OPPENHEIMER MAIN STREET FUNDS INC, 497, 1994-10-07

OPPENHEIMER MAIN STREET FUNDS INC
497, 1994-10-07

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Oppenheimer
Main Street Income & Growth Fund
Prospectus dated October 1, 1994

Oppenheimer Main Street Income & Growth Fund (the "Fund"), a series of
Oppenheimer Main Street Funds, Inc., is a mutual fund that seeks a high
total return (which includes current income and capital appreciation in
the value of its shares) from equity and debt securities. Please refer
to "Investment Policies and Strategies" for more information about the
types of securities the Fund invests in and the risks of investing in the
Fund.

The Fund offers three classes of shares: (1) Class A shares, which
are sold at a public offering price that includes a front-end sales
charge, and (2) Class B and Class C shares, which are sold without a
front-end sales charge, although you may pay a sales charge when you
redeem your shares, depending on how long you hold them. A contingent
deferred sales charge is imposed on most Class B shares redeemed within
six years of purchase. A contingent deferred sales charge is imposed on
most Class C shares redeemed within 12 months of purchase. Class B and
Class C shares are also subject to an annual "asset-based sales charge."
Each class of shares bears different expenses. In deciding which class
of shares to buy, you should consider how much you plan to purchase, how
long you plan to keep your shares, and other factors discussed in "How to
Buy Shares" starting on page ___.

This Prospectus explains concisely what you should know before
investing in the Fund. Please read this Prospectus carefully and keep it
for future reference. You can find more detailed information about the
Fund in the October 1, 1994, Statement of Additional Information. For a
free copy, call Oppenheimer Shareholder Services, the Fund's Transfer
Agent, at 1-800-525-7048, or write to the Transfer Agent at the address
on the back cover. The Statement of Additional Information has been filed
with the Securities and Exchange Commission and is incorporated into this
Prospectus by reference (which means that it is legally part of this
Prospectus).

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

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

<PAGE>

Contents

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

3 Expenses

5 Financial Highlights

6 Investment Objective and Policies

10 How the Fund is Managed

11 Performance of the Fund

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

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

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

22 How to Sell Shares
By Mail
By Telephone

23 How to Exchange Shares

24 Shareholder Account Rules and Policies

25 Dividends, Capital Gains and Taxes

<PAGE>

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

Expenses

The Fund pays a variety of expenses directly for management of its
assets, administration, distribution of its shares and other services, and
those expenses are reflected in the Fund's net asset value per share. As
a shareholder, you pay those expenses indirectly. Shareholders pay other
expenses directly, such as sales charges. The following tables are
provided to help you understand your direct expenses of investing in the
Fund and your share of the Fund's operating expenses that you might expect
to bear indirectly. The calculations are based on the Fund's expenses
during its fiscal year ended June 30, 1994.

-- Shareholder Transaction Expenses are charges you pay when you buy
or sell shares of the Fund. Please refer to pages 13 through 23 for an
explanation of how and when these charges apply.
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales 5.75% None None
Charge on Purchases
(as a % of offering price)
- -------------------------------------------------------------------------
Sales Charge on None None None
Reinvested Dividends
- -------------------------------------------------------------------------
Deferred Sales Charge None(1) 5% in the first 1.0% if
(as a % of the lower of the year, declining shares are
original purchase price or to 1% in the redeemed
redemption proceeds) sixth year and within 12
eliminated months of
thereafter(2) purchase(2)
- -------------------------------------------------------------------------
Exchange Fee $5.00(3) $5.00(3) $5.00(3)

<FN>
(1)If you invest more than $1 million in Class A shares, you may have to
pay a sales charge of up to 1% if you sell your shares within 18 calendar
months from the end of the calendar month during which you purchased those
shares. See "How to Buy Shares," below.
(2)See "How to Buy Shares," below, for more information on the contingent
deferred sales charges.
(3)Fee is waived for automated exchanges on PhoneLink, described in "How
to Buy Shares."

</TABLE>

-- Annual Fund Operating Expenses are paid out of the Fund's assets
and represent the Fund's expenses in operating its business. For example,
the Fund pays management fees to its investment adviser, Oppenheimer
Management Corporation (the "Manager"), and other regular expenses for
services, such as transfer agent fees, custodial fees paid to the bank
that holds its portfolio securities, audit fees and legal and other
expenses. The following numbers are projections of the Fund's business
expenses based on the Fund's expenses in its last fiscal year. These
amounts are shown as a percentage of the average net assets of each class
of the Fund's shares for that year. The "12b-1 Distribution Plan Fees" for
Class A shares are the Service Plan Fees (which are a maximum of 0.25% of
average annual net assets of that class), and for Class B and Class C
shares are the Distribution and Service Plan Fees (maximum Service Plan
fee of 0.25%) and the asset-based sales charges of 0.75%.

Class B shares were not publicly offered during the fiscal year ended
June 30, 1994. The "Annual Fund Operating Expenses" as to Class B shares
are estimates based on amounts that would have been payable in that period
assuming that Class B shares were outstanding during such fiscal year.
Class C shares were not publicly sold before December 1, 1993. Therefore
the Annual Fund Operating Expenses shown for Class C shares are based on
expenses for the period from December 1, 1993 through June 30, 1994. The
actual expenses for the Fund's Class A, B, and C shares in future years
may be more or less, depending on a number of factors, including the
actual amount of the assets represented by each class of shares.
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Management Fees 0.58% 0.57% 0.57%
- -------------------------------------------------------------------------
12b-1 Distribution
Plans Fees 0.25%* 1.00%** 1.00%**
- -------------------------------------------------------------------------
Other Expenses 0.45% 0.54% 0.54%
- -------------------------------------------------------------------------
Total Fund
Operating
Expenses 1.28% 2.11% 2.11%

<FN>
*Service Plan fees only.
**Includes Service Plan fee and asset-based sales charge.
</TABLE>

-- Examples. To try to show the effect of these expenses on an
investment over time, we have created the hypothetical examples shown
below. Assume that you make a $1,000 investment in each class of shares
of the Fund, and that the Fund's annual return is 5%, and that its
operating expenses for each class are the ones shown in the chart above.
If you were to redeem your shares at the end of each period shown below,
your investment would incur the following expenses by the end of each
period shown:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years(1)
- --------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Shares $70 $96 $124 $203
Class B Shares $71 $96 $133 $203

Class C Shares $31 $66 $113 $244

If you did not redeem your investment, it would incur the following
expenses:

1 year 3 years 5 years 10 years(1)
- --------------------------------------------------------------
Class A Shares $70 $96 $124 $203
Class B Shares $21 $66 $113 $203
Class C Shares $21 $66 $113 $244

<FN>
(1)The Class B expenses in years 7 through 10 are based on the Class A
expenses shown above, because the Fund automatically converts your Class
B shares into Class A shares after 6 years. Because of the asset-based
sales charge and the contingent deferred sales charge on Class B and Class
C shares, long-term Class B and Class C shareholders could pay the
economic equivalent of an amount greater than the maximum front-end sales
charge permitted under applicable regulatory requirements. The automatic
conversion of Class B shares is designed to minimize the likelihood that
this will occur. Please refer to "How to Buy Shares" for more
information.
</TABLE>

These examples show the effect of expenses on an investment, but are
not meant to state or predict actual or expected costs or investment
returns of the Fund.

<PAGE>

Financial Highlights

The table on this page presents selected financial information about
the Fund, including per share data and expense ratios and other data based
on the Fund's average net assets. This information has been audited by
Deloitte & Touche LLP, the Fund's independent auditors, whose report on
the Fund's financial statements for the fiscal year ended June 30, 1994,
is included in the Statement of Additional Information. Class C shares
were publicly offered only during a portion of that period, commencing
December 1, 1993. Class B shares were not publicly offered during the
fiscal year ended June 30, 1994. Accordingly, no information on Class B
shares is reflected in the table below or in the Fund's other financial
statements.

Class A Class C
- ------ ------
Year Ended Period
Ended
June 30, 1994 1993 1992 1991 1990 1989 1988(2) June
30, 1994(1)
- ------
Per Share Operating Data:
Net asset value, beginning
of period $19.88 $15.46 $13.22 $12.38 $11.67
$10.13
$9.60 $20.76
- ------
Income from investment operations:
Net investment income .37 .16 .25 .38 .17
.24 (3)
.05 .13
Net realized and unrealized gain
on investments and options written 2.50 6.65 4.72
.87 .88
1.62 .52 (.42)
- ------ ------ ------ ------ ------ ------
- ------
- ------
Total income from investment
operations 2.87 6.81 4.97 1.25 1.05 1.86
.57
(.29)
- ------
Dividends and distributions to shareholders:
Dividends from net investment income (.36) (.19)
(.22) (.41)
(.19) (.19) (.04) (.14)
Distributions from net realized gain
on investments and options written -- (2.20) (2.51)
-- (.15)
(.13) -- --
Distributions in excess of gains (1.99) -- -- --
-- --
-- --
- ------ ------ ------ ------ ------ ------
- ------
- ------
Total dividends and distributions
to shareholders (2.35) (2.39) (2.73) (.41)
(.34) (.32)
(.04) (.14)
- ------
Net asset value, end of period $20.40 $19.88 $15.46
$13.22
$12.38 $11.67 $10.13 $20.33
- ------ ------ ------ ------ ------ ------
- ------
- ------
- ------ ------ ------ ------ ------ ------
- ------
- ------
- ------
Total Return, at Net Asset Value(4) 14.34% 46.38%
39.48% 10.60%
9.07% 18.77% 5.94% (.97)%
- ------
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $739,552 $58,230 $26,926 $15,968
$13,851
$1,256 $345 $170,316
- ------
Average net assets
(in thousands) $270,417 $38,974 $23,018 $14,563
$ 7,520
$ 788 $118 $71,924
- ------
Number of shares outstanding
at end of period (in thousands) 36,251 2,929 1,742
1,208
1,119 108 34 8,377
- ------
Ratios to average net assets:
Net investment income 2.46% 1.02% 1.63% 3.15%
2.33%
2.67% 2.86% 1.86%

Expenses, before reimbursement
from or assumption by the Manager 1.28% 1.46% 1.66%
1.84%
2.21% 2.46% 10.54% 2.11%

Expenses, net of reimbursement
from or assumption by the Manager N/A N/A N/A N/A
N/A
2.12%(3) N/A N/A
- ------
Portfolio turnover rate(5) 199.4% 283.0% 290.1%
208.9%
214.3% 136.8% 18.8% 199.4%

[FN]
1. For the period from December 1, 1993 (inception of offering) to June
30,1994.
2. For the period from February 3, 1988 (commencement of operations) to
June 30, 1988.
3. Net investment income would have been $.20 per share absent the
voluntary expense reimbursement, resulting in an expense ratio of 2.46%.
4. Assumes a hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and
distributions reinvested in additional shares on the reinvestment date,
and redemption at the net asset value calculated on the last business day
of the fiscal period. Sales charges are not reflected in the total
returns.
5. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation. Purchases and sales of investment securities (excluding
short-term securities) for the year ended June 30, 1994 were
$1,510,599,271 and $494,572,017, respectively.

<PAGE>

Investment Objective and Policies

Objective. The Fund has the investment objective of seeking high total
return (which includes current income and capital appreciation in the
value of its shares) from equity and debt securities. The Fund is not
intended to be a complete investment program, and there is no assurance
that it will achieve its objective.

Investment Policies and Strategies. The Fund seeks its investment
objective by emphasizing investment in equity and debt securities - common
stocks, preferred stocks, convertible securities, bonds, debentures and
notes. The Fund may also assume a temporary defensive position when
appropriate to do so by investing in cash equivalents, as discussed below.
The composition of the Fund's portfolio among the different types of
permitted investments and maturities of debt instruments will vary from
time to time based upon the evaluation of economic and market trends by
the Fund's investment adviser, Oppenheimer Management Corporation (the
"Manager"), and perceived relative total anticipated return from such
types of securities.

-- Debt Securities. The Fund will purchase securities of issuers
believed by the Manager to be in sound financial condition, including
investment-grade senior securities, that is, bonds rated at least "Baa"
by Moody's Investors Service, Inc. ("Moody's") or at least "BBB" by either
Standard & Poor's Corporation ("Standard & Poor's") or Fitch Investors
Service, Inc. ("Fitch") or if unrated, judged by the Manager to be of
comparable quality to bonds rated within such grades. The Fund will not
invest in debt securities rated less than "Baa" by Moody's or "BBB" by
Standard & Poor's or Fitch, or, if unrated, judged by the Manager to be
of comparable quality to debt securities rated within such grades.
However, the Fund may invest up to 10% of its total assets in convertible
securities rated less than "Baa" or "BBB" or unrated convertible
securities judged by the Manager to be of comparable quality to such
lower-rated convertible securities. The conversion feature into equity
securities causes the Manager to regard convertible securities as "equity
equivalents" so that the assigned rating has less impact on the investment
decision than in the case of non-convertible securities. For further
explanation, see "Special Investment Methods--Convertible Securities" in
the Additional Statement. Securities rated "BBB"/"Baa" or less may be
subject to greater market fluctuations and risks of loss of income and
principal than higher-rated securities, and may be considered to have
speculative characteristics.

The Fund is not obligated to dispose of debt securities whose rating
is reduced below investment-grade and may hold such lower-rated securities
until maturity or until investment considerations indicate that their sale
is appropriate. Risks of lower-rated securities include (i) limited
liquidity and secondary market support, (ii) the possibility that earnings
of the issuer may be insufficient to meet its debt service, and (iii) the
issuer's low creditworthiness and potential for insolvency during periods
of rising interest rates and economic downturn. See Appendix A of the
Additional Statement for a description of investment ratings. Since
market risks are inherent in all securities to varying degrees, assurance
cannot be given that the investment objective of the Fund will be met.

-- Foreign Securities. The Fund may purchase equity and debt
securities issued or guaranteed by foreign companies or foreign
governments or their agencies. The Fund may buy securities of companies
in any country, developed or underdeveloped. There is no limit on the
amount of the Fund's assets that may be invested in foreign securities.
Foreign currency will be held by the Fund only in connection with the
purchase or sale of foreign securities. If the Fund's securities are held
abroad, the countries in which they are held and the sub-custodians
holding them must be approved by the Corporation's Board of Directors.

Foreign securities have special risks. For example, 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 changes in foreign currency rates, 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. More information about the risks and
potential rewards of investing in foreign securities is contained in the
Statement of Additional Information.

-- Special Risk Considerations - Borrowing. From time to time, the
Fund may increase its ownership of securities by borrowing from banks on
an unsecured basis and investing the borrowed funds (on which it will pay
interest), provided that immediately after any such borrowing, its total
assets, less its liabilities other than borrowings, is equal to at least
300% of all borrowings. Interest on borrowed money is an expense the Fund
would not otherwise incur, so that it may have substantially reduced net
investment income during periods of substantial borrowings.

-- Portfolio Turnover. A change in the securities held by the Fund
is known as "portfolio turnover." The Fund may engage frequently in
short-term trading to try to achieve its objective. As a result, the
Fund's portfolio turnover may be higher than other mutual funds. The
"Financial Highlights," above, show the Fund's portfolio turnover rate
during past fiscal years. High turnover and short-term trading may cause
the Fund to have relatively larger commission expenses and transaction
costs than funds that do not engage in short-term trading. Additionally,
high portfolio turnover may affect the ability of the Fund to qualify for
tax deductions for payments made to shareholders as a "regulated
investment company" under the Internal Revenue Code. The Fund qualified
in its last fiscal year and intends to do so in the coming year, although
it reserves the right not to qualify.

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

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

Other Investment Techniques and Strategies. The Fund may also use the
investment techniques and strategies described below, which involve
certain risks. The Statement of Additional Information contains more
information about these practices, including limitations designed to
reduce some of the risks.

-- Temporary Defensive Investments. In times of unstable market or
economic conditions, when the Manager determines it appropriate to do so
to attempt to reduce fluctuations in the value of the Fund's net assets,
the Fund may assume a temporary defensive position and invest an unlimited
amount of assets in: (i) obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities ("U.S. Government
Securities"); (ii) commercial paper rated in the highest category by an
established rating agency; (iii) certificates of deposit or bankers'
acceptances of domestic banks with assets of $1 billion or more; (iv) any
of the foregoing maturing in one year or less (also generally known as
"cash equivalents"); (v) short-term debt obligations; or (vi) repurchase
agreements (explained below).

-- When-Issued Securities. The Fund may purchase securities on a
"when-issued" basis, and may purchase or sell such securities on a
"delayed delivery" basis. "When-issued" and "delayed delivery" refer to
securities whose terms and indenture are available and for which a market
exists, but which are not available for immediate delivery. The Fund does
not intend to make such purchases for speculative purposes. During the
period between the purchase and settlement, no payment is made for the
security and no interest accrues to the buyer from the investment.

-- Repurchase Agreements. The Fund may enter into repurchase
agreements. There is no limit on the amount of the Fund's net assets that
may be subject to repurchase agreements of seven days or less. Repurchase
agreements must be fully collateralized. However, if the vendor of the
securities under a repurchase agreement 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 Fund will not enter into a repurchase agreement which causes more than
10% of its net assets to be subject to repurchase agreements having a
maturity beyond seven days.

-- Short Sales Against-the-Box. The Fund may not sell securities
short, except in collateralized transactions referred to as "short sales
against-the-box." No more than 15% of the net assets of the Fund will be
held as collateral for such short sales at any one time.

-- Rights and Warrants. The Fund may invest up to 10% of its total
assets in warrants attached to securities; otherwise, it may not purchase
warrants or rights. In connection with the qualification for sale of its
shares in certain states, the Fund has undertaken that it will limit its
investments in warrants to no more than 5% of its net assets, with no more
than 2% of its net assets invested in warrants that are not listed on The
New York Stock Exchange or The American Stock Exchange. Should its shares
no longer be offered in such states, the Fund would not be subject to that
undertaking.

-- Investing in Small, Unseasoned Companies. The Fund may invest in
securities of small, unseasoned companies. These are companies that have
been in operation for less than three years, even after including the
operations of any predecessors. Securities of these companies may have
limited liquidity and may be subject to volatility in their prices. The
Fund currently intends to invest no more than 5% of its net assets in
securities of small, unseasoned issuers.

-- Illiquid and Restricted Securities. Under the policies
established by the Corporation's Board of Directors, the Manager
determines the liquidity of the Fund's investments. Investments may be
illiquid because of the absence of an active trading market, making it
difficult to value them or dispose of them promptly at an acceptable
price. A restricted security is one that has a contractual restriction on
its resale or which cannot be sold publicly until it is registered under
the Securities Act of 1933. The Fund will not invest more than 10% of its
net assets in illiquid or restricted securities (that limit may increase
to 15% if certain state laws are changed or the Fund's shares are no
longer sold in those states). Certain restricted securities, eligible for
resale to qualified institutional purchasers, are not subject to that
limit.

-- Loans of Portfolio Securities. To raise cash for liquidity
purposes, the Fund may lend its portfolio securities to certain types of
eligible borrowers approved by the Board of Directors. Each loan must be
collateralized in accordance with applicable regulatory requirements.
After any loan, the value of the securities loaned must not exceed 25% of
the value of the Fund's net 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. The Fund presently does not intend to engage in loans
of securities in the coming year.

-- Derivative Investments. The Fund can invest in a number of
different kinds of "derivative investments." In general, a "derivative
investment" is a specially designed investment whose performance is linked
to the performance of another investment or security, such as an option,
future, index or currency. In the broadest sense derivative investments
include exchange-traded options and futures contracts (see "Writing
Covered Calls" and "Hedging with Options and Futures Contracts," below).
The risks of investing in derivative investments include not only the
ability of the company issuing the instrument to pay the amount due on the
maturity of the instrument, but also the risk that the underlying
investment or security might not perform the way the Manager expected it
to perform. The performance of derivative investments may also be
influenced by interest rate changes in the U.S. and abroad. All of this
can mean that the Fund will realize less income and/or principal than
expected. Certain derivative investments held by the Fund may trade in
the over-the-counter market and may be illiquid. See "Illiquid and
Restricted Securities," above.

Examples of derivative investments the Fund may invest in include,
among others, "index-linked" notes. These are debt securities of
companies that call for payment on the maturity of the note in different
terms than the typical note where the borrower agrees to pay a fixed sum
on the maturity of the note. The payment on maturity of an index-linked
note depends on the performance of one or more market indices, such as the
S & P 500 Index. Further examples of derivative investments the Fund may
invest in include "debt exchangeable for common stock" of an issuer or
"equity-linked debt securities" of an issuer. At maturity, the principal
amount of the debt security is exchanged for common stock of the issuer
or is payable in an amount based on the issuer's common stock price at the
time of maturity. In either case there is a risk that the amount payable
at maturity will be less than the principal amount of the debt.

Other examples of derivative investments the Fund may invest in are
currency-indexed securities. These are typically short-term or
intermediate-term debt securities whose maturity values or interest rates
are determined by reference to one or more specified foreign currencies.
Certain currency-indexed securities purchased by the Fund may have a
payout factor tied to a multiple of the movement of the U.S. dollar (or
the foreign currency in which the security is denominated) against the
movement in the U.S. dollar, the foreign currency, another currency, or
an index. Such securities may be subject to increased principal risk and
increased volatility than comparable securities without a payout factor
in excess of one, but the Manager believes the increased yield justifies
the increased risk.

-- Writing Covered Calls. The Fund may write (that is, sell) covered
call options (calls) to raise cash for liquidity purposes (for example,
to meet redemption requirements) or for defensive reasons. The Fund may
write calls only if certain conditions are met: (1) after writing any
call, not more than 25% of the Fund's total assets may be subject to
calls; (2) the calls must be listed on a domestic securities exchange or
quoted on the Automated Quotation System of the National Association of
Securities Dealers, Inc. ("NASDAQ"); in addition, calls on debt securities
may be written in the over-the-counter market; and (3) each call must be
"covered" while it is outstanding; that is, the Fund must own the
securities on which the call is written or it must own other securities
that are acceptable for the escrow arrangements required for calls. If
a covered call written by the Fund is exercised on a security that has
increased in value, the Fund will be required to sell the security at the
call price and will not be able to realize any profit on the security
above the call price.

-- Hedging With Options and Futures Contracts. The Fund may purchase
certain kinds of put and call options, Futures, options on Futures and on
broadly-based securities indices, may enter into forward contracts, and
may engage in interest rate swap transactions. These are all referred to
as "Hedging Instruments." The Fund does not use Hedging Instruments for
speculative purposes. Some of these strategies, such as selling futures,
buying puts and writing covered calls, hedge the Fund's portfolio against
price fluctuations. Other hedging strategies, such as buying futures,
writing put options and buying call options, tend to increase the Fund's
exposure to the market. The Hedging Instruments the Fund may use are
described below and in greater detail in "Other Investment Techniques and
Strategies" in the Statement of Additional Information.

-- Puts and Calls. The Fund may purchase put options ("puts") which
relate to (1) securities that the Fund owns, (2) Interest Rate Futures or
Financial Futures, whether or not the Fund owns the particular Future in
its portfolio, or (3) securities indices. The Fund may write put options
("puts") if: (i) the put relates to a security or securities index, (ii)
the put is covered by segregated liquid assets, and (iii) not more than
50% of the Fund's net assets are segregated to cover puts. The Fund may
purchase calls on securities, broadly-based indices, Interest Rate Futures
or Financial Futures, or to terminate its obligation on a call the Fund
previously wrote. The Fund may also purchase "relative performance call
options." These are call options that have a cash settlement based on the
difference between the returns on two market indices. These options are
subject to the risk that the value of the option may decline because of
adverse movements in the market indices. A call or put may not be
purchased if the value of all of the Fund's put and call options would
exceed 5% of the Fund's total assets.

-- Interest Rate Futures and Financial Futures. The Fund may buy and
sell Futures. An Interest Rate Future obligates the seller to deliver and
the purchaser to take a specific type of debt security at a specific
future date for a fixed price. That obligation may be satisfied by actual
delivery of the debt security or by entering into an offsetting contract.
A securities index assigns relative values to the securities included in
that index and is used as a basis for trading long-term Financial Futures
contracts. Financial Futures reflect the price movements of securities
included in the index. They differ from Interest Rate Futures in that
settlement is made in cash rather than by delivery of the underlying
investment. At present, the Fund does not intend to enter into Futures
contracts and options on Futures, if, after any such purchase, the sum of
margin deposits on Futures and premiums paid on Futures options would
exceed 5% of the Fund's total assets.

-- Risks of Options and Futures Trading. Hedging instruments can be
volatile investments and may involve special risks. If the Manager uses
a Hedging Instrument at the wrong time or judges market conditions
incorrectly, hedging strategies may reduce the Fund's return. The Fund
could also experience losses if the prices of its futures and options
positions were not correlated with its other investments or if it could
not close out a position because of an illiquid market for the future or
option. 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, in writing puts, there is a risk that the
Fund may be required to buy the underlying security at a disadvantageous
price. These risks and the hedging strategies the Fund may use are
described in greater detail in the Statement of Additional Information.

Other Investment Restrictions. The Fund has certain investment
restrictions that are fundamental policies. Under these fundamental
policies the Fund cannot do any of the following: (1) buy securities
issued or guaranteed by any one issuer (except the U.S. Government or any
of its agencies or instrumentalities) if with respect to 75% of its total
assets, more than 5% of its total assets would be invested in securities
of that issuer, or it would then own more than 10% of that issuer's voting
securities; (2) lend money except in connection with the acquisition of
debt securities which the Fund's investment policies and restrictions
permit it to purchase; the Fund may also make loans of portfolio
securities, subject to the restrictions stated under "Loans of Portfolio
Securities"; or (3) concentrate investments to the extent of 25% of its
assets in any industry; however, there is no limitation as to investment
in U.S. Government Securities.

The percentage restrictions described above and elsewhere in this
Prospectus and in the Additional Statement apply only at the time the Fund
purchases a security, and the Fund need not dispose of a security merely
because the Fund's assets have changed or the security has increased in
value relative to the size of the Fund. There are other fundamental
policies discussed in the Statement of Additional Information.

How the Fund is Managed

Organization and History. The Fund is one of two investment portfolios,
or "series" of Oppenheimer Main Street Funds, Inc. (the "Corporation"),
an open-end, management investment company organized as a Maryland
corporation in 1987. The Fund commenced operations on February 3, 1988.

The Corporation is governed by a Board of Directors, which is
responsible for protecting the interests of shareholders under Maryland
corporate law. The Directors meet periodically throughout the year to
oversee the Fund's activities, review its performance, and review the
actions of the Manager. "Directors and Officers of the Corporation" in
the Statement of Additional Information names the Directors and provides
more information about them and the officers of the Corporation. Although
the Fund is not required by law to hold annual meetings, it may hold
shareholder meetings from time to time on important matters, and
shareholders have the right to call a meeting to remove a Director or to
take other action described in the Articles of Incorporation.

The Board of Directors has the power, without shareholder approval,
to divide unissued shares of the Fund into two or more classes. The Board
has done so, and the Fund currently has three classes of shares, Class A,
Class B and Class C. Each class has its own dividends and distributions
and pays certain expenses which may be different for the different
classes. Each class may have a different net asset value. Each share has
one vote at shareholder meetings, with fractional shares voting
proportionally. Only shares of a particular class vote together on
matters that affect that class alone. Shares are freely transferrable.

The Manager and Its Affiliates. The Fund is managed by the Manager, which
chooses the Fund's investments and handles its day-to-day business. The
Manager carries out its duties, subject to the policies established by the
Board of Directors, under an Investment Advisory Agreement which states
the Manager's responsibilities and its fees, and describes the expenses
that the Fund pays to conduct its business.

The Manager has operated as an investment adviser since 1959. The
Manager and its affiliates currently manage investment companies,
including other OppenheimerFunds, with assets of more than $27 billion as
of June 30, 1994, and with more than 1.8 million shareholder accounts.
The Manager is owned by Oppenheimer Acquisition Corp., a holding company
that is owned in part by senior officers of the Manager and controlled by
Massachusetts Mutual Life Insurance Company, a mutual life insurance
company.

-- Portfolio Manager. John Wallace, a Vice President of the Manager,
serves as the Portfolio Manager of the Fund and a Vice President of the
Corporation and has been primarily responsible for the day to day
management of the Fund's portfolio since January 1991. During the past
five years, Mr. Wallace has also served as an officer and portfolio
manager for other OppenheimerFunds, prior to which he was a securities
analyst and assistant portfolio manager for the Manager.

-- Fees and Expenses. Under the Investment Advisory Agreement, the
Fund pays the Manager the following annual fees, which decline on
additional assets as the Fund grows: 0.65% of the first $200 million of
net assets of the Fund, 0.60% of the next $150 million, 0.55% of the next
$150 million and 0.45% of net assets in excess of $500 million. The
Fund's management fee for its last fiscal year was 0.58% of average annual
net assets for Class A shares and 0.57% for Class C shares.

The Fund pays expenses related to its daily operations, such as
custodian fees, Directors' fees, transfer agency fees, legal and auditing
costs. Those expenses are paid out of the Fund's assets and are not paid
directly by shareholders. However, those expenses reduce the net asset
value of shares, and therefore are indirectly borne by shareholders
through their investment. More information about the investment advisory
agreement and the other expenses paid by the Fund is contained in the
Statement of Additional Information.

There is also information about the Fund's brokerage policies and
practices in "Brokerage Policies of the Fund" in the Statement of
Additional Information. That section discusses how brokers and dealers are
selected for the Fund's portfolio transactions. When deciding which
brokers to use, the Manager is permitted by the investment advisory
agreement to consider whether brokers have sold shares of the Fund or any
other funds for which the Manager serves as investment adviser.

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

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

Performance of the Fund

Explanation of Performance Terminology. The Fund uses certain terms to
illustrate its performance: "total return" and "average annual total
return." These terms are used to show the performance of each class of
shares separately, because the performance of each class of shares will
usually be different, as a result of the different kinds of expenses each
class bears. This performance information may be useful to help you see
how well your investment has done and to compare it to other funds or
market indices, as we have done below.

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

-- Total Returns. There are different types of total returns used
to measure the Fund's performance. Total return is the change in value
of a hypothetical investment in the Fund over a given period, assuming
that all dividends and capital gains distributions are reinvested in
additional shares. The cumulative total return measures the change in
value over the entire period (for example, ten years). An average annual
total return shows the average rate of return for each year in a period
that would produce the cumulative total return over the entire period.
However, average annual total returns do not show the Fund's actual year-
by-year performance.

When total returns are quoted for Class A shares, they reflect the
payment of the maximum initial sales charge. Total returns may also be
quoted "at net asset value," without considering the effect of the sales
charge, and those returns would be reduced if sales charges were deducted.
When total returns are shown for Class B shares, they reflect the effect
of the contingent deferred sales charge that applies to the period for
which total return is shown. When total returns are shown for a one-year
period for Class C shares, they reflect the effect of the contingent
deferred sales charge. They may also be shown based on the change in net
asset value, without considering the effect of the contingent deferred
sales charge.

How Has the Fund Performed? Below is a discussion of the Fund's
performance during its last fiscal year ended June 30, 1994, followed by
a graphical comparison of the Fund's performance to appropriate broad-
based market indices.

-- Management's Discussion of Performance. During the Fund's fiscal
year ended June 30, 1994, the performance of the income and equity markets
was impacted by a number of economic factors, including four increases by
the Federal Reserve Bank in short-term interest rates from early February,
1994 through June 30, 1994. These increases adversely affected the
growth stocks held by the Fund for capital gains, as well as the
telecommunications and utilities issues held by the Fund for their yield.
With the rise in interest rates, convertible securities became attractive,
and the Fund added to positions in several shorter-term issues. The Fund
continued to invest in consumer companies the Manager believes are
positioned to increase market share and profit in the U.S., as well as in
industrial companies that the Manager believes should benefit from an
improving global economy. The Manager continuously monitors the income
and equity markets and actively manages the Fund to enable it to benefit
from new developments as they occur.

-- Comparing the Fund's Performance to the Market. The chart below
shows the performance of a hypothetical $10,000 investment in Class A and
Class C shares of the Fund held until June 30, 1994; in the case of Class
A shares, from the commencement of operations on February 3, 1988, and in
the case of Class C shares, from the inception of the Class on December
1, 1993, with all dividends and capital gains distributions reinvested in
additional shares. The graph reflects the deduction of the 5.75% maximum
initial sales charge on Class A shares and the 1.0% contingent deferred
sales charge on Class C shares. Class B shares were not publicly offered
during the fiscal year ended June 30, 1994. Accordingly, no information
is presented on Class B shares in the graph below.

The Fund's performance is compared to the performance of the S&P 500
Index and the Lipper Growth and Income Fund Index. The S&P 500 Index is
a broad-based index of equity securities widely regarded as a general
measurement of the performance of the U.S. equity securities market. The
Lipper Growth & Income Fund Index is an unmanaged index representing the
average performance of mutual funds having an objective of growth and
income as tracked by Lipper Analytical Services, Inc., and is widely
recognized as a measure of the performance of that category of mutual
funds. The S&P 500 Index performance reflects the reinvestment of
dividends but does not consider the effect of capital gains or transaction
costs, and none of the data below shows the effect of taxes. Also, the
Fund's performance reflects the effect of Fund business and operating
expenses. While index comparisons may be useful to provide a benchmark
for the Fund's performance, it must be noted that the Fund's investments
are not limited to the securities in the S&P 500 Index, which tend to be
securities of larger, well-capitalized companies. Moreover, the index
data does not reflect any assessment of the risk of the investments
included in the index.

Oppenheimer Main Street Income & Growth Fund

Comparison of Change in Value of
$10,000 Hypothetical Investment in:
Oppenheimer Main Street Income
& Growth Fund, Lipper Growth (Graph)
& Income Fund Index and S&P 500 Index

Past performance is not predictive of future performance.

Avg. Annual Total Returns at 6/30/94
1 Year 5 Year Life*
- ---------------------------------------------
A Shares 7.76% 21.56% 20.70%
- ----------------------------------------------

Cumulative Total Return of the Fund at 6/30/94
Life of Class**
- -----------------------------------------------
C Shares* -1.96%%
- -----------------------------------------------
*The Fund (Class A Shares) began
operations on 2/3/88.
**Class C shares of the Fund first publicly
offered on 12/1/93.

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

How to Buy Shares

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

-- Class A Shares. If you buy Class A shares, you pay an initial
sales charge (on investments up to $1 million). If you purchase Class A
shares as part of an investment of at least $1 million in shares of one
or more OppenheimerFunds, and you sell any of those shares within 18
months after your purchase, you will pay a contingent deferred sales
charge, which dollar value will vary depending on the amount you invested.

-- Class B Shares. If you buy Class B shares, you pay no sales
charge at the time of purchase, but if you sell your shares within six
years, you will normally pay a contingent deferred sales charge that
varies depending on how long you own your shares.

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

Which Class of Shares Should You Choose? Once you decide that the Fund
is an appropriate investment for you, deciding which class of shares is
best suited to your needs depends on a number of factors which you should
discuss with your financial advisor. Because the Fund's operating costs
that apply to a class of shares and the effect of the different types of
sales charges on your investment will vary your investment results over
time, the most important factors to consider are how much you plan to
invest, how long you plan to hold your investment, and whether you
anticipate exchanging your shares for shares of other OppenheimerFunds
(not all of which offer all three classes of shares). If your goals and
objectives change over time and you plan to purchase additional shares,
you should re-evaluate those factors to see if you should consider another
class of shares.

In the following discussion, to help provide you and your financial
advisor with a framework in which to choose a class, we have made some
assumptions using a hypothetical investment in the Fund, based on the
sales charge rates that apply to each class, and considering the effect
of the asset-based sales charges on Class B and Class C expenses (which
will affect your investment return), and, for the sake of comparison, we
have assumed that there is a 10% rate of appreciation in your investment
each year. Of course, the actual performance of your investment cannot be
predicted and will vary, based on the Fund's actual investment returns,
and the operating expenses borne by each class of shares, and which class
of shares you invest in. The factors discussed below are not intended to
be investment advice or recommendations, because each investor's financial
considerations are different.

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

Investing for the Short Term. If you have a short-term investment
horizon (that is, you plan to hold your shares for not more than six
years), you should probably consider purchasing Class A or Class C shares
rather than Class B shares, because of the effect of the Class B
contingent deferred sales charge if you redeem in less than 7 years, as
well as the effect of the Class B asset-based sales charge on the
investment return for that class in the short-term. Class C shares might
be the appropriate choice (especially for investments of less than
$100,000), because there is no initial sales charge on Class C shares, and
the contingent deferred sales charge does not apply to amounts you sell
after holding them one year.

However, if you plan to invest more than $100,000 for the shorter
term, then the more you invest and the more your investment horizon
increases toward six years, Class C shares might not be as advantageous
as Class A shares. That is because the annual asset-based sales charge on
Class C shares will have a greater impact on your account over the longer
term than the reduced front-end sales charge available for larger
purchases of Class A shares. For example, Class A might be more
advantageous than Class C (as well as Class B) for investments of more
than $100,000 expected to be held for 5 or 6 years (or more). For
investments over $250,000 expected to be held 4 to 6 years (or more),
Class A shares may become more advantageous than Class C (and B). If
investing $500,000 or more, Class A may be more advantageous as your
investment horizon approaches 3 years or more.

And for most 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 $1 million or more of Class B or C
shares from a single investor. Of course, these examples are based on
approximations of the effect of current sales charges and expenses on a
hypothetical investment over time, using the assumed annual performance
return stated above, and therefore should not be relied on as rigid
guidelines.

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

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

Also, because not all of the OppenheimerFunds currently offer Class
B and Class C shares, and because exchanges are permitted only to the same
class of shares in another of the OppenheimerFunds, you should consider
how important the exchange privilege is likely to be for you.

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

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

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

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

There is no minimum investment requirement if you are buying shares
by reinvesting dividends from the Fund or other OppenheimerFunds (a list
of them appears in the Statement of Additional Information, or you can ask
your dealer or call the Transfer Agent), or by reinvesting distributions
from unit investment trusts that have made arrangements with the
Distributor.

-- How Are Shares Purchased? You can buy shares several ways --
through any dealer, broker or financial institution that has a sales
agreement with the Distributor, or directly through the Distributor, or
automatically from your bank account through an Asset Builder Plan under
the OppenheimerFunds AccountLink service. When you buy shares, be sure
to specify Class A, Class B or Class C shares. If you do not choose, your
investment will be made in Class A shares.

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

-- Buying Shares Through the Distributor. Complete an
OppenheimerFunds New Account Application and return it with a check
payable to "Oppenheimer Funds 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.

-- Buying Shares Through OppenheimerFunds AccountLink. You can use
AccountLink to link your Fund account with an account at a U.S. bank or
other financial institution that is an Automated Clearing House (ACH)
member, to transmit funds electronically to purchase shares, to send
redemption proceeds, and to transmit dividends and distributions. Shares
are purchased for your account on the regular business day the Distributor
is instructed by you to initiate the ACH transfer to buy shares. You can
provide those instructions automatically, under an Asset Builder Plan,
described below, or by telephone instructions using OppenheimerFunds
PhoneLink, also described below. You must request AccountLink privileges
on the application or dealer settlement instructions used to establish
your account. Please refer to "AccountLink" below for more details.

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

-- At What Price Are Shares Sold? Shares are sold at the public
offering price based on the net asset value that is next determined after
the Distributor receives the purchase order in Denver. In most cases, to
enable you to receive that day's offering price, the Distributor must
receive your order by 4:00 P.M., New York time (all references to time in
this Prospectus mean "New York time"). The net asset value of each class
of shares is determined as of that time on each day The New York Stock
Exchange is open (which is a "regular business day"). If you buy shares
through a dealer, the dealer must receive your order by 4:00 P.M., on a
regular business day and transmit it to the Distributor so that it is
received before the Distributor's close of business that day, which is
normally 5:00 P.M. The Distributor may reject any purchase order for the
Fund's shares, in its sole discretion.

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, where purchases are not subject to an initial
sales charge, the offering price may be net asset value. In some cases,
reduced sales charges may be available, as described below. Out of the
amount you invest, the Fund receives the net asset value to invest for
your account. The sales charge varies depending on the amount of your
purchase. A portion of the sales charge may be retained by the
Distributor and allocated to your dealer. The current sales charge rates
and commissions paid to dealers and brokers are as follows:
- -------------------------------------------------------------------------
<TABLE>
<CAPTION>
Front-End Sales Charge Commission
As a Percentage of: as Percentage
Offering Amount of Offering
Amount of Purchase Price Invested Price
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $25,000 5.75% 6.10% 4.75%
- ------------------------------------------------------------------------
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
- ------------------------------------------------------------------------
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
- ------------------------------------------------------------------------
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
- ------------------------------------------------------------------------
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
- ------------------------------------------------------------------------
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
</TABLE>

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

-- Class A Contingent Deferred Sales Charge. There is no initial
sales charge on purchases of Class A shares of any one or more
OppenheimerFunds aggregating $1 million or more. However, the Distributor
pays dealers of record commissions on such purchases in an amount equal
to the sum of 1.0% of the first $2.5 million, plus 0.50% of the next $2.5
million, plus 0.25% of share purchases over $5 million. However, that
commission will be paid only on the amount of those purchases in excess
of $1 million that were not previously subject to a front-end sales charge
and dealer commission.

If you redeem any of those shares within 18 months of the end of the
calendar month of their purchase, a contingent deferred sales charge
(called the "Class A contingent deferred sales charge") will be deducted
from the redemption proceeds. That sales charge will be equal to 1.0% of
the aggregate net asset value of either (1) the redeemed shares (not
including shares purchased by reinvestment of dividends or capital gain
distributions) or (2) the original cost of the shares, whichever is less.
However, the Class A contingent deferred sales charge will not exceed the
aggregate commissions the Distributor paid to your dealer on all Class A
shares of all OppenheimerFunds you purchased subject to the Class A
contingent deferred sales charge. In determining whether a contingent
deferred sales charge is payable, the Fund will first redeem shares that
are not subject to the sales charge, including shares purchased by
reinvestment of dividends and capital gains, and then will redeem other
shares in the order that you purchased them. The Class A contingent
deferred sales charge is waived in certain cases described in "Waivers of
Class A Sales Charges" below.

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

-- Special Arrangements With Dealers. The Distributor may advance
up to 13 months' commissions to dealers that have established special
arrangements with the Distributor for Asset Builder Plans for their
clients. Dealers whose sales of Class A shares of OppenheimerFunds (other
than money market funds) under OppenheimerFunds-sponsored 403(b)(7)
custodial plans exceed $5 million per year (calculated per quarter), will
receive monthly one-half of the Distributor's retained commissions on
those sales, and if those sales exceed $10 million per year, those dealers
will receive the Distributor's entire retained commission on those sales.

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

-- Right of Accumulation. You and your spouse can cumulate Class A
shares you purchase for your own accounts, or jointly, or on behalf of
your children who are minors, under trust or custodial accounts. A
fiduciary can cumulate shares purchased for a trust, estate or other
fiduciary account (including one or more employee benefit plans of the
same employer) that has multiple accounts.

Additionally, you can cumulate current purchases of Class A shares
of the Fund and other OppenheimerFunds with Class A shares of
OppenheimerFunds you previously purchased subject to a sales charge,
provided that you still hold your investment in one of the
OppenheimerFunds. The value of those shares will be based on the greater
of the amount you paid for the shares or their current value (at offering
price). The OppenheimerFunds are listed in "Reduced Sales Charges" in the
Statement of Additional Information, or a list can be obtained from the
Transfer Agent. The reduced sales charge will apply only to current
purchases and must be requested when you buy your shares.

-- Letter of Intent. Under a Letter of Intent, you may purchase
Class A shares of the Fund and other OppenheimerFunds during a 13-month
period at the reduced sales charge rate that applies to the aggregate
amount of the intended purchases, including purchases made up to 90 days
before the date of the Letter. More information is contained in the
Application and in "Reduced Sales Charges" in the Statement of Additional
Information.

-- Waivers of Class A Sales Charges. No sales charge is imposed on
sales of Class A shares to the following investors: (1) the Manager or its
affiliates; (2) present or former officers, directors, trustees and
employees (and their "immediate families" as defined in "Reduced Sales
Charges" in the Statement of Additional Information) of the Fund, the
Manager and its affiliates, and retirement plans established by them for
their employees; (3) registered management investment companies, or
separate accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose; (4) 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; (5)
employees and registered representatives (and their spouses) of dealers
or brokers described above or financial institutions that have entered
into sales arrangements with such dealers or brokers (and are identified
to the Distributor) or with the Distributor; the purchaser must certify
to the Distributor at the time of purchase that the purchase is for the
purchaser's own account (or for the benefit of such employee's spouse or
minor children); (6) dealers, brokers or registered investment advisers
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.

Additionally, no sales charge is imposed on shares that are (a)
issued in plans of reorganization, such as mergers, asset acquisitions and
exchange offers, to which the Fund is a party, or (b) purchased by the
reinvestment of loan repayments by a participant in a retirement plan for
which the Manager or its affiliates act as sponsor, or (c) purchased by
the reinvestment of dividends or other distributions reinvested from the
Fund or other OppenheimerFunds (other than Oppenheimer Cash Reserves) or
unit investment trusts for which reinvestment arrangements have been made
with the Distributor. There is a further discussion of this policy in
"Reduced Sales Charges" in the Statement of Additional Information.

The Class A contingent deferred sales charge is also waived if shares
are redeemed in the following cases: (1) retirement distributions or loans
to participants or beneficiaries from qualified retirement plans, deferred
compensation plans or other employee benefit plans ("Retirement Plans"),
(2) returns of excess contributions made to Retirement Plans, (3)
Automatic Withdrawal Plan payments that are limited to no more than 12%
of the original account value annually, and (4) involuntary redemptions
of shares by operation of law or under the procedures set forth in the
Fund's Articles of Incorporation or adopted by the Board of Directors.

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

Services to be provided include, among others, answering customer
inquiries about the Fund, assisting in establishing and maintaining
accounts in the Fund, making the Fund's investment plans available and
providing other services at the request of the Fund or the Distributor.
Payments are made by the Distributor quarterly at an annual rate not to
exceed 0.25% of the average annual net assets of Class A shares held in
accounts of the dealer or its customers. The payments under the Plan
increase the annual expenses of Class A shares. For more details, please
refer to "Distribution and Service Plans" in the Statement of Additional
Information.

Class B Shares. Class B shares are sold at net asset value per share
without an initial sales charge. However, if Class B shares are redeemed
within 6 years of their purchase, a contingent deferred sales charge will
be deducted from the redemption proceeds. That sales charge will not
apply to shares purchased by the reinvestment of dividends or capital
gains distributions. The charge will be assessed on the lesser of the net
asset value of the shares at the time of redemption or the original
purchase price. The contingent deferred sales charge is not imposed on the
amount of your account value represented by the increase in net asset
value over the initial purchase price (including increases due to the
reinvestment of dividends and capital gains distributions). The Class B
contingent deferred sales charge is paid to the Distributor to reimburse
its expenses of providing distribution-related services to the Fund in
connection with the sale of Class B shares.

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

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

Years Since
Beginning of
Month in which Contingent Deferred Sales Charge
Purchase Order On Redemptions in That Year
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. All purchases are considered
to have been made on the first regular business day of the month in which
the purchase was made.

-- Waivers of Class B Sales Charge. The Class B contingent deferred
sales charge will be waived if the shareholder requests it for any of the
following redemptions: (1) distributions to participants or beneficiaries
from Retirement Plans, if the distributions are made (a) under an
Automatic Withdrawal Plan after the participant reaches age 59-1/2, as
long as the payments are no more than 10% of the account value annually
(measured from the date the Transfer Agent receives the request), or (b)
following the death or disability (as defined in the Internal Revenue
Code) of the participant or beneficiary; (2) redemptions from accounts
other than Retirement Plans following the death or disability of the
shareholder (you must provide evidence of a determination of disability
by the Social Security Administration), and (3) returns of excess
contributions to Retirement Plans.

The contingent deferred sales charge is also waived on Class B shares
in the following cases: (i) shares sold to the Manager or its affiliates;
(ii) 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; (iii) shares issued in plans of
reorganization to which the Fund is a party; and (iv) shares redeemed in
involuntary redemptions as described above. Further details about this
policy are contained in "Reduced Sales Charges" in the Statement of
Additional Information.

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

-- Distribution and Service Plan for Class B Shares. The Fund has
adopted a Distribution and Service Plan for Class B shares to compensate
the Distributor for its services and costs in distributing Class B shares
and servicing accounts. Under the Plan, the Fund pays the Distributor an
annual "asset-based sales charge" of 0.75% per year on Class B shares that
are outstanding for 6 years or less. The Distributor also receives a
service fee of 0.25% per year. Both fees are computed on the average
annual net assets of Class B shares, determined as of the close of each
regular business day. The asset-based sales charge allows investors to buy
Class B shares without a front-end sales charge while allowing the
Distributor to compensate dealers that sell Class B shares.

The Distributor uses the service fee to compensate dealers for
providing personal service for accounts that hold Class B shares. Those
services are similar to those provided under the Class A Service Plan,
described above. The asset-based sales charge and service fees increase
Class B expenses by up to 1.00% of average net assets per year.

The Distributor pays the 0.25% service fee to dealers in advance for
the first year after Class B shares have been sold by the dealer. After
the shares have been held for a year, the Distributor pays the fee on a
quarterly basis. The Distributor pays sales commissions of 3.75% of the
purchase price to dealers from its own resources at the time of sale. The
Distributor retains the asset-based sales charge to recoup the sales
commissions it pays, the advances of service fee payments it makes, and
its financing costs.

Because the Distributor's actual expenses in selling Class B shares
may be more than the payments it receives from contingent deferred sales
charges collected on redeemed shares and from the Fund under the
Distribution and Service Plan for Class B shares, those expenses may be
carried over and paid in future years. If the Plan is terminated by the
Fund, the Board of Directors may allow the Fund to continue payments of
the asset-based sales charge to the Distributor for certain expenses it
incurred before the Plan was terminated.

Class C Shares. Class C shares are sold at net asset value per share
without an initial sales charge. However, if Class C shares are redeemed
within 12 months of their purchase, a contingent deferred sales charge of
1.0% will be deducted from the redemption proceeds. That sales charge
will not apply to shares purchased by the reinvestment of dividends or
capital gains distributions. The charge will be assessed on the lesser of
the net asset value of the shares at the time of redemption or the
original purchase price. The contingent deferred sales charge is not
imposed on the amount of your account value represented by the increase
in net asset value over the initial purchase price (including increases
due to the reinvestment of dividends and capital gains distributions). The
Class C contingent deferred sales charge is paid to the Distributor to
reimburse its expenses of providing distribution-related services to the
Fund in connection with the sale of Class C shares.

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

-- Waivers of Class C Sales Charge. The Class C contingent deferred
sales charge will be waived if the shareholder requests it for any of the
following redemptions: (1) distributions to participants or beneficiaries
from Retirement Plans, if the distributions are made (a) under an
Automatic Withdrawal Plan after the participant reaches age 59-1/2, as
long as the payments are no more than 10% of the account value annually
(measured from the date the Transfer Agent receives the request), or (b)
following the death or disability (as defined in the Internal Revenue
Code) of the participant or beneficiary; (2) redemptions from accounts
other than Retirement Plans following the death or disability of the
shareholder (you must provide evidence of a determination of disability
by the Social Security Administration), and (3) returns of excess
contributions to Retirement Plans.

The contingent deferred sales charge is also waived on Class C shares
in the following cases: (i) shares sold to the Manager or its affiliates;
(ii) 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; (iii) shares issued in plans of
reorganization to which the Fund is a party; and (iv) shares redeemed in
involuntary redemptions as described above. Further details about this
policy are contained in "Reduced Sales Charges" in the Statement of
Additional Information.

-- Distribution and Service Plan for Class C Shares. The Fund has
adopted a Distribution and Service Plan for Class C shares to compensate
the Distributor for its services and costs in distributing Class C shares
and servicing accounts. Under the Plan, the Fund pays the Distributor an
annual "asset-based sales charge" of 0.75% per year on Class C shares.
The Distributor also receives a service fee of 0.25% per year. Both fees
are computed on the average annual net assets of Class C shares,
determined as of the close of each regular business day. The asset-based
sales charge allows investors to buy Class C shares without a front-end
sales charge while allowing the Distributor to compensate dealers that
sell Class C shares.

The Distributor uses the service fee to compensate dealers for
providing personal services for accounts that hold Class C shares. Those
services are similar to those provided under the Class A Service Plan,
described above. The asset-based sales charge and service fees increase
Class C expenses by up to 1.00% of average net assets per year.

The Distributor pays the 0.25% service fee to dealers in advance for
the first year after Class C shares have been sold by the dealer. After
the shares have been held for a year, the Distributor pays the fee on a
quarterly basis. The Distributor pays sales commissions of 0.75% of the
purchase price to dealers from its own resources at the time of sale. The
Distributor retains the asset-based sales charge during the first year
shares are outstanding to recoup the sales commissions it pays, the
advances of service fee payments it makes, and its financing costs. The
Distributor plans to pay the asset-based sales charge as an ongoing
commission to the dealer on Class C shares that have been outstanding for
a year or more.

Because the Distributor's actual expenses in selling Class C shares
may be more than the payments it receives from contingent deferred sales
charges collected on redeemed shares and from the Fund under the
Distribution and Service Plan for Class C shares, those expenses may be
carried over and paid in future years. If the Plan is terminated by the
Fund, the Board of Directors may allow the Fund to continue payments of
the asset-based sales charge to the Distributor for certain expenses it
incurred before the plan was terminated.

Special Investor Services

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

AccountLink privileges must be requested on the Application you use
to buy shares, or on your dealer's settlement instructions if you buy your
shares through your dealer. After your account is established, you can
request AccountLink privileges on 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.

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

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

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

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

-- 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.

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:

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

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

Reinvestment Privilege. If you redeem some or all of your Fund shares,
you have up to 6 months to reinvest all or part of the redemption proceeds
in Class A shares of the Fund or other OppenheimerFunds without paying a
sales charge. This privilege applies to Class A shares that you sell, and
Class B or Class C shares on which you paid a contingent deferred sales
charge when you redeemed them. You must be sure to ask the Distributor for
this privilege when you send your payment. Please consult the Statement
of Additional Information for more details.

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

-- Individual Retirement Accounts including rollover IRAs, for
individuals and their spouses
-- 403(b)(7) Custodial Plans for employees of eligible tax-exempt
organizations, such as schools, hospitals and charitable organizations
-- SEP-IRAs (Simplified Employee Pension Plans) for small business
owners or people with income from self-employment
-- Pension and Profit-Sharing Plans for self-employed persons and
small business owners

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

How to Sell Shares

You can arrange to take money out of your account on any regular
business day by selling (redeeming) some or all of your shares. Your
shares will be sold at the next net asset value calculated after your
order is received and accepted by the Transfer Agent. The Fund offers you
a number of ways to sell your shares: in writing or by telephone. You can
also set up Automatic Withdrawal Plans to redeem shares on a regular
basis, as described above. If you have questions about any of these
procedures, and especially if you are redeeming shares in a special
situation, such as due to the death of the owner, or from a retirement
plan, please call the Transfer Agent first, at 1-800-525-7048, for
assistance.

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

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

-- You wish to redeem more than $50,000 worth of shares and receive
a check
-- The check is not payable to all shareholders listed on the account
statement
-- The check is not sent to the address of record on your statement
-- Shares are being transferred to a Fund account with a different
owner or name
-- Shares are redeemed by someone other than the owners (such as an
Executor)

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

Selling Shares by Mail. Write a "letter of instructions" that includes:

-- Your name
-- The Fund's name
-- Your Fund account number (from your statement)
-- The dollar amount or number of shares to be redeemed
-- Any special payment instructions
-- Any share certificates for the shares you are selling, and
-- Any special requirements or documents requested by the Transfer
Agent to assure proper authorization of the person asking to sell shares.

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

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

Selling Shares by Telephone. You and your dealer representative of record
may also sell your shares by telephone. To receive the redemption price
on a regular business day, your call must be received by the Transfer
Agent by 4:00 P.M. You may not redeem shares held in an OppenheimerFunds
retirement plan 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, or, if you have linked your Fund account to your bank
account on AccountLink, you may have the proceeds wired to that account.

-- Telephone Redemptions Paid by Check. Up to $50,000 may be redeemed
by telephone, once in each 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. This service is not available within 30 days of changing the
address on an account.

-- Telephone Redemptions Through AccountLink. There are no dollar
limits on telephone redemption proceeds sent to a bank account designated
when you establish AccountLink. Normally the ACH wire 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 wired.

How to Exchange Shares

Shares of the Fund may be exchanged for shares of certain
OppenheimerFunds at net asset value per share at the time of exchange,
without sales charge. A $5 service fee will be deducted from the fund
account you are exchanging into to help defray administrative costs. That
charge is waived for automated exchanges between already established
accounts on PhoneLink described below. To exchange shares, you must meet
several conditions:

-- Shares of the fund selected for exchange must be available for
sale in your state of residence
-- The prospectuses of this Fund and the fund whose shares you want
to buy must offer the exchange privilege
-- You must hold the shares you buy when you establish your account
for at least 7 days before you can exchange them; after the account is
open 7 days, you can exchange shares every regular business day
-- You must meet the minimum purchase requirements for the fund you
purchase by exchange
-- Before exchanging into a fund, you should obtain and read its
prospectus

Shares of a particular class may be exchanged only for shares of the
same class in the other OppenheimerFunds. For example, you can exchange
Class A shares of this Fund only for Class A shares of another fund. At
present, not all of the OppenheimerFunds offer the same classes of shares.
If a fund has only one class of shares that does not have a class
designation, they are "Class A" shares for exchange purposes. In some
cases, sales charges may be imposed on exchange transactions. Certain
OppenheimerFunds offer Class A shares and either Class B or Class C
shares, and a list can be obtained by calling the Distributor at 1-800-
525-7048. Please refer to "How to Exchange Shares" in the Statement of
Additional Information for more details.

Exchanges may be requested in writing or by telephone:

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

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

You can find a list of OppenheimerFunds currently available for
exchanges in the Statement of Additional Information or by calling the
Distributor at 1-800-525-7048. Exchanges of shares involve a redemption
of the shares of the fund you own and a purchase of shares of the other
fund.

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 by 4:00 P.M. that
is in proper form, but either fund may delay the purchase of shares of the
fund you are exchanging into if it determines it would be disadvantaged
by a same-day transfer of the proceeds to buy shares. For example, the
receipt of multiple exchange requests from a dealer in a "market-timing"
strategy might require the disposition of securities at a time or price
disadvantageous to the Fund.

-- Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange request
that will disadvantage it, or to refuse multiple exchange requests
submitted by a shareholder or dealer.

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

-- If the Transfer Agent cannot exchange all the shares you request
because of a restriction cited above, only the shares eligible for
exchange will be exchanged.

Shareholder Account Rules and Policies

-- Net Asset Value Per Share is determined for each class of shares
as of 4:00 P.M. each day The New York Stock Exchange is open by dividing
the value of the Fund's net assets attributable to a class by the number
of shares of that class that are outstanding. The Corporation's Board of
Directors has established procedures to value the Fund's securities to
determine net asset value. In general, securities values are based on
market value. There are special procedures for valuing illiquid and
restricted securities, obligations for which market values cannot be
readily obtained, and call options and hedging instruments. These
procedures are described more completely in the Statement of Additional
Information.

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

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

-- The Transfer Agent will record any telephone calls to verify data
concerning transactions and has adopted other procedures to confirm that
telephone instructions are genuine, by requiring callers to provide tax
identification numbers and other account data or by using PINs, and by
confirming such transactions in writing. If the Transfer Agent does not
use reasonable procedures it may be liable for losses due to unauthorized
transactions, but otherwise it will not be liable for losses or expenses
arising out of telephone instructions reasonably believed to be genuine.
If you are unable to reach the Transfer Agent during periods of unusual
market activity, you may not be able to complete a telephone transaction
and should consider placing your order by mail.

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

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

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

-- Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the shareholder
under the redemption procedures described above) within 7 days after the
Transfer Agent receives redemption instructions in proper form, except
under unusual circumstances determined by the Securities and Exchange
Commission delaying or suspending such payments. 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 15 days from the date the shares
were purchased. That delay may be avoided if you purchase shares by
certified check or arrange with your bank to provide telephone or written
assurance to the Transfer Agent that your purchase payment has cleared.

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

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

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

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

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

Dividends, Capital Gains and Taxes

Dividends. The Fund declares dividends separately for Class A, Class B and
Class C shares from net investment income on a quarterly basis and
normally pays those dividends to shareholders in March, June, September
and December, but the Board of Directors can change that date. Dividends
paid on Class A shares generally are expected to be higher than for Class
B and Class C shares because expenses allocable to Class B and Class C
shares will generally be higher.

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

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

-- Reinvest All Distributions in the Fund. You can elect to reinvest
all dividends and long-term capital gains distributions in additional
shares of the Fund.
-- Reinvest Long-Term Capital Gains Only. You can elect to reinvest
long-term capital gains in the Fund while receiving dividends by check or
sent to your bank account on AccountLink.
-- Receive All Distributions in Cash. You can elect to receive a
check for all dividends and long-term capital gains distributions or have
them sent to your bank on AccountLink.
-- Reinvest Your Distributions in Another OppenheimerFunds Account.
You can reinvest all distributions in another OppenheimerFunds account you
have established.

Taxes. If your account is not a tax-deferred retirement account, you
should be aware of the following tax implications of investing in the
Fund. Long-term capital gains are taxable as long-term capital gains when
distributed to shareholders. Dividends paid from short-term capital gains
and net investment income are taxable as ordinary income. Distributions
are subject to federal income tax and may be subject to state or local
taxes. Your distributions are taxable when paid, whether you reinvest
them in additional shares or take them in cash. Every year the Fund will
send you and the IRS a statement showing the amount of each taxable
distribution you received in the previous year.

-- "Buying a Dividend": When a fund goes ex-dividend, its share price
is reduced by the amount of the distribution. If you buy shares on or
just before the ex-dividend date, or just before the Fund declares a
capital gains distribution, you will pay the full price for the shares and
then receive a portion of the price back as a taxable dividend or capital
gain.

-- Taxes on Transactions: Share redemptions, including redemptions
for exchanges, are subject to capital gains tax. A capital gain or loss
is the difference between the price you paid for the shares and the price
you received when you sold them.

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

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

<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER MAIN STREET INCOME & GROWTH FUND

Graphic material included in Prospectus of Oppenheimer Main Street
Income & Growth Fund: "Comparison of Total Return of Oppenheimer Main
Street Income & Growth Fund with the S&P 500 Index and the Lipper Growth
& Income Fund Index - Change in Value of a $10,000 Hypothetical
Investment"

A linear graph will be included in the Prospectus of Oppenheimer Main
Street Income & Growth Fund (the "Fund") depicting the initial account
value and subsequent account value of a hypothetical $10,000 investment
in the Fund. In the case of the Fund's Class A shares, that graph will
cover the period from February 3, 1988 (commencement of operations)
through June 30, 1994 and in the case of the Fund's Class C shares will
cover the period from the inception of the class (December 1, 1993)
through June 30, 1994. Class B shares were not publicly offered during
the fiscal year ended 6/30/94. Accordingly, no information on Class B
shares is presented in the table below. The graph will compare such
values with hypothetical $10,000 investments over the same time periods
in the S&P 500 Index and the Lipper Growth & Income Fund Index. Set forth
below are the relevant data points that will appear on the linear graph.
Additional information with respect to the foregoing, including a
description of the S&P 500 Index and the Lipper Growth & Income Index, is
set forth in the Prospectus under "Performance of the Fund - Comparing the
Fund's Performance to the Market."

<TABLE>
<CAPTION>
Oppenheimer
Main Street Lipper Growth
Fiscal Year Income & S&P 500 & Income Fund
(Period) Ended Growth Fund A Index Index
<S> <C> <C> <C>
2/3/88 $ 9,425 $10,000 $10,000
6/30/88 $ 9,955 $10,815 $11,082
6/30/89 $11,859 $13,034 $13,039
6/30/90 $12,934 $15,178 $14,226
6/30/91 $14,304 $16,297 $15,071
6/30/92 $19,952 $18,479 $17,212
6/30/93 $29,205 $20,994 $20,080
6/30/94 $33,393 $21,288 $20,906
</TABLE>

<TABLE>
<CAPTION>
Oppenheimer
Main Street Lipper Growth
Fiscal Year Income & S&P 500 & Income Fund
(Period) Ended Growth Fund C Index Index
<S> <C> <C> <C>
12/1/93 $10,000 $10,000 $10,000
6/30/94 $ 9,804 $ 9,778 $ 9,970

<FN>
(1)Class C shares of the Fund were first publicly offered on December 1,
1993.

</TABLE>

<PAGE>

Oppenheimer Main Street Income & Growth Fund
3410 South Galena Street
Denver, Colorado 80231
1-800-525-7048

Investment Adviser
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048

Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048

Transfer and Shareholder Servicing Agent O P P E N H E I M E R
Oppenheimer Shareholder Services
P.O. Box 5270 Main Street
Denver, Colorado 80217 Income &
1-800-525-7048 Growth Fund

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

Independent Auditors
Deloitte & Touche LLP
1560 Broadway
Denver, Colorado 80202

Legal Counsel
Myer, Swanson & Adams, P.C.
1600 Broadway
Denver, Colorado 80202 Prospectus
Effective October 1, 1994

No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in
this Prospectus or the Additional Statement, and if given or made, such
information and representation must not be relied upon as having been
authorized by the Corporation, Oppenheimer Management Corporation,
Oppenheimer Funds Distributor, Inc., or any affiliate thereof. This
Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any of the securities offered hereby in any state to any
person to whom it is unlawful to make such offer in such state.

OppenheimerFunds

PR701 (10/94) Printed on recycled paper

<PAGE>

Oppenheimer Main Street Income & Growth Fund

3410 South Galena Street, Denver, Colorado 80231
1-800-525-7048

Statement of Additional Information dated October 1, 1994

This Statement of Additional Information of Oppenheimer Main Street
Income & Growth Fund is not a Prospectus. This document contains
additional information about the Fund and supplements information in the
Prospectus dated October 1, 1994. It should be read together with the
Prospectus, which may be obtained upon written request to the Fund's
Transfer Agent, Oppenheimer Shareholder Services, at P.O. Box 5270,
Denver, Colorado 80217, or by calling the Transfer Agent at the toll-free
number shown above.
<TABLE>
<CAPTION>
Contents
<S> <C>
Page
About the Fund
Investment Objective and Policies 2
Investment Policies and Strategies 2
Other Investment Techniques and Strategies 3
Other Investment Restrictions 12
How the Fund is Managed 13
Organization and History 13
Directors and Officers of the Corporation 13
The Manager and Its Affiliates 16
Brokerage Policies of the Fund 17
Performance of the Fund 19
Distribution and Service Plans 21
About Your Account
How To Buy Shares 23
How To Sell Shares 28
How To Exchange Shares 32
Dividends, Capital Gains and Taxes 34
Additional Information About the Fund 35
Financial Information About the Fund
Independent Auditors' Report 36
Financial Statements 37
Appendix A: Description of Ratings A-1

</TABLE>

<PAGE>

ABOUT THE FUND

Investment Objective and Policies

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

-- Foreign Securities. "Foreign securities" include equity and debt
securities of companies organized under the laws of countries other than
the United States and debt securities of foreign governments that are
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.

Investing in foreign securities offer potential benefits not
available from investing solely in securities of domestic issuers,
including the opportunity to invest in foreign issuers that appear to
offer growth potential, or in foreign countries with economic policies or
business cycles different from those of the U.S., or to reduce
fluctuations in portfolio value by taking advantage of foreign stock
markets that do not move in a manner parallel to U.S. markets. If the
Fund's portfolio securities are held abroad, the countries in which they
may be held and the sub-custodians holding them must be approved by the
Corporation's Board of Directors under applicable rules of the Securities
and Exchange Commission.

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

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

-- Convertible Securities. While convertible securities are a form
of debt security in many cases, their conversion feature (allowing
conversion into equity securities) causes them to be regarded more as
"equity equivalents" so that the rating assigned to the security has less
impact on the investment decision than in the case of non-convertible
fixed income securities. To determine whether convertible securities
should be regarded as "equity equivalents," the Manager examines the
following factors: (1) whether, at the option of the investor, the
convertible security can be exchanged for a fixed number of shares of
common stock of the issuer, (2) whether the issuer of the convertible
securities has restated its earnings per share of common stock on a fully
diluted basis (considering the effect of conversion of the convertible
securities), and (3) the extent to which the convertible security may be
a defensive "equity substitute," providing the ability to participate in
any appreciation in the price of common stock.

Other Investment Techniques and Strategies

-- When-Issued and Delayed Delivery Transactions. As stated in the
Prospectus, the Fund may invest in securities on a "when-issued" or
"delayed delivery" basis. Payment for and delivery of the securities
generally settles within 45 days of the date the offer is accepted. The
purchase price and yield are fixed at the time the buyer enters into the
commitment. 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. However, the Fund intends to be as fully invested as
possible and will not invest in when-issued securities if its income or
net asset value will be materially adversely affected. At the time the
Fund makes the commitment to purchase a security on a when-issued basis,
it will record the transaction on its books and reflect the value of the
security in determining its net asset value. It will also segregate cash
or other high quality liquid securities equal in value to the commitment
for the when-issued securities. While when-issued securities may be sold
prior to settlement date, the Fund intends to acquire the securities upon
settlement unless a prior sale appears desirable for investment reasons.
There is a risk that the yield available in the market when delivery
occurs may be higher than the yield on the security acquired.

-- Repurchase Agreements. The Fund may acquire securities subject to
repurchase agreements for liquidity purposes to meet anticipated
redemptions, or pending the investment of the proceeds from sales of Fund
shares, or pending the settlement of purchases of portfolio securities.

In a repurchase transaction, the Fund acquires a security from, and
simultaneously resells it to, an approved vendor. An "approved vendor"
is a U.S. commercial bank or the U.S. branch of a foreign bank or a
broker-dealer which has been designated a primary dealer in government
securities, which must meet credit requirements set by the Corporation's
Board of Directors from time to time. The resale price exceeds the
purchase price by an amount that reflects an agreed-upon interest rate
effective for the period during which the repurchase agreement is in
effect. The majority of these transactions run from day to day, and
delivery pursuant to the resale typically will occur within one to five
days of the purchase. Repurchase agreements are considered "loans" under
the Investment Company Act, 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. Additionally, the Manager will impose creditworthiness
requirements to confirm that the vendor is financially sound and will
continuously monitor the collateral's value.

-- Short Sales Against-the-Box. In this type of short sale, while
the short position is open, the Fund must own an equal amount of the
securities sold short, or by virtue of ownership of other securities have
the right, without payment of further consideration, to obtain an equal
amount of the securities sold short. Short sales against-the-box may be
made to defer, for Federal income tax purposes, recognition of gain or
loss on the sale of securities "in the box" until the short position is
closed out.

-- Rights and Warrants. 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.

-- Investing in Small, Unseasoned Companies. The securities of
small, unseasoned companies may have a limited trading market, which may
adversely affect the Fund's ability to dispose of them and can reduce the
price the Fund might be able to obtain for them. If other investment
companies and investors that invest in this type of securities trade the
same securities when the Fund attempts to dispose of its holdings, the
Fund may receive lower prices than might otherwise be obtained, because
of the thinner market for such securities.

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

The Fund has percentage 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 pursuant to Rule
144A under the Securities Act of 1933, provided that those securities have
been determined to be liquid by the Board of Directors of the Corporation
or 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 holding
of that security may be deemed to be illiquid.

-- Loans of Portfolio Securities. The Fund may lend its portfolio
securities subject to the restrictions stated in the Prospectus. Under
applicable regulatory requirements (which are subject to change), the loan
collateral on each business day must at least equal the value of the
loaned securities and must consist of cash, bank letters of credit or
securities of the U.S. Government (or its agencies or instrumentalities).
To be acceptable as collateral, letters of credit must obligate a bank to
pay amounts demanded by the Fund if the demand meets the terms of the
letter. Such terms and the issuing bank must be satisfactory to the Fund.
When it lends securities, the Fund receives amounts equal to the dividends
or interest on loaned securities and also receives one or more of (a)
negotiated loan fees, (b) interest on securities used as collateral, and
(c) interest on 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.
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.

-- Writing Covered Calls. As described in the Prospectus, the Fund
may write covered calls. When the Fund writes a call, it receives a
premium and agrees to sell the underlying security to a purchaser of a
corresponding call on the same security during the call period (usually
not more than nine months) at a fixed exercise price (which may differ
from the market price of the underlying security), regardless of market
price changes during the call period. The Fund has retained the risk of
loss should the price of the underlying security decline during the call
period, which may be offset to some extent by the premium.

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

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

-- Hedging With Options and Futures Contracts. The Fund may use
Hedging Instruments for the purposes described in the Prospectus. When
hedging to attempt to protect against declines in the market value of the
Fund's portfolio, to permit the Fund to retain unrealized gains in the
value of portfolio securities which have appreciated, or to facilitate
selling securities for investment reasons, the Fund may: (i) sell
Futures, (ii) buy puts on such Futures or securities, or (iii) write
covered calls on securities or Futures. When hedging to permit the Fund
to establish a position in the securities market as a temporary substitute
for purchasing particular debt or equity securities (which the Fund will
normally purchase, and then terminate the hedging position), the Fund may:
(i) buy Futures, or (ii) buy calls on such Futures or on securities.
Normally, the Fund would then purchase the securities and terminate the
hedging portion.

The Fund's strategy of hedging with Futures and options on Futures
will be incidental to the Fund's activities on the underlying cash market.
In the future, the Fund may employ hedging instruments and strategies that
are not presently contemplated but which may be developed, to the extent
such investment methods are consistent with the Fund's investment
objective, and are legally permissible and disclosed in the Prospectus.
Additional information about the Hedging Instruments the Fund may use is
provided below.

-- Purchasing Calls and Puts. The Fund may purchase calls to protect
against the possibility that the Fund's portfolio will not participate in
an anticipated rise in the securities market. When the Fund purchases a
call (other than in a closing purchase transaction), it pays a premium and
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 the call is sold at a
profit or if, during the call period, the market price of the underlying
investment is above the sum of the call price plus the transaction costs
and the premium paid for the call and the call is exercised. If the call
is not exercised or sold (whether or not at a profit), it will become
worthless at its expiration date and the Fund will lose its premium
payment and the right to purchase the underlying investment. When the
Fund purchases a call or put (discussed below) 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.

When the Fund purchases a put, it pays a premium and, except as to
puts on indices, has the right to sell the underlying investment to a
seller of a put on a corresponding investment during the put period at a
fixed exercise price. Buying a put on securities or Futures the Fund owns
enables the Fund to attempt to protect itself during the put period
against a decline in the value of the underlying investment below the
exercise price by selling the underlying investment at the exercise price
to a seller of a corresponding put. If the market price of the underlying
investment is equal to or above the exercise price and, as a result, the
put is not exercised or resold, the put will become worthless at its
expiration date and the Fund will lose its premium payment and the right
to sell the underlying investment; the put may, however, be sold prior to
expiration (whether or not a profit).

-- Writing Put Options. A put option on securities gives the
purchaser the right to sell, and the writer the obligation to buy, the
underlying investment at the exercise price during the option period. The
Fund will not write puts if, as a result, more than 50% of the Fund's net
assets would be required to be segregated to cover such put options.
Writing a put covered by segregated liquid assets equal to the exercise
price of the put has the same economic effect to the Fund as writing a
covered call. The premium the Fund receives from writing a put option
represents a profit, as long as the price of the underlying investment
remains equal to or above the exercise price. However, the Fund has also
assumed the obligation during the option period to buy the underlying
investment from the buyer of the put at the exercise price, even though
the value of the investment may fall below the exercise price less
transaction costs incurred. If the put expires unexercised, the Fund (as
the writer of the put) 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, which will usually exceed the market value of the
investment at that time. In that case, the Fund may incur a loss, equal
to the sum of the sale price of the underlying investment and the premium
received minus the sum of the exercise price and any transaction costs
incurred.

When writing put options on securities, to secure its obligation to
pay for the underlying security, the Fund will deposit in escrow liquid
assets with a value equal to or greater than the exercise price of the
underlying securities. The Fund therefore foregoes the opportunity of
investing the segregated assets or writing calls against those assets.
As long as the obligation of the Fund as the put writer continues, it may
be assigned an exercise notice by the broker-dealer through whom such
option was sold, requiring the Fund to take delivery of the underlying
security against payment of the exercise price. The Fund has no control
over when it may be required to purchase the underlying security, since
it may be assigned an exercise notice at any time prior to the termination
of its obligation as the writer of the put. This obligation terminates
upon expiration of the put, or such earlier time at which the Fund effects
a closing purchase transaction by purchasing a put of the same series as
that previously sold. Once the Fund has been assigned an exercise notice,
it is thereafter not allowed to effect a closing purchase transaction.

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

-- Interest Rate Futures and Stock Index Futures. Stock Index
Futures require settlement in cash equal in amount to a specified dollar
amount multiplied by the difference between the index value on the last
trading day of the future and the price at which the future was originally
struck. No physical delivery of the stocks in the index is made.
Interest Rate Futures obligate the seller to deliver (and the purchaser
to take) a specific type of debt security or cash at a specified future
date for a fixed price. That obligation may be satisfied by actual
delivery of that security or cash. However, all Futures are generally
terminated by entering into an offsetting contract. No price is paid or
received upon the purchase or sale of an Interest Rate Future or Stock
Index 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"). The initial margin will be deposited
with the Fund's Custodian in an account registered in the futures broker's
name; however, the futures broker can gain access to that account only
under specified conditions. As the Future is marked to market to reflect
changes in its market value, subsequent margin payments, called variation
margin, will be paid to or by the futures broker on a daily basis. Prior
to expiration of the Future, if the Fund elects to close out its position
by taking an opposite position, a final determination of variation margin
is made, additional cash is required to be paid by or released to the
Fund, and any loss or gain is realized for tax purposes. Although
Interest Rate Futures by their terms call for settlement by delivery or
acquisition of debt securities, in most cases the obligation is fulfilled
by closing out the position. Stock Index Futures are similar except that
settlement is made in cash, and net gain or loss on options on such
Futures depends on price movements of the securities included in the
index. All futures transactions are effected through a clearinghouse
associated with the exchange on which the contracts are traded.

-- Forward Contracts. A Forward Contract involves bilateral
obligations of one party to purchase, and another party to sell, a
specific currency at a future date (which may be any fixed number of days
from the date of the contract agreed upon by the parties), at a price set
at the time the contract is entered into. These contracts are traded in
the interbank market conducted directly between 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 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.
In addition, although Forward Contracts limit the risk of loss due to a
decline in the value of the hedged currencies, at the same time they limit
any potential gain that might result should the value of the currencies
increase.

The Fund may enter into Forward Contracts with respect to specific
transactions. For example, when the Fund enters into a contract for the
purchase or sale of a security denominated in a foreign currency, or when
the Fund anticipates receipt of dividend payments in a foreign currency,
the Fund may desire to "lock-in" the U.S. dollar price of the security or
the U.S. dollar equivalent of such payment by entering into a Forward
Contract, for a fixed amount of U.S. dollars per unit of foreign currency,
for the purchase or sale of the amount of foreign currency involved in the
underlying transaction. The Fund will thereby be able to protect itself
against a possible loss resulting from an adverse change in the
relationship between 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 such payments are made or
received.

The Fund may also use Forward Contracts to lock in the U.S. dollar
value of portfolio positions ("position hedge"). In a position hedge, for
example, when the Fund believes that foreign currency may suffer a
substantial decline against the U.S. dollar, it may enter into a forward
sale contract to sell an amount of that foreign currency approximating the
value of some or all of the Fund's portfolio securities denominated in
such foreign currency, or when the Fund believes that the U.S. dollar may
suffer a substantial decline against a foreign currency, it may enter into
a forward purchase contract to buy that foreign currency for a fixed
dollar amount. In this situation the Fund may, in the alternative, enter
into a forward contract to sell a different foreign currency for a fixed
U.S. dollar amount where the Fund believes that the U.S. dollar value of
the currency to be sold pursuant to the 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 ("cross-hedge").

The Fund's Custodian will place cash or U.S. Government securities
or other liquid high-quality debt securities in a separate account of the
Fund having a value equal to the aggregate amount of the Fund's
commitments under forward contracts entered into with respect to position
hedges and cross-hedges. If the value of the securities placed in a
separate account declines, additional cash or securities will be placed
in the account on a daily basis so that the value of the account will
equal the amount of the Fund's commitments with respect to such contracts.
As an alternative to maintaining all or part of the separate account, 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 or 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 contract price. Unanticipated changes in currency prices may
result in poorer overall performance for the Fund than if it had not
entered into such contracts.

The precise matching of the Forward Contract amounts and the value
of the securities involved will not generally be possible because the
future value of such securities in foreign currencies will change as a
consequence of market movements in the value of these securities between
the date the Forward Contract is entered into and the date it is sold.
Accordingly, it may be necessary for the Fund to purchase additional
foreign currency on the spot (i.e., cash) market (and bear the expense of
such purchase), if the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver and if a
decision is made to sell the security and make delivery of the foreign
currency. Conversely, it may be necessary to sell on the spot market some
of the foreign currency received upon the sale of the portfolio security
if its market value exceeds the amount of foreign currency the Fund is
obligated to deliver. 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 transactions
costs.

At or before the maturity of a Forward Contract requiring the Fund
to sell a currency, the Fund may either sell a portfolio security and use
the sale proceeds to make delivery of the currency or retain the security
and offset its contractual obligation to deliver the currency by
purchasing a second contract pursuant to which the Fund will obtain, on
the same maturity date, the same amount of the currency that it is
obligated to deliver. Similarly, the Fund may 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 to the extent the exchange rate
or rates between the currencies involved moved between the execution dates
of the first contract and offsetting contract.

The cost 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 fees or commissions are
involved. Because such contracts are not traded on an exchange, the
Manager must evaluate the credit and performance risk of each particular
counterparty under a 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 investors should be aware of the costs of currency
conversion. 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 may
offer to sell a foreign currency to the Fund at one rate, while offering
a lesser rate of exchange should the Fund desire to resell that currency
to the dealer.

-- Interest Rate Swap Transactions. Swap agreements entail both
interest rate risk and credit risk. There is a risk that, based on
movements of interest rates in the future, the payments made by the Fund
under a swap agreement will have been greater than those received by it.
Credit risk arises from the possibility that the counterparty will
default. If the counterparty to an interest rate swap defaults, the
Fund's loss will consist of the net amount of contractual interest
payments that the Fund has not yet received. The Manager will monitor the
creditworthiness of counterparties to the Fund's interest rate swap
transactions on an ongoing basis. The Fund will enter into swap
transactions with appropriate counterparties pursuant to master netting
agreements. A master netting agreement provides that all swaps done
between the Fund and that counterparty under the master agreement shall
be regarded as parts of an integral agreement. If on any date amounts are
payable in the same currency in respect of one or more swap transactions,
the net amount payable on that date in that currency shall be paid. In
addition, the master netting agreement may provide that if one party
defaults generally or on one swap, the counterparty may terminate the
swaps with that party. Under such agreements, if there is a default
resulting in a loss to one party, the measure of that party's damages is
calculated by reference to the average cost of a replacement swap with
respect to each swap (i.e., the mark-to-market value at the time of the
termination of each swap). The gains and losses on all swaps are then
netted, and the result is the counterparty's gain or loss on termination.
The termination of all swaps and the netting of gains and losses on
termination is generally referred to as "aggregation."

-- Additional Information About Hedging Instruments and Their Use.
The Corporation's Custodian, or a securities depository acting for the
Custodian, will act as the Fund's escrow agent, through the facilities of
the Options Clearing Corporation ("OCC"), as to the securities on which
the Fund has written options or as to other acceptable escrow securities,
so that no margin will be required for such transactions. OCC will
release the securities on the expiration of the option or upon the Fund's
entering into a closing transaction. An option position may be closed out
only on a market which provides secondary trading for options of the same
series, and there is no assurance that a liquid secondary market will
exist for any particular option.

When the Fund writes an over-the-counter ("OTC") option, it will
enter into an arrangement with a primary U.S. Government securities
dealer, which would establish a formula price at which the Fund would have
the absolute right to repurchase that OTC option. This formula price
would generally be based on a multiple of the premium received for the
option, plus the amount by which the option is exercisable below the
market price of the underlying security ("in-the-money"). For any OTC
option the Fund writes, it will treat as illiquid (for purposes of the
restriction on illiquid securities, stated in the Prospectus) the mark-to-
market value of any OTC option held by it. The SEC is evaluating the
general issue of whether or not OTC options should be considered as liquid
securities, and the procedure described above could be affected by the
outcome of that evaluation.

An option position may be closed out only on a market which provides
secondary trading for options of the same series, and there is no
assurance that a liquid secondary market will exist for any particular
option. The Fund's option activities may affect its turnover rate and
brokerage commissions. The exercise of calls written by the Fund may
cause the Fund to sell related portfolio securities, thus increasing its
turnover rate in a manner beyond the Fund's control. The exercise by the
Fund of puts on securities or Futures may cause the sale of related
investments, also increasing portfolio turnover. Although such exercise
is within the Fund's control, holding a put might cause the Fund to sell
the underlying investment for reasons which would not exist in the absence
of the put. The Fund will pay a brokerage commission each time it buys
or sells a call, a put or an underlying investment in connection with the
exercise of a put or call. Such commissions may be higher, on a relative
basis, than those which would apply to direct purchases or sales of the
underlying investments. Premiums paid for options are small in relation
to the market value of such investments and consequently, put and call
options offer large amounts of leverage. The leverage offered by trading
in options could result in the Fund's net asset value being more sensitive
to changes in the value of the underlying investment.

-- Regulatory Aspects of Hedging Instruments. The Fund must operate
within certain restrictions as to its long and short positions in Futures
and options thereon under a rule ("CFTC Rule") adopted by the Commodity
Futures Trading Commission ("CFTC") under the Commodity Exchange Act (the
"CEA"). The CEA excludes the Fund from registration with the CFTC as a
"commodity pool operator" (as defined under the CEA), if the Fund complies
with the CFTC Rule. Under these restrictions, the Fund will not, as to
any positions, whether long, short or a combination thereof, enter into
Futures transactions and options thereon for which the aggregate initial
margins and premiums exceed 5% of the fair market value of the Fund's
assets, with certain exclusions as defined in the CFTC Rule. Under the
restrictions, the Fund also must, as to its short positions, use Futures
and options thereon solely for "bona fide hedging purposes" within the
meaning and intent of the applicable provisions of the CEA.

Transactions in options by the Fund are subject to limitations
established by option exchanges governing the maximum number of options
that may be written or held by a single investor or group of investors
acting in concert, regardless of whether the options were written or
purchased on the same or different exchanges or are held in one or more
accounts or through one or more different exchanges or through one or more
brokers. Thus the number of options which the Fund may write or hold may
be affected by options written or held by other entities, including other
investment companies having the same 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.

Due to requirements under the Investment Company Act, when the Fund
purchases a Stock Index Future, the Fund will maintain, in a segregated
account or accounts with its Custodian, cash or readily-marketable, short-
term (maturing in one year or less) debt instruments in an amount equal
to the market value of the securities underlying such Future, less the
margin deposit applicable to it.

-- Tax Aspects of Covered Calls and Hedging Instruments. The Fund
intends to qualify as a "regulated investment company" under the Internal
Revenue Code (although it reserves the right not to qualify). That
qualification enables the Fund to "pass through" its income and realized
capital gains to shareholders without 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). One of the tests for
the Fund's qualification as a regulated investment company is that less
than 30% of its gross income must be derived from gains realized on the
sale of securities held for less than three months. To comply with this
30% cap, the Fund will limit the extent to which it engages in the
following activities, but will not be precluded from them: (i) selling
investments, including Futures, held for less than three months, whether
or not they were purchased on the exercise of a call held by the Fund;
(ii) purchasing options which expire in less than three months; (iii)
effecting closing transactions with respect to calls or puts written or
purchased less than three months previously; (iv) exercising puts or calls
held by the Fund for less than three months; or (v) writing calls on
investments held less than three months.

-- Risks of Hedging With Options and Futures. An option position may
be closed out only on a market that provides secondary trading for options
on the same series, and there is no assurance that a liquid secondary
market will exist for any particular option. In addition to the risks
discussed in the Prospectus and above, there is a risk in using short
hedging by: (i) selling Futures or (ii) purchasing puts on Futures to
attempt to protect against declines in the value of the Fund's portfolio
securities, that the prices of such Futures or the applicable index will
correlate imperfectly with the behavior of the cash (i.e., market value)
prices of the Fund's securities. The ordinary spreads between prices in
the cash and futures markets are subject to distortions, due to
differences in the natures of those markets. First, all participants in
the futures 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 risk of imperfect correlation increases as the composition of the
Fund's portfolio diverges from the securities included in the index
applicable to its Hedging Instruments. To compensate for the imperfect
correlation of movements in the price of the portfolio securities being
hedged and movements in the price of the Hedging Instruments, the Fund may
use Hedging Instruments in a greater dollar amount than the dollar amount
of portfolio securities being hedged if the historical volatility of the
prices of such portfolio securities being hedged is more than the
historical volatility of the applicable index. It is also possible that
where the Fund has used Hedging Instruments in a short hedge, the market
may advance and the value of portfolio securities held in the Fund's
portfolio may decline. If this occurred, the Fund would lose money on the
Hedging Instruments and also experience a decline in value in 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.

If the Fund uses 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 or securities, it is possible that the market may decline.
If the Fund then concludes not to invest in securities at that time
because of concerns as to possible further market decline or for other
reasons, it will realize a loss on the Hedging Instruments that is not
offset by a reduction in the price of the securities purchased. In the
future, the Fund may employ hedging instruments and strategies that are
not presently contemplated but which may be developed, to the extent such
investment methods are consistent with the Fund's investment objective,
are legally permissible and adequately disclosed.

Other Investment Restrictions

The Fund's most significant investment restrictions are set forth in
the Prospectus. There are additional investment restrictions that the
Fund must follow that are also fundamental policies. Fundamental policies
and the Fund's investment objective cannot be changed without the vote of
a "majority" of the Fund's outstanding voting securities. Under the
Investment Company Act, such a majority vote is defined as the vote of the
holders of the lesser of: (i) 67% or more of the shares present or
represented by proxy at such meeting, if the holders of more than 50% of
the outstanding shares are present or represented by proxy, or (ii) more
than 50% of the outstanding shares.

Under these additional restrictions, the Fund cannot: (1) invest in
interests in oil or gas exploration or development programs or in
commodities; however, the Fund may buy and sell any of the Hedging
Instruments that it may use as permitted by any of its other policies,
whether or not such Hedging Instrument is considered to be a commodity or
commodity contract; (2) invest in real estate or in interests in real
estate; however, the Fund may purchase securities of issuers holding real
estate or interests therein (including securities of real estate
investment trusts); (3) purchase securities on margin; however, the Fund
may make margin deposits in connection with the use of Hedging Instruments
as permitted by any of its other policies; (4) invest in companies for the
purpose of acquiring control or management thereof; (5) underwrite
securities of other companies, except insofar as it might be deemed to be
an underwriter for purposes of the Securities Act in the resale of any
securities held in its own portfolio; (6) invest or hold securities of any
issuer if those officers and directors of the Corporation or its adviser
owning individually more than 1/2 of 1% of the securities of such issuer
together own more than 5% of the securities or such issuer; (7) invest in
other open-end investment companies, or invest more than 5% of its net
assets through open market purchases in closed-end investment companies,
including small business investment companies, nor make any such
investments at commission rates in excess of normal brokerage commissions;
or (8) pledge, mortgage or otherwise encumber, transfer or assign any of
its assets to secure a debt; collateral arrangements for premium and
margin payments in connection with Hedging Instruments are not deemed to
be a pledge of assets.

The Fund has undertaken, in connection with the qualification for
sale of its shares in certain states, (a) with respect to investment
restriction (1) above, not to invest in oil, gas or other mineral leases,
and (b) with respect to investment restriction (2) above, not to invest
in real estate limited partnerships unless such securities are determined
by the Board to be readily marketable and not to invest more than 10% of
its total assets in the securities of one or more real estate investment
trusts. Should its shares no longer be offered in such states, the Fund
would not be subject to the foregoing undertakings.

How the Fund is Managed

Organization and History. It is not contemplated that regular annual
shareholder meetings will be held. The Fund will hold meetings when
required to do so by the Investment Company Act or other applicable law,
or when a shareholder meeting is called by the Directors or upon proper
request of the shareholders. A meeting of shareholders will be called for
a specified purpose (which may include removal of a Director) upon the
written request of the record holders of at least 25% of the outstanding
shares eligible to be voted at that meeting. The Fund has undertaken that
it will then either give the applicants access to the Fund's shareholder
list or mail the applicants' communication to all other shareholders at
the applicants' expense.

Directors and Officers of the Corporation. The Corporation's Directors
and officers and their principal occupations and business affiliations
during the past five years are listed below. All of the Directors are
also trustees, directors or managing general partners of Centennial
America Fund, L.P., Oppenheimer Limited-Term Government Fund, Oppenheimer
Tax-Exempt Bond Fund, Oppenheimer Equity Income Fund, Oppenheimer Variable
Account Funds, Oppenheimer Cash Reserves, Oppenheimer High Yield Fund,
Oppenheimer Strategic Funds Trust, Oppenheimer Strategic Short-Term Income
Fund, Oppenheimer Strategic Investment Grade Bond Fund, Oppenheimer
Strategic Income & Growth Fund, Oppenheimer Total Return Fund, Inc.,
Oppenheimer Champion High Yield Fund, Oppenheimer Integrity Funds, The New
York Tax-Exempt Income Fund, Inc., Centennial Government Trust, Centennial
Money Market Trust, Centennial California Tax Exempt Trust, Centennial Tax
Exempt Trust, Centennial New York Tax Exempt Trust and Daily Cash
Accumulation Fund, Inc. (all of the foregoing funds are collectively
referred to as the "Denver-based OppenheimerFunds"). Messrs. Bishop,
Bowen, Donohue, Farrar and Zack hold similar positions as officers of all
such funds. Mr. Fossel is President and Mr. Swain is Chairman of the
Denver-based OppenheimerFunds. As of September 26, 1994, the Directors
and officers in the aggregate owned less than 1% of the Fund's and the
Corporation's respective outstanding shares.

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

William A. Baker, Director
197 Desert Lakes Drive, Palm Springs, California 92264
Management Consultant.

Charles Conrad, Jr., Director
1447 Vista del Cerro, Las Cruces, New Mexico 88005
Vice President of McDonnell Douglas Space Systems Co.; formerly
associated with the National Aeronautics and Space Administration.

Jon S. Fossel, President and Director*
Two World Trade Center, New York, New York 10048-0203
Chairman, Chief Executive Officer and a Director of the Manager;
President and director of Oppenheimer Acquisition Corp. ("OAC"), the
Manager's parent holding company; President and a Director of
HarbourView Asset Management Corp. ("HarbourView"), a subsidiary of
the Manager; a Director of Shareholder Financial Services, Inc.
("SFSI") and Shareholder Services, Inc. ("SSI"), transfer agent
subsidiaries of the Manager; formerly President of the Manager.

Raymond J. Kalinowski, Director
44 Portland Drive, St. Louis, Missouri 63131
Director of Wave Technologies Ltd.; formerly Vice Chairman and a
director of A.G. Edwards, Inc., parent holding company of A.G.
Edwards & Sons, Inc. (a broker-dealer), of which he was a Senior Vice
President.

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

Robert M. Kirchner, Director
7500 East Arapahoe Road, Englewood, Colorado 80112
President of The Kirchner Company (management consultants).

Ned M. Steel, Director
3416 South Race Street, Englewood, Colorado 80110
Chartered Property and Casualty Underwriter; formerly Senior Vice
President and a Director of the Van Gilder Insurance Corp. (insurance
brokers).

James C. Swain, Chairman and Director*
3410 South Galena Street, Denver, Colorado 80231
Vice Chairman of the Manager; President and a Director of Centennial
Asset Management Corporation, an investment adviser subsidiary of the
Manager ("Centennial"); formerly Chairman of the Board of SSI.

John L. Wallace, Vice President and Portfolio Manager
Two World Trade Center, New York, New York 10048-0203
Vice President of the Manager; an officer of other OppenheimerFunds;
formerly a Securities Analyst and Assistant Portfolio Manager for the
Manager.

Andrew J. Donohue, Vice President
Two World Trade Center, New York, New York 10048-0203
Executive Vice President and General Counsel of the Manager and
Oppenheimer Funds Distributor, Inc. (the "Distributor"); an officer
of other OppenheimerFunds; formerly Senior Vice President and
Associate General Counsel of the Manager and the Distributor, Partner
in, Kraft & McManimon (a law firm), an officer of First Investors
Corporation (a broker-dealer) and First Investors Management Company,
Inc. (broker-dealer and investment adviser), and director and an
officer of First Investors Family of Funds and First Investors Life
Insurance Company.

George C. Bowen, Vice President, Secretary and Treasurer
3410 South Galena Street, Denver, Colorado 80231
Senior Vice President and Treasurer of the Manager; Vice President
and Treasurer of the Distributor and HarbourView; Senior Vice
President, Treasurer, Assistant Secretary and a Director of
Centennial; Vice President, Treasurer and Secretary of SSI and SFSI;
an officer of other OppenheimerFunds.

Robert Bishop, Assistant Treasurer
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an
officer of other OppenheimerFunds; formerly a Fund Controller for the
Manager, prior to which he was an Accountant for Yale & Seffinger,
P.C., an accounting firm, and previously an Accountant and
Commissions Supervisor for Stuart James Company Inc., a broker-
dealer.

Scott Farrar, Assistant Treasurer
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an
officer of other OppenheimerFunds; formerly a Fund Controller for the
Manager, prior to which he was an International Mutual Fund
Supervisor for Brown Brothers, Harriman Co., a bank, and previously
a Senior Fund Accountant for State Street Bank & Trust Company,
before which he was a sales representative for Central Colorado
Planning.

Robert G. Zack, Assistant Secretary
Two World Trade Center, New York, New York 10048-0203
Senior Vice President and Associate General Counsel of the Manager;
Assistant Secretary of SSI and SFSI; an officer of other
OppenheimerFunds.

[FN]
_________________________
*A Director who is an "interested person" as defined in the Investment
Company Act.

-- Remuneration of Directors. The officers of the Corporation are
affiliated with the Manager. They and the Directors of the Corporation
who are affiliated with the Manager (Messrs. Fossel and Swain, both of
whom are an officer and Director) and receive no salary or fee from the
Corporation. During the fiscal year ended June 30, 1994, the remuneration
(including expense reimbursements) attributable to the Fund paid to all
Directors of the Corporation (excluding Messrs. Fossel and Swain) for
services as Directors and as members of one or more committees totaled
$2,648. The Corporation has an Audit Committee, comprised of William A.
Baker (Chairman), Charles Conrad, Jr. and Robert M. Kirchner. This
Committee meets regularly to review audits, audit procedures, financial
statements and other financial and operational matters of the Fund.

-- Major Shareholders. As of September 26, 1994, the only person who
owned of record or was known by the Fund to own beneficially 5% or more
of the Fund's outstanding Class A or Class C shares was Merrill Lynch
Pierce Fenner & Smith, Inc., 4800 Deer Lake Drive E FL3, Jacksonville,
Florida 32246 which was the record owner of 2,788,827.460 Class A shares
(approximately 5.64% of the Class A shares then outstanding) and
2,969,881.812 Class C shares (approximately 24.29% of the Class C shares
then outstanding).

The Manager and Its Affiliates. The Manager is wholly-owned by
Oppenheimer Acquisition Corporation ("OAC"), a holding company controlled
by Massachusetts Mutual Life Insurance Company. OAC is also owned in part
by certain of the Manager's directors and officers, some of whom may also
serve as officers of the Corporation and two of whom (Messrs. Fossel and
Swain) serve as directors of the Corporation.

-- The Investment Advisory Agreement. The investment advisory
agreement between the Manager and the Corporation on behalf of the Fund
requires the Manager, at its expense, to provide the Fund with adequate
office space, facilities and equipment and to provide and supervise the
activities of all administrative and clerical personnel required to
provide effective administration of the Fund, including the compilation
and maintenance of records with respect to its operations, the preparation
and filing of specified reports, and composition of proxy materials and
registration statements for continuous public sale of shares of the Fund.

Expenses not expressly assumed by the Manager under the advisory
agreement or by the Distributor under the General Distributors Agreement
are paid by the Corporation. Expenses with respect to the Corporation's
two series, including the Fund, are allocated in proportion to the net
assets of the respective funds except where allocations of direct expenses
could be made. Certain expenses are further allocated to certain classes
of shares of a series as explained in the Prospectus and under "How to Buy
Shares" below. The advisory agreement lists examples of expenses paid by
the Corporation, the major categories of which relate to interest, taxes,
brokerage commissions, fees to certain Directors, legal and audit
expenses, transfer agent and custodian expenses, share issuance costs,
certain printing and registration expenses and non-recurring expenses,
including litigation costs. During the Fund's fiscal years ended June 30,
1992, 1993 and 1994, the management fees paid by the Corporation on behalf
of the Fund to the Manager were $149,622, $253,182 and $1,817,623,
respectively.

The advisory agreement contains no provision limiting the Fund's
expenses. However, independently of the advisory agreement, the Manager
has voluntarily undertaken that the total expenses of the Fund in any
fiscal year (including the management fee but excluding taxes, interest,
brokerage fees and extraordinary expenses such as litigation costs), shall
not exceed the most stringent applicable state regulatory limitation.
Pursuant to the undertaking, the Manager's fee will be reduced at the end
of a month so that there will not be any accrued but unpaid liability
under this undertaking. Currently, the most stringent limitation is
imposed by California, and limits expenses (with specified exclusions) to
2.5% of the first $30 million of average annual net assets, 2.0% of the
next $70 million, and 1.5% of the average annual net assets in excess of
$100 million. Any assumption of the Fund's expenses under this limitation
lowers the Fund's overall expense ratio and increases its total return
during the time such expenses are assumed. The Manager reserves the right
to vary the amount of expenses assumed or eliminate the assumption of
expenses altogether.

The advisory agreement provides that in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties under the advisory agreement, the Manager is not
liable for any loss resulting from a good faith error or omission on its
part with respect to any of its duties thereunder. The advisory agreement
permits the Manager to act as investment adviser for any other person,
firm or corporation, and to use the name "Main Street" 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 right of the Corporation to use the name "Main
Street" as part of its name and the name of the Fund may be withdrawn.

-- The Distributor. Under its General Distributor's Agreement with
the Corporation, the Distributor acts as the Corporation's principal
underwriter in the continuous public offering of shares of the Fund's
Class A, Class B and Class C shares, but is not obligated to sell a
specific number of shares. Expenses normally attributable to sales (other
than those paid under the Rule 12b-1 plans), including advertising and the
cost of printing and mailing prospectuses, other than those furnished to
existing shareholders, are borne by the Distributor. During the Fund's
fiscal years ended June 30, 1992, 1993 and 1994, the aggregate amount of
sales charges on sales of the Fund's Class A shares was $310,560, $784,013
and $23,502,310, respectively, of which the Distributor retained in the
aggregate $6,147 and $87,916 for the fiscal years ended June 30, 1992 and
1993 and of which the Distributor and an affiliated broker-dealer retained
$6,373,770 during the fiscal year ended June 30, 1994. Contingent
deferred sales charges collected by the Distributor on the redemption of
Class C shares during the period December 1, 1993 (the commencement of the
offering of those shares) through June 30, 1994 totaled $20,728. For
additional information about distribution of the Fund's shares and the
expenses connected with such activities, refer to "Distribution and
Service Plans," below.

-- The Transfer Agent. Oppenheimer Shareholder Services, the Fund's
Transfer Agent, is responsible for maintaining the Fund's shareholder
registry and shareholder accounting records, and for shareholder servicing
and administrative functions.

Brokerage Policies of the Fund

Brokerage Provisions of the Investment Advisory Agreement. One of the
duties of the Manager under the advisory agreement is to arrange the
portfolio transactions of the Fund. The advisory agreement contains
provisions relating to the employment of broker-dealers ("brokers") to
effect the Fund's portfolio transactions. In doing so, the Manager is
authorized by the advisory agreement to employ broker-dealers, including
"affiliated" brokers (as that term is defined in the Investment Company
Act), as may, in the Manager's best judgment based on all relevant
factors, implement the policy of the Fund to obtain, at reasonable
expense, the "best execution" (prompt and reliable execution at the most
favorable price obtainable) of such transactions. The Manager need not
seek competitive commission bidding or base its selection on "posted"
rates, but 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 the Board of
Directors. Purchases of securities from underwriters include a commission
or concession paid by the issuer to the underwriter, and purchases from
dealers include a spread between the bid and asked price.

Under the advisory agreement, the Manager is authorized to 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 have charged,
if a good faith determination is made by the Manager that the commission
is reasonable in relation to the services provided. Subject to the
foregoing considerations, the Manager may also consider sales of shares
of the Fund and the other funds managed by the Manager and its affiliates
as a factor in the selection of brokers for the Fund's portfolio
transactions.

Description of Brokerage Practices Followed by the Manager. Subject to
the provisions of the Agreement, when brokers are used for the Fund's
portfolio transactions, allocations of brokerage are made by portfolio
managers under the supervision of the Manager's executive officers.
Transactions in securities other than those for which an exchange is the
primary market are generally done with principals or market makers. In
connection with transactions on foreign exchanges, the Fund may be
required to pay fixed brokerage commissions and thereby forego the benefit
of negotiated commissions available in U.S. markets. Brokerage
commissions are paid primarily for effecting transactions in listed
securities and otherwise only if it appears likely that a better price or
execution can be obtained. When the Fund engages in an option
transaction, ordinarily the same broker will be used for the purchase or
sale of the option and any transactions in the securities to which the
option relates. When possible, concurrent orders to purchase or sell the
same security by more than one of the accounts managed by the Manager or
it affiliates are combined. Transactions effected pursuant to such
combined orders are averaged as to price and allocated in accordance with
the purchase or sale orders actually placed for each account. Option
commissions may be relatively higher than those which would apply to
direct purchases and sales of portfolio securities.

The research services provided by a particular broker may be useful
only to one or more of the advisory accounts of the Manager and its
affiliates, and investment research received for the commissions of those
other accounts may be useful both to the Fund and one or more of such
other accounts. Such research, which may be supplied by a third party at
the instance of a broker, includes information and analyses on particular
companies and industries as well as market or economic trends and
portfolio strategy, receipt of market quotations for portfolio
evaluations, information systems, computer hardware and similar products
and services. If a research service also assists the Manager in a non-
research capacity (such as bookkeeping or other administrative functions),
then only the percentage or component that provides assistance to the
Manager in the investment decision-making process may be paid for in
commission dollars.

The research services provided by brokers broaden the scope and
supplement the research activities of the Manager, by making available
additional views for consideration and comparisons, and enabling the
Manager to obtain market information for the valuation of securities held
in the Fund's portfolios or being considered for purchase. The Board,
including the independent Directors, annually reviews information
furnished by the Manager relative to the commissions paid to brokers
furnishing such services in an effort to ascertain that the amount of such
commissions was reasonably related to the value or the benefit of such
services. The Board of Directors has permitted the manager to use
concessions on fixed price offerings to obtain research, in the same
manner as is permitted for agency transactions.

During the Fund's fiscal years ended June 30, 1992, 1993 and 1994,
total brokerage commissions paid by the Fund (not including spreads or
concessions on principal transactions on a net trade basis) were $141,035,
$292,787 and $6,479,920, respectively. During the fiscal year ended June
30, 1994, $616,284 was paid by the Fund to brokers for research services;
the aggregate dollar amounts of these transactions was $292,454,269. The
transactions giving rise to those commissions were allocated in accordance
with the internal allocation procedures described above.

Performance of the Fund

Total Return Information. As described in the Prospectus, from time to
time the "average annual total return", "total return" and "total return
at net asset value" of an investment in each class of the Fund may be
advertised. An explanation of how average annual total return and total
return are calculated for each class and the components of those
calculations is set forth below. No total return calculations are
presented below for Class B shares because no shares of that class were
publicly issued during the fiscal year ended June 30, 1994.

-- Average Annual Total Returns. The "average annual total return"
of each class is an average annual compounded rate of return. It is the
rate of return based on factors which include a hypothetical initial
investment of $1,000 ("P" in the formula below) held for a number of years
("n") with an Ending Redeemable Value ("ERV") of that investment,
according to the following formula:

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

The "average annual total returns" on an investment in Class A shares
of the Fund (using the method described above) for the one and five year
periods ended June 30, 1994 and for the period from February 3, 1988
(commencement of operations) to June 30, 1994 were 7.76%, 21.56% and
20.70%, respectively.

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

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

In calculating total returns for Class A shares, the current maximum
sales charge of 5.75% (as a percentage of the offering price) is deducted
from the initial investment ("P") (unless the return is shown at net asset
value, as described below). For Class C shares, the 1.0% contingent
deferred sales charge is applied to the investment result for the one-year
period (or less). The formulas also assume that all dividends and capital
gains distributions during the period are reinvested at net asset value
per share, and that the investment is redeemed at the end of the period.

The "total return" on Class A shares for the period from February 3,
1988 (commencement of operations) to June 30, 1994 was 233.93%. The
cumulative total return on Class C shares for the period from December 1,
1993 (the commencement of the offering of the shares) through June 30,
1994 was (1.96%).

-- Total Returns at Net Asset Value. From time to time the Fund may
also quote an "average annual total return at net asset value" or a
cumulative total return at net asset value for Class A, Class B 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 "total return at net asset
value" on the Fund's Class A shares for the one year period ended June 30,
1994 was 14.34%. The total return at net asset value for the Fund's Class
C shares for the period from December 1, 1993 through June 30, 1994 was
(0.77%).

Other Performance Comparisons. From time to time, the Fund may publish
the ranking of the performance of its Class A, Class B or Class C shares
by Morningstar, Inc. ("Morningstar"), an independent mutual fund
monitoring service that ranks various mutual funds, including the Fund,
monthly in broad investment categories (equity, taxable bond, municipal
bond and hybrid) based upon the funds' three, five and ten-year average
annual total returns (when available) and a risk factor that reflects fund
performances relative to three-month U.S. Treasury bill monthly returns.
Such returns are adjusted for fees and sales loads. There are five
ranking categories with a corresponding number of stars: highest (5),
above average (4), neutral (3), below average (2) and lowest (1). The top
ten percent of the funds, series or classes in an investment category
receive five stars; 22.5% receive four stars; 35% receive three stars;
22.5% receive two stars; and the bottom 10% receive one star. Morningstar
ranks the Fund in relation to other equity funds.

From time to time the Fund may publish the ranking of its performance
of its Class A, Class B or Class C shares by Lipper Analytical Services,
Inc. ("Lipper"), a widely-recognized independent service. Lipper monitors
the performance of regulated investment companies, including the Fund, and
ranks their performance for various periods based on categories relating
to investment objectives. The performance of the Fund is ranked against
(i) all other open-end mutual funds and (ii) the other open-end mutual
funds in the same category as the Fund, that is, growth and income funds.
The Lipper performance analysis includes the reinvestment of capital gains
distributions and income dividends but does not take sales charges or
taxes into consideration.

From time to time the Fund may include in its advertisements and
sales literature performance information about the Fund cited in other
newspapers and periodicals, such as The New York Times, which may include
performance quotations from other sources, including Lipper and
Morningstar.

Total return information may be useful to investors in reviewing the
performance of the Fund's Class A, Class B or Class C shares. However,
certain factors should be considered before using such information as a
basis for comparison with other investments. No adjustment is made for
taxes payable on distributions. Investors should be aware that an
investment in the Fund is not insured. Its total return is not guaranteed
and will fluctuate over time. Total return for any given past period is
not an indication or representation by the Fund of future rates of return
on its shares. An investment in the Fund is not insured by any
governmental agency. Investors should understand that certain other
investment alternatives such as money market instruments, certificates of
deposit, U.S. Government securities or bank accounts may provide yields
that are fixed or that may vary above a stated minimum, and also that bank
accounts may be insured. The total return of the Class A, Class B and
Class C shares of the Fund is affected by investment policy, portfolio
maturity, type of securities held and operating expenses.

Distribution and Service Plans

The Corporation has adopted a Service Plan for Class A shares and
Distribution and Service Plans for Class B and Class C shares of the Fund
under Rule 12b-1 of the Investment Company Act pursuant to which the
Corporation will reimburse the Distributor for all or a portion of its
costs incurred in connection with the distribution and/or servicing of the
shares of that class, as described in the Prospectus. Each Plan has been
approved by a vote of (i) the Board of Directors of the Corporation,
including a majority of the Independent Directors, cast in person at a
meeting called for the purpose of voting on that Plan, and (ii) the
holders of a "majority" (as defined in the Investment Company Act) of the
shares of each class, such vote having been cast by the Manager as the
sole initial holder of Class B and Class C shares of the Fund as to the
Class B Plan and Class C Plan, respectively.

In addition, under the Plans the Manager and the Distributor, in
their sole discretion, from time to time may use their own resources
(which, in the case of the Manager, may include profits from the advisory
fee it receives from the Fund) to make payments to brokers, dealers or
other financial institutions (each is referred to as a "Recipient" under
the Plans) for distribution and administrative services they perform. The
Distributor and the Manager may, in their sole discretion, increase or
decrease the amount of payments they make from their own resources to
Recipients.

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

While the Plans are in effect, the Treasurer of the Corporation shall
provide separate written reports to the Corporation's Board of Directors
at least quarterly on the amount of all payments made pursuant to each
Plan, the purpose for which the payment was made and the identity of each
Recipient that received any such payment. The report for the Class B Plan
and Class C Plan shall also include the distribution costs for that
quarter, and such costs for previous fiscal periods that are carried
forward, as explained in the Prospectus and below. Those reports,
including the allocations on which they are based, will be subject to the
review and approval of the Independent Directors in the exercise of their
fiduciary duty. Each Plan further provides that while it is in effect,
the selection and nomination of those Directors of the Corporation who are
not "interested persons" of the Corporation is committed to the discretion
of the Independent Directors. This does not prevent the involvement of
others in such selection and nomination if the final decision on any such
selection or nomination is approved by a majority of the Independent
Directors.

Under the Plans, no payment will be made to any Recipient in any
quarter if the aggregate net asset value of all Fund shares held by the
Recipient for itself and its customers did not exceed a minimum amount,
if any, that may be determined from time to time by a majority of the
Corporation's Independent Directors. Initially, the Board of Directors
has set the fee at the maximum rate and set no minimum amount.

For the fiscal year ended June 30, 1994, payments under the Class A
Plan totaled $643,787, all of which was paid by the Distributor to
Recipients, including $20,221 paid to an affiliated broker-dealer as
reimbursement for Class A personal service and maintenance expenses. For
the period December 1, 1993 through June 30, 1994, payments under the
Class C Plan totalled $413,111, of which the Distributor retained $386,830
as reimbursement for Class C sales commissions and service fee advances,
as well as financing costs.

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

Although the Class B and the Class C Plan permit the Distributor to
retain both the asset-based sales charge and the service fee, or to pay
Recipients the service fee on a quarterly basis, without payment in
advance, the Distributor intends to pay the service fee to Recipients in
the manner described above. A minimum holding period may be established
from time to time under the Class B Plan and the Class C Plan by the
Board. Initially, the Board has set no minimum holding period. All
payments under the Class B and the Class C Plan are subject to the
limitations imposed by the Rules of Fair Practice of the National
Association of Securities Dealers, Inc.

Any unreimbursed expenses incurred with respect to Class A shares for
any fiscal quarter by the Distributor may not be recovered under the Class
A Plan in subsequent fiscal quarters. Payments received by the
Distributor under the Class A Plan will not be used to pay any interest
expense, carrying charges, or other financial costs, or allocation of
overhead by the Distributor. The Class B Plan and the Class C Plan allow
for the carry-forward of distribution expenses, to be recovered from
asset-based sales charges in subsequent fiscal periods, as described in
the Prospectus. The asset-based sales charges paid to the Distributor by
the Fund under the Class B Plan and the Class C Plan are intended to allow
the Distributor to recoup the cost of sales commissions paid to authorized
brokers and dealers at the time of sale, plus financing costs, as
described in the Prospectus. Such payments may also be used to pay for
the following expenses in connection with the distribution of Class B and
Class C shares: (i) financing the advance of the service fee payment to
Recipients under the Class B and the Class C Plan, (ii) compensation and
expenses of personnel employed by the Distributor to support distribution
of Class B and Class C shares, and (iii) costs of sales literature,
advertising and prospectuses (other than those furnished to current
shareholders).

ABOUT YOUR ACCOUNT

How To Buy Shares

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

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

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

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

Determination of Net Asset Value Per Share. The net asset values per
share of Class A, Class B and Class C shares of the Fund are determined
each day The New York Stock Exchange (the "NYSE") is open, as of 4:00
P.M., New York time, that day, by dividing the value of the Fund's net
assets attributable to that class by the number of shares of that class
outstanding. The NYSE's most recent annual announcement (which is subject
to change) states that it will close New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. It may also close on other days. Trading may occur in
debt securities and in foreign securities at times when the NYSE is
closed. Because the net asset values of the Fund will not be calculated
at such times, if securities held in the Fund's portfolio are traded at
such times, the net asset values per share of Class A, Class B and Class
C shares of the Fund may be significantly affected at times when
shareholders do not have the ability to purchase or redeem shares.

The Corporation's Board of Directors has established procedures for
the valuation of the Fund's securities generally as follows: (i) equity
securities traded on a securities exchange or on the NASDAQ for which last
sale information is regularly reported are valued at the last sales prices
on their primary exchange or the NASDAQ that day (or, in the absence of
sales that day, at values based on the last sale prices of the preceding
trading day or closing bid and asked prices); (ii) NASDAQ and other
unlisted equity securities for which last sale prices are not regularly
reported but for which over-the-counter market quotations are readily
available are valued at the highest closing bid price at the time of
valuation, or, if no closing bid price is reported, on the basis of a
closing bid price obtained from a dealer who maintains an active market
in that security; (iii) securities (including restricted securities) not
having readily-available market quotations are valued at fair value under
the Board's procedures; (iv) long-term debt securities, and short-term
debt securities having a remaining maturity in excess of 60 days, are
valued at the mean between the asked and bid prices determined by a
portfolio pricing service appointed by the Corporation's Board of
Directors or obtained from active market makers in the security; (v)
short-term debt securities having a remaining maturity of 60 days or less
are valued at cost, adjusted for amortization of premiums and accretion
of discounts; and (vi) securities traded on foreign exchanges or in
foreign over-the-counter markets are valued as determined by a portfolio
pricing service, approved by the Board, based upon last sales prices
reported on a principal exchange or the mean between closing bid and asked
prices and reflect prevailing rates of exchange taken from the closing
price on the London foreign exchange market that day.

Trading in securities on European and Far Eastern exchanges and over-
the-counter markets is normally completed before the close of the NYSE.
Events affecting the values of foreign securities that occur between the
time their prices are determined and the close of the NYSE will not be
reflected in the Fund's calculation of net asset value unless the Manager,
under procedures established by the Board, determines that the particular
event would materially affect net asset value, in which case an adjustment
would be made. Foreign currency will be valued as close to the time fixed
for the valuation date as is reasonably practicable. The value of
securities denominated in foreign currency will be converted to U.S.
dollars at the prevailing rates of exchange taken from the closing price
on the London foreign exchange market that day. Forward currency
contracts are valued at the closing price on the London foreign exchange
market. In the case of U.S. Government Securities, mortgage-backed
securities, and corporate bonds, where last sale information is not
generally available, such pricing procedures may include "matrix"
comparisons to the prices for comparable debt instruments on the basis of
quality, yield, maturity and other special factors involved. The
Directors will monitor the accuracy of pricing services by comparing
prices used for portfolio evaluation to actual sales prices of selected
securities.

Puts, calls and Futures are valued at the last sale prices on the
principal exchanges or the NASDAQ National Market System on which they are
traded or, if there are no sales that day, in accordance with (i) above.
When the Fund writes an option, an amount equal to the premium received
by the Fund is included in its Statement of Assets and Liabilities as an
asset, and an equivalent deferred credit is included in the liability
section. The deferred credit is adjusted ("marked-to-market") to reflect
the current market value of the option.

AccountLink. When shares are purchased through AccountLink, each purchase
must be at least $25.00. Shares will be purchased on the regular business
day the Distributor is instructed to initiate the Automated Clearing House
transfer to buy the shares. Dividends will begin to accrue on such shares
on the day the Fund receives Federal Funds for such purchase through the
ACH system before 4:00 P.M., which is normally 3 days after the ACH
transfer is initiated. The Distributor and the Fund are not responsible
for any delays. If the Federal Funds are received after 4:00 P.M.,
dividends will begin to accrue on the next regular business day after such
Federal Funds are received.

Reduced Sales Charges. As discussed in the Prospectus, a reduced sales
charge rate may be obtained for Class A shares under Rights 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
circumstances described in the Prospectus because the Distributor incurs
little or no selling expenses. The term "immediate family" refers to
one's spouse, children, grandchildren, parents, grandparents, parents-in-
law, sons- and daughters-in-law, siblings, a sibling's spouse and a
spouse's siblings.

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

Oppenheimer Tax-Free Bond Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Intermediate Tax-Exempt Bond Fund
Oppenheimer Insured Tax-Exempt Bond Fund
Oppenheimer Main Street California Tax-Exempt Fund
Oppenheimer Florida Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer New Jersey Tax-Exempt Fund
Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Time Fund
Oppenheimer Target Fund
Oppenheimer Special Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund
Oppenheimer High Yield Fund
Oppenheimer Champion High Yield Fund
Oppenheimer Investment Grade Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer Limited-Term Government Fund
Oppenheimer Mortgage Income Fund
Oppenheimer Global Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Investment Grade Bond Fund
Oppenheimer Strategic Short-Term Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Strategic Diversified Income Fund

and the following "Money Market Funds":

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

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

-- Letters of Intent. A Letter of Intent ("Letter") is the
investor's statement of intention to purchase Class A shares of the Fund
(and other eligible OppenheimerFunds) sold with a front-end sales charge
during the 13-month period from the investor's first purchase pursuant to
the Letter (the "Letter of Intent period"), which may, at the investor's
request, include purchases made up to 90 days prior to the date of the
Letter. The Letter states the investor's intention to make the aggregate
amount of purchases (excluding any purchases made by reinvestments of
dividends or distributions or purchases made at net asset value without
sales charge), which together with the investor's holdings of such funds
(calculated at their respective public offering prices calculated on the
date of the Letter) will equal or exceed the amount specified in the
Letter. This enables the investor to obtain the reduced sales charge rate
(as set forth in the Prospectus) applicable to purchases of shares in that
amount (the "intended purchase amount"). Each purchase under the Letter
will be made at the public offering price applicable to a single lump-sum
purchase of shares in the intended purchase amount, as described in the
Prospectus.

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

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 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 applicable prospectus, the sales charges paid
will be adjusted to the lower rate, but only if and when the dealer
returns to the Distributor the excess of the amount of commissions allowed
or paid to the dealer over the amount of commissions that apply to the
actual amount of purchases. The excess commissions returned to the
Distributor will be used to purchase additional shares for the investor's
account at the net asset value per share in effect on the date of such
purchase, promptly after the Distributor's receipt thereof.

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

-- Terms of Escrow That Apply to Letters of Intent.

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

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

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

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

5. The shares eligible for purchase under the Letter (or the
holding of which may be counted toward completion of the Letter) do not
include any shares sold without a front-end sales charge or without being
subject to a Class A contingent deferred sales charge unless (for the
purpose of determining completion of the obligation to purchase shares
under the Letter) the shares were acquired in exchange for shares of one
of the OppenheimerFunds whose shares were acquired by payment of a 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 "Exchange Privilege," and the
escrow will be transferred to that other fund.

Asset Builder Plans. To establish an Asset Builder Plan from a bank
account, a check (minimum $25) for the initial purchase must accompany the
application. Shares purchased by Asset Builder Plan payments from bank
accounts are subject to the redemption restrictions for recent purchases
described in "How To Sell Shares," in the Prospectus. Asset Builder Plans
also enable shareholders of Oppenheimer Cash Reserves to use those
accounts for monthly automatic purchases of shares of up to four other
OppenheimerFunds.

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

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

How to Sell Shares

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

-- Payments "In Kind". The Prospectus states that payment for shares
tendered for redemption is ordinarily made in cash. However, the Board of
Directors of the Corporation may determine that it would be detrimental
to the best interests of the remaining shareholders of the Fund to make
payment of a redemption order wholly or partly in cash. In that case the
Fund may pay the redemption proceeds in whole or in part by a distribution
"in kind" of securities from the portfolio of the Fund, in lieu of cash,
in conformity with applicable rules of the Securities and Exchange
Commission. The Fund has elected to be governed by Rule 18f-1 under the
Investment Company Act, pursuant to which the Fund is obligated to redeem
shares solely in cash up to the lesser of $250,000 or 1% of the net assets
of the Fund during any 90-day period for any one shareholder. If shares
are redeemed in kind, the redeeming shareholder might incur brokerage or
other costs in selling the securities for cash. The method of valuing
securities used to make redemptions in kind will be the same as the method
the Fund uses to value it portfolio securities described above under
"Determination of Net Asset Values Per Share" and that valuation will be
made as of the time the redemption price is determined.

-- Involuntary Redemptions. The Board of Directors has the right to
cause the involuntary redemption of the shares held in any Fund account
if the aggregate net asset value of those shares is less than $500 or such
lesser amount as the Board may fix. The Board of Directors will not cause
the involuntary redemption of shares in an account if the aggregate net
asset value of the shares has fallen below the stated minimum solely as
a result of market fluctuations. Should the Board elect to exercise this
right, it may also fix, in accordance with the Investment Company Act, the
requirements for any notice to be given to the shareholders in question
(not less than 30 days), or the Board may set requirements for granting
permission to the Shareholder to increase the investment, and set other
terms and conditions so that the shares would not be involuntarily
redeemed.

Reinvestment Privilege. Within six months of a redemption, a shareholder
may reinvest all or part of the redemption proceeds of (i) Class A
shares,(ii) Class B shares that were subject to the Class B contingent
deferred sales charge when redeemed or (iii) Class C shares that were
subject to the Class C 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 OppenheimerFunds into which shares of the
Fund are exchangeable as described below, at the net asset value next
computed after the Transfer Agent receives the reinvestment order. The
shareholder must ask the Distributor for that privilege at the time of
reinvestment. Any capital gain that was realized when the shares were
redeemed is taxable, and reinvestment will not alter any capital gains tax
payable on that gain. If there has been a capital loss on the redemption,
some or all of the loss may not be tax deductible, depending on the timing
and amount of the reinvestment. Under the Internal Revenue Code, if the
redemption proceeds of Fund shares on which a sales charge was paid are
reinvested in shares of the Fund or another of the OppenheimerFunds within
90 days of payment of the sales charge, the shareholder's basis in the
shares of the Fund that were redeemed may not include the amount of the
sales charge paid. That would reduce the loss or increase the gain
recognized from the redemption. However, in that case the sales charge
would be added to the basis of the shares acquired by the reinvestment of
the redemption proceeds. The Fund may amend, suspend or cease offering
this reinvestment privilege at any time as to shares redeemed after the
date of such amendment, suspension or cessation.

Transfers of Shares. Shares are not subject to the payment of a
contingent deferred sales charge of any class at the time of transfer to
the name of another person or entity (whether the transfer occurs by
absolute assignment, gift or bequest, not involving, directly or
indirectly, a public sale). The transferred shares will remain subject
to the contingent deferred sales charge, calculated as if the transferee
shareholder had acquired the transferred shares in the same manner and at
the same time as the transferring shareholder. If less than all shares
held in an account are transferred, and some but not all shares in the
account would be subject to a contingent deferred sales charge if redeemed
at the time of transfer, the priorities described in the Prospectus under
"How to Buy Shares" for the imposition of the Class B and Class C
contingent deferred sales charge will be followed in determining the order
in which shares are transferred.

Distributions From Retirement Plans. Requests for distributions from
OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans, or pension or
profit-sharing plans should be addressed to "Trustee, OppenheimerFunds
Retirement Plans," c/o the Transfer Agent at its address listed in "How
To Sell Shares" in the Prospectus or on the back cover of this Statement
of Additional Information. The request must: (i) state the reason for the
distribution; (ii) state the owner's awareness of tax penalties if the
distribution is premature; and (iii) conform to the requirements of the
plan and the Fund's other redemption requirements. Participants (other
than self-employed persons) in OppenheimerFunds-sponsored pension or
profit-sharing plans may not directly request redemption of their
accounts. The employer or plan administrator must sign the request.
Distributions from pension and profit sharing plans are subject to special
requirements under the Internal Revenue Code and certain documents
(available from the Transfer Agent) must be completed before the
distribution may be made. Distributions from retirement plans are subject
to withholding requirements under the Internal Revenue Code, and IRS Form
W-4P (available from the Transfer Agent) must be submitted to the Transfer
Agent with the distribution request, or the distribution may be delayed.
Unless the shareholder has provided the Transfer Agent with a certified
tax identification number, the Internal Revenue Code requires that tax be
withheld from any distribution even if the shareholder elects not to have
tax withheld. The Fund, the Manager, the Distributor, the Trustee and the
Transfer Agent assume no responsibility to determine whether a
distribution satisfies the conditions of applicable tax laws and will not
be responsible for any tax penalties assessed in connection with a
distribution.

Special Arrangements for Repurchase of Shares from Dealers and Brokers.
The Distributor is the Fund's agent to repurchase its shares from
authorized dealers or brokers. The repurchase price will be the net asset
value next computed after the receipt of an order placed by such dealer
or broker, except that orders received from dealers or brokers after 4:00
P.M. on a regular business day will be processed at that day's net asset
value if such orders were received by the dealer or broker from its
customers prior to 4:00 P.M., and were transmitted to and received by the
Distributor prior to its close of business that day (normally 5:00 P.M.).
Payment ordinarily will be made within seven days after the Distributor's
receipt of the required redemption documents, with signature(s) 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 (minimum $50) automatically on a monthly, quarterly, semi-annual
or annual basis under an Automatic Withdrawal Plan. Shares will be
redeemed three business days prior to the date requested by the
shareholder for receipt of the payment. Automatic withdrawals of up to
$1,500 per month may be requested by telephone if payments are to be made
by check payable to all shareholders of record and sent to the address of
record for the account (and if the address has not been changed within the
prior 30 days). Required minimum distributions from OppenheimerFunds-
sponsored retirement plans may not be arranged on this basis. Payments
are normally made by check, but shareholders having AccountLink privileges
(see "How To Buy Shares") may arrange to have Automatic Withdrawal Plan
payments transferred to the bank account designated on the
OppenheimerFunds New Account Application or signature-guaranteed
instructions. The Fund cannot guarantee receipt of a payment on the date
requested and reserves the right to amend, suspend or discontinue offering
such plans at any time without prior notice. Because of the sales charge
assessed on Class A share purchases, shareholders should not make regular
additional Class A share purchases while participating in an Automatic
Withdrawal Plan. Class B and Class C shareholders should not establish
withdrawal plans because of the imposition of the contingent deferred
sales charges on such withdrawals (except where the Class B and Class C
contingent deferred sales charges are waived as described in the
Prospectus under "Class B Contingent Deferred Sales Charge" and "Class C
Contingent Deferred Sales Charge").

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

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

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

The Transfer Agent will administer the investor's Automatic
Withdrawal Plan (the "Plan") as agent for the investor (the "Planholder")
who executed the Plan authorization and application submitted to the
Transfer Agent. The Transfer Agent shall incur no liability to the
Planholder for any action taken or omitted by the Transfer Agent in good
faith to administer the Plan. Certificates will not be issued for shares
of the Fund purchased for and held under the Plan, but the Transfer Agent
will credit all such shares to the account of the Planholder on the
records of the Fund. Any share certificates held by a Planholder may be
surrendered unendorsed to the Transfer Agent with the Plan application so
that the shares represented by the certificate may be held under the Plan.

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

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

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

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

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

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

How To Exchange Shares

As stated in the Prospectus, shares of a particular class of
OppenheimerFunds having more than one class of shares may be exchanged
only for shares of the same class of other OppenheimerFunds. All of the
OppenheimerFunds offer Class A shares (except for Oppenheimer Strategic
Diversified Income Fund), but only the following other OppenheimerFunds
(referred to as "Advisors Portfolio" funds) offer Class C shares:

Oppenheimer Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Champion High Yield Fund
Oppenheimer U.S. Government Trust
Oppenheimer Intermediate Tax-Exempt Bond Fund
Oppenheimer Target Fund
Oppenheimer Cash Reserves (Class C shares are available only by
exchange)
Oppenheimer Strategic Diversified Income Fund

The following other OppenheimerFunds offer Class B shares:

Oppenheimer Strategic Income & Growth Fund
Oppenheimer Strategic Investment Grade Bond Fund
Oppenheimer Strategic Short-Term Income Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer Tax-Free Bond Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer Florida Tax-Exempt Fund
Oppenheimer Insured Tax-Exempt Bond Fund
Oppenheimer Main Street California Tax-Exempt Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Investment Grade Bond Fund
Oppenheimer Value Stock Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer High Yield Fund
Oppenheimer Mortgage Income Fund
Oppenheimer Cash Reserves (Class B shares are available only by
exchange)
Oppenheimer Special Fund
Oppenheimer Equity Income Fund
Oppenheimer Global Fund
Oppenheimer Discovery Fund

Class A shares of OppenheimerFunds may be exchanged at net asset
value for shares of any Money Market Fund. Shares of any Money Market
Fund purchased without a sales charge may be exchanged for shares of
OppenheimerFunds offered with a sales charge upon payment of the sales
charge (or, if applicable, may be used to purchase shares of
OppenheimerFunds subject to a contingent deferred sales charge). Shares
of this Fund acquired by reinvestment of dividends or distributions from
any other of the OppenheimerFunds 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 OppenheimerFunds.
No contingent deferred sales charge is imposed on exchanges of shares of
either class purchased subject to a contingent deferred sales charge.
However, when Class A shares acquired by exchange of Class A shares of
other OppenheimerFunds purchased subject to a Class A contingent deferred
sales charge are redeemed within 18 months of the end of the calendar
month of the initial purchase of the exchanged Class A shares, the Class
A contingent deferred sales charge is imposed on the redeemed shares (see
"Class A Contingent Deferred Sales Charge" in the Prospectus). The Class
C contingent deferred sales charge is imposed on Class C shares acquired
by exchange if they are redeemed within 12 months of the initial purchase
of the exchanged Class C shares. The Class B contingent deferred sales
charge is imposed on Class B shares redeemed within six years of the
initial purchase of the exchanged Class B shares.

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

The Fund reserves the right to reject telephone or written exchange
requests submitted in bulk by anyone on behalf of 10 or more accounts. The
Fund may accept requests for exchanges of up to 50 accounts per day from
representatives of authorized dealers that qualify for this privilege. In
connection with any exchange request, the number of shares exchanged may
be less than the number requested if the exchange or the number requested
would include shares subject to a restriction cited in the Prospectus or
this Statement of Additional Information or would include shares covered
by a share certificate that is not tendered with the request. In those
cases, only the shares available for exchange without restriction will be
exchanged.

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

Shares to be exchanged are redeemed on the regular business day the
Transfer Agent receives an exchange request in proper form (the
"Redemption Date"). Normally, shares of the fund to be acquired are
purchased on the Redemption Date, but such purchases may be delayed by
either fund up to five business days if it determines that it would be
disadvantaged by an immediate transfer of the redemption proceeds. The
Fund reserves the right, in its discretion, to refuse any exchange request
that may disadvantage it (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 different OppenheimerFunds available for exchange have different
investment objectives, policies and risks, and a shareholder should assure
that the Fund selected is appropriate for his or her investment and should
be aware of the tax consequences of an exchange. For federal income tax
purposes, an exchange transaction is treated as a redemption of shares of
one fund and a purchase of shares of another. "Reinvestment Privilege,"
above, discusses some of the tax consequences of reinvestment of
redemption proceeds in such cases. The Fund, the Distributor, and the
Transfer Agent are unable to provide investment, tax or legal advice to
a shareholder in connection with an exchange request or any other
investment transaction.

Dividends, Capital Gains and Taxes

Tax Status of the Fund's Dividends and Distributions. The Federal tax
treatment of the Fund's dividends and capital gains distributions is
explained in the Prospectus under the caption "Dividends, Capital Gains
and Taxes." 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. In addition, the amount of dividends paid by
the Fund which may qualify for the deduction is limited to the aggregate
amount of qualifying dividends that the Fund derives from its portfolio
investments that the Fund has held for a minimum period, usually 46 days.
A corporate shareholder will not be eligible for the deduction on
dividends paid on Fund shares held for 45 days or less. To the extent the
Fund's dividends are derived from gross income from option premiums,
interest income or short-term gains from the sale of securities or
dividends from foreign corporations, those dividends will not qualify for
the deduction.

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

Dividend Reinvestment in Another Fund. Shareholders of the Fund may elect
to reinvest all dividends and/or capital gains distributions in shares of
the same class of any of the other OppenheimerFunds listed in "Reduced
Sales Charges," above, at net asset value without sales charge. Class B
and Class C shareholders should be aware that as of the date of this
Statement of Additional Information, not all of the OppenheimerFunds offer
Class B and Class C shares. The names of the funds that do as of the date
of this document can be obtained by referring to "How To Exchange Shares,"
above or by calling the Distributor at 1-800-525-7048. To elect this
option, a shareholder must notify the Transfer Agent in writing and
either have an existing account in the fund selected for reinvestment or
must obtain a prospectus for that fund and an application from the
Distributor to establish an account. The investment will be made at the
net asset value per share in effect at the close of business on the
payable date of the dividend or distribution. Dividends and/or
distributions from certain of the OppenheimerFunds may be invested in
shares of this Fund on the same basis.

Additional Information About the Fund

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, collecting income on the
portfolio securities and handling the delivery of such securities to and
from the Fund. The Manager has represented to the Fund that the banking
relationships between the Manager and the Custodian have been and will
continue to be unrelated to and unaffected by the relationship between the
Fund and the Custodian. It will be the practice of the Fund to deal with
the Custodian in a manner uninfluenced by any banking relationship the
Custodian may have with the Manager and its affiliates.

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

Independent Auditors' Report

- ------
The Board of Trustees and Shareholders of Oppenheimer Main Street Income
and Growth Fund:

We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Oppenheimer Main Street Income
and Growth Fund as of June 30, 1994, the related statement of operations
for the year then ended, the statements of changes in net assets for the
years ended June 30, 1994 and 1993, and the financial highlights for the
period February 3, 1988 (commencement of operations) to June 30, 1994.
These financial statements and financial highlights are the responsibility
of the Fund's management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of securities owned at June 30, 1994 by correspondence with
the custodian and brokers; where replies were not received from brokers,
we performed other auditing procedures. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.

In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Oppenheimer
Main Street Income and Growth Fund at June 30, 1994, the results of its
operations, the changes in its net assets, and the financial highlights
for the respective stated periods, in conformity with generally accepted
accounting principles.

DELOITTE & TOUCHE

Denver, Colorado
July 22, 1994

Statement of Investments June 30, 1994
Face Market Value
Amount See Note 1
- ------
Repurchase Agreements--17.8%
- ------
Repurchase agreement with First Chicago Capital Markets, 4.22%,
dated 6/30/94,
to be repurchased at $162,119,001 on 7/1/94, collateralized by
U.S. Treasury
Nts., 3.875%--9.25%, 12/31/94--11/30/98, with a value of
$117,837,239 and U.S.
Treasury Bills, 0%, 6/29/95, with a value of $47,565,732 (Cost
$162,100,000)
$162,100,000 $162,100,000
- ------
Long-Term U.S. Government Obligations--2.2%
- ------
U.S. Treasury Nts., 7.25%, 5/15/04 10,000,000 9,943,750

- ------

U.S. Treasury STRIPS, 0%, Series S, 5/15/14 46,878,000
9,862,284
- ------
Total Long-Term U.S. Government Obligations (Cost $20,067,204)
19,806,034
- ------
Corporate Bonds and Notes--7.6%
- ------
Agnico Eagle, 3.50% Cv. Sr. Nts., 1/27/04 2,000,000
1,650,000
- ------
Arch Communications Group, 6.75% Cv. Sub. Debs., 12/1/03(2)
1,450,000 1,493,500
- ------
Chiron Corp., 1.90% Cv. Sub. Nts., 11/17/00(2) 6,000,000
4,080,000
- ------
Cypress Semiconductor Corp., 3.15% Cv. Sub. Nts., 3/15/01(2)
8,000,000 6,060,000
- ------
Delta Airlines, Inc., 3.23% Cv. Sub. Nts., 6/15/03 5,000,000
3,443,750
- ------
Eagle Hardware & Garden, Inc., 6.25% Cv. Sub. Debs., 3/15/01
4,500,000 3,420,000
- ------
Empresas Ica Sociedad, 5% Cv. Sub. Debs., 3/15/04 4,500,000
4,140,000
- ------
Genesis Health Ventures, Inc., 6% Cv. Sr. Sub. Debs., 11/30/03
750,000 915,000
- ------
Interpool, Inc., 5.25% Cv. Sub. Exch. Nts., 12/15/18
1,000,000 805,000
- ------
IVAX Corp., 6.50% Cv. Sub. Nts., 11/15/01(2) 2,000,000
1,637,500
- ------
L.A. Gear, Inc., 7.75% Cv. Sub. Debs., 11/30/02 3,000,000
2,400,000
- ------
McKesson Corp., 4.50% Cv. Sub. Debs., 3/1/04 4,000,000
3,950,000
- ------
Noble Affiliates, Inc., 4.25% Cv. Sub. Nts., 11/1/03
4,500,000 4,381,875
- ------
Novacare, Inc., 5.50% Cv. Sub. Debs., 1/15/00 3,000,000
2,801,250
- ------
Physicians Clinical Laboratory, Inc., 7.50% Cv. Sub. Debs.,
8/15/00(2)
1,000,000 1,003,750
- ------
Rohr, Inc., 7.75% Cv. Sub. Nts., 5/15/04 2,800,000
3,290,000
- ------
Seagate Technology, 5% Cv. Sub. Debs., 11/1/03(2) 1,000,000
920,000
- ------
Seagate Technology, 6.75% Cv. Sub. Debs., 5/1/12 4,000,000
3,370,000
- ------
Shangri-La Asia Ltd., 2.875% Cv.Sub.Debs., 6/16/00(2)
1,500,000 1,237,500
- ------
Sierra On-Line, Inc., 6.50% Cv. Sub. Nts., 4/1/01(2)
3,500,000 2,887,500
- ------
Softe SA, 4.25% Cv. Debs., 7/30/98(2) 2,350,000,000(4)
1,657,045
- ------
Synoptics Communications, Inc., 5.25% Cv. Sub. Debs., 5/15/03(2)
3,000,000
2,118,750
- ------
Time Warner, Inc., 8.75% Cv. Sr. Nts., 1/10/15 11,000,000
11,041,250
- ------
Total Corporate Bonds and Notes (Cost $71,587,174) 68,703,670

<PAGE>

- ------

Market Value
Date/Price Units See Note 1
- ------
Indexed Instruments--0.2% Nikkei Index (Cost $2,895,000)
Nov./$21,378
5,000 $1,740,000
- ------
Rights, Warrants and Certificates--0.1%
- ------
American Satellite Networks Wts., Exp. 6/99 18,750 0
- ------
Banco Santander Rts., Exp 7/1/94 100,000 547,109
- ------
Total Rights, Warrants and Certificates (Cost $0) 547,109
Shares
- ------
Preferred Stocks--4.3%
- ------
AMR Corp., $3.00 Cum. Cv. Depositary Shares, Series A(2)
225,000 9,956,250
- ------

Citicorp, $1.217 Cv. Depositary Shares, Series 15 200,000
3,925,000

- ------
Freeport-McMoRan Copper & Gold, Inc., $1.875 Cv. Exch. Depositary
Shares
175,000 3,959,375
- ------
James River Corp., 9% Cv. Exch. Depositary Shares, Series P
400,000 7,050,000
- ------
Nacional Financiera (TMX), 11.25% Cv., Exch., Series, 5/15/98,
Preferred
Redeemable Increased Dividend Equity Security 50,000
3,062,500
- ------
Noble Drilling Corp., $2.25 Cv. Exch., Series A 20,000
850,000
- ------
Salomon, Inc., 6.125% Cv., Exch. Series, Pfd. Equity Linked
Security
100,000 3,475,000
- ------
Santa Fe Energy Resources, Inc., $.732 Cv. Exch. Series A
325,000 3,128,125
- ------
Standish Care Co., $4.50 Cv., Series A(3) 60,000 547,500
- ------
Unisys Corp., $3.75 Cv., Series A 100,000 3,437,500
- ------
Total Preferred Stocks (Cost $42,093,807) 39,391,250
- ------
Common Stocks--69.0%
- ------
Basic Materials--3.5%
- ------
Chemicals--2.6% Bush Boake Allen, Inc.(1) 390,000
6,825,000
- ------
Great Lakes Chemical Corp. 90,000 4,871,250
- ------
Imperial Chemical Industries PLC, ADS 150,000 7,125,000
- ------
Methanex Corp.(1) 400,000 4,700,000
- ------
23,521,250

<PAGE>

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

Market Value
Shares See Note 1
- ------
Gold--0.1% MK Gold Co.(1) 150,000 $806,250
- ------
Metal: Miscellaneous--0.4% Birmingham Steel Corp. 125,000
3,375,000
- ------
Steel--0.4% AK Steel Holding Corp.(1) 150,000
3,825,000
- ------
Consumer Cyclicals--14.6%
- ------
Airlines--2.8% Atlantic Southeast Airlines, Inc. 360,000
8,730,000
- ------
Comair Holdings, Inc. 200,000 4,050,000
- ------
Continental Airlines, Inc., Cl. B(1) 300,000 3,862,500
- ------
SkyWest, Inc. 25,000 637,500
- ------
UAL Corp.(1) 65,000 8,206,250
- ------
25,486,250
- ------
Automobiles--1.9% Fiat SpA Di Risp. 815,900 1,948,201
- ------
Fiat SpA, Preference(1) 2,584,100 6,423,312
- ------
Volkswagon AG 18,000 5,361,155
- ------
Volvo AB, Series B Free 35,500 3,095,198
- ------
16,827,866
- ------
Broadcast Media--0.9% IDB Communications Group, Inc.(1)
450,000 4,162,500
- ------
International Cablecasting Technologies, Inc.(1) 240,000
840,000
- ------
Lin Broadcasting Corp.(1) 30,000 3,592,500
- ------
8,595,000
- ------
Entertainment--0.4% Imax Corp.(1) 200,000 1,825,000
- ------
Iwerks Entertainment, Inc.(1) 250,000 1,656,250
- ------
3,481,250
- ------
Household Furnishings and
Appliances--0.7%
Rival Manufacturing Co. 110,000 2,255,000
- ------
Shaw Industries, Inc. 250,000 4,125,000
- ------
6,380,000
- ------
Leisure Time--1.0% Bally Gaming International, Inc.(1)
125,000 1,531,250
- ------
Brunswick Corp. 150,000 3,300,000
- ------
Innovative Gaming Corp. of America(1) 175,000 1,268,750
- ------

Outboard Marine Corp. 150,000 3,000,000

- ------
9,100,000

<PAGE>

- ------

Market Value
Shares See Note 1
- ------
Manufactured Housing--0.1% Shelter Components Corp.
97,500 $1,255,313
- ------
Publishing--0.2% Meredith Corp. 50,000 2,125,000
- ------
Restaurants--0.5% Applebee's International, Inc. 400,000
4,900,000
- ------
Retail Stores: Ames Department Stores, Inc.(1) 300,000
975,000
Department Stores--0.1%
- ------
Retail: Specialty--3.7% Bed Bath & Beyond, Inc.(1)
100,000 2,862,500
- ------
Blockbuster Entertainment Corp. 200,000 5,175,000
- ------
Brookstone, Inc.(1) 200,000 3,050,000
- ------
CML Group, Inc. 250,000 2,937,500
- ------
Lowe's Cos., Inc. 260,000 8,905,000
- ------
Rite Aid Corp. 470,000 9,517,500
- ------
Spiegel, Inc., Cl. A 75,000 1,425,000
- ------
33,872,500
- ------
Retail: Specialty Apparel--0.5% Cato Corp. Cl. A 325,000
4,103,125
- ------
Shoes--1.2% Nike Incorporated Cl. B 175,000
10,456,250
- ------
Textiles: Apparel
Manufacturers--0.6%
Donnkenny, Inc.(1) 122,500 2,955,313
- ------
Norton McNaughton, Inc.(1) 100,000 2,025,000
- ------
4,980,313
- ------
Consumer Non-Cyclicals--8.6%
- ------
Drugs--0.5% Lilly (Eli) & Co. 50,000 2,843,750
- ------
Neurogen Corp.(1) 160,000 1,040,000
- ------
3,883,750
- ------
Food Processing--1.7% IBP, Inc. 175,000 4,659,375
- ------
McCormick & Co., Inc., Non-Vtg. 300,000 6,075,000
- ------
Pet, Inc. 225,000 4,190,625
- ------
Ralston-Continental Baking Group(1) 125,000 609,375
- ------
15,534,375
- ------
Food Wholesalers--0.3% Food Lion, Inc., Cl. A 450,000
2,700,000
- ------
Healthcare: Diversified--1.2% Bristol-Myers Squibb Co.
125,000 6,703,125
- ------
Theratx, Inc.(1) 370,000 4,162,500
- ------
10,865,625

<PAGE>

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

Market Value
Shares See Note 1
- ------
Healthcare: Alpha Beta Technology, Inc.(1) 95,000
$1,021,250
Miscellaneous--2.5%
- ------
Athena Neurosciences, Inc.(1) 120,000 810,000
- ------
COR Therapeutics, Inc.(1) 200,000 2,350,000
- ------
Cyto Therapeutics, Inc.(1) 100,000 562,500
- ------
Dentsply International, Inc.(1) 150,000 5,250,000
- ------
Matrix Pharmaceutical, Inc.(1) 200,000 2,050,000
- ------
Noven Pharmaceuticals, Inc.(1) 175,000 2,362,500
- ------
Pioneer Hi-Bred International, Inc. 69,400 2,272,850
- ------
ProCyte Corporation(1) 150,000 1,687,500
- ------
United Healthcare Corp. 100,000 4,587,500
- ------
22,954,100
- ------
Hospital Management--0.1% Pediatric Services of America,
Inc.(1)
150,000 1,087,500
- ------
Medical Products--1.0% St. Jude Medical, Inc. 67,500
2,193,750
- ------

Sybron Corp. of Delaware(1) 85,000 2,550,000

- ------
Ventritex, Inc.(1) 250,000 4,656,250
- ------
9,400,000
- ------
Tobacco--1.3% Philip Morris Cos., Inc. 225,000
11,587,500
- ------
Energy--3.7%
- ------
Oil: Exploration and Apache Corp. 200,000 5,525,000
Production--0.6%
- ------
Oil: Integrated Domestic--1.1% Atlantic Richfield Co.
100,000 10,212,500
- ------
Oil: Integrated
International--0.6%
Elf Aquitaine, Sponsored ADR(1) 150,000 4,987,500
- ------
Oil and Gas Drilling--0.3% Basin Exploration, Inc.(1)
100,000 850,000
- ------
Energy Service Company, Inc.(1) 125,000 2,156,250
- ------
3,006,250
- ------
Oil Well Services and
Equipment--1.1%
McDermott International, Inc. 100,000 2,500,000
- ------
Oceaneering International, Inc.(1) 200,000 2,800,000
- ------
Pride Petroleum Services(1) 200,000 1,087,500
- ------
Weatherford International, Inc.(1) 290,000 3,915,000
- ------
10,302,500
- ------
Financial--8.9%
- ------
Financial Services:
Miscellaneous--1.9%
First Financial Caribbean Corp. 27,000 297,000
- ------
H & R Block Incorporated 200,000 7,850,000
- ------
Japan OTC Equity Fund, Inc.(1) 200,000 2,475,000
- ------
Korea Equity Fund, Inc.(1) 110,000 1,141,250
- ------
Resource Bancshares Mortgage Group, Inc.(1) 84,000
798,000
- ------
Taiwan Fund, Inc. 75,000 2,015,625
- ------
Vallicorp Holdings, Inc. 171,000 2,565,000
- ------
17,141,875

<PAGE>

- ------

Market Value
Shares See Note 1
- ------
Insurance: Life--0.2% Southwestern Life Corp.(1) 365,800
$1,920,450
- ------
Insurance: Multi-line--0.3% CCP Insurance, Inc. 150,000
3,056,250
- ------
Insurance: Property and St. Paul Cos., Inc. (The)
200,000 8,025,000
Casualty--0.9%
- ------
Major Banks: Other--1.2% Banco de Santander SA 100,000
3,598,003
- ------
BankAmerica Corp. 125,000 5,718,750
- ------
Svenska Handelsbanken, Inc. 108,100 1,448,933
- ------
10,765,686
- ------
Major Banks: Regional--2.5% CoreStates Financial Corp.
175,000 4,506,250
- ------
First Interstate Bancorp 75,000 5,775,000
- ------
Midlantic Corp. 100,000 2,925,000
- ------
Norwest Corp. 200,000 5,225,000
- ------
West One Bancorp 150,000 4,312,500
- ------
22,743,750
- ------
Money Center Banks--0.6% First Chicago Corp. 120,000
5,775,000
- ------
Savings and Loans/Holding Cos.--1.3%
Charter One Financial, Inc. 190,000 3,847,500
- ------
Commercial Federal Corp.(1) 200,000 4,700,000
- ------
GP Financial Corp. 150,000 3,337,500
- ------
11,885,000
- ------
Industrial--5.2%
- ------
Building Materials Group--1.2% Centex Construction Products,
Inc.(1)
250,000 2,968,750
- ------
Martin Marietta Materials, Inc. 150,000 3,300,000
- ------
National Gypsum Co.(1) 100,000 3,075,000
- ------

TJ International, Inc. 100,000 1,950,000

- ------
11,293,750
- ------
Commercial Services--1.2% Manpower, Inc. 200,000
4,200,000
- ------
Safety-Kleen Corp. 200,000 3,400,000
- ------
Wallace Computer Services, Inc. 100,000 3,200,000
- ------
10,800,000
- ------
Electrical Equipment--0.3% Methode Electronics, Inc., Cl. A
150,000 2,550,000
- ------
Machine Tools--0.4% Acme-Cleveland Corp. 93,100
965,913
- ------
Greenfield Industries-GTD 125,000 2,437,500
- ------
3,403,413

<PAGE>

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

Market Value
Shares See Note 1
- ------
Manufacturing: Diversified
Industrials--0.3%
Watts Industries, Inc., Cl. A 125,000 $2,906,250
- ------
Railroads--0.3% Santa Fe Pacific Corp.(1) 150,000
3,131,250
- ------
Transportation:
Miscellaneous--0.8%
Airborne Freight Corp. 150,000 5,212,500
- ------
Kirby Corp.(1) 125,000 2,046,875
- ------
7,259,375
- ------
Truckers--0.6% Roadway Services, Inc. 90,000
5,670,000
- ------
Pollution Control--0.1% Newpark Resources, Inc.(1) 75,000
1,200,000
- ------
Technology--14.1%
- ------
Aerospace/Defense--0.5% Martin Marietta Corp. 100,000
4,412,500
- ------
Communication:
Equipment/Manufacturers--0.2%
CMG Information SVS Inc.(1)(3) 234,000 2,106,000
- ------
Computer Software and
Services--6.7%
Adobe Systems, Inc. 100,000 2,725,000
- ------
Alias Research, Inc.(1) 215,000 2,821,875
- ------
BMC Software, Inc.(1) 70,000 3,062,500
- ------
Banyan Systems, Inc.(1) 31,000 399,125
- ------
Cadence Design Systems(1) 150,000 2,512,500
- ------
Ciber, Inc.(1) 135,000 1,181,250
- ------
Computer Associates International, Inc. 100,000 4,000,000
- ------
Cornerstone Imaging, Inc.(1) 95,000 1,377,500
- ------
Exabyte Corp.(1) 100,000 1,425,000
- ------
Intersolv, Inc.(1) 205,000 2,203,750
- ------
Legent Corp.(1) 125,000 3,375,000
- ------
Micrografx, Inc.(1) 255,000 1,657,500
- ------
Microsoft Corp.(1)(5) 100,000 5,150,000
- ------
NetManage, Inc.(1) 200,000 2,800,000
- ------
Oracle Systems Corp.(1)(5) 75,000 2,812,500
- ------
Platinum Technology, Inc.(1) 125,000 1,625,000
- ------
QuickResponse Services, Inc.(1) 100,000 1,000,000
- ------
Reynolds & Reynolds Co., Cl. A 275,000 6,359,375
- ------
SHL Systemhouse, Inc.(1) 350,000 2,231,250
- ------
Sap AG, Preference 2,750 5,520,916
- ------
Shared Medical Systems Corp. 100,000 2,400,000
- ------
Softkey International, Inc.(1) 200,000 2,500,000
- ------
Virtuality Group PLC(1) 300,000 842,751
- ------
Wavefront Technologies, Inc.(1) 150,000 975,000
- ------
60,957,792

<PAGE>

- ------

Market Value
Shares See Note 1
- ------

Computer Systems--0.7% Auspex Systems, Inc.(1) 100,000
500,000

- ------
International Business Machines Corp. 60,000 3,525,000
- ------
Komag Incorporated(1) 100,000 1,850,000
- ------
Radius, Inc.(1) 170,000 828,750
- ------
6,703,750
- ------
Electronics--0.4% California Micro Devices Corp.(1)
150,000 $3,225,000
- ------
Electronics:
Instrumentation--0.3%
Recoton Corp.(1) 90,000 2,857,500
- ------
Electronics:
Semiconductors--1.0%
Intel Corp. 75,000 4,387,500
- ------
Micron Technology, Inc. 125,000 4,312,500
- ------
8,700,000
- ------
Office Equipment and
Supplies--0.5%
Moore Corp. Ltd. 250,000 4,218,750
- ------
Supermac Technology, Inc.(1) 50,000 293,750
- ------
4,512,500
- ------
Telecommunications--3.8% A+ Communications, Inc.(1)
230,000 2,472,500
- ------
Airtouch Communications, Inc.(1) 150,000 3,543,750
- ------
American Mobile Systems, Inc.(1) 102,000 1,326,000
- ------
Atlantic Tele-Network, Inc. 240,000 1,980,000
- ------
Ericsson Telefonaktiebolaget 111,900 5,591,736
- ------
Executive Telecard, Ltd.(1) 135,000 1,029,375
- ------
MCI Communications Corp. 200,000 4,425,000
- ------
MFS Communications Co., Inc.(1) 150,000 3,712,500
- ------
McCaw Cellular Communications, Inc.(1) 125,000 6,468,750
- ------
Millicom International Cellular SA(1) 210,200 4,361,650
- ------
34,911,261
- ------
Utilities--10.4%
- ------
Electric Cos.--6.6% Empresa Nacional De Electricidad--ADR
200,000 8,975,000
- ------
FPL Group, Inc. 250,000 7,468,750
- ------
Houston Industries, Inc. 275,000 8,971,875
- ------
Ohio Edison Co. 125,000 2,234,375
- ------
Pacific Gas & Electric Co. 250,000 5,937,500
- ------
Peco Energy Co. 225,000 5,934,375
- ------
Public Service Co. of Colorado 100,000 2,612,500
- ------
Public Service Enterprise Group, Inc. 300,000 7,800,000
- ------
Texas Utilities Co. 225,000 7,059,375
- ------
Union Electric Co. 100,000 3,175,000
- ------
60,168,750

<PAGE>

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

Market Value
Shares See Note 1
- ------
Natural Gas--1.2% Williams Cos., Inc. (The) 375,000
$10,734,375
- ------
Telephone--2.6% Bell Atlantic Corp. 200,000
11,200,000
- ------
GTE Corp. 250,000 7,875,000
- ------
Telefonica de Espana, ADS 350,000 4,707,418
- ------
23,782,418
- ------
Total Common Stocks (Cost $651,024,233) 628,710,862
- ------
Total Investments, at Value (Cost $949,767,418) 101.2%
920,998,925
- ------
Liabilities in Excess of Other Assets (1.2) (11,130,573)
- ------ ------
Net Assets 100.0% $909,868,352
- ------ ------
- ------ ------
1. Non-income producing security.
2. Restricted security--See Note 5 of Notes to Financial
Statements.

3. Affiliated company. Represents ownership of at least 5% of the
voting
securities of the issuer and is or was an affiliate, as defined
in the
Investment Company Act of 1940, at or during the year ended June
30, 1994. The
aggregate fair value of all securities of affiliated companies as
of June 30,
1994 amounted to $2,653,500. Transactions during the period in
which the issuer
was an affiliate are as follows:

Balance
Balance
June 30, 1993 Gross Additions Gross Reductions
June 30, 1994
- ------ ------ ------
- ------
Shares Cost Shares Cost Shares Cost
Shares Cost
- ------
Standish Care Co., $4.50 Cv., Series A -- $-- 60,000
$ 649,995
-- $-- 60,000 $ 649,995
- ------
CMG Information SVS Inc. -- -- 234,000 1,967,000
-- --
234,000 1,967,000
- ------ ------
$2,616,995 $2,616,995
- ------ ------
- ------ ------
4. Face amount reported in foreign currency.
5. Securities with an aggregate market value of $5,387,500 are
held in escrow to
cover outstanding call options, as follows:

Market
Shares Expiration Exercise Premium
Value
Subject to Call Date Price Received
See Note 1
- ------
Microsoft Corp. 50,000 7/94 $52.50 $ 92,247
$ 43,750
Oracle Systems 75,000 7/94 35.00 147,745
215,625
- ------ ------ ------
125,000 239,992 259,375
See accompanying Notes to Financial Statements.

<PAGE>

- ------
Statement of Assets and Liabilities June 30, 1994

- ------
Assets Investments, at value (cost $949,767,418)--see
accompanying
statements $920,998,925
- ------
Cash 914,813
- ------
Receivables:
Shares of capital stock sold 20,385,032
Investments sold 17,852,790
Dividends and interest 2,838,873
- ------
Other 106,676
- ------
Total assets 963,097,109
- ------
Liabilities Options written, at value (premiums received
$239,992)--see
accompanying statement--Note 6 259,375
Payables and other liabilities:
Investments purchased 47,827,181
Shares of capital stock redeemed 4,054,615
Distribution and service plan fees--Note 4 443,112
Other 644,474
- ------
Total liabilities 53,228,757
- ------
Net Assets $909,868,352
- ------
- ------
- ------
Composition of Net Assets
Par value of shares of capital stock 446,277
- ------
Additional paid-in capital 953,159,883
- ------
Undistributed net investment income 706,011
- ------
Accumulated net realized loss from investment and written option
transactions
(15,645,364)
- ------
Net unrealized depreciation on investments and translation of
assets and
liabilities denominated in foreign currencies (28,798,455)
- ------
Net assets $909,868,352
- ------
- ------
- ------

Net Asset Value
Per Share
Class A Shares:
Net asset value and redemption price per share (based on net
assets of
$739,552,177 and 36,250,537 shares of capital stock outstanding)
$20.40
Maximum offering price per share (net asset value plus sales
charge of 5.75% of
offering price) $21.64

- ------
Class C Shares:
Net asset value, redemption price and offering price per share
(based on net
assets of $170,316,175 and 8,377,158 shares of capital stock
outstanding)
$20.33

See accompanying Notes to Financial Statements.

<PAGE>

- ------
Statement of Operations For the Year Ended June 30, 1994

- ------
Investment Income Dividends $8,519,789
- ------
Interest 3,264,314
- ------
Total income 11,784,103
- ------
Expenses Management fees--Note 4 1,817,623
- ------
Transfer and shareholder servicing agent fees--Note 4 850,630
- ------
Distribution and service plan fees:
Class A--Note 4 643,787
Class C--Note 4 413,111
- ------
Registration and filing fees:
Class A 304,239
Class C 62,520
- ------
Shareholder reports 160,322
- ------
Custodian fees and expenses 29,902
- ------
Legal and auditing fees 21,002
- ------
Directors' fees and expenses 2,648
- ------
Other 42,633
- ------
Total expenses 4,348,417
- ------
Net Investment Income 7,435,686
- ------
Realized and Unrealized
Loss on Investments
Net realized loss on investments (12,425,245)
- ------
Net change in unrealized depreciation on investments
(36,662,021)
- ------
Net realized and unrealized loss on investments (49,087,266)
- ------
Net Decrease in Net Assets Resulting From Operations
$(41,651,580)
- ------
- ------
See accompanying Notes to Financial Statements.

<PAGE>

- ------
Statements of Changes in Net Assets
Year Ended Year Ended
June 30, 1994 June 30, 1993
- ------
Operations Net investment income $7,435,686 $398,115
- ------
Net realized gain (loss) on investments and options written
(12,425,245) 6,992,957
- ------
Net change in unrealized depreciation or appreciation on
investments
(36,662,021) 6,820,214
- ------ ------
Net increase (decrease) in net assets resulting from operations
(41,651,580) 14,211,286
- ------
Dividends and Distributions to Shareholders
Dividends from net investment income:
Class A ($.356 and $.192 per share, respectively) (5,859,657)
(434,312)
Class C ($.136 per share) (815,401) --
- ------
Distributions from net realized gain on investments and options
written:
Class A ($2.202 per share) -- (4,252,038)
- ------
Distributions in excess of gains:
Class A ($1.989 per share) (9,339,980) --
- ------
Capital Stock
Transactions
Net increase in net assets resulting from Class A
capital stock transactions--Note 2 727,055,604 21,779,236
- ------
Net increase in net assets resulting from Class C
capital stock transactions--Note 2 182,249,457 --
- ------

Net Assets Total increase 851,638,443 31,304,172

- ------
Beginning of year 58,229,909 26,925,737
- ------ ------
End of year (including undistributed net investment income of
$706,011
and $31,753, respectively) $909,868,352 $58,229,909
- ------ ------
- ------ ------

See accompanying Notes to Financial Statements.

<PAGE>

- ------
Financial Highlights

Expenses, before reimbursement
from or assumption by the Manager 1.28% 1.46% 1.66%
1.84%
2.21% 2.46% 10.54% 2.11%

Expenses, net of reimbursement
from or assumption by the Manager N/A N/A N/A N/A
N/A
2.12%(3) N/A N/A
- ------
Portfolio turnover rate(5) 199.4% 283.0% 290.1%
208.9%
214.3% 136.8% 18.8% 199.4%
1. For the period from December 1, 1993 (inception of offering)
to June 30,
1994.
2. For the period from February 3, 1988 (commencement of
operations) to June 30,
1988.
3. Net investment income would have been $.20 per share absent
the voluntary
expense reimbursement, resulting in an expense ratio of 2.46%.
4. Assumes a hypothetical initial investment on the business day
before the
first day of the fiscal period, with all dividends and
distributions reinvested
in additional shares on the reinvestment date, and redemption at
the net asset
value calculated on the last business day of the fiscal period.
Sales charges
are not reflected in the total returns.
5. The lesser of purchases or sales of portfolio securities for a
period,
divided by the monthly average of the market value of portfolio
securities owned
during the period. Securities with a maturity or expiration date
at the time of
acquisition of one year or less are excluded from the
calculation. Purchases and
sales of investment securities (excluding short-term securities)
for the year
ended June 30, 1994 were $1,510,599,271 and $494,572,017,
respectively.
See accompanying Notes to Financial Statements.

<PAGE>

- ------
Notes to Financial Statements

- ------
1. Significant Accounting Policies
Oppenheimer Main Street Income & Growth Fund (the Fund), formerly
named Main
Street Funds, Inc.-Income & Growth Fund, is a separate series of
Oppenheimer
Main Street Funds, Inc., an open-end management investment
company registered
under the Investment Company Act of 1940, as amended. The Fund's
investment
advisor is Oppenheimer Management Corporation (the Manager). The
Fund offers
both Class A and Class C shares. Class A shares are sold with a
front-end sales
charge. Class C shares may be subject to a contingent deferred
sales charge.
Both classes of shares have identical rights to earnings, assets
and voting
privileges, except that each class has its own distribution plan,
expenses
directly attributable to a particular class and exclusive voting
rights with
respect to matters affecting a single class. The following is a
summary of
significant accounting policies consistently followed by the
Fund.
- ------

Investment Valuation. Portfolio securities are valued at 4:00
p.m. (New York
time) on each trading day. Listed and unlisted securities for
which such
information is regularly reported are valued at the last sale
price of the day
or, in the absence of sales, at values based on the closing bid
or asked price
or the last sale price on the prior trading day. Long-term debt
securities are
valued by a portfolio pricing service approved by the Board of
Directors.
Long-term debt securities which cannot be valued by the approved
portfolio
pricing service are valued by averaging the mean between the bid
and asked
prices obtained from two active market makers in such securities.
Short-term
debt securities having a remaining maturity of 60 days or less
are valued at
cost (or last determined market value) adjusted for amortization
to maturity of
any premium or discount. Securities for which market quotes are
not readily
available are valued under procedures established by the Board of
Directors to
determine fair value in good faith. A call option is valued based
upon the last
sales price on the principal exchange on which the option is
traded or, in the
absence of any transactions that day, the value is based upon the
last sale on
the prior trading date if it is within the spread between the
closing bid and
asked prices. If the last sale price is outside the spread, the
closing bid or
asked price closest to the last reported sale price is used.

- ------
Repurchase Agreement. The Fund requires the custodian to take
possession, to
have legally segregated in the Federal Reserve Book Entry System
or to have
segregated within the custodian's vault, all securities held as
collateral for
repurchase agreements. If the seller of the agreement defaults
and the value of
the collateral declines, or if the seller enters an insolvency
proceeding,
realization of the value of the collateral by the Fund may be
delayed or
limited.
- ------
Allocation of Income, Expenses and Gains and Losses. Income,
expenses (other
than those attributable to a specific class) and gains and losses
are allocated
daily to each class of shares based upon the relative proportion
of net assets
represented by such class. Operating expenses directly
attributable to a
specific class are charged against the operations of that class.
- ------
Federal Income Taxes. The Fund intends to continue to comply with
provisions of
the Internal Revenue Code applicable to regulated investment
companies and to
distribute all of its taxable income, including any net realized
gain on
investments not offset by loss carryovers, to shareholders.
Therefore, no
federal income tax provision is required.
- ------
Distributions to Shareholders. Dividends and distributions to
shareholders are
recorded on the ex-dividend date.
- ------

Change in Accounting for Distributions to Shareholders. Effective
July 1, 1993,
the Fund adopted Statement of Position 93-2: Determination,
Disclosure, and
Financial Statement Presentation of Income, Capital Gain, and
Return of Capital
Distributions by Investment Companies. As a result, the Fund
changed the
classification of distributions to shareholders to better
disclose the
differences between financial statement amounts and distributions
determined in
accordance with income tax regulations. Accordingly, subsequent
to June 30,
1993, amounts have been reclassified to reflect an increase in
paid-in capital
of $23,375, an increase in undistributed net investment income of
$15,399, and a
decrease in undistributed capital gain on investments of $38,774.
During the
year ended June 30, 1994, in accordance with Statement of
Position 93-2,
undistributed capital gain on investments was increased by
$103,573,
undistributed net investment income was decreased by $101,769,
and paid-in
capital was decreased by $1,804.

- ------
Other. Investment transactions are accounted for on the date the
investments are
purchased or sold (trade date) and dividend income is recorded on
the
ex-dividend date. Discount on securities purchased is amortized
over the life of
the respective securities, in accordance with federal income tax
requirements.
Realized gains and losses on investments and unrealized
appreciation and
depreciation are determined on an identified cost basis, which is
the same basis
used for federal income tax purposes.

<PAGE>

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

- ------
2. Capital Stock The Fund has authorized 102,500,000 shares
of $.01 par
value capital stock (76,250,000 for Class A and 26,250,000 for
Class C).
Transactions in shares of capital stock were as follows:

Year Ended June 30, 1994(1) Year Ended June 30, 1993
- ------ ------
Shares Amount Shares Amount
- ------
Class A:
Sold 34,877,614 $761,137,297 1,080,758
$20,104,977
Dividends and distributions reinvested 704,717 14,641,214
264,954
4,627,593
Issued in connection with the acquisition of Main Street Asset
Allocation Fund--Note 7 72,926 1,179,937
Redeemed (2,260,838) (48,722,907) (231,352)
(4,133,271)
- ------ ------ ------ ------
Net increase 33,321,493 $727,055,604 1,187,286
$21,779,236
- ------ ------ ------ ------
- ------ ------ ------ ------
- ------
Class C:
Sold 8,563,107 $186,240,396 -- $--
Dividends and distributions reinvested 35,985 747,590
- -- --
Redeemed (221,934) (4,738,529) --
- ------ ------ ------ ------
Net increase 8,377,158 $182,249,457 -- $--
- ------ ------ ------ ------
- ------ ------ ------ ------
1. For the year ended June 30, 1994 for Class A shares and for
the period from
December 1, 1993 (inception of offering) to June 30, 1994 for
Class C shares.
- ------
3. Unrealized Gains and Losses on Investments
At June 30, 1994, net unrealized depreciation on investments of
$28,787,847 was
composed of gross appreciation of $23,383,823, and gross
depreciation of
$52,171,670.
- ------
4. Management Fees And Other Transactions With Affiliates

Management fees paid to the Manager were in accordance with the
investment
advisory agreement with the Fund which provides for an annual fee
of .65% on the
first $200 million of net assets with a reduction of .05% on each
$150 million
thereafter to $500 million and .45% on net assets in excess of
$500 million. The
Manager has agreed to reimburse the Fund if aggregate expenses
(with specified
exceptions) exceed the most stringent applicable regulatory limit
on Fund
expenses.

For the year ended June 30, 1994, commissions (sales charges
paid by
investors) on sales of Class A shares totaled $23,502,310, of
which $6,373,770
was retained by Oppenheimer Funds Distributor, Inc. (OFDI), a
subsidiary of the
Manager as general distributor, and by an affiliated
broker/dealer.
Oppenheimer Shareholder Services (OSS), a division of the
Manager, is the
transfer and shareholder servicing agent for the Fund, and for
other registered
investment companies. OSS's total costs of providing such
services are allocated
ratably to these companies.
Under separate approved plans, each class may expend up to
.25% of its net
assets annually to reimburse OFDI for costs incurred in
connection with the
personal service and maintenance of accounts that hold shares of
the Fund,
including amounts paid to brokers, dealers, banks and other
institutions. In
addition, Class C shares are subject to an asset-based sales
charge of .75% of
net assets annually, to reimburse OFDI for sales commissions paid
from its own
resources at the time of sale and associated financing costs. In
the event of
termination or discontinuance of the Class C plan, the Board of
Trustees may
allow the Fund to continue payment of the asset-based sales
charge to OFDI for
distribution expenses incurred on Class C shares sold prior to
termination or
discontinuance of the plan. During the year ended June 30, 1994,
OFDI paid
$20,221 to an affiliated broker/dealer as reimbursement for Class
A personal
service and maintenance expenses and retained $386,830 as
reimbursement for
Class C sales commissions and service fee advances, as well as
financing costs.

<PAGE>

- ------

- ------
5. Restricted Securities
The Fund owns securities purchased in private placement
transactions, without
registration under the Securities Act of 1993 (the Act). The
securities are
valued under methods approved by the Board of Directors as
reflecting fair
value. The Fund intends to invest no more than 10% of its net
assets (determined
at the time of purchase) in restricted and illiquid securities,
excluding
securities eligible for resale pursuant to Rule 144A of the Act
that are
determined to be liquid by the Board of Directors or by the
Manager under
Board-approved guidelines.

Valuation Per
Unit
Security Acquisition Date Cost Per Unit as of June 30,
1994
- ------
AMR Corp. $3.00 Cum. Cv.
Depositary Shares, Series A(1) 3/18/94 $44.84 $44.25
- ------
Arch Communications Group, 6.75%
Cv. Sub. Debs., 12/1/03(1) 6/21/94 $102.50 $103.00
- ------

Chiron Corp., 1.90% Cv. Sub. Nts., 11/17/00(1) 1/21/94
$76.67 $68.00

- ------
Cypress Semiconductor Corp.,
3.15% Cv. Sub. Nts., 3/15/01(1) 3/25/94 $80.30 $75.75
- ------
IVAX Corp., 6.50% Cv. Sub. Nts., 11/15/01(1) 9/22/92
$85.25 $81.87
- ------
Physicians Clinical Laboratory, Inc.,
7.50% Cv. Sub. Debs., 8/15/00(1) 1/13/94 $104.00
$100.37
- ------
Seagate Technology, 5% Cv. Sub. Debs., 11/1/03(1) 6/30/94
$92.00
$92.00
- ------
Shangri-La Asia Ltd., 2.875% Cv. Sub. Debs., 6/16/00(1)
12/13/93 $87.30
$82.50
- ------
Sierra On-Line, Inc., 6.50% Cv. Sub. Nts., 4/1/01(1) 4/13/94
$98.71
$82.50
- ------
Softe SA, 4.25% Cv. Debs., 7/30/98(1) 6/2/94 $117.75
$111.62
- ------
Synoptics Communications, Inc.,
5.25% Cv. Sub. Debs., 5/15/03(1) 5/5/94--5/20/94 $78.14
$70.62
1. Transferable under Rule 144A of the Act.
- ------
6. Call Option Activity Call option activity for the year
ended June 30,
1994 was as follows:

Number of Amount of
Call Option Activity Options Premiums
- ------
Options outstanding at June 30, 1993 -- $--
- ------
Options written 1,250 239,992
- ------
Options expired prior to exercise -- --
- ------
Options exercised -- --
- ------ ------
Options outstanding at June 30, 1994 1,250 $239,992
- ------ ------
- ------ ------
- ------
7. Acquisition On October 16, 1992, the Fund acquired all of
the net assets
of Main Street Asset Allocation Fund (AAF), pursuant to an
Agreement and Plan of
Reorganization approved by the AAF shareholders on October 9,
1992. The Fund
issued 72,926 shares of beneficial interest, valued at
$1,179,937, in exchange
for the net assets, resulting in combined net assets of
$30,151,286 on October
16, 1992. The net assets acquired included net unrealized
appreciation of
$145,867 and capital loss carryovers for federal income tax
purposes of $25,921.
The exchange was tax-free.

<PAGE>

Appendix A

DESCRIPTION OF RATINGS

Ratings of Investments

Description of Moody's Investors Service, Inc. Bond Ratings

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

Aa: Bonds which are 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 which are 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 which are rated "Baa" are considered medium grade obligations,
i.e., 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 which are 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 which are 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 which are 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 which are rated "Ca" represent obligations which are speculative
in a high degree and are often in default or have other marked
shortcomings.

C: Bonds which are rated "C" can be regarded as having extremely poor
prospects of ever retaining any real investment standing.

Description of Standard & Poor's Bond Ratings

AAA: "AAA" is the highest rating assigned to a debt obligation and
indicates an extremely strong capacity to pay principal and interest.

AA: Bonds rated "AA" also qualify as high quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority
of instances they differ from "AAA" issues only in small degree.

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

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

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

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

Description of Fitch Investors Service, Inc. Ratings

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

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

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

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

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

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

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

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

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

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

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

<PAGE>

Investment Adviser
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203

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

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

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

Independent Auditors
Deloitte & Touche LLP
1560 Broadway
Denver, Colorado 80202

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

<PAGE>

Oppenheimer
Main Street California
Tax-Exempt Fund

Prospectus dated October 1, 1994

Oppenheimer Main Street California Tax-Exempt Fund (the "Fund"), a
series of Oppenheimer Main Street Funds, Inc., is a mutual fund that seeks
as high a level of current income which is exempt from Federal and
California personal income taxes as is available from investing in
Municipal Securities while attempting to preserve capital. Please refer
to "Investment Policies and Strategies" for more information about the
types of securities the Fund invests in and the risks of investing in the
Fund.

The Fund offers two classes of shares: (1) Class A shares, which are
sold at a public offering price that includes a front-end sales charge,
and (2) Class B shares, which are sold without a front-end sales charge,
although you may pay a sales charge when you redeem your shares, depending
on how long you hold them. A contingent deferred sales charge is imposed
on most Class B shares redeemed within six years of purchase. Class B
shares are also subject to an annual "asset-based sales charge." Each
class of shares bears different expenses. In deciding which class of
shares to buy, you should consider how much you plan to purchase, how long
you plan to keep your shares, and other factors discussed in "How to Buy
Shares" starting on page 13.

<PAGE>

Contents

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

2 Expenses

4 Financial Highlights

5 Investment Objective and Policies

10 How the Fund is Managed

11 Performance of the Fund

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

13 How to Buy Shares
Class A Shares
Class B Shares

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

20 How to Sell Shares
By Mail
By Telephone
Checkwriting

21 How to Exchange Shares

22 Shareholder Account Rules and Policies

24 Dividends, Capital Gains and Taxes

<PAGE>

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

Expenses

The Fund pays a variety of expenses directly for management of its
assets, administration, distribution of its shares and other services, and
those expenses are reflected in the Fund's net asset value per share of
each class. As a shareholder, you pay those expenses indirectly.
Shareholders pay other expenses directly, such as sales charges. The
following tables are provided to help you understand your direct expenses
of investing in the Fund and your share of the Fund's operating expenses
that you might expect to bear indirectly. The calculations are based on
the Fund's expenses during its fiscal year ended June 30, 1994.

-- Shareholder Transaction Expenses are charges you pay when you buy
or sell shares of the Fund. Please refer to pages 14 through 22 for an
explanation of how and when these charges apply.
<TABLE>
<CAPTION>
Class A Class B
Shares Shares
- --------------------------------------------------------------------------
<S> <C> <C>
Maximum Sales 4.75% None
Charge on Purchases
(as a % of offering price)
- -------------------------------------------------------------------------
Sales Charge on
Reinvested Dividends None None
- -------------------------------------------------------------------------
Deferred Sales Charge None(1) 5% in the first year,
(as a % of the lower of the declining to 1% in
original purchase price or the six year and
redemption proceeds eliminated thereafter
- -------------------------------------------------------------------------
Exchange Fee $5.00(2) $5.00(2)
<FN>
(1)If you invest more than $1 million in Class A shares, you may have to
pay a sales charge of up to 1% if you sell your shares within 18 calendar
months from the end of the calendar month during which you purchased those
shares. See "How to Buy Shares," below.
(2)Fee is waived for automated exchanges on PhoneLink, described in "How
to Buy Shares."
</TABLE>

-- Annual Fund Operating Expenses are paid out of the Fund's assets
and represent the Fund's expenses in operating its business. For example,
the Fund pays management fees to its investment adviser, Oppenheimer
Management Corporation (the "Manager"), and other regular expenses for
services, such as transfer agent fees, custodial fees paid to the bank
that holds its portfolio securities, audit fees and legal and other
expenses. The following numbers are projections of the Fund's business
expenses based on the Fund's expenses in its last fiscal year. These
amounts are shown as a percentage of the average net assets of each class
of the Fund's shares for that year. The "12b-1 Distribution Plan Fees"
for Class B shares are the Distribution and Service Plan Fee (maximum
Service Plan fee of 0.25%) and the asset-based sales charge of 0.75%. The
actual expenses for each class of shares in future years may be more or
less, depending on a number of factors, including the actual amount of the
assets represented by each class of shares. Class B shares were not
publicly sold before October 29, 1993. Therefore, the Annual Fund
Operating Expenses shown for Class B shares are based on expenses for the
period from October 29, 1993 through June 30, 1994.

<TABLE>
<CAPTION>
Class A Class B
Shares Shares
- -------------------------------------------------------------------------
<S> <C> <C>
Management Fees 0.39% 0 .39%
- -------------------------------------------------------------------------
12b-1 Distribution Plan Fees None 1.00%*
- -------------------------------------------------------------------------
Other Expenses 0.14% 0.23%
- -------------------------------------------------------------------------
Total Fund Operating Expenses 0.53% 1.62%
<FN>
*Includes Service Plan Fee and asset-based sales charge.
</TABLE>

-- Examples. To try to show the effect of these expenses on an
investment over time, we have created the hypothetical examples shown
below. Assume that you make a $1,000 investment in each class of shares
of the Fund, and that the Fund's annual return is 5%, and that its
operating expenses for each class are the ones shown in the chart above.
If you were to redeem your shares at the end of each period shown below,
your investment would incur the following expenses by the end of each
period shown:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years(1)
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Shares $52 $63 $75 $109
- -------------------------------------------------------------------------
Class B Shares $66 $81 $108 $135

If you did not redeem your investment, it would incur the following
expenses:

Class A Shares $52 $63 $75 $109
- -------------------------------------------------------------------------
Class B Shares $16 $51 $88 $135
<FN>
(1)The Class B expenses in years 7 through 10 are based on the Class A
expenses shown above, because the Fund automatically converts your Class
B shares into Class A shares after 6 years. Because of the asset-based
sales charge and contingent deferred sales charge, long-term Class B
shareholders could pay the economic equivalent of an amount greater than
the maximum front-end sales charge permitted under applicable regulatory
requirements. The automatic conversion is designed to minimize the
likelihood that this will occur. Please refer to "How to Buy Shares -
Class B Shares" for more information.
</TABLE>

These examples show the effect of expenses on an investment, but are
not meant to state or predict actual or expected costs or investment
returns of the Fund, all of which will vary.

<PAGE>

Financial Highlights

The table on this page presents selected financial information about
the Fund, including per share data and expense ratios and other data based
on the Fund's average net assets. This information has been audited by
Deloitte & Touche LLP, the Fund's independent auditors, whose report on
the Fund's financial statements for the fiscal year ended June 30, 1994,
is included in the Statement of Additional Information. Class B shares
were publicly offered only during a portion of that period, commencing
October 29, 1993.

- ------
Financial Highlights

Class A Class B
- ------ ------
Year Ended Period Ended
June 30, June 30,
1994 1993 1992 1991 1990(2) 1994(1)
- ------
Per Share Operating Data:
Net asset value, beginning
of period $12.66 $12.05 $11.61 $11.56 $11.43
$12.90
Income (loss) from
investment operations:
Net investment income .75 .80 .82 .83(3) .06(3)
.38
Net realized and unrealized
gain (loss) on investments (.80) .64 .45 .05 .13
(1.07)
- ------ ------ ------ ------ ------ ------
Total income (loss) from
investment operations (.05) 1.44 1.27 .88 .19
(.69)
- ------
Dividends and distributions to shareholders:
Dividends from net
investment income (.73) (.81) (.82) (.83) (.06)
(.37)
Dividends in excess of net
investment income (.03) -- -- -- -- (.01)
Distributions from net realized
gain on investments -- (.02) (.01) -- -- --
Distributions in excess of net
realized gain on investments (.03) -- -- -- --
(.03)
- ------ ------ ------ ------ ------ ------

Total dividends and
distributions to shareholders (.79) (.83) (.83) (.83)
(.06) (.41)

- ------
Net asset value, end of period $11.82 $12.66 $12.05 $11.61
$11.56 $11.80
- ------ ------ ------ ------ ------ ------
- ------ ------ ------ ------ ------ ------
- ------
Total Return, at Net Asset Value(4) (.60)% 12.53% 11.21%
7.94% 1.95% (5.42)%
- ------
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $79,555 $72,387 $40,055 $13,924 $2,027
$1,203
- ------
Average net assets
(in thousands) $81,741 $54,840 $26,304 $6,661 $1,685
$649
- ------
Number of shares outstanding
at end of period (in thousands) 6,732 5,719 3,324 1,199
175
102
- ------
Ratios to average net assets:
Net investment income 6.09% 6.46% 6.74% 6.94%
5.48%(5)
4.91%(5)
Expenses .53% .39% .32% .33%(3) .20%(3)(5)
1.62%(5)
- ------
Portfolio turnover rate(6) 20.2% 5.8% 25.7% 14.6% 0.0%
20.2%
[FN]
1. For the period from October 29, 1993 (inception of offering) to June
30, 1994.
2. For the period from May 18, 1990 (commencement of operations) to June
30, 1990.
3. Net investment income would have been $.82 and $.04 per share in 1991
and 1990 absent the voluntary expense assumption, resulting in an expense
ratio of .42% and 1.93%, respectively.
4. Assumes a hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption
at the net asset value calculated on the last business day of the fiscal
period. Sales charges are not reflected in the total returns.
5. Annualized.
6. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation. Purchases and sales of investment securities (excluding
short-term securities) for the year ended June 30, 1994 were $29,672,105
and $15,979,622, respectively.

<PAGE>

Investment Objective and Policies

Objective. The Fund invests its assets to seek as high a level of current
income which is exempt from Federal and California personal income taxes
as is available from investing in Municipal Securities (defined below),
while attempting to preserve capital. The Fund is not intended to be a
complete investment program, and there is no assurance that it will
achieve its objective.

Investment Policies and Strategies. The Fund seeks its objective by
following the fundamental policy of investing, under normal market
conditions, at least 80% of its total assets in California Municipal
Securities.

Dividends paid by the Fund derived from interest attributable to
California Municipal Securities will be exempt from Federal individual
income taxes. Such dividends will also be exempt from California personal
income taxes provided that at the close of each quarter, at least 50% of
the value of the Fund's assets are invested in obligations the interest
of which is exempt from taxation under California law when held by an
individual. Dividends derived from interest on Municipal Securities of
other governmental issuers will be exempt from Federal individual income
tax, but will be subject to California personal income taxes. Any net
interest income on taxable investments and repurchase agreements will be
taxable as ordinary income when distributed to shareholders.

-- Municipal Securities. Municipal Securities are municipal bonds,
municipal notes (including tax anticipation notes, bond anticipation
notes, revenue anticipation notes, construction loan notes and other
loans), tax-exempt commercial paper, certificates of participation and
other debt obligations issued by or on behalf of the State of California,
other states and the District of Columbia, their political subdivisions,
or any commonwealth, territory or possession of the United States, or
their respective agencies, instrumentalities or authorities, the interest
from which, in the opinion of bond counsel for the respective issuer, is
not includable in gross income for purposes of Federal individual income
tax. California Municipal Securities are obligations of the state of
California and its political subdivisions, and their respective agencies,
authorities or instrumentalities, the interest from which, in the opinion
of bond counsel for the respective issuer, is not includable in gross
income for purposes of the California personal income tax. From time to
time the Fund may purchase private activity municipal securities, although
no independent investigation has been made by Oppenheimer Management
Corporation (the "Manager") as to the users of proceeds of bond offerings
or the application of such proceeds.

"Municipal bonds" are Municipal Securities that have a maturity when
issued of one year or more and "municipal notes" are Municipal Securities
that have a maturity when issued of less than one year. The two principal
classifications of Municipal Securities are "general obligations" (secured
by the issuer's pledge of its full faith, credit and taxing power for the
payment of principal and interest) and "revenue obligations" (payable only
from the revenues derived from a particular facility or class of
facilities, or specific excise tax or other revenue source). The Fund may
invest in Municipal Securities of both classifications.

-- Special Considerations - California Municipal Securities. Because
the Fund concentrates its investments in California Municipal Securities,
the market value and marketability of such Municipal Securities and the
interest income to the Fund from them could be adversely affected by a
default or a financial crisis relating to any of such issuers. Investors
should consider these matters as well as economic trends in California,
summarized in the Additional Statement under "Special Investment
Considerations - California Municipal Securities."

-- Investments in Taxable Securities and Temporary Defensive Investment
Strategy. Under normal market conditions, the Fund may invest up to 20%
of its assets in taxable investments, including (i) repurchase agreements;
(ii) Municipal Securities issued to benefit a private user ("Private
Activity Municipal Securities"), the interest from which may be subject
to Federal alternative minimum tax; (iii) debt obligations rated "A-3" or
better by Standard & Poor's Corporation ("Standard & Poor's"), "Prime-3"
or better by Moody's Investors Service, Inc. ("Moody's"), or "F-2" or
better by Fitch Investors Service, Inc. ("Fitch"), which mature in one
year or less ("short-term debt obligations"); (iv) bankers' acceptances,
certificates of deposit, time deposits and U.S. Treasury bills ("cash
equivalents"); and (v) Hedging Instruments.

In times of unstable market or economic conditions, when the Manager
determines it appropriate to do so to attempt to reduce fluctuations in
the value of the Fund's net assets, the Fund may assume a temporary
defensive position and invest an unlimited amount of assets in: (i)
obligations issued or guaranteed by the U.S. Government or its agencies
or instrumentalities; (ii) cash equivalents; (iii) commercial paper rated
in the highest category by an established rating agency; (iv) short-term
debt obligations; (v) certificates of deposit of domestic banks with
assets of $1 billion or more; or (vi) repurchase agreements. To the
extent the Fund assumes a temporary defensive position, a portion of the
Fund's distributions may be subject to Federal and state income taxes and
the Fund may not achieve its objective.

-- Credit Risk and Interest Rate Risk. The values of Municipal
Securities will vary as a result of changing evaluations by rating
services and investors of the ability of the issuers of such securities
to meet interest and principal payments. Generally, higher-yielding
lower-rated Municipal Securities are subject to greater credit risk than
higher-rated bonds. Such values will also change in response to changes
in interest rates. Should prevailing interest rates rise, the values of
outstanding Municipal Securities will probably decline and (if purchased
at principal amount) would sell at a discount. If interest rates fall,
the values of outstanding Municipal Securities will probably increase and
(if purchased at principal amount) would sell at a premium. The magnitude
of these fluctuations will be greater when the average maturity of these
securities is longer. It is anticipated that under normal market
conditions, the Fund's portfolio will have an average weighted maturity
of approximately 7 to 30 years. During periods when the Fund is
defensively invested in municipal notes and municipal commercial paper,
the average weighted maturity of the Fund's portfolio may decline to 3 to
4 years. Changes in the value of Municipal Securities held in the Fund's
portfolio arising from these or other factors will not affect interest
income derived from these securities but will affect the Fund's net asset
value per share.

-- Municipal Lease Obligations. The Fund may invest in certificates
of participation, which are tax-exempt obligations that evidence the
holder's right to share in lease, installment loan or other financing
payments by a public entity. Projects financed with certificates of
participation generally are not subject to state constitutional debt
limitations or other statutory requirements that may be applicable to
Municipal Securities. Payments by the public entity on the obligation
underlying the certificates are derived from available revenue sources;
such revenue may be diverted to the funding of other municipal service
projects. Payments of interest and/or principal with respect to the
certificates are not guaranteed and do not constitute an obligation of the
State of California or any of its political subdivisions. While some
municipal lease securities may be deemed to be "illiquid" securities (the
purchase of which would be limited as described below in "Illiquid and
Restricted Securities"), from time to time the Fund may invest more than
5% of its net assets in municipal lease obligations that the Manager has
determined to be liquid under guidelines set by the Corporation's Board
of Directors.

-- Floating Rate/Variable Rate Obligations. Some of the Municipal
Securities the Fund may purchase may have variable or floating interest
rates. Variable rates are adjusted at stated periodic intervals.
Floating rates are automatically adjusted according to a specified market
rate for such investments, such as the percentage of the prime rate of a
bank, or the 91-day U.S. Treasury bill rate. Such obligations may be
secured by bank letters of credit or other credit support arrangements.

-- Inverse Floaters and Other Derivative Investments. The Fund may
invest in variable rate bonds known as "inverse floaters." These bonds
pay interest at a rate that varies as the yields generally available on
short-term tax-exempt bonds change. However, the yields on inverse
floaters move in the opposite direction of yields on short-term bonds in
response to market changes. As interest rates rise, inverse floaters
produce less current income. Inverse floaters are a type of "derivative
security," which is a specially designed investment whose performance is
linked to the performance of another security or investment. Some inverse
floaters have a "cap" whereby if interest rates rise above the "cap," the
security pays additional interest income. If rates do not rise above the
"cap," the Fund will have paid an additional amount for a feature that
proves worthless. The Fund may also invest in municipal derivative
securities that pay interest that depends on an external pricing
mechanism. Examples are interest rate swaps or caps and municipal bond
or swap indices. The Fund anticipates that it would invest no more than
10% of its total assets in inverse floaters.

In the broadest sense, derivative investments also include
exchange-traded options and futures contracts (see "Writing Covered Calls"
and "Hedging with Options and Futures Contracts," below). The risks of
investing in derivative investments include not only the ability of the
issuer of the derivative investment to pay the amount due on the maturity
of the investment, but also the risk that the underlying security or
investment might not perform the way the Manager expected it to perform.
That can mean that the Fund will realize less principal and/or income than
expected. Another risk of investing in derivative investments is that
their market value could be expected to vary to a much greater extent than
the market value of municipal securities that are not derivative
investments but that have similar credit quality, redemption provisions
and maturities. Certain derivative investments held by the Fund may trade
in the over-the-counter market and may be illiquid - See "Illiquid and
Restricted Securities," below.

-- Ratings of Municipal Securities. Municipal Securities purchased by
the Fund must be rated at the time of purchase within the four highest
rating categories assigned by Moody's, Standard & Poor's or Fitch or, if
unrated, judged by the Manager to be of comparable quality to Municipal
Securities rated within such grades. See Appendix A of the Additional
Statement for a description of these ratings. Investment in unrated
Municipal Securities will not exceed 20% of the Fund's total assets. Not
more than 25% of the Fund's total assets will be invested in Municipal
Securities that are (a) municipal bonds rated either "Baa" by Moody's or
"BBB" by either Standard & Poor's or Fitch, (b) municipal notes rated "SP-
2" by Standard & Poor's, "MIG2" by Moody's or "F-2" by Fitch, or (c) if
unrated Municipal Securities, judged by the Manager to be of comparable
quality to Municipal Securities rated within the grades described in (a)
or (b) above, because such Municipal Securities, although investment
grade, may be subject to greater market fluctuations and risks of loss of
income and principal than higher-rated Municipal Securities, and may be
considered to have some speculative characteristics. A reduction in the
rating of a security after its purchase by the Fund will not require the
Fund to dispose of such security. Securities that have fallen below
investment grade entail a greater risk that the ability of the issuers of
such securities to meet their debt obligations will be impaired.

-- Portfolio Turnover. A change in the securities held by the Fund is
known as "portfolio turnover." The Fund generally will not engage in the
trading of securities to realize short-term gains, but the Fund may sell
securities as the Manager deems advisable to take advantage of
differentials in yield. The "Financial Highlights," above, show the
Fund's portfolio turnover rate during past fiscal years. While short-term
trading increases portfolio turnover, the Fund incurs little or no
brokerage costs because most of the Fund's portfolio transactions are
principal trades without brokerage commissions.

-- Non-diversification. The Fund is a "non-diversified" investment
company under the Investment Company Act. As a result, it may invest its
assets in a single issuer or limited number of issuers without limitation
by the Investment Company Act. However, the Fund intends to conduct its
operations so as to qualify as a "regulated investment company" for
purposes of the Internal Revenue Code of 1986, as amended (the "Internal
Revenue Code"), pursuant to which: (1) not more than 25% of the market
value of the Fund's total assets will be invested in the securities of a
single issuer, and (2) with respect to 50% of the market value of its
total assets, not more than 5% of the market value of its total assets may
be invested in the securities of a single issuer and the Fund must not own
more than 10% of the outstanding voting securities of a single issuer.
An investment in the Fund therefore will entail greater risk than an
investment in a diversified investment company because a higher percentage
of investments among fewer issuers may result in greater fluctuation in
the total market value of the Fund's portfolio, and economic, political
or regulatory developments may have a greater impact on the value of the
Fund's portfolio than would be the case if the portfolio were diversified
among more issuers.

-- Special Risk Considerations - Borrowing. The Fund may not borrow
in excess of 10% of the value of its total assets and it cannot make any
investment when borrowings exceed 5% of its total assets, and it may
borrow only as a temporary measure for extraordinary or emergency
purposes. Interest on borrowed money is an expense the Fund would not
otherwise incur, so that it may have substantially reduced net investment
income during periods of substantial borrowings.

-- When-Issued and Delayed Delivery Transactions. The Fund may
purchase Municipal Securities on a "when-issued" basis, and may purchase
or sell such securities on a "delayed delivery" basis. "When-issued" and
"delayed delivery" refer to securities whose terms and indenture are
available and for which a market exists, but which are not available for
immediate delivery. The Fund does not intend to make such purchases for
speculative purposes. During the period between the purchase and
settlement, no payment is made for the security and no interest accrues
to the buyer from the investment.

-- Repurchase Agreements. The Fund may acquire securities subject to
repurchase agreements to generate income and for liquidity purposes to
meet anticipated redemptions, or pending the investment of proceeds from
sales of Fund shares or settlement of purchases of portfolio investments.
The Fund's repurchase agreements will be fully collateralized. However,
if the seller of the securities fails to pay the agreed-upon repurchase
price on the delivery date, the Fund's risks may include any costs of
disposing of the collateral for the agreement, and losses that might
result from any delays in foreclosing on the collateral. Income earned
on repurchase transactions is not tax-exempt and, accordingly, under
normal market conditions, the Fund will limit its investments in
repurchase transactions to 20% of its total assets. When the Fund assumes
a temporary defensive position, there is no limit on the amount of its
assets that may be subject to repurchase agreements maturing in seven days
or less. See "Repurchase Agreements" in the Additional Statement for more
details.

-- Illiquid and Restricted Securities. Under the policies and
procedures established by the Corporation's Board of Directors, the
Manager determines the liquidity of the Fund's investments. Investments
may be illiquid because of the absence of an active trading market, making
it difficult to value them or dispose of them promptly at an acceptable
price. A restricted security is one that has a contractual restriction
on its resale or which cannot be sold publicly until it is registered
under the Securities Act of 1933. The Fund will not invest more than 10%
of its net assets in illiquid or restricted securities (that limit may
increase to 15%). Certain restricted securities, eligible for resale to
qualified institutional purchasers, are not subject to that limit.

-- Puts and Stand-By Commitments. For liquidity purposes, the Fund may
purchase Municipal Securities with puts from banks, brokers, dealers or
other institutions. The put gives the Fund the right to sell the
underlying security within a specified time at a stated price. Under a
stand-by commitment, a dealer agrees to purchase, at the Fund's option,
specified Municipal Securities at a stated price on same-day settlement.
The aggregate price of a security subject to a put or a stand-by
commitment may be higher than the price which otherwise would be paid for
the security without such put or stand-by commitment, thus increasing the
cost of such security and reducing its yield.

-- Loans of Portfolio Securities. To raise cash for liquidity purposes,
the Fund may lend its portfolio securities to certain types of eligible
borrowers approved by the Board of Directors. Each loan must be
collateralized in accordance with applicable regulatory requirements.
After any loan, the value of the securities loaned must not exceed 25% of
the value of the Fund's net 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. The Fund presently does not intend to engage in loans
of securities in the coming year.

-- Writing Covered Calls. The Fund may write (that is, sell) covered
call options (calls) to raise cash for liquidity purposes (for example,
to meet redemption requirements) or for defensive reasons. The Fund may
write calls only if certain conditions are met: (1) after writing any
call, not more than 25% of the Fund's total assets may be subject to
calls; (2) the calls must be listed on a domestic securities exchange or
quoted on the Automated Quotation System of the National Association of
Securities Dealers, Inc.; in addition, calls on debt securities may be
written in the over-the-counter market; and (3) each call must be
"covered" while it is outstanding; that is, the Fund must own the
securities on which the call is written or it must own other securities
that are acceptable for the escrow arrangements required for calls. If
a covered call written by the Fund is exercised on a security that has
increased in value, the Fund will be required to sell the security at the
call price and will not be able to realize any profit on the security
above the call price.

-- Hedging With Options and Futures Contracts. The Fund may purchase
certain kinds of put and call options, Interest Rate Futures and Municipal
Bond Index Futures, options on Interest Rate Futures and Municipal Bond
Index Futures, and may engage in interest rate swap transactions. These
are all referred to as "Hedging Instruments." The Fund does not use
hedging instruments for speculative purposes. Some of these strategies,
such as selling futures, buying puts and writing covered calls, hedge the
Fund's portfolio against price fluctuations. Other hedging strategies,
such as buying futures, writing put options and buying call options, tend
to increase the Fund's exposure to the market. The hedging instruments the
Fund may use are described below and in greater detail in "Other
Investment Techniques and Strategies" in the Statement of Additional
Information.

The Fund may purchase put options ("puts") which relate to (1)
securities that the Fund owns, (2) Interest Rate Futures and Municipal
Bond Index Futures, whether or not the Fund owns the particular Future in
its portfolio, or (3) municipal bond indices. The Fund may purchase calls
only on debt securities, Interest Rate Futures and Municipal Bond Index
Futures, or to terminate its obligation on a call the Fund previously
wrote. A call or put may not be purchased if the value of all of the
Fund's put and call options would exceed 5% of the Fund's total assets.
Writing puts requires the segregation of liquid assets to cover the put.
The Fund will not write a put if it will require more than 50% of the
Fund's net assets to be segregated to cover the put obligation. At
present, the Fund does not intend to enter into Futures contracts and
option on Futures if, after any such practice, the sum of margin deposits
on Futures and premiums paid on Futures would exceed 5% of the Fund's
total assets.

Hedging instruments can be volatile investments and may involve special
risks. If the Manager uses a hedging instrument at the wrong time or
judges market conditions incorrectly, hedging strategies may reduce the
Fund's return. The Fund could also experience losses if the prices of its
futures and options positions were not correlated with its other
investments or if it could not close out a position because of an illiquid
market for the future or option.

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, in writing puts, there is a risk that the Fund
may be required to buy the underlying security at a disadvantageous price.
These risks and the hedging strategies the Fund may use are described in
greater detail in the Statement of Additional Information.

Other Investment Restrictions. The Fund has certain investment
restrictions that are fundamental policies. Under these fundamental
policies, the Fund cannot do any of the following: (1) lend money except
in connection with the acquisition of debt securities which the Fund's
investment policies and restrictions permit it to purchase; the Fund may
also make loans of portfolio securities, subject to the restrictions
stated under "Loans of Portfolio Securities"; or (2) concentrate
investments to the extent of 25% of its assets in any industry; however,
there is no limitation as to investment in U.S. Government Securities,
Municipal Securities or as to investment in obligations issued by the
State of California or its subdivisions, agencies, authorities or
instrumentalities; the Fund cannot invest in securities or any other
investment other than Municipal Securities, temporary investments and
Hedging Instruments.

How the Fund is Managed

Organization and History. The Fund is one of two investment portfolios
or "series" of Oppenheimer Main Street Funds, Inc. (the "Corporation"),
an open-end, management investment company organized as a Maryland
corporation in 1987. The Fund commenced operations on May 18, 1990.

The Board of Directors has the power, without shareholder approval, to
divide unissued shares of the Fund into two or more classes. The Board
has done so, and the Fund currently has two classes of shares, Class A and
Class B. Each class has its own dividends and distributions and pays
certain expenses which may be different for the different classes. Each
class may have a different net asset value. Each share has one vote at
shareholder meetings, with fractional shares voting proportionally. Only
shares of a particular class vote together on matters that affect that
class alone. Shares are freely transferrable.

-- Portfolio Manager. The Portfolio Manager of the Fund (who is also
a Vice President of the Corporation) is Robert E. Patterson, a Senior Vice
President of the Manager. He has been responsible for the day-to-day
management of the Fund's portfolio since May 18, 1990, the date the Fund
commenced operations. During the past five years, Mr. Patterson has also
served as an officer and portfolio manager for other OppenheimerFunds.

-- Fees and Expenses. Under the Investment Advisory Agreement between
the Manager and the Corporation on behalf of the Fund, the Fund pays a
management fee to the Manager monthly, computed on the aggregate net asset
value of the Fund as of the close of business each day, at the annual rate
of 0.55% of net assets. Pursuant to the Agreement, the Manager has agreed
to waive a portion of the fee when the Fund's net assets are less than
$100 million. The fee rate, reflecting this waiver, is 0.40% when net
assets are $75 million or more but less than $100 million, 0.25% when net
assets are $50 million or more but less than $75 million, 0.15% when net
assets are $25 million or more but less than $50 million, and 0% when net
assets are less than $25 million. When asset level breakpoints are
reached, the fee applies to total net assets of the Fund, not only to
assets in excess of such breakpoint. The Fund's management fee for its
last fiscal year was 0.39% of average annual net assets for Class A shares
and 0.39% for Class B shares.

The Fund pays expenses related to its daily operations, such as
custodian fees, Directors' fees, transfer agency fees, legal and auditing
costs. Those expenses are paid out of the Fund's assets and are not paid
directly by shareholders. However, those expenses affect the net asset
value of shares, and therefore are indirectly borne by shareholders
through their investment. More information about the investment advisory
agreement and the other expenses paid by the Fund is contained in the
Statement of Additional Information.

There is also information about the Fund's brokerage policies and
practices in "Brokerage Policies of the Fund" in the Statement of
Additional Information. Because the Fund purchases most of its portfolio
securities directly from the sellers and not through brokers, it therefore
incurs relatively little expense for brokerage. From time to time it may
use brokers when buying portfolio securities. When deciding which brokers
to use, the Manager is permitted by the investment advisory agreement to
consider whether brokers have sold shares of the Fund or any other funds
for which the Manager serves as investment adviser.

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

Performance of the Fund

Explanation of Performance Terminology. The Fund uses certain terms to
illustrate its performance: "total return" and "yield." These terms are
used to show the performance of each class of shares separately, because
the performance of each class of shares will usually be different, as a
result of the different kinds of expenses each class bears. This
performance information may be useful to help you see how well your
investment has done and to compare it to other funds or market indices,
as we have done below.

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

-- Total Returns. There are different types of total returns used to
measure the Fund's performance. Total return is the change in value of
a hypothetical investment in the Fund over a given period, assuming that
all dividends and capital gains distributions are reinvested in additional
shares. The cumulative total return measures the change in value over the
entire period (for example, ten years). An average annual total return
shows the average rate of return for each year in a period that would
produce the cumulative total return over the entire period. However,
average annual total returns do not show the Fund's actual year-by-year
performance.

When total returns are quoted for Class A shares, they reflect the
payment of the maximum initial sales charge. Total returns may also be
quoted "at net asset value," without considering the effect of the sales
charge, and those returns would be reduced if sales charges were deducted.
When total returns are shown for Class B shares, they reflect the effect
of the contingent deferred sales charge. They may also be shown based on
the change in net asset value, without considering the effect of the
contingent deferred sales charge.

-- Yield. Each Class of shares calculates its yield by dividing the
annualized net investment income per share on the portfolio during a
30-day period by the maximum offering price on the last day of the period.
Tax-equivalent yield is the equivalent yield that would be earned in the
absence of income taxes. It is calculated by dividing that portion of the
yield that is tax-exempt by a factor equal to one minus the applicable tax
rate. The yield of each Class will differ because of the different
expenses of each Class of shares. The yield data represents a hypothetical
investment return on the portfolio, and does not measure an investment
return based on dividends actually paid to shareholders. To show that
return, a dividend yield may be calculated. Dividend yield is calculated
by dividing the dividends of a Class derived from net investment income
during a stated period by the maximum offering price on the last day of
the period. Yields and dividend yields for Class A shares reflect the
deduction of the maximum initial sales charge, but may also be shown based
on the Fund's net asset value per share. Yields for Class B shares do not
reflect the deduction of the contingent deferred sales charge.

How Has the Fund Performed? Below is a discussion by the Manager of the
Fund's performance during its last fiscal year ended June 30, 1994,
followed by a graphical comparison of the Fund's performance to an
appropriate broad-based market index.

-- Management's Discussion of Performance. During the twelve months
ended June 30, 1994, the performance of the California municipal bond
market was affected by the broad decline in bond prices that followed four
increases in short-term interest rates by the Federal Reserve Board from
early February, 1994 through mid-May, 1994. The Fund continued to
maintain a strong position in higher quality bonds that the Manager
considered to be related to essential services and projects that benefit
the entire community, such as transportation, housing and education.
Recent additions to the portfolio followed this basic strategy, while also
focusing on bond maturity. The Fund also sought to lock-in attractive
rates with call protection, which prevents the issuer of the bond from
calling or redeeming it before maturity. In the opinion of the Manager,
the Fund is diversified both by geographic location and by market sector
within California.

-- Comparing the Fund's Performance to the Market. The chart below
shows the performance of a hypothetical $10,000 investment in each Class
of shares of the Fund from the inception of the Class held through June
30, 1994, with all dividends and capital gains distributions reinvested
in additional shares. The graph reflects the deduction of the 4.75%
maximum initial sales charge on Class A shares and the 5% maximum
contingent deferred sales charge on Class B shares.

The Fund's performance is compared to the performance of the Lehman
Brothers Municipal Bond Index, an unmanaged index of a broad range of
investment grade municipal bonds widely regarded as a measure of the
performance of the general municipal bond market. Index performance
reflects the reinvestment of dividends but does not consider the effect
of capital gains or transaction costs, and none of the data below shows
the effect of taxes. While index comparisons may be useful to provide a
benchmark for the Fund's performance, it must be noted that the Fund's
investments are not limited to the securities in any one index. Moreover,
the index data does not reflect any assessment of the risk of the
investments included in the index.

Comparison of Change
in Value of $10,000
Hypothetical Investments in:
Main Street California Tax-Exempt Fund
And Lehman Brothers Municipal Bond Index

(Graph)

Past performance is not predictive of future performance.

Avg. Annual Total Return of the Fund at 6/30/94
A Shares 1 Year Life*
- ------------------------------------------------
-5.32%% 6.65%
- ------------------------------------------------

Cumulative Total Return of the Fund at 6/30/94
B Shares Life**
- ------------------------------------------------
-10.15%
- ------------------------------------------------
*The Fund (Class A shares) began
operations on 5/18/90.
**Class B shares of the Fund first publicly
offered on 10/29/93.

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

How to Buy Shares

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

-- Class B Shares. If you buy Class B shares, you pay no sales
charge at the time of purchase, but if you sell your shares within 6
years, you will normally pay a contingent deferred sales charge that
varies depending on how long you own your shares.

Which Class of Shares Should You Choose? Once you decide that the Fund
is an appropriate investment for you, deciding which class of shares is
best suited to your needs depends on a number of factors which you should
discuss with your financial advisor. Because the Fund's operating costs
that apply to a class of shares and the effect of the different types of
sales charges on your investment will vary your investment results over
time, the most important factors to consider are how much you plan to
invest, how long you plan to hold your investment, and whether you
anticipate exchanging your shares for shares of other OppenheimerFunds
(not all of which offer Class A and/or Class B shares). If your goals and
objectives change over time and you plan to purchase additional shares,
you should re-evaluate those factors to see if you should consider another
class of shares.

In the following discussion, to help provide you and your financial
advisor with a framework in which to choose a class, we have made some
assumptions using a hypothetical investment in the Fund, based on the
sales charge rates that apply to each class, and considering the effect
of the asset-based sales charge on Class B expenses (which will affect
your investment return), and, for the sake of comparison, we have assumed
that there is a 10% rate of appreciation in your investment each year. Of
course, the actual performance of your investment cannot be predicted and
will vary, based on the Fund's actual investment returns, and the
operating expenses borne by each class of shares, and which class of
shares you invest in. The factors discussed below are not intended to be
investment advice or recommendations, because each investor's financial
considerations are different.

However, Class A might be more advantageous than Class B for
investments of more than $100,000 expected to be held for 5 or 6 years (or
more). For investments over $250,000 expected to be held 4 to 6 years (or
more), Class A shares may become more advantageous than Class B. If
investing $500,000 or more, Class A may be more advantageous as your
investment horizon approaches 3 years or more.

And for most 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 $1 million or more of Class B shares
from a single investor. Of course, these examples are based on
approximations of the effect of current sales charges and expenses on a
hypothetical investment over time, using the assumed annual performance
return stated above, and therefore should not be relied on as rigid
guidelines.

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

-- Are There Differences in Account Features That Matter To You?
Because some features (such as Checkwriting) may not be available to Class
B shareholders, or other features (such as Automatic Withdrawal Plans) may
not be advisable (because of the effect of the contingent deferred sales
charge) for Class B shareholders, you should carefully review how you plan
to use your investment account before deciding which class of shares to
buy. Additionally, dividends payable to Class B shareholders will be
reduced by the additional expenses borne by that class that are not borne
by Class A, such as the Class B asset-based sales charge described below
and in the Statement of Additional Information.

Also, because not all of the OppenheimerFunds currently offer Class
B shares, and because exchanges are permitted only to the same class of
shares in another of the OppenheimerFunds, you should consider how
important the exchange privilege is likely to be for you.

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

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

-- How Are Shares Purchased? You can buy shares several ways --
through any dealer, broker or financial institution that has a sales
agreement with the Distributor, or directly through the Distributor, or
automatically from your bank account through an Asset Builder Plan under
the OppenheimerFunds AccountLink service. When you buy shares, be sure
to specify Class A or Class B shares. If you do not choose, your
investment will be made in Class A shares.

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

<TABLE>
<CAPTION>
Front-End
Front-End Sales Charge
Sales Charge as Commission
as Approximate as
Percentage Percentage Percentage
of Offering of Amount of Offering
Amount of Purchase Price Invested Price
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 4.75% 4.98% 4.00%
- -------------------------------------------------------------------------
$50,000 or more
but less than
$100,000 4.50% 4.71% 4.00%
- -------------------------------------------------------------------------
$100,000 or more
but less than
$250,000 3.50% 3.63% 3.00%
- -------------------------------------------------------------------------
$250,000 or more
but less than
$500,000 2.50% 2.56% 2.25%
- -------------------------------------------------------------------------
$500,000 or more
but less than
$1 million 2.00% 2.04% 1.80%
</TABLE>

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

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

The Class A contingent deferred sales charge is also waived if shares
are redeemed in the following cases: (1) Automatic Withdrawal Plan
payments that are limited to no more than 12% of the original account
value annually, and (2) involuntary redemptions of shares by operation of
law or under the procedures set forth in the Fund's Articles of
Incorporation or adopted by the Board of Directors.

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:
<TABLE>
<CAPTION>
Years Since Beginning Contingent Deferred Sales Charge
of Month in which On Redemptions in That Year
Purchase Order Was Made (As % of Amount Subject to Charge)
- ------------------------------------------------------------------
<S> <C>
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
</TABLE>

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

-- Waivers of Class B Sales Charge. The Class B contingent deferred
sales charge will be waived if the shareholder requests it for a
redemption following the death or disability of the shareholder (you must
provide evidence of a determination of disability by the Social Security
Administration).

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

The Distributor uses the service fee to compensate dealers for
providing personal service for accounts that hold Class B shares.
Services to be provided include, among others, answering customer
inquiries about the Fund, assisting in establishing and maintaining
accounts in the Fund, making the Fund's investment plans available and
providing other services at the request of the Fund or the Distributor.
The asset-based sales charge and service fees increase Class B expenses
by up to 1.00% of average net assets per year.

Special Investor Services

-- 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.

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:

Reinvestment Privilege. If you redeem some or all of your Fund shares,
you have up to 6 months to reinvest all or part of the redemption proceeds
in Class A shares of the Fund or other OppenheimerFunds without paying a
sales charge. This privilege applies to Class A shares that you sell, and
Class B shares on which you paid a contingent deferred sales charge when
you redeemed them. You must be sure to ask the Distributor for this
privilege when you send your payment. Please consult the Statement of
Additional Information for more details.

How to Sell Shares

You can arrange to take money out of your account on any regular
business day by selling (redeeming) some or all of your shares. Your
shares will be sold at the next net asset value calculated after your
order is received and accepted by the Transfer Agent. The Fund offers you
a number of ways to sell your shares: in writing or by telephone. You can
also set up Automatic Withdrawal Plans to redeem shares on a regular
basis, as described above. If you have questions about any of these
procedures, and especially if you are redeeming shares in a special
situation, such as due to the death of the owner, please call the Transfer
Agent first, at 1-800-525-7048, for assistance.

Selling Shares by Mail. Write a "letter of instructions" that includes:

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

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

-- To redeem shares through a service representative, call 1-800-852-
8457
-- To redeem shares automatically on PhoneLink, call 1-800-533-3310

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

-- 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
Class B shares, or Class A 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 15 days.
-- Don't use your checks if you changed your Fund account number.

The Fund will charge a $10 fee for any check that is not paid because
(1) the owners of the account told the Fund not to pay the check, or (2)
the check was for more than the account balance, or (3) the check did not
have the proper signatures, or (4) the check was written for less than
$100.

How to Exchange Shares

Exchanges may be requested in writing or by telephone:

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

There are certain exchange policies you should be aware of:

-- 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

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

Dividends, Capital Gains and Taxes

Dividends. The Fund declares dividends separately for Class A and Class
B shares from net investment income on each regular business day and pays
those dividends to shareholders monthly. Daily dividends will not be
declared or paid on newly purchased shares until 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, dividends
are paid on or about the tenth business day of every month, but the Board
of Directors can change that date. However, the amount of dividends and
distributions may vary from time to time, depending upon market
conditions, the composition of the Fund's portfolio, and expenses borne
by that class. It is expected that distributions paid with respect to
Class A shares will generally be higher than for Class B shares because
expenses allocable to Class B shares will generally be higher. During the
Fund's fiscal year ended June 30, 1994, the Fund maintained the practice,
to the extent consistent with the amount of the Fund's net investment
income and other distributable income, of attempting to pay dividends on
Class A shares at a constant level, although the amount of such dividends
was subject to change from time to time depending on market conditions,
the composition of the Fund's portfolio and expenses borne by the Fund.

Capital Gains. Although the Fund does not seek capital gains, the Fund
may realize capital gains on the sale of portfolio securities. If it
does, it may make distributions annually in December out of any net short-
term or long-term capital gains. The Fund may also make supplemental
distributions of dividends and capital gains following the end of its
fiscal year. If net capital losses are realized in any year, they are
charged against principal and not against net investment income, which is
distributed regardless of capital gains or losses. Long-term capital
gains will be separately identified in the tax information the Fund sends
you after the end of the calendar year. Short-term capital gains are
treated as taxable dividends for tax purposes.

Distribution Options. When you open your account, specify on your
application how you want to receive your distributions. You have four
options:

Taxes. Long-term capital gains are taxable as long-term capital gains
when distributed to shareholders. Dividends paid from short-term capital
gains are taxable as ordinary income. Dividends paid from net investment
income earned by the Fund on Municipal Securities will be excludable from
your gross income for federal income tax purposes. A portion of the
dividends paid by the Fund may be an item of tax preference if you are
subject to alternative minimum tax. Distributions are subject to federal
income tax and may be subject to state or local taxes. 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 as well as the amount of your tax-exempt income.

-- Taxes on Transactions: Even though the Fund seeks tax-exempt
income for distribution to shareholders, you may have a capital gain or
loss when you sell or exchange your shares. A capital gain or loss is the
difference between the price you paid for the shares and the price you
received when you sold them. Any capital gain is subject to capital gains
tax.

-- Returns of Capital: 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.

<PAGE>

APPENDIX TO PROSPECTUS OF
OPPENHEIMER MAIN STREET CALIFORNIA TAX-EXEMPT FUND

Graphic material included in Prospectus of Oppenheimer Main Street
California Tax-Exempt Fund: "Comparison of Total Return of Oppenheimer
Main Street California Tax-Exempt Fund and the Lehman Brothers Municipal
Bond Index - Change in Value of a $10,000 Hypothetical Investment"

A linear graph will be included in the Prospectus of Oppenheimer Main
Street California Tax-Exempt Fund (the "Fund") depicting the initial
account value and subsequent account value of a hypothetical $10,000
investment in the Fund. In the case of the Fund's class A shares, that
graph will cover the period from the commencement of the Fund's operations
(5/18/90) through 6/30/94 and in the case of the Fund's Class B shares
will cover the period from the inception of the class (October 29, 1993)
through June 30, 1994. The graph will compare such values with
hypothetical $10,000 investments over the same time periods in the Lehman
Brothers Municipal Bond Index. Set forth below are the relevant data
points that will appear on the linear graph. Additional information with
respect to the foregoing, including a description of the Lehman Brothers
Municipal Bond Index, is set forth in the Prospectus under "Fund
Information - Management's Discussion of Performance."

<TABLE>
<CAPTION>
Fiscal Year Oppenheimer Main Street Lehman Brothers
(Period) Ended California Tax-Exempt Fund A Municipal Bond Index
<S> <C> <C>
5/18/90 $ 9,525 $10,000
6/30/90 $ 9,683 $10,088
6/30/91 $10,446 $10,997
6/30/92 $11,615 $12,291
6/30/93 $13,080 $13,761
6/30/94 $13,037 $13,785
</TABLE>

<TABLE>
<CAPTION>
Fiscal Oppenheimer Main Street Lehman Brothers
Period Ended California Tax-Exempt Fund B Municipal Bond Index
<S> <C> <C>
10/29/93 $10,000 $10,000
6/30/94 $ 8,985 $ 9,673
</TABLE>

<PAGE>

Oppenheimer Main Street California Tax-Exempt Fund
3410 South Galena Street
Denver, Colorado 80231
1-800-525-7048

Investment Adviser
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048

Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048 O P P E N H E I M E R

Transfer and Shareholder Servicing Agent Main Street
Oppenheimer Shareholder Services California
P.O. Box 5270 Tax-Exempt
Denver, Colorado 80217 Fund
1-800-525-7048
Prospectus
Custodian of Portfolio Securities Effective October 1, 1994
The Bank of New York
One Wall Street
New York, New York 10015

Independent Auditors
Deloitte & Touche LLP
1560 Broadway
Denver, Colorado 80202

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

No dealer, salesperson or any other person has
been authorized to give any information or to make
any representations other than those contained in
this Prospectus or the Additional Statement, and
if given or made, such information and
representation must not be relied upon as having
been authorized by the Corporation, Oppenheimer
Management Corporation, Oppenheimer Funds
Distributor, Inc., or any affiliate thereof. This
Prospectus does not constitute an offer to sell or
a solicitation of an offer to buy any of the
securities offered hereby in any state to any
person to whom it is unlawful to make such offer
in such state.

OppenheimerFunds

California Federal Savings is the exclusive dealer for Oppenheimer Main
Street California Tax-Exempt Fund
PR725/726 (10/94) Printed on recycled paper

<PAGE>

Oppenheimer Main Street California Tax-Exempt Fund

3410 South Galena Street, Denver, Colorado 80231
1-800-525-7048

Statement of Additional Information dated October 1, 1994

This Statement of Additional Information of Oppenheimer Main Street
California Tax-Exempt Fund is not a Prospectus. This document contains
additional information about the Fund and supplements information in the
Prospectus dated October 1, 1994. It should be read together with the
Prospectus which may be obtained by writing to the Fund's Transfer Agent,
Oppenheimer Shareholder Services, at P.O. Box 5270, Denver, Colorado 80217
or by calling the Transfer Agent at the toll-free number shown above.
<TABLE>
<CAPTION>
Contents
<S> <C>
Page
About the Fund
Investment Objective and Policies 2
Investment Policies and Strategies 2
Other Investment Techniques and Strategies 9
Other Investment Restrictions 17
How the Fund is Managed 18
Organization and History 18
Directors and Officers of the Corporation 18
The Manager and Its Affiliates 21
Brokerage Policies of the Fund 22
Performance of the Fund 23
Distribution and Service Plan 27
About Your Account
How To Buy Shares 29
How To Sell Shares 34
How To Exchange Shares 38
Dividends, Capital Gains and Taxes 40
Additional Information About the Fund 42
Financial Information About the Fund
Independent Auditors' Report 43
Financial Statements 44
Appendix A: Description of Ratings A-1
Appendix B: Tax Equivalent Yield Table B-1
</TABLE>

<PAGE>

ABOUT THE FUND

Investment Objective and Policies

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

Municipal Securities. There are variations in the security of Municipal
Securities, both within a particular classification and between
classifications, depending on numerous factors. The yields of Municipal
Securities depend on, among other things, general conditions of the
Municipal Securities market, size of a particular offering, the maturity
of the obligation and rating of the issue. The market value of Municipal
Securities will vary as a result of changing evaluations of the ability
of their issuers to meet interest and principal payments, as well as
changes in the interest rates payable on new issues of Municipal
Securities.

-- Municipal Bonds. The principal classifications of long-term
municipal bonds are "general obligation" and "revenue" or "industrial
development" bonds. In California, municipal bonds may also be funded by
property taxes in specially created districts (Mello-Roos or Special
Assessment Bonds), tax allocations based on increased property tax
assessments over a specified period (frequently for redevelopment
projects) or specified redevelopment area sales allocations.

-- General Obligation Bonds. Issuers of general obligation bonds
include states, counties, cities, towns, and regional districts. The
proceeds of these obligations are used to fund a wide range of public
projects, including construction or improvement of schools, highways and
roads, and water and sewer systems. The basic security behind general
obligation bonds is the issuer's pledge of its full faith and credit and
taxing power for the payment of principal and interest. The taxes that
can be levied for the payment of debt service may be limited or unlimited
as to the rate or amount of special assessments.

-- Revenue Bonds. The principal security for a revenue bond is
generally the net revenues derived from a particular facility, group of
facilities, or, in some cases, the proceeds of a special excise or other
specific revenue source. Revenue bonds are issued to finance a wide
variety of capital projects including: electric, gas, water and sewer
systems; highways, bridges, and tunnels; port and airport facilities;
colleges and universities; and hospitals. Although the principal security
behind these bonds may vary, many provide additional security in the form
of a debt service reserve fund whose money may be used to make principal
and interest payments on the issuer's obligations. Housing finance
authorities have a wide range of security, including partially or fully
insured mortgages, rent subsidized and/or collateralized mortgages, and/or
the net revenues from housing or other public projects. Some authorities
provide further security in the form of a state's ability (without
obligation) to make up deficiencies in the debt service reserve fund.

-- Industrial Development Bonds. Industrial development bonds, which
are considered municipal bonds if the interest paid is exempt from federal
income tax, are issued by or on behalf of public authorities to raise
money to finance various privately operated facilities for business and
manufacturing, housing, sports, and pollution control. These bonds are
also used to finance public facilities such as airports, mass transit
systems, ports, and parking. The payment of the principal and interest
on such bonds is dependent solely on the ability of the facility's user
to meet its financial obligations and the pledge, if any, of real and
personal property so financed as security for such payment.

-- Advance Refunding. The refinancing of outstanding bonds by the
issuance of a new issue of bonds prior to the date on which the
outstanding bonds become due or are callable is known as advance
refunding. Accordingly, for a period of time, both the issue being
refunded and the refunding issue are outstanding. Bonds are "escrowed to
maturity" when the proceeds of the refunding bonds are deposited in escrow
for investment in federal securities in an amount sufficient to pay, when
due, the principal of and interest on the issue being refunded. Bonds are
considered "pre-refunded" when the refunding bond proceeds are escrowed
only until the call date of the refunded issue.

-- Mello-Roos Bonds. Bonds issued pursuant to the California Mello-
Roos Community Facilities Act ("Mello-Roos bonds") are used to finance
infrastructure projects (such as roads or sewage treatment plants) and are
primarily secured by real estate taxes levied on property located in the
same community as that project. Mello-Roos bond financing arose in
response to limitations contained in California's statutory limitations
on real property taxes (see "Special Investment Considerations --
California Municipal Securities" below), and do not constitute obligations
of a municipality. Timely payment of such bonds depends on the developer
or other property owners' ability to pay their real estate taxes, which
could be adversely affected by a declining economy and/or real estate
market.

-- Municipal Notes. Municipal Securities having a maturity when
issued of less than one year are generally known as municipal notes.
Municipal notes generally are used to provide for short-term working
capital needs and include:

-- Tax Anticipation Notes. Tax anticipation notes are issued to
finance working capital needs of municipalities. Generally, they are
issued in anticipation of various seasonal tax revenue, such as income,
sales, use or business taxes, and are payable from these specific future
taxes.

-- Revenue Anticipation Notes. Revenue anticipation notes are issued
in expectation of receipt of other types of revenue, such as federal
revenues available under the Federal revenue sharing programs.

-- Bond Anticipation Notes. Bond anticipation notes are issued to
provide interim financing until long-term financing can be arranged. In
most cases, the long-term bonds then provide the money for the repayment
of the notes.

-- Construction Loan Notes. Construction loan notes are sold to
provide construction financing. After successful completion and
acceptance, many projects receive permanent financing through the Federal
Housing Administration.

-- Tax-Exempt Commercial Paper. Tax-exempt commercial paper is a
short-term obligation with a stated maturity of 365 days or less. It is
issued by state and local governments or their agencies to finance
seasonal working capital needs or as short-term financing in anticipation
of longer-term financing.

-- Floating Rate/Variable Rate Obligations. Floating rate and
variable rate demand notes are tax-exempt obligations which may have a
stated maturity in excess of one year, but may include features that
permit the holder to recover the principal amount of the underlying
security at specified intervals. The issuer of such notes normally has
a corresponding right, after a given period, to prepay in its discretion
the outstanding principal amount of the note plus accrued interest upon
a specified number of days notice to the holder. The interest rate on a
floating rate demand note is based on a stated prevailing market rate,
such as a bank's prime rate, the 90-day U.S. Treasury Bill rate, or some
other standard, and is adjusted automatically each time such rate is
adjusted. The interest rate on a variable rate demand note is also based
on a stated prevailing market rate but is adjusted automatically at
specified intervals of no less than one year. Generally, the changes in
the interest rate on such securities reduce the fluctuation in their
market value. As interest rates decrease or increase, the potential for
capital appreciation or depreciation is less than that for fixed-rate
obligations of the same maturity. The Fund's investment manager,
Oppenheimer Management Corporation (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 the Fund's quality standards. There
is no limit on the amount of the Fund's assets that may be invested in
floating rate and variable rate obligations.

-- Inverse Floaters and Other Derivative Investments. Some inverse
floaters have a feature known as an interest rate "cap" as part of the
terms of the investment. Investing in inverse floaters that have interest
rate caps might be part of a portfolio strategy to try to maintain a high
current yield for the Fund when the Fund has invested in inverse floaters
that expose the Fund to the risk of short-term interest rate fluctuation.
Embedded caps hedge a portion of the Fund's exposure to rising interest
rates. When interest rates exceed the pre-determined rate, the cap
generates additional cash flows that offset the decline in interest rates
on the inverse floater, and the hedge is successful. However, the Fund
bears the risk that if interest rates do not rise above the pre-determined
rate, the cap (which is purchased for additional cost) will not provide
additional cash flows and will expire worthless.

-- Municipal Lease Obligations. From time to time the Fund may
invest more than 5% of its net assets in municipal lease obligations,
generally through the acquisition of certificates of participation, that
the Manager has determined to be liquid under guidelines set by the Board
of Directors. Those guidelines require the Manager to evaluate: (1) the
frequency of trades and price quotations for such securities; (2) the
number of dealers or other potential buyers willing to purchase or sell
such securities; (3) the availability of market-makers; and (4) the nature
of the trades for such securities. The Manager will also evaluate the
likelihood of a continuing market for such securities throughout the time
they are held by the Fund and the credit quality of the instrument.
Municipal leases may take the form of a lease or an installment purchase
contract issued by a state or local government authority to obtain funds
to acquire a wide variety of equipment and facilities. Although lease
obligations do not constitute general obligations of the municipality for
which the municipality's taxing power is pledged, a lease obligation is
ordinarily backed by the municipality's covenant to budget for,
appropriate and make the payments due under the lease obligation.
However, certain lease obligations contain "non-appropriation" clauses
which provide that the municipality has no obligation to make lease or
installment purchase payments in future years unless money is appropriated
for such purpose on a yearly basis. Projects financed with certificates
of participation generally are not subject to state constitutional debt
limitations or other statutory requirements that may be applicable to
Municipal Securities. Payments by the public entity on the obligation
underlying the certificates are derived from available revenue sources;
such revenue may be diverted to the funding of other municipal service
projects. Payments of interest and/or principal with respect to the
certificates are not guaranteed and do not constitute an obligation of the
State of California or any of its political subdivisions.

In addition to the risk of "non-appropriation," municipal lease
securities do not yet have a highly developed market to provide the degree
of liquidity of conventional municipal bonds. Municipal leases, like
other municipal debt obligations, are subject to the risk of non-payment.
The ability of issuers of municipal leases to make timely lease payments
may be adversely affected in general economic downturns and as relative
governmental cost burdens are reallocated among federal, state and local
governmental units. Such non-payment would result in a reduction of
income to the Fund, and could result in a reduction in the value of the
municipal lease experiencing non-payment and a potential decrease in the
net asset value of the Fund.

-- Puts and Stand-by Commitments. When the Fund buys Municipal
Securities, it may obtain a stand-by commitment to repurchase the
securities that entitles it to achieve same-day settlement from the
purchaser and to receive an exercise price equal to the amortized cost of
the underlying security plus accrued interest, if any, at the time of
exercise. A put purchased in conjunction with a Municipal Security
enables the Fund to sell the underlying security within a specified period
of time at a fixed exercise price. The Fund may pay for a stand-by
commitment or put either separately in cash or by paying a higher price
for the securities acquired subject to the stand-by commitment or put.
The Fund will enter into these transactions only with banks and dealers
which, in the Manager's opinion, present minimal credit risks. The Fund's
ability to exercise a put or stand-by commitment will depend on the
ability of the bank or dealer to pay for the securities if the put or
stand-by commitment is exercised. If the bank or dealer should default
on its obligation, the Fund might not be able to recover all or a portion
of any loss sustained from having to sell the security elsewhere. Puts
and stand-by commitments are not transferable by the Fund, and therefore
terminate if the Fund sells the underlying security to a third party. The
Fund intends to enter into these arrangements to facilitate portfolio
liquidity, although such arrangements may enable the Fund to sell a
security at a pre-arranged price which may be higher than the prevailing
market price at the time the put or stand-by commitment is exercised.
However, the Fund might refrain from exercising a put or stand-by
commitment if the exercise price is significantly higher than the
prevailing market price, to avoid imposing a loss on the seller which
could jeopardize the Fund's business relationships with the seller. Any
consideration paid by the Fund for the put or stand-by commitment (which
increases the cost of the security and reduces the yield otherwise
available from the security) will be reflected on the Fund's books as
unrealized depreciation while the put or stand-by commitment is held, and
a realized gain or loss when the put or commitment is exercised or
expires. Interest income received by the Fund from Municipal Securities
subject to puts or stand-by commitments may not qualify as tax-exempt in
its hands if the terms of the put or stand-by commitment cause the Fund
to not be treated as the tax owner of the underlying Municipal Securities.

-- Private Activity Municipal Securities. The Tax Reform Act of 1986
(the "Tax Reform Act") reorganized, as well as amended, the rules
governing tax exemption for interest on Municipal Securities. The Tax
Reform Act generally does not change the tax treatment of bonds issued to
finance governmental operations. Thus, interest on obligations issued by
or on behalf of state or local governments, the proceeds of which are used
to finance the operations of such governments (e.g., general obligation
bonds) continues to be tax-exempt. However, the Tax Reform Act further
limited the use of tax-exempt bonds for non-governmental (private)
purposes. More stringent restrictions were placed on the use of proceeds
of such bonds. Interest on certain private activity bonds (other than
those specified as "qualified" tax-exempt private activity bonds, e.g.,
exempt facility bonds including certain industrial development bonds,
qualified mortgage bonds, qualified Section 501(c)(3) bonds, qualified
student loan bonds, etc.) is taxable under the revised rules.

Interest on certain private activity bonds issued after August 7,
1986, which continues to be tax-exempt will be treated as a tax preference
item subject to the alternative minimum tax (discussed below) to which
certain taxpayers are subject. Furthermore, a private activity bond which
would otherwise be a qualified tax-exempt private activity bond will not,
under Internal Revenue Code Section 147(a), be a qualified bond for any
period during which it is held by a person who is a "substantial user" of
the facilities or by a "related person" of such a substantial user. This
"substantial user" provision is applicable primarily to exempt facility
bonds, including industrial development bonds. The Fund may not be an
appropriate investment for entities which are "substantial users" (or
persons related thereto) of such exempt facilities, and such persons
should consult their own tax advisers before purchasing shares. A
"substantial user" of such facilities is defined generally as a "non-
exempt person who regularly uses part of a facility" financed from the
proceeds of exempt facility bonds. Generally, an individual will not be
a "related person" under the Internal Revenue Code unless such investor
or the investor's immediate family (spouse, brothers, sisters and
immediate descendants) own directly or indirectly in the aggregate more
than 50% in value of the equity of a corporation or partnership which is
a "substantial user" of a facility financed from the proceeds of exempt
facility bonds. In addition, limitations as to the amount of private
activity bonds which each state may issue were revised downward, which
will reduce the supply of such bonds. The value of the Fund's portfolio
could be affected if there is a reduction in the availability of such
bonds. That value may also be affected by a 1988 U.S. Supreme Court
decision upholding the constitutionality of the imposition of a Federal
tax on the interest earned on Municipal Securities issued in bearer form.

A Municipal Security is treated as a taxable private activity bond
under a test for: (a) a trade or business use and security interest, or
(b) a private loan restriction. Under the trade or business use and
security interest test, an obligation is a private activity bond if: (i)
more than 10% of bond proceeds are used for private business purposes and
(ii) 10% or more of the payment of principal or interest on the issue is
directly or indirectly derived from such private use or is secured by the
privately used property or the payments related to the use of the
property. For certain types of uses, a 5% threshold is substituted for
this 10% threshold. (The term "private business use" means any direct or
indirect use in a trade or business carried on by an individual or entity
other than a state or municipal governmental unit.) Under the private
loan restriction, the amount of bond proceeds which may be used to make
private loans is limited to the lesser of 5% or $5.0 million of the
proceeds. Thus, certain issues of Municipal Securities could lose their
tax-exempt status retroactively if the issuer fails to meet certain
requirements as to the expenditure of the proceeds of that issue or use
of the bond-financed facility. The Fund makes no independent
investigation of the issuers of such bonds or their use of proceeds.
Should the Fund hold a bond that loses its tax-exempt status
retroactively, there might be an adjustment to the tax-exempt income
previously paid to shareholders.

The Federal alternative minimum tax is designed to ensure that all
taxpayers pay some tax, even if their regular tax is zero. This is
accomplished in part by including in taxable income certain tax preference
items in arriving at alternative minimum taxable income. The Tax Reform
Act, which makes tax-exempt interest from certain private activity bonds
a tax preference item for purposes of the alternative minimum tax,
specifically states that any exempt-interest dividend paid by a regulated
investment company will be treated as interest on a specific private
activity bond to the extent of its proportionate share of the interest on
such bonds received by the regulated investment company. The Treasury is
authorized to issue regulations implementing this provision. The Fund may
hold Municipal Securities the interest on which (and thus a proportionate
share of the exempt-interest dividends paid by the Fund) will be subject
to the Federal alternative minimum tax. In addition, corporate taxpayers
subject to the alternative minimum tax may, under some circumstances, have
to include exempt-interest dividends in calculating their alternative
minimum taxable income in situations where the "adjusted current earnings"
of the corporation exceeds its alternative minimum taxable income.

-- Changes in Ratings. Subsequent to its purchase by the Fund, a
Municipal Security may cease to be rated or its rating may be reduced
below the minimum required for purchase by the Fund. Neither event
requires the Fund to sell the security, but the Manager will consider such
events in determining whether the Fund should continue to hold the
security. To the extent that ratings given by Moody's, Standard & Poor's
or Fitch change as a result of changes in such organizations or their
rating systems, the Fund will attempt to use comparable ratings as
standards for investments in accordance with the Fund's investment
policies.

Special Investment Considerations - California Municipal Securities. As
stated in the Prospectus, the values of the Fund's California Municipal
Securities are highly sensitive to the fiscal stability of California and
its subdivisions, agencies, instrumentalities or authorities, which issue
the Municipal Securities in which the Trust concentrates its investments.
Certain amendments to the California State constitution, legislative
measures, executive orders, civil actions and voter initiatives in recent
years that could adversely affect the ability of California issuers to pay
interest and principal on Municipal Securities are described below. The
following constitutes only a brief summary, and is based on information
drawn from the relevant statutes and certain other publicly available
information. The Fund has not independently verified such information.

Changes in California constitutional and other laws during the last
several years have caused concerns about the ability of California state
and municipal issuers to obtain sufficient revenue to pay their bond
obligations. In 1978, California voters approved an amendment to the
California Constitution known as Proposition 13, which added Article XIIIA
to the California Constitution. Article XIIIA limits ad valorem taxes on
real property and restricts the ability of taxing entities to increase
real property taxes. However, legislation passed subsequent to
Proposition 13 provided for the redistribution of California's General
Fund surplus to local agencies, the reallocation of revenues to local
agencies and the assumption of certain local obligations by the state so
as to help California municipal issuers raise revenue to pay their bond
obligations. It is unknown whether additional revenue redistribution
legislation will be enacted in the future and whether, if enacted, such
legislation will provide sufficient revenue for such California issuers
to pay their obligations.

The state is also subject to another constitutional amendment,
Article XIIIB, which may have an adverse impact on California state and
municipal issuers. Article XIIIB restricts the state from spending
certain appropriations in excess of an appropriations limit imposed for
each state and local government entity. If revenues exceed such
appropriations limit, such revenues must be returned either as revisions
in the tax rates or fee schedules. In 1988, California voters approved
an initiative known as Proposition 98, which in addition to amending
Article XIIIB, amended Article XVI to require a minimum level of funding
for public schools and community colleges. In 1992-93 and 1993-94, the
state budget met part of its commitment to education through $1.8 billion
in off-book loans. The legality of these loans was challenged in a
lawsuit by the California Teachers Association. A lower court in
California has ruled against the state, and under this decision the
schools would not be required to repay these loans. If upheld on appeal,
the ruling would increase the state's officially recognized 1994-95 year-
end deficit by $1.8 billion.

Because of the uncertain impact of the aforementioned legislation,
the possible inconsistencies in the respective terms of the statutes and
the impossibility of predicting the level of future appropriations and
applicability of related statutes to such questions, it is not currently
possible to assess the impact of such legislation and policies on the long
term ability of the State of California and California municipal issuers
to pay interest or repay principal on their obligations.

California has substantial size, wealth and a diverse economy. It
is the largest in population of the states, and accounts for about 13% of
personal income in the U.S. Through the 1980s, the rate of state
population growth was more than twice that for the country. However,
although the national economic recovery continued at a strong pace in the
first quarter of 1994, California is still experiencing the effects of a
recession. However, the state's budget for fiscal year 1994-95 assumes
that the state will begin to recover from recessionary conditions in 1994,
with a modest upturn in 1994 and continuing in 1995. Substantial
contraction in California's defense related industries, overbuilding in
commercial real estate, and consolidation and decline in the state's
financial services industry will likely produce slower overall growth for
several years.

Although the median home prices in the state have continued to
decline, home sales have increased sharply. Median home prices in July
1994 were down 1.0% from July 1993, while home sales increased 4.6% from
a year earlier. Unemployment, however, has been above the national
average since 1990. In July 1994, unemployment in California stood at
9.0% versus 6.1% for the nation. Overall, the state has lost
approximately 600,000 jobs since the spring of 1990, notwithstanding the
continued increase in the state's population. Employment is expected to
fall 0.3% in 1994. With a slow recovery, economic forecasts predict
annual growth in employment of 1.5% and 1.6% in 1995 and 1996,
respectively. Personal bankruptcy filings also continue to increase, as
statewide filings rose 17% in 1992.

These economic difficulties have exacerbated the budget imbalance
which has been evident since 1985-86. Since that time, the state has
recorded General Fund operating deficits in five of the past six fiscal
years. Many of these problems have been attributable to a great
population increase which has increased demand for educational and social
services at a pace far greater than the growth in revenues.

By June 30, 1994, the General Fund had an accumulated deficit, on a
budgeted basis, of approximately $2.0 billion. In addition, the deficit
over the previous three years had exhausted the state's available cash
reserves and resources. In July and August, 1994, the state was required
to issue a total of $7 billion of short-term revenue anticipation warrants
to fund, in part, the state's cash flow management needs for the 1994-95
fiscal year.

On July 8, 1994, the Governor signed into law a new $57.5 billion
budget which includes General Fund spending of $40.9 billion, up 4.2% from
the level of spending during the 1993-94 fiscal year. The budget also
envisions General Fund spending climbing another 8.4% in the 1995-96
fiscal year. The budget forecasts levels of revenue and expenditures
which will result in operating surpluses in both 1994-95 and 1995-96,
leading to the elimination of the budget deficit by June 30, 1996.

Because of the State of California's continuing budget problems, the
state's General Obligation bonds were downgraded in July 1994 from Aa to
A1 by Moody's, from A+ to A by Standard & Poor's and from AA to A by
Fitch. All three rating agencies expressed uncertainty in the state's
ability to balance its budget by 1996.

On January 17, 1994, Northridge, California experienced an earthquake
that registered 6.8 on the Richter scale, resulting in significant
property damage to private and public facilities throughout the Los
Angeles and Ventura Counties, and to parts of the Orange and San
Bernardino Counties. The total amount of damage is estimated to be
between $13 billion and $20 billion. In mid-February Congress approved
an earthquake relief package totaling about $8.6 billion, bringing total
federal support to $9.5 billion. The California legislature approved $2
billion in bond financing in mid-March for earthquake recovery costs and
seismic safety improvements. However, the bond issue was rejected by
California voters in the June 1994 election. It now appears that the
state will pay for its share of the recovery costs through a reallocation
of existing funds and borrowing from the federal government. The
Commission on State Finance believes that, although it may carry long-term
implications for the City of Los Angeles, the earthquake will not derail
the state's economic recovery.

Other Investment Techniques and Strategies

-- When-Issued and Delayed Delivery Transactions. As stated in the
Prospectus, the Fund may invest in securities on a "when-issued" or
"delayed delivery" basis. Payment for and delivery of the securities
generally settles within 45 days of the date the offer is accepted. The
purchase price and yield are fixed at the time the buyer enters into the
commitment. 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. However, the Fund intends to be as fully invested as
possible and will not invest in when-issued securities if its income or
net asset value will be materially adversely affected. At the time the
Fund makes the commitment to purchase a Municipal Security on a when-
issued basis, it will record the transaction on its books and reflect the
value of the security in determining its net asset value. It will also
segregate cash or other high quality liquid Municipal Securities equal in
value to the commitment for the when-issued securities. While when-issued
securities may be sold prior to settlement date, the Fund intends to
acquire the securities upon settlement unless a prior sale appears
desirable for investment reasons. There is a risk that the yield
available in the market when delivery occurs may be higher than the yield
on the security acquired.

-- Portfolio Turnover. The Fund may purchase or sell Municipal
Securities without regard to the length of time the security has been
held, to take advantage of short-term differentials in yields consistent
with the Fund's investment objective. While short-term trading increases
portfolio turnover, the execution cost for such securities is
substantially less than for equivalent dollar values of equity securities.
However, short-term trading may affect the Fund's status as an investment
company under the Internal Revenue Code (see "Dividends, Capital Gains and
Taxes" in the Prospectus).

-- Writing Covered Calls. As described in the Prospectus, the Fund
may write covered calls. When the Fund writes a call on an investment, it
receives a premium and agrees to sell the callable investment to a
purchaser of a corresponding call during the call period (usually not more
than 9 months) at a fixed exercise price (which may differ from the market
price of the underlying investment) regardless of market price changes
during the call period. To terminate its obligation on a call it has
written, the Fund may purchase a corresponding call in a "closing
purchase transaction." A profit or loss will be realized, depending upon
whether the net of the amount of option transaction costs and the premium
received on the call the Fund has written is more or less than the price
of the call the Fund subsequently purchased. A profit may also be
realized if the call lapses unexercised because the Fund retains the
underlying investment and the premium received. Those profits are
considered short-term capital gains for Federal income tax purposes, as
are premiums on lapsed calls, and when distributed by the Fund are taxable
as ordinary income. If the Fund could not effect a closing purchase
transaction due to the lack of a market, it would have to hold the
callable investment until the call lapsed or was exercised.

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

-- Hedging With Options and Futures Contracts. The Fund may use
hedging instruments for the purposes described in the Prospectus. When
hedging to attempt to protect against declines in the market value of the
Fund's portfolio, or to permit the Fund to retain unrealized gains in the
value of portfolio securities which have appreciated, or to facilitate
selling securities for investment reasons, the Fund may: (i) sell Futures,
(ii) buy puts, or (iii) write covered calls on securities held by it or
on Futures (as described in the Prospectus). When hedging to establish
a position in the securities markets as a temporary substitute for the
purchase of individual debt securities the Fund may: (i) buy Futures, or
(ii) buy calls on such Futures or securities. Normally, the Fund would
then purchase the debt securities and terminate the hedging portion.

The Fund's strategy of hedging with Futures and options on Futures
will be incidental to the Fund's investment activities in the underlying
cash market. In the future, the Fund may employ hedging instruments and
strategies that are not presently contemplated but which may be developed,
to the extent such investment methods are consistent with the Fund's
investment objective, and are legally permissible and disclosed in the
Prospectus. Additional information about the hedging instruments the Fund
may use is provided below.

-- Purchasing Calls and Puts. The Fund may purchase calls to protect
against the possibility that the Fund's portfolio will not participate in
an anticipated rise in the securities market. When the Fund purchases a
call (other than in a closing purchase transaction), it pays a premium and
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. In purchasing a call, the Fund benefits only if the
call is sold at a profit or if, during the call period, the market price
of the underlying investment is above the sum of the call price plus the
transaction costs and the premium paid for the call and the call is
exercised. If the call is not exercised or sold (whether or not at a
profit), it will become worthless at its expiration date and the Fund will
lose its premium payment and the right to purchase the underlying
investment. When the Fund purchases a call or put (discussed below) 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.

Puts and calls on broadly-based municipal bond indices or Future are
similar to puts and calls on securities or futures contracts except that
all settlements are in cash and gain or loss depends on changes in the
index in question rather than on price movements of individual securities
or futures contracts. When the Fund buys a call on a municipal bond index
or Future, it pays a premium. If the Fund exercises the call during the
call period, a seller of a corresponding call on the same investment will
pay the Fund an amount of cash to settle the call if the closing level of
the index or Future upon which the call is based is greater than the
exercise price of the call. That cash payment is equal to the difference
between the closing price of the call and the exercise price of the call
times a specified multiple (the "multiplier") which determines the total
dollar value for each point of difference. When the Fund buys a put on
an index or Future, it pays a premium and has the right during the put
period to require a seller of a corresponding put, upon the Fund's
exercise of its put, to deliver cash to the Fund to settle the put if the
closing level of the index or Future upon which the put is based is less
than the exercise price of the put. That cash payment is determined by
the multiplier, in the same manner as described above as to calls.

When the Fund purchases a put on an index, or on a Future not owned
by it, the put protects the Fund to the extent that the index moves in a
similar pattern to the securities the Fund holds. The Fund can either
resell the put or, in the case of a put on a Future, buy the underlying
investment and sell it at the exercise price. The resale price of the put
will vary inversely with the price of the underlying investment. If the
market price of the underlying investment is above the exercise price, and
as a result the put is not exercised, the put will become worthless on the
expiration date. In the event of a decline in price of the underlying
investment, the Fund could exercise or sell the put at a profit to attempt
to offset some or all of its loss on its portfolio securities.

-- Writing Put Options. The Fund may write put options on debt
securities or Futures but only if such puts are covered by segregated
liquid assets. The Fund will not write puts if, as a result, more than
50% of the Fund's net assets would be required to be segregated to cover
such put obligations. In writing puts, there is the risk that the Fund
may be required to buy the underlying security at a disadvantageous price.
A put option on securities gives the purchaser the right to sell, and the
writer the obligation to buy, the underlying investment at the exercise
price during the option period. Writing a put covered by segregated
liquid assets equal to the exercise price of the put has the same economic
effect to the Fund as writing a covered call. The premium the Fund
receives from writing a put option represents a profit, as long as the
price of the underlying investment remains above the exercise price.
However, the Fund has also assumed the obligation during the option period
to buy the underlying investment from the buyer of the put at the exercise
price, even though the value of the investment may fall below the exercise
price. If the put lapses unexercised, the Fund (as the writer of the put)
realizes a gain in the amount of the premium. If the put is exercised,
the Fund must fulfill its obligation to purchase the underlying investment
at the exercise price, which will usually exceed the market value of the
investment at that time. In that case, the Fund may incur a loss, equal
to the sum of the current market value of the underlying investment and
the premium received minus the sum of the exercise price and any
transaction costs incurred.

When writing put options on securities, to secure its obligation to
pay for the underlying security, the Fund will deposit in escrow liquid
assets with a value equal to or greater than the exercise price of the put
option. The Fund therefore forgoes the opportunity of investing the
segregated assets or writing calls against those assets. As long as the
obligation of the Fund as the put writer continues, it may be assigned an
exercise notice by the broker-dealer through whom such option was sold,
requiring the Fund to take delivery of the underlying security against
payment of the exercise price. The Fund has no control over when it may
be required to purchase the underlying security, since it may be assigned
an exercise notice at any time prior to the termination of its obligation
as the writer of the put. This obligation terminates upon expiration of
the put, or such earlier time at which the Fund effects a closing purchase
transaction by purchasing a put of the same series as that previously
sold. Once the Fund has been assigned an exercise notice, it is
thereafter not allowed to effect a closing purchase transaction.

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

-- Interest Rate Futures. The Fund may buy and sell futures
contracts relating to debt securities ("Interest Rate Futures") and
municipal bond indices ("Municipal Bond Index Futures," discussed below).
Interest Rate Futures obligates the seller to deliver and the purchaser
to take a specific debt security at a specified price on a specified date.
No price is paid or received upon the purchase or sale of an Interest Rate
Future. Upon entering into a Futures transaction, the Fund will be
required to deposit an initial margin payment, equal to a specified
percentage of the contract amount, with the futures commission merchant
(the "futures broker"). The initial margin will be deposited with the
Fund's Custodian in an account registered in the futures broker's name;
however, the futures broker can gain access to that account only under
specified conditions. As the Future is marked to market to reflect
changes in its market value, subsequent margin payments, called variation
margin, will be made to and from the futures broker on a daily basis.

At any time prior to the 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 additional cash is
required to be paid by or released to the Fund and any gain or loss is
then realized for tax purposes. Although Interest Rate Futures by their
terms call for settlement by the delivery of debt securities, in most
cases the obligation is fulfilled by entering into an offsetting
transaction. All futures transactions are effected through a
clearinghouse associated with the exchange on which the contracts are
traded.

-- Municipal Bond Index Futures. Municipal Bond Index Futures are
similar to Interest Rate Futures except that settlement is made in cash.
The obligation under such contracts may also be satisfied by entering into
an offsetting contract to close out the futures position. Net gain or
loss on options on Municipal Bond Index Futures depends on the price
movements of the securities included in the index. The strategies which
the Fund employs regarding Municipal Bond Index Futures are similar to
those described above with regard to Interest Rate Futures.

-- Interest Rate Swap Transactions. Swap agreements entail both
interest rate risk and credit risk. There is a risk that, based on
movements of interest rates in the future, the payments made by the Fund
under a swap agreement will have been greater than those received by it.
Credit risk arises from the possibility that the counterparty will
default. If the counterparty to an interest rate swap defaults, the
Fund's loss will consist of the net amount of contractual interest
payments that the Fund has not yet received. The Manager will monitor the
creditworthiness of counterparties to the Fund's interest rate swap
transactions on an ongoing basis. The Fund will enter into swap
transactions with appropriate counterparties pursuant to master netting
agreements. A master netting agreement provides that all swaps done
between the Fund and that counterparty under the master agreement shall
be regarded as parts of an integral agreement. If on any date amounts are
payable in respect of one or more swap transactions, the net amount
payable on that date in that currency shall be paid. In addition, the
master netting agreement may provide that if one party defaults generally
or on one swap, the counterparty may terminate the swaps with that party.
Under such agreements, if there is a default resulting in a loss to one
party, the measure of that party's damages is calculated by reference to
the average cost of a replacement swap with respect to each swap (i.e.,
the mark-to-market value at the time of the termination of each swap).
The gains and losses on all swaps are then netted, and the result is the
counterparty's gain or loss on termination. The termination of all swaps
and the netting of gains and losses on termination is generally referred
to as "aggregation." Income earned on interest rate swaps may be taxable,
and subject to the Fund's limitations on investments in taxable
securities.

When the Fund writes an over-the-counter ("OTC") option, it will
enter into an arrangement with a primary U.S. Government securities
dealer, which would establish a formula price at which the Fund would have
the absolute right to repurchase that OTC option. This formula price
would generally be based on a multiple of the premium received for the
option, plus the amount by which the option is exercisable below the
market price of the underlying security ("in-the-money"). For any OTC
option a Fund writes, it will treat as illiquid (for purposes of the
restriction on illiquid securities, stated in the Prospectus) the mark-to-
market value of any OTC option held by it. The SEC is evaluating the
general issue of whether or not OTC options should be considered as liquid
securities, and the procedure described above could be affected by the
outcome of that evaluation.

An option position may be closed out only in a market which provides
secondary trading for options of the same series, and there is no
assurance that a liquid secondary market will exist for any particular
option. The Fund's option activities may affect its turnover rate and
brokerage commissions. The exercise of calls written by the Fund may
cause the Fund to sell related portfolio securities, thus increasing its
turnover rate in a manner beyond the Fund's control. The exercise by the
Fund of puts on securities or Futures may cause the sale of related
investments, also increasing portfolio turnover. Although such exercise
is within the Fund's control, holding a put might cause the Fund to sell
the underlying investment for reasons which would not exist in the absence
of the put. The Fund will pay a brokerage commission each time it buys
or sells a call, buys a put or an underlying investment in connection with
the exercise of a put or call. Such commissions may be higher, on a
relative basis, than those which would apply to direct purchases or sales
of the underlying investments. Premiums paid for options are small in
relation to the market value of such investments and consequently, put and
call options offer large amounts of leverage. The leverage offered by
trading in options could result in the Fund's net asset value being more
sensitive to changes in the value of the underlying investment.

Due to requirements under the Investment Company Act, when the Fund
purchases a Municipal Bond Index Future, the Fund will maintain, in a
segregated account or accounts with its Custodian, cash or readily-
marketable, short-term (maturing in one year or less) debt instruments in
an amount equal to the market value of the securities underlying such
Future, less the margin deposit applicable to it.

-- Tax Aspects of Covered Calls and Hedging Instruments. The Fund
intends to qualify as a "regulated investment company" under the Internal
Revenue Code (although it reserves the right not to qualify). That
qualification enables the Fund to "pass through" its taxable income and
realized capital gains to shareholders without having to pay tax on them.
This avoids a "double tax" on that taxable 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). One
of the tests for the Fund's qualification as a regulated investment
company is that less than 30% of its gross income must be derived from
gains realized on the sale of securities held for less than three months.
To comply with this 30% cap, the Fund will limit the extent to which it
engages in the following activities, but will not be precluded from them:
(i) selling investments, including Futures, held for less than three
months, whether or not they were purchased on the exercise of a call held
by the Fund; (ii) purchasing options which expire in less than three
months; (iii) effecting closing transactions with respect to calls or puts
written or purchased less than three months previously; (iv) exercising
puts or calls held by the Fund for less than three months; or (v) writing
calls on investments held less than three months.

-- Risks of Hedging With Options and Futures. 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. In addition to the risks
associated with hedging that are discussed in the Prospectus and above,
there is a risk in using short hedging by (i) selling Futures or (ii)
purchasing puts on Futures to attempt to protect against declines in the
value of the Fund's securities. The risk is that the prices of such
Futures will correlate imperfectly with the behavior of the cash (i.e.,
market value) prices of the Fund's securities. The ordinary spreads
between prices in the cash and futures markets are subject to distortions,
due to differences in the natures of those markets. First, all
participants in the futures markets are subject to margin deposit and
maintenance requirements. Rather than meeting additional margin deposit
requirements, investors may close out futures contracts through offsetting
transactions which could distort the normal relationship between the cash
and futures markets. Second, the liquidity of the futures markets depends
on participants entering into offsetting transactions rather than making
or taking delivery. To the extent participants decide to make or take
delivery, liquidity in the futures markets could be reduced, thus
producing distortion. Third, from the point of view of speculators, the
deposit requirements in the futures markets are less onerous than margin
requirements in the securities markets. Therefore, increased
participation by speculators in the futures markets may cause temporary
price distortions.

The risk of imperfect correlation increases as the composition of the
Fund's portfolio diverges from the securities included in the applicable
index. To compensate for the imperfect correlation of movements in the
price of the portfolio securities being hedged and movements in the price
of the hedging instruments, the Fund may use hedging instruments in a
greater dollar amount than the dollar amount of the portfolio securities
being hedged if the historical volatility of the prices of the debt
securities being hedged is more than the historical volatility of the
applicable index. It is also possible that if the Fund has used hedging
instruments in a short hedge, the market may advance and the value of the
debt securities held in the Fund's portfolio may decline. If that
occurred, the Fund would lose money on the hedging instruments and also
experience a decline in value in 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 debt securities will tend to
move in the same direction as the indices upon which the hedging
instruments are based.

If the Fund uses hedging instruments to establish a position in the
debt securities markets as a temporary substitute for the purchase of
individual particular debt securities (long hedging) by buying Interest
Rate Futures, Municipal Bond Index Futures and/or calls on such Futures,
on debt securities or on municipal bond indices, it is possible that the
market may decline. If the Fund then concludes not to invest in such
securities at that time because of concerns as to a possible further
market decline or for other reasons, the Fund will realize a loss on the
hedging instruments that is not offset by a reduction in the price of the
debt securities purchased.

Other Investment Restrictions

Under these additional restrictions, the Fund cannot: (1) invest in
interests in oil or gas exploration or development programs or in
commodities; however, the Fund may buy and sell any of the Hedging
Instruments that it may use as permitted by any of its other policies,
whether or not such Hedging Instrument is considered to be a commodity or
commodity contract; (2) invest in real estate or in interests in real
estate; however, the Fund may purchase securities of issuers holding real
estate or interests therein (including securities of real estate
investment trusts); (3) purchase securities on margin; however, the Fund
may make margin deposits in connection with the use of Hedging Instruments
as permitted by any of its other policies; (4) invest in companies for the
purpose of acquiring control or management thereof; (5) underwrite
securities of other companies, except insofar as it might be deemed to be
an underwriter for purposes of the Securities Act of 1933 in the resale
of any securities held in its own portfolio; (6) invest or hold securities
of any issuer if those officers and directors of the Corporation or its
adviser owning individually more than 1/2 of 1% of the securities of such
issuer together own more than 5% of the securities or such issuer; (7)
invest in other open-end investment companies, or invest more than 5% of
its net assets through open market purchases in closed-end investment
companies, including small business investment companies, nor make any
such investments at commission rates in excess of normal brokerage
commissions; or (8) pledge, mortgage or otherwise encumber, transfer or
assign any of its assets to secure a debt; collateral arrangements for
premium and margin payments in connection with Hedging Instruments are not
deemed to be a pledge of assets.

-- Diversification. For purposes of diversification under the
Investment Company Act, the identification of the "issuer" of a Municipal
Security depends on the terms and conditions of the security. When the
assets and revenues of an agency, authority, instrumentality or other
political subdivision are separate from those of the government creating
the subdivision and the security is backed only by the assets and revenues
of the subdivision, such subdivision would be deemed to be the sole
issuer. Similarly, in the case of an industrial development bond, if that
bond is backed only by the assets and revenues of the nongovernmental
user, then such nongovernmental user would be deemed to be the sole
issuer. However, if in either case the creating government or some other
entity guarantees the security, such guarantee would be considered a
separate security and would be treated as an issue of such government or
other agency.

In applying restriction (2) in the Prospectus, the Manager will
consider a nongovernmental user of facilities financed by industrial
development bonds as being in a particular industry, despite the fact that
there is no industry concentration limitation as to Municipal Securities.
Although this application of the restriction is not technically a
fundamental policy of the Fund, it will not be changed without shareholder
approval. Should any such change be made, the Prospectus and/or this
Additional Statement will be supplemented to reflect such change.

How the Fund is Managed

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

William A. Baker, Director
197 Desert Lakes Drive, Palm Springs, California 92264
Management Consultant.

Jon S. Fossel, President and Director*
Two World Trade Center, New York, New York 10048-0203
Chairman, Chief Executive Officer and a Director of the Manager;
President and director of Oppenheimer Acquisition Corp. ("OAC"), the
Manager's parent holding company; President and a Director of
HarbourView Asset Management Corp. ("HarbourView"), subsidiary of the
Manager; a Director of Shareholder Financial Services, Inc. ("SFSI")
and Shareholder Services, Inc. ("SSI"), transfer agent subsidiaries
of the Manager; formerly President of the Manager.

Raymond J. Kalinowski, Director
44 Portland Drive, St. Louis, Missouri 63131
Director of Wave Technologies, Ltd.; formerly Vice Chairman and a
Director of A.G. Edwards, Inc., parent holding company of A.G.
Edwards & Sons, Inc., (a broker-dealer), of which he was a Senior
Vice President.

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

Robert M. Kirchner, Director
7500 East Arapahoe Road, Englewood, Colorado 80112
President of The Kirchner Company (management consultants).

James C. Swain, Chairman and Director
3410 South Galena Street, Denver, Colorado 80231
Vice Chairman of the Manager; President and a Director of Centennial
Asset Management Corporation ("Centennial"), an investment adviser
subsidiary of the Manager; formerly Chairman of the Board of SSI.

Robert E. Patterson, Vice President and Portfolio Manager
Two World Trade Center, New York, New York 10048-0203
Senior Vice President of the Manager; an officer of other
OppenheimerFunds.

Andrew J. Donohue, Vice President
Two World Trade Center, New York, New York 10048-0203
Executive Vice President and General Counsel of the Manager and
Oppenheimer Funds Distributor, Inc. (the "Distributor"); an officer
of other OppenheimerFunds; formerly Senior Vice President and
Associate General Counsel of the Manager and the Distributor, Partner
in Kraft & McManimon (a law firm), an officer of First Investors
Corporation (a broker-dealer) and First Investors Management Company,
Inc. (broker-dealer and investment adviser), and director and an
officer of First Investors Family of Funds and First Investors Life
Insurance Company.

Scott Farrar, Assistant Treasurer
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an
officer of other OppenheimerFunds; formerly a Fund Controller for the
Manager, prior to which he was an International Mutual Fund
Supervisor for Brown Brothers Harriman & Co., a bank, and previously
a Senior Fund Accountant for State Street Bank & Trust Company,
before which he was a sales representative for Central Colorado
Planning.

-- Remuneration of Directors. The officers of the Corporation are
affiliated with the Manager. They and the Directors of the Corporation
who are affiliated with the Manager (Messrs. Fossel and Swain, both of
whom are an officer and Director) receive no salary or fee from the
Corporation. During the Fund's fiscal year ended June 30, 1994, the
remuneration (including expense reimbursements) attributable to the Fund
paid to all Directors of the Corporation (excluding Messrs. Fossel and
Swain) as a group for services as Directors and as members of one or more
committees totaled $1,397. The Corporation has an Audit Committee,
comprised of William A Baker (Chairman), Charles Conrad, Jr. and Robert
M. Kirchner. This Committee meets regularly to review audits, audit
procedures, financial statements and other financial and operational
matters of the Fund.

-- Major Shareholders. To the knowledge of the Corporation, as of
September 26, 1994, no person owned beneficially 5% or more of the
respective outstanding shares of the Fund or the Corporation except for
The Springer Family Trust, 1435 Roxbury Drive, Los Angeles, California
90035 which was the record owner of 8,183.306 shares (approximately 5.81%
of the Class B shares then outstanding).

The Manager and Its Affiliates. The Manager is wholly-owned by
Oppenheimer Acquisition Corp. ("OAC"), a holding company controlled by
Massachusetts Mutual Life Insurance Company. OAC is also owned in part
by certain of the Manager's directors and officers, some of whom may also
serve as officers of the Corporation and two of whom (Messrs. Fossel and
Swain) serve as directors of the Corporation.

-- The Investment Advisory Agreement. The investment advisory
agreement between the Manager and the Corporation on behalf of the Fund
requires the Manager, at its expense, to provide the Fund with adequate
office space, facilities and equipment and to provide and supervise the
activities of all administrative and clerical personnel required to
provide effective corporate administration for the Fund, including the
compilation and maintenance of records with respect to its operations, the
preparation and filing of specified reports, and composition of proxy
materials and registration statements for continuous public sale of shares
of the Fund.

The advisory agreement contains no provision limiting the Fund's
expenses. However, independently of the advisory agreement, the Manager
has voluntarily undertaken that the total expenses of the Fund in any
fiscal year (including the management fee, but excluding taxes, interest,
brokerage commissions, distribution assistance payments and extraordinary
expenses such as litigation costs) shall not exceed the most stringent
expense limitation imposed under state law applicable to the Fund.
Pursuant to the undertaking, the Manager's fee will be reduced at the end
of a month so that there will not be any accrued but unpaid liability
under this undertaking. Currently, the most stringent state expense
limitation is imposed by California, and limits expenses (with specified
exclusions) to 2.5% of the first $30 million of average annual net assets,
2.0% of the next $70 million, and 1.5% of the average annual net assets
in excess of $100 million. Any assumption of the Fund's expenses under
this limitation lowers the Fund's overall expense ratio and increases its
total return during the time such expenses are limited. The Manager
reserves the right to terminate or amend the undertaking at any time.

The advisory agreement provides that in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties under the advisory agreement, the Manager is not
liable for any loss resulting from a good faith error or omission on its
part with respect to any of its duties thereunder. The advisory agreement
permits the Manager to act as investment adviser for any other person,
firm or corporation, and to use the name "Oppenheimer" and "Main Street"
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 right of the Corporation to use
the name "Main Street" as part of its name and the name of the Fund may
be withdrawn.

-- The Distributor. Under its General Distributor's Agreement with
the Corporation, the Distributor acts as the Corporation's principal
underwriter in the continuous public offering of the Fund's Class A and
Class B shares, but is not obligated to sell a specific number of shares.
Expenses normally attributable to sales (other than as paid under the
Class B 12b-1 plan), including advertising and the cost of printing and
mailing prospectuses (other than those furnished to existing shareholders)
are borne by the Distributor. During the Fund's fiscal years ended June
30, 1992, 1993 and 1994, the aggregate amount of sales charges on sales
of the Fund's Class A shares was $903,656, $1,139,735 and $663,089,
respectively, of which the Distributor retained in the aggregate $149,657,
$183,933 and $108,300 in those respective years. During the Fund's fiscal
year ended June 30, 1994, the Distributor retained $4,375 as reimbursement
for Class B sales commissions and service fee advances, as well as
financing costs. For additional information about distribution of the
Fund's shares and the expenses connected with such activities, please
refer to "Distribution and Service Plans," below.

Brokerage Policies of the Fund

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

Under the advisory agreement, the Manager is authorized to 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 have charged if
a good faith determination is made by the Manager that the commission is
fair and reasonable in relation to the services provided. Subject to the
foregoing considerations, the Manager may also consider sales of shares
of the Fund and other investment companies managed by the Manager and its
affiliates as a factor in the selection of brokers for the Fund's
portfolio transactions.

Description of Brokerage Practices Followed by the Manager. Subject to
the provisions of the advisory agreement, the procedures and rules
described above, allocations of brokerage are made by portfolio managers
of the Manager under the supervision of the Manager's executive officers.
As most purchases made by the Fund are principal transactions at net
prices, the Fund incurs little or no brokerage costs. The Fund usually
deals directly with the selling or purchasing principal or market makers
without incurring charges for the services of a broker on its behalf
unless it is determined that better price or execution can be obtained by
utilizing the services of a broker. Purchases of securities from
underwriters include a commission or concession paid by the issuer to the
underwriter, and purchases from dealers include a spread between the bid
and asked price. The Fund seeks to obtain prompt execution of orders at
the most favorable net pace. When possible, concurrent orders to purchase
or sell the same security by more than one of the accounts managed by the
Manager or it affiliates are combined. Transactions effected pursuant to
such combined orders are averaged as to price and allocated in accordance
with the purchase or sale orders actually placed for each account. Option
commissions may be relatively higher than those which would apply to
direct purchases and sales of portfolio securities.

The research services provided by brokers broaden the scope and
supplement the research activities of the Manager, by making available
additional views for consideration and comparisons, and enabling the
Manager to obtain market information for the valuation of securities held
in the Fund's portfolios or being considered for purchase. The Board,
including the "Independent Directors" (those Directors who are not
"interested persons" as defined in the Investment Company Act, and who
have no direct or indirect financial interest in the operation of the
advisory agreement or the Distribution Plans described below) annually
reviews information furnished by the Manager as to the commissions paid
to brokers furnishing such services so that the Board may ascertain
whether the amount of such commissions was reasonably related to the value
or the benefit of such services.

Performance of the Fund

As described in the Prospectus, from time to time the "standardized
yield," "tax-equivalent yield," "dividend yield," "average annual total
return," "total return" and "total return at net asset value" of an
investment in each class of Fund shares may be advertised. An explanation
of how standardized yield, tax-equivalent yield, dividend yield, average
annual total return and total return are calculated for each class and the
components of those calculations is set forth below. Class B shares were
first publicly offered on October 29, 1993.

-- Standardized Yields.

-- Yield. The Fund's "yield" (referred to as "standardized yield")
for a given 30-day period for a class of shares is calculated using the
following formula set forth in rules adopted by the Securities and
Exchange Commission that apply to all funds that quote yields:

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

The symbols above represent the following factors:

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

The standardized yield of a class of shares for a 30-day period may
differ from its yield for any other period. The SEC formula assumes that
the yield for a 30-day period occurs at a constant rate for a six-month
period and is annualized at the end of the six-month period. This
standardized yield is not based on actual distributions paid by the Fund
to shareholders in the 30-day period, but is a hypothetical yield based
on the net investment income from the Fund's portfolio investments
calculated for that period. The standardized yield may differ from the
"dividend yield" of that class, described below. 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
the 30-day period ended June 30, 1994, the standardized yields for the
Fund's Class A and Class B shares were 5.47% and 4.60%, respectively.

-- Tax-Equivalent Yield. The Fund's "tax-equivalent yield" adjusts
the Fund's current yield, as calculated above, by a stated combined
Federal and state tax rate. The tax equivalent yield is based on a 30-day
period, and is computed by dividing the tax-exempt portion of the Fund's
current yield (as calculated above) by one minus a stated income tax rate
and adding the result to the portion (if any) of the Fund's current yield
that is not tax-exempt. The tax-equivalent yield may be used to compare
the tax effects of income derived from the Fund with income from taxable
investments at the tax rates stated. Appendix B includes a tax equivalent
yield table, based on various effective tax brackets for individual
taxpayers. Such tax brackets are determined by a taxpayer's Federal and
state taxable income (the net amount subject to Federal and state income
tax after deductions and exemptions). The tax-equivalent yield tables
assume that the investor is taxed at the highest bracket, regardless of
whether a switch to non-taxable investments would cause a lower bracket
to apply. For taxpayers with income above certain levels, otherwise
allowable itemized deductions are limited. The Fund's tax-equivalent
yield for its Class A and Class B shares for the 30-day period ended June
30, 1994 were 10.17% and 8.56%, respectively, for an individual in the
California/Federal combined 46.24% tax bracket.

-- Dividend Yield and Distribution Return. From time to time the
Fund may quote a "dividend yield" or a "distribution return" for each
class. Dividend yield is based on the Class A or Class B share dividends
derived from net investment income during a stated period. Distribution
return includes dividends derived from net investment income and from
realized capital gains declared during a stated period. Under those
calculations, the dividends and/or distributions for that class declared
during a stated period of one year or less (for example, 30 days) are
added together, and the sum is divided by the maximum offering price per
share of that class on the last day of the period. When the result is
annualized for a period of less than one year, the "dividend yield" is
calculated as follows:

Dividend Yield of the Class =

Dividends of the Class
-----------------------------------------------------
Max. Offering Price of the Class (last day of period)

divided by Number of days (accrual period) x 365

The maximum offering price for Class A shares includes the maximum
front-end sales charge. For Class B shares, the maximum offering price
is the net asset value per share, without considering the effect of
contingent deferred sales charges.

From time to time, similar calculations may also be made using the
Class A net asset value (instead of its respective maximum offering price)
at the end of the period. The dividend yields on Class A shares for the
30-day period ended June 30, 1994 were 5.91% and 6.36% when calculated at
maximum offering price and net asset value, respectively. The dividend
yield on Class B shares for the 30-day period ended June 30, 1994 was
5.19% when calculated at net asset value.

-- Total Return Information.

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

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

The "average annual total return" on an investment in Class A shares
of the Fund for the one year period ended June 30, 1994 was -5.32%, and
for the period from May 18, 1990 through June 30, 1994 was 6.65%.

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

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

In calculating total returns for Class A shares, the current maximum
sales charge of 4.75% (as a percentage of the offering price) is deducted
from the initial investment ("P") (unless the return is shown at net asset
value, as described below). For Class B shares, the payment of the
contingent deferred sales charge of 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 is applied, as described in the
Prospectus. Total returns also assume that all dividends and capital
gains distributions during the period are reinvested to buy additional
shares at net asset value per share, and that the investment is redeemed
at the end of the period. The "total return" on an investment in Class
A shares of the Fund (using the method described above) for the period
from May 18, 1990 (commencement of operations) through June 30, 1994, was
30.37%. The cumulative total return on Class B shares for the period from
October 29, 1993 (the commencement of the offering of the shares) through
June 30, 1994 was (10.15%).

-- Total Returns at Net Asset Value. From time to time the Fund may
also quote an average annual total return at net asset value or a
cumulative total return at net asset value for Class A or Class B 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 "total return at net asset value"
on the Fund's Class A shares for the one-year period ended June 30, 1994
and for the period May 18, 1990 (commencement of operations) through June
30, 1994, was (.60%) and 36.87%, respectively. The total return at net
asset value for the Fund's Class B shares for the period from October 29,
1993 through June 30, 1994 was (5.42%).

-- Other Performance Comparisons. From time to time, the Fund may
publish the ranking of the performance of its Class A or Class B shares
by Lipper Analytical Services, Inc. ("Lipper"), a widely-recognized
independent service. Lipper monitors the performance of regulated
investment companies, including the Fund, and ranks their performance for
various periods based on categories relating to investment objectives.
The performance of the Fund is ranked against (i) all other fixed-income
funds, other than money market funds, and (ii) all other California
municipal bond funds. The Lipper performance analysis includes the
reinvestment of capital gain distributions and income dividends but does
not take sales charge or taxes into consideration. From time to time the
Fund may include in its advertisement and sales literature performance
information about the Fund cited in other newspapers and periodicals such
as The New York Times, which may include performance quotations from other
sources, including Lipper and Morningstar.

From time to time, the Fund may publish the ranking of the
performance of its Class A or Class B shares by Morningstar, Inc.
("Morningstar"), an independent mutual fund monitoring service that ranks
various mutual funds, including the Fund, monthly in broad investment
categories (equity, taxable bond, municipal bond and hybrid) based upon
the funds' three, five and ten-year average annual total returns (when
available) and a risk factor that reflects fund performances relative to
three-month U.S. Treasury bill monthly returns. Such returns are adjusted
for fees and sales loads. There are five ranking categories with a
corresponding number of stars: highest (5), above average (4), neutral
(3), below average (2) and lowest (1). The top ten percent of the funds,
series or classes in an investment category receive five stars; 22.5%
receive four stars; 35% receive three stars; 22.5% receive two stars; and
the bottom 10% receive one star. Morningstar ranks the Fund in relation
to other municipal bond funds.

Investors may also wish to compare the Fund's Class A or Class B
return to the returns on fixed income investments available from banks and
thrift institutions, such as 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 and will
fluctuate daily, while bank depository obligations may be insured by the
FDIC and may provide fixed rates of return, and Treasury bills are
guaranteed as to principal and interest by the U.S. government.

When redeemed, an investor's shares may be worth more or less than
their original cost. Returns for any given past period will not be a
predication or representation by the Fund of future returns. The returns
of the Class A and Class B shares of the Fund are affected by portfolio
quality, the type of investments the Fund holds and its operating expenses
allocated to a particular class.

Distribution and Service Plan

The Corporation has adopted a Distribution and Service Plan for Class
B shares of the Fund (the "Class B Plan") under Rule 12b-1 of the
Investment Company Act pursuant to which the Corporation will reimburse
the Distributor quarterly for all or a portion of its costs incurred in
connection with the distribution and/or servicing of Class B shares, as
described in the Prospectus. Class A shares of the Fund do not have a
plan of distribution. The Plan has been approved by a vote of (i) the
Board of Directors of the Corporation, including a majority of the
"Independent Directors" (those Directors of the Corporation who are not
"interested persons," as defined in the Investment Company Act, and who
have no direct or indirect financial interest in the operation of the Plan
or in any agreements relating to the Plan), cast in person at a meeting
called for the purpose of voting on the Plan, and (ii) the holders of a
"majority" (as defined in the Investment Company Act) of the Class B
shares of the Fund, such vote having been cast by the Manager as the sole
initial holder of Class B shares of the Fund.

In addition, under the Class B Plan, the Manager and the Distributor,
in their sole discretion, from time to time may use their own resources
(which, in the case of the Manager, may include profits from the advisory
fee it receives from the Fund) to make payments to brokers, dealers or
other financial institutions (each is referred to as a "Recipient" under
the Class B Plan) for distribution and administrative services they
perform. The Distributor and the Manager may, in their sole discretion,
increase or decrease the amount of payments they make from their own
resources to Recipients.

Unless terminated as described below, the Class B Plan shall continue
in effect from year to year but only as long as such continuance is
specifically approved at least annually by the Corporation's Board of
Directors and its Independent Directors by a vote cast in person at a
meeting called for the purpose of voting on such continuance. The Class
B Plan may be terminated at any time by the vote of a majority of the
Independent Directors or by the vote of the holders of a "majority" (as
defined in the Investment Company Act) of the outstanding Class B shares.
The Class B Plan may not be amended to increase materially the amount of
payments to be made, unless such amendment is approved by shareholders of
Class B shares. All material amendments must be approved by the
Independent Directors.

While the Class B Plan is in effect, the Treasurer of the Corporation
shall provide a written report to the Corporation's Board of Directors at
least quarterly on the amount of all payments made pursuant to the Class
B Plan, the purpose for which each payment was made and the identity of
each Recipient of a payment. The report for the Class B Plan shall also
include the distribution costs for that quarter, and such costs for
previous fiscal periods that are carried forward, as explained in the
Prospectus and below. Those reports, including the cost allocations on
which they are based, will be subject to the review and approval of the
Independent Directors in the exercise of their fiduciary duty. The Class
B Plan further provides that while it is in effect, the selection and
nomination of those Directors of the Corporation who are not "interested
persons" of the Corporation is committed to the discretion of the
Independent Directors. This does not prevent the involvement of others
in such selection and nomination if the final decision on any such
selection or nomination is approved by a majority of the Independent
Directors.

Under the Class B Plan, no payment will be made to any Recipient in
any quarter if the aggregate net asset value of all Fund shares held by
the Recipient for itself and its customer does not exceed a minimum
amount, if any, that may be determined from time to time by a majority of
the Corporation's Independent Directors. Initially, the Board of
Directors has set the fee at the maximum rate and set no minimum amount.

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

Although the Class B Plan permits the Distributor to retain both the
asset-based sales charges and the service fee on Class B shares, or to pay
Recipients the service fee on a quarterly basis, without payment in
advance, the Distributor intends to pay the service fee to Recipients in
the manner described above. A minimum holding period may be established
from time to time under the Class B Plan by the Board. Initially, the
Board has set no minimum holding period. All payments under the Class B
Plan are subject to the limitations imposed by the Rules of Fair Practice
of the National Association of Securities Dealers, Inc. on payments of
asset-based sales charges and service fees. For the fiscal period October
29, 1993 through June 30, 1994, payments under the Class B Plan totaled
$4,375, which was retained by the Distributor as reimbursement for Class
B sales commissions and service fee advances, as well as financing costs.

The Class B Plan allows for the carry-forward of distribution
expenses, to be recovered from asset-based sales charges in subsequent
fiscal periods, as described in the Prospectus. The asset-based sales
charge paid to the Distributor by the Corporation under the Class B Plan
is intended to allow the Distributor to recoup the cost of sales
commissions paid to authorized brokers and dealers at the time of sale,
plus financing costs, as described in the Prospectus. Such payments may
also be used to pay for the following expenses in connection with the
distribution of Class B shares: (i) financing the advance of the service
fee payment to Recipients under the Class B Plan, (ii) compensation and
expenses of personnel employed by the Distributor to support distribution
of Class B shares, and (iii) costs of sales literature, advertising and
prospectuses (other than those furnished to current shareholders) and
state "blue sky" registration fees.

ABOUT YOUR ACCOUNT

How To Buy Shares

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

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

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

Determination of Net Asset Value Per Share. The net asset values per
share of Class A and Class B shares of the Fund are determined each day
The New York Stock Exchange (the "NYSE") is open, as of 4:00 P.M., New
York time, that day, by dividing the value of the Fund's net assets
attributable to that class by the number of shares of that class
outstanding. The NYSE's most recent annual announcement (which is subject
to change) states that it will close New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. It may also close on other days. Dealers other than NYSE
members may conduct trading in Municipal Securities on certain days on
which the NYSE is closed of after 4:00 P.M. on a regular business day.
Because the Fund's net asset values will not be calculated on those days,
the Fund's net asset value per share may be significantly affected, on
such days when shareholders will not have the ability to purchase or
redeem shares.

The Corporation's Board of Directors has established procedures for
the valuation of the Fund's securities, generally, as follows: (i) equity
securities traded on a securities exchange or on the NASDAQ for which last
sale information is regularly reported are valued at the last sales prices
on their primary exchange or the NASDAQ that day (or, in the absence of
sales that day, at values based on the last sale prices of the preceding
trading day or closing bid and asked prices); (ii) NASDAQ and other
unlisted equity securities for which last sale prices are not regularly
reported but for which over-the-counter market quotations are readily
available are valued at the highest closing bid price at the time of
valuation, or, if no closing bid price is reported, on the basis of a
closing bid price obtained from a dealer who maintains an active market
in that security; (iii) securities (including restricted securities) not
having readily-available market quotations are valued at fair value under
the Board's procedures; (iv) long-term debt securities, and short-term
debt securities having a remaining maturity in excess of 60 days, are
valued at the mean between the asked and bid prices determined by a
portfolio pricing service appointed by the Corporation's Board of
Directors or obtained from active market makers in the security; and (v)
short-term debt securities having a remaining maturity of 60 days or less
are valued at cost, adjusted for amortization of premiums and accretion
of discounts.

In the case of U.S. Government Securities, mortgage-backed securities
and Municipal Securities, where last sale information is not generally
available, such pricing procedures may include "matrix" comparisons to the
prices for comparable instruments on the basis of quality, yield, maturity
and other special factors involved (such as the tax-exempt status of the
interest paid by Municipal Securities). The Directors will monitor the
accuracy of pricing services by comparing prices used for portfolio
evaluation to actual sales prices of selected securities.

Puts, calls and Futures are valued at the last sale prices on the
principal exchanges (or the NASDAQ National Market System) on which they
are traded. If there are no sales that day, in accordance with (i) above.
When the Fund writes an option, an amount equal to the premium received
by the Fund is included in its Statement of Assets and Liabilities as an
asset, and an equivalent deferred credit is included in the liability
section. The deferred credit is adjusted ("marked-to-market") to reflect
the current market value of the option.

AccountLink. When shares are purchased through AccountLink, each purchase
must be at least $25. Shares will be purchased on the regular business
day the Distributor is instructed to initiate the Automated Clearing House
transfer to buy the shares. Dividends will begin to accrue on such shares
on the day the Fund receives Federal Funds for such purchase through the
ACH system before 4:00 P.M., which is normally 3 days after the ACH
transfer is initiated. The Distributor and the Fund are not responsible
for any delays. If the Federal Funds are received after 4:00 P.M.,
dividends will begin to accrue on the next regular business day after such
Federal Funds are received.

Reduced Sales Charges. As discussed in the Prospectus, a reduced sales
charge rate may be obtained for Class A shares under Rights of
Accumulation and Letters of Intent because of the economies of sales
efforts and reduction of expenses realized by the Distributor and dealers
making such sales. No sales charge is imposed in certain circumstances
described in the Prospectus because the Distributor incurs little or no
selling expenses. The term "immediate family" refers to one's spouse,
children, grandchildren, grandparents, parents-in-law, sons- and
daughters-in law, parents, siblings, a spouse's siblings and a sibling's
spouse.

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

Oppenheimer Tax-Free Bond Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Intermediate Tax-Exempt Bond Fund
Oppenheimer Insured Tax-Exempt Bond Fund
Oppenheimer Main Street California Tax-Exempt Fund
Oppenheimer Florida Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer New Jersey Tax-Exempt Fund
Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Time Fund
Oppenheimer Target Fund
Oppenheimer Special Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund
Oppenheimer High Yield Fund
Oppenheimer Champion High Yield Fund
Oppenheimer Investment Grade Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer Limited-Term Government Fund
Oppenheimer Mortgage Income Fund
Oppenheimer Global Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Environment Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Investment Grade Bond Fund
Oppenheimer Strategic Short-Term Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Strategic Diversified Income Fund

and the following "Money Market Funds":

-- Terms of Escrow That Apply to Letters of Intent.

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

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.

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

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.

How to Sell Shares

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

-- Payments "In Kind". The Prospectus states that payment for shares
tendered for redemption is ordinarily made in cash. However, the Board of
Directors of the Fund may determine that it would be detrimental to the
best interests of the remaining shareholders of the Fund to make payment
of a redemption order wholly or partly in cash. In that case the Fund may
pay the redemption proceeds in whole or in part by a distribution "in
kind" of securities from the portfolio of the Fund, in lieu of cash, in
conformity with applicable rules of the Securities and Exchange
Commission. The Fund has elected to be governed by Rule 18f-1 under the
Investment Company Act, pursuant to which the Fund is obligated to redeem
shares solely in cash up to the lesser of $250,000 or 1% of the net assets
of the Fund during any 90-day period for any one shareholder. If shares
are redeemed in kind, the redeeming shareholder might incur brokerage or
other costs in selling the securities for cash. The method of valuing
securities used to make redemptions in kind will be the same as the method
the Fund uses to value it portfolio securities described above under
"Determination of Net Asset Values Per Share" and that valuation will be
made as of the time the redemption price is determined.

-- Involuntary Redemptions. The Corporation's Board of Directors has
the right to cause the involuntary redemption of the shares held in any
account if the aggregate net asset value of those shares is less than $500
or such lesser amount as the Board may fix. The Board of Directors will
not cause the involuntary redemption of shares in an account if the
aggregate net asset value of the shares has fallen below the stated
minimum solely as a result of market fluctuations. Should the Board elect
to exercise this right, it may also fix, in accordance with the Investment
Company Act, the requirements for any notice to be given to the
shareholders in question (not less than 30 days), or the Board may set
requirements for granting permission to the Shareholder to increase the
investment, and set other terms and conditions so that the shares would
not be involuntarily redeemed.

Reinvestment Privilege. Within six months of a redemption, a shareholder
may reinvest all or part of the redemption proceeds of (i) Class A shares,
or (ii) 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
OppenheimerFunds into which shares of the Fund are exchangeable as
described below, at the net asset value next computed after the Transfer
Agent receives the reinvestment order. The shareholder must ask the
Distributor for that privilege at the time of reinvestment. Any capital
gain that was realized when the shares were redeemed is taxable, and
reinvestment will not alter any capital gains tax payable on that gain.
If there has been a capital loss on the redemption, some or all of the
loss may not be tax deductible, depending on the timing and amount of the
reinvestment. Under the Internal Revenue Code, if the redemption proceeds
of Fund shares on which a sales charge was paid are reinvested in shares
of the Fund or another of the OppenheimerFunds within 90 days of payment
of the sales charge, the shareholder's basis in the shares of the Fund
that were redeemed may not include the amount of the sales charge paid.
That would reduce the loss or increase the gain recognized from the
redemption. However, in that case the sales charge would be added to the
basis of the shares acquired by the reinvestment of the redemption
proceeds. The Fund may amend, suspend or cease offering this reinvestment
privilege at any time as to shares redeemed after the date of such
amendment, suspension or cessation.

Transfer of Shares. Shares are not subject to the payment of a contingent
deferred sales charge of either class at the time of transfer to the name
of another person or entity (whether the transfer occurs by absolute
assignment, gift or bequest, not involving, directly or indirectly, a
public sale). The transferred shares will remain subject to the
contingent deferred sales charge, calculated as if the transferee
shareholder had acquired the transferred shares in the same manner and at
the same time as the transferring shareholder. If less than all shares
held in an account are transferred, and some but not all shares in the
account would be subject to a contingent deferred sales charge if redeemed
at the time of transfer, the priorities described in the Prospectus under
"How To Buy Shares" for the imposition of the Class B contingent deferred
sales charge will be followed in determining the order in which shares are
transferred.

Automatic Withdrawal and Exchange Plans. Investors owning shares of the
Fund valued at $5,000 or more can authorize the Transfer Agent to redeem
shares (minimum $50) automatically on a monthly, quarterly, semi-annual
or annual basis under an Automatic Withdrawal Plan. Shares will be
redeemed three business days prior to the date requested by the
shareholder for receipt of the payment. Automatic withdrawals of up to
$1,500 per month may be requested by telephone if payments are to be made
by check payable to all shareholders of record and sent to the address of
record for the account (and if the address has not been changed within the
prior 30 days). Required minimum distributions from OppenheimerFunds-
sponsored retirement plans may not be arranged on this basis. Payments
are normally made by check, but shareholders having AccountLink privileges
(see "How To Buy Shares") may arrange to have Automatic Withdrawal Plan
payments transferred to the bank account designated on the
OppenheimerFunds New Account Application or signature-guaranteed
instructions. The Fund cannot guarantee receipt of a payment on the date
requested and reserves the right to amend, suspend or discontinue offering
such plans at any time without prior notice. Because of the sales charge
assessed on Class A share purchases, shareholders should not make regular
additional Class A share purchases while participating in an Automatic
Withdrawal Plan. Class B shareholders should not establish withdrawal
plans because of the imposition of the Class B contingent deferred sales
charge on such withdrawals (except where the Class B contingent deferred
sales charge is waived as described in the Prospectus under "Class B
Contingent Deferred Sales Charge").

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

Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Strategic Investment Grade Bond Fund
Oppenheimer Strategic Short-Term Income Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer Tax-Free Bond Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer Florida Tax-Exempt Fund
Oppenheimer Insured Tax-Exempt Bond Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Investment Grade Bond Fund
Oppenheimer Value Stock Fund
Oppenheimer Government Securities Fund
Oppenheimer High Yield Fund
Oppenheimer Mortgage Income Fund
Oppenheimer Cash Reserves (Class B shares are only available by
exchange)
Oppenheimer Special Fund
Oppenheimer Equity Income Fund
Oppenheimer Global Fund
Oppenheimer Discovery Fund
Oppenheimer Main Street Income & Growth Fund
Oppenheimer Main Street California Tax-Exempt Fund

Class A shares of OppenheimerFunds may be exchanged at net asset
value for shares of any Money Market Fund. Shares of any Money Market
Fund purchased without a sales charge may be exchanged for shares of
OppenheimerFunds offered with a sales charge upon payment of the sales
charge (or, if applicable, may be used to purchase shares of
OppenheimerFunds subject to a contingent deferred sales charge). Shares
of this Fund acquired by reinvestment of dividends or distributions from
any other of the OppenheimerFunds 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 OppenheimerFunds.
No contingent deferred sales charge is imposed on exchanges of shares of
either class purchased subject to a contingent deferred sales charge.
However, when Class A shares acquired by exchange of Class A shares of
other OppenheimerFunds purchased subject to a Class A contingent deferred
sales charge are redeemed within 18 months of the end of the calendar
month of the initial purchase of the exchanged Class A shares, the Class
A contingent deferred sales charge is imposed on the redeemed shares (see
"Class A Contingent Deferred Sales Charge" in the Prospectus). The Class
B contingent deferred sales charge is imposed on Class B shares acquired
by exchange if they are redeemed within six years of the initial purchase
of the exchanged Class B shares.

When Class B 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 contingent deferred sales charge will be
followed in determining the order in which the shares are exchanged.
Shareholders should take into account the effect of any exchange on the
applicability and rate of any contingent deferred sales charge that might
be imposed in the subsequent redemption of remaining shares. Shareholders
owning shares of both classes must specify whether they intend to exchange
Class A or Class B shares.

Dividends, Capital Gains and Taxes

Dividends and Distributions. During the Fund's fiscal year ended
June 30, 1994, the Fund maintained the practice, to the extent consistent
with the amount of the Fund's net investment income and other
distributable income, of attempting to pay dividends on Class A shares at
a constant level of $.0611 per share each month, although the amount of
such dividends was subject to change from time to time depending on market
conditions, the composition of the Fund's portfolio and expenses borne by
the Fund. The practice of attempting to pay dividends on Class A shares
at a constant level required the Manager, consistent with the Fund's
investment objective and investment restrictions, to monitor the Fund's
portfolio and select higher yielding securities when deemed appropriate
to maintain necessary net investment income levels. This practice did not
affect the net asset value of the Fund's Class A shares. The Board of
Directors may change the Fund's targeted dividend level at any time,
without prior notice to shareholders; the Fund does not otherwise have a
fixed dividend rate and there can be no assurance as to the payment of any
dividends or the realization of any capital gains.

Tax Status of the Fund's Dividends and Distributions. The Fund intends
to qualify under the Internal Revenue Code during each fiscal year to pay
"exempt-interest dividends" to its shareholders. Exempt-interest
dividends which are derived from net investment income earned by the Fund
on Municipal Securities will be excludable from gross income of
shareholders for Federal income tax purposes. Net investment income
includes the allocation of amounts of income from the Municipal Securities
in the Fund's portfolio which are free from Federal income taxes. This
allocation will be made by the use of one designated percentage applied
uniformly to all income dividends made during the Fund's tax year. Such
designation will normally be made following the end of each fiscal year
as to income dividends paid in the prior year. The percentage of income
designated as tax-exempt may substantially differ from the percentage of
the Fund's income that was tax-exempt for a given period. A portion of
the exempt-interest dividends paid by the Fund may be an item of tax
preference for shareholders subject to the alternative minimum tax. All
of the Fund's dividends (excluding capital gains distributions) paid
during 1994 were exempt from Federal and California personal income taxes.
The amount of any dividends attributable to tax preference items for
purposes of the alternative minimum tax will be identified when tax
information is distributed by the Fund. 3.97% of the Fund's dividends
(excluding distributions) paid during 1993 were a tax preference item for
shareholders subject to the alternative minimum tax.

A shareholder receiving a dividend from income earned by the Fund
from one or more of: (1) certain taxable temporary investments (such as
certificates of deposit, repurchase agreements, commercial paper and
obligations of the U.S. government, its agencies and instrumentalities);
(2) income from securities loans; (3) income or gains from options or
Futures; or (4) an excess of net short-term capital gain over net long-
term capital loss from the Fund, treats the dividend as a receipt of
either ordinary income or long-term capital gain in the computation of
gross income, regardless of whether the dividend is reinvested. The
Fund's dividends will not be eligible for the dividends-received deduction
for corporations. Shareholders receiving Social Security benefits should
be aware that exempt-interest dividends are a factor in determining
whether such benefits are subject to Federal income tax. Losses realized
by shareholders on the redemption of Fund shares within six months of
purchase (which period may be shortened by regulation) will be disallowed
for Federal income tax purposes to the extent of exempt-interest dividends
received on such shares.

If the Fund qualifies as a "regulated investment company" under the
Internal Revenue Code, it will not be liable for Federal income taxes on
amounts paid by it as dividends and distributions. The Fund qualified as
a regulated investment company in its last fiscal year and intends to
qualify in future years, but reserves the right not to qualify. The
Internal Revenue Code contains a number of complex tests to determine
whether the Fund will qualify, and the Fund might not meet those tests in
a particular year. For example, if the Fund derives 30% or more of its
gross income from the sale of securities held less than three months, it
may fail to qualify (see "Tax Aspects of Covered Calls and Hedging
Instruments," above). If it does not qualify, the Fund will be treated for
tax purposes as an ordinary corporation and will receive no tax deduction
for payments of dividends and distributions made to shareholders.

Under the Internal Revenue Code, by December 31 each year the Fund
must distribute 98% of its taxable investment income earned from January
1 through December 31 of that year and 98% of its capital gains realized
in the period from November 1 of the prior year through October 31 of the
current year, or else the Fund must pay an excise tax on the amounts not
distributed. The Manager might determine in a particular year that it
might be in the best interest of shareholders for the Fund not to make
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 Internal Revenue Code requires that a holder (such as the Fund)
of a zero coupon security accrue as income each year a portion of the
discount at which the security was purchased even though the Fund receives
no interest payment in cash on the security during the year. As an
investment company, the Fund must pay out substantially all of its net
investment income each year or be subject to excise taxes, as described
above. Accordingly, when the Fund holds zero coupon securities, it may
be required to pay out as an income distribution each year an amount which
is greater than the total amount of cash interest the Fund actually
received during that year. Such distributions will be made from the cash
assets of the Fund or by liquidation of portfolio securities, if
necessary. The Fund may realize a gain or loss from such sales. In the
event the Fund realizes net capital gains from such transactions, its
shareholders may receive a larger capital gain distribution than they
would have had in the absence of such transactions.

California law relating to taxation of regulated investment companies
and their shareholders was generally conformed to federal law effective
January 1, 1993. In any year in which the Fund qualifies as a regulated
investment company under the Code and is exempt from federal income tax,
(i) the Fund will also be exempt from the California corporate income and
franchise taxes to the extent it distributes its income and (ii), provided
50% or more of the value of the total assets of the Fund at the close of
each quarter of its taxable year consists of obligations ("California
Obligations"), the interest on which (when held by an individual) is
exempt from personal income taxation under the laws of California, the
Fund will be qualified under California law to pay exempt-interest
dividends which will be exempt from the California personal income tax.

Individual shareholders of the Fund who reside in California will not
be subject to the California personal income tax on distributions received
from the Fund which are exempt-interest dividends. The portion of any
distribution constituting exempt-interest dividends is that (i) portion
derived from California Obligations and (ii) designated as such by the
Fund. The total amount of exempt-interest dividends paid by the Fund to
its shareholders with respect to any taxable year cannot exceed the amount
of interest received by the Fund during such year on California
Obligations less any expenses and expenditures deemed to have been paid
from such interest.

Distributions from the Fund that are attributable to sources other
than California Obligations generally will be taxable to such shareholders
as ordinary income. In addition, distributions of short-term capital
gains realized by the Fund will be taxable to the shareholders as ordinary
income. Distributions of long-term capital gains will be taxable as such
to the shareholders regardless of how long they held their shares. Any
dividends paid to corporate shareholders subject to the California
franchise tax will be taxed to such shareholders.

Interest on indebtedness incurred or continued by shareholders to
purchase or carry shares of the Fund will not be deductible for California
personal income tax purposes. As a result of California's incorporation
of certain provisions of the Code, a loss realized by a shareholder upon
the sale of shares held for six months or less may be disallowed to the
extent of any exempt-interest dividends received with respect to such
shares. Any loss realized upon the redemption of shares within 30 days
before or after the acquisition of other shares of the same series may be
disallowed under the "wash sale" rules. With respect to individual
shareholders, California does not treat tax-exempt interest as a tax
preference item for purposes of its alternative minimum tax. To the
extent a corporate shareholder receives dividends which are exempt from
California taxation, a portion of such dividends may be subject to the
alternative minimum tax.

Dividend Reinvestment in Another Fund. Shareholders of the Fund may elect
to reinvest all dividends and/or distributions in shares of the same class
of any of the other OppenheimerFunds listed in "Reduced Sales Charges,"
above, at net asset value without sales charge. Class B shareholders
should be aware that as of the date of this Statement of Additional
Information, not all of the OppenheimerFunds offer Class B shares. The
names of the funds that do as of the date of the document can be obtained
by referring to "How to Exchange Shares," above or by calling the
Distributor at 1-800-525-7048. To elect this option, a shareholder must
notify the Transfer Agent in writing and either must have an existing
account in the fund selected for investment or must obtain a prospectus
for that fund and an application from the Distributor to establish an
account. The investment will be made at the net asset value per share
in effect at the close of business on the payable date of the dividend or
distribution. Dividends and distributions from other Eligible Funds may
be invested in shares of this Fund on the same basis.

Additional Information About the Fund

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
portfolio securities to and from the Fund. The Manager has represented
to the Fund that its banking relationships with the Custodian have been
and will continue to be unrelated to and unaffected by the relationship
between the Fund and the Custodian. It will be the practice of the Fund
to deal with the Custodian in a manner uninfluenced by any banking
relationship the Custodian may have with the Manager and its affiliates.

<PAGE>

Independent Auditors' Report

The Board of Trustees and Shareholders of Oppenheimer Main Street
California Tax-Exempt Fund:

We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Oppenheimer Main Street
California Tax-Exempt Fund as of June 30, 1994, the related statement of
operations for the year then ended, the statements of changes in net
assets for the years ended June 30, 1994 and 1993, and the financial
highlights for the period May 18, 1990 to June 30, 1994. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of securities owned at June 30, 1994 by correspondence with
the custodian. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
Oppenheimer Main Street California Tax-Exempt Fund at June 30, 1994, the
results of its operations, the changes in its net assets, and the
financial highlights for the respective stated periods, in conformity with
generally accepted accounting principles.

DELOITTE & TOUCHE

Denver, Colorado
July 22, 1994

<PAGE>

Statement of Investments June 30, 1994

Ratings: Moody's/
S&P's/Fitch's Face Market Value
(Unaudited) Amount See Note 1
- ------
Municipal Bonds and Notes--98.1%
- ------
California--86.2% Alameda County, California Certificates of
Participation, Prerefunded, BIG Insured, 7.25%, 6/1/09 Aaa/AAA
$1,635,000 $1,839,542
- ------
Anaheim, California Public Financing Authority
Tax Allocation Revenue Bonds, MBIA Insured,
9.72%, 12/28/18(1) Aaa/AAA 1,000,000 1,028,398
- ------
California Educational Facilities Authority Revenue Bonds, Santa Clara
University Project,
6.25%, 2/1/16 A1/NR 1,000,000 979,076
California Health Facilities Financing Authority:
Revenue Bonds:
Episcopal Homes Project, Series A,
OSHPD Insured,
7.80%, 7/1/15 NR/A+ 1,000,000 1,080,854
Henry Mayo Newhall Project, Series A,
OSHPD Insured,
8%, 10/1/18 NR/A+ 280,000 305,834
Revenue Refunding Bonds, Catholic Health
Facilities, Series A, MBIA Insured,
5%, 7/1/11 Aaa/AAA 2,500,000 2,185,082
- ------
California Housing Finance Agency Revenue Bonds, Home Mtg., Series C:
FHA Insured, 7.60%, 8/1/30 Aa/A+ 75,000 77,456
6.75%, 2/1/25 Aa/A+ 5,000,000 5,069,714
- ------
California Pollution Control Financing Authority Revenue Bonds, Pacific
Gas and
Electric Co., Series B,
6.35%, 6/1/09 A1/A 2,000,000 1,971,482
- ------
California State Department of Water Resources Revenue Bonds, Central
Valley
Water System Project, Series L,
5.50%, 12/1/23 Aa/AA 2,000,000 1,748,456
- ------
California State General Obligation Bonds, FSA Insured,
5.50%, 4/1/19 Aaa/AAA/AAA 2,500,000 2,219,265
- ------
California State Public Works Board Lease Revenue Bonds:
Department of Corrections California State Prison, Series B, MBIA Insured,
5.50%, 12/1/12 Aaa/AAA/A+ 3,000,000 2,764,941
Regents of the University of California, Prerefunded, Series A,
7%, 9/1/15 Aaa/AAA/AAA 150,000 166,281
- ------
Capistrano, California University School District Community Facilities
Special
Tax Bonds, No. 87-1,
7.60%, 9/1/14 NR/NR 1,000,000 1,017,478
- ------
Contra Costa, California Water District Revenue Bonds, Prerefunded, Series
A,
6.875%, 10/1/20 A/A+ 1,100,000 1,212,945
- ------
Corona, California Certificates of Participation, Prerefunded, Series B,
10%, 11/1/20 Aaa/AAA 2,250,000 2,966,168
- ------
East Bay, California Municipal Utility District Water System Revenue
Bonds,
Prerefunded, AMBAC Insured,
6.375%, 6/1/21 Aaa/AAA/AAA 1,000,000 1,078,550
- ------
Los Angeles, California Community Redevelopment Agency Finance Revenue
Bonds,
Grand Central Qualified Redevelopment, Series A,
5.90%, 12/1/13 A2/A
1,000,000 884,096
- ------

Los Angeles, California Department of Water and Power Electric Plant
Revenue
Bonds: Second Issue 1991,
6%, 6/1/12 Aa/AA 500,000 483,473
7.375%, 2/1/29 Aa/AA 2,000,000 2,234,378

<PAGE>

- ------

Ratings: Moody's/
S&P's/Fitch's Face Market Value
(Unaudited) Amount See Note 1
- ------
California (continued) Los Angeles, California Wastewater System
Revenue
Refunding Bonds, Series D, FGIC Insured,
8.70%, 11/1/03 Aaa/AAA/AAA $5,115,000 $6,267,650
- ------
Los Angeles County, California Certificates of Participation, Correctional
Facilities Project, MBIA Insured,
6.50%, 9/1/13 Aaa/AAA 400,000 408,584
- ------
Los Angeles County, California Transportation: Revenue Bonds, Commission
Sales
Tax, Prerefunded, Series A, FGIC Insured,
6.75%, 7/1/18 Aaa/AAA/AAA 1,000,000 1,097,976
Revenue Refunding Bonds, Commission Sales Tax, Prerefunded, Series A,
8%, 7/1/16 Aaa/A+/A+ 1,000,000 1,110,403
- ------
Metropolitan Water District Revenue Bonds, Southern California Waterworks
Project:
5%, 7/1/20 Aa/AA 2,500,000 2,016,460
8.005%, 10/30/20(1) Aa/AA 1,500,000 1,150,183
- ------
Orange County, California Community Facilities District Special Tax Bonds:
No. 87-3 Mission Viejo, Series A,
8.05%, 8/15/08 A/NR 1,480,000 1,623,846
No. 88-1 Aliso Viejo, Prerefunded, Series A,
7.35%, 8/15/18 NR/NR 2,000,000 2,280,546
- ------
Pittsburg, California Improvement Bond Act of 1915 Bonds, Assessment
District
1990-01,
7.75%, 9/2/20 NR/NR 100,000 100,768
- ------
Rancho, California Water District Financing Authority Revenue Refunding
Bonds,
AMBAC Insured,
5%, 8/15/14 Aaa/AAA/AAA 1,500,000 1,262,617
- ------
Redding, California Electric System Revenue Certificates of Participation:
FGIC Insured, 8.043%, 6/1/19(1) Aaa/AAA/AAA 1,150,000 926,680
MBIA Insured, 9.461%, 7/8/22(1) Aaa/AAA 500,000 493,109
- ------
Riverside County, California Community Facilities District Bonds, Special
Tax
No. 88-12,
7.55%, 9/1/17 NR/NR 1,500,000 1,515,208
- ------
Sacramento, California Municipal Utility District Electric Revenue
Refunding
Bonds:
Series B, FGIC Insured, 9.376%, 8/15/18(1) Aaa/AAA/AAA 1,500,000
1,487,415
Series D, MBIA Insured, 5.25%, 11/15/20 Aaa/AAA/A- 2,000,000
1,706,446
- ------
San Bernardino County, California Certificates of Participation, Medical
Center
Financing Project,
5.50%, 8/1/17 Baa1/A 2,500,000 2,108,652
- ------
San Diego County, California Water Authority Revenue Certificates of
Participation, Series B, MBIA Insured,
9.28%, 4/8/21(1) Aaa/AAA 1,000,000 994,013
- ------
San Francisco, California Bay Area Rapid Transit District Revenue
Refunding
Bonds, AMBAC Insured,
6.75%, 7/1/11 Aaa/AAA/AAA 1,000,000 1,060,548
- ------
San Francisco, California City and County Airport Commission International
Airport Revenue Refunding Bonds, Second Series, Issue I, AMBAC Insured,
6.30%, 5/1/11 Aaa/AAA/AAA 1,000,000 1,010,109

- ------

San Joaquin Hills, California Transportation Corridor Agency Toll Road
Revenue
Bonds, Sr. Lien,
6.75%, 1/1/32 NR/NR/BBB 3,500,000 3,348,859

<PAGE>

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

Ratings: Moody's/
S&P's/Fitch's Face Market Value
(Unaudited) Amount See Note 1
- ------
California (continued) South Orange County, California Public
Financing
Authority Special Tax Revenue Bonds, Sr. Lien, Series A, MBIA Insured,
6.20%, 9/1/13 Aaa/AAA $1,000,000 $987,758
- ------
Southern California Home Financing Authority Single Family Mtg. Revenue
Bonds,
GNMA and FNMA Mtg.-Backed Securities, Series A,
7.35%, 9/1/24 NR/AAA 285,000 297,185
- ------
Southern California Public Power Authority Revenue Refunding Bonds,
8.848%, 7/1/12(1) Aa/AA- 2,500,000 2,369,835
- ------
University of California Revenue Refunding Bonds, Multiple Purpose
Project,
Series A,
6.875%, 9/1/16 A/A- 1,000,000 1,109,214
- ------
Victorville, California Special Tax Bonds, Community Facilities District
No.
90-1 (Western Addition), Series A,
8.30%, 9/1/16 NR/NR 450,000 468,852
- ------
West Basin, California Municipal Water District Certificates of
Participation,
Prerefunded, AMBAC Insured,
6.85%, 8/1/16 Aaa/AAA/AAA 1,000,000 1,099,815
- ------
69,616,200
- ------
U.S. Possessions--11.9% Puerto Rico Commonwealth Highway Authority
Revenue
Bonds,Prerefunded, Series P,
8.125%, 7/1/13 Aaa/AAA 2,000,000 2,268,576
- ------
Puerto Rico Commonwealth Public Improvement General Obligation Bonds:
Prerefunded, Series A, 7.75%, 7/1/17 NR/AAA 1,000,000
1,132,213
Prerefunded, 7.25%, 7/1/12 NR/AAA 1,430,000 1,558,711
YCNS, MBIA Insured, 8.314%, 7/1/08(1) Aaa/AAA 1,500,000
1,517,763
- ------
Puerto Rico Housing Finance Corp. Single Family Mtg. Revenue Bonds,
Portfolio 1,
Series B,
7.65%, 10/15/22 Aaa/AAA 380,000 391,638
- ------
Puerto Rico Public Buildings Authority Guaranteed Public Education and
Health
Facilities Revenue Bonds, Prerefunded, Series H,
7.875%, 7/1/07 Aaa/AAA 2,500,000 2,766,995
- ------
9,635,896
- ------
Total Investments, at Value (Cost $81,294,291) 98.1% 79,252,096
- ------
Other Assets Net of Liabilities 1.9 1,505,267
- ------ ------
Net Assets 100.0% $80,757,363
- ------ ------
- ------ ------
(1) Represents the current interest rate for a variable rate bond.
Variable rate
bonds known as "inverse floaters" pay interest at a rate that varies
inversely
with short-term interest rates. As interest rates rise, inverse floaters
produce
less current income. Their price may be more volatile than the price of
a
comparable fixed-rate security.

See accompanying Notes to Financial Statements.

<PAGE>

- ------

Statement of Assets and Liabilities June 30, 1994

- ------
Assets Investments, at value (cost $81,294,291)--see accompanying
statement
$79,252,096
- ------
Cash 181,329
- ------
Receivables:
Interest 1,564,695
Shares of capital stock sold 145,006
- ------
Deferred organization costs 1,391
- ------
Other 8,736
- ------
Total assets 81,153,253
- ------
Liabilities Payables and other liabilities:
Dividends 265,443
Shares of capital stock redeemed 92,116
Distribution and service plan fees--Note 4 1,031
Other 37,300
- ------
Total liabilities 395,890
- ------
Net Assets $80,757,363
- ------
- ------
- ------
Composition of Net Assets
Par value of shares of capital stock 68,336
- ------
Additional paid-in capital 82,845,340
- ------
Overdistributed net investment income (95,768)
- ------
Accumulated net realized loss from investment transactions (18,350)
- ------
Net unrealized depreciation on investments--Note 3 (2,042,195)
- ------
Net assets $80,757,363
- ------
- ------
- ------
Net Asset Value
Per Share
Class A Shares:
Net asset value and redemption price per share (net assets of $79,554,826
and
6,731,736 shares of capital stock outstanding) $11.82
Maximum offering price per share (net asset value plus sales charge of
4.75% of
offering price) $12.41
- ------
Class B Shares:
Net asset value, redemption price and offering price per share (based on
net
assets of $1,202,537 and 101,906 shares of capital stock outstanding)
$11.80
See accompanying Notes to Financial Statements.

<PAGE>

- ------
Statement of Operations For the Year Ended June 30, 1994

- ------
Investment Income Interest $5,432,409
- ------
Expenses Management fees--Note 4 318,921
- ------
Transfer and shareholder servicing agent fees--Note 4 51,532
- ------
Shareholder reports 32,644
- ------
Legal and auditing fees 16,104
- ------
Registration and filing fees:
Class A 5,418
Class B 391
- ------
Distribution and service plan fees--Class B--Note 4 4,375
- ------
Custodian fees and expenses 2,333
- ------
Directors' fees and expenses 1,397
- ------
Other 3,982
- ------
Total expenses 437,097
- ------
Net Investment Income 4,995,312
- ------
Realized and Unrealized
Loss on Investments
Net realized loss on investments (102,647)

- ------

Net change in unrealized appreciation or depreciation on investments
(5,742,053)
- ------
Net realized and unrealized loss on investments (5,844,700)
- ------
Net Decrease in Net Assets Resulting From Operations $(849,388)
- ------
- ------
See accompanying Notes to Financial Statements.

<PAGE>

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

Year Ended June 30,
1994 1993
- ------
Operations Net investment income $4,995,312 $3,542,119
- ------
Net realized gain (loss) on investments (102,647) 175,417
- ------
Net change in unrealized appreciation or depreciation on investments
(5,742,053) 2,790,047
- ------ ------
Net increase in net assets resulting from operations (849,388)
6,507,583
- ------
Dividends and Distributions to Shareholders
Dividends from net investment income:
Class A ($.729 and $.81 per share, respectively) (4,729,265)
(3,585,299)
Class B ($.37 per share) (19,459) --
- ------
Dividends in excess of net investment income:
Class A ($.028 per share) (179,070) --
Class B ($.014 per share) (737) --
- ------
Distributions from net realized gain on investments:
Class A ($.02 per share) -- (78,238)
- ------
Distributions in excess of gain on investments:
Class A ($.028 per share) (186,921) --
Class B ($.028 per share) (599) --
- ------
Capital Stock
Transactions
Net increase in net assets resulting from Class A capital stock
transactions--Note 2 13,070,898 29,488,371
- ------
Net increase in net assets resulting from Class B capital stock
transactions--Note 2 1,264,874 --
- ------
Net Assets Total increase 8,370,333 32,332,417
- ------
Beginning of year 72,387,030 40,054,613
- ------ ------
End of year (including overdistributed net investment income
of $95,768 and $43,180, respectively) $80,757,363 $72,387,030
- ------ ------
- ------ ------
See accompanying Notes to Financial Statements.

<PAGE>

- ------
Financial Highlights

Total dividends and
distributions to shareholders (.79) (.83) (.83) (.83)
(.06) (.41)

1. For the period from October 29, 1993 (inception of offering) to June
30, 1994.
2. For the period from May 18, 1990 (commencement of operations) to June
30, 1990.
3. Net investment income would have been $.82 and $.04 per share in 1991
and 1990 absent the voluntary expense assumption, resulting in an expense
ratio of .42% and 1.93%, respectively.
4. Assumes a hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption
at the net asset value calculated on the last business day of the fiscal
period. Sales charges are not reflected in the total returns.
5. Annualized.
6. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation. Purchases and sales of investment securities (excluding
short-term securities) for the year ended June 30, 1994 were $29,672,105
and $15,979,622, respectively.
See accompanying Notes to Financial Statements.

<PAGE>

- ------
Notes to Financial Statements

- ------
1. Significant Accounting Policies

Oppenheimer Main Street California Tax-Exempt Fund (the Fund), formerly
named Main Street Funds, Inc. -- California Tax-Exempt Fund, is a separate
series of Oppenheimer Main Street Funds, Inc., an open-end management
investment company registered under the Investment Company Act of 1940,
as amended. The Fund's investment advisor is Oppenheimer Management
Corporation (the Manager). The Fund offers both Class A and Class B
shares. Class A shares are sold with a front-end sales charge. Class B
shares may be subject to a contingent deferred sales charge. Both classes
of shares have identical rights to earnings, assets and voting privileges,
except that each class has its own expenses directly attributable to a
particular class and exclusive voting rights with respect to matters
affecting a single class. In addition, Class B shares have their own
distribution plan and will automatically convert to Class A shares six
years after the date of purchase. The following is a summary of
significant accounting policies consistently followed by the Fund.

- ------
Investment Valuation. Portfolio securities are valued at 4:00 p.m. (New
York time) on each trading day. Long-term debt securities are valued by
a portfolio pricing service approved by the Board of Directors. Long-term
debt securities which cannot be valued by the approved portfolio pricing
service are valued by averaging the mean between the bid and asked prices
obtained from two active market makers in such securities. Short-term debt
securities having a remaining maturity of 60 days or less are valued at
cost (or last determined market value) adjusted for amortization to
maturity of any premium or discount. Securities for which market quotes
are not readily available are valued under procedures established by the
Board of Directors to determine fair value in good faith.
- ------
Allocation of Income, Expenses and Gains and Losses. Income, expenses
(other than those attributable to a specific class) and gains and losses
are allocated daily to each class of shares based upon the relative
proportion of net assets represented by such class. Operating expenses
directly attributable to a specific class are charged against the
operations of that class.
- ------
Federal Income Taxes. The Fund intends to continue to comply with
provisions of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income, including any net
realized gain on investments not offset by loss carryovers, to
shareholders. Therefore, no federal income tax provision is required.
- ------
Organization Costs. The Manager advanced $16,719 for organization and
start-up costs of the Fund. Such expenses are being amortized over a
five-year period from the date operations commenced. In the event that all
or part of the Manager's initial investment in shares of the fund is
withdrawn during the amortization period, the redemption proceeds will be
reduced to reimburse the Fund for any unamortized expenses, in the same
ratio as the number of shares redeemed bears to the number of initial
shares outstanding at the time of such redemption.
- ------
Distributions to Shareholders. The Fund intends to declare dividends
separately for Class A and Class B shares from net investment income each
day the New York Stock Exchange is open for business and pay such
dividends monthly. Distributions from net realized gains on investments,
if any, will be declared at least once each year.
- ------

Change in Accounting for Distributions to Shareholders. Effective July 1,
1993, the Fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the Fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, subsequent to June 30, 1993 amounts have been reclassified
to reflect a decrease in undistributed net investment income of $14,319,
and a decrease in overdistributed capital loss on investments of $14,319.
During the year ended June 30, 1994, in accordance with Statement of
Position 93-2, undistributed net income was decreased by $105,050, and
overdistributed capital loss on investments was decreased by $105,050.

- ------
Other. Investment transactions are accounted for on the date the
investments are purchased or sold (trade date).Original issue discount on
securities purchased is amortized over the life of the respective
securities, in accordance with federal income tax requirements. Realized
gains and losses on investments and unrealized appreciation and
depreciation are determined on an identified cost basis, which is the same
basis used for federal income tax purposes. For bonds acquired after April
30, 1993, accrued market discount is recognized at maturity or disposition
as taxable ordinary income. Taxable ordinary income is realized to the
extent of the lesser of gain or accrued market discount.

<PAGE>

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

- ------
2. Capital Stock
The Fund has authorized 26,250,000 shares of $.01 par value capital
stock of each class. Transactions in shares of capital stock were as
follows:

Year Ended June 30, 1994(1) Year Ended June 30, 1993
- ------ ------
Shares Amount Shares Amount
- ------
Class A
Sold 1,640,622 $20,818,911 2,642,454 $32,529,648
Dividends and distributions reinvested 275,074 3,448,622
201,620
2,481,021
Redeemed (903,096) (11,196,635) (449,110) (5,522,298)
- ------ ------ ------ ------
Net increase 1,012,600 $13,070,898 2,394,964 $29,488,371
- ------ ------ ------ ------
- ------ ------ ------ ------
- ------
Class B
Sold 101,400 $1,258,622 -- $--
Dividends and distributions reinvested 1,061 12,907 -- --
Redeemed (555) (6,655) -- --
- ------ ------ ------ ------
Net increase 101,906 $1,264,874 -- $--
- ------ ------ ------ ------
- ------ ------ ------ ------

1. For the year ended June 30, 1994 for Class A shares and for the period
from October 29, 1993 (inception of offering) to June 30, 1994 for Class
B shares.

- ------
3. Unrealized Gains and Losses on Investments
At June 30, 1994, net unrealized depreciation on investments of $2,042,195
was composed of gross appreciation of $1,286,705, and gross depreciation
of $3,328,900.
- ------
4. Management Fees and Other Transactions With Affiliates
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for an annual fee of .55%
on net assets, with a contractual waiver when net assets are less than
$100 million. Annual fees, reflecting this waiver, are .40% on net assets
of $75 million or more but less than $100 million, .25% of net assets of
$50 million or more but less than $75 million, .15% of net assets of $25
million or more but less than $50 million, and 0% on net assets less than
$25 million. The Manager has agreed to assume Fund expenses (with
specified exceptions) in excess of the regulatory limitation of the State
of California.
For the year ended June 30, 1994, commissions (sales charges paid by
investors) on sales of Class A shares totaled $663,089, of which $108,300
was retained by Oppenheimer Funds Distributor, Inc. (OFDI), a subsidiary
of the Manager as general distributor.
Oppenheimer Shareholder Services (OSS), a division of the Manager, is
the transfer and shareholder servicing agent for the Fund, and for other
registered investment companies. OSS's total costs of providing such
services are allocated ratably to these companies.
Under a separate approved plan, the Fund may expend up to .25% of its
Class B net assets annually to reimburse OFDI for costs incurred in
connection with the personal service and maintenance of accounts that hold
Class B shares of the Fund, including amounts paid to brokers, dealers,
banks and other institutions. In addition, Class B shares are subject to
an asset-based sales charge of .75% of net assets annually, to reimburse
OFDI for sales commissions paid from its own resources at the time of sale
and associated financing costs. In the event of termination or
discontinuance of the Class B plan, the Board of Trustees may allow the
Fund to continue payment of the asset-based sales charge to OFDI for
distribution expenses incurred on Class B shares sold prior to termination
or discontinuance of the plan. During the year ended June 30, 1994, OFDI
retained $4,375 as reimbursement for Class B sales commissions and service
fee advances, as well as financing costs.

<PAGE>

Appendix A

RATINGS OF INVESTMENTS

Municipal Bonds

Moody's Investors Service, Inc.. The four highest ratings of Moody's
Investors Service, Inc. ("Moody's") for Municipal Bonds are Aaa, Aa, A
and Baa. Municipal Bonds rated Aaa are judged to be of the "best
quality." The rating of Aa is assigned to bonds which are of "high
quality by all standards," but as to which margins of protection or other
elements make long-term risks appear somewhat larger than Aaa rated
Municipal Bonds. The Aaa and Aa rated bonds comprise what are generally
known as "high grade bonds." Municipal Bonds which are rated A by Moody's
possess many favorable investment attributes and are considered "upper
medium grade obligations." Factors giving security to principal and
interest of A rated bonds are considered adequate, but elements may be
present which suggest a susceptibility to impairment at some time in the
future. Municipal Bonds rated Baa are considered "medium grade"
obligations. 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. Those bonds
in the Aa, A and Baa groups which Moody's believes possess the strongest
attributes are designated Aa1, A1 and Baa1, respectively.

In addition to the alphabetic rating system described above,
Municipal Bonds rated by Moody's which have a demand feature that provides
the holder with the ability to periodically tender ("put") the portion of
the debt covered by the demand feature, may also have a short-term rating
assigned to such demand feature. The short-term rating uses the symbol
VMIG to distinguish characteristics which include payment upon periodic
demand rather than fund or scheduled maturity dates and potential reliance
upon external liquidity, as well as other factors. The highest investment
quality is designated by the VMIG 1 rating and the lowest by VMIG 4.

Standard & Poor's Corporation. The four highest ratings of Standard &
Poor's Corporation ("S&P") for Municipal Bonds are AAA (Prime), AA (High
Grade), A (Good Grade), and BBB (Medium Grade). Municipal Bonds rated AAA
are "obligations of the highest quality." The rating of AA is accorded
issues with investment characteristics "only slightly less marked than
those of the prime quality issues." The category of A describes "the
third strongest capacity for payment of debt service." Principal and
interest payments on bonds in this category are regarded as safe. It
differs from the two higher ratings because, with respect to general
obligations bonds, there is some weakness, either in the local economic
base, in debt burden, in the balance between revenues and expenditures,
or in quality of management. Under certain adverse circumstances, any one
such weakness might impair the ability of the issuer to meet debt
obligations at some future date. With respect to revenue bonds, debt
service coverage is good, but not exceptional. Stability of the pledged
revenues could show some variations because of increased competition or
economic influences on revenues. Basic security provisions, while
satisfactory, are less stringent. Management performance appears
adequate.

The BBB rating is the lowest "investment grade" security rating. The
difference between A and BBB ratings is that the latter shows more than
one fundamental weakness, or one very substantial fundamental weakness,
whereas the former shows only one deficiency among the factors considered.
With respect to revenue bonds, debt coverage is only fair. Stability of
the pledged revenues could show variations, with the revenue flow possibly
being subject to erosion over time. Basic security provisions are no more
than adequate. Management performance could be stronger. The ratings AA,
A, and BBB may be modified by the addition of a plus or minus sign to show
relative standing within the major rating categories.

Fitch. The four highest ratings of Fitch for Municipal Bonds are AAA, AA,
A, and BBB. Municipal Bonds rated AAA are judged to be of the "highest
credit quality." The rating of AA is assigned to bonds of "very high
credit quality." Municipal Bonds which are rated A by Fitch are
considered to be of "high credit quality." The rating of BBB is assigned
to bonds of "satisfactory credit quality." The A and BBB rated bonds are
more vulnerable to adverse changes in economic conditions than bonds with
higher ratings.

Corporate Debt

The "other debt securities" included in the definition of temporary
investments are corporate (as opposed to municipal) debt obligations rated
Aaa, Aa or A by Moody's, AAA, AA or A by S&P or F+1-, F-1, F-2 or F-1 by
Fitch. The Moody's corporate debt ratings shown do not differ materially
from those set forth above for Municipal Bonds. Corporate debt
obligations rated AAA by S&P are "highest grade obligations." Obligations
bearing the rating of AA also qualify as "high grade obligations" and "in
the majority of instances differ from AAA issues only in small degrees."
Corporate debt obligations rated A by S&P are regarded as "upper medium
grade" and have considerable investment strength, but are not entirely
free from adverse effects of changes in economic and trade conditions.
The Fitch ratings shown do not differ from those set forth below for tax-
exempt municipal notes.

Commercial Paper

The commercial paper ratings of A-1 by S&P, P-1 by Moody's, and F-1+
by Fitch are the highest commercial paper ratings of the respective
agencies. The issuer's earnings, quality of long-term debt, management
and industry position are among the factors considered in assigning such
ratings.

Tax-Exempt Municipal Notes

Moody's ratings for state and municipal notes and other short-term
loans are designated Moody's Investment Grade ("MIG"). Notes bearing the
designation MIG-1 are of the best quality, enjoying strong protection from
established cash flows of funds for their servicing or from established
and broad-based access to the market for financing. Notes bearing the
designation "MIG-2" are of high quality with ample margins of protection,
although not as large as notes rated "MIG." Such short-term notes which
have demand features may also carry a rating using the symbol VMIG as
described above, with the designation MIG-1/VMIG 1 denoting best quality,
with superior liquidity support in addition to those characteristics
attributable to the designation MIG-1.

S&P's rating for Municipal Notes due in three years or less are SP-1
and SP-2. SP-1 describes issues with a very strong capacity to pay
principal and interest and compares with bonds rated A by S&P; if modified
by a plus sign, it compares with bonds rated AA or AAA by S&P. SP-2
describes issues with a satisfactory capacity to pay principal and
interest, and compares with bonds rated BBB by S&P.

Fitch's rating for Municipal Notes due in three years or less are F-
1+, F-1, F-2 and F-3. F-1+ describes notes with an exceptionally strong
credit quality and the strongest degree of assurance for timely payment.
F-1 describes notes with a very strong credit quality and assurance of
timely payment is only slightly less in degree than issues rated F-1+.
F-2 describes notes with a good credit quality and a satisfactory
assurance of timely payment, but the margin of safety is not as great for
issues assigned F-1+ or F-1 ratings. F-3 describes notes with a fair
credit quality and an adequate assurance of timely payment, but near-term
adverse changes could cause such securities to be rated below investment
grade.

<PAGE>

APPENDIX B

TAX-EQUIVALENT YIELDS

The equivalent yield tables below compare tax-free income with taxable
income under Federal individual income tax rates effective January 1,
1994, and California state individual income tax rates effective January
1, 1993 (California tax brackets are adjusted for inflation sometime
between June 1 and August 1 of the current year). "Combined Taxable
Income" refers to the net amount subject to Federal and California income
taxes after deductions and exemptions. The tables assume that an
investor's highest tax bracket applies to the change in taxable income
resulting from a switch between taxable and non-taxable investments, and
that state tax payments are currently deductible for Federal tax purposes
and that the investor is not subject to Federal or state alternative
minimum tax. The income tax brackets are subject to indexing in future
years to reflect changes in the Consumer Price Index. The brackets do not
reflect the phaseout of itemized deductions and personal exemptions at
higher income levels, resulting in higher effective tax rates (and tax
equivalent yields).

Combine Taxable Income
<TABLE>
<CAPTION>
Oppenheimer Main Street California Tax-Exempt Fund Yield of:
Joint Return Effective Tax Bracket3.0%3.5%4.0%4.5% 5.0% 5.5% 6.0%
But Cali-
Over Not OverFederalforniaCombinedIs Approximately Equivalent to a Taxable Yield of:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 22,118$ 34,90615.00%4.00% 18.40% 3.68% 4.29% 4.90%5.51% 6.13% 6.74% 7.35%
$ 34,906$ 38,00015.00%6.00% 20.10% 3.75% 4.38% 5.01%5.63% 6.26% 6.88% 7.51%
$ 38,000$ 48,45628.00%6.00% 32.32% 4.43% 5.17% 5.91%6.65% 7.39% 8.13% 8.87%
$ 48,456$ 61,24028.00%8.00% 33.76% 4.53% 5.28% 6.04%6.79% 7.55% 8.30% 9.06%
$ 61,240$ 91,85028.00%9.30% 34.70% 4.59% 5.36% 6.13%6.89% 7.66% 8.42% 9.19%
$ 91,850$140,00031.00%9.30% 37.42% 4.79% 5.59% 6.39%7.19% 7.99% 8.79% 9.59%
$140,000$212,38036.00%9.30% 41.95% 5.17% 6.03% 6.89%7.75% 8.61% 8.47% 10.34%
$212,380$250,00036.00%10.00%42.40% 5.21% 6.08% 6.94%7.81% 8.68% 9.55% 10.42%
$250,000$424,76039.60%10.00%45.64% 5.52% 6.44% 7.36%8.28% 9.20% 10.12% 11.04%
$424,760 39.60%11.00%46.24% 5.58% 6.51% 7.44%8.37% 9.30% 10.23% 11.16%
</TABLE>

<TABLE>
<CAPTION>
Single Return:

But
Over Not Over
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 17,453$ 22,75015.00%6.00% 20.10% 3.75% 4.38% 5.01%5.63% 6.26% 6.88% 7.51%
$ 22,750$ 24,22828.00%6.00% 32.32% 4.43% 5.17% 5.91%6.65% 7.39% 8.13% 8.87%
$ 24,228$ 30,62028.00%8.00% 33.76% 4.53% 5.28% 6.04%6.79% 7.55% 8.30% 9.06%
$ 30,620$ 55,10028.00%9.30% 34.70% 4.59% 5.36% 6.13%6.89% 7.66% 8.42% 9.19%
$ 55,100$106,19031.00%9.30% 37.42% 4.79% 5.59% 6.39%7.19% 7.99% 8.79% 9.59%
$106,190$115,00031.00%10.00%37.90% 4.83% 5.64% 6.44%7.25% 8.05% 8.86% 9.66%
$115,000$212,38036.00%10.00%42.40% 5.21% 6.08% 6.94%7.81% 8.68% 9.55% 10.42%
$212,380$250,00036.00%11.00%43.04% 5.27% 6.14% 7.02%7.90% 8.78% 9.66% 10.53%
$250,000 39.60%11.00%46.24% 5.58% 6.51% 7.44%8.37% 9.30% 10.23% 11.16%
</TABLE>

<PAGE>

Investment Adviser
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203

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

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

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

Independent Auditors
Deloitte & Touche LLP
1560 Broadway
Denver, Colorado 80202

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