please  call the
Transfer Agent at 1-800-525-7048.

Automatic  Withdrawal and Exchange Plans. The Fund has several plans that enable
you to sell shares  automatically  or exchange them to another  Oppenheimer fund
account on a regular  basis.  Please  call the  Transfer  Agent or  consult  the
Statement of Additional Information for details.

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

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

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

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

How to Sell Shares

      You can sell (redeem)  some or all of your shares on any regular  business
day. Your shares will be sold at the next net asset value  calculated after your
order is received in proper form (which means it must comply with the procedures
described  below) and is accepted by the Transfer Agent.  The Fund lets you sell
your shares by writing a letter, by using the Fund's  checkwriting  privilege or
by telephone. You can also set up Automatic Withdrawal Plans to redeem shares on
a  regular  basis.  If you have  questions  about any of these  procedures,  and
especially if you are redeeming  shares in a special  situation,  such as due to
the  death of the  owner or from a  retirement  plan  account,  please  call the
Transfer Agent first, at 1-800-525-7048, for assistance.

      |X| Certain Requests Require a Signature Guarantee. To protect you and the
Fund from fraud, the following  redemption  requests must be in writing and must
include a  signature  guarantee  (although  there may be other  situations  that
require a signature guarantee):
      |_| You  wish to  redeem  $50,000  or more  and  receive  a check  |_| The
      redemption check is not payable to all shareholders listed on
the account statement
      |_| The  redemption  check is not sent to the  address  of record on your
account statement
      |_| Shares  are being  transferred  to a Fund  account  with a  different
owner or name
      |_| Shares are being  redeemed  by someone  (such as an  Executor)  other
than the owners

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

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

      |X| Sending  Redemption  Proceeds by Wire.  While the Fund normally  sends
your money by check, you can arrange to have the proceeds of the shares you sell
sent  by  Federal  Funds  wire to a bank  account  you  designate.  It must be a
commercial bank that is a member of the Federal Reserve wire system. The minimum
redemption  you can  have  sent by wire is  $2,500.  There is a $10 fee for each
wire.  To find out how to set up this  feature  on your  account or to arrange a
wire, call the Transfer Agent at 1-800-852-8457.

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

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

- -------------------------------------------------------------------------------
Send courier or express mail requests to:
- -------------------------------------------------------------------------------
OppenheimerFunds Services
10200 E. Girard Avenue, Building D
Denver, Colorado 80231

How Do I Sell Shares by Telephone?  You and your dealer representative of record
may also sell your shares by  telephone.  To receive the  redemption  price on a
regular  business day,  your call must be received by the Transfer  Agent by the
close of The New York Stock  Exchange that day, which is normally 4:00 P.M., but
may  be  earlier  on  some  days.   You  may  not  redeem   shares  held  in  an
OppenheimerFunds  retirement  plan  account  or  under  a share  certificate  by
telephone.
      |_|  To   redeem   shares   through  a   service   representative,   call
1-800-852-8457
      |_|  To redeem shares automatically on PhoneLink, call 1-800-533-3310

      Whichever  method you use, you may have a check sent to the address on the
account statement, or, if you have linked your Fund account to your bank account
on AccountLink, you may have the proceeds sent to that bank account.

Are There Limits on Amounts Redeemed by Telephone?

      |X| Telephone  Redemptions Paid by Check. Up to $50,000 may be redeemed by
telephone in any 7-day period. The check must be payable to all owners of record
of the shares and must be sent to the  address on the  account  statement.  This
service is not available within 30 days of changing the address on an account.

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

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

      |_| Checks can be written to the order of whomever  you wish,  but may not
be cashed at the Fund's bank or Custodian.
      |_| Checkwriting  privileges are not available for accounts holding shares
that are subject to a contingent deferred sales charge.
      |_|  Checks must be written for at least $100.
      |_| Checks  cannot be paid if they are written for more than your  account
value.
      |_| 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.
      |_| Don't use your checks if you changed your Fund account  number,  until
you receive new checks.

Can I Sell Shares Through My Dealer?  The Distributor  has made  arrangements to
repurchase  Fund shares from  dealers and brokers on behalf of their  customers.
Brokers or dealers may charge for that  service.  If your shares are held in the
name of your dealer, you must redeem them through your dealer.

How to Exchange Shares

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

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

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

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

      |X| Telephone Exchange  Requests.  Telephone exchange requests may be made
either by  calling  a  service  representative  at  1-800-852-8457,  or by using
PhoneLink for automated exchanges by calling 1-800-533-3310. Telephone exchanges
may be made only between  accounts that are registered with the same name(s) and
address. Shares held under certificates may not be exchanged by telephone.

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

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

Shareholder Account Rules and Policies

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

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

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

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

      |X| Dealers that can perform  account  transactions  for their  clients by
participating in NETWORKING through the National Securities Clearing Corporation
are  responsible  for  obtaining  their  clients'  permission  to perform  those
transactions,  and are responsible to their clients who are  shareholders of the
Fund if the dealer performs any transaction erroneously or improperly.

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

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

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

      |X|  Involuntary  redemptions of small accounts may be made by the Fund if
the account value has fallen below $200 for reasons other than the fact that the
market value of shares has dropped. In some cases involuntary redemptions may be
made to repay the Distributor for losses from the cancellation of share purchase
orders.

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

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

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

Dividends and Tax Information

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

      The  amount of those  dividends  may vary over time,  depending  on market
conditions,  the composition of the Fund's portfolio,  and expenses borne by the
particular class of shares.  Dividends and distributions  paid on Class A shares
will  generally be higher than  dividends for Class B and Class C shares,  which
normally have higher  expenses than Class A. The Fund has no fixed dividend rate
and cannot guarantee that it will pay any dividends or distributions.

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

What Choices Do I Have for Receiving Distributions?  When you open your account,
specify  on  your  application  how you  want  to  receive  your  dividends  and
distributions. You have four options:

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

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

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

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

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

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

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

      |X| Remember, There May be Taxes on Transactions. Because the Fund's share
price fluctuates,  you may have a capital gain or loss when you sell or exchange
your shares. A capital gain or loss is the difference between the price you paid
for the shares and the price you received when you sold them.
Any capital gain is subject to capital gains tax.

      |X| Returns of Capital Can Occur.  In certain cases,  distributions  made
by  the  Fund  may  be   considered   a   non-taxable   return  of  capital  to
shareholders.   If  that  occurs,   it  will  be   identified   in  notices  to
shareholders.

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


<PAGE>


Financial Highlights

The Financial Highlights Table is presented to help you understand the Fund's
financial performance for the past 5 fiscal years. Certain information
reflects financial results for a single Fund share. The total returns in the
table represent the rate that an investor would have earned [or lost] on an
investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by Deloitte & Touche LLP,
the Fund's independent auditors, whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available on request.
- -------------------------------------------------------------------------------


<PAGE>


Oppenheimer Champion Income Fund
- -------------------------------------------------------------------------------

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

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

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

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


How to Get More Information:


- ----------------------------------------------------------------------------
You can  request  the  Statement  of  Additional  Information,  the  Annual  and
Semi-Annual Report, and other information about the Fund or your account:
By Telephone:
Call OppenheimerFunds Services toll-free:
1-800-525-7048

By Mail:
Write to:
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217-5270

On the Internet:
You  can  read  or  down-load  documents  on  the   OppenheimerFunds  web  site:
http://www.oppenheimerfunds.com  You can also obtain  copies of the Statement of
Additional  Information  and other Fund  documents  and reports by visiting  the
SEC's Public Reference Room in Washington,  D.C. (Phone  1-800-SEC-0330)  or the
SEC's  Internet  web site at  http://www.sec.gov.  Copies may be  obtained  upon
payment of a duplicating fee by writing to the SEC's Public  Reference  Section,
Washington, D.C. 20549-6009.

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

The Fund's shares are distributed by:
OppenheimerFunds Distributor, Inc.

SEC File No. 811-5281
PR0190.001.0199 Printed on recycled paper.

<PAGE>

32

- -------------------------------------------------------------------------------
Oppenheimer Champion Income Fund
- -------------------------------------------------------------------------------

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

Statement of Additional Information dated January 29, 1999

      This  Statement  of  Additional  Information  is  not a  Prospectus.  This
document  contains  additional   information  about  the  Fund  and  supplements
information in the Prospectus dated January 29, 1999. It should be read together
with the  Prospectus.  You can  obtain the  Prospectus  by writing to the Fund's
Transfer Agent,  OppenheimerFunds  Services, at P.O. Box 5270, Denver,  Colorado
80217, or by calling the Transfer Agent at the toll-free  number shown above, or
by   downloading   it  from   the   OppenheimerFunds   Internet   web   site  at
www.oppenheimerfunds.com.

Contents
                                                                            Page
About the Fund
Additional Information About the Fund's Investment Policies and Risks
   The Fund's Investment Policies............................
   Other Investment Techniques and Strategies................
   Investment Restrictions...................................
How the Fund is Managed .....................................
   Organization and History..................................
   Trustees and Officers.....................................
   The Manager...............................................
Brokerage Policies of the Fund...............................
Distribution and Service Plans...............................
Performance of the Fund......................................

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

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

Appendix A: Description of Debt Security Ratings............. A-1
Appendix B: Industry Classifications......................... B-1
Appendix C: Special Sales Charge Arrangements and Waivers.... C-1

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


<PAGE>


ABOUT THE FUND
- -------------------------------------------------------------------------------

Additional Information About the Fund's Investment Policies and Risks

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

The Fund's Investment Policies.  The composition of the Fund's portfolio and the
techniques  and  strategies  that the Manager will use will vary over time.  The
Fund is not  required to use all of the  investment  techniques  and  strategies
described below in seeking its goal.

      In selecting  securities for the Fund's  portfolio,  the Manager evaluates
the merits of particular  fixed-income securities primarily through the exercise
of its own investment  analysis.  That process may include,  among other things,
evaluation of the issuer's historical operations,  prospects for the industry of
which the issuer is part, the issuer's financial condition,  its pending product
developments  and  business  (and those of  competitors),  the effect of general
market  and  economic  conditions  on the  issuer's  business,  and  legislative
proposals that might affect the issuer.

      Additionally,  in analyzing a particular  issuer, the Manager may consider
the trading  activity in the issuer's  securities,  present and anticipated cash
flow,  estimated  current  value of its assets in relation  to their  historical
cost,  the issuer's  experience  and  managerial  expertise,  responsiveness  to
changes in interest  rates and business  conditions,  debt  maturity  schedules,
current  and future  borrowing  requirements,  and any  change in the  financial
condition  of an issuer and the issuer's  continuing  ability to meet its future
obligations.  The  Manager  also may  consider  anticipated  changes in business
conditions,  levels of interest rates of bonds as contrasted with levels of cash
dividends,  industry and regional prospects,  the availability of new investment
opportunities  and the general  economic,  legislative and monetary  outlook for
specific industries, the nation and the world.

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

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

      The Fund's debt  investments can include high yield,  non-investment-grade
bonds (commonly referred to as "junk bonds").  Investment-grade  bonds are bonds
rated at least  "Baa" by Moody's  Investors  Service,  Inc.,  at least  "BBB" by
Standard & Poor's Corporation or Duff & Phelps, Inc., or have comparable ratings
by another nationally recognized statistical rating organization.

      In making  investments  in debt  securities,  the Manager may rely to some
extent on the ratings of ratings organizations or it may use its own research to
evaluate a security's credit-worthiness. If the securities are unrated, they are
assigned a rating by the Manager of comparable  quality to bonds having  similar
yield  and  risk   characteristics   within  a  rating   category  of  a  rating
organization.

      The Fund does not have investment policies  establishing specific maturity
ranges for the Fund's  investments,  and they may be within any  maturity  range
(short,  medium or long)  depending on the  Manager's  evaluation  of investment
opportunities available within the debt securities markets. Generally,  however,
it is expected that the Fund's  average  portfolio  maturity will be of a longer
average  maturity,  of seven to fifteen years. The Fund may shift its investment
focus to  securities  of  longer  maturity  as  interest  rates  decline  and to
securities of shorter maturity as interest rates rise.

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

      While the changes in value of the Fund's  portfolio  securities after they
are  purchased  will be reflected  in the net asset value of the Fund's  shares,
those  changes  normally  do not  affect  the  interest  income  paid  by  those
securities (unless the security's  interest is paid at a variable rate pegged to
particular  interest rate changes).  However,  those price  fluctuations will be
reflected in the  valuations  of the  securities,  and  therefore the Fund's net
asset values will be affected by those fluctuations.

           |_|  Special  Risks of  Lower-Grade  Securities.  The Fund can invest
without limit in lower-grade debt securities,  and the Fund will normally invest
60% or more of its assets in these securities to seek the Fund's main objective.
Lower-rated  securities  tend to  offer  higher  yields  than  investment  grade
securities,  but also are  subject to greater  risks of default by the issuer in
its  obligations to pay interest  and/or repay  principal on the maturity of the
security.

      "Lower-grade"  debt securities are those rated below  "investment  grade,"
which  means they have a rating  lower than "Baa" by Moody's or lower than "BBB"
by  Standard  & Poor's or Duff & Phelps,  or  similar  ratings  by other  rating
organizations.  If they are unrated,  and are determined by the Manager to be of
comparable  quality to debt securities  rated below investment  grade,  they are
considered part of the Fund's portfolio of lower-grade securities.  The Fund can
invest in  securities  rated as low as "C" or "D" or which may be in  default at
the time the Fund buys them.

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

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

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

           |X| Foreign Securities. The percentage of the Fund's assets that will
be allocated to foreign  securities will vary over time depending on a number of
factors.  Those  factors  may include  the  relative  yields of foreign and U.S.
securities,  the  economies of foreign  countries,  the condition of a country's
financial markets, the interest rate climate of particular foreign countries and
the  relationship  of  particular  foreign  currencies to the U.S.  dollar.  The
Manager analyzes fundamental economic criteria (for example,  relative inflation
levels and  trends,  growth rate  forecasts,  balance of  payments  status,  and
economic policies) as well as technical and political data.

      The Fund can  invest up to 100% of its assets in  foreign  securities  and
expects from time to time to have substantial investments in foreign securities.
These  primarily  will  be debt  securities  issued  or  guaranteed  by  foreign
companies  or   governments,   including   supra-national   entities.   "Foreign
securities"  include equity and debt securities of companies organized under the
laws of countries  other than the United  States and debt  securities  issued or
guaranteed  by  governments  other  than  the  U.S.  government  or  by  foreign
supra-national  entities.  They also include securities of companies  (including
those that are located in the U.S. or  organized  under U.S.  law) that derive a
significant  portion  of their  revenue  or  profits  from  foreign  businesses,
investments or sales, or that have a significant portion of their assets abroad.
They  may  be  traded  on  foreign  securities   exchanges  or  in  the  foreign
over-the-counter markets.

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

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

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

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

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

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

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

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

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

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

         |_| Risks of Conversion to Euro. On January 1, 1999,  eleven  countries
in the European  Monetary Union will adopt the euro as their official  currency.
However,  their current  currencies (for example,  the franc,  the mark, and the
lire) will also  continue in use until  January 1, 2002.  After that date, it is
expected that only the euro will be used in those  countries.  A common currency
is expected  to confer some  benefits in those  markets,  by  consolidating  the
government  debt market for those countries and reducing some currency risks and
costs. But the conversion to the new currency will affect the Fund operationally
and also has  potential  risks,  some of which are  listed  below.  Among  other
things, the conversion will affect:

      o issuers in which the Fund invests, because of changes in the competitive
      environment  from a consolidated  currency market and greater  operational
      costs  from  converting  to the new  currency.  This might  depress  stock
      values.  o vendors the Fund depends on to carry out its business,  such as
      its  Custodian  (which holds the foreign  securities  the Fund buys),  the
      Manager  (which  must  price  the  Fund's  investments  to deal  with  the
      conversion  to the euro)  and  brokers,  foreign  markets  and  securities
      depositories.  If  they  are  not  prepared,  there  could  be  delays  in
      settlements  and  additional  costs to the Fund. o exchange  contracts and
      derivatives  that are  outstanding  during the transition to the euro. The
      lack of currency rate calculations between the affected currencies and the
      need to update the Fund's contracts could pose extra costs to the Fund.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

      GNMA Certificates are backed by the aggregate  indebtedness secured by the
underlying FHA-insured,  FMHA-insured or VA-guaranteed mortgages.  Except to the
extent of payments  received by the issuers on account of such  mortgages,  GNMA
Certificates  do not  constitute  a  liability  of  those  issuers,  nor do they
evidence any recourse  against those  issuers.  Recourse is solely against GNMA.
Holders of GNMA 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
GNMA  Certificates  held by the Fund. All of the mortgages in the pools relating
to the GNMA  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 GNMA 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.

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

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

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

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

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

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

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

      |X|  Preferred  Stocks.  If  interest  rates rise,  the fixed  dividend on
preferred stocks may be less  attractive,  causing the price of preferred stocks
to decline.  Preferred stock may have mandatory sinking fund provisions, as well
as call/redemption provisions prior to maturity, which can be a negative feature
when interest  rates  decline.  Preferred  stock also generally has a preference
over common stock on the distribution of a corporation's  assets in the event of
liquidation of the corporation.  Preferred stock may be  "participating"  stock,
which means that it may be entitled to a dividend  exceeding the stated dividend
in  certain  cases.   The  rights  of  preferred  stock  on  distribution  of  a
corporation's assets in the event of a liquidation are generally  subordinate to
the rights associated with a corporation's debt securities.

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

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

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

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

Other Investment Techniques and Strategies.  In seeking its objective,  the Fund
may from time to time employ the types of investment  strategies and investments
described below.

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

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

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

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

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

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

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

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

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

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

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

      At the time the Fund makes the  commitment  to purchase or sell a security
on a when-issued or delayed  delivery  basis,  it records the transaction on its
books and reflects the value of the security purchased in determining the Fund's
net asset value. In a sale transaction,  it records the proceeds to be received.
The Fund will identify to its Custodian bank cash, U.S. government securities or
other  high-grade  debt  obligations  at lest equal in value to the value of the
Fund's purchase commitments until the Fund pays for the investment.

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

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

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

      The  majority  of these  transactions  run from day to day,  and  delivery
pursuant to the resale typically occurs within one to five days of the purchase.
Repurchase  agreements  having a maturity  beyond  seven days are subject to the
Fund's limits on holding  illiquid  investments.  The Fund will not enter into a
repurchase  agreement  that causes more than 10% of its net assets to be subject
to repurchase  agreements having a maturity beyond seven days. There is no limit
on the  amount of the  Fund's  net  assets  that may be  subject  to  repurchase
agreements having maturities of seven days or less.

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

      |X| Illiquid and Restricted Securities.  Under the policies and procedures
established  by the  Fund's  Board  of  Trustees,  the  Manager  determines  the
liquidity of certain of the Fund's  investments.  To enable the Fund to sell its
holdings of a restricted  security not  registered  under the  Securities Act of
1933, the Fund may have to cause those securities to be registered. The expenses
of  registering  restricted  securities  may be  negotiated by the Fund with the
issuer at the time the Fund  buys the  securities.  When the Fund  must  arrange
registration because the Fund wishes to sell the security, a considerable period
may elapse  between the time the  decision is made to sell the  security and the
time the security is  registered  so that the Fund could sell it. The Fund would
bear the risks of any downward price fluctuation during that period.

      The  Fund  may  also  acquire   restricted   securities   through  private
placements.  Those  securities  have  contractual  restrictions  on their public
resale.  Those  restrictions  might  limit the Fund's  ability to dispose of the
securities and might lower the amount the Fund could realize upon the sale.

      The Fund has limitations that apply to purchases of restricted securities,
as  stated  in the  Prospectus.  Those  percentage  restrictions  do  not  limit
purchases  of  restricted  securities  that are  eligible  for sale to qualified
institutional purchasers under Rule 144A of the Securities Act of 1933, if those
securities have been determined to be liquid by the Manager under Board-approved
guidelines.  Those  guidelines  take into account the trading  activity for such
securities and the  availability of reliable  pricing  information,  among other
factors.  If there is a lack of  trading  interest  in a  particular  Rule  144A
security, the Fund's holdings of that security may be considered to be illiquid.

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

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

      The Fund will only  enter  into  "covered"  rolls.  To assure  its  future
payment of the purchase  price,  the Fund will identify on its books cash,  U.S.
government  securities or other high-grade debt securities in an amount equal to
the payment obligation under the roll.

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

      |X| Investments in Equity Securities.  The Fund can invest limited amounts
of its assets in securities other than debt securities,  including certain types
of equity securities of both foreign and U.S. companies. Those equity securities
include preferred stocks (described above), rights and warrants,  and securities
convertible into common stock. Certain equity securities may be selected because
they may provide dividend income.

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

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

           |_|  Rights and  Warrants.  The Fund may invest up to 5% of its total
assets in warrants or rights.  That limit does not apply to warrants  and rights
the Fund has  acquired as part of units of  securities  or that are  attached to
other  securities that the Fund buys. The Fund does not expect that it will have
significant investments in warrants and rights.

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

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

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

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

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

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

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

      |X| Hedging.  Although the Fund does not  anticipate  the extensive use of
hedging instruments,  the Fund can use hedging instruments.  It is not obligated
to use them in seeking its objective.  To attempt to protect against declines in
the  market  value  of the  Fund's  portfolio,  to  permit  the  Fund to  retain
unrealized gains in the value of portfolio securities that have appreciated,  or
to facilitate selling securities for investment reasons, the Fund could:
      |_|    sell futures contracts,
      |_| buy puts on such futures or on securities, or
      |_| write covered  calls on securities or futures.  Covered calls may also
      be used to increase the Fund's income,  but the Manager does not expect to
      engage extensively in that practice.

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

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

      |_|  Futures.  The  Fund  may  buy and  sell  futures  contracts  but as a
fundamental  policy only those futures that relate to debt securities (these are
referred to as interest rate  futures).  An interest  rate future  obligates the
seller to deliver (and the  purchaser to take) cash or a specified  type of debt
security to settle the futures  transaction.  Either party could also enter into
an offsetting contract to close out the position.

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

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

      |_| Put and Call  Options.  The Fund  may buy and sell  certain  kinds of
put options ("puts") and call options ("calls").

           |_| Writing Covered Call Options.  The Fund may write (that is, sell)
covered calls on debt securities,  interest rate futures and foreign currencies.
As a fundamental  policy,  the calls must be listed on a domestic  securities or
commodities  exchange  or quoted on  NASDAQ,  or in the case of calls on foreign
currencies,  quoted  by a major  recognized  dealer.  If the  Fund  sells a call
option, it must be covered. That means the Fund must own the security subject to
the call while the call is outstanding, or, for certain types of calls, the call
may be covered by  segregating  liquid  assets to enable the Fund to satisfy its
obligations  if the call is  exercised.  There is no limit on the  amount of the
Fund's total assets may be subject to covered calls the Fund writes.

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

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

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

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

           |_|  Writing  Put  Options.  The Fund may  sell put  options  on debt
securities or foreign currency options,  but as a fundamental policy only if the
put is listed on a domestic  securities  or  commodities  exchange  or quoted on
NASDAQ,  or,  in the case of puts on  currencies,  they may be quoted by a major
recognized  dealer.  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.  As a  fundamental  policy,  the Fund
cannot write puts if, as a result,  more than 50% of the Fund's net assets would
be required to be segregated to cover such put options.

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

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

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

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

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

           |_|  Purchasing  Calls and Puts. The Fund may purchase puts and calls
on  debt  securities,   foreign  currencies  or  interest  rate  futures.  As  a
fundamental  policy,  the  calls  must be  listed on a  domestic  securities  or
commodities  exchange  or  quoted  on  NASDAQ.  In the case of puts and calls on
currencies,  they may be quoted by major recognized dealers.  The Fund may do so
to  protect  against  the  possibility   that  the  Fund's  portfolio  will  not
participate in an anticipated rise in the securities market.  When the Fund buys
a call (other than in a closing purchase  transaction),  it pays a premium.  The
Fund  then has the  right to buy the  underlying  investment  from a seller of a
corresponding  call on the same  investment  during  the call  period at a fixed
exercise price.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

      |_| Interest Rate Swap Transactions. The Fund can enter into interest rate
swap  agreements.  In an interest rate swap, the Fund and another party exchange
their right to receive or their  obligation  to pay interest on a security.  For
example,  they may swap the right to receive  floating  rate  payments for fixed
rate payments.  The Fund enters into swaps only on securities  that it owns. The
Fund  will not  enter  into  swaps  with  respect  to more than 25% of its total
assets.  Also,  the Fund  will  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.

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

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

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

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

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

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

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

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

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

      |X|  Temporary   Defensive   Investments.   When  market  conditions  are
unstable,  or the  Manager  believes  it is  otherwise  appropriate  to  reduce
holdings  in stocks,  the Fund can invest in a variety of debt  securities  for
defensive  purposes.  The Fund can also purchase these securities for liquidity
purposes to meet cash needs due to the  redemption  of Fund shares,  or to hold
while  waiting  reinvest  cash  received  from  the  sale  of  other  portfolio
securities.  The Fund can buy the  following  short-term  (maturing in one year
or less) dollar-denominated debt obligations:
|_|   obligations  issued  or  guaranteed  by  the  U.  S.  government  or  its
         instrumentalities or agencies,
|_|      commercial paper (short-term,  unsecured promissory notes) rated in the
         highest rating category by an established rating organization,
|_|      debt obligations of domestic or foreign  corporate  issuers rated "Baa"
         or higher by Moody's or "BBB" or higher by Standard & Poor's,
|_|   certificates   of  deposit  and  bankers'   acceptances  and  other  bank
         obligations, and
|_|   repurchase agreements.

      Short-term  debt  securities  would  normally be selected for defensive or
cash management  purposes because they can normally be disposed of quickly,  are
not generally  subject to significant  fluctuations in principal value and their
value  will  be less  subject  to  interest  rate  risk  than  longer-term  debt
securities.


Investment Restrictions

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

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

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

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


      |_| The Fund  cannot  invest  25% or more of its  total  assets in any one
industry.  That limit does not apply to  securities  issued or guaranteed by the
U.S.  government  or its  agencies  and  instrumentalities.  Under this  policy,
utilities are divided into  "industries"  according to the services they provide
(for example,  gas, gas transmission,  electric and telephone  utilities will be
considered in separate industries).

      |_| The Fund cannot  invest more than 5% of its total assets in securities
of issuers (including their  predecessors) that have been in operation less than
three years.

      |_| The Fund  cannot  borrow  money in  excess  of 10% of the value of its
total  assets.  The Fund may only  borrow as a temporary  measure for  emergency
purposes.  The Fund  cannot  make any  investment  at a time  during  which  its
borrowings exceed 5% of the value of its assets..

      |_| The Fund cannot make loans. However, it can invest in debt obligations
in  accordance  with its  investment  objective  and  policies  and  enter  into
delayed-delivery  or when-issued  transactions  and forward rolls.  The Fund may
also lend its portfolio securities and may enter into repurchase agreements.

      |_| The Fund cannot invest in real estate.  However, the Fund can purchase
debt securities secured by real estate or interests in real estate, or issued by
companies,  including real estate investment trusts,  that invest in real estate
or interests in real estate.

      |_| The Fund cannot invest in the securities issued by any company for the
primary purpose of acquiring management control.

      |_| The Fund cannot invest in or hold securities of any issuer if officers
and Trustees of the Fund or the Manager individually  beneficially own more than
1/2 of 1% of the  securities of that issuer and together own more than 5% of the
securities of that issuer.

      |_| The Fund  cannot buy  securities  on margin or engage in short  sales.
However,  the Fund can make escrow  arrangements  in connection  with its use of
hedging instruments permitted by its other fundamental policies.

      |_| The Fund  cannot  mortgage,  hypothecate  or pledge any of its assets.
However,  the Fund can make escrow  arrangements  in connection  with its use of
hedging instruments permitted by its other fundamental policies.

      |_|  The Fund cannot invest in mineral-related programs or leases.

      |_| The Fund  cannot  invest  in other  investment  companies,  except  in
connection  with a  merger,  consolidation,  reorganization  or  acquisition  of
assets.

      |_| The Fund cannot invest in commodities or commodity contracts. However,
the Fund may buy and sell any of the hedging instruments  permitted by its other
investment  policies,  whether or not the hedging  instrument  is  considered  a
commodity  or  commodity  contract,  and  subject  to the  limitations  on  such
investments specified in its other fundamental policies.

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

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

      The Fund currently has an operating  policy (which is not  fundamental but
will not be changed  without the approval of  shareholders)  that  prohibits the
Fund from  issuing  senior  securities.  However,  that policy does not prohibit
certain  activities that are permitted by the Fund's other  policies,  including
borrowing  money for investment or emergency  purposes as permitted by its other
investment policies and applicable  regulations,  and entering into contracts to
buy or sell derivatives,  hedging instruments,  options, futures and the related
margin,  collateral or escrow arrangements  permitted under its other investment
policies.


How the Fund is Managed

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

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

      |_|  Classes  of Shares.  The Board of  Trustees  has the  power,  without
shareholder  approval,  to divide  unissued  shares of the Fund into two or more
classes.  The Board has done so,  and the Fund  currently  has three  classes of
shares: Class A, Class B, and Class C. All classes invest in the same investment
portfolio.  Each class of shares: o has its own dividends and  distributions,  o
pays certain  expenses which may be different for the different  classes,  o may
have a different net asset value,  o may have separate  voting rights on matters
in which interests of one
      class are  different  from  interests of another  class,  and o votes as a
class on matters that affect that class alone.

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

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

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

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

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

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

Trustees  and Officers of the Fund.  The Fund's  Trustees and officers and their
principal  occupations and business  affiliations during the past five years are
listed  below.  Trustees  denoted  with an  asterisk  (*) below are deemed to be
"interested  persons" of the Fund under the  Investment  Company Act. All of the
Trustees  are also  trustees,  directors  or  managing  general  partners of the
following Denver-based Oppenheimer funds1:



<PAGE>


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


<PAGE>


34


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

Robert G. Avis,* Trustee; Age 67
One North Jefferson Ave., St. Louis, Missouri 63103
Vice  Chairman  of A.G.  Edwards  &  Sons,  Inc.  (a  broker-dealer)  and  A.G.
Edwards,   Inc.  (its  parent  holding  company);   Chairman  of  A.G.E.  Asset
Management and A.G.  Edwards Trust Company (its affiliated  investment  adviser
and trust company, respectively).

William A. Baker, Trustee; Age 83
197 Desert Lakes Drive, Palm Springs, California 92264
Management Consultant.

George C. Bowen,* Vice President,  Assistant Secretary,  Treasurer and Trustee;
Age 62
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  Asset  Management  Corp.,  an  investment  adviser
subsidiary  of  the  Manager;  Senior  Vice  President  (since  February  1992),
Treasurer  (since July 1991) and a director  (since December 1991) of Centennial
Asset Management  Corporation,  an investment adviser subsidiary of the Manager;
Vice  President  and Treasurer  (since  August 1978) and Secretary  (since April
1981) of Shareholder  Services Inc., a transfer agent subsidiary of the Manager;
Vice  President,  Treasurer and Secretary  (since  November 1989) of Shareholder
Financial Services, Inc., a transfer agent subsidiary of the Manager;  Assistant
Treasurer  (since  March  1998) of  Oppenheimer  Acquisition  Corp.,  the parent
company of the Manager;  Treasurer of  Oppenheimer  Partnership  Holdings,  Inc.
(since  November 1989);  Vice President and Treasurer of Oppenheimer  Real Asset
Management,  Inc.  (since July 1996),  an investment  adviser  subsidiary of the
Manager;  an officer of other Oppenheimer funds;  formerly Treasurer (June 1990-
March 1998) of Oppenheimer Acquisition Corp.

Charles Conrad, Jr., Trustee; Age 68
1501 Quail Street, Newport Beach, CA 92660
Chairman and CEO of Universal  Space Lines,  Inc. (a space services  management
company);  formerly Vice  President of McDonnell  Douglas Space Systems Co. and
associated with the National Aeronautics and Space Administration.

Jon S. Fossel, Trustee; Age 56
P.O. Box 44, Mead Street, Waccabuc, New York 10597
Formerly  Chairman and a director of the Manager,  President  and a director of
Oppenheimer  Acquisition  Corp.,  Shareholder  Services,  Inc. and  Shareholder
Financial Services, Inc.

Sam Freedman, Trustee; Age: 58
4975 Lakeshore Drive, Littleton, Colorado 80123
Formerly  Chairman and Chief Executive  Officer of  OppenheimerFunds  Services,
Chairman,  Chief  Executive  Officer  and a director of  Shareholder  Services,
Inc. and Shareholder  Financial  Services,  Inc., Vice President and a director
of Oppenheimer Acquisition Corp. and a director of the Manager.

Raymond J. Kalinowski, Trustee; Age 69
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 77
7500 E. Arapahoe Road, Englewood, Colorado 80112
President of The Kirchner Company (management consultants).

Bridget A. Macaskill,* President and Trustee; Age: 50
Two World Trade Center, 34th Floor, New York, New York 10048
President (since June 1991),  Chief Executive Officer (since September 1995) and
a director (since December 1994) of the Manager; President and a director (since
June 1991) of HarbourView Asset Management Corp.; Chairman and a director (since
August  1994)  of  Shareholder   Services,   Inc.  and  (since  September  1995)
Shareholder  Financial  Services,  Inc.;  President (since September 1995) and a
director (since October 1990) of Oppenheimer Acquisition Corp.; 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 management  subsidiary of the Manager, and Oppenheimer  Millennium
Funds plc;  President and a director of other  Oppenheimer  funds; a director of
Hillsdown  Holdings  plc (a U.K.  food  company);  formerly  an  Executive  Vice
President of the Manager.

Ned M. Steel, Trustee; Age 83
3416 South Race Street, Englewood, Colorado 80110
Chartered  Property  and  Casualty  Underwriter;  a director of Visiting  Nurse
Corporation of Colorado.

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

David P. Negri,  Vice President and Portfolio  Manager;  Age 44. Two World Trade
Center,  34th Floor, New York, New York 10048-0203  Senior Vice President of the
Manager; an officer of other Oppenheimer funds.

Thomas P. Reedy, Vice President and Portfolio  Manager;  Age: 36
Two World Trade Center,
34th Floor,  New York, New York  10048-0203 Vice President of the Manager (since
June 1993); an officer of other Oppenheimer funds; formerly a Securities Analyst
for the Manager.

Ralph  W.  Stellmacher,  Vice  President  and  Portfolio  Manager; Age: 39
Senior  Vice
President of the Manager  (since March  1993);  an officer of other  Oppenheimer
funds.

Andrew J. Donohue, Vice President and Secretary; Age 48
Two World Trade Center, 34th Floor, New York, New York 10048
Executive Vice President  (since January 1993),  General  Counsel (since October
1991) and a Director  (since  September  1995) of the  Manager;  Executive  Vice
President  (since  September  1993) and a director  (since  January 1992) of the
Distributor;  Executive  Vice  President,  General  Counsel  and a  director  of
HarbourView  Asset Management Corp.,  Shareholder  Services,  Inc.,  Shareholder
Financial  Services,  Inc. and  Oppenheimer  Partnership  Holdings,  Inc. (since
September  1995);  President and a director of Centennial Asset Management Corp.
(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 Oppenheimer  Acquisition  Corp.;  Vice President
and a Director of OppenheimerFunds International Ltd. and Oppenheimer Millennium
Funds plc (since October 1997); an officer of other Oppenheimer funds.

Robert J. Bishop, Assistant Treasurer; Age 40
6803 South Tucson Way, Englewood, Colorado 80112
Vice  President  of the  Manager/Mutual  Fund  Accounting  (since May 1996);  an
officer of other Oppenheimer funds;  formerly an Assistant Vice President of the
Manager/Mutual Fund Accounting (April 1994-May 1996), and a Fund
Controller for the Manager.

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

Robert G. Zack, Assistant Secretary; Age 50
Two World Trade Center,  34th Floor,  New York, New York 10048-0203  Senior Vice
President (since May 1985) and Associate General Counsel (since May 1981) of the
Manager, Assistant Secretary of Shareholder Services, Inc. (since May 1985), and
Shareholder Financial Services,  Inc. (since November 1989); Assistant Secretary
of Oppenheimer  Millennium  Funds plc (since October 1997) and  OppenheimerFunds
International Ltd.; an officer of other Oppenheimer funds.

    |X|  Remuneration  of  Trustees.  The  officers of the Fund and three of the
Trustees  of the Fund  (Ms.  Macaskill  and  Messrs.  Bowen and Mr.  Swain)  are
affiliated  with the  Manager  and  receive no salary or fee from the Fund.  The
remaining  Trustees of the Fund  received  the  compensation  shown  below.  The
compensation  from the Fund was paid during its fiscal year ended  September 30,
1998. The compensation  from all of the Denver-based  Oppenheimer funds includes
the  compensation  from the  Fund  and  represents  compensation  received  as a
director,  trustee,  managing  general  partner or member of a committee  of the
Board during the calendar year 1998.

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

Robert G. Avis                  $____________             $________

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

William A. Baker
Audit and Review
Committee Ex-Officio            $____________             $________
Member2

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

Charles Conrad, Jr.             $____________             $________

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

Jon. S. Fossel                  $____________             $________

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

Sam Freedman
Audit and Review                $____________             $________
Committee Member
- --------------------------------------------------------------------
- --------------------------------------------------------------------

Raymond J. Kalinowski
Audit and Review
Committee Member                $____________             $________
- --------------------------------------------------------------------
- --------------------------------------------------------------------

C. Howard Kast
Audit and Review
Committee Chairman              $____________             $________

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

Robert M. Kirchner              $____________             $________

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

Ned M. Steel                    $____________             $________

- --------------------------------------------------------------------
1.    For the 1998 calendar year.


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

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

      |X| Major  Shareholders.  As of  December  1, 1998,  the only  person who
owned of  record  or was  known by the Fund to own  beneficially  5% or more of
the     Fund's     outstanding      securities     of     any     class     was
__________________________________   who  owned   _________________   Class____
shares  (representing  approximately  _____%  of  the  Fund's  then-outstanding
Class_______ shares).

The Manager.  The Manager is  wholly-owned by Oppenheimer  Acquisition  Corp., a
holding company controlled by Massachusetts  Mutual Life Insurance Company.  The
Manager and the Fund have a Code of Ethics. It is designed to detect and prevent
improper personal trading by certain employees,  including  portfolio  managers,
that would compete with or take advantage of the Fund's portfolio  transactions.
Compliance  with the Code of Ethics is carefully  monitored  and enforced by the
Manager.

    |X| The  Investment  Advisory  Agreement.  The Manager  provides  investment
advisory  and  management  services  to the Fund  under an  investment  advisory
agreement  between the Manager and the Fund. The Manager selects  securities for
the Fund's portfolio and handles its day-to-day business. The portfolio managers
of the Fund are employed by the Manager and are the persons who are  principally
responsible for the day-to-day management of the Fund's portfolio. Other members
of the Manager's Fixed-Income Portfolio Team provide the portfolio managers with
counsel and support in managing the Fund's portfolio.

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

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


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

Fiscal Year ended 9/30:  Management Fees Paid to OppenheimerFunds,
                                            Inc.
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------

         1996                                             $2,902,865
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------

         1997                                             $4,685,210
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------

         1998                                           $___________
- ---------------------------------------------------------------------


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

    The agreement permits the Manager to act as investment adviser for any other
person, firm or corporation and to use the name "Oppenheimer" in connection with
other investment companies for which it may act as investment adviser or general
distributor.  If the Manager  shall no longer act as  investment  adviser to the
Fund,  the  Manager  may  withdraw  the  right  of  the  Fund  to use  the  name
"Oppenheimer" as part of its name.


Brokerage Policies of the Fund

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

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

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

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

    In an option  transaction,  the Fund ordinarily uses the same broker for the
purchase or sale of the option and any  transaction  in the  securities to which
the option  relates.  When  possible,  the Manager  tries to combine  concurrent
orders to  purchase or sell the same  security by more than one of the  accounts
managed by the Manager or its affiliates.  The transactions under those combined
orders are averaged as to price and allocated in accordance with the purchase or
sale orders actually placed for each account.

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

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

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

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

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

    Other funds advised by the Manager have investment policies similar to those
of the Fund.  Those other funds may purchase or sell the same  securities as the
Fund at the same time as the Fund,  which  could  affect the supply and price of
the  securities.  If two or more funds advised by the Manager  purchase the same
security on the same day from the same dealer, the Manager may average the price
of the transactions and allocate the average among the funds.


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

Fiscal Year Ended 9/30: Total Brokerage Commissions Paid by the Fund1
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------

         1996                              $18,000
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------

         1997                              $70,843
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------

         1998                                $2
- ----------------------------------------------------------------------
1. Amounts do not include spreads or concessions on principal  transactions on a
   net trade basis.
2. In the fiscal  year ended  9/30/98,  the amount of  transactions  directed to
   brokers for research  services was  $_________________  and the amount of the
   commissions paid to broker-dealers for those services was $_______.


Distribution and Service Plans

The Distributor.  Under its General  Distributor's  Agreement with the Fund, the
Distributor  acts as the Fund's principal  underwriter in the continuous  public
offering of the Fund's  classes of shares.  The  Distributor is not obligated to
sell a specific number of shares.  Expenses  normally  attributable to sales are
borne by the Distributor.  They exclude  payments under the Fund's  Distribution
and Service Plans but include  advertising  and the cost of printing and mailing
prospectuses (other than prospectuses furnished to current shareholders).

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


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


         Aggregate   Class A     Commissions Commissions Commissions
Fiscal   Front-End   Front-End   on Class A  on Class B  on Class
Year     Sales       Sales       Shares      Shares      C Shares
Ended    Charges on  Charges     Advanced    Advanced    Advanced
9/30:    Class A     Retained    by          by          by
         Shares      by          Distributor1Distributor1Distributor1
                     Distributor
- --------------------------------------------------------------------
- --------------------------------------------------------------------
  1996   $2,709,849       $           $           $          $
- --------------------------------------------------------------------
- --------------------------------------------------------------------
  1997   $2,874,912       $           $           $          $
- --------------------------------------------------------------------
- --------------------------------------------------------------------
  1998        $           $           $           $          $
- --------------------------------------------------------------------
1. The Distributor  advances commission payments to dealers for certain sales of
   Class A  shares  and for  sales of  Class B and  Class C shares  from its own
   resources at the time of sale.

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

           Class A           Class B Contingent  Class C
Fiscal     Contingent        Deferred Sales      Contingent
Year       Deferred Sales    Charges Retained    Deferred Sales
Ended 9/30 Charges Retained  by Distributor      Charges Retained
           by Distributor                        by Distributor
- --------------------------------------------------------------------
- --------------------------------------------------------------------
   1998            $                  $                  $
- --------------------------------------------------------------------

    For  additional   information  about  distribution  of  the  Fund's  shares,
including fees and expenses,  please refer to "Distribution  and Service Plans,"
below.

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 Rule
12b-1 of the  Investment  Company  Act.  Under  those  plans  the Fund  pays the
Distributor  for all or a portion of its costs  incurred in connection  with the
distribution and/or servicing of the shares of the particular class.

    Each plan has been approved by a vote of the Board of Trustees,  including a
majority of the  Independent  Trustees2,  cast in person at a meeting called for
the  purpose of voting on that  plan.  Each plan has also been  approved  by the
holders of a "majority" (as defined in the Investment Company Act) of the shares
of the applicable  class.  The  shareholder  votes for the plans for Class B and
Class C shares  were cast by the  Manager  as the sole  initial  holder of those
classes of shares of the Fund.

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

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

    The Board of Trustees and the Independent Trustees must approve all material
amendments to a plan. An amendment to increase materially the amount of payments
to be made under a plan must be approved by  shareholders  of the class affected
by the amendment.  Because Class B shares of the Fund automatically convert into
Class A shares after six years,  the Fund must obtain the approval of both Class
A and Class B shareholders for a proposed material amendment to the Class A Plan
that would materially increase payments under the Plan. That approval must be by
a "majority"  (as defined in the  Investment  Company Act) of the shares of each
Class, voting separately by class.
    While the Plans are in  effect,  the  Treasurer  of the Fund  shall  provide
separate  written  reports  on the  plans  to the  Board  of  Trustees  at least
quarterly  for its review.  The Reports  shall detail the amount of all payments
made under a plan, the purpose for which the payments were made and the identity
of each recipient of a payment. The reports on the Class B Plan and Class C Plan
shall also include the Distributor's  distribution costs for that quarter and in
the case of the Class B plan the  amount  of those  costs  for  previous  fiscal
periods  that are  unreimbursed.  Those  reports  are  subject to the review and
approval of the Independent Trustees.

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

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

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

    For the fiscal period ended  September  30, 1998 payments  under the Class A
Plan totaled $_________, all of which was paid by the Distributor to recipients.
That  included  $________  paid  to an  affiliate  of the  Distributor's  parent
company. Any unreimbursed  expenses the Distributor incurs with respect to Class
A shares in any  fiscal  year  cannot be  recovered  in  subsequent  years.  The
Distributor  may not use  payments  received  the Class A Plan to pay any of its
interest expenses,  carrying charges, or other financial costs, or allocation of
overhead.

    |_| Class B and Class C Service and Distribution Plan Fees. Under each plan,
service fees and distribution  fees are computed on the average of the net asset
value of  shares in the  respective  class,  determined  as of the close of each
regular business day during the period.  The Class C plan allows the Distributor
to be reimbursed for its services and costs in  distributing  Class B shares and
servicing  accounts.  The  Class  B plan  provides  for  the  Distributor  to be
compensated at a flat rate, whether the Distributor's  distribution expenses are
more or less than the amounts  paid by the Fund under the plan during the period
for which the fee is paid.

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

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

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

    For the fiscal period ended  September 30, 1998,  payments under the Class B
plan totaled  $___________  (including  $___________ paid to an affiliate of the
Distributor's parent). The Distributor retained $__________________ of the total
amount. For the fiscal period ended September 30, 1998, payments under the Class
C plan totaled $_______________, (including $___________ paid to an affiliate of
the Distributor's parent). The Distributor retained  $_____________ of the total
amount.

    The Distributor's  actual expenses in selling Class B and Class C shares may
be more than the payments it receives from the contingent deferred sales charges
collected on redeemed  shares and from the Fund under the plans. As of September
30, 1998, the Distributor had incurred  unreimbursed  expenses under the Class B
plan in the amount of  $_______________  (equal to ___% of the Fund's net assets
represented by Class B shares on that date) and unreimbursed  expenses under the
Class  C plan  of  $_____________  (equal  to  ___%  of the  Fund's  net  assets
represented by Class C shares on that date).  If either the Class B or the Class
C plan is  terminated  by the Fund,  the Board of Trustees may allow the Fund to
continue  payments  of the  asset-based  sales  charge  to the  Distributor  for
distributing shares before the plan was terminated.  The Class B plan allows for
the carry-forward of unreimbursed  distribution  expenses,  to be recovered from
asset-based sales charges in subsequent fiscal periods.

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

Performance of the Fund

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

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

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

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

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

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

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

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

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

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

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

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

                     Standardized Yield = 2[(a-b + 1)6 - 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 assumptions).

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

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

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

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

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

      The maximum offering price for Class A shares includes the current maximum
initial sales charge.  The maximum offering price for Class B and Class C shares
is the net asset value per share,  without  considering the effect of contingent
deferred sales charges.  There is no sales charge on Class Y shares. The Class A
dividend  yield may also be quoted without  deducting the maximum  initial sales
charge.


  ------------------------------------------------------------------
       The Fund's Yields for the 30-Day Periods Ended 9/30/98
  ------------------------------------------------------------------
  ------------------------------------------------------------------

               Standardized Yield            Dividend Yield

  Class of
  Shares
  ------------------------------------------------------------------
  ------------------------------------------------------------------
            Without    After         Without      After
            Sales      Sales         Sales        Sales
            Charge     Charge        Charge       Charge
  ------------------------------------------------------------------
  ------------------------------------------------------------------
  Class A            %             %            %                 %
  ------------------------------------------------------------------
  ------------------------------------------------------------------
  Class B            %           N/A            %               N/A
  ------------------------------------------------------------------
  ------------------------------------------------------------------
  Class C            %           N/A            %               N/A
  ------------------------------------------------------------------

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

      In calculating total returns for Class A shares, the current maximum sales
charge of 4.75% (as a  percentage  of the offering  price) is deducted  from the
initial  investment  ("P") (unless the return is shown without sales charge,  as
described  below).  For Class B shares,  payment  of the  applicable  contingent
deferred  sales charge is applied,  depending on the period for which the return
is shown: 5.0% in the first year, 4.0% in the second year, 3.0% in the third and
fourth  years,  2.0%  in the  fifth  year,  1.0%  in the  sixth  year  and  none
thereafter.  For Class C shares,  the 1%  contingent  deferred  sales  charge is
deducted for returns for the 1-year period.

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

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

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

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

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


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

       The Fund's Total Returns for the Periods Ended 9/30/98
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
         Cumulative             Average Annual Total Returns
Class    Total Returns
of       (10 years or
Shares   Life of Class)
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
                            1-Year         5-Year         10-Year
                             (or             (or            (or
                        life-of-class) life-of-class)  life-of-class)
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
         After   WithoutAfter   WithoutAfter   Without After  Without
         Sales   Sales  Sales   Sales  Sales   Sales   Sales  Sales
         Charge  Charge Charge  Charge Charge  Charge  Charge Charge
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Class A                                                1      1
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Class B                                2       2       N/A    N/A
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Class C                                                3      3
- ----------------------------------------------------------------------

1. Inception of Class A:  11/16/87
2. Inception of Class B:  10/2/95
3. Inception of Class C:  12/1/93

Other  Performance  Comparisons.  The Fund compares its performance  annually to
that of an  appropriate  broadly  based  market  index in its  Annual  Report to
shareholders.  You can obtain that  information by contacting the Transfer Agent
at the addresses or telephone  numbers  shown on the cover of this  Statement of
Additional  Information.  The Fund may also compare its  performance  to that of
other  investments,  including  other  mutual  funds,  or  use  rankings  of its
performance  by  independent  ranking  entities.  Examples of these  performance
comparisons are set forth below.

      |_| Lipper Rankings. From time to time the Fund may publish the ranking of
the  performance of its classes of shares by Lipper  Analytical  Services,  Inc.
Lipper is a widely-recognized independent mutual fund monitoring service. Lipper
monitors the performance of regulated investment companies,  including the Fund,
and ranks their performance for various periods based on categories  relating to
investment objectives. Lipper currently ranks the Fund's performance against all
other high current  yield funds.  The Lipper  performance  rankings are based on
total returns that include the  reinvestment of capital gain  distributions  and
income  dividends  but do not take sales  charges  or taxes into  consideration.
Lipper also  publishes  "peer-group"  indices of the  performance  of all mutual
funds in a category  that it monitors  and  averages of the  performance  of the
funds in particular categories.

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

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

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

      |_|   Performance   Rankings  and   Comparisons   by  Other  Entities  and
Publications.  From time to time the Fund may include in its  advertisements and
sales literature performance  information about the Fund cited in newspapers and
other periodicals such as The New York Times, The Wall Street Journal, Barron's,
or similar  publications.  That information may include  performance  quotations
from other sources,  including  Lipper and  Morningstar.  The performance of the
Fund's classes of shares may be compared in  publications  to the performance of
various market indices or other investments, and averages,  performance rankings
or other benchmarks prepared by recognized mutual fund statistical services.

      Investors may also wish to compare the returns on the Fund's share classes
to the  return on  fixed-income  investments  available  from  banks and  thrift
institutions.  Those include certificates of deposit,  ordinary  interest-paying
checking  and  savings  accounts,  and  other  forms of fixed or  variable  time
deposits,  and various other  instruments such as Treasury bills.  However,  the
Fund's  returns and share price are not guaranteed or insured by the FDIC or any
other agency and will fluctuate daily, while bank depository  obligations may be
insured  by the  FDIC  and may  provide  fixed  rates of  return.  Repayment  of
principal  and payment of interest on Treasury  securities is backed by the full
faith and credit of the U.S. government.

      From time to time, the Fund may publish rankings or ratings of the Manager
or Transfer Agent, and of the investor services provided by them to shareholders
of the Oppenheimer  funds,  other than  performance  rankings of the Oppenheimer
funds themselves. Those ratings or rankings of shareholder and investor services
by third parties may include  comparisons of their services to those provided by
other mutual fund families selected by the rating or ranking services.  They may
be based upon the opinions of the rating or ranking  service  itself,  using its
research or judgment, or based upon surveys of investors,  brokers, shareholders
or others.


- -------------------------------------------------------------------------------
ABOUT YOUR ACCOUNT
- -------------------------------------------------------------------------------

How to Buy Shares

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

AccountLink.  When shares are purchased through AccountLink,  each purchase must
be at least $25.  Shares  will be  purchased  on the  regular  business  day the
Distributor  is  instructed  to initiate the  Automated  Clearing  House ("ACH")
transfer to buy the shares.  Dividends will begin to accrue on shares  purchased
with the proceeds of ACH transfers on the business day the Fund receives Federal
Funds for the purchase  through the ACH system  before the close of The New York
Stock Exchange. The Exchange normally closes at 4:00 P.M., but may close earlier
on certain days. If Federal Funds are received on a business day after the close
of the Exchange, the shares will be purchased and dividends will begin to accrue
on the next regular  business  day. The proceeds of ACH  transfers  are normally
received by the Fund 3 days after the transfers are initiated.  The  Distributor
and the Fund are not responsible for any delays in purchasing  shares  resulting
from delays in ACH transmissions.

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

      |X| Right of  Accumulation.  To qualify for the lower sales  charge  rates
that apply to larger  purchases  of Class A shares,  you and your spouse can add
together:
         |_| Class  A and  Class B  shares  you  purchase  for  your  individual
           accounts,  or for your  joint  accounts,  or for  trust or  custodial
           accounts on behalf of your children who are minors, and
        |_|current  purchases  of  Class A and  Class B  shares  of the Fund and
           other  Oppenheimer funds to reduce the sales charge rate that applies
           to current purchases of Class A shares, and
        |_|Class A and  Class B  shares  of  Oppenheimer  funds  you  previously
           purchased  subject to an initial or contingent  deferred sales charge
           to reduce the sales  charge  rate for  current  purchases  of Class A
           shares,  provided  that you still hold your  investment in one of the
           Oppenheimer funds.

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

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



<PAGE>


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

and the following money market funds:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Classes of Shares.  Each class of shares of the Fund  represents  an interest in
the same portfolio of investments of the Fund. However, each class has different
shareholder  privileges and features.  The net income attributable to Class B or
Class C shares and the  dividends  payable on Class B or Class C shares  will be
reduced by  incremental  expenses  borne  solely by that class.  Those  expenses
include the asset-based sales charges to which Class B and Class C are subject.

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

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

      |_| Class B Conversion. The conversion of Class B shares to Class A shares
after six years is subject to the  continuing  availability  of a private letter
ruling  from the  Internal  Revenue  Service,  or an  opinion  of counsel or tax
adviser, to the effect that the conversion of Class B shares does not constitute
a taxable event for the 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.

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

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

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

Determination  of Net Asset Values Per Share.  The net asset values per share of
each class of shares of the Fund are  determined  as of the close of business of
The New  York  Stock  Exchange  on each  day that  the  Exchange  is  open.  The
calculation is done by dividing the value of the Fund's net assets  attributable
to a class by the  number of  shares of that  class  that are  outstanding.  The
Exchange  normally  closes at 4:00 P.M., New York time, but may close earlier on
some other days (for example,  in case of weather emergencies or on days falling
before a holiday).  The  Exchange's  most recent annual  announcement  (which is
subject to change) states that it will close on New Year's Day, Presidents' Day,
Martin Luther King, Jr. Day, Good Friday,  Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. It may also close on other days.

      Dealers  other  than  Exchange  members  may  conduct  trading  in certain
securities  on days on which the  Exchange  is closed  (including  weekends  and
holidays) or after 4:00 P.M. on a regular  business day.  Because the Fund's net
asset values will not be calculated  on those days,  the Fund's net asset values
per share may be significantly  affected on such days when  shareholders may not
purchase or redeem  shares.  For  example,  trading on European  and Asian stock
exchanges and over-the-counter markets normally is completed before the close of
The New York Stock Exchange.

      Changes in the values of securities traded on foreign exchanges or markets
as a result of  events  that  occur  after the  prices of those  securities  are
determined,  but before the close of The New York  Stock  Exchange,  will not be
reflected in the Fund's  calculation of its net asset values that day unless the
Board of  Trustees  determines  that the event is  likely  to effect a  material
change in the value of the  security.  The Manager may make that  determination,
under procedures established by the Board.

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

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

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

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

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

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

How to Sell Shares

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

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.

      In choosing to take advantage of the  Checkwriting  privilege,  by signing
the Account  Application or by completing a Checkwriting  card,  each individual
who signs: (1) for individual accounts, represents that they are the registered
        owner(s) of the shares of the Fund in that account;
(2)   for accounts for corporations,  partnerships,  trusts and other entities,
        represents that they are an officer,  general partner,  trustee or other
        fiduciary or agent,  as applicable,  duly authorized to act on behalf of
        the registered owner(s);
(3)     authorizes  the Fund,  its Transfer Agent and any bank through which the
        Fund's  drafts  (checks) are payable to pay all checks drawn on the Fund
        account of such  person(s)  and to redeem a sufficient  amount of shares
        from that account to cover payment of each check;
(4)     specifically  acknowledges  that if they  choose to permit  checks to be
        honored if there is a single  signature  on checks drawn  against  joint
        accounts,  or accounts for corporations,  partnerships,  trusts or other
        entities,  the  signature  of any  one  signatory  on a  check  will  be
        sufficient to authorize  payment of that check and  redemption  from the
        account,  even if that account is  registered  in the names of more than
        one  person  or  more  than  one  authorized  signature  appears  on the
        Checkwriting card or the Application, as applicable;
(5)     understands that the Checkwriting privilege may be terminated or amended
        at any time by the Fund and/or the Fund's bank; and
(6)     acknowledges  and agrees that  neither the Fund nor its bank shall incur
        any  liability  for  that  amendment  or  termination  of   checkwriting
        privileges or for redeeming shares to pay checks reasonably  believed by
        them to be genuine,  or for returning or not paying checks that have not
        been accepted for any reason.

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

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

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

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

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

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

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

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

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

Distributions   From  Retirement   Plans.   Requests  for   distributions   from
OppenheimerFunds-sponsored  IRAs,  403(b)(7)  custodial  plans,  401(k) plans or
pension   or   profit-sharing   plans   should   be   addressed   to   "Trustee,
OppenheimerFunds Retirement Plans," c/o the Transfer Agent at its address listed
in "How To Sell Shares" in the Prospectus or on the back cover of this Statement
of  Additional  Information.  The  request  must (1)  state the  reason  for the
distribution;   (2)  state  the  owner's  awareness  of  tax  penalties  if  the
distribution is
        premature; and
(3)     conform to the  requirements of the plan and the Fund's other redemption
        requirements.

      Participants      (other      than      self-employed      persons)     in
OppenheimerFunds-sponsored  pension or  profit-sharing  plans with shares of the
Fund  held in the name of the plan or its  fiduciary  may not  directly  request
redemption of their accounts.  The plan administrator or fiduciary must sign the
request.

      Distributions from pension and profit sharing plans are subject to special
requirements  under the Internal Revenue Code and certain  documents  (available
from the Transfer  Agent) must be completed and submitted to the Transfer  Agent
before the  distribution  may be made.  Distributions  from retirement plans are
subject to  withholding  requirements  under the Internal  Revenue Code, and IRS
Form W-4P  (available from the Transfer Agent) must be submitted to the Transfer
Agent with the distribution request, or the distribution may be delayed.  Unless
the   shareholder   has  provided  the  Transfer  Agent  with  a  certified  tax
identification  number,  the Internal Revenue Code requires that tax be withheld
from any distribution  even if the shareholder  elects not to have tax withheld.
The Fund,  the  Manager,  the  Distributor,  and the  Transfer  Agent  assume no
responsibility to determine  whether a distribution  satisfies the conditions of
applicable tax laws and will not be responsible  for any tax penalties  assessed
in connection with a distribution.

Special  Arrangements  for  Repurchase  of Shares from Dealers and Brokers.  The
Distributor is the Fund's agent to repurchase its shares from authorized dealers
or brokers  on behalf of their  customers.  Shareholders  should  contact  their
broker or dealer to arrange this type of redemption.  The  repurchase  price per
share will be the net asset value next computed after the  Distributor  receives
an order placed by the dealer or broker.  However, if the Distributor receives a
repurchase  order from a dealer or broker  after the close of The New York Stock
Exchange on a regular business day, it will be processed at that day's net asset
value if the order was received by the dealer or broker from its customers prior
to the time the Exchange closes. Normally, the Exchange closes at 4:00 P.M., but
may do so  earlier  on  some  days.  Additionally,  the  order  must  have  been
transmitted  to and received by the  Distributor  prior to its close of business
that day (normally 5:00 P.M.).

      Ordinarily, for accounts redeemed by a broker-dealer under this procedure,
payment  will be made  within  three  business  days after the shares  have been
redeemed upon the Distributor's  receipt of the required redemption documents in
proper  form.  The  signature(s)  of the  registered  owners  on the  redemption
documents must be guaranteed as described in the Prospectus.

Automatic  Withdrawal and Exchange  Plans.  Investors  owning shares of the Fund
valued at $5,000  or more can  authorize  the  Transfer  Agent to redeem  shares
(having  a  value  of at  least  $50)  automatically  on a  monthly,  quarterly,
semi-annual or annual basis under an Automatic  Withdrawal Plan.  Shares will be
redeemed three business days prior to the date requested by the  shareholder for
receipt of the payment.  Automatic  withdrawals of up to $1,500 per month may be
requested  by  telephone  if  payments  are to be made by check  payable  to all
shareholders of record.  Payments must also be sent to the address of record for
the account and the address must not have been changed within the prior 30 days.
Required minimum distributions from OppenheimerFunds-sponsored  retirement plans
may not be arranged on this basis.

      Payments are normally made by check, but shareholders  having  AccountLink
privileges  (see "How To Buy Shares") may arrange to have  Automatic  Withdrawal
Plan  payments  transferred  to the  bank  account  designated  on  the  Account
Application or by signature-guaranteed  instructions sent to the Transfer Agent.
Shares are  normally  redeemed  pursuant to an Automatic  Withdrawal  Plan three
business  days  before the  payment  transmittal  date you select in the Account
Application.  If a contingent  deferred sales charge applies to the  redemption,
the amount of the check or payment will be reduced accordingly.

      The Fund cannot guarantee receipt of a payment on the date requested.  The
Fund reserves the right to amend, suspend or discontinue offering these plans at
any time without prior notice.  Because of the sales charge  assessed on Class A
share purchases,  shareholders  should not make regular additional Class A share
purchases while participating in an Automatic Withdrawal Plan. Class B and Class
C shareholders should not establish  withdrawal plans, because of the imposition
of the contingent  deferred sales charge on such  withdrawals  (except where the
contingent  deferred  sales charge is waived as described in "Waivers of Class B
and Class C Sales Charges" below).

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

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

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

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

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

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

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

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

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

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

How to Exchange Shares

      As stated in the Prospectus,  shares of a particular  class of Oppenheimer
funds having more than one class of shares may be  exchanged  only for shares of
the same class of other Oppenheimer funds. Shares of Oppenheimer funds that have
a single class without a class  designation are deemed "Class A" shares for this
purpose.  You can obtain a current list showing  which funds offer which classes
by calling the Distributor at 1-800-525-7048.
      |_| All of the  Oppenheimer  funds currently offer Class A, B and C shares
except  Oppenheimer  Money Market Fund,  Inc.,  Centennial  Money Market  Trust,
Centennial Tax Exempt Trust,  Centennial  Government Trust,  Centennial New York
Tax Exempt Trust, Centennial California Tax Exempt Trust, and Centennial America
Fund, L.P., which only offer Class A shares.
      |_| Oppenheimer  Main Street  California  Municipal Fund currently  offers
only 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.
      |_| Class Y shares of Oppenheimer Real Asset Fund may not be exchanged for
shares of any other Fund.

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

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

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

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

      |_| How Exchanges Affect Contingent  Deferred Sales Charges. No contingent
deferred  sales charge is imposed on exchanges of shares of any class  purchased
subject to a contingent  deferred  sales  charge.  However,  when Class A shares
acquired  by  exchange of Class A shares of other  Oppenheimer  funds  purchased
subject to a Class A contingent  deferred  sales  charge are redeemed  within 18
months of the end of the calendar month of the initial purchase of the exchanged
Class A shares,  the Class A contingent  deferred sales charge is imposed on the
redeemed  shares.  The Class B  contingent  deferred  sales charge is imposed on
Class B shares  acquired by exchange if they are redeemed  within 6 years of the
initial  purchase  of the  exchanged  Class B  shares.  The  Class C  contingent
deferred sales charge is imposed on Class C shares  acquired by exchange if they
are redeemed  within 12 months of the initial  purchase of the exchanged Class C
shares.

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

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

      |_| Telephone  Exchange Requests.  When exchanging shares by telephone,  a
shareholder  must have an existing  account in the fund to which the exchange is
to be made.  Otherwise,  the  investors  must obtain a  Prospectus  of that fund
before the exchange request may be submitted.  For full or partial  exchanges of
an account made by telephone, any special account features such as Asset Builder
Plans and Automatic  Withdrawal Plans will be switched to the new account unless
the Transfer  Agent is instructed  otherwise.  If all  telephone  lines are busy
(which  might  occur,  for  example,   during  periods  of  substantial   market
fluctuations),  shareholders might not be able to request exchanges by telephone
and would have to submit written exchange requests.

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

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

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

Dividends, Capital Gains and Taxes

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

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

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

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

      Under the Internal  Revenue Code, by December 31 each year,  the Fund must
distribute  98% of its taxable  investment  income earned from January 1 through
December  31 of that year and 98% of its  capital  gains  realized in the period
from November 1 of the prior year through  October 31 of the current year. If it
does not, the Fund must pay an excise tax on the amounts not distributed.  It is
presently  anticipated that the Fund will meet those requirements.  However, the
Board of Trustees and the Manager might  determine in a particular  year that it
would be in the best  interests  of  shareholders  for the Fund not to make such
distributions  at  the  required  levels  and  to  pay  the  excise  tax  on the
undistributed  amounts.  That would reduce the amount of income or capital gains
available for distribution to shareholders.

      The Fund intends to qualify as a "regulated  investment company" under the
Internal  Revenue Code  (although  it reserves  the right not to qualify).  That
qualification enables the Fund to "pass through" its income and realized capital
gains to  shareholders  without having to pay tax on them.  This avoids a double
tax on that income and capital gains, since shareholders  normally will be taxed
on the dividends and capital gains they receive from the Fund (unless the Fund's
shares are held in a retirement  account or the shareholder is otherwise  exempt
from tax). If the Fund qualifies as a "regulated  investment  company" under the
Internal Revenue Code, it will not be liable for Federal income taxes on amounts
paid by it as dividends  and  distributions.  The Fund  qualified as a regulated
investment company in its last fiscal year. The Internal Revenue Code contains a
number of complex tests relating to qualification  which the Fund might not meet
in any particular year. If it did not so qualify,  the Fund would be treated for
tax  purposes  as an  ordinary  corporation  and  receive no tax  deduction  for
payments made to shareholders.

      If prior  distributions  made by the Fund  must be  re-characterized  as a
non-taxable  return of capital at the end of the fiscal  year as a result of the
effect of the Fund's  investment  policies,  they will be  identified as such in
notices sent to shareholders.

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

Additional Information About the Fund

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

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

The Custodian.  The Bank of New York is the Custodian of the Fund's assets.  The
Custodian's  responsibilities  include  safeguarding  and controlling the Fund's
portfolio  securities  and handling the delivery of such  securities to and from
the Fund.  It will be the  practice of the Fund to deal with the  Custodian in a
manner uninfluenced by any banking  relationship the Custodian may have with the
Manager and its  affiliates.  The Fund's cash  balances  with the  custodian  in
excess of  $100,000  are not  protected  by  Federal  deposit  insurance.  Those
uninsured balances at times may be substantial. Independent Auditors. Deloitte &
Touche  LLP are the  independent  auditors  of the Fund.  They  audit the Fund's
financial statements and perform other related audit services.  They also act as
auditors for the Manager and for certain  other funds advised by the Manager and
its affiliates.


<PAGE>




                                   Appendix A
- -------------------------------------------------------------------------------
                       DESCRIPTION OF RATINGS
- -------------------------------------------------------------------------------

Ratings of Investments

Description of Moody's Investor Services, Inc. Bond Ratings

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

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

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

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

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

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

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

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

C: Bonds rated C can be regarded as having  extremely  poor  prospects  of ever
attaining any real investment standing.

Description of Standard & Poor's Long-Term Bond Ratings

AAA:  Bonds rated "AAA" have  extremely  strong  capacity to pay  principal and
interest. "AAA" is the highest issuer credit rating assigned by S&P.

AA:  Bonds  rated  "AA"  have  very  strong   capacity  to  pay  principal  and
interest.  They  differ  from  the  highest  rated  obligations  only in  small
degree.

A: Bonds rated "A" have strong capacity to pay principal and interest,  although
they are somewhat more susceptible to adverse effects of change in circumstances
and economic conditions.

BBB:  Bonds  rated  BBB are  regarded  as  having an  adequate  capacity  to pay
principal and interest.  Whereas they normally  exhibit  protection  parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened  capacity to pay  principal  and interest for bonds in this  category
than for bonds in the A category.

BB, B, CCC,  CC:  Bonds rated BB, B, CCC and CC are  regarded,  on  balance,  as
predominantly  speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB indicates
the lowest degree of  speculation  and CC the highest  degree.  While such bonds
will  likely  have  some  quality  and  protective  characteristics,  these  are
outweighed by large uncertainties or major risk exposures to adverse conditions.

C, D:  Bonds on which no  interest  is being  paid are rated C.  Bonds  rated D
are in default and payment of interest  and/or  repayment  of  principal  is in
arrears.

Description of Fitch IBCA, Inc. Ratings

AAA:  Bonds rated AAA are  considered to be investment  grade and of the highest
credit quality.  The obligor has an exceptionally strong ability to pay interest
and repay principal,  which is unlikely to be affected by reasonably foreseeable
events.

AA: Bonds rated AA are considered to be investment grade and of very high credit
quality.  The  obligor's  ability to pay  interest  and repay  principal is very
strong,  although not quite as strong as bonds rated AAA. Because bonds rated in
the AAA and AA categories are not significantly vulnerable to foreseeable future
developments, short-term debt of these issuers is generally rated F-1+.

A:  Bonds  rated A are  considered  to be  investment  grade and of high  credit
quality. The obligor's ability to pay interest and repay principal is considered
to be  strong,  but  may be more  vulnerable  to  adverse  changes  in  economic
conditions and circumstances than bonds with higher ratings.

BBB:  Bonds rate BBB are considered to be investment  grade and of  satisfactory
credit  quality.  The obligor's  ability to pay interest and repay  principal is
considered  to  be  adequate.   Adverse  changes  in  economic   conditions  and
circumstances,  however,  are more likely to have adverse impact on these bonds,
and therefore  impair timely  payment.  The likelihood that the ratings of these
bonds  will fall below  investment  grade is higher  than for bonds with  higher
ratings.

BB: Bonds rated BB are  considered  speculative.  The  obligor's  ability to pay
interest  and repay  principal  may be  affected  over time by adverse  economic
changes.  However,  business and financial  alternatives can be identified which
could assist the obligor in satisfying its debt service requirements.

B: Bonds rated B are considered  highly  speculative.  While bonds in this class
are currently  meeting debt service  requirements,  the probability of continued
timely payment of principal and interest  reflects the obligor's  limited margin
of safety and the need for reasonable business and economic activity through the
life of the issue.

CCC: Bonds rated CCC have certain  identifiable  characteristics  which, if not
remedied,  may lead to  default.  The ability to meet  obligations  requires an
advantageous business and economic environment.

CC:  Bonds  rated CC are  minimally  protected.  Default in payment of interest
and/or principal seems probable over time.

C: Bonds rated C are in imminent default in payment of interest or principal.

DDD,  DD, and D: Bonds in these  rating  categories  are in default on  interest
and/or principal  payments.  Such bonds are extremely  speculative and should be
valued  on the  basis  of  their  ultimate  recovery  value  in  liquidation  or
reorganization of the obligor. DDD represents the highest potential for recovery
of these bonds, and D represents the lowest potential for recovery.

Plus (+)  Minus  (-) Plus and  minus  signs  are used  with a rating  symbol  to
indicate the relative position of a credit within the rating category.  Plus and
minus signs, however, are not used in the DDD, DD, or D categories.

Description of Duff & Phelps' Ratings

Long-Term Debt and Preferred Stock

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

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

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

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

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

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

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

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

DP:  Preferred stock with dividend arrearages.

<PAGE>



                                   Appendix B


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

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


<PAGE>



13
                                       C-
                                   Appendix C
- -------------------------------------------------------------------------------
        OppenheimerFunds Special Sales Charge Arrangements and Waivers
- -------------------------------------------------------------------------------

      In certain  cases,  the initial  sales charge that applies to purchases of
Class A shares of the Oppenheimer funds or the contingent  deferred sales charge
that may  apply to Class A,  Class B or Class C shares  may be  waived.  That is
because of the economies of sales  efforts  realized by the  Distributor  or the
dealers or other financial institutions offering those shares to certain classes
of investors or in certain transactions.

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

      For the  purposes  of  some  of the  waivers  described  below  and in the
Prospectus and Statement of Additional Information of the applicable Oppenheimer
funds,  the term  "Retirement  Plan" refers to the following types of plans: (1)
plans qualified under Sections 401(a) or 401(k) of the Internal Revenue
        Code,
(2) non-qualified  deferred  compensation plans, (3) employee benefit plans1 (4)
Group  Retirement  Plans2 (5)  403(b)(7)  custodial  plan accounts (6) SEP-IRAs,
SARSEPs or SIMPLE plans

      The interpretation of these provisions as to the applicability of a waiver
in a particular  case is determined  solely by the  Distributor  or the Transfer
Agent of the fund.  These  waivers  and special  arrangements  may be amended or
terminated at any time by the applicable  Fund and/or the  Distributor.  Waivers
that apply at the time shares are redeemed must be requested by the  shareholder
and/or dealer in the redemption request.
- --------------
1. An "employee  benefit plan" means any plan or arrangement,  whether or not it
   is "qualified" under the Internal Revenue Code, under which Class A shares of
   an  Oppenheimer  fund  or  funds  are  purchased  by  a  fiduciary  or  other
   administrator  for the account of participants  who are employees of a single
   employer or of affiliated employers.  These may include, for example, medical
   savings accounts, payroll deduction plans or similar plans. The fund accounts
   must be registered in the name of the fiduciary or  administrator  purchasing
   the shares for the benefit of participants in the plan.
2. The term  "Group  Retirement  Plan"  means  any  qualified  or  non-qualified
   retirement  plan  for  employees  of a  corporation  or sole  proprietorship,
   members and  employees of a partnership  or  association  or other  organized
   group of persons  (the  members of which may include  other  groups),  if the
   group has made special  arrangements  with the Distributor and all members of
   the group  participating  in (or who are eligible to participate in) the plan
   purchase  Class A shares  of an  Oppenheimer  fund or funds  through a single
   investment dealer,  broker or other financial  institution  designated by the
   group.  Such plans  include 457 plans,  SEP-IRAs,  SARSEPs,  SIMPLE plans and
   403(b) plans other than plans for public  school  employees.  The term "Group
   Retirement Plan" also includes  qualified  retirement plans and non-qualified
   deferred  compensation  plans  and IRAs  that  purchase  Class A shares of an
   Oppenheimer fund or funds through a single investment dealer, broker or other
   financial institution that has made special arrangements with the Distributor
   enabling  those  plans to  purchase  Class A shares  at net  asset  value but
   subject to the Class A contingent deferred sales charge.
- -------------------------------------------------------------------------------


<PAGE>


Applicability of Class A Contingent Deferred Sales Charges in Certain Cases
- -------------------------------------------------------------------------------

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

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

- -------------------------------------------------------------------------------
Waivers of Class A Sales Charges of Oppenheimer Funds
- -------------------------------------------------------------------------------

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

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

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

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

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

The Class A contingent deferred sales charge is also waived if shares that would
otherwise be subject to the contingent deferred sales charge are redeemed in the
following cases:
      |_| To make Automatic  Withdrawal Plan payments that are limited  annually
to no more than 12% of the original account value.
      |_|  Involuntary  redemptions of shares by operation of law or involuntary
redemptions of small accounts (see "Shareholder  Account Rules and Policies," in
the Prospectus).
      |_|  For  distributions  from  Retirement  Plans,  deferred  compensation
plans or other employee benefit plans for any of the following purposes:
(1)   Following  the death or  disability  (as defined in the Internal  Revenue
           Code) of the participant or beneficiary. The death or disability must
           occur after the participant's account was established.
(2)   To return excess contributions.
(3) To  return  contributions  made  due to a  mistake  of  fact.  (4)  Hardship
withdrawals, as defined in the plan.
(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 Manager or a subsidiary.  The fund
        must be one that is 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.  (11) Plan termination or
        "in-service  distributions," if the redemption  proceeds are rolled over
        directly to an OppenheimerFunds-sponsored IRA.
      |_| For  distributions  from Retirement  Plans having 500 or more eligible
participants,  except distributions due to termination of all of the Oppenheimer
funds as an investment option under the Plan. |_| For distributions  from 401(k)
plans sponsored by broker-dealers that
        have entered into a special agreement with the Distributor allowing this
        waiver.


<PAGE>



- -------------------------------------------------------------------------------
Waivers of Class B and Class C Sales Charges of Oppenheimer Funds
- -------------------------------------------------------------------------------

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

Waivers for Redemptions in Certain Cases.

The Class B and Class C  contingent  deferred  sales  charges will be waived for
redemptions of shares in the following cases:
      |_|Shares redeemed  involuntarily,  as described in "Shareholder  Account
Rules and Policies,"
in the applicable Prospectus.
      |_|  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).
      |_| 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.
      |_|  Returns of excess contributions to Retirement Plans.
      |_|  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.
      |_|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  or
beneficiaries.
      |_| Distributions from 401(k) plans sponsored by broker-dealers  that have
entered into a special agreement with the Distributor allowing this waiver.
      |_|  Redemptions of Class B shares held by Retirement  Plans whose records
are  maintained on a daily  valuation  basis by Merrill Lynch or an  independent
record keeper under a contract with Merrill Lynch.
      |_|  Redemptions of Class C shares of Oppenheimer  U.S.  Government  Trust
from  accounts of clients of  financial  institutions  that have  entered into a
special arrangement with the Distributor for this purpose.

Waivers for Shares Sold or Issued in Certain Transactions.

      The contingent deferred sales charge is also waived on Class B and Class C
shares sold or issued in the following cases:
      |_| Shares sold to the Manager or its affiliates.
      |_| Shares sold to registered  management investment companies or separate
accounts of  insurance  companies  having an  agreement  with the Manager or the
Distributor for that purpose.
            |_| Shares issued in plans of  reorganization  to which the Fund is
a party.

- -------------------------------------------------------------------------------
Special  Sales Charge  Arrangements  for  Shareholders  of Certain  Oppenheimer
Funds Who Were Shareholders of the Former Quest for Value Funds
- -------------------------------------------------------------------------------

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

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

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

      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

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

Reductions or Waivers of Class A Sales Charges.

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

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

- ----------------------------------------------------------------------
Number of                           Initial Sales
Eligible         Initial Sales      Charge as a %    Commission as %
Employees or     Charge as a % of   of Net Amount    of Offering
Members          Offering 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  Associations  having 50 or more  eligible  employees or
members,  there is no initial  sales charge on purchases of Class A shares,  but
those  shares  are  subject  to the Class A  contingent  deferred  sales  charge
described in the applicable fund's Prospectus.

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

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

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

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

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

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

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

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

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

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

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

      The  initial and  contingent  deferred  sale charge  rates and waivers for
Class A and Class B shares  described  in the  Prospectus  or this  Appendix for
Oppenheimer  U.  S.  Government  Trust,   Oppenheimer  Bond  Fund,   Oppenheimer
Disciplined  Value Fund and  Oppenheimer  Disciplined  Allocation  Fund (each is
included in the reference to "Fund"  below) are modified as described  below for
those  shareholders who were shareholders of Connecticut  Mutual Liquid Account,
Connecticut  Mutual Government  Securities  Account,  Connecticut  Mutual Income
Account,  Connecticut  Mutual Growth  Account,  Connecticut  Mutual Total Return
Account,  CMIA LifeSpan Capital  Appreciation  Account,  CMIA LifeSpan  Balanced
Account and CMIA  Diversified  Income  Account (the "Former  Connecticut  Mutual
Funds") on March 1, 1996,  when  OppenheimerFunds,  Inc.  became the  investment
adviser to the Former Connecticut Mutual Funds.

Prior Class A CDSC and Class A Sales Charge Waivers

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

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

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

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

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

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



<PAGE>


Class A and Class B Contingent Deferred Sales Charge Waivers

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

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

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



<PAGE>


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


<PAGE>


Oppenheimer Champion Income Fund
- -------------------------------------------------------------------------------

Internet Web Site:
      www.oppenheimerfunds.com

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

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

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

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

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

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


PX190.0199

<PAGE>


                        OPPENHEIMER CHAMPION INCOME FUND

                                    FORM N-1A

                                     PART C

                                OTHER INFORMATION

Item 23.  Exhibits

(a)   Amended  and  Restated  Declaration  of Trust dated  8/22/95:  Filed with
Post-Effective   Amendment  No.  15  (9/28/95)  and   incorporated   herein  by
reference.

(b)   Restated By-Laws as amended 6/26/90:  Filed with Post-Effective  Amendment
      No. 9 to Registrant's  Registration  Statement,  1/29/92, and refiled with
      Registrant's Post-Effective Amendment No. 13, 1/24/95 pursuant to Item 102
      of Regulation S-T.

(c)    (i) Specimen  Class  A  Share  Certificate:  Filed  with  Post-Effective
      Amendment No. 17 to Registrant's  Registration  Statement,  1/17/97,  and
      incorporated herein by reference.
      (ii)  Specimen  Class  B Share  Certificate:  Filed  with  Post-Effective
      Amendment No. 17 to Registrant's  Registration  Statement,  1/17/97,  and
      incorporated herein by reference.
      (iii)  Specimen  Class C Share  Certificate:  Filed  with  Post-Effective
      Amendment No. 17 to Registrant's  Registration  Statement,  1/17/97,  and
      incorporated herein by reference.

(d)   Investment  Advisory Agreement dated 10/22/90:  Filed with  Post-Effective
      Amendment No. 6 to the Registrant's  Registration Statement,  1/25/91, and
      refiled  with  Registrant's   Post-Effective  Amendment  No.  13,  1/24/95
      pursuant  to  Item  102 of  Regulation  S-T  and  incorporated  herein  by
      reference.

(e)   (i)  General   Distributor's   Agreement   dated   10/13/92:   Filed  with
      Post-Effective  Amendment No. 10 to Registrant's  Registration  Statement,
      1/28/93,  and refiled with Registrant's  Post-Effective  Amendment No. 13,
      1/24/95,  pursuant to Item 102 of Regulation S-T, and incorporated  herein
      by reference.

      (ii) Form of OppenheimerFunds  Distributor,  Inc. Dealer Agreement: Filed
      with  Post-Effective  Amendment No. 14 of Oppenheimer  Main Street Funds,
      Inc. (Reg. No. 33-17850),  9/30/94, pursuant to Item 102 and incorporated
      herein by reference.

      (iii)Form of OppenheimerFunds  Distributor,  Inc. Broker Agreement: Filed
      with  Post-Effective  Amendment No. 14 of Oppenheimer  Main Street Funds,
      Inc. (Reg. No. 33-17850),  9/30/94, pursuant to Item 102 and incorporated
      herein by reference.

      (iv) Form of OppenheimerFunds  Distributor,  Inc. Agency Agreement: Filed
      with  Post-Effective  Amendment No. 14 of Oppenheimer  Main Street Funds,
      Inc. (Reg.  No.  33-17850),  9/30/94,  pursuant to Item 102 of Regulation
      S-T, and incorporated herein by reference.

(f)   Form    of    Deferred     Compensation     Plan    for     Disinterested
Trustees/Directors:

      Filed with Post-Effective  Amendment No. 40 to the Registration Statement
of Oppenheimer High Yield Fund (Reg. No. 2-62076),  10/27/98,  and incorporated
herein by reference.

 (g)  Custody  Agreement dated 10/6/92  between  Registrant and The Bank of New
York:   Filed   with   Post-Effective   Amendment   No.   10  to   Registrant's
Registration Statement,  1/28/93, and refiled with Registrant's  Post-Effective
Amendment  No.  13,  1/24/95,  pursuant  to  Item  102 of  Regulation  S-T  and
incorporated herein by reference.

(h)   Not applicable.

(i)  Opinion  and  Consent of Counsel  dated  9/30/87:  Filed with  Registrant's
Post-Effective   Amendment  No.  2,  10/6/87,   and  refiled  with  Registrant's
Post-Effective Amendment No. 13, 1/24/95, pursuant to Item 102 of Regulation S-T
and incorporated herein by reference.

(j)   Independent   Auditors'   Consent:   [To  be  filed   by   Post-Effective
Amendment].

(k)   Not applicable.

(l)   Investment   Letter  dated   10/1/87  from  Champion   Asset   Management
      Corporation  to  Registrant:   Filed  with  Registrant's   Post-Effective
      Amendment No. 1, 4/28/88, and incorporated herein by reference.

(m)   (i) Service Plan and Agreement for Class A shares dated 6/22/93 under Rule
      12b-1 of the  Investment  Company Act of 1940:  Filed with  Post-Effective
      Amendment No. 11, 11/30/93, and incorporated herein by reference.

      (ii)  Distribution and Service Plan and Agreement for Class B shares dated
      10/1/95 under Rule 12b-1 of the Investment Company Act of 1940: Filed with
      Post-Effective  Amendment  No. 14,  7/27/95,  and  incorporated  herein by
      reference.

      (iii)Distribution  and  Service  Plan and  Agreement  for  Class C shares
      dated  12/1/93  under Rule 12b-1 of the  Investment  Company Act of 1940:
      Filed with  Post-Effective  Amendment No. 13, 1/24/95,  and  incorporated
      herein by reference.

(n)   (i)  Financial  Data  Schedule  for  Class  A  Shares:  To  be  filed  by
      Post-Effective Amendment.

      (ii) Financial  Data  Schedule  for  Class  B  Shares:  To  be  filed  by
      Post-Effective Amendment.

      (iii)Financial  Data  Schedule  for  Class  C  Shares:  To  be  filed  by
      Post-Effective Amendment.

 (o)  Oppenheimer  Funds  Multiple  Class  Plan  under  Rule  18f-3  under  the
Investment  Company Act of 1940:  updated  through  8/25/98:  Previously  filed
with  Post-Effective   Amendment  No.  70  to  the  Registration  Statement  of
Oppenheimer Global Fund (Reg. No. 2-31661),  9/14/98,  and incorporated  herein
by reference.

- --    Powers of Attorney:  For George C. Bowen,  Trustee:  Filed herewith.  For
Sam  Freedman,   Trustee:   Filed  with   Amendment  No.  17  to   Registrant's
Registration  Statement,  1/17/97,  and incorporated  herein by reference;  for
Bridget A.  Macaskill,  Trustee:  Filed with  Amendment  No.16 to  Registrant's
Registration  Statement,  1/24/96,  and incorporated  herein by reference;  for
all other Trustees:  Filed with Amendment No. 11 to  Registrant's  Registration
Statement, 11/30/93, and incorporated herein by reference.

Item 24.  Persons Controlled by or Under Common Control with the Fund

None.

Item 25.  Indemnification

      Reference is made to the  provisions  of Article  Seventh of  Registrant's
Amended  and  Restated  Declaration  of  Trust  filed as  Exhibit  23(a) to this
Registration Statement, and incorporated herein by reference.

      Insofar as  indemnification  for liabilities  arising under the Securities
Act of 1933 may be permitted to trustees,  officers and  controlling  persons of
Registrant  pursuant to the foregoing  provisions or otherwise,  Registrant  has
been advised that in the opinion of the Securities and Exchange  Commission such
indemnification  is against  public policy as expressed in the Securities Act of
1933  and  is,  therefore,   unenforceable.  In  the  event  that  a  claim  for
indemnification  against such liabilities  (other than the payment by Registrant
of expenses  incurred  or paid by a trustee,  officer or  controlling  person of
Registrant  in the  successful  defense of any action,  suit or  proceeding)  is
asserted by such trustee, officer or controlling person, Registrant will, unless
in the  opinion  of its  counsel  the matter  has been  settled  by  controlling
precedent,  submit to a court of appropriate  jurisdiction  the question whether
such  indemnification  by it is  against  public  policy  as  expressed  in  the
Securities  Act of 1933 and will be governed by the final  adjudication  of such
issue.

Item 26.  Business and Other Connections of the Investment Adviser

(a) OppenheimerFunds,  Inc. is the investment adviser of the Registrant;  it and
certain subsidiaries and affiliates act in the same capacity to other registered
investment  companies  as  described  in Parts A and B hereof and listed in Item
26(b) below.

 (b) There is set forth below information as to any other business,  profession,
vocation  or  employment  of a  substantial  nature in which  each  officer  and
director of OppenheimerFunds, Inc. is, or at any time during the past two fiscal
years has been,  engaged for his/her own account or in the capacity of director,
officer, employee, partner or trustee.

Name and Current Position      Other Business and Connections
with OppenheimerFunds, Inc.    During the Past Two Years

Charles E. Albers,
Senior Vice President          An officer and/or  portfolio  manager of certain
                               Oppenheimer   funds  (since   April   1998);   a
                               Chartered  Financial Analyst;  formerly,  a Vice
                               President  and  portfolio  manager for  Guardian
                               Investor  Services,  the  investment  management
                               subsidiary  of  The  Guardian   Life   Insurance
                               Company (since 1972).

Edward Amberger,
Assistant                      Vice President Formerly Assistant Vice President,
                               Securities Analyst for Morgan Stanley Dean Witter
                               (May 1997 - April  1998);  and  Research  Analyst
                               (July  1996  -  May  1997),   Portfolio   Manager
                               (February   1992  -  July  1996)  and  Department
                               Manager (June 1988 to February 1992) for The Bank
                               of New York.

Mark J.P. Anson,
Vice President                 Vice   President  of   Oppenheimer   Real  Asset
                               Management,   Inc.  ("ORAMI");   formerly,  Vice
                               President  of  Equity   Derivatives  at  Salomon
                                 Brothers, Inc.

Peter M. Antos,
Senior Vice President          An officer and/or  portfolio  manager of certain
                               Oppenheimer   funds;   a   Chartered   Financial
                               Analyst;  Senior Vice  President of  HarbourView
                               Asset  Management  Corporation  ("HarbourView");
                               prior to March,  1996 he was the  senior  equity
                               portfolio  manager for the Panorama Series Fund,
                               Inc. (the  "Company") and other mutual funds and
                               pension funds managed by G.R.  Phelps & Co. Inc.
                               ("G.R.    Phelps"),    the   Company's    former
                               investment  adviser,  which was a subsidiary  of
                               Connecticut  Mutual Life Insurance  Company;  he
                               was also  responsible  for  managing  the common
                               stock  department  and common stock  investments
                               of Connecticut Mutual Life Insurance Co.

Lawrence Apolito,
Vice President                 None.

Victor Babin,
Senior Vice President          None.

Bruce Bartlett,
Vice President                 An officer and/or  portfolio  manager of certain
                               Oppenheimer  funds.  Formerly,  a Vice President
                               and  Senior   Portfolio   Manager  at  First  of
                               America Investment Corp.

George Batejan,
Executive Vice President,
Chief Information Officer      Formerly    Senior   Vice    President,    Group
                               Executive,   and  Senior  Systems   Officer  for
                               American  International  Group  (October  1994 -
                               May, 1998).

John R. Blomfield,
Vice President                 Formerly Senior Product Manager (November,  1995
                               - August,  1997) of International Home Foods and
                               American Home Products  (March,  1994 - October,
                               1996).
Kathleen Beichert,
Vice President                 None.

Rajeev Bhaman,
Vice President                 Formerly,   Vice   President   (January  1992  -
                               February,  1996) of Asian  Equities for Barclays
                               de Zoete Wedd, Inc.

Robert J. Bishop,
Vice                           President   Vice   President   of   Mutual   Fund
                               Accounting  (since May 1996); an officer of other
                               Oppenheimer  funds;  formerly,  an Assistant Vice
                               President of OFI/Mutual  Fund  Accounting  (April
                               1994-May 1996), and a Fund Controller for OFI.

George C. Bowen,
Senior Vice President, Treasurer
and Director                   Vice  President  (since June 1983) and Treasurer
                               (since    March   1985)   of    OppenheimerFunds
                               Distributor,  Inc.  (the  "Distributor");   Vice
                               President  (since  October  1989) and  Treasurer
                               (since April 1986) of  HarbourView;  Senior Vice
                               President   (since  February  1992),   Treasurer
                               (since July 1991)and a director  (since December
                               1991) of  Centennial;  President,  Treasurer and
                               a director  of  Centennial  Capital  Corporation
                               (since   June   1989);    Vice   President   and
                               Treasurer  (since  August  1978)  and  Secretary
                               (since  April  1981)  of  Shareholder  Services,
                               Inc.  ("SSI");  Vice  President,  Treasurer  and
                               Secretary  of  Shareholder  Financial  Services,
                               Inc.  ("SFSI") (since November 1989);  Assistant
                               Treasurer  of  Oppenheimer   Acquisition   Corp.
                               ("OAC")  (since  March,   1998);   Treasurer  of
                               Oppenheimer  Partnership  Holdings,  Inc. (since
                               November  1989);  Vice  President  and Treasurer
                               of  ORAMI  (since  July  1996);  an  officer  of
                               other Oppenheimer funds.

Scott Brooks,
Vice President                 None.

Susan Burton,
Vice President                 None.

Adele Campbell,
Assistant Vice President & Assistant
Treasurer: Rochester Division  Formerly,  Assistant Vice President of Rochester
                               Fund Services, Inc.

Michael Carbuto,
Vice                           President An officer and/or portfolio  manager of
                               certain  Oppenheimer  funds;  Vice  President  of
                               Centennial.

John Cardillo,
Assistant Vice President       None.

Erin Cawley,
Assistant Vice President       None.

H.D. Digby Clements,
Assistant Vice President:
Rochester Division             None.

O. Leonard Darling,
Executive Vice President       Trustee  (1993 - present) of Awhtolia  College -
                               Greece.

William DeJianne,              None.
Assistant Vice President

Robert A. Densen,
Senior Vice President          None.

Sheri Devereux,
Assistant Vice President       None.

Craig P. Dinsell
Executive                      Vice President Formerly, Senior Vice President of
                               Human  Resources for Fidelity  Investments-Retail
                               Division   (January,   1995  -  January,   1996),
                               Fidelity  Investments  FMR Co.  (January,  1996 -
                               June, 1997) and Fidelity  Investments FTPG (June,
                               1997 - January, 1998).

Robert Doll, Jr.,
Executive                      Vice  President  &  Director  An  officer  and/or
                               portfolio manager of certain Oppenheimer funds.

John Doney,
Vice                           President An officer and/or portfolio  manager of
                               certain Oppenheimer funds.

Andrew J. Donohue,
Executive Vice President,
General Counsel and Director   Executive   Vice  President   (since   September
                               1993),  and a director  (since  January 1992) of
                               the   Distributor;   Executive  Vice  President,
                               General  Counsel and a director of  HarbourView,
                               SSI, SFSI and Oppenheimer  Partnership Holdings,
                               Inc.  since  (September  1995);  President and a
                               director of Centennial  (since  September 1995);
                               President  and a director  of ORAMI  (since July
                               1996);  General  Counsel  (since  May  1996) and
                               Secretary   (since  April  1997)  of  OAC;  Vice
                               President   and  Director  of   OppenheimerFunds
                               International,  Ltd.  ("OFIL")  and  Oppenheimer
                               Millennium  Funds plc (since October  1997);  an
                               officer of other Oppenheimer funds.

Patrick Dougherty,             None.
Assistant Vice President

Bruce Dunbar,                  None.
Vice President

Eric Edstrom,
Vice                           President  Formerly an Assistant  Vice  President
                               and National  Account  Executive  (February  1996
                               August 1998) for MBNA America.

George Evans,
Vice                           President An officer and/or portfolio  manager of
                               certain Oppenheimer funds.

Edward Everett,
Assistant Vice President       None.

Scott Farrar,
Vice                           President   Assistant  Treasurer  of  Oppenheimer
                               Millennium  Funds plc (since  October  1997);  an
                               officer of other Oppenheimer funds;  formerly, an
                               Assistant  Vice  President  of  OFI/Mutual   Fund
                               Accounting (April 1994-May 1996), and a Fund
                               Controller for OFI.

Leslie A. Falconio,
Assistant Vice President       None.

Katherine P. Feld,
Vice                           President  and  Secretary   Vice   President  and
                               Secretary  of  the   Distributor;   Secretary  of
                               HarbourView,  and  Centennial;   Secretary,  Vice
                               President  and  Director  of  Centennial  Capital
                               Corporation;  Vice  President  and  Secretary  of
                               ORAMI.

Ronald H. Fielding,
Senior Vice President; Chairman:
Rochester Division             An officer,  Director and/or  portfolio  manager
                               of  certain  Oppenheimer  funds;   Presently  he
                               holds the following  other  positions:  Director
                               (since  1995) of ICI Mutual  Insurance  Company;
                               Governor  (since  1994) of St.  John's  College;
                               Director    (since    1994   -    present)    of
                               International  Museum of  Photography  at George
                               Eastman House.  Formerly,  he held the following
                               positions:  formerly,  Chairman of the Board and
                               Director of Rochester  Fund  Distributors,  Inc.
                               ("RFD");  President  and  Director  of  Fielding
                               Management Company, Inc. ("FMC");  President and
                               Director of  Rochester  Capital  Advisors,  Inc.
                               ("RCAI");  Managing Partner of Rochester Capital
                               Advisors,   L.P.,   President  and  Director  of
                               Rochester   Fund   Services,    Inc.    ("RFS");
                               President  and Director of Rochester Tax Managed
                               Fund,  Inc.;  Director (1993 - 1997) of VehiCare
                               Corp.; Director (1993 - 1996) of VoiceMode.

John Fortuna,
Vice President                 None.

Patricia Foster,
Vice President                 Formerly,  she held the following positions:  An
                               officer of certain former  Rochester funds (May,
                               1993 - January,  1996);  Secretary  of Rochester
                               Capital  Advisors,   Inc.  and  General  Counsel
                               (June,   1993  -  January   1996)  of  Rochester
                               Capital Advisors, L.P.

Jennifer Foxson,
Vice President                 None.

Erin Gardiner,
Assistant Vice President       None.

Linda Gardner,
Vice President                 None.

Alan Gilston,
Vice President                 Formerly,   Vice   President   (1987-1997)   for
                               Schroder Capital Management International.

Jill Glazerman,
Assistant Vice President       None.

Robyn Goldstein-Liebler
Assistant Vice President       None.

Mikhail Goldverg
Assistant Vice President       None.

Jeremy Griffiths,
Executive Vice President and
Chief                          Financial  Officer  Chief  Financial  Officer and
                               Treasurer  (since  March,  1998)  of  Oppenheimer
                               Acquisition  Corp.;  a Member  and  Fellow of the
                               Institute of Chartered Accountants;  formerly, an
                               accountant for Arthur Young (London, U.K.).

Robert Grill,
Senior                         Vice President Formerly, Marketing Vice President
                               for Bankers Trust Company  (1993-1996);  Steering
                               Committee  Member,   Subcommittee   Chairman  for
                               American Savings Education Council (1995-1996).

Caryn Halbrecht,
Vice                           President An officer and/or portfolio  manager of
                               certain Oppenheimer funds.

Elaine T. Hamann,
Vice President                 Formerly,  Vice  President  (September,  1989  -
                               January, 1997) of Bankers Trust Company.

Robert Haley
Assistant Vice President       Formerly,    Vice   President   of   Information
                               Services  for Bankers  Trust  Company  (January,
                               1991 - November, 1997).

Thomas B. Hayes,
Vice President                 None.

Barbara Hennigar,
Executive Vice President and
Chief Executive Officer of
OppenheimerFunds Services,
a                              division of the Manager President and Director of
                               SFSI;  President and Chief  executive  Officer of
                               SSI.

Dorothy Hirshman,              None.
Assistant Vice President

Merryl Hoffman,
Vice President                 None.

Nicholas Horsley,
Vice President                 Formerly,  a Senior Vice President and Portfolio
                               Manager for Warburg,  Pincus  Counsellors,  Inc.
                               (1993-1997),   Co-manager  of  Warburg,   Pincus
                               Emerging   Markets   Fund   (12/94   -   10/97),
                               Co-manager   Warburg,    Pincus    Institutional
                               Emerging   Markets   Fund  -  Emerging   Markets
                               Portfolio  (8/96 - 10/97),  Warburg Pincus Japan
                               OTC  Fund,   Associate   Portfolio   Manager  of
                               Warburg   Pincus   International   Equity  Fund,
                               Warburg    Pincus     Institutional    Fund    -
                               Intermediate   Equity  Portfolio,   and  Warburg
                               Pincus EAFE Fund.

Scott T. Huebl,
Assistant Vice President       None.

Richard Hymes,
Vice President                 None.

Jane Ingalls,
Vice President                 None.

Kathleen T. Ives,
Vice President                 None.

Frank Jennings,
Vice                           President An officer and/or portfolio  manager of
                               certain Oppenheimer funds.

Thomas W. Keffer,
Senior Vice President          None.

Avram Kornberg,
Vice President                 None.

John Kowalik,
Senior                         Vice  President  An  officer   and/or   portfolio
                               manager for certain  OppenheimerFunds;  formerly,
                               Managing Director and Senior Portfolio Manager at
                               Prudential Global Advisors (1989 - 1998).

Joseph Krist,
Assistant Vice President       None.



Michael Levine,
Assistant Vice President       None.

Shanquan Li,
Vice President                 None.

Stephen F. Libera,
Vice President                 An officer and/or portfolio  manager for certain
                               Oppenheimer   funds;   a   Chartered   Financial
                               Analyst; a Vice President of HarbourView;  prior
                               to  March  1996,   the  senior  bond   portfolio
                               manager for  Panorama  Series  Fund Inc.,  other
                               mutual  funds and  pension  accounts  managed by
                               G.R.  Phelps;  also responsible for managing the
                               public  fixed-income  securities  department  at
                               Connecticut Mutual Life Insurance Co.

Mitchell J. Lindauer,
Vice President                 None.

Dan Loughran,
Assistant Vice President:
Rochester Division             None.

David Mabry,
Assistant Vice President       None.

Steve Macchia,
Assistant Vice President       None.

Bridget Macaskill,
President, Chief Executive Officer
and Director                   Chief Executive  Officer (since September 1995);
                               President  and  director  (since  June  1991) of
                               HarbourView;  Chairman  and a  director  of  SSI
                               (since August 1994), and SFSI (September  1995);
                               President   (since   September   1995)   and   a
                               director    (since   October   1990)   of   OAC;
                               President   (since   September   1995)   and   a
                               director  (since  November  1989) of Oppenheimer
                               Partnership  Holdings,  Inc., a holding  company
                               subsidiary  of OFI; a director  of ORAMI  (since
                               July 1996) ;  President  and a  director  (since
                               October  1997) of OFIL, an offshore fund manager
                               subsidiary  of OFI  and  Oppenheimer  Millennium
                               Funds plc (since  October  1997);  President and
                               a  director  of  other   Oppenheimer   funds;  a
                               director of Hillsdown  Holdings plc (a U.K. food
                               company);  formerly, an Executive Vice President
                               of OFI.

Wesley Mayer,
Vice President                 Formerly,  Vice President (January, 1995 - June,
                               1996) of Manufacturers Life Insurance Company.

Loretta McCarthy,
Executive Vice President       None.

Kelley A. McCarthy-Kane
Assistant                      Vice   President   Formerly,   Product   Manager,
                               Assistant  Vice  President  (June 1995-  October,
                               1997) of Merrill Lynch Pierce Fenner & Smith.

Beth Michnowski,
Assistant                      Vice President  Formerly Senior Marketing Manager
                               May,  1996 - June,  1997) and Director of Product
                               Marketing   (August,   1992  -  May,  1996)  with
                               Fidelity Investments.

Lisa Migan,
Assistant Vice President       None.



Denis R. Molleur,
Vice President                 None.

Nikolaos Monoyios,
Vice President                 A Vice  President  and/or  portfolio  manager of
                               certain  Oppenheimer funds (since April 1998); a
                               Certified  Financial Analyst;  formerly,  a Vice
                               President  and  portfolio  manager for  Guardian
                               Investor Services,  the management subsidiary of
                               The  Guardian  Life  Insurance   Company  (since
                               1979).

Linda Moore,
Vice President                 Formerly,  Marketing Manager (July 1995-November
                               1996) for Chase Investment Services Corp.

Kenneth Nadler,
Vice President                 None.


David Negri,
Senior                         Vice  President  An  officer   and/or   portfolio
                               manager of certain Oppenheimer funds.

Barbara Niederbrach,
Assistant Vice President       None.

Robert A. Nowaczyk,
Vice President                 None.

Ray Olson,
Assistant Vice President       None.

Richard M. O'Shaugnessy,
Assistant Vice President:
Rochester Division             None.

Gina M. Palmieri,
Assistant Vice President       None.

Robert E. Patterson,
Senior                         Vice  President  An  officer   and/or   portfolio
                               manager of certain Oppenheimer funds.

James Phillips
Assistant Vice President       None.

Jane Putnam,
Vice                           President An officer and/or portfolio  manager of
                               certain Oppenheimer funds.

Michael Quinn,
Assistant                      Vice President Formerly, Assistant Vice President
                               (April,  1995 -  January,  1998)  of  Van  Kampen
                               American Capital.

Russell Read,
Senior Vice President          Vice   President  of   Oppenheimer   Real  Asset
                               Management, Inc. (since March, 1995).

Thomas Reedy,
Vice President                 An officer and/or  portfolio  manager of certain
                               Oppenheimer   funds;   formerly,   a  Securities
                               Analyst for the Manager.

John Reinhardt,
Vice President: Rochester Division  None
Ruxandra Risko,
Vice President                 None.

Michael S. Rosen,
Vice                           President An officer and/or portfolio  manager of
                               certain Oppenheimer funds.

Richard H. Rubinstein,
Senior                         Vice  President  An  officer   and/or   portfolio
                               manager of certain Oppenheimer funds.

Lawrence Rudnick,
Assistant Vice President       None.

James Ruff,
Executive Vice President & Director None.

Valerie Sanders,
Vice President                 None.

Ellen Schoenfeld,
Assistant Vice President       None.

Stephanie Seminara,
Vice President                 None.

Michelle Simone,
Assistant Vice President       None.

Richard Soper,
Vice President                 None.

Stuart J. Speckman
Vice President                 Formerly,  Vice  President  and  Wholesaler  for
                               Prudential  Securities  (December,  1990 - July,
                               1997).
Nancy Sperte,
Executive Vice President       None.

Donald W. Spiro,
Chairman                       Emeritus and Director  Vice  Chairman and Trustee
                               of  the   New   York-based   Oppenheimer   Funds;
                               formerly,   Chairman   of  the  Manager  and  the
                               Distributor.

Richard A. Stein,
Vice President: Rochester Division  Assistant  Vice  President  (since 1995) of
                               Rochester Capitol Advisors, L.P.

Arthur Steinmetz,
Senior                         Vice  President  An  officer   and/or   portfolio
                               manager of certain Oppenheimer funds.

Ralph Stellmacher,
Senior                         Vice  President  An  officer   and/or   portfolio
                               manager of certain Oppenheimer funds.

John Stoma,
Senior Vice President, Director
of Retirement Plans            None.

Michael C. Strathearn,
Vice                           President An officer and/or portfolio  manager of
                               certain  Oppenheimer funds; a Chartered Financial
                               Analyst; a Vice President of HarbourView.

James C. Swain,
Vice                           Chairman of the Board Chairman,  CEO and Trustee,
                               Director or Managing  Partner of the Denver-based
                               Oppenheimer   Funds;   formerly,   President  and
                               Director of OAMC,  CAMC and Chairman of the Board
                               of SSI.

Susan Switzer,
Assistant Vice President

Anthony A. Tanner,
Vice President:  Rochester Division

James Tobin,
Vice President                 None.

Susan Torrisi,
Assistant Vice President       None.

Jay Tracey,
Vice                           President An officer and/or portfolio  manager of
                               certain Oppenheimer funds.

James Turner,
Assistant Vice President       None.

Maureen VanNorstrand,
Assistant Vice President       None.

Ashwin Vasan,
Vice                           President An officer and/or portfolio  manager of
                               certain Oppenheimer funds.

Teresa Ward,
Assistant Vice President       None.

Jerry Webman,
Senior Vice President          Director  of  New  York-based  tax-exempt  fixed
                               income Oppenheimer funds.

Christine Wells,
Vice President                 None.

Joseph Welsh,
Assistant Vice President       None.

Kenneth B. White,
Vice                           President An officer and/or portfolio  manager of
                               certain  Oppenheimer funds; a Chartered Financial
                               Analyst; Vice President of HarbourView.

William L. Wilby,
Senior Vice President          An officer and/or  portfolio  manager of certain
                               Oppenheimer    funds;    Vice    President    of
                                  HarbourView.

Carol Wolf,
Vice President                 An officer and/or  portfolio  manager of certain
                               Oppenheimer    funds;    Vice    President    of
                               Centennial;   Vice   President,    Finance   and
                               Accounting;    Point   of    Contact:    Finance
                               Supporters  of Children;  Member of the Oncology
                               Advisory Board of the Childrens Hospital.

Caleb Wong,
Assistant Vice President       None.

Robert G. Zack,
Senior Vice President and
Assistant Secretary, Associate
General                        Counsel  Assistant  Secretary  of SSI  (since May
                               1985),  SFSI (since November  1989),  OFIL (since
                               1998),  Oppenheimer  Millennium  Funds plc (since
                               October  1997);  an officer of other  Oppenheimer
                               funds.

Jill Zachman,
Assistant Vice President:
Rochester Division             None.

Arthur J. Zimmer,
Senior                         Vice  President  An  officer   and/or   portfolio
                               manager  of  certain   Oppenheimer   funds;  Vice
                               President of Centennial.

The  Oppenheimer  Funds  include  the New  York-based  Oppenheimer  Funds,  the
Denver-based  Oppenheimer Funds and the  Oppenheimer/Quest  Rochester Funds, as
set forth below:

New York-based Oppenheimer Funds

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

Quest/Rochester Funds

Limited Term New York Municipal Fund
Oppenheimer Convertible Securities Fund
Oppenheimer MidCap Fund
Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Quest For Value Funds
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Rochester Fund Municipals

Denver-based Oppenheimer Funds

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

The address of OppenheimerFunds, Inc., the New York-based Oppenheimer Funds, the
Quest Funds,  OppenheimerFunds  Distributor,  Inc., HarbourView Asset Management
Corp., Oppenheimer Partnership Holdings, Inc., and Oppenheimer Acquisition Corp.
is Two World Trade Center, New York, New York 10048-0203.

The  address  of  the  Denver-based  Oppenheimer  Funds,  Shareholder  Financial
Services,   Inc.,  Shareholder  Services,   Inc.,   OppenheimerFunds   Services,
Centennial  Asset  Management   Corporation,   Centennial   Capital  Corp.,  and
Oppenheimer  Real Asset  Management,  Inc. is 6803 South Tucson Way,  Englewood,
Colorado 80112.

The address of the Rochester-based funds is 350 Linden Oaks, Rochester, New York
14625-2807.

Item 27.  Principal Underwriter

(a)  OppenheimerFunds  Distributor,  Inc. is the Distributor of the Registrant's
shares.  It is also the  Distributor  of each of the other  registered  open-end
investment companies for which OppenheimerFunds, Inc. is the investment adviser,
as described in Part A and B of this  Registration  Statement and listed in Item
26(b) above.

(b) The directors and officers of the Registrant's principal underwriter are:

Name & Principal         Positions & Offices     Positions & Offices
Business Address         with Underwriter        with Registrant

Jason Bach               Vice President          None
31 Racquel Drive
Marietta, GA 30364

Peter Beebe              Vice President          None
876 Foxdale Avenue
Winnetka, IL  60093

Douglas S. Blankenship   Vice President          None
17011 Woodbank
Spring, TX  77379

George C. Bowen(1)       Vice President and      Vice President and
                         Treasurer               Treasurer of the
                                                 Oppenheimer funds.

Peter W. Brennan         Vice President          None
1940 Cotswold Drive
Orlando, FL 32825

Robert Coli              Vice President          None
12 White Tail Lane
Bedminster, NJ 07921

Ronald T. Collins        Vice President          None
710-3 E. Ponce de Leon Ave.
Decatur, GA  30030

William Coughlin         Vice President          None
542 West Surf - #2N
Chicago, IL  60657

Mary Crooks(1)

Daniel Deckman           Vice President          None
12252 Rockledge Circle
Boca Raton, FL 33428

Christopher DeSimone     Vice President          None
5105 Aldrich Avenue South
Minneapolis, MN 55403

Rhonda Dixon-Gunner(1)   Assistant Vice PresidentNone

Andrew John Donohue(2)   Executive Vice          Secretary of the
                         President & Director    Oppenheimer funds.
                         And General Counsel

John Donovan             Vice President          None
868 Washington Road
Woodbury, CT  06798

Kenneth Dorris           Vice President          None
4104 Harlanwood Drive
Fort Worth, TX 76109

Wendy H. Ehrlich         Vice President          None
4 Craig Street
Jericho, NY 11753

Kent Elwell              Vice President          None
35 Crown Terrace
Yardley, PA  19067

Todd Ermenio             Vice President          None
11011 South Darlington
Tulsa, OK  74137

John Ewalt               Vice President          None
2301 Overview Dr. NE
Tacoma, WA 98422

George Fahey             Vice President          None
412 Commons Way
Doylestown, PA 18901

Patrice Falagrady(1)     Senior Vice President   None

Eric Fallon              Vice President          None
10 Worth Circle
Newton, MA  02158

Katherine P. Feld(2)     Vice President          None
& Secretary

Mark Ferro               Vice President          None
43 Market Street
Breezy Point, NY 11697

Ronald H. Fielding(3)    Vice President          None

Ronald R. Foster         Senior Vice President   None
11339 Avant Lane
Cincinnati, OH 45249

Patricia Gadecki-Wells   Vice President          None
950 First St., S.
Suite 204
Winter Haven, FL  33880

Luiggino Galleto         Vice President          None
10239 Rougemont Lane
Charlotte, NC 28277

Michelle Gans            Vice President          None
8327 Kimball Drive
Eden Prairie, MN  55347

L. Daniel Garrity        Vice President          None
2120 Brookhaven View, N.E.
Atlanta, GA 30319

Mark Giles               Vice President          None
5506 Bryn Mawr
Dallas, TX 75209

Ralph Grant(2)           Vice President/National None
Sales Manager

Michael Guman            Vice President          None
3913 Pleasent Avenue
Allentown, PA 18103

Allen Hamilton           Vice President          None
5 Giovanni
Aliso Viejo, CA  92656

C. Webb Heidinger        Vice President          None
138 Gales Street
Portsmouth, NH  03801

Byron Ingram(1)          Assistant Vice PresidentNone

Kathleen T. Ives(1)      Vice President          None

Eric K. Johnson          Vice President          None
3665 Clay Street
San Francisco, CA 94118

Mark D. Johnson          Vice President          None
409 Sundowner Ridge Court
Wildwood, MO  63011

Elyse Jurman             Vice President          None
1194 Hillsboro Mile, #51
Hillsboro Beach, FL  33062

Michael Keogh(2)         Vice President          None

Brian Kelly              Vice President          None
60 Larkspur Road
Fairfield, CT  06430

John Kennedy             Vice President          None
799 Paine Drive
Westchester, PA  19382

Richard Klein            Vice President          None
4820 Fremont Avenue So.
Minneapolis, MN 55409

Daniel Krause            Vice President          None
560 Beacon Hill Drive
Orange Village, OH  44022

Ilene Kutno(2)           Vice President/         None
                         Director of Sales

Oren Lane                Vice President          None
5286 Timber Bend Drive
Brighton, MI  48116

Todd Lawson              Vice President          None
3333 E. Bayaud Avenue
Unit 714
Denver, CO 80209

Wayne A. LeBlang         Senior Vice President   None
54511 Southern Hills
LaQuinta, CA  92253

Dawn Lind                Vice President          None
7 Maize Court
Melville, NY 11747

James Loehle             Vice President          None
2714 Orchard Terrace
Linden, NJ  07036

Steve Manns              Vice President          None
1941 W. Wolfram Street
Chicago, IL  60657

Todd Marion              Vice President          None
39 Coleman Avenue
Chatham, N.J. 07928

Marie Masters            Vice President          None
8384 Glen Eagle Drive
Manlius, NY  13104

LuAnn Mascia(2)          Assistant Vice PresidentNone

Theresa-Marie Maynier    Vice President          None
2421 Charlotte Drive
Charlotte, NC  28203

Anthony Mazzariello      Vice President          None
100 Anderson Street, #427
Pittsburgh, PA  15212

John McDonough           Vice President          None
3812 Leland Street
Chevey Chase, MD  20815

Wayne Meyer              Vice President          None
2617 Sun Meadow Drive
Chesterfield, MO  63005

Tanya Mrva(2)            Assistant Vice PresidentNone

Laura Mulhall(2)         Senior Vice President   None

Charles Murray           Vice President          None
18 Spring Lake Drive
Far Hills, NJ 07931

Wendy Murray             Vice President          None
32 Carolin Road
Upper Montclair, NJ 07043

Denise-Marke Nakamura    Vice President          None
2870 White Ridge Place, #24
Thousand Oaks, CA  91362

Chad V. Noel             Vice President          None
2408 Eagleridge Dr.
Henderson, NV  89014

Joseph Norton            Vice President          None
2518 Fillmore Street
San Francisco, CA  94115

Kevin Parchinski         Vice President          None
8409 West 116th Terrace
Overland Park, KS 66210

Gayle Pereira            Vice President          None
2707 Via Arboleda
San Clemente, CA 92672

Charles K. Pettit        Vice President          None
22 Fall Meadow Dr.
Pittsford, NY  14534

Bill Presutti            Vice President          None
130 E. 63rd Street, #10E
New York, NY  10021

Steve Puckett            Vice President          None
5297 Soledad Mountain Road
San Diego, CA  92109

Elaine Puleo(2)          Senior Vice President   None

Minnie Ra                Vice President          None
100 Delores Street, #203
Carmel, CA 93923

Dustin Raring            Vice President          None
378 Elm Street
Denver, CO 80220

Michael Raso             Vice President          None
16 N. Chatsworth Ave.
Apt. 301
Larchmont, NY  10538

John C. Reinhardt(3)     Vice President          None

Douglas Rentschler       Vice President          None
677 Middlesex Road
Grosse Pointe Park, MI 48230

Ian Robertson            Vice President          None
4204 Summit Wa
Marietta, GA 30066

Michael S. Rosen(2)      Vice President          None

Kenneth Rosenson         Vice President          None
3505 Malibu Country Drive
Malibu, CA 90265

James Ruff(2)            President               None

Timothy Schoeffler       Vice President          None
1717 Fox Hall Road
Washington, DC  77479

Michael Sciortino        Vice President          None
785 Beau Chene Drive
Mandeville, LA  70471

Eric Sharp               Vice President          None
862 McNeill Circle
Woodland, CA  95695

Robert Shore             Vice President          None
26 Baroness Lane
Laguna Niguel, CA 92677

Timothy Stegner          Vice President          None
794 Jackson Street
Denver, CO 80206

Peter Sullivan           Vice President          None
21445 S. E 35th Street
Issaquah, WA  98029

David Sturgis            Vice President          None
44 Abington Road
Danvers, MA  0923

Brian Summe              Vice President          None
239 N. Colony Drive
Edgewood, KY 41017

George Sweeney           Vice President          None
5 Smokehouse Lane
Hummelstown, PA  17036

Andrew Sweeny            Vice President          None
5967 Bayberry Drive
Cincinnati, OH 45242

Scott McGregor Tatum     Vice President          None
704 Inwood
 Southlake, TX  76092

David G. Thomas          Vice President          None
7009 Metropolitan Place, #300
Falls Church, VA 22043

Sarah Turpin             Vice President          None
2201 Wolf Street, #5202
Dallas, TX 75201

Andrea Walsh(1)          Vice President          None

Suzanne Walters(1)       Assistant Vice PresidentNone

Mark Stephen Vandehey(1) Vice President          None

James Wiaduck            Vice President          None
29900 Meridian Place
#22303
Farmington Hills, MI  48331

Marjorie Williams        Vice President          None
6930 East Ranch Road
Cave Creek, AZ  85331

(1)   6803 South Tucson Way, Englewood, CO  80112
(2)   Two World Trade Center, New York, NY  10048
(3)   350 Linden Oaks, Rochester, NY  14623

      (c)  Not applicable.

Item 28.  Location of Accounts and Records
The accounts,  books and other documents required to be maintained by Registrant
pursuant  to  Section  31(a) of the  Investment  Company  Act of 1940 and  rules
promulgated  thereunder are in the possession of  OppenheimerFunds,  Inc. at its
offices at 6803 South Tuscon Way, Englewood, Colorado 80112.

Item 29.  Management Services

Not applicable

Item 30.  Undertakings

Not applicable.




<PAGE>


                                   SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and/or the Investment
Company Act of 1940, the Registrant has duly caused this Registration  Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
County of Arapahoe and State of Colorado on the 27th day of November, 1998.

                               OPPENHEIMER CHAMPION INCOME FUND


                     By:  /s/ ______________________________*
                                        James C. Swain, Chairman

Pursuant to the  requirements of the Securities Act of 1933,  this  Registration
Statement  has been signed below by the following  persons in the  capacities on
the dates indicated:

Signatures                 Title                    Date
- ----------                 -----                    ----

/s/ James C. Swain*       Chairman of the           November 27, 1998
- --------------            Board of Trustees
James C. Swain            and Principal Executive
                          Officer

/s/ George C. Bowen       Chief Financial and       November 27, 1998
- ------------------        Accounting Officer
George C. Bowen           and Treasurer and Trustee

/s/ Bridget A. Macaskill* President and Trustee     November 27, 1998
- -----------------
Bridget A. Macaskill

/s/ Robert G. Avis*       Trustee                   November 27, 1998
- -------------------
Robert G. Avis

/s/ William A. Baker*     Trustee                   November 27, 1998
- ----------------------
William A. Baker

/s/ Charles Conrad, Jr.*  Trustee                   November 27, 1998
- ------------------------
Charles Conrad, Jr.

/s/ Jon S. Fossel*        Trustee                   November 27, 1998
- --------------------------
Jon S. Fossel

/s/ Sam Freedman*         Trustee                   November 27, 1998
- -----------------------
Sam Freedman

/s/ Raymond J. Kalinowski    Trustee              November 27, 1998
- ------------------
Raymond J. Kalinowski

/s/ C. Howard Kast*          Trustee              November 27, 1998
- -------------------
C. Howard Kast

/s/ Robert M. Kirchner*      Trustee              November 27, 1998
- --------------------
Robert M. Kirchner

/s/ Ned M. Steel*            Trustee              November 27, 1998
- -----------------------
Ned M. Steel


*By: /s/ Robert G. Zack
- --------------------------------
Robert G. Zack, Attorney-in-Fact



© 2022 IncJournal is not affiliated with or endorsed by the U.S. Securities and Exchange Commission