OPPENHEIMER CHAMPION INCOME FUND/NY
485APOS, 2000-11-16
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                                                      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. 22                               [ X ]

                                    and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940                                                 [     ]

Amendment No. 22                                              [ X ]
                       Oppenheimer Champion Income Fund
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              (Exact Name of Registrant as Specified in Charter)

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

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

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

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

[   ] Immediately upon filing pursuant to paragraph (b)
[   ] On _______________ pursuant to paragraph (b)
[   ] 60 days after filing pursuant to paragraph (a)(1)
[X  ] On January 19, 2001 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 19, 2001



                                       Oppenheimer  Champion  Income  Fund  is a
                                    mutual fund. It seeks high current income by
                                    investing mainly in high-yield,  lower rated
                                    fixed-income securities as its primary goal.
                                    The Fund  secondarily  seeks capital  growth
                                    when consistent with its 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
As with all mutual funds, the       Fund and other account
Securities and Exchange             features.  Please read this
Commission has not approved or      Prospectus carefully before you
disapproved the Fund's              invest and keep it for future
securities nor has it               reference about your account.
determined that this
Prospectus is accurate or
complete. It is a criminal
offense to represent otherwise.


<PAGE>

Contents

           About the Fund
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           The Fund's Investment Objectives and Strategies

           Main Risks of Investing in the Fund

           The Fund's Past Performance

           Fees and Expenses of the Fund

           About the Fund's Investments

           How the Fund is Managed


           About Your Account
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           How to Buy Shares
           Class A Shares
           Class B Shares
           Class C Shares
           Class N Shares

           Special Investor Services
           AccountLink
           PhoneLink
           OppenheimerFunds Internet Web Site
           Retirement Plans

           How to Sell Shares
           By Mail
           By Telephone
           By Checkwriting

           How to Exchange Shares

           Shareholder Account Rules and Policies

           Dividends, Capital Gains and Taxes

           Financial Highlights


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<PAGE>


About the Fund
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The Fund's Investment Objectives and Strategies

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What Are the Fund's  Investment  Objectives?  The Fund's  primary  objective is
to  seek  a  high  level  of  current  income  by  investing  in a  diversified
portfolio of high-yield,  lower-rated  fixed-income  securities that the Fund's
investment  Manager,  OppenheimerFunds,  Inc.,  believes do not  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
fixed income debt  securities  of domestic and foreign  issuers for high current
income. These securities primarily include:
o     Lower-grade bonds and notes of corporate issuers
o     Foreign corporate and 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, commonly called "junk
bonds."  Lower-grade  debt  securities  are those  rated  below "Baa" by Moody's
Investors  Service  ("Moody's")  or lower than "BBB" by Standard & Poor's Rating
Services  ("S&P") or comparable  ratings by other  nationally-recognized  rating
organizations (or, in the case of unrated securities,  determined by the Manager
to be comparable to securities rated below investment  grade). See Appendix A to
the Statement of Additional Information for a description of the Bond Ratings.

      The remainder of the Fund's  assets may be held in other debt  securities,
cash or cash  equivalents,  in rights or warrants,  or invested in common stocks
and other equity  securities when the Manager believes those are consistent with
the  Fund's  objectives.   Investments  in  high-yield   securities  and  equity
securities  may provide  opportunities  for capital  growth while also providing
income to the Fund.

      The Fund's  foreign  investments  currently  focus on debt  securities  of
issuers in developed markets. The Fund also uses 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 Do the Portfolio  Managers  Decide What Securities to Buy or Sell?
In selecting  securities for the Fund, the Fund's portfolio managers analyze the
overall  investment   opportunities  and  risks  in  different  market  sectors,
industries and countries. The 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 managers currently use a "bottom up"
approach,   focusing  on  the  performance  of  individual   securities   before
considering  industry  trends.  They evaluate an issuer's  liquidity,  financial
strength and earnings  power and also consider 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  portfolio  managers'  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, and
      |_| 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  invests  mainly in  lower-grade
domestic  and foreign  debt  securities.  Those  investors  should be willing to
assume the greater risks of short-term share price fluctuations that are typical
for a fund that invests  mainly in high-yield  domestic and foreign fixed income
debt securities,  which also have special credit 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 intended to be a long-term  investment and may be
appropriate as a part of a retirement plan portfolio. 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 are
subject  to changes in their  value  from a number of factors  described  below.
There  is  also  the  risk  that  poor   security   selection  by  the  Manager,
OppenheimerFunds,  Inc., will cause the Fund to underperform  other funds having
similar objectives.

      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. There is no assurance that the Fund will achieve its objectives.

      |X| Credit Risk. Debt  securities are subject to credit risk.  Credit risk
is the risk that the issuer of a security  might not make interest and principal
payments  on the  security  as they  become  due.  If the  issuer  fails  to pay
interest,  the Fund's income might be reduced,  and if the issuer fails to repay
principal, the value of that security and of the Fund's shares might be reduced.
High-yield,  lower-grade  debt  securities  are  especially  subject to risks of
default. A downgrade in an issuer's credit rating or other adverse news about an
issuer can reduce a security's market value.

           |_| 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  securities.  Lower-grade  debt  securities  may be  subject to
greater  market  fluctuations  and greater risks of loss of income and principal
than investment-grade debt securities. Securities that are (or that have fallen)
below  investment  grade are exposed to a greater risk that the issuers of those
securities  might not meet their debt  obligations.  These  risks can reduce the
Fund's share prices and the income it earns.

      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.  The
market for lower-grade securities may be less liquid, especially during times of
general  economic  distress,  and  therefore  they may be  harder  to sell at an
acceptable price.

      |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 fall, and they may
sell at a discount from their face amount.  The magnitude of these  fluctuations
will often be greater for longer-term debt securities than for shorter-term debt
securities and at times the Fund's average portfolio  maturity may be relatively
long-term.  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.  Also, if interest rates fall,  the Fund's  investments in new
securities at lower yields will reduce the Fund's income.

      |X|  Risks of  Foreign  Investing.  The Fund can  invest up to 100% of its
assets in foreign securities. It can buy securities of governments and companies
in both  developed  markets and emerging  markets.  The Fund  currently does not
intend to invest more than 25% of its net assets in foreign  securities  but may
invest  significant  amounts of its assets in those  securities.  While  foreign
securities offer special investment  opportunities,  they are subject to 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
affect 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.  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.

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

      If the issuer of the derivative  does not pay the amount due, the Fund can
lose money on the  investment.  Also, the  underlying  security or investment on
which the derivative is based, and the derivative itself,  might not perform the
way the Manager expected it to perform. If that happens, the Fund's share prices
could  decline and the Fund could receive less income than expected or its hedge
might be unsuccessful.  Some derivatives may be illiquid, making it difficult to
sell  them at an  acceptable  price.  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? The risks described above collectively form
the  overall  risk  profile  of the Fund and can  affect the value of the Fund's
investments,  its investment  performance and prices of its shares.  These risks
mean that you can lose money by  investing  in the Fund.  When you  redeem  your
shares,  they may be worth more or less than what you paid for them. There is no
assurance that the Fund will achieve its objectives.

      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 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.  Defaults  by  issuers  of  lower-grade
securities could reduce the Fund's income and share prices.

      Debt  securities  are subject to credit and  interest  rate risks that can
affect their values and the share  prices of the Fund.  In the  OppenheimerFunds
spectrum,  the Fund is likely to be more  volatile and has more risks than funds
that focus on  investing  in U.S.  government  securities  and  investment-grade
bonds.

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

The Fund's Past Performance

      The bar chart and table below show one  measure of the risks of  investing
in the Fund,  by  showing  changes in the  Fund's  performance  (for its Class A
shares)  from year to year for the past ten (10)  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  12.06%  (1QTR91)  and  the  lowest  return  (not
annualized) for a calendar quarter was 6.46% (3QTR98).

--------------------------------------------------------------------
Average Annual
Total Returns for                   5 Years           10 Years
the periods ended      1 Year     (or life of       (or life of
December 31, 2000               class, if less)   class, if less)
--------------------------------------------------------------------
--------------------------------------------------------------------
Class A Shares
(inception 11/16/87)     %             %                 %
--------------------------------------------------------------------
--------------------------------------------------------------------
Merrill Lynch High
Yield Bond Master
Index                    %             %                 %*
(inception 12/31/89)
--------------------------------------------------------------------
--------------------------------------------------------------------
Lehman Brothers
Corporate Bond Index
(inception 12/31/89)     %             %                 %*
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--------------------------------------------------------------------
Class B Shares
(inception 10/2/95)      %             %                 %
--------------------------------------------------------------------
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Class C Shares
(inception 12/1/93)      %             %                 %
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* from 12/31/89
The Fund's average annual total returns include the applicable sales charge: 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 2% (5 years); and for Class
C, the 1% contingent deferred sales charge for the 1-year period.  Because Class
N shares were not offered for sale during the Fund's fiscal year ended September
30, 2000, no performance  information is included in the table above for Class N
shares.

The returns  measure the  performance of a hypothetical  account and assume that
all dividends and capital gains distributions have been reinvested in additional
shares.  The performance of Class A shares is compared to the Merrill Lynch High
Yield Bond Master  Index,  an  unmanaged  index of  below-investment-grade  debt
securities of U.S.  corporate  issuers and the Lehman  Brothers  Corporate  Bond
Index, an unmanaged index of  non-convertible  U.S.  investment-grade  corporate
bonds.  The index  performance  reflects the reinvestment of income but does not
consider  transaction  costs. The Fund may have investments that vary from those
in the indices.

Fees and Expenses of the Fund

      The Fund pays a variety of expenses directly for management of its assets,
administration,  distribution of its shares and other  services.  Those expenses
are  subtracted  from the Fund's assets to calculate the Fund's net asset values
per  share.   All   shareholders   therefore  pay  those  expenses   indirectly.
Shareholders  pay other  expenses  directly,  such as sales  charges and account
transaction  charges.  The following tables are meant to help you understand the
fees  and  expenses  you may pay if you buy and hold  shares  of the  Fund.  The
numbers  below are based on the Fund's  expenses  during  its fiscal  year ended
September 30, 2000,  except that the numbers for Class N shares,  which is a new
class,  are based on the Fund's  anticipated  expenses for Class N shares during
the upcoming year.

Shareholder Fees (charges paid directly from your investment):

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

Annual Fund Operating Expenses (deducted from Fund assets):
(% of average daily net assets)
--------------------------------------------------------
                       Class A  Class   Class C Class
                        Shares     B    Shares     N
                                Shares          Shares
--------------------------------------------------------
--------------------------------------------------------
Management Fees               %       %       %       %
--------------------------------------------------------
--------------------------------------------------------
Distribution    and/or
Service (12b-1) Fees          %       %       %       %
--------------------------------------------------------
--------------------------------------------------------
Other Expenses                %       %       %       %
--------------------------------------------------------
--------------------------------------------------------
Total           Annual        %       %       %       %
Operating Expenses
--------------------------------------------------------
Expenses may vary in future years. "Other expenses" include transfer agent fees,
custodial  expenses,  and accounting  and legal expenses the Fund pays.  Class N
shares  were not  offered  for sale  during the Fund's  last  fiscal  year.  The
expenses  above for Class N shares are based on the  expected  expenses for that
class of shares for the current fiscal year.

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

      The first  example  assumes that you redeem all of your shares at the end
of those periods.  The second example  assumes that you keep your shares.  Both
examples  also assume that your  investment  has a 5% return each year and that
the  class's  operating  expenses  remain the same.  Your  actual  costs may be
higher or lower because expenses will vary over time. Based on these assumptions
your expenses would be as follows:
----------------------------------------------------------------------
If shares are           1 Year      3 Years     5 Years    10 Years1
redeemed:
----------------------------------------------------------------------
----------------------------------------------------------------------
Class A Shares                  $            $          $           $
----------------------------------------------------------------------
----------------------------------------------------------------------
Class B Shares                  $            $          $           $
----------------------------------------------------------------------
----------------------------------------------------------------------
Class C Shares                  $            $          $           $
----------------------------------------------------------------------
----------------------------------------------------------------------
Class N Shares                  $            $          $           $
----------------------------------------------------------------------

----------------------------------------------------------------------
If shares are not       1 Year      3 Years     5 Years    10 Years1
redeemed:
----------------------------------------------------------------------
----------------------------------------------------------------------
Class A Shares                  $            $          $           $
----------------------------------------------------------------------
----------------------------------------------------------------------
Class B Shares                  $            $          $           $
----------------------------------------------------------------------
----------------------------------------------------------------------
Class C Shares                  $            $          $           $
----------------------------------------------------------------------
----------------------------------------------------------------------
Class N Shares                  $            $          $           $
----------------------------------------------------------------------
In the first example,  expenses include the initial sales charge for Class A and
the applicable Class B, Class C or Class N contingent deferred sales charges. In
the second example,  the Class A expenses include the sales charge, but Class B,
Class C and Class N  expenses  do not  include  the  contingent  deferred  sales
charges.  1.  Class B  expenses  for  years 7  through  10 are  based on Class A
expenses,  since Class B shares  automatically  convert to Class A after six (6)
years.

About the Fund's Investments

The Fund's Principal Investment Policies. The allocation of the Fund's portfolio
among  different  types of  investments  will  vary  over  time  based  upon the
Manager's evaluation of economic and market trends. However, under normal market
conditions,   the  Fund  emphasizes  investments  in  high-yield,   lower  grade
fixed-income  securities.  The  Fund  has no  requirements  as to the  range  of
maturities of the debt securities it can buy or as to the market  capitalization
of the issuers of those securities.

      The Manager does not rely solely on ratings of debt  securities  by rating
organizations when selecting  investments for the Fund. The Fund can buy unrated
securities.  The  Manager  assigns  a  rating  to an  unrated  security  that is
equivalent to what the Manager believes are comparable rated securities.

      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 goals.  The Fund's portfolio might not
always include all of the different types of investments  described  below.  The
Statement of Additional Information contains more detailed information about the
Fund's investment policies and risks.

      The Manager  tries to reduce  risks by  carefully  researching  securities
before they are  purchased.  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  issuer.  Also,  the Fund does not
concentrate  25% or more of its  investments in the securities of issuers in any
one industry or the securities of any one foreign government.

      However, changes in the overall market prices of securities and the income
they pay can occur at any  time.  The  share  prices  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.

      |X|  High-Yield,   Lower-Grade  Debt  Securities.  The  Fund  mainly  buys
lower-grade,  high yield  fixed-income  securities of U.S. and foreign  issuers,
including  bonds,  debentures,   notes,  preferred  stocks,  loan  participation
interests and structured  notes, and asset-backed  securities,  among others, to
seek high current income. There are no limits on the amount of the Fund's assets
that can be invested in debt securities below investment grade.

      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.

      |X|  Foreign  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 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.  The Fund buys 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 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 values of these  notes will 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| Derivative  Investments.  The Fund can invest in a number of different
kinds of "derivative" investments.  Options, futures contracts, structured notes
and mortgage-related  securities are "derivative  investments" the Fund can use.
In addition to using some  derivatives to hedge  investment  risks, the Fund can
use other derivative  investments because they offer the potential for increased
income and principal value. Some derivative  investments held by the Fund may be
illiquid.

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

Other Investment Strategies.  To seek its objectives,  the Fund can also use the
investment  techniques and strategies described below. The Fund might not always
use all of them. These techniques have risks, although some are designed to help
reduce overall investment or market risks.

      |X| Common  Stocks  and Other  Equity  Securities.  The Fund can invest in
common  stocks and other  equity  securities,  including  warrants  and  rights,
preferred  stock and  convertible  securities,  when  consistent with the Fund's
objectives.

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

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  values 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.  When interest rates rise, the value of preferred stock having a fixed
dividend  rate tends to fall.  The right to payment of  dividends  on  preferred
stock generally is subordinate to the rights of a company's debt securities.

Other  Derivative  Investments.  In addition to structured  notes, the Fund can
use other types of derivative investments to seek its objectives.

Mortgage-Related   Securities.   The  Fund  can  buy   interests  in  pools  of
residential or commercial  mortgages,  in the form of  collateralized  mortgage
obligations  ("CMOs") and other "pass-through"  mortgage  securities.  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,  each having  different  interest rates and
maturities.  The  collateral  is  either in the form of  mortgage  pass-through
certificates   issued   or   guaranteed   by  a  U.S.   government   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 could be
reduced.  Additionally,  the Fund might have to reinvest the prepayment proceeds
in other  securities  paying  interest at lower  rates,  which could  reduce the
Fund's  yield.  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.

      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 prepayment risks 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.

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

      |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.  They are issued at a  substantial  discount  from  their face  value.
"Stripped"  securities are the separate income or principal components of a debt
security.  Some CMOs or other mortgage-related  securities may be stripped, with
each component having a different  proportion of principal or interest payments.
One class  might  receive  all the  interest  and the  other  all the  principal
payments.

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

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

|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 net  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. The Fund can also purchase interests in trusts or other entities
that hold loan  obligations.  In that case the Fund will also be  subject to the
trust's credit risks.

      |X|  "When-Issued"  and  "Delayed-Delivery"  Transactions.  The  Fund  can
purchase securities on a "when-issued" basis and may purchase or sell securities
on a  "delayed-delivery"  basis.  These terms refer to securities that have been
created and for which a market exists, but which are not available for immediate
delivery. There might be a risk of loss to the Fund if the value of the security
declines prior to the settlement date.

      |X|  Hedging.  The Fund can buy and sell futures  contracts,  put and call
options  and  forward   contracts.   These  are  all  referred  to  as  "hedging
instruments."  The Fund is not required to use hedging  instruments  to seek its
objectives.  The Fund will not use hedging instruments for speculative  purposes
and has limits on its use of them.

      The Fund could buy and sell options,  futures and forward  contracts for a
number  of  purposes.  It  might  do so to try to  manage  its  exposure  to the
possibility  that the  prices of its  portfolio  securities  may  decline  or to
establish a position in the  securities  market as a  temporary  substitute  for
purchasing individual  securities.  It might do so to try to manage its exposure
to changing  interest rates. The Fund can use forward contracts to try to manage
foreign currency risks on the Fund's foreign investments.

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

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

      |X|  Illiquid  and  Restricted  Securities.  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  can  increase  that  limit  to  15%.  That
 percentage   limitation  is  not  a  fundamental  policy.   Certain  restricted
 securities that are eligible for resale to qualified  institutional  purchasers
 may not be subject to that  limit.  The Manager  monitors  holdings of illiquid
 securities  on an ongoing  basis to  determine  whether to sell any holdings to
 maintain adequate liquidity.

Special Risks of Emerging  Markets.  The Fund can buy securities in emerging and
developing  markets.  They  may  offer  special  investment   opportunities  but
investments in these  countries  present risks not found in more mature markets.
Those  securities  might 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.

Portfolio Turnover.  The Fund may engage in short-term trading to try to achieve
its objectives.  Portfolio  turnover affects brokerage costs,  although the Fund
does not pay for  brokerage on most of its portfolio  transactions.  If the Fund
realizes  capital  gains  when  it  sells  its  portfolio  investments,  it must
generally  pay  those  gains  out  to  shareholders,  increasing  their  taxable
distributions.  The  Financial  Highlights  table at the end of this  Prospectus
shows the Fund's portfolio turnover rates during recent fiscal years.

Temporary Defensive Investments. When market or economic conditions are unstable
or  adverse,  the Fund can invest  all or a portion  of its assets in  defensive
securities.  Generally,  they  would be cash or cash  equivalents,  such as U.S.
Treasury Bills and other  short-term U.S.  Government  obligations or high-grade
commercial  paper.  To  the  extent  the  Fund  invests   defensively  in  these
securities, it might not achieve its investment objectives.

How the Fund Is Managed

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

      The Manager has been an investment adviser since January 1960. The Manager
(including subsidiaries and affiliates) managed more than $125 billion in assets
as of June 30, 2000,  including other Oppenheimer funds with more than 5 million
shareholder  accounts.  The Manager is located at Two World Trade  Center,  34th
Floor, New York, New York 10048-0203.

     |X| Portfolio  Managers.  The  portfolio  managers of the Fund are David P.
Negri and Thomas P. Reedy.  They have been the  portfolio  managers  principally
responsible  for the  day-to-day  management  of the  Fund's  investments  since
October 1998.  Each is a Vice  President of the Fund. Mr. Negri is a Senior Vice
President of the Manager  (since May 1998) and of HarbourView  Asset  Management
Corporation  (since  April 1999).  Mr. Reedy is a Vice  President of the Manager
(since 1993) and of HarbourView Asset Management Corporation (since April 1999).
Each is an officer and portfolio manager of other Oppenheimer funds.

      |X| Advisory Fees. Under the Fund's  investment  advisory  agreement,  the
Fund pays the  Manager an advisory  fee at an annual  rate that  declines as the
Fund's assets grow: 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, 2000 was ____% 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, as described below.
The Fund's Distributor,  OppenheimerFunds Distributor, Inc., may appoint certain
servicing agents to accept purchase (and redemption) orders. The Distributor, in
its sole discretion, may reject any purchase order for the Fund's shares.

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

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

     |X| Paying by Federal Funds Wire.  Shares purchased through the Distributor
may be paid for by Federal Funds wire. The minimum investment is $2,500.  Before
sending a wire,  call the  Distributor's  Wire Department at  1.800.525.7048  to
notify the Distributor of the wire and to receive further instructions.

     |X| Buying Shares Through OppenheimerFunds  AccountLink.  With AccountLink,
you pay for shares by electronic  payments through the Automated  Clearing House
(ACH) system. You can provide those instructions  automatically,  under an Asset
Builder   Plan,   described   below,   or  by   telephone   instructions   using
OppenheimerFunds PhoneLink, also described below. Please refer to "AccountLink,"
below for more details.

     |X| Buying Shares Through Asset Builder Plans.  You may purchase  shares of
the Fund (and up to four (4) other Oppenheimer  funds)  automatically each month
from  your  account  at a bank or  other  financial  institution  under an Asset
Builder Plan with AccountLink.  Details are in the Asset Builder Application and
the Statement of Additional Information.

HOW MUCH  MUST  YOU  INVEST?  You can buy Fund  shares  with a  minimum  initial
investment of $1,000 and make additional  investments at any time with as little
as $25. There are reduced minimum investments under special investment plans.

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

     |_| 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, which is
the net asset value per share plus any initial  sales charge that  applies.  The
offering price that applies to a purchase order is based on the next calculation
of the net asset value per share that is made after the Distributor receives the
purchase order at its offices in Colorado,  or after any agent  appointed by the
Distributor receives the order and sends it to the Distributor.

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

      The net asset value per share is  determined  by dividing the value of the
Fund's net assets  attributable to a class by the number of shares of that class
that are outstanding. To determine net asset value, the Fund's Board of Trustees
has established  procedures to value the Fund's securities,  in general based on
market value. The Board has adopted special  procedures for valuing illiquid and
restricted  securities and obligations for which market values cannot be readily
obtained. Because foreign securities trade in markets and exchanges that operate
on weekends and U.S. holidays,  the values of the Fund's foreign investments may
change on days when investors cannot buy or redeem Fund shares.

     The Offering  Price. To receive the offering price for a particular day, in
most cases the  Distributor or its  designated  agent must receive your order by
the time of day The New York Stock  Exchange  closes  that day. If your order is
received on a day when the Exchange is closed or after it has closed,  the order
will  receive the next  offering  price that is  determined  after your order is
received. Shares purchased for your account through AccountLink normally will be
purchased  two (2)  business  days after the regular  business  day on which you
instruct the Distributor to initiate the ACH transfer to buy the shares.

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

-------------------------------------------------------------------------------
What  Classes of Shares Does the Fund Offer?  The Fund  offers  investors  four
(4)  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).  The amount of that sales charge will
vary  depending  on the amount you invest.  The sales charge rates are listed in
"How Can You Buy Class A Shares?" below.

      |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.  If you sell your  shares  within  six (6) years of  buying  them,  you
will  normally  pay  a  contingent   deferred  sales  charge.  That  contingent
deferred  sales charge  varies  depending  on how long you own your  shares,  as
described in "How Can You Buy Class B Shares?" below.
-------------------------------------------------------------------------------

     |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. If
you sell your shares within twelve (12) months of buying them, you will normally
pay a contingent  deferred  sales charge of 1%, as described in "How Can You Buy
Class C Shares?" below.


-------------------------------------------------------------------------------
|X| Class N Shares. Class N shares are offered only through retirement plans. If
a retirement  plan buys Class N shares,  it will pay no sales charge at the time
of  purchase,  but it  will  pay an  annual  asset-based  sales  charge.  If the
retirement  plan is terminated  or the  Oppenheimer  funds are  terminated as an
investment  option of the plan and Class N shares are redeemed  within  eighteen
(18) months of its first purchase of Class N shares of any Oppenheimer  fund, it
will normally pay a contingent deferred sales charge of 1%, as described in "How
Can I Buy Class N Shares?" below.

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

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

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

     |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,  Class C or Class N
shares.

          |_| Investing  for the Shorter  Term.  While the Fund is intended as a
long-term  investment,  if you have a relatively  short-term  investment horizon
(that is,  you plan to hold your  shares for not more than six (6)  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 (6) 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 (1) year.

     However,  if you plan to invest more than  $100,000  for the shorter  term,
then as your investment  horizon increases toward six (6) 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 (7) 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,  Class  C or  Class  N
shareholders.  Other features may not be advisable (because of the effect of the
contingent  deferred sales charge) for Class B, Class C or Class N shareholders.
Therefore,  you  should  carefully  review  how you plan to use your  investment
account before deciding which class of shares to buy.

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

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

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

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

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

----------------------------------------------------------------------
                   Front-End Sales  Front-End Sales
                   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 Appendix C to the Statement of Additional
Information.  The  Distributor  pays dealers of record  commissions in an amount
equal to 1.0% of purchases of $1 million or more other than by those  retirement
accounts.  For those  retirement  plan  accounts,  the commission is 1.0% of the
first $2.5 million, plus 0.50% of the next $2.5 million, plus 0.25% of purchases
over $5 million,  based on the cumulative purchases during the prior twelve (12)
months ending with the current purchase.  In either case, the commission will be
paid only on purchases  that were not  previously  subject to a front-end  sales
charge and dealer  commission.1 That commission will not be paid on purchases of
shares in amounts of $1 million or more  (including any right of accumulation by
a retirement  plan that pays for the  purchase  with the  redemption  of Class C
shares of one or more  Oppenheimer  funds held by the plan for more than one (1)
year).

      If you redeem any of those shares within an eighteen  (18) month  "holding
period"  measured from eighteen (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.

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

How Can You Buy Class B Shares?  Class B shares are sold at net asset  value per
share without an initial sales charge.  However,  if Class B shares are redeemed
within six (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 amount of the  contingent  deferred  sales  charge  will depend on the
number  of years  since you  invested  and the  dollar  amount  being  redeemed,
according to the following  schedule for the Class B contingent  deferred  sales
charge holding period:

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

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

How Can You Buy Class N Shares?  As discussed above,  Class N shares are offered
only  through  retirement  plans  that  purchase  Class N shares  of one or more
Oppenheimer  funds totaling $500,000 or more, or that have assets of $500,000 or
more, or 100 or more eligible plan participants.  Non-retirement  plan investors
cannot buy Class N shares  directly.  Class N shares are sold at net asset value
per share without an initial sales charge.  However, a contingent deferred sales
charge of 1.00% will be imposed if the retirement  plan is terminated or Class N
shares of all  Oppenheimer  funds are terminated as an investment  option of the
plan and Class N shares are  redeemed  within  eighteen  (18)  months  after the
plan's  first  purchase  of  Class N shares  of any  Oppenheimer  fund.  See the
Statement of  Additional  Information  for when the  contingent  deferred  sales
charge  is  waived.  The Class N  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 N shares.

Distribution and Service (12b-1) Plans.

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

      |X|  Distribution  and  Service  Plans  for  Class B,  Class C and Class N
Shares. The Fund has adopted Distribution and Service Plans for Class B, Class C
and  Class N  shares  to pay the  Distributor  for its  services  and  costs  in
distributing Class B, Class C and Class N shares and servicing  accounts.  Under
the plans, the Fund pays the Distributor an annual  asset-based  sales charge of
0.75%  per year on Class B shares  and on Class C shares  and  0.25% per year on
Class N shares.  The  Distributor  also receives a service fee of 0.25% per year
under the Class B and Class C plans.  The  Distributor  is entitled to receive a
service fee of 0.25% per year under the Class N  Distribution  and Service Plan,
but the Fund's  trustees  have not  authorized  the Fund to pay service  fees on
Class N shares at this time.

      The asset-based sales charge and service fees increase Class B and Class C
expenses by 1.00% and the asset-based sales charge increases Class N expenses by
0.25% of the net assets per year.  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 are sold by the  dealer.  After the shares have been held for a
year, the Distributor pays the service fees to dealers on a quarterly basis.

      The Distributor  currently pays 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 sale of Class B shares  is  therefore
4.00% of the purchase  price.  The  Distributor  retains the Class B asset-based
sales charge.

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

      The Distributor  currently pays sales commissions of 1.00% of the purchase
price of Class N shares to  dealers  from its own  resources  at the time of the
sale. The Distributor retains the asset-based sales charge on Class N shares.

Special Investor Services

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

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

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

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

      |X| Purchasing  Shares.  You may purchase shares in amounts up to $100,000
by phone,  by  calling  1.800.533.3310.  You must have  established  AccountLink
privileges to link your bank account with the Fund to pay for these purchases.

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

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

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

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

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

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

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

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

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

How to Sell Shares

      You can sell (redeem)  some or all of your shares on any regular  business
day. Your shares will be sold at the next net asset value  calculated after your
order is  received  in proper  form  (which  means that it must  comply with the
procedures described below) and is accepted by the Transfer Agent. The Fund lets
you sell your  shares by  writing a  letter,  by 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.

How Can Plan Participants  Arrange To Sell Shares? The redemption of Fund shares
held in accounts for plan participants are handled in accordance with the plan's
specific  provisions.  Plans may have different  provisions  with respect to the
timing and method of redemptions by plan participants.  Plan participants should
contact  their  plan  administrator  to find out how they can  arrange to redeem
shares of the Fund. It is the responsibility of the individual authorized to buy
shares on behalf of a plan to forward  instructions for redemption  transactions
to the Fund's  transfer  agent.  The  information  below  about  selling  shares
generally applies to plan sponsors or plan administrators, and not to individual
participants.

      |X| Certain Requests Require a Signature Guarantee. To protect you and the
Fund from fraud, the following  redemption  requests must be in writing and must
include a signature  guarantee (although there may be other situations that also
require a signature guarantee):
      |_| You wish to redeem  more  than  $100,000  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 You Have Your  Signature  Guaranteed?  The  Transfer  Agent
will  accept  a  guarantee   of  your   signature  by  a  number  of  financial
institutions, including:

      |_| U.S. bank, trust company, credit union or savings association,
      |_| a foreign bank that has a U.S. correspondent bank,
      |_|  a  U.S.  registered  dealer  or  broker  in  securities,   municipal
      securities or government securities, or
      |_|  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  You  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 You Sell  Shares by  Telephone?  You and your  dealer  representative  of
record may also sell your shares by telephone.  To receive the redemption  price
calculated on a particular  regular  business day, your call must be received by
the Transfer  Agent by the close of The New York Stock  Exchange that day, which
is  normally  4:00 P.M.,  but may be  earlier  on some days.  You may not redeem
shares  held in an  OppenheimerFunds  retirement  plan  account or under a share
certificate by telephone.

      |_|  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 $100,000 may be redeemed by
telephone  in any seven (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 thirty (30) days of changing the
address on an account.

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

      Shareholders may also have the Transfer Agent send redemption  proceeds of
$2,500 or more by Federal  Funds wire to a designated  commercial  bank account.
The bank must be a member of the Federal Reserve wire system. There is a $10 fee
for each  Federal  Funds  wire.  To place a wire  redemption  request,  call the
Transfer Agent at  1.800.852.8457.  The wire will normally be transmitted on the
next bank  business day after the shares are  redeemed.  There is a  possibility
that the wire may be  delayed  up to seven (7) days to  enable  the Fund to sell
securities to pay the redemption  proceeds.  No dividends are accrued or paid on
the proceeds of shares that have been redeemed and are awaiting  transmittal  by
wire.  To establish  wire  redemption  privileges  on an account that is already
established, please contact the Transfer Agent for instructions.

Checkwriting.  To 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. See the Statement of Additional  Information for terms and
conditions applicable to checkwriting.
      |_| 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. Remember, your shares fluctuate in value and you should not write a check
close to the total 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 ten
(10) days.
      |_| Don't use your checks if you changed your Fund account  number,  until
you receive new checks.

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

How Contingent Deferred Sales Charges Affect Redemptions. If you purchase shares
subject  to a Class A,  Class B, Class C or Class N  contingent  deferred  sales
charge  and redeem any Class A, Class B or Class C shares and all Class N shares
during the  applicable  holding  period for the class of shares,  the contingent
deferred sales charge will be deducted from the redemption  proceeds (unless you
are eligible for a waiver of that sales charge based on the categories listed in
Appendix  C to the  Statement  of  Additional  Information  and you  advise  the
Transfer Agent of your  eligibility or the waiver when you place your redemption
request).  A contingent deferred sales charge will be based on the lesser of the
net asset value of the redeemed shares at the time of redemption or the original
net asset value. A contingent deferred sales charge is not imposed on:
      |_| the amount of your  account  value  represented  by an increase in net
      asset value over the initial  purchase price,  |_| shares purchased by the
      reinvestment  of dividends or capital gains  distributions,  or |_| shares
      redeemed  in the  special  circumstances  described  in  Appendix C to the
      Statement of Additional Information.

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

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

How to Exchange Shares

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

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

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

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

      |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.

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.  The Fund will  provide  you notice  whenever  it is  required to do so by
applicable  law,  but it may  impose  these  changes  at any time for  emergency
purposes.
      |_| If the  Transfer  Agent  cannot  exchange  all the shares you  request
because of a restriction cited above, only the shares eligible for exchange will
be exchanged.

Shareholder Account Rules and Policies

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

      |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 (7) 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 (3) 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 ten (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.

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

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

Dividends, Capital Gains and Taxes

Dividends.  The Fund intends to declare  dividends  separately for each class of
shares from net investment  income on 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, Class C and Class N shares,
which normally have higher expenses than Class A. The Fund has no fixed dividend
rate and cannot guarantee that it will pay any dividends or distributions.

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

What Choices Do 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 (4) options:

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

      |X| Reinvest  Dividends or Capital  Gains.  You can elect to reinvest some
distributions  (dividends,  short-term  capital gains or long-term capital gains
distributions) in the Fund while receiving other types of distributions by check
or having them sent to your bank account through AccountLink.

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

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

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

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

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

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

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

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

Financial Highlights

The Financial  Highlights  Table is presented to help you  understand the Fund's
financial  performance for the past five (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>


FOR MORE INFORMATION ABOUT OPPENHEIMER CHAMPION INCOME FUND:
THE  FOLLOWING  ADDITIONAL  INFORMATION  ABOUT  THE FUND IS  AVAILABLE  WITHOUT
CHARGE UPON REQUEST:

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

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

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


How to Get More Information:


----------------------------------------------------------------------------
You can  request  the  Statement  of  Additional  Information,  the  Annual  and
Semi-Annual Reports, and other information about the Fund or your account:
By Telephone:
Call OppenheimerFunds Services toll-free:
1.800.525.7048

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

On the Internet:
You can send us a request by e-mail or read or  down-load  documents  on the
OppenheimerFunds web site:
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.  (1.202.942.1090)  or the SEC's Internet web site
at   http://www.sec.gov.   Copies  may  be  obtained   after  payment  of  a
duplicating  fee  by  electronic   request  at  the  SEC's  e-mail  address:
[email protected].  or by writing to the SEC's  Public  Reference  Section,
Washington, D.C. 20549-0102.

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

The Fund's shares are distributed by:
OppenheimerFunds Distributor, Inc.
The Fund's SEC File No. 811-5281
PR0190.11.00  Printed on recycled paper.

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

<PAGE>


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

6803 South Tucson Way, Englewood, Colorado 80112
1.800.525.7048

    Statement of Additional Information dated January 19, 2001

      This  Statement  of  Additional  Information  is  not a  Prospectus.  This
document  contains  additional   information  about  the  Fund  and  supplements
information in the Prospectus dated January 19, 2001. It should be read together
with the  Prospectus.  You can  obtain the  Prospectus  by writing to the Fund's
Transfer Agent,  OppenheimerFunds  Services, at P.O. Box 5270, Denver,  Colorado
80217, or by calling the Transfer Agent at the toll-free  number shown above, or
by   downloading   it  from   the   OppenheimerFunds   Internet   web   site  at
www.oppenheimerfunds.com.

Contents
                                                                            Page
About the Fund
Additional Information About the Fund's Investment Policies and Risks
   The Fund's Investment Policies............................
   Other Investment Techniques and Strategies................
   Investment Restrictions...................................
How the Fund is Managed .....................................
   Organization and History..................................
   Trustees and Officers of the Fund.........................
   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: Ratings Definitions.............................. 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 objectives,  the principal investment policies and the main
risks of the Fund are described in the Prospectus.  This Statement of Additional
Information contains supplemental information about those policies and risks and
the types of securities that the Fund's  investment  Manager,  OppenheimerFunds,
Inc., can select for the Fund. Additional information is also provided about the
strategies that the Fund may use to try to achieve its objectives.

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

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

      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.  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    mainly    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.  ("Moody's"),  at least "BBB" by Standard & Poor's Rating Services
("Standard & Poor's") or Fitch, Inc.  ("Fitch") or that have comparable  ratings
by another nationally-recognized rating organization.

      In making  investments  in debt  securities,  the Manager may rely to some
extent on the ratings of ratings organizations or it may use its own research to
evaluate  a  security's  credit-worthiness.  If  securities  the  Fund  buys 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.  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 Risk. Interest rate risk refers to the fluctuations
in value of debt  securities  resulting  from the inverse  relationship  between
price and yield. For example, an increase in general interest rates will tend to
reduce the market value of  already-issued  debt  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-grade  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 Fitch 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
Fitch are investment grade and are not regarded as junk bonds,  those securities
may be subject  to special  risks,  and have some  speculative  characteristics.
Definitions  of the debt security  ratings  categories  of 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.  While
it currently limits  investment in foreign  securities to 25% of its net assets,
the Fund 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 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  can  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   supra-national   entities   are
"stockholders" that typically make capital contributions and may be committed to
make  additional  capital  contributions  if the  entity  is unable to repay its
borrowings.  A supra-national  entity's  lending  activities may be limited to a
percentage  of its  total  capital,  reserves  and net  income.  There can be no
assurance that the constituent  foreign  governments will continue to be able or
willing to honor their capitalization commitments for those entities.

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

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

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

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

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

         |_| Risks of Conversion to Euro. On January 1, 1999,  eleven  countries
in the European  Union  adopted the Euro as their  official  currency.  However,
their current  currencies (for example,  the franc, the mark, and the 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  securities
      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 has upgraded  (at its  expense)  its computer and  bookkeeping
systems  to deal with the  conversion.  The Fund's  Custodian  has  advised  the
Manager of its plans to deal with the  conversion,  including how it will update
its record keeping systems and handle the redenomination of outstanding  foreign
debt.  The  Fund's  portfolio  managers  will also  monitor  the  effects of the
conversion  on the issuers in which the Fund  invests.  The  possible  effect of
these factors on the Fund's  investments  cannot be determined with certainty at
this time,  but they may reduce  the value of some of the  Fund's  holdings  and
increase its operational costs.

      |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 response to changes in interest  rates. If the prepayments on the
Fund's  mortgage-related   securities  were  to  decrease  broadly,  the  Fund's
effective  duration,  and  therefore its  sensitivity  to interest rate changes,
would increase.

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

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

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

      |X| U.S. Government Securities.  These are securities issued or guaranteed
by the  U.S.  Treasury  or  other  government  agencies  or  federally-chartered
corporate entities referred to as  "instrumentalities."  The obligations of U.S.
Government agencies or instrumentalities in which the Fund can invest may or may
not be  guaranteed  or  supported  by the "full  faith and credit" of the United
States.  "Full faith and credit"  means  generally  that the taxing power of the
U.S. government is pledged to the payment of interest and repayment of principal
on a  security.  If a security is not backed by the full faith and credit of the
United  States,  the owner of the security must look  principally  to the agency
issuing the obligation  for  repayment.  The owner might not be able to assert a
claim against the United States if the issuing  agency or  instrumentality  does
not meet its commitment.  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 (1) year or less when issued),  Treasury notes (maturities of
from one to ten years),  and Treasury  bonds  (maturities  of more than ten (10)
years).  Treasury  securities  are  backed by the full  faith and  credit of the
United  States as to timely  payments of interest and  repayments  of principal.
They also can include U. S. Treasury  securities  that have been "stripped" by a
Federal Reserve Bank,  zero-coupon U.S. Treasury securities described below, and
Treasury Inflation-Protection Securities ("TIPS").

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

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

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

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

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

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

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

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

      Monthly payments of principal will be made, and additional  prepayments of
principal may be made, to the Fund with respect to the mortgages  underlying the
Ginnie Maes held by the Fund.  All of the mortgages in the pools relating to the
Ginnie  Maes in the Fund are  subject  to  prepayment  without  any  significant
premium or penalty,  at the option of the  mortgagors.  While the  mortgages  on
1-to-4-family dwellings underlying certain Ginnie Maes have a stated maturity of
up to thirty (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 (FHLMC)  Certificates.  FHLMC, a
corporate  instrumentality  of the  United  States,  issues  FHLMC  Certificates
representing  interests in mortgage loans.  FHLMC  guarantees to each registered
holder of a FHLMC  Certificate  timely  payment of the  amounts  representing  a
holder's  proportionate  share in: (i)  interest  payments  less  servicing  and
guarantee fees, (ii) principal prepayments, and (iii) the ultimate collection of
amounts representing the holder's  proportionate  interest in principal payments
on the mortgage loans in the pool represented by the FHLMC Certificate,  in each
case whether or not such amounts are actually received.

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

      |_| 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 or  redemption  provisions  allowing  calls  or  redemptions  prior  to
maturity,  which also can have a negative  impact on prices when interest  rates
decline. The rights of preferred stock on distribution of a corporation's assets
in the event of a liquidation are generally subordinate to the rights associated
with  the  corporation's  debt  securities.  Preferred  stock  generally  has  a
preference over common stock on the  distribution  of a corporation's  assets in
the event of liquidation of the corporation.

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

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

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

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

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

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

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

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

      The interest rate on a floating rate demand note is adjusted automatically
according to a stated  prevailing  market rate, such as a bank's prime rate, the
ninety  (91)  day  U.S.  Treasury  Bill  rate,  or  some  other  standard.   The
instrument's rate is adjusted automatically each time the base rate is adjusted.
The  interest  rate on a  variable  rate  demand  note is also based on a stated
prevailing  market rate but is adjusted  automatically  at specified  intervals.
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 (1) year may have  features  that  permit the holder to recover
the  principal  amount of the  underlying  security at specified  intervals  not
exceeding  one (1) year and upon no more than  thirty  (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"   (or    "forward-commitment")    basis.    When-issued   and
delayed-delivery  are terms that refer to  securities  whose terms and indenture
are  available  and for which a market  exists,  but which are not available for
immediate delivery.

      When such  transactions  are  negotiated,  the price  (which is  generally
expressed in yield terms) is fixed at the time the commitment is made.  Delivery
and  payment for the  securities  take place at a later date  (generally  within
forty-five  (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 until it receives the security at settlement.

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

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

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

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

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

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

      The  majority  of these  transactions  run from day to day,  and  delivery
pursuant to the resale typically occurs within one to five days of the purchase.
Repurchase  agreements  having a maturity  beyond  seven days are subject to the
Fund's limits on holding  illiquid  investments.  The Fund will not enter into a
repurchase  agreement  that causes more than 10% of its net assets to be subject
to repurchase  agreements  having a maturity beyond seven (7) 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 (7) days or less.

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

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

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

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

      Illiquid  securities include repurchase  agreements  maturing in more than
seven (7) days and  participation  interests  that do not have puts  exercisable
within seven (7) days.

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

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

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

      |X|  Investments in Other 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),  common stocks,
rights and warrants,  and  securities  convertible  into common  stock.  Certain
equity securities may be selected because they may provide dividend income.

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

      The value of a  convertible  security  is a  function  of its  "investment
value"  and  its  "conversion  value."  If  the  investment  value  exceeds  the
conversion  value,  the security  will behave more like a debt  security and the
security's price will likely increase when interest rates fall and decrease when
interest rates rise. If the conversion  value exceeds the investment  value, the
security will behave more like an equity security.  In that case, it will likely
sell at a premium over its conversion value and its price will tend to fluctuate
directly with the price of the underlying security.

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

           |_| Rights and  Warrants.  The Fund cannot invest more than 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 or income
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, but
if it does so, such loans will not likely exceed 5% of the Fund's total assets.

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

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

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

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

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

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

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

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

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

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

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

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

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

      |_| Put and Call Options.  The Fund can buy and sell  exchange-traded  and
over-the-counter  put options  ("puts")  and call options  ("calls"),  including
index options,  securities  options,  currency options,  commodities options and
options on futures.

      |_|   Writing   Covered   Call   Options.   The  Fund  can  buy  and  sell
exchange-traded  and  over-the-counter  put options and call options,  including
index options,  securities  options,  currency options,  commodities options and
options on futures.  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 must 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 on a security,  it receives  cash (a premium).
The  Fund  agrees  to  sell  the  underlying   security  to  a  purchaser  of  a
corresponding  call on the  same  security  during  the call  period  at a fixed
exercise price  regardless of market price changes  during the call period.  The
call period is usually not more than nine months.  The exercise price may differ
from the market price of the underlying security.  The Fund has the risk of loss
that the price of the  underlying  security may decline  during the call period.
That risk may be offset to some extent by the premium the Fund receives.  If the
value of the  investment  does not rise above the call price,  it is likely that
the call will lapse  without being  exercised.  In that case the Fund would keep
the cash premium and the investment.

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

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

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

      To  terminate  its  obligation  on a call it has  written,  the  Fund  may
purchase a corresponding call in a "closing purchase transaction." The Fund will
then realize a profit or loss,  depending  upon whether the net of the amount of
the option transaction costs and the premium received on the call the Fund wrote
is more or less than the price of the call the Fund  purchases  to close out the
transaction.  The Fund may  realize  a profit if the call  expires  unexercised,
because the Fund will retain the underlying security and the premium it received
when it wrote the call. Any such profits are considered short-term capital gains
for  Federal  income tax  purposes,  as are the  premiums on lapsed  calls.  hen
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 as identified in the Fund's books. The
Fund will  segregate  additional  liquid  assets if the value of the  segregated
assets  drops  below 100% of the current  value of the  future.  Because of this
segregation  requirement,  in no  circumstances  would the Fund's  receipt of an
exercise  notice  as to that  future  require  the  Fund to  deliver  a  futures
contract.  It would simply put the Fund in a short  futures  position,  which is
permitted by the Fund's hedging policies.

      |_| Writing Put  Options.  The Fund can buy and sell  exchange-traded  and
over-the-counter  put  options  and  call  options,   including  index  options,
securities  options,  currency  options,  commodities  options  and  options  on
futures.  A put option on securities  gives the purchaser the right to sell, and
the writer the  obligation  to buy, the  underlying  investment  at the exercise
price during the option period. A put written on debt securities must be covered
by segregated liquid assets and 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  liquid  assets
identified in the Fund's books. The premium the Fund receives from writing a put
represents a profit, as long as the price of the underlying  investment  remains
equal to or above  the  exercise  price.  However,  the Fund  also  assumes  the
obligation  during the option period to buy the underlying  investment  from the
buyer of the put at the  exercise  price,  even if the  value of the  investment
falls below the exercise price.

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

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

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

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

      |_| Purchasing  Calls and Puts. The Fund can buy and sell  exchange-traded
and  over-the-counter  put options and call options,  including  index  options,
securities  options,  currency  options,  commodities  options  and  options  on
futures.  When  the  Fund  buys  a  call  (other  than  in  a  closing  purchase
transaction),  it  pays a  premium.  The  Fund  then  has the  right  to buy the
underlying  investment  from a  seller  of a  corresponding  call  on  the  same
investment during the call period at a fixed exercise price.

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

      The Fund can buy puts  whether or not it 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 an index or 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.

      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   exchange-traded  and  over-the-counter  put  options  and  call  options,
including  index options,  securities  options,  currency  options,  commodities
options and  options on futures.  The Fund could use these calls and puts to try
to protect  against  declines  in the dollar  value of  foreign  securities  and
increases in the dollar cost of foreign securities the Fund wants to acquire.

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

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

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

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

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

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

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

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

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

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

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

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

           |_|  Forward  Contracts.   Forward  contracts  are  foreign  currency
exchange  contracts.  They are used to buy or sell  foreign  currency for future
delivery at a fixed  price.  The Fund can use 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 can also use  "cross-hedging"  where the Fund hedges against
changes in  currencies  other than the  currency in which a security it holds is
denominated.

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

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

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

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

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

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

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

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

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

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

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

           |_| Interest Rate Swap Transactions. The Fund can enter into interest
rate swap  agreements.  In an interest  rate swap,  the Fund and  another  party
exchange  their  right to  receive  or their  obligation  to pay  interest  on a
security.  For  example,  they  might swap the right to  receive  floating  rate
payments  for  fixed  rate  payments.  The Fund can  enter  into  swaps  only on
securities that it owns. The Fund will not enter into swaps with respect to more
than 25% of its total assets.  Also, the Fund will 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 can enter  into swap  transactions  with  certain  counterparties
pursuant to master netting agreements.  A master netting agreement provides that
all swaps done between the Fund and that counterparty shall be regarded as parts
of an integral  agreement.  If amounts are payable on a  particular  date in the
same currency in respect of one or more swap transactions, the amount payable on
that date in that  currency  shall be the net amount.  In  addition,  the master
netting  agreement  may provide that if one party  defaults  generally or on one
swap,  the  counterparty  can terminate all of the swaps with that party.  Under
these  agreements,  if a default results in a loss to one party,  the measure of
that  party's  damages is  calculated  by  reference  to the  average  cost of a
replacement  swap for each swap. It is measured by the  mark-to-market  value at
the time of the  termination of each swap. The gains and losses on all swaps are
then netted, and the result is the  counterparty's  gain or loss on termination.
The  termination of all swaps and the netting of gains and losses on termination
is generally referred to as "aggregation."

           |_| 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.

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

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

      Under the Internal Revenue Code, the following gains or losses are treated
as ordinary income or loss:

(1)     gains or losses  attributable  to  fluctuations  in exchange  rates that
        occur between the time the Fund accrues interest or other receivables or
        accrues expenses or other liabilities  denominated in a foreign currency
        and the time the Fund actually  collects such  receivables  or pays such
        liabilities, and
(2)     gains or losses  attributable  to fluctuations in the value of a foreign
        currency between the date of acquisition of a debt security  denominated
        in a foreign currency or foreign currency forward contracts and the date
        of disposition.

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

      |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's
temporary defensive  investments can include the following  short-term (maturing
in one (1) 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 or securities of other investment companies.

      |_| 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 to be in separate industries).

      |_| The Fund cannot  borrow money in excess of 33 1/3% of the value of its
total  assets.  The Fund may borrow  from  banks  and/or  affiliated  investment
companies  and  only as a  temporary  measure  for  extraordinary  or  emergency
purposes.  The Fund  cannot  make any  investment  at a time  during  which  its
borrowings  exceed  5% of  the  value  of  its  assets.  With  respect  to  this
fundamental  policy,  the Fund can borrow  only if it  maintains a 300% ratio of
assets to  borrowings  at all times in the  manner  set forth in the  Investment
Company Act of 1940.

      |_| The Fund cannot make loans except (a) through  lending of  securities,
(b)  through  the  purchase  of  debt   instruments  or  similar   evidences  of
indebtedness,  (c) through an interfund  lending  program with other  affiliated
funds,  provided that no such loan may be made if, as a result, the aggregate of
such  loans  would  exceed 33 1/3% of the value of its  total  assets  (taken at
market value at the time of such loans), and (d) through 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 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,  subject to the restrictions and limitations on
such  investments  specified in the  Prospectus and this Statement of Additional
Information.

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

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

      The Fund has an operating  policy (which is not  fundamental)  that states
that it cannot underwrite the securities of other issuers. A permitted exception
is in case it is determined to be an  underwriter  under the  Securities  Act of
1933 when reselling any securities held in its own portfolio.

      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.

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.

      |X|  Classes  of Shares.  The Board of  Trustees  has the  power,  without
shareholder approval, to divide unissued shares of the Fund into two (2) or more
classes.  The Board has done so, and the Fund  currently has four (4) classes of
shares:  Class A, Class B, Class C and Class N. All  classes  invest in the same
investment  portfolio.  Only retirement plans may purchase Class N shares.  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 (1)
      class are  different  from  interests of another  class,  and o votes as a
class on matters that affect that class alone.

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

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

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

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

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

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

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

    Ms. Macaskill and Messrs. Swain, Bishop,  Donohue,  Farrar, Wixted and Zack,
who are officers of the Fund,  respectively hold the same offices with the other
Denver-based  Oppenheimer  funds.  As of October  25,  2000,  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.

James C. Swain*,  Chairman,  Chief Executive Officer and Trustee,  Age: 66. 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, a wholly-owned subsidiary of the Manager and Chairman of
the Board of  Shareholder  Services,  Inc., a transfer  agent  subsidiary of the
Manager.

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

William L. Armstrong, Trustee, Age: 63.
11 Carriage Lane, Littleton, Colorado 80121
Chairman of the  following  private  mortgage  banking  companies:  Cherry Creek
Mortgage  Company (since 1991),  Centennial State Mortgage Company (since 1994),
The El Paso Mortgage Company (since 1993),  Transland Financial  Services,  Inc.
(since 1997), and Ambassador  Media  Corporation  (since 1984);  Chairman of the
following private companies: Frontier Real Estate, Inc. (residential real estate
brokerage)  (since 1994),  Frontier Title (title insurance  agency) (since 1995)
and Great Frontier Insurance  (insurance  agency) (since 1995);  Director of the
following public companies:  Storage Technology  Corporation (computer equipment
company) (since 1991), Helmerich & Payne, Inc. (oil and gas  drilling/production
company) (since 1992),  UNUMProvident (insurance company) (since 1991); formerly
Director of the following public companies:  International  Family Entertainment
(television  channel)  (1991 - 1997) and Natec  Resources,  Inc. (air  pollution
control equipment and services company) (1991 - 1995).

Robert G. Avis*, Trustee, Age: 69.
One North Jefferson Ave., St. Louis, Missouri 63103
Director and  President  of A.G.  Edwards  Capital,  Inc.  (General  Partner of
private  equity funds),  formerly,  until March 2000,  Chairman,  President and
Chief Executive Officer of A.G. Edwards Capital,  Inc.;  formerly,  until March
1999,  Vice  Chairman  and Director of A.G.  Edwards and Vice  Chairman of A.G.
Edwards & Sons,  Inc. (its  brokerage  company  subsidiary);  until March 1999,
Chairman  of  A.G.   Edwards   Trust  Company  and  A.G.E.   Asset   Management
(investment  advisor);  until March 2000, a Director of A.G. Edwards & Sons and
A.G. Edwards Trust Company.

George C. Bowen, Trustee, Age: 64.
9224 Bauer Ct., Lone Tree, Colorado 80124
Formerly  (until April 1999) Mr.  Bowen held the  following  positions:  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
OppenheimerFunds,  Distributor,  Inc.,  a  subsidiary  of the  Manager  and the
Fund's  Distributor;  Senior Vice President  (since February  1992),  Treasurer
(since July 1991)  Assistant  Secretary and a director (since December 1991) of
Centennial  Asset Management  Corporation;  Vice President (since October 1989)
and Treasurer (since April 1986) of HarbourView  Asset Management  Corporation;
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.; Vice  President,  Treasurer
and Secretary of Shareholder  Financial  Services,  Inc. (since November 1989);
Assistant  Treasurer  of  Oppenheimer  Acquisition  Corp.  (since  March 1998);
Treasurer of Oppenheimer  Partnership  Holdings,  Inc.  (since  November 1989);
Vice  President  and  Treasurer  of  Oppenheimer  Real Asset  Management,  Inc.
(since  July  1996);  Treasurer  of  OppenheimerFunds  International  Ltd.  and
Oppenheimer Millennium Funds plc (since October 1997).

Edward L. Cameron, Trustee, Age: 62.
Spring Valley Road, Morristown, New Jersey 07960
Formerly  (from  1974-1999)  a  partner  with   PricewaterhouseCoopers  LLC  (an
accounting firm) and Chairman, Price Waterhouse LLP Global Investment Management
Industry Services Group (from 1994-1998).

Jon S. Fossel, Trustee, Age: 58.
P.O. Box 44, Mead Street, Waccabuc, New York 10597
Formerly  (until  October  1990)  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: 60.
4975 Lakeshore Drive, Littleton, Colorado 80123
Formerly  (until  October  1994)  Chairman  and  Chief   Executive   Officer  of
OppenheimerFunds  Services,  Chairman, Chief Executive Officer and a director of
Shareholder  Services,  Inc., Chairman,  Chief Executive Officer and director of
Shareholder Financial Services, Inc., Vice President and director of Oppenheimer
Acquisition Corp. and a director of OppenheimerFunds, Inc.

Raymond J. Kalinowski, Trustee, Age: 71.
44 Portland Drive, St. Louis, Missouri 63131
Formerly  a director  of Wave  Technologies  International,  Inc.  (a  computer
products training company), self-employed consultant (securities matters).

C. Howard Kast, Trustee, Age: 78.
2552 East Alameda, Denver, Colorado 80209
Formerly Managing Partner of Deloitte, Haskins & Sells (an accounting firm).

Robert M. Kirchner, Trustee, Age: 79.
7500 E. Arapahoe Road, Englewood, Colorado 80112
President of The Kirchner Company (management consultants).
F. William Marshall, Jr., Trustee, Age: 58.
87 Ely Road, Longmeadow, MA  01106
Formerly (until 1999) Chairman of SIS & Family Bank, F.S.B. (formerly SIS Bank);
President,  Chief Executive Officer and Director of SIS Bankcorp.,  Inc. and SIS
Bank (formerly Springfield Institution for Savings) (1993-1999);  Executive Vice
President (until 1999) of Peoples Heritage Financial Group,  Inc.;  Chairman and
Chief  Executive  Office of Bank of Ireland First  Holdings,  Inc. and First New
Hampshire Banks  (1990-1993);  Trustee (since 1996) of MassMutual  Institutional
Funds and of MML Series Investment Fund (open-end investment companies).

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

Thomas P. Reedy, Vice President and Portfolio Manager,  Age: 38. Two World Trade
Center,  New York, New York 10048-0203 Vice President of the Manager (since June
1993) and of HarbourView  Asset  Management  Corporation  (since April 1999); an
officer and portfolio manager of other Oppenheimer funds.

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

Robert J. Bishop, Assistant Treasurer, Age: 41.
6803 South Tucson Way, Englewood, Colorado 80112
Vice  President  of the  Manager/Mutual  Fund  Accounting  (since May 1996);  an
officer of other Oppenheimer funds;  formerly an Assistant Vice President of the
Manager/Mutual Fund Accounting (April 1994 - May 1996), and a Fund
Controller for the Manager.

Scott T. Farrar, Assistant Treasurer, Age: 36.
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.

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

Robert G. Zack, Assistant Secretary, Age:52.
Two World Trade Center, New York, New York 10048-0203
Senior Vice  President  (since May 1985) and Associate  General  Counsel (since
May 1981) of the Manager,  Assistant  Secretary of Shareholder  Services,  Inc.
(since May 1985),  and  Shareholder  Financial  Services,  Inc. (since November
1989);   Assistant  Secretary  of   OppenheimerFunds   International  Ltd.  and
Oppenheimer  Millennium  Funds plc (since  October  1997);  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,
1999. 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 1999.

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


Robert G. Avis                 $1,477                $67,998
--------------------------------------------------------------------
--------------------------------------------------------------------

William A. Baker2              $1,510                $69,998
--------------------------------------------------------------------
--------------------------------------------------------------------

George C. Bowen                 $258                  None2
--------------------------------------------------------------------
--------------------------------------------------------------------

Jon. S. Fossel
Review Committee               $1,499                $67,496
Member
--------------------------------------------------------------------
--------------------------------------------------------------------
Sam Freedman
Review Committee               $1,608                $73,998
Member
--------------------------------------------------------------------
--------------------------------------------------------------------

Raymond J. Kalinowski
Audit Committee Member
                               $1,591                $73,998
--------------------------------------------------------------------
--------------------------------------------------------------------

C. Howard Kast
Review Committee               $1,698                $76,998
Chairman and Audit
Committee Chairman
--------------------------------------------------------------------
--------------------------------------------------------------------

Robert M. Kirchner
Audit Committee Member         $1,494                $67,998
--------------------------------------------------------------------
--------------------------------------------------------------------

Ned M. Steel2                  $1,477                $67,998
--------------------------------------------------------------------
1.    For the 1999 calendar year.
2.    Effective  July 1, 2000,  Messrs.  Baker and Steel resigned as Trustees of
      the Fund.

    |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 15, 1999, the only person who owned
of record or was known by the Fund to own  beneficially  5% or more of any class
of the Fund's outstanding  shares was Merrill,  Lynch,  Pierce,  Fenner & Smith,
Inc.,  4800 Deer Lake Drive  East,  Jacksonville,  Florida  32246,  which  owned
2,841,277.609  Class B shares (6.13% of the Class B shares then outstanding) and
4,402,830.686  Class C shares  (20.80% of the Class C shares then  outstanding),
which it advised the Fund that it held for the benefit of its customers.

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

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

      The Code of Ethics is an  exhibit  to the  Fund's  registration  statement
filed with the Securities and Exchange Commission and can be reviewed and copied
at  the  SEC's  Public  Reference  Room  in  Washington,  D.C.  You  can  obtain
information about the hours of operation of the Public Reference Room by calling
the SEC at 1-202-942-8090.  The Code of Ethics can also be viewed as part of the
Fund's registration  statement on the SEC's EDGAR database at the SEC's Internet
web  site  at  http://www.sec.gov.  Copies  may  be  obtained,  after  paying  a
duplicating  fee,  by  electronic  request  at  the  following  E-mail  address:
[email protected].,  or by  writing  to the  SEC's  Public  Reference  Section,
Washington, D.C. 20549-0102.

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

         1998                            $6,943,300
---------------------------------------------------------------------
---------------------------------------------------------------------

         1999                            $8,385,597
---------------------------------------------------------------------
---------------------------------------------------------------------

         2000                                $
---------------------------------------------------------------------

    The  investment  advisory  agreement  states  that in the absence of willful
misfeasance,  bad faith,  gross  negligence in the  performance of its duties or
reckless  disregard of its obligations and duties under the investment  advisory
agreement,  the  Manager is not liable  for any loss the Fund  sustains  for any
investment,  adoption  of any  investment  policy,  or  the  purchase,  sale  or
retention of any security.

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

Brokerage Policies of the Fund

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

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

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

    Transactions  in  securities  other than those for which an  exchange is the
primary  market  are  generally  done  with  principals  or  market  makers.  In
transactions  on  foreign  exchanges,  the Fund  may be  required  to pay  fixed
brokerage  commissions  and  therefore  would not have the benefit of negotiated
commissions available in U.S. markets.  Brokerage commissions are paid primarily
for  transactions  in  listed  securities  or for  certain  fixed-income  agency
transactions in the secondary market.  Otherwise brokerage  commissions are paid
only if it appears  likely that a better price or  execution  can be obtained by
doing so. In an option transaction, the Fund ordinarily uses the same broker for
the  purchase or sale of the option and any  transaction  in the  securities  to
which the option  relates.  Other funds  advised by the Manager have  investment
policies  similar to those of the Fund.  Those other funds may  purchase or sell
the same securities as the Fund at the same time as the Fund, which could affect
the supply  and price of the  securities.  If two or more  funds  advised by the
Manager  purchase the same  security on the same day from the same  dealer,  the
transactions  under those combined orders are averaged as to price and allocated
in accordance with the purchase or sale orders actually placed for each account.

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

    The investment  advisory agreement permits the Manager to allocate brokerage
for research services. The investment research services provided by a particular
broker may be useful  only to one (1) 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.

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

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

         1998                             $200,709
----------------------------------------------------------------------
----------------------------------------------------------------------

         1999                             $137,770
----------------------------------------------------------------------
----------------------------------------------------------------------

         2000                                 $
----------------------------------------------------------------------
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  $27,278,545  and  the  amount  of  the
   commissions paid to broker-dealers for those services was $34,890.
3. In the fiscal year ended 9/30/00,  the amount of  transactions 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.

    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 (3) 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
--------------------------------------------------------------------
--------------------------------------------------------------------
  1998   $3,634,751  $1,033,370   $162,557   $7,767,436  $1,005,500
--------------------------------------------------------------------
--------------------------------------------------------------------
  1999   $3,331,908   $ 935,204   $266,601   $7,660,279  $  838,706
--------------------------------------------------------------------
--------------------------------------------------------------------
  2000        $           $           $           $          $
--------------------------------------------------------------------
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
--------------------------------------------------------------------
--------------------------------------------------------------------
   2000            $                  $                  $
--------------------------------------------------------------------

Distribution  and Service Plans. The Fund has adopted a Service Plan for Class A
shares  and  Distribution  and  Service  Plans for Class B,  Class C and Class N
shares under Rule 12b-1 of the  Investment  Company  Act.  Under those plans the
Fund  pays  the  Distributor  for all or a  portion  of its  costs  incurred  in
connection  with  the  distribution  and/or  servicing  of  the  shares  of  the
particular  class.  Each  plan  has  been  approved  by a vote of the  Board  of
Trustees, including a majority of the Independent Trustees2, cast in person at a
meeting called for the purpose of voting on that plan.

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

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

    The Board of Trustees and the Independent Trustees must approve all material
amendments to a plan. An amendment to increase materially the amount of payments
to be made under a plan must be approved by  shareholders  of the class affected
by the amendment.  Because Class B shares of the Fund automatically convert into
Class A shares  after six (6) 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.  Those reports
are subject to the review and approval of the Independent Trustees.

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

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

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

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

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

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

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

    The  asset-based  sales charges on Class B, Class C and Class N shares allow
investors to buy shares  without a front-end  sales  charge  while  allowing the
Distributor  to  compensate  dealers that sell those  shares.  The Fund pays the
asset-based  sales  charges to the  Distributor  for its  services  rendered  in
distributing  Class B, Class C and Class N 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, Class C and Class
      N shares, and
o     bears the costs of sales literature,  advertising and prospectuses  (other
      than  those  furnished  to  current  shareholders)  and state  "blue  sky"
      registration fees and certain other distribution expenses.

      When Class B, Class C or Class N shares are sold  without the  designation
of  a  broker-dealer,   the  Distributor  is  automatically  designated  as  the
broker-dealer of record. In those cases, the Distributor retains the service fee
paid on Class B and Class C shares and retains the asset-based sales charge paid
on Class B, Class C and Class N shares.

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

--------------------------------------------------------------------
Distribution Fees Paid to the Distributor in the Fiscal Year Ended
                             9/30/00*
--------------------------------------------------------------------
--------------------------------------------------------------------
                                        Distributor's  Distributor's
                                          Aggregate    Unreimbursed
                 Total        Amount     Unreimbursed  Expenses as
                Payments   Retained by     Expenses         %
    Class      Under Plan  Distributor    Under Plan      of Net
                                                          Assets
                                                         of Class
--------------------------------------------------------------------
--------------------------------------------------------------------
Class B Plan       $            $             $             %
--------------------------------------------------------------------
--------------------------------------------------------------------
Class C Plan       $            $             $             %
--------------------------------------------------------------------
* Class N shares were not  offered for sale during the Fund's  fiscal year ended
6/30/00.

    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  thirty (30) day
period. It is not based on actual distributions paid by the Fund to shareholders
in the thirty (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     6
                                                 --- + 1) - 1]
                                                 cd

      The symbols above represent the following factors:

      a =dividends  and  interest  earned  during the thirty (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 thirty (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 thirty (30) day period may differ
from the yield for other periods.  The SEC formula assumes that the standardized
yield for a thirty (30) day period occurs at a constant rate for a six (6) month
period and is annualized  at the end of the six (6) 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
thirty (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 twelve (12) (to  annualize  the yield) and divided by the
maximum  offering price on the last day of the dividend  period.  The formula is
shown below:

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

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

  ------------------------------------------------------------------
       The Fund's Yields for the 30-Day Periods Ended 9/30/00
  ------------------------------------------------------------------
  ------------------------------------------------------------------

               Standardized Yield            Dividend Yield

  Class of
  Shares
  ------------------------------------------------------------------
  ------------------------------------------------------------------
             Without       After       Without          After
              Sales        Sales        Sales           Sales
            Charge        Charge        Charge         Charge
              (NAV)
  ------------------------------------------------------------------
  ------------------------------------------------------------------
  Class A        %           %            %               %
  ------------------------------------------------------------------
  ------------------------------------------------------------------
  Class B        %           %            %               %
  ------------------------------------------------------------------
  ------------------------------------------------------------------
  Class C        %           %            %               %
  ------------------------------------------------------------------
     * Class N shares were not  offered  for sale during the Fund's  fiscal year
ended 9/30/00.

      |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 (10) 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 one (1) year period.

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

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


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

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

           |_| Total Returns at Net Asset Value.  From time to time the Fund may
also quote a cumulative  or an average  annual total return "at net asset value"
(without  deducting sales charges) for Class A, Class B 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 9/30/00
----------------------------------------------------------------------
----------------------------------------------------------------------
         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  %       %      %       %      %       %       %      %
----------------------------------------------------------------------
----------------------------------------------------------------------
Class B  %       %2     %       %      %       %       %      %
----------------------------------------------------------------------
----------------------------------------------------------------------
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
4. Class N shares were not offered for sale during the Fund's  fiscal year ended
9/30/00.

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

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

      |X|  Morningstar  Ratings  and  Rankings.  From  time to time the Fund may
publish the star ranking and/or star rating of the performance of its classes of
shares  by  Morningstar,   Inc.,  ("Morningstar")  an  independent  mutual  fund
monitoring service. Morningstar rates and ranks mutual funds in broad investment
categories:  domestic stock funds, international stock funds, taxable bond funds
and  municipal  bond  funds.  The Fund is  included  in the  taxable  bond funds
category.

      Morningstar  proprietary  star ratings  reflect  historical  risk-adjusted
total investment return.  Investment return measures a fund's (or class's) one-,
three-,  five- and ten-year  average  annual  total  returns  (depending  on the
inception of the fund or class) in excess of ninety (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  ninety  (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  ratings.  Those  total  return
rankings  are  percentages  from one percent to one hundred  percent and are not
risk adjusted. For example, if a fund is in the 94th percentile, that means that
94% of the funds in the same category performed better than it did.

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

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

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


-------------------------------------------------------------------------------
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 two regular  business days  following
the regular  business day you instruct the Distributor to initiate the Automated
Clearing  House ("ACH")  transfer to buy the shares.  That  instruction  must be
received prior to the close of the New York Stock  Exchange that day.  Dividends
will begin to accrue on shares  purchased  with the proceeds of ACH transfers on
the business day after the shares are purchased. The Exchange normally closes at
4:00 P.M.,  but may close earlier on certain days. The proceeds of ACH transfers
are  normally  received  by the Fund  three  (3) days  after the  transfers  are
initiated.  If the  proceeds of the ACH  transfer  are not  received on a timely
basis,  the  Distributor  reserves the right to cancel the purchase  order.  The
Distributor and the Fund are not responsible for any delays in purchasing shares
resulting from delays in ACH transmissions.

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

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

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

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

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

and the following money market funds:

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

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

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

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

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

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

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

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

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

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

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

      3. If, at the end of the thirteen  (13) 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
(60) days of the expiration of the Letter,  redeem the number of escrowed shares
necessary to realize  such  difference  in sales  charges.  Full and  fractional
shares  remaining  after such  redemption  will be released  from  escrow.  If a
request is  received  to redeem  escrowed  shares  prior to the  payment of such
additional  sales charge,  the sales charge will be withheld from the redemption
proceeds.

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

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

      6. Shares held in escrow  hereunder  will  automatically  be exchanged for
shares of another  fund to which an exchange is  requested,  as described in the
section of the Prospectus  entitled "How to Exchange Shares" and the escrow will
be  transferred to that other fund.  Asset Builder Plans.  To establish an Asset
Builder  Plan to buy shares  directly  from a bank  account,  you must enclose a
check  (the  minimum is $25) for the  initial  purchase  with your  application.
Shares  purchased by Asset  Builder Plan payments from bank accounts are subject
to the redemption restrictions for recent purchases described in the Prospectus.
Asset  Builder  Plans are  available  only if your bank is an ACH member.  Asset
Builder   Plans  may  not  be  used  to  buy   shares  for   Oppenheimer   Funds
employer-sponsored  qualified  retirement  accounts.  Asset  Builder  Plans also
enable  shareholders  of Oppenheimer  Cash Reserves to use their fund account to
make monthly  automatic  purchases of shares of up to four (4) other Oppenheimer
funds.

      If you make  payments  from your bank  account to  purchase  shares of the
Fund, your bank account will be debited  automatically.  Normally the debit will
be made two (2) business days prior to the investment dates you selected on your
Application.  Neither the Distributor,  the Transfer Agent nor the Fund shall be
responsible  for any delays in purchasing  shares that result from delays in ACH
transmissions.

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

Retirement  Plans.  Certain types of  retirement  plans are entitled to purchase
shares of the Fund without  sales charge or at reduced  sales charge  rates,  as
described in Appendix C to this  Statement of  Additional  Information.  Certain
special sales charge arrangements described in that Appendix apply to retirement
plans whose records are maintained on a daily  valuation  basis by Merrill Lynch
Pierce Fenner & Smith, Inc.  ("Merrill  Lynch") 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.  he investor is  responsible  for that
loss. If the investor fails to compensate the Fund for the loss, the Distributor
will do so. The Fund may reimburse the  Distributor for that amount by redeeming
shares from any account  registered in that investor's  name, or the Fund or the
Distributor may seek other redress.

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

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

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

      |X| Class B Conversion. The conversion of Class B shares to Class A shares
after six (6)  years is  subject  to the  continuing  availability  of a private
letter ruling from the Internal Revenue Service, or an opinion of counsel or tax
adviser, to the effect that the conversion of Class B shares does not constitute
a taxable  event for the  shareholder  under  Federal  income tax law. If such a
revenue  ruling or  opinion is no longer  available,  the  automatic  conversion
feature  may be  suspended,  in which  event no further  conversions  of Class B
shares would occur while such  suspension  remained in effect.  Although Class B
shares could then be  exchanged  for Class A shares on the basis of relative net
asset value of the two (2) classes,  without the imposition of a sales charge or
fee, such exchange  could  constitute a taxable event for the  shareholder,  and
absent  such  exchange,  Class B shares  might  continue  to be  subject  to the
asset-based sales charge for longer than six (6) years.

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

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

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

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

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

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

      |X| Securities  Valuation.  The Fund's Board of 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
sixty  (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 three hundred
        ninety-seven (397) days when issued,
(2)     debt instruments that had a maturity of three hundred ninety-seven (397)
        days or less when  issued  and have a  remaining  maturity  of more than
        sixty (60) days, and
(3)     non-money  market debt  instruments that had a maturity of three hundred
        ninety-seven  (397) days or less when  issued and which have a remaining
        maturity of sixty (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 three hundred  ninety-seven (397) days when issued
        that have a remaining maturity of sixty (60) days or less, and
(2)     debt  instruments  held by a money  market  fund that  have a  remaining
        maturity of three hundred ninety-seven (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.

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

Reinvestment  Privilege.  Within six (6) months of a redemption,  a shareholder
may reinvest all or part of the redemption proceeds of:
      |_| Class A shares purchased subject to an initial sales charge or Class A
shares on which a contingent deferred sales charge was paid, or
      |_| Class B shares that were  subject to the Class B  contingent  deferred
sales charge when redeemed.

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

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

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

      The Fund has elected to be  governed  by Rule 18f-1  under the  Investment
Company Act.  Under that rule,  the Fund is obligated to redeem shares solely in
cash up to the lesser of $250,000 or 1% of the net assets of the Fund during any
ninety (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, Class C
or Class N contingent  deferred sales charge will be followed in determining the
order in which shares are transferred.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

How to Exchange Shares

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

      |_| 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.  |_| Only  certain
Oppenheimer Funds currently offer Class Y shares.  Class Y shares of Oppenheimer
Real Asset Fund may not be exchanged  for shares of any other Fund.  |_| Class M
shares of  Oppenheimer  Convertible  Securities  Fund may be exchanged  only for
Class A shares of other Oppenheimer  funds. They may not be acquired by exchange
of shares of any other  Oppenheimer  funds except Class A shares of  Oppenheimer
Money Market Fund or Oppenheimer  Cash Reserves  acquired by exchange of Class M
shares.  |_| Class A shares of Senior  Floating  Rate Fund are not  available by
exchange of Class A shares of other Oppenheimer  funds. Class A shares of Senior
Floating Rate Fund that are exchanged for shares of the other  Oppenheimer funds
may not be exchanged  back for Class A shares of Senior  Floating Rate Fund. |_|
Class X shares of Limited Term New York Municipal Fund can be exchanged only for
Class B shares of other  Oppenheimer funds and no exchanges may be made to Class
X  shares.  |_|  Shares  of  Oppenheimer  Capital  Preservation  Fund may not be
exchanged for shares of Oppenheimer  Money Market Fund,  Inc.,  Oppenheimer Cash
Reserves or Oppenheimer  Limited-Term  Government  Fund.  Only  participants  in
certain retirement plans may purchase shares of Oppenheimer Capital Preservation
Fund, and only those participants may exchange shares of other Oppenheimer funds
for shares of Oppenheimer Capital Preservation Fund.

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

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

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

      |X| How Exchanges Affect Contingent  Deferred Sales Charges. No contingent
deferred  sales charge is imposed on exchanges of shares of any class  purchased
subject to a contingent  deferred  sales  charge.  However,  when Class A shares
acquired  by  exchange of Class A shares of other  Oppenheimer  funds  purchased
subject  to a Class A  contingent  deferred  sales  charge are  redeemed  within
eighteen (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 six
(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 twelve (12) months of the initial  purchase
of the exchanged Class C shares. The Class N contingent deferred sales charge is
imposed on Class N shares  acquired  by  exchange  if they are  redeemed  within
eighteen (18) months of the initial purchase of the exchanged Class N shares.

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

      If Class B shares of an Oppenheimer  fund are exchanged for Class B shares
of Oppenheimer  Limited-Term  Government  Fund,  Limited-Term New York Municipal
Fund or  Oppenheimer  Senior  Floating  Rate Fund and those  shares  acquired by
exchange are  subsequently  redeemed or  repurchased  by the fund,  they will be
subject to the  contingent  deferred sales charge of the  Oppenheimer  fund from
which they were exchanged. The contingent deferred sales charge rates of Class B
shares of other  Oppenheimer  funds are  typically  higher for the same  holding
period  than for Class B shares of  Oppenheimer  Limited-Term  Government  Fund,
Limited-Term New York Municipal Fund and Oppenheimer  Senior Floating Rate Fund.
They will not be subject to the contingent  deferred sales charge of Oppenheimer
Limited-Term   Government   Fund,   Limited-Term  New  York  Municipal  Fund  or
Oppenheimer Senior Floating Rate Fund.

      Shareholders owning shares of more than one class must specify which class
of shares they wish to exchange.

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

      |X| Telephone  Exchange Requests.  When exchanging shares by telephone,  a
shareholder  must have an existing  account in the fund to which the exchange is
to be made.  Otherwise,  the  investors  must obtain a  Prospectus  of that fund
before the exchange  request may be submitted.  When you exchange some or all of
your shares from one fund to another,  any special  account  features such as an
Asset  Builder Plan or Automatic  Withdrawal  Plan,  will be switched to the new
fund account unless you tell the Transfer Agent not to do so.  However,  special
redemption and exchange features such as Automatic  Exchange Plans and Automatic
Withdrawal Plans cannot be switched to an account in Oppenheimer Senior Floating
Rate Fund.  If all  telephone  lines are busy (which might  occur,  for example,
during periods of substantial  market  fluctuations),  shareholders might not be
able to request exchanges by telephone and would have to submit written exchange
requests.

|X|  Processing  Exchange  Requests.  Shares to be exchanged are redeemed on the
regular  business day the Transfer Agent receives an exchange  request in proper
form (the "Redemption  Date").  Normally,  shares of the fund to be acquired are
purchased on the  Redemption  Date,  but such purchases may be delayed by either
fund  up  to  five  (5)  business  days  if  it  determines  that  it  would  be
disadvantaged  by an immediate  transfer of the  redemption  proceeds.  The Fund
reserves the right, in its discretion,  to refuse any exchange  request that may
disadvantage it. For example,  if the receipt of multiple exchange requests from
a dealer might require the disposition of portfolio securities at a time or at a
price  that  might be  disadvantageous  to the  Fund,  the Fund may  refuse  the
request.  For a full or partial  exchange of an account made by  telephone,  any
special  account  features such as Asset  Builder  Plans and Automatic  Exchange
Plans  will  be  switched  to the new  account  unless  the  Transfer  Agent  is
instructed otherwise.

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

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

Dividends, Capital Gains and Taxes

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

      Shares  redeemed  through the regular  redemption  procedure  will be paid
dividends  through  and  including  the day on which the  redemption  request is
received by the  Transfer  Agent in proper form.  Dividends  will be declared on
shares  repurchased  by a dealer or broker for three (3) business days following
the trade date (that is, up to and  including the day prior to settlement of the
repurchase).  If all shares in an account are redeemed, all dividends accrued on
shares  of the  same  class  in the  account  will be  paid  together  with  the
redemption proceeds.

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

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

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

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

      Special  provisions of the Internal Revenue Code govern the eligibility of
the  Fund's  dividends  for  the  dividends-received   deduction  for  corporate
shareholders.  Long-term  capital gains  distributions  are not eligible for the
deduction.  The amount of  dividends  paid by the Fund that may  qualify for the
deduction is limited to the aggregate  amount of qualifying  dividends  that the
Fund derives  from  portfolio  investments  that the Fund has held for a minimum
period,  usually  forty-six  (46)  days.  A  corporate  shareholder  will not be
eligible for the deduction on dividends  paid on Fund shares held for forty-five
(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

                               RATINGS DEFINITIONS

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

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

Long-Term (Taxable) Bond Ratings

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

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

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

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

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

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

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

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

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

Moody's  applies  numerical  modifiers  1,  2,  and  3 in  each  generic  rating
classification  from Aa  through  Caa.  The  modifier  "1"  indicates  that  the
obligation ranks in the higher end of its category; the modifier "2" indicates a
mid-range  ranking and the modifier "3"  indicates a ranking in the lower end of
the category. Short-Term Ratings - Taxable Debt

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

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

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

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

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

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

Long-Term Credit Ratings

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

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

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

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

Bonds rated BB, B, CCC, CC and C are regarded as having significant  speculative
characteristics. BB indicates the least degree of speculation and C the highest.
While  such   obligations   will  likely  have  some   quality  and   protective
characteristics,  these  may be  outweighed  by  large  uncertainties  or  major
exposures to adverse conditions.

BB: Bonds rated BB are less  vulnerable  to  nonpayment  than other  speculative
issues. However, these face major uncertainties or exposure to adverse business,
financial,  or economic conditions which could lead to the obligor's  inadequate
capacity to meet its financial commitment on the obligation.

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

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

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

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

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

Short-Term Issue Credit Ratings

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

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

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

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

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

D:  In payment default. Payments on the obligation have not been made on the
due date. The rating may also be used if a bankruptcy petition has been filed
or similar actions jeopardize payments on the obligation.

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

International Long-Term Credit Ratings

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

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


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

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

Speculative Grade:

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

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

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

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

Entities  rated  in  this  category  have  defaulted  on  some  or all of  their
obligations.  Entities  rated 'DDD' have the highest  prospect for resumption of
performance  or  continued  operation  with or  without a formal  reorganization
process.  Entities  rated  `DD'  and  `D'  are  generally  undergoing  a  formal
reorganization or liquidation process;  those rated `DD' are likely to satisfy a
higher portion of their outstanding obligations, while entities rated `D' have a
poor prospect for repaying all obligations.

Plus (+) and  minus  (-)  signs  may be  appended  to a rating  symbol to denote
relative status within the major rating categories. Plus and minus signs are not
added to the "AAA"  category or to  categories  below  "CCC," nor to  short-term
ratings other than "F1" (see below).

International Short-Term Credit Ratings

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

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

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

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

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

D:     Default. Denotes actual or imminent payment default.




<PAGE>


                                       B-1
                                   Appendix B

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

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





<PAGE>


                                      C-12
                                   Appendix C

        OppenheimerFunds Special Sales Charge Arrangements and Waivers

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

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

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

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

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

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

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

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


<PAGE>


           II. Waivers of Class A Sales Charges of Oppenheimer Funds

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

Class A shares purchased by the following investors are not subject to any Class
A sales  charges  (and  no  commissions  are  paid  by the  Distributor  on such
purchases):  |_| The Manager or its affiliates.  |_| Present or former officers,
directors, trustees and employees (and their
        "immediate  families") of the Fund, the Manager and its affiliates,  and
        retirement  plans  established  by them for  their  employees.  The term
        "immediate  family"  refers to one's  spouse,  children,  grandchildren,
        grandparents,  parents, parents-in-law,  brothers and sisters, sons- and
        daughters-in-law,  a  sibling's  spouse,  a  spouse's  siblings,  aunts,
        uncles,  nieces  and  nephews;  relatives  by  virtue  of  a  remarriage
        (step-children, step-parents, etc.) are included.
|_|     Registered  management  investment  companies,  or separate  accounts of
        insurance  companies  having  an  agreement  with  the  Manager  or  the
        Distributor for that purpose.
|_|     Dealers or brokers that have a sales agreement with the Distributor,  if
        they purchase shares for their own accounts or for retirement  plans for
        their employees.
|_|     Employees and registered  representatives (and their spouses) of dealers
        or brokers  described above or financial  institutions that have entered
        into sales  arrangements  with such  dealers  or brokers  (and which are
        identified  as such to the  Distributor)  or with the  Distributor.  The
        purchaser  must certify to the  Distributor at the time of purchase that
        the purchase is for the  purchaser's  own account (or for the benefit of
        such employee's spouse or minor children).
|_|     Dealers,  brokers,  banks or  registered  investment  advisors that have
        entered into an agreement with the  Distributor  providing  specifically
        for the use of shares of the Fund in particular investment products made
        available to their  clients.  Those clients may be charged a transaction
        fee by their dealer, broker, bank or advisor for the purchase or sale of
        Fund shares.
|_|     Investment  advisors  and  financial  planners  who have entered into an
        agreement  for this  purpose  with the  Distributor  and who  charge  an
        advisory,  consulting or other fee for their services and buy shares for
        their own accounts or the accounts of their clients.
|_|     "Rabbi trusts" that buy shares for their own accounts,  if the purchases
        are made through a broker or agent or other financial  intermediary that
        has made special arrangements with the Distributor for those purchases.
|_|   Clients of investment advisors or financial planners (that have entered
        into an agreement for this purpose with the Distributor) who buy
        shares for their own accounts may also purchase shares without sales
        charge but only if their accounts are linked to a master account of
        their investment advisor or financial planner on the books and records
        of the broker, agent or financial intermediary with which the
        Distributor has made such special arrangements . Each of these
        investors may be charged a fee by the broker, agent or financial
        intermediary for purchasing shares.
|_|     Directors,  trustees,  officers or full-time employees of OpCap Advisors
        or its affiliates, their relatives or any trust, pension, profit sharing
        or other benefit plan which beneficially owns shares for those persons.
|_|     Accounts  for  which  Oppenheimer  Capital  (or  its  successor)  is the
        investment advisor (the Distributor must be advised of this arrangement)
        and persons who are  directors or trustees of the company or trust which
        is the beneficial owner of such accounts.
|_|     A unit investment  trust that has entered into an appropriate  agreement
        with the Distributor.
|_|     Dealers,  brokers,  banks, or registered  investment  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.
|-|

<PAGE>


      Retirement Plans and deferred  compensation  plans and trusts used to fund
        those plans  (including,  for example,  plans qualified or created under
        sections 401(a), 401(k), 403(b) or 457 of the Internal Revenue Code), in
        each case if those  purchases are made through a broker,  agent or other
        financial  intermediary  that has  made  special  arrangements  with the
        Distributor for those purchases.
|_|     A  TRAC-2000  401(k)  plan  (sponsored  by the  former  Quest  for Value
        Advisors)  whose  Class B or Class C shares of a Former  Quest for Value
        Fund  were  exchanged  for  Class  A  shares  of  that  Fund  due to the
        termination of the Class B and Class C TRAC-2000 program on November 24,
        1995.
|_|     A qualified  Retirement  Plan that had agreed with the former  Quest for
        Value  Advisors to purchase  shares of any of the Former Quest for Value
        Funds at net asset value, with such shares to be held through DCXchange,
        a sub-transfer agency mutual fund clearinghouse, if that arrangement was
        consummated and share purchases commenced by December 31, 1996.

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

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

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

The Class A contingent deferred sales charge is also waived if shares that would
otherwise be subject to the contingent deferred sales charge are redeemed in the
following cases: |_| To make Automatic Withdrawal Plan payments that are limited
annually to
        no more than 12% of the account value adjusted annually.
|_|   Involuntary redemptions of shares by operation of law or involuntary
        redemptions  of small  accounts  (please refer to  "Shareholder  Account
        Rules and Policies," in the applicable fund Prospectus).
|_|     For distributions from Retirement Plans,  deferred compensation plans or
        other employee benefit plans for any of the following purposes:
(1)         Following  the  death or  disability  (as  defined  in the  Internal
            Revenue  Code)  of the  participant  or  beneficiary.  The  death or
            disability   must  occur   after  the   participant's   account  was
            established.
(2)   To return excess contributions.
(3)

<PAGE>


        To return  contributions  made due to a mistake  of fact.  (4)  Hardship
withdrawals,  as defined in the plan.4 (5) Under a Qualified  Domestic Relations
Order, as defined in the Internal
            Revenue  Code,  or, in the case of an IRA, a divorce  or  separation
            agreement described in Section 71(b) of the Internal Revenue Code.
(6)         To  meet  the  minimum  distribution  requirements  of the  Internal
            Revenue Code.
(7)         To make  "substantially  equal  periodic  payments"  as described in
            Section 72(t) of the Internal Revenue Code.
(8) For loans to participants or beneficiaries. (9) Separation from service.5
        (10)Participant-directed  redemptions  to  purchase  shares  of a mutual
            fund (other than a fund  managed by the Manager or a  subsidiary  of
            the  Manager)  if the plan has made  special  arrangements  with the
            Distributor.
        (11)Plan  termination or "in-service  distributions,"  if the redemption
            proceeds are rolled over  directly to an  OppenheimerFunds-sponsored
            IRA.
|_|     For  distributions  from  Retirement  Plans having 500 or more  eligible
        employees,  except  distributions  due  to  termination  of  all  of the
        Oppenheimer funds as an investment option under the Plan.
|_|     For  distributions  from 401(k) plans sponsored by  broker-dealers  that
        have entered into a special agreement with the Distributor allowing this
        waiver.


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

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

A.  Waivers for Redemptions in Certain Cases.

The Class B and Class C  contingent  deferred  sales  charges will be waived for
redemptions of shares in the following cases: |_| Shares redeemed involuntarily,
as described in "Shareholder Account
        Rules and Policies," in the applicable Prospectus.
|_|   Redemptions from accounts other than Retirement Plans following the
        death or  disability  of the last  surviving  shareholder,  including  a
        trustee  of a  grantor  trust or  revocable  living  trust for which the
        trustee is also the sole beneficiary.  The death or disability must have
        occurred after the account was established,  and for disability you must
        provide evidence of a determination of disability by the Social Security
        Administration.
|_|     Distributions  from accounts for which the  broker-dealer  of record has
        entered into a special  agreement  with the  Distributor  allowing  this
        waiver.
|_|     Redemptions of Class B shares held by Retirement Plans whose records are
        maintained on a daily valuation basis by Merrill Lynch or an independent
        record keeper under a contract with Merrill Lynch.
|_|     Redemptions of Class C shares of Oppenheimer U.S.  Government Trust from
        accounts of clients of financial  institutions  that have entered into a
        special arrangement with the Distributor for this purpose.
|_|     Redemptions requested in writing by a Retirement Plan sponsor of Class C
        shares of an  Oppenheimer  fund in amounts of $1 million or more held by
        the Retirement  Plan for more than one year, if the redemption  proceeds
        are invested in Class A shares of one or more Oppenheimer funds.

Distributions from Retirement Plans or other employee benefit plans for any
of the following purposes:
(1)   Following the death or disability (as defined in the Internal Revenue
            Code) of the  participant  or  beneficiary.  The death or disability
            must occur after the  participant's  account was  established  in an
            Oppenheimer fund.
(2) To return  excess  contributions  made to a  participant's  account.  (3) To
return  contributions  made  due to a  mistake  of  fact.  (4) To make  hardship
withdrawals, as defined in the plan.6 (5) To make distributions required under a
Qualified Domestic Relations
            Order or, in the case of an IRA, a divorce or  separation  agreement
            described in Section 71(b) of the Internal Revenue Code.
(6)         To  meet  the  minimum  distribution  requirements  of the  Internal
            Revenue Code.
(7)         To make  "substantially  equal  periodic  payments"  as described in
            Section 72(t) of the Internal Revenue Code.
(8)  For  loans  to  participants  or  beneficiaries.7  (9)  On  account  of the
participant's separation from service.8 (10) Participant-directed redemptions to
purchase shares of a mutual fund
            (other  than a fund  managed by the Manager or a  subsidiary  of the
            Manager) offered as an investment option in a Retirement Plan if the
            plan has made special arrangements with the Distributor.
(11)        Distributions  made on account of a plan termination or "in-service"
            distributions,  if the redemption  proceeds are rolled over directly
            to an OppenheimerFunds-sponsored IRA.
(12)        Distributions  from  Retirement  Plans  having 500 or more  eligible
            employees,  but excluding  distributions  made because of the Plan's
            elimination  as  investment  options  under  the  Plan of all of the
            Oppenheimer funds that had been offered.
(13)        For  distributions  from a participant's  account under an Automatic
            Withdrawal Plan after the participant reaches age 59 1/2, as long
            as the aggregate value of the  distributions  does not exceed 10% of
            the account's value, adjusted annually.
(14)        Redemptions of Class B shares under an Automatic Withdrawal Plan for
            an account other than a Retirement  Plan, if the aggregate  value of
            the  redeemed  shares  does not exceed 10% of the  account's  value,
            adjusted annually.
      |_|  Redemptions  of Class B shares or Class C shares  under an  Automatic
        Withdrawal  Plan from an  account  other than a  Retirement  Plan if the
        aggregate  value  of the  redeemed  shares  does not  exceed  10% of the
        account's value annually.

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

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


<PAGE>



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

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



<PAGE>


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

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

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

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

A.  Reductions or Waivers of Class A Sales Charges.

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

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

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



<PAGE>


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

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

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

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

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

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

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

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


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

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

  Connecticut Mutual Liquid Account   Connecticut     Mutual    Total
                                      Return Account
  Connecticut    Mutual    Government CMIA      LifeSpan      Capital
Securities Account                    Appreciation Account
  Connecticut Mutual Income Account   CMIA LifeSpan Balanced Account
  Connecticut Mutual Growth Account   CMIA Diversified Income Account

A.  Prior Class A CDSC and Class A Sales Charge Waivers.

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

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

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

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

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

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

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

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

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

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


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

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


<PAGE>



-------------------------------------------------------------------------------
Oppenheimer 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


PX190.1101

--------
* Trustee who is an "interested person" of the Fund and of the Manager.
1. Ms. Macaskill and Mr. Bowen are not Trustees or Directors of Oppenheimer
Integrity Funds, Oppenheimer Strategic Income Fund, Panorama Series Fund,
Inc. or Oppenheimer Variable Account Funds. Mr. Fossel and Mr. Bowen are not
Trustees of Centennial New York Tax Exempt Trust or Managing General Partners
of Centennial America Fund, L.P.
2. In  accordance  with  Rule  12b-1 of the  Investment  Company  Act,  the term
"Independent  Trustees" in this  Statement of Additional  Information  refers to
those Trustees who are not "interested  persons" of the Fund and who do not have
any direct or indirect  financial  interest in the operation of the distribution
plan or any agreement  under the plan. 3 However,  that  commission  will not be
paid on  purchases  of shares in amounts of $1  million or more  (including  any
right of  accumulation) by a Retirement Plan that pays for the purchase with the
redemption  proceeds of Class C shares of one or more Oppenheimer  funds held by
the Plan for more than one year. 4 This provision does not apply to IRAs. 5 This
provision does not apply to 403(b)(7) custodial plans if the participant is less
than age 55,  nor to IRAs.  6 This  provision  does  not  apply to IRAs.  7 This
provision  does not  apply to  loans  from  403(b)(7)  custodial  plans.  8 This
provision does not apply to 403(b)(7) custodial plans if the participant is less
than age 55, nor to IRAs.

<PAGE>


                        OPPENHEIMER CHAMPION INCOME FUND

                                    FORM N-1A

                                     PART C

                                OTHER INFORMATION

Item 23.  Exhibits

    (a)   Amended  and  Restated   Declaration  of  Trust  dated  10/24/00:
          Filed herewith.

(b) Restated By-Laws as amended 10/24/00: Filed herewith.

(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.

      (iv) Specimen Class N Share Certificate: Filed herewith.

(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  Pre-Effective  Amendment  No. 2 to the  Registration  Statement  of
      Oppenheimer  Trinity  Value  Fund  (Reg.  No.  333-79707),  8/25/99,  and
      incorporated herein by reference.

      (iii)Form of OppenheimerFunds  Distributor,  Inc. Agency Agreement: Filed
      with  Pre-Effective  Amendment  No. 2 to the  Registration  Statement  of
      Oppenheimer  Trinity  Value  Fund  (Reg.  No.  333-79707),  8/25/99,  and
      incorporated herein by reference.

      (iv)  Form  of  OppenheimerFunds   Distributor,  Inc.  Broker  Agreement:
      Filed with  Pre-Effective  Amendment No. 2 to the Registration  Statement
      of Oppenheimer  Trinity Value Fund (Reg.  No.  333-79707),  8/25/99,  and
      incorporated herein by reference.


 (f)  Form    of    Deferred     Compensation     Plan    for     Disinterested
Trustees/Directors:   Filed  with  Post-Effective   Amendment  No.  40  to  the
Registration  Statement  of  Oppenheimer  High Yield Fund (Reg.  No.  2-62076),
10/27/98, and incorporated herein by reference.


 (g) (i) Custody Agreement dated 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.

      (ii) Foreign Custody Manager  Agreement  between  Registrant and The Bank
of New  York:  Previously  filed  with  Pre-Effective  Amendment  No.  2 to the
Registration  Statement of Oppenheimer  World Bond Fund (Reg.  No.  333-48973),
4/23/98, and incorporated herein by reference.


(h)   Not applicable.


(i)  Opinion  and  Consent of Counsel  dated  9/30/87:  Filed with  Registrant's
Pre-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.

      (iv)  Distribution and Service Plan and Agreement for Class N shares dated
      10/24/00: To be filed by amendment.


(n)   Oppenheimer  Funds  Multiple  Class  Plan  under  Rule  18f-3  under  the
Investment  Company Act of 1940:  updated  through  8/24/99:  Previously  filed
with   Pre-Effective   Amendment  No.  1  to  the  Registration   Statement  of
Oppenheimer  Senior  Floating  Rate Fund (Reg.  No.  333-82579),  8/27/99,  and
incorporated herein by reference.

--    Powers of Attorney: For all Trustees except Edward L. Cameron,
previously filed with Post-Effective Amendment No. 41 to the Registration
Statement of Oppenheimer High Yield Fund (Reg. No. 2-62078), 8/26/99, and
incorporated herein by reference.

--    Power of Attorney: For Edward L. Cameron, filed with Post-Effective
Amendment No. 5 to the Registration Statement of Oppenheimer Real Asset Fund
(Reg. No.333-14887), 12/28/99, and incorporated herein by reference.


--    Power of Attorney: For William L. Armstrong, dated 10/24/00: To be filed
by amendment.

--    Power of Attorney: For F. William Marshall Jr., dated 10/24/00: To be
filed by amendment.


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 investment
companies,  including without limitation those described in Parts A and B hereof
and listed in Item 26(b) below.



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

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

Amy Adamshick,
Vice President

Charles E. Albers,
Senior                         Vice  President  An  officer   and/or   portfolio
                               manager of certain Oppenheimer funds (since April
                               1998); a Chartered Financial Analyst.

Edward Amberger,
Assistant Vice President       None.

Janette Aprilante,
Assistant Vice President       None.

Victor Babin,
Senior Vice President          None.

Bruce L. Bartlett,
Senior                         Vice  President  An  officer   and/or   portfolio
                               manager of certain Oppenheimer funds.

George Batejan,
Executive Vice President/
Chief Information Officer      Formerly Senior Vice President (until May 1998).

Connie Bechtolt,
Assistant Vice President       None.

Kathleen Beichert,
Vice President                 None.

Rajeev Bhaman,
Vice President                 None.

Mark Binning
Assistant Vice President       None.
Robert J. Bishop,
Vice President                 Vice President of Mutual Fund Accounting  (since
                               May  1996);  an  officer  of  other  Oppenheimer
                               funds.

John R. Blomfield,
Vice President                 None.

Chad Boll,
Assistant Vice President       None

Scott Brooks,
Vice President                 None.

Jeffrey Burns,
Vice                           President,   Assistant  Counsel  Stradley,  Ronen
                               Stevens and Young,  LLP (February  1998-September
                               1999).

Bruce Burroughs,
Vice President

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

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

John Cardillo,
Assistant Vice President       None.

Elisa Chrysanthis
Assistant Vice President       None.

H.C. Digby Clements,
Vice President: Rochester Division  None.






O. Leonard Darling,
Vice Chairman, Executive Vice
President and Chief Investment
Officer and Director           Chairman  of the  Board  and a  director  (since
                               June 1999) and Senior  Managing  Director (since
                               December 1998) of HarbourView  Asset  Management
                               Corporation;  a director  (since  March 2000) of
                               OFI Private  Investments,  Inc.;  Trustee (1993)
                               of  Awhtolia  College - Greece;  formerly  Chief
                               Executive    Officer   of   HarbourView    Asset
                               Management  Corporation  (December  1998  - June
                               1999).

John Davis
Assistant Vice President       EAB Financial (April 1998-February 1999).

Robert A. Densen,
Senior Vice President          None.

Ruggero de'Rossi
Vice President                 Formerly, Chief Strategist at ING Barings (July
                               1998 - March 2000).

Sheri Devereux,
Vice President                 None.

Max Dietshe
Vice President                 Deloitte & Touche LLP (1989-1999).

Craig P. Dinsell
Executive Vice President       None.

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

Andrew J. Donohue,
Executive Vice President,
General Counsel and Director   Executive Vice President  (since September 1993)
                               and a  director  (since  January  1992)  of  the
                               Distributor;  Executive Vice President,  General
                               Counsel  (since  September  1995) and a director
                               (since   August  1994)  of   HarbourView   Asset
                               Management  Corporation,  Shareholder  Services,
                               Inc.,  Shareholder Financial Services,  Inc. and
                               Oppenheimer  Partnership Holdings,  Inc., of OFI
                               Private  Investments,  Inc.  (since March 2000),
                               and of PIMCO  Trust  Company  (since  May 2000);
                               President  and a director  of  Centennial  Asset
                               Management  Corporation  (since  September 1995)
                               and of Oppenheimer Real Asset  Management,  Inc.
                               (since  July  1996);   Vice   President   and  a
                               director     (since     September    1997)    of
                               OppenheimerFunds    International    Ltd.    and
                               Oppenheimer  Millennium  Funds  plc;  a director
                               (since  April 2000) of  OppenheimerFunds  Legacy
                               Program, a charitable trust program  established
                               by  the  Manager;  General  Counsel  (since  May
                               1996)  and  Secretary   (since  April  1997)  of
                               Oppenheimer  Acquisition  Corp.;  an  officer of
                               other Oppenheimer funds.

Bruce Dunbar,
Vice President                 None.

Daniel Engstrom,
Assistant Vice President       None.

Armond Erpf
Assistant Vice President       None.

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

Edward N. Everett,
Assistant Vice President       None.

George Fahey,
Vice President                 None.

Leslie A. Falconio,
Vice                           President An officer and/or portfolio  manager of
                               certain Oppenheimer funds (since 6/99).

Scott Farrar,
Vice President                 Assistant  Treasurer of  Oppenheimer  Millennium
                               Funds plc (since  October  1997);  an officer of
                               other Oppenheimer funds.


Katherine P. Feld,
Vice President, Senior Counsel
and Secretary                  Vice    President    and    Secretary   of   the
                               Distributor;    Secretary    and   Director   of
                               Centennial  Asset Management  Corporation;  Vice
                               President  and  Secretary  of  Oppenheimer  Real
                               Asset    Management,    Inc.;    Secretary    of
                               HarbourView   Asset   Management    Corporation,
                               Oppenheimer    Partnership    Holdings,    Inc.,
                               Shareholder   Financial   Services,   Inc.   and
                               Shareholder Services, Inc.

Ronald H. Fielding,
Senior Vice President; Chairman:
Rochester Division             An officer,  Director and/or  portfolio  manager
                               of  certain  Oppenheimer  funds;   presently  he
                               holds the following  other  positions:  Director
                               (since  1995) of ICI Mutual  Insurance  Company;
                               Governor  (since  1994) of St.  John's  College;
                               Director    (since    1994   -    present)    of
                               International  Museum of  Photography  at George
                               Eastman House..

David Foxhoven,
Assistant Vice President       Formerly Manager,  Banking Operations Department
                               (July 1996 - November 1998).

Colleen Franca,
Assistant Vice President       None.

Crystal French
Vice President                 None.

Dan Gangemi,
Vice President                 None.

Subrata Ghose
Assistant Vice President       Formerly,    Equity    Analyst    at    Fidelity
                               Investments (1995 - March 2000).

Charles Gilbert,
Assistant Vice President       None.

Alan Gilston,
Vice President                 None.

Jill Glazerman,
Vice President                 None.

Paul Goldenberg,
Vice President

Mikhail Goldverg
Assistant Vice President       None.

Laura Granger,
Vice President

Jeremy Griffiths,
Executive Vice President,
Chief Financial Officer and
Director                       Chief Financial Officer,  Treasurer and director
                               of  Oppenheimer   Acquisition  Corp.;  Executive
                               Vice President of HarbourView  Asset  Management
                               Corporation;  President. Chief Executive Officer
                               and  director of PIMCO Trust  Company;  director
                               of OppenheimerFunds,  Legacy Program (charitable
                               trust  program);  Vice  President of OFI Private
                               Investments,  Inc.  and a Member  and  Fellow of
                               the Institute of Chartered Accountants.

Robert Grill,
Senior Vice President          None.

Robert Guy,
Senior Vice President          None.

Robert Haley,
Assistant Vice President       None.

Kelly Haney,
Assistant Vice President

Thomas B. Hayes,
Vice President                 None.

Dorothy Hirshman,
Assistant Vice President       None

Merryl Hoffman,
Vice President and
Senior Counsel                 None

Merrell Hora,
Assistant Vice President       None.

Scott T. Huebl,
Vice President                 None.

James Hyland,
Assistant Vice President       Formerly   Manager  of  Customer   Research  for
                               Prudential  Investments  (February  1998  - July
                               1999).

David Hyun,
Vice                           President Formerly portfolio manager,  technology
                               analyst  and  research  associate  at Fred  Alger
                               Management, Inc. (August 1993 - June 2000).

Steve Ilnitzki,
Senior Vice President          Formerly  Vice  President of Product  Management
                               at Ameritrade (until March 2000).

Kathleen T. Ives,
Vice President                 None.

William Jaume,
Vice President                 Senior  Vice  President  (since  April  2000) of
                               HarbourView Asset Management Corporation.

Frank Jennings,
Vice                           President An officer and/or portfolio  manager of
                               certain Oppenheimer funds.

Andrew Jordan,
Assistant Vice President       None.

Deborah Kaback,
Vice President and
Senior Counsel                 Senior Vice President and Deputy General
                               Counsel of Oppenheimer Capital (April
                               1989-November 1999).

Lewis Kamman
Vice President                 Senior  Consultant  for  Bell  Atlantic  Network
                               Integration, Inc. (June 1997-December 1998).

Jennifer Kane
Assistant Vice President       None.

Lynn Oberist Keeshan
Senior Vice President          Formerly  (until  March  1999)  Vice  President,
                               Business   Development   and   Treasury  at  Liz
                                 Claiborne, Inc.

Thomas W. Keffer,
Senior Vice President          None.

Erica Klein,
Assistant Vice President       None.

Walter Konops,
Assistant Vice President       None.

Avram Kornberg,
Senior Vice President          None.

Jimmy Kourkoulakos,
Assistant Vice President.      None.

John Kowalik,
Senior                         Vice  President  An  officer   and/or   portfolio
                               manager for certain OppenheimerFunds.

Joseph Krist,
Assistant Vice President       None.

Christopher Leavy
Senior                         Vice   President  Vice  President  and  Portfolio
                               Manager at Morgan Stanley  Investment  Management
                               (1997-September   2000)   and  an   Analyst   and
                               Portfolio  Manager  at Crestar  Asset  Management
                               (1995-1997).

Michael Levine,
Vice President                 None.

Shanquan Li,
Vice President                 None.


Mitchell J. Lindauer,
Vice President and Assistant
General Counsel                None.

Malissa Lischin
Assistant Vice President       Formerly    Associate    Manager,     Investment
                               Management  Analyst at Prudential  (1996 - March
                               2000).

David Mabry,
Vice President                 None.

Bridget Macaskill,
Chairman, Chief Executive Officer
and Director                   President,   Chief   Executive   Officer  and  a
                               director  (since  March  2000)  of  OFI  Private
                               Investments,   Inc.,   an   investment   adviser
                               subsidiary  of  the  Manager;   Chairman  and  a
                               director of Shareholder  Services,  Inc.  (since
                               August   1994)   and    Shareholder    Financial
                               Services,  Inc. (since September 1995), transfer
                               agent  subsidiaries  of the  Manager;  President
                               (since  September  1995) and a  director  (since
                               October 1990) of Oppenheimer  Acquisition Corp.,
                               the Manager's parent holding company;  President
                               (since  September  1995) and a  director  (since
                               November   1989)  of   Oppenheimer   Partnership
                               Holdings,  Inc., a holding company subsidiary of
                               the  Manager;  President  and a director  (since
                               October 1997) of OppenheimerFunds  International
                               Ltd., an offshore fund management  subsidiary of
                               the Manager and of Oppenheimer  Millennium Funds
                               plc; a director of HarbourView  Asset Management
                               Corporation    (since    July   1991)   and   of
                               Oppenheimer Real Asset  Management,  Inc. (since
                               July 1996),  investment adviser  subsidiaries of
                               the  Manager;  a director  (since April 2000) of
                               OppenheimerFunds  Legacy  Program,  a charitable
                               trust  program  established  by the  Manager;  a
                               director of Prudential  Corporation  plc (a U.K.
                               financial  service  company);  President  and  a
                               trustee  of other  Oppenheimer  funds;  formerly
                               President  of the  Manager  (June  1991 - August
                               2000).
Steve Macchia,
Vice President                 None.

Marianne Manzolillo,
Assistant Vice President

Philip T. Masterson,
Vice President                 None.

Loretta McCarthy,
Executive Vice President       None.

Lisa Migan,
Assistant Vice President       None.

Andrew J. Mika
Senior                         Vice  President  Formerly a Second Vice President
                               for  Guardian  Investments  (June  1990 - October
                               1999).

Joy Milan
Assistant Vice President       None.

Denis R. Molleur,
Vice President and
Senior Counsel                 None.

Nikolaos Monoyios,
Vice                           President  A  Vice  President   and/or  portfolio
                               manager of certain Oppenheimer funds.

Margaret Mudd
Assistant                      Vice   President   Formerly   Vice   President  -
                               Syndications  of Sanwa Bank  California  (January
                               1998 - September 1999).

John Murphy,
President, Chief Operating
Officer                        and    Director     President    of    MassMutual
                               Institutional  Funds  and  the MML  Series  Funds
                               until September 2000.

Kenneth Nadler,
Vice President                 None.

David Negri,
Senior                         Vice  President  An  officer   and/or   portfolio
                               manager of certain Oppenheimer funds.

Barbara Niederbrach,
Assistant Vice President       None.

Robert A. Nowaczyk,
Vice President                 None.

Ray Olson,
Assistant Vice President       None.

Gina M. Palmieri,
Vice                           President An officer and/or portfolio  manager of
                               certain Oppenheimer funds (since June 1999).

Frank Pavlak,
Vice President                 Formerly.  Branch  Chief of  Investment  Company
                               Examinations  at U.S.  Securities  and  Exchange
                               Commission (January 1981 - December 1998).

James Phillips
Assistant Vice President       None.

David Pellegrino
Vice President                 None.

Jane Putnam,
Vice                           President An officer and/or portfolio  manager of
                               certain Oppenheimer funds.

Michael Quinn,
Assistant Vice President       None.

Julie Radtke,
Vice President                 None.

Thomas Reedy,
Vice                           President  Vice  President  (since April 1999) of
                               HarbourView  Asset  Management  Corporation;   an
                               officer  and/or  portfolio   manager  of  certain
                               Oppenheimer funds.

John Reinhardt,
Vice President: Rochester Division  None

David Robertson,
Senior Vice President

Jeffrey Rosen,
Vice President                 None.

Marci Rossell,
Vice President and             Corporate Economist  Economist    with   Federal
                               Reserve  Bank  of  Dallas  (April  1996 -  March
                               1999).

Richard H. Rubinstein,
Senior                         Vice  President  An  officer   and/or   portfolio
                               manager of certain Oppenheimer funds.

Lawrence Rudnick,
Assistant Vice President       None.

James Ruff,
Executive Vice President       President and director of the Distributor;  Vice
                               President  (since  March  2000)  of OFI  Private
                                Investments, Inc.

Andrew Ruotolo
Executive Vice President       President and director of Shareholder  Services,
                               Inc.;  formerly  Chief  Operations  Officer  for
                               American     International     Group     (August
                              1997-September 1999).

Rohit Sah,
Assistant Vice President       None.

Valerie Sanders,
Vice President                 None.

Kenneth Schlupp
Assistant Vice President       Assistant Vice  President  (since March 2000) of
                               OFI Private Investments, Inc.

Jeff Schneider,
Vice President                 Formerly  (until  May 1999)  Director,  Personal
                               Decisions International.

Ellen Schoenfeld,
Vice President                 None.

Allan Sedmak
Assistant Vice President       None.


Jennifer Sexton,
Vice President                 None.

Martha Shapiro,
Assistant Vice President       None.

Connie Song,
Assistant Vice President       None.

Richard Soper,
Vice President                 None.

Keith Spencer,
Vice President                 None.

Cathleen Stahl,
Vice President                 Assistant  Vice  President  & Manager of Women &
                                Investing Program

Richard A. Stein,
Vice President: Rochester Division  Assistant  Vice  President  (since 1995) of
                               Rochester Capitol Advisors, L.P.

Arthur Steinmetz,
Senior                         Vice  President  An  officer   and/or   portfolio
                               manager of certain Oppenheimer funds.

Jayne Stevlingson,
Vice President                 None.

Gregg Stitt,
Assistant Vice President       None.

John Stoma,
Senior Vice President          None.

Deborah Sullivan,
Assistant Vice President,
Assistant Counsel

Kevin Surrett,
Assistant Vice President       Assistant Vice President of Product Development
                               At Evergreen Investor Services,  Inc. (June 1995
-
                               May 1999).

James C. Swain,
Vice                           Chairman of the Board Chairman,  CEO and Trustee,
                               Director or Managing  Partner of the Denver-based
                               Oppenheimer   Funds;   formerly,   President  and
                               Director   of   Centennial    Asset    Management
                               Corporation   and   Chairman   of  the  Board  of
                               Shareholder Services, Inc.

Susan Switzer,
Assistant Vice President       None.

Anthony A. Tanner,
Vice President: Rochester Division  None.

Paul Temple,
Vice President                 Formerly  (until May 2000)  Director  of Product
                               Development at Prudential.

Angela Uttaro,
Assistant Vice President       None.

Mark Vandehey,
Vice President                 None.

Maureen VanNorstrand,
Assistant Vice President       None.

Annette Von Brandis,
Assistant Vice President       None.

Phillip Vottiero,
Vice President                 Chief  Financial  officer for the Sovlink  Group
                               (April 1996 - June 1999).

Sloan Walker
Vice President

Teresa Ward,
Vice President                 None.

Jerry Webman,
Senior Vice President          Senior  Investment  Officer,  Director  of Fixed
                               Income.

Barry Weiss,
Assistant Vice President       Fitch IBCA (1996 - January 2000)

Christine Wells,
Vice President                 None.

Joseph Welsh,
Assistant Vice President       None.

Catherine White,
Assistant Vice President

William L. Wilby,
Senior                         Vice   President   Senior   Investment   Officer,
                               Director of International  Equities;  Senior Vice
                               President   of   HarbourView   Asset   Management
                               Corporation.

Donna Winn,
Senior Vice President          Vice   President   (since  March  2000)  of  OFI
                               Private Investments, Inc.

Brian W. Wixted,
Senior Vice President and
Treasurer                      Treasurer  (since  March  1999)  of  HarbourView
                               Asset   Management   Corporation,    Shareholder
                               Services,    Inc.,    Oppenheimer   Real   Asset
                               Management  Corporation,  Shareholder  Financial
                               Services,   Inc.  and  Oppenheimer   Partnership
                               Holdings,  Inc.,  of  OFI  Private  Investments,
                               Inc. (since March 2000) and of  OppenheimerFunds
                               International  Ltd. and  Oppenheimer  Millennium
                               Funds plc (since May 2000);  Treasurer and Chief
                               Financial  Officer  (since  May  2000)  of PIMCO
                               Trust Company;  Assistant Treasurer (since March
                               1999) of  Oppenheimer  Acquisition  Corp. and of
                               Centennial  Asset  Management  Corporation;   an
                               officer  of other  Oppenheimer  funds;  formerly
                               Principal and Chief Operating  Officer,  Bankers
                               Trust  Company - Mutual Fund  Services  Division
                               (March 1995 - March 1999).


Carol Wolf,
Senior                         Vice  President  An  officer   and/or   portfolio
                               manager of certain  Oppenheimer funds;  serves on
                               the   Board   of   Chinese   Children    Adoption
                               International  Parents  Council,   Supporters  of
                               Children,   and  the  Advisory  Board  of  Denver
                               Children's Hospital
                              Oncology Department.

Kurt Wolfgruber
Senior Vice President          Senior Investment Officer,  Director of Domestic
                               Equities;   member  of  the  Investment  Product
                               Review Committee and the Executive  Committee of
                               HarbourView   Asset   Management    Corporation;
                               formerly (until April 2000) a Managing  Director
                               and Portfolio  Manager at J.P. Morgan Investment
                                Management, Inc.

Caleb Wong,
Vice                           President An officer and/or portfolio  manager of
                               certain Oppenheimer funds (since June 1999) .

Robert G. Zack,
Senior Vice President and
Assistant Secretary, Associate
General Counsel                Assistant  Secretary  of  Shareholder  Services,
                               Inc.  (since  May 1985),  Shareholder  Financial
                               Services,    Inc.    (since    November   1989),
                               OppenheimerFunds    International    Ltd.    and
                               Oppenheimer  Millennium Funds plc (since October
                               1997); an officer of other Oppenheimer funds.

Jill Zachman,
Assistant Vice President:
Rochester Division             None.

Neal Zamore,
Vice President                 Director  e-Commerce;  formerly (until May 2000)
                               Vice President at GE Capital.

Mark Zavanelli,
Assistant Vice President       None.

Arthur J. Zimmer,
Senior                         Vice President Senior Vice President (since April
                               1999)    of    HarbourView    Asset    Management
                               Corporation;  Vice President of Centennial  Asset
                               Management   Corporation;   an   officer   and/or
                               portfolio manager of certain Oppenheimer funds.


Susan Zimmerman,
Vice President                 None.

The  Oppenheimer  Funds  include  the New  York-based  Oppenheimer  Funds,  the
Denver-based  Oppenheimer  Funds and the Oppenheimer Quest /Rochester Funds, as
set forth below:

           New York-based Oppenheimer Funds

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

           Quest/Rochester Funds

           Limited Term New York Municipal Fund
           Oppenheimer Convertible Securities Fund
           Oppenheimer MidCap Fund
           Oppenheimer Quest Capital Value Fund, Inc.
           Oppenheimer Quest For Value Funds
           Oppenheimer Quest Global Value Fund, Inc.
           Oppenheimer Quest Value Fund, Inc.
           Rochester Fund Municipals

           Denver-based Oppenheimer Funds

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

The address of  OppenheimerFunds,  Inc.,  OppenheimerFunds  Distributor,  Inc.,
HarbourView Asset Management Corp.,  Oppenheimer  Partnership  Holdings,  Inc.,
Oppenheimer  Acquisition Corp. and OFI Private  Investments,  Inc. is Two World
Trade Center, New York, New York 10048-0203.

The  address of the New  York-based  Oppenheimer  Funds,  the Quest  Funds,  the
Rochester-based funds, the Denver-based Oppenheimer Funds, Shareholder Financial
Services,   Inc.,  Shareholder  Services,   Inc.,   OppenheimerFunds   Services,
Centennial  Asset  Management   Corporation,   Centennial   Capital  Corp.,  and
Oppenheimer  Real Asset  Management,  Inc. is 6803 South Tucson Way,  Englewood,
Colorado 80112.


Item 27. Principal Underwriter

(a)  OppenheimerFunds  Distributor,  Inc. is the Distributor of the Registrant's
shares.  It is also the  Distributor  of each of the other  registered  open-end
investment companies for which OppenheimerFunds, Inc. is the investment adviser,
as described in Part A and B of this  Registration  Statement and listed in Item
26(b) above (except  Oppenheimer  Multi-Sector  Income Trust and Panorama Series
Fund, Inc.) and for MassMutual Institutional Funds.

(b) The directors and officers of the Registrant's principal underwriter are:

Name & Principal             Positions & Offices    Positions & Offices
Business Address             with Underwriter       with Registrant

Jason Bach                   Vice President         None
31 Raquel Drive
Marietta, GA 30064

William Beardsley (2)        Vice President         None

Peter Beebe                  Vice President         None
876 Foxdale Avenue
Winnetka, IL  60093

Douglas S. Blankenship       Vice President         None
17011 Woodbank
Spring, TX  77379

Kevin Brosmith               Senior Vice President  None.
856 West Fullerton
Chicago, IL  60614

Susan Burton(2)              Vice President         None

Robert Coli                  Vice President         None
12 White Tail Lane
Bedminster, NJ 07921

William Coughlin             Vice President         None
1730 N. Clark Street
#3203
Chicago, IL 60614

Jeff Damia(2)                Vice President         None

Stephen Demetrovits(2)       Vice President         None

Christopher DeSimone         Vice President         None
5105 Aldrich Avenue South
Minneapolis, MN 55419

Michael Dickson              Vice President         None
21 Trinity Avenue
Glastonburg, CT 06033

Joseph DiMauro               Vice President         None
244 McKinley Avenue
Grosse Pointe Farms, MI 48236

Steven Dombrowser            Vice President         None

Andrew John Donohue(2)       Executive Vice
                             President and Director Vice President and
                                                    Secretary

G. Patrick Dougherty (2)     Vice President         None

Cliff Dunteman               Vice President         None
940 Wedgewood Drive
Crystal Lake, IL 60014

Wendy H. Ehrlich             Vice President         None
4 Craig Street
Jericho, NY 11753

Kent Elwell                  Vice President         None
35 Crown Terrace
Yardley, PA  19067

George Fahey                 Vice President         None
9 Townview Ct.
Flemington, NJ 08822

Eric Fallon                  Vice President         None
10 Worth Circle
Newton, MA  02158

Katherine P. Feld(2)         Vice President and     None
                               Corporate Secretary

Mark Ferro                   Vice President         None
43 Market Street
Breezy Point, NY 11697

Ronald H. Fielding(3)        Vice President         None

Brian Flahive                Assistant Vice President    None

John ("J") Fortuna(2)        Vice President         None

Ronald R. Foster             Senior Vice President  None
11339 Avant Lane
Cincinnati, OH 45249

Victoria Friece(1)           Assistant Vice President    None

Luiggino Galleto             Vice President         None
10302 Riesling Court
Charlotte, NC 28277

Michelle Gans                Vice President         None
18771 The Pines
Eden Prairie, MN 55347

L. Daniel Garrity            Vice President         None
27 Covington Road
Avondale Estates, GA 30002

Lucio Giliberti              Vice President         None
6 Cyndi Court
Flemington, NJ 08822

Ralph Grant(2)               Senior Vice President/ None
                             National Sales Manager

Michael Guman                Vice President         None
3913 Pleasent Avenue
Allentown, PA 18103

Webb Heidinger               Vice President         None
90 Gates Street
Portsmouth, NH 03801

Phillip Hemery               Vice President         None
184 Park Avenue
Rochester, NY 14607

Brian Husch(2)               Vice President         None

Edward Hrybenko (2)          Vice President         None

Richard L. Hymes(2)          Assistant Vice President    None

Byron Ingram(1)              Assistant Vice President    None

Kathleen T. Ives(1)          Vice President         None

Eric K. Johnson              Vice President         None
28 Oxford Avenue
Mill Valley, CA 94941

Mark D. Johnson              Vice President         None
409 Sundowner Ridge Court
Wildwood, MO  63011

Elyse Jurman                 Vice President         None
1194 Hillsboro Mile, #51
Hillsboro Beach, FL  33062

John Kavanaugh               Vice President         None
2 Cervantes Blvd., Apt. #301
San Francisco, CA 94123

Brian G. ly                  Vice President         None
60 Larkspur Road
Fairfield, CT  06430

Michael Keogh(2)             Vice President         None

Lisa Klassen(1)              Assistant Vice President    None

Richard Klein                Senior Vice President  None
4820 Fremont Avenue So.
Minneapolis, MN 55409



Brent Krantz                 Vice President         None
2609 SW 149th Place
Seattle, WA 98166

Oren Lane                    Vice President         None
5286 Timber Bend Drive
Brighton, MI  48116

Dawn Lind                    Vice President         None
21 Meadow Lane
Rockville Centre, NY 11570

James Loehle                 Vice President         None
30 Wesley Hill Lane
Warwick, NY 10990

John Lynch (2)               Vice President         None

Michael Magee(2)             Vice President         None

Steve Manns                  Vice President         None
1941 W. Wolfram Street
Chicago, IL  60657

Todd Marion                  Vice President         None
3 St. Marks Place
Cold Spring Harbor, NY 11724

LuAnn Mascia(2)              Assistant Vice President    None

Theresa-Marie Maynier        Vice President         None
2421 Charlotte Drive
Charlotte, NC  28203

Anthony Mazzariello          Vice President         None
704 Beaver Road
Leetsdale, PA 15056

John McDonough               Vice President         None
3812 Leland Street
Chevy Chase, MD  20815



Kent McGowan                 Vice President         None
18424 12th Avenue West
Lynnwood, WA 98037

Laura Mulhall(2)             Senior Vice President  None

Charles Murray               Vice President         None
18 Spring Lake Drive
Far Hills, NJ 07931

Wendy Murray                 Vice President         None
32 Carolin Road
Upper Montclair, NJ 07043

Denise-Marie Nakamura        Vice President         None
4111 Colony Plaza
Newport Beach, CA 92660

John Nesnay                  Vice President         None
9511 S. Hackberry Street
Highlands Ranch, CO 80126

Kevin Neznek(2)              Vice President         None

Chad V. Noel                 Vice President         None
2408 Eagleridge Drive
Henderson, NV  89014

Raymond Olson(1)             Assistant Vice President    None
                             & Treasurer

Alan Panzer                  Assistant Vice President    None
925 Canterbury Road, Apt. #848
Atlanta, GA 30324

Kevin Parchinski             Vice President         None
8409 West 116th Terrace
Overland Park, KS 66210

Gayle Pereira                Vice President         None
2707 Via Arboleda
San Clemente, CA 92672


Brian Perkes                 Vice President         None
8734 Shady Shore Drive
Frisco, TX 75034

Charles K. Pettit            Vice President         None
22 Fall Meadow Drive
Pittsford, NY  14534

Bill Presutti(2)             Vice President         None

Steve Puckett                Vice President         None
5297 Soledad Mountain Road
San Diego, CA  92109

Elaine Puleo(2)              Senior Vice President  None

Minnie Ra                    Vice President         None
100 Dolores Street, #203
Carmel, CA 93923

Dustin Raring                Vice President         None
184 South Ulster
Denver, CO 80220

Michael Raso                 Vice President         None
16 N. Chatsworth Ave.
Apt. 301
Larchmont, NY  10538

Douglas Rentschler           Vice President         None
677 Middlesex Road
Grosse Pointe Park, MI 48230

Michelle Simone - Ricter(2)  Assistant Vice President    None

Ruxandra Risko(2)            Vice President         None

David Robertson(2)           Senior Vice President, None
                              Director of Variable
                             Accounts




Kenneth Rosenson             Vice President         None
26966 W. Malibu
Cove Colony Drive
Malibu, CA 90265

James Ruff(2)                President & Director   None

William Rylander (2)         Vice President         None

Alfredo Scalzo               Vice President         None
9616 Lale Chase Island Way
Tampa, FL  33626

Michael Sciortino            Vice President         None
785 Beau Chene Drive
Mandeville, LA  70471

Eric Sharp                   Vice President         None
862 McNeill Circle
Woodland, CA  95695

Kristen Sims (2)             Vice President         None

Douglas Smith                Vice President         None
808 South 194th Street
Seattle,WA 98148

David Sturgis                Vice President         None
81 Surrey Lane
Boxford, MA 01921

Brian Summe                  Vice President         None
239 N. Colony Drive
Edgewood, KY 41017

Michael Sussman(2)           Vice President         None

Andrew Sweeny                Vice President         None
5967 Bayberry Drive
Cincinnati, OH 45242



George Sweeney               Senior Vice President  None
5 Smokehouse Lane
Hummelstown, PA  17036

Scott McGregor Tatum         Vice President         None
704 Inwood
Southlake, TX  76092

Martin Telles(2)             Senior Vice President  None

David G. Thomas              Vice President         None
2200 North Wilson Blvd.
Suite 102-176
Arlington, VA 22201

Tanya Valency (2)            Assistant Vice President    None

Mark Vandehey(1)             Vice President         None

Brian Villec (2)             Vice President         None

Andrea Walsh(1)              Vice President         None

Suzanne Walters(1)           Assistant Vice President    None

Michael Weigner              Vice President         None
5722 Harborside Drive
Tampa, FL 33615

Donn Weise                   Vice President         None
3249 Earlmar Drive
Los Angeles, CA  90064

Marjorie Williams            Vice President         None
6930 East Ranch Road
Cave Creek, AZ  85331

Cary Wozniak                 Vice President         None
18808 Bravata Court
San Diego, CA 92128




Gregor Yuska(2)              Vice President         None

(1)6803 South Tucson Way, Englewood, CO 80112
(2)Two World Trade Center, New York, NY 10048
(3)350 Linden Oaks, Rochester, NY 14623

(c)   Not applicable.

Item 28. Location of Accounts and Records

The accounts,  books and other documents required to be maintained by Registrant
pursuant  to  Section  31(a) of the  Investment  Company  Act of 1940 and  rules
promulgated  thereunder are in the possession of  OppenheimerFunds,  Inc. at its
offices at 6803 South Tucson Way, Englewood, Colorado 80112.

Item 29. Management Services

Not applicable


Item 30. Undertakings

Not applicable.

<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and/or the Investment
Company Act of 1940, the Registrant has duly caused this Registration  Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
County of Arapahoe and State of Colorado on the 16th day of November, 2000.

                        Oppenheimer Champion Income Fund

                             By: /s/ James C. Swain*
                          -----------------------------------
                            James C. Swain, Chairman

Pursuant to the  requirements of the Securities Act of 1933,  this  Registration
Statement  has been signed below by the following  persons in the  capacities on
the dates indicated:

Signatures                        Title                     Date


/s/ James C. Swain*               Chairman of the Board,
-------------------               Chief Executive Officer   November 16, 2000
James C. Swain                    and Trustee

/s/ Bridget A. Macaskill*
------------------------          President and Trustee     November 16, 2000
Bridget A. Macaskill

/s/ Brian W. Wixted*              Treasurer and Chief       November 16, 2000
------------------------          Financial and
Brian W. Wixted                   Accounting Officer

/s/ Robert G. Avis*               Trustee                   November 16, 2000
-----------------------
Robert G. Avis

/s/ George Bowen*                 Trustee                   November 16, 2000
-----------------------
George Bowen

/s/ Jon S. Fossel*                Trustee                   November 16, 2000
-----------------------
Jon S. Fossel


/s/ Sam Freedman*                 Trustee                   November 16, 2000
-----------------------
Sam Freedman

/s/ Raymond J. Kalinowski*        Trustee                   November 16, 2000
-------------------------
Raymond J. Kalinowski

/s/ C. Howard Kast*               Trustee                   November 16, 2000
------------------------
C. Howard Kast

/s/ Robert M. Kirchner*           Trustee                   November 16, 2000
------------------------
Robert M. Kirchner

/s/ William L. Armstrong*         Trustee                   November 16, 2000
------------------------
William L. Armstrong

/s/ F. William Marshall Jr.*      Trustee                   November 16, 2000
---------------------------
F. William Marshall Jr.

/s/Edward L. Cameron*             Trustee                   November 16, 2000
---------------------------
Edward L. Cameron


*By: /s/ Robert G. Zack
-------------------------------
Robert G. Zack, Attorney-in-Fact


<PAGE>

                                  EXHIBIT INDEX


Exhibit No.          Description
--------------       --------------

    23(a)            Amended and Restated Declaration of Trust

23(b)                Restated By-Laws

23(c)                Specimen Class N Share Certificate





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