OPPENHEIMER STRATEGIC FUNDS TRUST, N14AE24, 1995-08-28

OPPENHEIMER STRATEGIC FUNDS TRUST
N14AE24, 1995-08-28

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As filed with the Securities and Exchange Commission on August 25, 1995

Registration No. 33-28598
811-5724

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-14

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /

PRE-EFFECTIVE AMENDMENT NO. / /

POST-EFFECTIVE AMENDMENT NO. / /

OPPENHEIMER STRATEGIC FUNDS TRUST
(Exact Name of Registrant as Specified in Charter)

3410 South Galena Street, Denver, Colorado 80231-5099
(Address of Principal Executive Offices)

212-323-0200
(Registrant's Telephone Number)

Andrew J. Donohue, Esq.
Executive Vice President & General Counsel
Oppenheimer Management Corporation
Two World Trade Center, New York, New York 10048-0203
(212) 323-0256
(Name and Address of Agent for Service)

As soon as practicable after the Registration Statement becomes effective.
(Approximate Date of Proposed Public Offering)

It is proposed that this filing will become effective on September 22,
1995, pursuant to Rule 488.

No filing fee is due because the Registrant has previously registered an
indefinite number of shares under Rule 24f-2; a Rule 24f-2 notice for the
year ended September 30, 1994 was filed on November 29, 1994.

CONTENTS OF REGISTRATION STATEMENT

This Registration Statement contains the following pages and documents:

Front Cover
Contents Page
Cross-Reference Sheet

Part A

Proxy Statement for Quest for Value Global Income Fund,
a series of Quest for Value Global Funds, Inc.
and
Prospectus for Oppenheimer Strategic Income Fund

Part B

Statement of Additional Information

Part C

Other Information
Signatures
Exhibits

FORM N-14
OPPENHEIMER STRATEGIC FUNDS TRUST
Cross Reference Sheet

Part A of
Form N-14
Item No. Proxy Statement and Prospectus Heading and/or Title of Document
--------- ---------------------------------------------------------------
1 (a) Cross Reference Sheet
(b) Front Cover Page
(c) *
2 (a) *
(b) Table of Contents
3 (a) Comparative Fee Tables
(b) Synopsis
(c) Principal Risk Factors
4 (a) Synopsis; Approval of the Reorganization; Comparison between
Strategic Income Fund and the Fund; Miscellaneous
(b) Approval of the Reorganization - Capitalization Table
5 (a) Registrant's Prospectus; Comparison Between Strategic Income
Fund and the Fund
(b) *
(c) *
(d) *
(e) Miscellaneous
(f) Miscellaneous
6 (a) Prospectus of Quest for Value Global Income Fund; Annual Report
of Quest For Value Global Income Fund; Comparison Between
Strategic Income Fund and the Fund
(b) Miscellaneous
(c) *
(d) *
7 (a) Synopsis; Information Concerning the Meeting
(b) *
(c) Synopsis; Information Concerning the Meeting
8 (a) Proxy Statement
(b) *
9 *

Part B of
Form N-14
Item No. Statement of Additional Information Heading
--------- -------------------------------------------
10 Cover Page
11 Table of Contents
12 (a) Registrant's Statement of Additional Information
(b) *
(c) *
13 (a) Statement of Additional Information about Quest for Value Global
Income Fund
(b) *
(c) *
14 Registrant's Statement of Additional Information; Statement of
Additional Information about Quest for Value Global Income Fund;
Annual Report of Quest for Value Global Income Fund at 11/30/94;
Semi-Annual Report of Quest for Value Global Income Fund at
5/31/95; Registrant's Annual Report at 9/30/94; Semi-Annual
Report of Registrant at 3/31/95

Part C of
Form N-14
Item No. Other Information Heading
--------- -------------------------
15 Indemnification
16 Exhibits
17 Undertakings

_______________
* Not Applicable or negative answer

merge/231qvn14.a
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

Filed by the registrant / x /

Filed by a party other than the registrant / /

Check the appropriate box:

/ X / Preliminary proxy statement

/ / Definitive proxy statement

/ / Definitive additional materials

/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12

Oppenheimer Strategic Funds Trust
------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

Quest for Value Global Income Fund,
a series of Quest for Value Global Funds, Inc.
------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)

Payment of filing fee (Check the appropriate box):
/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-
6(j)(2).

/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).

/ / Fee Computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.

(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the form or schedule and the
date of its filing.

(1) Amount previously paid:
------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------
(4) Date Filed:

-----------------------
(1) Set forth the amount on which the filing fee is calculated and state
how it was determined.

<PAGE>

Preliminary Copy

QUEST FOR VALUE GLOBAL FUNDS, INC.
QUEST FOR VALUE GLOBAL INCOME FUND
One World Financial Center, New York, New York 10281
1-800-232-FUND

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held November 3, 1995

To the Shareholders of Quest for Value Global Income Fund:

Notice is hereby given that a Special Meeting of the Shareholders of Quest
for Value Global Income Fund (the "Fund"), a series of Quest for Value
Global Funds, Inc. (the "Corporation"), an open-end, management investment
company, will be held at One World Financial Center, New York, New York
10281 on the 40th Floor, at 10:00 A.M., New York time, on November 3,
1995, and any adjournments thereof (the "Meeting"), for the following
purposes:

1. To consider and vote upon approval of the Agreement and Plan of
Reorganization dated as of ____, 1995 (the "Reorganization
Agreement") by and among Oppenheimer Strategic Funds Trust, on behalf
of Oppenheimer Strategic Income Fund ("Strategic Income Fund"), the
Corporation, on behalf of the Fund, and Quest for Value Advisors,
investment adviser to the Fund, and the transactions contemplated
thereby (the "Reorganization"), including (i) the transfer of
substantially all the assets of the Fund to Strategic Income Fund in
exchange for Class A, Class B and Class C shares of Strategic Income
Fund and the assumption by Strategic Income Fund of certain
liabilities of the Fund, (ii) the distribution of such shares of
Strategic Income Fund to shareholders of the Fund in complete
liquidation of the Fund, and (iii) the cancellation of the
outstanding shares of the Fund (the "Proposal"); and

2. To act upon such other matters as may properly come before the
Meeting.

The Reorganization is more fully described in the accompanying Proxy
Statement and Prospectus and a copy of the Reorganization Agreement is
attached as Exhibit A thereto. Shareholders of record at the close of
business on September 7, 1995 are entitled to notice of, and to vote at,
the Meeting. Please read the Proxy Statement and Prospectus carefully
before telling us, through your proxy or in person, how you wish your
shares to be voted. The Board of Directors of the Corporation recommends
a vote in favor of the Reorganization. WE URGE YOU TO SIGN, DATE AND MAIL
THE ENCLOSED PROXY PROMPTLY.

By Order of the Board of Directors,

Deborah Kaback, Secretary

_________, 1995

Shareholders who do not expect to attend the Meeting are requested to
indicate voting instructions on the enclosed proxy and to date, sign and
return it in the accompanying postage-paid envelope. To avoid unnecessary
duplicate mailings, we ask your cooperation in promptly mailing your proxy
no matter how large or small your holdings may be.
<PAGE>
Preliminary Copy

QUEST FOR VALUE GLOBAL FUNDS, INC.
QUEST FOR VALUE GLOBAL INCOME FUND
One World Financial Center, New York, New York 10281
1-800-232-FUND

PROXY STATEMENT

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

OPPENHEIMER STRATEGIC INCOME FUND
3410 South Galena Street, Denver, Colorado 80231
1-800-525-7048

PROSPECTUS

This Proxy Statement and Prospectus is being furnished to shareholders of
Quest for Value Global Income Fund (the "Fund"), a series of Quest for
Value Global Funds, Inc. (the "Corporation"), an open-end, management
investment company, in connection with the solicitation by the Board of
Directors of the Corporation (the "Board") of proxies to be used at the
Special Meeting of Shareholders of the Fund, to be held at One World
Financial Center, New York, New York 10281 on the 40th Floor at 10:00
A.M., New York time, on November 3, 1995, and any adjournments thereof
(the "Meeting"). It is expected that this Proxy Statement and Prospectus
will be mailed to shareholders on or about ____, 1995.

At the Meeting, shareholders of the Fund will be asked to consider and
vote upon approval of the Agreement and Plan of Reorganization, dated as
of _____, 1995 (the "Reorganization Agreement"), by and among Oppenheimer
Strategic Funds Trust (the "Strategic Trust"), an open-end management
investment company, on behalf of Oppenheimer Strategic Income Fund
("Strategic Income Fund"), the Corporation, on behalf of the Fund, and
Quest for Value Advisors ("QVA"), investment adviser to the Fund, and the
transactions contemplated by the Reorganization Agreement (the
"Reorganization"). The Reorganization Agreement provides for the transfer
of substantially all the assets of the Fund to Strategic Income Fund in
exchange for Class A, Class B and Class C shares of Strategic Income Fund
and the assumption by Strategic Income Fund of certain liabilities of the
Fund, the distribution of such shares of Strategic Income Fund to
shareholders of the Fund in complete liquidation of the Fund and the
cancellation of the outstanding shares of the Fund. A copy of the
Reorganization Agreement is attached hereto as Exhibit A and is
incorporated by reference herein. As a result of the proposed
Reorganization, each Class A, Class B and Class C shareholder of the Fund
will receive that number of Class A, Class B and Class C shares,
respectively, of Strategic Income Fund having an aggregate net asset value
equal to the net asset value of such shareholder's shares of the Fund of
that class. This transaction is being structured as a tax-free
reorganization. See "Approval of the Reorganization."

Strategic Income Fund currently offers Class A, Class B and Class C
shares. Class A shares are sold with a sales charge imposed at the time
of purchase (certain purchases aggregating $1.0 million or more ($500,000
as to purchases by OppenheimerFunds prototype 401(k) plans) are not
subject to a sales charge, but may be subject to a contingent deferred
sales charge ("CDSC") if redeemed within 18 months of the date of
purchase); Class B shares are sold without a front end sales charge but
may be subject to a CDSC if redeemed within six years of the date of
purchase; and Class C shares are sold without a front-end sales charge but
may be subject to a CDSC if not held for one year. Holders of Class A
shares in the Fund will receive Class A shares of Strategic Income Fund
and no sales charge will be imposed on the Class A shares received by the
Fund Class A shareholders. Holders of Class B and Class C shares in the
Fund will receive Class B and Class C shares, respectively, of Strategic
Income Fund; any CDSC which is applicable to a shareholder's investment
will continue to apply, and, in calculating the applicable CDSC payable
upon the subsequent redemption of shares of Strategic Income Fund the
period during which a Fund shareholder held shares of the Fund will be
counted.

Strategic Income Fund is a mutual fund that seeks a high level of current
income by investing mainly in debt securities and by writing covered call
options on them. Strategic Income Fund does not invest with the objective
of seeking capital appreciation. The Fund seeks investment income as its
primary objective, with capital appreciation as a secondary objective
through a non-diversified portfolio primarily of debt securities.
Shareholders of the Fund should consider the differences in investment
objectives and policies of Strategic Income Fund and the Fund, including
the ability of Strategic Income Fund to invest without limit in securities
rated lower than investment grade. Strategic Income Fund is a diversified
portfolio designed for investors willing to assume additional risk in
return for seeking high current income. See "Comparison Between Strategic
Income Fund and the Fund -Comparison of Investment Objectives, Policies
and Restrictions."

Strategic Income Fund has filed with the Securities and Exchange
Commission (the "SEC") a Registration Statement on Form N-14 (the
"Registration Statement") relating to the registration of shares of
Strategic Income Fund to be offered to the shareholders of the Fund
pursuant to the Reorganization Agreement. This Proxy Statement and
Prospectus relating to the Reorganization also constitutes a Prospectus
of Strategic Income Fund filed as part of such Registration Statement.
Information contained or incorporated by reference herein relating to
Strategic Income Fund has been prepared by and is the responsibility of
Strategic Income Fund. Information contained or incorporated by reference
herein relating to the Fund has been prepared by and is the responsibility
of the Fund.

This Proxy Statement and Prospectus sets forth concisely information about
Strategic Income Fund that a prospective investor should know before
voting on the Reorganization. The following documents have been filed
with the SEC, are incorporated herein by reference and are available
without charge upon written request to Quest for Value Distributors
("QVD"), the general distributor for the Fund, at P.O. Box 3567, Church
Street Station, New York, New York 10277-1296, or by calling the toll-free
number for the Fund shown above: (i) a Prospectus for the Fund, dated
March 1, 1995, as revised June 30, 1995; and (ii) a Statement of
Additional Information about the Fund, dated March 1, 1995. The following
documents have each been filed with the SEC, are incorporated herein by
reference and are available without charge upon written request to the
transfer and shareholder servicing agent for Strategic Income Fund,
Oppenheimer Shareholder Services ("OSS"), at P.O. Box 5270, Denver
Colorado 80217, or by calling the toll-free number for Strategic Income
Fund shown above: (i) a Prospectus for Strategic Income Fund, dated May
26, 1995, as supplemented July 14, 1995; (ii) a Statement of Additional
Information about Strategic Income Fund, dated May 26, 1995, as
supplemented July 14, 1995 (the "Strategic Income Fund Additional
Statement"), which contains more detailed information about Strategic
Income Fund and its management; and (iii) a Statement of Additional
Information relating to the Reorganization described in this Proxy
Statement and Prospectus (the "Additional Statement"), dated ____, 1995
and filed as part of the Registration Statement.

Investors are advised to read and retain this Proxy Statement and
Prospectus for future reference.

Shares of Strategic Income 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 the principal amount invested.

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 ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

This Proxy Statement and Prospectus is dated _______, 1995.

<PAGE>
TABLE OF CONTENTS
PROXY STATEMENT AND PROSPECTUS

COMPARATIVE FEE TABLES

SYNOPSIS
Parties to the Reorganization
The Reorganization
Tax Consequences of the Reorganization
Investment Objectives and Policies
Investment Advisory and Distribution Plan Fees
Purchases, Exchanges and Redemptions

PRINCIPAL RISK FACTORS

APPROVAL OF THE REORGANIZATION (The Proposal)
Reasons for the Reorganization
The Reorganization
Tax Aspects of the Reorganization
Capitalization Table (Unaudited)

COMPARISON BETWEEN STRATEGIC INCOME FUND AND THE FUND
Comparison of Investment Objectives, Policies and Restrictions
Special Investment Methods
Investment Restrictions
Strategic Income Fund Performance
Additional Comparative Information

INFORMATION CONCERNING THE MEETING
General
Record Date; Vote Required; Share Information
Proxies
Costs of the Solicitation and the Reorganization

MISCELLANEOUS
Financial Information
Public Information

OTHER BUSINESS

EXHIBIT A - Agreement and Plan of Reorganization, dated as of _____,
1995, by and among Oppenheimer Strategic Funds Trust, on
behalf of Oppenheimer Strategic Income Fund, Quest for Value
Global Funds, Inc., on behalf of Quest for Value Global
Income Fund, and Quest for Value Advisors . . . . . . . . A-1

EXHIBIT B - Purchase Price Formula Pursuant to the Acquisition
Agreement B-1
<PAGE>
COMPARATIVE FEE TABLES

Transaction Charges

Shareholders pay certain expenses directly, such as sales charges and
account transaction charges. The schedule of such charges for both
Strategic Income Fund and the Fund (collectively, the "funds") is
substantially the same, except as noted below.

Oppenheimer Strategic
Income Fund
Class A Class B Class C

Maximum Sales Charge on Purchases 4.75% None None
(as a % of offering price)
Sales Charge on Reinvested Dividends None None None
Deferred Sales Charge None(1) 5.0%(2) 1.0%(3)
(as a % of the lower of the original
purchase price or redemption proceeds)
Exchange Fee None None None

Global Income Fund
Class A Class B Class C

Maximum Sales Charge on Purchases 3.00% None None
(as a % of offering price)
Sales Charge on Reinvested Dividends None None None
Deferred Sales Charge None 5.0%(2) 1.0%(3)
(as a % of the lower of the original
purchase price or redemption proceeds)
Exchange Fee $5.00 $5.00 $5.00

(1)If you invest $1 million or more ($500,000 for purchases by
OppenheimerFunds prototype 401(k) plans) in Class A shares of Strategic
Income Fund, although you will generally not pay an initial sales charge,
you may have to pay a sales charge of up to 1.0% if you sell your shares
within 18 calendar months from the end of the calendar month during which
you purchased those shares.

(2)If you redeem Class B shares within six years of their purchase, you
may have to pay a contingent deferred sales charge starting at 5.0% in the
first year and declining thereafter.

(3)If you redeem Class C shares within 12 months of their purchase, you
may have to pay a 1.0% contingent deferred sales charge.

Expenses of Strategic Income Fund and the Fund; Pro Forma Expenses

The funds each pay a variety of expenses directly for management of their
assets, administration, distribution of their shares and other services,
and those expenses are reflected in the net asset value per share of each
of Strategic Income Fund and the Fund.

The following calculations are based on the expenses of Strategic Income
Fund and the Fund for the 12 months ended September 30, 1994 and the six
months ended March 31, 1995. These amounts are shown as a percentage of
the average net assets of each class of shares of the Fund and of
Strategic Income Fund for those periods. The pro forma fees reflect what
the fee schedules would have been at September 30, 1994 and March 31, 1995
as if the Reorganization had occurred on either of those dates.
<TABLE>
<CAPTION>
Oppenheimer Strategic Income Fund
12 months ended 9/30/94 6 months ended 3/31/95
Class A Class B Class C(1) Class A Class B Class C(1)
<S> <C> <C> <C> <C> <C> <C>
Management Fees 0.54% 0.54% 0.54% 0.54% 0.54% 0.54%
12b-1 Fees 0.25% 1.00% 1.00% 0.24% 1.00% 1.00%
Other Expenses 0.16% 0.17% 0.17% 0.16% 0.15% 0.15%
Total Fund Operating
Expenses 0.95% 1.71% 1.71% 0.94% 1.69% 1.69%

Global Income Fund
12 months ended 9/30/94 6 months ended 3/31/95
Class A Class B Class C Class A Class B Class C

Management Fees
(after waiver)(2) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12b-1 Fees 0.25% 1.00% 1.00% 0.25% 1.00% 1.00%
Other Expenses
(after waiver)(2)(3)1.42% 1.41% 1.41% 1.37% 1.38% 2.04%
Total Fund Operating
Expenses (after
waiver)(2)(3) 1.67% 2.41% 2.41% 1.62% 2.38% 3.04%

Pro Forma Combined Fund
12 months ended 9/30/94 6 months ended 3/31/95
Class A Class B Class C(1) Class A Class B Class C(1)

Management Fees 0.54% 0.54% 0.54% 0.54% 0.54% 0.54%
12b-1 Fees 0.25% 1.00% 1.00% 0.24% 1.00% 1.00%
Other Expenses 0.16% 0.17% 0.17% 0.16% 0.15% 0.15%
Total Fund Operating
Expenses 0.95% 1.71% 1.71% 0.94% 1.69% 1.69%
</TABLE>

(1)Class C shares of Strategic Income Fund were first publicly offered on
May 26, 1995. "Other Expenses" shown for Class C shares of Strategic
Income Fund and the combined fund on a pro forma basis are estimates based
on amounts that would have been payable if Strategic Income Fund Class C
shares had been outstanding for the 12 months ended September 30, 1994 and
the six months ended March 31, 1995, respectively.

(2)"Management Fees," "Other Expenses" and "Total Fund Operating Expenses"
reflects a voluntary waiver by QVA of all of its management fee and the
reimbursement of other Fund operating expenses. Without such waiver and
reimbursement, for the 12 months ended September 30, 1994, as to Class A,
Class B and Class C shares of the Fund, "Management Fees" would have been
0.50%, 0.50% and 0.50%, "Other Expenses" would have been 1.57%, 1.62% and
1.59%, and "Total Fund Operating Expenses" would have been 2.32%, 3.12%
and 3.09%, in each case of their respective average annual net assets.
Without such waiver and reimbursement, for the six months ended March 31,
1995, as to Class A, Class B and Class C shares of the Fund, "Management
Fees" would have been 0.50%, 0.50% and 0.50%, "Other Expenses" would have
been 1.52%, 1.54% and 2.22% and "Total Fund Operating Expenses" would have
been 2.27%, 3.04% and 3.72%, in each case of their respective average
annual net assets. The expense waiver and reimbursement, which are still
in effect, may be terminated at any time.

(3)"Other Expenses" for the Fund includes a fee for administrative
services payable to QVA at the annual rate of .25% of average daily net
assets of the Fund. OMC provides such services to Strategic Income Fund
under its investment advisory agreement and no separate fee is charged.

Hypothetical Expenses

To attempt to show the effect of these expenses on an investment over
time, the hypotheticals shown below have been created. Assume that you
make a $1,000 investment in either the Fund or Strategic Income Fund or
the new combined fund and that the annual return is 5% and that the
operating expenses for each fund are the ones shown in the chart above for
the 12 months ended September 30, 1994 and the six months ended March 31,
1995. 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:
12 Months ended 9/30/94
1 year 3 years 5 years 10 years

Oppenheimer Strategic
Income Fund
Class A Shares $57 $76 $ 98 $159
Class B Shares $67 $84 $113 $163(1)
Class C Shares $27 $54 $ 93 $202(2)

Global Income Fund
Class A Shares $46 $ 81 $118 $222
Class B Shares $74 $105 $139 $256(1)
Class C Shares $34 $ 75 $129 $275(2)

Pro Forma Combined
Fund
Class A Shares $57 $76 $ 98 $159
Class B Shares $67 $84 $113 $163(1)
Class C Shares $27 $54 $ 93 $202(2)

If you did not redeem your investment, it would incur the following
expenses:
12 months ended 9/30/94
1 year 3 years 5 years 10 years

Oppenheimer Strategic
Income Fund
Class A Shares $57 $76 $98 $159
Class B Shares $17 $54 $93 $163 (1)
Class C Shares $17 $54 $93 $202(2)

Global Income Fund
Class A Shares $46 $81 $118 $222
Class B Shares $24 $75 $129 $256(1)
Class C Shares $24 $75 $129 $275(2)

Pro Forma Combined
Fund
Class A Shares $57 $76 $98 $159
Class B Shares $17 $54 $93 $163(1)
Class C Shares $17 $54 $93 $202(2)

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:

6 Months ended 3/31/95
1 year 3 years 5 years 10 years

Oppenheimer Strategic
Income Fund
Class A Shares $57 $76 $ 97 $157
Class B Shares $67 $83 $112 $162(1)
Class C Shares $27 $53 $ 92 $200(2)

Global Income Fund
Class A Shares $46 $ 80 $115 $216
Class B Shares $74 $104 $137 $253(1)
Class C Shares $41 $ 94 $160 $336(2)

Pro Forma Combined
Fund
Class A Shares $57 $76 $ 97 $157
Class B Shares $67 $83 $112 $162(1)
Class C Shares $27 $53 $ 92 $206(2)

If you did not redeem your investment, it would incur the following
expenses:
6 months ended 3/31/95
1 year 3 years 5 years 10 years

Oppenheimer Strategic
Income Fund
Class A Shares $57 $76 $97 $157
Class B Shares $17 $53 $92 $162 (1)
Class C Shares $17 $53 $92 $200(2)

Global Income Fund
Class A Shares $46 $80 $115 $216
Class B Shares $24 $74 $127 $253(1)
Class C Shares $31 $94 $160 $336(2)

Pro Forma Combined
Fund
Class A Shares $57 $76 $97 $157
Class B Shares $17 $53 $92 $162(1)
Class C Shares $17 $53 $92 $200(2)

(1)The Class B expenses in years seven through ten for Strategic Income
Fund and year nine and ten for the Fund are based on the Class A expenses
shown above, because Strategic Income Fund and the Fund automatically
convert Class B shares into Class A shares after six years and eight
years, respectively. Long-term Class B shareholders could pay the
economic equivalent of more than the maximum front-end sales charge
allowed under applicable regulatory requirements, because of the effect
of the asset-based sales charge and contingent deferred sales charge. The
automatic conversion of Class B shares to Class A shares is designed to
minimize the likelihood that this will occur.

(2)Because of the asset-based sales charge imposed on Class C shares of
Strategic Income Fund and the Fund, long-term shareholders of Class C
shares could bear expenses that would be the economic equivalent of an
amount greater than the maximum front-end sales charges permitted under
applicable regulatory requirements.

SYNOPSIS

The following is a synopsis of certain information contained in or
incorporated by reference in this Proxy Statement and Prospectus and
presents key considerations for shareholders of the Fund to assist them
in determining whether to approve the Reorganization. This synopsis is
only a summary and is qualified in its entirety by the more detailed
information contained in or incorporated by reference in this Proxy
Statement and Prospectus and the Exhibits hereto. Shareholders should
carefully review this Proxy Statement and Prospectus and the Exhibits
hereto in their entirety and, in particular, the current Prospectus of
Strategic Income Fund which accompanies this Proxy Statement and
Prospectus and is incorporated by reference herein.

Parties to the Reorganization

Strategic Income Fund was organized in 1989 as a Massachusetts business
trust with one series. In December 1993, that business trust was
reorganized to become a multi-series business trust called Oppenheimer
Strategic Funds Trust (the "Strategic Trust") and Strategic Income Fund
became a series of it. The Strategic Trust is an open-end, diversified
management investment company. Strategic Income Fund is located at 3410
South Galena Street, Denver, Colorado 80231. Oppenheimer Management
Corporation ("OMC") acts as investment adviser to Strategic Income Fund.
Oppenheimer Funds Distributor, Inc. ("OFDI"), a subsidiary of OMC, acts
as the distributor of Strategic Income Fund's shares. Additional
information about Strategic Income Fund is set forth below.

The Fund, a non-diversified investment company, is a series of Quest for
Value Global Funds, Inc. (the "Corporation"), an open-end, management
investment company organized as a Maryland corporation in 1991. The Fund
is located at One World Financial Center, New York, New York 10281. QVA
acts as investment adviser to the Fund. QVD acts as the distributor of
the Fund's shares. QVA and QVD are majority-owned subsidiaries of
Oppenheimer Capital, an institutional investment manager. OMC is not
related to Oppenheimer Capital nor its affiliate the brokerage firm
Oppenheimer & Co., Inc. Additional information about the Fund is set
forth below.

The Reorganization

The Reorganization Agreement provides for the transfer of substantially
all the assets of the Fund to Strategic Income Fund in exchange for Class
A, Class B and Class C shares of Strategic Income Fund and the assumption
by Strategic Income Fund of certain liabilities of the Fund. The
Reorganization Agreement also provides for the distribution of shares of
Strategic Income Fund to the Fund shareholders in complete liquidation of
the Fund. As a result of the Reorganization, each Fund shareholder will
receive that number of full and fractional Strategic Income Fund shares
equal in value to such shareholder's pro rata interest in the net assets
transferred to Strategic Income Fund as of the Valuation Date (as
hereinafter defined). Holders of Class A, Class B and Class C shares of
the Fund will receive Class A, Class B and Class C shares, respectively,
of Strategic Income Fund. For further information about the
Reorganization see "Approval of the Reorganization" below.

For the reasons set forth below under "Approval of the Reorganization -
Reasons for the Reorganization," the Board, including the directors who
are not "interested persons" of the Corporation (the "Independent
Directors"), as that term is defined in the Investment Company Act of
1940, as amended (the "1940 Act"), has concluded that the Reorganization
is in the best interests of the Fund and its shareholders and that the
interests of existing Fund shareholders will not be diluted as a result
of the Reorganization, and recommends approval of the Reorganization by
Fund shareholders. The Board of Trustees of Strategic Trust has also
approved the Reorganization and determined that the interests of existing
Strategic Income Fund shareholders will not be diluted as a result of the
Reorganization. If the Reorganization is not approved, the Fund will
continue in existence and the Board will determine whether to pursue
alternative actions. "Approval of the Reorganization" sets forth certain
information with respect to the background of the Reorganization,
including other transactions and agreements entered into, or contemplated
to be entered into, by OMC, QVA and their respective affiliates.

Approval of the Reorganization will require the affirmative vote of a
majority of the shares of the Fund outstanding and entitled to vote at the
Meeting. See "Information Concerning the Meeting - Record Date; Vote
Required; Share Information."

Tax Consequences of the Reorganization

As a condition to the closing of the Reorganization, the Fund and
Strategic Income Fund will have received an opinion to the effect that the
Reorganization will qualify as a tax-free reorganization for Federal
income tax purposes. As a result of such tax-free reorganization, no gain
or loss would be recognized by the Fund, Strategic Income Fund, or the
shareholders of either fund for Federal income tax purposes. For further
information about the tax consequences of the Reorganization, see
"Approval of the Reorganization -Tax Aspects of the Reorganization" below.

Investment Objectives and Policies

As its investment objective, Strategic Income Fund seeks a high level of
current income by investing mainly in a diversified portfolio of debt
securities and by writing covered call options on them. Strategic Income
Fund does not invest with the objective of seeking capital appreciation.
The Fund seeks investment income as its primary objective, with capital
appreciation as a secondary objective, through a non-diversified portfolio
consisting primarily of debt securities.

Strategic Income Fund seeks its investment objective by investing
principally in three market sectors: (1) debt securities of foreign
governments and companies, (2) securities issued or guaranteed by the U.S.
Government or its agencies and instrumentalities ("U.S. Government
Securities"), and (3) lower-rated, high-yield debt securities of U.S.
companies. Under normal market conditions Strategic Income Fund will
invest in each of these three sectors, but from time to time OMC will
adjust the amounts Strategic Income Fund invests in each sector. Because
of the high-yield, lower-rated securities in which Strategic Income Fund
invests, and its ability to invest in such securities without limit,
Strategic Income Fund is considered a speculative investment, and the
value of a shareholder's shares of Strategic Income Fund may decline in
adverse market conditions. Strategic Income Fund may also invest in
dividend-paying common stocks issued by U.S. companies, preferred stocks
and participation interests.

The Fund seeks its investment objective by investing primarily in
investment-grade debt securities of foreign and domestic corporations and
foreign governments, or their agencies and instrumentalities, and in U.S.
Government Securities. The Fund may invest in high-yield lower-rated
debt securities of foreign issuers which may be located in countries with
"emerging markets". The Fund's current intention is to limit its
investment in these securities to up to 35% of its net assets. Under
normal circumstances the Fund will invest at least 65% of its total assets
in the securities of issuers located in not less than three different
countries, one of which may be the United States. The Fund may also
invest in preferred stocks, securities convertible into common stock and
short-term money market instruments. Investments in preferred stocks and
securities convertible into common stock will be limited to 10% of the
total assets of the Fund at the time of purchase.

Strategic Income Fund may also write covered calls and use certain
derivative investments such as options and futures to enhance income. The
funds may use hedging instruments, including options and futures, to try
to manage investment risks.

Shareholders of the Fund should consider the differences in investment
objectives and policies of the funds, including the ability of Strategic
Income Fund to invest without limit in securities rated lower than
investment grade. Strategic Income Fund is a diversified portfolio
designed for investors willing to assume additional risk in return for
seeking high current income. See "Comparison Between Strategic Income
Fund and the Fund -Comparison of Investment Objectives, Policies and
Restrictions." For a detailed description of the risks associated with
an investment in high-yield, lower-rated securities and a comparison of
these risks as to each Fund, see "Principal Risk Factors" below.

Investment Advisory and Distribution Plan Fees

The funds obtain investment management services from their investment
advisers pursuant to the terms of their respective investment advisory
agreements. The management fee is payable to the investment advisers
monthly and is computed on the net asset value of each fund as of the
close of business each day. Strategic Income Fund pays a management fee
which declines on additional assets as Strategic Income Fund increases its
asset base, at the annual rate of 0.75% of the first $200 million of net
assets, 0.72% of the next $200 million, 0.69% of the next $200 million,
0.66% of the next $200 million, 0.60% of the next $200 million and 0.50%
of net assets over $1 billion. The management fee payable by the Fund to
QVA is at an annual rate of 0.50% of net assets. The administration fee
payable by the Fund to QVA for certain administrative services is at an
annual rate of 0.25% of average daily net assets of the Fund. QVA
currently waives payment of the investment advisory fee payable by the
Fund. See "Comparative Fee Tables - Expenses of Strategic Income and the
Fund; Pro Forma Expenses."

Both Strategic Income Fund and the Fund have adopted separate service
and/or distribution plans pursuant to Rule 12b-1 under the 1940 Act for
their respective Class A, Class B and Class C shares. Pursuant to the
plans, Class A, Class B and Class C shares of Strategic Income Fund and
the Fund are authorized to reimburse (as to Class A and Class B shares of
Strategic Income Fund only) for costs incurred by, or to compensate, OFDI
and QVD, respectively, in connection with the distribution of shares and
the servicing of shareholder accounts that hold the fund's shares. The
current maximum annual fee payable by shares of Strategic Income Fund and
the Fund pursuant to their service and/or distribution plans is (i) as to
Class A shares, 0.25% (as a service fee), (ii) as to Class B shares, 1.00%
(consisting of a 0.25% service fee and a 0.75% "asset-based sales charge")
and (iii) as to Class C shares, 1.00% (consisting of a 0.25% service fee
and a 0.75% "asset-based sales charge") respectively, of average annual
net assets. Class A shares of the Fund are also authorized to pay QVD a
distribution fee at an annual rate of 0.05% although the Board has set the
maximum fee under the Fund's Class A plan at .25%. Class B shares of
Strategic Income Fund automatically convert to Class A shares of Strategic
Income Fund six years after the end of the calendar month of their
purchase. Class B shares of the Fund automatically convert to Class A
shares of the Fund eight years after purchase. Accordingly, Class B
shareholders of the Fund pay the asset-based sales charge on their shares
for a longer period than Strategic Income Fund Class B shareholders.

Purchases, Exchanges and Redemptions

Purchases. Purchases of shares of Strategic Income Fund and the Fund may
be made directly through the distributor for Strategic Income Fund or the
transfer agent for the Fund, respectively, or through any dealer, broker
or financial institution that has a sales agreement with the distributor
for such fund (initial purchases of Fund shares must be made through such
dealer, broker or institution). In addition, a shareholder of Strategic
Income Fund may purchase shares automatically from an account at a
domestic bank or other financial institution under the "OppenheimerFunds
AccountLink" service. Class A shares of both Strategic Income Fund and
the Fund generally are sold subject to an initial sales charge and Class
B and Class C shares generally are sold without a front-end sales charge
but may be subject to a CDSC upon redemption. See "Comparative Fee Tables
-- Transaction Charges" above for a complete description of such sales
charges.

The Class A Strategic Income Fund shares to be issued under the
Reorganization Agreement will be issued by Strategic Income Fund at net
asset value without a sales charge. The sales charge on Class A shares
of Strategic Income Fund will only affect shareholders of the Fund to the
extent that they desire to make additional purchases of Class A shares of
Strategic Income Fund in addition to the shares which they will receive
as a result of the Reorganization. Future dividends and capital gain
distributions of Strategic Income Fund, if any, may be reinvested without
sales charge. The Class B and Class C shares of Strategic Income Fund to
be issued under the Reorganization Agreement will be issued at net asset
value and will be deemed aged to the same level as the shareholder's
existing Fund Class B and Class C shares. Strategic Income Fund has
undertaken that any Fund shareholders entitled to a waiver of or exemption
from sales charges pursuant to the policy stated in the Fund's Prospectus
dated March 1, 1995, as revised June 30, 1995, shall continue to be
entitled to such waiver or exemption as a shareholder of Strategic Income
Fund (or any other OppenheimerFund) after the Reorganization so long as
they continue to meet the applicable eligibility criteria.

Exchanges. Shareholders of Strategic Income Fund and the Fund may
exchange their shares at net asset value for shares of the same class of
mutual funds distributed by OFDI and QVD, respectively, subject to certain
conditions. A Fund shareholder that exchanges Class A shares of the Fund
into another fund in the Quest Funds family within six months of the
purchase of such Class A Fund shares will have to pay the difference
between the sales charge paid on the purchase of Class A shares of the
Fund and the sales charge that would have been charged if the shareholder
had originally purchased Class A shares of the Quest Fund into which the
shareholder is exchanging. Strategic Income Fund offers an automatic
exchange plan providing for systematic exchanges from Strategic Income
Fund of a specified amount for shares of the same class of other funds
within the OppenheimerFunds family.

Redemptions. Class A shares of the funds may be redeemed without charge
at their respective net asset values per share calculated after the
redemption order is received and accepted. See "Comparative Fee Tables -
- Transaction Charges" above. Class B shares of the funds may be redeemed
at their net asset value per share, subject to a maximum CDSC of 5.0% for
redemptions occurring within six years of purchase. Class C shares of
both funds may be redeemed at their net asset value per share, subject to
a CDSC of 1.00% if such shares are redeemed during the first 12 months
following their purchase.

Shareholders of Strategic Income Fund may reinvest redemption proceeds of
Class A shares on which an initial sales charge was paid, or Class A or
Class B shares on which a CDSC was paid, within six months of a redemption
at net asset value in Class A shares of Strategic Income Fund or any of
numerous mutual funds within the OppenheimerFunds family. This privilege
is not applicable to Class C Strategic Income Fund shares. Shareholders
of the Fund that reinvest redemption proceeds of Class A, Class B or Class
C shares in another fund in the Quest Funds family within 60 days will be
reinstated as a shareholder with the same privileges regarding the non-
payment of sales charges that apply to exchanges. Shareholders of the
funds may redeem their shares by written request or by telephone request
in certain stated amounts, or they may arrange to have share redemption
proceeds wired, for a fee, to a pre-designated account at a U.S. bank or
other financial institution that is an automated clearing house ("ACH")
member. Checkwriting privileges on Class A shares of Strategic Income
Fund are also available. Strategic Income Fund may redeem accounts valued
at less than $200 if the account has fallen below such stated amount for
reasons other than market value fluctuations. The funds offer automatic
withdrawal plans providing for systematic withdrawals of a specified
amount from the fund account.

PRINCIPAL RISK FACTORS

In evaluating whether to approve the Reorganization and invest in
Strategic Income Fund, shareholders should carefully consider the
following summary of risk factors, relating to both Strategic Income Fund
and the Fund, in addition to the other information set forth in this Proxy
Statement and Prospectus. A complete description of risk factors for each
fund is set forth in the documents incorporated by reference herein,
including the Prospectuses of the funds and their respective Statements
of Additional Information. There is no assurance that either Strategic
Income Fund or the Fund will achieve its investment objective and
investment in the funds is subject to investment risks, including the
possible loss of the principal invested.

Strategic Income Fund is intended for investors seeking high current
income and not for investors seeking capital appreciation. Strategic
Income Fund is not a complete investment program and is designed for
investors willing to assume a higher degree of risk. Because of the high-
yield, lower-rated securities in which Strategic Income Fund invests, and
its ability to invest in such securities without limit, Strategic Income
Fund is considered a speculative investment, and the value of a
shareholder's shares of Strategic Income Fund may decline in adverse
market conditions.

Investment in Debt Securities

The funds both seek their investment objective through investments
primarily in debt securities. Debt securities are subject to interest
rate risk and credit risk. Interest rate risk relates to fluctuations in
market value due to changes in prevailing interest rates. When prevailing
interest rates fall, the value of already-issued debt securities generally
rise. When interest rates rise, the value of already-issued debt
securities generally decline. The magnitude of these fluctuations will
often be greater for longer-term debt securities than shorter-term debt
securities. Changes in the value of securities held by a fund means that
the fund's share prices can go up or down when interest rates change,
because of the effect of the change on the value of the fund's portfolio
of debt securities. Credit risk relates to the ability of the issuer of
a debt security to make interest or principal payments on the security as
they become due. Strategic Income Fund and the Fund are permitted to
invest a percentage of their respective total assets (as to Strategic
Income Fund, up to 100%, and as to the Fund, up to 35%) in debt securities
rated less than investment grade or, if unrated, judged by OMC or QVA to
be of comparable quality to such lower-rated debt securities (often called
"junk bonds"). Such securities are speculative and involve greater credit
risks, including risk of default, than higher-rated securities. They also
may be less liquid than higher-rated securities. If a fund were forced
to sell a lower-grade debt security during a period of rapidly declining
prices, it might experience significant losses especially if a
substantial number of other holders decide to sell at the same time.
Other risks may involve the default of the issuer or price changes in the
issuer's securities due to change in the issuer's financial strength or
economic conditions.

The funds may invest in mortgage-backed securities which securities are
subject to prepayment risks. The effective maturity of a mortgage-backed
security may be shortened by unscheduled or early payment of principal and
interest on the underlying mortgages. This may result in greater price
and yield volatility than traditional fixed-income securities that have
a fixed maturity and interest rate. The principal that is returned may
be invested in instruments having a higher or lower yield than the prepaid
instruments depending on then-current market conditions. Such securities
therefore may be less effective as a means of "locking in" attractive
long-term interest rates and may have less potential for appreciation
during period of declining interest rates than conventional bonds with
comparable stated maturities. If the funds buy mortgage-backed securities
at a premium, prepayments of principal and foreclosures of mortgages may
result in some loss of the fund's principal investment to the extent of
the premium paid. The value of mortgage-backed securities may also be
affected by changes in the market's perception of the creditworthiness of
the entity issuing or guaranteeing them or by changes in government
regulations and tax policies.

Collateralized Mortgage Obligations. The funds may invest in
collateralized mortgage obligations ("CMOs"). CMOs may be issued in a
variety of classes or series ("tranches"). The principal value of certain
CMO tranches may be more volatile and less liquid than other types of
mortgage-related securities, because of the possibility that the principal
value of the CMOs may be prepaid earlier than the maturity of the CMOs as
a result of prepayments of the underlying mortgage loans by the borrowers.

Stripped Mortgage-Backed Securities. Strategic Income Fund may also
invest in "stripped" mortgage-backed securities of CMOs. The Fund does
not invest in these securities. Stripped mortgage-backed securities
usually have two classes. The classes receive different proportions of
the interest and principal distributions on the pool of mortgage assets
that act as collateral for the security. In certain cases, one class will
receive all of the interest payments, while the other class will receive
all of the principal payments. The yield to maturity on the class that
receives only interest is extremely sensitive to the rate of payment of
the principal on the underlying mortgages. Principal prepayments increase
that sensitivity. Stripped securities that pay "interest only" are
therefore subject to greater price volatility when interest rates change,
and they have the additional risk that if the underlying mortgages are
prepaid, the fund will lose the anticipated cash flow from the interest
on the prepaid mortgages. That risk is increased when general interest
rates fall, and in times of rapidly falling interest rates, the fund might
receive back less than its investment in such interest only security. The
value of "principal only" securities generally increases as interest rates
decline and prepayment rates rise. The price of these securities is
typically more volatile than that of coupon-bearing bonds of the same
maturity.

Zero Coupon Securities. Strategic Income Fund may invest in zero coupon
Treasury and corporate securities. The Fund does not invest in these
securities. A zero coupon security pays no current interest and trades
at a deep discount from its face value and will be subject to greater
market fluctuations from changes in interest rates than interest-paying
securities. Strategic Income Fund accrues interest on its holdings without
receiving the actual cash. As a result, Strategic Income Fund may be
forced to sell portfolio securities to pay cash dividends or meet
redemptions. Zero coupon corporate securities have an additional risk
that the issuing company may fail to pay interest or repay the principal
on the obligation. Strategic Income Fund may invest up to 50% of its
total assets in zero coupon securities issued by either the U.S.
Government or U.S. companies.

Corporate Asset-Backed Securities. Strategic Income Fund may invest in
asset-backed securities. The Fund does not invest in these securities.
These securities are frequently supported by a credit enhancement, such
as a letter of credit, a guarantee or a preference right. However, the
extent of the credit enhancement may be different for different securities
and generally applies to only a fraction of the security's value. These
securities present special risks. For example, in the case of credit card
receivables, the issuer of the security may have no security interest in
the related collateral. Thus, the risks of corporate asset-backed
securities are ultimately dependent upon payment of consumer loans by the
individual borrowers.

Participation Interests. Strategic Income Fund may acquire participation
interests in loans that are made to U.S. or foreign companies (the
"borrower") although no more than 5% of Strategic Income Fund's net assets
can be invested in participation interests of the same borrower. The Fund
does not invest in these securities. The value of loan participation
interests depends primarily upon the creditworthiness of the borrower, and
its ability to pay interest and principal. Borrowers may have difficulty
making payments. If a borrower fails to make scheduled interest or
principal payments, Strategic Income Fund could experience a decline in
the net asset value of its shares. Some borrowers may have senior
securities rated as low as "C" by Moody's or "D" by Standard & Poor's, but
may be deemed acceptable credit risks.

Foreign Securities

The funds may generally invest without limit in debt securities of foreign
governments and foreign companies (subject to the policy of Strategic
Income Fund to not invest more than 25% of its total assets in government
securities of any one foreign country). Under normal circumstances the
Fund will invest at least 65% of its total assets in the securities of
issuers located in not less than three different countries, one of which
may be the United States. There are certain risks of foreign investing.
For example, foreign issuers are not required to use generally-accepted
accounting principles. If foreign securities are not registered for sale
in the U.S. under U.S. securities laws, the issuer does not have to comply
with the disclosure requirements of our laws, which are generally more
stringent than foreign laws. The values of foreign securities investments
will be affected by other factors, including exchange control regulations
or currency blockage and possible expropriation or nationalization of
assets. There are risks of changes in foreign currency values. The funds
may purchase securities denominated in foreign currencies; accordingly,
a change in value of a foreign currency against the U.S. dollar will
result in a change in the U.S. dollar value of a fund's securities
denominated in that currency. The currency rate change will also affect
its income available for distribution. Although the funds' investment
income from foreign securities may be received in foreign currencies, the
funds will be required to absorb the cost of currency fluctuations. If
a fund suffers a loss on foreign currencies after it has distributed its
income during the year, the fund may find that it has distributed more
income than was available from actual investment income. There may also
be changes in governmental administration or economic or monetary policy
in the U.S. or abroad that can affect foreign investing. In addition, it
is generally more difficult to obtain court judgments outside the United
States if the fund has to sue a foreign broker or issuer. Additional
costs may be incurred because foreign broker commissions are generally
higher than U.S. rates, and there are additional custodial costs
associated with holding securities abroad.

The funds may invest in U.S. dollar-denominated foreign securities
referred to as "Brady Bonds." These are debt obligations of foreign
entities that may be fixed-rate par bonds or floating-rate discount bonds
and are generally collateralized in full as to principal due at maturity
by U.S. Treasury zero coupon obligations that have the same maturity as
the Brady Bonds. In the event of a default with respect to collateralized
Brady Bonds as a result of which the payment obligations of the issuer are
accelerated, the securities held as collateral will not be distributed to
investors, nor will such obligations be sold and the proceeds distributed.
Instead, the collateral will be held by the collateral agent to the
scheduled maturity of the defaulted Brady Bonds, which will continue to
be outstanding, at which time the face amount of the collateral will equal
the principal payments which would have then been due on the Brady Bonds
in the normal course. In addition, in light of the residual risk of Brady
Bonds and, among other factors, the history of defaults with respect to
commercial bank loans by public and private entities of countries issuing
Brady Bonds, investments in Brady Bonds are to be viewed as speculative.

Repurchase Agreements; Reverse Repurchase Agreements

The funds may enter into repurchase agreements as described below.
Repurchase agreements must be fully collateralized. However, if the
vendor fails to pay the resale price on the delivery date, the funds may
experience costs or delays in disposing of the collateral and may
experience losses to the extent that the proceeds from the sale of the
collateral are less than the repurchase price.

The Fund may enter into reverse repurchase agreements. Reverse repurchase
agreements involve the risk that the market value of the securities
retained in lieu of sale by the Fund may decline more than or appreciate
less than the securities the Fund has sold but is obligated to repurchase.
In the event the buyer of securities under a reverse repurchase agreement
files for bankruptcy or becomes insolvent, such buyer or its trustee or
receiver may receive an extension of time to determine whether to enforce
the Fund's obligation to repurchase the securities and the Fund's use of
the proceeds of the reverse repurchase agreements may effectively be
restricted pending such decisions. Reverse repurchase agreements create
leverage, a speculative factor, and will be considered borrowings by the
Fund.

Options, Futures and Interest Rate Swaps; Derivatives

The funds may purchase and sell certain kinds of futures contracts, put
and call options, forward contracts, foreign currency exchange contracts
and options on futures, broadly-based securities indices (as to Strategic
Income Fund) and currencies (as to the Fund) for hedging purposes.
Strategic Income Fund may also enter into interest rate swap agreements.
The foregoing instruments, referred to as "hedging instruments," may be
considered derivative investments. Strategic Income Fund may also invest
in certain derivative investments to enhance income. Hedging instruments
and derivative investments and their special risks are described below in
"Comparison Between Strategic Income Fund and the Fund."

Borrowing for Leverage

Purchasing securities with borrowed funds is a speculative investment
method known as leveraging. There are risks associated with leveraging
purchases of portfolio securities by borrowing, including a possible
reduction of income and increased fluctuation of net asset value per
share. As described below, Strategic Income Fund is permitted to borrow
for leveraging purposes although it presently does not engage in this
practice. The Fund is not permitted to borrow for leveraging purposes.

Non-Diversification

The Fund is a non-diversified investment company but intends to continue
to qualify as a "regulated investment company" for Federal income tax
purposes. This means generally that more than 5% of the Fund's total
assets may be invested in any one issuer, but only if at the close of each
fiscal quarter the aggregate amount of such holdings does not exceed 50%
of the value of its total assets and no more than 25% of the value of its
total assets is invested in the securities of a single issuer. As a non-
diversified investment company, the Fund may present greater risks than
diversified companies because the Fund can invest in a smaller number of
issuers. The Strategic Trust is a diversified investment company.

APPROVAL OF THE REORGANIZATION
(The Proposal)

Background

Oppenheimer Capital, in the course of a review of its business, recently
concluded that it should concentrate on its core investment management
business and not continue in the retail distribution of mutual funds.
Oppenheimer Capital is the parent of QVA. The retail mutual fund market
requires significant assets per fund to cover normal costs, significant
capital, investment in new products and services, financing for Class B
and Class C shares and sales support. Sometime after this determination
was made, representatives of OMC approached Oppenheimer Capital about
acquiring certain of its mutual fund assets. Representatives of OMC,
Oppenheimer Capital, QVD and QVA held meetings beginning in April 1995.
Following the negotiation of the terms of an acquisition agreement and
related agreements, an acquisition agreement (the "Acquisition Agreement")
was executed by OMC, Oppenheimer Capital, QVD and QVA on August 17, 1995.

The Reorganization described in this Proxy Statement and Prospectus is one
aspect of the overall Acquisition (as hereinafter defined) contemplated
by the Acquisition Agreement described below. The consummation of the
Acquisition is one condition, among others, to the closing of the
Reorganization. Accordingly, unless the parties otherwise agree, the
Reorganization may not be effected, despite shareholder approval, if the
Acquisition does not close. In such case, the Fund will continue in
existence and the Board will take such further action as it, in its sole
discretion, deems necessary or advisable. The description of the
Acquisition Agreement set forth below is a summary only.

Acquisition Agreement

The Acquisition Agreement contemplates the sale to OMC of substantially
all the assets (the "Purchased Assets") of QVA, QVD and Oppenheimer
Capital (collectively, the "Companies") relating to twelve Quest For Value
mutual funds (the "Acquired Funds") and the assumption by OMC of certain
liabilities of the Companies with respect to the Acquired Funds (the
"Assumed Liabilities") (the foregoing, the "Acquisition"). The
Acquisition Agreement contemplates that six of the Acquired Funds
(including the Fund) will be reorganized with certain mutual funds
currently advised by OMC (the "Reorganized Funds") and the remaining six
Acquired Funds will enter into investment advisory agreements with OMC (or
its designee) and OMC (or its designee) will thereupon enter into
subadvisory agreements with QVA for the benefit of each such fund (the
"Continuing Funds").

A condition to the obligation of OMC to close under the Acquisition
Agreement (the "Acquisition Closing") is the approval of the
reorganizations of the Reorganized Funds (including the Reorganization
described in this Proxy Statement and Prospectus) and the approval of the
investment advisory agreements and subadvisory agreements with the
Continuing Funds by shareholders that have in the aggregate at least 75%
of the closing net assets of all Acquired Funds. A condition to the
obligation of the Companies to close under the Acquisition Agreement
(which condition has been satisfied) is that the directors or trustees of
the Continuing Funds and the Reorganized Funds have adopted a resolution
that for a period of three years after the Acquisition Closing, at least
75% of the members of the board of each such fund will not be "interested
persons" (as defined in the 1940 Act of the investment adviser or
subadviser for such fund or "interested persons" (as defined in the 1940
Act) of QVA, the predecessor investment adviser as to the Continuing
Funds. The Acquisition Agreement sets forth certain other closing
conditions.

The purchase price for the Purchased Assets will be calculated pursuant
to the formula set forth on Exhibit B hereto. If the Acquisition had been
consummated on July 31, 1995, QVA estimates that the purchase price would
have been approximately $50 million. The actual purchase price may be
lower depending upon changes in the net asset value of the Acquired Funds.

The Companies have each agreed not to sponsor, manage or distribute any
open- end or closed end management investment company registered under the
1940 Act or any similar law in Canada (except for certain identified
investment companies or types of investment companies) and not to sell,
underwrite or assist in the distribution of shares of any such funds for
a period to end on the earlier of (i) the third anniversary of the date
on which there is no effective sub-advisory agreement between OMC and QVA
or (ii) the eighth anniversary of the Acquisition Closing. OMC and the
Companies have agreed to indemnify the other for certain liabilities.

Board Approval of the Reorganization

At its meeting on June 22, 1995, the Board, including the Independent
Directors, unanimously approved the Reorganization and the Reorganization
Agreement, determined that the Reorganization is in the best interests of
the Fund and its shareholders and resolved to recommend that Fund
shareholders vote for approval of the Reorganization. The Board further
determined that the Reorganization would not result in dilution of the
Fund's shareholders' interests.

In evaluating the Reorganization, the Board requested and reviewed, with
the assistance of independent legal counsel, materials furnished by OMC
and QVA. These materials included financial statements as well as other
written information regarding OMC and its personnel, operations and
financial condition. The Board also reviewed the same type of information
about QVA. Consideration was given to comparative information concerning
other mutual funds with similar investment objectives to the Fund and
Strategic Income Fund, including information prepared by Lipper Analytical
Services, Inc. and Management Practice Inc. The Board also considered
information with respect to the relative historical performance of the
funds. The Board also reviewed and discussed the terms and provisions of
the investment advisory agreement pursuant to which OMC provides
investment management services to Strategic Income Fund and compared them
to the existing management arrangements for the Fund as well as the
management arrangements of other mutual funds, particularly with respect
to the allocation of various types of expenses, levels of fees and
resulting expense ratios.

In reaching its determination, the Board gave careful consideration to the
following factors, among others: the Reorganization would afford the
shareholders of the Fund the capabilities and resources of OMC and its
affiliates in the area of investment management, distribution, shareholder
servicing and marketing; the ability of the shareholders of the Fund to
exchange their shares for a wider variety of portfolios within the
OppenheimerFunds family with differing investment objectives than are
currently available to shareholders of the Fund; the terms and conditions
of the Reorganization (including that there would be no sales charge
imposed in effecting the Reorganization, the Reorganization was intended
to qualify as a tax-free exchange and all expenses of the Reorganization
would be paid by QVA and OMC in the amounts incurred by them and the
respective fund); and the similarity and differences of the investment
objectives, policies and methods of the Fund and Strategic Income Fund.

The Board also considered that the annual operating expenses of Strategic
Income Fund are lower, as a percentage of assets, and would be lower on
a pro forma basis after giving effect to the Reorganization, than the
operating expenses of the Fund, resulting in a savings to Fund
shareholders. For operating expenses and other expense information
relating to Strategic Income Fund and the Fund, see "Comparative Fee
Tables - Expenses of Strategic Income Fund and the Fund; Pro Forma
Expenses." Further, since Class B shares of Strategic Income Fund
automatically convert to Class A shares after six years, as compared to
a conversion of Class B shares of the Fund after eight years, Class B Fund
shareholders would benefit from the earlier conversion to a Class that
does not bear an annual asset-based sales charge. In addition, the Board
determined that the purchase, exchange and redemption procedures and
privileges provided by Strategic Income Fund are comparable to those of
the Fund and that Fund shareholders currently exempt from payment of
certain transaction-based sales charges will continue to be so exempt as
shareholders of Strategic Income Fund.

The Strategic Trust Board of Trustees, including the trustees who are not
"interested persons" of Strategic Income Fund, unanimously approved the
Reorganization and the Reorganization Agreement and determined that the
Reorganization is in the best interests of Strategic Income Fund and its
shareholders. The Strategic Trust Board further determined that the
Reorganization would not result in dilution of the Strategic Income Fund
shareholders' interests. The Strategic Trust Board considered, among
other things, that an increase in Strategic Income Fund's asset base as
a result of the Reorganization should benefit Strategic Income Fund
shareholders due to the economies of scale available to a larger fund.
These economies of scale should result in lower costs per account for each
Strategic Income Fund shareholder through lower operating expenses and
transfer agency expenses.

The Reorganization

The following summary of the Reorganization Agreement is qualified in its
entirety by reference to the Reorganization Agreement (a copy of which is
set forth in full as Exhibit A to this Proxy Statement and Prospectus).
The Reorganization Agreement contemplates a reorganization under which (i)
substantially all of the assets of the Fund would be transferred to
Strategic Income Fund in exchange for Class A, Class B and Class C shares
of Strategic Income Fund and the assumption by Strategic Income Fund of
certain liabilities of the Fund, (ii) the Class A, Class B and Class C
shares would be distributed among the respective Class A, Class B and
Class C shareholders of the Fund in complete liquidation of the Fund and
(iii) the outstanding shares of the Fund would be cancelled. Prior to the
Closing Date (as hereinafter defined), the Fund will endeavor to discharge
all of its liabilities and obligations when and as due prior to such date.
Strategic Income Fund will not assume any liabilities or obligations of
the Fund other than those reflected on an unaudited statement of assets
and liabilities of the Fund prepared as of the Valuation Date and that are
agreed to by Strategic Income Fund. In this regard, the Fund will retain
a cash reserve (the "Cash Reserve") in an amount which is deemed
sufficient in the discretion of the Board for the payment of (a) the
Fund's expenses of liquidation and (b) the Fund's liabilities, other than
those assumed by Strategic Income Fund. The number of full and fractional
Class A, Class B and Class C shares of Strategic Income Fund to be issued
to the Fund will be determined on the basis of Strategic Income Fund's and
the Fund's relative net asset values per Class A, Class B and Class C
shares, respectively, computed as of the close of business of the New York
Stock Exchange, Inc. on ______________, 1995 or at such time on such
earlier or later date as may be mutually agreed upon in writing (the
"Valuation Date"). The Closing Date for the Reorganization will be the
next business day following the Valuation Date.

OMC will utilize the valuation procedures set forth in the Prospectus and
Statement of Additional Information of Strategic Income Fund to determine
the value of the Fund's assets to be transferred to Strategic Income Fund
pursuant to the Reorganization, the value of Strategic Income Fund's
assets and the net asset value of each class of shares of Strategic Income
Fund. Such values will be computed by OMC as of the Valuation Date in a
manner consistent with its regular practice in pricing Strategic Income
Fund.

The Reorganization Agreement provides for coordination between the funds
as to their respective portfolios so that, on and after the Closing Date,
Strategic Income Fund will be in compliance with all of its investment
policies and restrictions. The Fund will recognize capital gain or loss
on any sales made pursuant to this condition. As noted in "Tax Aspects
of the Reorganization" below, if the Fund realizes net gain from the sale
of securities, such gain, to the extent not offset by capital loss carry-
forwards, will be distributed to shareholders prior to the Closing Date
and will be taxable to shareholders as capital gain.

Contemporaneously with the closing, the Fund will be liquidated and the
Fund will distribute or cause to be distributed pro rata to Fund
shareholders of record as of the close of business on the Valuation Date
the full and fractional Strategic Income Fund shares of each class
received by the Fund. Upon such liquidation all issued and outstanding
shares of the Fund will be cancelled on the Fund's books and Fund
shareholders will have no further rights as shareholders of the Fund. To
assist the Fund in the distribution of Strategic Income Fund shares,
Strategic Income Fund will, in accordance with a shareholder list supplied
by the Fund, cause Strategic Income Fund's transfer agent to credit and
confirm an appropriate number of shares of Strategic Income Fund to each
shareholder of the Fund. Certificates for shares of Strategic Income Fund
will be issued upon written request of a former shareholder of the Fund
but only for whole shares with fractional shares credited to the name of
the shareholder on the books of Strategic Income Fund. Former
shareholders of the Fund who wish certificates representing their shares
of Strategic Income Fund must, after receipt of their confirmations, make
a written request to Oppenheimer Shareholder Services, P.O. Box 5270,
Denver, Colorado 80217. Shareholders of the Fund holding certificates
representing their shares will not be required to surrender their
certificates to anyone in connection with the Reorganization. After the
Reorganization, however, it will be necessary for such shareholders to
surrender such certificates in order to redeem, transfer or exchange any
shares of Strategic Income Fund. After the closing of the Reorganization,
the Fund will not conduct any business except in connection with the
winding up of its affairs. Under the Reorganization Agreement, within one
year after the Closing Date, the Fund shall: either (i) transfer any
remaining amount of the Cash Reserve to Strategic Income Fund, if such
remaining amount is not material (as defined below) or (ii) distribute
such remaining amount to the shareholders of the Fund who were such on the
Valuation Date. Such remaining amount shall be deemed to be material if
the amount to be distributed, after deducting the estimated expenses of
the distribution, equals or exceeds one cent per share of the number of
Fund shares outstanding on the Valuation Date.

The consummation of the Reorganization is subject to the conditions set
forth in the Reorganization Agreement, including, without limitation,
approval of the Reorganization by the Fund's shareholders.
Notwithstanding approval of the Fund's shareholders, the Reorganization
may be terminated at any time at or prior to the Closing Date (i) by
mutual written consent of the Corporation, on behalf of the Fund, and
Strategic Trust on behalf of Strategic Income Fund, (ii) by the
Corporation, on behalf of the Fund, or Strategic Trust on behalf of
Strategic Income Fund if the closing shall not have occurred on or before
February 29, 1996 or, if later, two business days after the date of any
Fund shareholder's meeting called for the purpose of approving the
Reorganization which was convened prior to ____ but adjourned to a date
after _______, or (iii) by the Corporation, on behalf of the Fund, or
Strategic Trust on behalf of Strategic Income Fund upon a material breach
by the other (and, with respect to Strategic Trust on behalf of Strategic
Income Fund, a material breach by QVA) of any representation, warranty,
covenant or agreement contained therein to be performed on or prior to the
Closing Date, if a condition therein expressed to be precedent to the
obligations of the terminating party has not been met and it reasonably
appears that it will not or cannot be met prior to the Closing Date or the
Acquisition is not consummated. Termination of the Reorganization
Agreement will terminate all obligations of the parties thereto (other
than a confidentiality obligation of Strategic Income Fund with respect
to information relating to the Fund and the obligation of Strategic Income
Fund to return certain books and records to the Fund) without liability
except, in the event of a termination pursuant to (iii) above, any party
in breach (other than a breach due to the Fund's shareholders not
approving the Reorganization) of the Reorganization Agreement (or the
Acquisition Agreement, if applicable) will, upon demand, reimburse the
non-breaching party for all reasonable out-of-pocket fees and expenses
incurred in connection with the transactions contemplated by the
Reorganization Agreement.

Approval of the Reorganization will require the vote specified below in
"Information Concerning the Meeting - Record Date; Vote Required; Share
Information." If the Reorganization is not approved by the shareholders
of the Fund, the Directors of the Corporation will consider other possible
courses of action.

Tax Aspects of the Reorganization

At or prior to the Closing Date, the Fund will declare a dividend in an
amount large enough so that it will have declared a dividend of all of its
investment company taxable income and net capital gain, if any, for the
taxable period ending with its dissolution (determined without regard to
any deduction for dividends paid). Such dividends will be included in the
taxable income of the Fund's shareholders as ordinary income and capital
gain, respectively.

The exchange of the assets of the Fund for Class A, Class B and Class C
shares of Strategic Income Fund and the assumption by Strategic Income
Fund of certain liabilities of the Fund is intended to qualify for Federal
income tax purposes as a tax-free reorganization under Section 368(a)(1)
of the Internal Revenue Code of 1986, as amended (the "Code"). The Fund
has represented to Price Waterhouse LLP, tax adviser to the Fund, that,
to the Fund's best knowledge, there is no plan or intention by any Fund
shareholder who owns 5% or more of the Fund's outstanding shares, and, to
the Fund's best knowledge, there is no plan or intention on the part of
the remaining Fund shareholders, to redeem, sell, exchange or otherwise
dispose of a number of Strategic Income Fund shares received in the
transaction that would reduce the Fund shareholders' ownership of
Strategic Income Fund Class A, Class B and Class C shares to a number of
shares having a value, as of the Closing Date, of less than 50% of the
value of all the formerly outstanding Fund shares as of the same date.
The Fund and Strategic Income Fund have each further represented to the
fact that, as of the Closing Date, the Fund and Strategic Income Fund will
qualify as regulated investment companies or will meet the diversification
test of Section 368(a)(2)(F)(ii) of the Code.

As a condition to the closing of the Reorganization, Strategic Income Fund
and the Fund will receive the opinion of Price Waterhouse LLP to the
effect that, based on the Reorganization Agreement, the above
representations, existing provisions of the Code, Treasury Regulations
issued thereunder, current Revenue Rulings, Revenue Procedures and court
decisions, for Federal income tax purposes:

1. The transfer of substantially all of the Fund's assets in
exchange for Class A, Class B and Class C shares of Strategic Income
Fund and the assumption by Strategic Income Fund of certain
identified liabilities of the Fund followed by the distribution by
the Fund of Class A, Class B and Class C shares of Strategic Income
Fund to the Fund shareholders in exchange for their Fund shares will
constitute a "reorganization" within the meaning of Section 368(a)(1)
of the Code and the Fund and Strategic Income Fund will each be a
"party to the reorganization" within the meaning of Section 368(b)
of the Code.

2. No gain or loss will be recognized by Strategic Income Fund upon
the receipt of the assets of the Fund solely in exchange for Class
A, Class B and Class C shares of Strategic Income Fund and the
assumption by Strategic Income Fund of the identified liabilities of
the Fund.

3. No gain or loss will be recognized by the Fund upon the transfer
of the assets of the Fund to Strategic Income Fund in exchange for
Class A, Class B and Class C shares of Strategic Income Fund and the
assumption by Strategic Income Fund of the identified liabilities or
upon the distribution of Class A, Class B and Class C shares of
Strategic Income Fund to the Fund shareholders in exchange for the
Fund shares.

4. No gain or loss will be recognized by the Fund shareholders upon
the exchange of the Fund shares for the Class A, Class B and Class
C shares of Strategic Income Fund.

5. The aggregate tax basis for Class A, Class B and Class C shares
of Strategic Income Fund received by each Fund shareholder pursuant
to the Reorganization will be the same as the aggregate tax basis of
the Fund shares held by each such Fund shareholder immediately prior
to the Reorganization.

6. The holding period of Class A, Class B and Class C shares of
Strategic Income Fund to be received by each Fund shareholder will
include the period during which the Fund shares surrendered in
exchange therefor were held (provided such Fund shares were held as
capital assets on the date of the Reorganization).

7. The tax basis of the assets of the Fund will be the same as the
tax basis of such assets of the Fund immediately prior to the
Reorganization.

8. The holding period of the assets of the Fund in the hands of
Strategic Income Fund will include the period during which those
assets were held by the Fund.

Shareholders of the Fund should consult their tax advisors regarding the
effect, if any, of the Reorganization in light of their individual
circumstances. Since the foregoing discussion only relates to the Federal
income tax consequences of the Reorganization, shareholders of the Fund
should also consult their tax advisers as to state and local tax
consequences, if any, of the Reorganization.

Capitalization Table (Unaudited)

The table below sets forth the capitalization of Strategic Income Fund and
the Fund and indicates the pro forma combined capitalization as of March
31, 1995 as if the Reorganization had occurred on that date.

Net Asset
Shares Value
Net Assets Outstanding Per Share

Oppenheimer Strategic
Income Fund*
Class A Shares $2,990,586,689 663,783,585 $4.51
Class B Shares 1,652,677,216 366,177,811 4.51

Global
Income Fund
Class A Shares 12,333,647 1,450,983 8.50
Class B Shares 1,114,520 131,085 8.50
Class C Shares 277,753 32,671 8.50

Pro Forma Combined
Fund**
Class A Shares 3,002,920,336 666,518,319 4.51
Class B Shares 1,653,791,736 366,424,933 4.51
Class C Shares 277,753 61,587 4.51

------------------
* Class C shares of Strategic Income Fund were first publicly offered on
May 26, 1995. Accordingly, information with respect to Class C share of
Strategic Income Fund is not reflected in the table above.

**Reflects issuance of 2,734,734 Class A shares, 247,122 Class B shares
and 61,587 Class C shares of Strategic Income Fund in a tax-free exchange
for the net assets of the Fund, aggregating $ 12,333,647, $ 1,114,520 and
$ 277,753 for Class A, Class B and Class C shares, respectively, of the
Fund.

The pro forma ratio of expenses to average annual net assets of the
combined fund at March 31, 1995 would have been 0.94%, 1.69% and 1.69% of
Class A, Class B and Class C shares, respectively.

COMPARISON BETWEEN STRATEGIC INCOME FUND AND THE FUND

Comparative information about Strategic Income Fund and the Fund is
presented below. More complete information about Strategic Income Fund
and the Fund is set forth in their respective Prospectuses (which, as to
Strategic Income Fund, accompanies this Proxy Statement and Prospectus)
and is incorporated herein by reference. To obtain additional copies, see
"Miscellaneous - Public Information."

Comparison of Investment Objectives, Policies and Restrictions

Strategic Income Fund seeks a high level of current income by investing
mainly in debt securities and by writing covered call options on them.
Strategic Income Fund does not invest with the objective of seeking
capital appreciation. The Fund seeks investment income as its primary
objective, with capital appreciation as a secondary objective, through
investment in a non-diversified portfolio consisting primarily of debt
securities. In seeking their investment objectives, Strategic Income Fund
and the Fund employ the investment policies as described in detail below.

Strategic Income Fund. Strategic Income Fund seeks its investment
objective by investing principally in three market sectors: (1) debt
securities of foreign governments and companies, (2) U.S. Government
Securities, and (3) lower-rated, high-yield debt securities of U.S.
companies. Under normal market conditions Strategic Income Fund will
invest in each of these three sectors, but from time to time OMC will
adjust the amounts Strategic Income Fund invests in each sector.

By investing in all three sectors, Strategic Income Fund seeks to reduce
the volatility of fluctuations in its net asset value per share, because
the overall securities price and interest rate movements in each of the
different sectors are not necessarily correlated with each other. Changes
in one sector may be offset by changes in another sector that moves in a
different direction. Therefore, this strategy may help reduce some of the
risks from negative market movements and interest rate changes in any one
sector. However, Strategic Income Fund may invest up to 100% of its
assets in any one sector if OMC believes that in doing so Strategic Income
Fund can achieve its objective without undue risk to Strategic Income
Fund's assets.

When investing Strategic Income Fund's assets, OMC considers many factors,
including general economic conditions in the U.S. and abroad, prevailing
interest rates, and the relative yields of U.S. and foreign securities.
While Strategic Income Fund may seek to earn income by writing covered
call options, market price movements may make it disadvantageous to do so.
Strategic Income Fund may also try to hedge against losses by using
hedging strategies described below. When market conditions are unstable,
Strategic Income Fund may invest substantial amounts of its assets in
money market instruments for defensive purposes. These investments
include U.S. Government Securities, bank obligations, commercial paper,
corporate obligations and other instruments approved by the Board of
Trustees of Strategic Trust.

In seeking high current income, Strategic Income Fund may invest in
higher-yielding, lower-rated debt securities, commonly known as "junk
bonds." There is no restriction on the amount of Strategic Income Fund's
assets that could be invested in these types of securities. Lower-rated
debt securities are those rated below "investment grade," such as debt
securities that have a rating of "Baa" or lower by Moody's Investors
Service, Inc. ("Moody's") or "BBB" or lower by Standard & Poor's
Corporation ("S&P"). These securities may be rated as low as "C" or "D"
or may be in default at time of purchase. OMC does not rely solely on
ratings of securities by rating agencies when selecting investments for
Strategic Income Fund, but evaluates other economic and business factors
as well. Strategic Income Fund may invest in unrated securities that OMC
believes offer yields and risks comparable to rated securities.

As of June 30, 1995, Strategic Income Fund's portfolio included corporate
bonds in the following S&P rating categories or if unrated, determined by
OMC to be comparable to the category indicated (the amounts shown are
dollar-weighted average values of the bonds in each category measured as
a percentage of Strategic Income Fund's total assets): AAA, 0%; AA, 0%;
A, 0.3%; BBB, 1.5%; BB, 3.9%; B, 18.3%; CCC, 3.4%; CC, 0%; C, 0%; D, 0.4%;
unrated (by S&P or Moody's), 5.1%. The Appendix to the Prospectus of
Strategic Income Fund describes the rating categories.

Strategic Income Fund may invest in debt securities issued or guaranteed
by foreign companies, "supranational" entities such as the World Bank, and
foreign governments or their agencies. These foreign securities may
include debt obligations such as government bonds, debentures issued by
companies, as well as notes. Strategic Income Fund will not invest more
than 25% of its total assets in government securities of any one foreign
country. Otherwise, Strategic Income Fund is not restricted in the amount
of its assets it may invest in foreign countries or in which countries.
Strategic Income Fund may buy or sell foreign currencies and foreign
currency forward contracts (agreements to exchange one currency for
another at a future date) to hedge currency risks and to facilitate
transactions in foreign investments. Although currency forward contracts
can be used to protect Strategic Income Fund from adverse exchange rate
changes, there is a risk of loss if OMC fails to predict currency exchange
movements correctly.

Strategic Income Fund may also invest in U.S. Government Securities
(including U.S. Government Securities that are issued or guaranteed by
federal agencies or government-sponsored entities but are not supported
by the full faith and credit of the U.S. Government, mortgage-backed U.S.
Government Securities and zero coupon Treasury securities), CMOs and
stripped mortgage-backed securities of CMOs.

Strategic Income Fund may also enter into "forward roll" transactions with
banks and dealers with respect to the mortgage-related securities in which
it can invest. These require Strategic Income Fund to secure its
obligation in the transaction by segregating assets with its custodian
bank equal in amount to its obligation under the roll.

Strategic Income Fund may write (that is, sell) covered call options on
debt securities to raise cash for income to distribute to shareholders or
for defensive reasons. When Strategic Income Fund writes a call, it
receives cash (called a premium). The call gives the buyer the ability
to buy the investment on which the call was written from Strategic Income
Fund at the call price during the period in which the call may be
exercised. If the value of the investment does not rise above the call
price, it is likely that the call will lapse without being exercised,
while Strategic Income Fund keeps the cash premium (and the investment).

In addition to the foregoing, Strategic Income Fund may invest in debt
securities and dividend-paying common stocks issued by U.S. companies,
including bonds, debentures, notes, preferred stocks, zero coupon
securities, participation interests, asset-backed securities and sinking
fund and callable bonds. Strategic Income Fund may purchase these
securities in public offerings or through private placements. Strategic
Income Fund has no limitations on the maturity, capitalization of the
issuer or credit rating of the domestic and foreign debt securities in
which it invests, although it is expected that most issuers will have
total assets in excess of $100 million.

The Fund. The Fund seeks its investment objective by investing primarily
in investment-grade debt securities of foreign and domestic corporations
and foreign governments, or their agencies and instrumentalities, and in
U.S. Government Securities. Generally the debt securities in which the
Fund will invest will be those believed by QVA to offer potential for
capital appreciation in addition to investment income, because of such
factors as anticipated changes in the comparative level of interest rates
in different countries or anticipated improvements in the issuer's credit
rating. Under normal circumstances the Fund will invest at least 65% of
its total assets in the securities of issuers located in not less than
three different countries, one of which may be the United States. The
Fund may also invest in preferred stocks, securities convertible into
common stock and short-term money market instruments. Investments in
preferred stocks and securities convertible into common stock will be
limited to 10% of the total assets of the Fund at the time of purchase.
The Fund may invest in lower-quality high yielding debt securities (also
known as "junk bonds") of foreign issuers which may be located in
countries with "emerging markets". The Fund's current intention is to
limit its investment in these securities to up to 35% of its net assets.
QVA anticipates that the average dollar weighted maturity of the Fund will
be between 5 and 10 years.

Special Investment Methods

Strategic Income Fund and the Fund may use the special investment methods
summarized below.

Loans of Portfolio Securities. Both Strategic Income Fund and the Fund may
lend their portfolio securities to brokers, dealers and other financial
institutions, subject to certain conditions. As to Strategic Income Fund,
these loans are limited to not more than 25% of Strategic Income Fund's
total assets although it is not expected that such loans will exceed 5%
of the value of the total assets of Strategic Income Fund. The Fund may
commit up to 33-1/3% of the value of its total assets to such loans, but
has not entered into any to date.

Repurchase Agreements; Reverse Repurchase Agreements. Both Strategic
Income Fund and the Fund may enter into repurchase agreements. In a
repurchase transaction, the fund buys a security and simultaneously sells
it to the vendor for delivery at a future date. There is no limit on the
amount of either fund's net assets that may be subject to repurchase
agreements of seven days or less. Strategic Income Fund and the Fund
will not enter into a repurchase agreement that will cause more than 10%
(as to Strategic Income Fund, which limit could increase to 15%) or 15%
(as to the Fund) of its net assets to be subject to repurchase agreements
having a maturity beyond seven days. The Fund may also enter into reverse
repurchase agreements. Under a reverse repurchase agreement the Fund
sells securities and agrees to repurchase them at a mutually agreed to
date and price.

Hedging. Strategic Income Fund may purchase and sell: futures contracts
that relate to broadly-based securities indices and interest rates;
foreign currency exchange contracts ("forward contracts"); and certain put
and call options. Strategic Income Fund may also enter into interest rate
swap agreements. The Fund may purchase or sell financial futures
contracts (including bond futures contracts and index futures contracts),
forward contracts, foreign currency futures contracts, options on futures
contracts and options on currencies. The Fund may also write covered call
options; it is also authorized to write covered put options but does not
presently intend to do so. These are all referred to as "hedging
instruments." The funds do not use hedging instruments for speculative
purposes. Strategic Income Fund may only purchase a call or put if, after
such purchase, the value of all call and put options held by Strategic
Income Fund would not exceed 5% of Strategic Income Fund's total assets.
Other limits on the use of hedging instruments are described in the funds'
respective Prospectuses and Statements of Additional Information.

Hedging instruments may be used to manage a fund's exposure to the
possibility that the prices of its portfolio securities may decline, or
to establish a position in the securities market as a temporary substitute
for purchasing individual securities; to try to manage its exposure to
changing interest rates; to hedge the fund's portfolio against price
fluctuations; and to increase the fund's exposure to the securities
market. Forward contracts are used to try to manage foreign currency
risks on foreign investments. Foreign currency options are used to try
to protect against declines in the dollar value of foreign securities a
fund owns, or to protect against an increase in the dollar cost of buying
foreign securities.

The use of hedging instruments requires special skills and knowledge of
investment techniques that are different than those required for normal
portfolio management. If the investment adviser to the fund 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. If a covered call written by the fund is exercised
on an investment that has increased in value, the fund will be required
to sell the investment at the call price and will not be able to realize
any profit if the investment has increased in value above the call price.
Interest rate swaps are subject to credit risks (if the other party fails
to meet its obligations) and also to interest rate risks. Strategic
Income Fund could be obligated to pay more under its swap agreements than
it receives under them, as a result of interest rate changes.

Derivative Investments. Strategic Income Fund can invest in a number of
different kinds of "derivative investments." Some types of derivatives
may be used for hedging purposes, as described above. Strategic Income
Fund may invest in others because they offer the potential for increased
income and principal value. Strategic Income Fund may write covered call
options to provide income for liquidity purposes, defensive reasons, or
to raise cash to distribute to shareholders. In general, a "derivative
investment" is a specially-designed investment the performance of which
is linked to the performance of another investment or security, such as
an option, future, index, currency or commodity. In the broadest sense,
derivative investments include the hedging instruments in which the funds
may invest. Other types of derivatives in which Strategic Income Fund may
invest include index-linked or commodity-linked notes, debt exchangeable
for common stock, equity-linked debt securities and currency indexed
securities.

One risk of investing in derivative investments is that the company
issuing the instrument might not pay the amount due on the maturity of the
instrument. There is also the risk that the underlying investment or
security might not perform the way the investment adviser expected it to
perform. The performance of derivative investments may also be influenced
by interest rate changes in the U.S. and abroad. All of these risks can
mean that Strategic Income Fund will realize less income than expected
from its investments, or that it can lose part of the value of its
investments, which will affect Strategic Income Fund's share price.

Borrowing for Leverage. Strategic Income Fund is permitted to increase
its ownership of securities by borrowing up to 50% of the value of its net
assets from banks on an unsecured basis and investing the borrowed funds
(on which Strategic Income Fund will pay interest), subject to the 300%
asset coverage requirement of the 1940 Act. Purchasing securities with
borrowed funds is a speculative investment method known as leveraging.
There are risks associated with leveraging purchases of portfolio
securities by borrowing, including a possible reduction of income and
increased fluctuation of net asset value per share. The Fund may not
borrow for leveraging purposes. Any borrowings of money by the Fund may
not exceed 33-1/3% of the value of its total assets, and additional
investments may not be made while such borrowings exceed 5% of total
assets.

Illiquid and Restricted Securities. Under the policies and procedures
established by Strategic Trust's Board of Trustees, OMC determines the
liquidity of certain of Strategic Income 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. Strategic Income 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 shares are
no longer sold in those states). Strategic Income Fund's percentage
limitation on these investments does not apply to certain restricted
securities that are eligible for resale to qualified institutional
purchasers. As a matter of fundamental policy the Fund may not invest
more than 15% of its total assets in illiquid securities including
securities for which there is no readily available market, repurchase
agreement which have a maturity of longer than seven days, securities
subject to legal or contractual restrictions and certain over-the-counter
options.

Warrants and Rights. Warrants basically are options to purchase stock at
set prices that are valid for a limited period of time. Rights are
options to purchase securities, normally granted to current holders by the
issuer. The funds may invest up to 5% of their respective total assets
in warrants or rights. That 5% does not apply to warrants and rights
Strategic Income Fund acquired as part of units with other securities or
that were attached to other securities. No more than 2% of Strategic
Income Fund's assets may be invested in warrants that are not listed on
the New York or American Stock Exchanges.

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

Investment Restrictions

Both Strategic Income Fund and Fund have certain investment restrictions
that, together with their respective investment objectives, are
fundamental policies changeable only by shareholder approval. The
investment restrictions of Strategic Income Fund and the Fund are
substantially the same except as set forth below.

Strategic Income Fund cannot (1) as to 75% of its total assets, buy
securities issued or guaranteed by a single issuer if, as a result,
Strategic Income Fund would have invested more than 5% of its assets in
the securities of that issuer, or would own more than 10% of that issuer's
voting securities (purchases of U.S. Government Securities are not
restricted by this policy); (2) make loans except by purchasing debt
obligations in accordance with its investment objectives and policies, or
by entering into repurchase agreements or as described in "Loans of
Portfolio Securities" in its Prospectus; and (3) buy securities of an
issuer which, together with any predecessor, has been in operation for
less than three years if, as a result, the aggregate of such investments
would exceed 5% of the value of the Fund's total assets. The Fund has an
investment restriction similar to the foregoing "(3)", but it is not
fundamental.

The Fund cannot: (1) invest in securities of other investment companies
except in connection with a merger, consolidation, reorganization or
acquisition of assets, (2) invest more than 15% of its total assets in
illiquid securities including securities for which there is no readily
available market, repurchase agreements which have a maturity of longer
than seven days, securities subject to legal or contractual restrictions
and certain over-the counter options; (3) as to 75% of its total assets,
purchase more than 10% of the voting securities of any one issuer; (4)
issue senior securities as defined in the 1940 Act except insofar as the
Fund may be deemed to have issued a senior security by reason of: (a)
entering into any repurchase agreement; (b) borrowing money in accordance
with restrictions described above; or (c) lending portfolio securities;
(5) invest more than 10% of its assets in securities of other investment
companies or more than 5% of its assets in the securities of one
investment company or more 3% of the outstanding voting securities of such
company,provided that the foregoing restrictions on investment company
purchases and holding are inapplicable to acquisition in connection with
a merger, consolidation, reorganization or acquisition of assets (except
that the Fund may in the future invest all of its investable assets in an
open end management invest company with substantially the same investment
objective and restrictions as the Fund); (6) pledge its assets or assign
or otherwise encumber its assets in excess of 33 1/3% of its net assets
(taken at market value at the time of pledging ) and then only to secure
borrowings effected within the limitations set forth in the Fund's
Prospectus; and (7) make short sales of securities (including "short sales
against-the-box").

Strategic Income Fund Performance

During Strategic Income Fund's fiscal year ended September 30, 1994,
Strategic Income Fund attempted to pay dividends on its Class A shares at
a constant level. That was done keeping in mind the amount of net
investment income and other distributable income available from Strategic
Income Fund's portfolio investments. However, the amount of each dividend
can change from time to time (or there might not be a dividend at all on
either class) depending on market conditions, Strategic Income Fund's
expenses, and the composition of Strategic Income Fund's portfolio.
Attempting to pay dividends at a constant level required OMC to monitor
Strategic Income Fund's income stream from its investments and at times
to select higher yielding securities (appropriate to Strategic Income
Fund's objectives and investment restrictions) to maintain income at the
required level. This practice did not affect the net asset values of
either class of shares. The Board of Trustees of Strategic Trust may
change or end Strategic Income Fund's targeted dividend level for Class
A shares at any time. There is no targeted dividend level for Class B or
Class C shares.

During the past fiscal year, Strategic Income Fund's performance was
affected by the rise in short-term interest rates, both in the U.S. and
abroad. As interest rates rose, the bond market declined. In response
to rising interest rates in the U.S., OMC reduced Strategic Income Fund's
exposure to long-term U.S. government bonds, as well as high yield
corporate bonds issued by companies whose earnings are sensitive to
interest rate changes. The proceeds from the sale of those investments
were used to increase Strategic Income Fund's investment in higher-
yielding, lower-rated corporate bonds issued by companies whose earnings
tend to rise in the middle-to-late stages of an economic expansion. In
addition, OMC used futures to hedge against interest rate risk and thus
avoided the sale of interest bearing securities. As foreign interest
rates rose and the dollar weakened against major currencies, OMC reduced
Strategic Income Fund's investments in Latin America and other emerging
markets which tend to perform poorly in a rising interest rate
environment. OMC increased Strategic Income Fund's investments in foreign
government bonds which OMC believed would benefit from economic growth.

Included in the Prospectus for Strategic Income Fund, a copy of which
accompanies this Proxy Statement and Prospectus, in the section entitled
"Performance of the Fund" is a performance graph which depicts the
performance of a hypothetical $10,000 investment in Class A and Class B
shares of Strategic Income Fund from the inception of each respective
Class held through September 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 maximum 5% contingent deferred sales charge for Class B shares.
Class C shares were not publicly offered during the fiscal year ended
September 30, 1994. Accordingly, no information is presented on Class C
shares in the graph.

Because Strategic Income Fund invests in a variety of debt securities in
domestic and foreign markets, Strategic Income Fund's performance is
compared to the performance of The Lehman Brothers Aggregate Bond Index
and The Salomon Brothers World Government Bond Index. The Lehman Brothers
Aggregate Bond Index is a broad-based, unmanaged index of U.S. corporate
bond issues, U.S. government securities and mortgage-backed securities
widely regarded as a measure of the performance of the domestic debt
securities market. The Salomon Brothers World Government Bond Index is
an unmanaged index of fixed-rate bonds having a maturity of one year or
more, widely regarded as a benchmark of fixed income performance on a
world-wide basis. Index performance reflects the reinvestment of income,
but not capital gains or transaction costs, and none of the data below
shows the effect of taxes. Also, Strategic Income Fund's performance data
reflects the effect of Strategic Income Fund business and operating
expenses. While index comparisons may be useful to provide a benchmark
for Strategic Income Fund's performance, it must be noted that Strategic
Income 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.

Information on Fund performance is set forth in the Fund's Annual Report
as of November 30, 1994, which is incorporated herein by reference and may
be obtained without charge as set forth in "Miscellaneous - Public
Information."

Additional Comparative Information

General

For a discussion of the organization and operation of Strategic Income
Fund, including brokerage practices, see "Investment Objective and
Policies" and "How the Fund is Managed" in Strategic Income Fund's current
Prospectus and "Brokerage Policies of the Fund" in the Strategic Income
Fund current Statement of Additional Information. For a discussion of the
organization and operation of the Fund, including brokerage practices, see
"Investment Objectives of the Fund," "Investment Restrictions and
Techniques," "Investment Management Agreement" and "Additional
Information" in the Fund's current Prospectus.

Financial Information

For certain financial information about Strategic Income Fund and the
Fund, see (as to Strategic Income Fund) "Financial Highlights" and
"Performance of the Fund" in the Strategic Income Fund current Prospectus
and (as to the Fund) "Financial Highlights" in the Fund current
Prospectus.

Management of Strategic Income Fund and the Fund

For information about the management of Strategic Income Fund and the
Fund, including their respective Boards of Trustees, investment advisers,
portfolio managers and distributors, see (as to Strategic Income Fund)
"Expenses" and "How the Fund is Managed" in the Strategic Income Fund
current Prospectus and (as to the Fund) "Investment Management Agreement,"
Distribution Plan," "Portfolio Transactions and Turnover" and "Additional
Information" in the Fund current Prospectus.

Description of Shares of Strategic Income Fund and the Fund

For a description of the classes of shares of Strategic Income Fund and
the Fund, including voting rights, restrictions on disposition and
potential liability associated with their ownership, see (as to Strategic
Income Fund) "How the Fund is Managed" in the Strategic Income Fund
current Prospectus and Statement of Additional Information and (as to the
Fund) "Additional Information" in the Fund current Prospectus.

Dividends, Distributions and Taxes

Both funds declare dividends from net investment income on each regular
business day, distribute dividends monthly and distribute net long-term
capital gains annually. Strategic Income Fund distributes net short-term
capital gains annually and the Fund distributes such gains quarterly. For
a discussion of the policies of Strategic Income Fund and the Fund with
respect to dividends and distributions, and a discussion of the tax
consequences of an investment in Strategic Income Fund and the Fund, see
(as to Strategic Income Fund) "Dividends, Capital Gains and Taxes" in the
Strategic Income Fund current Prospectus and (as to the Fund) "Dividends
and Distributions" and "Tax Status" in the Fund current Prospectus.

Purchases, Redemptions and Exchanges of Shares

For a discussion of how shares of Strategic Income Fund and the Fund may
be purchased, redeemed and exchanged, see (as to Strategic Income Fund)
"How to Buy Shares," "How to Sell Shares," "Exchanges of Shares," "Special
Investor Services," "Service Plan for Class A Shares," "Distribution and
Service Plan for Class B Shares" and "Distribution and Service Plan for
Class C Shares" in the Strategic Income Fund current Prospectus and "How
to Buy Shares," "How to Redeem Shares," "Exchanging Shares" and
"Additional Information" in the Fund current Prospectus.

Shareholder Inquiries

For a description of how shareholder inquiries should be made, see (as to
Strategic Income Fund) "How the Fund is Managed" in the Strategic Income
Fund current Prospectus and (as to the Fund) "Additional Information" in
the Fund current Prospectus.

INFORMATION CONCERNING THE MEETING

The Meeting

The Meeting will be held at One World Financial Center, New York, New York
10281 on the 40th Floor at 10:00 A.M., New York time, on November 3, 1995
and any adjournments thereof. At the Meeting, shareholders of the Fund
will be asked to consider and vote upon approval of the Reorganization
Agreement, and the transactions contemplated thereby, including the
transfer of substantially all the assets of the Fund in exchange for Class
A, Class B and Class C shares of Strategic Income Fund and the assumption
by Strategic Income Fund of certain liabilities of the Fund, the
distribution of such shares to the shareholders of the Fund in complete
liquidation of the Fund and the cancellation of the outstanding shares of
the Fund.

Record Date; Vote Required; Share Information

The Board has fixed the close of business on September 7, 1995 as the
record date (the "Record Date") for the determination of shareholders
entitled to notice of, and to vote at, the Meeting. The affirmative vote
of a majority of the shares of the Fund outstanding and entitled to vote
at the Meeting is required for approval of the Proposal. Each shareholder
will be entitled to one vote for each share and a fractional vote for each
fractional share held of record at the close of business on the Record
Date. For purposes of voting with respect to the Reorganization, the
Class A, Class B and Class C shares of the Fund shall vote together as a
single class. Only shareholders of the Fund will vote on the
Reorganization. The vote of shareholders of Strategic Income Fund is not
being solicited to approve the Reorganization Agreement.

At the close of business on the Record Date, there were approximately
_____________ Class A, ___________ Class B and _____________ Class C
shares of the Fund issued and outstanding. The presence in person or by
proxy of the holders of a majority of such shares constitutes a quorum for
the transaction of business at the Meeting. As of the close of business
on the Record Date, there were approximately _____________ Class A,
_______________ Class B and ______________ Class C shares of Strategic
Income Fund issued and outstanding. (To the knowledge of the Fund, as of
the Record Date, no person owned of record or beneficially 5% or more of
the outstanding Class A, Class B or Class C Fund shares or 5% or more of
the outstanding shares of the Fund.) To the knowledge of Strategic Trust
as of the Record Date, no person owned of record or beneficially 5% or
more of the outstanding Class A, Class B or Class C Strategic Income Fund
shares or 5% or more of the outstanding shares of Strategic Income Fund.
(As of the Record Date, the officers and Trustees of Strategic Income
Fund, and the officers and Trustees of the Trust, beneficially owned as
a group less than 1% of the outstanding shares of each class of Strategic
Income Fund and the Fund, respectively, and of Strategic Income Fund and
the Fund, respectively.)

Proxies

The enclosed form of proxy, if properly executed and returned, will be
voted (or counted as an abstention or withheld from voting) in accordance
with the choices specified thereon, and will be included in determining
whether there is quorum to conduct the Meeting. The proxy will be voted
in favor of the Proposal unless a choice is indicated to vote against or
to abstain from voting on the Proposal.

Shares owned of record by broker-dealers for the benefit of their
customers ("street account shares") will be voted by the broker-dealer
based on instructions received from its customers. If no instructions are
received, the broker-dealer may (if permitted under applicable stock
exchange rules), as record holder, vote such shares on the Proposal in the
same proportion as that broker-dealer votes street account shares for
which voting instructions were received in time to be voted. If a
shareholder executes and returns a proxy but fails to indicate how the
votes should be cast, the proxy will be voted in favor of the Proposal.
The proxy may be revoked at any time prior to the voting thereof by: (i)
writing to the Secretary of the Corporation at One World Financial Center,
New York, New York 10281; (ii) attending the Meeting and voting in person;
or (iii) signing and returning a new proxy (if returned and received in
time to be voted).

Costs of the Solicitation and the Reorganization

All expenses of this solicitation, including the cost of printing and
mailing this Proxy Statement and Prospectus, will be evenly apportioned
between QVA and OMC. Any documents such as existing prospectuses or
annual reports that are included in that mailing will be a cost of the
fund issuing the document. In addition to the solicitation of proxies by
mail, proxies may be solicited by officers and employees of QVA, the
Corporation's investment adviser, or QVA's affiliates, personally or by
telephone or telegraph. In addition, QVA has retained D.F. King & Co.,
Inc., 77 Water Street, New York, New York 10005 to assist in the
solicitation of proxies primarily by contacting shareholders by telephone
and telegram for a fee not to exceed $____, plus reasonable out-of-pocket
expenses. The cost for such proxy solicitor will be shared by QVA and
OMC. Brokerage houses, banks and other fiduciaries may be requested to
forward soliciting material to the beneficial owners of shares of the Fund
and to obtain authorization for the execution of proxies. For those
services, if any, they will be reimbursed by the Corporation for their
reasonable out-of-pocket expenses.

With respect to the Reorganization, OMC and QVA will share the cost of
the tax opinion. Any other out-of-pocket expenses of Strategic Income
Fund and the Fund associated with the Reorganization, including fund,
accounting and transfer agent expenses, will be borne by OMC and QVA,
respectively, in the amounts so incurred by the respective fund.

MISCELLANEOUS

Financial Information

The Reorganization will be accounted for by the surviving fund in its
financial statements similar to a pooling without restatement. Further
financial information as to the Fund is contained in its current
Prospectus, which is available without charge upon written request to
Quest for Value Distributors, at P.O. Box 3567, Church Street Station, New
York, New York 10277-1296, and is incorporated herein, and in its audited
financial statements as of November 30, 1994, which are included in the
Additional Statement. Financial information for Strategic Income Fund is
contained in its current Prospectus accompanying this Proxy Statement and
Prospectus and incorporated herein, and in its audited financial
statements as of December 31, 1994 which are included in the Additional
Statement.

Public Information

Additional information about Strategic Income Fund and the Fund is
available, as applicable, in the following documents which are
incorporated herein by reference: (i) Strategic Income Fund's Prospectus
dated May 26, 1995, supplemented July 14, 1995, accompanying this Proxy
Statement and Prospectus and incorporated herein; (ii) the Fund's
Prospectus dated March 1, 1995 as revised June 30, 1995, which may be
obtained without charge by writing to QVD at the address indicated above;
(iii) Strategic Income Fund's Annual Report as of September 30, 1994 and
Semi-Annual Report as of March 31, 1995, which may be obtained without
charge by writing to OSS at the address on the cover of this Proxy
Statement and Prospectus; and (iv) the Fund's Annual Report as of November
30, 1994, and Semi-Annual Report as of May 31, 1995 which may be obtained
without charge by writing to QVD. All of the foregoing documents and the
Statements of Additional Information referred to below may be obtained by
calling the toll-free number for Strategic Income Fund or the Fund, as
applicable, on the cover of this Proxy Statement and Prospectus.

Additional information about the following matters is contained in the
Additional Statement, which incorporates by reference the Strategic Income
Fund Additional Statement, and the Fund's Prospectus dated March 1, 1995,
as revised June 30, 1995, and Statement of Additional Information dated
March 1, 1995: the organization and operation of Strategic Income Fund and
the Fund; more information on investment policies, practices and risks;
information about Strategic Income Fund's and the Fund's respective Boards
of Trustees and their responsibilities; a further description of the
services provided by Strategic Income Fund's and the Fund's investment
adviser, distributor, and transfer and shareholder servicing agent;
dividend policies; tax matters; an explanation of the method of
determining the offering price of the shares of Strategic Income Fund and
the Fund; purchase, redemption and exchange programs; and distribution
arrangements.

Strategic Income Fund and the Fund are subject to the informational
requirements of the Securities Exchange Act of 1934, as amended, and in
accordance therewith, file reports and other information with the SEC.
Proxy material, reports and other information about Strategic Income Fund
and the Fund which are of public record can be inspected and copied at
public reference facilities maintained by the SEC in Washington, D.C. and
certain of its regional offices, and copies of such materials can be
obtained at prescribed rates from the Public Reference Branch, Office of
Consumer Affairs and Information Services, SEC, Washington, D.C. 20549.

OTHER BUSINESS

Management of the Fund knows of no business other than the matters
specified above which will be presented at the Meeting. Since matters not
known at the time of the solicitation may come before the Meeting, the
proxy as solicited confers discretionary authority with respect to such
matters as properly come before the Meeting, including any adjournment or
adjournments thereof, and it is the intention of the persons named as
attorneys-in-fact in the proxy to vote this proxy in accordance with their
judgment on such matters.

By Order of the Board of Directors

Deborah Kaback, Secretary

_______, 1995285

<PAGE>
EXHIBIT A

AGREEMENT AND PLAN OF REORGANIZATION

<PAGE>

AGREEMENT AND PLAN OF REORGANIZATION

This AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made as
of this ____ day of _____, 1995, by and among Oppenheimer Strategic Funds
Trust, a Massachusetts business trust ("Oppenheimer Trust"), on behalf of
Oppenheimer Strategic Income Fund ("Oppenheimer Fund"), a series of
Oppenheimer Trust, Quest for Value Global Funds, Inc., a Maryland
corporation ("Quest For Value"), on behalf of Quest for Value Global
Income Fund ("Quest Portfolio"), a series of Quest For Value, and Quest
for Value Advisors ("Quest Advisors"), a Delaware general partnership
which serves as investment adviser to the Quest Portfolio.

This Agreement is intended to be and is adopted as a "plan of
reorganization", within the meaning of Treas. Reg. Section 1.368-2(g), for
a reorganization under Section 368(a)(1) of the Internal Revenue Code of
1986, as amended ("Code"). The reorganization ("Reorganization") will
consist of the transfer to the Oppenheimer Fund of substantially all of
the assets of the Quest Portfolio in exchange for the assumption by the
Oppenheimer Fund of all stated liabilities of the Quest Portfolio and the
issuance by the Oppenheimer Fund of shares of beneficial interest of the
Oppenheimer Fund ("shares") to be distributed, after the Closing Date (as
hereinafter defined), to the shareholders of the Quest Portfolio in
liquidation of the Quest Portfolio as provided herein, all upon the terms
and conditions hereinafter set forth in this Agreement. To the extent
necessary to effectuate the transactions contemplated by this Agreement,
or as the context of representations, warranties, covenants and other
agreements set forth in this Agreement may require, all references in this
Agreement to the Quest Portfolio shall include Quest For Value and all
references to the Oppenheimer Fund shall include the Oppenheimer Trust.

In consideration of the premises and of the covenants and agreements
hereinafter set forth, the parties hereto covenant and agree as follows:

1. THE REORGANIZATION AND LIQUIDATION OF THE QUEST PORTFOLIO

1.1 Subject to the terms and conditions herein set forth and on the
basis of the representations and warranties contained herein, on the
Closing Date, the Quest Portfolio will assign, deliver and otherwise
transfer its assets as set forth in paragraph 1.2 ("Quest Portfolio
Assets") to the Oppenheimer Fund, and the Oppenheimer Fund will in
exchange therefor assume Quest Portfolio's stated liabilities on the
Closing Date as set forth in paragraph 1.3 and deliver to the Quest
Portfolio the number of each class of shares of the Oppenheimer Fund,
including fractional Oppenheimer Fund shares, determined by dividing the
value of the Quest Portfolio Assets, net of such stated liabilities,
represented by shares of each class of the Quest Portfolio computed in the
manner and as of the time and date set forth in paragraph 2.1, by the net
asset value of each class of shares of the Oppenheimer Fund, computed in
the manner and as of the time and date set forth in paragraph 2.2. Such
transactions shall take place at the closing provided for in paragraph 3.1
("Closing").

1.2 (a) The Quest Portfolio Assets shall consist of all property
and rights, including without limitation all cash, cash equivalents,
securities and dividend and interest receivables owned by the Quest
Portfolio, and any deferred or prepaid expenses shown as an asset on the
Quest Portfolio's books on the Closing Date. Notwithstanding the
foregoing, the Quest Portfolio Assets shall exclude a cash reserve (the
"Cash Reserve") to be retained by the Quest Portfolio sufficient in its
discretion for the payment of the expenses of the Quest Portfolio's
dissolution and its liabilities, but not in excess of the amount
contemplated by paragraph 7.12.

(b) Promptly following the signing of this Agreement, the Quest
Portfolio will provide the Oppenheimer Fund with a list of its assets as
of the most reasonably practical date. On the Closing Date, the Quest
Portfolio will provide the Oppenheimer Fund with a list of the Quest
Portfolio Assets to be assigned, delivered and otherwise transferred to
the Oppenheimer Fund and of the stated liabilities to be assumed by the
Oppenheimer Fund pursuant to this Agreement.

1.3 The Quest Portfolio will endeavor to discharge of all of its
liabilities and obligations when and as due prior to the Closing Date.
An unaudited Statement of Assets and Liabilities of the Quest Portfolio
will be prepared by the Treasurer of the Quest Portfolio, as of the
Valuation Date, which Statement shall be prepared in conformity with
generally accepted accounting principles consistently applied from the
prior audited period. On the Closing Date, the Oppenheimer Fund shall
assume such stated liabilities, expenses, costs, charges and reserves set
forth on such Statement as shall be agreed to by Oppenheimer Fund.

1.4 In order for the Quest Portfolio to comply with Section
852(a)(1) of the Code and to avoid having any investment company taxable
income or net capital gain (as defined in Section 852(b)(2) and 1222(11)
of the Code, respectively) in the short taxable year ending with its
dissolution, the Quest Portfolio will on or before the Closing Date (a)
declare a dividend in an amount large enough so that it will have declared
dividends of all of its investment company taxable income and net capital
gain, if any, for such taxable year (determined without regard to any
deduction for dividends paid) and (b) distribute such dividend.

1.5 Contemporaneously with the Closing, the Quest Portfolio will be
liquidated (except for the Cash Reserve) and the Quest Portfolio will
distribute or cause to be distributed the Oppenheimer Fund shares of each
class received by the Quest Portfolio pursuant to paragraph 1.1 pro rata
to the appropriate shareholders of record of each class determined as of
the close of business on the Valuation Date as defined in paragraph 2.1.
Upon such liquidation all issued and outstanding shares of the Quest
Portfolio will be cancelled on the Quest Portfolio's books and the Quest
Portfolio Shareholders will have no further rights as such Shareholders.
The Oppenheimer Fund will not issue certificates representing the shares
of the Oppenheimer Fund in connection with such exchange.

1.6 After the Closing, the Quest Portfolio shall not conduct any
business except in connection with the winding up of its affairs and shall
file, or make provision for filing of, all reports it is required by law
to file. After the Closing, Quest For Value may be dissolved and
deregistered as an investment company under the Investment Company Act of
1940, as amended (the "1940 Act"). Within one year after the Closing, the
Quest Portfolio shall (a) either pay or make provision for payment of all
of its liabilities and taxes, and (b) either (i) transfer any remaining
amount of the Cash Reserve to the Oppenheimer Fund, if such remaining
amount (as reduced by the estimated cost of distributing it to
shareholders) is not material (as defined below) or (ii) distribute such
remaining amount to the shareholders of the Quest Portfolio on the
Valuation Date. Such remaining amount shall be deemed to be material if
the amount to be distributed, after deduction of the estimated expenses
of the distribution, equals or exceeds one cent per share of the Quest
Portfolio outstanding on the Valuation Date.

1.7 Copies of all books and records of or pertaining to the Quest
Portfolio, including those in connection with its obligations under the
1940 Act, the Code, State blue sky laws or otherwise in connection with
this Agreement, will promptly after the Closing be delivered to officers
of the Oppenheimer Fund or their designee. Quest For Value and Quest
Advisors shall have access to such books and records upon reasonable
request during normal business hours.

2. THE CALCULATION

2.1 The value of the Quest Portfolio Assets shall be the value of
such assets computed as of the close of business of the New York Stock
Exchange on ___________, 1995, or at such time on such earlier or later
date as may be mutually agreed upon in writing (such time and date being
hereinafter called the "Valuation Date"), using the valuation procedures
set forth in the Oppenheimer Fund's then current prospectus and statement
of additional information.

2.2 The net asset value of each class of shares of the Oppenheimer
Fund shall be the net asset value per share computed on the Valuation
Date, using the valuation procedures set forth in the Oppenheimer Fund's
then current prospectus and statement of additional information.

2.3 The number of each class of Oppenheimer Fund shares (including
fractional shares, if any) to be issued hereunder shall be determined by
dividing the value of the Quest Portfolio Assets, net of the liabilities
assumed by the Oppenheimer Fund pursuant to paragraph 1.1 attributable to
that class, determined in accordance with paragraph 2.1, by the net asset
value of an Oppenheimer Fund share of a similar class determined in
accordance with paragraph 2.2.

2.4 All computations of value shall be made by Oppenheimer
Management Corporation in accordance with its regular practice in pricing
the Oppenheimer Fund. The Oppenheimer Fund shall cause Oppenheimer
Management Corporation to deliver to the Quest Portfolio a copy of its
valuation report at the Closing.

3. CLOSING AND CLOSING DATE

3.1 The Closing Date (the "Closing Date") shall be the next business
day following the Valuation Date. The Closing shall be held in a location
mutually agreeable to all the parties hereto. All acts taking place at the
Closing shall be deemed to take place simultaneously as of 9:00 a.m.
Eastern time on the Closing Date unless otherwise agreed by the parties.

3.2 Portfolio securities held by the Quest Portfolio and represented
by a certificate or written instrument shall be presented by it or on its
behalf to Citibank, N.A. (the "Custodian"), custodian for the Oppenheimer
Fund, for examination no later than five business days preceding the
Valuation Date. Such portfolio securities (together with any cash or
other assets) shall be delivered by the Quest Portfolio to the Custodian
for the account of the Oppenheimer Fund on or before the Closing Date in
conformity with applicable custody provisions under the 1940 Act and duly
endorsed in proper form for transfer in such condition as to constitute
good delivery thereof in accordance with the custom of brokers. The
portfolio securities shall be accompanied by all necessary federal and
state stock transfer stamps or a check of the appropriate purchase price
of such stamps. Portfolio securities and instruments deposited with a
securities depository, as defined in Rule 17f-4 under the 1940 Act, or
with a qualified foreign custodian under Rule 17f-5 of the 1940 Act shall
be delivered on or before the Closing Date by book entry in accordance
with customary practices of such depositories and the Custodian. The cash
delivered shall be in the form of a Federal Funds wire, payable to the
order of "Citibank, N.A.", Custodian for Oppenheimer Strategic Income
Fund.

3.3 In the event that on the Valuation Date (a) the New York Stock
Exchange shall be closed to trading or trading thereon shall be restricted
or (b) trading or the reporting of trading on such Exchange or elsewhere
shall be disrupted so that, in the judgment of both the Oppenheimer Fund
and the Quest Portfolio, accurate appraisal of the value of the net assets
of the Oppenheimer Fund or the Quest Portfolio Assets is impracticable,
the Valuation Date shall be postponed until the first business day after
the day when trading shall have been fully resumed without restriction or
disruption and reporting shall have been restored.

3.4 The Quest Portfolio shall deliver to the Oppenheimer Fund or its
designee (a) at the Closing a list, certified by its Secretary, of the
names, addresses and taxpayer identification numbers of the Quest
Portfolio Shareholders (as hereinafter defined) and the number of each
class of outstanding Quest Portfolio shares owned by each such
shareholder, all as of the Valuation Date (the "Quest Portfolio
Shareholders"), and (b) as soon as practicable after the Closing all
original documentation (including Internal Revenue Service forms,
certificates, certifications and correspondence) relating to the Quest
Portfolio Shareholders' taxpayer identification numbers and their
liability for or exemption from back-up withholding. The Oppenheimer Fund
shall issue and deliver to Quest Portfolio a confirmation evidencing
delivery of each class of Oppenheimer Fund shares to be credited on the
Closing Date to the Quest Portfolio or provide evidence reasonably
satisfactory to the Quest Portfolio that such Oppenheimer Fund shares have
been credited to Quest Portfolio's account on the books of the Oppenheimer
Fund. At the Closing each party shall deliver to the other such bills of
sale, assignments, assumption agreements, receipts or other documents as
such other party or its counsel may reasonably request to effect the
consummation of the transactions contemplated by the Agreement.

4. COVENANTS OF THE OPPENHEIMER FUND AND THE QUEST PORTFOLIO

4.1 The Oppenheimer Fund will operate its business in the ordinary
course between the date hereof and the Closing Date, it being understood
that such ordinary course of business will include customary dividends and
other distributions and such changes that have been approved by
shareholders of the Oppenheimer Fund at a shareholders meeting prior to
the Closing of which Quest Portfolio has been advised.

4.2 The Oppenheimer Fund will prepare and file with the Securities
and Exchange Commission ("Commission") a registration statement on Form
N-14 under the Securities Act of 1933, as amended ("1933 Act"), relating
to the Oppenheimer Fund shares to be issued to the Quest Portfolio
Shareholders pursuant to the Reorganization ("Registration Statement").
The Quest Portfolio will provide the Oppenheimer Fund with the Proxy
Materials as described in paragraph 4.3 below, for inclusion in the
Registration Statement. The Quest Portfolio will further provide the
Oppenheimer Fund with such other information and documents relating to the
Quest Portfolio as are reasonably necessary for the preparation of the
Registration Statement.

4.3 The Quest Portfolio will call a meeting of its shareholders to
consider and act upon the Reorganization, including this Agreement, and
take all other action necessary to obtain approval of the transactions
contemplated herein. The Quest Portfolio will prepare, with such
assistance from the Oppenheimer Fund as may be mutually agreed to, the
notice of meeting, form of proxy and proxy statement and prospectus
(collectively "Proxy Materials") to be used in connection with such
meeting provided that the Oppenheimer Fund will furnish the Quest
Portfolio with a current effective prospectus relating to the Oppenheimer
Fund shares for inclusion in the Proxy Materials and with such other
information relating to the Oppenheimer Fund as is reasonably necessary
for the preparation of the Proxy Materials.

4.4 Prior to the Closing Date, the Quest Portfolio will assist the
Oppenheimer Fund in obtaining such information as the Oppenheimer Fund
reasonably requests concerning the beneficial ownership of the shares of
the Quest Portfolio.

4.5 Subject to the provisions of this Agreement, the Oppenheimer
Fund and the Quest Portfolio will each take, or cause to be taken, all
action, and do or cause to be done, all things reasonably necessary,
proper or advisable to consummate and make effective the transactions
contemplated by this Agreement.

4.6 As promptly as practicable, but in any case within 60 days after
the Closing Date, the Quest Portfolio shall furnish or cause to be
furnished to the Oppenheimer Fund, such information as the Oppenheimer
Fund reasonably requests to enable the Oppenheimer Fund to determine the
Quest Portfolio's earnings and profits for federal income tax purposes
that will be carried over to the Oppenheimer Fund pursuant to Section 381
of the Code.

4.7 As soon after the Closing Date as is reasonably practicable,
Quest for Value shall prepare and file all federal and other tax returns
and reports of the Quest Portfolio required by law to be filed with
respect to all periods ending on or before the Closing Date but not
theretofore filed.

4.8 The Oppenheimer Fund agrees to use all reasonable efforts to
obtain the approvals and authorizations required by the 1933 Act, the 1940
Act and such of the state Blue Sky and securities laws as it may deem
appropriate in order to continue its operations after the Closing Date.

4.9 Until the third anniversary of the Closing Date, the Oppenheimer
Fund will use its best efforts to assure that at least 75% of the Trustees
of the Oppenheimer Fund will not be "interested persons" of the investment
adviser for the Oppenheimer Fund or Quest Advisors, as the term
"interested person" is defined by the 1940 Act.

5. REPRESENTATIONS AND WARRANTIES

5.1 Oppenheimer Trust, on behalf of the Oppenheimer Fund represents
and warrants to the Quest Portfolio as follows:

(a) The Oppenheimer Fund is a series of Oppenheimer Trust, an
unincorporated voluntary association validly existing and in good standing
under the laws of the Commonwealth of Massachusetts, and has the power and
authority to own its properties and to carry on its business as it is now
conducted;

(b) Oppenheimer Trust is a duly registered, open-end, management
investment company, and its registration with the Commission as an
investment company under the 1940 Act and the registration of its shares
under the 1933 Act are in full force and effect;

(c) All of the issued and outstanding shares of each class of the
Oppenheimer Fund have been offered and sold in compliance in all material
respects with applicable registration requirements of the 1933 Act and
state securities laws. Shares of each class of the Oppenheimer Fund are
registered in all jurisdictions in which they are required to be
registered under state securities laws and other laws, and said
registrations, including any periodic reports or supplemental filings, are
complete and current, all fees required to be paid have been paid, and the
Oppenheimer Fund is not subject to any stop order and is fully qualified
to sell its shares in each state in which its shares have been registered;

(d) The current prospectus and statement of additional information
of the Oppenheimer Fund conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the regulations
thereunder and do not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading;

(e) At the Closing Date, the Oppenheimer Fund will have title to the
Oppenheimer Fund's assets, subject to no liens, security interests or
other encumbrances except those incurred in the ordinary course of
business.

(f) The Oppenheimer Fund is not, and the execution, delivery and
performance of this Agreement will not result, in a material violation of
any provision of the Oppenheimer Trust's Declaration of Trust or By-Laws
or of any material agreement, indenture, instrument, contract, lease or
other undertakings to which the Oppenheimer Fund is a party or by which
it is bound;

(g) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently
pending or, to its knowledge, threatened against the Oppenheimer Fund or
any of its properties or assets, except as previously disclosed in writing
to the Quest Portfolio. The Oppenheimer Fund knows of no facts that might
form the basis for the institution of such proceedings and is not a party
to or subject to the provisions of any order, decree or judgment of any
court or governmental body which materially and adversely affects, or is
reasonably likely to materially and adversely affect, its business or its
ability to consummate the transactions contemplated herein;

(h) The Statement of Assets and Liabilities, Statement of Operations
and Statement of Changes in Net Assets as of September 30, 1994 of the
Oppenheimer Fund examined by Deloitte & Touche LLP (a copy of which has
been furnished to the Quest Portfolio), fairly present, in all material
respects, the financial condition of the Oppenheimer Fund as of such date
in conformity with generally accepted accounting principles consistently
applied, and as of such date there were no known liabilities of the
Oppenheimer Fund (contingent or otherwise) not disclosed therein that
would be required in conformity with generally accepted accounting
principles to be disclosed therein;

(i) All issued and outstanding Oppenheimer Fund shares of each class
are, and at the Closing Date will be, duly and validly issued and
outstanding, fully paid and non-assessable with no personal liability
attaching to the ownership thereof except as otherwise set forth in the
current statement of additional information for the Oppenheimer Fund under
"How the Fund is Managed - Organization and History;"

(j) Oppenheimer Trust has the power to enter into this Agreement and
carry out its obligations hereunder. The execution, delivery and
performance of this Agreement have been duly authorized by all necessary
corporate action on the part of Oppenheimer Trust, and this Agreement
constitutes a valid and binding obligation of the Oppenheimer Trust
enforceable in accordance with its terms, subject as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium and other laws relating
to or affecting creditors rights and to general equity principles;

(k) The Oppenheimer Fund shares of each class to be issued and
delivered to the Quest Portfolio, for the account of the Quest Portfolio
Shareholders, pursuant to the terms of this Agreement will at the Closing
Date have been duly authorized and, when so issued and delivered, will be
duly and validly issued Oppenheimer Fund shares, and will be fully paid
and non-assessable with no personal liability attaching to the ownership
thereof except as otherwise set forth in the current statement of
additional information for the Oppenheimer Fund under "How the Fund is
Managed - Organization and History," and no shareholder of Oppenheimer
Fund will have any preemptive right or right of subscription or purchase
in respect thereof;

(l) Since September 30, 1994, there has not been (i) any material
adverse change in the Oppenheimer Fund's financial condition, assets,
liabilities or business other than changes occurring in the ordinary
course of business, or that have been approved by shareholders of the
Oppenheimer Fund or (ii) any incurrence by the Oppenheimer Fund of any
indebtedness except indebtedness incurred in the ordinary course of
business. For the purposes of this subparagraph, neither a decline in net
asset value per share of any class of the Oppenheimer Fund nor the
redemption of Oppenheimer Fund shares by Oppenheimer Fund shareholders,
shall constitute a material adverse change;

(m) All material Federal and other tax returns and reports of the
Oppenheimer Fund required by law to have been filed, have been filed, and
all Federal and other taxes shown as due or required to be shown as due
on said returns and reports have been paid or provision has been made for
the payment thereof, and to the best of the Oppenheimer Fund's knowledge
no such return is currently under audit and no assessment has been
asserted with respect to such returns;

(n) For each taxable year of its operation, the Oppenheimer Fund has
met the requirements of Subchapter M of the Code for qualification and
treatment as a regulated investment company and neither the execution or
delivery of nor the performance of its obligations under this Agreement
will adversely affect, and no other events are reasonably likely to occur
which will adversely affect the ability of the Oppenheimer Fund to
continue to meet the requirements of Subchapter M of the Code;

(o) Since September 30, 1994, there has been no change by the
Oppenheimer Fund in accounting methods, principles, or practices,
including those required by generally accepted accounting principles,
except as disclosed in writing to the Quest Portfolio or as set forth in
the financial statements of the Oppenheimer Fund covering such period;

(p) The information furnished or to be furnished by the Oppenheimer
Fund for use in registration statements, proxy materials and other
documents which may be necessary in connection with the transactions
contemplated hereby shall be accurate and complete in all material
respects and shall comply in all material respects with Federal securities
and other laws and regulations applicable thereto; and

(q) The Proxy Statement and Prospectus to be included in the
Registration Statement (only insofar as it relates to the Oppenheimer
Fund) will, on the effective date of the Registration Statement and on the
Closing Date, not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
such statements were made, not materially misleading.

5.2 Quest for Value, on behalf of the Quest Portfolio, represents and
warrants to the Oppenheimer Fund as follows:

(a) The Quest Portfolio is a series of Quest For Value, a
corporation validly existing and in good standing under the laws of State
of Maryland;

(b) Quest For Value is a duly registered, open-end, management
investment company, its registration with the Commission as an investment
company under the 1940 Act is in full force and effect and its current
Prospectus and Statement of Additional Information conform in all material
respects to the requirements of the 1933 Act and the 1940 Act and the
regulations thereunder and do not include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;

(c) All of the issued and outstanding shares of each class of the
Quest Portfolio have been offered and sold in compliance in all material
respects with applicable registration requirements of the 1933 Act and
state securities laws. Shares of each class of the Quest Portfolio are
registered in all jurisdictions in which they are required to be
registered under state securities laws and other laws, and said
registrations, including any periodic reports or supplemental filings, are
complete and current, all fees required to be paid have been paid, and the
Quest Portfolio is not subject to any stop order and is fully qualified
to sell its shares in each state in which its shares have been registered;

(d) The Quest Portfolio is not, and the execution, delivery and
performance of this Agreement will not result, in a violation of (i) any
provision of Quest For Value's Declaration of Trust or By-Laws or (ii) of
any agreement, indenture, instrument, contract, lease or other undertaking
to which the Quest Portfolio is a party or by which it is bound (other
than any violations that individually or in the aggregate would not have
a material adverse effect on the Quest Portfolio);

(e) The Quest Portfolio has no material contracts or other
commitments (other than this Agreement) that will be terminated with
liability to it prior to or as of the Closing Date;

(f) Except as otherwise disclosed in writing to and acknowledged by
the Oppenheimer Fund prior to the date of this Agreement, no litigation,
administrative proceeding, investigation, examination or inquiry of or
before any court or governmental body is presently pending, or to its
knowledge, threatened relating to the Quest Portfolio or any of its
properties or assets which, if adversely determined, would materially and
adversely affect its financial condition or the conduct of its business.
The Quest Portfolio knows of no facts that might form the basis for the
institution of such proceedings and is not a party to or subject to the
provisions of any order, decree or judgment of any court or governmental
body that materially and adversely affects, or is likely to materially and
adversely affect, its business or its ability to consummate the
transactions herein contemplated;

(g) The Statements of Assets and Liabilities, Statements of
Operations and Statements of Changes in Net Assets of the Quest Portfolio
as of November 31, 1994, and May 31, 1995 examined by Price Waterhouse LLP
(copies of which have been furnished to the Oppenheimer Fund) fairly
present, in all material respects, the Quest Portfolio's financial
condition as of such dates, its results of operations for such periods and
changes in its net assets for such periods in conformity with generally
accepted accounting principles, and as of such dates there were no known
liabilities of the Quest Portfolio (contingent or otherwise) not disclosed
therein that would be required in conformity with generally accepted
accounting principles to be disclosed therein. All liabilities
(contingent and otherwise) as of the Closing Date known to the Quest
Portfolio will be set forth on the unaudited Statement of Assets and
Liabilities referred to in paragraph 1.3.

(h) Since the date of the most recent audited financial statements,
there has not been any material adverse change in the Quest Portfolio's
financial condition, assets, liabilities or business, other than changes
occurring in the ordinary course of business, or any incurrence by the
Quest Portfolio of indebtedness maturing more than one year from the date
such indebtedness was incurred, except as otherwise disclosed in writing
to and acknowledged by the Oppenheimer Fund prior to the date of this
Agreement and prior to the Closing Date. All liabilities of the Quest
Portfolio (contingent and otherwise) are reflected in the unaudited
statement described in paragraph 1.3 above. For the purpose of this
subparagraph (h), neither a decline in the Quest Portfolio's net asset
value per share nor a decrease in the Quest Portfolio's size due to
redemptions by Quest Portfolio shareholders shall constitute a material
adverse change;

(i) At the Closing Date, all federal and other tax returns and
reports of the Quest Portfolio required by law to be filed on or before
the Closing Date shall have been filed, there are no claims, levies,
liabilities or amounts due for corporate, excise, income or other federal,
state or local taxes outstanding or threatened against Quest Portfolio
(other than those reflected on its most recent financial statements) and
to the best of Quest For Value's knowledge there are no facts that might
form the basis for such proceedings, no such return is currently under
audit and no assessment has been asserted with respect to any such return;

(j) For each taxable year since its inception, the Quest Portfolio
has met all the requirements of Subchapter M of the Code for qualification
and treatment as a "regulated investment company" as defined therein and
will be in compliance with said requirements at and as of the Closing
Date;

(k) All issued and outstanding shares of each class of the Quest
Portfolio are, and at the Closing Date will be, duly and validly issued
and outstanding, fully paid and non-assessable with no personal liability
attaching to the ownership thereof. All such shares of each class will,
at the time of Closing, be held by the persons and in the amounts set
forth in the list of shareholders submitted to the Oppenheimer Fund
pursuant to paragraph 3.4. The Quest Portfolio does not have outstanding
any options, warrants or other rights to subscribe for or purchase any of
its shares of any class, nor is there outstanding any security convertible
into any of its shares of any class except for class B shares of the Quest
Portfolio which convert into class A shares of the Quest Portfolio as
described in the current prospectus of the Quest Portfolio.

(l) At the Closing Date, the Quest Portfolio will have title to the
Quest Portfolio Assets, subject to no liens, security interests or other
encumbrances, and full right, power and authority to assign, deliver and
otherwise transfer the Quest Portfolio Assets hereunder, and upon delivery
and payment for the Quest Portfolio Assets, the Oppenheimer Fund will
acquire title thereto, subject to no restrictions on the full transfer
thereof, including such restrictions as might arise under the 1933 Act;

(m) Quest For Value has the power to enter into this Agreement and
carry out its obligations hereunder. The execution, delivery and
performance of this Agreement will have been duly authorized prior to the
Closing Date by all necessary action on the part of Quest For Value, and
subject to the approval of Quest Portfolio's shareholders, this Agreement
constitutes a valid and binding obligation of Quest For Value, enforceable
in accordance with its terms, subject as to enforcement, to bankruptcy,
insolvency, reorganization, moratorium and other laws relating to or
affecting creditors rights and to general equity principles. No other
consents, authorizations or approvals are necessary in connection with the
performance of this Agreement.

(n) On the effective date of the Registration Statement, at the time
of the meeting of Quest Portfolio's shareholders and on the Closing Date,
the Proxy Materials (exclusive of the currently effective Oppenheimer Fund
prospectus and statement of additional information incorporated therein)
will (i) comply in all material respects with the provisions of the 1933
Act, the Securities Exchange Act of 1934 ("1934 Act") and the 1940 Act and
the regulations thereunder and (ii) not contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statement therein, in light of the
circumstances under which such statements were made, not misleading. Any
other information furnished or to be furnished by Quest Portfolio for use
in the Registration Statement or in any other manner that may be necessary
in connection with the transactions contemplated hereby shall be accurate
and complete and shall comply in all material respects with applicable
federal securities and other laws and all regulations thereunder;

(o) Quest Portfolio will, on or prior to the Closing Date, declare
one or more dividends or other distributions to shareholders that,
together with all previous dividends and other distributions to
shareholders, shall have the effect of distributing to the shareholders
all of its investment company taxable income and net capital gain, if any,
through the Closing Date (computed without regard to any deduction for
dividends paid);

(p) Quest Portfolio has maintained or has caused to be maintained
on its behalf all books and accounts as required of a registered
investment company in compliance with the requirements of Section 31 of
the 1940 Act and the Rules thereunder;

(q) Quest Portfolio is not acquiring Oppenheimer Fund shares to be
issued hereunder for the purpose of making any distribution thereof other
than in accordance with the terms of this Agreement;

(r) As of the Closing Date no violation of applicable federal, state
and local statute, law or regulation, exists that individually, or in the
aggregate, would have a material adverse effect on the business or
operations of Quest Portfolio;

(s) As of the Closing Date the Quest Portfolio is in compliance with
its investment objective(s), policies and restrictions as described in its
current prospectus and statement of additional information;

(t) There are no unresolved or outstanding shareholder claims or
complaints related to Quest Portfolio and there will be no such claims or
complaints as of the Closing Date other than as disclosed by Quest
Advisors in writing to Oppenheimer Fund prior to the Closing Date;

(u) Except as previously disclosed to Oppenheimer Fund in writing,
and except as have been fully corrected, there have been no
miscalculations of the net asset value of Quest Portfolio during the
twelve-month period preceding the Closing Date and all such calculations
have been done in accordance with the provisions of Rule 2a-4 under the
1940 Act.

5.3 Quest Advisors represents and warrants to the Oppenheimer Fund
as follows:

(a) To the best knowledge of Quest Advisors after due inquiry, as
of the Closing Date no violation of applicable federal, state and local
statute, law or regulation, exists that individually, or in the aggregate,
would have a material adverse effect on the business or operations of
Quest Portfolio.

(b) To the best knowledge of Quest Advisors after due inquiry,
assuming fulfillment of the conditions precedent to the consummation of
the Reorganization, Quest Portfolio has the right, power, legal capacity
and authority to enter into the Reorganization contemplated by this
Agreement.

(c) To the best knowledge of Quest Advisors after due inquiry, as
of the Closing Date Quest Portfolio is in compliance with its investment
objective(s), policies and restrictions as described in its current
prospectus and statement of additional information.

(d) To the best knowledge of Quest Advisors after due inquiry, as
of the Closing Date there are no outstanding breaches by Quest Portfolio
of any agreement, indenture, instrument, contract, lease or other
undertaking to which it is a party, or by which it is bound (other than
any breaches that individually or in the aggregate would not have a
material adverse effect on the Quest Portfolio).

(e) To the best knowledge of Quest Advisors upon due inquiry, there
are no unresolved or outstanding shareholder claims or inquiries related
to Quest Portfolio and there will be no such claims or inquiries as of
the Closing Date other than as disclosed by Quest Advisors in writing to
Oppenheimer Fund prior to the Closing Date.

(f) Quest Advisors is not aware of any threatened or pending
litigation, administrative proceeding, investigation, examination or
inquiry of or before any court or governmental body relating to the Quest
Portfolio or any of its properties or assets which, if adversely
determined, would materially and adversely affect the Quest Portfolio's
business or its ability to consummate the transactions herein
contemplated.

(g) Quest Advisors is not aware of any outstanding or threatened
private claims or litigation relating to Quest Portfolio. Quest Advisors
knows of no facts that might form the basis for such proceedings.

(h) Except as previously disclosed to Oppenheimer Fund in writing,
and except as have been fully corrected, there have been no
miscalculations of the net asset value of Quest Portfolio during the
twelve-month period preceding the Closing Date and all such calculations
have been done in accordance with the provisions of Rule 2a-4 under the
1940 Act.

(i) There are no claims, levies or liabilities for corporate,
excise, income or other federal, state or local taxes outstanding or
threatened against Quest Portfolio, other than those reflected in its most
recent audited financial statements. Quest Advisors knows of no facts
that might form the basis for such proceedings.

(j) To the best knowledge of Quest Advisors after due inquiry, there
have been no material adverse changes in Quest Portfolio's financial
condition, assets, liabilities or business, other than those reflected in
its most recent audited financial statements and all liabilities of Quest
Portfolio (contingent and otherwise) known to Quest Advisors have been
reported in writing to and accepted by Oppenheimer Fund prior to the
Closing Date. A reduction in net assets due to shareowner redemptions
will not be deemed to be a material adverse change.

6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE QUEST PORTFOLIO

The obligations of Quest Portfolio to consummate the transactions
provided for herein shall be subject, at its election, to the performance
by Oppenheimer Fund of all the obligations to be performed by it hereunder
on or before the Closing Date and, in addition thereto, the following
conditions:

6.1 All representations and warranties of Oppenheimer Trust, on
behalf of Oppenheimer Fund, contained in this Agreement shall be true and
correct in all material respects as of the date hereof and, except as they
may be affected by the transactions contemplated by this Agreement, as of
the Closing Date with the same force and effect as if made on and as of
the Closing Date.

6.2 Oppenheimer Fund shall have delivered to Quest Portfolio a
certificate executed in Oppenheimer Fund's name by Oppenheimer Fund's
President, Vice President or Secretary and, Treasurer or Assistant
Treasurer, in a form reasonably satisfactory to Quest Portfolio and dated
as of the Closing Date, to the effect that the representations and
warranties of Oppenheimer Trust, on behalf of Oppenheimer Fund made in
this Agreement are true and correct at and as of the Closing Date, except
as they may be affected by the transactions contemplated by this
Agreement, and as to such other matters as Quest Portfolio shall
reasonably request;

6.3 Quest Portfolio shall have received a favorable opinion from
Myer, Swanson, Adams & Wolf, P.C., counsel to the Oppenheimer Fund, dated
as of the Closing Date, in a form reasonably satisfactory to Gordon Altman
Butowsky Weitzen Shalov & Wein, counsel to Quest Portfolio, covering the
following points:

That (a) Oppenheimer Fund is a series of Oppenheimer Trust, an
unincorporated voluntary association duly organized, validly existing
and in good standing under the laws of the Commonwealth of
Massachusetts, and has the power to own all of its properties and
assets and to carry on its business as presently conducted
(Massachusetts counsel may be relied upon in delivering such
opinion); (b) Oppenheimer Trust is a duly registered, open-end,
management investment company and its registration with the
Commission as an investment company under the 1940 Act is in full
force and effect; (c) this Agreement has been duly authorized,
executed and delivered by the Oppenheimer Trust, on behalf of
Oppenheimer Fund, and assuming due authorization, execution and
delivery of this Agreement by Quest Portfolio, is a valid and binding
obligation of Oppenheimer Trust enforceable against Oppenheimer Trust
in accordance with its terms, subject as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium and other laws
relating to or affecting creditors rights and to general equity
principles; (d) Oppenheimer Fund shares to be issued to Quest
Portfolio shareholders as provided by this Agreement are duly
authorized and upon delivery of such shares to Quest Portfolio will
be validly issued and outstanding and fully paid and non-assessable
(except as otherwise set forth in the current statement of additional
information for the Oppenheimer Fund under "How the Fund is Managed -
Organization and History") and no shareholder of Oppenheimer Fund
has any preemptive rights to subscription or purchase in respect
thereof (Massachusetts counsel may be relied upon in delivering such
opinion); (e) the execution and delivery of this Agreement did not,
and the consummation of the transactions contemplated hereby will
not, violate Oppenheimer Trust's Declaration of Trust and By-Laws or
any provision of any material agreement (known to such counsel) to
which Oppenheimer Fund is a party or by which it is bound or, to the
knowledge of such counsel, result in the acceleration of any material
obligation or the imposition of any material penalty under any
agreement, judgment or decree to which Oppenheimer Fund is a party
or by which it is bound; (f) to the knowledge of such counsel, no
consent, approval, authorization or order of any court or
governmental authority of the United States or any state is required
for the consummation by Oppenheimer Fund of the transactions
contemplated herein, except such as have been obtained under the 1933
Act , the 1934 Act and the 1940 Act and such as may be required under
state securities laws; (g) only insofar as they relate to Oppenheimer
Fund, the descriptions in the Proxy Materials of statutes, legal and
governmental proceedings and contracts and other documents, if any,
are accurate and fairly present the information required to be shown;
(h) such counsel does not know of any legal or governmental
proceedings, only insofar as they relate to Oppenheimer Fund,
existing on or before the date of mailing of the Proxy Materials or
the Closing Date that are required to be described in the
Registration Statement or in any documents that are required to be
filed as exhibits to the Registration Statement that are not
described as required; and (i) to the best knowledge of such counsel,
no material litigation or administrative proceedings or investigation
of or before any court or governmental body is presently pending or
overtly threatened as to Oppenheimer Fund or any of its properties
or assets and Oppenheimer Fund is not a party to or subject to the
provisions of any order, decree or judgment of any court or
governmental body that materially and adversely affects its business,
other than as previously disclosed in the Registration Statement.

6.4 All proceedings taken by Oppenheimer Trust and Oppenheimer Fund
in connection with the transactions contemplated by this Agreement and all
documents incidental thereto shall be satisfactory in form and substance
to Quest Portfolio and its counsel, Gordon Altman Butowsky Weitzen Shalov
& Wein.

6.5 As of the Closing Date, there shall be no material change in the
investment objective, policies and restrictions nor any increase in the
investment management fees, fees payable pursuant to Oppenheimer Fund's
12b-1 plans of distribution or sales loads of Oppenheimer Fund from those
described in the Prospectus and Statement of Additional Information of
Oppenheimer Fund dated May 30, 1995 as supplemented July 14, 1995, except
as may have been approved by shareholders of the Oppenheimer Fund.

6.6 The Cash Reserve shall not exceed 10% of the value of the net
assets, nor 30% in value of the gross assets, of the Quest Portfolio at
the close of business on the Valuation Date.

7. CONDITIONS PRECEDENT TO OBLIGATIONS OF OPPENHEIMER FUND

The obligations of Oppenheimer Fund to complete the transactions
provided for herein shall be subject, at its election, to the performance
by Quest Portfolio of all the obligations to be performed by it hereunder
on or before the Closing Date and, in addition thereto, the following
conditions:

7.1 All representations and warranties of Quest For Value, on behalf
of Quest Portfolio, and Quest Advisors contained in this Agreement shall
be true and correct in all material respects as of the date hereof and,
except as they may be affected by the transactions contemplated by this
Agreement, as of the Closing Date with the same force and effect as if
made on and as of the Closing Date;

7.2 Quest Portfolio shall have delivered to Oppenheimer Fund a
statement of Quest Portfolio Assets and its liabilities, together with a
list of Quest Portfolio's securities and other assets showing the
respective adjusted bases and holding periods thereof for income tax
purposes, as of the Closing Date, certified by the Treasurer of Quest
Portfolio;

7.3 Quest Portfolio shall have delivered to Oppenheimer Fund at the
Closing a letter from Price Waterhouse LLP dated the Closing Date stating
that (a) such firm has performed a limited review of the federal and state
income tax returns of Quest Portfolio for each of the last three taxable
years and, based on such limited review, nothing came to their attention
that caused them to believe that such returns did not properly reflect,
in all material aspects, the federal and state income tax liabilities of
Quest Portfolio for the periods covered thereby, (b) for the period
___________, 199__ to and including the Closing Date, such firm has
performed a limited review (based on unaudited financial data) to
ascertain the amount of applicable federal, state and local taxes and has
determined that same either have been paid or reserves have been
established for payment of such taxes, and, based on such limited review,
nothing came to their attention that caused them to believe that the taxes
paid or reserves set aside for payment of such taxes were not adequate in
all material respects for the satisfaction of all federal, state and local
tax liabilities for the period from ___________, 199___ to and including
the Closing Date and (c) based on such limited reviews, nothing came to
their attention that caused them to believe that Quest Portfolio would not
qualify as a regulated investment company for federal income tax purposes
for any such year or period;

7.4 Quest Portfolio shall have delivered to Oppenheimer Fund at the
Closing a certificate executed in Quest For Value's name by the President,
Vice President or Secretary and the Treasurer or Assistant Treasurer of
Quest For Value, in form and substance satisfactory to Oppenheimer Fund
and dated as of the Closing Date, to the effect that the representations
and warranties of Quest for Value, on behalf of Quest Portfolio, made in
this Agreement are true and correct at and as of the Closing Date, except
as they may be affected by the transactions contemplated by this
Agreement, and as to such other matters as Oppenheimer Fund shall
reasonably request. Such a certificate shall also be delivered to
Oppenheimer Fund as executed by Quest Advisors with respect to its
representations and warranties made in paragraph 5.3.

7.5 Oppenheimer Fund shall have received at the Closing a favorable
opinion dated as of the Closing Date of Gordon Altman Butowsky Weitzen
Shalov & Wein, counsel to Quest For Value, in a form satisfactory to Myer,
Swanson, Adams & Wolf, P.C., counsel to Oppenheimer Fund covering the
following points:

That (a) Quest Portfolio is a series of Quest For Value, a
corporation duly organized, validly existing and in good standing
under the laws of the State of Maryland and has the power to own all
of its properties and assets and to carry on its business as
presently conducted (Maryland counsel may be relied upon in
delivering such opinion); (b) Quest For Value is registered as an
investment company under the 1940 Act, and its registration with the
Commission as an investment company under the 1940 Act is in full
force and effect; (c) this Agreement has been duly authorized,
executed and delivered by Quest For Value on behalf of Quest
Portfolio and, assuming due authorization, execution and delivery of
this Agreement by Oppenheimer Fund, is a valid and binding obligation
of Quest For Value enforceable against Quest For Value in accordance
with its terms, subject as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting
creditors rights and to general equity principles; (d) the execution
and delivery of this Agreement did not, and the consummation of the
transactions contemplated hereby will not, violate Quest For Value's
Declaration of Trust or By-Laws or any provision of any material
agreement (known to such counsel) to which Quest For Value is a party
or by which it is bound or, to the knowledge of such counsel, result
in the acceleration of any material obligation or the imposition of
any material penalty under any agreement, judgment or decree to which
Quest For Value is a party or by which it is bound; (e) to the
knowledge of such counsel, no consent, approval, authorization or
order of any court or governmental authority of the United States or
any state is required for the consummation by Quest For Value of the
transactions contemplated herein, except such as have been obtained
under the 1933 Act, the 1934 Act and the 1940 Act and such as may be
required under state securities laws; (f) only insofar as they relate
to Quest For Value, the descriptions in the Proxy Materials of
statutes, legal and governmental proceedings and contracts and other
documents, if any, are accurate and fairly present the information
required to be shown; (g) such counsel does not know of any legal or
governmental proceedings, only insofar as they relate to Quest For
Value, existing on or before the date of mailing the Proxy Materials
or the Closing Date that are required to be described in the
Registration Statement or in any documents that are required to be
filed as exhibits to the Registration Statement that are not
described as required; and (h) to the best knowledge of such counsel,
no material litigation or administrative proceedings or investigation
of or before any court or governmental body is presently pending or
overtly threatened as to Quest For Value or any of its properties or
assets and Quest Portfolio is not a party to or subject to the
provisions of any order, decree or judgment of any court or
governmental body that materially and adversely affects its business,
other than as previously disclosed in the Registration Statement.

7.6 Between the date hereof and the Closing Date, Quest For Value
shall provide Oppenheimer Fund and its representatives reasonable access
during regular business hours and upon reasonable notice to the books and
records of or relating to Quest Portfolio, including without limitation
the books and records of Quest For Value, as Oppenheimer Fund may
reasonably request. All such information obtained by Oppenheimer Fund
and its representatives shall be held in confidence and may not be used
for any purpose other than in connection with the transaction contemplated
hereby. In the event that the transaction contemplated by this Agreement
is not consummated, Oppenheimer Fund and its representatives will
promptly return to Quest For Value all documents and copies thereof with
respect to Quest Portfolio obtained from Quest For Value during the course
of such investigation.

7.7 Quest For Value, on behalf of Quest Portfolio shall have
delivered to Oppenheimer Fund, pursuant to paragraph 5.2(g), copies of the
most recent financial statements of Quest Portfolio certified by Price
Waterhouse LLP.

7.8 On the Closing Date, the Quest Portfolio Assets shall include
no assets that Oppenheimer Fund, by reason of charter limitations or
otherwise, may not properly acquire.

7.9 All proceedings taken by Quest For Value and Quest Portfolio in
connection with the transactions contemplated by the Agreement and all
documents incidental thereto shall be reasonably satisfactory in form and
substance to Oppenheimer Fund and its counsel, Myer, Swanson, Adams &
Wolf, P.C.

7.10 The stated liabilities, expenses, costs, charges and reserves
reflected on the unaudited Statement of Assets and Liabilities of the
Quest Portfolio referred to in paragraph 1.3 shall have been agreed to by
the Oppenheimer Fund.

7.11 The Registration Statement, including the Proxy Materials filed
as a part thereof, shall have been approved by the Board of Trustees of
the Oppenheimer Fund.

7.12 The Cash Reserve shall not exceed 10% of the value of the net
assets, nor 30% in value of the gross assets, of the Quest Portfolio at
the close of business on the Valuation Date.

8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF OPPENHEIMER FUND AND
QUEST PORTFOLIO

The obligations of Quest Portfolio and Oppenheimer Fund hereunder are
each subject to the further conditions that on or before the Closing Date:

8.1 This Agreement and the transactions contemplated herein shall
have been approved by the requisite vote of the holders of the outstanding
shares of Quest Portfolio and certified copies of the resolutions
evidencing such approval shall have been delivered to Oppenheimer Fund;

8.2 On the Closing Date, no action, suit or other proceeding shall
be pending before any court or governmental agency in which it is sought
to restrain or prohibit, or obtain damages or other relief in connection
with, this Agreement or the transactions contemplated herein;

8.3 All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities (including
those of the Commission and of state Blue Sky and securities authorities,
including "no-action" positions or any exemptive orders from such federal
and state authorities) deemed necessary by Oppenheimer Fund or Quest For
Value on behalf of Quest Portfolio to permit consummation, in all material
respects, of the transactions contemplated herein shall have been
obtained, except where failure to obtain any such consent, order or permit
would not involve risk of a material adverse effect on the assets or
properties of Oppenheimer Fund or Quest Portfolio.

8.4 The Registration Statement on Form N-14 shall have become
effective under the 1933 Act, no stop orders suspending the effectiveness
thereof shall have been issued and, to the best knowledge of the parties
hereto, no investigation or proceeding for that purpose shall have been
instituted or be pending, threatened or contemplated under the 1933 Act;

8.5 Quest Portfolio shall have declared and paid a dividend or
dividends and/or other distributions that, together with all previous such
dividends or distributions, shall have the effect of distributing to the
Quest Portfolio Shareholders all of Quest Portfolio's investment company
taxable income (computed without regard to any deduction for dividends
paid) and all of its net capital gain (after reduction for any capital
loss carry-forward and computed without regard to any deduction for
dividends paid) for all taxable years ending on or before the Closing
Date; and

8.6 The parties shall have received a favorable opinion from Price
Waterhouse LLP (based on such representations as such firm shall
reasonably request), addressed to Oppenheimer Fund and Quest Portfolio,
which opinion may be relied upon by the shareholders of Oppenheimer Fund
and Quest Portfolio, substantially to the effect that, for federal income
tax purposes:

(a) The transfer of substantially all of Quest Portfolio's assets
in exchange for Oppenheimer Fund Shares and the assumption by
Oppenheimer Fund of certain identified liabilities of Quest Portfolio
followed by the distribution by Quest Portfolio of Oppenheimer Fund
Shares to the Quest Portfolio Shareholders in exchange for their
Quest Portfolio shares will constitute a "reorganization" within the
meaning of Section 368(a)(1) of the Code and Quest Portfolio and
Oppenheimer Fund will each be a "party to the reorganization" within
the meaning of Section 368(b) of the Code;

(b) No gain or loss will be recognized by Oppenheimer Fund upon the
receipt of the assets of Quest Portfolio solely in exchange for
Oppenheimer Fund Shares and the assumption by Oppenheimer Fund of the
identified liabilities of Quest Portfolio;

(c) No gain or loss will be recognized by Quest Portfolio or Quest
For Value upon the transfer of the assets of Quest Portfolio to
Oppenheimer Fund in exchange for Oppenheimer Fund Shares and the
assumption by Oppenheimer Fund of the identified liabilities or upon
the distribution of Oppenheimer Fund Shares to the Quest Portfolio
Shareholders in exchange for the Quest Portfolio shares;

(d) No gain or loss will be recognized by the Quest Portfolio
Shareholders upon the exchange of the Quest Portfolio shares for the
Oppenheimer Fund Shares;

(e) The aggregate tax basis for Oppenheimer Fund Shares received by
each Quest Portfolio Shareholder pursuant to the reorganization will
be the same as the aggregate tax basis of the Quest Portfolio Shares
held by each such Quest Portfolio Shareholder immediately prior to
the reorganization;

(f) The holding period of Oppenheimer Fund Shares to be received by
each Quest Portfolio Shareholder will include the period during which
the Quest Portfolio Shares surrendered in exchange therefor were held
(provided such Quest Portfolio Shares were held as capital assets on
the date of the Reorganization);

(g) The tax basis of the assets of Quest Portfolio acquired by
Oppenheimer Fund will be the same as the tax basis of such assets to
Quest Portfolio immediately prior to the Reorganization; and

(h) The holding period of the assets of Quest Portfolio in the hands
of Oppenheimer Fund will include the period during which those
assets were held by Quest Portfolio.

Notwithstanding anything herein to the contrary, neither Oppenheimer Fund
nor Quest Portfolio may waive the material conditions set forth in this
paragraph 8.6 although the actual wording of such opinion may differ to
the extent agreed to by Oppenheimer Fund and Quest Portfolio.

9. BROKERAGE FEES AND EXPENSES

9.1 Oppenheimer Fund and Quest For Value on behalf of Quest
Portfolio each represents and warrants to the other that there are no
brokers or finders entitled to receive any payments in connection with the
transactions provided for herein.

9.2 (a) Oppenheimer Fund shall bear its expenses incurred in
connection with entering into and carrying out the provisions of this
Agreement, including legal, accounting and Commission registration fees
and Blue Sky expenses. Quest Advisors (or a party other than Oppenheimer
Fund) shall bear Quest Portfolio's expenses incurred in connection with
entering into and carrying out the provisions of this Agreement, including
legal and accounting fees, printing, filing and proxy solicitation
expenses and portfolio transfer taxes (if any) incurred in connection with
the consummation of the transactions contemplated herein.

(b) In the event the transactions contemplated herein are not
consummated by reason of Quest Portfolio's being either unwilling or
unable to go forward (other than by reason of the nonfulfillment or
failure of any condition to Quest Portfolio's obligations specified in
this Agreement), Quest Advisor's (or a party other than Oppenheimer Fund)
only obligation hereunder shall be to reimburse Oppenheimer Fund for all
reasonable out-of-pocket fees and expenses incurred by Oppenheimer Fund
in connection with those transactions, including legal, accounting and
filing fees.

(c) In the event the transactions contemplated herein are not
consummated by reason of Oppenheimer Fund's being either unwilling or
unable to go forward (other than by reason of the nonfulfillment or
failure of any condition to Oppenheimer Fund's obligations specified in
the Agreement), Oppenheimer Fund's only obligations hereunder shall be to
reimburse Quest Portfolio for all reasonable out-of-pocket fees and
expenses incurred by Quest Portfolio in connection with those
transactions, including legal, accounting and filing fees, and to comply
with the provisions of paragraph 7.6 hereof.

10. ENTIRE AGREEMENT: SURVIVAL OF WARRANTIES

10.1 Oppenheimer Trust, on behalf of Oppenheimer Fund, Quest For
Value, on behalf of Quest Portfolio and Quest Advisors agree that no party
has made any representation, warranty or covenant not set forth herein and
that this Agreement constitutes the entire agreement between the parties.

10.2 The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection
herewith shall survive the consummation of the transactions contemplated
herein.

11. TERMINATION

11.1 This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Closing:

(a) by the mutual written consent of Quest For Value, on behalf of
Quest Portfolio, and Oppenheimer Trust, on behalf of Oppenheimer Fund;

(b) by either Oppenheimer Trust, on behalf of Oppenheimer Fund or
Quest For Value, on behalf of Quest Portfolio, by notice to the other,
without liability to the terminating party on account of such termination
(providing the termination party is not otherwise in default or in breach
of this Agreement) if the Closing shall not have occurred on or before
February 29, 1996, or if later, two business days after the date of any
Quest Portfolio shareowner's meeting called for the purpose of approving
the Agreement which was convened prior to ___________, 199___ but
adjourned to a date after ____________ 199___; or

(c) by either Oppenheimer Trust, on behalf of Oppenheimer Fund or
Quest For Value, on behalf of Quest Portfolio, in writing without
liability to the terminating party on account of such termination
(provided the terminating party is not otherwise in material default or
breach of the Agreement), if (i) the other party shall fail to perform in
any material respect its agreements contained herein required to be
performed on or prior to the Closing Date, (ii) Quest Advisors, Quest For
Value or the Quest Portfolio, or Oppenheimer Trust or the Oppenheimer
Fund, respectively, materially breaches or shall have breached any of its
representations, warranties or covenants contained herein, (iii) the Quest
Portfolio Shareholders fail to approve the Agreement, (iv) any other
condition herein expressed to be precedent to the obligations of the
terminating party has not been met and it reasonably appears that it will
not or cannot be met or (v) the acquisition contemplated by that certain
Acquisition Agreement (the "Acquisition Agreement") dated August 17, 1995
between Oppenheimer Management Corporation, Quest Advisors, Quest for
Value Distributors and Oppenheimer Capital is not consummated.

11.2 (a) Termination of this Agreement pursuant to paragraphs
11.1(a) or (b) shall terminate all obligations of the parties hereunder
(other than Oppenheimer Fund's obligations under paragraph 7.6) and there
shall be no liability for damages on the part of Oppenheimer Trust, the
Oppenheimer Fund, Quest Portfolio or Quest Advisors or the trustees,
directors or officers of Oppenheimer Trust, Quest Portfolio or Quest
Advisors, to any other party or its trustees, directors or officers.

(b) Termination of this Agreement pursuant to paragraph 11.1(c)
shall terminate all obligations of the parties hereunder (other than
Oppenheimer Fund's obligations under paragraph 7.6) and there shall be no
liability for damages on the part of Oppenheimer Fund, Quest Portfolio or
Quest Advisors or the trustees, directors or officers of Oppenheimer
Trust, Quest Portfolio or Quest Advisors, to any other party or its
trustees, directors or officers, except that any party in breach of this
Agreement (or, as to a termination pursuant to paragraph 11.1(c)(v), in
breach of the Acquisition Agreement) shall, upon demand, reimburse the
non-breaching party or parties for all reasonable out-of-pocket fees and
expenses incurred in connection with the transactions contemplated by this
Agreement, including legal, accounting and filing fees. For the purposes
of this paragraph 11.2(b), the non-fulfillment of the condition set forth
in paragraph 8.1 shall not be deemed a breach entitling a party to
reimbursement of expenses and fees.

12. AMENDMENTS

This Agreement may be amended, modified or supplemented in such
manner as may be mutually agreed upon in writing by the authorized
officers of Quest For Value, Oppenheimer Trust and Quest Advisors;
provided, however, that following the meeting of Quest Portfolio's
shareholders called by Quest Portfolio pursuant to paragraph 4,2, no such
amendment may have the effect of changing the provisions for determining
the number of Oppenheimer Fund Shares to be issued to the Quest Portfolio
Shareholders under this Agreement to the detriment of such Shareholders
without their further approval.

13. INDEMNIFICATION

13.1 Oppenheimer Trust will indemnify and hold harmless, Quest For
Value, Quest Advisors, their trustees, directors, officers and
shareholders against any and all claims to the extent such claims are
based upon, arise out of or relate to any untruthful or inaccurate
representations made by Oppenheimer Trust on behalf of Oppenheimer Fund
in this Agreement or any breach by Oppenheimer Fund of any warranty or any
failure to perform or comply with any of its obligations, covenants,
conditions or agreements set forth in this Agreement, including those set
forth in paragraph 1.3.

13.2 Quest Advisors will indemnify and hold harmless Quest For Value,
Oppenheimer Trust and Oppenheimer Fund's trustees, officers and
shareholders against any and all claims to the extent such claims are
based upon, arise out of or relate to any untruthful or inaccurate
representation made by Quest For Value on behalf of Quest Portfolio or
Quest Advisors in this Agreement or any breach by Quest Portfolio or Quest
Advisors of any warranty or any failure by Quest Portfolio to perform or
comply with any of its obligations, covenants, conditions or agreements
set forth in this Agreement.

13.3 As used in this section 13, the word "claim" means any and all
liabilities, obligations, losses, damages, deficiencies, demands, claims,
penalties, assessments, judgments, actions, proceedings and suits of
whatever kind and nature and all costs and expenses (including, without
limitation, reasonable attorneys' fees).

13.4 Promptly after the receipt by any party (the "Indemnified
Party"), of notice of any claim by a third party which may give rise to
indemnification hereunder, the Indemnified Party shall notify the party
against whom a claim for indemnification may be made hereunder (the
"Indemnifying Party"), in reasonable detail of the nature and amount of
the claim. The Indemnifying Party shall be entitled to assume, at its
sole cost and expense (unless it is subsequently determined that the
Indemnifying Party did not have the obligation to indemnify the
Indemnified Party under such circumstances), and shall have sole control
of the defense and settlement of such action or claim; provided, however,
that:

(a) the Indemnified Party shall be entitled to participate in the
defense of such claim and, in connection therewith, to employ counsel at
its own expense; and

(b) without the prior written consent of the Indemnified Party which
shall not be unreasonably withheld, the Indemnifying Party shall not
consent to the entry of any judgment or enter into any settlement that
requires any action other than the payment of money.

In the event the Indemnifying Party elects to assume control of the
defense of any such action in accordance with the foregoing provisions,
(I) the Indemnifying Party shall not be liable to Indemnified Party for
any legal fees, costs and expenses incurred by the Indemnified Party in
connection with the defense thereof arising after the date the
Indemnifying Party elects to assume control of such defense and (ii)
Indemnified Party shall fully cooperate with the Indemnifying Party in
such defense. If the Indemnifying Party does not assume control of the
defense of such claim in accordance with the foregoing provisions, the
Indemnified Party shall have the right to defend such claim, in which case
the Indemnifying Party shall pay all reasonable costs and expenses of
such defense plus interest on the cost of defense from the date paid at
a rate equal to the prime commercial rate of interest as in effect from
time to time at Citibank, N.A. The Indemnified Party shall conduct such
defense in good faith and shall have the right to settle the matter with
the prior written consent of the Indemnifying Party which shall not be
reasonably withheld.

14. NOTICES

Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by
prepaid telegraph, telecopy, certified mail or overnight express courier
addressed to Oppenheimer Management Corporation at Two World Trade Center,
34th Floor, New York, New York 10048-0203 Attention: Andrew J. Donohue
with a copy to Allan Adams, Esq. at Myer, Swanson, Adams & Wolf, P.C.,
1600 Broadway, Denver, Colorado 80202; to Quest For Value at One World
Financial Center, New York, New York 10281 Attention: Thomas Duggan, with
a copy to Stuart Strauss, Esq. at Gordon Altman Butowsky Weitzen Shalov
& Wein, 114 West 47th Street, New York, New York 10036.

15. HEADINGS: COUNTERPARTS: GOVERNING LAW: ASSIGNMENT, LIMITATION OF
LIABILITY

15.1 The article and paragraph headings contained in this Agreement
are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.

15.2 This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original.

15.3 This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.

15.4 This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns, but no
assignment or transfer hereof or of any rights or obligations hereunder
shall be made by any party without the written consent of the other
parties. Except as provided in the following sentence, nothing herein
expressed or implied is intended or shall be construed to confer upon or
give any person, firm or corporation, other than the parties hereto and
their respective successors and assigns, any rights or remedies under or
by reason of this Agreement. A shareholder of Quest Portfolio who becomes
a shareholder of Oppenheimer Fund on the Closing Date and continues to be
a shareholder of Oppenheimer Fund, shall be entitled to the benefits and
may enforce the provisions of paragraph 4.9 hereof except insofar as
paragraph 4.9 relates to the election of trustees; and the persons
designated in paragraphs 13.1 and 13.2 hereof shall be entitled to the
benefits and may enforce the provisions of section 13 hereof.

15.5 The obligations and liabilities of Oppenheimer Trust, on
behalf of Oppenheimer Fund, hereunder are solely those of Oppenheimer Fund
and not of any other series of Oppenheimer Trust. It is expressly agreed
that shareholders, trustees, nominees, officers, agents or employees of
Oppenheimer Trust and Oppenheimer Fund shall not be personally liable
hereunder. The execution and delivery of this Agreement have been
authorized by the trustees of Oppenheimer Trust and signed by authorized
by the officers of Oppenheimer Trust acting as such, and neither such
authorization by such trustees nor such execution and delivery by such
officers shall be deemed to have been made by any of the, individually or
to impose any liability on any of them personally.

15.6 The obligations and liabilities of the Quest For Value on behalf
of Quest Portfolio hereunder are solely those of the Quest Portfolio and
not of any other series of Quest For Value. It is expressly agreed that
shareholders, trustees, nominees, officers, agents, or employees of Quest
For Value and Quest Portfolio shall not be personally liable hereunder.
The execution and delivery of this Agreement have been authorized by the
trustees of Quest For Value and signed by authorized officers of Quest For
Value acting as such, and neither such authorization by such trustees nor
such execution and delivery by such officers shall be deemed to have been
made by any of them individually or to impose any liability on any of them
personally.

IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized officer.

OPPENHEIMER STRATEGIC FUNDS TRUST

By: ________________________________

QUEST FOR VALUE FAMILY OF FUNDS

By: ____________________________

QUEST FOR VALUE ADVISORS

By: ____________________________

<PAGE>
EXHIBIT B

The aggregate purchase price for the Purchased Assets and Assumed
Liabilities will be an amount equal to the sum of (i) the Initial Purchase
Payment (as hereinafter defined) payable in cash at the Acquisition
Closing, (ii) the aggregate amount of all unamortized prepaid commissions
as of the business day immediately preceding the Acquisition Closing which
relate to the Acquired Funds (excluding those with respect to Citibank,
N.A.) payable in cash at the Acquisition Closing, (iii) the amount payable
by OMC in respect of the right, title and interest of Citibank, N.A. to
certain commissions, (iv) the Deferred Purchase Payment (as hereinafter
defined) and (v) the aggregate amount of the Assumed Liabilities.

The "Initial Purchase Payment" shall be an amount equal to the sum of (x)
225% of the Annualized Fee Amount (as hereinafter defined) of each
Reorganized Fund and (y) 270% of the Annualized Fee Amount of each
Continuing Fund (excluding the Quest for Value Officers Fund). The
"Annualized Fee Amount" of an Acquired Fund shall equal the product of (i)
such Acquired Fund's Closing Net Assets (as hereinafter defined) and (ii)
the annual advisory fee payable to QVA by such Acquired Fund at the rate
indicated in the most recent prospectus for such Acquired Fund at the
Acquisition Closing (plus any applicable annual administrative fee)
"Closing Net Assets" for an Acquired Fund shall mean the aggregate net
asset value of such Acquired Fund as of the close of business on the last
business date preceding the Acquisition Closing.

The "Deferred Purchase Payment" shall be an amount equal to the aggregate
amounts determined for all Reorganized Funds pursuant to the following
formula: the Closing Payment (as hereinafter defined) times the
Applicable Percentage (as hereinafter defined). The "Closing Payment"
shall be the aggregate amount calculated for all Reorganized Funds
pursuant to clause (x) of the Initial Purchase Payment formula. The
"Applicable Percentage" shall be 100% if the Continuing Net Asset
Percentage (as hereinafter defined) is 75% or more, 0% if the Continuing
Net Asset Percentage is 50% or less and the percentage determined in
accordance with the following formula if the Continuing Net Asset
Percentage is between 75% and 50%: 100% - (4) (75% - Continuing Net
Asset Percentage). The "Continuing Net Asset Percentage" shall equal the
percentage obtained by dividing the Anniversary Net Assets (as hereinafter
defined) by the Closing Net Assets. The "Anniversary Net Assets" shall
mean the most recently determined aggregate net asset values of all
Reorganized Funds as of 8:00 p.m. on the first anniversary of the
Acquisition Closing of each account of the Reorganized Funds which are
eligible to be included in Anniversary Net Assets in accordance with the
principles set forth in the Acquisition Agreement.

<PAGE>
Preliminary Copy
QUEST FOR VALUE GLOBAL FUNDS, INC.
QUEST FOR VALUE GLOBAL INCOME FUND - CLASS A SHARES

PROXY FOR SPECIAL SHAREHOLDERS MEETING
TO BE HELD NOVEMBER 3, 1995

The undersigned shareholder of Quest for Value Global Income Fund (the
"Fund"), a series of Quest for Value Global Funds, Inc. (the
"Corporation"), does hereby appoint Thomas E. Duggan and Maria Camacho,
and each of them, as attorneys-in-fact and proxies of the undersigned,
with full power of substitution, to attend the Special Meeting of
Shareholders of the Fund to be held on November 3, 1995, at One World
Financial Center, New York, New York 10281 on the 40th Floor at 10:00
A.M., New York time, and at all adjournments thereof, and to vote the
shares held in the name of the undersigned on the record date for said
meeting on the Proposal specified on the reverse side. Said attorneys-in-
fact shall vote in accordance with their best judgment as to any other
matter.

PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS, WHO RECOMMENDS A VOTE
FOR THE PROPOSAL ON THE REVERSE SIDE. THE SHARES REPRESENTED HEREBY WILL
BE VOTED AS INDICATED ON THE REVERSE SIDE OR FOR IF NO CHOICE IS
INDICATED.

Please mark your proxy, date and sign it on the reverse side and return
it promptly in the accompanying envelope, which requires no postage if
mailed in the United States.

The Proposal:

To approve an Agreement and Plan of Reorganization dated as of
_______________, 1995 by and among Oppenheimer Strategic Funds Trust,
on behalf of Oppenheimer Strategic Income Fund, the Corporation, on
behalf of the Fund, and Quest for Value Advisors, and the
transactions contemplated thereby, including the transfer of
substantially all the assets of the Fund in exchange for Class A,
Class B and Class C shares of Oppenheimer Strategic Income Fund and
the assumption by Oppenheimer Strategic Income Fund of certain
liabilities of the Fund, the distribution of such shares to the
shareholders of the Fund in complete liquidation of the Fund and the
cancellation of the outstanding shares of the Fund.

FOR____ AGAINST____ ABSTAIN____

Dated:________________________, 1995
(Month) (Day)

______________________________
Signature(s)

Please read both sides of this ballot.
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR HEREON. When signing
as custodian, attorney, executor, administrator, trustee, etc., please
give your full title as such. All joint owners should sign this proxy.
If the account is registered in the name of a corporation, partnership or
other entity, a duly authorized individual must sign on its behalf and
give his or her title.

<PAGE>
Preliminary Copy
QUEST FOR VALUE GLOBAL FUNDS, INC.
QUEST FOR VALUE GLOBAL INCOME FUND - CLASS B SHARES

PROXY FOR SPECIAL SHAREHOLDERS MEETING
TO BE HELD NOVEMBER 3, 1995

Please mark your proxy, date and sign it on the reverse side and return
it promptly in the accompanying envelope, which requires no postage if
mailed in the United States.

The Proposal:

FOR____ AGAINST____ ABSTAIN____

Dated:________________________, 1995
(Month) (Day)

______________________________
Signature(s)

<PAGE>
Preliminary Copy
QUEST FOR VALUE GLOBAL FUNDS, INC.
QUEST FOR VALUE GLOBAL INCOME FUND - CLASS C SHARES

PROXY FOR SPECIAL SHAREHOLDERS MEETING
TO BE HELD NOVEMBER 3, 1995

Please mark your proxy, date and sign it on the reverse side and return
it promptly in the accompanying envelope, which requires no postage if
mailed in the United States.

The Proposal:

FOR____ AGAINST____ ABSTAIN____

Dated:________________________, 1995
(Month) (Day)

______________________________
Signature(s)

<PAGE>

OPPENHEIMER STRATEGIC INCOME FUND
Supplement dated July 14, 1995 to the
Prospectus dated May 26, 1995

The following changes are made to the Prospectus:

1. Footnote 1 under the "Shareholder Transaction Expenses" chart in
"Expenses" on page 3 is changed to read as follows:

1. If you invest more than $1 million (more than $500,000 for
purchases by OppenheimerFunds prototype 401(k) plans) 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 in which you purchased those shares. See "How to
Buy Shares -- Class A Shares," below.

2. In "How to Buy Shares," the section entitled "Class A Shares" on page
26 under "Classes of Shares" is changed to read as follows:

If you buy Class A shares, you may pay an initial sales charge
on investments up to $1 million (up to $500,000 for purchases
by OppenheimerFunds prototype 401(k) plans). If you purchase
Class A shares as part of an investment of at least $1 million
($500,000 for OppenheimerFunds prototype 401(k) plans) in shares
of one or more OppenheimerFunds, you will not pay an initial
sales charge, but if you sell any of those shares within 18
months of buying them, you may pay a contingent deferred sales
charge. The amount of that sales charge will vary depending on
the amount you invested. Sales charge rates are described in
"Class A Shares" below.

3. In "How to Buy Shares," the section entitled "Which Class of Shares
Should You Choose?" on page 26 is changed by adding a new final sentence
to the second paragraph of that section as follows:

The discussion below of the factors to consider in purchasing
a particular class of shares assumes that you will purchase only
one class of shares and not a combination of shares of different
classes.

4. In "How to Buy Shares," the first paragraph of the section "Class A
Contingent Deferred Sales Charge" on page 30 is amended in its entirety
to read as follows:

There is no initial sales charge on purchases of Class A shares
of any one or more of the OppenheimerFunds in the following
cases:
-- purchases aggregating $1 million or more, or
-- purchases by an OppenheimerFunds prototype 401(k)
plan that: (1) buys shares costing $500,000 or more
or (2) has, at the time of purchase, 100 or more
eligible participants, or (3) certifies that it
projects to have annual plan purchases of $200,000 or
more.

Shares of any of the OppenheimerFunds that offers only one class
of shares that has no designation are considered "Class A shares" for
this purpose. The Distributor pays dealers of record commissions on
those 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
purchases over $5 million. That commission will be paid only on the
amount of those purchases in excess of $1 million ($500,000 for
purchases by OppenheimerFunds 401(k) prototype plans) that were not
previously subject to a front-end sales charge and dealer commission.

5. In "Reduced Sales Charges for Class A Purchases," on page 31, the
first sentence of the section "Right of Accumulation" is changed to read
as follows:

To qualify for the lower sales charge rates that apply to larger
purchases of Class A shares, you and your spouse can add
together Class A and Class B shares you purchase for your
individual accounts, or jointly, or for trust or custodial
accounts on behalf of your children who are minors.

The first sentence of the second paragraph of that section is revised to
read as follows:

Additionally, you can add together current purchases of
Class A and Class B shares of the Fund and other
OppenheimerFunds to reduce the sales charge rate that applies
to current purchases of Class A shares. You can also count Class
A and Class B shares of OppenheimerFunds you previously
purchased subject to an initial or contingent deferred sales
charge to reduce the sales charge rate for current purchases of
Class A shares, provided that you still hold that 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).

6. The first sentence of the section entitled "Letter of Intent" is
revised to read as follows:

Under a Letter of Intent, if you purchase Class A shares or
Class A shares and Class B shares of the Fund and other
OppenheimerFunds during a 13-month period, you can reduce the
sales charge rate that applies to your purchases of Class A
shares. The total amount of your intended purchases of both
Class A and Class B shares will determine the reduced sales
charge rate for the Class A shares purchased during that period.

7. In the section entitled "Waivers of Class A Sales Charges," the
following changes are made:

The first sentence of the first paragraph is replaced by a new
introductory paragraph set forth below and the list of circumstances
describing the sales charge waivers follows a new initial sentence:

-- Waivers of Class A Sales Charges. The Class A sales charges
are not imposed in the circumstances described below. There is
an explanation of this policy in "Reduced Sales Charges" in the
Statement of Additional Information.

Waivers of Initial and Contingent Deferred Sales Charges
for Certain Purchasers. Class A shares purchased by the
following investors are not subject to any Class A sales
charges:

The introductory phrase preceding the list of sales charge waivers in the
second paragraph and subsection (d) of that paragraph are replaced by the
following:

Waivers of Initial and Contingent Deferred Sales Charges
in Certain Transactions. Class A shares issued or purchased in
the following transactions are not subject to Class A sales
charges:

(d) shares purchased and paid for with the proceeds of
shares redeemed in the prior 12 months from a mutual fund (other
than a fund managed by the Manager or any of its subsidiaries)
on which an initial sales charge or contingent deferred sales
charge was paid (this waiver also applies to shares purchased
by exchange of shares of Oppenheimer Money Market Fund, Inc.
that were purchased and paid for in this manner); this waiver
must be requested when the purchase order is placed for your
shares of the Fund, and the Distributor may require evidence of
your qualification for this waiver.

The third paragraph of that section is revised to read as follows:

Waivers of the Class A Contingent Deferred Sales Charge.
The Class A contingent deferred sales charge does not apply to
purchases of Class A shares at net asset value without sales
charge as described in the two sections above. It is also waived
if shares that would otherwise be subject to the contingent
deferred sales charge are redeemed in the following cases:
-- for retirement distributions or loans to participants
or beneficiaries from qualified retirement plans, deferred
compensation plans or other employee benefit plans, including
OppenheimerFunds prototype 401(k) plans (these are all referred
to as "Retirement Plans"); or
-- to return excess contributions made to Retirement Plans; or
-- to make Automatic Withdrawal Plan payments that are
limited annually to no more than 12% of the original account
value; or
-- involuntary redemptions of shares by operation of law
or involuntary redemptions of small accounts (see "Shareholder
Account Rules and Policies," below); or
-- if, at the time a purchase order is placed for Class A
shares that would otherwise be subject to the Class A contingent
deferred sales charge, the dealer agrees to accept the dealer's
portion of the commission payable on the sale in installments
of 1/18th of the commission per month (and no further commission
will be payable if the shares are redeemed within 18 months of
purchase); or
-- for distributions from OppenheimerFunds prototype 401(k)
plans for any of the following cases or purposes: (1) following
the death or disability (as defined in the Internal Revenue
Code) of the participant or beneficiary (the death or disability
must occur after the participant's account was established); (2)
hardship withdrawals, as defined in the plan; (3) under a
Qualified Domestic Relations Order, as defined in the Internal
Revenue Code; (4) to meet the minimum distribution requirements
of the Internal Revenue Code; (5) to establish "substantially
equal periodic payments" as described in Section 72(t) of the
Internal Revenue Code, or (6) separation from service.

8. The first paragraph of the section entitled "Waivers of Class B Sales
Charge" on page 34 is amended by replacing the introductory phrase of
that paragraph with the sentences below and adding a new section at the
end of that paragraph as follows:

-- Waivers of Class B Sales Charge. The Class B contingent
deferred sales charge will not be applied to shares purchased
in certain types of transactions nor will it apply to Class B
shares redeemed in certain circumstances as described below. The
reasons for this policy are in "Reduced Sales Charges" in the
Statement of Additional Information.

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

(5) for distributions from OppenheimerFunds prototype
401(k) plans (a) for hardship withdrawals; (b) under a Qualified
Domestic Relations Order, as defined in the Internal Revenue
Code; (c) to meet minimum distribution requirements as defined
in the Internal Revenue Code; (d) to make "substantially equal
periodic payments" as described in Section 72(t) of the Internal
Revenue Code; or (e) for separation from service.

9. In the section entitled "Reinvestment Privilege" on page 38, the
first three sentences are revised to read as follows:

If you redeem some or all of your Class A or B shares of the
Fund, you have up to 6 months to reinvest all or part of the
redemption proceeds in Class A shares of the Fund or other
OppenheimerFunds without paying a sales charge. This privilege
applies to Class A shares that you purchased subject to an
initial sales charge and to Class A or B shares on which you
paid a contingent deferred sales charge when you redeemed them.
It does not apply to Class C shares.

10. In the section entitled "Retirement Plans" on page 38, the following
is added to the list of plans offered by the Distributor:

-- 401(k) prototype retirement plans for businesses

<PAGE>

Oppenheimer Strategic Income Fund

Prospectus dated May 26, 1995

Oppenheimer Strategic Income Fund (the "Fund") is a mutual fund that
seeks a high level of current income by investing mainly in debt
securities and by writing covered call options on them. The Fund invests
principally in (1) debt securities of foreign governments and companies,
(2) U.S. Government securities, and (3) lower-rated, high-yield debt
securities of U.S. companies, commonly known as "junk bonds." The Fund
may invest some or all of its assets in any of these three market sectors
at any time. When it invests in more than one sector, the Fund may reduce
some of the risks of investing in only one market sector, which may help
to reduce the fluctuations in its net asset value per share.
The Fund may invest up to 100% of its assets in "junk bonds," or
foreign debt securities rated below investment grade, which are securities
that are speculative and involve greater risks, including risk of default,
than higher-rated securities. The Fund is a diversified portfolio
designed for investors willing to assume additional risk in return for
seeking high current income. You should carefully review the risks
associated with an investment in the Fund. Please refer to "Special Risks
of Lower-Rated Securities" on page 17.

This Prospectus explains concisely what you should know before
investing in the Fund. Please read it carefully and keep it for future
reference. You can find more detailed information about the Fund in the
May 26, 1995, 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 ("SEC") and is incorporated into this Prospectus
by reference (which means that it is legally part of this Prospectus).

(OppenheimerFunds logo)

Shares of the Fund are not deposits or obligations of any bank, nor are
they guaranteed by any bank or insured by the F.D.I.C. or any other
agency, and involve investment risks including the possible loss of the
principal amount invested.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION 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

ABOUT THE FUND

Expenses
Overview of the Fund
Financial Highlights
Investment Objective and Policies
How the Fund is Managed
Performance of the Fund

ABOUT YOUR ACCOUNT

How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
Special Investor Services
AccountLink
Automatic Withdrawal and Exchange
Plans
Reinvestment Privilege
Retirement Plans
How to Sell Shares
By Mail
By Telephone
Checkwriting
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
Appendix: Description of Ratings Categories
<PAGE>
ABOUT THE FUND

Expenses

The Fund pays a variety of expenses directly for management of its
assets, administration, distribution of its shares and other services and
those expenses are subtracted from the Fund's assets to calculate the
Fund's net asset value per share. All shareholders therefore pay those
expenses indirectly. Shareholders pay other expenses directly, such as
sales charges and account transaction charges. The following tables are
provided to help you understand your direct expenses of investing in the
Fund and your share of the Fund's business operating expenses that you
will bear indirectly. The numbers below are based on the Fund's expenses
during its last fiscal year ended September 30, 1994.

- Shareholder Transaction Expenses are charges you pay when you buy
or sell shares of the Fund. Please refer to "About Your Account," from
pages __ through __ for an explanation of how and when these charges
apply.

Class A Class B Class C
Shares Shares Shares

Maximum Sales 4.75% None None
Charge on
Purchases (as a %
of offering price)

Sales Charge on None None None
Reinvested
Dividends

Deferred Sales None(1) 5% in the 1% if
Charge (as a % first year, shares are
of the lower declining redeemed
of the original to 1% in the within 12
purchase price sixth year and months of
or redemption eliminated purchase(2)
proceeds) thereafter(2)

Exchange Fee None None None
Redemption Fee None(3) None(3) None(3)

(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 - Class A Shares," below.

(2) See "How to Buy Shares," below, for more information on the contingent
deferred sales charges.

(3) There is a $10 transaction fee for redemptions paid by Federal Funds
wire, but not for redemptions paid by check or by ACH wire through
AccountLink, or for which checkwriting privileges are used (see "How to
Sell Shares").

- 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 (which is referred to in this Prospectus as the
"Manager"). The rates of the Manager's fees are set forth in "How the
Fund is Managed" below. The Fund has other regular expenses for services,
such as transfer agent fees, custodial fees paid to the bank that holds
its portfolio securities, audit fees and legal expenses. Those expenses
are detailed in the Fund's Financial Statements in the Statement of
Additional Information.

The numbers in the table below 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 service fees. For Class B and Class C shares, the 12b-
1 Distribution Plan Fees are service fees and asset-based sales charges.
The service fee for each class is 0.25% of average annual net assets of
the class and the asset-based sales charge for Class B and Class C shares
is 0.75%. These Plans are described in greater detail in "How to Buy
Shares."

The actual expenses for each class of shares in future years may be
more or less than the numbers in the table, depending on a number of
factors, including the actual value of the Fund's assets represented by
each class of shares. Class C shares were not publicly offered during the
fiscal year ended September 30, 1994. Therefore, the Annual Fund
Operating Expenses for Class C shares are estimates based on amounts that
would have been payable in that period assuming that Class C shares were
outstanding during such fiscal year.

Class A Class B Class C
Shares Shares Shares
-----------------------------------------------------------------------
Management Fees 0.54% 0.54% 0.54%
-----------------------------------------------------------------------
12b-1 Distribution Plan Fees 0.25% 1.00% 1.00%
-----------------------------------------------------------------------
Other Expenses 0.16% 0.17% 0.17%
-----------------------------------------------------------------------
Total Fund Operating 0.95% 1.71% 1.71%
Expenses

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

1 year 3 years 5 years 10 years*
Class A Shares $57 $76 $98 $159
Class B Shares $67 $84 $113 $163
Class C Shares $27 $54 $93 $202

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

1 year 3 years 5 years 10 years*
Class A Shares $57 $76 $98 $159
Class B Shares $17 $54 $93 $163
Class C Shares $17 $54 $93 $202

* 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 allowed under applicable regulatory requirements. For Class B
shareholders, the automatic conversion of Class B shares to Class A shares
is designed to minimize the likelihood that this will occur. Please refer
to "How to Buy Shares" for more information.

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

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

- What Is The Fund's Investment Objective? The Fund's investment
objective is to seek a high level of current income by investing mainly
in debt securities and by writing covered call options on them.

- What Does the Fund Invest In? The Fund invests primarily in debt
securities of foreign governments and companies, U.S. Government
securities, and lower-rated high yield debt securities of U.S. companies.
The Fund may also write covered calls and use derivative investments to
enhance income, and may use hedging instruments, including some derivative
investments, to try to manage investment risks. These investments are
more fully explained in "Investment Objective and Policies," starting on
page __.

- Who Manages the Fund? The Fund's investment advisor is
Oppenheimer Management Corporation, which (including a subsidiary) advises
investment company portfolios having over $30 billion in assets. The
Fund's portfolio managers, who are primarily responsible for the selection
of the Fund's securities, are David Negri and Arthur Steinmetz. The
Manager is paid an advisory fee by the Fund, based on its assets. The
Board of Trustees, elected by shareholders, oversees the investment
advisor and the portfolio manager. Please refer to "How the Fund is
Managed," starting on page __ for more information about the Manager and
its fees.

- How Risky is the Fund? All investments carry risks to some
degree. The Fund's investments in foreign securities, especially those
issued by underdeveloped countries, generally involve special risks. The
value of foreign securities 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 transactions,
changes in governmental, economic or monetary policy in the U.S. or
abroad, or other political or economic factors. The Fund's investments
in lower-rated securities are considered speculative, involve greater
risks and may be less liquid than higher-rated securities. In addition,
the Fund's investments in U.S. Government securities and bonds are subject
to changes in their value from a number of factors such as changes in
general bond and stock market movements, the change in value of particular
stocks or bonds because of an event affecting the issuer, or changes in
interest rates that can affect bond prices. These changes affect the
value of the Fund's investments and its price per share. In the
OppenheimerFunds spectrum, the Fund is generally not as risky as
aggressive growth funds, but is more aggressive than money market or
investment grade bond funds. While the Manager tries to reduce risks by
diversifying investments, by carefully researching securities before they
are purchased for the portfolio, and in some cases by using hedging
techniques, there is no guarantee of success in achieving the Fund's
objectives and your shares may be worth more or less than their original
cost when you redeem them. Please refer to "Investment Objective and
Policies" starting on page ___ for a more complete discussion.

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

- Will I Pay a Sales Charge to Buy Shares? The Fund has three
classes of shares. Class A shares are offered with a front-end sales
charge, starting at 4.75%, and reduced for larger purchases. Class B and
Class C shares are offered without a front-end sales charge, but may be
subject to a contingent deferred sales charge if redeemed within 6 years
or 12 months, respectively, of purchase. There is also an annual asset-
based sales charge on Class B and Class C shares. Please review "How To
Buy Shares" starting on page ___ for more details, including a discussion
about which class may be appropriate for you.

- How Can I Sell My Shares? Shares can be redeemed by mail, by
telephone call to the Transfer Agent on any business day, or through your
dealer, by writing a check against your Fund account (available for Class
A shares only) or by wire to a previously designated bank account. Please
refer to "How To Sell Shares" on page ___. The Fund also offers exchange
privileges to other OppenheimerFunds, described in "How to Exchange
Shares" on page ____.

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

<PAGE>
Financial Highlights

The table on the following pages presents selected financial
information about the Fund, including per share data and expense ratios
and other data based on the Fund's average net assets. 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 September 30, 1994, is included in the Statement of Additional
Information. Class B shares were publicly offered only during a portion
of that period, commencing November 30, 1992. Class C shares were not
publicly offered during the fiscal year ended September 30, 1994.
Accordingly, no information on Class C shares is reflected in the table
below or in the Fund's other financial statements.

Financial Highlights September 30, 1993

<TABLE> Class A Class B
<CAPTION> ------- -------
Year Ended Year Ended
September 30, September 30,
1994 1993 1992 1991 1990(2) 1994 1993(1)
--------------------------------------------------------------------------------
--------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
<C>
Per Share Operating Data:
Net asset value, beginning of period $5.21 $5.07 $5.01 $4.87 $5.00 $5.22 $4.89
----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .45 .48 .46 .56 .59 .42 .36
Net realized and unrealized gain (loss)
on investments, options written
and foreign currency transactions (.35) .17 .14 .21 (.10) (.36) .34
------ ------ ------ ------ ------ ------ ------
Total income from investment
operations .10 .65 .60 .77 .49 .06 .70
----------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment income (.43) (.50) (.46) (.57) (.57) (.39) (.36)
Distributions from net realized gain
on investments, options written
and foreign currency transactions -- (.01) (.08) (.06) (.05) -- (.01)
Distributions in excess of net
realized gain on investments,
options written and foreign
currency transactions (.12) -- -- -- -- (.12) --
Tax return of capital (.01) -- -- -- -- (.01) --
------ ------ ------ ------ ------ ------ ------
Total dividends and distributions
to shareholders (.56) (.51) (.54) (.63) (.62) (.52) (.37)
----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.75 $5.21 $5.07 $5.01 $4.87 $4.76 $5.22
------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------
----------------------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value(3) 1.85% 13.30% 12.56% 16.97% 10.20% 1.07%
13.58%
----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period
(in millions) $3,143 $2,754 $1,736 $560 $177 $1,586 $695
----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in millions) $3,082 $2,107 $1,084 $311 $93 $1,236 $276
----------------------------------------------------------------------------------------------------------------------------------
Number of shares outstanding
at end of period (in thousands) 661,897 528,587 342,034 111,739 36,418 333,489
133,235
----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 8.72% 9.78% 9.39% 11.82% 12.79%(4) 7.90%
8.13%(4)
Expenses .95% 1.09% 1.16%(5) 1.27%(5) 1.36%(4) 1.71%
1.80%(4)
----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 119.0% 148.6% 208.2% 194.7% 424.6% 119.0%
148.6%
</TABLE>

<PAGE>
Investment Objective and Policies

Objective. The Fund seeks a high level of current income mainly from
interest on debt securities and also seeks to enhance its income by
writing covered call options on debt securities. The Fund does not invest
with the objective of seeking capital appreciation.

Investment Policies and Strategies. The Fund seeks its investment
objective by investing principally in three market sectors: (1) debt
securities of foreign governments and companies, (2) U.S. Government
securities, and (3) lower-rated, high-yield debt securities of U.S.
companies. Under normal market conditions the Fund will invest in each of
these three sectors, but from time to time the Manager will adjust the
amounts the Fund invests in each sector.

By investing in all three sectors, the Fund seeks to reduce the
volatility of fluctuations in its net asset value per share, because the
overall securities price and interest rate movements in each of the
different sectors are not necessarily correlated with each other. Changes
in one sector may be offset by changes in another sector that moves in a
different direction. Therefore, this strategy may help reduce some of the
risks from negative market movements and interest rate changes in any one
sector. However, the Fund may invest up to 100% of its assets in any one
sector if the Manager believes that in doing so the Fund can achieve its
objective without undue risk to the Fund's assets.

When investing the Fund's assets, the Manager considers many factors,
including general economic conditions in the U.S. and abroad, prevailing
interest rates, and the relative yields of U.S. and foreign securities.
While the Fund may seek to earn income by writing covered call options,
market price movements may make it disadvantageous to do so. The Fund may
also try to hedge against losses by using hedging strategies described
below. When market conditions are unstable, the Fund may invest
substantial amounts of its assets in money market instruments for
defensive purposes. These strategies are described in greater detail
below and also in the Statement of Additional Information under the same
headings.

The amount of income the Fund may earn to distribute to shareholders
will fluctuate, depending on the securities the Fund owns and the sectors
in which it invests. The Fund is not a complete investment program and is
designed for investors willing to assume a higher degree of risk. There
is no assurance that the Fund will be able to achieve its investment
objective. Because of the high-yield, lower-rated securities in which the
Fund invests, the Fund is considered a speculative investment, and the
value of your shares may decline in adverse market conditions.

- Special Risks of Lower-Rated Securities. In seeking high current
income, the Fund may invest in higher-yielding, lower-rated debt
securities, commonly known as "junk bonds." There is no restriction on the
amount of the Fund's assets that could be invested in these types of
securities. Lower-rated debt securities are those rated below "investment
grade," such as debt securities that have a rating of "Baa" or lower by
Moody's Investors Service, Inc. ("Moody's") or "BBB" or lower by Standard
& Poor's Corporation ("S&P"). These securities may be rated as low as "C"
or "D" or may be in default at time of purchase.

The Manager does not rely solely on ratings of securities by rating
agencies when selecting investments for the Fund, but evaluates other
economic and business factors as well. The Fund may invest in unrated
securities that the Manager believes offer yields and risks comparable to
rated securities. High yield, lower-grade securities, whether rated or
unrated, often have speculative characteristics. Lower-grade securities
have special risks that make them riskier investments than investment
grade securities. They may be subject to greater market fluctuations and
risk of loss of income and principal than lower yielding, investment grade
securities. There may be less of a market for them and therefore they may
be harder to sell at an acceptable price. There is a relatively greater
possibility that the issuer's earnings may be insufficient to make the
payments of interest due on the bonds. The issuer's low creditworthiness
may increase the potential for its insolvency ("credit risk"). All
corporate debt securities (whether foreign or domestic) are subject to
some degree of credit risk.

These risks mean that the Fund may not achieve the expected income
from lower-grade securities, and that the Fund's net asset value per share
may be affected by declines in value of these securities. The Fund is not
obligated to dispose of securities when issuers are in default or if the
rating of the security is reduced. These risks are discussed in more
detail in the Statement of Additional Information.

- Portfolio Turnover. The length of time the Fund has held a
security is not generally a consideration in investment decisions. A
change in the securities held by the Fund is known as "portfolio
turnover." As a result of the Fund's investment policies and market
factors, the Fund will trade its portfolio actively to try to benefit from
short-term yield differences among debt securities and as a result the
Fund's portfolio turnover may be higher than other mutual funds. This
strategy may involve greater transaction costs from brokerage commissions
and dealer mark-ups. Additionally, high portfolio turnover may result in
increased short-term capital gains and 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.

- How the Fund's Portfolio Securities Are Rated. As of September 30,
1994, the Fund's portfolio included corporate bonds in the following S&P
rating categories or if unrated, determined by the Manager to be
comparable to the category indicated (the amounts shown are dollar-
weighted average values of the bonds in each category measured as a
percentage of the Fund's total assets): AAA, 0.80%; AA, 0.00%; A, 0.07%;
BBB, 1.59%; BB, 4.29%; B, 22.66%; CCC, 4.37%; CC, 0.71%; C, 0.46%; D,
0.69%. The Appendix to this Prospectus describes the rating categories.
The allocation of the Fund's assets in securities in the different rating
categories will vary over time.

- Interest Rate Risks. In addition to credit risk, described
above, debt securities are subject to changes in value due to changes in
prevailing interest rates. When prevailing interest rates fall, the
values of outstanding debt securities generally rise. Conversely, when
interest rates rise, the values of outstanding debt securities generally
decline. The magnitude of these fluctuations will be greater when the
average maturity of the portfolio securities is longer. Changes in the
value of securities held by the Fund mean that the Fund's share prices can
go up or down when interest rates change because of the effect of the
change on the value of the Fund's portfolio of debt securities.

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

The Fund's Board of Trustees may change non-fundamental policies,
strategies and techniques without shareholder approval, although
significant changes will be described in amendments to this Prospectus.
Fundamental policies are those that cannot be changed without the approval
of a "majority" of the Fund's outstanding voting shares. The 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).

Debt Securities of Foreign Governments and Companies. The Fund may invest
in debt securities issued or guaranteed by foreign companies,
"supranational" entities such as the World Bank, and foreign governments
or their agencies. These foreign securities may include debt obligations
such as government bonds, debentures issued by companies, as well as
notes. Some of these debt securities may have variable interest rates or
"floating" interest rates that change in different market conditions.
Those changes will affect the income the Fund receives. The Fund can also
invest in preferred stocks and "zero coupon" securities, which have
similar features to the ones described below in "Debt Securities of U.S.
Companies." Preferred stocks and zero coupon securities are described in
more detail in the Statement of Additional Information.

The Fund will not invest more than 25% of its total assets in
government securities of any one foreign country. Otherwise, the Fund is
not restricted in the amount of its assets it may invest in foreign
countries or in which countries and has no limitations on the maturity or
capitalization of the issuer of the foreign debt securities in which it
invests, although it is expected that most issuers will have total assets
or capitalization in excess of $100 million. However, if the Fund's
assets are held abroad, the countries in which they are held and the sub-
custodians holding them must be approved by the Fund's Board of Trustees.

The Fund may buy or sell foreign currencies and foreign currency
forward contracts (agreements to exchange one currency for another at a
future date) to hedge currency risks and to facilitate transactions in
foreign investments. Although currency forward contracts can be used to
protect the Fund from adverse exchange rate changes, there is a risk of
loss if the Manager fails to predict currency exchange movements
correctly.

- Risks of Foreign Securities. Investing in foreign securities,
especially those issued in underdeveloped countries, generally involves
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. If the Fund
distributes more income during a period than it earns because of
unfavorable currency exchange rates, those dividends may later have to be
considered a return of capital. Some of the foreign debt securities the
Fund may invest in, such as emerging market debt, have speculative
characteristics. More information about the risks and potential rewards
of foreign securities is contained in the Statement of Additional
Information.

U.S. Government Securities. The Fund may invest in debt securities issued
or guaranteed by the U.S. Government or its agencies and instrumentalities
("U.S. Government Securities"). Certain U.S. Government Securities,
including U.S. Treasury bills, notes and bonds, and mortgage participation
certificates guaranteed by the Government National Mortgage Association
("Ginnie Mae") are supported by the full faith and credit of the U.S.
Government. Ginnie Mae certificates are one type of mortgage-related U.S.
Government Security the Fund invests in. Other mortgage-related U.S.
Government Securities the Fund invests in that are issued or guaranteed
by federal agencies or government-sponsored entities are not supported by
the full faith and credit of the U.S. Government. Those securities
include obligations supported by the right of the issuer to borrow from
the U.S. Treasury, such as obligations of Federal Home Loan Mortgage
Corporation ("Freddie Mac") and obligations supported only by the credit
of the instrumentality, such as Federal National Mortgage Association
("Fannie Mae"). Other U.S. Government Securities the Fund invests in may
be zero coupon Treasury securities and collateralized mortgage obligations
("CMOs").

Although U.S. Government Securities involve little credit risk, their
values will fluctuate depending on prevailing interest rates. Because the
yields on U.S. Government Securities are generally lower than on corporate
debt securities, when the Fund holds U.S. Government Securities it may
attempt to increase the income it can earn from them by writing covered
call options against them when market conditions are appropriate. Writing
covered calls is explained below, under "Other Investment Techniques and
Strategies."

- Zero Coupon Treasury Securities. Zero coupon Treasury securities
generally are U.S. Treasury notes or bonds that have been "stripped" of
their interest coupons, U.S. Treasury bills issued without interest
coupons, or certificates representing an interest in the stripped
securities. A zero coupon Treasury security pays no current interest and
trades at a deep discount from its face value and will be subject to
greater market fluctuations from changes in interest rates than interest-
paying securities. The Fund accrues interest on its holdings without
receiving the actual cash. As a result, the Fund may be forced to sell
portfolio securities to pay cash dividends or meet redemptions. The Fund
may invest up to 50% of its total assets in zero coupon securities issued
by either the U.S. Government or U.S. companies.

- Mortgage-Backed U.S. Government Securities and CMOs. Certain
mortgage-backed U.S. Government securities "pass-through" to investors the
interest and principal payments generated by a pool of mortgages assembled
for sale by government agencies. Pass-through mortgage-backed securities
entail the risk that principal may be repaid at any time because of
prepayments on the underlying mortgages. That may result in greater price
and yield volatility than traditional fixed-income securities that have
a fixed maturity and interest rate.

The Fund may also invest in CMOs, which generally are obligations
fully collateralized by a portfolio of mortgages or mortgage-related
securities. Payment of the interest and principal generated by the pool
of mortgages is passed through to the holders as the payments are
received. CMOs are issued with a variety of classes or series which have
different maturities. Certain CMOs may be more volatile and less liquid
than other types of mortgage-related securities, because of the
possibility of the prepayment of principal due to prepayments on the
underlying mortgage loans.

The Fund may also enter into "forward roll" transactions with banks
and dealers with respect to the mortgage-related securities in which it
can invest. These require the Fund to secure its obligation in the
transaction by segregating assets with its custodian bank equal in amount
to its obligation under the roll.

The Fund may invest in CMOs that are "stripped"; that is, the
security is divided into two parts, one of which receives some or all of
the principal payments and the other of which receives some or all of the
interest. Stripped securities that receive interest only are subject to
increased volatility in price due to interest rate changes and have the
additional risk that if the principal underlying the CMO is prepaid (which
is more likely to happen if interest rates fall), the Fund will lose the
anticipated cash flow from the interest on the mortgages that were
prepaid. Stripped securities that receive principal payments only are
also subject to increased volatility in price due to interest rate changes
and have the additional risk that the security will be less liquid during
demand or supply imbalances. See "Mortgage-backed Securities" in the
Statement of Additional Information for more details.

Debt Securities of U.S. Companies. The Fund may invest in debt securities
and dividend-paying common stocks issued by U.S. companies, including
bonds, debentures, notes, preferred stocks, zero coupon securities,
participation interests, asset-backed securities and sinking fund and
callable bonds.The Fund may purchase these securities in public offerings
or through private placements. The Fund has no limitations on the
maturity, capitalization of the issuer or credit rating of the domestic
debt securities in which it invests, although it is expected that most
issuers will have total assets in excess of $100 million.

- Zero Coupon Corporate Securities. Zero coupon corporate securities
are similar to U.S. Government zero coupon Treasury securities but are
issued by companies. They have an additional risk that the issuing company
may fail to pay interest or repay the principal on the obligation.

- Corporate Asset-Backed Securities. Asset-backed securities are
fractional interests in pools of consumer loans and other trade
receivables, similar to mortgage-backed securities. They are issued by
trusts and special purpose corporations. They are backed by a pool of
assets, such as credit card or auto loan receivables, which are the
obligations of a number of different parties. The income from the
underlying pool is passed through to holders, such as the Fund. These
securities are frequently supported by a credit enhancement, such as a
letter of credit, a guarantee or a preference right. However, the extent
of the credit enhancement may be different for different securities and
generally applies to only a fraction of the security's value. These
securities present special risks. For example, in the case of credit card
receivables, the issuer of the security may have no security interest in
the related collateral. Thus, the risks of corporate asset-backed
securities are ultimately dependent upon payment of consumer loans by the
individual borrowers.

- Participation Interests. The Fund may acquire participation
interests in loans that are made to U.S. or foreign companies (the
"borrower"). They may be interests in, or assignments of, the loan and
are acquired from banks or brokers that have made the loan or are members
of the lending syndicate. No more than 5% of the Fund's net assets can
be invested in participation interests of the same borrower. The Manager
has set certain creditworthiness standards for issuers of loan
participations, and monitors their creditworthiness. The value of loan
participation interests depends primarily upon the creditworthiness of the
borrower, and its ability to pay interest and principal. Borrowers may
have difficulty making payments. If a borrower fails to make scheduled
interest or principal payments, the Fund could experience a decline in the
net asset value of its shares. Some borrowers may have senior securities
rated as low as "C" by Moody's or "D" by Standard & Poor's, but may be
deemed acceptable credit risks. Participation interests are subject to
the Fund's limitations on investments in illiquid securities. See
"Illiquid and Restricted Securities".

- Special Risks - Borrowing for Leverage. The Fund may borrow up
to 50% of the value of its net assets from banks to buy securities. The
Fund will borrow only if it can do so without putting up assets as
security for a loan. This is a speculative investment method known as
"leverage." This investing technique may subject the Fund to greater
risks and costs than funds that do not borrow. These risks may include
the possibility that the Fund's net asset value per share will fluctuate
more than the net asset value of funds that don't borrow, since the Fund
pays interest on borrowings and interest expense affects the Fund's share
price and yield. Borrowing for leverage is subject to limits under the
Investment Company Act, described in more detail in "Borrowing for
Leverage" in the Statement of Additional Information.

Other Investment Techniques and Strategies. The Fund may also use the
investment techniques and strategies described below. These techniques
involve certain risks. The Statement of Additional Information contains
more detailed information about these practices, including limitations on
their use that are designed to reduce some of the risks. For more
information, please refer to the description of these techniques under the
same headings in "Other Investment Techniques and Strategies" in the
Statement of Additional Information.

- Temporary Defensive Investments. In times of unstable economic
or market conditions, the Manager may determine that it is appropriate for
the Fund to assume a temporary defensive position by investing some of its
assets (there is no limit on the amount) in short-term money market
instruments. These include U.S. Government Securities, bank obligations,
commercial paper, corporate obligations and other instruments approved by
the Fund's Board of Trustees.

- Loans of Portfolio Securities. To attempt to increase its income,
the Fund may lend its portfolio securities amounting to not more than 25%
of its total assets to brokers, dealers and other financial institutions,
subject to certain conditions described in the Statement of Additional
Information. The Fund presently does not intend to lend its portfolio
securities, but if it does, the value of securities loaned is not expected
to exceed 5% of the value of its total assets.

- Repurchase Agreements. The Fund may enter into repurchase
agreements. In a repurchase transaction, the Fund buys a security and
simultaneously sells it to the vendor for delivery at a future date.
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 fails to
pay the re-sale price on the delivery date, the Fund may experience costs
in disposing of the collateral and losses if there is any delay in doing
so.

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

- Warrants and Rights. Warrants basically are options to purchase
stock at set prices that are valid for a limited period of time. Rights
are options to purchase securities, normally granted to current holders
by the issuer. The Fund may invest up to 5% of its total assets in
warrants or rights. That 5% does not apply to warrants and rights the
Fund acquired as part of units with other securities or that were attached
to other securities. No more than 2% of the Fund's assets may be invested
in warrants that are not listed on the New York or American Stock
Exchanges. For further details about these investments, please refer to
"Warrants and Rights" in the Statement of Additional Information.

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

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

The Fund may buy and sell options, futures and forward contracts for
a number of purposes. It may do so to try to manage its exposure to the
possibility that the prices of its portfolio securities may decline, or
to establish a position in the securities market as a temporary substitute
for purchasing individual securities. It may do so to try to manage its
exposure to changing interest rates. Some of these strategies, such as
selling futures, buying puts and writing covered calls, hedge the Fund's
portfolio against price fluctuations.

Other hedging strategies, such as buying futures and call options,
tend to increase the Fund's exposure to the securities market. Forward
contracts are used to try to manage foreign currency risks on the Fund's
foreign investments. Foreign currency options are used to try to protect
against declines in the dollar value of foreign securities the Fund owns,
or to protect against an increase in the dollar cost of buying foreign
securities. Writing covered call options may also provide income to the
Fund for liquidity purposes or defensive reasons or to raise cash to
distribute to shareholders.

Futures. The Fund may buy and sell futures contracts that relate to
(1) broadly-based securities indices (these are referred to as Stock Index
Futures and Bond Index Futures), and (2) interest rates (these are
referred to as Interest Rate Futures). All of these futures are described
in "Hedging With Options and Futures Contracts" in the Statement of
Additional Information. The Fund does not use futures and options on
futures for speculative purposes.

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

The Fund may purchase calls on (1) debt securities, (2) Futures, (3)
broadly-based securities indices and (4) foreign currencies, or to
terminate its obligation on a call the Fund previously wrote. The Fund
may write (that is, sell) covered call options on debt securities to raise
cash for income to distribute to shareholders or for defensive reasons.
When the Fund writes a call, it receives cash (called a premium). The
call gives the buyer the ability to buy the investment on which the call
was written from the Fund at the call price during the period in which the
call may be exercised. If the value of the investment does not rise above
the call price, it is likely that the call will lapse without being
exercised, while the Fund keeps the cash premium (and the investment).

The Fund may purchase put options. Buying a put on an investment
gives the Fund the right to sell the investment at a set price to a seller
of a put on that investment. The Fund can purchase those puts that relate
to (1) debt securities, (2) Interest Rate Futures, (3) Stock or Bond Index
Futures or (4) foreign currencies. The Fund may purchase puts on
investments it does not own. 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.

The Fund may buy or sell foreign currency puts and calls only if they
are traded on a securities or commodities exchange or on the over-the-
counter market, or are quoted by recognized dealers in those options.
Foreign currency options are used to try to protect against declines in
the dollar value of foreign securities the Fund owns, or to protect
against increases in the dollar cost of buying foreign securities.

The Fund may buy and sell calls if certain conditions are met: (1)
the calls must be listed on a domestic or foreign securities or
commodities exchange or quoted on the Automated Quotation System of the
National Association of Securities Dealers, Inc. or on the over-the-
counter market; and (2) each call must be "covered" while it is
outstanding; that means 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. There is no limit on the amount
of the Fund's total assets that may be subject to covered calls. The Fund
can also write calls on foreign currencies (discussed below). The Fund
may also write covered calls on Futures Contracts it owns, but these calls
must be covered by securities or other liquid assets the Fund owns and
segregates to enable it to satisfy its obligations if the call is
exercised. A call or put option may not be purchased if the value of all
of the Fund's put and call options would exceed 5% of the Fund's total
assets.

Forward Contracts. Forward contracts are foreign currency exchange
contracts. They are used to buy or sell foreign currency for future
delivery at a fixed price. The Fund uses them to "lock-in" the U.S.
dollar price of a security denominated in a foreign currency that the Fund
has bought or sold, or to protect against losses from changes in the
relative values of the U.S. dollar and a foreign currency. The Fund may
also use "cross hedging," where the Fund hedges against changes in
currencies other than the currency in which a security it holds is
denominated.
Interest Rate Swaps. In an interest rate swap, the Fund and another
party exchange their right to receive or their obligation to pay interest
on a security. For example, they may swap a right to receive floating
rate payments for fixed rate payments. The Fund enters into swaps only
on securities it owns. The Fund may not enter into swaps with respect to
more than 25% of its total assets. Also, the Fund will segregate liquid
assets (such as cash or U.S. Government securities) to cover any amounts
it could owe under swaps that exceed the amounts it is entitled to
receive, and it will adjust that amount daily, as needed.

Hedging instruments can be volatile investments and may involve
special risks. The use of hedging instruments requires special skills and
knowledge of investment techniques that are different than what is
required for normal portfolio management. If the Manager uses a hedging
instrument at the wrong time or judges market conditions incorrectly,
hedging strategies may reduce the Fund's return. The Fund could also
experience losses if the prices of its futures and options positions were
not correlated with its other investments 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. 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
if the security has increased in value above the call price. The use of
forward contracts may reduce the gain that would otherwise result from a
change in the relationship between the U.S. dollar and a foreign currency.
To limit its exposure in foreign currency exchange contracts, the Fund
limits its exposure to the amount of its assets denominated in the foreign
currency. Interest rate swaps are subject to credit risks (if the other
party fails to meet its obligations) and also to interest rate risks. The
Fund could be obligated to pay more
under its swap agreements than it receives under them, as a result of
interest rate changes. These risks are described in greater detail in the
Statement of Additional Information.

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

One risk of investing in derivative investments is that the company
issuing the instrument might not pay the amount due on the maturity of the
instrument. There is also the risk that the underlying investment or
security 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 these risks can mean
that the Fund will realize less income than expected from its investments,
or that it can lose part of the value of its investments, which will
affect the Fund's share price. Certain derivative investments held by the
Fund may trade in the over-the-counter markets and may be illiquid. If
that is the case, the Fund's investment in them will be limited, as
discussed in "Illiquid and Restricted Securities".

Another type of derivative the Fund may invest in is an "index-
linked" note. On the maturity of this type of debt security, payment is
made based on the performance of an underlying index, rather than based
on a set principal amount for a typical note. Another derivative
investment the Fund may invest in is a currency-indexed security. These
are typically short-term or intermediate-term debt securities. Their
value at maturity or the interest rates at which they pay income are
determined by the change in value of the U.S. dollar against one or more
foreign currencies or an index. In some cases, these securities may pay
an amount at maturity based on a multiple of the amount of the relative
currency movements. This variety of index security offers the potential
for greater income but at a greater risk of loss.

Other 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 debt security is exchanged for
common stock of the issuer or is payable in an amount based on the price
of the issuer's common stock 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 (because the price of the issuer's common
stock is not as high as was expected).

Other Investment Restrictions. The Fund has other investment restrictions
which are fundamental policies. Under these fundamental policies, the
Fund cannot do any of the following: (1) as to 75% of its total assets,
the Fund may not buy securities issued or guaranteed by a single issuer
if, as a result, the Fund would have invested more than 5% of its assets
in the securities of that issuer or would own more than 10% of the voting
securities of that issuer (purchases of U.S. Government Securities are not
restricted by this policy); (2) the Fund may not borrow money in excess
of 50% of the value of its total assets (as a non-fundamental policy, that
limit is applied to the Fund's net assets), and it may borrow only subject
to the restrictions described under "Borrowing for Leverage," in the
Statement of Additional Information; (3) the Fund may not invest more than
25% of its total assets in any one industry (this limit does not apply to
U.S. Government Securities but each foreign government is treated as an
"industry," and utilities are divided according to the services they
provide); and (4) the Fund may not invest more than 5% of its total assets
in securities of issuers (including their predecessors) that have been in
operation less than three years.

All of the percentage limitations described above and elsewhere in
this Prospectus and Statement of Additional Information apply only at the
time the Fund purchases a security, and the Fund need not dispose of a
security merely because the size of the Fund's assets has 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 was organized in 1989 as a
Massachusetts business trust with one series, but in December 1993, that
business trust was reorganized to become a multi-series business trust
called Oppenheimer Strategic Funds Trust (the "Trust"), and the Fund
became a series of it. The Trust is an open-end, diversified management
investment company, with an unlimited number of authorized shares of
beneficial interest.

The Board of Trustees has the power, without shareholder approval,
to divide unissued shares of this 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 Fund is governed by a Board of Trustees, which is responsible for
protecting the interests of shareholders under Massachusetts law. The
Trustees meet periodically throughout the year to oversee the Fund's
activities, review its performance, and review the actions of the Manager.
"Trustees and Officers of the Fund" in the Statement of Additional
Information names the Trustees and provides more information about them
and the officers of the Fund. 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 Trustee or to take other action described in the
Fund's Declaration of Trust.

The Manager and its Affiliates. The Fund is managed by the Manager,
Oppenheimer Management Corporation, which is responsible for selecting the
Fund's investments and handles its day-to-day business. The Manager
carries out its duties, subject to the policies established by the Board
of Trustees, under an Investment Advisory Agreement which states the
Manager's responsibilities. The Agreement sets forth the fees paid by the
Fund to the Manager and describes the expenses that the Fund is
responsible to pay to conduct its business.

The Manager has operated as an investment adviser since 1959. The
Manager (including a subsidiary) currently manages investment companies,
including other OppenheimerFunds, with assets of more than $30 billion as
of March 31, 1995, and with more than 2.4 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 Managers. The Portfolio Managers of the Fund are Arthur
P. Steinmetz and David P. Negri. They have been the individuals
principally responsible for the day-to-day management of the Fund's
portfolio since November 1989. Mr. Steinmetz, a Senior Vice President of
the Manager, and Mr. Negri, a Vice President of the Manager, are Vice
Presidents of the Trust. They each serve as officers and portfolio
managers of other OppenheimerFunds.

- 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: 0.75% of the first $200 million of
the Fund's average annual net assets, 0.72% of the next $200 million,
0.69% of the next $200 million, 0.66% of the next $200 million, 0.60% of
the next $200 million, and 0.50% of net assets in excess of $1 billion.
The Fund's management fee for its last fiscal year was 0.54% of average
annual net assets for Class A shares and 0.54% for Class B shares, which
may be higher than the rate paid by some other mutual funds.

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

There is also information about the Fund's brokerage policies and
portfolio transactions 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 in those cases, the investment advisory
agreement allows the Manager to consider whether brokers have sold shares
of the Fund or any other funds for which the Manager also serves as
investment adviser.

- The Distributor. The Fund's shares are sold through dealers or
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
accounts to the Transfer Agent at the address and toll-free numbers shown
below in this Prospectus and on the back cover.

Performance of the Fund

Explanation of Performance Terminology. The Fund uses the terms "total
return," "average annual total return" and "yield" to illustrate its
performance. The performance of each class of shares is shown separately,
because the performance of each class 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 indices and other ways
to measure and compare the Fund's performance. The Fund's investment
performance will vary over time, depending on market conditions, the
composition of the portfolio, expenses and which class of shares you
purchase.

- 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 current maximum initial sales charge. 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.
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.

- 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.
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 and Class C
shares do not reflect the deduction of the contingent deferred sales
charge.

How Has the Fund Performed? Below is a discussion by the Manager of the
Fund's performance during its last fiscal year ended September 30, 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 past fiscal
year, the Fund's performance was affected by the rise in short-term
interest rates, both in the U.S. and abroad. As interest rates rose, the
bond market declined. In response to rising interest rates in the U.S.,
the Manager reduced the Fund's exposure to long-term U.S. government
bonds, as well as high yield corporate bonds issued by companies whose
earnings are sensitive to interest rate changes. The proceeds from the
sale of those investments were used to increase the Fund's investment in
higher- yielding, lower-rated corporate bonds issued by companies whose
earnings tend to rise in the middle-to-late stages of an economic
expansion. In addition, the Manager used futures to hedge against
interest rate risk and thus avoided the sale of interest bearing
securities. As foreign interest rates rose and the dollar weakened
against major currencies, the Manager reduced the Fund's investments in
Latin America and other emerging markets which tend to perform poorly in
a rising interest rate environment. The Manager increased the Fund's
investments in foreign government bonds which the Manager believed would
benefit from economic growth.

- 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 B shares of the Fund from the inception of each respective Class
held through September 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 maximum 5% contingent deferred sales charge for Class B shares. Class
C shares were not publicly offered during the fiscal year ended September
30, 1994. Accordingly, no information is presented on Class C shares in
the graph below.

Because the Fund invests in a variety of debt securities in domestic
and foreign markets, the Fund's performance is compared to the performance
of The Lehman Brothers Aggregate Bond Index and The Salomon Brothers World
Government Bond Index. The Lehman Brothers Aggregate Bond Index is a
broad-based, unmanaged index of U.S. corporate bond issues, U.S.
government securities and mortgage-backed securities widely regarded as
a measure of the performance of the domestic debt securities market. The
Salomon Brothers World Government Bond Index is an unmanaged index of
fixed-rate bonds having a maturity of one year or more, widely regarded
as a benchmark of fixed income performance on a world-wide basis. Index
performance reflects the reinvestment of income, but not capital gains or
transaction costs, and none of the data below shows the effect of taxes.
Also, the Fund's performance data reflects the effect of Fund business and
operating expenses. While index comparisons may be useful to provide a
benchmark for the Fund's performance, it must be noted that the Fund's
investments are not limited to the securities in any one index. Moreover,
the index data does not reflect any assessment of the risk of the
investments included in the index.

Oppenheimer Strategic Income Fund
Comparison of Change in Value
of $10,000 Hypothetical Investment to
Lehman Brothers Aggregate Bond Index and
Salomon Brothers World Government Bond Index

(Graph)

Past Performance is not predictive of future performance.

Oppenheimer Strategic Income Fund
Average Annual Total Returns at 9/30/94

1 Year Life of Class*

Class A: -2.98% 9.93%
Class B: -3.49% 6.49%

_________________
* Class A shares were first publicly offered on 10/16/89.
Class B shares were first publicly offered on 11/30/92.

ABOUT YOUR ACCOUNT

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, you will not pay an initial sales charge but if
you sell any of those shares within 18 months after your purchase, you may
pay a contingent deferred sales charge, which will vary depending on the
amount you invested. Sales charges are described below.

- 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. It is described below.

- 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, the decision as to which class of
shares is better suited to your needs depends on a number of factors which
you should discuss with your financial advisor. The Fund's operating
costs that apply to a class of shares and the effect of the different
types of sales charges on your investment will vary your investment
results over time. The most important factors are how much you plan to
invest, how long you plan to hold your investment, and whether you
anticipate exchanging your shares for shares of other OppenheimerFunds
(not all of which currently offer Class B and Class C 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. We used the
sales charge rates that apply to each class, and considered the effect of
the asset-based sales charges on Class B and Class C expenses (which will
affect your investment return). For the sake of comparison, we have
assumed that there is a 10% rate of appreciation in the 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 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? The Fund is
designed for long-term 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.
The effect of the sales charge over time, using our assumptions, will
generally depend on the amount invested. Because of the effect of class-
based expenses, your choice will also depend on how much you invest.

Investing for the Short Term. If you have a short term horizon (that
is, you plan to hold your shares less than six years), you should probably
consider purchasing Class C shares rather than Class A or Class B shares.
This is 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 $250,000 for a period less
than six years, Class C shares might not be as advantageous as Class A
shares. This is because the annual asset-based sales charge on Class C
shares (and the contingent deferred sales charges that apply if you redeem
Class C shares within a year of purchase) might have a greater impact on
your account during the period than the initial sales charge that would
apply if Class A shares were purchased instead at the applicable reduced
Class A sales charge rate.

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

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 A shares will likely be more
advantageous than Class B or Class C shares. This is because of the
effect of 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. Class B shares may be appropriate
for smaller investments held for the longer term because there is no
initial sales charge on Class B shares and Class B shares held six years
following their purchase convert into Class A shares.

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

- Are There Differences in Account Features That Matter to You?
Because some account features (such as checkwriting) may not be available
to Class B or Class C shareholders, or other features (such as Automatic
Withdrawal Plans) might 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 OppenheimerFunds currently offer Class B and
Class C shares, and because exchanges are permitted only to the same class
of shares in other 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 contingent deferred sales
charge and asset-based sales charge for Class B and Class C shares is the
same as the purpose of the front-end sales charge on sales of Class A
shares: to compensate the Distributor for commissions it pays to dealers
and financial institutions for selling shares.

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. However, we
recommend that you discuss your investment first with a financial advisor,
to be sure it is appropriate for you.

- 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. You can then transmit funds
electronically to purchase shares, to receive redemption proceeds, and to
transmit dividends and distributions.

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

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

If you buy shares through a dealer, the dealer must receive your
order by the close of The New York Stock Exchange, on a regular business
day and transmit it to the Distributor so that it is received before the
Distributor's close of business that day, which is normally 5:00 P.M. The
Distributor 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, purchases are not subject to an initial sales
charge, and the offering price will be the net asset value. In some cases,
reduced sales charges may be available, as described below. Out of the
amount you invest, the Fund receives the net asset value to invest for
your account. The sales charge varies depending on the amount of your
purchase. A portion of the sales charge may be retained by the
Distributor and allocated to your dealer as commission. The current sales
charge rates and commissions paid to dealers and brokers are as follows:
_______________________________________________________________________
Front-End Front-End
Sales Charge Sales Charge
As a As a Commission as
Percentage of Percentage of Percentage of
Amount of Purchase Offering Price Amount Invested Offering Price
_______________________________________________________________________
Less than $50,000 4.75% 4.98% 4.00%

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

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

$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%
_______________________________________________________________________
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 (shares of the Fund and
other OppenheimerFunds that offer only one class of shares that have no
class designation are considered "Class A shares" for this purpose).
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. 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 may 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.
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. To qualify for the lower sales charge
rates that apply to larger purchases for Class A shares, you and your
spouse can add together Class A shares you purchase for your individual
accounts, or jointly, or on behalf of your children who are minors, under
trust or custodial accounts. A fiduciary can count all shares purchased
for a trust, estate or other fiduciary account (including one or more
employee benefit plans of the same employer) that has multiple accounts.

Additionally, you can add together current purchases of Class A
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 total amount
of the intended purchases. This can include 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; and (7) dealers, brokers or
registered investment advisers that have entered into an agreement with
the Distributor to sell shares to defined contribution employee retirement
plans for which the dealer, broker or investment adviser provides
administration services.

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 acts 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, or (d) purchased and paid for with proceeds of
shares redeemed in the prior 12 months from a mutual fund on which an
initial sales charge or contingent deferred sales charge was paid (other
than a fund managed by the Manager or any of its affiliates); this waiver
must be requested when the purchase order is placed for your shares of the
Fund, and the Distributor may require evidence of your qualification for
this waiver. 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 does not apply to
purchases of Class A shares at net asset value described above and 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, (4)
involuntary redemptions of shares by operation of law or under the
procedures set forth in the Fund's Declaration of Trust or adopted by the
Board of Trustees, and (5) if at the time an order is placed for Class A
shares that would otherwise be subject to the Class A contingent deferred
sales charge, the dealer agrees to accept the dealer's portion of the
commission payable on the sale in installments of 1/18th of the commission
per month (with no further commission payable if the shares are redeemed
within 18 months of purchase).

- Service Plan for Class A Shares. The Fund has adopted a Service
Plan for Class A shares to reimburse the Distributor for a portion of its
costs incurred in connection with the personal service and maintenance of
accounts that hold Class A shares. Reimbursement is made quarterly at an
annual rate that may not exceed 0.25% of the average annual net assets of
Class A shares of the Fund. The Distributor uses all of those fees to
compensate dealers, brokers, banks and other financial institutions
quarterly for providing personal service and maintenance of accounts of
their

customers that hold Class A shares and to reimburse itself (if the Fund's
Board of Trustees authorizes such reimbursements, which it has not yet
done) for its other expenditures under the Plan.

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

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 Contingent Deferred Sales Charge
Beginning of Month In Which on Redemptions in that Year
Purchase Order was Accepted (As % of Amount Subject to Charge)

0 - 1 5.0%
1 - 2 4.0%
2 - 3 3.0%
3 - 4 3.0%
4 - 5 2.0%
5 - 6 1.0%
6 and following None

In the table, a "year" is a 12-month period. 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 (the disability must have occurred after the account was
established and you must provide evidence of a determination of disability
by the Social Security Administration); (3) returns of excess
contributions to Retirement Plans; and (4) distributions from IRAs
(including SEP-IRAs and SAR/SEP accounts) before the participant is age
59 1/2, and distributions from 403(b)(7) custodial plans or pension or
profit sharing plans before the participant is age 59 1/2 but only after
the participant has separated from service, if the distributions are made
in substantially equal periodic payments over the life (or life
expectancy) of the participant or the joint lives (or joint life and last
survivor expectancy) of the participant and the participant's designated
beneficiary (and the distributions must comply with the other requirements
for such distributions under the Internal Revenue Code and may not exceed
10% of the account value annually, measured from the date the Transfer
Agent receives the request).

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 below. 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 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 fee 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.

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. Therefore, those expenses may be carried
over and paid in future years. At September 30, 1994, the end of the Plan
year, the Distributor had incurred unreimbursed expenses under the Plan
of $64,673,369 (equal to 4.08% of the Fund's net assets represented by
Class B shares on that date), which have been carried over into the
present Plan year. If the Plan is terminated by the Fund, the Board of
Trustees may allow the Fund to continue payments of the asset-based sales
charge to the Distributor for 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
redemptions or circumstances described above under "Waivers of Class B
Sales Charge."

- 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 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 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 service 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 total up-front commission paid by the Distributor to the dealer at the
time of sale of Class C shares is 1.00% of the purchase price. The
Distributor plans to pay the asset-based sales charge as an ongoing
commission to the dealer on Class C shares that have been outstanding for
a year or more.

The Fund pays the asset-based sales charge to the Distributor for its
services rendered in connection with the distribution of Class C shares.
Those payments are at a fixed rate which is not related to the
Distributor's expenses. The services rendered by the Distributor include
paying and financing the payment of sales commissions, service fees, and
other costs of distributing and selling Class C shares, including
compensating personnel of the Distributor who support distribution of
Class C shares. If the Plan is terminated by the Fund, the Board of
Trustees may allow the Fund to continue payments of the asset-based sales
charge to the Distributor for distributing Class C shares 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. These include purchases of shares by telephone
(either through a service representative or by PhoneLink, described
below), automatic investments under Asset Builder Plans, and sending
dividends and distributions or Automatic Withdrawal Plan payments directly
to your bank account. Please 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 worth $5,000
or more, you can establish an Automatic Withdrawal Plan to receive
payments of at least $50 on a monthly, quarterly, semi-annual or annual
basis. The checks may be sent to you or sent automatically to your bank
account on AccountLink. You may even set up certain types of withdrawals
of up to $1,500 per month by telephone. You should consult the
Application and Statement of Additional Information for more details.

- Automatic Exchange Plans. You can authorize the Transfer Agent to
automatically exchange an amount you establish in advance 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 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 only to redemptions of Class A
shares or to redemptions of Class B shares of the Fund that you purchased
by reinvesting dividends or distributions or on which you paid a
contingent deferred sales charge when your redeemed them. It also applies
to 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, including SAR/SEP-IRAs

- Pension and Profit-Sharing Plans for self-employed persons and
other 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, by using the Fund's
checkwriting privilege or by telephone. You can also set up Automatic
Withdrawal Plans to redeem shares on a regular basis, as described above.
If you have questions about any of these procedures, and especially if you
are redeeming shares in a special situation, such as due to the death of
the owner, or from a retirement plan, please call the Transfer Agent
first, at 1-800-525-7048, for assistance.

- 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
- A redemption check is not payable to all shareholders listed on
the account statement
- A redemption 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 from a foreign bank that has a U.S. correspondent
bank, or from a U.S. registered dealer or broker in securities, municipal
securities or government securities, or from a U.S. national securities
exchange, a registered securities association or a clearing agency. If you
are signing on behalf of a corporation, partnership or other business, or
as a fiduciary, you must also include your title in the signature.

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: Send courier or Express
Mail requests to:
Oppenheimer Shareholder Services Oppenheimer Shareholder Services
P.O. Box 5270, 10200 E. Girard Avenue,
Denver, Colorado 80217 Building D
Denver, Colorado 80231

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

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

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

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

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

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

Selling Shares Through Your Dealer. The Distributor has made arrangements
to repurchase Fund shares from dealers and brokers on behalf of their
customers. Brokers or dealers may charge for that service. Please refer
to "Special Arrangements for Repurchase of Shares from Dealers and
Brokers" in the Statement of Additional Information for more details.

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 C 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 10
days.
- Don't use your checks if you changed your Fund account number.

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. 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. Certain
OppenheimerFunds offer Class A and Class B or Class C shares, and a list
can be obtained by calling the Distributor at 1-800-525-7048. In some
cases, sales charges may be imposed on exchange transactions. Please
refer to "How to Exchange Shares" in the Statement of Additional
Information for more details.

Exchanges may be requested in writing or by telephone:

- 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 a
service representative 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 that is in proper
form by the close of The New York Stock Exchange that day, which is
normally 4:00 P.M. but may be earlier on some days. However, either fund
may delay the purchase of shares of the fund you are exchanging into 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 portfolio 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 the close of The New York Stock Exchange on each regular business
day, by dividing the value of the Fund's net assets attributable to a
class by the number of shares of that class that are outstanding. The
Fund's Board of Trustees has established procedures to value the Fund's
securities to determine net asset value. In general, securities values
are based on market value. There are special procedures for valuing
illiquid and restricted securities, 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 Trustees at any time the Board believes it
is in the Fund's best interest to do so.

- Telephone Transaction Privileges for purchases, redemptions or
exchanges may be modified, suspended or terminated by the Fund at any
time. If an account has more than one owner, the Fund and the Transfer
Agent may rely on the instructions of any one owner. Telephone privileges
apply to each owner of the account and the dealer representative of record
for the account unless 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 neither the Transfer Agent nor the Fund will
be liable for losses or expenses arising out of telephone instructions
reasonably believed to be genuine. If you are unable to reach the
Transfer Agent during periods of unusual market activity, you may not be
able to complete a telephone transaction and should consider placing your
order by mail.

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

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

- The redemption price for shares will vary from day to day because
the value of the securities in the Fund's portfolio fluctuates, 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. Effective June 7, 1995,
for accounts registered in the name of a broker-dealer, payment will be
forwarded within 3 business days. The Transfer Agent may delay forwarding
a check or processing a payment via AccountLink for recently purchased
shares, but only until the purchase payment has cleared. That delay may
be as much as 10 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 $200 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 "How to Sell
Shares" in 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 Employer 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 to
shareholders having the same last name and address on the Fund's records.
However, each shareholder may call the Transfer Agent at 1-800-525-7048
to ask that copies of those materials be sent personally to that
shareholder.

Dividends, Capital Gains and Taxes

Dividends. The Fund declares dividends separately for Class A, Class B and
Class C shares from net investment income each regular business day and
pays those dividends to shareholders monthly. Normally, dividends are paid
on the 25th day of each month (or the prior regular business day if the
25th is not a regular business day), but the Board of Trustees can change
that date. Distributions may be made monthly from any net short-term
capital gains the Fund realizes in selling securities. It is expected
that distributions paid with respect to Class A
shares will generally be higher than for Class B or Class C shares because
expenses allocable to Class B and Class C shares will generally be higher.

During the Fund's fiscal year ended September 30, 1994, the Fund
attempted to pay dividends on its Class A shares at a constant level.
That was done keeping in mind the amount of net investment income and
other distributable income available from the Fund's portfolio
investments. However, the amount of each dividend can change from time
to time (or there might not be a dividend at all on either class)
depending on market conditions, the Fund's expenses, and the composition
of the Fund's portfolio. Attempting to pay dividends at a constant level
required the Manager to monitor the Fund's income stream from its
investments and at times to select higher yielding securities (appropriate
to the Fund's objectives and investment restrictions) to maintain income
at the required level. This practice did not affect the net asset values
of either class of shares. The Board of Trustees may change or end the
Fund's targeted dividend level for Class A shares at any time. There is
no targeted dividend level for Class B or Class C shares.

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
year. Short-term capital gains are treated as dividends for tax purposes.
There can be no assurance that the Fund will pay any capital gains
distributions in a particular year.

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

- 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. It does not matter how long you held your
shares. Dividends paid from short-term capital gains and net investment
income are taxable as ordinary income. Distributions are subject to
federal income tax and may be subject to state or local taxes. Your
distributions are taxable when paid, whether you reinvest them in
additional shares or take them in cash. Every year the Fund will send you
and the IRS a statement showing the amount of each taxable distribution
you received in the previous year.

- "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. Generally speaking, 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: If distributions made by the Fund must be
recharacterized at the end of a fiscal year because of the Fund's
investment policies (for example, due to losses on foreign currency
exchange), shareholders may have a non-taxable return of capital. If this
occurs, it will be identified in notices to shareholders. A non-taxable
return of capital may reduce the tax basis in your Fund shares.

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

Appendix: Description of Ratings Categories of Rating Services

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

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

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

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

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

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

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

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

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

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

Description of Standard & Poor's 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.
<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER STRATEGIC INCOME FUND

Graphic material included in Prospectus of Oppenheimer Strategic
Income Fund: "Comparison of Total Return of Oppenheimer Strategic Income
Fund with The Lehman Aggregate Bond Index and The Salomon Brothers World
Government Bond Index - Change in Value of a $10,000 Hypothetical
Investment"

A linear graph will be included in the Prospectus of Oppenheimer Strategic
Income Fund (the "Fund") depicting the initial account value and
subsequent account value of a hypothetical $10,000 investment in the Fund
during each of the Fund's fiscal years since the commencement of the
Fund's operations as to Class A shares (October 16, 1989) and Class B
shares (November 30, 1992) and comparing such values with the same
investments over the same time periods with The Lehman Aggregate Bond
Index and The Salomon World Government 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 Aggregate Bond Index and The Salomon Brothers World
Government Bond Index, is set forth in the Prospectus under "Fund
Performance Information - Management's Discussion of Performance."

Oppenheimer Lehman Bros. Salomon Brothers
Fiscal Year Strategic Aggregate World Government
(Period) Ended Income Fund A Bond Index Bond Index

10/16/89(1) $ 9,525 $10,000 $10,000
09/30/90 $10,489 $10,498 $10,664
09/30/91 $12,258 $12,177 $12,268
09/30/92 $13,794 $13,705 $14,513
09/30/93 $15,666 $15,072 $15,991
09/30/94 $15,988 $14,586 $16,126

Oppenheimer Lehman Bros. Salomon Brothers
Fiscal Year Strategic Aggregate World Government
(Period) Ended Income Fund B Bond Index Bond Index

11/30/92(2) $10,000 $10,000 $10,000
09/30/93 $11,468 $11,141 $11,509
09/30/94 $11,222 $10,782 $11,606

----------------------
(1) The Fund commenced operations on October 16, 1989.
(2) Class B shares of the Fund were first publicly offered on November 30,
1992.

<PAGE>
Oppenheimer Strategic Income Fund
3410 South Galena Street
Denver, CO 80231
Telephone: 1-800-525-7048

Investment Advisor
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 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 & Wolf, P.C.
1600 Broadway
Denver, Colorado 80202

No dealer, broker, salesperson or any other person has been authorized to
give any information or to make any representations other than those
contained in this Prospectus or the Statement of Additional Information,
and if given or made, such information and representations must not be
relied upon as having been authorized by the Fund, 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.

PR0230.001.0595 * Printed on recycled paper

<PAGE>

OPPENHEIMER STRATEGIC FUNDS TRUST
3410 SOUTH GALENA STREET, DENVER, COLORADO 80231-5099
1-800-525-7048

PART B

STATEMENT OF ADDITIONAL INFORMATION
September __, 1995

___________________________________

This Statement of Additional Information of Oppenheimer Strategic
Funds Trust consists of this cover page and the following documents:

1. Statement of Additional Information of Oppenheimer Strategic Income
Fund dated May 26, 1995, supplemented July 14, 1995, filed herewith and
incorporated herein by reference.

2. Oppenheimer Strategic Income Fund's Annual Report as of September 30,
1994 and its Semi-Annual Report as of March 31, 1995, filed herewith and
incorporated herein by reference.

3. Prospectus of Quest for Value Global Income Fund dated March 1, 1995,
as revised June 30, 1995, filed herewith and incorporated herein by
reference.

4. Statement of Additional Information of Quest for Value Global Income
Fund dated March 1, 1995, filed herewith and incorporated herein by
reference.

5. Quest for Value Global Income Fund's Annual Report as of November 30,
1994 and its Semi-Annual Report as of May 31, 1995, filed herewith and
incorporated herein by reference.

This Statement of Additional Information (the "Additional Statement")
is not a Prospectus. This Additional Statement should be read in
conjunction with the Proxy Statement and Prospectus, which may be obtained
by written request to Oppenheimer Shareholder Services ("OSS"), P.O. Box
5270, Denver, Colorado 80217, or by calling OSS at the toll-free number
shown above.

<PAGE>

OPPENHEIMER STRATEGIC INCOME FUND
Supplement dated July 14, 1995 to the
Statement of Additional Information dated May 26, 1995

The Statement of Additional Information is amended as follows:

1. In "Total Return Information," the section entitled "Cumulative Total
Returns" on page 35, the first full paragraph is changed by adding a new
third sentence as follows:

For the Class C shares, the payment of the 1.0% contingent
deferred sales charge is applied to the investment result for
the one-year period (or less).

2. In "How to Buy Shares" the section entitled "Alternative Sales
Arrangements - Class A, Class B and Class C Shares" on page 40, the last
sentence of the first paragraph of the section is revised to read as
follows:

The Distributor will not accept any order of $500,000 or more
of Class B shares or $1 million or more of 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.

3. In the section entitled "Letters of Intent" on page 45, the first
three sentences of the first paragraph in that section are replaced by the
following:

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

4. In the section entitled "Letters of Intent" on page 46, a new third
paragraph is added as follows:

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

5. In the section entitled "Terms of Escrow That Apply to Letters of
Intent" on page 45, item 5 of that section is replaced by the following:

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

6. In the section entitled "Distributions from Retirement Plans" on page
48, the phrase "401(k) plans" is added after "403(b)(7) custodial plans"
in the first sentence, and the third sentence of that section is revised
to read as follows:

Participants (other than self-employed persons maintaining a
plan account in their own name) in OppenheimerFunds-sponsored
prototype pension, profit-sharing or 401(k) plans may not
directly redeem or exchange shares held for their account under
those plans.

7. In the section entitled "Special Arrangements for Repurchase of
Shares from Dealers and Brokers" on page 49, the last sentence of that
section is revised to read as follows:

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

8. In the section entitled "How To Exchange Shares" on page 52, the
second full paragraph is changed by adding new third and fourth sentences
as follows:

However, shares of Oppenheimer Money Market Fund, Inc.
purchased with the redemption proceeds of shares of other
mutual funds (other than funds managed by the Manager or its
subsidiaries) redeemed within the 12 months prior to that
purchase may subsequently be exchanged for shares of other
OppenheimerFunds without being subject to an initial or
contingent deferred sales charge, whichever is applicable. To
qualify for that privilege, the investor or the investor's
dealer must notify the Distributor of eligibility for this
privilege at the time the shares of Oppenheimer Money Market
Fund, Inc. are purchased, and, if requested, must supply proof
of entitlement to this privilege.

July 14, 1995 PXO230.002

<PAGE>

Oppenheimer Strategic Income Fund

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

Statement of Additional Information dated May 26, 1995

This Statement of Additional Information is not a Prospectus. This
document contains additional information about the Fund and supplements
information in the Prospectus dated May 26, 1995. 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 OF CONTENTS

Page
About the Fund
Investment Objective and Policies 2
Investment Policies and Strategies 2
Other Investment Techniques and Strategies 11
Other Investment Restrictions 25
How the Fund is Managed 25
Organization and History 25
Trustees and Officers of the Fund 26
The Manager and Its Affiliates 30
Brokerage Policies of the Fund 32
Performance of the Fund 33
Distribution and Service Plans 38
About Your Account 40
How To Buy Shares 40
How To Sell Shares 46
How To Exchange Shares 51
Dividends, Capital Gains and Taxes 53
Additional Information About the Fund 55
Financial Information About the Fund
Independent Auditors' Report 57
Financial Statements 58
Appendix: Industry Classifications A-1

<PAGE>
ABOUT THE FUND

Investment Objective and Policies

Investment Policies and Strategies. The investment objective and policies
of the Fund are discussed 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 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.

In selecting securities for the Fund's portfolio, the Fund's
investment manager, Oppenheimer Management Corporation (the "Manager"),
evaluates the investment merits of debt securities primarily through the
exercise of its own investment analysis. This may include, among other
things, consideration of the financial strength of an issuer, including
its historic and current financial condition, the trading activity in its
securities, present and anticipated cash flow, estimated current value of
its assets in relation to their historical cost, the issuer's experience
and managerial expertise, responsiveness to changes in interest rates and
business conditions, debt maturity schedules, current and future borrowing
requirements, and any change in the financial condition of an issuer and
the issuer's continuing ability to meet its future obligations. The
Manager also may consider anticipated changes in business conditions,
levels of interest rates of bonds as contrasted with levels of cash
dividends, industry and regional prospects, the availability of new
investment opportunities and the general economic, legislative and
monetary outlook for specific industries, the nation and the world.

- Investment Risks. With the exception of U.S. Government
Securities, the debt securities the Fund invests in will have one or more
types of investment risk: credit risk, interest rate risk or foreign
exchange rate risk: credit risk and interest rate risk. Credit risk
relates to the ability of the issuer to meet interest or principal
payments or both as they become due. Generally, higher yielding bonds are
subject to credit risk to a greater extent than higher quality bonds.
Interest rate risk refers to the fluctuations in value of debt securities
resulting solely from the inverse relationship between price and yield of
outstanding debt securities. An increase in prevailing interest rates
will generally reduce the market value of debt securities, and a decline
in interest rates will tend to increase their value. In addition, debt
securities with longer maturities, which tend to produce higher yields,
are subject to potentially greater capital appreciation and depreciation
than obligations with shorter maturities. Fluctuations in the market
value of debt securities subsequent to their acquisition will not affect
the interest payable on those securities, and thus the cash income from
such securities, but will be reflected in the valuations of these
securities used to compute the Fund's net asset values. Foreign exchange
rate risk refers to the change in value of the currency in which a foreign
security the Fund holds is denominated against the U.S. dollar.

- Special Risks - High Yield Securities. As stated in the
Prospectus, the corporate debt securities in which the Fund will
principally invest may be in the lower rating categories. The Fund may
invest in securities rated as low as "C" by Moody's or "D" by Standard &
Poor's. The Manager will not rely solely on the ratings assigned by
rating services and may invest, without limitation, in unrated securities
which offer, in the opinion of the Manager, comparable yields and risks
as those rated securities in which the Fund may invest.

Risks of high yield securities may include: (i) limited liquidity
and secondary market support, (ii) substantial market price volatility
resulting from changes in prevailing interest rates, (iii) subordination
to the prior claims of banks and other senior lenders, (iv) the operation
of mandatory sinking fund or call/redemption provisions during periods of
declining interest rates that could cause the Fund to be able to reinvest
premature redemption proceeds only in lower yielding portfolio securities,
(v) the possibility that earnings of the issuer may be insufficient to
meet its debt service, and (vi) the issuer's low creditworthiness and
potential for insolvency during periods of rising interest rates and
economic downturn. As a result of the limited liquidity of high yield
securities, their prices have at times experienced significant and rapid
decline when a substantial number of holders decided to sell. A decline
is also likely in the high yield bond market during an economic downturn.
An economic downturn or an increase in interest rates could severely
disrupt the market for high yield bonds and adversely affect the value of
outstanding bonds and the ability of the issuers to repay principal and
interest.

- Portfolio Turnover. The Manager will monitor the Fund's tax
status under the Internal Revenue Code of 1986, as amended (the "Internal
Revenue Code") during periods in which the Fund's annual turnover rate
exceeds 100%. To the extent that increased portfolio turnover results in
sales of securities held less than three months, the Fund's ability to
qualify as "regulated investment company" under the Internal Revenue Code
may be affected (see "Dividends and Distributions," below). No
limitations are placed on the weighted average maturity of the portfolio,
which will generally be of longer duration. Preferred stocks, other than
those of a finite maturity, will be assumed to have a 40 year maturity for
the purpose of calculating a weighted average maturity. The Fund
anticipates it will shift its investment focus to securities of longer
maturity as interest rates decline, and to securities of shorter maturity
as interest rates rise. Although changes in the value of the Fund's
portfolio securities subsequent to their acquisition are reflected in the
net asset value of the Fund's shares, such changes will not affect the
income received by the Fund from such securities. The dividends paid by
the Fund will increase or decrease in relation to the income received by
the Fund from its investments, which will in any case be reduced by the
Fund's expenses before being distributed to the Fund's shareholders.

- Debt Securities of Foreign Governments and Companies. As stated
in the Prospectus, the Fund may invest in debt obligations and other
securities (which may be denominated in U.S. dollars or non-U.S.
currencies) issued or guaranteed by foreign corporations, certain
"supranational entities" (described below) and foreign governments or
their agencies or instrumentalities, and in debt obligations and other
securities issued by U.S. corporations denominated in non-U.S. currencies.
The types of foreign debt obligations and other securities in which the
Fund may invest are the same types of debt obligations identified under
"Debt Securities of U.S. Companies," below.

The percentage of the Fund's assets that will be allocated to foreign
securities will vary depending on the relative yields of foreign and U.S.
securities, the economies of foreign countries, the condition of such
countries' financial markets, the interest rate climate of such countries
and the relationship of such countries' currency to the U.S. dollar.
These factors are judged on the basis of fundamental economic criteria
(e.g., relative inflation levels and trends, growth rate forecasts,
balance of payments status, and economic policies) as well as technical
and political data.

Investments in foreign securities offer potential benefits not
available from investments solely in securities of domestic issuers, by
offering 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 bond or
other markets that do not move in a manner parallel to U.S. markets. From
time to time, 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
reimposed.

Securities of foreign issuers that are represented by American
depository receipts, or that are listed on a U.S. securities exchange, or
are traded in the U.S. over-the-counter market are not considered "foreign
securities" when the Fund moves its investment focus among different
sectors, because they are not subject to many of the special
considerations and risks (discussed below) that apply to foreign
securities traded and held abroad. If the Fund's portfolio securities are
held abroad, the countries in which such securities may be held and the
sub-custodians holding them must be approved by the Fund's Board of
Trustees under applicable SEC rules.

- Risks of Foreign Securities. Investment in foreign securities
involves considerations and risks not associated with investment in
securities of U.S. issuers. For example, foreign issuers are not required
to use generally-accepted accounting principles ("G.A.A.P."). If foreign
securities are not registered under the Securities Act of 1933, the issuer
does not have to comply with the disclosure requirements of the Securities
Exchange Act of 1934. In addition, it is generally more difficult to
obtain court judgments outside the United States. The values of foreign
securities will be affected by incomplete or inaccurate information
available as to foreign issuers, changes in currency rates or exchange
control regulations or currency blockage, application of foreign tax laws,
including withholding taxes, changes in governmental administration or
economic or monetary policy (in the U.S. or abroad) or changed
circumstances in dealings between nations. Costs will be incurred in
connection with conversions between various currencies. Foreign brokerage
commissions are generally higher than commissions in the U.S., and foreign
securities markets may be less liquid, more volatile and less subject to
governmental regulation than in the U.S. Investments in foreign countries
could be affected by other factors not generally thought to be present in
the U.S., including expropriation or nationalization, confiscatory
taxation and potential difficulties in enforcing contractual obligations,
and could be subject to extended settlement periods.

Because the Fund may purchase securities denominated in foreign
currencies, a change in the value of any such currency against the U.S.
dollar will result in a change in the U.S. dollar value of the Fund's
assets and its income available for distribution. In addition, although
a portion of the Fund's investment income may be received or realized in
foreign currencies, the Fund will be required to compute and distribute
its income in U.S. dollars, and absorb the cost of currency fluctuations.
The Fund may engage in foreign currency exchange transactions for hedging
purposes to protect against changes in future exchange rates. See
"Covered Calls and Hedging," below.

The values of foreign investments and the investment income derived
from them may also be affected unfavorably by changes in currency exchange
control regulations. Although the Fund will invest only in securities
denominated in foreign currencies that at the time of investment do not
have significant government-imposed restrictions on conversion into U.S.
dollars, there can be no assurance against subsequent imposition of
currency controls. In addition, the values of foreign securities will
fluctuate in response to a variety of factors, including changes in U.S.
and foreign interest rates.

The Fund may invest in U.S. dollar-denominated foreign securities
referred to as "Brady Bonds." These are debt obligations of foreign
entities that may be fixed-rate par bonds or floating-rate discount bonds
and are generally collateralized in full as to principal due at maturity
by U.S. Treasury zero coupon obligations that have the same maturity as
the Brady Bonds. However, the Fund may also invest in uncollateralized
Brady Bonds. Brady Bonds are generally viewed as having three or four
valuation components: (i) any collateralized repayment of principal at
final maturity; (ii) the collateralized interest payments; (iii) the
uncollateralized interest payments; and (iv) any uncollateralized
repayment of principal at maturity (these uncollateralized amounts
constitute what is referred to as the "residual risk" of such bonds). In
the event of a default with respect to collateralized Brady Bonds as a
result of which the payment obligations of the issuer are accelerated, the
zero coupon U.S. Treasury securities held as collateral for the payment
of principal will not be distributed to investors, nor will such
obligations be sold and the proceeds distributed. The collateral will be
held by the collateral agent to the scheduled maturity of the defaulted
Brady Bonds, which will continue to be outstanding, at which time the face
amount of the collateral will equal the principal payments which would
have then been due on the Brady Bonds in the normal course. In addition,
in light of the residual risk of Brady Bonds and, among other factors, the
history of defaults with respect to commercial bank loans by public and
private entities of countries issuing Brady Bonds, investments in Brady
Bonds are to be viewed as speculative.

The obligations of foreign governmental entities may or may not be
supported by the full faith and credit of a foreign government.
Obligations of "supranational entities" include those of international
organizations designated or supported by governmental entities to promote
economic reconstruction or development and of international banking
institutions and related government agencies. Examples include the
International Bank for Reconstruction and Development (the "World Bank"),
the European Coal and Steel Community, the Asian Development Bank and the
Inter-American Development Bank. The governmental members, or
"stockholders," usually make initial capital contributions to the
supranational entity and in many cases are committed to make additional
capital contributions if the supranational entity is unable to repay its
borrowings. Each supranational entity's lending activities are limited
to a percentage of its total capital (including "callable capital"
contributed by members at the entity's call), reserves and net income.
There is no assurance that foreign governments will be able or willing to
honor their commitments.

- U.S. Government Securities. U.S. Government Securities are debt
obligations issued or guaranteed by the U.S. Government or one of its
agencies or instrumentalities. The U.S. Government Securities the Fund
can invest in are described in the Prospectus and include U.S. Treasury
securities such as "zero coupon" Treasury securities, mortgage-backed
securities and CMOs.

- Zero Coupon Treasury Securities. The Fund may invest in zero
coupon Treasury securities, which are U.S. Treasury bills issued without
interest coupons, U.S. Treasury notes and bonds which have been stripped
of their unmatured interest coupons, and receipts or certificates
representing interests in such stripped obligations and coupons. These
securities usually trade at a deep discount from their face or par value
and will be subject to greater fluctuations in market value in response
to changing interest rates than debt obligations of comparable maturities
that make current payments of interest. However, the interest rate is
"locked in" and there is no risk of having to reinvest periodic interest
payments in securities having lower rates.

- Mortgage-Backed U.S. Government Securities and CMOs. These
securities represent participation interests in pools of residential
mortgage loans made by lenders such as banks and savings and loan
associations. The pools are assembled for sale to investors (such as the
Fund) by government agencies, which issue or guarantee the securities
relating to the pool. Such securities differ from conventional debt
securities which generally provide for periodic payment of interest in
fixed or determinable amounts (usually semi-annually) with principal
payments at maturity or specified call dates. Some mortgage-backed U.S.
Government securities in which the Fund may invest may be backed by the
full faith and credit of the U.S. Treasury (e.g., direct pass-through
certificates of Government National Mortgage Association); some are
supported by the right of the issuer to borrow from the U.S. Government
(e.g., obligations of Federal Home Loan Mortgage Corporation); and some
are backed by only the credit of the issuer itself (e.g., Federal National
Mortgage Association). Those guarantees do not extend to the value or
yield of the mortgage-backed securities themselves or to the net asset
value of the Fund's shares. Those government agencies may also issue
derivative mortgage backed securities such as collateralized mortgage
obligations ("CMOs"), discussed below.

The yield on mortgage-backed securities is based on the average
expected life of the underlying pool of mortgage loans. The actual life
of any particular pool will be shortened by any unscheduled or early
payments of principal and interest. Principal prepayments generally
result from the sale of the underlying property or the refinancing or
foreclosure of underlying mortgages. The occurrence of prepayments is
affected by a wide range of economic, demographic and social factors and,
accordingly, it is not possible to predict accurately the average life of
a particular pool. Yield on such pools is usually computed by using the
historical record of prepayments for that pool, or, in the case of newly-
issued mortgages, the prepayment history of similar pools. The actual
prepayment experience of a pool of mortgage loans may cause the yield
realized by the Fund to differ from the yield calculated on the basis of
the expected average life of the pool.

Prepayments tend to increase during periods of falling interest
rates, while during periods of rising interest rates prepayments will most
likely decline. When prevailing interest rates rise, the value of a pass-
through security may decrease as do the values of other debt securities,
but, when prevailing interest rates decline, the value of a pass-through
security is not likely to rise to the extent that the values of other debt
securities rise, because of the prepayment feature of pass-through
securities. The Fund's reinvestment of scheduled principal payments and
unscheduled prepayments it receives may occur at times when available
investments offer higher or lower rates than the original investment, thus
affecting the yield of the Fund. Monthly interest payments received by
the Fund have a compounding effect which may increase the yield to the
Fund more than debt obligations that pay interest semi-annually. Because
of those factors, mortgage-backed securities may be less effective than
Treasury bonds of similar maturity at maintaining yields during periods
of declining interest rates. The Fund may purchase mortgage-backed
securities at a premium or at a discount. Accelerated prepayments
adversely affect yields for pass-through securities purchased at a premium
(i.e., at a price in excess of their principal amount) and may involve
additional risk of loss of principal because the premium may not have been
fully amortized at the time the obligation is repaid. The opposite is
true for pass-through securities purchased at a discount.

- GNMA Certificates. Certificates of Government National Mortgage
Association ("GNMA") are mortgage-backed securities of GNMA that evidence
an undivided interest in a pool or pools of mortgages ("GNMA
Certificates"). The GNMA Certificates that the Fund may purchase are of
the "modified pass-through" type, which entitle the holder to receive
timely payment of all interest and principal payments due on the mortgage
pool, net of fees paid to the "issuer" and GNMA, regardless of whether the
mortgagor actually makes the payments when due.

The National Housing Act authorizes GNMA to guarantee the timely
payment of principal and interest on securities backed by a pool of
mortgages insured by the Federal Housing Administration ("FHA") or
guaranteed by the Veterans Administration ("VA"). The GNMA guarantee is
backed by the full faith and credit of the U.S. Government. GNMA is also
empowered to borrow without limitation from the U.S. Treasury if necessary
to make any payments required under its guarantee.

The average life of a GNMA Certificate is likely to be substantially
shorter than the original maturity of the mortgages underlying the
securities. Prepayments of principal by mortgagors and mortgage
foreclosures will usually result in the return of the greater part of
principal investment long before the maturity of the mortgages in the
pool. Foreclosures impose no risk to principal investment because of the
GNMA guarantee, except to the extent that the Fund has purchased the
certificates at a premium in the secondary market.

- FNMA Securities. The Federal National Mortgage Association
("FNMA") was established to create a secondary market in mortgages insured
by the FHA. FNMA issues guaranteed mortgage pass-through certificates
("FNMA Certificates"). FNMA Certificates resemble GNMA Certificates in
that each FNMA Certificate represents a pro rata share of all interest and
principal payments made and owed on the underlying pool. FNMA guarantees
timely payment of interest and principal on FNMA Certificates. The FNMA
guarantee is not backed by the full faith and credit of the U.S.
Government.

- FHLMC Securities. The Federal Home Loan Mortgage Corporation
("FHLMC") was created to promote development of a nationwide secondary
market for conventional residential mortgages. FHLMC issues two types of
mortgage pass-through securities ("FHLMC Certificates"): mortgage
participation certificates ("PCs") and guaranteed mortgage certificates
("GMCs"). PCs resemble GNMA Certificates in that each PC represents a pro
rata share of all interest and principal payments made and owed on the
underlying pool. FHMLC guarantees timely monthly payment of interest on
PCs and the ultimate payment of principal. The FHLMC guarantee is not
backed by the full faith and credit of the U.S. Government.

- Collateralized Mortgage-Backed Obligations ("CMOs"). CMOs are
fully-collateralized bonds that are the general obligations of the issuer
thereof, either the U.S. Government, a U.S. Government instrumentality,
or a private issuer. Such bonds generally are secured by an assignment
to a trustee (under the indenture pursuant to which the bonds are issued)
of collateral consisting of a pool of mortgages. Payments with respect
to the underlying mortgages generally are made to the trustee under the
indenture. Payments of principal and interest on the underlying mortgages
are not passed through to the holders of the CMOs as such (i.e., the
character of payments of principal and interest is not passed through, and
therefore payments to holders of CMOs attributable to interest paid and
principal repaid on the underlying mortgages do not necessarily constitute
income and return of capital, respectively, to such holders), but such
payments are dedicated to payment of interest on and repayment of
principal of the CMOs. CMOs often are issued in two or more classes with
different characteristics such as varying maturities and stated rates of
interest. Because interest and principal payments on the underlying
mortgages are not passed through to holders of CMOs, CMOs of varying
maturities may be secured by the same pool of mortgages, the payments on
which are used to pay interest on each class and to retire successive
maturities in sequence. Unlike other mortgage-backed securities
(discussed above), CMOs are designed to be retired as the underlying
mortgages are repaid. In the event of prepayment on such mortgages, the
class of CMO first to mature generally will be paid down. Therefore,
although in most cases the issuer of CMOs will not supply additional
collateral in the event of such prepayment, there will be sufficient
collateral to secure CMOs that remain outstanding.

- Stripped Mortgage-Backed Securities. These are derivative multi-
class mortgage back securities, that are usually structured with two
classes that receive different proportions of the interest and principal
distributions on a pool of GNMA, FNMA or FHLMC certificates. Commonly,
one class receives some of the interest and most of the principal, while
the other class will receive most of the interest and the rest of the
principal. In some cases, one class will receive all of the interest
("interest-only" securities) and the other will receive all of the
principal. The yield on interest-only securities is extremely sensitive
to the rate of principal payments (including prepayments) on the
underlying pool, and a rapid rate of principal prepayments may have a
material adverse effect on the yield of the interest-only class. If the
underlying pool experiences greater than anticipated principal
prepayments, the Fund may fail to fully recoup its initial investment.

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

- Debt Securities of U.S. Companies. The Fund's investments in
fixed-income securities issued by domestic companies and other issuers may
include debt obligations (bonds, debentures, notes, mortgage-backed and
asset-backed securities and CMOs) together with preferred stocks.

The risks attendant to investing in high-yielding, lower-rated bonds
are described above. If a sinking fund or callable bond held by the Fund
is selling at a premium (or discount) and the issuer exercises the call
or makes a mandatory sinking fund payment, the Fund would realize a loss
(or gain) in market value; the income from the reinvestment of the
proceeds would be determined by current market conditions, and
reinvestment of that income may occur at times when rates are generally
lower than those on the called bond.

- Preferred Stocks. Preferred stock, unlike common stock, offers
a stated dividend rate payable from the corporation's earnings. Such
preferred stock dividends may be cumulative or non-cumulative,
participating, or auction rate. If interest rates rise, the fixed
dividend on preferred stocks may be less attractive, causing the price of
preferred stocks to decline. Preferred stock may have mandatory sinking
fund provisions, as well as call/redemption provisions prior to maturity,
a negative feature when interest rates decline. Dividends on some
preferred stock may be "cumulative," requiring all or a portion of prior
unpaid dividends to be paid. Preferred stock also generally has a
preference over common stock on the distribution of a corporation's assets
in the event of liquidation of the corporation, and may be
"participating," which means that it may be entitled to a dividend
exceeding the stated dividend in certain cases. The rights of preferred
stocks on distribution of a corporation's assets in the event of a
liquidation are generally subordinate to the rights associated with a
corporation's debt securities.

- Participation Interests. The Fund may invest in participation
interests, subject to the limitation, described in "Illiquid and
Restricted Securities" in the Prospectus, on investments by the Fund in
illiquid investments. Participation interests represent an undivided
interest in or assignment of a loan made by the issuing financial
institution. No more than 5% of the Fund's net assets can be invested in
participation interests of the same issuing bank. Participation interests
are primarily dependent upon the financial strength of the borrowing
corporation, which is obligated to make payments of principal and interest
on the loan, and there is a risk that such borrowers may have difficulty
making payments. Such borrowers may have senior securities rated as low
as "C" by Moody's or "D" by Standard & Poor's. In the event the borrower
fails to pay scheduled interest or principal payments, the Fund could
experience a reduction in its income and might experience a decline in the
net asset value of its shares. In the event of a failure by the financial
institution to perform its obligation in connection with the participation
agreement, the Fund might incur certain costs and delays in realizing
payment or may suffer a loss of principal and/or interest. The Manager
has set certain creditworthiness standards for issuers of loan
participation and monitors their creditworthiness. These same standards
apply to participation interests in loans to foreign companies.

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

- Asset-Backed Securities. These securities, issued by trusts and
special purpose corporations, are backed by pools of assets, primarily
automobile and credit-card receivables and home equity loans, which pass
through the payments on the underlying obligations to the security holders
(less servicing fees paid to the originator or fees for any credit
enhancement). The value of an asset-backed security is affected by
changes in the market's perception of the asset backing the security, the
creditworthiness of the servicing agent for the loan pool, the originator
of the loans, or the financial institution providing any credit
enhancement, and is also affected if any credit enhancement has been
exhausted. Payments of principal and interest passed through to holders
of asset-backed securities are typically supported by some form of credit
enhancement, such as a letter of credit, surety bond, limited guarantee
by another entity or having a priority to certain of the borrower's other
securities. The degree of credit enhancement varies, and generally
applies to only a fraction of the asset-backed security's par value until
exhausted. If the credit enhancement of an asset-backed security held by
the Fund has been exhausted, and if any required payments of principal and
interest are not made with respect to the underlying loans, the Fund may
experience losses or delays in receiving payment. The risks of investing
in asset-backed securities are ultimately dependent upon payment of
consumer loans by the individual borrowers. As a purchaser of an asset-
backed security, the Fund would generally have no recourse to the entity
that originated the loans in the event of default by a borrower. The
underlying loans are subject to prepayments, which shorten the weighted
average life of asset-backed securities and may lower their return, in the
same manner as described above for prepayments of a pool of mortgage loans
underlying mortgage-backed securities. However, asset-backed securities
do not have the benefit of the same security interest in the underlying
collateral as do mortgage-backed securities.

- Zero Coupon Corporate Securities. The Fund may invest in zero
coupon securities issued by corporations. Corporate zero coupon
securities are: (i) notes or debentures which do not pay current interest
and are issued at substantial discounts from par value, or (ii) notes or
debentures that pay no current interest until a stated date one or more
years into the future, after which the issuer is obligated to pay interest
until maturity, usually at a higher rate than if interest were payable
from the date of issuance. Such corporate zero coupon securities, in
addition to the risks identified above under "U.S. Government Securities -
Zero Coupon Treasury Securities," are subject to the risk of the issuer's
failure to pay interest and repay principal in accordance with the terms
of the obligation.

- Mortgage-Backed Securities. Mortgage-backed securities may also
be issued by private issuers such as commercial banks, savings and loan
associations, mortgage insurance companies and other secondary market
issuers that create pass-through pools of conventional residential
mortgage loans and on commercial mortgage loans. They may be the
originators of the underlying loans as well as the guarantors of the
mortgage-backed securities. There are no direct or indirect government
guarantees of payments on these pools. However, timely payment of
interest and principal of these pools is generally supported by various
forms of insurance or guarantees. The insurance and guarantees are issued
by government entities, private insurers and the mortgage poolers. The
insurance available, the guarantees, and the creditworthiness of the
issuers will be evaluated by the Manager to determine whether a particular
mortgage-backed security of this type meets the Fund's investment
standards. There can be no assurance that the private insurers can meet
their obligations under the policies. Securities issued by certain
private poolers may not be readily marketable, and would be treated as
illiquid securities subject to the Fund's limitations on investments in
such securities.

- Temporary Defensive Investments. In times of unstable or
uncertain economic or market conditions, when the Manager determines it
appropriate to do so, the Fund may assume a temporary defensive position
and invest an unlimited amount of its assets in U.S. dollar-denominated
debt obligations, issued by the U.S. or foreign governments, domestic or
foreign corporations or banks, maturing in one year or less ("money market
securities"). The Fund will purchase money market securities to maintain
liquidity deemed necessary by the Manager for investment purposes, and to
minimize the impact of fluctuating interest rates on the net asset value
of the Fund. To the extent the Fund is so invested, it is not invested
to achieve its investment objective of seeking a high level of current
income.

Other Investment Techniques and Strategies

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

- Illiquid and Restricted Securities. The Fund will not purchase
or otherwise acquire any security if, as a result, more than 10% of its
net assets (taken at current value) would be invested in securities that
are illiquid by virtue of the absence of a readily available market or
because of legal or contractual restrictions on resale ("restricted
securities"). As noted in the prospectus, that amount may, in the future,
increase to 15%. This policy applies to participation interests, bank
time deposits, master demand notes, repurchase transactions having a
maturity beyond seven days, over-the-counter options held by the Fund and
that portion of assets used to cover such options and certain derivative
instruments. This policy is not a fundamental policy and does not limit
purchases of restricted securities eligible for resale to qualified
institutional purchasers pursuant to Rule 144A under the Securities Act
of 1933 that are determined to be liquid by the Board of Trustees or by
the Manager under Board-approved guidelines. Such guidelines take into
account trading activity for such securities and the availability of
reliable pricing information, among other factors. If there is a lack of
trading interest in particular Rule 144A securities, the Fund's holdings
of those securities may be illiquid. There may be undesirable delays in
selling illiquid securities at prices representing their fair value. The
expenses of registration of restricted securities that are subject to
legal restrictions on resale (excluding securities that may be resold by
the Fund pursuant to Rule 144A, as explained in the Prospectus) may be
negotiated at the time such securities are purchased by the Fund. When
registration is required, a considerable period may elapse between a
decision to sell the securities and the time the Fund would be permitted
to sell them. Thus, the Fund might not be able to obtain as favorable a
price as that prevailing at the time of the decision to sell. The Fund
also may acquire, through private placements, securities having
contractual resale restrictions, which might lower the amount realizable
upon the sale of such securities.

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

- Special Risks - Borrowing for Leverage. From time to time, the
Fund may increase its ownership of securities by borrowing from banks on
a unsecured basis and investing the borrowed funds, subject to the
restrictions stated in the Prospectus. Any such borrowing will be made
only from banks, and pursuant to the current requirements of the
Investment Company Act, will be made only to the extent that the value of
the Fund's assets, less its liabilities other than borrowings, is equal
to at least 300% of all borrowings including the proposed borrowing and
amounts covering the Fund's obligations under "forward roll" transactions.
If the value of the Fund's assets so computed should fail to meet the 300%
asset coverage requirement, the Fund is required within three days to
reduce its bank debt to the extent necessary to meet such requirement and
may have to sell a portion of its investments at a time when independent
investment judgment would not dictate such sale. Borrowing for investment
increases both investment opportunity and risk. Since substantially all
of the Fund's assets fluctuate in value, but borrowing obligations are
fixed, when the Fund has outstanding borrowings, the net asset value per
share of the Fund correspondingly will tend to increase and decrease more
when portfolio assets fluctuate in value than otherwise would be the case.

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

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

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

When-issued transactions and forward commitments allow the Fund a
technique to use against anticipated changes in interest rates and prices.
For instance, in periods of rising interest rates and falling prices, the
Fund might sell securities in its portfolio on a forward commitment basis
to attempt to limit its exposure to anticipated falling prices. In
periods of falling interest rates and rising prices, the Fund might sell
portfolio securities and purchase the same or similar securities on a
when-issued or forward commitment basis, thereby obtaining the benefit of
currently higher cash yields.

- Floating Rate/Variable Rate Obligations. Floating rate and
variable rate demand notes are debt obligations that 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 not exceeding one year and upon no more than 30 days'
notice. The issuer of such notes normally has a corresponding right,
after a given period, in its discretion to prepay 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 on these securities is less than that for
fixed-rate obligations of the same maturity. The Manager may determine
that an unrated floating rate or variable rate demand obligation meets the
Fund's quality standards by reason of being backed by a letter of credit
or guarantee issued by a bank that meets the Fund's quality standards.
Floating rate or variable rate obligations that do not provide for
recovery of principal and interest within seven days will be subject to
the limitations applicable to illiquid securities described in "Illiquid
and Restricted Securities." There is otherwise no limit on the amount of
the Fund's assets that may be invested in floating rate and variable rate
obligations.

- Hedging with Options and Futures Contracts. As described in the
Prospectus, the Fund may employ one or more types of Hedging Instruments
for temporary defensive purposes. The Fund's strategy of hedging with
Futures and options on Futures will be incidental to the Fund's activities
in the underlying cash market. Puts may also be written on debt
securities to attempt to increase the Fund's income. For hedging
purposes, the Fund may use Interest Rate Futures; Financial Futures
(together with Interest Rate Futures, "Futures"); Forward Contracts
(defined below); and call and put options on debt securities, Futures,
bond indices and foreign currencies (all of the foregoing are referred to
as "Hedging Instruments"). Hedging Instruments may be used to attempt to:
(i) protect against possible declines in the market value of the Fund's
portfolio resulting from downward trends in the debt securities markets
(generally due to a rise in interest rates), (ii) protect unrealized gains
in the value of the Fund's debt securities which have appreciated, (iii)
facilitate selling debt securities for investment reasons, (iv) establish
a position in the debt securities markets as a temporary substitute for
purchasing particular debt securities, or (v) reduce the risk of adverse
currency fluctuations. A call or put may be purchased only if, after such
purchase, the value of all call and put options held by the Fund would not
exceed 5% of the Fund's total assets. The Fund will not use Futures and
options on Futures for speculation. The Hedging Instruments the Fund may
use are described below.

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) purchase puts on such Futures or securities, or (iii)
write calls on securities held by it or on Futures. When hedging to
attempt to protect against the possibility that portfolio securities are
not fully included in a rise in value of the debt securities market, the
Fund may: (i) purchase Futures, or (ii) purchase calls on such Futures or
on securities. Covered calls and puts may also be written on debt
securities to attempt to increase the Fund's income. When hedging to
protect against declines in the dollar value of a foreign currency-
denominated security, the Fund may: (a) purchase puts on that foreign
currency and on foreign currency Futures, (b) write calls on that currency
or on such Futures, or (c) enter into Forward Contracts at a lower rate
than the spot ("cash") rate.

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

- Writing Call Options. The Fund may write (i.e. sell) call options
("calls") on debt securities that are traded on U.S. and foreign
securities exchanges and over-the-counter markets, to enhance income
through the receipt of premiums from expired calls and any net profits
from closing purchase transactions. After any such sale up to 100% of the
Fund's total assets may be subject to calls. All such calls written by
the Fund must be "covered" while the call is outstanding (i.e. the Fund
must own the securities subject to the call or other securities acceptable
for applicable escrow requirements). Calls on Futures (discussed below)
must be covered by deliverable securities or by liquid assets segregated
to satisfy the Futures contract. When the Fund writes a call on a
security it receives a premium and agrees to sell the callable investment
to a purchaser of a corresponding call on the same security during the
call period (usually not more than 9 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 received on the
call written was more or less than the price of the call subsequently
purchased. A profit may also be realized if the call lapses unexercised,
because the Fund retains the underlying investment and the premium
received. Any such profits are considered short-term capital gains for
Federal income tax purposes, and when distributed by the Fund are taxable
as ordinary income. If the Fund could not effect a closing purchase
transaction due to lack of a market, it would have to hold the callable
investments until the call lapsed or was exercised.

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

- 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.

- Purchasing Calls and Puts. The Fund may purchase calls on debt
securities or on Futures that are traded on U.S. and foreign securities
exchanges and the U.S. over-the-counter markets, in order to protect
against the possibility that the Fund's portfolio will not fully
participate in an anticipated rise in value of the long-term debt
securities market. The value of debt securities underlying calls
purchased by the Fund will not exceed the value of the portion of the
Fund's portfolio invested in cash or cash equivalents (i.e. securities
with maturities of less than one year). When the Fund purchases a call
(other than in a closing purchase transaction), it pays a premium and,
except as to calls on indices or Futures, has the right to buy the
underlying investment from a seller of a corresponding call on the same
investment during the call period at a fixed exercise price. When the
Fund purchases a call on an index or Future, it pays a premium, but
settlement is in cash rather than by delivery of the underlying investment
to the Fund. In purchasing a call, the Fund benefits only if the call is
sold at a profit or if, during the call period, the market price of the
underlying investment is above the sum of the call price plus the
transaction costs and the premium paid and the call is exercised. If the
call is not exercised or sold (whether or not at a profit), it will become
worthless at its expiration date and the Fund will lose its premium
payment and the right to purchase the underlying investment.

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

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

Puts and calls on broadly-based indices or Futures 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 (and thus on price movements in the stock market generally)
rather than on price movements in individual securities or futures
contracts. When the Fund buys a call on an index or Future, it pays a
premium. During the call period, upon exercise of a call by the Fund, 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 index 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 to the Fund an amount of cash 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.

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

- Options on Foreign Currencies. The Fund intends to write and
purchase calls on foreign currencies. The Fund may purchase and write
puts and calls on foreign currencies that are traded on a securities or
commodities exchange or quoted by major recognized dealers in such
options, for the purpose of protecting against declines in the dollar
value of foreign securities and against increases in the dollar cost of
foreign securities to be acquired. If a rise is anticipated in the dollar
value of a foreign currency in which securities to be acquired are
denominated, the increased cost of such securities may be partially offset
by purchasing calls or writing puts on that foreign currency. If a
decline in the dollar value of a foreign currency is anticipated, the
decline in value of portfolio securities denominated in that currency may
be partially offset by writing calls or purchasing puts on that foreign
currency. However, in the event of currency rate fluctuations adverse to
the Fund's position, it would lose the premium it paid and transactions
costs. A call written on a foreign currency by the Fund is covered if the
Fund owns the underlying foreign currency covered by the call or has an
absolute and immediate right to acquire that foreign currency without
additional cash consideration (or for additional cash consideration held
in a segregated account by its custodian) upon conversion or exchange of
other foreign currency held in its portfolio. A call may be written by
the Fund on a foreign currency to provide a hedge against a decline due
to an expected adverse change in the exchange rate in the U.S. dollar
value of a security which the Fund owns or has the right to acquire and
which is denominated in the currency underlying the option. This is a
cross-hedging strategy. In such circumstances, the Fund collateralizes
the option by maintaining in a segregated account with the Fund's
custodian, cash or U.S. Government Securities in an amount not less than
the value of the underlying foreign currency in U.S. dollars marked-to-
market daily.

- Futures. The Fund may buy and sell Futures. No price is paid or
received upon the purchase or sale of an Interest Rate Future or a foreign
currency exchange contract ("Forward Contract"), discussed below. 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.

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

Financial Futures are similar to Interest Rate Futures except that
settlement is made in cash, and net gain or loss on options on Financial
Futures depends on price movements of the securities included in the
index. The strategies which the Fund employs regarding Financial Futures
are similar to those described above with regard to Interest Rate Futures.

- Forward Contracts. The Fund may enter into foreign currency
exchange contracts ("Forward Contracts"), which obligate the seller to
deliver and the purchaser to take a specific amount of foreign currency
at a specific future date for a fixed price. 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 enter
into a Forward Contract in order to "lock in" the U.S. dollar price of a
security denominated in a foreign currency which it has purchased or sold
but which has not yet settled, or to protect against a possible loss
resulting from an adverse change in the relationship between the U.S.
dollar and a foreign currency. There is a risk that use of Forward
Contracts may reduce the gain that would otherwise result from a change
in the relationship between the U.S. dollar and a foreign currency.
Forward contracts include standardized foreign currency futures contracts
which are traded on exchanges and are subject to procedures and
regulations applicable to other Futures. The Fund may also enter into a
forward contract to sell a foreign currency denominated in a currency
other than that in which the underlying security is denominated. This is
done in the expectation that there is a greater correlation between the
foreign currency of the forward contract and the foreign currency of the
underlying investment than between the U.S. dollar and the foreign
currency of the underlying investment. This technique is referred to as
"cross hedging." The success of cross hedging is dependent on many
factors, including the ability of the Manager to correctly identify and
monitor the correlation between foreign currencies and the U.S. dollar.
To the extent that the correlation is not identical, the Fund may
experience losses or gains on both the underlying security and the cross
currency hedge.

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.

There is no limitation as to the percentage of the Fund's assets that
may be committed to foreign currency exchange contracts. The Fund does
not enter into such forward contracts or maintain a net exposure in such
contracts to the extent that the Fund would be obligated to deliver an
amount of foreign currency in excess of the value of the Fund's assets
denominated in that currency, or enter into a "cross hedge," unless it is
denominated in a currency or currencies that the Manager believes will
have price movements that tend to correlate closely with the currency in
which the investment being hedged is denominated. See "Tax Aspects of
Covered Calls and Hedging Instruments" below for a discussion of the tax
treatment of foreign currency exchange contracts.

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

- Additional Information About Hedging Instruments and Their Use.
The Fund's Custodian, or a securities depository acting for the Custodian,
will act as the Fund's escrow agent, through the facilities of the Options
Clearing Corporation ("OCC"), as to the investments on which the Fund has
written options traded on exchanges or as to other acceptable escrow
securities, so that no margin will be required for such transactions. OCC
will release the securities 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. That formula price
would generally be based on a multiple of the premium received for the
option, plus the amount by which the option is exercisable below the
market price of the underlying security (that is, the extent to which the
option is "in-the-money"). When the Fund writes an OTC option, it will
treat as illiquid (for purposes of the limit on its assets that may be
invested in illiquid securities, stated in the Prospectus) the mark-to-
market value of any OTC option held by it. The Securities and Exchange
Commission ("SEC") is evaluating whether OTC options should be considered
liquid securities, and the procedure described above could be affected by
the outcome of that evaluation.

- 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 (the "CFTC Rule") adopted by the
Commodity Futures Trading Commission (the "CFTC") under the Commodity
Exchange Act (the "CEA"), which exempts the Fund from registration with
the CFTC as a "commodity pool operator" (as defined in the CEA) if it
complies with the CFTC Rule. Under these restrictions the Fund will not,
as to any positions, whether short, long or a combination thereof, enter
into Futures and options thereon for which the aggregate initial margins
and premiums exceed 5% of the fair market value of its total 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 under the CEA.

Transactions in options by the Fund are subject to limitations
established by each of the exchanges governing the maximum number of
options which may be written or held by a single investor or group of
investors acting in concert, regardless of whether the options were
written or purchased on the same or different exchanges or are held in one
or more accounts or through one or more exchanges or brokers. Thus, the
number of options which the Fund may write or hold may be affected by
options written or held by other entities, including other investment
companies having the same or an affiliated investment adviser. Position
limits also apply to Futures. An exchange may order the liquidation of
positions found to be in violation of those limits and may impose certain
other sanctions. Due to requirements under the Investment Company Act,
when the Fund purchases a Future, the Fund will maintain, in a segregated
account or accounts with its custodian bank, 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. One of the tests for such qualification is that less than
30% of its gross income (irrespective of losses) must be derived from
gains realized on the sale of securities held for less than three months.
Due to this limitation, 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 calls or puts which expire in less than three
months; (iii) effecting closing transactions with respect to calls or puts
purchased less than three months previously; (iv) exercising puts or calls
held by the Fund for less than three months; and (v) writing calls on
investments held for less than three months.

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

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

Under the Internal Revenue Code, gains or losses attributable to
fluctuations in exchange rates that occur between the time the Fund
accrues interest or other receivables or accrues expenses or other
liabilities denominated in a foreign currency and the time the Fund
actually collects such receivables or pays such liabilities generally are
treated as ordinary income or ordinary loss. Similarly, on disposition
of debt securities denominated in a foreign currency and on disposition
of foreign currency forward contracts, gains or losses attributable to
fluctuations in the value of a foreign currency between the date of
acquisition of the security or contract and the date of disposition also
are treated as ordinary gain or loss. Currency gains and losses are
offset against market gains and losses before determining a net "Section
988" gain or loss under the Internal Revenue Code, which may increase or
decrease the amount of the Fund's investment company income available for
distribution to its shareholders.

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

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

Other Investment Restrictions

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

Under these additional restrictions, the Fund cannot: (1) buy or sell
real estate, or commodities or commodity contracts; however, the Fund may
invest in debt securities secured by real estate or interests therein or
issued by companies, including real estate investment trusts, which invest
in real estate or interests therein, and the Fund may buy and sell Hedging
Instruments; (2) buy securities on margin, except that the Fund may make
margin deposits in connection with any of the Hedging Instruments which
it may use; (3) underwrite securities issued by other persons except to
the extent that, in connection with the disposition of its portfolio
investments, it may be deemed to be an underwriter for purposes of the
Securities Act of 1933; (4) buy and retain securities of any issuer if
those officers, Trustees or Directors of the Fund or the Manager who
beneficially own more than .5% of the securities of such issuer together
own more than 5% of the securities of such issuer; (5) invest in oil, gas,
or other mineral exploration or development programs; (6) buy the
securities of any company for the purpose of exercising management
control; (7) make loans, except by purchasing debt obligations in
accordance with its investment objectives and policies, or by entering
into repurchase agreements, or as described in "Loans of Portfolio
Securities"; (8) buy securities of an issuer which, together with any
predecessor, has been in operation for less than three years, if as a
result, the aggregate of such investments would exceed 5% of the value of
the Fund's total assets; or (9) make short sales of securities or maintain
a short position, unless at all times when a short position is open it
owns an equal amount of such securities or by virtue of ownership of other
securities has the right, without payment of any further consideration,
to obtain an equal amount of securities sold short ("short sales against-
the-box"); short sales against-the-box may be made to defer realization
of gain or loss for Federal income tax purposes.

For purposes of the Fund's policy not to concentrate described under
investment restriction number 3 in the Prospectus, the Fund has adopted
the industry classifications set forth in the Appendix to this Statement
of Additional Information. This is not a fundamental policy.

How the Fund Is Managed

Organization and History. As a series of a Massachusetts business trust,
the Fund is not required to hold, and does not plan to hold, regular
annual meetings of shareholders. The Fund will hold meetings when required
to do so by the Investment Company Act or other applicable law, or when
a shareholder meeting is called by the Trustees or upon proper request of
the shareholders. Shareholders have the right, upon the declaration in
writing or vote of two-thirds of the outstanding shares of the Fund, to
remove a Trustee. The Trustees will call a meeting of shareholders to
vote on the removal of a Trustee upon the written request of the record
holders of 10% of its outstanding shares. In addition, if the Trustees
receive a request from at least 10 shareholders (who have been
shareholders for at least six months) holding shares of the Fund valued
at $25,000 or more or holding at least 1% of the Fund's outstanding
shares, whichever is less, stating that they wish to communicate with
other shareholders to request a meeting to remove a Trustee, the Trustees
will then either make the Fund's shareholder list available to the
applicants or mail their communication to all other shareholders at the
applicants' expense, or the Trustees may take such other action as set
forth under Section 16(c) of the Investment Company Act.

The Fund and Oppenheimer Strategic Diversified Income Fund ("OSDIF")
are separate series of Oppenheimer Strategic Funds Trust. Each series is
a fund that issues its own shares and has its own investment portfolio,
assets and liabilities. The Board of Trustees has approved an agreement
and plan of reorganization (the "Plan") between the Fund and OSDIF in
which the Fund would survive the reorganization. Implementation of the
Plan is subject to approval of OSDIF shareholders, and would ultimately
result in the Fund being the only series of Oppenheimer Strategic Funds
Trust. Neither this Statement of Additional Information nor the Prospectus
will be amended to disclose implementation of the Plan.

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

Trustees and Officers of the Fund. The Fund's Trustees and officers and
their principal occupations and business affiliations during the past five
years are listed below. All of the Trustees are also trustees, directors
or managing general partners of Oppenheimer Total Return Fund, Inc.,
Oppenheimer Equity Income Fund, Oppenheimer High Yield Fund, Oppenheimer
Cash Reserves, Oppenheimer Tax-Exempt Bond Fund, Oppenheimer Limited-Term
Government Fund, The New York Tax-Exempt Income Fund, Inc., Centennial
America Fund, L.P., Oppenheimer Champion High Yield Fund, Oppenheimer Main
Street Funds, Inc., Oppenheimer Strategic Income & Growth Fund,
Oppenheimer Strategic Investment Grade Bond Fund, Oppenheimer Strategic
Short-Term Income Fund, Oppenheimer Variable Account Funds, and
Oppenheimer Integrity Funds; as well as the following "Centennial Funds":
Daily Cash Accumulation Fund, Inc., Centennial Money Market Trust,
Centennial Government Trust, Centennial New York Tax Exempt Trust,
Centennial Tax Exempt Trust and Centennial California Tax Exempt Trust,
(all of the foregoing funds are collectively referred to as the "Denver
OppenheimerFunds"). All of the Fund's officers except Messrs. Steinmetz
and Negri are officers of the Denver OppenheimerFunds. Mr. Fossel is
President and Mr. Swain is Chairman of the Denver OppenheimerFunds. As
of May 2, 1995, the Trustees and officers of the Fund as a group owned
less than 1% of the outstanding shares of the Fund. The foregoing
statement does not reflect ownership of shares held of record by an
employee benefit plan for employees of the Manager (for which plan two
officers of the Fund, Jon S. Fossel and Andrew J. Donohue, are trustees),
other than the shares beneficially owned under that plan by officers of
the Fund listed above.

Robert G. Avis, Trustee*; Age 63
One North Jefferson Ave., St. Louis, Missouri 63103
Vice Chairman of A.G. Edwards & Sons, Inc. (a broker-dealer) and A.G.
Edwards, Inc. (its parent holding company); Chairman of A.G.E. Asset
Management and A.G. Edwards Trust Company (its affiliated investment
adviser and trust company, respectively).

William A. Baker, Trustee; Age 80
197 Desert Lakes Drive, Palm Springs, California 92264
Management Consultant.

Charles Conrad, Jr., Trustee; Age 64
19411 Merion Circle, Huntington Beach, California 92648
Vice President of McDonnell Douglas Space Systems Co.; formerly associated
with the National Aeronautics and Space Administration.

Jon S. Fossel, President and Trustee*; Age 53
Two World Trade Center, New York, New York 10048-0203
Chairman, Chief Executive Officer and a director of the Manager; President
and a director of Oppenheimer Acquisition Corp. ("OAC"), the Manager's
parent holding company; President and a director of HarbourView Asset
Management Corporation ("HarbourView"), a subsidiary of the Manager; a
director of Shareholder Services, Inc. ("SSI") and Shareholder Financial
Services, Inc. ("SFSI"), transfer agent subsidiaries of the Manager;
formerly President of the Manager.

Raymond J. Kalinowski, Trustee; Age 65
44 Portland Drive, St. Louis, Missouri 63131
Director of Wave Technologies International, Inc.; 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, Trustee; Age 73
2552 East Alameda, Denver, Colorado 80209
Formerly the Managing Partner of Deloitte, Haskins & Sells (an accounting
firm).

[FN]
__________________
*A Trustee who is an "interested person" of the Fund as defined in the
Investment Company Act.

Robert M. Kirchner, Trustee; Age 73
7500 E. Arapahoe Road, Englewood, Colorado 80112
President of The Kirchner Company (management consultants).

Ned M. Steel, Trustee; Age 79
3416 S. Race Street, Englewood, Colorado 80110
Chartered Property and Casualty Underwriter; Director of Visiting Nurse
Corporation of Colorado; formerly Senior Vice President and a Director of
Van Gilder Insurance Corp. (insurance brokers).

James C. Swain, Chairman and Trustee*; Age 61
3410 South Galena Street, Denver, Colorado 80231
Vice Chairman and a Director 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.

Andrew J. Donohue, Vice President; Age 44
Executive Vice President and General Counsel of Oppenheimer Management
Corporation ("OMC") (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); director
and an officer of First Investors Family of Funds and First Investors Life
Insurance Company.

George C. Bowen, Vice President, Secretary and Treasurer; Age 58
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.

Arthur P. Steinmetz, Vice President and Portfolio Manager; Age 36
Two World Trade Center, New York, New York 10048-0203
Senior Vice President of the Manager; an officer of other
OppenheimerFunds.

David P. Negri, Vice President and Portfolio Manager; Age 41
Two World Trade Center, New York, New York 10048-0203
Vice President of the Manager; an officer of other OppenheimerFunds.

Robert G. Zack, Assistant Secretary; Age 46
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 Trustee who is an "interested person" of the Fund as defined in the
Investment Company Act.

Robert J. Bishop, Assistant Treasurer; Age 36
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an officer
of other OppenheimerFunds; previously a Fund Controller of the Manager,
prior to which he was an
Accountant for Resolution Trust Corporation and previously an Accountant
and Commissions Supervisor for Stuart James Company Inc., a broker-dealer.

Scott Farrar, Assistant Treasurer; Age 29
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting, an officer
of other OppenheimerFunds; previously 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.

- Remuneration of Trustees. The officers of the Trust are
affiliated with the Manager; they and the Trustees of the Fund who are
affiliated with the Manager (Messrs. Fossel and Swain, who are both
officers and Trustees) receive no salary or fee from the Fund. The
Trustees of the Fund (excluding Messrs. Fossel and Swain) received the
total amounts shown below (i) from the Fund during its fiscal year ended
September 30, 1994, and (ii) from all 22 of the Denver-based
OppenheimerFunds (including the Fund) listed in the first paragraph of
this section, for services in the positions shown:
<TABLE>
<CAPTION>
Total Compensation
Aggregate From All
Compensation Denver-based
Name and Position from Fund OppenheimerFunds1
<S> <C> <C>
Robert G. Avis $6,907.62 $53,000.00
Trustee
William A. Baker $9,547.76 $73,257.01
Audit and Review
Committee Chairman
and Trustee
Charles Conrad, Jr. $8,900.88 $68,293.67
Audit and Review
Committee Member
and Trustee
Raymond J. Kalinowski $6,907.62 $53,000.00
Trustee
C. Howard Kast $6,907.62 $53,000.00
Trustee
Robert M. Kirchner $8,900.88 $68,293.67
Audit and Review
Committee Member
and Trustee

Ned M. Steel $6,907.62 $53,000.00
Trustee
<FN>
______________________
1 For the 1994 calendar year.
</TABLE>

Major Shareholders. As of May 2, 1995, no person owned of record or was
known by the Fund to own beneficially 5% or more of the Fund's outstanding
Class A or Class B shares. As of that date, no Class C shares were
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 also
serve as officers of the Fund, and two of whom (Mr. Fossel and Mr. Swain)
serve as Trustees of the Fund.

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

- The Investment Advisory Agreement. A management fee is payable
monthly to the Manager under the terms of the investment advisory
agreement between the Manager and the Fund, and is computed on the
aggregate net assets of the Fund as of the close of business each day.
The investment advisory agreement 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 for the
Fund, including the compilation and maintenance of records with respect
to its operations, the preparation and filing of specified reports, and
composition of proxy materials and registration statements for continuous
public sale of shares of the Fund.

Expenses not expressly assumed by the Manager under the advisory
agreement or by the Distributor are paid by the Fund. The advisory
agreement lists examples of expenses paid by the Fund, the major
categories of which relate to interest, taxes, brokerage commissions, fees
to unaffiliated trustees, legal, bookkeeping and audit expenses, custodian
and transfer agent expenses, share issuance costs, certain printing and
registration costs and non-recurring expenses, including litigation. The
Fund also pays its organizational and start-up expenses, as explained in
the notes to the accompanying Financial Statements. During the Fund's
fiscal years ended September 30, 1992, 1993 and 1994 the management fees
paid by the Fund to the Manager were $7,128,280, $14,044,913 and
$23,416,082, respectively.

The advisory agreement contains no expense limitation. However,
independently of the advisory agreement, the Manager has voluntarily
agreed to reimburse the Fund if aggregate expenses (with specified
exceptions) exceed the most stringent state regulatory limitation on Fund
expenses applicable to the Fund. At present, this limitation, imposed by
California, limits such expenses to 2.5% of the first $30 million of
average annual net assets, 2.0% of the next $70 million, and 1.5% of
average annual net assets in excess of $100 million. The payment of the
management fee at the end of the month will be reduced so that there will
not be any accrued but unpaid liability under this expense limitation.
The Manager reserves the right to terminate or amend this undertaking at
any time. Any assumption of the Fund's expenses under this undertaking
would lower the Fund's overall expense ratio and increase its total return
during any period in which expenses are limited. The Manager has also
undertaken to assume the Fund's expenses (other than extraordinary non-
recurring expenses) to enable the Fund to pay a dividend of $0.438 per
share per annum. As a result of that expense assumption, the Fund's yield
and total return may have been higher during that period than they
otherwise would have been. The Manager may terminate that undertaking at
any time.

The advisory agreement provides that in the absence of willful
misfeasance, bad faith, gross negligence in the performance of its duties,
or reckless disregard of its obligations and duties under the advisory
agreement, the Manager is not liable for any loss sustained by reason of
good faith errors or omissions in connection with any matters to which the
Agreement relates. The advisory agreement permits the Manager to act as
investment adviser for any other person, firm or corporation and to use
the name "Oppenheimer" in connection with other investment companies for
which it may act as investment adviser or general distributor. If the
Manager or one of its affiliates shall no longer act as investment adviser
to the Fund, the right of the Fund to use the name "Oppenheimer" as part
of its name may be withdrawn.

- The Distributor. Under its General Distributor's Agreement
with the Fund, the Distributor acts as the Fund's principal underwriter
in the continuous public offering of the Fund's 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
Distribution and Service 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 September 30, 1992, 1993 and 1994, the aggregate amount of
sales charges on sales of the Fund's Class A shares was $38,724,674,
$39,326,104 and $31,059,937, respectively, of which the Distributor and
an affiliated broker-dealer retained in the aggregate $10,331,365,
$9,834,389 and $8,686,206 in those respective years. During the Fund's
fiscal period November 30, 1992 through September 30, 1993 and the fiscal
year ended September 30, 1994, the contingent deferred sales charges
collected on the Fund's Class B shares totalled 281,835 and 2,731,436,
respectively, all of which the Distributor retained. 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.

- The Transfer Agent. Oppenheimer Shareholder Services, as
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 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 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 provisions
of the advisory agreement and the interests and policies of the Fund as
established by its Board of Trustees.

Under the advisory agreement, the Manager is authorized to select
brokers which 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 the shares of the
Fund and other investment companies managed by the Manager or its
affiliates as a factor in the selection of brokers for the Fund's
portfolio transactions. Most purchases made by the Fund are principal
transactions at net prices, and the Fund incurs little or no brokerage
costs.

Description of Brokerage Practices Followed by the Manager. Subject to
the provisions of the advisory agreement, when brokers are used for the
Fund's portfolio transactions, allocations of brokerage are generally made
by the Manager's portfolio traders based upon recommendations from the
Manager's portfolio managers. In certain circumstances, portfolio
managers may directly place trades and allocate brokerage, also subject
to the provisions of the advisory agreement and the procedures and rules
described above. Brokerage is allocated under the supervision of the
Manager's executive officers. Transactions in securities other than those
for which an exchange is the primary market are generally done with
principals or market makers. Brokerage commissions are paid primarily for
effecting transactions in listed securities 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 its 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.

Most purchases of money market instruments and debt obligations
are principal transactions at net prices. Instead of using a broker for
those transactions, the Fund normally deals directly with the selling or
purchasing principal or market maker unless it determines that a better
price or execution can be obtained using a broker. Purchases of these
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 prices. The Fund seeks to obtain prompt
execution of such orders at the most favorable net price.

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 Board of Trustees has permitted the Manager to
use concessions on fixed price offerings to obtain research in the same
manner as is permitted for agency transactions.

The research services provided by brokers broaden the scope and
supplement the research activities of the Manager by making available
additional views for consideration and comparisons, and enabling the
Manager to obtain market information for the valuation of securities held
in the Fund's portfolio or being considered for purchase. The Board of
Trustees, including the "Independent Trustees" (those Trustees of the Fund
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 Agreement, the Plans of Distribution described below or
in any agreements relating to those Plans), 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.

During the Fund's fiscal years ended September 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
$4,200, $4,663 and $46,217, respectively. During the Fund's fiscal year
ended September 30, 1994, $6,989 was paid to brokers as commissions in
return for research services; the aggregate amount of those transactions
was $1,329,858.

Performance of the Fund

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

The Fund's advertisement of its performance must, under applicable
SEC rules, include the average annual total returns for each class of
shares of the Fund for the 1, 5 and 10-year period (or the life of the
class, if less) as of the most recently ended calendar quarter. This
enables an investor to compare the Fund's performance to the performance
of other funds for the same periods. However, a number of factors should
be considered before using such information as a basis for comparison with
other investments. An investment in the Fund is not insured; its yield
and total return are not guaranteed and normally will fluctuate on a daily
basis. When redeemed, an investor's shares may be worth more or less than
their original cost. Yield and total return for any given past period are
not a prediction or representation by the Fund of future yields or rates
of return on its shares. The yield and total returns of the Class A,
Class B and Class C shares of the Fund are affected by portfolio quality,
portfolio maturity, the type of investments the Fund holds and expenses
allocated to the particular class.

- 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 the 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 standardized yield for a 30-day period occurs at a constant rate
for a six-month period and is annualized at the end of the six-month
period. 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 upon 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 September 30, 1994, the standardized
yields for the Fund's Class A and Class B shares were 8.65% and 8.31%,
respectively.

- 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, Class B or Class C 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 or Class C 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 yield or distribution return
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 September
30, 1994, were 8.77% and 9.21% when calculated at maximum offering price
and at net asset value, respectively. The dividend yield on Class B
shares for the 30-day period ended September 30, 1994, was 8.43% 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"), according to the following formula:

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

- Cumulative Total Returns. The cumulative "total return"
calculation measures the change in value of a hypothetical investment of
$1,000 over an entire period of years. Its calculation uses some of the
same factors as average annual total return, but it does not average the
rate of return on an annual basis. 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 discussed below). For Class B shares, the payment of
the applicable contingent deferred sales charge (5.0% for the first year,
4.0% for the second year, 3.0% for the third and fourth years, 2.0% in the
fifth year, 1.0% in the sixth year and none thereafter) is applied to the
investment result for the time period shown (unless the total return is
shown at net asset value, as described below). Total returns also assume
that all dividends and capital gains distributions during the period are
reinvested to buy additional shares at net asset value per share, and that
the investment is redeemed at the end of the period. The "average annual
total returns" on an investment in Class A shares of the Fund for the one
year period ended September 30, 1994 and for the period from October 16,
1989 (commencement of operations) to September 30, 1994, were -2.98% and
9.93%, respectively. The cumulative "total return" on Class A shares for
the latter period was 59.88%. For the fiscal year ended September 30,
1994 and the period from November 30, 1992 through September 30, 1994, the
average annual total return on an investment in Class B shares of the Fund
were -3.49% and 6.49%, respectively. The cumulative total return on an
investment in Class B shares of the Fund for the period from November 30,
1992 to September 30, 1994 was 12.22%.

- 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 cumulative "total returns
at net asset value" on the Fund's Class A shares for the fiscal year ended
September 30, 1994, and for the period from October 16, 1989 to September
30, 1994 were 1.85% and 67.85%, respectively. The cumulative total return
at net asset value on the Fund's Class B shares for the fiscal year ended
September 30, 1994 and for the period from November 30, 1992 through
September 30, 1994 was 1.07% and 16.11%, respectively.

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
Lipper Analytical Services, Inc. ("Lipper"), a widely-recognized
independent mutual fund monitoring service. Lipper monitors the
performance of regulated investment companies, including the Fund, and
ranks their performance for various periods based on categories relating
to investment objectives. The performance of the Fund's classes is ranked
against (i) all other funds, excluding money market funds, and (ii) all
other general bond funds. The Lipper performance rankings are based on
total return that includes the reinvestment of capital gains distributions
and income dividends but does not take sales charges or taxes into
consideration. The Fund's performance may also be compared to the
performance of the Lipper General Bond Fund Index, which is a net asset
value weighted index of general bond funds compiled by Lipper. It is
calculated with adjustments for income dividends and capital gains
distributions as of the ex-dividend date.

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., an independent mutual fund monitoring service that ranks mutual
funds, including the Fund, in broad investment categories (equity, taxable
bond, municipal bond and hybrid) monthly, based on risk-adjusted
investment return. Investment return measures a fund's three, five and
ten-year average annual total returns (when available) in excess of 90-day
U.S. Treasury bill returns after considering sales charges and expenses.
Risk measures fund performance below 90-day U.S. Treasury bill monthly
returns. Risk and return are combined to produce star rankings reflecting
performance relative to the average fund in a fund's category. Five stars
is the "highest" ranking (top 10%), four stars is "above average" (next
22.5%), three stars is "average" (next 35%), two stars is "below average"
(next 22.5%) and one star is "lowest" (bottom 10%). Morningstar ranks the
Class A and Class B shares of the Fund in relation to other taxable bond
funds. Rankings are subject to change.

The total return on an investment made in Class A or Class B
shares of the Fund may be compared with the performance for the same
period of one or more of the following indices: the Consumer Price Index,
the Salomon Brothers World Government Bond Index, the Standard & Poor's
500 Index, the Salomon Brothers High Grade Corporate Bond Index, the
Shearson Lehman Government/Corporate Bond Index, the Lehman Brothers
Aggregate Bond Index, and the J.P. Morgan Government Bond Index. Other
indices may be used from time to time. The Consumer Price Index is
generally considered to be a measure of inflation. The Salomon Brothers
World Government Bond Index generally represents the performance of
government debt securities of various markets throughout the world,
including the United States. The Salomon Brothers High Grade Corporate
Bond Index generally represents the performance of high grade long-term
corporate bonds, and the Lehman Government/Corporate Bond Index generally
represents the performance of intermediate and long-term government and
investment grade corporate debt securities. The Lehman Brothers Aggregate
Bond Index measures the performance of U.S. corporate bond issues, U.S.
government securities and mortgage-backed securities. The J.P. Morgan
Government Bond Index generally represents the performance of government
bonds issued by various countries including the United States. The S&P
500 Index is a composite index of 500 common stocks generally regarded as
an index of U.S. stock market performance. The foregoing bond indices are
unmanaged indices of securities that do not reflect reinvestment of
capital gains or take investment costs into consideration, as these items
are not applicable to indices.

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

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

Distribution and Service Plans

The Fund has adopted a Service Plan for Class A Shares and
Distribution and Service Plans for Class B and Class C shares of the Fund
under Rule 12b-1 of the Investment Company Act, pursuant to which the Fund
makes payments to the Distributor 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
Trustees of the Fund, including a majority of the Independent Trustees,
cast in person at a meeting called for the purpose of voting on that Plan,
and (ii) the holders of a "majority" (as defined in the Investment Company
Act) of the shares of each class. For the Distribution and Service Plans
for the Class B and Class C shares, the votes were cast by the Manager as
the then-sole initial holder of such shares.

In addition, the Manager and the Distributor may, under the Plans,
from time to time from their own resources (which, as to the Manager, may
include profits derived from the advisory fee it receives from the Fund)
make payments to Recipients for distribution and administrative services
they perform. The Distributor and the Manager may, in their sole
discretion, increase or decrease the amount of distribution assistance
payments they make to Recipients from their own assets.

Unless terminated as described below, each Plan continues in
effect from year to year but only as long as such continuance is
specifically approved at least annually by the Fund's Board of Trustees
and its Independent Trustees 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 Trustees or by
the vote of the holders of a "majority" (as defined in the Investment
Company Act) of the outstanding shares of that class. No Plan may be
amended to increase materially the amount of payments to be made unless
such amendment is approved by shareholders of the class affected by the
amendment. In addition, because Class B shares of the Fund automatically
convert into Class A shares after six years, the Fund is required by 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 amendment to the Class A Plan that would materially increase the
amount to be paid by Class A shareholders under the Class A Plan. Such
approval must be by a "majority" of the Class A and Class B shares (as
defined in the Investment Company Act), voting separately by class. All
material amendments must be approved by the Independent Trustees.
While the Plans are in effect, the Treasurer of the Fund shall
provide separate written reports to the Fund's Board of Trustees 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 shall
also include the Distributor's distribution costs for that quarter, and
such costs for previous fiscal periods that are carried forward under the
Class B Plan, 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 Trustees in the exercise of their
fiduciary duty. Each Plan further provides that while it is in effect,
the selection and nomination of those Trustees of the Fund who are not
"interested persons" of the Fund is committed to the discretion of the
Independent Trustees. This does not prevent the involvement of others in
such selection and nomination if the final decision on any such selection
or nomination is approved by a majority of the Independent Trustees.

Under the Plans, no payment will be made to any broker, dealer or
other financial institution under the Plan (each is referred to as a
"Recipient") in any quarter if the aggregate net asset value of all Fund
shares held by the Recipient for itself and its customers did not exceed
a minimum amount, if any, that may be determined from time to time by a
majority of the Fund's Independent Trustees. Initially, the Board of
Trustees has set the fee at the maximum rate allowed under the Plans and
set no minimum amount.

For the fiscal year ended September 30, 1994, payments under the
Class A Plan totaled $7,673,295, all of which was paid by the
Distributor to Recipients, including $468,405 paid to an affiliate of the
Distributor. 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 Class C Plan allow the service fee payments
to be paid by the Distributor to Recipients in advance for the first year
such shares are outstanding, and thereafter on a quarterly basis, as
described in the Prospectus. The advance payment is based on the net
asset value of shares sold. An exchange of shares does not entitle the
Recipient to an advance payment of the service fee. In the event shares
are redeemed during the first year such shares are outstanding, the
Recipient will be obligated to repay a pro rata portion of the advance of
the service fee payment to the Distributor.

Although the Class B Plan and the Class C Plan permit the
Distributor to retain both the asset-based sales charges and the service
fee, or to pay Recipients the service fee on a quarterly basis, without
payment in advance, the Distributor presently intends to pay the service
fee to Recipients in the manner described above. A minimum holding period
may be established from time to time under the Class B Plan and the Class
C Plan by the Board. Initially, the Board has set no minimum holding
period. All payments under the Class B Plan and the Class C Plan are
subject to the limitations imposed by the Rules of Fair Practice of the
National Association of Securities Dealers, Inc. on payments of asset
based sales charges and service fees. The Distributor anticipates that
it will take a number of years for it to recoup (from the Fund's payments
to the Distributor under the Class B Plan and from the contingent deferred
sales charges collected on redeemed Class B shares) the sales commissions
paid to authorized brokers or dealers. For the fiscal year ended
September 30, 1994, payments under the Class B Plan totaled $12,329,469,
including $17,712 paid to an affiliate of the Distributor and $11,816,316
retained by the Distributor. No payments have been made under the Class
C Plan during that period, as no Class C shares were outstanding.

Asset-based sales charge payments are designed to permit an
investor to purchase shares of the Fund without the assessment of a front-
end sales load and at the same time permit the Distributor to compensate
brokers and dealers in connection with the sale of Class B and Class C
shares of the Fund. The Distributor's actual distribution expenses for
any given year may exceed the aggregate of payments received pursuant to
the Class B or Class C Plan and from contingent deferred sales charges.
Under the Class B Plan, such expenses will be carried forward and paid in
future years. The Fund will be charged only for interest expenses,
carrying charges or other financial costs that are directly related to the
carry-forward of actual distribution expenses for such shares. For
example, if the Distributor incurred distribution expenses of $4 million
in a given fiscal year, of which $2,000,000 was recovered in the form of
contingent deferred sales charges paid by investors and $1,600,000 was
reimbursed in the form of payments made by the Fund to the Distributor
under the Class B Plan, the balance of $400,000 (plus interest) would be
subject to recovery in future fiscal years from such sources.

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 above and in the Prospectus. The asset-based
sales charge paid to the Distributor by the Fund 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.

The Class C Plan provides for the Distributor to be compensated
at a flat rate, whether the Distributor's distribution expenses are more
or less than the amounts paid by the Fund. Such payments are made in
recognition that the Distributor (i) pays sales commissions to authorized
brokers and dealers at the time of sale, as described in the Prospectus,
(ii) may finance such commissions and/or the advance of the service fee
payment to Recipients under that Plan, (iii) employs personnel to support
distribution of shares, and (iv) may bear the 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, 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 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,
including the asset-based sales charge to which Class B and Class C shares
are subject.

The conversion of Class B shares to Class A shares after six years
is subject to the continuing availability of a private letter ruling from
the Internal Revenue Service, or an opinion of counsel or tax 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 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 any class are allocated pro rata to the shares of each class, based on
the percentage of the net assets of such class to the Fund's total 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 Trustees, (v) custodian
expenses, (vi) share issuance costs, (vii) organization and start-up
costs, (viii) interest, taxes and brokerage commissions, and (ix) non-
recurring expenses, such as litigation costs. Other expenses that are
directly attributable to a class are allocated equally to each outstanding
share within that class. Such expenses include (i) Distribution 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 Values Per Share. The net asset values per
share of Class A, Class B and Class C shares of the Fund are determined
as of the close of business of The New York Stock Exchange on each day
that the Exchange is open by dividing the value of the Fund's net assets
attributable to a class by the number of shares of that class outstanding.
The Exchange normally closes at 4:00 P.M., New York time, but may close
earlier on some days (for example, in case of weather emergencies or on
days falling before a holiday). The NYSE's most recent annual holiday
schedule (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 Exchange is closed, including weekends and holidays or after the
close of the Exchange on a regular business day. Because the net asset
values of the Fund will not be calculated at such times, if securities
held in the Fund's portfolio are traded at such times, the net asset
values per share of Class A, Class B 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 Fund's Board of Trustees has established procedures for the
valuation of the Fund's securities as follows: (i) equity securities
traded on a securities exchange or on NASDAQ for which last sale
information is regularly reported are valued at the last reported sale
price on their primary exchange or NASDAQ that day (or, in the absence of
sales that day, at values based on the last sales prices of the preceding
trading day, or closing bid and asked prices); (ii) securities traded on
NASDAQ and other unlisted equity securities for which last sales 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) debt securities having a
maturity in excess of 60 days are valued at the mean between the bid and
asked prices determined by a portfolio pricing service approved by the
Fund's Board of Trustees or obtained from active market makers in the
security on the basis of reasonable inquiry; (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 at the closing or last sales prices reported
on a principal exchange or, if none, at 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. 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 at the time of valuation.

Trading in securities on European and Asian exchanges and over-
the-counter markets is normally completed before the close of the NYSE.
Events affecting the values of foreign securities traded in such markets
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 its net asset
value unless the Board of Trustees, or the Manager under procedures
established by the Board, determines that the particular event would
materially affect the Fund's net asset value, in which case an adjustment
would be made.

In the case of U.S. Government Securities, mortgage-backed
securities, foreign fixed-income securities and corporate bonds, when last
sale information is not generally available, such pricing procedures may
include "matrix" comparisons to the prices for comparable instruments on
the basis of quality, yield, maturity, and other special factors involved.
The Fund's Board of Trustees has authorized the Manager to employ a
pricing service to price U.S. Government Securities, mortgage-backed
securities, foreign government securities and corporate bonds. The
Trustees will monitor the accuracy of such pricing services by comparing
prices used for portfolio evaluation to actual sales prices of selected
securities.

Calls, puts and Futures are valued at the last sale prices on the
principal exchanges or on the NASDAQ National Market on which they are
traded, or, if there are no sales that day, in accordance with (i) above.
Forward currency contracts are valued at the closing price on the London
foreign exchange market. 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 shares
purchased by the proceeds of ACH transfers on the business day the Fund
receives Federal Funds for the purchase through the ACH system before the
close of The New York Stock Exchange. The Exchange normally closes at
4:00 P.M., but may close earlier on certain days. If Federal Funds are
received on a business day after the close of the Exchange, the shares
will begin to accrue dividends on the next regular business day. The
proceeds of ACH transfers are normally received by the Fund 3 days after
the transfers are initiated. The Distributor and the Fund are not
responsible for any delays in purchasing shares resulting from delays in
ACH transmissions.

Reduced Sales Charges. As discussed in the Prospectus, a reduced sales
charge rate may be obtained for Class A shares under Right of Accumulation
and Letters of Intent because of the economies of sales efforts and
reduction in expenses realized by the Distributor, dealers and brokers
making such sales. No sales charge is imposed in certain other
circumstances described in the Prospectus because the Distributor incurs
little or no selling expenses. The term "immediate family" refers to
one's spouse, children, grandchildren, grandparents, parents, parents-in-
law, brothers and sisters, sons- and daughters-in-law, a sibling's spouse
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 New Jersey Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Time Fund
Oppenheimer Target Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund

<PAGE>
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

the following "Money Market Funds":

Oppenheimer Money Market Fund, Inc.
Oppenheimer Cash Reserves
Centennial Money Market Trust
Centennial Tax Exempt Trust
<PAGE>
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 CDSC).

- 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 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 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 amount, the commissions
previously paid to the dealer of record for the account and the amount of
sales charge retained by the Distributor will be adjusted to the rates
applicable to actual total purchases. If total eligible purchases during
the Letter of Intent period exceed the intended amount and exceed the
amount needed to qualify for the next sales charge rate reduction set
forth in the applicable prospectus, the sales charges paid will be
adjusted to the lower rate, but only if and when the dealer returns to the
Distributor the excess of the amount of commissions allowed or paid to the
dealer over the amount of commissions that apply to the actual amount of
purchases. The excess commissions returned to the Distributor will be
used to purchase additional shares for the investor's account at the net
asset value per share in effect on the date of such purchase, promptly
after the Distributor's receipt thereof.

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

- 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 amount specified in the Letter shall be held in
escrow by the Transfer Agent. For example, if the intended amount
specified under the Letter is $50,000, the escrow shall be shares valued
in the amount of $2,500 (computed at the public offering price adjusted
for a $50,000 purchase). Any dividends and capital gains distributions
on the escrowed shares will be credited to the investor's account.

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

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

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

5. The shares eligible for purchase under the Letter (or the
holding of which may be counted toward completion of the Letter) do not
include any shares sold without a front-end sales charge or 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
Eligible Funds.

There is a sales charge on the purchase of certain Eligible Funds.
An application should be obtained from the Transfer Agent, completed and
returned, and a prospectus of the selected fund(s) (available from the
Distributor) should be obtained 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.

- 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.

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

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

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

Reinvestment Privilege. Within six months of a redemption, a shareholder
may reinvest all or part of the redemption proceeds of (i) Class A shares
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 receipt by the
Transfer Agent of the reinvestment order. The shareholder must ask the
Distributor for such 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 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. 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 per share will be the
net asset value next computed after receipt of an order placed by such
dealer or broker, except that if the Distributor receives a repurchase
order from a dealer or broker after the close of The New York Stock
Exchange on a regular business day, it will be processed at that day's net
asset value if the order was received by the dealer or broker from its
customers prior to the time the Exchange closes (normally, that is 4:00
P.M., but may be earlier on some days) and the order was transmitted to
and received by the Distributor prior to its close of business that day
(normally 5:00 P.M.). Payment ordinarily will be made within seven
(effective through June 7, 1995, within three) 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 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 the payment on the date requested and reserves the
right to amend, suspend or discontinue offering such plans at any time
without prior notice. Because of the sales charge assessed on Class A
share purchases, shareholders should not make regular additional Class A
purchases while participating in an Automatic Withdrawal Plan. Class B
and Class C shareholders should not establish withdrawal plans, because
of the imposition of the contingent deferred sales charge on such
withdrawals (except where the Class B and Class C contingent deferred
sales charge is 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 thereafter shares acquired with
reinvested dividends and capital gains distributions will be redeemed
next, followed by shares acquired with a sales charge, to the extent
necessary to make withdrawal payments. Depending upon the amount
withdrawn, the investor's principal may be depleted. Payments made under
such plans should not be considered as a yield or income on your
investment. It may not be desirable to purchases additional Class A
shares while making automatic withdrawals because of the sales charges
that apply to purchases when made. Accordingly, a shareholder normally
may not maintain an Automatic Withdrawal Plan while simultaneously making
regular purchases of Class A shares.

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 Fund and 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 (the date selected for receipt is an approximate
date), 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. Shares of
the OppenheimerFunds that have a single class without a class designation
are deemed "Class A" shares for this purpose. All OppenheimerFunds offer
Class A shares (except for Oppenheimer Strategic Diversified Income Fund),
but only the following other OppenheimerFunds currently 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
Oppenheimer Main Street Income & Growth Fund

The following other OppenheimerFunds offer Class B shares:

Oppenheimer Main Street Income & Growth Fund
Oppenheimer Equity 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 New Jersey 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 only
available by exchange)
Oppenheimer Growth Fund
Oppenheimer Global Fund
Oppenheimer Discovery Fund

Class A shares of OppenheimerFunds may be exchanged 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 CDSC); and
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 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 redeemed
within six years of the initial purchase of the exchanged Class B shares.
The Class C contingent deferred sales charge is imposed on Class C shares
acquired by exchange if they are redeemed within 12 months of the initial
purchase of the exchanged Class C shares.

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

When exchanging shares by telephone, the shareholder must either
have an existing account in, or 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
request from a dealer might require the disposition of portfolio
securities at a time or at a price that might be disadvantageous to the
Fund).

The different 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 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 transaction.

Dividends, Capital Gains and Taxes

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

Dividends, distributions and the proceeds of the redemption of
Fund shares represented by checks returned to the Transfer Agent by the
Postal Service as undeliverable will be invested in shares of Oppenheimer
Money Market Fund, Inc., as promptly as possible after the return of such
checks to the Transfer Agent, to enable the investor to earn a return on
otherwise idle funds.

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 (generally dividends from domestic
corporations) which the Fund derives from its portfolio investments held
for a minimum period, usually 46 days. A corporate shareholder will not
be eligible for the deduction on dividends paid on shares held by that
shareholder for 45 days or less. To the extent the Fund's dividends are
derived from its gross income from option premiums, interest income or
short-term capital gains from the sale of securities, or dividends from
foreign corporations, its dividends will not qualify for the deduction.
It is expected that for the most part the Fund's dividends will not
qualify, because of the nature of the investments held by the Fund in its
portfolio.

The amount of a class's distributions may vary from time to time
depending on market conditions, the composition of the Fund's portfolio,
and expenses borne by the Fund or borne separately by a class, as
described in "Alternative Sales Arrangements -- Class A, Class B and Class
C Shares," above. Dividends are calculated in the same manner, at the same
time and on the same day for shares of each class. However, dividends on
Class B and Class C shares are expected to be lower as a result of the
asset-based sales charge on Class B and Class C shares, and Class B
dividends will also differ in amount as a consequence of any difference
in net asset value between the classes.

Distributions may be made annually in December out of any net
short-term or long-term capital gains realized from the sale of
securities, premiums from expired calls written by the Fund and net
profits from Hedging Instruments and closing purchase transactions
realized in the twelve months ending on October 31 of the current year.
Any difference between the net asset value of Class A, Class B and Class
C shares will be reflected in such distributions. Distributions from net
short-term capital gains are taxable to shareholders as ordinary income
and when paid by the Fund are considered "dividends." The Fund may make
a supplemental distribution of capital gains and ordinary income following
the end of its fiscal year. Any long-term capital gains distributions
will be identified separately when paid and when tax information is
distributed by the Fund. If prior distributions must be re-characterized
at the end of the fiscal year as a result of the effect of the Fund's
investment policies, shareholders may have a non-taxable return of
capital, which will be identified in notices to shareholders. There is
no fixed dividend rate (although the Fund may have a targeted dividend
rate for Class A shares) and there can be no assurance as to the payment
of any dividends or the realization of any capital gains.

If the Fund qualifies as a "regulated investment company" under
the Internal Revenue Code, it will not be liable for Federal income taxes
on amounts paid by it as dividends and distributions. The Fund qualified
as a regulated investment company in its last fiscal year and intends to
qualify in future years, but reserves the right not to qualify. The
Internal Revenue Code contains a number of complex tests to determine
whether the Fund will qualify, and the Fund might not meet those tests in
a particular year. 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.

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. Not all
OppenheimerFunds currently offer Class B and Class C shares. To elect
this option, the shareholder must notify the Transfer Agent in writing and
either must 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.

Additional Information About The Fund

The Custodian. The Custodian of the assets of the Fund is The Bank of New
York. 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 and its affiliates have banking relationships
with the Custodian. 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. The Fund's cash
balances with the Custodian in excess of $100,000 are not protected by
Federal deposit insurance. Such uninsured balances may at times be
substantial.

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

Independent Auditors' Report

The Board of Trustees and Shareholders of Oppenheimer Strategic Income
Fund:

We have audited the accompanying statement of assets and liabilities,
including
the statement of investments, of Oppenheimer Strategic Income Fund as of
September 30, 1994, the related statement of operations for the year then
ended,the statements of changes in net assets for the years ended
September 30, 1994 and 1993, and the financial highlights for the period
October 16, 1989 (commencement of operations) to September 30, 1994. These
financial statementsand 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 September 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 Strategic Income Fund at September 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.

Denver, Colorado
October 21, 1994

Statement of Investments September 30, 1994

Face Market Value
Amount See Note 1
<S> <C> <C>
------------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreements--0.9%
------------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with First Chicago Capital Markets, 4.95%, dated
9/30/94, to be repurchased at $40,716,789 on 10/3/94, collateralized by U.S.
Treasury Nts., 4.25%--8.50%, 4/15/95--7/15/98, with a value of $23,014,481
and U.S. Treasury Bills, 0%, 3/16/95--3/23/95, with a value of $18,537,281
(Cost $40,700,000) $40,700,000 $40,700,000
------------------------------------------------------------------------------------------------------------------------------------
Short-Term Government Obligations--0.3%
------------------------------------------------------------------------------------------------------------------------------------
Bonos de la Tesoreria la Federacion:
0%, 8/3/95 7,623,450(1) 2,103,222
0%, 8/10/95 12,197,520(1) 3,360,261
------------------------------------------------------------------------------------------------------------------------------------
United Mexican States Treasury Bills, 0%, 11/10/94 35,238,970(1) 10,203,270
------------------------------------------------------------------------------------------------------------------------------------
Total Short-Term Government Obligations (Cost $15,646,044) 15,666,753
------------------------------------------------------------------------------------------------------------------------------------
Long-Term Government Obligations--49.8%
------------------------------------------------------------------------------------------------------------------------------------
Argentina (Republic Of):
Bonos de Consolidacion de Deudas:
Bonds, 8.375%, 12/20/03 36,950,000 30,797,934
Bonds, Series I, 3.704%, 4/1/01(4)(6) 77,759,247(1) 45,377,982
Bonds, Series I, 4.375%, 4/1/01(4)(6) 27,007,821 20,469,552
Bonds, Series I, 4.8125%, 4/1/07(4)(6) 45,913,296 28,585,986
Bonds, Series I, 4.8125%, 9/1/02(4)(6) 15,634,644 10,528,088
Supplier Bocon (Pesos), 4.60%, 4/1/07 5,057,512(1) 2,118,317
Discount Bonds, 4.250%, 3/31/23 20,000,000 14,250,000
Par Bonds, 4.25%, 3/31/23(8) 30,000,000 14,925,000
Past Due Interest Bonds, 5%, 3/31/05(4)(6) 107,000,000 81,721,250
------------------------------------------------------------------------------------------------------------------------------------
Bariven SA Sr. Nts., Gtd. by Petroleos de Venezuela:
9.50%, 12/10/96 500,000 478,750
9%, 2/25/97(5) 1,000,000 930,000
------------------------------------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of):
6% Debs., 9/15/13 32,000,000 17,220,000
Bonds, Banco do Brasil SA, 10.50%, 4/14/98 5,000,000 5,043,750
Bonds, Banco do Nordeste, Sr. Unsec. Debs, 9%, 11/12/96 8,200,000 7,779,750
Bonds, Nacional de Desenvolvimento Economico e Social:
10.375%, 4/27/98 3,850,000 3,854,813
Interest Due and Unpaid Bonds, 8.75%, 1/1/01(4) 19,061,000 15,844,456
Nts., Banco Estado Minas Gerais:
10%, 1/15/96 14,870,000 14,349,550
7.875%, 2/10/99(5) 4,000,000 3,290,000
8.25%, 2/10/00 9,000,000 7,245,000
8.25%, 2/10/00(5) 2,000,000 1,630,000
------------------------------------------------------------------------------------------------------------------------------------
Colombia (Republic of):
8.75%, Nts., 10/6/99 5,000,000 4,984,084
1989--1990 Integrated Loan Facility Bonds:
4.188%, 7/1/01(4)(5) 16,131,048 15,485,807
4.44%, 10/26/03(4)(5) 8,122,423 7,594,466
Empresa Columbiana de Petroleos, Nts., 7.25%, 7/8/98(5) 15,650,000 14,926,188
------------------------------------------------------------------------------------------------------------------------------------
Denmark (Kingdom of) Bonds:
9%, 11/15/98 158,160,000(1) 26,215,716
6%, 12/10/99 47,450,000(1) 6,929,474
</TABLE>

4 Oppenheimer Strategic Income Fund

<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Face Market Value
Amount See Note 1
------ ------------
<S> <C> <C>
------------------------------------------------------------------------------------------------------------------------------------
Long-Term Government Obligations (continued)
First Australia National Mortgage Acceptance Corp. Ltd Bonds,
Series 17, 15%, 7/15/02 $3,740,000(1) $ 3,015,869
------------------------------------------------------------------------------------------------------------------------------------
Indonesia (Republic of) CD, Bank Negara, 0%, 4/24/95 56,500,000,000(1)
23,817,889
------------------------------------------------------------------------------------------------------------------------------------
Italy (Republic of) Treasury Bonds:
12%, 9/1/97 13,600,000,000(1) 8,843,486
12.50%, 1/1/98 13,500,000,000(1) 8,877,980
Buoni Pollennali del Tes:
12%, 1/1/96 13,720,000,000(1) 8,904,807
12%, 5/1/97 62,325,000,000(1) 40,491,269
12.50%, 6/16/97 12,300,000,000(1) 8,074,634
12.50%, 3/19/98 4,740,000,000(1) 3,135,692
12%, 1/17/99 10,000,000,000(1) 6,476,281
------------------------------------------------------------------------------------------------------------------------------------
Jamaica (Government of) 1990 Refinancing Agreement Nts.:
Tranche A, 4.125%, 10/15/00(4)(5) 900,000 738,000
Tranche B, 4.125%, 11/15/04(4)(5) 5,000,000 3,400,000
------------------------------------------------------------------------------------------------------------------------------------
Landeskredietbank Baden Sr. Unsec. Unsub. Nts., 11.625%, 6/24/99 5,000,000,000(1)
3,241,186
------------------------------------------------------------------------------------------------------------------------------------
Morocco (Kingdom of):
Loan Participation Agreement:
Tranche A, 5.938%, 1/1/09(4)(5) 55,950,000 40,843,500
Tranche B, 4.312%, 1/1/04(4)(5) 33,800,000 26,089,375
------------------------------------------------------------------------------------------------------------------------------------
New South Wales Treasury Corp., 7% Gtd. Bonds, 4/1/04 16,000,000(1)
9,375,719
------------------------------------------------------------------------------------------------------------------------------------
New Zealand (Republic of) Bonds:
9%, 11/15/96 65,570,000(1) 39,610,123
10%, 7/15/97 29,150,000(1) 18,009,173
------------------------------------------------------------------------------------------------------------------------------------
Oesterreich Kontrollbank Sr. Unsec. Unsub. Gtd. Nts., 10%, 8/10/99 3,700,000,000(1)
2,276,923
------------------------------------------------------------------------------------------------------------------------------------
Polish People's Republic Loan Participation Agreement, 5.0625%, 2/3/24(4)(5)(7) 20,750,000(1)
11,481,851
------------------------------------------------------------------------------------------------------------------------------------
Quebec, Canada (Province of), Sr. Nts., 9.50%, 10/2/02 20,000,000(1) 13,495,634
------------------------------------------------------------------------------------------------------------------------------------
South Africa (Republic of), Loan Participation Agreements:
Eskom 4.907%, 12/23/97(4)(5) 6,457,568 6,037,827
Eskom 4.651%, 1/15/98(4)(5) 8,750,000 8,137,500
Eskom 4.875%, 4/15/98(4)(5) 2,767,816 2,504,874
Eskom 4.75%, 9/15/99(4)(5) 8,578,951 7,763,951
Eskom 4.875%, 2/15/00(4)(5) 29,550,000 27,333,750
------------------------------------------------------------------------------------------------------------------------------------
South Australia Government Finance Authority Bonds, 10%, 1/15/03 34,200,000(1)
24,282,057
------------------------------------------------------------------------------------------------------------------------------------
Spain (Kingdom of):
Bonds, 11.45%, 8/30/98 10,236,000,000(1) 80,606,211
Bonds, 10.25%, 11/30/98 1,500,000,000(1) 11,351,344
Gtd. Bonds, Bonos y Obligacion del Estado, 12.25%, 3/25/00 9,781,000,000(1)
78,905,977
------------------------------------------------------------------------------------------------------------------------------------
Treasury Corp. of Victoria:
Bonds, 12%, 10/22/98 19,000,000(1) 15,100,310
Gtd. Bonds, 8.25%, 10/15/03 80,290,000(1) 51,130,130
------------------------------------------------------------------------------------------------------------------------------------
United Kingdom Treasury Nts., 12%, 11/20/98 43,743,000(1) 76,484,630
------------------------------------------------------------------------------------------------------------------------------------
United Mexican States:
1990 Combined Multi-Year Restructuring Agreement,
Restructured Sov. Loan, 4.28%, 12/23/06(4)(5) 26,277,514 21,876,031
Banco Nacional de Comercio Exterior SNC International Finance BV
Collateralized Fixed Rate Par Bonds:
Series A, 6.25%, 12/31/19 15,000,000 9,721,875
Series B, 6.25%, 12/31/19 15,000,000 9,721,875
</TABLE>

5 Oppenheimer Strategic Income Fund

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

Face Market Value
Amount See Note 1
------- --------------
<S> <C> <C>
------------------------------------------------------------------------------------------------------------------------------------
Long-Term Government Obligations (continued)
Gtd. Matador Bonds:
13%, 1/29/97 $1,250,000,000(1) $9,819,166
12.65%, 6/21/98 2,900,000,000(1) 21,652,719
12.25%, 12/3/98 19,500,000(1) 32,000,800
7.25% Debs., 2/2/04 1,750,000 1,467,821
Bankpesca Restructured Sov. Loan, 6.0625%, 10/26/06(4)(5) 5,310,128 4,420,682
Banobras Myra Loan Participation Agreement, Tranche 2,
6.125%, 11/16/06(4)(5) 3,271,125 2,723,213
------------------------------------------------------------------------------------------------------------------------------------
Myra Old Money Loan Participation Agreements:
5.6875%, 3/20/05(4)(5) 4,039,820 3,363,150
6.1725%, 3/20/05(4)(5) 167,589 139,518
------------------------------------------------------------------------------------------------------------------------------------
New New Money Loan Participation Agreements, 5.1825%, 3/25/05(4)(5) 1,203,817
1,002,178
Tranche A, 6.0625%, 3/25/05(4)(5) 2,659,208 2,213,791
Nts., Nacional Financiera SNC, 13.60%, 4/2/98 1,395,000,000(1) 10,998,875
------------------------------------------------------------------------------------------------------------------------------------
Petacalco Topolobampo Trust, Sr. Sec. Unsub. Nts.:
8.125%, 12/15/03(5) 1,950,000 1,674,563
8.125%, 12/15/03 10,975,000 9,424,781
------------------------------------------------------------------------------------------------------------------------------------
Petroleos Mexicanos Gtd. Medium Term Nts.:
7.60%, 6/15/00(5) 14,310,000 13,033,834
8.625%, 12/1/23 13,500,000 11,189,070
------------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds:
10.50%, 2/15/95(11) 190,000,000 193,443,750
10.375%, 5/15/95 25,000,000 25,703,125
8.125%, 8/15/19 100,100,000 101,726,250
7.875%, 2/15/21 197,500,000 195,031,250
6.25%, 8/15/23 48,000,000 38,984,971
7.125%, 2/15/23 100,000,000 90,906,189
------------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
11.25%, 2/15/95 66,500,000 67,892,303
5.125%, 11/15/95 150,000 148,500
9.25%, 1/15/96 13,000,000 13,475,305
11.25%, 5/15/19 28,000,000 28,936,233
8.875%, 11/15/19(12) 128,719,000 135,637,646
9.50%, 11/15/19 85,000,000 88,107,761
8.50%, 11/15/20 44,000,000 46,392,500
------------------------------------------------------------------------------------------------------------------------------------
Venezuela (Republic of):
6.75% Debs., 9/20/95(5) 29,025,000 27,537,469
6.2364% Debs., 12/29/95(4) 8,048,318 7,364,211
8.2375% Unsub. Nts., 9/20/95(4) 2,500,000 2,360,738
9.125% Unsub., 3/11/96 7,500,000 7,106,250
9.00% Sr. Unsec. Unsub. Nts., 5/27/96(5) 23,025,000 21,557,156
------------------------------------------------------------------------------------------------------------------------------------
Bonds, Banco Venezuela TCI:
0% Debs, 12/13/94 456,558 442,862
0% Debs, 12/13/98(5) 9,885,056 6,326,436
------------------------------------------------------------------------------------------------------------------------------------
Western Australia Treasury Corp. Gtd. Bonds, 12.50%, 4/1/98 21,400,000(1)
17,192,205
------------------------------------------------------------------------------------------------------------------------------------
Total Long-Term Government Obligations (Cost $2,518,241,698) 2,355,130,917
------------------------------------------------------------------------------------------------------------------------------------
Mortgage/Asset-Backed Obligations--5.7%
------------------------------------------------------------------------------------------------------------------------------------
Chase Mortgage Finance Corp:
Nts., 6.75%, 4/25/24(5) 849,343 579,412
Nts., 6.75%, 2/25/25(5) 710,295 485,665
</TABLE>

6 Oppenheimer Strategic Income Fund

<PAGE>

------------------------------------------------------------------------------------------------------------------------------------
Face Market Value
Amount See Note 1
------- ------------
<S> <C> <C>
------------------------------------------------------------------------------------------------------------------------------------

Mortgage/Asset-Backed
Obligations (continued)
Sub. Mtg. Pass-Through Certificates, Series 1994-1:
0%, Cl. B-8, 3/25/25(5) $2,184,269 $1,639,568
0%, Cl. B-9, 3/25/25(5) 2,184,269 1,566,531
0%, Cl B-10, 3/25/25(5) 1,092,134 779,511
------------------------------------------------------------------------------------------------------------------------------------
Citicorp Mortgage Securities, Inc., 7% Sub. Bonds, Series 1993-5:
Cl. B3, 4/25/23 1,662,792 1,189,417
Cl. B4, 4/25/23 1,603,408 217,963
------------------------------------------------------------------------------------------------------------------------------------
CMC Security Corp. III, 0% Collateralized Mtg. Oblig., Series 1994-E,
Cl. E-B3, 3/25/24(5) 4,957,267 3,389,532
------------------------------------------------------------------------------------------------------------------------------------
CSFOB 11%, Cl.E, 2/15/14(5) 12,000,000 11,701,248
------------------------------------------------------------------------------------------------------------------------------------
FDIC Trust, 1994-C1, Class 2-D, 8.70%, 9/25/25(5) 2,500,000 2,398,828
------------------------------------------------------------------------------------------------------------------------------------
FDIC Trust, 1994-C1, Class 2-E, 8.70%, 9/25/25(5) 2,500,000 2,312,109
------------------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Series 176, Class F, 8.95%, 3/15/20 16,988,000
17,368,530
------------------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn. Interest-Only Stripped Mtg.-Backed
Security:
Trust 221, Class 2, 7.50%, 5/25/23(10) 63,848,072 23,923,063
Trust 240, Class 2, 7%, 9/25/23(10) 114,242,159 43,197,816
Trust 240, Class 2, 7%, 2/25/24(10) 170,646,483 65,485,589
Trust 252, Class 2, 7.50%, 11/30/23(10) 88,701,927 33,679,013
Trust 258, Class 2, 7%, 3/25/24(10) 35,135,718 12,714,738
------------------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn. Principal-Only Stripped
Mtg.-Backed Security, Series 1993-253 Class G, 0%, 11/25/23(9) 7,802,220
3,513,437
------------------------------------------------------------------------------------------------------------------------------------
GE Capital Mtg. Services, Inc.:
Series 1994-7 Cl. B3, 6% Sub. Bonds., 2/25/09 1,586,524 1,149,239
Series 1994-10 Cl. B3, 6.5% Sub. Bonds., 3/25/24(5) 4,763,001 3,328,148
Series 1994-11 Cl. B3, 6.5% Sub. Bonds., 5/25/24(5) 3,167,515 2,134,114
------------------------------------------------------------------------------------------------------------------------------------
Prudential Agricultural Credit, Inc. Farmer Mac Agricultural Real Estate
Trust Sr. Sub. Mtg. Pass-Through Certificates:
9.18%, Series 1992-2, Cl. B2, 1/15/03(4)(5) 5,681,627 4,320,255
9.47%, Series 1992-2, Cl. B3, 4/15/09(4)(5) 5,792,386 4,407,260
------------------------------------------------------------------------------------------------------------------------------------
Residential Funding Corp. 7.785% Mtg. Pass-Through Certificates,
Series 1993-6, Cl. B5, 6/15/23(5) 4,087,900 3,021,214
------------------------------------------------------------------------------------------------------------------------------------
Resolution Trust Corp. Commercial Mtg. Pass-Through Certificates:
8.25%, Series 1992-CHF, Cl.C, 12/25/20 1,776,220 1,726,265
10.638 %, Series 1992-16, Cl. B3, 5/24/24(4) 2,822,000 2,859,039
8.75%, Series 1993-C1, Cl.B, 5/25/24 7,572,000 7,496,280
8.50%, Series 1993-C2, Cl.E, 3/25/25 161,685 158,578
8%, Series 1994-C1, Cl.E, 6/25/26 5,000,000 3,781,250
------------------------------------------------------------------------------------------------------------------------------------
SKW Real Estate Limited Partnership, 9.05%, Secured
Note, Cl. E, 4/15/04(5) 9,500,000 9,048,750
------------------------------------------------------------------------------------------------------------------------------------
Total Mortgage/Asset-Backed Obligations (Cost $268,347,594) 269,572,362
------------------------------------------------------------------------------------------------------------------------------------
Corporate Bonds and Notes--35.6%
------------------------------------------------------------------------------------------------------------------------------------
Basic Materials--4.2%
------------------------------------------------------------------------------------------------------------------------------------
Chemicals--1.7%
Acme Metals, Inc., 12.50% Sr. Sec. Nts., 8/1/02 6,500,000 6,597,500
------------------------------------------------------------------------------------------------------------------------------------
Aftermarket Technology Corp., 12% Sr. Sub. Nts., 8/1/04(5) 2,000,000 2,030,000
------------------------------------------------------------------------------------------------------------------------------------
Atlantis Group, Inc., 11% Sr. Nts., 2/15/03 9,000,000 8,865,000
------------------------------------------------------------------------------------------------------------------------------------
Carbide/Graphite Group, Inc., 11.50% Sr. Nts., 9/1/03 15,500,000 15,848,750
</TABLE>

7 Oppenheimer Strategic Income Fund

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

Face Market Value
Amount See Note 1
------- ------------
<S> <C> <C>
------------------------------------------------------------------------------------------------------------------------------------
Chemicals (continued)
Harris Chemical North America, Inc.:
0%/10.25% Gtd. Sr. Sec. Disc. Nts., 7/15/01(3) $12,500,000 $10,187,500
10.75% Gtd. Sr. Sub. Nts., 10/15/03 1,000,000 942,500
------------------------------------------------------------------------------------------------------------------------------------
Malette, Inc., 12.25% Sr. Sec. Nts., 7/15/04 3,750,000 3,881,250
------------------------------------------------------------------------------------------------------------------------------------
NL Industries Inc.:
11.75% Sr. Sec. Nts., 10/15/03 500,000 516,250
0%/13% Sr. Sec. Disc. Nts., 10/15/05(3) 1,250,000 795,313
------------------------------------------------------------------------------------------------------------------------------------
Quantum Chemical Corp., 10.375% Fst. Mtg. Nts., 6/1/03 3,500,000 3,883,799
------------------------------------------------------------------------------------------------------------------------------------
Rexene Corp.:
9% Fst. Priority Nts., 11/15/99(8) 2,535,000 2,522,325
10% 2nd Priority Nts., 11/15/02(6) 3,706,000 3,536,143
------------------------------------------------------------------------------------------------------------------------------------
Sherritt, Inc., 11.00% Debs., 3/31/04 10,000,000(1) 7,175,639
------------------------------------------------------------------------------------------------------------------------------------
Synthetic Industries, Inc., 12.75% Sr. Sub. Debs., 12/01/02 12,275,000 12,397,750
USG Corp., 9.25%, 9/15/01 3,200,000 3,048,000
------------------------------------------------------------------------------------------------------------------------------------
82,227,719
------------------------------------------------------------------------------------------------------------------------------------
Metals--0.8%
Haynes International, Inc., 11.25% Sr. Sec. Nts., 6/15/98 3,000,000 2,565,000
------------------------------------------------------------------------------------------------------------------------------------
Horsehead Industries, Inc.:
13.50% Extd. Nts., 6/1/97(4) 4,566,000 4,702,980
14% Sub. Nts., 6/1/99 5,050,000 4,974,250
------------------------------------------------------------------------------------------------------------------------------------
Jorgensen (Earle M.) Co., 10.75% Sr. Nts., 3/1/00 2,000,000 2,000,000
------------------------------------------------------------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp.:
9.875% Sr. Nts., 2/15/02 4,175,000 3,715,750
12.75% Sr. Sub. Nts., 2/1/03 16,850,000 16,386,625
------------------------------------------------------------------------------------------------------------------------------------
Stelco, Inc., 10.25% Debs., 4/30/96 4,300,000(1) 3,173,683
------------------------------------------------------------------------------------------------------------------------------------
37,518,288
------------------------------------------------------------------------------------------------------------------------------------
Paper and Forest
Products--1.7%
Domtar, Inc., 10.85% Debs., 8/15/17 2,500,000(1) 1,703,049
------------------------------------------------------------------------------------------------------------------------------------
Equitable Bag, Inc., 12.375% Sr. Nts., 8/15/02(2) 1,830,000 1,070,550
------------------------------------------------------------------------------------------------------------------------------------
Gaylord Container Corp., 11.50% Sr. Nts., 5/15/01 8,450,000 8,661,250
------------------------------------------------------------------------------------------------------------------------------------
Pacific Lumber Co., 10.50% Sr. Nts., 3/1/03 14,370,000 13,471,875
------------------------------------------------------------------------------------------------------------------------------------
PT Inti Indorayon Utama, 9.125% Sr. Nts., 10/15/00 17,500,000 15,312,500
------------------------------------------------------------------------------------------------------------------------------------
Rainy River Forest Products, 10.75% Sr. Sec. Nts., 10/15/01 3,250,000 3,258,125
------------------------------------------------------------------------------------------------------------------------------------
Riverwood International Corp.:
10.75% Sr. Nts., 6/15/00 5,000,000 5,225,000
11.25% Sr. Sub. Nts., 6/15/02 950,000 997,500
10.375% Sr. Sub. Nts., 6/30/04 3,600,000 3,681,000
------------------------------------------------------------------------------------------------------------------------------------
Scotia Pacific Holding Co., 7.95% Timber Collateralized Nts., 7/20/15 2,645,897 2,435,522
------------------------------------------------------------------------------------------------------------------------------------
Stone Container Corp.:
9.875% Sr. Nts., 2/1/01 18,300,000 17,224,875
10.75% Sr. Sub. Debs., 4/1/02 300,000 286,500
10.75% Fst. Mtg. Nts., 10/1/02 4,100,000 4,094,875
------------------------------------------------------------------------------------------------------------------------------------
Stone Consolidated Corp., 10.25% Sr. Sec. Nts., 12/15/00 5,125,000 5,060,938
------------------------------------------------------------------------------------------------------------------------------------
82,483,559
</TABLE>

8 Oppenheimer Strategic Income Fund

<PAGE>

Face Market Value
Amount See Note 1
------- ------------
<S> <C> <C>
------------------------------------------------------------------------------------------------------------------------------------
Consumer Cyclicals--9.7%
------------------------------------------------------------------------------------------------------------------------------------
Automotive--0.6% Envirotest Systems Corp.:
9.125% Sr. Nts., 3/15/01 $3,000,000 $2,782,500
9.625% Sr. Sub. Nts., 4/1/03 8,940,000 8,224,800
------------------------------------------------------------------------------------------------------------------------------------
Foamex LP/Foamex Capital Corp., 11.875% Sr. Sub. Debs., 10/1/04 2,600,000
2,626,000
------------------------------------------------------------------------------------------------------------------------------------
Foamex LP/JPS Automotive Corp., Units(5) 8,750,000 4,856,250
------------------------------------------------------------------------------------------------------------------------------------
JPS Automotive Products Corp., 11.125% Sr. Nts., 6/15/01 2,500,000 2,525,000
------------------------------------------------------------------------------------------------------------------------------------
Penda Corp., 10.75% Sr. Nts., Series B, 3/1/04 8,600,000 7,955,000
------------------------------------------------------------------------------------------------------------------------------------
SPX Corp., 11.75% Sr. Sub. Nts., 6/1/02 1,350,000 1,410,750
------------------------------------------------------------------------------------------------------------------------------------
30,380,300
------------------------------------------------------------------------------------------------------------------------------------
Construction Supplies and
Development--0.9%
Baldwin Co., 10.375% Sr. Nts., Series B, 8/1/03 9,000,000 7,605,000
------------------------------------------------------------------------------------------------------------------------------------
Dal-Tile International, Inc., 0% Sr. Sec. Nts., 7/15/98 21,500,000 13,491,250
------------------------------------------------------------------------------------------------------------------------------------
Hovnanian K. Enterprises, Inc., 11.25% Gtd. Sub. Nts., 4/15/02 6,900,000 6,555,000
------------------------------------------------------------------------------------------------------------------------------------
NVR, Inc., 11% Gtd. Sr. Nts., 4/15/03 3,490,000 3,193,350
------------------------------------------------------------------------------------------------------------------------------------
USG Corp., 10.25% Sr. Sec. Nts., 12/15/02 10,967,000 11,241,175
------------------------------------------------------------------------------------------------------------------------------------
Walter Industries, Inc., 14.625% Sr. Nts., Series B, 1/1/99(2) 742,000 1,253,980
------------------------------------------------------------------------------------------------------------------------------------
43,339,755
------------------------------------------------------------------------------------------------------------------------------------
Consumer Goods
and Services--2.6%
Amstar Corp., 11.375% Sr. Sub. Nts., 2/15/97 10,886,000 10,777,140
------------------------------------------------------------------------------------------------------------------------------------
Coleman Holdings, Inc., 0% Sr. Sec. Disc. Nts., Series B, 5/27/98 13,450,000 9,078,750
------------------------------------------------------------------------------------------------------------------------------------
Dr. Pepper Bottling Co. of Texas, 10.25% Sr. Nts., 2/15/00 3,000,000 3,030,000
------------------------------------------------------------------------------------------------------------------------------------
Dr. Pepper/Seven-Up Cos., Inc., 0%/11.50% Sr. Sub. Disc. Nts., 11/1/02(3) 4,118,000
3,294,400
------------------------------------------------------------------------------------------------------------------------------------
Harman International Industries, Inc., 12% Sr. Sub. Nts., 8/1/02 23,000,000 24,610,000
------------------------------------------------------------------------------------------------------------------------------------
Insilco Corp., 10.375% Sr. Sec. Nts., 7/1/97 5,866,000 5,961,323
------------------------------------------------------------------------------------------------------------------------------------
Interco, Inc., 9% Sec. Nts., Series B, 6/1/04(5) 17,826,000 17,539,045
------------------------------------------------------------------------------------------------------------------------------------
MacAndrews & Forbes Group, Inc., Sub. Nts., 12.25%, 7/1/96 1,565,000
1,561,088
------------------------------------------------------------------------------------------------------------------------------------
MacAndrews & Forbes Holdings, Inc., 13% Sub. Debs., 3/1/99 4,915,000
4,890,425
------------------------------------------------------------------------------------------------------------------------------------
Mary Kay Corp.:
12.75% Gtd. Sr. Nts., Series B, 12/6/00(5) 1,000,000 1,045,000
10.25% Sr. Nts., 12/31/00(5) 9,875,000 9,677,500
------------------------------------------------------------------------------------------------------------------------------------
PT Polysindo Eka Perkasa, 13% Sr. Nts., 6/15/01 4,150,000 3,934,893
------------------------------------------------------------------------------------------------------------------------------------
Protection One Alarm Monitoring, Inc., 12% Sr. Sub. Nts., Series B, 11/1/03 6,500,000
6,207,500
------------------------------------------------------------------------------------------------------------------------------------
Revlon Consumer Products Corp., 9.375% Sr. Nts., 4/1/01 5,200,000 4,563,041
------------------------------------------------------------------------------------------------------------------------------------
Revlon Worldwide Corp., 0% Sr. Sec. Disc. Nts., 3/15/98 15,450,000 7,184,250
------------------------------------------------------------------------------------------------------------------------------------
WestPoint Stevens, Inc., 9.375% Sr. Sub. Debs., 12/15/05 9,450,000 8,587,688
------------------------------------------------------------------------------------------------------------------------------------
121,942,043
------------------------------------------------------------------------------------------------------------------------------------
Entertainment--1.8%
Arizona Charlie's, Inc., 12% Fst. Mtg. Nts., Series A, 11/15/00(5) 5,775,000 5,053,125
------------------------------------------------------------------------------------------------------------------------------------
Aztar Corp., 11% Sr. Sub. Nts., 10/1/02 6,250,000 5,507,813
------------------------------------------------------------------------------------------------------------------------------------
Aztar Mortgage Funding, Inc., 13.50% Gtd. Fst. Mtg. Nts., 9/15/96 2,220,000
2,203,350
------------------------------------------------------------------------------------------------------------------------------------
Capital Gaming International, Inc., 11.50% Sr. Sec. Nts., 2/1/01 3,100,000 2,170,000
------------------------------------------------------------------------------------------------------------------------------------
Capitol Queen & Casino, Inc., 12% Fst. Mtg. Nts., Series A, 11/15/00(5) 4,200,000
3,255,000
------------------------------------------------------------------------------------------------------------------------------------
Gillett Holdings, Inc., 12.25% Sr. Sub. Nts., Series A, 6/30/02 12,800,000 13,600,000
------------------------------------------------------------------------------------------------------------------------------------
Hollywood Casino Corp., 13.50% Fst. Mtg. Nts., 9/30/98 3,500,000 2,992,500
------------------------------------------------------------------------------------------------------------------------------------
Hollywood Casino, 14%, 4/1/98 3,000,000 3,105,000
------------------------------------------------------------------------------------------------------------------------------------
Kloster Cruise Ltd., 13% Sr. Sec. Nts., 5/1/03 14,000,000 13,930,000
</TABLE>

9 Oppenheimer Strategic Income Fund

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

Face Market Value
Amount See Note 1
<S> <C> <C>
------------------------------------------------------------------------------------------------------------------------------------
Entertainment
(continued)
Lady Luck Gaming Finance Corp., 10.50% Fst. Mtg. Nts., 3/1/01 $4,020,000
$1,809,000
------------------------------------------------------------------------------------------------------------------------------------
MGM Grand Hotel Finance Corp, 11.75% Fst. Mtg. Nts., Series A, 5/1/99 5,000,000
5,337,500
------------------------------------------------------------------------------------------------------------------------------------
Maritime Group Ltd., Units(4)(5)(6) 2,939,466 2,330,262
------------------------------------------------------------------------------------------------------------------------------------
Marvel (Parent) Holdings, Inc., 0% Sr. Sec. Disc. Nts., 4/15/98 7,050,000 4,406,250
------------------------------------------------------------------------------------------------------------------------------------
Marvel Holdings, Inc., 0% Sr. Sec. Disc. Nts., Series B, 4/15/98 12,500,000 7,843,750
------------------------------------------------------------------------------------------------------------------------------------
Station Casinos, Inc., 9.625% Sr. Sub. Nts., 6/1/03 10,000,000 8,600,000
------------------------------------------------------------------------------------------------------------------------------------
Treasure Bay Gaming & Resorts, Inc., Units(5) 4,050,000 1,235,250
------------------------------------------------------------------------------------------------------------------------------------
Treasure Bay Gaming, 12.25% Fst. Mtg. Nts., 11/15/00(5) 1,125,000 354,375
------------------------------------------------------------------------------------------------------------------------------------
Trump Plaza Funding, 10.875%, 6/15/01 1,000,000 712,500
------------------------------------------------------------------------------------------------------------------------------------
United Gaming, Inc., 7.50% Cv. Sub. Debs., 9/15/03 1,540,000 1,287,825
------------------------------------------------------------------------------------------------------------------------------------
85,733,500
------------------------------------------------------------------------------------------------------------------------------------
Hotels/Lodging--0.1%
Embassy Suites, Inc., 10.875% Gtd. Sr. Sub. Nts., 4/15/02 2,250,000 2,340,000
------------------------------------------------------------------------------------------------------------------------------------
Host Marriott Hospitality, Inc., 11% Sr. Nts., Series L, 5/1/07 4,353,000 4,380,206
------------------------------------------------------------------------------------------------------------------------------------
6,720,206
------------------------------------------------------------------------------------------------------------------------------------
Media--1.8%
Ackerley Communications, Inc., 10.75% Sr. Sec. Nts., Series A, 10/1/03 8,850,000
8,584,500
------------------------------------------------------------------------------------------------------------------------------------
Act III Broadcasting, Inc., 9.625% Sr. Sub. Nts., 12/15/03 1,000,000 955,000
------------------------------------------------------------------------------------------------------------------------------------
GSPI Corp., 10.15% Fst. Mtg. Bonds, 6/24/10(5) 835,202 896,590
------------------------------------------------------------------------------------------------------------------------------------
General Media, Inc., 10.625% Sr. Sec. Nts., 12/31/00 4,000,000 3,740,000
------------------------------------------------------------------------------------------------------------------------------------
Infinity Broadcasting Corp., 10.375% Sr. Sub. Nts., 3/15/02 4,000,000 4,160,000
------------------------------------------------------------------------------------------------------------------------------------
Lamar Advertising Co., 11% Sr. Sec. Nts., 5/15/03 12,000,000 11,730,000
------------------------------------------------------------------------------------------------------------------------------------
News America Holdings, Inc.:
12% Sr. Nts., 12/15/01 2,500,000 2,849,190
8.50% Sr. Nts., 2/15/02 6,000,000 5,815,097
8.625%, Sr. Nts., 2/1/03 10,400,000 10,298,006
10.125% Gtd. Sr. Debs., 10/15/12 3,300,000 3,461,541
------------------------------------------------------------------------------------------------------------------------------------
SCI Television, Inc.:
7.50% Fst. Sec. Loan Nts., 6/30/98 4,380,331 4,281,774
11% Sr. Sec. Nts., 6/30/05 5,653,155 5,759,152
------------------------------------------------------------------------------------------------------------------------------------
SFX Broadcasting, Inc., 11.375% Sr. Sub. Nts., 10/1/08 3,000,000 3,127,500
------------------------------------------------------------------------------------------------------------------------------------
Sinclair Broadcasting Group, Inc., 10% Sr. Sub. Nts., 12/15/03 12,925,000 12,537,250
------------------------------------------------------------------------------------------------------------------------------------
Univision Television Group, Inc., 11.75% Sr. Sub. Nts., 1/15/01 5,500,000 5,836,875
------------------------------------------------------------------------------------------------------------------------------------
84,032,475
------------------------------------------------------------------------------------------------------------------------------------
Real Estate Development--0.5%
Casino Magic Finance Corp., 11.50% Fst. Mtg. Nts., 10/15/01 4,150,000
3,216,250
------------------------------------------------------------------------------------------------------------------------------------
Noranda Forest, Inc., 11% Debs., 7/15/98 2,000,000(1) 1,580,504
------------------------------------------------------------------------------------------------------------------------------------
Olympia & York First Canadian Place Ltd., 11% Debs., Series 3, 11/4/49(2) 5,150,000(1)
2,380,448
------------------------------------------------------------------------------------------------------------------------------------
Saul (B.F.) Real Estate Investment Trust, 11.625% Sr. Nts., 4/1/02 17,000,000 15,385,000
------------------------------------------------------------------------------------------------------------------------------------
22,562,202
------------------------------------------------------------------------------------------------------------------------------------
Retail--1.4%
Cole National Group, Inc., 11.25% Sr. Nts., 10/1/01 17,950,000 17,680,750
------------------------------------------------------------------------------------------------------------------------------------
Eye Care Centers of America, Inc., 12% Sr. Nts., 10/1/03 7,000,000 5,915,000
------------------------------------------------------------------------------------------------------------------------------------
Finlay Enterprises, Inc., 0%/12% Sr. Disc. Debs., 5/1/05(3) 750,000 435,000
------------------------------------------------------------------------------------------------------------------------------------
Finlay Fine Jewelry Corp., 10.625% Sr. Nts., 5/1/03 8,370,000 7,951,500
------------------------------------------------------------------------------------------------------------------------------------
Parisian, Inc., 9.875% Sr. Sub. Nts., 7/15/03 11,500,000 9,775,000
------------------------------------------------------------------------------------------------------------------------------------
R.H. Macy & Co., Inc., 14.50% Sr. Sub. Debs., 10/15/98(2) 7,450,000
5,364,000
</TABLE>

10 Oppenheimer Strategic Income Fund

<PAGE>

Face Market Value
Amount See Note 1
<S> <C> <C>
------------------------------------------------------------------------------------------------------------------------------------
Retail (continued)

Sears Canada, Inc.:
11.75% Debs., 12/5/95 $2,400,000(1) $1,874,240
11.70% Debs., 7/10/00 3,150,000(1) 2,542,133
------------------------------------------------------------------------------------------------------------------------------------
Southland Corp., 4.50% 2nd Priority Sr. Sub. Debs., Series A, 6/15/04 4,850,000
3,031,250
------------------------------------------------------------------------------------------------------------------------------------
Waban, Inc., 11% Sr. Sub. Nts., 5/15/04 8,000,000 7,920,000
------------------------------------------------------------------------------------------------------------------------------------
Zale Delaware, Inc., 11% Gtd. 2nd Priority Sr. Sec. Nts., 7/30/00 2,000,000 2,005,000
------------------------------------------------------------------------------------------------------------------------------------
64,493,873
------------------------------------------------------------------------------------------------------------------------------------
Consumer Non-Cyclicals--4.3%
------------------------------------------------------------------------------------------------------------------------------------
Food--2.6%
Family Restaurant, Inc.:
9.75% Sr. Nts., 2/1/02 8,000,000 7,040,000
0%/10.875% Sr. Sub. Disc. Nts., 2/1/04(3) 14,850,000 8,984,250
------------------------------------------------------------------------------------------------------------------------------------
Farm Fresh, Inc., 12.25% Sr. Nts., 10/1/00 10,350,000 8,952,750
------------------------------------------------------------------------------------------------------------------------------------
Flagstar Corp., 10.75% Sr. Nts., 9/15/01 4,000,000 3,790,000
------------------------------------------------------------------------------------------------------------------------------------
Food 4 Less Supermarkets, Inc., 13.75% Sr. Sub Nts., 6/15/01 1,500,000 1,620,000
------------------------------------------------------------------------------------------------------------------------------------
Foodmaker, Inc., 14.25% Sr. Sub. Nts., 5/15/98 15,000,000 15,768,750
------------------------------------------------------------------------------------------------------------------------------------
Heileman Acquisition Corp., 9.625% Sr. Sub. Nts., 1/31/04 8,050,000 6,862,625
------------------------------------------------------------------------------------------------------------------------------------
Kash 'N Karry Food Stores, Inc., 14% Sub. Debs., 2/1/01(2) 1,000,000 285,000
------------------------------------------------------------------------------------------------------------------------------------
Pulsar Internacional, S.A. de C.V.:
8%, Nts., 12/14/94(5) 30,000,000 30,000,000
9%, Nts., 9/19/95(5) 14,750,000 14,750,000
------------------------------------------------------------------------------------------------------------------------------------
RJR Nabisco, Inc., 8.625% Medium-Term Nts., 12/1/02 20,000,000
18,255,759
------------------------------------------------------------------------------------------------------------------------------------
Royal Crown Corp., 9.75% Sr. Sec. Nts., 8/1/00 2,000,000 1,865,000
------------------------------------------------------------------------------------------------------------------------------------
Specialty Foods, 10.25% Sr. Nts., 8/15/01 6,100,000 5,490,000
------------------------------------------------------------------------------------------------------------------------------------
123,664,134
------------------------------------------------------------------------------------------------------------------------------------
Food and Drug Distribution--1.1%
Alco Health Distribution Corp., 11.25% Sr. Debs., 7/15/05(6) 13,540,068 13,248,117
------------------------------------------------------------------------------------------------------------------------------------
Di Giorgio Corp., 12% Sr. Nts., 2/15/03 8,680,000 8,680,000
------------------------------------------------------------------------------------------------------------------------------------
Duane Reade, 12% Sr. Nts., Series B, 9/15/02 2,250,000 2,182,500
------------------------------------------------------------------------------------------------------------------------------------
Grand Union Co.:
11.25% Sr. Nts., 7/15/00 8,350,000 7,577,625
12.25% Sr. Sub. Nts., 7/15/02 8,200,000 6,068,000
------------------------------------------------------------------------------------------------------------------------------------
Purity Supreme, Inc., 11.75% Sr. Sec. Nts., Series B, 8/1/99 7,350,000 6,504,750
------------------------------------------------------------------------------------------------------------------------------------
Thrifty Payless Holdings, 12.25% Sr. Sub. Nts., 4/15/04 2,000,000 2,065,000
------------------------------------------------------------------------------------------------------------------------------------
Thrifty Payless, Inc., 11.75% Sr. Nts., 4/15/03 5,000,000 4,987,500
------------------------------------------------------------------------------------------------------------------------------------
51,313,492
------------------------------------------------------------------------------------------------------------------------------------
Healthcare--0.6%
Abbey Healthcare Group, Inc., 9.50% Sr. Sub. Nts., 11/1/02 2,000,000 1,835,000
------------------------------------------------------------------------------------------------------------------------------------
American Medical International, Inc.:
11.25% Nts., 2/6/95 1,060,000(1) 1,684,158
13.50% Sr. Sub. Nts., 8/15/01 1,200,000 1,342,500
------------------------------------------------------------------------------------------------------------------------------------
Charter Medical Corp., 11.25% Sr. Sub. Nts., 4/15/04(5) 3,000,000 3,105,000
------------------------------------------------------------------------------------------------------------------------------------
Mediq/PRN Life Support Services, Inc., 11.125% Sr. Sec. Nts., 7/1/99 3,000,000
2,835,000
------------------------------------------------------------------------------------------------------------------------------------
Multicare Cos., Inc. (The), 12.50% Sr. Sub. Nts., 7/1/02 6,290,000 7,327,850
------------------------------------------------------------------------------------------------------------------------------------
Quorum Health Group, Inc., 11.875% Sr. Sub. Nts., 12/15/02 3,750,000
4,003,125
------------------------------------------------------------------------------------------------------------------------------------
Total Renal Care, Inc., Units 9,700,000 6,984,000
------------------------------------------------------------------------------------------------------------------------------------
29,116,633
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

11 Oppenheimer Strategic Income Fund

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

Face Market Value
Amount See Note 1
<S> <C> <C>
------------------------------------------------------------------------------------------------------------------------------------
Energy--1.9%
Global Marine, Inc., 12.75% Sr. Sec. Nts., 12/15/99 $2,600,000 $2,827,500
------------------------------------------------------------------------------------------------------------------------------------
Gulf Canada Resources Ltd., 9.25% Sr. Sub. Debs., 1/15/04 10,500,000 9,667,875
------------------------------------------------------------------------------------------------------------------------------------
HS Resources, Inc., 9.875% Sr. Sub. Nts., 12/1/03 3,750,000 3,543,750
------------------------------------------------------------------------------------------------------------------------------------
Maxus Energy Corp.:
9.875% Nts., 10/15/02 4,550,000 4,390,750
8.50% Debs., 4/1/08 5,000,000 4,306,250
11.50% Debs., 11/15/15 3,500,000 3,517,500
------------------------------------------------------------------------------------------------------------------------------------
Mesa Capital Corp., 0%/12.75% Sec. Disc. Nts., 6/30/98(3) 21,047,000
18,679,213
------------------------------------------------------------------------------------------------------------------------------------
OPI International, Inc., 12.875% Gtd. Sr. Nts., 7/15/02 13,000,000 14,852,500
------------------------------------------------------------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc., 9.375% Sub. Debs., 2/1/06 1,700,000
1,566,125
------------------------------------------------------------------------------------------------------------------------------------
Presidio Oil Co.:
11.50% Sr. Sec. Nts., Series B, 9/15/00 6,564,500 6,269,098
13.90% Sr. Sub. Gas Indexed Nts., Series B, 7/15/02(4) 5,250,000 4,672,500
------------------------------------------------------------------------------------------------------------------------------------
Rowan Cos., Inc., 11.875% Sr. Nts., 12/1/01 7,500,000 8,025,000
------------------------------------------------------------------------------------------------------------------------------------
TGX Corp., 12.675% Sr. Sub. Exch. Nts., 4/1/94(2) 6,920,000 2,802,600
------------------------------------------------------------------------------------------------------------------------------------
Triton Energy Corp., 0% Sr. Sub. Disc. Nts., 11/1/97 3,500,000 2,572,500
------------------------------------------------------------------------------------------------------------------------------------
87,693,161
------------------------------------------------------------------------------------------------------------------------------------
Financial--3.5%
Acadia Partners LP, 13% Sub.Nts., 10/1/97(5) 25,000,000 25,750,000
------------------------------------------------------------------------------------------------------------------------------------
Banco Ganadero SA, 9.75%, 8/26/99(5) 13,700,000 13,802,750
------------------------------------------------------------------------------------------------------------------------------------
Blue Bell Funding, Inc., 11.85% Extd. Sec. Nts., 5/1/99(4) 4,500,000 4,820,625
------------------------------------------------------------------------------------------------------------------------------------
Borg-Warner Security Corp, 9.125%, Sr. Sub. Nts., 5/1/03 5,360,000 4,837,400
------------------------------------------------------------------------------------------------------------------------------------
Card Establishment Services, Inc., 10% Sr. Sub. Nts., Series B, 10/1/03 17,275,000
16,324,875
------------------------------------------------------------------------------------------------------------------------------------
ECM Fund, L.P.I., 14% Sub. Nts., 6/10/02(5) 1,611,387 1,772,526
------------------------------------------------------------------------------------------------------------------------------------
Grupo Mexicano de Desarrollo S.A., 8.25%, Gtd. Nts., 2/17/01(5) 14,700,000
12,090,750
------------------------------------------------------------------------------------------------------------------------------------
International Bank for Reconstruction and Development Bonds, 12.50%, 7/25/97 60,320,000(1)
39,253,853
------------------------------------------------------------------------------------------------------------------------------------
Life Partners Group, Inc., 12.75% Sr. Sub. Nts., 7/15/02 2,500,000 2,718,750
------------------------------------------------------------------------------------------------------------------------------------
Nacolah Holding Corp., 9.50% Sr. Nts., 12/1/03 6,500,000 5,801,250
------------------------------------------------------------------------------------------------------------------------------------
Navistar Financial Corp., 9.50% Medium-Term Nts., 6/1/96 6,075,000 6,101,122
------------------------------------------------------------------------------------------------------------------------------------
Pioneer Finance, 13.50% Fst Mtg. Bonds, 12/1/98 18,205,000 16,839,625
------------------------------------------------------------------------------------------------------------------------------------
Reliance Group Holdings, Inc., 9.75% Sr. Sub. Debs., 11/15/03 3,200,000 2,896,016
------------------------------------------------------------------------------------------------------------------------------------
Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A, 12/1/11(5) 13,700,000
12,364,250
------------------------------------------------------------------------------------------------------------------------------------
165,373,792
------------------------------------------------------------------------------------------------------------------------------------
Industrial--2.5%
------------------------------------------------------------------------------------------------------------------------------------
Containers--0.8%
Calmar, Inc., 12% Sr. Sec. Nts., 12/15/97 7,000,000 7,017,500
------------------------------------------------------------------------------------------------------------------------------------
Calmar Spraying Systems, Inc., 14% Sr. Sub. Disc. Nts., 2/15/99 3,850,000 3,869,250
------------------------------------------------------------------------------------------------------------------------------------
Owens-Illinois, Inc., 10% Sr. Sub. Nts., 8/1/02 2,100,000 2,110,500
------------------------------------------------------------------------------------------------------------------------------------
Sea Containers Ltd.:
9.50% Sr. Nts., 7/1/03 4,750,000 4,405,625
12.50% Sr. Sub. Debs., Series A, 12/1/04 2,850,000 2,985,375
------------------------------------------------------------------------------------------------------------------------------------
Terex Corp., 13% Sr. Nts., 8/1/96(5) 4,065,000 3,780,450
------------------------------------------------------------------------------------------------------------------------------------
Trans Ocean Container Corp., 12.25% Sr. Sub. Nts., 7/1/04 11,900,000 11,840,500
------------------------------------------------------------------------------------------------------------------------------------
36,009,200
</TABLE>

12 Oppenheimer Strategic Income Fund

<PAGE>

<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
<S> <C> <C>
------------------------------------------------------------------------------------------------------------------------------------
General Industrial--0.9%
EnviroSource, Inc., 9.75% Sr. Nts., 6/15/03 $15,785,000 $14,364,350
------------------------------------------------------------------------------------------------------------------------------------
Imo Industries, Inc., 12.25% Sr. Sub. Debs., 8/15/97 3,850,000 3,898,125
------------------------------------------------------------------------------------------------------------------------------------
Pace Industries, 10.625% Sr. Nts., 12/1/02 12,300,000 11,193,000
------------------------------------------------------------------------------------------------------------------------------------
Polymer Group, Inc., 12.25% Sr. Nts., 7/15/02(5) 3,900,000 3,900,000
------------------------------------------------------------------------------------------------------------------------------------
Southdown, Inc., 14% Sr. Sub. Nts., Series B, 10/15/01 3,450,000 3,907,125
------------------------------------------------------------------------------------------------------------------------------------
United States Banknote Corp., 11.625%, 8/1/02 4,220,000 3,776,900
------------------------------------------------------------------------------------------------------------------------------------
41,039,500
------------------------------------------------------------------------------------------------------------------------------------
Transportation--0.8%
Chrysler Corp., 13% Debs., 3/1/97 500,000 513,706
------------------------------------------------------------------------------------------------------------------------------------
Chrysler Financial Corp., 13.25% Sr. Nts., 10/15/99 4,500,000 5,485,211
------------------------------------------------------------------------------------------------------------------------------------
Tiphook Financial Corp.:
7.125% Gtd. Nts., 5/1/98 5,000,000 3,625,000
8% Gtd. Nts., 3/15/00 5,583,000 3,852,270
------------------------------------------------------------------------------------------------------------------------------------
Transportacion Maritima Mexicana S.A.:
8.50% Nts., 10/15/00 4,000,000 3,525,000
9.25% Nts., 5/15/03 11,000,000 9,693,750
------------------------------------------------------------------------------------------------------------------------------------
Transtar Holdings LP/Transtar Capital Corp., 0%/13.375% Sr. Disc. Nts.,
Series B, 12/15/03(3) 19,266,000 10,548,135
------------------------------------------------------------------------------------------------------------------------------------
Trism, Inc., 10.75% Sr. Sub. Nts., 12/15/00 1,250,000 1,226,563
------------------------------------------------------------------------------------------------------------------------------------
38,469,635
------------------------------------------------------------------------------------------------------------------------------------
Technology--7.5%
------------------------------------------------------------------------------------------------------------------------------------
Aerospace/Defense--1.0%
GPA Delaware, Inc.:
8.75% Gtd. Nts., 12/15/98 5,255,000 4,414,200
9.75%, 12/10/01 2,000,000 1,545,000
------------------------------------------------------------------------------------------------------------------------------------
GPA Holland BV:
8.50% Medium-Term Nts., 2/10/97(5) 10,500,000 9,318,750
8.625% Medium-Term Nts., Series C, 1/15/99(5) 4,750,000 3,752,500
8.94% Medium-Term Nts., Series C, 2/16/99 2,000,000 1,595,000
9.50% Medium-Term Nts., Series A, 12/15/01(5) 1,500,000 1,155,000
------------------------------------------------------------------------------------------------------------------------------------
GPA Investment BV, 6.40% Nts., 11/19/98 2,000,000 1,505,000
------------------------------------------------------------------------------------------------------------------------------------
GPA Netherlands BV, 8.50% Medium-Term Nts., 3/3/97(5) 6,500,000
5,752,500
------------------------------------------------------------------------------------------------------------------------------------
Rohr, Inc., 11.625% Sr. Nts., 5/15/03 1,800,000 1,845,000
------------------------------------------------------------------------------------------------------------------------------------
Sequa Corp., 8.75% Sr. Nts., 12/15/01 9,000,000 8,325,000
------------------------------------------------------------------------------------------------------------------------------------
Talley Industries, Inc., 0%/12.25% Sr. Disc. Debs., 10/15/05 17,296,000 9,080,400
------------------------------------------------------------------------------------------------------------------------------------
48,288,350
------------------------------------------------------------------------------------------------------------------------------------
Cable Television--2.7%
Adelphia Communications Corp.:
10.25% Sr. Nts., Series B, 7/15/00 2,000,000 1,840,000
12.50% Sr. Nts., 5/15/02 6,740,000 6,740,000
------------------------------------------------------------------------------------------------------------------------------------
American Telecasting, Inc., 12.50%, Sr. Disc. Nts., 6/15/04 17,600,000 8,624,000
------------------------------------------------------------------------------------------------------------------------------------
Bell Media Cable, 11.95%, 7/15/04 6,125,000 3,498,906
------------------------------------------------------------------------------------------------------------------------------------
Cablevision Systems Corp.:
14% Sr. Sub. Reset Debs., 11/15/03(4) 7,900,000 7,998,750
10.75% Sr. Sub. Debs., 4/1/04 2,525,000 2,575,500
9.875% Sr. Sub. Debs., 2/15/13 5,550,000 5,175,375
9.875% Sr. Sub. Debs., 2/15/13 2,000,000 1,840,000
------------------------------------------------------------------------------------------------------------------------------------
Celcaribe SA, 0%/13.50% Sr. Sec. Nts., 3/15/04(3)(5) 12,600,000 7,985,224
------------------------------------------------------------------------------------------------------------------------------------
Comcast Cellular Corp., 0% Nts., Series B, 3/5/00 6,600,000 4,092,000
</TABLE>

13 Oppenheimer Strategic Income Fund

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

Face Market Value
Amount See Note 1
<S> <C> <C>
------------------------------------------------------------------------------------------------------------------------------------
Cable Television
(continued)
Continental Broadcasting Ltd./Continental Broadcasting Capital Corp.,
10.625% Sr. Sub. Nts., 7/1/03 $7,150,000 $7,230,438
------------------------------------------------------------------------------------------------------------------------------------
Continental Cablevision, Inc., 9.50% Sr. Debs., 8/1/13 8,200,000 7,462,000
------------------------------------------------------------------------------------------------------------------------------------
Echostar Communications Corp., Units 23,250,000 11,160,000
------------------------------------------------------------------------------------------------------------------------------------
Helicon Group LP/Helicon Capital Corp., 9% Sr. Sec. Nts., Series B, 11/1/03(4) 17,500,000
15,837,500
------------------------------------------------------------------------------------------------------------------------------------
International CableTel, Inc., 0%/10.875% Sr. Def. Cpn. Nts., 10/15/03(3) 3,600,000
2,016,000
------------------------------------------------------------------------------------------------------------------------------------
Marcus Cable, 0%/13.5% Gtd. Sr. Sub. Disc. Nts., 8/1/04(3) 13,200,000 7,227,000
------------------------------------------------------------------------------------------------------------------------------------
New World Communications Holding Corp., 0%, 6/15/99(5) 17,000,000
9,201,250
------------------------------------------------------------------------------------------------------------------------------------
Outlet Broadcasting, Inc., 10.875% Sr. Sub. Nts., 7/15/03 2,000,000 2,010,000
------------------------------------------------------------------------------------------------------------------------------------
Time Warner, Inc.:
7.45% Nts., 2/1/98 800,000 787,000
7.95% Nts., 2/1/00 3,020,000 2,955,825
------------------------------------------------------------------------------------------------------------------------------------
Time Warner, Inc./Time Warner Entertainment LP, 10.15% Sr. Nts., 5/1/12 1,000,000
1,053,737
------------------------------------------------------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 8,000,000 8,690,000
------------------------------------------------------------------------------------------------------------------------------------
126,000,505
------------------------------------------------------------------------------------------------------------------------------------
Communications--2.4%
Cellular, Inc., 0%/11.75% Sr. Sub. Disc. Nts., 9/1/03(3) 26,626,000 17,573,160
------------------------------------------------------------------------------------------------------------------------------------
Centennial Cellular Corp., 8.875% Sr. Nts., 11/1/01 15,250,000 13,801,250
------------------------------------------------------------------------------------------------------------------------------------
Horizon Cellular Telephone LP/Horizon Finance Corp.,
0%/11.375% Sr. Sub. Disc. Nts., 10/1/00(3) 21,402,000 15,409,440
------------------------------------------------------------------------------------------------------------------------------------
MFS Communications, Inc., 0%/9.375% Sr. Disc. Nts., 1/15/04(3) 12,400,000
7,347,000
------------------------------------------------------------------------------------------------------------------------------------
New City Communications, Inc., 11.375%, Sr. Sub. Nts., 11/1/03 17,975,000
18,199,688
------------------------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., 0%/9.75% Sr. Disc. Nts., 8/15/04(3) 4,675,000
2,314,125
------------------------------------------------------------------------------------------------------------------------------------
Panamsat LP/Panamsat Capital Corp.:
9.75% Sr. Sec. Nts., 8/1/00 3,600,000 3,591,000
0%/11.375% Sr. Sub. Disc. Nts., 8/1/03(3) 33,700,000 22,663,250
------------------------------------------------------------------------------------------------------------------------------------
Rogers Communications, Inc., 10.875% Sr. Debs., 4/15/04 2,200,000 2,249,500
------------------------------------------------------------------------------------------------------------------------------------
USA Mobile Communication, Inc. II, 9.50% Sr. Nts., 2/1/04 9,350,000 8,415,000
------------------------------------------------------------------------------------------------------------------------------------
111,563,413
------------------------------------------------------------------------------------------------------------------------------------
Technology--1.4%
Bell & Howell Holdings Co.:
10.75% Sr. Sub. Nts., Series B, 10/1/02 2,000,000 1,950,000
0%/10.75% Sr. Disc. Debs., Series B, 3/1/05(3) 28,450,000 14,936,250
------------------------------------------------------------------------------------------------------------------------------------
Berg Electronics Holdings Corp., 11.375% Sr. Sub. Debs., 5/1/03 2,100,000
2,147,250
------------------------------------------------------------------------------------------------------------------------------------
Computervision Corp., 10.875% Sr. Nts., 8/15/97 4,650,000 4,336,125
------------------------------------------------------------------------------------------------------------------------------------
Dell Computer Corp., 11% Sr. Nts, 8/15/00 9,500,000 9,951,250
------------------------------------------------------------------------------------------------------------------------------------
Imax Corp., 7% Sr. Nts., 3/1/01(8) 13,200,000 11,550,000
------------------------------------------------------------------------------------------------------------------------------------
International Semi-Tech Microelectronics, Inc.,
0%/11.50% Sr. Sec. Disc. Nts., 8/15/03(3) 24,000,000 11,340,000
------------------------------------------------------------------------------------------------------------------------------------
Unisys Corp.:
9.75% Sr. Nts., 9/15/96 2,000,000 2,026,100
13.50% Credit Sensitive Nts., 7/1/97 4,200,000 4,567,517
8.875% Nts., 7/15/97 1,000,000 977,135
9.75% Sr. Nts., 9/15/16 3,900,000 3,460,263
------------------------------------------------------------------------------------------------------------------------------------
67,241,890
</TABLE>

14 Oppenheimer Strategic Income Fund

<PAGE>

<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
<S> <C> <C>
------------------------------------------------------------------------------------------------------------------------------------
Utilities--2.0%
Beaver Valley Funding Corp., 9% Debs., 6/1/17 $20,400,000 $15,520,666
------------------------------------------------------------------------------------------------------------------------------------
California Energy Co., 0%/10.25% Sr. Disc. Nts., 1/15/04(3) 17,575,000 12,610,063
------------------------------------------------------------------------------------------------------------------------------------
Coastal Corp., 11.75% Sr. Debs., 6/15/06 2,500,000 2,743,750
------------------------------------------------------------------------------------------------------------------------------------
Del Norte Funding Corp.:
9.95% Debs., 1/2/98(2) 5,000,000 2,601,765
11.25% Debs., 1/2/14(2) 3,350,000 1,744,459
------------------------------------------------------------------------------------------------------------------------------------
El Paso Electric Co.:
9.20% Debs., 7/2/97(2) 1,500,000 810,487
10.375% Lease Obligation Debs., 1/15/94(2) 12,750,000 6,895,735
------------------------------------------------------------------------------------------------------------------------------------
El Paso Funding Corp.:
9.375% Debs., 1/1/96(2) 6,000,000 3,241,415
10.75% Debs., 4/1/13(2) 11,900,000 6,485,500
------------------------------------------------------------------------------------------------------------------------------------
First PV Funding Corp., Lease Obligation Bonds:
10.30%, Series 1986A, 1/15/14 16,450,000 15,296,409
10.15%, Series 1986B, 1/15/16 20,100,000 18,484,870
------------------------------------------------------------------------------------------------------------------------------------
Southwest Gas Corp., 9.75% Debs., Series F, 6/15/02 125,000 131,362
------------------------------------------------------------------------------------------------------------------------------------
Subic Power Corp., 9.50% Sr. Sec. Nts., Series A, 12/28/08(5) 9,500,000 8,763,750
------------------------------------------------------------------------------------------------------------------------------------
95,330,231
------------------------------------------------------------------------------------------------------------------------------------
Total Corporate Bonds and Notes (Cost $1,779,466,288) 1,682,537,856
Shares
------------------------------------------------------------------------------------------------------------------------------------
Common Stocks--0.2%
------------------------------------------------------------------------------------------------------------------------------------
Berg Electronics Holdings Corp.(2)(5) 159,220 716,490
------------------------------------------------------------------------------------------------------------------------------------
Capital Gaming, Inc.(6) 82,676 547,729
------------------------------------------------------------------------------------------------------------------------------------
Celcaribe SA(5) 2,048,760 2,504,275
------------------------------------------------------------------------------------------------------------------------------------
ECM Fund, L.P.I.(5) 525 525,000
------------------------------------------------------------------------------------------------------------------------------------
Ladish, Inc. 806,000 806,000
------------------------------------------------------------------------------------------------------------------------------------
New World Communications Group, Inc., Cl. A 44,672 636,576
------------------------------------------------------------------------------------------------------------------------------------
Triangle Wire & Cable, Inc. 232,222 2,264,165
------------------------------------------------------------------------------------------------------------------------------------
Trizec, Ltd. 52,913(1) 414,201
------------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $7,871,447) 8,414,436
------------------------------------------------------------------------------------------------------------------------------------
Preferred Stocks--0.6%
------------------------------------------------------------------------------------------------------------------------------------
Berg Electronic Holdings, Series E(6) 81,248 2,193,696
------------------------------------------------------------------------------------------------------------------------------------
Dell Computer Corp., $7.00 Cv., Series A(5) 23,500 3,724,750
------------------------------------------------------------------------------------------------------------------------------------
First Madison Bank, FSB, 11.50% 95,000 9,975,000
------------------------------------------------------------------------------------------------------------------------------------
K-III Communications Corp.:
Sr. Exch., Series A 80,000 2,060,000
$11.625 Exch., Series B(6)(13) 53,248 5,218,378
------------------------------------------------------------------------------------------------------------------------------------
Prime Retail, Inc., $19.00 Cv., Series B 50,000 1,206,250
------------------------------------------------------------------------------------------------------------------------------------
Unisys Corp., $3.75 Cv., Series A 118,800 4,336,200
------------------------------------------------------------------------------------------------------------------------------------
Total Preferred Stocks (Cost $27,762,014) 28,714,274
Units
------------------------------------------------------------------------------------------------------------------------------------
Rights, Warrants and Certificates--0.0%
------------------------------------------------------------------------------------------------------------------------------------
Ames Department Stores, Inc.:
Excess Cash Flow Payment Ctfs. 37,200 372
Litigation Trust Units 118,975 1,190
</TABLE>

15 Oppenheimer Strategic Income Fund

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

Market Value
Units See Note 1
<S> <C> <C>
------------------------------------------------------------------------------------------------------------------------------------
Rights, Warrants and
Certificates (continued)
Becker Gaming, Inc. Wts., Exp. 11/00(5) 262,500 $525,000
------------------------------------------------------------------------------------------------------------------------------------
Capital Gaming International, Inc. Wts., Exp. 2/99 69,024 224,328
------------------------------------------------------------------------------------------------------------------------------------
Casino America, Inc. Wts., Exp. 11/96 9,789 14,684
------------------------------------------------------------------------------------------------------------------------------------
Eye Care Centers of America, Inc. Wts., Exp. 10/03 7,000 70,000
------------------------------------------------------------------------------------------------------------------------------------
General Media, Inc. Wts., Exp. 12/00(5) 4,000 40,000
------------------------------------------------------------------------------------------------------------------------------------
Hollywood Casino Corp. Wts., Exp. 4/98 13,333 1,439,999
------------------------------------------------------------------------------------------------------------------------------------
Protection One, Inc. Wts., Exp. 11/03 182,000 584,220
------------------------------------------------------------------------------------------------------------------------------------
Santa Fe Hotel, Inc., Wts., Exp. 12/96 100 55,500
------------------------------------------------------------------------------------------------------------------------------------
Terex Corp. Rts., Exp. 7/96(5) 13,935 20,903
------------------------------------------------------------------------------------------------------------------------------------
Triangle Wire & Cable, Inc. Wts., Exp. 1/98(5) 55,000 0
------------------------------------------------------------------------------------------------------------------------------------
Total Rights, Warrants, and Certificates (Cost $1,705,251) 2,976,196

<CAPTION>
Face
Date/Price Amount
<S> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------------------------
Put Options Purchased--0.0%
------------------------------------------------------------------------------------------------------------------------------------
OTC 96-20+ Put Tsy, 7.50%, 11/24 Oct. 12/.009531 $50,000,000
484,375
European OTC Deutsche Mark/U.S. Dollar Put Nov. 2/1.60DEM 338,733,106(1)
698,620
European OTC Deutsche Mark/U.S. Dollar Put Nov. 8/1.60DEM 169,366,553(1)
382,058
European OTC Deutsche Mark/U.S. Dollar Put Nov. 4/1.60DEM 169,366,553(1)
444,933
------------------------------------------------------------------------------------------------------------------------------------
Total Put Options Purchased (Cost $7,858,128) 2,009,986
------------------------------------------------------------------------------------------------------------------------------------
Structured Instruments--5.6%
------------------------------------------------------------------------------------------------------------------------------------
Argentina Local Market Securities Trust:
Series I, 14.75%, 9/1/02(5) 3,750,000 3,750,000
Series II, 11.30%, 4/1/00(5) 23,400,000 23,576,670
------------------------------------------------------------------------------------------------------------------------------------
Bancario San Paolo, 14.28% CD, 10/18/94 6,500,000,000(1) 2,419,583
------------------------------------------------------------------------------------------------------------------------------------
Bayerishe Landesbank, N.Y. Branch:
Italian Lira Linked Confidence Nt., Girozentrale Branch,
10%, 8/7/95(5) 12,500,000 11,818,750
Italian Lira/Deutsche Mark Linked Confidence Nt., Girozentrale Branch,
10%, 8/7/95 24,580,000 24,029,408
Mexican Peso Linked Confidence Nt., Girozentrale Branch,
35.50%, 12/30/94(5) 19,980,000 19,630,350
------------------------------------------------------------------------------------------------------------------------------------
Citibank, 10.50%-17% CD, 8/18/94--8/28/95 31,736,857,279(1) 84,366,061
------------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs International Limited, 5.10%, 2/28/95 9,690,000 9,424,494
------------------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc., Standard & Poor's 500 Indexed-Linked Nts.:
4.85%, 11/16/94(5) 3,250,000 4,195,100
4.85%, 11/25/94(5) 300,000 410,490
4.85%, 11/25/94(5) 2,212,500 3,165,645
5.038%, 12/22/94(5) 2,000,000 2,665,400
------------------------------------------------------------------------------------------------------------------------------------
Morgan Guaranty Trust Co. of New York
(Singapore Branch) CD, 12.15%, 2/3/95 14,898,412,500(1) 6,846,539
------------------------------------------------------------------------------------------------------------------------------------
Rabobank Certificate of Deposit:
Japanese Yen Maximum Rate Nts., 10%, 6/2/95(5) 12,500,000 11,620,000
British Pound Sterling Maximum Rate Nts., 10%, 6/2/95(5) 25,000,000 22,797,500
Structured Product Asset Return Certificates, 9.40%,
Series 94-2, 9/1/97(5) 10,000,000 9,969,000
</TABLE>

16 Oppenheimer Strategic Income Fund

<PAGE>

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Face Market Value
Amount See Note 1
<S> <C> <C>
------------------------------------------------------------------------------------------------------------------------------------
Structured Instruments
(continued)
Swiss Bank Corporation Investment Banking, Inc.,
10% CD Sterling Rate Linked Nts., 7/3/95 $23,530,000 $23,209,992
------------------------------------------------------------------------------------------------------------------------------------
Total Structured Instruments (Cost $270,746,085) 263,894,982
------------------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $4,938,344,549) 98.7% 4,669,617,762
------------------------------------------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 1.3 59,576,648
------- --------------
------------------------------------------------------------------------------------------------------------------------------------
Net Assets 100.00% $4,729,194,410
------- --------------
------- --------------
------------------------------------------------------------------------------------------------------------------------------------
<FN>

1. Face amount is reported in foreign currency.
2. Non-income producing security.
3. Represents a zero coupon bond that converts to a fixed rate of interest at a
designated date in the future.
4. Represents the current interest rate for a variable rate security.
5. Restricted security-see Note 6 of Notes to Financial Statements.
6. Interest or dividend is paid in kind.
7. Partial interest payment was received.
8. Represents the current interest rate for an increasing rate security.
9. Principal-Only Strips represent the right to receive the monthly principal
payments on an underlying pool of mortgage loans. The value of these
securities generally increases as interest rates decline and prepayment
rates rise. The price of these securities is typically more volatile than
that of coupon-bearing bonds of the same maturity.
10. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline. Most other fixed-income
securities increase in price when interest rates decline. The principal
amount of the underlying pool represents the notional amount on which
current interest is calculated. The price of these securities is typically
more sensitive to changes in prepayment rates than traditional mortgage
backed securities (for example, GNMA pass-throughs).
11. Securities with an aggregate market value of $936,675 are held in escrow to
cover initial margin requirements on open interest rate futures sales
contracts, as follows:

Type of Contract Number of Contracts Face Amount
----------------------------------------------------------------------------
U.S. Treasury Nts., 12/94 245 $24,921,094
U.S. Treasury Bonds, 12/94 89 8,808,219

The market value of the open contracts was $33,665,282 at September 30,
1994, with a net unrealized gain of $64,031.
12. Securities with an aggregate market value of $22,128,750 are held in escrow
to cover outstanding call options, as follows:

Shares Expiration Exercise Premium Market Value
Subject to Call Date Price Received See Note 1
------------------------------------------------------------------------------------------------------
OTC 96-20 Put Tsy 7.50 11/24 300,000 10/12/94 1.000156 $609,375 $937,500
European OTC Deutsche Mark/U.S. Dollar 73,914,099 11/04/94 1.50 DEM 355,784 218,277
European OTC Deutsche Mark/U.S. Dollar 33,207,784 11/04/94 1.60 DEM 872,628 1,096,836
European OTC Deutsche Mark/U.S. Dollar 147,828,199 11/02/94 1.50 DEM 686,696 389,856
European OTC Deutsche Mark/U.S. Dollar 66,415,567 11/02/94 1.60 DEM 1,732,112 2,213,366
European OTC Deutsche Mark/U.S. Dollar 73,914,100 11/08/94 1.54 DEM 881,869 908,660
European OTC Deutsche Mark/U.S. Dollar 33,207,784 11/08/94 1.60 DEM 903,055 1,136,225
Argentina (Republic of) OTC U.S. Dollar 25,000 11/16/94 .7533 500,000 540,000
---------
------------------------------------------------------------------------------------------------------
$6,541,519 $7,440,720
13. 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 September 30,
1994. The aggregate fair value of all securities of affiliated companies as
of September 30, 1994 amounted to $5,218,378. Transactions during the period
in which the issuer was an affiliate are as follows:

Balance Balance
September 30, 1993 Gross Additions Gross Reductions September 30, 1994
------------------------------ ---------------- ---------------- ------------------------------
Dividend
Shares Cost Shares Cost Shares Cost Shares Cost Income
-------- ------ ---------- ------ ---------- ------ ------- ------ ---------- --------
K-III Communications Corp., $11.625 21,103 $2,095,713 32,281 $3,301,943 136 $13,677 53,248
$5,383,979 $564,467
</TABLE>

See accompanying Notes to Financial Statements.

17 Oppenheimer Strategic Income Fund

------------------------------------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities September 30, 1994
<S> <C>
------------------------------------------------------------------------------------------------------------------------------------
Assets
Investments, at value (cost $4,938,344,549)--see accompanying statement
$4,669,617,762
------------------------------------------------------------------------------------------------------------------------------------
Cash 4,400,431
------------------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation on futures contracts--Note 7 64,031
------------------------------------------------------------------------------------------------------------------------------------
Receivables:
Interest and dividends 109,861,572
Investments sold 84,944,908
Shares of beneficial interest sold 16,958,955
------------------------------------------------------------------------------------------------------------------------------------
Other 141,704
------------------------------------------------------------------------------------------------------------------------------------
Total assets 4,885,989,363
------------------------------------------------------------------------------------------------------------------------------------
Liabilities Options written, at value (premiums received $6,541,519)--see accompanying statement--Note 4
7,440,720
------------------------------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 114,847,063
Shares of beneficial interest redeemed 19,984,405
Distribution and service plan fees--Note 5 2,939,585
Dividends and distributions 10,331,176
------------------------------------------------------------------------------------------------------------------------------------
Other 1,252,004
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 156,794,953
------------------------------------------------------------------------------------------------------------------------------------
Net Assets $4,729,194,410
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Composition of
Net Assets
Paid-in capital $5,035,306,478
------------------------------------------------------------------------------------------------------------------------------------
Overdistributed net investment income (2,882,064)
------------------------------------------------------------------------------------------------------------------------------------
Accumulated net realized loss from investment, written option and foreign
currency transactions (34,233,637)
------------------------------------------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments, options written and translation of assets
and liabilities denominated in foreign currencies (268,996,367)
------------------------------------------------------------------------------------------------------------------------------------
Net assets $4,729,194,410
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value
Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets of $3,143,103,010
and 661,897,244 shares of beneficial interest outstanding) $4.75
Maximum offering price per share
(net asset value plus sales charge of 4.75% of offering price) $4.99
------------------------------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $1,586,091,400 and 333,489,354 shares of beneficial interest outstanding) $4.76
See accompanying Notes to Financial Statements.
</TABLE>

18 Oppenheimer Strategic Income Fund

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

------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment Income
Interest:
Unaffiliated companies (net of withholding taxes of $1,101,145) $413,257,729
------------------------------------------------------------------------------------------------------------------------------------
Dividends:
Unaffiliated companies 3,242,246
Affiliated companies 564,467
------------------------------------------------------------------------------------------------------------------------------------
Total income $417,064,442
------------------------------------------------------------------------------------------------------------------------------------
Expenses
Management fees--Note 5 23,416,082
------------------------------------------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A--Note 5 7,673,295
Class B--Note 5 12,329,469
------------------------------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 5 4,218,280
------------------------------------------------------------------------------------------------------------------------------------
Shareholder reports 1,313,497
------------------------------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 846,200
------------------------------------------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 156,391
Class B 324,858
------------------------------------------------------------------------------------------------------------------------------------
Legal and auditing fees 106,799
------------------------------------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 54,980
------------------------------------------------------------------------------------------------------------------------------------
Other 78,098
------------------------------------------------------------------------------------------------------------------------------------
Total expenses 50,517,949
------------------------------------------------------------------------------------------------------------------------------------
Net Investment Income 366,546,493
------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized
Gain (Loss) on Investments,
Options Written and
Foreign Currency
Transactions
Net realized gain (loss) from:
Investments and options written (including premiums on options exercised) (4,635,548)
Closing and expiration of option contracts written--Note 4 9,145,220
Foreign currency transactions (21,719,790)
------------------------------------------------------------------------------------------------------------------------------------
Net realized loss (17,210,118)
------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments and options written (371,603,790)
Translation of assets and liabilities denominated in foreign currencies 54,421,484
------------------------------------------------------------------------------------------------------------------------------------
Net change (317,182,306)
------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments, options written and foreign
currency transactions (334,392,424)
------------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting From Operations $32,154,069
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.

19 Oppenheimer Strategic Income Fund

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

Year Ended September 30,
1994 1993
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income $366,546,493 $225,207,116
------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments, options written and foreign
currency transactions (17,210,118) 63,690,435
------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments,
options written and translation of assets and liabilities denominated
in foreign currencies (317,182,306) 32,124,174
----------- -----------
Net increase in net assets resulting from operations 32,154,069 321,021,725
------------------------------------------------------------------------------------------------------------------------------------
Dividends and
Distributions to
Shareholders
Dividends from net investment income:
Class A ($.4329 and $.4960 per share, respectively) (236,741,649) (210,522,530)
Class B ($.3938 and $.3637 per share, respectively) (119,419,105) (18,595,592)
------------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain on investments, options written
and foreign currency transactions:
Class A ($.0124 per share) -- (7,998,180)
Class B ($.0124 per share) -- (36,330)
------------------------------------------------------------------------------------------------------------------------------------
Distributions in excess of gains on investments, options written
and foreign currency transactions:
Class A ($.1179 per share) (57,628,697) --
Class B ($.1179 per share) (29,069,526) --
------------------------------------------------------------------------------------------------------------------------------------
Tax return of capital:
Class A ($.0135 per share) (8,947,314) --
Class B ($.0135 per share) (4,513,275) --
------------------------------------------------------------------------------------------------------------------------------------
Beneficial Interest
Transactions
Net increase in net assets resulting from Class A beneficial interest
transactions--Note 2 685,155,178 945,622,259
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from Class B beneficial interest
transactions--Note 2 1,019,463,146 683,558,019
------------------------------------------------------------------------------------------------------------------------------------
Net Assets
Total increase 1,280,452,827 1,713,049,371
------------------------------------------------------------------------------------------------------------------------------------
Beginning of year 3,448,741,583 1,735,692,212
-------------- --------------
End of year [including undistributed (overdistributed) net
investment income of ($2,882,064) and $2,865,362, respectively] $4,729,194,410
$3,448,741,583
-------------- --------------
-------------- --------------
</TABLE>
See accompanying Notes to Financial Statements.

20 Oppenheimer Strategic Income Fund

------------------------------------------------------------------------------------------------------------------------------------
Financial Highlights September 30, 1993

Class A Class B
------- -------
Year Ended Year Ended
September 30, September 30,
1994 1993 1992 1991 1990(2) 1994 1993(1)
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
<C>
Per Share Operating Data:
Net asset value, beginning of period $5.21 $5.07 $5.01 $4.87 $5.00 $5.22 $4.89
----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .45 .48 .46 .56 .59 .42 .36
Net realized and unrealized gain (loss)
on investments, options written
and foreign currency transactions (.35) .17 .14 .21 (.10) (.36) .34
------ ------ ------ ------ ------ ------ ------
Total income from investment
operations .10 .65 .60 .77 .49 .06 .70
----------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment income (.43) (.50) (.46) (.57) (.57) (.39) (.36)
Distributions from net realized gain
on investments, options written
and foreign currency transactions -- (.01) (.08) (.06) (.05) -- (.01)
Distributions in excess of net
realized gain on investments,
options written and foreign
currency transactions (.12) -- -- -- -- (.12) --
Tax return of capital (.01) -- -- -- -- (.01) --
------ ------ ------ ------ ------ ------ ------
Total dividends and distributions
to shareholders (.56) (.51) (.54) (.63) (.62) (.52) (.37)
----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.75 $5.21 $5.07 $5.01 $4.87 $4.76 $5.22
------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------
----------------------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value(3) 1.85% 13.30% 12.56% 16.97% 10.20% 1.07%
13.58%
----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period
(in millions) $3,143 $2,754 $1,736 $560 $177 $1,586 $695
----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in millions) $3,082 $2,107 $1,084 $311 $93 $1,236 $276
----------------------------------------------------------------------------------------------------------------------------------
Number of shares outstanding
at end of period (in thousands) 661,897 528,587 342,034 111,739 36,418 333,489
133,235
----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 8.72% 9.78% 9.39% 11.82% 12.79%(4) 7.90%
8.13%(4)
Expenses .95% 1.09% 1.16%(5) 1.27%(5) 1.36%(4) 1.71%
1.80%(4)
----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 119.0% 148.6% 208.2% 194.7% 424.6% 119.0%
148.6%

<FN>
1. For the period from November 30, 1992 (inception of offering) to September
30, 1993.
2. For the period from October 16, 1989 (commencement of operations) to
September 30, 1990.
3. 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.
4. Annualized.
5. Includes $.0002 and $.0020 per share of federal excise tax expense for 1992
and 1991, respectively. The expense ratio, exclusive of federal excise tax
expense, was 1.16% and 1.23%, respectively.
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 September 30, 1994 were $6,168,422,547 and
$4,642,399,344, respectively.
</TABLE>

See accompanying Notes to Financial Statements.

21 Oppenheimer Strategic Income Fund

<PAGE>

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

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

Oppenheimer Strategic Income Fund (the Fund) is a separate series of
Oppenheimer Strategic Funds Trust, a diversified, 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 distribution and/or
service plan, expenses directly attributable to a particular class and exclusive
voting rights with respect to matters affecting a single class. Class B shares
will automatically convert to Class A shares six years after the date of
purchase. The following is a summary of significant accounting policies
consistently followed by the Fund.
-------------------------------------------------------------------------------

Investment Valuation. Portfolio securities are valued at 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 Trustees.
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 Trustees to
determine fair value in good faith. An 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. Forward foreign
currency contracts are valued at the forward rate on a daily basis.
-------------------------------------------------------------------------------
Security Credit Risk. The Fund invests in high yield securities, which may be
subject to a greater degree of credit risk, greater market fluctuations and risk
of loss of income and principal, and may be more sensitive to economic
conditions than lower yielding, higher rated fixed income securities. The Fund
may acquire securities in default, and is not obligated to dispose of securities
whose issuers subsequently default. At September 30, 1994, securities with an
aggregate market value of $46,417,790, representing .95% of the Fund's total
assets, were in default.
-------------------------------------------------------------------------------
Foreign Currency Translation. The accounting records of the Fund are maintained
in U.S. dollars. Prices of securities denominated in foreign currencies are
translated into U.S. dollars at the closing rates of exchange. Amounts related
to the purchase and sale of securities and investment income are translated at
the rates of exchange prevailing on the respective dates of such transactions.

The Fund generally enters into forward foreign currency exchange contracts
as a hedge, upon the purchase or sale of a security denominated in a foreign
currency. In addition, the Fund may enter into such contracts as a hedge against
changes in foreign currency exchange rates on portfolio positions. A forward
exchange contract is a commitment to purchase or sell a foreign currency at a
future date, at a negotiated rate. Risks may arise from the potential inability
of the counterparty to meet the terms of the contract and from unanticipated
movements in the value of a foreign currency relative to the U.S. dollar.

The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Fund's results of operations.
-------------------------------------------------------------------------------
Repurchase Agreements. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. 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.

22 Oppenheimer Strategic Income Fund

<PAGE>

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

-------------------------------------------------------------------------------
1. Significant Accounting Policies (continued)

Options Written. The Fund may write covered call and put options. When an
option is written, the Fund receives a premium and becomes obligated to sell or
purchase the underlying security at a fixed price, upon exercise of the option.
In writing an option, the Fund bears the market risk of an unfavorable change in
the price of the security underlying the written option. Exercise of an option
written by the Fund could result in the Fund selling or purchasing a security at
a price different from the current market value. All securities covering call
options written are held in escrow by the custodian bank and the Fund maintains
liquid assets sufficient to cover written put options in the event of exercise
by the holder.
-------------------------------------------------------------------------------
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 $13,675 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 October 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 September 30,
1993, amounts have been reclassified to reflect an increase in paid-in capital
of $223,939, an increase in undistributed net investment loss of $9,032,371, and
a decrease in undistributed capital loss on investments of $8,808,432. During
the year ended September 30, 1994, in accordance with Statement of Position
93-2, paid-in capital was decreased by $13,460,589, undistributed net investment
loss was decreased by $6,359,795 and undistributed capital loss was decreased by
$7,100,794.
-------------------------------------------------------------------------------
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 options written and unrealized
appreciation and depreciation are determined on an identified cost basis, which
is the same basis used for federal income tax purposes. Dividends in kind are
recognized as income on the ex-dividend date, at the current market value of the
underlying security. Interest on payment-in-kind debt instruments is accrued as
income at the coupon rate and a market adjustment is made on the ex-date.

23 Oppenheimer Strategic Income Fund

<PAGE>

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

-------------------------------------------------------------------------------
2. Shares of Beneficial Interest

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

<TABLE>
<CAPTION>
Year Ended September 30, 1994 Period Ended September 30, 1993(1)
----------------------------- ----------------------------------
Shares Amount Shares Amount
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 236,638,548 $1,198,107,502 249,430,763 $1,264,793,607
Dividends and distributions reinvested 46,661,271 234,357,544 29,150,165 147,612,098
Redeemed (149,989,676) (747,309,868) (92,028,210) (466,783,446)
------------ -------------- ----------- --------------
Net increase 133,310,143 $685,155,178 186,552,718 $945,622,259
------------ -------------- ----------- --------------
------------ -------------- ----------- --------------
--------------------------------------------------------------------------------------------------------------------------------
Class B:
Sold 211,514,941 $1,074,296,304 133,631,433 $685,673,857
Dividends and distributions reinvested 13,715,575 68,501,659 1,974,080 10,213,941
Redeemed (24,975,699) (123,334,817) (2,370,976) (12,329,779)
------------ -------------- ----------- --------------
Net increase 200,254,817 $1,019,463,146 133,234,537 $683,558,019
------------ -------------- ----------- --------------
------------ -------------- ----------- --------------
<FN>
1. For the year ended September 30, 1993 for Class A shares and for the period
from November 30, 1992 (inception of offering) to September 30, 1993 for
Class B shares.
-------------------------------------------------------------------------------

3. Unrealized Gains And Losses on Investments and Options Written

At September 30, 1994, net unrealized depreciation on investments and
options written of $269,561,957 was composed of gross appreciation of
$34,252,245, and gross depreciation of $303,814,202.
-------------------------------------------------------------------------------
4. Option Activity

Option activity for the year ended September 30, 1994 was as follows:

Call Options Put Options
------------ -----------
Number Amount Number Amount
of Options of Premiums of Options of Premiums
--------------------------------------------------------------------------------------------------------------------------
Options outstanding at September 30, 1993 30,000 $3,914,062 -- $--
--------------------------------------------------------------------------------------------------------------------------
Options written 428,562,283 14,188,394 525,152 1,670,220
--------------------------------------------------------------------------------------------------------------------------
Options cancelled in closing purchase transactions (10,000) (1,734,375) -- --
--------------------------------------------------------------------------------------------------------------------------
Options expired prior to exercise (39,750) (6,350,000) (225,152) (1,060,845)
--------------------------------------------------------------------------------------------------------------------------
Options exercised (30,000) (4,085,937) -- --
----------- ---------- ------- --------
Options outstanding at September 30, 1994 428,512,533 $5,932,144 300,000 $609,375
----------- ---------- ------- --------
----------- ---------- ------- --------
--------------------------------------------------------------------------------------------------------------------------
</TABLE>

5. 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 .75% on the
first $200 million of net assets with a reduction of .03% on each $200 million
thereafter to $800 million, .60% on the next $200 million and .50% on net assets
in excess of $1 billion. 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 September 30, 1994, commissions (sales charges paid by
investors) on sales of Class A shares totaled $31,059,937, of which $8,686,206
was retained by Oppenheimer Funds Distributor, Inc. (OFDI), a subsidiary of the
Manager, as general distributor, and by an affiliated broker/dealer. During the
year ended September 30, 1994, OFDI received contingent deferred sales charges
of $2,731,436 upon redemption of Class B shares as reimbursement for sales
commissions advanced by OFDI at the time of sale of such shares.

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.

24 Oppenheimer Strategic Income Fund

<PAGE>

-------------------------------------------------------------------------------
5. Management Fees And Other Transactions With Affiliates (continued)

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 financial
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 September 30,
1994, OFDI paid $468,405 and $17,712, respectively, to an affiliated
broker/dealer as reimbursement for Class A and Class B personal service and
maintenance expenses and retained $11,816,316 as reimbursement for Class B sales
commissions and service fee advances, as well as financing costs.
-------------------------------------------------------------------------------
6. Restricted Securities

The Fund owns securities purchased in private placement transactions, without
registration under the Securities Act of 1933 (the Act). The securities are
valued under methods approved by the Board of Trustees 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 Trustees or by the Manager under Board-approved
guidelines. Restricted and illiquid securities, excluding securities eligible
for resale pursuant to Rule 144A of the Act amount to $370,578,238, or 7.8% of
the Fund's net assets, at September 30, 1994. Illiquid and/or restricted
securities, including those restricted securities that are transferable under
Rule 144A of the Act are listed below.

<TABLE>
<CAPTION>
Valuation
Per Unit as of
Security Acquisition Date Cost Per Unit September 30, 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Acadia Partners LP, 13% Sub. Nts., 10/1/97(1) 3/12/93 $100.00 $103.00
------------------------------------------------------------------------------------------------------------------------------------
Aftermarket Technology Corp., 12% Sr. Sub. Nts., 8/1/04(1) 7/21/94 $100.00 $101.50
------------------------------------------------------------------------------------------------------------------------------------
Argentina Local Market Securities Trust:
Series I, 14.75%, 9/1/02(1) 9/19/94 $100.00 $100.76
Series II, 11.30%, 4/1/00(1) 8/24/94 $100.00 $100.76
------------------------------------------------------------------------------------------------------------------------------------
Arizona Charlie's, Inc., 12% Fst. Mtg. Nts., Series A, 11/15/00(1) 11/18/93--12/9/93 $100.00 $87.50
------------------------------------------------------------------------------------------------------------------------------------
Banco Ganadero SA, 9.75%, 8/26/99(1) 8/10/94 $99.58 $100.75
------------------------------------------------------------------------------------------------------------------------------------
Bariven SA, Sr. Nts., Gtd. by Petroleos de Venezuela, 9%, 2/25/97(1) 7/20/94 $85.38 $93.00
------------------------------------------------------------------------------------------------------------------------------------
Bayerische Landesbank N.Y. Branch:
Italian Lira Linked Confidence Nt.,
Girozentrale Branch, 10%, 8/7/95(1) 5/20/94 $100.00 $94.55
Mexican Peso Linked Confidence Nt.,
Girozentrale Branch, 35.50%, 12/30/94 9/23/94 $100.00 $98.25
------------------------------------------------------------------------------------------------------------------------------------
Becker Gaming, Inc. Wts., Exp. 11/00 11/18/93--12/9/93 $2.10 $2.00
------------------------------------------------------------------------------------------------------------------------------------
Berg Electronics Holdings Corp.(1) 4/28/93--8/11/93 $1.27 $4.50
------------------------------------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of):
Nts., Banco Estado Minas Gerais:
7.875%, 2/10/99(1) 8/16/94--8/17/94 $79.66 $82.25
8.25%, 2/10/00(1) 8/15/94 $76.25 $81.50
------------------------------------------------------------------------------------------------------------------------------------
Capital Queen & Casino, Inc., 12% Fst. Mtg. Nts., Series A, 11/15/00 11/18/93--12/17/93 $87.70
$77.50
------------------------------------------------------------------------------------------------------------------------------------
Celcaribe SA(1) 5/17/94 $1.19 $1.22
------------------------------------------------------------------------------------------------------------------------------------
Celcaribe SA, 0%/13.50% Sr. Sec. Nts., 3/15/04(1) 5/17/94 $60.78 $63.37
------------------------------------------------------------------------------------------------------------------------------------
Charter Medical Corp., 11.25% Sr. Sub. Nts., 4/15/04(1) 4/22/94 $100.00 $103.50
------------------------------------------------------------------------------------------------------------------------------------
Chase Mortgage Finance Corp.:
Nts., 6.75%, 2/25/25(1) 3/21/94 $78.55 $68.38
Nts., 6.75%, 4/25/24(1) 3/21/94 $78.41 $68.22
Sub. Mtg. Pass-Through Certificates, Series 1994-1:
0%, Cl. B-8, 3/25/25(1) 3/22/94 $81.12 $75.06
0%, Cl. B-9, 3/25/25(1) 3/22/94 $80.89 $71.72
0%, Cl. B-10, 3/25/25(1) 3/22/94 $80.41 $71.38
</TABLE>

25 Oppenheimer Strategic Income Fund

<PAGE>

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

-------------------------------------------------------------------------------
6. Restricted Securities (continued)

Valuation
Per Unit as of
Security Acquisition Date Cost Per Unit September 30, 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CMC Security Corp. III, 0% Collateralized Mtg. Oblig.,
Series 1994-E, Cl. E-B3, 3/25/24(1) 3/21/94 $75.88 $68.38
------------------------------------------------------------------------------------------------------------------------------------
CSFOB 11%, Cl. E, 2/15/14 5/16/94 $98.85 $97.51
------------------------------------------------------------------------------------------------------------------------------------
Colombia (Republic of):
1989-1990 Integrated Loan Facility Bonds:
4.188%, 7/1/01 6/17/93--11/12/93 $91.78 $96.00
4.44%, 10/26/03 10/25/93--12/17/93 $89.77 $93.50
------------------------------------------------------------------------------------------------------------------------------------
Empresa Columbiana de Petroleos, Nts., 7.25%, 7/8/98(1) 4/25/94 $93.25 $95.38
------------------------------------------------------------------------------------------------------------------------------------
Dell Computer Corp. $7.00 Cv., Series A(1) 1/27/94--2/2/94 $103.57 $158.50
------------------------------------------------------------------------------------------------------------------------------------
ECM Fund, L.P.I. 4/14/92 $1,000.00 $1,000.00
------------------------------------------------------------------------------------------------------------------------------------
ECM Fund, L.P.I., 14% Sub. Nts., 6/10/02 4/14/92 $100.00 $110.00
------------------------------------------------------------------------------------------------------------------------------------
FDIC Trust, 1994-Cl Class 2-D, 8.70%, 9/25/25 8/10/94 $98.00 $95.95
------------------------------------------------------------------------------------------------------------------------------------
FDIC Trust, 1994-Cl Class 2-E, 8.70%, 9/25/25 8/10/94 $94.88 $92.48
------------------------------------------------------------------------------------------------------------------------------------
Foamex LP/JPS Automotive Corp., Units(1) 6/21/94 $51.39 $55.50
------------------------------------------------------------------------------------------------------------------------------------
GE Capital Mortgage Services, Inc.:
Series 1994-11 Cl. B3, 6.50%, 5/25/24(1) 3/11/94 $76.00 $67.38
Series 1994-10 Cl. B3, 6.50%, 3/25/24(1) 3/8/94 $77.45 $69.88
------------------------------------------------------------------------------------------------------------------------------------
General Media, Inc. Wts., Exp. 12/00(1) 12/15/93 $.01 $10.00
------------------------------------------------------------------------------------------------------------------------------------
GPA Holland BV:
8.50% Med.-Term Nts., 2/10/97(1) 6/30/93 $69.50 $88.75
8.625% Med.-Term Nts., Series C, 1/15/99 1/10/94 $78.13 $79.00
9.50% Med.-Term Nts., Series A, 12/15/01 1/27/94 $79.96 $77.00
------------------------------------------------------------------------------------------------------------------------------------
GPA Netherlands BV, 8.50% Med.-Term Nts., 3/3/97(1) 7/8/93--10/27/93 $76.63
$88.50
------------------------------------------------------------------------------------------------------------------------------------
Grupo Mexicano de Desarrollo SA, 8.25% Gtd. Nts., 2/17/01(1) 2/8/94 $100.00 $82.25
------------------------------------------------------------------------------------------------------------------------------------
GSPI Corp., 10.15% First Mtg. Bonds, 6/24/10 1/29/93 $102.40 $107.35
------------------------------------------------------------------------------------------------------------------------------------
Interco, Inc., 9% Sec. Nts., Series B, 6/1/04(1) 10/14/92 $91.50 $98.50
------------------------------------------------------------------------------------------------------------------------------------
Jamaica (Government of) 1990 Refinancing Agreement Nts.:
Tranche A, 4.25%, 10/15/00 4/15/94 $78.50 $82.00
Tranche B, 4.125%, 11/15/04 9/23/93 $70.00 $68.00
------------------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc., Standard & Poor's
500 Indexed-Linked Nts.:
4.85%, 11/16/94 8/16/94 $139.20 $129.08
4.85%, 11/25/94 8/24/94 $132.00 $136.83
4.85%, 11/25/94 8/24/94 $139.00 $143.08
5.038%, 12/22/94 9/21/94 $146.40 $133.27
------------------------------------------------------------------------------------------------------------------------------------
Maritime Group Ltd., Units(1) 2/16/94--8/12/94 $99.60 $79.28
------------------------------------------------------------------------------------------------------------------------------------
Mary Kay Corp.:
12.75% Gtd. Sr. Nts., Series B, 12/6/00 12/11/92 $106.50 $104.50
10.25% Sr. Nts., 12/31/00 6/30/93--10/11/93 $101.03 $98.00
------------------------------------------------------------------------------------------------------------------------------------
Morocco (Kingdom of)
Loan Participation Agreement:
Tranche A, 5.938%, 1/1/09 2/23/94--9/15/94 $75.29 $73.00
Tranche B, 4.312%, 1/1/04 5/18/94--6/3/94 $80.02 $77.19
------------------------------------------------------------------------------------------------------------------------------------
New World Communications Holdings Corp., 0%, 6/15/99(1) 6/24/94 $52.32 $54.13
------------------------------------------------------------------------------------------------------------------------------------
Polish People's Republic Loan Participation Agreement,
5.0625%, 2/3/24 1/12/94--2/7/94 $63.71 $55.33
------------------------------------------------------------------------------------------------------------------------------------
Polymer Group, Inc., 12.25% Sr. Nts., 7/15/02(1) 6/17/94 $100.00 $100.00
------------------------------------------------------------------------------------------------------------------------------------
Prudential Agricultural Credit, Inc. Farmer Mac Agricultural
Real Estate Trust Sr. Sub. Mtg. Pass Through Certificates:
9.18%, Series 1992-2, Cl. B2, 1/15/03 8/18/92 $70.74 $76.04
9.47%, Series 1992-2, Cl. B3, 4/15/09 8/18/92 $74.47 $76.09

26 Oppenheimer Strategic Income Fund

<PAGE>

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

------------------------------------------------------------------------------------------------------------------------------------
6. Restricted Securities (continued)

Valuation
Per Unit as of
Security Acquisition Date Cost Per Unit September 30, 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pulsar Internacional, S.A. de C.V.:
8% Nts., 12/14/94 12/14/93 $100.00 $100.00
9% Nts., 9/19/95 9/16/94 $99.62 $100.00
------------------------------------------------------------------------------------------------------------------------------------
Rabobank Certificate of Deposit:
Japanese Yen Maximum Rate Nts., 10%, 6/2/95 5/20/94 $100.00 $92.96
British Pound Sterling Maximum Rate Nts., 10%, 6/2/95 5/20/94 $100.00 $91.19
------------------------------------------------------------------------------------------------------------------------------------
Residential Funding Corp. 7.785% Mtg.
Pass Through Certificates, Series 1993-6, Cl. B5, 6/15/23(1) 6/10/93 $82.13 $73.91
------------------------------------------------------------------------------------------------------------------------------------
SKW Real Estate Limited Partnership, 9.05%,
Secured Note, Cl. E, 4/15/04(1) 4/14/94 $99.96 $95.25
------------------------------------------------------------------------------------------------------------------------------------
South Africa (Republic Of) Loan Participation Agreements:
Eskom, 4.907%, 12/23/97 11/18/93 $94.75 $93.50
Eskom, 4.651%, 1/15/98 2/9/94 $95.25 $93.00
Eskom, 4.875%, 4/15/98 11/18/93 $94.75 $90.50
Eskom, 4.75%, 9/15/99 12/17/93 $89.75 $90.50
Eskom, 4.875%, 2/15/00 12/3/93 $90.50 $92.50
------------------------------------------------------------------------------------------------------------------------------------
Structured Product Asset Return Certificates,
9.40%, Series 94-2, 9/1/97(1) 9/7/94 $100.00 $99.69
------------------------------------------------------------------------------------------------------------------------------------
Subic Power Corp., 9.50% Sr. Sec. Nts., Series A, 12/28/08(1) 12/20/93--12/22/93 $100.43
$92.25
------------------------------------------------------------------------------------------------------------------------------------
Terex Corp.:
13% Sr. Nts., 8/1/96(1) 4/5/94--5/13/94 $93.33 $93.00
Rts., Exp. 7/96(1) 4/5/94--6/29/94 $1.53 $1.50
------------------------------------------------------------------------------------------------------------------------------------
Treasure Bay Gaming & Resorts, Inc., Units(1) 11/10/93--9/12/94 $102.96 $30.50
------------------------------------------------------------------------------------------------------------------------------------
Treasure Bay Gaming, 12.25% Fst. Mtg. Nts., 11/15/00(1) 4/21/94--9/12/94 $92.19 $31.50
------------------------------------------------------------------------------------------------------------------------------------
Triangle Wire & Cable, Inc. Wts., Exp. 1/98 1/13/92--1/23/92 $0.00 $0.00
------------------------------------------------------------------------------------------------------------------------------------
Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A, 12/1/11(1) 11/8/93--11/18/93 $100.02
$90.25
------------------------------------------------------------------------------------------------------------------------------------
United Mexican States:
1990 Combined Multi-Year Restructuring Agreement,
Restructured Sov. Loan, 4.28%, 12/23/06 1/11/94 $92.00 $83.25
Bankpesca Restructured Sov. Loan, 6.0625%, 10/26/06 1/13/94 $91.75 $83.25
Banobras Myra Loan Participation Agreement,
Tranche 2, 6.125%, 11/16/06 1/24/94 $91.75 $83.25
------------------------------------------------------------------------------------------------------------------------------------
Myra Old Money Loan Participation Agreements:
5.6875%, 3/20/05 1/24/94 $91.75 $83.25
6.1725%, 3/20/05 1/24/94 $91.75 $83.25
------------------------------------------------------------------------------------------------------------------------------------
New New Money Loan Participation Agreements:
5.1825%, 3/25/05 1/24/94 $91.75 $83.25
Tranche A, 6.0625%, 3/25/05 1/24/94 $91.75 $83.25
------------------------------------------------------------------------------------------------------------------------------------
Petacalco Topolobampo Trust, Sr. Sec. Unsub. Nts.,
8.125%, 12/15/03(1) 5/18/94--8/22/94 $87.92 $85.88
------------------------------------------------------------------------------------------------------------------------------------
Petroleos Mexicanos Gtd. Med.-Term Nts.,
7.60%, 6/15/00(1) 8/3/94--8/5/94 $84.94 $82.88
------------------------------------------------------------------------------------------------------------------------------------
Venezuela (Republic of):
6.75% Debs., 9/20/95(1) 4/6/94--5/19/94 $95.14 $94.88
9.00% Sr. Unsec. Unsub. Nts., 5/27/96(1) 5/3/94--7/15/94 $94.58 $93.63
------------------------------------------------------------------------------------------------------------------------------------
Bonds, Banco Venezuela TCI:
0% Debs., 12/13/98 7/13/93--7/15/93 $72.64 $64.00
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

7. Futures Contracts

At September 30, 1994, the Fund had outstanding futures contracts to sell
debt securities as follows:

<TABLE>
<CAPTION>
Expiration Number of Valuation as of Unrealized
Date Futures Contracts September 30, 1994 Appreciation
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Nts. 12/94 245 $24,859,844 $61,250
U.S. Treasury Bonds 12/94 89 8,805,438 2,781
--- ----------- -------
334 $33,665,282 $64,031
--- ----------- -------
--- ----------- -------
<FN>
1. Transferable under Rule 144A of the Act.
</TABLE>

<PAGE>
Appendix

Industry Classifications

Aerospace/Defense
Air Transportation
Auto Parts Distribution
Automotive
Bank Holding Companies
Banks
Beverages
Broadcasting
Broker-Dealers
Building Materials
Cable Television
Chemicals
Commercial Finance
Computer Hardware
Computer Software
Conglomerates
Consumer Finance
Containers
Convenience Stores
Department Stores
Diversified Financial
Diversified Media
Drug Stores
Drug Wholesalers
Durable Household Goods
Education
Electric Utilities
Electrical Equipment
Electronics
Energy Services & Producers
Entertainment/Film
Environmental

<PAGE>
Food
Gas Utilities*
Gold
Health Care/Drugs
Health Care/Supplies & Services
Homebuilders/Real Estate
Hotel/Gaming
Industrial Services
Insurance
Leasing & Factoring
Leisure
Manufacturing
Metals/Mining
Nondurable Household Goods
Oil - Integrated
Paper
Publishing/Printing
Railroads
Restaurants
Savings & Loans
Shipping
Special Purpose Financial
Specialty Retailing
Steel
Supermarkets
Telecommunications - Technology
Telephone - Utility
Textile/Apparel
Tobacco
Toys
Trucking

[FN]<PAGE>
________________________
* For purposes of the Fund's investment policy not to concentrate in
securities of issuers in the same industry, gas utilities and gas
transmission utilities each will be considered a separate industry.

<PAGE>

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 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 & Wolf, P.C.
1600 Broadway
Denver, Colorado 80202

<PAGE>

[Logo] OPPENHEIMER FUNDS

OPPENHEIMER STRATEGIC INCOME FUND
ANNUAL REPORT SEPTEMBER 30, 1994

"I NEED HIGH INCOME, BUT NOT A LOT OF RISK.

"MY FINANCIAL ADVISOR RECOMMENDED THIS FUND BECAUSE ITS UNIQUE
INVESTMENT STRATEGY IS SPECIFICALLY DESIGNED TO LOWER RISK."

WOMAN SITTING BY
WOMAN HUGGING
CHILD
<PAGE>

FUND FACTS

IN THIS REPORT:

ANSWERS TO TIMELY QUESTIONS YOU SHOULD ASK YOUR FUND'S MANAGERS.

- HOW DID THE FUND RESPOND TO RISING INTEREST RATES IN THE U.S. AND OVERSEAS?

- WHAT'S THE OUTLOOK FOR THE CORPORATE BOND MARKET?

- WHERE ARE YOU FINDING ATTRACTIVE INVESTMENT OPPORTUNITIES TODAY?

FACTS EVERY SHAREHOLDER SHOULD KNOW ABOUT OPPENHEIMER STRATEGIC INCOME FUND

--------------------------------------------------------------------------------
1 The Fund seeks high current income by investing in foreign fixed income
securities, U.S. government issues and higher-yielding, lower-rated
corporate bonds.

--------------------------------------------------------------------------------
2 Standardized yield for the 30 days ended September 30, 1994 for Class A
shares was 8.65% and 8.31% for Class B shares.(1)

--------------------------------------------------------------------------------
3 Total return at net asset value for the 12 months ended September 30, 1994
was 1.85% for Class A shares and 1.07% for Class B shares.(2)

--------------------------------------------------------------------------------
4 Average annual total returns for Class A shares for the 1-year period ended
September 30, 1994 and since inception of the Fund on October 16, 1989 were
--2.98% and 9.93%, respectively. For Class B shares, average annual total
returns for the 1-year period ended September 30, 1994 and since inception
of the Class on November 30, 1992 were --3.93% and 6.43%, respectively.(3)

--------------------------------------------------------------------------------
5 The Fund's Class A shares received **** from Morningstar, Inc. as of
September 30, 1994. The Fund was ranked among 165 hybrid funds.(4)

--------------------------------------------------------------------------------
6 "The Fund's flexibility to shift assets strategically among bond market
sectors is a major plus for shareholders in the current investment
environment. It has allowed us to capitalize on opportunities offered in
higher-yielding corporate bonds, the best performing bond market sector
over the last 12 months. And it has enabled us to limit the portfolio's
exposure to rising interest rates worldwide."

PORTFOLIO MANAGERS DAVID NEGRI AND ART STEINMETZ, SEPTEMBER 30, 1994

(1) Standardized yield is net investment income calculated on a
yield-to-maturity basis for the 30-day period ended 9/30/94, divided by the
maximum offering price at the end of the period, compounded semiannually and
then annualized. Falling net asset values will tend to artificially raise
yields.

(2) Based on the change in net asset value per share from 9/30/93 to 9/30/94,
without deducting any sales charges. Such performance would have been lower if
sales charges were taken into account.

(3) Average annual total returns are based on a hypothetical investment held
until 9/30/94, after deducting the current maximum initial sales charge of 4.75%
for Class A shares and the contingent deferred sales charge of 5% (1-year) and
4% (since inception) for Class B shares.

(4) Source: Morningstar Mutual Funds, 9/30/94. Morningstar, Inc., an
independent mutual fund monitoring service, produces proprietary monthly
rankings of mutual funds in broad investment categories (equity, taxable bond,
tax-exempt bond, and "hybrid") based on risk-adjusted investment return, after
considering sales charges and expenses. Investment return measures a fund's (or
class's) 3-, 5-, and 10-year (depending on the inception of the class or fund)
average annual total returns in excess of 90-day U.S. Treasury bill returns.
Risk measures a fund's (or class's) performance below 90-day U.S. Treasury bill
returns. Risk and returns are combined to produce star rankings reflecting
performance relative to the average fund in a fund's category. Five stars is the
"highest" ranking (top 10%), four stars is "above average" (22.5%) and 1 star is
lowest (bottom 1%). The Fund's current ranking is also the Fund's ranking for
the 1-year and 3-year periods ended 9/30/94. Rankings are subject to change. The
Fund's Class A and Class B shares have the same portfolio.

All figures assume reinvestment of dividends and capital gains distributions.

Past performance is not indicative of future results. Investment and principal
value on an investment in the Fund will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than the original cost.

2 Oppenheimer Strategic Income Fund

<PAGE>

REPORT TO SHAREHOLDERS

ABOVE-AVERAGE TOTAL RETURN

TOTAL RETURN FOR THE 1-YEAR PERIOD ENDED SEPTEMBER 30, 1994

OPPENHEIMER STRATEGIC 1.85%
INCOME FUND A
(AT NAV)(7)

OPPENHEIMER STRATEGIC 1.07%
INCOME FUND B
(AT NAV)(7)

LIPPER GENERAL BOND --2.69%
FUNDS AVERAGE(8)

Extending the record of performance that has earned the Fund's Class A Shares a
**** ranking from Morningstar, Inc., Oppenheimer Strategic Income Fund continued
to provide an attractive level of income for the 12 months ended September 30,
1994.(5) At that date, the Fund's standardized 30-day yield was 8.65% for Class
A shares and 8.31% for Class B shares.(6)

Once again, your managers' ability to shift assets strategically among
three sectors--U.S. government securities, high yield corporate bonds and
foreign fixed income securities--played an important role in the Fund's
performance over the past year. As the Federal Reserve and central banks
worldwide moved aggressively to raise short-term interest rates to fend off
inflation, your managers were able to capture rising yields while limiting the
portfolio's price volatility.

As U.S. interest rates began to rise, your managers reduced the Fund's
exposure to long-term U.S. government bonds, as well as to high yield corporate
bonds issued by consumer-durable and financial services companies, whose
earnings are sensitive to interest rate changes.

The proceeds were used to add to holdings in higher-yielding corporate
bonds issued by larger industrial companies, notably in chemicals, mining,
metals, and forest products sectors. These companies' earnings tend to rise in
the middle-to-late stages of an economic expansion.

The foreign portion of the portfolio continues to emphasize Latin
America and other emerging markets. As interest rates rose offshore and the
dollar weakened against major currencies, these positions were reduced somewhat,
while more investments were centered in Europe. In addition to increasing the
portfolio's holdings of foreign government bonds, your managers focused more
attention on large European industrial companies positioned to benefit from
economic growth.

Looking ahead, your managers don't anticipate major changes in the
portfolio's composition in the near term. The Fund's allocations will, of
course, be adjusted should the economic expansion appear to be ending, but signs
are currently pointing to continued gradual growth--and your Fund is
well-positioned to provide attractive returns.

We appreciate the confidence you have placed in Oppenheimer Strategic
Income Fund and we look forward to continuing to help you reach your investment
goals.

James C. Swain
Chairman
Oppenheimer Strategic Funds Trust for
Oppenheimer Strategic Income Fund

Jon S. Fossel
President
Oppenheimer Strategic Funds Trust for
Oppenheimer Strategic Income Fund

October 21, 1994

(5) See footnote 4, page 2.

(6) See footnote 1, page 2.

(7) See footnote 2, page 2.

(8) Source of data: Lipper Analytical Services. The Lipper total return average
for the 1-year period ended 9/30/94 was for 35 general bond funds. The average
is shown for comparative purposes only. Oppenheimer Strategic Income Fund is
characterized by Lipper as a general bond fund. Lipper performance does not
take sales charges into consideration.

3 Oppenheimer Strategic Income Fund
<PAGE>

------------------------------------------------------------------------------
Statement of Investments September 30, 1994

Face Market Value
Amount See Note 1
<S> <C> <C>
------------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreements--0.9%
------------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with First Chicago Capital Markets, 4.95%, dated
9/30/94, to be repurchased at $40,716,789 on 10/3/94, collateralized by U.S.
Treasury Nts., 4.25%--8.50%, 4/15/95--7/15/98, with a value of $23,014,481
and U.S. Treasury Bills, 0%, 3/16/95--3/23/95, with a value of $18,537,281
(Cost $40,700,000) $40,700,000 $40,700,000
------------------------------------------------------------------------------------------------------------------------------------
Short-Term Government Obligations--0.3%
------------------------------------------------------------------------------------------------------------------------------------
Bonos de la Tesoreria la Federacion:
0%, 8/3/95 7,623,450(1) 2,103,222
0%, 8/10/95 12,197,520(1) 3,360,261
------------------------------------------------------------------------------------------------------------------------------------
United Mexican States Treasury Bills, 0%, 11/10/94 35,238,970(1) 10,203,270
------------------------------------------------------------------------------------------------------------------------------------
Total Short-Term Government Obligations (Cost $15,646,044) 15,666,753
------------------------------------------------------------------------------------------------------------------------------------
Long-Term Government Obligations--49.8%
------------------------------------------------------------------------------------------------------------------------------------
Argentina (Republic Of):
Bonos de Consolidacion de Deudas:
Bonds, 8.375%, 12/20/03 36,950,000 30,797,934
Bonds, Series I, 3.704%, 4/1/01(4)(6) 77,759,247(1) 45,377,982
Bonds, Series I, 4.375%, 4/1/01(4)(6) 27,007,821 20,469,552
Bonds, Series I, 4.8125%, 4/1/07(4)(6) 45,913,296 28,585,986
Bonds, Series I, 4.8125%, 9/1/02(4)(6) 15,634,644 10,528,088
Supplier Bocon (Pesos), 4.60%, 4/1/07 5,057,512(1) 2,118,317
Discount Bonds, 4.250%, 3/31/23 20,000,000 14,250,000
Par Bonds, 4.25%, 3/31/23(8) 30,000,000 14,925,000
Past Due Interest Bonds, 5%, 3/31/05(4)(6) 107,000,000 81,721,250
------------------------------------------------------------------------------------------------------------------------------------
Bariven SA Sr. Nts., Gtd. by Petroleos de Venezuela:
9.50%, 12/10/96 500,000 478,750
9%, 2/25/97(5) 1,000,000 930,000
------------------------------------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of):
6% Debs., 9/15/13 32,000,000 17,220,000
Bonds, Banco do Brasil SA, 10.50%, 4/14/98 5,000,000 5,043,750
Bonds, Banco do Nordeste, Sr. Unsec. Debs, 9%, 11/12/96 8,200,000 7,779,750
Bonds, Nacional de Desenvolvimento Economico e Social:
10.375%, 4/27/98 3,850,000 3,854,813
Interest Due and Unpaid Bonds, 8.75%, 1/1/01(4) 19,061,000 15,844,456
Nts., Banco Estado Minas Gerais:
10%, 1/15/96 14,870,000 14,349,550
7.875%, 2/10/99(5) 4,000,000 3,290,000
8.25%, 2/10/00 9,000,000 7,245,000
8.25%, 2/10/00(5) 2,000,000 1,630,000
------------------------------------------------------------------------------------------------------------------------------------
Colombia (Republic of):
8.75%, Nts., 10/6/99 5,000,000 4,984,084
1989--1990 Integrated Loan Facility Bonds:
4.188%, 7/1/01(4)(5) 16,131,048 15,485,807
4.44%, 10/26/03(4)(5) 8,122,423 7,594,466
Empresa Columbiana de Petroleos, Nts., 7.25%, 7/8/98(5) 15,650,000 14,926,188
------------------------------------------------------------------------------------------------------------------------------------
Denmark (Kingdom of) Bonds:
9%, 11/15/98 158,160,000(1) 26,215,716
6%, 12/10/99 47,450,000(1) 6,929,474
</TABLE>

4 Oppenheimer Strategic Income Fund

5 Oppenheimer Strategic Income Fund

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

6 Oppenheimer Strategic Income Fund

<PAGE>

7 Oppenheimer Strategic Income Fund

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

Face Market Value
Amount See Note 1
------- ------------
<S> <C> <C>
------------------------------------------------------------------------------------------------------------------------------------
Chemicals (continued)
Harris Chemical North America, Inc.:
0%/10.25% Gtd. Sr. Sec. Disc. Nts., 7/15/01(3) $12,500,000 $10,187,500
10.75% Gtd. Sr. Sub. Nts., 10/15/03 1,000,000 942,500
------------------------------------------------------------------------------------------------------------------------------------
Malette, Inc., 12.25% Sr. Sec. Nts., 7/15/04 3,750,000 3,881,250
------------------------------------------------------------------------------------------------------------------------------------
NL Industries Inc.:
11.75% Sr. Sec. Nts., 10/15/03 500,000 516,250
0%/13% Sr. Sec. Disc. Nts., 10/15/05(3) 1,250,000 795,313
------------------------------------------------------------------------------------------------------------------------------------
Quantum Chemical Corp., 10.375% Fst. Mtg. Nts., 6/1/03 3,500,000 3,883,799
------------------------------------------------------------------------------------------------------------------------------------
Rexene Corp.:
9% Fst. Priority Nts., 11/15/99(8) 2,535,000 2,522,325
10% 2nd Priority Nts., 11/15/02(6) 3,706,000 3,536,143
------------------------------------------------------------------------------------------------------------------------------------
Sherritt, Inc., 11.00% Debs., 3/31/04 10,000,000(1) 7,175,639
------------------------------------------------------------------------------------------------------------------------------------
Synthetic Industries, Inc., 12.75% Sr. Sub. Debs., 12/01/02 12,275,000 12,397,750
USG Corp., 9.25%, 9/15/01 3,200,000 3,048,000
------------------------------------------------------------------------------------------------------------------------------------
82,227,719
------------------------------------------------------------------------------------------------------------------------------------
Metals--0.8%
Haynes International, Inc., 11.25% Sr. Sec. Nts., 6/15/98 3,000,000 2,565,000
------------------------------------------------------------------------------------------------------------------------------------
Horsehead Industries, Inc.:
13.50% Extd. Nts., 6/1/97(4) 4,566,000 4,702,980
14% Sub. Nts., 6/1/99 5,050,000 4,974,250
------------------------------------------------------------------------------------------------------------------------------------
Jorgensen (Earle M.) Co., 10.75% Sr. Nts., 3/1/00 2,000,000 2,000,000
------------------------------------------------------------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp.:
9.875% Sr. Nts., 2/15/02 4,175,000 3,715,750
12.75% Sr. Sub. Nts., 2/1/03 16,850,000 16,386,625
------------------------------------------------------------------------------------------------------------------------------------
Stelco, Inc., 10.25% Debs., 4/30/96 4,300,000(1) 3,173,683
------------------------------------------------------------------------------------------------------------------------------------
37,518,288
------------------------------------------------------------------------------------------------------------------------------------
Paper and Forest
Products--1.7%
Domtar, Inc., 10.85% Debs., 8/15/17 2,500,000(1) 1,703,049
------------------------------------------------------------------------------------------------------------------------------------
Equitable Bag, Inc., 12.375% Sr. Nts., 8/15/02(2) 1,830,000 1,070,550
------------------------------------------------------------------------------------------------------------------------------------
Gaylord Container Corp., 11.50% Sr. Nts., 5/15/01 8,450,000 8,661,250
------------------------------------------------------------------------------------------------------------------------------------
Pacific Lumber Co., 10.50% Sr. Nts., 3/1/03 14,370,000 13,471,875
------------------------------------------------------------------------------------------------------------------------------------
PT Inti Indorayon Utama, 9.125% Sr. Nts., 10/15/00 17,500,000 15,312,500
------------------------------------------------------------------------------------------------------------------------------------
Rainy River Forest Products, 10.75% Sr. Sec. Nts., 10/15/01 3,250,000 3,258,125
------------------------------------------------------------------------------------------------------------------------------------
Riverwood International Corp.:
10.75% Sr. Nts., 6/15/00 5,000,000 5,225,000
11.25% Sr. Sub. Nts., 6/15/02 950,000 997,500
10.375% Sr. Sub. Nts., 6/30/04 3,600,000 3,681,000
------------------------------------------------------------------------------------------------------------------------------------
Scotia Pacific Holding Co., 7.95% Timber Collateralized Nts., 7/20/15 2,645,897 2,435,522
------------------------------------------------------------------------------------------------------------------------------------
Stone Container Corp.:
9.875% Sr. Nts., 2/1/01 18,300,000 17,224,875
10.75% Sr. Sub. Debs., 4/1/02 300,000 286,500
10.75% Fst. Mtg. Nts., 10/1/02 4,100,000 4,094,875
------------------------------------------------------------------------------------------------------------------------------------
Stone Consolidated Corp., 10.25% Sr. Sec. Nts., 12/15/00 5,125,000 5,060,938
------------------------------------------------------------------------------------------------------------------------------------
82,483,559
</TABLE>

8 Oppenheimer Strategic Income Fund

<PAGE>

Face Market Value
Amount See Note 1
------- ------------
<S> <C> <C>
------------------------------------------------------------------------------------------------------------------------------------
Consumer Cyclicals--9.7%
------------------------------------------------------------------------------------------------------------------------------------
Automotive--0.6% Envirotest Systems Corp.:
9.125% Sr. Nts., 3/15/01 $3,000,000 $2,782,500
9.625% Sr. Sub. Nts., 4/1/03 8,940,000 8,224,800
------------------------------------------------------------------------------------------------------------------------------------
Foamex LP/Foamex Capital Corp., 11.875% Sr. Sub. Debs., 10/1/04 2,600,000
2,626,000
------------------------------------------------------------------------------------------------------------------------------------
Foamex LP/JPS Automotive Corp., Units(5) 8,750,000 4,856,250
------------------------------------------------------------------------------------------------------------------------------------
JPS Automotive Products Corp., 11.125% Sr. Nts., 6/15/01 2,500,000 2,525,000
------------------------------------------------------------------------------------------------------------------------------------
Penda Corp., 10.75% Sr. Nts., Series B, 3/1/04 8,600,000 7,955,000
------------------------------------------------------------------------------------------------------------------------------------
SPX Corp., 11.75% Sr. Sub. Nts., 6/1/02 1,350,000 1,410,750
------------------------------------------------------------------------------------------------------------------------------------
30,380,300
------------------------------------------------------------------------------------------------------------------------------------
Construction Supplies and
Development--0.9%
Baldwin Co., 10.375% Sr. Nts., Series B, 8/1/03 9,000,000 7,605,000
------------------------------------------------------------------------------------------------------------------------------------
Dal-Tile International, Inc., 0% Sr. Sec. Nts., 7/15/98 21,500,000 13,491,250
------------------------------------------------------------------------------------------------------------------------------------
Hovnanian K. Enterprises, Inc., 11.25% Gtd. Sub. Nts., 4/15/02 6,900,000 6,555,000
------------------------------------------------------------------------------------------------------------------------------------
NVR, Inc., 11% Gtd. Sr. Nts., 4/15/03 3,490,000 3,193,350
------------------------------------------------------------------------------------------------------------------------------------
USG Corp., 10.25% Sr. Sec. Nts., 12/15/02 10,967,000 11,241,175
------------------------------------------------------------------------------------------------------------------------------------
Walter Industries, Inc., 14.625% Sr. Nts., Series B, 1/1/99(2) 742,000 1,253,980
------------------------------------------------------------------------------------------------------------------------------------
43,339,755
------------------------------------------------------------------------------------------------------------------------------------
Consumer Goods
and Services--2.6%
Amstar Corp., 11.375% Sr. Sub. Nts., 2/15/97 10,886,000 10,777,140
------------------------------------------------------------------------------------------------------------------------------------
Coleman Holdings, Inc., 0% Sr. Sec. Disc. Nts., Series B, 5/27/98 13,450,000 9,078,750
------------------------------------------------------------------------------------------------------------------------------------
Dr. Pepper Bottling Co. of Texas, 10.25% Sr. Nts., 2/15/00 3,000,000 3,030,000
------------------------------------------------------------------------------------------------------------------------------------
Dr. Pepper/Seven-Up Cos., Inc., 0%/11.50% Sr. Sub. Disc. Nts., 11/1/02(3) 4,118,000
3,294,400
------------------------------------------------------------------------------------------------------------------------------------
Harman International Industries, Inc., 12% Sr. Sub. Nts., 8/1/02 23,000,000 24,610,000
------------------------------------------------------------------------------------------------------------------------------------
Insilco Corp., 10.375% Sr. Sec. Nts., 7/1/97 5,866,000 5,961,323
------------------------------------------------------------------------------------------------------------------------------------
Interco, Inc., 9% Sec. Nts., Series B, 6/1/04(5) 17,826,000 17,539,045
------------------------------------------------------------------------------------------------------------------------------------
MacAndrews & Forbes Group, Inc., Sub. Nts., 12.25%, 7/1/96 1,565,000
1,561,088
------------------------------------------------------------------------------------------------------------------------------------
MacAndrews & Forbes Holdings, Inc., 13% Sub. Debs., 3/1/99 4,915,000
4,890,425
------------------------------------------------------------------------------------------------------------------------------------
Mary Kay Corp.:
12.75% Gtd. Sr. Nts., Series B, 12/6/00(5) 1,000,000 1,045,000
10.25% Sr. Nts., 12/31/00(5) 9,875,000 9,677,500
------------------------------------------------------------------------------------------------------------------------------------
PT Polysindo Eka Perkasa, 13% Sr. Nts., 6/15/01 4,150,000 3,934,893
------------------------------------------------------------------------------------------------------------------------------------
Protection One Alarm Monitoring, Inc., 12% Sr. Sub. Nts., Series B, 11/1/03 6,500,000
6,207,500
------------------------------------------------------------------------------------------------------------------------------------
Revlon Consumer Products Corp., 9.375% Sr. Nts., 4/1/01 5,200,000 4,563,041
------------------------------------------------------------------------------------------------------------------------------------
Revlon Worldwide Corp., 0% Sr. Sec. Disc. Nts., 3/15/98 15,450,000 7,184,250
------------------------------------------------------------------------------------------------------------------------------------
WestPoint Stevens, Inc., 9.375% Sr. Sub. Debs., 12/15/05 9,450,000 8,587,688
------------------------------------------------------------------------------------------------------------------------------------
121,942,043
------------------------------------------------------------------------------------------------------------------------------------
Entertainment--1.8%
Arizona Charlie's, Inc., 12% Fst. Mtg. Nts., Series A, 11/15/00(5) 5,775,000 5,053,125
------------------------------------------------------------------------------------------------------------------------------------
Aztar Corp., 11% Sr. Sub. Nts., 10/1/02 6,250,000 5,507,813
------------------------------------------------------------------------------------------------------------------------------------
Aztar Mortgage Funding, Inc., 13.50% Gtd. Fst. Mtg. Nts., 9/15/96 2,220,000
2,203,350
------------------------------------------------------------------------------------------------------------------------------------
Capital Gaming International, Inc., 11.50% Sr. Sec. Nts., 2/1/01 3,100,000 2,170,000
------------------------------------------------------------------------------------------------------------------------------------
Capitol Queen & Casino, Inc., 12% Fst. Mtg. Nts., Series A, 11/15/00(5) 4,200,000
3,255,000
------------------------------------------------------------------------------------------------------------------------------------
Gillett Holdings, Inc., 12.25% Sr. Sub. Nts., Series A, 6/30/02 12,800,000 13,600,000
------------------------------------------------------------------------------------------------------------------------------------
Hollywood Casino Corp., 13.50% Fst. Mtg. Nts., 9/30/98 3,500,000 2,992,500
------------------------------------------------------------------------------------------------------------------------------------
Hollywood Casino, 14%, 4/1/98 3,000,000 3,105,000
------------------------------------------------------------------------------------------------------------------------------------
Kloster Cruise Ltd., 13% Sr. Sec. Nts., 5/1/03 14,000,000 13,930,000
</TABLE>

9 Oppenheimer Strategic Income Fund

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

Face Market Value
Amount See Note 1
<S> <C> <C>
------------------------------------------------------------------------------------------------------------------------------------
Entertainment
(continued)
Lady Luck Gaming Finance Corp., 10.50% Fst. Mtg. Nts., 3/1/01 $4,020,000
$1,809,000
------------------------------------------------------------------------------------------------------------------------------------
MGM Grand Hotel Finance Corp, 11.75% Fst. Mtg. Nts., Series A, 5/1/99 5,000,000
5,337,500
------------------------------------------------------------------------------------------------------------------------------------
Maritime Group Ltd., Units(4)(5)(6) 2,939,466 2,330,262
------------------------------------------------------------------------------------------------------------------------------------
Marvel (Parent) Holdings, Inc., 0% Sr. Sec. Disc. Nts., 4/15/98 7,050,000 4,406,250
------------------------------------------------------------------------------------------------------------------------------------
Marvel Holdings, Inc., 0% Sr. Sec. Disc. Nts., Series B, 4/15/98 12,500,000 7,843,750
------------------------------------------------------------------------------------------------------------------------------------
Station Casinos, Inc., 9.625% Sr. Sub. Nts., 6/1/03 10,000,000 8,600,000
------------------------------------------------------------------------------------------------------------------------------------
Treasure Bay Gaming & Resorts, Inc., Units(5) 4,050,000 1,235,250
------------------------------------------------------------------------------------------------------------------------------------
Treasure Bay Gaming, 12.25% Fst. Mtg. Nts., 11/15/00(5) 1,125,000 354,375
------------------------------------------------------------------------------------------------------------------------------------
Trump Plaza Funding, 10.875%, 6/15/01 1,000,000 712,500
------------------------------------------------------------------------------------------------------------------------------------
United Gaming, Inc., 7.50% Cv. Sub. Debs., 9/15/03 1,540,000 1,287,825
------------------------------------------------------------------------------------------------------------------------------------
85,733,500
------------------------------------------------------------------------------------------------------------------------------------
Hotels/Lodging--0.1%
Embassy Suites, Inc., 10.875% Gtd. Sr. Sub. Nts., 4/15/02 2,250,000 2,340,000
------------------------------------------------------------------------------------------------------------------------------------
Host Marriott Hospitality, Inc., 11% Sr. Nts., Series L, 5/1/07 4,353,000 4,380,206
------------------------------------------------------------------------------------------------------------------------------------
6,720,206
------------------------------------------------------------------------------------------------------------------------------------
Media--1.8%
Ackerley Communications, Inc., 10.75% Sr. Sec. Nts., Series A, 10/1/03 8,850,000
8,584,500
------------------------------------------------------------------------------------------------------------------------------------
Act III Broadcasting, Inc., 9.625% Sr. Sub. Nts., 12/15/03 1,000,000 955,000
------------------------------------------------------------------------------------------------------------------------------------
GSPI Corp., 10.15% Fst. Mtg. Bonds, 6/24/10(5) 835,202 896,590
------------------------------------------------------------------------------------------------------------------------------------
General Media, Inc., 10.625% Sr. Sec. Nts., 12/31/00 4,000,000 3,740,000
------------------------------------------------------------------------------------------------------------------------------------
Infinity Broadcasting Corp., 10.375% Sr. Sub. Nts., 3/15/02 4,000,000 4,160,000
------------------------------------------------------------------------------------------------------------------------------------
Lamar Advertising Co., 11% Sr. Sec. Nts., 5/15/03 12,000,000 11,730,000
------------------------------------------------------------------------------------------------------------------------------------
News America Holdings, Inc.:
12% Sr. Nts., 12/15/01 2,500,000 2,849,190
8.50% Sr. Nts., 2/15/02 6,000,000 5,815,097
8.625%, Sr. Nts., 2/1/03 10,400,000 10,298,006
10.125% Gtd. Sr. Debs., 10/15/12 3,300,000 3,461,541
------------------------------------------------------------------------------------------------------------------------------------
SCI Television, Inc.:
7.50% Fst. Sec. Loan Nts., 6/30/98 4,380,331 4,281,774
11% Sr. Sec. Nts., 6/30/05 5,653,155 5,759,152
------------------------------------------------------------------------------------------------------------------------------------
SFX Broadcasting, Inc., 11.375% Sr. Sub. Nts., 10/1/08 3,000,000 3,127,500
------------------------------------------------------------------------------------------------------------------------------------
Sinclair Broadcasting Group, Inc., 10% Sr. Sub. Nts., 12/15/03 12,925,000 12,537,250
------------------------------------------------------------------------------------------------------------------------------------
Univision Television Group, Inc., 11.75% Sr. Sub. Nts., 1/15/01 5,500,000 5,836,875
------------------------------------------------------------------------------------------------------------------------------------
84,032,475
------------------------------------------------------------------------------------------------------------------------------------
Real Estate Development--0.5%
Casino Magic Finance Corp., 11.50% Fst. Mtg. Nts., 10/15/01 4,150,000
3,216,250
------------------------------------------------------------------------------------------------------------------------------------
Noranda Forest, Inc., 11% Debs., 7/15/98 2,000,000(1) 1,580,504
------------------------------------------------------------------------------------------------------------------------------------
Olympia & York First Canadian Place Ltd., 11% Debs., Series 3, 11/4/49(2) 5,150,000(1)
2,380,448
------------------------------------------------------------------------------------------------------------------------------------
Saul (B.F.) Real Estate Investment Trust, 11.625% Sr. Nts., 4/1/02 17,000,000 15,385,000
------------------------------------------------------------------------------------------------------------------------------------
22,562,202
------------------------------------------------------------------------------------------------------------------------------------
Retail--1.4%
Cole National Group, Inc., 11.25% Sr. Nts., 10/1/01 17,950,000 17,680,750
------------------------------------------------------------------------------------------------------------------------------------
Eye Care Centers of America, Inc., 12% Sr. Nts., 10/1/03 7,000,000 5,915,000
------------------------------------------------------------------------------------------------------------------------------------
Finlay Enterprises, Inc., 0%/12% Sr. Disc. Debs., 5/1/05(3) 750,000 435,000
------------------------------------------------------------------------------------------------------------------------------------
Finlay Fine Jewelry Corp., 10.625% Sr. Nts., 5/1/03 8,370,000 7,951,500
------------------------------------------------------------------------------------------------------------------------------------
Parisian, Inc., 9.875% Sr. Sub. Nts., 7/15/03 11,500,000 9,775,000
------------------------------------------------------------------------------------------------------------------------------------
R.H. Macy & Co., Inc., 14.50% Sr. Sub. Debs., 10/15/98(2) 7,450,000
5,364,000
</TABLE>

10 Oppenheimer Strategic Income Fund

<PAGE>

Face Market Value
Amount See Note 1
<S> <C> <C>
------------------------------------------------------------------------------------------------------------------------------------
Retail (continued)

11 Oppenheimer Strategic Income Fund

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

Face Market Value
Amount See Note 1
<S> <C> <C>
------------------------------------------------------------------------------------------------------------------------------------
Energy--1.9%
Global Marine, Inc., 12.75% Sr. Sec. Nts., 12/15/99 $2,600,000 $2,827,500
------------------------------------------------------------------------------------------------------------------------------------
Gulf Canada Resources Ltd., 9.25% Sr. Sub. Debs., 1/15/04 10,500,000 9,667,875
------------------------------------------------------------------------------------------------------------------------------------
HS Resources, Inc., 9.875% Sr. Sub. Nts., 12/1/03 3,750,000 3,543,750
------------------------------------------------------------------------------------------------------------------------------------
Maxus Energy Corp.:
9.875% Nts., 10/15/02 4,550,000 4,390,750
8.50% Debs., 4/1/08 5,000,000 4,306,250
11.50% Debs., 11/15/15 3,500,000 3,517,500
------------------------------------------------------------------------------------------------------------------------------------
Mesa Capital Corp., 0%/12.75% Sec. Disc. Nts., 6/30/98(3) 21,047,000
18,679,213
------------------------------------------------------------------------------------------------------------------------------------
OPI International, Inc., 12.875% Gtd. Sr. Nts., 7/15/02 13,000,000 14,852,500
------------------------------------------------------------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc., 9.375% Sub. Debs., 2/1/06 1,700,000
1,566,125
------------------------------------------------------------------------------------------------------------------------------------
Presidio Oil Co.:
11.50% Sr. Sec. Nts., Series B, 9/15/00 6,564,500 6,269,098
13.90% Sr. Sub. Gas Indexed Nts., Series B, 7/15/02(4) 5,250,000 4,672,500
------------------------------------------------------------------------------------------------------------------------------------
Rowan Cos., Inc., 11.875% Sr. Nts., 12/1/01 7,500,000 8,025,000
------------------------------------------------------------------------------------------------------------------------------------
TGX Corp., 12.675% Sr. Sub. Exch. Nts., 4/1/94(2) 6,920,000 2,802,600
------------------------------------------------------------------------------------------------------------------------------------
Triton Energy Corp., 0% Sr. Sub. Disc. Nts., 11/1/97 3,500,000 2,572,500
------------------------------------------------------------------------------------------------------------------------------------
87,693,161
------------------------------------------------------------------------------------------------------------------------------------
Financial--3.5%
Acadia Partners LP, 13% Sub.Nts., 10/1/97(5) 25,000,000 25,750,000
------------------------------------------------------------------------------------------------------------------------------------
Banco Ganadero SA, 9.75%, 8/26/99(5) 13,700,000 13,802,750
------------------------------------------------------------------------------------------------------------------------------------
Blue Bell Funding, Inc., 11.85% Extd. Sec. Nts., 5/1/99(4) 4,500,000 4,820,625
------------------------------------------------------------------------------------------------------------------------------------
Borg-Warner Security Corp, 9.125%, Sr. Sub. Nts., 5/1/03 5,360,000 4,837,400
------------------------------------------------------------------------------------------------------------------------------------
Card Establishment Services, Inc., 10% Sr. Sub. Nts., Series B, 10/1/03 17,275,000
16,324,875
------------------------------------------------------------------------------------------------------------------------------------
ECM Fund, L.P.I., 14% Sub. Nts., 6/10/02(5) 1,611,387 1,772,526
------------------------------------------------------------------------------------------------------------------------------------
Grupo Mexicano de Desarrollo S.A., 8.25%, Gtd. Nts., 2/17/01(5) 14,700,000
12,090,750
------------------------------------------------------------------------------------------------------------------------------------
International Bank for Reconstruction and Development Bonds, 12.50%, 7/25/97 60,320,000(1)
39,253,853
------------------------------------------------------------------------------------------------------------------------------------
Life Partners Group, Inc., 12.75% Sr. Sub. Nts., 7/15/02 2,500,000 2,718,750
------------------------------------------------------------------------------------------------------------------------------------
Nacolah Holding Corp., 9.50% Sr. Nts., 12/1/03 6,500,000 5,801,250
------------------------------------------------------------------------------------------------------------------------------------
Navistar Financial Corp., 9.50% Medium-Term Nts., 6/1/96 6,075,000 6,101,122
------------------------------------------------------------------------------------------------------------------------------------
Pioneer Finance, 13.50% Fst Mtg. Bonds, 12/1/98 18,205,000 16,839,625
------------------------------------------------------------------------------------------------------------------------------------
Reliance Group Holdings, Inc., 9.75% Sr. Sub. Debs., 11/15/03 3,200,000 2,896,016
------------------------------------------------------------------------------------------------------------------------------------
Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A, 12/1/11(5) 13,700,000
12,364,250
------------------------------------------------------------------------------------------------------------------------------------
165,373,792
------------------------------------------------------------------------------------------------------------------------------------
Industrial--2.5%
------------------------------------------------------------------------------------------------------------------------------------
Containers--0.8%
Calmar, Inc., 12% Sr. Sec. Nts., 12/15/97 7,000,000 7,017,500
------------------------------------------------------------------------------------------------------------------------------------
Calmar Spraying Systems, Inc., 14% Sr. Sub. Disc. Nts., 2/15/99 3,850,000 3,869,250
------------------------------------------------------------------------------------------------------------------------------------
Owens-Illinois, Inc., 10% Sr. Sub. Nts., 8/1/02 2,100,000 2,110,500
------------------------------------------------------------------------------------------------------------------------------------
Sea Containers Ltd.:
9.50% Sr. Nts., 7/1/03 4,750,000 4,405,625
12.50% Sr. Sub. Debs., Series A, 12/1/04 2,850,000 2,985,375
------------------------------------------------------------------------------------------------------------------------------------
Terex Corp., 13% Sr. Nts., 8/1/96(5) 4,065,000 3,780,450
------------------------------------------------------------------------------------------------------------------------------------
Trans Ocean Container Corp., 12.25% Sr. Sub. Nts., 7/1/04 11,900,000 11,840,500
------------------------------------------------------------------------------------------------------------------------------------
36,009,200
</TABLE>

12 Oppenheimer Strategic Income Fund

<PAGE>

13 Oppenheimer Strategic Income Fund

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

Face Market Value
Amount See Note 1
<S> <C> <C>
------------------------------------------------------------------------------------------------------------------------------------
Cable Television
(continued)
Continental Broadcasting Ltd./Continental Broadcasting Capital Corp.,
10.625% Sr. Sub. Nts., 7/1/03 $7,150,000 $7,230,438
------------------------------------------------------------------------------------------------------------------------------------
Continental Cablevision, Inc., 9.50% Sr. Debs., 8/1/13 8,200,000 7,462,000
------------------------------------------------------------------------------------------------------------------------------------
Echostar Communications Corp., Units 23,250,000 11,160,000
------------------------------------------------------------------------------------------------------------------------------------
Helicon Group LP/Helicon Capital Corp., 9% Sr. Sec. Nts., Series B, 11/1/03(4) 17,500,000
15,837,500
------------------------------------------------------------------------------------------------------------------------------------
International CableTel, Inc., 0%/10.875% Sr. Def. Cpn. Nts., 10/15/03(3) 3,600,000
2,016,000
------------------------------------------------------------------------------------------------------------------------------------
Marcus Cable, 0%/13.5% Gtd. Sr. Sub. Disc. Nts., 8/1/04(3) 13,200,000 7,227,000
------------------------------------------------------------------------------------------------------------------------------------
New World Communications Holding Corp., 0%, 6/15/99(5) 17,000,000
9,201,250
------------------------------------------------------------------------------------------------------------------------------------
Outlet Broadcasting, Inc., 10.875% Sr. Sub. Nts., 7/15/03 2,000,000 2,010,000
------------------------------------------------------------------------------------------------------------------------------------
Time Warner, Inc.:
7.45% Nts., 2/1/98 800,000 787,000
7.95% Nts., 2/1/00 3,020,000 2,955,825
------------------------------------------------------------------------------------------------------------------------------------
Time Warner, Inc./Time Warner Entertainment LP, 10.15% Sr. Nts., 5/1/12 1,000,000
1,053,737
------------------------------------------------------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 8,000,000 8,690,000
------------------------------------------------------------------------------------------------------------------------------------
126,000,505
------------------------------------------------------------------------------------------------------------------------------------
Communications--2.4%
Cellular, Inc., 0%/11.75% Sr. Sub. Disc. Nts., 9/1/03(3) 26,626,000 17,573,160
------------------------------------------------------------------------------------------------------------------------------------
Centennial Cellular Corp., 8.875% Sr. Nts., 11/1/01 15,250,000 13,801,250
------------------------------------------------------------------------------------------------------------------------------------
Horizon Cellular Telephone LP/Horizon Finance Corp.,
0%/11.375% Sr. Sub. Disc. Nts., 10/1/00(3) 21,402,000 15,409,440
------------------------------------------------------------------------------------------------------------------------------------
MFS Communications, Inc., 0%/9.375% Sr. Disc. Nts., 1/15/04(3) 12,400,000
7,347,000
------------------------------------------------------------------------------------------------------------------------------------
New City Communications, Inc., 11.375%, Sr. Sub. Nts., 11/1/03 17,975,000
18,199,688
------------------------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., 0%/9.75% Sr. Disc. Nts., 8/15/04(3) 4,675,000
2,314,125
------------------------------------------------------------------------------------------------------------------------------------
Panamsat LP/Panamsat Capital Corp.:
9.75% Sr. Sec. Nts., 8/1/00 3,600,000 3,591,000
0%/11.375% Sr. Sub. Disc. Nts., 8/1/03(3) 33,700,000 22,663,250
------------------------------------------------------------------------------------------------------------------------------------
Rogers Communications, Inc., 10.875% Sr. Debs., 4/15/04 2,200,000 2,249,500
------------------------------------------------------------------------------------------------------------------------------------
USA Mobile Communication, Inc. II, 9.50% Sr. Nts., 2/1/04 9,350,000 8,415,000
------------------------------------------------------------------------------------------------------------------------------------
111,563,413
------------------------------------------------------------------------------------------------------------------------------------
Technology--1.4%
Bell & Howell Holdings Co.:
10.75% Sr. Sub. Nts., Series B, 10/1/02 2,000,000 1,950,000
0%/10.75% Sr. Disc. Debs., Series B, 3/1/05(3) 28,450,000 14,936,250
------------------------------------------------------------------------------------------------------------------------------------
Berg Electronics Holdings Corp., 11.375% Sr. Sub. Debs., 5/1/03 2,100,000
2,147,250
------------------------------------------------------------------------------------------------------------------------------------
Computervision Corp., 10.875% Sr. Nts., 8/15/97 4,650,000 4,336,125
------------------------------------------------------------------------------------------------------------------------------------
Dell Computer Corp., 11% Sr. Nts, 8/15/00 9,500,000 9,951,250
------------------------------------------------------------------------------------------------------------------------------------
Imax Corp., 7% Sr. Nts., 3/1/01(8) 13,200,000 11,550,000
------------------------------------------------------------------------------------------------------------------------------------
International Semi-Tech Microelectronics, Inc.,
0%/11.50% Sr. Sec. Disc. Nts., 8/15/03(3) 24,000,000 11,340,000
------------------------------------------------------------------------------------------------------------------------------------
Unisys Corp.:
9.75% Sr. Nts., 9/15/96 2,000,000 2,026,100
13.50% Credit Sensitive Nts., 7/1/97 4,200,000 4,567,517
8.875% Nts., 7/15/97 1,000,000 977,135
9.75% Sr. Nts., 9/15/16 3,900,000 3,460,263
------------------------------------------------------------------------------------------------------------------------------------
67,241,890
</TABLE>

14 Oppenheimer Strategic Income Fund

<PAGE>

<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
<S> <C> <C>
------------------------------------------------------------------------------------------------------------------------------------
Utilities--2.0%
Beaver Valley Funding Corp., 9% Debs., 6/1/17 $20,400,000 $15,520,666
------------------------------------------------------------------------------------------------------------------------------------
California Energy Co., 0%/10.25% Sr. Disc. Nts., 1/15/04(3) 17,575,000 12,610,063
------------------------------------------------------------------------------------------------------------------------------------
Coastal Corp., 11.75% Sr. Debs., 6/15/06 2,500,000 2,743,750
------------------------------------------------------------------------------------------------------------------------------------
Del Norte Funding Corp.:
9.95% Debs., 1/2/98(2) 5,000,000 2,601,765
11.25% Debs., 1/2/14(2) 3,350,000 1,744,459
------------------------------------------------------------------------------------------------------------------------------------
El Paso Electric Co.:
9.20% Debs., 7/2/97(2) 1,500,000 810,487
10.375% Lease Obligation Debs., 1/15/94(2) 12,750,000 6,895,735
------------------------------------------------------------------------------------------------------------------------------------
El Paso Funding Corp.:
9.375% Debs., 1/1/96(2) 6,000,000 3,241,415
10.75% Debs., 4/1/13(2) 11,900,000 6,485,500
------------------------------------------------------------------------------------------------------------------------------------
First PV Funding Corp., Lease Obligation Bonds:
10.30%, Series 1986A, 1/15/14 16,450,000 15,296,409
10.15%, Series 1986B, 1/15/16 20,100,000 18,484,870
------------------------------------------------------------------------------------------------------------------------------------
Southwest Gas Corp., 9.75% Debs., Series F, 6/15/02 125,000 131,362
------------------------------------------------------------------------------------------------------------------------------------
Subic Power Corp., 9.50% Sr. Sec. Nts., Series A, 12/28/08(5) 9,500,000 8,763,750
------------------------------------------------------------------------------------------------------------------------------------
95,330,231
------------------------------------------------------------------------------------------------------------------------------------
Total Corporate Bonds and Notes (Cost $1,779,466,288) 1,682,537,856
Shares
------------------------------------------------------------------------------------------------------------------------------------
Common Stocks--0.2%
------------------------------------------------------------------------------------------------------------------------------------
Berg Electronics Holdings Corp.(2)(5) 159,220 716,490
------------------------------------------------------------------------------------------------------------------------------------
Capital Gaming, Inc.(6) 82,676 547,729
------------------------------------------------------------------------------------------------------------------------------------
Celcaribe SA(5) 2,048,760 2,504,275
------------------------------------------------------------------------------------------------------------------------------------
ECM Fund, L.P.I.(5) 525 525,000
------------------------------------------------------------------------------------------------------------------------------------
Ladish, Inc. 806,000 806,000
------------------------------------------------------------------------------------------------------------------------------------
New World Communications Group, Inc., Cl. A 44,672 636,576
------------------------------------------------------------------------------------------------------------------------------------
Triangle Wire & Cable, Inc. 232,222 2,264,165
------------------------------------------------------------------------------------------------------------------------------------
Trizec, Ltd. 52,913(1) 414,201
------------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $7,871,447) 8,414,436
------------------------------------------------------------------------------------------------------------------------------------
Preferred Stocks--0.6%
------------------------------------------------------------------------------------------------------------------------------------
Berg Electronic Holdings, Series E(6) 81,248 2,193,696
------------------------------------------------------------------------------------------------------------------------------------
Dell Computer Corp., $7.00 Cv., Series A(5) 23,500 3,724,750
------------------------------------------------------------------------------------------------------------------------------------
First Madison Bank, FSB, 11.50% 95,000 9,975,000
------------------------------------------------------------------------------------------------------------------------------------
K-III Communications Corp.:
Sr. Exch., Series A 80,000 2,060,000
$11.625 Exch., Series B(6)(13) 53,248 5,218,378
------------------------------------------------------------------------------------------------------------------------------------
Prime Retail, Inc., $19.00 Cv., Series B 50,000 1,206,250
------------------------------------------------------------------------------------------------------------------------------------
Unisys Corp., $3.75 Cv., Series A 118,800 4,336,200
------------------------------------------------------------------------------------------------------------------------------------
Total Preferred Stocks (Cost $27,762,014) 28,714,274
Units
------------------------------------------------------------------------------------------------------------------------------------
Rights, Warrants and Certificates--0.0%
------------------------------------------------------------------------------------------------------------------------------------
Ames Department Stores, Inc.:
Excess Cash Flow Payment Ctfs. 37,200 372
Litigation Trust Units 118,975 1,190
</TABLE>

15 Oppenheimer Strategic Income Fund

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

16 Oppenheimer Strategic Income Fund

<PAGE>

See accompanying Notes to Financial Statements.

17 Oppenheimer Strategic Income Fund

18 Oppenheimer Strategic Income Fund

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

19 Oppenheimer Strategic Income Fund

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

20 Oppenheimer Strategic Income Fund

------------------------------------------------------------------------------------------------------------------------------------
Financial Highlights September 30, 1993

See accompanying Notes to Financial Statements.

21 Oppenheimer Strategic Income Fund

<PAGE>

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

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

22 Oppenheimer Strategic Income Fund

<PAGE>

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

-------------------------------------------------------------------------------
1. Significant Accounting Policies (continued)

23 Oppenheimer Strategic Income Fund

<PAGE>

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

-------------------------------------------------------------------------------
2. Shares of Beneficial Interest

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

3. Unrealized Gains And Losses on Investments and Options Written

Option activity for the year ended September 30, 1994 was as follows:

5. Management Fees And Other Transactions With Affiliates

24 Oppenheimer Strategic Income Fund

<PAGE>

-------------------------------------------------------------------------------
5. Management Fees And Other Transactions With Affiliates (continued)

25 Oppenheimer Strategic Income Fund

<PAGE>

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

-------------------------------------------------------------------------------
6. Restricted Securities (continued)

26 Oppenheimer Strategic Income Fund

<PAGE>

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

------------------------------------------------------------------------------------------------------------------------------------
6. Restricted Securities (continued)

Valuation
Per Unit as of
Security Acquisition Date Cost Per Unit September 30, 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pulsar Internacional, S.A. de C.V.:
8% Nts., 12/14/94 12/14/93 $100.00 $100.00
9% Nts., 9/19/95 9/16/94 $99.62 $100.00
------------------------------------------------------------------------------------------------------------------------------------
Rabobank Certificate of Deposit:
Japanese Yen Maximum Rate Nts., 10%, 6/2/95 5/20/94 $100.00 $92.96
British Pound Sterling Maximum Rate Nts., 10%, 6/2/95 5/20/94 $100.00 $91.19
------------------------------------------------------------------------------------------------------------------------------------
Residential Funding Corp. 7.785% Mtg.
Pass Through Certificates, Series 1993-6, Cl. B5, 6/15/23(1) 6/10/93 $82.13 $73.91
------------------------------------------------------------------------------------------------------------------------------------
SKW Real Estate Limited Partnership, 9.05%,
Secured Note, Cl. E, 4/15/04(1) 4/14/94 $99.96 $95.25
------------------------------------------------------------------------------------------------------------------------------------
South Africa (Republic Of) Loan Participation Agreements:
Eskom, 4.907%, 12/23/97 11/18/93 $94.75 $93.50
Eskom, 4.651%, 1/15/98 2/9/94 $95.25 $93.00
Eskom, 4.875%, 4/15/98 11/18/93 $94.75 $90.50
Eskom, 4.75%, 9/15/99 12/17/93 $89.75 $90.50
Eskom, 4.875%, 2/15/00 12/3/93 $90.50 $92.50
------------------------------------------------------------------------------------------------------------------------------------
Structured Product Asset Return Certificates,
9.40%, Series 94-2, 9/1/97(1) 9/7/94 $100.00 $99.69
------------------------------------------------------------------------------------------------------------------------------------
Subic Power Corp., 9.50% Sr. Sec. Nts., Series A, 12/28/08(1) 12/20/93--12/22/93 $100.43
$92.25
------------------------------------------------------------------------------------------------------------------------------------
Terex Corp.:
13% Sr. Nts., 8/1/96(1) 4/5/94--5/13/94 $93.33 $93.00
Rts., Exp. 7/96(1) 4/5/94--6/29/94 $1.53 $1.50
------------------------------------------------------------------------------------------------------------------------------------
Treasure Bay Gaming & Resorts, Inc., Units(1) 11/10/93--9/12/94 $102.96 $30.50
------------------------------------------------------------------------------------------------------------------------------------
Treasure Bay Gaming, 12.25% Fst. Mtg. Nts., 11/15/00(1) 4/21/94--9/12/94 $92.19 $31.50
------------------------------------------------------------------------------------------------------------------------------------
Triangle Wire & Cable, Inc. Wts., Exp. 1/98 1/13/92--1/23/92 $0.00 $0.00
------------------------------------------------------------------------------------------------------------------------------------
Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A, 12/1/11(1) 11/8/93--11/18/93 $100.02
$90.25
------------------------------------------------------------------------------------------------------------------------------------
United Mexican States:
1990 Combined Multi-Year Restructuring Agreement,
Restructured Sov. Loan, 4.28%, 12/23/06 1/11/94 $92.00 $83.25
Bankpesca Restructured Sov. Loan, 6.0625%, 10/26/06 1/13/94 $91.75 $83.25
Banobras Myra Loan Participation Agreement,
Tranche 2, 6.125%, 11/16/06 1/24/94 $91.75 $83.25
------------------------------------------------------------------------------------------------------------------------------------
Myra Old Money Loan Participation Agreements:
5.6875%, 3/20/05 1/24/94 $91.75 $83.25
6.1725%, 3/20/05 1/24/94 $91.75 $83.25
------------------------------------------------------------------------------------------------------------------------------------
New New Money Loan Participation Agreements:
5.1825%, 3/25/05 1/24/94 $91.75 $83.25
Tranche A, 6.0625%, 3/25/05 1/24/94 $91.75 $83.25
------------------------------------------------------------------------------------------------------------------------------------
Petacalco Topolobampo Trust, Sr. Sec. Unsub. Nts.,
8.125%, 12/15/03(1) 5/18/94--8/22/94 $87.92 $85.88
------------------------------------------------------------------------------------------------------------------------------------
Petroleos Mexicanos Gtd. Med.-Term Nts.,
7.60%, 6/15/00(1) 8/3/94--8/5/94 $84.94 $82.88
------------------------------------------------------------------------------------------------------------------------------------
Venezuela (Republic of):
6.75% Debs., 9/20/95(1) 4/6/94--5/19/94 $95.14 $94.88
9.00% Sr. Unsec. Unsub. Nts., 5/27/96(1) 5/3/94--7/15/94 $94.58 $93.63
------------------------------------------------------------------------------------------------------------------------------------
Bonds, Banco Venezuela TCI:
0% Debs., 12/13/98 7/13/93--7/15/93 $72.64 $64.00
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

7. Futures Contracts

At September 30, 1994, the Fund had outstanding futures contracts to sell
debt securities as follows:

27 Oppenheimer Strategic Income Fund

<PAGE>

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

-------------------------------------------------------------------------------
The Board of Trustees and Shareholders of Oppenheimer Strategic Income Fund:

We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppenheimer Strategic Income Fund as of
September 30, 1994, the related statement of operations for the year then ended,
the statements of changes in net assets for the years ended September 30, 1994
and 1993, and the financial highlights for the period October 16, 1989
(commencement of operations) to September 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 September 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
Strategic Income Fund at September 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 LLP

Denver, Colorado
October 21, 1994

28 Oppenheimer Strategic Income Fund

<PAGE>

-------------------------------------------------------------------------------
Federal Income Tax Information (Unaudited)

-------------------------------------------------------------------------------
In early 1995, shareholders will receive information regarding all dividends and
distributions paid to them by the Fund during calendar year 1994. Regulations of
the U.S. Treasury Department require the Fund to report this information to the
Internal Revenue Service.

A distribution of $.104 per share was paid on November 24, 1993, of which
$.010 was designated as a ``capital gain distribution'' for federal income tax
purposes. Whether received in stock or cash, the capital gain distribution
should be treated by shareholders as a gain from the sale of capital assets held
for more than one year (long-term capital gains).

Dividends paid by the Fund during the fiscal year ended September 30, 1994
which are not designated as capital gain distributions should be multiplied by
1.00% to arrive at the net amount eligible for the corporate dividend-received
deduction.

The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because of
the complexity of the federal regulations which may affect your individual tax
return and the many variations in state and local tax regulations, we recommend
that you consult your tax advisor for specific guidance.

29 Oppenheimer Strategic Income Fund

<PAGE>

--------------------------------------------------------------------------------
Oppenheimer Strategic Income Fund
A Series of Oppenheimer Strategic Funds Trust

--------------------------------------------------------------------------------
Officers and Trustees
James C. Swain, Chairman and Chief Executive Officer
Robert G. Avis, Trustee
William A. Baker, Trustee
Charles Conrad, Jr., Trustee
Jon S. Fossel, Trustee and President
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Ned M. Steel, Trustee
Andrew J. Donohue, Vice President
David P. Negri, Vice President
Arthur P. Steinmetz, Vice President
George C. Bowen, Vice President, Secretary, and Treasurer
Robert J. Bishop, Assistant Treasurer
Scott Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
--------------------------------------------------------------------------------
Investment Advisor Oppenheimer Management Corporation
--------------------------------------------------------------------------------
Distributor Oppenheimer Funds Distributor, Inc.
--------------------------------------------------------------------------------
Transfer and Shareholder
Servicing Agent Oppenheimer Shareholder Services

--------------------------------------------------------------------------------
Custodian of Portfolio Securities The Bank of New York

--------------------------------------------------------------------------------
Independent Auditors Deloitte & Touche LLP
--------------------------------------------------------------------------------
Legal Counsel Myer, Swanson & Adams, P.C.

This is a copy of a report to shareholders of Oppenheimer Strategic Income Fund.
This report must be preceded or accompanied by a Prospectus of Oppenheimer
Strategic Income Fund. For material information concerning the Fund, see the
Prospectus.

30 Oppenheimer Strategic Income Fund

<PAGE>

--------------------------------------------------------------------------------
OppenheimerFunds Family

--------------------------------------------------------------------------------
OppenheimerFunds offers over 35 funds designed to fit virtually every investment
goal. Whether you're investing for retirement, your children's education or
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When you invest with OppenheimerFunds, you can feel comfortable knowing
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As an OppenheimerFunds shareholder, you can easily exchange shares of
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Growth Fund3
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--------------------------------------------------------------------------------
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1. The fee is waived for PhoneLink exchanges between existing accounts. Exchange
privileges are subject to change or termination.

2. Formerly Oppenheimer Global Bio-Tech Fund and Oppenheimer Global Environment
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3. Formerly Special Fund.

4. Available only to residents of those states.
OppenheimerFunds are distributed by Oppenheimer Funds Distributor, Inc., Two
World Trade Center, New York, NY 10048-0203.
(C) Copyright 1994 Oppenheimer Management Corporation. All rights reserved.

31 Oppenheimer Strategic Income Fund

<PAGE>

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it, too, as it awarded Oppenheimer Shareholder Services a 1993 Award of
Excellence for consistently demonstrating superior customer service.

"Whatever your needs, we're ready to assist you."

RA275.1194.N

[Logo] OPPENHEIMERFUNDS

Oppenheimer Funds Distributor, Inc.
P.O. Box 5270
Denver, CO 80217-5270

Bulk Rate
U.S. Postage
PAID
Permit No. 469
Denver, CO

Oppenheimer Strategic Income Fund
Semiannual Report March 31, 1995

"We want our money to work hard, but we're concerned about risk."

Appendix photo: man and woman at flower show

[Oppenheimer Funds Logo]

This Fund is for people who want high income
from an investment that's strategically designed to
lower risk.

News

"Over the trailing three-year period, the fund has been one of the
top-performing strategic-income offerings. This fund has a lot to offer one-stop
fixed-income shoppers."
Morningstar Mutual Funds
12/9/94

"The Fund's Class A shares are ranked HHHH among 189 hybrid funds as of
3/31/95.(1)

How Your Fund Is Managed

Oppenheimer Strategic Income Fund seeks high current income by
strategically allocating its assets among three sectors: U.S. government issues,
foreign fixed income securities and higher-yielding, lower-rated corporate
bonds. Strategic investing gives the Fund's managers the flexibility to shift
assets among three fixed income sectors to capitalize on worldwide investment
opportunities. At the same time, allocating the Fund's assets among three
distinct fixed income sectors can provide the diversification necessary to
lower risk.

Performance

Total returns at net asset value for the 6 months ended 3/31/95 for Class A
and B shares were -0.42% and -1.01%, respectively.(2)

Your Fund's average annual total returns at maximum offering price for
Class A shares for the 1- and 5-year periods ended 3/31/95 and since inception
of the Class on 10/16/89 were -4.38%, 9.00% and 8.90%, respectively. For Class B
shares, average annual total returns for the 1-year period ended 3/31/95 and
since inception of the Class on 11/30/92 were -4.96% and 5.06%, respectively.(3)

Outlook

"The outlook for the bond market is more positive today than it has been in
some time, both in terms of income and potential total returns. The Fund's
ability to shift assets strategically among market sectors worldwide remains a
major advantage for shareholders in the current environment. It allows us to
seek high yields, while keeping portfolio risks under careful control."

David Negri and Art Steinmetz, Portfolio Managers
March 31, 1995

All figures assume reinvestment of dividends and capital gains distributions.
Past performance is not indicative of future results. Investment and
principal value on an investment in the Fund will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the original
cost.

1. Source: Morningstar Mutual Funds, 3/31/95. Morningstar, Inc., an
independent mutual fund monitoring service, produces proprietary monthly
rankings of funds in broad investment categories (equity, taxable bond,
tax-exempt bond, or "hybrid") based on risk-adjusted investment return, after
considering sales charges and expenses. Investment return measures a fund's
(or class's) 3-, 5-, and 10-year (depending on the inception of the class or
fund) average annual total returns in excess of 90-day U.S. Treasury bill
returns. Risk measures a fund's (or class's) performance below 90-day U.S.
Treasury bill returns. Risk and returns are combined to produce star
rankings, reflecting performance relative to the average fund in a fund's
category. Five stars is the highest ranking (top 10%), 4 stars is "above
average" and 1 star is the lowest (bottom 1%). The 4-star current ranking is
a weighted average of the 3- and 5-year rankings for the class, which were
both 4 stars, weighted 40%/60%. The Fund was ranked among 189 hybrid funds.
Rankings are subject to change. The Fund's Class A and Class B shares have
the same portfolio.

2. Based on the change in net asset value per share for the periods shown,
without deducting any sales charges. Such performance would have been lower
if sales charges were taken into account.

3. Class A returns show results of hypothetical investments on 4/1/94, 4/1/90,
and 10/16/89 (inception of class), after deducting the current maximum initial
sales charge of 4.75%. Class B returns show results of hypothetical investments
on 4/1/94 and 11/30/92 (inception of class) and the deduction of the applicable
contingent deferred sales charge of 5% (1-year) and 4% (since inception). An
explanation of the different total returns is in the Fund's prospectus.

2 Oppenheimer Strategic Income Fund

Dear OppenheimerFunds Shareholder,

1994 was marked by one of the greatest tests the bond markets faced in more
than six decades. As the U.S. Federal Reserve undertook the most aggressive
moves in its history to raise interest rates, bond prices and bond mutual funds
declined across the board. Changing interest rates are a fact of life and they
affect the short-term performance of all bond markets. That is why we believe
the best measure of any fixed income mutual fund is its performance over the
long term. And we believe the long-term outlook for the bond markets is very
positive.

To see how greatly the U.S. bond market has improved since last fall, we
need look no further than the market's reaction to the Fed's most recent
short-term rate increase in February. While the markets had already anticipated
this move, unlike previous rate increases, long-term interest rates continued to
decline and bonds rallied further. Although the Fed could raise rates again, we
believe that this positive environment will prove more than momentary as a
result of several factors.

First, concerns about the effects of inflation on bond prices are fading
fast. By most indicators, economic growth is slowing to a pace that can be
sustained without reigniting inflation or causing a recession. Second, at
current prices, intermediate and long-term bonds are producing some of the best
inflation-adjusted returns in years. With the actual inflation rate running just
over 3 percent today, many fixed income investors are clearly being rewarded.
Attracted by the strong, real returns intermediate and long-term bonds offer,
investors are returning to bonds in a significant way. This rising demand is
providing solid support for bond prices. Third, as the Fed concludes its
tightening efforts and recent reports suggest that point is near-long-term
interest rates will likely stay within their current range, and could decline
further. Of course, rates could rise later this year if future reports indicate
that the economy isn't slowing as quickly as it seems to be today; however, we
believe that over the longer term, the downward trend of rates will continue.

Two uncertainties affecting the fixed income markets are foreign investors'
attitudes toward U.S. debt and the weakness of the U.S. dollar abroad relative
to other major currencies. But investors' attitudes overseas and the dollar's
decline, in our view, should prove temporary. Both have been driven by the
government's moves to support the Mexican peso, a widening trade deficit, and
Congress's apparent inability to limit the Federal budget deficit.

We believe the trade deficit will narrow with increasing U.S. exports as
European economies come out of recession and emerging world markets stabilize.
Additionally, the need to support the peso has begun to decline as Mexico's
tough domestic economic policy has gained credibility. Finally, we are confident
that Congress will be able to get the budget deficit issue dealt with because
Americans are demanding it.

Of course, no one can predict the future with perfect clarity. The bond
markets are always subject to fluctuations and, as we saw in 1994, the shifts
can sometimes be sharp. Overall, however, we believe the outlook for the bond
markets today appears positive.

Your portfolio manager discusses the outlook for your Fund on the following
pages. We appreciate your trust, and we'll continue to do our best to help you
meet your long-term investment objectives.

James C. Swain Jon S. Fossel
April 24, 1995

James C. Swain
Chairman
Oppenheimer
Strategic Income Fund

Jon S. Fossel
President
Oppenheimer
Strategic Income Fund

3 Oppenheimer Strategic Income Fund

Q + A

An interview with your Fund's managers.

Q What's your outlook for the Fund?

Investments in emerging markets historically have played an important role
in the Fund's portfolio. Did the devaluation of the peso affect your strategy?
It certainly did with regard to Mexico itself, where we have drastically reduced
our positions. And it had a short-term negative impact on performance.

In other emerging markets, however, we think the perception of risk has been
exaggerated. We've reduced our emerging-market holdings as a defensive measure,
but for the most part we've redirected our investments among emerging markets,
to countries like Morocco and Poland, with relatively stronger markets and
economies, and where attractive yields should compensate for perceived risks. We
also continue to maintain positions in several other markets that were not
significantly affected by the turmoil in Mexico. (1)

These markets don't, of course, develop in straight lines. Foreign
investments are always subject to adverse market changes as a result of currency
fluctuations, and sometimes the shifts can be sharp. But over time, we expect
that the long-term returns will more than compensate for temporary risks,
especially when these investments are part of a diversified portfolio.

Have changes in interest rates and the economy affected your allocations
among the U.S. government and high yield corporate sectors?

While where we allocate the Fund's assets among fixed income sectors is
critical to producing good returns, how we allocate assets within each sector is
just as important to meeting the Fund's objectives. For example, last year, when
interest rates were rising and the economy was gaining strength, our strategy
was to decrease the impact of interest-rate risk by shortening Treasury
maturities and investing in corporate bonds with stronger prospects than their
credit ratings suggested.

That strategy worked well for us, but today, as the economic expansion and
interest rates approach what we believe will be their peak, we're revers-

1. The Fund's portfolio is subject to change.

4 Oppenheimer Strategic Income Fund

ing that strategy. With interest rates poised to fall and the economy
slowing, we're extending Treasury maturities and upgrading the quality of the
high yield portion of the portfolio.

Have you made any changes in the types of bonds you're buying in the high
yield sector of the portfolio?

While we think the expansion phase of the economic cycle is drawing to a
close, cyclical companies continue to do well, and we are still focusing on
industrial companies whose earnings benefit in the later stages of the economic
cycle.

At the same time, however, there's little doubt the Fed's efforts to
control inflation are slowing the economy. For high yield issuers, that means
earnings and cash flow may come under pressure, and we've been managing the
Fund's high yield sector more conservatively, focusing on issuers' financial
strength and orienting the portfolio toward relatively higher quality. Of
course, investments in high yield bonds are subject to greater risk that the
issuer will default in principal or interest payments. Our focus on quality,
however, helps reduce that risk.

Has the recent weakness of the dollar affected the Fund?

It has to some extent. The dollar's decline was driven largely by the U.S.
government's attempt to support Mexico by buying peso-denominated securities. As
our government pumped U.S. dollars into the system, and as the supply of dollars
rose, their value fell. But as investors sought stability, other markets and
currencies, notably Germany and the mark, benefitted. Currency declines
affecting one sector of the Fund were largely offset by currency gains in
Europe.

What's your outlook for the Fund?

The Fund's flexibility and diversification should continue to help us
manage risk and seek solid returns. And now that the prospects for the bond
markets in general are positive, we believe that the Fund is positioned for good
performance in 1995.

Facing page
Top left: Art Steinmetz,
Portfolio Manager

Top right: The trading desk

Bottom: Eva Zeff, Assistant VP
Fixed Income Investments
Portfolio Management Team

This page
Top: Ashwin Vasan, VP
Fixed Income Investments
Portfolio Management Team

Bottom: David Negri,
Portfolio Manager

A Flexibility and diversification should continue to help us manage risk
and seek solid returns.

5 Oppenheimer Strategic Income Fund

Statement of Investments March 31, 1995 (Unaudited)

<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
========================================================
========================================================
====================

<S> <C> <C> <C>
Certificates of
Deposit--1.6%
------------------------------------------------------------------------------------------------------------------------------------
Citibank CD:
10.50%, 7/14/95(2) ARA $ 7,400,000 $ 7,401,821
-----------------------------------------------------------------------------------------------------------
10.75%, 11/20/95--11/21/95(2) CLP 2,735,851,960 6,779,462
-----------------------------------------------------------------------------------------------------------
13%, 11/13/95(2) CLP 970,588,931 2,405,127
-----------------------------------------------------------------------------------------------------------
15%, 8/28/95(2) CLP 1,166,000,000 2,889,357
-----------------------------------------------------------------------------------------------------------
16%, 5/3/95--8/17/95(2) CLP 9,007,661,571 22,321,053
-----------------------------------------------------------------------------------------------------------
16.25%, 5/30/95(2) CLP 1,988,563,369 4,927,674
-----------------------------------------------------------------------------------------------------------
16.50%, 7/12/95(2) CLP 2,558,400,000 6,339,733
-----------------------------------------------------------------------------------------------------------
Indonesia (Republic of) CD, Bank Negara, Zero Coupon, 4/24/95 IDR 56,500,000,000
24,986,983
---------------
Total Certificates of Deposit (Cost $77,911,253) 78,051,210

========================================================
========================================================
====================
Mortgage-Backed Obligations--11.8%
------------------------------------------------------------------------------------------------------------------------------------
Government Agency--8.9%
------------------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/
Sponsored--6.2% Federal Home Loan Mortgage Corp., Series 176, Cl. F, 8.95%, 3/15/20 16,988,000
17,290,726
-----------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, 10.50%, 11/25/20 38,400,000
43,535,613
Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates,
Trust 1993-87, Cl. S, Inverse Floater, 4.875%, 6/25/23(3) 28,806,289
14,457,157
Interest-Only Stripped Mtg.-Backed Security:
Trust 221, Cl. 2, 7.50%, 5/25/23(4) 179,107,604 63,835,070
Trust 222, Cl. 2, 7%, 6/25/23(4) 97,830,154 34,821,420
Trust 240, Cl. 2, 7%, 9/25/23(4) 189,670,144 68,696,156
Trust 258, Cl. 2, 7%, 3/25/24(4) 34,471,293 12,097,270
Principal-Only Stripped Mtg.-Backed Security, Series 1993-253,
Cl. G, Zero Coupon, 11/25/23(5) 7,802,220 3,966,941
Series 1994-83, Cl. Z, 7.50%, 6/25/24 33,168,748 28,013,994
---------------
286,714,347

------------------------------------------------------------------------------------------------------------------------------------
GNMA/Guaranteed--2.7% Government National Mortgage Assn., 7.50%, 4/1/25--6/1/25(6) 123,500,000
126,085,781
------------------------------------------------------------------------------------------------------------------------------------
Private--2.9%
------------------------------------------------------------------------------------------------------------------------------------
Agricultural--0.2% Prudential Agricultural Credit, Inc., Farmer Mac Agricultural
Real Estate Trust Sr. Sub. Mtg. Pass-Through Certificates, Series 1992-2:
Cl. B2, 8.961%, 1/15/03(7)(8) 5,720,249 4,342,921
Cl. B3, 9.294%, 4/15/09(7)(8) 5,635,220 4,205,371
---------------
8,548,292

------------------------------------------------------------------------------------------------------------------------------------
Commercial--1.1% Citicorp Mortgage Securities, Inc., Sub. Bonds, Series 1993-5:
Cl. B3, 7%, 4/25/23 1,653,341 1,142,356
Cl. B4, 7%, 4/25/23(8) 1,594,295 223,201
-----------------------------------------------------------------------------------------------------------
CS First Boston Mortgage Securities Corp., Mtg. Pass-Through
Certificates, Cl. 1E-1, 11%, 2/15/14(9) 12,000,000 11,637,588
-----------------------------------------------------------------------------------------------------------
FDIC Trust, Gtd. Real Estate Mtg. Investment Conduit Pass-Through
Certificates, Series 1994-C1:
Cl. 2-D, 8.70%, 9/25/25(8) 2,500,000 2,452,344
Cl. 2-E, 8.70%, 9/25/25(8) 2,500,000 2,366,406
Cl. 2-G, 8.70%, 9/25/25 4,870,000 4,443,875

6 Oppenheimer Strategic Income Fund
<PAGE>
Face Market Value
Amount(1) See Note 1
------------------------------------------------------------------------------------------------------------------------------------
Commercial (continued) Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates:
Series 1992-CHF, Cl. C, 8.25%, 12/25/20 $ 1,740,537 $ 1,713,191
Series 1992-CHF, Cl. D, 8.25%, 12/25/20 9,890,259 9,609,005
Series 1993-C1, Cl. B, 8.75%, 5/25/24 7,572,000 7,564,901
Series 1993-C1, Cl. D, 9.45%, 5/25/24 6,370,007 6,332,185
Series 1993-C2, Cl. E, 8.50%, 3/25/25 137,688 131,880
Series 1994-C2, Cl. D, 8%, 4/25/25 1,988,211 1,871,090
Series 1994-C1, Cl. E, 8%, 6/25/26 4,875,808 3,728,470
---------------
53,216,492

------------------------------------------------------------------------------------------------------------------------------------
Multi-Family--1.0% Countrywide Funding Corp., Series 1993-12, Cl. B1, 6.625%, 2/25/24 3,500,000
2,855,781
-----------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates:
Series 1991-M6, Cl. B4, 6.45%, 6/25/21(7) 10,573,125 10,199,762
Series 1992-M4, Cl. B, 7.20%, 9/25/21 4,468,291 4,369,850
Series 1994-C1, Cl. C, 8%, 6/25/26 8,000,000 7,658,750
Series 1994-C2, Cl. E, 8%, 4/25/25 19,595,191 16,407,911
Series 1994-C2, Cl. G, 8%, 4/25/25 3,917,480 2,916,437
---------------
44,408,491

------------------------------------------------------------------------------------------------------------------------------------
Residential--0.6% Chase Mortgage Finance Corp.:
Nts., 6.75%, 2/25/25(9) 706,397 472,845
Nts., 6.75%, 3/25/25(9) 844,890 565,549
Sub. Mtg. Pass-Through Certificates, Series 1994-1:
Cl. B-10, 6.601%, 3/25/25(9) 1,075,853 739,986
Cl. B-8, 6.601%, 3/25/25(9) 2,151,707 1,500,816
Cl. B-9, 6.601%, 3/25/25(9) 2,151,707 1,492,747
-----------------------------------------------------------------------------------------------------------
CMC Security Corp. III, Collateralized Mtg. Obligation,
Series 1994-E, Cl. E-B3, 6.50%, 3/25/24(9) 4,932,128 3,160,030
-----------------------------------------------------------------------------------------------------------
GE Capital Mortgage Services, Inc., Sub. Bonds:
Series 1994-10, Cl. B3, 6.50%, 3/25/24(9) 4,738,823 3,145,394
Series 1994-11, Cl. B3, 6.50%, 4/25/24(9) 3,151,273 2,101,006
Series 1994-7, Cl. B3, 6%, 2/25/09 1,552,394 1,120,636
-----------------------------------------------------------------------------------------------------------
Prudential Home Mortgage Securities Corp., Sub. Fixed Rate Mtg.
Securities, Real Estate Mtg. Investment Conduit Pass-Through
Certificates, Series 1995-A, Cl. B2, 8.684%, 3/28/25(9) 5,437,000 5,340,153
-----------------------------------------------------------------------------------------------------------
SKW Real Estate L.P., Sec. Nt.,
Cl. D, 9.05%, 4/15/04(7)(9) 9,500,000 9,378,281
---------------
29,017,443
---------------
Total Mortgage-Backed Obligations (Cost $547,015,912) 547,990,846

========================================================
========================================================
====================
U.S. Government Obligations--31.5%
------------------------------------------------------------------------------------------------------------------------------------
Treasury--31.5% U.S. Treasury Bonds:
7.125%, 2/15/23 100,000,000 95,656,189
7.50%, 11/15/24 21,000,000 21,072,175
7.875%, 2/15/21(10)(11) 222,500,000 229,939,708
8.125%, 8/15/19--8/15/21 134,157,000 142,654,573
8.75%, 8/15/00 143,500,000 153,948,506
10.375%, 5/15/95 122,500,000 123,112,500
11.50%, 11/15/95 51,150,000 52,748,438
11.625%, 11/15/02 138,279,000 173,885,843
13.375%, 8/15/01 72,000,000 94,612,456

7 Oppenheimer Strategic Income Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)

Face Market Value
Amount(1) See Note 1
------------------------------------------------------------------------------------------------------------------------------------
Treasury (continued) U.S. Treasury Nts.:
8.875%, 11/15/97 $ 128,719,000 $ 134,752,703
9.375%, 4/15/96 67,100,000 68,966,249
10.50%, 8/15/95 101,695,000 103,283,984
11.25%, 5/15/95(10)(11) 68,000,000 68,403,708
---------------
Total U.S. Government Obligations (Cost $1,530,543,776)
1,463,037,032

========================================================
========================================================
====================
Foreign Government Obligations--19.5%
------------------------------------------------------------------------------------------------------------------------------------
Argentina--0.9% Argentina (Republic of):
Bonos de Consolidacion de Deudas:
Bonds, Series I, 3.032%, 4/1/01(7)(12) ARA 298,090 100,450
Bonds, Series I, 6.062%, 4/1/01(7)(12) 8,265,641 4,350,745
Bonds, Series I, 6.062%, 4/1/07(7)(12) 873,796 328,586
Bonos del Tesoro:
Bonds, Series II, 6.188%, 9/1/97(7) 16,486,500 13,945,485
Bonds, Series I, 6.188%, 5/31/96(7) 4,578,000 4,237,108
Par Bonds, 4.25%, 3/31/23(13) 35,000,000 14,284,375
---------------
37,246,749

------------------------------------------------------------------------------------------------------------------------------------
Australia--2.7% First Australia National Mortgage Acceptance Corp. Ltd. Bonds,
Series 17, 15%, 7/15/02 AUD 2,370,000 1,907,099
-----------------------------------------------------------------------------------------------------------
New South Wales Treasury Corp. Gtd.:
Bonds, 12%, 12/1/01 AUD 22,803,000 18,359,013
Exch. Bonds, 12%, 12/1/01 AUD 38,250,000 30,802,061
-----------------------------------------------------------------------------------------------------------
Queensland Treasury Corp. Gtd. Nts., 8%, 8/14/01 AUD 78,780,000
52,425,377
-----------------------------------------------------------------------------------------------------------
Western Australia Treasury Corp. Gtd. Bonds, 12%, 8/1/01 AUD 30,010,000
24,079,143
---------------
127,572,693

------------------------------------------------------------------------------------------------------------------------------------
Brazil--0.7% Brazil (Federal Republic of):
Interest Due and Unpaid Bonds, 7.813%, 1/1/01(7) 1,309,500 960,641
Nts., Banco Estado Minas Gerais:
10%, 1/15/96 14,870,000 13,717,575
7.875%, 2/10/99(9) 4,000,000 2,540,000
8.25%, 2/10/00 9,000,000 5,535,000
8.25%, 2/10/00(9) 2,000,000 1,362,500
-----------------------------------------------------------------------------------------------------------
Petroquimica do Nordeste Sr. Unsec. Unsub. Nts., 9.50%, 10/19/01 11,850,000
10,428,000
---------------
34,543,716

------------------------------------------------------------------------------------------------------------------------------------
Colombia--0.4% Colombia (Republic of) 1989--1990 Integrated Loan Facility Bonds:
6.75%, 7/1/01(7)(8) 16,131,048 13,953,358
7.937%, 10/26/03(7)(8) 8,089,264 6,835,428
---------------
20,788,786

------------------------------------------------------------------------------------------------------------------------------------
Denmark--0.9% Denmark (Kingdom of) Bonds, 9%, 11/15/00 DKK 215,000,000
40,265,801
------------------------------------------------------------------------------------------------------------------------------------
Ecuador--0.3% Ecuador (Republic of) Bonds, 7.25%, 2/28/25(7) 36,500,000
16,242,500
------------------------------------------------------------------------------------------------------------------------------------
Germany--0.9% Germany (Republic of) Gtd. Federal Government Debs., 9%, 10/20/00 DEM 52,000,000
41,892,828
------------------------------------------------------------------------------------------------------------------------------------
Great Britain--3.4% United Kingdom Treasury Nts.:
12%, 11/20/98 GBP 43,743,000 79,174,995
13%, 7/14/00 GBP 34,090,000 65,832,758
9%, 3/3/00 GBP 7,800,000 12,986,523
---------------
157,994,276

8 Oppenheimer Strategic Income Fund
<PAGE>
Face Market Value
Amount(1) See Note 1
------------------------------------------------------------------------------------------------------------------------------------
Mexico--1.6% Banco Nacional de Comercio Exterior SNC International Finance
BV Gtd. Matador Bonds:
13%, 1/29/97 ESP 1,250,000,000 $ 9,461,801
12.65%, 6/21/98 ESP 3,028,000,000 19,886,260
-----------------------------------------------------------------------------------------------------------
Bonos de la Tesoreria de la Federacion, Zero Coupon:
4/20/95 1,313,000 1,291,766
5/4/95 1,050,000 1,020,408
-----------------------------------------------------------------------------------------------------------
United Mexican States:
Banco Nacional de Comercio Exterior SNC International Finance
BV Gtd. Matador Bonds, 12.25%, 12/3/98 GBP 8,500,000
12,858,357
Combined Facility 2, Loan Participation Agreement, Tranche A,
7.625%, 3/20/99(7)(8) 1,083,614 612,242
Gtd. Matador Bonds, Bankpesca Restructured Sov. Loan,
7.562%, 10/26/06(7)(8) 5,237,680 2,789,065
Nacional Financiera SNC Nts., 13.60%, 4/2/98 ESP 1,395,000,000
9,881,245
Petacalco Topolobampo Trust Sr. Sec. Unsub. Nts.:
8.125%, 12/15/03 10,975,000 5,432,625
8.125%, 12/15/03(9) 1,950,000 965,250
Petroleos Mexicanos Gtd. Medium-Term Nts., 7.60%, 6/15/00 14,310,000
8,729,100
---------------
72,928,119

------------------------------------------------------------------------------------------------------------------------------------
Morocco--1.6% Morocco (Kingdom of) Loan Participation Agreement:
Tranche A, 7.375%, 1/1/09(7) 88,450,000 51,522,125
Tranche B, 7.375%, 1/1/04(7) 33,800,000 21,336,250
---------------
72,858,375

------------------------------------------------------------------------------------------------------------------------------------
New Zealand--2.9% International Bank for Reconstruction and Development Bonds,
12.50%, 7/25/97 NZD 65,320,000 46,402,331
-----------------------------------------------------------------------------------------------------------
New Zealand (Republic of) Bonds:
10%, 7/15/97 NZD 108,531,000 73,358,277
8%, 11/15/95 NZD 22,700,000 14,744,339
---------------
134,504,947

------------------------------------------------------------------------------------------------------------------------------------
Poland--0.5% Poland (Republic of):
Disc. Bonds, 6.812%, 10/27/24(7) 10,500,000 6,772,500
Past Due Interest Bonds, 3.25%, 10/27/14(13) 39,250,000 15,650,938
---------------
22,423,438

------------------------------------------------------------------------------------------------------------------------------------
South Africa--0.6% South Africa (Republic of) Loan Participation Agreements, Eskom:
7.375%, 4/15/98(7)(8) 2,421,839 2,246,256
7.875%, 2/9/00(7)(8) 9,590,909 9,087,387
7.875%, 9/15/99(7)(8) 7,721,056 7,180,582
8.625%, 1/5/98(7)(8) 7,500,000 7,087,500
---------------
25,601,725

------------------------------------------------------------------------------------------------------------------------------------
Spain--1.2% Spain (Kingdom of) Gtd. Bonds, Bonos y Obligacion del Estado,
10.25%, 11/30/98 ESP 7,319,000,000 55,211,953

------------------------------------------------------------------------------------------------------------------------------------
Supranational--0.0% Corporacion Andina de Fomento Sr. Unsec. Debs.:
6.625%, 10/14/98 1,250,000 1,143,750
7.25%, 4/30/98 1,030,000 952,750
---------------
2,096,500
9 Oppenheimer Strategic Income Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)

Face Market Value
Amount(1) See Note 1
------------------------------------------------------------------------------------------------------------------------------------
Venezuela--0.9% Bariven SA Sr. Nts., Gtd. by Petroleos de Venezuela, 9.50%, 12/10/96 $ 500,000
$483,125
-----------------------------------------------------------------------------------------------------------
Venezuela (Republic of):
Debs., 6.75%, 9/20/95 1,200,000 1,176,000
Debs., 8.313%, 12/29/95(7) 5,365,714 4,976,700
Debs., 9%, 5/27/96 23,025,000 21,758,623
Debs., 9.125%, 3/11/96 7,500,000 7,059,375
Debs., Banco Venezuela TCI, Zero Coupon, 12/13/98(8) 7,908,048
4,942,530
Unsub. Nts., 8.237%, 9/20/95(7) 2,500,000 2,418,750
---------------
42,815,103
---------------
Total Foreign Government Obligations (Cost $926,488,025) 904,987,509

========================================================
========================================================
====================
Corporate Bonds and Notes--33.5%
------------------------------------------------------------------------------------------------------------------------------------
Basic Industry--4.1%
------------------------------------------------------------------------------------------------------------------------------------
Chemicals--1.0% Carbide/Graphite Group, Inc., 11.50% Sr. Nts., 9/1/03 13,000,000
13,585,000
-----------------------------------------------------------------------------------------------------------
Georgia Gulf Corp., 15% Sr. Sub. Nts., 4/15/00 500,000 500,000
-----------------------------------------------------------------------------------------------------------
NL Industries, Inc.:
0%/13% Sr. Sec. Disc. Nts., 10/15/05(14) 13,450,000 8,809,750
11.75% Sr. Sec. Nts., 10/15/03 3,500,000 3,596,250
-----------------------------------------------------------------------------------------------------------
Polymer Group, Inc., 12.25% Sr. Nts., 7/15/02(9) 3,900,000 3,783,000
-----------------------------------------------------------------------------------------------------------
Quantum Chemical Corp., 10.375% Fst. Mtg. Nts., 6/1/03 3,500,000
3,868,805
-----------------------------------------------------------------------------------------------------------
Sherritt, Inc., 11% Debs., 3/31/04 CAD 10,000,000 6,879,344
-----------------------------------------------------------------------------------------------------------
UCAR Global Enterprises, Inc., 12% Sr. Sub. Nts., 1/15/05(9) 4,000,000
4,215,000
---------------
45,237,149

------------------------------------------------------------------------------------------------------------------------------------
Containers--0.3% Calmar Spraying Systems, Inc., 14% Sr. Sub. Disc. Nts., 2/15/99 3,850,000
3,893,313
-----------------------------------------------------------------------------------------------------------
Calmar, Inc., 12% Sr. Sec. Nts., 12/15/97 7,000,000 7,105,000
-----------------------------------------------------------------------------------------------------------
Owens-Illinois, Inc.:
10% Sr. Sub. Nts., 8/1/02 1,150,000 1,155,750
11% Sr. Debs., 12/1/03 750,000 804,375
---------------
12,958,438

------------------------------------------------------------------------------------------------------------------------------------
Metals/Mining--0.5% Horsehead Industries, Inc.:
14% Sub. Nts., 6/1/99 3,050,000 3,126,250
15.75% Sr. Sub. Nts., 6/1/97 4,566,000 4,725,810
-----------------------------------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp.:
12.75% Sr. Sub. Nts., 2/1/03 2,800,000 2,898,000
9.875% Sr. Nts., 2/15/02 14,775,000 13,888,500
---------------
24,638,560

------------------------------------------------------------------------------------------------------------------------------------
Paper--1.9% Domtar, Inc.:
10.85% Debs., 8/15/17 CAD 1,700,000 1,146,765
11.25% Debs., 9/15/17 1,325,000 1,393,734
11.75% Sr. Nts., 3/15/99 500,000 537,500
12% Nts., 4/15/01 1,050,000 1,160,250
-----------------------------------------------------------------------------------------------------------
Gaylord Container Corp.:
0%/12.75% Sr. Sub. Disc. Debs., 5/15/05(14) 9,250,000 8,810,625
11.50% Sr. Nts., 5/15/01 8,250,000 8,703,750
-----------------------------------------------------------------------------------------------------------
Malette, Inc., 12.25% Sr. Sec. Nts., 7/15/04 3,350,000 3,500,750

10 Oppenheimer Strategic Income Fund
<PAGE>
Face Market Value
Amount(1) See Note 1
------------------------------------------------------------------------------------------------------------------------------------
Paper (continued) Noranda Forest, Inc., 11% Debs., 7/15/98 CAD $ 2,000,000 $
1,511,317
-----------------------------------------------------------------------------------------------------------
PT Inti Indorayon Utama, 9.125% Sr. Nts., 10/15/00 12,040,000
10,173,800
-----------------------------------------------------------------------------------------------------------
Rainy River Forest Products, 10.75% Sr. Sec. Nts., 10/15/01 1,500,000
1,541,250
-----------------------------------------------------------------------------------------------------------
Repap Wisconsin, Inc., 9.25% Fst. Priority Sr. Sec. Nts., 2/1/02 1,000,000
945,000
-----------------------------------------------------------------------------------------------------------
Riverwood International Corp.:
10.375% Sr. Sub. Nts., 6/30/04 3,600,000 3,699,000
10.75% Sr. Nts., 6/15/00 9,790,000 10,255,025
11.25% Sr. Sub. Nts., 6/15/02 3,904,000 4,128,480
-----------------------------------------------------------------------------------------------------------
Scotia Pacific Holding Co., 7.95% Timber Collateralized Nts., 7/20/15 2,586,007
2,448,835
-----------------------------------------------------------------------------------------------------------
SD Warren Co., 12% Sr. Sub. Nts., 12/15/04(9) 2,000,000
2,130,000
-----------------------------------------------------------------------------------------------------------
Stone Consolidated Corp., 10.25% Sr. Sec. Nts., 12/15/00 4,800,000
4,878,000
-----------------------------------------------------------------------------------------------------------
Stone Container Corp.:
10.75% Fst. Mtg. Nts., 10/1/02 4,100,000 4,253,750
10.75% Sr. Sub. Nts., 6/15/97 900,000 931,500
9.875% Sr. Nts., 2/1/01 14,900,000 14,527,500
---------------
86,676,831

------------------------------------------------------------------------------------------------------------------------------------
Steel--0.4% AK Steel Corp., 10.75% Gtd. Sr. Nts., 4/1/04 3,000,000
3,030,000
-----------------------------------------------------------------------------------------------------------
Jorgensen (Earle M.) Co., 10.75% Sr. Nts., 3/1/00 5,975,000 5,736,000
-----------------------------------------------------------------------------------------------------------
Sheffield Steel Corp., 12% Sec. Fst. Mtg., 11/1/01 4,000,000 3,820,000
-----------------------------------------------------------------------------------------------------------
Wheel-Pittsburgh Corp., 9.375% Sr. Nts., 11/15/03 7,750,000 6,800,625
---------------
19,386,625

------------------------------------------------------------------------------------------------------------------------------------
Consumer Related--7.8%
------------------------------------------------------------------------------------------------------------------------------------
Consumer Products--1.8% Amstar Corp., 11.375% Sr. Sub. Nts., 2/15/97 10,886,000
10,886,000
-----------------------------------------------------------------------------------------------------------
Harman International Industries, Inc., 12% Sr. Sub. Nts., 8/1/02 24,750,000
27,101,250
-----------------------------------------------------------------------------------------------------------
International Semi-Tech Microelectronics, Inc., 0%/11.50%
Sr. Sec. Disc. Nts., 8/15/03(14) 19,560,000 8,704,200
-----------------------------------------------------------------------------------------------------------
Pace Industries, Inc., 10.625% Sr. Nts., Series B, 12/1/02 12,300,000
11,377,500
-----------------------------------------------------------------------------------------------------------
Revlon Consumer Products Corp., 9.375% Sr. Nts., 4/1/01 3,490,000
3,289,325
-----------------------------------------------------------------------------------------------------------
Revlon Worldwide Corp., Zero Coupon Sr. Sec. Disc. Nts., 3/15/98 4,000,000
2,390,000
-----------------------------------------------------------------------------------------------------------
Synthetic Industries, Inc., 12.75% Sr. Sub. Debs., 12/1/02 13,925,000
13,576,875
-----------------------------------------------------------------------------------------------------------
Williams (J. B.) Holdings, Inc., 12% Sr. Nts., 3/1/04 5,000,000 4,812,500
---------------
82,137,650

------------------------------------------------------------------------------------------------------------------------------------
Food/Beverages/
Tobacco--1.7% Consolidated Cigar Corp., 10.50% Sr. Sub. Nts., 3/1/03 4,400,000
4,180,000
-----------------------------------------------------------------------------------------------------------
Di Giorgio Corp., 12% Sr. Nts., 2/15/03 8,680,000 7,421,400
-----------------------------------------------------------------------------------------------------------
Dr. Pepper Bottling Co. of Texas, 10.25% Sr. Nts., 2/15/00 3,000,000
3,045,000
-----------------------------------------------------------------------------------------------------------
Dr. Pepper Bottling Holdings, Inc., 0%/11.625% Sr. Disc. Nts., 2/15/03(14) 5,300,000
3,736,500
-----------------------------------------------------------------------------------------------------------
Dr. Pepper/Seven-Up Cos., Inc., 0%/11.50% Sr. Sub. Disc. Nts., 11/1/02(14) 4,118,000
3,582,660
-----------------------------------------------------------------------------------------------------------
Heileman Acquisition Corp., 9.625% Sr. Sub. Nts., 1/31/04 8,050,000
5,554,500
-----------------------------------------------------------------------------------------------------------
Pulsar Internacional, SA de C.V., 9% Nts., 9/19/95(8) 14,750,000
14,012,500
-----------------------------------------------------------------------------------------------------------
RJR Nabisco, Inc., 8.625% Medium-Term Nts., 12/1/02 20,000,000
19,653,638
-----------------------------------------------------------------------------------------------------------
Royal Crown Corp., 9.75% Sr. Sec. Nts., 8/1/00 13,650,000
12,831,000
-----------------------------------------------------------------------------------------------------------
Specialty Foods Acquisition Corp.:
10.25% Sr. Nts., 8/15/01 5,000,000 4,900,000
11.25% Sr. Sub. Nts., 8/15/03 1,500,000 1,462,500
---------------
80,379,698
11 Oppenheimer Strategic Income Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
Face Market Value
Amount(1) See Note 1
------------------------------------------------------------------------------------------------------------------------------------
Healthcare--1.7% Abbey Healthcare Group, Inc., 9.50% Sr. Sub. Nts., 11/1/02 $ 3,850,000 $
3,984,750
-----------------------------------------------------------------------------------------------------------
AmeriSource Corp., 11.25% Sr. Debs., 7/15/05(12) 14,301,696
14,896,117
-----------------------------------------------------------------------------------------------------------
Capstone Capital Corp., 10.50% Cv. Sub. Debs., 4/1/02 1,000,000
1,007,500
-----------------------------------------------------------------------------------------------------------
Charter Medical Corp., 11.25% Sr. Sub. Nts., 4/15/04 3,900,000
4,114,500
-----------------------------------------------------------------------------------------------------------
Healthsouth Rehabilitation Corp., 9.50% Sr. Sub. Nts., 4/1/01 3,200,000
3,208,000
-----------------------------------------------------------------------------------------------------------
Icon Health & Fitness, Inc., 13% Sr. Sub. Nts., 7/15/02(9) 10,900,000
11,608,500
-----------------------------------------------------------------------------------------------------------
Mediq/PRN Life Support Services, Inc., 11.125% Sr. Sec. Nts., 7/1/99 3,000,000
2,767,500
-----------------------------------------------------------------------------------------------------------
Multicare Cos., Inc. (The), 12.50% Sr. Sub. Nts., 7/1/02 6,290,000
7,107,700
-----------------------------------------------------------------------------------------------------------
National Medical Enterprises, Inc., 10.125% Sr. Sub. Nts., 3/1/05 13,900,000
14,351,750
-----------------------------------------------------------------------------------------------------------
Quorum Health Group, Inc., 11.875% Sr. Sub. Nts., 12/15/02 3,750,000
4,087,500
-----------------------------------------------------------------------------------------------------------
Surgical Health Corp., 11.50% Sr. Sub. Nts., 7/15/04 3,350,000 3,618,000
-----------------------------------------------------------------------------------------------------------
Total Renal Care, Inc., Units 9,700,000 8,487,500
---------------
79,239,317

------------------------------------------------------------------------------------------------------------------------------------
Hotel/Gaming--1.4% Arizona Charlie's, Inc., 12% Fst. Mtg. Nts., Series A, 11/15/00(8) 5,775,000
4,706,625
-----------------------------------------------------------------------------------------------------------
Aztar Corp., 13.75% Sr. Sub. Nts., 10/1/04 5,575,000 6,034,938
-----------------------------------------------------------------------------------------------------------
Capital Gaming International, Inc. Promissory Nts. 31,000 --
-----------------------------------------------------------------------------------------------------------
Capitol Queen & Casino, Inc., 12% Fst. Mtg. Nts., Series A, 11/15/00(8) 2,100,000
1,921,500
-----------------------------------------------------------------------------------------------------------
Casino Magic Finance Corp., 11.50% Fst. Mtg. Nts., 10/15/01 4,150,000
3,174,750
-----------------------------------------------------------------------------------------------------------
GB Property Funding Corp., 10.875% Fst. Mtg. Nts., 1/15/04 4,400,000
3,773,000
-----------------------------------------------------------------------------------------------------------
Hollywood Casino Corp.:
13.50% Fst. Mtg. Nts., 9/30/98 3,500,000 3,447,500
14% Sr. Sec. Nts., 4/1/98 3,900,000 4,173,000
-----------------------------------------------------------------------------------------------------------
Host Marriott Hospitality, Inc., 11% Sr. Nts., Series L, 5/1/07 3,880,000 3,938,200
-----------------------------------------------------------------------------------------------------------
Maritime Group Ltd., Units(9)(15) 3,042,347 1,916,679
-----------------------------------------------------------------------------------------------------------
MGM Grand Hotel Finance Corp.:
11.75% Fst. Mtg. Nts., Series A, 5/1/99 5,000,000 5,362,500
12% Fst. Mtg. Nts., 5/1/02 625,000 690,625
-----------------------------------------------------------------------------------------------------------
Pioneer Finance Corp., 13.50% Gtd. Fst. Mtg. Bonds, 12/1/98 18,205,000
14,290,924
-----------------------------------------------------------------------------------------------------------
Showboat, Inc., 13% Sr. Sub. Nts., 8/1/09 1,750,000 1,820,000
-----------------------------------------------------------------------------------------------------------
Station Casinos, Inc., 9.625% Sr. Sub. Nts., 6/1/03 3,750,000 3,318,750
-----------------------------------------------------------------------------------------------------------
Stratosphere Corp., 14.25% Gtd. Fst. Mtg. Nts., 5/15/02 1,000,000
1,025,000
-----------------------------------------------------------------------------------------------------------
Trump Plaza Funding, Inc., 10.875% Gtd. Mtg. Nts., 6/15/01 1,450,000
1,210,750
-----------------------------------------------------------------------------------------------------------
Trump Taj Mahal Funding, Inc., 11.35% Debs., Series A, 11/15/99 2,250,000
1,624,775
---------------
62,429,516

------------------------------------------------------------------------------------------------------------------------------------
Leisure--0.4% Coleman Holdings, Inc., Zero Coupon Sr. Sec. Disc. Nts., Series B, 5/27/98 17,450,000
12,345,875
-----------------------------------------------------------------------------------------------------------
Kloster Cruise Ltd., 13% Sr. Sec. Nts., 5/1/03 4,250,000 3,336,250
---------------
15,682,125

------------------------------------------------------------------------------------------------------------------------------------
Restaurants--0.6% Family Restaurants, Inc.:
0%/10.875% Sr. Sub. Disc. Nts., 2/1/04(14) 4,850,000 1,818,750
9.75% Sr. Nts., 2/1/02 2,900,000 2,008,250
-----------------------------------------------------------------------------------------------------------
Flagstar Corp., 10.75% Sr. Nts., 9/15/01 9,800,000 9,432,500
-----------------------------------------------------------------------------------------------------------
Foodmaker, Inc., 14.25% Sr. Sub. Nts., 5/15/98 15,000,000
15,487,500
---------------
28,747,000
12 Oppenheimer Strategic Income Fund
<PAGE>
Face Market Value
Amount(1) See Note 1
------------------------------------------------------------------------------------------------------------------------------------
Textile/Apparel--0.2% PT Polysindo Eka Perkasa, Zero Coupon Promissory Nts., 10/23/96 IDR 20,000,000,000
$ 6,188,560
-----------------------------------------------------------------------------------------------------------
WestPoint Stevens, Inc., 9.375% Sr. Sub. Debs., 12/15/05 5,600,000
5,159,000
---------------
11,347,560

------------------------------------------------------------------------------------------------------------------------------------
Housing Related--2.1%
------------------------------------------------------------------------------------------------------------------------------------
Building Materials--1.2% Dal-Tile International, Inc., Zero Coupon Sr. Sec. Nts., 7/15/98 17,750,000
11,759,375
-----------------------------------------------------------------------------------------------------------
Nortek, Inc., 9.875% Sr. Sub. Nts., 3/1/04 8,300,000 7,594,500
-----------------------------------------------------------------------------------------------------------
Pacific Lumber Co., 10.50% Sr. Nts., 3/1/03 14,370,000 13,507,800
-----------------------------------------------------------------------------------------------------------
Southdown, Inc., 14% Sr. Sub. Nts., Series B, 10/15/01 3,450,000
3,812,250
-----------------------------------------------------------------------------------------------------------
USG Corp.:
10.25% Sr. Sec. Nts., 12/15/02 10,967,000 11,117,796
9.25% Sr. Nts., Series B, 9/15/01 3,200,000 3,156,000
-----------------------------------------------------------------------------------------------------------
Walter Industries, Inc.:
14.625% Sr. Nts., Series B, 1/1/49(15) 742,000 1,398,670
17% Sub. Nts., 1/1/96(15) 4,250,000 2,698,750
---------------
55,045,141

------------------------------------------------------------------------------------------------------------------------------------
Homebuilders/
Real Estate--0.9% Baldwin Co., 10.375% Sr. Nts., Series B, 8/1/03 7,200,000
4,572,000
-----------------------------------------------------------------------------------------------------------
Blue Bell Funding, Inc., 11.85% Extd. Sec. Nts., 5/1/99 4,500,000
4,680,000
-----------------------------------------------------------------------------------------------------------
Hovnanian K. Enterprises, Inc., 11.25% Gtd. Sub. Nts., 4/15/02 6,900,000
6,089,250
-----------------------------------------------------------------------------------------------------------
Olympia & York First Canadian Place Ltd., 11% Debs., Series 3,
11/4/49(16) CAD 5,150,000 2,276,243
-----------------------------------------------------------------------------------------------------------
Saul (B.F.) Real Estate Investment Trust, 11.625% Sr. Nts., 4/1/02 17,000,000
15,810,000
-----------------------------------------------------------------------------------------------------------
Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A, 12/1/11(9) 13,700,000
8,254,250
---------------
41,681,743

------------------------------------------------------------------------------------------------------------------------------------
Energy--1.5%
------------------------------------------------------------------------------------------------------------------------------------
Argo Petroleum Corp., 16.50% Sub. Debs., 1/1/02(15) 3,000,000
--
-----------------------------------------------------------------------------------------------------------
Coastal Corp., 11.75% Sr. Debs., 6/15/06 2,500,000 2,702,855
-----------------------------------------------------------------------------------------------------------
Global Marine, Inc., 12.75% Sr. Sec. Nts., 12/15/99 6,785,000 7,310,838
-----------------------------------------------------------------------------------------------------------
Gulf Canada Resources Ltd., 9.25% Sr. Sub. Debs., 1/15/04 10,500,000
9,871,154
-----------------------------------------------------------------------------------------------------------
HS Resources, Inc., 9.875% Sr. Sub. Nts., 12/1/03 3,750,000 3,600,000
-----------------------------------------------------------------------------------------------------------
Maxus Energy Corp.:
11.50% Debs., 11/15/15 3,500,000 2,992,500
8.50% Debs., 4/1/08 1,000,000 835,000
9.375% Nts., 11/1/03 1,250,000 1,037,500
-----------------------------------------------------------------------------------------------------------
Mesa Capital Corp., 0%/12.75% Sec. Disc. Nts., 6/30/98(14) 8,908,000
8,596,220
-----------------------------------------------------------------------------------------------------------
OPI International, Inc., 12.875% Gtd. Sr. Nts., 7/15/02 13,000,000
14,365,000
-----------------------------------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc.:
12.25% Sub. Debs., 2/1/05 3,625,000 3,788,125
9.375% Sub. Debs., 2/1/06 3,250,000 2,843,750
-----------------------------------------------------------------------------------------------------------
Presidio Oil Co., 13.30% Sr. Sub. Gas Indexed Nts., Series B, 7/15/02(7) 750,000
348,750
-----------------------------------------------------------------------------------------------------------
Rowan Cos., Inc., 11.875% Sr. Nts., 12/1/01 4,500,000 4,668,750
-----------------------------------------------------------------------------------------------------------
Southwest Gas Corp., 9.75% Debs., Series F, 6/15/02 125,000
134,777
-----------------------------------------------------------------------------------------------------------
Triton Energy Corp.:
0%/9.75% Sr. Sub. Disc. Nts., 12/15/00(14) 800,000 652,000
Zero Coupon Sr. Sub. Disc. Nts., 11/1/97 9,250,000 7,307,500
---------------
71,054,719

13 Oppenheimer Strategic Income Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
Face Market Value
Amount(1) See Note 1
------------------------------------------------------------------------------------------------------------------------------------
Financial Services--1.2%
------------------------------------------------------------------------------------------------------------------------------------
Diversified
Financial--1.1% Card Establishment Services, Inc., 10% Sr. Sub. Nts.,
Series B, 10/1/03 $ 17,275,000 $ 19,196,844
-----------------------------------------------------------------------------------------------------------
ECM Fund, L.P.I., 14% Sub. Nts., 6/10/02(8) 1,293,590 1,422,950
-----------------------------------------------------------------------------------------------------------
GPA Delaware, Inc.:
8.75% Gtd. Nts., 12/15/98 5,955,000 4,704,450
9.75%, 12/10/01 2,000,000 1,320,000
-----------------------------------------------------------------------------------------------------------
GPA Holland BV:
8.50% Medium-Term Nts., 2/10/97(9) 10,500,000 9,187,500
8.625% Medium-Term Nts., Series C, 1/15/99(8) 4,750,000
3,544,687
8.94% Medium-Term Nts., Series C, 2/16/99 2,000,000
1,502,500
9.50% Medium-Term Nts., Series A, 12/15/01(8) 1,500,000
975,000
-----------------------------------------------------------------------------------------------------------
GPA Investment BV, 6.40% Nts., 11/19/98 2,000,000 1,375,000
-----------------------------------------------------------------------------------------------------------
GPA Netherlands BV, 8.50% Medium-Term Nts., 3/3/97(9) 6,500,000
5,703,750
---------------
48,932,681

------------------------------------------------------------------------------------------------------------------------------------
Insurance--0.1% Life Partners Group, Inc., 12.75% Sr. Sub. Nts., 7/15/02 2,500,000
2,737,500
-----------------------------------------------------------------------------------------------------------
Nacolah Holding Corp., 9.50% Sr. Nts., 12/1/03 2,100,000 1,932,000
---------------
4,669,500

------------------------------------------------------------------------------------------------------------------------------------
Media--6.1%
------------------------------------------------------------------------------------------------------------------------------------
Broadcasting--1.5% Act III Broadcasting, Inc., 9.625% Sr. Sub. Nts., 12/15/03 4,930,000
4,794,425
-----------------------------------------------------------------------------------------------------------
Chancellor Broadcasting Co., 12.50% Sr. Sub. Nts., 10/1/04 7,000,000
7,070,000
-----------------------------------------------------------------------------------------------------------
Gillett Holdings, Inc., 12.25% Sr. Sub. Nts., Series A, 6/30/02 12,800,000
13,504,000
-----------------------------------------------------------------------------------------------------------
New City Communications, Inc., 11.375% Sr. Sub. Nts., 11/1/03 17,975,000
16,447,125
-----------------------------------------------------------------------------------------------------------
New World Communications Group Holding Corp., Zero Coupon
Sr. Disc. Nts., Series B, 6/15/99 12,000,000 6,990,000
-----------------------------------------------------------------------------------------------------------
Outlet Broadcasting, Inc., 10.875% Sr. Sub. Nts., 7/15/03 2,000,000
2,010,000
-----------------------------------------------------------------------------------------------------------
SCI Television, Inc., 11% Sr. Nts., Series 1, 6/30/05 2,153,155 2,217,750
-----------------------------------------------------------------------------------------------------------
SFX Broadcasting, Inc., 11.375% Sr. Sub. Nts., 10/1/00 3,000,000
3,060,000
-----------------------------------------------------------------------------------------------------------
Sinclair Broadcasting Group, Inc., 10% Sr. Sub. Nts., 12/15/03 8,975,000
8,660,875
-----------------------------------------------------------------------------------------------------------
Univision Television Group, Inc., 11.75% Sr. Sub. Nts., 1/15/01 5,500,000
5,857,500
---------------
70,611,675

------------------------------------------------------------------------------------------------------------------------------------
Cable Television--2.6% Adelphia Communications Corp., 12.50% Sr. Nts., 5/15/02 7,740,000
7,430,400
-----------------------------------------------------------------------------------------------------------
American Telecasting, Inc., 0%/12.50% Sr. Disc. Nts., 6/15/04(14) 20,150,000
10,175,750
-----------------------------------------------------------------------------------------------------------
Bell Cablemedia PLC, 0%/11.95% Sr. Disc. Nts., 7/15/04(14) 22,500,000
13,640,625
-----------------------------------------------------------------------------------------------------------
Cablevision Industries Corp.:
10.75% Sr. Nts., 1/30/02 900,000 951,750
9.25% Sr. Debs., Series B, 4/1/08 2,400,000 2,370,000
-----------------------------------------------------------------------------------------------------------
Cablevision Systems Corp.:
10.75% Sr. Sub. Debs., 4/1/04 6,025,000 6,281,063
9.875% Sr. Sub. Debs., 2/15/13 4,550,000 4,390,750
9.875% Sr. Sub. Debs., 4/1/23 1,100,000 1,040,875
-----------------------------------------------------------------------------------------------------------
Continental Cablevision, Inc.:
11% Sr. Sub. Debs., 6/1/07 2,700,000 2,889,135
9.50% Sr. Debs., 8/1/13 12,255,000 11,826,075
-----------------------------------------------------------------------------------------------------------
Helicon Group LP/Helicon Capital Corp., 9% Sr. Sec. Nts., Series B,
11/1/03(7) 18,500,000 16,326,250

14 Oppenheimer Strategic Income Fund
<PAGE>
Face Market Value
Amount(1) See Note 1
------------------------------------------------------------------------------------------------------------------------------------
Cable Television
(continued) Marcus Cable Operating Co. LP/Marcus Capital Corp., 0%/13.50%
Gtd. Sr. Sub. Disc. Nts., Series II, 8/1/04(14) $ 13,200,000 $ 7,606,500
-----------------------------------------------------------------------------------------------------------
Time Warner, Inc.:
9.125% Debs., 1/15/13 12,550,000 12,054,538
9.15% Debs., 2/1/23 4,500,000 4,284,516
-----------------------------------------------------------------------------------------------------------
Time Warner, Inc./Time Warner Entertainment LP:
10.15% Sr. Nts., 5/1/12 1,000,000 1,068,014
8.375% Sr. Debs., 3/15/23 12,804,000 11,520,552
-----------------------------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 6,000,000 6,390,000
---------------
120,246,793

------------------------------------------------------------------------------------------------------------------------------------
Diversified Media--1.2% Ackerley Communications, Inc., 10.75% Sr. Sec. Nts., Series A, 10/1/03 8,850,000
8,938,500
-----------------------------------------------------------------------------------------------------------
Echostar Communications Corp., Units 19,220,000 8,745,100
-----------------------------------------------------------------------------------------------------------
GSPI Corp., 10.15% Fst. Mtg. Bonds, 6/24/10(9) 829,369 916,454
-----------------------------------------------------------------------------------------------------------
Lamar Advertising Co., 11% Sr. Sec. Nts., 5/15/03 12,000,000
11,730,000
-----------------------------------------------------------------------------------------------------------
News America Holdings, Inc.:
10.125% Gtd. Sr. Debs., 10/15/12 3,300,000 3,572,257
12% Sr. Nts., 12/15/01 2,500,000 2,817,307
8.50% Sr. Nts., 2/15/05 6,000,000 6,041,147
8.625% Sr. Nts., 2/1/03 10,400,000 10,540,150
-----------------------------------------------------------------------------------------------------------
Rogers Communications, Inc., 10.875% Sr. Debs., 4/15/04 2,200,000
2,222,000
---------------
55,522,915

------------------------------------------------------------------------------------------------------------------------------------
Entertainment/Film--0.4% Imax Corp., 7% Sr. Nts., 3/1/01(13) 13,200,000
11,484,000
-----------------------------------------------------------------------------------------------------------
Marvel Holdings, Inc., Zero Coupon Sr. Sec. Disc. Nts., Series B, 4/15/98 11,000,000
7,095,000
---------------
18,579,000

------------------------------------------------------------------------------------------------------------------------------------
Publishing/
Printing--0.4% Bell & Howell Co., 10.75% Sr. Sub. Nts., Series B, 10/1/02 2,000,000
2,060,000
-----------------------------------------------------------------------------------------------------------
Bell & Howell Holdings Co., 0%/11.50% Sr. Disc. Debs., Series B, 3/1/05(14) 13,500,000
7,323,750
-----------------------------------------------------------------------------------------------------------
General Media, Inc., 10.625% Sr. Sec. Nts., 12/31/00 4,000,000
3,340,000
-----------------------------------------------------------------------------------------------------------
United States Banknote Corp., 11.625% Sr. Nts., Series B, 8/1/02 4,220,000
3,291,600
---------------
16,015,350

------------------------------------------------------------------------------------------------------------------------------------
Transportation--0.8%
------------------------------------------------------------------------------------------------------------------------------------
Air Transportation--0.1% Northwest Airlines, Inc., 12.0916% Sr. Gtd. Nts., 12/31/00 4,969,886
5,075,491
------------------------------------------------------------------------------------------------------------------------------------
Railroads--0.2% Transtar Holdings LP/Transtar Capital Corp., 0%/13.375%
Sr. Disc. Nts., Series B, 12/15/03(14) 19,266,000 10,114,650
------------------------------------------------------------------------------------------------------------------------------------
Shipping--0.4% Sea Containers Ltd.:
12.50% Sr. Sub. Debs., Series A, 12/1/04 2,850,000 3,021,000
9.50% Sr. Sub. Debs., 7/1/03 4,750,000 4,465,000
-----------------------------------------------------------------------------------------------------------
Trans Ocean Container Corp., 12.25% Sr. Sub. Nts., 7/1/04 11,900,000
11,483,500
---------------
18,969,500

------------------------------------------------------------------------------------------------------------------------------------
Trucking--0.1% Trism, Inc., 10.75% Sr. Sub. Nts., 12/15/00 1,250,000
1,212,500
------------------------------------------------------------------------------------------------------------------------------------
Utilities--4.8%
------------------------------------------------------------------------------------------------------------------------------------
Electric Utilities--2.4% Beaver Valley II Funding Corp., 9% 2nd Lease Obligation Bonds, 6/1/17 24,189,000
18,667,618
-----------------------------------------------------------------------------------------------------------
C.A. La Electricidad de Caracas, 7.188% Exchange Eurobonds, 9/30/03(7) 3,691,162
1,421,098

15 Oppenheimer Strategic Income Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
Face Market Value
Amount(1) See Note 1
------------------------------------------------------------------------------------------------------------------------------------
Electric Utilities
(continued) California Energy Co., 0%/10.25% Sr. Disc. Nts., 1/15/04(14) $ 17,390,000 $
13,129,450
-----------------------------------------------------------------------------------------------------------
Del Norte Funding Corp.:
11.25% Debs., 1/2/14(15) 3,350,000 2,012,931
9.95% Debs., 1/2/98(15) 5,000,000 3,001,060
-----------------------------------------------------------------------------------------------------------
El Paso Electric Co.:
10.375% Lease Obligation Bonds, Series 1986A, 1/2/11(15) 12,750,000
7,774,706
10.75% Lease Obligation Bonds, 4/1/13(15) 11,900,000 7,268,793
9.20% Lease Obligation Bonds, Series 1986A, 7/2/97(15) 1,500,000
915,355
9.375% Lease Obligation Bonds, 10/1/96(15) 6,000,000 3,662,813
-----------------------------------------------------------------------------------------------------------
First PV Funding Corp.:
10.15% Lease Obligation Bonds, Series 1986B, 1/15/16 24,800,000
24,145,478
10.30% Lease Obligation Bonds, Series 1986A, 1/15/14 16,700,000
16,708,417
-----------------------------------------------------------------------------------------------------------
Subic Power Corp.:
9.50% Sinking Fund Debs., 12/28/08 7,434,350 6,040,409
9.50% Sinking Fund Debs., 12/28/08(9) 5,793,103 5,011,034
---------------
109,759,162

------------------------------------------------------------------------------------------------------------------------------------
Telecommunications--2.4% Call-Net Enterprises, Inc., 0%/13.25% Sr. Disc. Nts., 12/1/04(14) 8,400,000
4,641,000
-----------------------------------------------------------------------------------------------------------
Celcaribe SA, 0%/13.50% Sr. Sec. Nts., 3/15/04(9)(14) 12,600,000
8,461,646
-----------------------------------------------------------------------------------------------------------
Cellular, Inc., 0%/11.75% Sr. Sub. Disc. Nts., 9/1/03(14) 26,626,000
18,505,070
-----------------------------------------------------------------------------------------------------------
Comcast Cellular Corp., Zero Coupon Nts., Series B, 3/5/00 10,250,000
7,277,500
-----------------------------------------------------------------------------------------------------------
Horizon Cellular Telephone LP/Horizon Finance Corp., 0%/11.375%
Sr. Sub. Disc. Nts., 10/1/00(14) 21,402,000 16,265,520
-----------------------------------------------------------------------------------------------------------
MFS Communications, Inc., 0%/9.375% Sr. Disc. Nts., 1/15/04(14) 13,400,000
8,609,500
-----------------------------------------------------------------------------------------------------------
Panamsat LP/Panamsat Capital Corp.:
0%/11.375% Sr. Sub. Disc. Nts., 8/1/03(14) 33,700,000 22,157,750
9.75% Sr. Sec. Nts., 8/1/00 5,700,000 5,628,750
-----------------------------------------------------------------------------------------------------------
PriCellular Wireless Corp., 0%/14% Sr. Sub. Disc. Nts., 11/15/01(14) 16,667,000
12,333,580
-----------------------------------------------------------------------------------------------------------
USA Mobile Communications, Inc. II:
14% Sr. Nts., 11/1/04 7,750,000 8,331,250
9.50% Sr. Nts., 2/1/04 1,850,000 1,600,250
---------------
113,811,816

------------------------------------------------------------------------------------------------------------------------------------
Other--1.7%
------------------------------------------------------------------------------------------------------------------------------------
Conglomerates--0.9% Acadia Partners LP, 13% Sub. Nts., 10/1/97(9) 25,000,000
25,750,000
-----------------------------------------------------------------------------------------------------------
MacAndrews & Forbes Group, Inc., 12.25% Sub. Nts., 7/1/96 1,565,000
1,561,088
-----------------------------------------------------------------------------------------------------------
MacAndrews & Forbes Holdings, Inc., 13% Sub. Debs., 3/1/99 4,915,000
4,890,425
-----------------------------------------------------------------------------------------------------------
Talley Industries, Inc., 0%/12.25% Sr. Disc. Debs., 10/15/05(14) 16,946,000
9,616,855
---------------
41,818,368

------------------------------------------------------------------------------------------------------------------------------------
Environmental--0.4% EnviroSource, Inc., 9.75% Sr. Nts., 6/15/03 13,135,000
11,493,125
-----------------------------------------------------------------------------------------------------------
Envirotest Systems Corp., 9.125% Sr. Nts., 3/15/01 10,250,000
7,738,750
---------------
19,231,875

16 Oppenheimer Strategic Income Fund
<PAGE>
Face Market Value
Amount(1) See Note 1
------------------------------------------------------------------------------------------------------------------------------------
Services--0.4% Borg-Warner Security Corp., 9.125% Sr. Sub. Nts., 5/1/03 $ 11,760,000 $
9,702,000
-----------------------------------------------------------------------------------------------------------
Grupo Mexicano de Desarrollo SA:
8.25% Gtd. Nts., 2/17/01(9) 11,700,000 2,866,500
8.25% Gtd. Nts., 2/17/01 3,000,000 735,000
-----------------------------------------------------------------------------------------------------------
Protection One Alarm Monitoring, Inc., 12% Sr. Sub. Nts.,
Series B, 11/1/03 6,500,000 6,077,500
---------------
19,381,000

------------------------------------------------------------------------------------------------------------------------------------
Retail--1.4%
------------------------------------------------------------------------------------------------------------------------------------
Department Stores--0.1% Parisian, Inc., 9.875% Sr. Sub. Nts., 7/15/03 4,000,000
2,800,000
-----------------------------------------------------------------------------------------------------------
Sears Canada, Inc., 11.75% Debs., 12/5/95 CAD 2,400,000
1,749,421
---------------
4,549,421

------------------------------------------------------------------------------------------------------------------------------------
Drug Stores--0.1% Duane Reade, 12% Sr. Nts., Series B, 9/15/02 2,250,000
1,676,250
-----------------------------------------------------------------------------------------------------------
Thrifty Payless, Inc., 11.75% Sr. Nts., 4/15/03 5,000,000 5,262,500
---------------
6,938,750

------------------------------------------------------------------------------------------------------------------------------------
Specialty
Retailing--0.7% Caldor Corp., 15% Sr. Sub. Nts., 6/1/00 2,000,000
2,150,000
-----------------------------------------------------------------------------------------------------------
Cole National Group, Inc., 11.25% Sr. Nts., 10/1/01 13,300,000
12,768,000
-----------------------------------------------------------------------------------------------------------
Eye Care Centers of America, Inc., 12% Sr. Nts., 10/1/03 7,000,000
5,460,000
-----------------------------------------------------------------------------------------------------------
Finlay Fine Jewelry Corp., 10.625% Sr. Nts., 5/1/03 6,870,000 6,423,450
-----------------------------------------------------------------------------------------------------------
Waban, Inc., 11% Sr. Sub. Nts., 5/15/04 2,950,000 3,001,625
-----------------------------------------------------------------------------------------------------------
Zale Delaware, Inc., 11% Gtd. 2nd Priority Sr. Sec. Nts., 7/30/00 2,000,000
2,005,000
---------------
31,808,075

------------------------------------------------------------------------------------------------------------------------------------
Supermarkets--0.5% Food 4 Less Supermarkets, Inc., 13.75% Sr. Sub. Nts., 6/15/01 1,500,000
1,605,000
-----------------------------------------------------------------------------------------------------------
Grand Union Co.:
11.25% Sr. Nts., 7/15/00(15) 2,700,000 2,824,875
11.75% Sr. Nts., 2/15/99(15) 4,650,000 4,719,750
12.25% Sr. Sub. Nts., 7/15/02(15) 5,070,000 1,698,450
-----------------------------------------------------------------------------------------------------------
Purity Supreme, Inc., 11.75% Sr. Sec. Nts., Series B, 8/1/99 9,000,000
7,740,000
-----------------------------------------------------------------------------------------------------------
Southland Corp., 4.50% 2nd Priority Sr. Sub. Debs., Series A, 6/15/04 4,850,000
3,140,375
---------------
21,728,450

------------------------------------------------------------------------------------------------------------------------------------
Manufacturing--2.0%
------------------------------------------------------------------------------------------------------------------------------------
Aerospace/Electronics/
Computers--0.6% Berg Electronics Holdings Corp., 11.375% Sr. Sub. Debs., 5/1/03 4,450,000
4,594,625
-----------------------------------------------------------------------------------------------------------
Dell Computer Corp., 11% Sr. Nts., 8/15/00 9,500,000 10,212,500
-----------------------------------------------------------------------------------------------------------
Rohr, Inc., 11.625% Sr. Nts., 5/15/03 1,800,000 1,836,000
-----------------------------------------------------------------------------------------------------------
Unisys Corp.:
13.50% Credit Sensitive Nts., 7/1/97(7) 9,200,000 10,142,356
8.875% Nts., 7/15/97 1,000,000 993,230
9.75% Sr. Nts., 9/15/16 3,900,000 3,687,157
---------------
31,465,868

------------------------------------------------------------------------------------------------------------------------------------
Automotive--1.1% Aftermarket Technology Corp., 12% Sr. Sub. Nts., 8/1/04 4,650,000
4,905,750
-----------------------------------------------------------------------------------------------------------
Chrysler Financial Corp., 13.25% Sr. Nts., 10/15/99 4,500,000 5,434,434
-----------------------------------------------------------------------------------------------------------
Foamex LP/Foamex Capital Corp.:
11.25% Sr. Nts., 10/1/02 4,800,000 4,728,000
9.50% Sr. Sec. Nts., 6/1/00 3,622,000 3,531,450

17 Oppenheimer Strategic Income Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
Face Market Value
Amount(1) See Note 1
------------------------------------------------------------------------------------------------------------------------------------
Automotive (continued) Foamex LP/JPS Automotive Corp., 0%/14% Sr. Disc. Nts.,
Series B, 7/1/04(14) $ 7,250,000 $ 3,987,500
-----------------------------------------------------------------------------------------------------------
JPS Automotive Products Corp., 11.125% Sr. Nts., 6/15/01 2,500,000
2,450,000
-----------------------------------------------------------------------------------------------------------
Navistar Financial Corp., 9.50% Medium-Term Nts., 6/1/96 6,075,000
6,133,623
-----------------------------------------------------------------------------------------------------------
Penda Corp., 10.75% Sr. Nts., Series B, 3/1/04 11,500,000 10,378,750
-----------------------------------------------------------------------------------------------------------
SPX Corp., 11.75% Sr. Sub. Nts., 6/1/02 1,000,000 1,045,000
-----------------------------------------------------------------------------------------------------------
Terex Corp., 13% Sr. Nts., 8/1/96(9) 8,759,000 8,496,230
---------------
51,090,737

------------------------------------------------------------------------------------------------------------------------------------
Capital Goods--0.3% Atlantis Group, Inc., 11% Sr. Nts., 2/15/03 9,000,000
8,955,000
-----------------------------------------------------------------------------------------------------------
Imo Industries, Inc., 12.25% Sr. Sub. Debs., 8/15/97 2,860,000 2,888,600
---------------
11,843,600
---------------
Total Corporate Bonds and Notes (Cost $1,627,067,998) 1,550,019,249
Shares

========================================================
========================================================
====================
Common Stocks--0.2%
------------------------------------------------------------------------------------------------------------------------------------
Berg Electronics Holdings Corp.(9)(17) 159,220 716,490
-----------------------------------------------------------------------------------------------------------
Celcaribe SA(9)(17) 2,048,760 1,870,354
-----------------------------------------------------------------------------------------------------------
Dell Computer Corp.(17) 61,052 2,671,025
-----------------------------------------------------------------------------------------------------------
ECM Fund, L.P.I.(8) 525 525,000
-----------------------------------------------------------------------------------------------------------
Equitable Bag, Inc.(17) 68,985 206,955
-----------------------------------------------------------------------------------------------------------
Kash 'N Karry Food Stores, Inc.(17) 25,095 483,079
-----------------------------------------------------------------------------------------------------------
Ladish, Inc.(17) 806,000 201,500
-----------------------------------------------------------------------------------------------------------
New World Communications Group, Inc., Cl. A(17) 44,672
770,592
-----------------------------------------------------------------------------------------------------------
Thrifty Payless Holdings, Inc.(17) 38,000 152,000
-----------------------------------------------------------------------------------------------------------
Triangle Wire & Cable, Inc.(8)(17) 232,222 928,888
---------------
Total Common Stocks (Cost $8,919,466) 8,525,883

========================================================
========================================================
====================
Preferred Stocks--1.0%
------------------------------------------------------------------------------------------------------------------------------------
AK Steel Holding Corp., 7% Cv. Stock Appreciation Income
Linked Securities 107,000 3,076,250
-----------------------------------------------------------------------------------------------------------
Atlantic Richfield Co., 9% Exchangeable Notes for Common Stock
of Lyondell Petrochemical Co., 9/15/97 48,500 1,212,500
-----------------------------------------------------------------------------------------------------------
Berg Electronics Holdings Corp., $3.3438, Series E 86,772 2,386,230
-----------------------------------------------------------------------------------------------------------
California Federal Bank, 10.625% Non-Cum., Series B 63,475
6,474,450
-----------------------------------------------------------------------------------------------------------
First Nationwide Bank, 11.50% Non-Cum. 132,000 13,299,000
-----------------------------------------------------------------------------------------------------------
K-III Communications Corp.:
$11.625 Exch., Series B(12)(18) 56,388 5,469,652
Sr. Exch., Series A 80,000 2,130,000
-----------------------------------------------------------------------------------------------------------
Kaiser Aluminum Corp.:
$.65 Cv., Series A 42,000 346,500
8.255% Provisionally Redeemable Income Debt Exchangeable for Stock 289,400
3,038,700
-----------------------------------------------------------------------------------------------------------
Prime Retail, Inc., $19.00 Cv., Series B 200,000 3,475,000
-----------------------------------------------------------------------------------------------------------
TGX Corp., Series A 692,000 1,211,000
-----------------------------------------------------------------------------------------------------------
Unisys Corp., $3.75 Cv., Series A 118,800 4,618,350
---------------
Total Preferred Stocks (Cost $48,094,903) 46,737,632

18 Oppenheimer Strategic Income Fund
<PAGE>
Market Value
Units See Note 1
========================================================
========================================================
====================

</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Rights, Warrants and Certificates--0.0 %
---------------------------------------------
American Telecasting, Inc. Wts., Exp. 6/99 100,750 $201,500
--------------------------------------------------------------------
Ames Department Stores, Inc.:
Excess Cash Flow Payment Certificates,
Series AG-7A 37,200 372
Litigation Trust 118,975 1,190
---------------------------------------------------------------------
-------------------------------------
Becker Gaming, Inc. Wts., Exp. 11/00(8) 262,500 525,000
-------------------------------------------------------------------------------
----------------------------
Capital Gaming International, Inc.
Wts., Exp. 2/99 69,024 172,560
-----------------------------------
------------------------------------------------------------------------
Casino America, Inc. Wts., Exp. 11/96 9,789 2,447
-------------------------------------------------------------------------------
----------------------------
Eye Care Centers of America, Inc. Wts.,
Exp. 10/03 7,000 35,000
------------------------------------------------------------------------------
-----------------------------
Foamex LP/JPS Automotive Corp. Wts.,
Exp. 7/99 7,250 8,750
-------------------------------------------------------------------------------
----------------------------
General Media, Inc. Wts., Exp. 12/00(9) 4,000 45,000
-------------------------------------------------------------------------------
----------------------------
Mexican Value Rights MXP 21,153,000
-------------------------------------------------------------------------------
----------------------------
Protection One, Inc. Wts., Exp. 11/03 182,000 819,000
-----------------------------------------------------------------------------
------------------------------
Santa Fe Hotel, Inc. Wts., Exp. 12/96 100 69,000
------------------------------------------------------------------------------
-----------------------------
Terex Corp. Rts., Exp. 7/96(9) 13,935 10,451
Total Rights, Warrants and Certificates (Cost $1,588,702) 1,990,270
Date/Price Shares

========================================================
========================================================
====================
Put Options Purchased--0.0%
------------------------------------------------------------------------------------------------------------------------------------
Fderal National Mortgage Assn., 6.50% Put Opt. Apr. 11/ 91,000
42,656
(Cost $234,609) 0.258
Face
Amount
========================================================
========================================================
====================
Structured Instruments--2.3%
------------------------------------------------------------------------------------------------------------------------------------
Argentina Local Market Securities Trust, Series 1994-II, 11.30%,
4/1/00(2)(9) $ 21,365,217 16,718,283
-----------------------------------------------------------------------------------------------------------
Bayerische Landesbank, N.Y. Branch, 10% Italian Lira/Deutsche Mark
Linked Confidence Nts., Girozentrale Branch, 8/7/95(2) 14,600,000
2,708,300
-----------------------------------------------------------------------------------------------------------
Rabobank Certificate of Deposit:
British Pound Sterling Maximum Rate Linked Nts., 10%, 6/2/95(2)(8) 25,000,000
24,095,000
Japanese Yen Minimum Rate Linked Nts., 10%, 6/2/95(2)(8) 12,500,000
12,562,500
-----------------------------------------------------------------------------------------------------------
Repackaged Argentina Domestic Securities Trust I, 14.75%, 9/1/02(9) 11,500,000
6,583,750
-----------------------------------------------------------------------------------------------------------
Structured Product Asset Return Certificates, 9.40%, Series 94-2, 9/1/97(9) 8,285,714
7,109,275
-----------------------------------------------------------------------------------------------------------
Swiss Bank Corp. Investment Banking, Inc.:
10% CD Japanese Yen Rate Linked Nts., 6/5/95(2)(8) 12,500,000
12,500,000
10% CD Sterling Rate Linked Nts., 7/3/95(2) 23,530,000 23,153,520
---------------
Total Structured Instruments (Cost $129,268,690) 105,430,628

========================================================
========================================================
====================
Repurchase
Agreements--0.1% Repurchase agreement with First Chicago Capital Markets,
6.25%, dated 3/31/95, to be repurchased at $4,402,292 on 4/3/95,
collateralized by U.S. Treasury Nts., 4.75%--8.875%, 5/15/96--10/31/99,
with a value of $653,436 (Cost $4,400,000) 4,400,000 4,400,000

------------------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $4,901,533,334) 101.5% 4,711,212,915
------------------------------------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (1.5) (67,949,010)
--------------- ---------------
Net Assets 100.0% $ 4,643,263,905
===============
===============
</TABLE>

19 Oppenheimer Strategic Income Fund

Statement of Investments (Unaudited) (Continued)
------------------------------------------------------------------------------
1. Face amount is reported in local currency. Foreign currency
abbreviations are as follows:
ARA--Argentine Austral
DEM--German Deutsche Mark
IDR--Indonesian Rupiah
AUD--Australian Dollar
DKK--Danish Krone
MXP--Mexican Peso
CAD--Canadian Dollar
ESP--Spanish Peseta
NZD--New Zealand Dollar
CLP--Chilean Peso
GBP--British Pound Sterling
USD--U.S. Dollar

2. Indexed instrument for which the principal amount and/or interest due at
maturity is affected by the relative value of a foreign currency.

3. 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. Inverse floaters amount to
$14,457,157 or .31% of the Fund's net assets, at March 31, 1995.

4. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline. Most other fixed-income securities
increase in price when interest rates decline. The principal amount of the
underlying pool represents the notional amount on which current interest is
calculated. The price of these securities is typically more sensitive to changes
in prepayment rates than traditional mortgage-backed securities (for example,
GNMA's pass-throughs).

5. Principal-Only Strips represent the right to receive the monthly
principal payments on an underlying pool of mortgage loans. The value of these
securities generally increases as interest rates decline and prepayment rates
rise. The price of these securities is typically more volatile than that of
coupon-bearing bonds of the same maturity.

6. When-issued security to be delivered and settled after March 31, 1995.

7. Represents the current interest rate for a variable rate security.

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

9. Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security has
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $175,756,290 or 3.79% of the Fund's net
assets at March 31, 1995.

10. A sufficient amount of securities is segregated to collateralize
outstanding forward foreign currency exchange contracts. See Note 5 of Notes to
Financial Statements.

11. A sufficient amount of liquid assets has been designated to cover
outstanding call and put options, as follows:

<TABLE>
<CAPTION>
Face Subject Expiration Exercise Premium Market Value
To Call/Put Date Price Received See Note 1
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Call Option on Australian Dollar 44,750,000 AUD 4/20/95 0.74 USD/AUD $ 77,418 $ 132,460
-----------------------------------------------------------------------------------------------------------
Call Option on New South Wales Treasury
Corp. Gtd. Exch. Bonds, 12%, 12/1/01 24,300,000 AUD 4/28/95 109.056 AUD 164,844 213,887
-----------------------------------------------------------------------------------------------------------
Call Option on Poland (Republic of) Disc.
Bonds, 6.812%, 7/15/97 10,500,000 4/21/95 64.875 105,000 93,492
-----------------------------------------------------------------------------------------------------------
Call Option on Pound Sterling 45,025,000 GBP 5/8/95 1.60 USD/GBP 444,847 1,743,369
-----------------------------------------------------------------------------------------------------------
Call Option on Spanish Peseta/Deutsche
Mark 2,800,000,000 ESP 5/4/95 89.00 ESP/DEM 156,180 91,957
-----------------------------------------------------------------------------------------------------------
Put Option on Argentina (Republic of) Past
Due Interest Bonds, 6.50%, 3/31/05 30,000,000 11/2/95 62.00 405,000 4,128,000
-----------------------------------------------------------------------------------------------------------
Put Option on Brazil (Republic of) Interest
Due and Unpaid Bonds, 7.813%, 1/1/01 19,000,000 11/2/95 95.00 313,500 942,400
-----------------------------------------------------------------------------------------------------------
Put Option on Deutsche Mark 50,000,000 DEM 6/2/95 1.48 DEM/USD 297,500 162,162
Put Option on Deutsche Mark 47,750,000 DEM 6/6/95 1.46 DEM/USD 338,070 238,750
---------- ----------
$2,302,359 $7,746,477
</TABLE>
12. Interest or dividend is paid in kind.
13. Represents the current interest rate for an increasing rate security.
14. Represents a zero coupon bond that converts to a fixed rate of interest
at a designated future date.
15. Non-income producing--issuer is in default of interest payment.
16. Partial interest payment received.
17. Non-income producing security.
18. 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 period ended March 31, 1995.
The aggregate fair value of all securities of affiliated companies as of March
31, 1995 amounted to $5,469,652. Transactions during the period in which the
issuer was an affiliate are as follows:

<TABLE>
<CAPTION>
Balance Balance
September 30, 1994 Gross Additions Gross Reductions March 31, 1995 Dividend
Shares Cost Shares Cost Shares Cost Shares Cost Income
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<C>
K-III Communications
Corp., $11.625 Exch.,
Series B 53,249 $5,383,979 3,139 $302,089 -- -- 56,388 $5,686,068 $302,089
</TABLE>

See accompanying Notes to Financial Statements.

20 Oppenheimer Strategic Income Fund
<PAGE>
Statement of Assets and Liabilities March 31, 1995 (Unaudited)
<TABLE>
========================================================
========================================================
===================
<S> <C> <C>

Assets Investments, at value (cost $4,901,533,334)--see accompanying statement
$4,711,212,915
----------------------------------------------------------------------------------------------------------
Receivables:
Interest and dividends 112,681,886
Investments sold 81,300,604
Shares of beneficial interest sold 17,679,643
----------------------------------------------------------------------------------------------------------
Other 117,830
--------------
Total assets 4,922,992,878

========================================================
========================================================
===================
Liabilities Bank overdraft 621,894
----------------------------------------------------------------------------------------------------------
Unrealized depreciation on forward foreign currency exchange contracts--Note 5
122,643
----------------------------------------------------------------------------------------------------------
Options written, at value (premiums received $2,302,359)--
see accompanying statement--Note 4 7,746,477
----------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 235,990,249
Shares of beneficial interest redeemed 18,154,378
Dividends 14,019,735
Distribution and service plan fees--Note 6 2,804,791
Other 268,806
--------------
Total liabilities 279,728,973

========================================================
========================================================
===================
Net Assets $4,643,263,905
==============
========================================================
========================================================
===================
Composition of
Net Assets Paid-in capital $5,194,278,050
----------------------------------------------------------------------------------------------------------
Overdistributed net investment income (32,622,783)
----------------------------------------------------------------------------------------------------------
Accumulated net realized loss from investment, written option and foreign
currency transactions (323,248,765)
----------------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments, written options and translation of assets
and liabilities denominated in foreign currencies (195,142,597)
--------------
Net assets $4,643,263,905
==============
========================================================
========================================================
===================
Net Asset Value
Per Share Class A Shares:
Net asset value and redemption price per share (based on net assets
of $2,990,586,689 and 663,783,585 shares of beneficial interest outstanding) $4.51
Maximum offering price per share
(net asset value plus sales charge of 4.75% of offering price) $4.73
----------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $1,652,677,216 and 366,177,811 shares of beneficial interest outstanding) $4.51
</TABLE>
See accompanying Notes to Financial Statements.

21 Oppenheimer Strategic Income Fund
<PAGE>
Statement of Operations For the Six Months Ended March 31, 1995 (Unaudited)
<TABLE>
========================================================
========================================================
===================
<S> <C> <C>
Investment Income Interest (net of foreign withholding taxes of $849,421) $ 249,135,073
----------------------------------------------------------------------------------------------------------
Dividends:
Unaffiliated companies 1,927,618
Affiliated companies 302,089
--------------
Total income 251,364,780

========================================================
========================================================
===================
Expenses Management fees--Note 6 12,485,016
----------------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A--Note 6 3,682,992
Class B--Note 6 7,986,106
----------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 6 2,125,389
----------------------------------------------------------------------------------------------------------
Custodian fees and expenses 948,370
----------------------------------------------------------------------------------------------------------
Shareholder reports 469,706
----------------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 1,414
Class B 63,741
----------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 37,831
----------------------------------------------------------------------------------------------------------
Legal and auditing fees 35,635
----------------------------------------------------------------------------------------------------------
Other 25,645
--------------
Total expenses 27,861,845

========================================================
========================================================
===================
Net Investment Income 223,502,935

========================================================
========================================================
===================
Realized and Unrealized
Gain (Loss) on Investments,
Options Written and
Foreign Currency
Transactions Net realized loss from:
Investments and options written (294,935,347)
Closing and expiration of options written--Note 4 (14,875,135)
Foreign currency transactions (18,594,305)
--------------
Net realized loss (328,404,787)
----------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments and options written 57,857,416
Translation of assets and liabilities denominated in foreign currencies 15,996,354
--------------
Net change 73,853,770
--------------
Net realized and unrealized loss on investments, options written and
foreign currency transactions (254,551,017)

========================================================
========================================================
===================
Net Decrease in Net Assets Resulting From Operations $ (31,048,082)
==============

</TABLE>
See accompanying Notes to Financial Statements.

22 Oppenheimer Strategic Income Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended
March 31, 1995 Year Ended
(Unaudited) Sept. 30, 1994
========================================================
========================================================
===================
<S> <C> <C> <C>

Operations Net investment income $ 223,502,935 $ 366,546,493
----------------------------------------------------------------------------------------------------------
Net realized loss on investments, options written and foreign
currency transactions (328,404,787) (17,210,118)
----------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments,
options written and translation of assets and liabilities denominated
in foreign currencies 73,853,770 (317,182,306)
--------------- --------------
Net increase (decrease) in net assets resulting from operations (31,048,082) 32,154,069

========================================================
========================================================
===================
Dividends and
Distributions to
Shareholders Dividends from net investment income:
Class A ($.2182 and $.4329 per share, respectively) (144,270,531) (236,741,649)
Class B ($.2008 and $.3938 per share, respectively) (69,583,464) (119,419,105)
----------------------------------------------------------------------------------------------------------
Distributions in excess of net realized gain on investments, options written
and foreign currency transactions:
Class A ($.1179 per share) -- (57,628,697)
Class B ($.1179 per share) -- (29,069,526)
----------------------------------------------------------------------------------------------------------
Tax return of capital distribution:
Class A ($.0135 per share) -- (8,947,314)
Class B ($.0135 per share) -- (4,513,275)

========================================================
========================================================
===================
Beneficial Interest
Transactions
Net increase in net assets resulting from Class A beneficial interest
transactions--Note 2 8,602,927 685,155,178
----------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from Class B beneficial interest
transactions--Note 2 150,368,645 1,019,463,146

========================================================
========================================================
===================
Net Assets Total increase (decrease) (85,930,505) 1,280,452,827
----------------------------------------------------------------------------------------------------------
Beginning of period 4,729,194,410 3,448,741,583
--------------- --------------
End of period (including overdistributed net investment income of
$32,622,783 and $2,882,064, respectively) $ 4,643,263,905 $4,729,194,410
===============
==============
</TABLE>

See accompanying Notes to Financial Statements.

23 Oppenheimer Strategic Income Fund
<PAGE>
Financial Highlights

<TABLE>
<CAPTION>
Class A Class B
------------------------------------------------------------------- -------------------------------------
Six Months Ended Six Months Ended
March 31, 1995 Year Ended September 30, March 31, 1995 Year Ended
Sept. 30,
(Unaudited) 1994 1993 1992 1991 1990(2) (Unaudited) 1994 1993(1)
========================================================
========================================================
====================
<S> <C> <C> <C> <C> <C> <C> <C>
<C> <C>
Per Share Operating Data:
Net asset value,
beginning of period $4.75 $5.21 $5.07 $5.01 $4.87 $5.00 $4.76 $5.22 $4.89
------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income .23 .45 .48 .46 .56 .59 .21 .42 .36
Net realized and
unrealized gain (loss)
on investments, options
written and foreign
currency transactions (.25) (.35) .17 .14 .21 (.10) (.26) (.36) .34
------- ------- ------- ------- ------- ------- ------- ------- -------
Total income (loss) from
investment operations (.02) .10 .65 .60 .77 .49 (.05) .06 .70
------------------------------------------------------------------------------------------------------------------------------------
Dividends and
distributions to
shareholders:
Dividends from net
investment income (.22) (.43) (.50) (.46) (.57) (.57) (.20) (.39) (.36)
Distributions from net
realized gain on
investments, options
written and foreign
currency transactions -- -- (.01) (.08) (.06) (.05) -- -- (.01)
Distributions in excess
of net realized gain on
investments, options
written and foreign
currency transactions -- (.12) -- -- -- -- -- (.12) --
Tax return of capital -- (.01) -- -- -- -- -- (.01) --
------- ------- ------- ------- ------- ------- ------- ------- -------
Total dividends and
distributions to
shareholders (.22) (.56) (.51) (.54) (.63) (.62) (.20) (.52) (.37)
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end
of period $4.51 $4.75 $5.21 $5.07 $5.01 $4.87 $4.51 $4.76 $5.22
======= ======= ======= ======= =======
======= ======= ======= =======

========================================================
========================================================
====================
Total Return, at Net
Asset Value(3) (.42)% 1.85% 13.30% 12.56% 16.97% 10.20% (1.01)% 1.07%
13.58%
========================================================
========================================================
====================
Ratios/Supplemental Data:
Net assets, end of period
(in millions) $2,991 $3,143 $2,754 $1,736 $560 $177 $1,653 $1,586 $695
------------------------------------------------------------------------------------------------------------------------------------
Average net assets
(in millions) $3,037 $3,082 $2,107 $1,084 $311 $93 $1,603 $1,236 $276
------------------------------------------------------------------------------------------------------------------------------------
Number of shares
outstanding
at end of period (in
thousands) 663,784 661,897 528,587 342,034 111,739 36,418 366,178 333,489
133,235
------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net
assets:
Net investment income 9.88%(4) 8.72% 9.78% 9.39% 11.82% 12.79%(4) 9.10%(4) 7.90%
8.13%(4)
Expenses .94%(4) .95% 1.09% 1.16%(5) 1.27%(5) 1.36%(4) 1.69%(4) 1.71%
1.80%(4)
------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 66.9% 119.0% 148.6% 208.2% 194.7% 424.6% 66.9% 119.0%
148.6%

</TABLE>
1. For the period from November 30, 1992 (inception of offering) to
September 30, 1993.
2. For the period from October 16, 1989 (commencement of operations) to
September 30, 1990.
3. 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. Total returns are not annualized for
periods of less than one full year.
4. Annualized.
5. Includes $.0002 and $.0020 per share of federal excise tax expense for
1992 and 1991, respectively. The expense ratio, exclusive of federal excise tax
expense, was 1.16% and 1.23%, respectively.
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 six
months ended March 31, 1995 were $3,262,530,007 and $2,841,432,985,
respectively.

See accompanying Notes to Financial Statements.

24 Oppenheimer Strategic Income Fund
<PAGE>
Notes to Financial Statements (Unaudited)

1. Significant
Accounting Policies

Oppenheimer Strategic Income Fund (the Fund) is a separate series of
Oppenheimer Strategic Funds Trust, a diversified, 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 distribution and/or
service plan, expenses directly attributable to a particular class and exclusive
voting rights with respect to matters affecting a single class. Class B shares
will automatically convert to Class A shares six years after the date of
purchase. The following is a summary of significant accounting policies
consistently followed by the Fund.

Investment Valuation. Portfolio securities are valued at the close of the
New York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
asked price or the last sale price on the prior trading day. Long-term and
short-term "non-money market" debt securities are valued by a portfolio
pricing service approved by the Board of Trustees. Such securities which cannot
be valued by the approved portfolio pricing service are valued using
dealer-supplied valuations provided the Manager is satisfied that the firm
rendering the quotes is reliable and that the quotes reflect current market
value, or under consistently applied procedures established by the Board of
Trustees to determine fair value in good faith. Short-term "money market type"
debt securities having a remaining maturity of 60 days or less are valued at
cost (or last determined market value) adjusted for amortization to maturity of
any premium or discount. Forward contracts are valued based on the closing
prices of the forward currency contract rates in the London foreign exchange
markets on a daily basis as provided by a reliable bank or dealer. Options are
valued based upon the last sale price on the principal exchange on which the
option is traded or, in the absence of any transactions that day, the value is
based upon the last sale price on the prior trading date if it is within the
spread between the closing bid and asked prices. If the last sale price is
outside the spread, the closing bid or asked price closest to the last reported
sale price is used.

Security Credit Risk. The Fund invests in high yield securities, which may be
subject to a greater degree of credit risk, greater market fluctuations and risk
of loss of income and principal, and may be more sensitive to economic
conditions than lower yielding, higher rated fixed income securities. The Fund
may acquire securities in default, and is not obligated to dispose of securities
whose issuers subsequently default. At March 31, 1995, securities with an
aggregate market value of $42,169,075, representing .91% of the Fund's net
assets, were in default.

Foreign Currency Translation. The accounting records of the Fund are
maintained in U.S. dollars. Prices of securities denominated in foreign
currencies are translated into U.S. dollars at the closing rates of exchange.
Amounts related to the purchase and sale of securities and investment income are
translated at the rates of exchange prevailing on the respective dates of such
transactions.

Repurchase Agreements. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.

25 Oppenheimer Strategic Income Fund

<PAGE>
Notes to Financial Statements (Unaudited) (Continued)

1. Significant
Accounting Policies
(continued)

Allocation of Income, Expenses and Gains and Losses. Income, expenses
(other than those attributable to a specific class) and gains and losses are
allocated daily to each class of shares based upon the relative proportion of
net assets represented by such class. Operating expenses directly attributable
to a specific class are charged against the operations of that class.

Federal Taxes. The Fund intends to continue to comply with provisions of
the Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required.

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.

Classification of Distributions to Shareholders. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax purposes
primarily because of paydown gains (losses), and the recognition of certain
foreign currency gains (losses) as ordinary income (loss) for tax purposes. The
character of the distributions made during the year from net investment income
or net realized gains may differ from their ultimate characterization for
federal income tax purposes. Also, due to timing of dividend distributions, the
fiscal year in which amounts are distributed may differ from the year that the
income or realized gain (loss) was recorded by the Fund. Effective October 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. During the period ended March 31, 1995,
in accordance with Statement of Position 93-2, undistributed net investment
income and accumulated net realized loss were decreased by $39,389,659 due to
the recognition of certain foreign currency gains (losses) as ordinary income
(loss) for tax purposes.

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 options written and unrealized
appreciation and depreciation are determined on an identified cost basis, which
is the same basis used for federal income tax purposes. Dividends in kind are
recognized as income on the ex-dividend date, at the current market value of the
underlying security. Interest on payment-in- kind debt instruments is accrued as
income at the coupon rate and a market adjustment is made on the ex-date.

2. Shares of Beneficial Interest

The Fund has authorized an unlimited number of no par value shares of
beneficial interest of each class. Transactions in shares of beneficial interest
were as follows:
<TABLE>
<CAPTION>
Six Months Ended March 31, 1995 Year Ended September 30, 1994
Shares Amount Shares Amount
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 73,931,762 $339,303,475 236,638,548 $1,198,107,502
Dividends and distributions reinvested 20,518,912 93,796,832 46,661,271 234,357,544
Redeemed (92,564,333) (424,497,380) (149,989,676) (747,309,868)
----------- ------------ ------------ --------------
Net increase 1,886,341 $8,602,927 133,310,143 $685,155,178
=========== ============ ============
==============
--------------------------------------------------------------------------------------------------------
Class B:
Sold 54,907,870 $252,496,780 211,514,941 $1,074,296,304
Dividends and distributions reinvested 8,332,909 38,143,804 13,715,575 68,501,659
Redeemed (30,552,322) (140,271,939) (24,975,699) (123,334,817)
----------- ------------ ------------ --------------
Net increase 32,688,457 $150,368,645 200,254,817 $1,019,463,146
=========== ============ ============
==============
</TABLE>
26 Oppenheimer Strategic Income Fund
<PAGE>
3. Unrealized Gains
And Losses on
Investments and
Options Written

At March 31, 1995, net unrealized depreciation on investments and options
written of $195,764,537 was composed of gross appreciation of $74,502,296, and
gross depreciation of $270,266,833.

4. Option Activity

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

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

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

In this report, securities designated to cover outstanding call options are
noted in the Statement of Investments. Shares subject to call, expiration date,
exercise price, premium received and market value are detailed in a footnote to
the Statement of Investments. Options written are reported as a liability in the
Statement of Assets and Liabilities. Gains and losses are reported in the
Statement of Operations.

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

Written option activity for the six months ended March 31, 1995 was as
follows:
<TABLE>
<CAPTION>
Call Options Put Options
Number Amount Number Amount
of Options of Premiums of Options of Premiums
<S> <C> <C> <C> <C>
Options outstanding at September 30, 1994 428,512,533 $5,932,144 300,000 $609,375
Options written 319,249 1,714,679 66,538,263 1,354,070
Options canceled in closing purchase
transactions (428,650,783) (6,198,535) (300,000) (609,375)
Options expired prior to exercise (25,000) (500,000) -- --
Options outstanding at March 31, 1995 155,999 $948,288 66,538,263 $1,354,070
</TABLE>
5. Forward Contracts

A forward foreign currency exchange contract (forward contract) is a
commitment to purchase or sell a foreign currency at a future date, at a
negotiated rate.

The Fund uses forward contracts to seek to manage foreign currency risks.
They may also be used to tactically shift portfolio currency risk. The Fund
generally enters into forward contracts as a hedge upon the purchase or sale of
a security denominated in a foreign currency. In addition, the Fund may enter
into such contracts as a hedge against changes in foreign currency exchange
rates on portfolio positions.

Forward contracts are valued based on the closing prices of the forward
currency contract rates in the London foreign exchange markets on a daily basis
as provided by a reliable bank or dealer. The Fund will realize a gain or loss
upon the closing or settlement of the forward transaction.

In this report, securities held in segregated accounts to cover net exposure on
outstanding forward contracts are noted in the Statement of Investments where
applicable. Gains and losses on outstanding contracts (unreal ized appreciation
or depreciation on forward contracts) are reported in the Statement of Assets
and Liabilities. Realized gains and losses are reported with all other foreign
currency gains and losses in the Fund's Statement of Operations.

Risks include the potential inability of the counterparty to meet the terms
of the contract and unanticipated movements in the value of a foreign currency
relative to the U.S. dollar.

27 Oppenheimer Strategic Income Fund
<PAGE>
Notes to Financial Statements (Unaudited) (Continued)

5. Forward
Contracts
(continued)

At March 31, 1995, the Fund had outstanding forward contracts to purchase
and sell foreign currencies as follows:
<TABLE>
<CAPTION>
Contract Unrealized
Contracts to Amount Valuation as of Appreciation
Purchase Expiration Date (000's) March 31, 1995 (Depreciation)
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Deutsche Mark 4/10/95--5/16/95 105,981 $77,518,657 $1,914,846
New Zealand Dollar 5/4/95 25,081 16,419,849 18,976
----------- -----------
$93,938,506 $1,933,822
=========== ===========
Contracts to Sell
-----------------------------------------------------------------------------------------------------------
Argentine Austral 4/3/95--4/6/95 9,896 $9,898,685 $(2,435)
Australian Dollar 5/4/95 22,375 16,424,551 (23,678)
British Pound Sterling 4/4/95 871 1,418,967 (12,544)
Spanish Peseta 4/10/95--5/15/95 9,800,000 77,621,618 (2,017,808)
----------- -----------
$105,363,821 (2,056,465)
============ -----------
$(122,643)
===========
</TABLE>

6. Management Fees
And Other Transactions
With Affiliates

For the six months ended March 31, 1995, commissions (sales charges paid by
investors) on sales of Class A shares totaled $8,005,768, of which $2,308,900
was retained by Oppenheimer Funds Distributor, Inc. (OFDI), a subsidiary of the
Manager, as general distributor, and by an affiliated broker/dealer. Sales
charges advanced to broker/dealers by OFDI on sales of the Fund's Class B shares
totaled $9,478,623, of which $886,439 was paid to an affiliated broker/dealer.
During the six months ended March 31, 1995, OFDI received contingent deferred
sales charges of $2,947,531 upon redemption of Class B shares as reimbursement
for sales commissions advanced by OFDI at the time of sale of such shares.

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 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 six months ended March 31, 1995, OFDI
paid $244,099 and $33,581, respectively, to an affiliated broker/dealer as
reimbursement for Class A and Class B personal service and maintenance expenses
and retained $6,953,364 as reimbursement for Class B sales commissions and
service fee advances, as well as financing costs.

28 Oppenheimer Strategic Income Fund
<PAGE>

7. Illiquid
Securities

At March 31, 1995, investments in securities included issues that are
illiquid or restricted. The securities are often purchased in private placement
transactions, are not registered under the Securities Act of 1933, may have
contractual restrictions on resale, and are valued under methods approved by the
Board of Trustees as reflecting fair value. The Fund intends to invest no more
than 10% of its net assets (determined at the time of purchase) in illiquid and
restricted securities. The aggregate value of these securities subject to this
limitation at March 31, 1995 was $146,044,241, which represents 3.1% of the
Fund's net assets. Information concerning these securities is as follows:

<TABLE>
<CAPTION>
Valuation
Per Unit as of
Security Acquisition Date Cost Per Unit March 31, 1995
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Arizona Charlie's, Inc., 12% Fst. Mtg. Nts., Series A, 11/15/00 11/18/93-12/9/93 $100.00 $81.50
------------------------------------------------------------------------------------------------------------------------------------
Becker Gaming, Inc. Wts., Exp. 11/00 11/18/93-12/9/93 $2.10 $2.00
------------------------------------------------------------------------------------------------------------------------------------
Capital Queen & Casino, Inc., 12% Fst. Mtg. Nts., Series A, 11/15/00 11/18/93-12/17/93 $87.89
$91.50
------------------------------------------------------------------------------------------------------------------------------------
Citicorp Mortgage Securities, Inc., Sub. Bonds, Series 1993-5,
Cl. B4, 7%, 4/25/23 4/29/93 $13.97 $14.00
------------------------------------------------------------------------------------------------------------------------------------
Colombia (Republic of) 1989--1990 Integrated Loan Facility Bonds:
6.75%, 7/1/01 6/17/93-11/12/93 $91.78 $86.50
7.937%, 10/26/03 10/25/93-12/17/93 $89.77 $84.50
------------------------------------------------------------------------------------------------------------------------------------
ECM Fund, L.P.I. 4/14/92 $1,000.00 $1,000.00
------------------------------------------------------------------------------------------------------------------------------------
ECM Fund, L.P.I., 14% Sub. Nts., 6/10/02 4/14/92 $100.00 $110.00
------------------------------------------------------------------------------------------------------------------------------------
FDIC Trust, Gtd. Real Estate Mtg. Investment Conduit Pass-Through
Certificates, Series 1994-C1:
Cl. 2-D, 8.70%, 9/25/25 8/10/94 $98.00 $98.09
Cl. 2-E, 8.70%, 9/25/25 8/10/94 $94.88 $94.66
------------------------------------------------------------------------------------------------------------------------------------
GPA Holland BV, 8.625% Medium-Term Nts., Series C, 1/15/99 1/10/94 $78.13
$74.63
------------------------------------------------------------------------------------------------------------------------------------
GPA Holland BV, 9.50% Medium-Term Nts., Series A, 12/15/01 1/27/94 $79.96
$65.00
------------------------------------------------------------------------------------------------------------------------------------
Prudential Agricultural Credit, Inc., Farmer Mac Agricultural Real
Estate Trust Sr. Sub. Mtg. Pass- Through Certificates, Series 1992-2:
Cl. B2, 8.961%, 1/15/03 8/18/92 $70.74 $75.92
Cl. B3, 9.294%, 4/15/09 8/18/92 $74.47 $74.63
------------------------------------------------------------------------------------------------------------------------------------
Pulsar Internacional, SA de C.V., 9%, 9/19/95 9/16/94 $99.62 $95.00
------------------------------------------------------------------------------------------------------------------------------------
Rabobank Certificate of Deposit British Pound Sterling Maximum
Rate Linked Nts., 10%, 6/2/95 5/20/94 $100.00 $96.38
------------------------------------------------------------------------------------------------------------------------------------
Rabobank Certificate of Deposit Japanese Yen Minimum Rate
Linked Nts., 10%, 6/2/95 5/20/94 $100.00 $100.50
------------------------------------------------------------------------------------------------------------------------------------
South Africa (Republic of) Loan Participation Agreements, Eskom:
7.375%, 4/15/98 11/18/93 $94.75 $92.75
7.875%, 2/9/00 12/3/93 $90.50 $94.75
7.875%, 9/15/99 12/17/93 $89.75 $93.00
8.625%, 1/15/98 2/9/94 $95.25 $94.50
------------------------------------------------------------------------------------------------------------------------------------
Swiss Bank Corp. Investment Banking, Inc., 10% CD Japanese
Yen Rate Linked Nts., 6/5/95 5/20/94 $100.00 $100.00
------------------------------------------------------------------------------------------------------------------------------------
Triangle Wire & Cable, Inc. 5/2/94 $9.50 $4.00
------------------------------------------------------------------------------------------------------------------------------------
United Mexican States, Gtd. Matador Bonds, Bankpesca
Restructured Sov. Loan, 7.562%, 10/26/06 1/13/94 $91.75 $53.25
------------------------------------------------------------------------------------------------------------------------------------
United Mexican States, Combined Facility 2, Loan
Participation Agreement, Tranche A, 7.625%, 3/20/99 10/25/94 $85.25 $56.50
------------------------------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Debs., Banco Venezuela TCI, Zero
Coupon, 12/13/98 7/13/93-7/15/93 $72.64 $62.50

</TABLE>
Pursuant to guidelines adopted by the Board of Trustees, certain
unregistered securities are determined to be liquid and are not included within
the 10% limitation specified above.

29 Oppenheimer Strategic Income Fund
<PAGE>

Oppenheimer Strategic Income Fund
A Series of Oppenheimer Strategic Funds Trust
========================================================
=======================
Officers and Trustees James C. Swain, Chairman and Chief Executive Officer
Robert G. Avis, Trustee
William A. Baker, Trustee
Charles Conrad, Jr., Trustee
Jon S. Fossel, Trustee and President
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Ned M. Steel, Trustee
Andrew J. Donohue, Vice President
David P. Negri, Vice President
Arthur P. Steinmetz, Vice President
George C. Bowen, Vice President, Secretary,
and Treasurer
Robert J. Bishop, Assistant Treasurer
Scott Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary

========================================================
=======================
Investment Advisor Oppenheimer Management Corporation

========================================================
=======================
Distributor Oppenheimer Funds Distributor, Inc.

========================================================
=======================
Transfer and Shareholder
Servicing Agent Oppenheimer Shareholder Services
========================================================
=======================
Custodian of
Portfolio Securities The Bank of New York
========================================================
=======================
Independent Auditors Deloitte & Touche LLP

========================================================
=======================
Legal Counsel Myer, Swanson, Adams & Wolf, P.C.

The financial statements included herein have been taken from the records
of the Fund without examination by the independent auditors. This is a copy of a
report to shareholders of Oppenheimer Strategic Income Fund. This report must be
preceded or accompanied by a Prospectus of Oppenheimer Strategic Income Fund.
For material information concerning the Fund, see the Prospectus.

30 Oppenheimer Strategic Income Fund
<PAGE>
OppenheimerFunds Family

OppenheimerFunds offers over 35 funds designed to fit virtually every
investment goal. Whether you're investing for retirement, your children's
education or tax-free income, we have the funds to help you seek your objective.

When you invest with OppenheimerFunds, you can feel comfortable knowing that you
are investing with a respected financial institution with over 30 years of
experience in helping people just like you reach their financial goals. And
you're investing with a leader in global, growth stock and flexible fixed income
investmentswith over 2.4 million shareholder accounts and more than $30 billion
under Oppenheimer's management and that of our affiliates.

At OppenheimerFunds, we don't charge a fee to exchange shares of eligible funds
of the same class. And you can exchange shares easily by mail or by telephone.
(1) For more information on OppenheimerFunds, please contact your financial
advisor or call us at 1-800-525-7048 for a prospectus. You may also write us at
the address shown on the back cover. As always, please read the prospectus
carefully before you invest.

Stock Funds
Discovery Fund Global Fund
Global Emerging Growth Fund(2) Oppenheimer Fund
Time Fund Value Stock Fund
Target Fund Gold & Special Minerals Fund
Growth Fund(3)

Stock & Bond Funds
Main Street Income & Growth Fund Equity Income Fund
Total Return Fund Asset Allocation Fund
Global Growth & Income Fund

Bond Funds
High Yield Fund Strategic Short-Term Income Fund
Champion High Yield Fund Investment Grade Bond Fund
Strategic Income & Growth Fund Mortgage Income Fund
Strategic Income Fund U.S. Government Trust
Strategic Diversified Income Fund Limited-Term Government Fund
Strategic Investment Grade Bond Fund

Tax-Exempt Funds
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California Tax-Exempt Fund(4) Tax-Free Bond Fund
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Florida Tax-Exempt Fund(4) Intermediate Tax-Exempt Bond Fund

Money Market Funds
Money Market Fund Cash Reserves

1. Exchange privileges are subject to change or termination.

2. Formerly Global Bio-Tech Fund.

3. Formerly Special Fund.

4. Available only to residents of certain states.

OppenheimerFunds are distributed by Oppenheimer Funds Distributor, Inc.,
Two World Trade Center, New York, NY 10048-0203.

31 Oppenheimer Strategic Income Fund

<PAGE>
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Whether it's automatic investment plans, informative newsletters and hotlines,
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And when you need help, our Customer Service Representatives are only a
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RS0230.001.0595 May 31, 1995

[Oppenheimer Funds Logo]
Oppenheimer Funds Distributor, Inc.
P.O. Box 5270
Denver, CO 80217-5270

Bulk Rate
U.S. Postage
PAID
Permit No. 11
Philadelphia, PA

QUEST FOR VALUE-SM-

FUNDS

Quest for Value Funds is a family of mutual funds (the "Funds")
managed by Quest for Value Advisors ("Quest Advisors"). The Global
Income Fund is a non-diversified fund. The other Funds covered
by this Prospectus are diversified funds. Total assets under
the management of Quest Advisors and its parent,
Oppenheimer Capital, amounted to approximately $33 billion on May 31,
1995. The Funds covered by this prospectus are:

Equity: QUEST FOR VALUE FUND, INC.
SMALL CAPITALIZATION FUND
GROWTH AND INCOME FUND
Fixed
Income: U.S. GOVERNMENT INCOME FUND
INVESTMENT QUALITY INCOME FUND
Flexible: OPPORTUNITY FUND
Global:
Equity: QUEST FOR VALUE GLOBAL EQUITY FUND,
INC.
Income: GLOBAL INCOME FUND

This Prospectus sets forth basic information about the Funds, including
applicable sales and distribution fees, that you should understand before
investing. You should read it carefully and retain it for future reference.
Statements of Additional Information dated March 1, 1995 for each of the Quest
for Value Global Equity Fund, Inc., Global Income Fund, Quest for Value Family
of Funds, and Quest for Value Fund, Inc.

(the "SAIs"), have been filed with the Securities and Exchange Commission and
are incorporated by reference in this Prospectus. You can obtain a copy of the
SAIs without charge by contacting Quest for Value Distributors, at the address
or telephone number listed on the back cover. SHARES IN THE FUNDS ARE NOT
DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY ANY BANK AND THE SHARES
OF THE FUNDS ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL INVESTED.
The Funds offer three separate classes of shares: Class A, B and C shares.
Shares of each Class represent an identical interest in the investment portfolio
of a Fund, and generally have the same rights, but are offered under different
sales charge and distribution fee arrangements. The offering of Class A, B and C
shares presents the investor with the opportunity to choose the sales charge and
distribution fee arrangement which is most beneficial, depending on the amount
of purchase, the length of time the investor expects to hold the shares, and
other circumstances.
Shares of each Class are offered at the net asset value next determined after
receipt of your purchase order plus an initial ("front-end") sales charge for
purchases of Class A shares, or a deferred sales charge for purchases of Class B
or Class C shares. (See "How to Buy Shares," p. 17) Class B and C shares bear a
higher ongoing distribution fee than Class A shares, and investors should
understand that over time the accumulated distribution charges on Class B and C
shares may exceed the amount of the initial sales charge and ongoing
distribution fee on Class A shares. (See "Distribution Plan," p. 35)
MARCH 1, 1995, AS REVISED JUNE 30, 1995

--------------------------------------------------------------------------------
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 THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------------------------------------------------------------------------------
QUEST FOR VALUE is a registered service mark of Oppenheimer Capital
<PAGE>
--------------------------------------------------------------------------------

SUMMARY OF FUND EXPENSES

<TABLE>
<CAPTION>
QUEST FOR VALUE SMALL CAPITALIZATION U.S.
GOVERNMENT INCOME
FUND
CLASS OF SHARES: A B C A B C
A B C
----------------------------------- -------- -------- -------- --------
-------- -------- -------- -------- --------
<C> <C> <C> <C> <C> <C>
<C> <C>
<C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Initial Sales Load Imposed
on Purchase (as a % of offering
price)............................ 5.50% none none 5.50%
none none 4.75% none none
Maximum Deferred Sales Load(1)..... none 5.00% 1.00% none
5.00% 1.00% none 5.00%
1.00%
Maximum Sales Load Imposed On
Reinvested Dividends.............. none none none none
none none none none none
Redemption Fee..................... none none none none
none none none none none
Exchange Fee....................... $ 5.00 $ 5.00 $ 5.00 $ 5.00
$ 5.00 $ 5.00 $ 5.00 $ 5.00 $ 5.00
ANNUAL FUND OPERATING EXPENSES (AS
% OF AVERAGE NET ASSETS)
Management Fee (2)................. 1.00% 1.00% 1.00% 1.00%
1.00% 1.00% .60% .60%
.60%
12b-1 Fee (including service fees
of .25%) (4)...................... .50% 1.00% 1.00% .50% 1.00% 1.00% .30% 1.00% 1.00%
Other Expenses..................... .21% .24% .28% .38% .48% .59% .33% .33% .35%
-------- -------- -------- -------- -------- -------- -------- -------- --------
TOTAL FUND OPERATING EXPENSES AFTER
WAIVER AND/OR EXPENSE
ASSUMPTIONS(3).................... 1.71% 2.24% 2.28% 1.88% 2.48% 2.59% 1.23% 1.93%
1.95%
-------- -------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- -------- --------
EXAMPLE 1: You would pay the following expense over the indicated periods in each of the Funds on a $1,000
investment
assuming (a) payment of the maximum sales charge, (b) a 5% annual return, and (c) retention of shares at the end of the
time period. 10-year figures for Class B shares assume conversion to Class A shares after eight years.
1 Year............................. 71.43 22.71 23.11 73.04 25.11 26.21 59.44 19.60 19.80
3 Years............................ 105.92 70.03 71.23 110.84 77.25 80.54 84.68 60.62 61.22
5 Years............................ 142.72 119.99 122.01 151.03 132.05 137.52 111.86 104.20 105.21
10 Years........................... 245.84 244.16 261.54 263.00 266.87 292.45 189.29 207.22 227.48
EXAMPLE 2: You would pay the following expenses over the indicated periods in each of the Funds on a $1,000
investment
assuming (a) payment of the maximum sales charge, (b) a 5% annual return, and (c) redemption at the end of the time
period.
10-year figures for Class B shares assume conversion to Class A shares after eight years.
1 Year............................. 71.43 72.71 33.11 73.04 75.11 36.21 59.44 69.60 29.80
3 Years............................ 105.92 100.03 71.23 110.84 107.25 80.54 84.68 90.62 61.22
5 Years............................ 142.72 129.99 122.01 151.03 142.05 137.52 111.86 114.20 105.21
10 Years........................... 245.84 244.16 261.54 263.00 266.87 292.45 189.29 207.22 227.48
</TABLE>

THE EXAMPLES SHOULD NOT BE CONSIDERED INDICATIONS OF PAST OR FUTURE EXPENSES OR
PERFORMANCE, AND ACTUAL EXPENSES OR PERFORMANCE MAY VARY FROM THOSE SHOWN.

The purpose of the table is to assist you in understanding the various costs
and expenses that you would bear, whether directly or indirectly. For more
complete descriptions of the various costs and expenses, see "How to Buy
Shares," "Investment Management Agreement" and "Distribution Plan".

Investors should be aware that over time, Class B and C shareholders may pay
more than the equivalent of the maximum front-end sales charges permitted by the
National Association of Securities Dealers Rules of Fair Practice.

(1) Certain purchases of Class A shares of $1 million or more are not
subject to front-end sales charges, but a contingent deferred sales charge
("CDSC") is imposed on the proceeds of such shares equal to 1% if the shares are
redeemed within the first 12 months after the end of the calendar month of their
purchase, and .5 of 1% if redeemed within the next 12 months. Purchases made on
or after July 1, 1994 of the Quest for Value Fund, Inc., the Small
Capitalization Fund, the Growth and Income Fund, the Opportunity Fund and the
Global Equity Fund are subject to a CDSC of 1% if the shares are redeemed within
the first 12 months after the end of the calendar month of their purchase. See
"How to Buy Shares."

(2) Includes an administration fee of .25% of average net assets.

2
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT QUALITY INCOME OPPORTUNITY GLOBAL EQUITY
A B C A B C A B C
------- ------- ------- ------- ------- ------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
4.75% none none 5.50% none none 5.50% none none
none 5.00% 1.00% none 5.00% 1.00% none 5.00% 1.00%
none none none none none none none none none
none none none none none none none none none
$5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00

.60% .60% .60% 1.00% 1.00% 1.00% .75% .75% .75%
.40% 1.00% 1.00% .50% 1.00% 1.00% .50% 1.00% 1.00%
.59% .63% .61% .28% .34% .35% .68%(2) .66%(2) .66%(2)
------- ------- ------- ------- ------- ------- ---------- ---------- ----------

1.59% 2.23% 2.21% 1.78% 2.34% 2.35% 1.93% 2.41% 2.41%
------- ------- ------- ------- ------- ------- ---------- ---------- ----------
------- ------- ------- ------- ------- ------- ---------- ---------- ----------

62.90 22.61 22.41 72.09 23.71 23.81 73.52 24.41 24.41
95.30 69.73 69.12 107.94 73.04 73.34 112.28 75.14 75.14
129.94 119.49 118.48 146.14 125.03 125.53 153.46 128.54 128.54
227.44 240.35 254.43 252.93 253.66 268.61 267.98 262.76 274.62

62.90 72.61 32.41 72.09 73.71 33.81 73.52 74.41 34.41
95.30 99.73 69.12 107.94 103.04 73.34 112.28 105.14 75.14
129.94 129.49 118.48 146.14 135.03 125.53 153.46 138.54 128.54
227.44 240.35 254.43 252.93 253.66 268.61 267.98 262.76 274.62

GROWTH AND INCOME GLOBAL INCOME
A B C A B C
------- ------- ------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
4.75% none none 3.00% none none
none 5.00% 1.00% none 5.00% 1.00%
none none none none none none
none none none none none none
$5.00 $5.00 $5.00 $5.00 $5.00 $5.00
.57% .57% .57% .11% .11% .11%
.40% 1.00% 1.00% .25%(4) 1.00% 1.00%
.93% .93% .93% 1.34%(2) 1.34%(2) 1.34%(2)
------- ------- ------- ---------- ---------- ----------
1.90% 2.50% 2.50% 1.70% 2.45% 2.45%
------- ------- ------- ---------- ---------- ----------
------- ------- ------- ---------- ---------- ----------
65.88 25.31 25.31 46.76 24.81 24.81
104.37 77.85 77.85 81.97 76.35 76.35
145.28 133.05 133.05 119.54 130.55 130.55
259.17 268.89 283.59 224.85 260.12 278.62
65.88 75.31 35.31 46.76 74.81 34.81
104.37 107.85 77.85 81.97 106.35 76.35
145.28 143.05 133.05 119.54 140.55 130.55
259.17 268.89 283.59 224.85 260.12 278.62
</TABLE>

(3) The expenses for certain funds have been restated to reflect voluntary
expense limitations currently in effect. Currently, expenses of the Growth and
Income and Global Income Funds are voluntarily limited by Quest Advisors so that
annualized operating Fund Expenses (as defined on p. 33) exclusive of Class
Expenses (as defined on p. 33) do not exceed 1.50% and 1.45%, respectively.
These Fund Expense limitations may be discontinued at any time. Without such
limitations, annual operating expenses as a percentage of average daily net
assets would have been as follows: Growth and Income Fund: Class A: 2.32%, Class
B: 2.93% and Class C: 3.10%; and Global Income Fund: Class A: 2.09%, Class B:
2.88% and Class C: 2.84%. Certain expenses of the Growth and Income Fund were
waived in order to comply with a state's expense limitations. The expenses
stated for the U.S. Government Income, Investment Quality Income and Global
Equity Funds reflect what the expenses of those Funds would have been for their
respective fiscal years if Quest Advisors had not waived a portion of its fee.

(4) See "Distribution Plan." Although the Global Income Fund's Distribution
Plan and Agreement ("Plan") for Class A shares authorizes the Fund to pay a
maximum service fee of .25% of average daily net assets and a distribution fee
of .05% of average daily net assets, the Board of Directors of the Fund has set
a maximum .25% service fee under the Plan.

3
<PAGE>
--------------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS

The financial information given for the Small Capitalization, U.S. Government
Income, Investment Quality Income, Opportunity, Growth and Income, Global Equity
and Global Income Funds has been audited by Price Waterhouse LLP, independent
accountants, whose unqualified reports thereon appear in the Statements of
Additional Information ("SAI(s)"). The financial information given for Quest for
Value Fund has been audited by KPMG Peat Marwick LLP, independent auditors,
whose unqualified report thereon appears in the SAI. All the following
information should be read in conjunction with the financial statements and
related notes thereto appearing in the SAIs. Further information regarding the
performance of each Fund is available in each Fund's Annual Report. Annual
Reports may be obtained without charge by calling the Fund at (800) 232-FUND.
<TABLE>
<CAPTION>
NET
REALIZED DISTRIBUTION
NET AND DIVIDENDS FROM
INVEST- UNREALIZED TOTAL FROM NET TOTAL
NAV: MENT GAIN FROM NET REALIZED TAX
DIVIDENDS
START OF INCOME (LOSS) ON INVESTMENT INVESTMENT GAIN ON
RETURN OF AND
PERIOD (LOSS) INVESTMENTS OPERATIONS INCOME INVESTMENTS
CAPITAL DISTRIBUTIONS
--------- ------- ---------- ------- ------- ------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
<C>
QUEST FOR VALUE - CLASS A
Year ended 10/31/94............. $12.51 $ .09 $ .50 $ .59 $ (.04) $ (.47) -- $ (.51)
...10/31/93..................... 11.71 .05 1.34 1.39 (.05) (.54) -- (.59)
...10/31/92..................... 10.61 .04 1.77 1.81 (.07) (.64) -- (.71)
...10/31/91..................... 7.84 .09 2.84 2.93 (.16) -- -- (.16)
...10/31/90 (9)................. 9.85 .18 (1.38) (1.20) (.26) (.55) -- (.81)
...10/31/89 (9)................. 8.99 .24 1.09 1.33 (.10) (.37) -- (.47)
...10/31/88 (9)................. 7.94 .09 1.38 1.47 (.05) (.37) -- (.42)
5/1/87-10/31/87 (9,10).......... 9.44 .03 (1.14) (1.11) (.09) (.30) -- (.39)
Year ended 4/30/87 (9).......... 9.47 .09 .81 .90 (.07) (.86) -- (.93)
...4/30/86 (9).................. 7.40 .06 2.33 2.39 (.09) (.23) -- (.32)
...4/30/85 (9).................. 7.69 .10 .99 1.09 (.11) (1.27) -- (1.38)
...4/30/84 (9).................. 8.90 .10 .48 .58 (.17) (1.62) -- (1.79)
QUEST FOR VALUE - CLASS B
Year ended 10/31/94............. 12.51 .02 .50 .52 (.03) (.47) -- (.50)
9/2/93(4) - 10/31/93............ 12.66(3) (.01) (.14) (.15) -- -- -- --
QUEST FOR VALUE - CLASS C
Year ended 10/31/94............. 12.50 .01 .51 .52 (.03) (.47) -- (.50)
9/2/93(4) - 10/31/93............ 12.66(3) (.01) (.15) (.16) -- -- -- --
SMALL CAPITALIZATION - CLASS A
Year ended 10/31/94............. $17.68 $ (.03) $ .01 $ (.02) -- $(1.33) -- $(1.33)
...10/31/93..................... 14.60 (.04) 4.26 4.22 -- (1.14) -- (1.14)
...10/31/92..................... 13.52 .00 1.50 1.50 -- (.42) -- (.42)
...10/31/91..................... 8.80 (.05) 4.85 4.80 (.08) -- -- (.08)
...10/31/90..................... 10.91 .07 (2.04) (1.97) (.08) (.06) -- (.14)
...1/1/89(7)-10/31/89........... 10.00(3) .08 .83 .91 -- -- -- --
SMALL CAPITALIZATION - CLASS B
Year ended 10/31/94............. 17.66 (.11) .02 (.09) -- (1.33) -- (1.33)
9/2/93(4)-10/31/93.............. 17.19(3) (.02) .49 .47 -- -- -- --
SMALL CAPITALIZATION - CLASS C
Year ended 10/31/94............. 17.67 (.13) .02 (.11) -- (1.33) -- (1.33)
...9/2/93(4) - 10/31/93......... 17.19(3) (.02) .50 .48 -- -- -- --
OPPORTUNITY - CLASS A
Year ended 10/31/94............. $18.71 $ .18 $ 1.35 $ 1.53 $ (.33) $ (.22) -- $ (.55)
...10/31/93..................... 16.73 .35 2.02 2.37 (.07) (.32) -- (.39)
...10/31/92..................... 14.29 .09 2.93 3.02 (.03) (.55) -- (.58)
...10/31/91..................... 9.74 .03 4.78 4.81 (.23) (.03) -- (.26)
...10/31/90..................... 11.59 .25 (1.64) (1.39) (.22) (.24) -- (.46)
1/1/89(7)-10/31/89.............. 10.00(3) .17 1.42 1.59 -- -- -- --
OPPORTUNITY - CLASS B
Year ended 10/31/94............. 18.70 .08 1.34 1.42 (.31) (.22) -- (.53)
...9/2/93(4)-10/31/93........... 18.73(3) .02 (.05) (.03) -- -- -- --
OPPORTUNITY - CLASS C
Year ended 10/31/94............. 18.70 .08 1.33 1.41 (.31) (.22) -- (.53)
...9/2/93(4)-10/31/93........... 18.73(3) .02 (.05) (.03) -- -- -- --
U.S. GOVERNMENT INCOME - CLASS A
Year ended 10/31/94............. $12.08 $ .59 $(1.08) $ (.49) $ (.59) $ (.21) -- $ (.80)
...10/31/93..................... 11.92 .65 .35 1.00 (.68) (.16) -- (.84)
...10/31/92..................... 11.80 .74 .18 .92 (.74) (.06) -- (.80)
...10/31/91..................... 11.35 .85 .61 1.46 (.86) (.15) -- (1.01)
...10/31/90..................... 11.50 .93 (.06) .87 (.93) (.09) -- (1.02)
...10/31/89..................... 11.50 .94 .08 1.02 (.93) (.09) -- (1.02)
...5/6/88(7)-10/31/88........... 11.46(3) .44 .10 .54 (.44) (.06) -- (.50)
U.S. GOVERNMENT INCOME - CLASS B
Year ended 10/31/94............. 12.08 .51 (1.08) (.57) (.51) (.21) -- (.72)
9/2/93(4)-10/31/93.............. 12.13(3) .08 (.04) .04 (.08) (.01) -- (.09)
U.S. GOVERNMENT INCOME - CLASS C
Year ended 10/31/94............. 12.08 .51 (1.08) (.57) (.51) (.21) -- (.72)
...9/2/93(4)-10/31/93........... 12.13(3) .08 (.04) .04 (.08) (.01) -- (.09)

NET
ASSETS RATIO OF NET RATIO OF NET
NAV: TOTAL AT END OPERATING INVESTMENT PORT-
END RETURN OF EXPENSES TO INCOME (LOSS) FOLIO
OF FOR PERIOD AVERAGE NET TO AVERAGE TURN-
PERIOD PERIOD(1)* (000) ASSETS NET ASSETS OVER
------- -------- ------- ------------ ------------- -------
<S> <C> <C> <C> <C> <C> <C>
QUEST FOR VALUE - CLASS A
Year ended 10/31/94............. $ 12.59 5.01% $238,085 1.71%(2) .72% 49%
...10/31/93..................... 12.51 12.27% 245,320 1.75% .40% 27%
...10/31/92..................... 11.71 18.45% 142,939 1.75% .53% 41%
...10/31/91..................... 10.61 37.94% 79,914 1.83% 1.06% 48%
...10/31/90 (9)................. 7.84 (13.43%) 49,740 1.82% 1.71% 51%
...10/31/89 (9)................. 9.85 15.68% 77,205 1.81% 2.31% 30%
...10/31/88 (9)................. 8.99 19.54% 83,228 2.21% .94% 15%
5/1/87-10/31/87 (9,10).......... 7.94 (12.19%) 91,255 2.24%(2) .76%(2) 21%
Year ended 4/30/87 (9).......... 9.44 10.25% 104,538 2.17% 1.23% 34%
...4/30/86 (9).................. 9.47 33.66% 64,331 2.18% 1.18% 68%
...4/30/85 (9).................. 7.40 17.86% 28,055 2.34% 1.90% 42%
...4/30/84 (9).................. 7.69 7.45% 13,388 2.29% 1.68% 74%
QUEST FOR VALUE - CLASS B
Year ended 10/31/94............. 12.53 4.43% 14,373 2.24% .14% 49%
9/2/93(4) - 10/31/93............ 12.51 (1.19%) 2,015 2.27%(1) (1.19%)(1) 27%
QUEST FOR VALUE - CLASS C
Year ended 10/31/94............. 12.52 4.45% 3,581 2.28% .09% 49%
9/2/93(4) - 10/31/93............ 12.50 (1.26%) 221 2.27%(1) (.90%)(1) 27%
SMALL CAPITALIZATION - CLASS A
Year ended 10/31/94............. $ 16.33 .04% $120,102 1.88% (.14%) 67%
...10/31/93..................... 17.68 30.21% 104,898 1.89% (.36%) 74%
...10/31/92..................... 14.60 11.60% 39,693 2.11% (.04%) 95%
...10/31/91..................... 13.52 55.01% 20,686 2.25%(5) (.41%)(5) 103%
...10/31/90..................... 8.80 (18.33%) 1,880 2.00%(5) .71%(5) 18%
...1/1/89(7)-10/31/89........... 10.91 9.10% 2,085 1.74%(1,5) 1.34%(1,5) 32%
SMALL CAPITALIZATION - CLASS B
Year ended 10/31/94............. 16.24 (.39%) 16,144 2.48% (.70%) 67%
9/2/93(4)-10/31/93.............. 17.66 2.73% 1,754 2.57%(1) (1.15%)(1) 74%
SMALL CAPITALIZATION - CLASS C
Year ended 10/31/94............. 16.23 (.51%) 3,344 2.59% (.81%) 67%
...9/2/93(4) - 10/31/93......... 17.67 2.79% 235 2.57%(1) (1.20%)(1) 74%
OPPORTUNITY - CLASS A
Year ended 10/31/94............. $ 19.69 8.41% $163,340 1.78% .96% 42%
...10/31/93..................... 18.71 14.34% 127,225 1.83% 2.69% 24%
...10/31/92..................... 16.73 21.93% 40,563 2.27% .72% 32%
...10/31/91..................... 14.29 50.44% 8,446 2.35%(5) .30%(5) 88%
...10/31/90..................... 9.74 (12.62%) 4,570 2.00%(5) 2.30%(5) 206%
1/1/89(7)-10/31/89.............. 11.59 15.90% 3,868 1.84%(1,5) 3.75%(5) 103%
OPPORTUNITY - CLASS B
Year ended 10/31/94............. 19.59 7.84% 43,317 2.34% .43% 42%
...9/2/93(4)-10/31/93........... 18.70 (.16%) 2,115 2.52%(1) 1.32%(1) 24%
OPPORTUNITY - CLASS C
Year ended 10/31/94............. 19.58 7.78% 7,289 2.35% .43% 42%
...9/2/93(4)-10/31/93........... 18.70 (.16%) 313 2.52%(1) 1.13%(1) 24%
U.S. GOVERNMENT INCOME - CLASS A
Year ended 10/31/94............. $ 10.79 (4.15%) $123,257 1.20% 5.19%(6) 126%
...10/31/93..................... 12.08 8.55% 189,091 1.15%(6) 5.33%(6) 315%
...10/31/92..................... 11.92 7.98% 151,197 1.15%(6) 6.26%(6) 207%
...10/31/91..................... 11.80 13.40% 82,400 1.15%(6) 7.24%(6) 309%
...10/31/90..................... 11.35 7.98% 52,742 1.15%(6) 8.21%(6) 101%
...10/31/89..................... 11.50 9.42% 71,139 1.15%(6) 8.37%(6) 255%
...5/6/88(7)-10/31/88........... 11.50 4.78% 82,560 1.15%(6) 7.78%(1,6) 207%
U.S. GOVERNMENT INCOME - CLASS B
Year ended 10/31/94............. 10.79 (4.84%) 6,813 1.92%(6) 4.53%(6) 126%
9/2/93(4)-10/31/93.............. 12.08 .29% 1,286 1.85%(6) 3.07%(1,6) 315%
U.S. GOVERNMENT INCOME - CLASS C
Year ended 10/31/94............. 10.79 (4.84%) 1,224 1.94%(6) 4.57%(6) 126%
...9/2/93(4)-10/31/93........... 12.08 .34% 141 1.85%(1,6) 3.89%(1,6) 315%
</TABLE>

4
<PAGE>
<TABLE>
<CAPTION>
NET
REALIZED DISTRIBUTION
NET AND DIVIDENDS FROM
INVEST- UNREALIZED TOTAL FROM NET TOTAL
NAV: MENT GAIN FROM NET REALIZED TAX
DIVIDENDS
START OF INCOME (LOSS) ON INVESTMENT INVESTMENT GAIN ON
RETURN OF AND
PERIOD (LOSS) INVESTMENTS OPERATIONS INCOME INVESTMENTS
CAPITAL DISTRIBUTIONS
--------- ------- ---------- ------- ------- ------- ---------- ----------
INVESTMENT QUALITY INCOME -
CLASS A
<S> <C> <C> <C> <C> <C> <C> <C>
<C>
Year ended 10/31/94............. $11.49 $ .68 $(1.75) $(1.07) $ (.68) $ (.07) -- $ (.75)
...10/31/93..................... 10.36 .68 1.19 1.87 (.68) (.06) -- (.74)
...10/31/92..................... 10.06 .80 .30 1.10 (.80) -- -- (.80)
12/18/90(7) - 10/31/91.......... 10.00(3) .71 .06 .77 (.71) -- -- (.71)
INVESTMENT QUALITY INCOME -
CLASS B
Year ended 10/31/94............. 11.49 .61 (1.75) (1.14) (.61) (.07) -- (.68)
9/2/93(4)-10/31/93.............. 11.52(3) .08 (.03) .05 (.08) -- -- (.08)
INVESTMENT QUALITY INCOME -
CLASS C
Year ended 10/31/94............. 11.49 .61 (1.75) (1.14) (.61) (.07) -- (.68)
9/2/93(4)-10/31/93.............. 11.52(3) .09 (.03) .06 (.09) -- -- (.09)
GLOBAL EQUITY - CLASS A
Year ended 11/30/94............. $13.54 $ .01 $ 1.10(8) $ 1.11 -- $ (.49) -- $ (.49)
...11/30/93..................... 12.30 -- 2.26(8) 2.26 (.12) (.90) -- (1.02)
...11/30/92..................... 11.25 .12 .93(8) 1.05 -- -- -- --
...11/30/91..................... 10.57 (.04) .85(8) .81 (.05) (.08)(8) -- (.13)
7/2/90(7)-11/30/90.............. 12.05(3) .05 (1.53)(8) (1.48) -- -- -- --
GLOBAL EQUITY - CLASS B
Year ended 11/30/94............. 13.52 (.06) 1.10(8) 1.04 -- (.49) -- $ (.49)
9/2/93(4)-11/30/93.............. 13.75(3) (.02) (.21)(8) (.23) -- -- -- --
GLOBAL EQUITY - CLASS C
Year ended 11/30/94............. 13.52 (.08) 1.11(8) 1.03 -- (.49) -- $ (.49)
9/2/93(4)-11/30/93.............. 13.75(3) (.02) (.21)(8) (.23) -- -- -- --
GLOBAL INCOME - CLASS A
Year ended 11/30/94............. $ 9.36 $ 57 $ (.87)(8) $ (.30) $ (.08) -- $ (.49) $ (.57)
...11/30/93..................... 9.14 .63 .27(8) .90 (.17) -- (.51) (.68)
...12/2/91(7) - 11/30/92 10.00(3) .77 (1.00)(8) (.23) (.63) -- -- (.63)
GLOBAL INCOME - CLASS B
Year ended 11/30/94............. 9.36 .50 (.87)(8) (.37) (.07) -- (.43) (.50)
9/2/92(4) - 11/30/93............ 9.42(3) .12 (.06)(8) .06 (.03) -- (.09) (.12)
GLOBAL INCOME - CLASS C
Year ended 11/30/94............. 9.36 .48 (.87)(8) (.39) (.07) -- (.41) (.48)
9/2/93(4) - 11/30/93............ 9.42(3) .13 (.06)(8) .07 (.03) -- (.10) (.13)
GROWTH AND INCOME - CLASS A
Year ended 10/31/94............. $11.24 $ .32 $ .55 $ .87 $ (.32) $(1.70) -- $(2.02)
...10/31/93..................... 10.80 .30 .73 1.03 (.26) (.33) -- (.59)
11/4/91(7) - 10/31/92........... 10.00(3) .28 .80 1.08 (.28) -- -- (.28)
GROWTH AND INCOME - CLASS B
Year ended 10/31/94............. 11.23 .25 .56 .81 (.27) (1.70) -- (1.97)
9/2/93(4) - 10/31/93............ 11.21(3) .04 .05 .09 (.07) -- -- (.07)
GROWTH AND INCOME - CLASS C
Year ended 10/31/94............. 11.23 .24 .56 .80 (.26) (1.70) -- (1.96)
9/2/93(4) - 10/31/93............ 11.21(3) .04 .05 .09 (.07) -- -- (.07)

NET
ASSETS RATIO OF NET RATIO OF NET
NAV: TOTAL AT END OPERATING INVESTMENT PORT-
END RETURN OF EXPENSES TO INCOME (LOSS) FOLIO
OF FOR PERIOD AVERAGE NET TO AVERAGE TURN-
PERIOD PERIOD(1)* (000) ASSETS NET ASSETS OVER
------- -------- ------- ------------ ------------- -------
INVESTMENT QUALITY INCOME -
CLASS A
<S> <C> <C> <C> <C> <C> <C>
Year ended 10/31/94............. $ 9.67 (9.61%) $46,922 1.29%(5) 6.47%(5) 33%
...10/31/93..................... 11.49 18.64% 61,288 1.20%(5) 6.07%(5) 12%
...10/31/92..................... 10.36 11.21% 29,701 .95%(5) 7.62%(5) 18%
12/18/90(7) - 10/31/91.......... 10.06 8.11% 17,235 .82%(1,5) 8.25%(1,5) 19%
INVESTMENT QUALITY INCOME -
CLASS B
Year ended 10/31/94............. 9.67 (10.22%) 6,605 1.92%(5) 5.85%(5) 33%
9/2/93(4)-10/31/93.............. 11.49 .45% 1,468 1.84%(1,5) 3.68%(1,5) 12%
INVESTMENT QUALITY INCOME -
CLASS C
Year ended 10/31/94............. 9.67 (10.23%) 2,583 1.90%(5) 6.01%(5) 33%
9/2/93(4)-10/31/93.............. 11.49 .55% 101 1.84%(1,5) 4.83%(1,5) 12%
GLOBAL EQUITY - CLASS A
Year ended 11/30/94............. $ 14.16 8.37% $148,044 1.92%(6) .05%(6) 70%
...11/30/93..................... 13.54 19.72% 135,616 1.76%(6) .04%(6) 46%
...11/30/92..................... 12.30 9.33% 111,207 1.76%(6) .72%(6) 62%
...11/30/91..................... 11.25 7.72% 46,937 2.09% (.27%) 41%
7/2/90(7)-11/30/90.............. 10.57 (12.28%) 58,087 2.11% .92% 2%
GLOBAL EQUITY - CLASS B
Year ended 11/30/94............. 14.07 7.84% 10,268 2.50%(6) (.44%)(6) 70%
9/2/93(4)-11/30/93.............. 13.52 (1.67%) 1,676 2.26%(1,6) (.76%)(1,6) 46%
GLOBAL EQUITY - CLASS C
Year ended 11/30/94............. 14.06 7.77% 2,415 2.66%(6) (.59%)(6) 70%
9/2/93(4)-11/30/93.............. 13.52 (1.67%) 244 2.26%(1,6) (.69%)(1,6) 46%
GLOBAL INCOME - CLASS A
Year ended 11/30/94............. $ 8.49 (3.24%) $16,781 1.65% 6.45% 144%
...11/30/93..................... 9.36 10.20% 22,465 1.70%(6) 6.73%(6) 114%
...12/2/91(7) - 11/30/92 9.14 (2.60%) 19,469 1.84%(2,6) 7.93%(1,6) 360%
GLOBAL INCOME - CLASS B
Year ended 11/30/94............. 8.49 (3.99%) 1,176 2.41% 5.71% 144%
9/2/92(4) - 11/30/93............ 9.36 .65% 699 2.45%(1,6) 4.38%(1,6) 114%
GLOBAL INCOME - CLASS C
Year ended 11/30/94............. 8.49 (4.20%) 220 2.70% 5.48% 144%
9/2/93(4) - 11/30/93............ 9.36 .71% 151 2.45%(1,6) 5.16%(1,6) 114%
GROWTH AND INCOME - CLASS A
Year ended 10/31/94............. $ 10.09 8.64% $30,576 1.86%(6) 3.16%(6) 113%
...10/31/93..................... 11.24 9.93% 28,466 1.90%(6) 2.66%(6) 192%
11/4/91(7) - 10/31/92........... 10.80 10.84% 8,057 2.23%(1,6) 2.73%(1,6) 77%
GROWTH AND INCOME - CLASS B
Year ended 10/31/94............. 10.07 7.96% 2,928 2.47(6) 2.53%(6) 113%
9/2/93(4) - 10/31/93............ 11.23 .81% 319 2.49%(1,6) 1.83%(1,6) 192%
GROWTH AND INCOME - CLASS C
Year ended 10/31/94............. 10.07 7.91% 455 2.62%(6) 2.39%(6) 113%
9/2/93(4) - 10/31/93............ 11.23 .81% 102 2.49%(1,6) 2.18%(1,6) 192%
</TABLE>

----------------------------------------
(1)Total return shown assumes reinvestment of all dividends and distributions
but does not reflect deductions for sales charges. Aggregate (not
annualized) total return is shown for any period shorter than one year.
(2)Annualized
(3)Offering Price
(4)Initial offering of Class B and C shares
(5)During the periods the Advisor voluntarily waived all or a portion of its
fees and assumed some operating expenses of the Funds. Without such waivers
and assumptions, the ratios of net operating expenses to average net assets
and the ratios of net investment income to average net assets would have
been, respectively: Investment Quality Income Fund: Class A shares - 1.59%
and 6.17% for the year ended October 31, 1994, 1.50% and 5.77% for the year
ended 10/31/93, 1.72% and 6.85% for the year ended 10/31/92, and 2.11% and
6.96% (annualized) for the period 12/18/90 (commencement of operations) to
10/31/91; Class B shares - 2.23% and 5.54% for the year ended October 31,
1994. 2.07% and 3.45% (annualized) for the period 9/2/93 (initial offering)
to October 31, 1993; and Class C shares - 2.21% and 5.70% for the year ended
October 31, 1994 and 2.06% and 4.61% (annualized) for the period 9/2/93
(initial offering) to 10/31/93; Small Capitalization Fund: Class A shares -
3.27% and (1.43%) for the year ended 10/31/91, 5.82% and (3.11%) for the
year ended 10/31/90, and 6.27% and (3.19%) (annualized) for the period
1/1/89 (commencement of operations) to 10/31/89; Opportunity Fund: Class A
shares - 3.33% and (.68%) for the year ended 10/31/91, 3.69% and .61% for
the year ended 10/31/90, and 5.32% and .27% (annualized) for the period
1/1/89 (commencement of operations) to 10/31/89.
(6)During the periods the Advisor voluntarily waived a portion of its fees.
Without such waiver, the ratios of operating expenses to average net assets
and the ratios of net investment income to average net assets would have
been, respectively: U.S. Government Income Fund: Class A shares - 1.23% and
5.16% for the year ended October 31, 1994, 1.20% and 5.28% for the year
ended 10/31/93, 1.17% and 6.24% for the year ended 10/31/92, 1.46% and 6.93%
for the year ended 10/31/91, 1.44% and 7.92% for the year ended 10/31/90,
1.37% and 8.15% for the year ended 10/31/89, and 1.42% and 7.51%
(annualized) for the period from 5/6/88 (commencement of operations) to
10/31/88; Class B shares - 1.93% and 4.52% for the year ended October 31,
1994 and 1.96% and 2.96% (annualized) for the period September 2, 1993
(initial offering) to October 31, 1993 and Class C shares - 1.95% and 4.56%
for the year ended October 31, 1994 and 1.96% and 3.78% (annualized) for the
period September 2, 1993 (initial offering) to October 31, 1993 ; Growth and
Income Fund: Class A shares - 2.32% and 2.70% for the year ended October 31,
1994, 2.18% and 2.38% for the year ended 10/31/93, and 2.98% and 1.98%
(annualized) for the period 11/4/91 (commencement of operations) to
10/31/92, Class B shares - 2.93% and 2.07% for the year ended October 31,
1994 and 2.88% and 1.44% (annualized) for the period September 2, 1993
(initial offering) to October 31, 1993 and Class C shares 3.10% and 1.91%
for the year ended October 31, 1994 and 2.87% and 1.80% (annualized) for the
period 9/2/93 (initial offering) to 10/31/93; Global Equity Fund: Class A
shares - 1.93% and .04% for the year ended 11/30/94, 1.91% and (.11%) for
the year ended 11/30/93 and 1.84% and .64% for the year ended 11/30/92,
Class B shares - 2.51% and (.45%) for the year ended 11/30/94 and 2.32% and
(.82%) (annualized) for the period 9/2/93 (initial offering) to 11/30/93 and
Class C shares - 2.66% and (.59%) for the year ended 11/30/94 and 2.35% and
(.78%) (annualized) for the period 9/2/93 (initial offering) to 11/30/93;
Global Income Fund - Class A shares -2.35% and 5.75% for the year ended
11/30/94, 2.09% and 6.34% for the year ended 11/30/93 and 1.88% and 7.89%
(annualized) for the period 12/2/91 (commencement of operations) to
11/30/92, Class B shares - 3.12% and 5.00% for the year ended 11/30/94 and
2.88% and 3.95% (annualized) for the period 9/2/93 (initial offering) to
11/30/93 and Class C shares - 3.39% and 4.79% for the year ended 11/30/94
and 2.84% and 4.77% (annualized) for the period 9/2/93 (initial offering) to
11/30/93.
(7)Commencement of Operations
(8)Includes net gains (losses) on foreign currency transactions
(9)Per share data has been retroactively restated to reflect a 200% stock
dividend as of July 1, 1991.
(10)Quest for Value Fund, Inc. changed its fiscal year end to October 31 in
1987.

5
<PAGE>
----------------------------------------------------------------------------

INTRODUCTION

The Quest for Value Funds are a family of open-end mutual funds offering many
different investment objectives to select from ranging from funds that
invest primarily in bonds or other fixed income securities to funds that
invest in common stocks of large or small companies. You can select from all of
these funds in order to meet your long term investment objectives. This
introduction is designed to provide an overview of the funds. More information
and greater detail is provided in the remainder of this Prospectus.

WHAT ARE THE BENEFITS OF INVESTING IN QUEST FOR VALUE FUNDS? Quest for Value
Funds offer the individual investor or qualified retirement plans access to
professional money managers that are normally available only to investors with
several millions to invest. The Quest for Value Funds are managed by Quest for
Value Advisors ("Quest Advisors"), a subsidiary of Oppenheimer Capital, one of
the nation's largest institutional money managers, which has been in business
since 1968.

In addition to professional money management, the Funds offer the benefit of
diversification. Your investment is spread over many different securities in
many different industries. Diversification is so important in reducing risk that
the law requires all qualified retirement plans to diversify their investments.
Professional management and diversification offers you the opportunity to
improve your returns and reduce the risk that you would incur if you
concentrated your investments in just a limited number of securities.

WHAT FUNDS CAN I INVEST IN? There are many Quest for Value Funds that you can
choose from to meet your investment objectives. We have funds that invest in
stocks, bonds or a combination of stocks and bonds, as well as funds that invest
in foreign securities. See "Investment Objectives of the Funds," following this
Introduction, for a description of the specific investment objectives of each of
the Funds:

FUNDS INVESTING IN COMMON STOCKS
Quest for Value Fund
Small Capitalization Fund

FUNDS INVESTING IN STOCKS AND BONDS
Opportunity Fund
Growth and Income Fund

FUNDS INVESTING IN BONDS
U.S. Government Income Fund
Investment Quality Income Fund

FUNDS INVESTING IN FOREIGN SECURITIES
Global Equity Fund
Global Income Fund

In addition, Quest for Value manages and distributes money market funds and
tax-exempt funds. Ask your broker or dealer for a prospectus.

HOW CAN I PURCHASE SHARES? You can purchase shares through your broker or dealer
who has a sales agreement with Quest for Value Distributors ("Quest
Distributors"). The Funds offer Class A, B and C shares. Class A shares have an
initial sales charge that declines for larger orders. Purchases of $1 million or
more of Class A shares of the U.S. Government Income Fund and the Investment
Quality Income Fund have no initial sales charge but are subject to a contingent
deferred sales charge ("CDSC") if held for less than two years. Purchases of $1
million or more of Class A shares of the Quest for Value Fund, Inc., the Small
Capitalization Fund, the Growth and Income Fund, the Opportunity Fund and the
Global Equity Fund made on or after July 1, 1994 have no initial sales charge
but are subject to a CDSC if held for less than one year; if such purchases were
made before July 1, 1994 they are subject to a CDSC if held for less than two
years. Class A shares are also subject to an ongoing distribution fee pursuant
to the

6
<PAGE>
Distribution Plan and Agreement for Class A shares ("Plan") at the following
annual rates of each Fund's average daily net assets: U.S. Government Income
Fund--.05%, Investment Quality Income and Growth and Income Fund--.15%, all
other Funds except Global Income Fund--.25%. Each Fund's Class A Shares also pay
a service fee at the annual rate of .25% of average daily net assets. Although
the Global Income Fund is authorized to pay a distribution fee of .05% and a
service fee of .25% under its Plan, the Board of Directors of that Fund has set
a maximum fee under the Plan of .25%.

Class B shares incur no initial sales charge but are subject to a CDSC that
declines over time for shares held less than six years; Class B shares are only
available to investors purchasing less than $250,000. Class B shares are also
subject to an ongoing distribution fee pursuant to the Distribution Plan and
Agreement for Class B shares at the annual rate of .75% of each Fund's average
daily net assets and a service fee at the annual rate of .25% of average daily
net assets. Class B shares will automatically convert to Class A shares of the
same Fund eight years after the end of the calendar month in which the purchase
order for such Class B shares was accepted, on the basis of the relative net
asset values of the two classes, subject to the terms described under
"Conversion of Class B Shares," p. 20.

Class C shares incur no initial sales charge but are subject to a CDSC for
shares held less than one year. Class C shares of each Fund are subject to an
ongoing distribution fee pursuant to the Distribution Plan and Agreement for
Class C shares at the annual rate of .75% of each Fund's average daily net
assets and a service fee at the annual rate of .25% of average daily net assets.

In determining which class of shares to purchase, investors should consider
whether during the anticipated life of their investment in a Fund the
accumulated distribution fees and deferred sales charges on Class B or C shares
would be more or less than the amount of the initial sales charges and
distribution fees paid on Class A shares held for the same amount of time.
Investors who qualify for significantly reduced sales charges for Class A shares
or who expect to hold their investment for an extended period of time might find
the initial sales charge alternative preferable. However, because the initial
sales charge is deducted at the time of purchase, investors should consider the
extent to which any return might otherwise be realized on the additional funds
invested under the deferred sales charge alternative and weigh such
consideration against the higher per share return of Class A shares afforded by
the lower distribution fees of such shares. Other investors might determine it
more advantageous to have all their funds invested initially, although they
would be subject to higher ongoing distribution fees and, possibly, a CDSC.

ARE THERE SPECIAL SALES CHARGES FOR QUALIFIED RETIREMENT PLANS? The Funds offer
qualified retirement plans several different ways of buying shares at reduced
sales charges. Class A shares offer a special lower sales charge structure based
on the number of eligible employees in the plan, and do not have a sales charge
for sales over $1,000,000 or for retirement plans covering at least 50
employees. Class B shares currently are not being offered to non-qualified
retirement plans and qualified retirement plans under Internal Revenue Code
Sections 401(a), 401(k), 403(b) and 457 but are being offered to qualified
retirement plans under Internal Revenue Code Section 408(a). The CDSC is waived
for certain benefit payments from these plans. See "Exemptions from Class A, B
and C CDSC" p. 21. Your broker or dealer can help you establish an IRA, 401(k),
403(b) or pension and profit sharing plan using the Quest for Value Funds.

7
<PAGE>
HOW DO I GET MONEY OUT OF A FUND? You can receive periodic income dividends.
Some of our Funds distribute income monthly, some quarterly and some for which
income is not a primary goal, annually. You can establish a withdrawal plan that
will send you a set amount or percentage of your account on a regular basis.

You can redeem shares through your broker or dealer or through Quest
Distributors directly. Some of the Funds offer the ability to redeem shares by
writing a check on the shares in your account. For convenience, you can also
redeem shares by telephone. When you redeem shares you will receive the value of
the shares that are redeemed (less any applicable CDSC). This value can be more
or less than your purchase price depending on the results of the investments
that the fund holds. A check will be mailed to you for your redemption (or the
proceeds wired to your bank) on the day after a redemption request is received.

WHERE CAN I GET INFORMATION ABOUT MY INVESTMENT? The Funds send all shareholders
an annual and semi-annual report. The annual report contains information about
the Funds' investment management strategies and performance; you can receive a
copy of this report from your broker or dealer or from the Fund free of charge.
You will receive a confirmation from the Funds' transfer agent, State Street
Bank and Trust Company, after every transaction (purchase, redemption, exchange
or distribution). The confirmation will show you the number of shares that you
own. You can determine the value of your shares by looking up the price in the
mutual fund pages of most daily newspapers. You can also get current information
from your broker or dealer or by calling the Fund at 800-232-FUND
(800-232-3863).

WHAT ARE THE RISKS OF INVESTING IN MUTUAL FUNDS? The Funds are not fixed
investments and their net asset values will fluctuate because the values of the
securities that they own will fluctuate. On redemption the value of your shares
may be more or less than your investment. See "Risk Factors."

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

INVESTMENT OBJECTIVES OF THE FUNDS

Quest Advisors manages the Funds in accordance with their investment objectives
described below. Quest Advisors' equity investment policy is overseen by
George Long, Managing Director and Chief Investment Officer for
Oppenheimer Capital, the parent of Quest Advisors. Mr. Long has been with
Oppenheimer Capital since 1982. Fixed income investment policy is overseen by
Robert J. Bluestone, Managing Director and Director of Fixed Income Management
for Oppenheimer Capital. Mr. Bluestone has been with the firm since 1986.

QUEST FOR VALUE FUND seeks capital appreciation through investment in securities
(primarily equity securities) of companies believed by Quest Advisors to be
undervalued in the marketplace in relation to factors such as the companies'
assets, earnings, growth potential and cash flows. For the purposes of this
Prospectus the term equity securities is defined as common stocks and preferred
stocks; bonds, debentures and notes convertible into common stocks; and
depository receipts for such securities. Investments of the Quest for Value Fund
are managed by Eileen Rominger, Managing Director of Oppenheimer Capital. She
has been portfolio manager and Vice President of this Fund since 1989. Ms.
Rominger has been an analyst and portfolio manager at Oppenheimer Capital since
1981.

SMALL CAPITALIZATION FUND seeks capital appreciation through investments in a
diversified portfolio which under normal conditions will have at least 65% of
its assets invested in equity securities of companies with market
capitalizations under $1

8
<PAGE>
billion. The Fund's investment approach will attempt to identify securities of
companies whose prices are favorable in relation to their book values and/or
sales and securities of companies which have limited operating leverage
(relatively stable business with below average sensitivity to changes in the
general economy) and/or limited financial leverage (a ratio of debt to assets,
or cost of debt service to income, which is meaningfully below those of their
competitors). The Small Capitalization Fund is managed by Jenny Beth Jones,
Senior Vice President of Oppenheimer Capital, and Louis Goldstein, Vice
President of Oppenheimer Capital . Ms. Jones has been portfolio manager and Vice
President of this Fund since 1990. Previously Ms. Jones was a portfolio manager
and analyst with Mutual of America. Mr. Goldstein has been portfolio manager of
the Fund since January 3, 1995. He has been a security analyst with Oppenheimer
Capital since 1991. From 1988 to 1991 he was a security analyst with David J.
Greene & Co.

U.S. GOVERNMENT INCOME FUND seeks to provide shareholders with a high level of
current income together with protection of capital by investing exclusively in
debt obligations, including mortgage-backed securities, issued or guaranteed by
the United States government, its agencies or instrumentalities ("U.S.
government securities"), and in related futures, options and repurchase
agreements. The Fund will attempt to enhance its income and reduce the impact of
changing interest rates on the value of its shares by engaging in options and
financial futures transactions. Such transactions will tend to limit
opportunities for appreciation during periods of declining interest rates. The
average maturity of the Fund's investments will vary based on market conditions.
It is estimated that the average dollar weighted maturity of the Fund will be
between five and ten years. The U.S. Government Income Fund is managed by Vikki
Hanges, Vice President of Oppenheimer Capital. Ms. Hanges has been portfolio
manager and Vice President of this Fund since 1993. Ms. Hanges assisted with the
management of Quest Cash Reserves, Inc., a money market fund with five
portfolios managed by Quest Advisors, from 1987 through 1992. Ms. Hanges has
been on the fixed income trading desk at Oppenheimer Capital since 1982. Howard
Potter, President and Chief Executive of New Castle Advisers, Inc., advises the
Fund on investment strategies for options and financial futures. From 1986-1991
he was a Vice President in the Fixed Income Department at Oppenheimer & Co.,
Inc. ("Opco") and while Opco acted as subadvisor to this Fund from 1988 to 1991,
Mr. Potter was responsible for advising this Fund regarding options and
financial futures.

INVESTMENT QUALITY INCOME FUND seeks to provide shareholders with as high a
level of current income as is consistent with conservation of principal through
a portfolio consisting primarily of fixed income obligations. Under normal
conditions, at least 80% of the Fund's assets will be invested in corporate
bonds, U.S. government securities and/or mortgage backed debt securities rated A
or better by Moody's Investor Services Inc. (Moody's) or Standard & Poors
Corporation ("S&P"), or, if unrated, considered to be of comparable quality by
Quest Advisors. The Fund may invest up to 20% of its assets in the lowest
category of investment-grade corporate bonds, those which are rated Baa3 by
Moody's or BBB - by S&P or, if unrated, considered to be of comparable quality
by Quest Advisors. The term bonds includes debentures but does not include
bills, commercial paper or notes. The average maturity of the Fund's investments
will vary based on market conditions. It is anticipated, however, that the
average dollar weighted maturity of the Fund will be greater than 20 years. The
Investment Quality Income Fund is managed by George H. Tilghman, Jr., Vice
President of Oppenheimer Capital. Mr. Tilghman has been responsible for the
management of this fund's portfolio since its inception. He was named Vice
President of the

9
<PAGE>
Fund in 1993. He was previously a fixed income portfolio manager in
International Investment Management at Brown Brothers Harriman & Co.

OPPORTUNITY FUND seeks growth of capital over time through investments in a
diversified portfolio of common stocks, bonds and cash equivalents, the
proportions of which will vary based upon management's assessment of the
relative values of each investment under prevailing market conditions. The
Fund's portfolio will normally be invested primarily in common stocks and
securities convertible into common stock. During periods when common stocks
appear to be overvalued and when value differentials are such that fixed-income
obligations appear to present meaningful capital growth opportunities relative
to common stocks or pending investment in securities with capital growth
opportunities, up to 50% or more of the Fund's assets may be invested in bonds
and other fixed-income obligations. This may include cash equivalents which do
not generate capital appreciation. The bonds in which the Fund invests will be
limited to U.S. government obligations, mortgage-backed securities,
investment-grade corporate debt obligations and unrated obligations, including
those of foreign issuers, which management believes to be of comparable quality.
The investments of the Opportunity Fund are managed by Richard J. Glasebrook II,
Managing Director of Oppenheimer Capital. Mr. Glasebrook has been portfolio
manager and Vice President of this Fund since 1991. Previously, he was a Partner
with Delafield Asset Management where he served as a portfolio manager and
analyst.

GROWTH AND INCOME FUND seeks to achieve a combination of growth of capital and
investment income with growth of capital as the primary objective, by investing
in securities that are believed by Quest Advisors to be undervalued in the
marketplace and to offer the possibility of increased value. The Fund invests in
marketable securities traded on national securities exchanges and in the
over-the-counter market. Ordinarily, the Fund invests its assets in common
stocks (with emphasis on dividend paying stocks), preferred stocks, securities
convertible into common stock, and debt securities. The Fund may invest in
lower-quality, high-yielding convertible debt securities and other debt
securities and currently intends to limit its investments in these securities to
up to 25% of its assets. See "Risk Factors." By focusing its purchases of equity
securities on those issued by mature companies which it believes to be
under-valued, the Fund seeks to achieve both its objectives of obtaining capital
appreciation as well as income from dividends. The Fund's purchases of
convertible securities similarly affords it the potential of capital growth
through the conversion option and greater investment income prior to conversion.
The Fund's purchases of debt securities furthers the objective of investment
income and offers potential for capital appreciation in an economic environment
of declining interest rates or as a result of improved issuer credit quality. It
is anticipated that the Fund, as a result of its investment approach, will be
less volatile than the market in general. The Growth and Income Fund is managed
by Colin Glinsman, Vice President of Oppenheimer Capital. Mr. Glinsman has been
portfolio manager and Vice President of this Fund since 1992. Since 1991, Mr.
Glinsman has assisted with the management of the Quest for Value Dual Purpose
Fund, Inc., a closed-end mutual fund managed by Quest Advisors, and has been a
securities analyst with Oppenheimer Capital since 1989. He was previously an
investment banker with Prudential Securities and Morgan Grenfell, and qualified
as a certified public accountant while with Coopers & Lybrand.

GLOBAL EQUITY FUND seeks long-term capital appreciation through pursuit of a
global investment strategy primarily involving equity securities. The Fund may
invest anywhere in the world with no requirement that any specific percentage of
its assets be committed to any given country. Under

10
<PAGE>
normal circumstances, at least 65% of the Fund's total assets will be invested
in equity securities in at least three different countries, one of which may be
the United States. Opportunities for capital appreciation may also be presented
by debt securities. The Fund may invest up to 35% of its total assets in debt
obligations with remaining maturities of one year or more of U.S. or foreign
corporate, governmental or bank issuers. It is the present intention of the
Fund, although not a fundamental policy, not to invest more than 5% of its total
assets in debt securities rated below investment-grade. Domestic investments of
this Fund are managed by Richard J. Glasebrook II, Managing Director of
Oppenheimer Capital. Mr. Glasebrook has been portfolio manager and Vice
President and of this Fund since 1991. Effective January 1, 1994, the Fund's
investments in foreign securities are managed by Pierre Daviron, President and
Chief Investment Officer of Oppenheimer Capital International, a division of
Oppenheimer Capital created in 1993. Mr. Daviron was named portfolio manager and
Vice President of this Fund in 1993. Previously, he was Chairman and Chief
Executive Officer at Indosuez Gartmore Asset Management, a division of Banque
Indosuez, Paris, France. Prior thereto he was a Managing Director in Mergers and
Acquisitions at J.P. Morgan.

GLOBAL INCOME FUND seeks investment income as its primary objective, with
capital appreciation as a secondary objective through a non-diversified
portfolio. The Fund invests primarily in investment-grade debt securities of
foreign and domestic corporations and foreign governments, or their agencies and
instrumentalities, and in U.S. government securities. Generally, the debt
securities in which the Global Income Fund will invest will be those believed by
Quest Advisors to offer potential for capital appreciation in addition to
investment income, because of such factors as anticipated changes in the
comparative level of interest rates in different countries or anticipated
improvements in the issuer's credit rating. Under normal circumstances the Fund
will invest at least 65% of its total assets in the securities of issuers
located in not less than three different countries, one of which may be the
United States. The Fund may also invest in preferred stocks, securities
convertible into common stock and short-term money market instruments.
Investments in preferred stocks and securities convertible into common stock
will be limited to 10% of the total assets of the Fund at the time of purchase.
The Fund may invest in lower-quality high-yielding debt securities (also known
as "junk bonds") of foreign issuers which may be located in countries with
"emerging markets" (as defined under "Emerging Market Countries," below). The
Fund's current intention is to limit its investment in these securities to up to
35% of its net assets. See "Risk Factors" and "Investment Restrictions and
Techniques." The Fund also may engage in certain transactions in options and
futures. See "Risk Factors" and "Investment Restrictions and Techniques." The
Fund's limitations respecting options and futures transactions, preferred stock,
convertible securities, lower-rated debt secu-
rities and foreign currency are non-fundamental policies and can be changed
without a vote of shareholders. It is anticipated that the average dollar
weighted maturity of the Fund will be between 5 and 10 years. The Global Income
Fund is managed by Richard A. Gluck, Vice President of Oppenheimer Capital. Mr.
Gluck was named portfolio manager and Vice President of this Fund in 1993. He
was previously a global fixed income portfolio manager with Dean Witter
InterCapital and Clemente Capital.
---------------------

To provide liquidity for the purchase of new instruments and to effect
redemptions of shares, the Funds typically invest a part of their assets in
various types of U.S. government securities and

11
<PAGE>
high quality, short-term debt securities with remaining maturities of one year
or less such as government obligations, certificates of deposit, bankers'
acceptances, commercial paper, short-term corporate securities and repurchase
agreements ("money market instruments"). For temporary defensive purposes, the
Funds may invest up to 100% of their assets in such securities and, in the case
of the Growth and Income Fund, preferred stock. At any time that a Fund for
temporary defensive purposes invests in such securities, to the extent of such
investments, it is not pursuing its investment objectives. In the case of the
Global Equity Fund and Global Income Fund, such money market instruments may be
issued by entities organized in the U.S. or any foreign country, denominated in
dollars or in the currency of any foreign country.

In the future, each of the Quest for Value, U.S. Government Income, Growth and
Income, Global Equity and Global Income Funds may endeavor to achieve its
respective investment objective by investing its assets in a no-load diversified
open-end management investment company which has the same portfolio manager and
substantially the same investment objective as that Fund. This possible
investment has been approved by shareholder vote. Shareholders will receive
prior notice with respect to the commencement of any such investment.

Except as indicated, the investment objectives and policies described above
are fundamental and may not be changed without a vote of the shareholders.

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

RISK FACTORS

The value of the Funds' shares will fluctuate and on redemption the value of
your shares may be more or less than your investment.

There are two types of risk generally associated with owning equity
securities: market risk and financial risk. Market risk is the risk associated
with the movement of the stock market in general. Financial risk is associated
with the financial condition and profitability of the underlying company.
Smaller capitalization companies may experience higher growth rates and higher
failure rates than do larger capitalization companies. The trading volume of
securities of smaller capitalization companies is normally less than that of
larger capitalization companies and, therefore, may disproportionately affect
their market price, tending to make them rise more in response to buying demand
and fall more in response to selling pressure than is the case with larger
capitalization companies.

There are two types of risk associated with owning debt securities: interest
rate risk and credit risk. Interest rate risk relates to fluctuations in market
value arising from changes in interest rates. If interest rates rise, the value
of debt securities will normally decline and if interest rates fall, the value
of debt securities will normally increase. All debt securities, including U.S.
government securities, which are generally considered to be the most
creditworthy of all debt obligations, are subject to interest rate risk.
Securities with longer maturities generally will have a more pronounced reaction
to interest rate changes than shorter term securities.

Credit risk relates to the ability of the issuer to make periodic interest
payments and ultimately repay principal at maturity. Bonds rated Baa3 by Moody's
or BBB- by S&P, which the Quest for Value, Small Capitalization, Investment
Quality Income, Opportunity, Growth and Income, Global Equity and Global Income
Funds may acquire, are described by those rating agencies as having speculative
elements. If a debt security is rated below investment grade by one rating
agency and as investment grade by a different rating agency, Quest Advisors will
make a determination as to the debt security's investment grade quality. It is
the present intention of the Quest for Value, Small

12
<PAGE>
Capitalization and Global Equity Funds to invest no more than 5% of their
respective assets in bonds rated below Baa3 by Moody's or BBB- by S&P (commonly
known as "high yield" or "junk bonds"). In the event that any of those Funds
intends in the future to invest more than 5% of its assets in such bonds,
appropriate disclosures will be made to existing and prospective shareholders.
The Growth and Income Fund may invest up to 25% of the value of net assets in
convertible debt and other debt securities rated not lower than Caa by Moody's
or CCC by S&P, Fitch Investors Service, Inc. ("Fitch") or Duff & Phelps, Inc.
("Duff") or, if unrated, deemed to be of comparable quality by Quest Advisors.
The Global Income Fund may invest up to 35% of its net assets in lower-quality
high-yielding debt securities of government and corporate issuers including
securities of issuers located in emerging market countries. Such securities may
be rated Ca or C by Moody's or CI or D by S&P, or if unrated, deemed to be of
comparable quality in the opinion of Quest Advisors. As used in this Prospectus,
an "emerging market country" is any country considered to be an emerging market
country by the World Bank at the time of the Fund's investment. Such securities
may be subject to higher risks and greater market fluctuations than are
lower-yielding higher-rated securities. Securities rated Ba by Moody's are
judged to have speculative elements; their future cannot be considered as well
assured and often the protection of interest and principal payments may be very
moderate. Securities rated BB by S&P, Fitch or Duff are regarded as having
predominantly speculative characteristics and, while such obligations have less
near-term vulnerability to default than other speculative grade debt, they face
major ongoing uncertainties or exposure to adverse business, financial or
economic conditions which could lead to inadequate capacity to meet timely
interest and principal payment. Securities rated Caa by Moody's or CCC by S&P,
Fitch and Duff are considered to have predominantly speculative characteristics
with respect to capacity to pay interest and repay principal and to be of poor
standing. Securities rated Ca by Moody's are speculative to a high degree; such
issues are often in default or have other marked shortcomings. A security rated
C by Moody's has extremely poor prospects of ever attaining any real investment
standing. Securities rated CI by S&P are income bonds on which no interest is
being paid, and securities rated D by S&P are in payment default. Debt
obligations of issuers outside the United States and its territories are rated
on substantially the same basis as domestic corporate and municipal issues. The
ratings measure the creditworthiness of the issuer but do not take into account
potential actions by the government controlling the currency of denomination
which might have a negative effect on exchange rates. The Growth and Income and
Global Income Funds do not intend to hold such lower-rated securities unless the
opportunities for capital appreciation and income, combined, remain attractive.
See the Appendix in the SAI for a more complete general description of Moody's,
S&P, Fitch and Duff ratings. The ratings of Moody's, S&P, Fitch and Duff
represent their opinions as to the quality of the obligations which they
undertake to rate. It should be emphasized, however, that ratings are relative
and subjective and although ratings may be useful in evaluating the safety of
interest and principal payments, they do not evaluate the market risk of these
securities. Therefore, although these ratings may be an initial criterion for
selection of such investments, Quest Advisors also will evaluate these
securities and the ability of the issuers of such securities to pay interest and
principal. The Growth and Income and Global Income Funds' ability to achieve
their investment objectives may be more dependent on Quest Advisors' credit
analysis than might be the case for a fund that invested in higher rated
securities. Once the rating of a security has been changed, the Growth and
Income and

13
<PAGE>
Global Income Funds will consider all circumstances deemed relevant in
determining whether to continue to hold the security. The market price and yield
of securities rated Ba or lower by Moody's and BB or lower by S&P, Fitch or Duff
are more volatile than those of higher rated securities. Factors adversely
affecting the market price and yield of these securities will adversely affect
the Growth and Income or Global Income Fund's net asset value. In addition, the
retail secondary market for these securities may be less liquid than that of
higher rated securities; adverse market conditions could make it difficult at
times for the Growth and Income and Global Income Funds to sell certain
securities. The market values of certain lower rated debt securities tend to
reflect individual corporate developments to a greater extent than do higher
rated securities, which react primarily to fluctuations in the general level of
interest rates, and tend to be more sensitive to economic conditions than higher
rated securities. Companies that issue such securities are often highly
leveraged and may not have available to them more traditional methods of
financing. Consequently, the risk associated with acquiring the securities of
such issuers is greater than with higher rated securities. The Funds are not
obliged to dispose of securities due to changes by the rating agencies. Although
there is no minimum rating for the investments of the Quest for Value, Small
Capitalization, Global Equity, or Growth and Income Funds, the Funds do not
intend to invest in bonds which are in default. The Global Income Fund may
invest in bonds which are in default, which could result in increased costs
associated with the sale or recovery of such bonds. To the extent the Funds
invest in mortgage-backed securities, they will be subject to prepayment risks.
Prepayments of mortgage principal reduce the stream of future payments and
generate cash which must be reinvested. Prepayments tend to increase following
declines in interest rates, resulting in reinvestment in a lower interest rate
environment. The ability of the Investment Quality Income Fund to generate
income is limited by its policy to invest at least 80% of its assets in
investment-grade securities.

The Global Income Fund is non-diversified as that term is defined in the
Investment Company Act of 1940 but intends to continue to qualify as a
"regulated investment company" for Federal income tax purposes. This means
generally that more than 5% of such Fund's total assets may be invested in any
one issuer, but only if at the close of each fiscal quarter the aggregate amount
of such holdings does not exceed 50% of the value of its total assets and no
more than 25% of the value of its total assets is invested in the securities of
a single issuer. As a non-diversified investment company, the Global Income Fund
may present greater risks than diversified companies because the Fund can invest
in a smaller number of issuers.

The nature and degree of market and financial risk affecting an investment in
each of the Opportunity Fund and Growth and Income Fund will depend on the
relative amounts of the Fund's assets committed to equity, longer-term debt or
money market securities at any particular time.

Higher portfolio turnover can be expected to result in a higher incidence of
short-term capital gains upon which taxes will be payable and will also result
in correspondingly higher transaction costs. Certain of the Funds may have
turnover rates of up to 250%.

ADDITIONAL RISKS OF FOREIGN SECURITIES: All Funds (except the U.S. Government
Income Fund) may purchase foreign securities that are listed on a domestic or
foreign securities exchange, traded in domestic or foreign over-the counter
markets or represented by American Depository Receipts. There is no limit to the
amount of such foreign securities the Funds may acquire. It will be the general
practice of the Global Equity Fund to invest

14
<PAGE>
in foreign equity securities and the general practice of the Global Income Fund
to invest in foreign debt securities. Certain factors and risks are presented by
investment in foreign securities which are in addition to the usual risks
inherent in domestic securities. Foreign companies are not necessarily subject
to uniform accounting, auditing and financial reporting standards or other
regulatory requirements comparable to those applicable to U.S. companies. Thus,
there may be less available information concerning non-U.S. issuers of
securities held by a Fund than is available concerning U.S. companies. In
addition, with respect to some foreign countries, there is the possibility of
nationalization, expropriation or confiscatory taxation; income earned in the
foreign nation being subject to taxation, including withholding taxes on
interest and dividends (see "Tax Status"), or other taxes imposed with respect
to investments in the foreign nation; limitations on the removal of securities,
property or other assets of a fund; difficulties in pursuing legal remedies and
obtaining judgments in foreign courts, or political or social instability or
diplomatic developments which could affect U.S. investments in those countries.
For a description of the risks of possible losses through holding of securities
in foreign custodian banks and depositories, see "Risk Factors and Special
Considerations" in the SAI.

Securities of many non-U.S. companies may be less liquid and their prices more
volatile than securities of comparable U.S. companies. Non-U.S. stock exchanges
and brokers are generally subject to less governmental supervision and
regulation than in the U.S. and commissions on foreign stock exchanges are
generally higher than negotiated commissions on U.S. transactions. In addition,
there may in certain instances be delays in the settlement of non-U.S. stock
exchange transactions. Certain countries restrict foreign investments in their
securities markets. These restrictions may limit or preclude investment in
certain countries, industries or market sectors, or may increase the cost of
investing in securities of particular companies. Purchasing the shares of
investment companies which invest in securities of a given country may be the
only or the most efficient way to invest in that country. This may require the
payment of a premium above the net asset value of such investment companies and
the return will be reduced by the operating expenses of those investment
companies.

A decline in the value of the U.S. dollar against the value of any particular
currency will cause an increase in the U.S. dollar value of a Fund's holdings
denominated in such currency. Conversely, a decline in the value of any
particular currency against the U.S. dollar will cause a decline in the U.S.
dollar value of the Fund's holdings of securities denominated in such currency.
Some foreign currency values may be volatile and there is the possibility of
governmental controls on currency exchange or governmental intervention in
currency markets which could adversely affect a Fund. The Funds do not intend to
speculate in foreign currency in connection with the purchase or sale of
securities on a foreign securities exchange but may enter into foreign currency
contracts to hedge their foreign currency exposure. While those transactions may
minimize the impact of currency appreciation and depreciation, the Funds will
bear a cost for entering into the transaction and such transactions do not
protect against a decline in the security's value relative to other securities
denominated in that currency.

The Global Equity Fund may invest its assets in American Depository Receipts
("ADRs"), European Depository Receipts ("EDRs") or Global Depository Receipts
("GDRs") which are U.S. dollar-denominated receipts that represent and may be
converted into the underlying foreign security. ADRs, GDRs or EDRs are issued by
persons other

15
<PAGE>
than the underlying issuer, typically a domestic bank or trust company. Issuers
of the stock of ADRs, EDRs or GDRs sponsored by banks or trust companies are not
obligated to disclose material information in the United States and therefore,
there may not be a correlation between such information and the market value of
such ADRs, GDRs or EDRs.

EMERGING MARKET COUNTRIES: Certain developing countries may have relatively
unstable governments, economies based on only a few industries that are
dependent upon international trade and reduced secondary market liquidity.
Foreign investment in certain emerging market countries is restricted or
controlled in varying degrees. In the past, securities in these countries have
experienced greater price movement, both positive and negative, than securities
of companies located in developed countries. Lower-rated high-yielding emerging
market securities may be considered to have speculative elements.

SOVEREIGN DEBT OBLIGATIONS: The Global Income Fund and the Global Equity Fund
may purchase sovereign debt instruments issued or guaranteed by foreign
governments or their agencies, including those located in emerging market
countries. Sovereign debt may be in the form of conventional securities or other
types of debt instruments such as loans or loan participations. Sovereign debt
of emerging market countries may involve a high degree of risk and may be in
default or present the risk of default. Certain emerging market countries have
historically experienced, and may continue to experience, high inflation and
interest rates, large fluctuations in exchange rates, large amounts of external
debt, trade difficulties and extreme poverty and unemployment. Governmental
entities responsible for repayment of the debt may be unable or unwilling to
repay principal and interest when due. In the event of a default, the Funds may
have limited legal recourse against the issuer or guarantor. Remedies must in
some cases be pursued in the courts of the defaulting party itself and the
ability of holders of foreign government debt securities to obtain recourse may
depend on the political climate in the relevant country. No assurance can be
given that the holders of commercial bank debt will not contest payments to
holders of other sovereign debt obligations in the event of a default under
their commercial bank loan agreements.

EASTERN EUROPE: The Global Equity Fund presently intends not to invest more than
5% of its net assets in companies located in Eastern European countries, but may
invest in companies located outside of such countries which conduct business in
such countries.

OPTIONS AND FUTURES: Different uses of futures and options have different risk
and return characteristics. Generally, selling futures contracts, purchasing put
options and writing call options are strategies designed to protect against
falling security prices and can limit potential gains if prices rise. Purchasing
futures contracts, purchasing call options and writing put options are
strategies whose returns tend to rise and fall together with securities prices
and can cause losses if prices fall. If securities prices remain unchanged over
time, option writing strategies tend to be profitable while option buying
strategies tend to be unprofitable. The U.S. Government Income Fund will write
covered put and call options on U.S. Government securities to generate
additional income through the receipt of options premiums. CURRENTLY, EACH OF
THE U.S. GOVERNMENT INCOME, INVESTMENT QUALITY INCOME, GLOBAL INCOME, GLOBAL
EQUITY, GROWTH AND INCOME, SMALL CAPITALIZATION AND QUEST FOR VALUE FUNDS INTEND
TO ENGAGE ONLY IN FUTURES CONTRACTS, OPTIONS ON FUTURES CONTRACTS OR OPTIONS ON
STOCK INDEXES FOR BONA FIDE HEDGING OR OTHER NON-SPECULATIVE PURPOSES. The
Global Income Fund may also write covered call options and purchase

16
<PAGE>
put options. The Small Capitalization Fund may write covered call options on
individual securities. The Funds will not enter into any leveraged futures
transactions.

REPURCHASE AGREEMENTS AND REVERSE REPURCHASE AGREEMENTS: All Funds may acquire
securities subject to repurchase agreements. The Global Income Fund may enter
into reverse repurchase agreements. Repurchase agreements and reverse repurchase
agreements involve certain risks.

For a further description of options and futures, repurchase agreements and
reverse repurchase agreements and other investment techniques used by the Funds,
see "Investment Restrictions and Techniques."

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

HOW TO BUY SHARES

The Funds offer Class A, Class B and Class C shares. Class A shares are sold
with an initial sales charge that declines for larger orders. Purchases of
$1 million or more of Class A shares of the U.S. Government Income Fund and
the Investment Quality Income Fund are sold without an initial sales charge but
are subject to a CDSC if held less than two years. Purchases of $1 million or
more of Class A shares of the Quest for Value Fund, Inc., the Small
Capitalization Fund, the Growth and Income Fund, the Opportunity Fund and the
Global Equity Fund made on or after July 1, 1994 are sold without an initial
sales charge but are subject to CDSC if held less than one year; if such
purchases were made prior to July 1, 1994 they are subject to a CDSC if held for
less than two years. Class B shares are sold without an initial sales charge but
are subject to a CDSC if held for less than six years. Class B shares are
available only to investors purchasing less than $250,000 in the aggregate and
currently are not being offered to non-qualified deferred compensation plans and
qualified retirement plans under Internal Revenue Code Sections 401(a), 401(k),
403(b) and 457 but are being offered to qualified retirement plans under
Internal Revenue Code Section 408(a). Class C shares are sold without an initial
sales charge but are subject to a CDSC if held less than one year. Each class is
described below in greater detail. The different classes provide you with
alternative methods of acquiring shares and you should determine which class
best meets your individual needs. Dealers may be compensated at different rates
for selling Class A, Class B or Class C shares.

Your initial purchase of either Class A, B or C shares must be made through a
broker or dealer having a sales agreement with Quest Distributors, an affiliate
of Quest Advisors. Subsequent purchases of shares may also be made through your
broker or dealer by mailing your payment to the Fund's Transfer Agent, State
Street Bank and Trust Company ("State Street"), P.O. Box 8505, Boston, MA 02266.
Your initial investment must be at least $1,000 and subsequent investments must
be at least $250. There are no minimums for shares purchased under an Automatic
Investment Plan or under employee benefit plans.

Some investors may qualify to purchase Class A shares at net asset value
without a sales charge. (See "Reduced Sales Charges--Net Asset Value Purchases,"
and "Additional Information--Purchases by Former Shareholders of AMA Family of
Funds and Unified Funds.") Class B and C shares will not be sold to investors
who qualify to purchase Class A shares at net asset value, as described on pages
20 and 38.

Sales of all classes of shares will be suspended during any period when the
determination of net asset value is suspended, and may be suspended by the Board
of a Fund whenever the Board judges it to be in the best interest of the Fund to
do so. Quest Distributors, in its sole discretion, may accept or reject any
purchase order.

17
<PAGE>
BUYING CLASS A SHARES. Purchases of Class A shares will be processed at the net
asset value next determined after receipt of your purchase order, plus the
applicable front-end sales charge, if any, as set forth in the following tables.
<TABLE>
<CAPTION>
QUEST FOR VALUE, SMALL
CAPITALIZATION, OPPORTUNITY AND U.S. GOVERNMENT INCOME,
INVESTMENT QUALITY INCOME, AND
GLOBAL EQUITY FUNDS GROWTH AND INCOME FUNDS
---------------------------------- ----------------------------------
OFFERING OFFERING
% OF NET PRICE SALES CHARGE TABLES* % OF NET PRICE
AS A % OF ASSET RE-ALLOWED CLASS A SHARES AS A % OF ASSET
RE-ALLOWED
OFFERING VALUE PER TO SELLING ----------------------------------- OFFERING VALUE PER TO
SELLING
PRICE SHARE DEALER AMOUNT OF PURCHASE PRICE SHARE DEALER
--------- --------- ---------- ----------------------------------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
5.50% 5.82% 4.75% Less than $50,000.................. 4.75% 4.99% 4.25%
4.75% 4.99% 4.25% $50,000 - 99,999................... 4.50% 4.71% 4.00%
4.00% 4.17% 3.50% $100,000 - 249,999................. 3.50% 3.63% 3.15%
3.00% 3.09% 2.75% $250,000 - 499,999................. 2.75% 2.85% 2.50%
2.00% 2.04% 1.75% $500,000 - 999,999................. 2.00% 2.04% 1.75%
** ** ** $1 million or more**............... ** ** **

<CAPTION>
GLOBAL INCOME FUND
----------------------------------
OFFERING
% OF NET PRICE
AS A % OF ASSET RE-ALLOWED
OFFERING VALUE PER TO SELLING
AMOUNT OF PURCHASE PRICE SHARE DEALER
----------------------------------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Less than $100,000................. 3.00% 3.09% 2.50%
$100,000 - 249,999................. 2.50% 2.56% 2.15%
$250,000 - 499,999................. 2.00% 2.04% 1.75%
$500,000 - 999,999................. 1.50% 1.52% 1.25%
$1 million or more................. .75% .76% .65%
</TABLE>

-------------
*The entire sales charge may be re-allowed to dealers who achieve certain levels
of sales or who have rendered coordinated sales support efforts. Such dealers
may be deemed to be "underwriters."

**PURCHASES OF CLASS A SHARES OF $1 MILLION OR MORE (all funds except Global
Income Fund)
On purchases by a single purchaser aggregating $1 million or more, the investor
will not pay an initial sales charge, and Quest Distributors will pay authorized
dealers an amount equal to .9 of 1% of the first $2 million of such purchases,
plus .8 of 1% of the next $1 million, plus .50 of 1% of the next $2 million,
plus .35 of 1% on amounts over $6 million. A CDSC will be imposed on the
proceeds of the redemption of shares of the U.S. Government Income Fund and the
Investment Quality Income Fund purchased in amounts aggregating $1 million or
more or of shares of the Quest for Value Fund, Inc., the Small Capitalization
Fund, the Growth and Income Fund, the Opportunity Fund and the Global Equity
Fund purchased prior to July 1, 1994 in amounts aggregating $1 million or more
if they are redeemed within 24 months of the end of the calendar month of their
purchase, in an amount equal to 1% if the redemption occurs within the first 12
months and equal to .5 of 1% if the redemption occurs in the next 12 months, of
the lesser of (a) the net asset value of the shares at the time of purchase or
(b) the net asset value of the shares at the time of redemption. A CDSC will be
imposed on the proceeds of the redemption of shares of the Quest for Value Fund,
the Small Capitalization Fund, the Growth and Income Fund, the Opportunity Fund
and the Global Equity Fund purchased on or after July 1, 1994 in amounts
aggregating $1 million or more if they are redeemed within 12 months of the end
of the calendar month of their purchase in an amount equal to 1% of the lesser
of (a) the net asset value of the shares at the time of purchase or (b) the

18
<PAGE>
net asset value of the shares at the time of redemption. The CDSC will be
deducted from the redemption proceeds otherwise payable to the shareholder and
will be retained by Quest Distributors. For the period of 13 months from the
date of the sales of Class A shares of $1 million or more, the distribution fee
payable by a Fund to Quest Distributors pursuant to the Fund's Distribution Plan
in connection with such shares will be retained by Quest Distributors.

REDUCED SALES CHARGES: There are several ways you may qualify for reduced sales
charges when buying Class A Shares. You should notify the Transfer Agent or your
Dealer if you qualify.

COMBINED PURCHASE: Purchases by related accounts may be combined to determine
the appropriate sales charge. Related accounts are: all accounts in your name
and/or of your spouse or children under 21 years of age, all accounts of a
fiduciary purchasing for a single trust, and all accounts for which a single
person (e.g., investment advisor, trust department, etc.) exercises investment
discretion. Qualified employee benefit trusts of an employer and its
consolidated subsidiaries will be considered a single trust.

RIGHTS OF ACCUMULATION: In determining the applicable level of sales charge, the
value of shares you purchase will be added to the greater of cost or market
value of the Class A, B or C shares you hold of any Quest Fund, provided that
any such Class A shares were purchased with a sales charge, were acquired by
exchange for shares on which a sales charge was paid, or were subject to a CDSC.

LETTER OF INTENT: If you intend to purchase shares valued at $50,000 or more
during a 13-month period, you may make the purchase under a Letter of Intent so
that the initial shares you purchase qualify for the reduced sales charge
applicable to the aggregate amount of your projected purchase. Your initial
purchase must be at least 5% of the intended purchase. An appropriate number of
shares will be held by the Transfer Agent to cover any sales charge due if you
purchase less than the indicated amount during the 13-month period.

GROUP AND ASSOCIATION PURCHASES AND PURCHASES BY QUALIFIED RETIREMENT PLANS: The
following table sets forth the applicable sales charge for purchases of Class A
shares made through a single broker or dealer by qualified retirement plans
including 401(k), 403(b) plans, SEP/IRA and IRA plans of a single employer, and
by members of associations formed for any purpose other than the purchase of
securities:

<TABLE>
<CAPTION>
AS A % OF PERCENT OF
NUMBER OF AS A % OF NET ASSET OFFERING PRICE
ELIGIBLE EMPLOYEES OR OFFERING VALUE PER RE-ALLOWED TO
MEMBERS PRICE SHARE SELLING DEALERS
---------------------- ------------- -------------- -------------------
<S> <C> <C> <C>
9 or less............. 3.00% 3.09% 2.60%
Between 10 & 49....... 2.00% 2.04% 1.65%
50 or more............ 0.00% see "Purchases of Class A shares of
$1,000,000 or more," p. 18
</TABLE>

Purchases made under the Group Purchase provision will qualify for the lower
of the sales charge computed according to the table based on the number of
eligible employees in a plan or members of an association or the sales charge
level under the Rights of Accumulation described above. Purchases by retirement
plans covering 50 or more employees or by associations or groups with 50 or more
members shall be entitled to the sales charge waiver applicable to purchases of
$1 million or more described above. In addition, purchases by 401(k) plans can
qualify for this sales charge waiver if, in the opinion of Quest Distributors,
the initial purchase plus projected contributions to be invested in the plan for
the following 12 months will exceed $1,000,000. Individuals who qualify for
reduced sales charges as members of associations,

19
<PAGE>
groups or eligible employees in plans as set forth in the above table may also
purchase shares for their individual or custodial accounts at the same sales
charge level.

NET ASSET VALUE PURCHASES: No sales charge will be applied to the following
transactions in Class A shares: purchases by persons who for the prior 90 days
have been directors, trustees, officers or full-time employees of any of the
Funds distributed by Quest Distributors, or of Quest Advisors, Quest
Distributors, or of their affiliates, their relatives or any trust, pension,
profit sharing or other benefit plan for any of them; purchases by any account
advised by Oppenheimer Capital, the parent of Quest Advisors, or by persons who
are directors or trustees of such accounts; purchases made with the proceeds of
maturing principal of any Quest Unit Investment Laddered Trust Series
("QUILTS"); purchases by an employee of a broker-dealer or bank having a dealer
or agency agreement pertaining to Fund shares; purchases by trust companies and
bank trust departments for funds over which they exercise exclusive
discretionary investment authority and charge an account management fee and
which are held in a fiduciary, agency, advisory, custodial or similar capacity;
purchases by registered investment advisors for their clients for whom they
charge an account management fee; accounts opened for shareholders by dealers
where the amounts invested represent the redemption proceeds from investment
companies distributed by an entity other than Quest Distributors if such
redemption has occurred no more than 60 days prior to the purchase of shares of
the Funds and the shareholder paid an initial sales charge or a contingent
deferred sales charge on the redeemed account. Shares sold at net asset value
will be included in the asset base upon which payments under a Fund's
Distribution Plan and Agreement are determined. The CDSC does not apply to
purchases of Class A shares at net asset value described herein.

BUYING CLASS B SHARES. Purchases of Class B shares will be processed at the net
asset value next determined after receipt of your purchase order for less than
$250,000. While not subject to a front-end sales charge, Class B shares may be
subject to a CDSC upon redemption. Dealers who sell Class B shares are paid a
commission by Quest Distributors equal to 4.00% of the purchase price of the
shares. CLASS B SHARES CURRENTLY ARE NOT BEING OFFERED TO NON-QUALIFIED DEFERRED
COMPENSATION PLANS AND QUALIFIED RETIREMENT PLANS UNDER INTERNAL REVENUE CODE
SECTIONS 401(A), 401(K), 403(B) AND 457 BUT ARE BEING OFFERED TO QUALIFIED
RETIREMENT PLANS UNDER INTERNAL REVENUE CODE SECTION 408(A).

If Class B Shares of any Fund are redeemed within six years after the end of
the calendar month in which a purchase order for Class B shares was accepted, a
CDSC will be imposed by applying the appropriate percentage indicated below to
the lesser of: (1) the net asset value of such shares at the time of purchase or
(2) the net asset value of such shares at the time of redemption. The CDSC will
be deducted from the redemption proceeds otherwise payable to the shareholder
and will be retained by Quest Distributors. The CDSC to be imposed on such share
redemptions will be assessed according to the following schedule:

<TABLE>
<CAPTION>
YEARS SINCE PURCHASE APPLICABLE CLASS B
ORDER OF LESS THAN CONTINGENT DEFERRED
$250,000 WAS ACCEPTED SALES CHARGE
----------------------------------- ------------------------
<S> <C>
Up to one year..................... 5.00%
One year or more but less than 2
years............................. 4.00%
Two years or more but less than 4
years............................. 3.00%
Four years or more but less than 5
years............................. 2.00%
Five years or more but less than 6
years............................. 1.00%
6 or more years.................... None
</TABLE>

CONVERSION OF CLASS B SHARES. Class B shares will automatically convert to Class
A shares of the same Fund eight years after the end of the calendar month in
which the purchase order for Class B shares was accepted, on the basis of the
relative net asset values of the two classes and subject to the following terms:
Class B shares acquired through the reinvestment of dividends and distributions
("reinvested Class B shares") will be converted to Class A shares on a pro-rata
basis only when Class B

20
<PAGE>
shares not acquired through reinvestment of dividends or distributions
("purchased Class B shares") are converted. The portion of reinvested Class B
shares to be converted will be determined by the ratio that the purchased Class
B shares eligible for conversion bear to the total amount of purchased Class B
shares in the shareholder's account. For the purposes of calculating the holding
period, Class B shares will be deemed to have been issued on the sooner of: (a)
the date on which the issuance of Class B shares occurred, or (b) for Class B
shares obtained by an exchange or series of exchanges, the date on which the
issuance of the original Class B shares occurred. This conversion to Class A
shares will relieve Class B shares that have been outstanding for at least eight
years (a period of time sufficient for Quest Distributors to have been
compensated for distribution expenses related to such Class B shares) from the
higher ongoing distribution fee paid by Class B shares. Only Class B shares have
this conversion feature. Conversion of Class B shares to Class A shares is
contingent on the continuing availability of a private letter revenue ruling
from the Internal Revenue Service affirming that such conversion does not
constitute a taxable event for the shareholder under the Internal Revenue Code.
If such revenue ruling or an opinion of counsel is no longer available,
conversion of Class B shares to Class A shares would have to be suspended, and
Class B shares would continue to be subject to the Class B distribution fee
until redeemed.

BUYING CLASS C SHARES. Purchases of Class C shares will be processed at the net
asset value next determined after receipt of your purchase order. Class C shares
are not subject to a front-end sales charge, but may be subject to a CDSC upon
redemption. Dealers who sell Class C shares are paid a commission by Quest
Distributors equal to .85% of the purchase price of the shares.

If Class C shares are redeemed within one year after the end of the calendar
month in which a purchase order for Class C shares was accepted, a CDSC of 1.00%
would be imposed on the lesser of (1) the net asset value of such shares at the
time of purchase or (2) the net asset value of such shares at the time of
redemption. The CDSC will be deducted from the redemption proceeds otherwise
payable to the shareholder and will be retained by Quest Distributors.

EXEMPTIONS FROM CLASS A, B AND C CDSC. No CDSC will be imposed when a
shareholder redeems Class A, B or C shares in the following instances: (a)
shares or amounts representing increases in the value of an account above the
net cost of the investment due to increases in the net asset value per share;
(b) shares acquired through reinvestment of income dividends or capital gains
distributions; (c) shares acquired by exchange from any Quest Fund, other than a
money market fund, where the exchanged shares would not have been subject to a
CDSC upon redemption; and (d) Class A shares of the U.S. Government Income Fund
or the Investment Quality Income Fund purchased in the amount of $1 million or
more held for more than 24 months, Class A shares of the Quest for Value Fund,
Inc., the Small Capitalization Fund, the Growth and Income Fund, the Opportunity
Fund and Global Equity Fund purchased in the amount of $1 million or more prior
to July 1, 1994 held for more than 24 months and Class A shares purchased in the
amount of $1 million or more on or after July 1, 1994 if held for more than 12
months, Class B shares held for more than six years or Class C shares held for
more than one year from the end of the calendar month in which the purchase
order was accepted.

PURCHASES PRIOR TO MARCH 6, 1995. The CDSC does not apply to purchases of Class
A shares at net asset value described under "Net Asset Value Purchases" above
and will be waived in the case of redemptions of Class A, B or C shares
purchased prior to March 6, 1995 in connection with (i) distributions to
participants or beneficiaries of

21
<PAGE>
plans qualified under Section 401(a) of the Internal Revenue Code ("IRC") or
from custodial accounts under IRC Section 403(b)(7), individual retirement
accounts under IRC Section 408(a), deferred compensation plans under IRC section
457 and other employee benefit plans ("plans"), and returns of excess
contributions made to these plans, (ii) withdrawals under an automatic
withdrawal plan where the annual withdrawal does not exceed 10% of the opening
value of the account (only for Class B and C shares); and (iii) liquidation of a
shareholder's account if the aggregate net asset value of shares held in the
account is less than the required minimum.

PURCHASES ON OR AFTER MARCH 6, 1995. The CDSC will be waived in the case of
redemptions of Class A, B or C shares purchased on or after March 6, 1995 in
connection with 1) distributions to participants or beneficiaries from
individual retirement accounts under Section 408(a) of the IRC, and retirement
plans under Section 401(a), 401(k), 403(b) and 457 of the IRC, which
distributions are made either (a) to an individual participant as a result of
separation from service or (b) following the death or disability (as defined in
the IRC) of the participant or beneficiary; 2) returns of excess contributions
to such retirement plans; 3) redemptions other than from retirement plans
following the death or disability of the shareholder(s) (as evidenced by a
determination of total disability by the U.S. Social Security Administration);
4) withdrawals under an automatic withdrawal plan where the annual withdrawals
do not exceed 10% of the opening value of the account (only for Class B and C
shares); and 5) liquidation of a shareholder's account if the aggregate net
asset value of shares held in the account is less than the required minimum. A
shareholder will be credited with any CDSC paid in connection with the
redemption of any Class A, B or C shares if within 90 days after such
redemption, the proceeds are invested in the same Class of shares in the same
and/or another Quest Fund.

In determining whether the Class A, B or C CDSC is payable, it will be assumed
that shares not subject to a CDSC are redeemed first and that other shares are
then redeemed in the order purchased. No CDSC will be imposed on exchanges to
purchase shares of another Quest Fund although a CDSC will be imposed on shares
of the acquired Quest Fund purchased by exchange of shares subject to a CDSC if
the acquired shares are then redeemed within 24 months if the exchanged shares
were Class A Shares (12 months with respect to Class A shares of the Quest for
Value Fund, Inc., the Small Capitalization Fund, the Growth and Income Fund, the
Opportunity Fund, or the Global Equity Fund purchased on or after July 1, 1994),
six years if the exchanged shares were Class B Shares or one year if the
exchanged shares were Class C shares of the end of the calendar month in which
the exchanged shares were purchased.

SPECIAL FIDUCIARY RELATIONSHIPS. The CDSC will not apply with respect to
purchases of Class A shares for which the selling dealer is not permitted to
receive a sales load or redemption fee imposed on a shareholder with whom such
dealer has a fiduciary relationship in accordance with provisions of the
Employee Retirement Income Security Act and regulations thereunder. If such
dealer agrees to the reimbursement provision described below, no sales charge
will be imposed on sales of $1,000,000 or more and Quest Distributors will pay
to the selling dealer a commission described above in "Purchases of Class A
Shares of $1 Million or More."

For the period of 13 months from the date of the sales referred to in the
above paragraph, the distribution fee payable by a Fund to Quest Distributors
pursuant to the Fund's Distribution Plan in

22
<PAGE>
connection with such shares will be retained by Quest Distributors. In the event
of a redemption of any such shares within 24 months of purchase, the selling
dealer will reimburse Quest Distributors for the amount of commission paid less
the amount of the distribution fee with respect to such shares.

PURCHASES BY STRATEGIC ALLIANCES. The CDSC will not apply with respect to
purchases of Class A shares by participants in qualified retirement plans that
are part of strategic alliances. No sales charge will be imposed on such
purchases and Quest Distributors will pay to the selling dealer a commission
described above in "Purchases of Class A Shares of $1 Million or More." For the
period of 13 months from the date of such sales, the distribution fee payable by
a Fund to Quest Distributors pursuant to the Fund's Distribution Plan in
connection with such shares will be retained by Quest Distributors.

OTHER DEALER COMPENSATION. Quest Distributors will provide additional
compensation to dealers in connection with sales of shares of the Funds and
other mutual funds distributed by Quest Distributors ("Quest Funds") including
promotional gifts (which may include gift certificates, dinners and other
items), financial assistance to dealers in connection with conferences, sales or
training programs for their employees, seminars for the public and advertising
campaigns. In some instances, these incentives may be made available only to
dealers whose representatives have sold or are expected to sell significant
amounts of shares. If a registered representative of a securities dealer sells
more than $500,000 or $1 million (net of redemptions) of any open-end investment
company distributed by Quest Distributors and managed by Quest Advisors other
than Quest Cash Reserves, Inc. in the 1995 calendar year, the dealer firm is
eligible to send the representative and a guest to a sales conference at a
luxury resort; individual sales of Class A shares in the amount of $1 million or
more that are purchased at net asset value and sales of Class C shares will
count as one-half their amount for determining eligibility.

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

DETERMINING NET ASSET VALUE

The value of shares is determined by adding up the value of all security
holdings and other assets of the Fund, deducting the value of the
liabilities, and dividing the result by the number of shares outstanding.
The value of a Fund's portfolio securities and other assets is based on market
values determined by procedures established by the Board of the Fund. Securities
listed on a national securities exchange or designated as national market system
securities are valued at the last sale price or, if there has been no sale that
day, at the last bid price. Debt and equity securities actively traded in the
over-the-counter market but not designated as national market system securities
are valued at the most recent bid price. Valuations may be provided by a pricing
service or from independent securities dealers. Short-term investments with
remaining maturities of less than 60 days are valued at amortized cost so long
as the Board determines in good faith that such method reflects fair value.
Other securities are valued by methods that the Board of a Fund believes
accurately reflect fair value. The calculation is made at the close of the
regular trading session ("Close") of the New York Stock Exchange ("NYSE")
(currently 4:00 p.m. Eastern Time) each day the NYSE is open. The value that is
calculated is known as the net asset value per share, which will fluctuate
daily. Although the legal rights of Class A, B and C shares are identical, the
different expenses borne by each class may result in differing net asset values
and dividends for each Class.

Generally, trading in foreign securities is substantially completed each day
at various times prior to the Close of the NYSE. The values of such securities

23
<PAGE>
used in computing the net asset value of a Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the Close of the NYSE. If events materially affecting the value of such
securities and exchange rates occur between the time of such determination
and/or the Close of the NYSE, then these securities will be valued at their fair
value as determined in good faith under procedures established by and under the
supervision of the Fund's Board. See "Determination of Net Asset Value" in the
SAIs.
---------------------------------------------

HOW TO REDEEM SHARES

You may redeem shares on any day the Funds are open for business--normally when
the New York Stock Exchange ("NYSE") is open-- using the Procedures
described below. See "Determination of Net Asset Value" in the SAI for the
days on which the NYSE will be closed.

DEALER REDEMPTION: Your redemption requests may be handled by your securities
dealer who is responsible for providing the necessary documentation to the
Transfer Agent and who may impose a charge for its services. Requests received
by your dealer prior to the Close of the NYSE and transmitted to the Transfer
Agent by its close of business that day will receive that day's net asset value
per share.

REGULAR REDEMPTION: You may send a redemption request by mail to the Transfer
Agent and will receive the net asset value of the shares being redeemed which is
next determined after your request is received in "good form". "Good form" means
the request is signed in the name in which the account is registered and the
signature is guaranteed by an eligible guarantor. Eligible guarantors include
member firms of a national securities exchange, banks, savings associations and
credit unions, as defined by the Federal Deposit Insurance Act. Special
requirements may exist for corporations, trusts and similar accounts. If you
hold stock certificates, you should call the Transfer Agent for instructions on
the appropriate redemption procedure.

EXPEDITED REDEMPTIONS: You and your account representative will automatically
receive the ability to redeem or exchange shares by telephone unless you
indicate otherwise on the application. You may also authorize certain other
expedited redemption procedures. BY TELEPHONE (minimum $1,000). The proceeds of
redemption will either be mailed to you or wired to the account of any bank that
is a member of the Federal Reserve wire system. This account must be designated
on your application. If you change the bank account, you must let us know in
writing with a signature guarantee. BY AUTOMATIC WITHDRAWAL PLAN (minimum $50).
If your account has a value of at least $5,000 you may arrange an automatic
withdrawal plan so that the amount you specify (minimum $50) will be sent to you
on a monthly or quarterly basis. Dividends and distributions on your shares must
be reinvested. BY CHECK DRAFT (U.S. Government Income Fund only--$250 minimum).
A service fee of $10 is imposed for drafts under $250. Your checks are drafts
drawn on State Street. When your draft is presented, State Street as your agent
redeems a sufficient number of whole and fractional shares to cover the amount
of the draft. You cannot close out your account by check redemption, because
your shares continue to earn dividends and fluctuate in value until the draft is
presented.

Your redemption proceeds, from which any applicable CDSC will have been
deducted, will normally be mailed or wired the day after your redemption is
processed. Payments for redemption of shares that you purchased by check may be
delayed until the

24
<PAGE>
check has cleared, which may take up to 15 days. To avoid this collection
period, you can wire federal funds to pay for purchases.

REINSTATEMENT PRIVILEGE: If you reinvest in a Quest Fund within 60 days of
redemption, you will be reinstated as a shareholder with the same privileges
regarding the non-payment of sales charges that apply to exchanges. You may
exercise this privilege only once each calendar year. The redemption may produce
a gain or loss for tax purposes.

The Funds may suspend redemption procedures and postpone redemption payments
during any period when the NYSE is closed other than for customary weekend or
holiday closing or the SEC has determined an emergency exists or has otherwise
permitted such suspension or postponement. The Funds reserve the right to redeem
your account if its value is less than $500 due to redemptions. Your Fund will
give you 30 days' notice to increase your account value to at least $500.
Redemption proceeds will be mailed.
---------------------------------------------

EXCHANGING SHARES

An exchange represents the sale of shares of one fund and the purchase of shares
of another, which may produce a gain or loss for tax purposes.

Your exchange will be processed at the net asset value next determined after
the Transfer Agent receives your exchange request. A service fee (currently $5)
will be charged for administrative services in connection with an exchange. You
will receive a prospectus along with your confirmation if you exchange into a
Fund not offered in this Prospectus. The exchange feature may be modified or
discontinued at any time, upon notice to shareholders in accordance with
applicable rules adopted by the Securities and Exchange Commission ("SEC"). Your
exchange may be processed only if the shares of the fund to be acquired are
eligible for sale in your state and if the amount of your transaction meets the
minimum requirements for that fund. The exchange privilege is only available in
states in which it may be legally offered.

EXCHANGES OF CLASS A SHARES: You may exchange your Class A shares for Class A
shares of any mutual fund (except as described below with respect to exchanges
from the Global Income Fund) distributed by Quest Distributors ("Quest Fund")
and for shares of Quest Cash Reserves, Inc. ("QCR"), a single-class money market
fund with five different portfolios. You need not pay any sales charge
differential between Quest Funds on the exchange of Class A shares purchased
with a front-end sales charge if:
1. You have held the shares being exchanged for
at least 31 days;
2. The shares being exchanged were acquired
through the reinvestment of dividends or distributions; or
3. The shares being exchanged were themselves
the proceeds of an exchange from a fund with the same or higher sales
charge.

If you exchange Class A shares of the Global Income Fund into another Quest
Fund within six months of your purchase of Class A shares of the Global Income
Fund, you will have to pay the difference between the sales charge paid on your
purchase of Class A shares of the Global Income Fund and the sales charge that
would have been charged if you had originally purchased Class A shares of the
Fund into which you are exchanging.

EXCHANGES OF CLASS B SHARES: Class B shares of all Quest Funds are exchangeable
for Class B shares of any other Quest Fund. Class B shares of any Quest Fund
cannot be exchanged for Class A or C shares of any Quest Fund.

25
<PAGE>
EXCHANGES OF CLASS C SHARES: Class C shares of all Quest Funds are exchangeable
for Class C shares of any other Quest Fund. Class C shares of any Quest Fund
cannot be exchanged for Class A or B shares of any Quest Fund.

Because excessive trading (including short-term "market timing" trading) can
hurt a Fund's performance, each Fund may refuse any exchange orders (1) if they
appear to be market-timing transactions involving significant portions of a
Fund's assets or (2) from any shareholder account if the shareholder or his or
her broker-dealer has been advised that previous use of the exchange privilege
is considered excessive. Accounts under common ownership or control, including
those with the same taxpayer ID number and those administered so as to redeem or
purchase shares based upon certain predetermined market indicators, will be
considered one account for this purpose.

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

Quest Distributors and the Fund's transfer agent will employ reasonable
procedures for telephone redemptions and exchanges to confirm that the
instructions received from shareholders or their account representatives are
genuine, and if they do not, Quest Distributors or the transfer agent may be
liable for any losses due to unauthorized or fraudulent instructions.
Shareholders will be required to provide their name, address, social security
number and other identifying information. Account representatives must identify
themselves and their firm and Quest Distributors will confirm that such firm has
a valid selling agreement with Quest Distributors and that the representative is
authorized to act on behalf of the firm.

IF YOU HAVE ANY QUESTIONS ON EXCHANGE OR REDEMPTION PROCEDURES, CALL YOUR
DEALER OR OUR TRANSFER AGENT.

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

INVESTMENT RESTRICTIONS AND TECHNIQUES

The Funds are subject to certain investment restrictions which are fundamental
policies changeable only by shareholder vote. The restrictions in a, b and
c below do not apply to U.S. government securities. The restrictions apply
to each Fund unless otherwise noted. A Fund may not (except that in the future
the Quest for Value, U.S. Government Income, the Growth and Income, the Global
Income and the Global Equity Funds may invest all or part of their respective
assets in an open-end management investment company with substantially the same
respective investment objective and restrictions): (a) Purchase more than 10% of
the voting securities of any one issuer (for Global Equity, Global Income and
Growth and Income only with respect to 75% of their respective total assets;
except that to comply with a state's securities laws, Global Income has adopted
this restriction with respect to 100% of its total assets, although this
restriction is not a fundamental policy of the Global Income Fund); (b) Purchase
more than 10% of any class of security of any issuer, with all outstanding debt
securities and all preferred stock of an issuer each being considered as one
class (all Funds except Global Equity, Global Income and Growth and Income); (c)
Concentrate its investments in any particular industry, but if deemed
appropriate for attaining its investment objective, a Fund may invest up to 25%
of its total assets (valued at the time of investment) in any one industry
classification used by the Fund for investment purposes (for this purpose, a
foreign government is considered an industry). Concentration of investment in
securities of one issuer may tend to increase a Fund's financial risk (See "Risk
Factors," p. 12);(d) Borrow money in excess of: 10% of the value of the Fund's
total assets in the case of the Small Capitalization, U.S. Government Income,
Investment Quality Income and Opportunity Funds;

26
<PAGE>
33 1/3% of the value of the Fund's total assets in the case of the Quest for
Value, Global Equity, Global Income and Growth and Income Funds; each Fund
(except for Quest for Value Fund) may borrow only from banks and only as a
temporary measure for extraordinary or emergency purposes and will make no
additional investments while such borrowings exceed 5% of the total assets;
Quest for Value Fund may, but has no present intention to, borrow for leveraging
purposes; (e) Invest more than 10% of the Fund's total assets in illiquid
securities (15% for Quest for Value Fund, the Growth and Income Fund, the Global
Income Fund and the Global Equity Fund), including securities for which there is
no readily available market, repurchase agreements which have a maturity of
longer than seven days, securities subject to legal or contractual restrictions
and certain over-the-counter options (it is the opinion of the Wisconsin
Securities Commission that investments in restricted securities in excess of 5%
of a Fund's total assets may be considered a speculative activity and therefore
involve greater risk and increase the Fund's expenses; to comply with
Wisconsin's securities laws, all Funds except Global Income have agreed to limit
investments in restricted securities to 5% of their respective total assets,
although the restriction is not a fundamental policy of such Funds); and (f)
Invest more than 5% (15% for Quest for Value Fund) of the Fund's total assets in
securities of issuers having a record, together with predecessors, of less than
three years of continuous operation. (This restriction is not a fundamental
policy of each of the Global Equity, Global Income or Growth and Income Funds,
but was adopted to comply with a state's securities laws). Notwithstanding
investment restriction (e) above, the Funds each may purchase securities which
are not registered under the Securities Act of 1933 ("1933 Act") but which can
be sold to "qualified institutional buyers" in accordance with Rule 144A under
the 1933 Act. Any such security will not be considered illiquid so long as it is
determined by the Board of Directors or Quest Advisors, acting under guidelines
approved and monitored by the Board, which has the ultimate responsibility for
any determination regarding liquidity, that an adequate trading market exists
for that security. This investment practice could have the effect of increasing
the level of illiquidity in each of the Funds during any period that qualified
institutional buyers become uninterested in purchasing these restricted
securities. The ability to sell to qualified institutional buyers under Rule
144A is a relatively recent development and it is not possible to predict how
this market will develop. The Board will carefully monitor any investments by
each of the Funds in these securities. Other investment restrictions are
described in the SAIs.

The investment techniques or instruments described below are used for
investment programs of the Funds.

REPURCHASE AGREEMENTS AND REVERSE REPURCHASE AGREEMENTS: All Funds may acquire
securities subject to repurchase agreements. Under a typical repurchase
agreement, a Fund acquires a debt security for a relatively short period
(usually for one day and very seldom for more than one week) subject to an
obligation of the seller to repurchase (and the Fund's obligation to resell) the
security at an agreed-upon higher price, thereby establishing a fixed investment
return during the holding period. Pending such repurchase, the seller of the
instrument maintains securities as collateral equal in market value to the
repurchase price.

In the event a seller defaulted on its repurchase obligation, a Fund might
suffer a loss to the extent that the proceeds from the sale of the collateral
were less than the repurchase price. In the event of a seller's bankruptcy, a
Fund might be delayed in, or prevented from, selling the collateral for the
Fund's benefit. Each Fund's Board of Directors/ Trustees has established
procedures, which are

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<PAGE>
periodically reviewed by the Board, pursuant to which Quest Advisors will
monitor the creditworthiness of the dealers and banks with which the Funds enter
into repurchase agreement transactions.

The Global Income Fund may enter into reverse repurchase agreements. Under a
reverse repurchase agreement, a Fund sells securities and agrees to repurchase
them at a mutually agreed date and price. At the time the Global Income Fund
enters into a reverse repurchase agreement, it will establish and maintain a
segregated account with an approved custodian containing liquid high grade
securities having a value not less than the repurchase price (including accrued
interest). Reverse repurchase agreements involve the risk that the market value
of the securities retained in lieu of sale by the Fund may decline more than or
appreciate less than the securities the Fund has sold but is obligated to
repurchase. In the event the buyer of securities under a reverse repurchase
agreement files for bankruptcy or becomes insolvent, such buyer or its trustee
or receiver may receive an extension of time to determine whether to enforce the
Fund's obligation to repurchase the securities and the Fund's use of the
proceeds of the reverse repurchase agreements may effectively be restricted
pending such decisions. Reverse repurchase agreements create leverage, a
speculative factor, and will be considered borrowings for purposes of the Global
Income Fund's limitation on borrowing.

LOANS OF PORTFOLIO SECURITIES: All Funds may lend portfolio securities if
collateral (cash, U.S. Government or agency obligations or letters of credit)
securing such loans is maintained daily in an amount at least equal to the
market value of the securities loaned and if the Funds do not incur any fees
(except transaction fees of the custodian bank) in connection with such loans. A
Fund may call the loan at any time on five days' notice and reacquire the loaned
securities. The Fund would receive the cash equivalent of the interest or
dividends paid by the issuer on the securities loan and would have the right to
receive the interest on investment of the cash collateral in short-term debt
instruments. A portion of either or both kinds of such interest may be paid to
the borrower of such securities. The Fund would continue to retain any voting
rights with respect to the securities. The value of the securities loaned, if
any, is not expected to exceed 10% of the value of the total assets of Quest for
Value, Small Capitalization, Opportunity or Investment Quality Income Funds and
33 1/3% of the value of the total assets of U.S. Government Income, Global
Equity, Global Income or Growth and Income Funds. There is a risk that the
borrower of the securities may default and the Funds may have difficulty in
reacquiring the loaned securities.

BRADY BONDS. The Global Income Fund and the Global Equity Fund may purchase
Brady Bonds and other sovereign debt of countries that have restructured or are
in the process of restructuring their sovereign debt. Brady Bonds are debt
securities issued under the Brady Plan, a mechanism whereby debtor nations can
restructure their indebtedness by negotiating with lenders and exchanging
existing commercial bank debt for Brady Bonds. Brady Bonds may also be issued in
respect of new money being advanced by existing lenders in connection with the
debt restructuring. The Brady Plan only sets forth general guidelines for
economic reform and debt reduction, emphasizing that solutions must be
negotiated on a case-by-case basis between debtor nations and their creditors.
Brady Bonds have been issued only recently and consequently do not have a long
payment history. The principal of certain Brady Bonds has been collateralized by
Treasury zero coupon bonds with maturities equal to the final maturity of such
Brady Bonds. In addition, the first two or three interest payments on certain
Brady Bonds may be collateralized by cash

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<PAGE>
or securities agreed upon by creditors. See "Risk Factors and Special
Considerations" in the SAI for a more complete description of Brady Bonds.

MORTGAGE-BACKED SECURITIES: The U.S. Government Income, Investment Quality
Income, Opportunity, Growth and Income and Global Income Funds may invest in a
type of mortgage-backed security known as modified pass-through certificates.
Each certificate evidences an interest in a specific pool of mortgages that have
been grouped together for sale and provides investors with payments of interest
and principal. The issuer of modified pass-through certificates guarantees the
payment of the principal and interest whether or not the issuer has collected
such amounts on the underlying mortgage.

The average life of these securities varies with the maturities of the
underlying mortgage instruments (generally up to 30 years) and with the extent
of prepayments or the mortgages themselves. Any such prepayments are passed
through to the certificate holder, reducing the stream of future payments.
Prepayments tend to rise in periods of falling interest rates, decreasing the
average life of the certificate and generating cash which must be invested in a
lower interest rate environment. This could also limit the appreciation
potential of the certificates when compared to similar debt obligations which
may not be paid down at will, and could cause losses on certificates purchased
at a premium or gains on certificates purchased at a discount. Government
National Mortgage Association ("Ginnie Mae") certificates represent pools of
mortgages insured by the Federal Housing Administration or the Farmers Home
Administration or guaranteed by the Veteran's Administration. The guarantee of
payments under these certificates is backed by the full faith and credit of the
United States. Federal National Mortgage Association ("Fannie Mae") is a
government-sponsored corporation owned entirely by private stockholders. The
guarantee of payments under these instruments is that of Fannie Mae only. They
are not backed by the full faith and credit of the United States but the U.S.
Treasury may extend credit to Fannie Mae through discretionary purchases of its
securities. The U.S. Government has no obligation to assume the liabilities of
Fannie Mae. Federal Home Loan Mortgage Corp. ("Freddie Mac") is a corporate
instrumentality of the United States government whose stock is owned by the
Federal Home Loan Banks. Certificates issued by Freddie Mac represent interest
in mortgages from its portfolio. Freddie Mac guarantees payments under its
certificates but this guarantee is not backed by the full faith and credit of
the United States and Freddie Mac does not have authority to borrow from the
U.S. Treasury.

The coupon rate of these instruments is lower than the interest rate on the
underlying mortgages by the amount of fees paid to the issuing agencies, usually
approximately 1/2 of 1%. It is not anticipated that the Funds' investments will
have any particular maturity. Mortgage-backed securities, due to the scheduled
periodic repayment of principal, and the possibility of accelerated repayment of
underlying mortgage obligations, fluctuate in value in a different manner than
other, non-redeemable debt securities. The U.S. Government Income, Investment
Quality Income, Opportunity, Growth and Income and Global Income Funds also may
invest in "collateralized mortgage obligations" ("CMO's") which are debt
obligations secured by mortgage-backed securities where the investor looks only
to the issuer of the security for payment of principal and interest.

OPTIONS AND FUTURES: The U.S. Government Income Fund may buy and sell futures
contracts and options, write covered put and call options on U.S. government
securities to generate additional income, purchase put and call options to
close-out or off-set options it has written and to hedge its investments against
changes in value or as a temporary substitute for purchases or sales of actual

29
<PAGE>
securities. The U.S. Government Income Fund also may purchase put and call
options on financial futures and write put and call options on such contracts.
The Global Income Fund may write covered call options and the Global Equity and
Global Income Funds may purchase and sell financial futures contracts (including
bond futures contracts and index futures contracts), foreign currency forward
contracts, foreign currency futures contracts, options on futures contracts and
options on currencies. In addition, the Global Income Fund is authorized to
write covered put options but does not presently intend to do so. The Quest for
Value, Small Capitalization and Growth and Income Funds may buy and sell options
on stock indexes, futures contracts and options on futures to hedge their
investments against changes in value or as a temporary substitute for purchases
or sales of actual securities. The Small Capitalization Fund may write covered
call options on individual securities. The Investment Quality Income Fund may
purchase or sell financial futures contracts and options on such contracts for
similar purposes. When each such Fund anticipates a significant market or market
sector advance, the purchase of a futures contract affords a hedge against not
participating in the advance at a time when the Fund is not fully invested
("anticipatory hedge"). Such a purchase of a futures contract would serve as a
temporary substitute for the purchase of individual securities, which may be
purchased in an orderly fashion once the market has stabilized. As individual
securities are purchased, an equivalent amount of futures contracts could be
terminated by offsetting sales. A Fund may sell futures contracts in
anticipation of or in a general market or market sector decline or increase in
interest rates that may adversely affect the market value of the Fund's
securities ("defensive hedge"). To the extent that a Fund's portfolio of
securities changes in value in correlation with the underlying security or
index, the sale of futures contracts would substantially reduce the risk to the
Fund of a market decline and by so doing, provide an alternative to the
liquidation of securities positions in the Fund with attendant transaction
costs. All options purchased or sold by a Fund will be traded on a U.S. or
foreign commodities exchange or will result from separate, privately negotiated
transactions with a primary government securities dealer recognized by the Board
of Governors of the Federal Reserve System or with other broker-dealers approved
by the Fund's Board. Options on securities, futures contracts and options on
futures contracts that are traded on foreign exchanges are subject to the risk
of governmental action affecting trading in or the prices of foreign currencies
or securities. The value of such positions also could be adversely affected by
(i) other complex foreign political and economic factors, (ii) lesser
availability than in the United States of data on which to make trading
decisions (iii) delays in a Fund's ability to act upon economic events occurring
in foreign markets during nonbusiness hours in the United States, (iv) the
imposition of different exercise and settlement terms and procedures and margin
requirements than in the United States, (v) lesser trading volume and (vi) in
certain circumstances, currency fluctuations. In addition, the Small
Capitalization Fund may write covered call options on individual securities.

So long as Commodities Futures Trading Commission rules so require, a Fund
will not enter into any financial futures or options contract unless such
transactions are for bona-fide hedging purposes or for other purposes only if
the aggregate initial margins and premiums required to establish such
non-hedging positions would not exceed 5% of the liquidation value of the Fund's
total assets. A call option written by a Fund is "covered" if the Fund owns the
underlying security covered by the call or has an absolute and immediate right
to acquire that security without additional cash consideration (or

30
<PAGE>
for additional cash consideration held in a segregated account by its custodian)
upon conversion or exchange of other securities held in its portfolio. A call
option is also covered if the Fund holds a call on the same security and in the
same principal amount as the call written where the exercise price of the call
held (a) is equal to or less than the exercise price of the call written or (b)
is greater than the exercise price of the call written if the difference is
maintained by the Fund in cash, U.S. Government Securities or other liquid
high-grade debt securities in a segregated account with its custodian. A put
option written by a Fund is "covered" if the Fund maintains cash, U.S.
Government securities or other liquid high-grade debt securities with a value
equal to the exercise price in a segregated account with its custodian, or else
holds a put on the same security and in the same principal amount as the put
written where the exercise price of the put held is equal to or greater than the
exercise price of the put written. As a result, the Fund forgoes the opportunity
of trading the segregated assets or writing calls against those assets. There
may not be a complete correlation between the price of options or futures and
the market prices of the underlying securities. The Fund may lose the ability to
profit from an increase in the market value of the underlying securities or may
lose its premium payment. If due to a lack of a market the Fund could not effect
a closing purchase transaction with respect to an OTC option, it would have to
hold the callable securities until the call lapsed or was exercised.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES AND FIRM COMMITMENTS: All Funds may
purchase securities on a "when-issued" or "delayed delivery" basis or may either
purchase or sell securities on a "firm commitment basis", whereby the price is
fixed at the time of commitment but delivery and payment may be as much as a
month or more later. The underlying securities are subject to market
fluctuations and no interest accrues prior to delivery of the securities.

RIGHTS AND WARRANTS (GLOBAL EQUITY, GLOBAL INCOME AND GROWTH AND INCOME
FUNDS): Each of these Funds may invest up to 5% of its total assets in rights or
warrants which entitle the holder to buy equity securities at a specific price
for a specific period of time. The 5% limitation is not a fundamental policy for
the Global Equity and Global Income Funds.

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

DIVIDENDS AND DISTRIBUTIONS

The U.S. Government Income, Investment Quality Income and Global Income Funds
declare dividends of their net investment income, consisting of interest
earned less estimated expenses, on a daily basis. These dividends are paid
monthly. You are entitled to receive the dividend declared on the day after the
Transfer Agent receives payment for your shares of these funds. Dividends from
net investment income are declared and paid quarterly for the Growth and Income
Fund. The Quest for Value, Small Capitalization, Opportunity and Global Equity
Funds declare and pay dividends from net investment income on an annual basis
following the end of their fiscal years (October 31, except for the Global
Equity and Global Income Funds, which is November 30). The Funds may at times
make payments from sources other than income or net capital gains. Payments from
such sources would, in effect, represent a return of each shareholder's
investment. All or a portion of such payments would not be taxable to
shareholders.

Distributions from net long-term capital gains, if any, for all Funds normally
are declared and paid annually, subsequent to the end of their respective

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fiscal years. Distributions from net short-term capital gains, if any, for the
U.S. Government Income Fund will be made quarterly and for all other Funds will
be made annually. Short-term capital gains include the gains from the
disposition of securities held less than one year, a portion of the premiums
from expired put and call options written by a Fund and net gains from closing
transactions with respect to such options. If required by tax laws to avoid
excise or other taxes, dividends and/or capital gains distributions may be made
more frequently.

Dividends paid by any Fund with respect to Class A, B and C shares, to the
extent any dividends are paid, will be calculated in the same manner at the same
time on the same day, with each class bearing its own distribution and other
class-related expenses. Accordingly, the higher distribution fees paid by Class
B and C shares and the higher resulting expense ratio will cause such shares to
be paid lower per share dividends than those paid on Class A shares. However, a
Class B or C shareholder will receive more shares at the time of purchase than a
Class A shareholder investing the same dollar amount since no sales charge is
deducted from the amount invested in Class B or C shares.

REINVESTMENT OPTIONS: You can receive your dividends and capital gains
distributions either in cash or in additional Fund shares without a sales
charge. You will be subject to tax on such distributions. See the SAI for a
description of how to change your election.
---------------------------------------------

TAX STATUS

The Funds intend to qualify for taxation as regulated investment companies under
the provisions of Subchapter M of the Internal Revenue Code. As such, the
Funds will not be taxed on their net investment income or net realized
capital gains, if any, to the extent they have been distributed to their
shareholders. Distributions from the Funds' income and short-term capital gains
are taxed as ordinary income while long-term capital gains distributions by the
Fund are taxed to you as long-term capital gains, regardless of how long you
have held your shares. While tax treatment varies from state to state, some
portion of the dividends of the U.S. Government Income Fund should be exempt
from income taxes in most states depending, in part, on the percentage of income
that is derived from direct U.S. Government obligations. The U.S. Government
Income Fund will send you its best information on the tax status of dividends
under the laws of each state and will provide information regarding the source
(including the percentage of income derived from direct U.S. Government
obligations) of all its dividends and distributions. For purposes of Federal
income tax, futures contracts and certain options, if any, held by the Funds at
the end of their respective fiscal years generally will be treated as having
been sold at market value. As a general rule any gain or loss on such contracts
will be treated as 60% long-term and 40% short-term. See the SAI for more detail
on the tax aspects of Hedging Instruments. Dividends will qualify for the
dividends received deduction for corporations only to the extent of a Fund's
qualifying dividend income. Since the income received by the U.S. Government
Income, Investment Quality Income and Global Income Funds will be derived from
interest income rather than dividend income, their dividends normally will not
qualify for this deduction. Shortly after the end of each calendar year, the
Funds will send you a statement of the amount and nature of net income and
capital gains. Dividends, interest and gains on foreign securities may give rise
to withholding and other taxes imposed by foreign countries, reducing the amount
distributable to you. Tax conventions between certain countries and the United
States may reduce or eliminate such taxes. The Global Equity and Global Income
Funds may each qualify to make an election

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<PAGE>
to allow you either to claim United States foreign tax credits with respect to
such foreign taxes withheld or paid, or to deduct such amounts as an itemized
deduction on your tax return. This would increase your taxable income (in
addition to income you actually received) by the amount of such taxes and these
Funds would not be able to deduct such taxes in computing their taxable income.

The above information is a summary of the tax treatment that will be applied
to a Fund and its distributions. You should contact your tax adviser,
particularly in connection with state and local taxes.
---------------------------------------------

INVESTMENT MANAGEMENT AGREEMENT

The day-to-day management of the Funds is the responsibility of Quest Advisors,
operating under the supervision of the Board of Directors or Trustees of
each Fund. Quest Advisors is a majority-owned subsidiary of Oppenheimer
Capital, a registered investment advisor, whose employees perform all investment
advisory services provided to the Funds by Quest Advisors. For its services each
Fund is authorized to pay Quest Advisors a monthly fee at the following annual
rates, based on each Fund's daily net assets: Quest for Value, Small
Capitalization and Opportunity--1.00%; Growth and Income--.85%; Global
Equity--.75%; U.S. Government Income and Investment Quality Income--.60%; and
Global Income-- .50%. The fees paid by the Quest for Value, Small
Capitalization, Opportunity and Growth and Income Funds are higher than that
paid by most other investment companies. The fee of the Global Equity Fund
combined with the administration fee described below, is also higher than that
paid by most other investment companies. Each of the Funds except Quest for
Value, Global Income and Global Equity also reimburses Quest Advisors on a cost
basis for bookkeeping and accounting services performed on behalf of each Fund.
The U.S. Government Income Fund, the Small Capitalization Fund, the Opportunity
Fund, the Investment Quality Income Fund and the Growth and Income Fund have
retained State Street Bank and Trust Company ("State Street"), the custodian of
each of the Funds, to calculate the net asset value of each class of the Fund's
shares and prepare the Fund's books and records. State Street also performs such
services for the Quest for Value Fund, the Global Income Fund and the Global
Equity Fund but the fees for such services are paid by Quest Advisors.

Pursuant to Administration Agreements with the Global Equity and Global Income
Funds, Quest Advisors provides administrative services and manages the business
affairs of each Fund. Such services include maintenance of the Fund's books and
records, monitoring the activities of entities providing services to the Fund,
furnishing office space, facilities, equipment, clerical help and bookkeeping
and legal services required in the conduct of the Fund's business, including the
preparation of proxy statements and reports filed with federal and state
securities commissions (except to the extent that the participation of
independent accountants and attorneys is, in the opinion of Quest Advisors,
necessary or desirable). Quest Advisors bears the cost of telephone service,
heat, light, power and other utilities provided to the Fund. For these services,
the Fund pays Quest Advisors a fee at the annual rate of .25% of average daily
net assets of the respective Fund.

Each Fund is responsible for bearing certain expenses attributable to the Fund
but not to a particular class ("Fund Expenses"), including deferred organization
expenses; taxes; registration fees; typesetting of prospectuses and financial
reports required for distribution to shareholders; brokerage commissions; fees
and related expenses of trustees or directors who are not interested persons;
legal, accounting and audit expenses;

33
<PAGE>
custodian fees; insurance premiums; and trade association dues. Fund Expenses
will be allocated based on the total net assets of each class.

Each class of shares of each Fund will also be responsible for certain
expenses attributable only to that class ("Class Expenses"). These Class
Expenses may include distribution and service fees, transfer and shareholder
servicing agent fees, professional fees, printing and postage expenses for
materials distributed to current shareholders, state registration fees and
shareholder meeting expenses. Such items are considered Class Expenses provided
such fees and expenses relate solely to such Class.

A portion of printing expenses, such as typesetting costs, will be divided
equally among the Funds, while other printing expenses, such as the number of
copies printed, will be considered Class Expenses.

Quest Advisors will assume expenses of each class of the Funds in the event
that aggregate ordinary operating expenses incurred in any fiscal year exceed
the most restrictive expense limitations imposed upon the Funds in states in
which shares are then eligible for sale. Currently the most restrictive expense
limitation, which excludes certain distribution fees from operating expenses, is
2 1/2% of the first $30 million of average net assets, 2% of the next $70
million of average net assets and 1 1/2% of the remaining average net assets.
Quest Advisors has agreed to limit Fund Expenses (as defined above) of the
Growth and Income and Global Income Funds so that annualized operating Fund
Expenses, exclusive of Class Expenses (as defined above), do not exceed 1.50%
and 1.45%, respectively, of each Fund's average daily net assets; this expense
limitations are voluntary and may be discontinued at any time. Quest Advisors
may make additional waivers of its management fee and/or assume Fund expenses on
a voluntary basis.

Quest Advisors has retained New Castle Advisers Inc. ("New Castle") as the
Subadvisor for the U.S. Government Income Fund pursuant to an agreement with
Quest Advisors whereby New Castle provides advice and assistance in connection
with the options and financial futures investments of the U.S. Government Income
Fund. New Castle, a registered investment advisor, maintains an office at 1
Barker Avenue, White Plains, New York, and has been in business since 1991.
Howard Potter is the President and Chief Executive Officer of New Castle and is
the sole stockholder. Prior to establishing New Castle, Mr. Potter was the
individual responsible for developing investment strategies for options and
financial futures for Oppenheimer & Co., Inc, subadvisor to the U.S. Government
Income Fund from April 29, 1988 to November 1, 1991. Quest Advisors will pay New
Castle 20% of the advisory fee paid by the U.S. Government Income Fund to the
Advisor, subject to certain reimbursements. There is no additional cost to the
U.S. Government Income Fund from this agreement.

Prior to January 1, 1994, Quest Advisors had retained Clay Finlay Inc.
(formerly Globe Finlay Inc.) as the Subadvisor for the Global Equity Fund
pursuant to an agreement with Quest Advisors whereby Clay Finlay had the primary
responsibility for selecting non-U.S. securities, subject to the overall review
of Quest Advisors. This agreement was terminated effective December 31, 1993 and
management of the non-U.S. portion of the Fund's portfolio was assumed by Quest
Advisors.

Oppenheimer Financial Corp., a holding company holds a 33% interest in
Oppenheimer Capital, a registered investment advisor, and Oppenheimer Capital,
L.P., a Delaware limited partnership whose units are traded on the New York
Stock Exchange and of which Oppenheimer Financial Corp. is the sole general
partner, owns the remaining 67% interest. Oppenheimer Capital has operated as an
investment advisor since 1968.

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

DISTRIBUTION PLAN

Each Class of shares of each Fund has adopted a Distribution Plan and Agreement
(the "Plan(s)") pursuant to Rule 12b-1 adopted under the Investment Company
Act of 1940. Under the Plans, Class A, B and C shares of each of the Funds
are authorized to pay Quest Distributors a distribution fee for expenses
incurred in connection with the distribution of shares of the Fund and for
shareholder servicing.

CLASS A SHARES. Class A shares of each Fund pay Quest Distributors a
distribution fee at the following annual rates of each Fund's average daily net
assets: U.S. Government Income Fund--.05%, Investment Quality Income and Growth
and Income Fund--.15%, all other Funds except Global Income Fund --.25%. Each
Fund's Class A Shares also pay a service fee at the annual rate of .25% of
average daily net assets. Although the Global Income Fund is authorized under
its Plan to pay a distribution fee of .05% and a service fee of .25%, the Board
of Directors of the Global Income Fund has set a maximum fee under the Plan of
.25%.

CLASS B AND C SHARES. Class B and C shares of each Fund pay Quest Distributors a
distribution fee at the annual rate of .75% of each Fund's average daily net
assets. Class B and C shares of each Fund will also pay a service fee at the
annual rate of .25% of each Fund's average daily net assets. The Class B Plans
were amended and restated in December 1994, without changing the fees each Fund
pays to Quest Distributors under such Plans, to reflect the intention of Quest
Distributors to assign its right to payments under the Plans in order to finance
Quest Distributors' costs in distributing Plan B Shares.

USE OF DISTRIBUTION AND SERVICE FEES. All or a portion of the distribution fees
paid by either Class A, B or C shares may be used by Quest Distributors to pay
costs of printing reports and prospectuses for potential investors and all or a
portion of the distribution and/or service fees may be paid to broker-dealers or
others for the provision of personal continuing services to shareholders,
including such matters as responding to shareholder inquiries concerning the
status of their accounts and assistance in account maintenance matters such as
changes in address. Payments under the Plan are not limited to amounts actually
paid or expenses actually incurred by Quest Distributors but cannot exceed the
maximum rate set by the Plan or by the Board. It is, therefore, possible that
Quest Distributors may realize a profit in a particular year as a result of
these payments. The Plans have the effect of increasing the Funds' expenses from
what they otherwise would be. The Board of each Fund reviews that Fund's
distribution payments and may reduce or eliminate the fee at any time without
further obligation of the Fund. Investors should understand that the purpose and
function of the distribution fee and CDSC applicable to Class B and C shares are
the same as the sales charge and distribution fee applicable to Class A shares,
i.e., to compensate Quest Distributors for expenses incurred in distributing
shares of the Funds. The SAIs contain more information about the Investment
Management Agreement and the Plans.

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

PORTFOLIO TRANSACTIONS AND TURNOVER

Quest Advisors may select its affiliate Oppenheimer & Co., Inc. ("Opco"), a
registered broker-dealer to execute transactions for the Funds, provided
that the commissions, fees or other remuneration received by Opco are
reasonable and fair compared to those paid to other brokers in connection with
comparable transactions. When selecting broker-dealers other than Opco,

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<PAGE>
Quest Advisors may consider their record of sales of shares of the Funds. (For a
further discussion of portfolio trading, see the SAIs, "Investment Objectives,
Policies and Restrictions"). Although Quest Advisors cannot accurately predict a
Fund's annual turnover rate, it is anticipated that the Small Capitalization,
Global Equity and Growth and Income Funds each will have an annual turnover rate
(excluding turnover of securities having a maturity of one year or less) of 100%
or less and that the U.S. Government Income, Opportunity, Investment Quality
Income and Global Income Funds each will have an annual turnover rate of 250% or
less. For the year ended October 31, 1994, the annual turnover rate of the
Growth and Income Fund was 113%, which was higher than anticipated, as a result
of asset allocation shifts made in reaction to interest rate changes and the
overall market outlook. To the extent that higher portfolio turnover increases
capital gains, more taxes will be payable. See "Tax Status".
---------------------------------------------

ADDITIONAL INFORMATION

ORGANIZATION OF THE FUNDS. The Small Capitalization, U.S. Government Income,
Investment Quality Income, Opportunity and Growth and Income Funds are
portfolios of Quest for Value Family of Funds (the "Trust"), an open-end
management investment company organized as a Massachusetts business trust on
April 17, 1987. The Trust's other portfolios are National Tax-Exempt, California
Tax-Exempt and New York Tax-Exempt Funds and the Officers Fund. The Trust may
establish additional portfolios which may have different investment objectives
from those stated in this prospectus. Quest for Value Fund, Inc. and Quest for
Value Global Equity Fund, Inc. are each open-end diversified management
investment companies organized as Maryland corporations. Global Income Fund, an
open-end non-diversified management investment company, is a portfolio of Quest
for Value Global Funds, Inc., a company organized as a Maryland corporation.

None of the Funds is required to hold annual shareholder meetings, although
special meetings may be called for a specific Fund or group of Funds as a whole
as required by applicable law or as requested in writing by holders of 10% or
more of the outstanding shares of the Fund for the purpose of voting upon the
question of removal of a director or trustee. Each Fund will assist shareholders
in communicating with one another in connection with such a meeting. For matters
affecting only one portfolio of Quest for Value Family of Funds or Quest for
Value Global Funds, Inc., only the shareholders of that portfolio are entitled
to vote. For matters affecting all the portfolios, but affecting them
differently, separate votes by portfolio are required. No stock certificates
will be issued unless specifically requested in writing.

Under Massachusetts law shareholders of the Trust could, in certain
circumstances, be held personally liable as partners for obligations of the
Trust. The Declaration of Trust contains an express disclaimer of shareholder
liability for acts or obligations of the Trust and its portfolios and requires
that notice of such disclaimer be given in each instrument entered into or
executed by the Trust on behalf of its portfolios. The Declaration of Trust also
provides indemnification out of the Trust's property for any shareholder held
personally liable for any of the obligations of the Trust. Thus, the risk of
loss to a shareholder from being held personally liable for the obligations of
the Trust is limited to the unlikely circumstance in which the Trust would be
unable to meet its obligations. There is a remote possibility that one Fund
might become liable for a misstatement in this Prospectus about another Fund.

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<PAGE>
Each class of shares represents identical interests in the applicable Fund's
investment portfolio. As such, they have the same rights, privileges and
preferences, except with respect to the: (a) designation of each class, (b)
effect of the respective sales charges, if any, for each class, (c) distribution
fees borne by each class, (d) expenses allocable exclusively to each class, (e)
voting rights on matters exclusively affecting a single class and (f) exchange
privilege of each class.

PERFORMANCE INFORMATION: From time to time the Funds may advertise yield and
total return figures, based on historical earnings. The figures are not intended
to indicate future performance. "Yield" is calculated by dividing the net
investment income for the stated period (exclusive of gains, if any, from
options and financial futures transactions) by the value, at maximum offering
price on the last day of the period, of the average number of shares entitled to
receive dividends during the period. The yield formula assumes that net
investment income is earned at a constant rate and reinvested semi-annually.
"Total Return" refers to the average annual compounded rates of return over some
representative period that would equate an initial amount invested at the
beginning of a stated period to the ending redeemable value of the investment,
after giving effect to the reinvestment of all dividends and distributions and
deductions of expenses during the period. A Fund also may advertise its total
return over different periods of time by means of aggregate, average, year by
year or other types of total return figures. In addition, reference in
advertisements may be made to ratings and rankings among similar funds by
independent evaluators such as Lipper Analytical Services, Inc. or Morningstar
and the performance of the Funds may be compared to recognized indices of market
performance. Performance data will be computed separately for each Class of
shares in accordance with formulas specified by the SEC.

POSSIBLE CONFLICTS OF INTEREST BETWEEN CLASSES. The Boards of the Funds have
determined that currently no conflict of interest exists between Class A, B
and/or C shares of any Fund. On an ongoing basis, the Boards shall monitor the
Funds for the existence of any material conflicts between the interests of the
classes of outstanding shares. The Boards shall take such action as is
reasonably necessary to eliminate any such conflicts that may develop, up to and
including establishing a new Fund.

CUSTODIAN, TRANSFER AGENT AND SHAREHOLDER SERVICING AGENT. The custodian of the
assets, transfer agent and shareholder servicing agent for the Funds is State
Street Bank and Trust Company, whose principal business address is P.O. Box
8505, Boston, MA 02266. Cash balances of the Funds with the Custodian in excess
of $100,000 are unprotected by Federal deposit insurance. Such uninsured
balances may at times be substantial.

SHAREHOLDER INQUIRIES. You may telephone 1-800-232-FUND for inquiries concerning
the Funds, including purchase and sale of shares of the Funds, as well as
inquiries concerning dividends and account statements. If you prefer, you may
write to Quest for Value Shareholder Services, P.O. Box 3567, Church Street
Station, New York, NY, 10277-1296. Written inquiries concerning management and
investment policies of the Funds may be directed to Quest for Value Advisors,
One World Financial Center, New York, New York 10281.

SHAREHOLDER REPORTS. To reduce expenses, only one copy of financial reports will
be mailed to your household, even if you have more than one account in the
particular fund. If you wish to receive additional copies of financial reports,
please call 1-800-232-FUND.

SHAREHOLDER SERVICING AGENT FOR CERTAIN SHAREHOLDERS. Unified Management
Corporation (1-800-346-4601) is the shareholder servicing agent

37
<PAGE>
for former shareholders of the AMA Family of Funds and clients of AMA Investment
Advisers, L.P. who acquire shares of any Quest Fund, and for former shareholders
of the Unified Funds and Liquid Green Trusts, accounts which participated or
participate in a retirement plan for which Unified Investment Advisers, Inc. or
an affiliate acts as custodian or trustee, accounts which have a Money Manager
brokerage account, and other accounts for which Unified Management Corporation
is the dealer of record.

SPECIAL ARRANGEMENTS FOR FORMER SHAREHOLDERS OF AMA FAMILY OF FUNDS AND UNIFIED
FUNDS:

PURCHASES BY FORMER SHAREHOLDERS OF AMA FAMILY OF FUNDS. All shareholders of the
AMA Family of Funds who acquired shares of any Quest Funds pursuant to the
combination of a Quest Fund with a portfolio of the AMA Family of Funds who were
shareholders of the AMA Family of Funds on February 28, 1991, are able to make
future purchases of any of the Funds at net asset value without a sales charge,
provided they continuously own shares of a Quest Fund.

PURCHASES BY FORMER SHAREHOLDERS OF THE UNIFIED FUNDS. Shareholders who acquired
shares of any Quest Fund pursuant to the combination of several Quest Funds
(including the Growth and Income and Quest for Value Funds) with portfolios of
the Unified Funds are able to make future purchases of any Quest Fund at net
asset value without a sales charge, provided that such shareholders continuously
own shares of a Quest Fund subsequent to their acquisition of shares of a Quest
Fund in the above described transactions.

REDEMPTIONS BY FORMER SHAREHOLDERS OF AMA FAMILY OF FUNDS AND UNIFIED
FUNDS. While they have no present intention to do so, in the event that Quest
Distributors imposes a redemption fee in the future, no redemption fees will be
imposed upon redemption of shares of any Quest Fund by former shareholders of
the Unified Funds who are entitled to purchase shares of Quest Funds at net
asset value (see Purchases by Former Shareholders of the Unified Funds, above).

EXCHANGES BY FORMER SHAREHOLDERS OF AMA FAMILY OF FUNDS AND UNIFIED FUNDS. All
former shareholders of the AMA Family of Funds who acquired shares of any Quest
Fund pursuant to the combination of a Quest Fund with a portfolio of the AMA
Family of Funds who were shareholders of the AMA Family of Funds on February 28,
1991 and former shareholders of the Unified Funds who qualify to purchase shares
of Quest Funds at net asset value (see Purchases by Former Shareholders of the
Unified Funds), will be able to make exchanges into any other Quest Fund without
a sales charge provided they continuously own shares of a Quest Fund. They will
pay a service fee (currently $5) for administrative services in connection with
an exchange into a non-money market fund.

38
<PAGE>

APPENDIX

The average distribution of investments in bonds by ratings as a percentage of
average net assets for the Growth and Income Fund and the Global Income Fund for
the fiscal year ended October 31, 1994 and November 30, 1994, respectively,
calculated monthly on a dollar-weighted basis was as follows:

RATED BONDS

<TABLE>
<CAPTION>
MOODY'S STANDARD &
INVESTORS POOR'S
SERVICE, INC. CORPORATION PERCENTAGE
--------------- --------------- -------------------------------------
GROWTH AND GLOBAL
INCOME FUND INCOME FUND
-------------- --------------
<S> <C> <C> <C>
Aaa AAA -- 10.2%
Aa AA -- 6.5%
A A -- --
Baa BBB 6.2% 2.6%
Ba BB -- 17.7%
B B 6.8% 5.2%
Caa CCC 4.4% --
</TABLE>

UNRATED BONDS DEEMED COMPARABLE TO THE INDICATED RATING

<TABLE>
<CAPTION>
MOODY'S STANDARD &
INVESTORS POOR'S
SERVICE, INC. CORPORATION PERCENTAGE
--------------- --------------- -------------------------------------
GROWTH AND GLOBAL
INCOME FUND INCOME FUND
-------------- --------------
<S> <C> <C> <C>
Aaa AAA 0% 15.2%
Aa AA 0% 32.2%
A A 0% 0%
Baa BBB 0% 0%
Ba BB 0% 5.6%
B B 0% 2.2%
Caa CCC 0% 0%
</TABLE>

The actual distribution of a Fund's corporate bond investments by rating will
vary on any given date. The distribution of a Fund's investments by rating as
set forth above should not be considered representative of the future
composition of the Fund's portfolio.

41
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
QUEST FOR VALUE-SM- FUNDS
TWO WORLD FINANCIAL CENTER
NEW YORK, NEW YORK 10080
QUEST FOR VALUE-SM-
FUNDS

TABLE OF CONTENTS

<TABLE>
<S> <C>
Summary of Fund Expenses.................. 2
Financial Highlights...................... 4
Introduction.............................. 6
Investment Objectives of the Funds........ 8
Risk Factors.............................. 12
How to Buy Shares......................... 17
Determining Net Asset Value............... 23
How to Redeem Shares...................... 24
Exchanging Shares......................... 25
Investment Restrictions and Techniques.... 26
Dividends and Distributions............... 31
Tax Status................................ 32
Investment Management Agreement........... 33
Distribution Plan......................... 35
Portfolio Transactions and Turnover....... 35
Additional Information.................... 36
Application Terms and Conditions.......... 39
</TABLE>

INVESTMENT ADVISOR:
QUEST FOR VALUE ADVISORS
ONE WORLD FINANCIAL CENTER
NEW YORK, NEW YORK 10281
(800) 232-FUND

TRANSFER AGENT:
STATE STREET BANK AND TRUST COMPANY
BOSTON, MA 02266-8505

GENERAL DISTRIBUTOR:
QUEST FOR VALUE DISTRIBUTORS
P.O. BOX 3567
CHURCH STREET STATION
NEW YORK, NY 10277-1296
(800) 232-FUND

QUEST FOR
VALUE FUNDS

/ / GROWTH AND INCOME FUND

/ / INVESTMENT QUALITY INCOME FUND

/ / OPPORTUNITY FUND

/ / SMALL CAPITALIZATION FUND

/ / U.S. GOVERNMENT INCOME FUND
(THE ABOVE FUNDS ARE SERIES OF QUEST FOR VALUE FAMILY OF FUNDS)

/ / QUEST FOR VALUE FUND, INC.

/ / QUEST FOR VALUE GLOBAL EQUITY FUND, INC.

/ / GLOBAL INCOME FUND
(A SERIES OF QUEST FOR VALUE GLOBAL FUNDS, INC.)

MARCH 1, 1995, AS
REVISED JUNE 30, 1995

PROSPECTUS

<PAGE>

Statement of Additional Information

QUEST FOR VALUE GLOBAL EQUITY FUND, INC.

QUEST FOR VALUE GLOBAL INCOME FUND
(A Series of Quest for Value Global Funds, Inc.)

One World Financial Center
New York, New York 10281
(800) 232-FUND

This Statement of Additional Information (the "Additional Statement") is
not a Prospectus. Investors should understand that this Additional Statement
should be read in conjunction with the Prospectus dated March 1, 1995 (the
"Prospectus") of the Quest for Value Global Equity Fund, Inc. and the Quest for
Value Global Income Fund (the "Fund(s)") which may be obtained by written
request to State Street Bank and Trust Company ("State Street"), P.O. Box 8505,
Boston, MA 02266-8505 or by calling State Street at (800) 232-FUND.

The date of this Additional Statement is March 1, 1995.

QUEST FOR VALUE is a registered service mark of Oppenheimer Capital

<PAGE>

TABLE OF CONTENTS

Page
----

INVESTMENT OF THE FUNDS' ASSETS. . . . . . . . . . . . . . . . . . . . . . . . 3

OTHER RISK FACTORS AND SPECIAL CONSIDERATIONS. . . . . . . . . . . . . . . . .16

INVESTMENT RESTRICTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . .20

DIRECTORS AND OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

INVESTMENT MANAGEMENT AND OTHER SERVICES . . . . . . . . . . . . . . . . . . .26

DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . . .31

PERFORMANCE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . .32

DISTRIBUTION EXPENSE PLAN. . . . . . . . . . . . . . . . . . . . . . . . . . .36

ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . .38

Appendix A -- Ratings. . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1

Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1

<PAGE>

INVESTMENT OF THE FUNDS' ASSETS

The investment objective and policies of the Funds are described in the
Prospectus. A further description of the Funds' investments and investment
methods appears below.

TYPE OF SECURITIES IN WHICH THE FUNDS MAY INVEST. As discussed in the
Prospectus, the Funds seek to achieve their investment objectives through
investment primarily in equity securities in the case of the Global Equity Fund
and investment grade debt securities in the case of the Global Income Fund. In
addition to investing directly in equity securities, the Funds may invest in
American Depository Receipts ("ADRs") and European Depository Receipts ("EDRs").
Generally, ADRs in registered form are U.S. dollar denominated securities
designed for use in the U.S. securities markets, which represent and may be
converted into the underlying foreign security. EDRs are typically issued in
bearer form and are designed for use in the European securities markets. No
more than 5% of the Global Equity Fund's assets will be invested in ADRs or EDRs
sponsored by persons other than the underlying issuers. Issuers of the stock of
such unsponsored ADRs are not obligated to disclose material information in the
United States and, therefore, there may not be a correlation between such
information and the market value of such ADRs. Each Fund also may purchase
shares of investment companies or trusts which invest principally in securities
in which the Fund is authorized to invest. The return on a Fund's investments
in investment companies will be reduced by the operating expenses, including
investment advisory and administrative fees, of such companies. A Fund's
investment in an investment company may require the payment of a premium above
the net asset value of the investment company's shares, and the market price of
the investment company thereafter may decline without any change in the value of
the investment company's assets. Neither Fund, however, will invest in any
investment company or trust unless it is believed that the potential benefits of
such investment are sufficient to warrant the payment of any such premium.
Under the Investment Company Act of 1940, neither Fund may invest more than 10%
of its assets in investment companies or more than 5% of its total assets in the
securities of any one investment company, nor may it own more than 3% of the
outstanding voting securities of any such company. To the extent a Fund invests
in securities in bearer form it may be more difficult to recover securities in
the event such securities are lost or stolen.

If a Fund invests in an entity which is classified as a "passive foreign
investment company" ("PFIC") for U.S. tax purposes, the application of certain
technical tax provisions applying to such companies could result in the
imposition of federal income tax with respect to such investments at the Fund
level which could not be eliminated by distributions to shareholders. The U.S.
Treasury has issued proposed regulations which establish a mark-to-market regime
that allows a regulated investment company ("RIC") to avoid most, if not all, of
the difficulties posed by the PFIC rules. In any event, it is not anticipated
that any taxes on a Fund with respect to investments in PFIC's would be
significant.

PRIVATE PLACEMENTS. The Funds may invest in securities which are subject
to restriction on resale because they have not been registered under the
Securities Act of 1933, or which are otherwise not readily marketable. These
securities are generally referred to as private placements or restricted

<PAGE>

securities. Limitations on the resale of such securities may have an adverse
effect on their marketability, and may prevent the Fund from disposing of them
promptly at reasonable prices. The Fund may have to bear the expense of
registering such securities for resale and risk the substantive delays in
effecting such registration. However, as described in the Prospectus, the Funds
may avail themselves of recently adopted regulatory changes to the Securities
Act of 1933 ("Rule 144A") which permit the Funds to purchase securities which
have been privately placed and resell such securities to certain qualified
institutional buyers without restriction. Since it is not possible to predict
with assurance exactly how this market for restricted securities sold and
offered under Rule 144A will develop, the Boards of Directors will carefully
monitor the Funds' investments in these securities, focusing on such important
factors, among others, as valuation, liquidity and availability of information.
This investment practice could have the effect of increasing the level of
illiquidity in the Funds to the extent that qualified institutional buyers
become, for a time, uninterested in purchasing these restricted securities.

Securities of foreign issuers often have not been registered in the U.S.
Accordingly, if a Fund wishes to sell unregistered foreign securities in the
U.S. it will avail itself of Rule 144A.

CONVERTIBLE SECURITIES. The Funds may invest in fixed-income securities
which are convertible into common stock. Convertible securities rank senior to
common stocks in a corporation's capital structure and, therefore, entail less
risk than the corporation's common stock. The value of a convertible security
is a function of its "investment value" (its value as if it did not have a
conversion privilege), and its "conversion value" (the security's worth if it
were to be exchanged for the underlying security, at market value, pursuant to
its conversion privilege).

To the extent that a convertible security's investment value is greater
than its conversion value, its price will be primarily a reflection of such
investment value and its price will be likely to increase when interest rates
fall and decrease when interest rates rise, as with a fixed-income security (the
credit standing of the issuer and other factors may also have an effect on the
convertible security's value). If the conversion value exceeds the investment
value, the price of the convertible security will rise above its investment
value and, in addition, will sell at some premium over its conversion value.
(This premium represents the price investors are willing to pay for the
privilege of purchasing a fixed-income security with a possibility of capital
appreciation due to the conversion privilege.) At such times the price of the
convertible security will tend to fluctuate directly with the price of the
underlying equity security. Convertible securities may be purchased by the
Funds at varying price levels above their investment values and/or their
conversion values in keeping with the Funds' objectives.

FOREIGN CURRENCY TRANSACTIONS. When a Fund agrees to purchase or sell a
security in a foreign market it will generally be obligated to pay or entitled
to receive a specified amount of foreign currency and will then generally
convert dollars to that currency in the case of a purchase or that currency to
dollars in the case of a sale. The Funds will conduct their foreign currency
exchange transactions either on a spot basis (i.e., cash) at the spot rate
prevailing in the foreign currency exchange market, or through entering into
forward foreign currency contracts ("forward contracts") to

<PAGE>

purchase or sell foreign currencies. A Fund may enter into forward contracts in
order to lock in the U.S. dollar amount it must pay or expects to receive for a
security it has agreed to buy or sell. A Fund may also enter into forward
currency contracts with respect to the Fund's portfolio positions when it
believes that a particular currency may change unfavorably compared to the U.S.
dollar. A forward contract involves an obligation to purchase or 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
of the contract. These contracts are traded in the interbank market conducted
directly between currency traders (usually large, commercial banks) and their
customers. A forward contract generally has no deposit requirement, and no
commissions are charged at any stage for trades.

The Fund's custodian bank will place cash, U.S. Government securities or
debt securities in a separate account of the Fund in an amount equal to the
value of the Fund's total assets committed to the consummation of any such
contract in such account and if the value of the securities placed in the
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 forward contracts. If, rather
than cash, portfolio securities are used to secure such a forward contract, on
the settlement of the forward contract for delivery by the Fund of a foreign
currency, the Fund may either sell the portfolio security and make delivery of
the foreign currency, or it may retain the security and terminate its
contractual obligation to deliver the foreign currency by purchasing an
"offsetting" contract obligating it to purchase, on the same settlement date,
the same amount of foreign currency.

The Funds may effect currency hedging transactions in foreign currency
futures contracts, exchange-listed and over-the-counter call and put options on
foreign currency futures contracts and on foreign currencies. The use of
forward futures or options contracts will not eliminate fluctuations in the
underlying prices of the securities which the Funds own or intend to purchase or
sell. They simply establish a rate of exchange for a future point in time.
Additionally, while these techniques tend to minimize the risk of loss due to a
decline in the value of the hedged currency, their use tends to limit any
potential gain which might result from the increase in value of such currency.
In addition, such transactions involve costs and may result in losses.

Although each 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. It will, however, do so from time to time, and investors
should be aware of the costs of currency conversion. Although foreign exchange
dealers do not charge a fee for conversion, they do realize a profit based on
the spread between the prices at which they are buying and selling 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.

Under Internal Revenue Code Section 988, special rules are provided for
certain transactions in a currency other than the taxpayer's functional currency
(i.e., unless certain special rules apply, currencies other than the U.S.
dollar). In general, foreign currency gains or losses from forward contracts,
futures contracts that are not "regulated futures contracts", and from unlisted
options will be

<PAGE>

treated as ordinary income or loss under Code Section 988. Also, certain
foreign exchange gains or losses derived with respect to fixed-income securities
are also subject to Section 988 treatment. In general, therefore, Code Section
988 gains or losses will increase or decrease the amount of the Fund's
investment company taxable income available to be distributed to shareholders as
ordinary income, rather than increasing or decreasing the amount of the Fund's
net capital gain. Additionally, if Code Section 988 losses exceed other
investment company taxable income during a taxable year, the Fund would not be
able to make any ordinary income distributions.

COLLATERALIZED MORTGAGE OBLIGATIONS. The Global Income Fund may invest in
mortgage-backed securities. In addition to securities issued by Ginnie Mae,
Fannie Mae and Freddie Mac, another type of mortgage-backed security is the
"collateralized mortgage obligation", which is secured by groups of individual
mortgages but is similar to a conventional bond where the investor looks only to
the issuer for payment of principal and interest. Although the obligations are
recourse obligations to the issuer, the issuer typically has no significant
assets, other than assets pledged as collateral for the obligations, and the
market value of the collateral, which is sensitive to interest rate movements,
may affect the market value of the obligations. A public market for a
particular collateralized mortgage obligation may or may not develop and thus,
there can be no guarantee of liquidity of an investment in such obligations.

TIME DEPOSITS AND VARIABLE RATE NOTES. The Global Income Fund may invest
in fixed time deposits, whether or not subject to withdrawal penalties; however,
investment in such deposits which are subject to withdrawal penalties, other
than overnight deposits, are subject to the 15% limit on investments in illiquid
securities set forth in the Prospectus.

The commercial paper obligations which the Global Income Fund may buy may
include variable rate notes. The nature and terms of a variable rate note
(i.e., a "Master Note") permit a fund to invest fluctuating amounts at varying
rates of interest pursuant to a direct arrangement between a fund as lender, and
the issuer, as borrower. It permits daily changes in the amounts borrowed. The
fund has the right at any time to increase, up to the full amount stated in the
note agreement, or to decrease the amount outstanding under the note. The
issuer may prepay at any time and without penalty any part of or the full amount
of the note. The note may or may not be backed by one or more bank letters of
credit. Because these notes are direct lending arrangements between the fund
and the issuer, it is not generally contemplated that they will be traded;
moreover, there is currently no secondary market for them. Except as
specifically provided in the Prospectus, there is no limitation on the type of
issuer from whom these notes will be purchased; however, in connection with such
purchase and on an ongoing basis, Quest for Value Advisors ("Quest Advisors")
will consider the earning power, cash flow and other liquidity ratios of the
issuer, and its ability to pay principal and interest on demand, including in a
situation in which all holders of such notes made demand simultaneously. The
Global Income Fund will not invest more than 5% of its total assets in variable
rate notes. Variable rate notes are subject to the Global Income Fund's
investment restriction on illiquid securities unless such notes can be put back
to the issuer on demand within seven days.

<PAGE>

PORTFOLIO TRADING. It is anticipated that the Global Equity Fund's
portfolio turnover rate will not exceed 100% in any one year and the Global
Income Fund's portfolio turnover rate will not exceed 250% in any one year.
However, as it is difficult to anticipate actual portfolio turnover, no
guarantee can be given that the actual portfolio turnover rates of the Funds
will not be greater or less than these predictions. A 100% turnover rate would
occur, for example, if 100% of the securities held in the Fund's portfolio
(excluding all securities whose maturities at acquisition were one year or less)
were sold and replaced within one year.

SECURITY LOANS. Consistent with applicable regulatory requirements and
procedures adopted by the Board of Directors, each Fund may lend its portfolio
securities to brokers, dealers and other financial institutions, provided that
such loans are callable at any time by the Fund (subject to notice provisions
described below), and are at all times secured by cash or cash equivalents,
which are maintained in a segregated account pursuant to applicable regulations
and that are equal to at least the market value, determined daily, of the loaned
securities. The advantage of such loans is that the Fund continues to receive
the income on the loaned securities while at the same time earning interest on
the cash amounts deposited as collateral, which will be invested in short-term
obligations.

A loan may be terminated by the borrower on one business day's notice, or
by the Fund on five business days' notice. If the borrower fails to deliver the
loaned securities within five days after receipt of notice, the Fund could use
the collateral to replace the securities while holding the borrower liable for
any excess of replacement cost over collateral. As with any extensions of
credit, there are risks of delay in recovery and in some cases, even loss of
rights in the collateral should the borrower of the securities fail financially.
However, these loans of portfolio securities will only be made to firms deemed
by the Fund's management to be creditworthy and when the income which can be
earned from such loans justifies the attendant risks. Upon termination of the
loan, the borrower is required to return the securities to the Fund. Any gain
or loss in the market price during the loan period would inure to the Fund. A
Fund will pay reasonable finder's, administrative and custodial fees in
connection with a loan of its securities. The creditworthiness of firms to
which each Fund lends its portfolio securities will be monitored on an ongoing
basis by its Board of Directors.

When voting or consent rights which accompany loaned securities pass to the
borrower, each Fund will follow the policy of calling the loaned securities, to
be delivered within one day after notice, to permit the exercise of such rights
if the matters involved would have a material effect on the Fund's investment in
such loaned securities. Neither Fund will lend portfolio securities with a
value in excess of one-third of its total assets at the time of the loan.

REPURCHASE AGREEMENTS. When cash may be available for only a few days, it
may be invested by each Fund in repurchase agreements until such time as it may
otherwise be invested or used for payments of obligations of the Fund.
Repurchase agreements, which may be viewed as a type of secured lending by a
Fund, typically involve the acquisition by the Fund of government securities or
other securities from a selling financial institution such as a bank, savings
and loan association or broker-dealer. The agreement provides that the Fund
will sell back to the institution, and that the

<PAGE>

institution will repurchase, the underlying security ("collateral") at a
specified price and at a fixed time in the future, usually not more than seven
days from the date of purchase. The Fund will accrue interest from the
institution until the time when the repurchase is to occur. Although such date
is deemed by the Fund to be the maturity date of a repurchase agreement, the
maturities of securities subject to repurchase agreements are not subject to any
limits and may exceed one year.

While repurchase agreements involve certain risks not associated with
direct investments in debt securities, the Funds follow procedures designed to
minimize such risks. These procedures include effecting repurchase transactions
only with large, well capitalized and well established financial institutions
under guidelines established and monitored by the Directors of the Fund. In
addition, the collateral will be maintained in a segregated account and will be
marked-to-market daily to determine that the full value of the collateral, as
specified in the agreement, does not decrease below the purchase price plus
accrued interest. If such decrease occurs, additional collateral will be
requested and, when received, added to maintain full collateralization. In the
event of a default or bankruptcy by a selling financial institution, the Fund
will seek to liquidate such collateral. However, the exercise of the Fund's
right to liquidate such collateral could involve certain costs or delays and, to
the extent that proceeds from any sale upon a default of the obligation to
repurchase were less than the repurchase price, the Fund could suffer a loss.
It is the current policy of each Fund not to invest in repurchase agreements
that do not mature within seven days if any such investment, together with any
other illiquid assets held by the Fund, amount to more than 15% of its total
assets. The Funds' investments in repurchase agreements may at times be
substantial when, in the view of Quest Advisors, liquidity or other
considerations warrant.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES AND FORWARD COMMIT-
MENTS. As
discussed in the Prospectus, from time to time, in the ordinary course of
business, the Funds may purchase securities on a when-issued or delayed delivery
basis and may purchase or sell securities on a forward commitment basis. When
such transactions are negotiated, the price is fixed at the time of the
commitment, but delivery and payment can take place a month or more after the
date of the commitment. The securities so purchased are subject to market
fluctuation and no interest accrues to the purchaser during this period. While
each Fund will only purchase securities on a when-issued, delayed delivery or
forward commitment basis with the intention of acquiring the securities, the
Fund may sell the securities before the settlement date, if it is deemed
advisable. At the time a Fund makes the commitment to purchase securities on a
when-issued or delayed delivery basis, the Fund will record the transaction and
thereafter reflect the value, each day, of such security in determining the net
asset value of the Fund. At the time of delivery of the securities, the value
may be more or less than the purchase price. Each Fund will also establish a
segregated account with the Fund's custodian bank in which it will continuously
maintain cash or U.S. Government securities or other high grade debt portfolio
securities equal in value to commitments for such when-issued or delayed
delivery securities; subject to this requirement, each Fund may purchase
securities on such basis without limit. An increase in the percentage of a
Fund's assets committed to the purchase of securities on a when-issued or
delayed delivery basis may increase the volatility of the Fund's net asset
value. Each Fund's

<PAGE>

management and Directors do not believe that such Fund's net asset value or
income will be adversely affected by its purchases of securities on such basis.

SECURITY SELECTION PROCESS. The allocation of assets of each Fund between
U.S. and foreign markets will vary from time to time as deemed appropriate by
Quest Advisors. It is a dynamic process based on an on-going analysis of
economic and political conditions, the growth potential of the securities
markets throughout the world, currency exchange considerations and the
availability of attractively priced securities within the respective markets.
In all markets, security selection is designed to reduce risk through a value
oriented approach in which emphasis is placed on identifying well-managed
companies which, in the case of the Global Equity Fund, represent exceptional
values in terms of such factors as assets, earnings and growth potential.

While the U.S. securities markets represented more than 50% of the
capitalization of the global securities markets in the late 1970s, a combination
of factors reduced that percentage to approximately 33% as of December 31, 1994.
Moreover, the relative performance of the securities markets of different
countries, expressed in terms of United States dollars, varies widely. A global
portfolio provides U.S. investors with the opportunity to participate in these
markets, diversifying their domestic portfolios so that their investments will
not be influenced solely by the political, economic and fiscal events affecting
the U.S.

HEDGING. As stated in the Prospectus, the Global Equity and Global Income
Funds may engage in transactions in options and futures. Information about the
options and futures transactions the Funds may enter into is set forth below.

FINANCIAL FUTURES. The Global Equity and Global Income Funds may purchase
and sell futures contracts that are currently traded, or may in the future be
traded, on U.S. and foreign commodity exchanges on common stocks, such
underlying fixed-income securities as U.S. Treasury bonds, notes, and bills
and/or any foreign government fixed-income security ("interest rate" futures),
on various currencies ("currency" futures) and on such indexes of U.S. or
foreign equity and fixed-income securities as may exist or come into being, such
as the Standard & Poor's 500 Index or the Financial Times Equity Index ("index"
futures). No price is paid or received upon the purchase of a financial future.
Upon entering into a futures transaction, a Fund will be required to deposit an
initial margin payment equal to a specified percentage of the contract value.
Initial margin payments will be deposited with the Fund's custodian bank in an
account registered in the futures commission merchant's name; however, the
futures commission merchant 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 payments, called variation margin, will be made to or from the
futures commission merchant 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 financial futures by their terms call for the actual
delivery or acquisition of the specified debt security, in most cases the
obligation is fulfilled by closing out the position.

<PAGE>

INFORMATION ON PUTS AND CALLS. Each Fund is authorized to write covered
put and call options and purchase put and call options on the securities in
which it may invest. When a Fund writes a call, it receives a premium and
agrees to sell the callable securities 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 securities)
regardless of market price changes during the call period. If the call is
exercised, the fund forgoes any possible profit from an increase in market price
over the exercise price. The Fund may, in the case of listed options, purchase
calls in "closing purchase transactions" to terminate a call obligation. 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 written is more or
less than the price of the call subsequently purchased. A profit may be
realized if the call lapses unexercised, because the Fund retains the underlying
security and the premium received. Sixty percent of any such profits are
considered long-term gains and forty percent are considered short-term gains for
tax purposes. If, due to a lack of a market, the Fund could not effect a
closing purchase transaction, it would have to hold the callable securities
until the call lapsed or was exercised. The Funds' custodian, or a securities
depository acting for the custodian, will act as the Funds' escrow agent,
through the facilities of the Options Clearing Corporation ("OCC") in connection
with listed calls, as to the securities on which the Funds have written calls,
or as to other acceptable escrow securities, so that no margin will be required
for such transaction. OCC will release the securities on the expiration of the
calls or upon the Fund's entering into a closing purchase transaction.

When a 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 (or on a certain date for OTC options) at a fixed exercise
price. A 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 call
price plus the transaction costs and the premium paid for the call and the call
is exercised. If a 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.

With OTC options, such variables as expiration date, exercise price and
premium will be agreed upon between a Fund and the transacting dealer, without
the intermediation of a third party such as the OCC. If a transacting dealer
fails to make delivery on the securities underlying an option it has written, in
accordance with the terms of the option as written, the Fund could lose the
premium paid for the option as well as any anticipated benefit of the
transaction. The Global Equity Fund will engage in OTC option transactions only
with primary U.S. Government securities dealers recognized by the Federal
Reserve Bank of New York. In the event that any OTC option transaction is not
subject to a forward price at which the Fund has the absolute right to
repurchase the OTC option which it has sold, the value of the OTC option
purchased and of the Fund assets used to "cover" the OTC option will be
considered "illiquid securities" and will be subject to the 10% limit on
illiquid securities. The "formula" on which the forward price will be based may
vary among contracts with different primary dealers, but it will be based on a
multiple of the premium received by the Fund for

<PAGE>

writing the option plus the amount, if any, of the option's intrinsic value,
i.e., current market value of the underlying securities minus the option's
strike price.

A put option 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 (or on a certain date for OTC options). The investment
characteristics of writing a put covered by segregated liquid assets equal to
the exercise price of the put are similar to those of writing a covered call.
The premium paid on a put written by a Fund represents a profit, as long as the
price of the underlying investment remains above the exercise price. However,
the Fund has also assumed the obligation during the option period to buy the
underlying investment from the buyer of the put at the exercise price, even
though the value of the investment may fall below the exercise price. If the
put expires unexercised, the Fund (as writer) 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 upon disposition, 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, to secure its obligation to pay for the
underlying security, the Fund will deposit in escrow liquid assets with a value
equal to at least the exercise price of the option. As a result, the Fund
forgoes the opportunity of investing the segregated assets or writing calls
against those assets. As long as the Fund's obligation as a put writer
continues, the Fund may be assigned an exercise notice by the broker-dealer
through whom such option was sold, requiring the Fund to purchase the underlying
security at 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 the earlier of the
expiration of the put, or the consummation by the Fund of 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.

A 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 to it. 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.

When a Fund purchases a put, it pays a premium and has a right to sell the
underlying investment at a fixed exercise price to a seller of a corresponding
put on the same investment during the put period if it is a listed option (or on
a certain date if it is an OTC option). Buying a put on securities or futures
held by it permits 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. In the event of a decline in

<PAGE>

the market, the Fund could exercise, or sell the put option at a profit that
would offset some or all of its loss on the portfolio securities. 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 at its expiration date
and the purchasing Fund will lose the premium paid and the right to sell the
underlying securities; the put may, however, be sold prior to expiration
(whether or not at a profit). Purchasing a put on futures or securities not
held by it permits the Fund to protect its portfolio securities against a
decline in the market to the extent that the prices of the future or securities
underlying the put move in a similar pattern to the prices of the securities in
the Fund's portfolio.

An option position may be closed out only on a market which provides
secondary trading for options of the same series, and there is no assurance that
a liquid secondary market will exist for any particular option. A Fund's option
activities may affect its turnover rate and brokerage commissions. The exercise
of calls written by a Fund may cause that Fund to sell from its portfolio
securities to cover the call, thus increasing its turnover rate in a manner
beyond the Fund's control. The exercise of puts on securities or futures will
increase portfolio turnover. Although such exercise is within a Fund's control,
holding a put might cause that 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 every time it purchases and sells a put or a call or
purchases or sells a related investment in connection with the exercise of a put
or a call.

Each Fund may purchase and write call and put options on futures contracts
which are traded on an exchange and enter into closing transactions with respect
to such options to terminate an existing position. An option on a futures
contract gives the purchaser the right (in return for the premium paid) to
assume a position in a futures contract (a long position if the option is a call
and a short position if the option is a put) at a specified exercise price at
any time during the term of the option. Upon exercise of the option, the
delivery of the futures position by the writer of the option to the holder of
the option is accompanied by delivery of the accumulated balance in the writer's
futures margin account, which represents the amount by which the market price of
the futures contract at the time of exercise exceeds, in the case of a call, or
is less than, in the case of a put, the exercise price of the option on the
futures contract.

A Fund may purchase and write options on futures contracts for hedging
purposes. The purchase of a call option on a futures contract is similar in
some respects to the purchase of a call option on an individual security.
Depending on the pricing of the option compared to either the price of the
futures contract upon which it is based or the price of the underlying
securities, it may or may not be less risky than ownership of the futures
contract or underlying securities. As with the purchase of futures contracts,
when a Fund is not fully invested it may purchase a call option on a futures
contract to hedge against an anticipated increase in securities prices.

The writing of a call option on a futures contract constitutes a partial
hedge against declining prices of the security which is deliverable upon
exercise of the futures contract. If the futures price at expiration of the
option is below the exercise price, the Fund will retain the full amount of the
option

<PAGE>

premium which provides a partial hedge against any decline that may have
occurred in the Fund's portfolio holdings. The writing of a put option on a
futures contract constitutes a partial hedge against increasing prices of the
security which is deliverable upon exercise of the futures contract. If the
futures price at expiration of the option is higher than the exercise price, the
Fund will retain the full amount of the option premium which provides a partial
hedge against any increase in the price of securities which the Fund intends to
purchase. If a put or call option the Fund has written is exercised, the Fund
will incur a loss which will be reduced by the amount of the premium it
receives. Depending on the degree of correlation between changes in the value
of its portfolio securities and changes in the value of its futures positions,
the Fund's losses from existing options may to some extent be reduced or
increased by changes in the value of portfolio securities.

The purchase of a put option on a futures contract is similar in some
respects to the purchase of protective put options on portfolio securities. For
example, a Fund may purchase a put option on a futures contract to hedge the
Fund's portfolio against the risk of a decline in securities prices.

The amount of risk a Fund assumes when it purchases an option on a futures
contract is the premium paid for the option plus related transaction costs. In
addition to the correlation risks discussed above, the purchase of an option
also entails the risk that changes in the value of the underlying futures
contract will not be fully reflected in the value of the option purchased

REGULATORY ASPECTS OF HEDGING INSTRUMENTS. Transactions in options by a
Fund are subject to limitations established (and changed from time to time) by
each of the exchanges governing the maximum number of options which may be
written or held by a single investor or group of investors acting in concert,
regardless of whether the options were written or purchased on the same or
different exchanges or are held in one or more accounts or through one or more
different exchanges or through one or more brokers. Thus, the number of options
which a fund may write or hold may be affected by options written or held by
other investment companies and discretionary accounts of the manager, including
other investment companies having the same or an affiliated investment advisor.
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 of 1940 (the "1940
Act"), when a Fund sells a future, it will maintain in a segregated account or
accounts with its custodian bank, cash or readily marketable short-term
(maturing in one year or less) debt instruments in an amount equal to the market
value of such future, less the margin deposit applicable to it unless the Fund
holds an offsetting position.

Each 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"), which excludes the Fund from registration with the CFTC as a
"commodity pool operator" (as defined under the CEA). Under those restrictions
a fund may not enter into any financial futures or options contract unless such

<PAGE>

transactions are for bona fide hedging purposes, or for other purposes only if
the aggregate initial margins and premiums required to establish such non-
hedging positions would not exceed 5% of the liquidation value of its assets. A
fund may use futures and options thereon for bona fide hedging or for other
purposes within the meaning and intent of the applicable provisions of the CEA.

TAX ASPECTS OF HEDGING INSTRUMENTS. Each Fund intends to qualify as a
"regulated investment company" under the Internal Revenue Code. One of the
tests for such qualification is that at least 90% of its gross income must be
derived from dividends, interest and gains from the sale or other disposition of
securities. Another test 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. In connection with the 90% test, the Internal Revenue Code specifies
that income from options, futures and other gains derived from investments in
securities is qualifying income under the 90% test. Due to the 30% limitation,
each Fund will limit the extent to which it engages in the following activities,
but, except as otherwise set forth herein or in the Prospectus, 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) writing or purchasing calls on investments held less than
three months; (iii) purchasing calls or puts which expire in less than three
months; (iv) effecting closing transactions with respect to calls or puts
purchased less than three months previously; and (v) exercising put or calls
held by the Fund for less than three months.

Regulated futures contracts, options on certain broad-based stock indices,
options on stock index futures, certain other futures contracts and options
thereon (collectively, "Section 1256 contracts") held by a fund at the end of
each taxable year may be required to be "marked to market" for federal income
tax purposes (that is, treated as having been sold at that time at market
value). Any unrealized gain or loss taxed pursuant to this rule will be added
to realized gains or losses recognized on Section 1256 contracts sold by a fund
during the year, and the resulting gain or loss will be deemed to consist of 60%
long-term capital gain or loss and 40% short-term capital gain or loss. A fund
may elect to exclude certain transactions from the mark-to-market rule although
doing so may have the effect of increasing the relative proportion of short-term
capital gain (taxable as ordinary income) and/or increasing the amount of
dividends that must be distributed annually to meet income distribution
requirements.

It should also be noted that under certain circumstances, the acquisition
of positions in hedging instruments may result in the elimination or suspension
of the holding period for tax purposes of other assets held by a Fund with the
result that the relative proportion of short-term capital gains (taxable as
ordinary income) could increase.

POSSIBLE RISK FACTORS IN HEDGING. There is a risk in selling futures that
the prices of futures will correlate imperfectly with the behavior of the cash
(i.e., market value) prices of a 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

<PAGE>

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 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 market. Therefore,
increased participation by speculators in the futures market may cause temporary
price distortions.

If Quest Advisors' investment judgment about the general direction of
securities prices is incorrect, a Fund's overall performance would be poorer
than if it had not entered into a Hedging Transaction. For example, if a Fund
has hedged against the possibility of a decrease in securities prices which
would adversely affect the price of securities held in its portfolio and
securities prices increase instead, the Fund will lose part or all of the
benefit of the increased value of its securities which it has hedged because it
will have offsetting losses in its futures positions. In addition, in such
situations, if the Fund has insufficient cash, it may have to sell securities
from its portfolio to meet daily variation margin requirements. Such sales of
securities may be, but will not necessarily be, at increased prices which
reflect the rising market. The Fund may have to sell securities at a time when
it may be disadvantageous to do so. Also when an options or futures position is
a temporary substitute for the purchase of individual securities (long hedging)
by buying futures and/or calls on such futures or on a particular security, it
is possible that the market may decline. If the Fund then concludes not to
invest in such securities at that time because of concerns as to possible
further market decline or for other reasons, it will realize a loss on the
position that is not offset by a reduction in the price of the securities
purchased.

OTHER RISK FACTORS AND SPECIAL CONSIDERATIONS

INVESTMENTS IN EASTERN EUROPE. Both the Global Equity Fund and the Global
Income Fund are authorized to invest in Eastern European countries; however, the
Global Equity Fund presently intends not to invest more than 5% of its assets in
such securities. Investments in Eastern Europe are speculative and involve a
high degree of risk of loss. The emergence of Eastern European capital markets
is in part a function of the policies of the former Gorbachev administration.
With the recent change in power and restructuring of the Soviet Union there is
no assurance that such markets will continue to constitute a viable investment
opportunity for the Funds and there may be a high degree of risk of
expropriation without compensation. The governments of a number of Eastern
European countries previously expropriated large quantities of private property.
The claims of many property owners against those governments were never finally
settled. There is no assurance that such expropriation will not occur again.
If such expropriation were to recur, the Funds could lose all or a substantial
portion of its investments in such countries. Further, no accounting standards
comparable to those in the U.S. exist in Eastern European countries. Finally,
even though certain Eastern European currencies may be convertible into United
States dollars, the conversion rates may be artificial to the actual market
values and may be adverse to the shareholders of the Funds.

<PAGE>

The governments of certain Eastern European countries may require that a
governmental or quasi-governmental authority act as custodian of the Fund's
assets invested in such countries. These authorities may not be qualified to
act as foreign custodians under the 1940 Act and as a result, the Fund would not
be able to invest in the countries in the absence of exemptive relief from the
Securities and Exchange Commission. In addition, the risk of loss through
government confiscation may be increased in such countries.

RISKS OF DEBT SECURITIES. Each of the Funds is authorized to invest, to
the extent specified in the Prospectus, in bonds rated below Baa by Moody's
Investor Service Inc. ("Moody's) or BBB by Standard & Poor's Corporation ("S&P")
("high yield bonds," commonly known as "junk bonds"). Securities rated less
than Baa by Moody's or BBB by S&P are classified as non-investment grade
securities and are considered speculative by those rating agencies. Such bonds
may be issued as a consequence of corporate restructurings, such as leveraged
buyouts, mergers, acquisitions, debt recapitalizations, or similar events or by
smaller or highly leveraged companies. Although the growth of the high yield
securities market in the 1980s had paralleled a long economic expansion,
recently many issuers have been affected by adverse economic and market
conditions. It should be recognized that an economic downturn or increase in
interest rates is likely to have a negative effect on (i) the high yield bond
market, (ii) the value of high yield securities and (iii) the ability of the
securities' issuers to service their principal and interest payment obligations,
to meet their projected business goals or to obtain additional financing. When
economic conditions appear to be deteriorating, these bonds may decline in
market value regardless of prevailing interest rates due to heightened investor
concerns over credit quality. In such periods the ability of highly leveraged
issuers to service principal and interest payments, to meet their business goals
or obtain additional financing could be adversely affected. These bonds may
also be affected by legislative and regulatory developments. The market for
these bonds may, therefore, be less liquid than for investment grade bonds and
their prices more volatile. In addition, there may at times be significant
disparities in the prices quoted for such bonds by various dealers, making it
difficult for the Funds to rely on such quotes. Also, prices for high yield
bonds may be affected by legislative and regulatory developments. For example,
new federal rules require that savings and loans gradually reduce their holding
of high-yield securities. Also, from time to time, Congress has considered
legislation to restrict or eliminate the corporate tax deduction for interest
payments or to regulate corporate restructurings such as takeovers, mergers or
leveraged buyouts. Such legislation, if enacted, may depress the prices of
outstanding high yield bonds. Debt securities rated in the lowest category by
Moody's are of poor standing and there may be present elements of danger with
respect to principal or interest. Debt securities rated in the lowest category
by S&P have a currently identifiable vulnerability to default and are dependent
upon favorable business, financial and economic conditions to meet timely
payment of interest and repayment of principal. In the event of adverse
business conditions they are not likely to have the capacity to pay interest and
repay principal.

BRADY BONDS. The Global Income Fund may invest in Brady Bonds and other
sovereign debt securities of countries that have restructured or are in the
process of restructuring sovereign debt pursuant to the Brady Plan. Brady Bonds
are debt securities issued under the framework of the Brady

<PAGE>

Plan, an initiative introduced by former Treasury Secretary Nicholas F. Brady in
1989 as a mechanism for debtor nations to restructure their outstanding external
commercial bank indebtedness. In restructuring its external debt under the
Brady Plan, a debtor nation negotiates with its existing bank lenders as well as
multilateral institutions such as the World Bank or International Money Fund
("IMF"). As it has developed, the Brady Plan contemplates the exchange of
commercial bank debt for newly issued Brady Bonds. Brady Bonds may also be
issued in respect of new money being advanced by existing lenders in connection
with the debt restructuring. The World Bank and/or the IMF support the
restructuring by providing funds pursuant to loan agreements or other
arrangements which enable the debtor nation to collateralize the new Brady Bonds
or to repurchase outstanding bank debt at a discount. Under these arrangements
with the World Bank and/or IMF, debtor nations have been required to agree to
implement certain domestic monetary and fiscal reforms. Such reforms have
included the liberalization of trade and foreign investment, the privatization
of state-owned enterprises and the setting of targets for public spending and
borrowing. These policies and programs seek to promote the debtor country's
ability to service its external obligations and promote its economic growth and
development. Investors should be aware that the Brady Plan only sets forth
general guidelines for economic reform and debt reduction, emphasizing that
solutions must be negotiated on a case-by-case basis between debtor nations and
their creditors. Quest Advisors believes that economic reforms undertaken by
countries in connection with the issuance of Brady Bonds make the debt of
countries which have issued or have announced plans to issue Brady Bonds an
attractive opportunity for investment.

Investors should recognize that Brady Bonds have been issued only recently
and, accordingly, do not have a long payment history. Agreements implemented
under the Brady Plan to date are designed to achieve debt and debt-service
reduction through specific options negotiated by a debtor nation with its
creditors. As a result, the financial packages offered by each country differ.
Variations have included but are not limited to the exchange of outstanding
commercial bank debt for: (1) bonds issued at 100% of the face value of such
debt, which carry a below-market stated rate of interest (generally known as par
bonds); (2) bonds issued at a discount from the face value of such debt
(generally known as discount bonds); (3) bonds bearing an interest rate which
increases over time; and (4) bonds issued in exchange for the advancement of new
money by existing lenders. Regardless of the stated face amount and stated
interest rate of the various types of Brady Bonds, the Global Income Fund may
purchase Brady Bonds in secondary markets in which the price and yield to the
investor reflect market conditions at the time of purchase. (Brady Bonds issued
to date are purchased and sold in secondary markets through U.S. securities
dealers and other financial institutions and are generally maintained through
European transnational securities depositories.) Certain Brady Bonds have been
collateralized as to principal due at maturity by U.S. Treasury zero coupon
bonds with a maturity equal to the final maturity of such Brady Bonds, although
the collateral is not available to investors until the final maturity of the
Brady Bonds. Collateral purchases are financed by the IMF, the World Bank and
the debtor nations' reserves. Interest payments on certain types of Brady Bonds
may be collateralized by cash or high-grade securities in amounts that typically
represent between twelve and eighteen months of interest accruals on these
instruments with the balance of the interest accruals being uncollateralized.
The Global Income Fund may purchase Brady Bonds with limited or no

<PAGE>

collateralization and will be relying primarily on the willingness and ability
of the foreign government to make payment of interest and principal (except in
the case of principal collateralized Brady Bonds) in accordance with the terms
of the Brady Bonds.

A substantial portion of the Brady Bonds and other sovereign debt
securities in which the Global Income Fund invests are likely to be acquired at
a discount. Pursuant to the Internal Revenue Code, the Fund is required to
accrue a portion of any original issue or market discount with respect to such
securities as income each year even though the Fund does not receive interest
payments in cash during the year which reflect the discount so accrued. As a
result, the Fund may make distributions of net investment income in excess of
the total amount of cash interest actually received.

SOVEREIGN DEBT. The Global Income Fund may purchase sovereign debt
instruments issued or guaranteed by foreign governments, their political
subdivisions, agencies, instrumentalities or central banks. Sovereign debt may
be in the form of conventional securities or other types of debt instruments
such as loans or loan participations. Governmental entities responsible for
repayment of the debt may be unable or unwilling to repay principal and interest
when due, and may require renegotiation or rescheduling of debt payments.
Prospects for repayment of principal and interest may depend on the political
climate in the relevant country as well as economic factors. A governmental
entity's willingness or ability to repay principal and interest in a timely
manner may be affected by, among other things, its cash flow situation, the
extent of its foreign reserves, the availability of sufficient foreign exchange
on the date a payment is due, the relative size of the debt service burden to
the economy as a whole, the governmental entity's policy toward the IMF, and the
political constraints to which a governmental entity may be subject. Such
entities may also be dependent on expected disbursements from foreign
governments, multilateral agencies and others abroad to reduce principal and
interest arrearage on their debt. The commitment on the part of these
governments, agencies and others to make such disbursements may be conditioned
on a governmental entity's implementation of economic reforms and/or economic
performance and the timely service of such debtor's obligations. Failure to
implement such reforms, achieve such levels of performance or repay principal or
interest when due may result in the cancellation of such third parties'
commitments to lend funds to the governmental entity, which may further impair
such debtor's ability or willingness to service its debts in a timely manner.
Consequently, governmental entities may default on government securities.
Holders of foreign government securities, including the Fund, may be requested
to participate in the rescheduling of such debt and to extend further loans to
governmental entities. There is no bankruptcy proceeding by which defaulted
foreign government securities may be collected in whole or in part.

RIGHTS AND WARRANTS. As mentioned in the Prospectus, each of the Funds may
invest in rights and warrants which entitle the holder to buy equity securities
at a specified price for a specific period of time. Such securities do not
entitle a holder to dividends or voting rights with respect to the securities
which may be purchased, nor do they represent any rights to the assets of the
issuing company. The value of a right or warrant may be more volatile than the
value of the underlying securities. Also, their value does not necessarily
change with the value of the underlying securities and

<PAGE>

a right or warrant ceases to have value if it is not exercised prior to the
expiration date. Rights and warrants purchased by a Fund which expire without
being exercised will result in a loss to the Fund.

FOREIGN CUSTODY. Rules adopted under the 1940 Act permit each Fund to
maintain its securities and cash in the custody of certain eligible banks and
securities depositories. The Funds' portfolios of securities of issuers located
outside of the U.S. will be held by their sub-custodians who will be approved by
the directors in accordance with such Rules. Such determination will be made
pursuant to such Rules following a consideration of a number of factors,
including, but not limited to, the reliability and financial stability of the
institution; the ability of the institution to perform custodial services for
the Fund; the reputation of the institution in its national market; the
political and economic stability of the country in which the institution is
located; and the risks of potential nationalization or expropriation of the
Fund's assets. However, no assurances can be given that the directors'
appraisal of the risks in connection with foreign custodial arrangements will
always be correct or that expropriation, nationalization, freezes (including
currency blockage), or confiscations of assets that would affect assets of the
Fund will not occur, and shareholders bear the risk of losses arising from those
or other similar events.

BORROWING. As discussed in the Prospectus, the Funds will not borrow money
except as a temporary measure for extraordinary or emergency purposes. Such
borrowing shall not exceed 33 1/3% of the value of a Fund's assets, provided
that a Fund will make no additional investments while such borrowing exceeds 5%
of its assets. Borrowing may exaggerate the effect of any increase or decrease
in the value of the portfolio securities on a Fund's net asset value and money
borrowed will be subject to interest and other costs (which may include
commitment fees and/or the cost of maintaining average balances) which may or
may not exceed the income received from the securities purchased with borrowed
funds.

ADDITIONAL RISKS. Securities in which the Funds may invest are subject to
the provisions of bankruptcy, insolvency or other laws affecting the rights and
remedies of creditors, such as the federal Bankruptcy Code, and laws, if any,
which may be enacted by Congress or the state legislatures extending the time
for payment of principal or interest, or both or imposing other constraints upon
enforcement of such obligations.

INVESTMENT RESTRICTIONS

The Funds' significant investment restrictions are described in the
Prospectus. The following are also fundamental policies and, together with the
restrictions and other fundamental policies described in the Prospectus, cannot
be changed without the vote of a majority of the outstanding voting securities
of the Fund, as defined in the 1940 Act. Such a majority is defined as the
lesser of (a) 67% or more of the shares of the Fund present at a meeting of
shareholders of the Fund, if the holders of more than 50% of the outstanding
shares of the Fund are present or represented by Proxy or (b) more than 50% of
the outstanding shares of the Fund. For purposes of the following restrictions
and those contained in the Prospectus: (i) all percentage limitations apply
immediately after a purchase or

<PAGE>

initial investment; (ii) any subsequent change in any applicable percentage
resulting from market fluctuations or other changes in the amount of total
assets does not require elimination of any security from the Fund; and (iii) the
term "industry" does not include the U.S. Government and agencies and
instrumentalities of the U.S. Government, although a foreign government is
deemed to be an "industry." Unless otherwise noted, the restrictions apply to
both Funds.

Under these additional restrictions, the Funds cannot: (a) Invest in
physical commodities or physical commodity contracts or speculate in financial
commodity contracts, but may purchase and sell financial futures contracts and
options on such futures contracts exclusively for hedging and other non-
speculative purposes; (b) Invest in real estate; however, the Funds may purchase
securities of issuers which engage in real estate operations and securities
which are secured by real estate or interests therein; (c) Purchase securities
on margin (except for such short-term loans as are necessary for the clearance
of purchases of portfolio securities) or make short sales of securities.
(Collateral arrangements in connection with transactions in futures and options
are not deemed to be margin transactions.) (d) Underwrite securities of other
companies except insofar as the Fund may be deemed to be an underwriter under
the Securities Act of 1933 in disposing of a security (except that each Fund may
in the future invest all of its investable assets in an open-end management
investment company with substantially the same investment objective and
restrictions as the respective Fund); (e) Invest more than 10% of its assets in
securities of other investment companies or more than 5% of its assets in the
securities of one investment company or more than 3% of the outstanding voting
securities of such company, provided that the foregoing restrictions on
investment company purchases and holdings by both Funds are inapplicable to
acquisitions in connection with a merger, consolidation, reorganization or
acquisition of assets (except that each Fund may in the future invest all of its
investable assets in an open-end management investment company with
substantially the same investment objective and restrictions as the respective
Fund); (f) Invest in interests in oil, gas or other mineral exploration or
development programs; (g) Invest in securities of any issuer if, to the
knowledge of the Fund, any officer or director of the Fund or any officer or
director of Quest Advisors owns more than 1/2 of 1% of the outstanding
securities of such issuer, and such officers and directors who own more than 1/2
of 1% own in the aggregate more than 5% of the outstanding securities of such
issuer; (h) Pledge its assets or assign or otherwise encumber its assets in
excess of 33 1/3% of its net assets (taken at market value at the time of
pledging) and then only to secure borrowings effected within the limitations set
forth in the Prospectus; (i) Invest for the purpose of exercising control or
management of another company (except that each Fund may in the future invest
all of its investable assets in an open-end management investment company with
substantially the same investment objective and restrictions as the respective
Fund); and (j) Issue senior securities as defined in the 1940 Act except
insofar as the Fund may be deemed to have issued a senior security by reason of:
(1) entering into any repurchase agreement; (2) borrowing money in accordance
with restrictions described in the Prospectus; or (3) lending portfolio
securities. In addition, the Global Equity Fund may not with respect to 75% of
its assets, invest more than 5% of the value of its total assets in the
securities of any one issuer (except that each Fund may in the future invest all
of its investable assets in an open-end management investment company with
substantially the same investment objective and restrictions as the respective
Fund). In addition, as a non-fundamental investment restriction, the Funds (i)
may not purchase

<PAGE>

warrants if as a result the Fund would then have either more than 5% of its
total assets (determined at the time of investment) invested in warrants or more
than 2% of its total assets invested in warrants not listed on the New York or
American Stock Exchange; (ii) may not invest in real estate limited partnership
programs; (iii) may not invest in oil, gas or mineral leases; (iv) may not
invest more than 15% of its assets in restricted securities, foreign equity
securities not listed on an exchange, illiquid securities, securities for which
market quotations are not readily available and repurchase agreements in excess
of seven days; and (v) more than 5% of its assets in unseasoned issues. In
addition, to comply with a state's securities laws, the Funds may not make loans
to any person or individual (except that portfolio securities may be loaned
within the limitations set forth in the Prospectus).

DIRECTORS AND OFFICERS

The directors and officers of the Funds, and their principal occupations
during the past five years, are set forth below. Directors who are "interested
persons", as defined in the 1940 Act, are denoted by an asterisk. The address
of each is One World Financial Center, New York, New York 10281, except as
noted. As of January 31, 1995 all of the Directors and Officers of the Funds as
a group owned less than 1% of the outstanding shares of each of the Global
Equity Fund and Global Income Fund.

JOSEPH M. LA MOTTA, CHAIRMAN OF THE BOARD OF DIRECTORS AND PRESIDENT*

President of Oppenheimer Capitaland Chairman of Quest for Value Advisors,
registered investment advisers; Chairman of the Board and President of Quest
Cash Reserves, Inc., Quest for Value Accumulation Trust, Quest for Value Family
of Funds, and Quest for Value Fund, Inc., and Chairman of the Board of The
Saratoga Advantage Trust, open-end investment companies, and Quest for Value
Dual Purpose Fund, Inc., a closed-end investment company.

PAUL Y. CLINTON, DIRECTOR
946 Morris Avenue
Bryn Mawr, Pennsylvania 19010

Director, External Affairs, Kravco Corporation, a national real estate owner and
property management corporation; formerly President of Essex Management
Corporation, a management consulting company; Trustee of Capital Cash Management
Trust, Prime Cash Fund and Short Term Asset Reserves, each of which is a money-
market fund; Director of Quest Cash Reserves, Inc., Quest for Value Global
Equity Fund, Inc. and Quest for Value Global Funds, Inc., Trustee of Quest for
Value Accumulation Trust and Quest for Value Family of Funds, all of which are
open-end investment companies. Formerly a general partner of Capital Growth
Fund, a venture capital partnership; formerly a general partner of Essex Limited
Partnership, an investment partnership; formerly President of Geneve Corp., a
venture capital fund; formerly Chairman of Woodland Capital Corp., a small
business investment company; formerly Vice President of W.R. Grace & Co.

<PAGE>

THOMAS W, COURTNEY, C.F.A., DIRECTOR
P.O. Box 580
Sewickley, Pennsylvania 15143

Principal of Courtney Associates, Inc., a venture capital firm; former General
Partner of Trivest Venture Fund, a private venture capital fund; former
President of Investment Counseling Federated Investors, Inc.; Trustee of Cash
Assets Trust, a money market fund; Director of Quest for Value Fund, Inc. and
Quest Cash Reserves, Inc., Trustee of Quest for Value Accumulation Trust and
Quest for Value Family of Funds, all of which are open-end investment companies;
former President of Boston Company Institutional Investors; Trustee of Hawaiian
Tax-Free Trust and Tax Free Trust of Arizona, tax-exempt bond funds; Director of
several privately owned corporations; former Director of Financial Analysts
Federation.

LACY B. HERRMANN, DIRECTOR
380 Madison Avenue, Suite 2300
New York, New York 10017

President and Chairman of the Board of Aquila Management Corporation (since
1984) and of Incap Management Corporation (since 1982), the sponsoring
organizations and Administrator and/or Sub-Advisor to the following open-end
investment companies, and Chairman of the Board of Trustees and President of
each; Churchill Cash Reserves Trust (since 1985), Short Term Asset Reserves
(since 1984), Cash Assets Trust (since 1984), U.S. Treasuries Cash Assets Trust
(since 1988), Tax-Free Cash Assets Trust (since 1988), Prime Cash Fund (since
1982), Oxford Cash Management Fund (1982-1988) and Trinity Liquid Assets Trust
(1982-1985), each of which is a money market fund, and of Churchill Tax-Free
Fund of Kentucky (since 1986), Tax-Free Fund of Colorado (since 1986), Tax-Free
Trust of Oregon (since 1985), Tax-Free Trust of Arizona (since 1985), and
Hawaiian Tax-Free Trust (since 1984), each of which is a tax-free municipal bond
fund; Vice President, Director, Secretary, and formerly Treasurer of Aquila
Distributors, Inc. (since 1981), distributor of most of the above funds;
President and Chairman of the Board of Trustees of Capital Cash Management Trust
("CCMT") a money market fund (since 1981) and an Officer and Trustee/Director of
its predecessors (since 1974); President and Director of STCM Management
Company, Inc., sponsor and Sub-Advisor to CCMT; General Partner of Tamarack
Associates (1966-1984), a private investment partnership and Chairman of the
Board and President of various of its subsidiaries through 1986. Director of
the Quest for Value Fund, Inc. and Quest Cash Reserves, Inc., and Trustee of the
Quest for Value Accumulation Trust, Quest for Value Family of Funds and The
Saratoga Advantage Trust, each of which is an open-end investment company.

<PAGE>

GEORGE LOFT, DIRECTOR
51 Herrick Road
Sharon, Connecticut 06069

Private Investor; Director of Quest for Value Fund, Inc. and Quest Cash
Reserves, Inc., Trustee of Quest for Value Accumulation Trust, Quest for Value
Family of Funds and The Saratoga Advantage Trust, all of which are open-end
investment companies, and Director of the Quest for Value Dual Purpose Fund,
Inc., a closed-end investment company.

ROBERT J. BLUESTONE, VICE PRESIDENT, GLOBAL INCOME FUND

Managing Director, Oppenheimer Capital; Vice President, Quest for Value
Accumulation Trust, Quest Cash Reserves, Inc., and Quest for Value Family of
Funds, open-end investment companies.

MARIA CAMACHO, ASSISTANT SECRETARY

Assistant Vice President of Oppenheimer Capital since 1994 and Registrations
Department Administrator with Oppenheimer Capital since 1989; Assistant
Secretary of Quest For Value Fund, Inc., Quest Cash Reserves, Inc., Quest For
Value Global Equity Fund, Inc., Quest For Value Global Funds, Inc. and The
Saratoga Advantage Trust, open-end investment companies.

PIERRE DAVIRON, VICE PRESIDENT AND PORTFOLIO MANAGER, GLOBAL EQUITY
FUND

Senior Vice President, Oppenheimer Capital; President and Chief Investment
Officer, Oppenheimer Capital International, a division of Oppenheimer Capital.
Previously Chairman and Chief Executive Officer at Indosuez Gartmore Asset
Management, a division of Banque Indosuez, Paris, France. Previously Managing
Director in Mergers and Acquisitions at J.P. Morgan.

BERNARD H. GARIL, VICE PRESIDENT

President and Chief Operating Officer of Quest for Value Advisors; Vice
President of Quest for Value Accumulation Trust, Quest Cash Reserves, Inc. and
Quest for Value Family of Funds, open-end investment companies, and Vice
President of Quest for Value Dual Purpose Fund, Inc., a closed-end investment
company.

RICHARD J. GLASEBROOK, II, VICE PRESIDENT AND PORTFOLIO MANAGER, GLOBAL
EQUITY
FUND

Managing Director, Oppenheimer Capital; Vice President and Portfolio Manager,
Quest for Value Family of Funds and Quest for Value Accumulation Trust, open-end
investment companies; formerly Vice President and Director of Delafield Asset
Management.

<PAGE>

RICHARD A. GLUCK, VICE PRESIDENT AND PORTFOLIO MANAGER, GLOBAL INCOME
FUND

Vice President, Oppenheimer Capital; previously a Global Fixed Income Portfolio
Manager with Dean Witter InterCapital and Clemente Capital.

THOMAS E. DUGGAN, ASSISTANT SECRETARY

General Counsel and Secretary, Oppenheimer Capital and Quest for Value Advisors,
Secretary of Quest for Value Dual Purpose Fund, Inc., a closed-end investment
company; Assistant Secretary of Quest Cash Reserves, Inc., , Quest for Value
Family of Funds, Quest for Value Global Equity Fund, Inc., Quest for Value
Global Funds, Inc. And The Saratoga Advantage Trust, open-end investment
companies.

DEBORAH KABACK, SECRETARY

Senior Vice President, Oppenheimer Capital; Secretary of Quest for Value
Accumulation Trust, Quest Cash Reserves, Inc., Quest for Value Family of Funds,
Quest for Value Fund, Inc. and The Saratoga Advantage Trust, open-end investment
companies, and Assistant Secretary of Quest for Value Dual Purpose Fund, Inc., a
closed-end investment company.

LESLIE KLEIN, ASSISTANT TREASURER

Vice President of Oppenheimer Capital; Assistant Treasurer of Quest for Value
Accumulation Trust, Quest Cash Reserves, Inc., Quest for Value Family of Funds,
Quest for Value Fund, Inc. and The Saratoga Advantage Trust, open-end investment
companies, and Quest for Value Dual Purpose Fund, Inc., a closed-end investment
company.

SHELDON M. SIEGEL, TREASURER

Managing Director of Oppenheimer Capital; Treasurer of Quest for Value Advisors;
Treasurer of Quest for Value Accumulation Trust, Quest Cash Reserves, Inc.,
Quest for Value Family of Funds, Quest for Value Fund, Inc. and The Saratoga
Advantage Trust, open-end investment companies, and Quest for Value Dual Purpose
Fund, Inc., a closed-end investment company.

REMUNERATION OF OFFICERS AND DIRECTORS. All officers of the Fund are
officers or directors of Oppenheimer Capital and receive no salary or fee from
the Fund. The Directors, other than Mr. La Motta, are paid an annual fee of
$3000 plus $250 for each directors' meeting attended and $100 for each committee
meeting attended. During the fiscal year ended October 31, 1994 the Fund
accrued or paid a directors' fee of $4,200 to each independent Director. The
independent directors also serve as directors/trustees for other funds in the
Advisor's Fund Complex. During the last fiscal year of such funds, Mr. Clinton
earned aggregate directors fees of $_68,100 with respect to 18 investment
companies in the Advisor's Fund Complex; Mr. Courtney earned aggregate directors
fees of $66,600

<PAGE>

with respect to 18 investment companies in the Advisor's Fund Complex; Mr.
Herrmann earned aggregate directors fees of $67,350 with respect to 18
investment companies in the Advisor's Fund Complex; and Mr. Loft earned
aggregate directors fees of $74,800 with respect to 19 investment companies in
the Advisor's Fund Complex. During such periods the independent Directors
received fees from three investment companies for which they no longer serve as
directors and which are no longer part of the Advisor's Fund Complex but for
which the Advisor currently serves as subadviser. In addition during such
periods, Mr. Clinton and Mr. Courtney each served as director with respect to
three investment companies in the Advisor's Fund Complex for which they received
no fees; Mr. Loft and Mr. Herrmann each served as director with respect to 10
investment companies for which they received no fees. For the purpose of this
paragraph, a portfolio of an investment company organized in series form is
considered to be an investment company.

AMA FAMILY OF FUNDS INDEMNIFICATION. In connection with the combination of
each of the Global Equity Fund and Global Income Fund with a portfolio of the
AMA Family of Funds, Inc., each Fund has agreed to assume the obligation of such
portfolio of AMA Family of Funds, Inc. to indemnify the directors of the AMA
Family of Funds, Inc. to the fullest extent permitted by law and the By-Laws of
the AMA Family of Funds, Inc.

INVESTMENT MANAGEMENT AND OTHER SERVICES

THE INVESTMENT ADVISORY AGREEMENTS. Under an Investment Advisory Agreement
with each Fund (the "Advisory Agreements"), Quest Advisors is required to,
through consultation with its own portfolio management staff: (i) regularly
provide investment advice and recommendations to each Fund with respect to its
investments, investment policies and the purchase and sale of securities; (ii)
supervise continuously the securities purchased or sold by each Fund and the
portion, if any, of the Fund's assets to be held uninvested; and (iii) arrange
for the purchase of securities and other investments by the Funds and the sale
of securities and other investments held by the Funds.

The Advisory Agreements provide that in the absence of willful misfeasance,
bad faith, gross negligence or reckless disregard for its obligations
thereunder, Quest Advisors is not liable for any act or omission in the course
of, or in connection with, the rendition of services thereunder. The Agreements
permit Quest Advisors to act as investment adviser for any person, firm or
corporation and to use the name "Quest for Value" in connection with other
investment companies for which it may act as investment adviser or general
distributor. If Quest Advisors shall no longer act as investment adviser to a
Fund, the right of the Fund to use the name "Quest for Value" as part of its
name may be withdrawn.

The Advisory Agreements provide that Quest Advisors may enter into sub-
advisory agreements with other affiliated or unaffiliated investment advisors in
order to obtain specialized services for the Fund provided that the Fund is not
required to pay any additional fees for such services. Pursuant to a Sub-
Advisory Agreement, Clay Finlay, in the case of the Global Equity Fund,

<PAGE>

had been retained, subject to the overall supervision of Quest Advisors and the
Directors of the Global Equity Fund, to continuously furnish investment advice
concerning individual security selections, asset allocations and overall
economic trends outside of the U.S., to, jointly with Quest Advisors, allocate
the Global Equity Fund's assets among geographic regions, and manage the portion
of the Global Equity Fund's portfolio invested in securities of issuers located
outside of the U.S. This agreement was terminated December 31, 1993, and the
responsibility for management of all assets of the Global Equity Fund was
assumed by Quest Advisors effective January 1, 1994.

The Advisory Agreements were initially approved by the Boards of Directors,
including a majority of the Directors who are not "interested persons" of the
Funds (as defined in the 1940 Act) and who have no direct or indirect financial
interest in such Agreements, and by Oppenheimer Capital as the sole shareholder
of each Fund on June 21, 1990 with respect to the Global Equity Fund and on July
29, 1991 with respect to the Global Income Fund. The shareholders of the Global
Equity Fund approved its Advisory Agreement on January 13, 1992. Each Agreement
may be terminated by a Fund at any time without penalty on sixty days notice by
the Directors of the Fund or by the holders of a majority (as defined in the
1940 Act) of the outstanding shares of the Fund and terminates in the event of
its assignment (as defined in the 1940 Act).

For the fiscal year ended November 30, 1992, the total advisory fees
accrued or paid by the Global Equity Fund were $943,392, of which $103,795 was
waived by Quest Advisors. For the fiscal year ended November 30, 1993, the
total advisory fees accrued or paid by the Global Equity Fund were $940,930, of
which $187,345 was waived by Quest Advisors. For the fiscal year ended November
30, 1994, the total advisory fees accrued or paid by the Global Equity Fund were
$1,166,949, of which $15,349 was waived by Quest Advisors. Quest Advisors has
informed the Global Equity Fund that the total subadvisory fees paid by Quest
Advisors to Clay Finlay with respect to the Global Equity Fund were, $257,648,
$376,794 and $25,534 (net of reimbursements), respectively, for each of the
aforementioned periods. For the period December 2, 1991 (commencement of
operations) to November 30, 1992, the total investment advisory fees accrued or
paid by the Global Income Fund were $97,609, of which $7,616 was waived by Quest
Advisors. For the fiscal year ended November 30, 1993, the total investment
advisory fees accrued or paid by the Global Income Fund were $106,028, of which
$83,745 was waived by Quest Advisors. For the fiscal year ended November 30,
1994, the total advisory fees accrued or paid by the Global Income Fund were
$99,506, all of which was waived by Quest Advisors. In addition, Quest Advisors
reimbursed the Global Income Fund for $40,330 of other operating expenses.

Under their terms, the Agreements will continue in effect for two years
from the date of their execution and from year to year thereafter, provided
continuance of the agreements is approved at least annually by the vote of the
holders of a majority, as defined in the 1940 Act, of the outstanding shares of
the Fund, or by the Directors of the Fund; provided that in either event such
continuances are approved annually by the vote of a majority of the Directors of
the Fund who are not parties to the Agreement or "interested persons" (as
defined in the 1940 Act) of any such party (the "Independent

<PAGE>

Directors"), which votes must be cast in person at a meeting called for the
purpose of voting on such approval.

THE ADMINISTRATION AGREEMENT. Quest Advisors acts as each Fund's
administrator pursuant to Administration Agreements between Quest Advisors and
the Funds. The Administration Agreements were approved by the Global Equity
Fund's directors and its initial shareholder on June 21, 1990 and by the Global
Income Fund's directors and its initial shareholder on July 29, 1991. The
shareholders of the Global Equity Fund approved the Administration Agreement on
January 13, 1992. Each Administration Agreement will remain in effect for two
years from the date of its execution and may be continued annually thereafter if
approved by a majority vote of the Directors who are neither interested persons
of the Fund nor have any direct or indirect financial interest in the
Administration Agreement, cast in person at a meeting called for the purpose of
voting on such approval. For the fiscal years ended November 30, 1992, 1993 and
1994, the total administrative fees accrued or paid by the Global Equity Fund
were $314,464, 313,644 and $388,983, respectively. For the period December 2,
1991 (commencement of operations) to November 30, 1992, the fiscal years ended
November 30, 1993 and 1994, the total administrative fees accrued or paid by the
Global Income Fund were $48,804, $53,014 and $49,753, respectively.

FUND EXPENSES. Expenses of each Fund not expressly assumed by Quest
Advisors under the Advisory Agreements or Administration Agreements or by Quest
for Value Distributors (the "Distributor") are paid by each respective Fund.
Each Fund is responsible for bearing certain expenses attributable to the Fund
but not to a particular class ("Fund Expenses"), including deferred organization
expenses; taxes; registration fees; typesetting of prospectuses and financial
reports required for distribution to shareholders; brokerage commissions; fees
and related expenses of trustees or directors who are not interested persons;
legal, accounting and audit expenses; custodian fees; insurance premiums; and
trade association dues. Fund Expenses will be allocated based on the total net
assets of each class. Each class of shares of each Fund will also be
responsible for certain expenses attributable only to that class ("Class
Expenses"). These Class Expenses may include distribution and service fees,
transfer and shareholder servicing agent fees, professional fees, printing and
postage expenses for materials distributed to current shareholders, state
registration fees and shareholder meeting expenses. Such items are considered
Class Expenses provided such fees and expenses relate solely to such Class. A
portion of printing expenses, such as typesetting costs, will be divided equally
among the Funds, while other printing expenses, such as the number of copies
printed, will be considered Class Expenses. Under the Advisory Agreement, Quest
Advisors guarantees that the expenses of each Fund in any fiscal year, exclusive
of taxes, interest, brokerage fees and distribution expenses, shall not exceed,
and Quest Advisors undertakes to pay or refund to the Fund any amount by which
such expenses do exceed, the most restrictive state law provisions in effect in
states where shares of the Fund are qualified to be sold and under such
circumstances the payment of the management fee at the end of any month will be
reduced. Quest Advisors will comply with the applicable state regulations which
may require Quest Advisors to assume expenses of a Fund in the event that the
Fund's aggregate operating expenses incurred in any fiscal year exceed the most
restrictive state law provisions in effect in states where shares of the Fund
are qualified to be sold. Quest Advisors has agreed to limit Fund Expenses

<PAGE>

(as defined above) so that annualized operating Fund Expenses, exclusive of
Class Expenses (as defined above) of the Global Income Fund do not exceed 1.45%
of average daily net assets.

PORTFOLIO TRANSACTIONS. Portfolio decisions are based upon recommendations
of Quest Advisors. Purchases and sales of securities on a stock exchange are
effected through brokers who charge a commission for their services.
Transactions in debt obligations and in equity securities in the over-the-
counter market are generally effected on a net basis with non-affiliated dealers
acting as principal for their own accounts without a stated commission although
the price usually includes a profit to the dealer. Prices of portfolio
securities purchased from underwriters of new issues include a commission or
concession paid by the issuer to the underwriter, and prices of debt securities
purchased from dealers include a spread between the bid and asked prices.

Quest Advisors seeks to obtain prompt execution of orders at the most
favorable net price. If Quest Advisors believes such prices and execution are
obtainable from more than one broker or dealer, it may give consideration to
placing portfolio transactions with those brokers and dealers who furnish
brokerage and research services to the Funds and/or Quest Advisors. In
addition, transactions may be directed to dealers during the course of an
underwriting in return for their execution and research services. Such services
are intangible and no dollar value can be placed thereon. The information may
or may not be useful to the Funds and/or other accounts of Quest Advisors. Such
information may be in written or oral form and includes information on
particular companies and industries as well as market, economic or institutional
activity areas. It serves to broaden the scope and supplement the research
activities of Quest Advisors, to make available additional views for
consideration and comparison, and to enable Quest Advisors to obtain market
information for the valuation of securities held in the Funds' assets. Such
services and information may be used by Quest Advisors in servicing all of their
accounts, but all such services and information may not be used for each Fund.

Sales of shares of the Funds, subject to applicable rules covering the
Distributor's activities in this area, will also be considered as a factor in
the direction of portfolio transactions to dealers, but only in conformity with
the price, execution and other considerations and practices discussed above.
The Funds will not purchase any securities from or sell any securities to
Oppenheimer & Co., Inc. ("Opco"), an affiliate of Quest Advisors, acting as
principal for its own account.

Quest Advisors currently serves as investment manager to a number of
clients including other investment companies, and may in the future act as
investment manager or adviser to others. It is the practice of Quest Advisors
to cause purchase or sale transactions to be allocated among the Funds and
others whose assets it manages in such manner as it deems equitable. In making
such allocations among the Funds and other client accounts, the main factors
considered are the respective investment objectives, the relative size of
portfolio holdings of the same or comparable securities, the availability of
cash for investment, the size of investment commitments generally held and the
opinions of the persons responsible for managing the portfolios of the Funds and
other client accounts. When orders to purchase or sell the same security on
identical terms are placed by more than one of the Funds and/or other advisory
accounts managed by Quest Advisors or its affiliates, the transactions are
generally

<PAGE>

executed as received, although a Fund or advisory account that does not direct
trades to a specific broker ("free trades") usually will have its order executed
first. Purchases are combined where possible for the purpose of negotiating
brokerage commissions, which in some cases might have a detrimental effect on
the price or volume of the security in a particular transaction as far as the
Funds are concerned. Orders placed by accounts that direct trades to a specific
broker will generally be executed after the free trades. All orders placed on
behalf of the Funds are considered free trades. However, having an order placed
first in the market does not necessarily guarantee the most favorable price.

Consistent with the policy described above, brokerage transactions may be
effected through Opco. The commissions, fees or other remuneration received by
Opco must be reasonable and fair compared to the commissions, fees or other
remuneration paid to other brokers in connection with comparable transactions
involving similar securities being purchased or sold on an exchange during a
comparable period of time. The Board of Directors of each Fund, including a
majority of the Directors who are not "interested" persons of the Fund, (as
defined in the 1940 Act) have adopted procedures which are reasonably designed
to provide that any commissions, fees or other remuneration paid to Opco is
consistent with the foregoing standard. Opco may be paid for effecting the
Funds' portfolio transactions on an exchange of which it is a member only if the
floor execution is by a broker which is not an associated person of Opco and if
(as is the case) there is a contract with the Funds permitting Opco to be paid
for such transactions.

The following table presents information as to the allocation of brokerage
commissions paid by the Global Equity Fund for the fiscal years ended November
30, 1992, 1993 and 1994:

--------------------------------------------------------------------------
-----------------------
Fiscal year ended Total Brokerage Brokerage Commissions Total Amount
Transactions of
Commissions Paid Paid to Opco Where Brokerage
Commissions
Paid to Opco (1)
---------------------------------------------------------------------------
----------------------
Dollar Amounts % Dollar Amounts %
------------------------------------------------------------------------------
-------------------
<S> <C> <C> <C> <C>
<C>
11/30/92 275,868 85,751 31.08 57,807,717
40.90
--------------------------------------------------------------------------------
-----------------
11/30/93 200,029 18,503 9.25 102,916,572
15.91
-------------------------------------------------------------------------------
------------------
11/30/94 566,615 16,402 2.89 13,811,383
-------------------------------------------------------------------------------
------------------
<FN>
(1) The Global Equity Fund does not effect principal transactions with Opco.
When the Fund effects principal transactions with other broker-dealers,
commissions are imputed.

During the fiscal year ended November 30, 1994, the Global Equity Fund
directed $65,558,341 of brokerage transactions to brokers because of
research services provided. The commissions related to such transactions
were $234,399.
</TABLE>

<PAGE>

The following table presents information as to the allocation of brokerage
commissions paid by the Global Income Fund for the period from 12/2/91
(commencement of operations) to 11/30/92 and for the fiscal years ended
November 30, 1993 and November 30, 1994:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
For the period Total Brokerage Brokerage Commissions Total Amount
of Transactions
Commissions Paid Paid to Opco Where Brokerage
Commissions
Paid to Opco (1)
--------------------------------------------------------------------------------------------------------------------
Dollar Amounts % Dollar Amounts
%
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
<C>
12/2/91 (commencement of 2,629 0 0 0
0
operations) to 11/30/92
--------------------------------------------------------------------------------------------------------------------
Fisca year ended 11/30/93 0 0 0 0
0
--------------------------------------------------------------------------------------------------------------------
Fiscal year ended 11/30/94 0 0 0 0
0
--------------------------------------------------------------------------------------------------------------------
<FN>
(1) The Global Income Fund does not effect principal transactions with Opco.
When the Fund effects principal transactions with other broker-dealers,
commissions are imputed.
</TABLE>

DETERMINATION OF NET ASSET VALUE

The net asset value per share of each Fund is determined each day the New
York Stock Exchange (the "Exchange") is open, as of the close of the regular
trading session of the Exchange that day (currently 4:00 p.m. Eastern Time), by
dividing the value of the Fund's net assets by the number of its shares
outstanding. Although the legal rights of Class A, B and C shares are
identical, the different expenses borne by each class may result in differing
net asset values and dividends for each class.

The Exchange's most recent annual announcement (which is subject to change)
states that it will close on New Year's Day, Presidents' Day, Good Friday,
Memorial Day, July 4, Labor Day, Thanksgiving and Christmas Day. It may also
close on other days.

Securities listed on a national securities exchange or on the national
market system are valued at the last reported sale price on that day. If there
has been no sale on such day or on the previous day on which the Exchange was
open (if a week has not elapsed between such days), then the value of such
security is taken to be the reported bid price at the time as of which the value
is being ascertained. Securities traded in the over-the-counter market but not
listed on the national market system are valued at their last quoted bid price.
Any securities or other assets for which current market quotations are not
readily available are valued at their fair value as determined in good faith
under procedures established by and under the general supervision and
responsibility of each Fund's Board of Directors. The value of a foreign
security is determined in its national currency and that value is then converted
into its U.S. dollar equivalent at the foreign exchange rate in effect on the
date of valuation.

<PAGE>

Each Fund's Board of Directors has approved the use of nationally
recognized bond pricing services for the valuation of the Fund's debt
securities. The service selected by Quest Advisors creates and maintains price
matrices of U.S. Government and other securities from which individual holdings
are valued shortly after the close of business each trading day. Debt
securities not covered by the pricing service are valued based upon bid prices
obtained from dealers who maintain an active market therein or, if no readily
available market quotations are available from dealers, such securities
(including restricted securities and OTC options) are valued at fair value under
the Board's procedures. Short-term (having a maturity of 60 days or less) debt
securities are valued at amortized cost.

Puts and calls are valued at the last sales price thereof, or, if there are
no transactions, at the last reported sales price that is within the spread
between the closing bid and asked prices on the valuation date. Futures are
valued based on their daily settlement value. When a Fund writes a call, an
amount equal to the premium received is included in the Fund's 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 call. If a call written by
a Fund is exercised, the proceeds on the sale of the underlying securities are
increased by the premium received. If a call or put written by a Fund expires
on its stipulated expiration date or if a Fund enters into a closing
transaction, it will realize a gain or loss depending on whether the premium was
more or less than the transaction costs, without regard to unrealized
appreciation or depreciation on the underlying securities. If a put held by a
Fund is exercised by it, the amount the Fund receives on its sale of the
underlying investment is reduced by the amount of the premium paid by the Fund.

PERFORMANCE INFORMATION

As discussed in the Prospectus, from time to time the Global Income Fund
may quote its yield and each Fund may quote its total return in advertisements
and sales literature.

YIELDS. Yield information may be useful to investors in reviewing the
Global Income Fund's performance. However, a number of factors should be
considered before using yield information as a basis for comparison with other
investments. An investment in the Fund is not insured; yield is not guaranteed
and normally will fluctuate on a daily basis. The yield for any given past
period is not an indication or representation of future yields or rates of
return. Yield is affected by portfolio quality, portfolio maturity, type of
instruments held and operating expenses. When comparing the Fund's yield with
that of other investments, investors should understand that certain other
investment alternatives such as money-market instruments or bank accounts
provide fixed yields and also that bank accounts may be insured.

Current yield is calculated according to the following formula:

x
YIELD = 2(--- + 1)TO THE POWER OF 6 - 1
cd

<PAGE>

Where:

x = daily net investment income, based upon the subtraction of daily accrued
expenses from daily accrued income of the portfolio. Income is accrued
daily for each day of the indicated period based upon yield-to-maturity of
each obligation held in the portfolio as of the day before the beginning of
any thirty-day period or as of contractual settlement date for securities
acquired during the period. Mortgage and other receivables-backed
securities calculate income using coupon rate and outstanding principal
amount.

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

d = the maximum offering price per share on the last day of the period.

Yield may also be calculated by substituting the net asset value or lower
offering price per share for the maximum offering price per share in
representing the yield to those persons or groups who are entitled to purchase
shares at lower than offering prices or net asset value without sales charge.

Yield does not reflect capital gains or losses, non-recurring or irregular
income. Gain or loss attributable to actual monthly paydowns on mortgage or
other receivables-backed obligations purchased at a discount or premium is
reflected as an increase or decrease in interest income during the period.

A Funds' average annual total return represents an annualization of the
Fund's total return ("T" in the formula below), over a particular period and is
computed by finding the current percentage rate which will result in the ending
redeemable value ("ERV" in the formula below). Of a $1,000 investment, ("P" in
the formula below) made at the beginning of a one, five or ten year period, or
for the period from the date of commencement of the Fund's operation, if shorter
("N" in the formula below). The following formula will be used to compute the
average annual total return for each Fund:

P (1 + T)TO THE POWER OF N = ERV

<PAGE>

AVERAGE ANNUAL TOTAL RETURN

From commencement of
operations* to For the Fiscal Year Ended
November 30, 1994 November 30, 1994
----------------- -----------------
Reflecting Without Reflecting Without
Deduction of Deduction of Deduction of Deduction of
Maximum Maximum Maximum Maximum
Sales Charge Sales Charge Sales Charge Sales Charge
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Global Equity (1)

Class A 5.49% 6.85% 2.41% 8.37%

Class B 1.63 4.82 2.84 7.84

Class C 4.76 4.76 6.77 7.77

Global Income (1)

Class A (1, 2) .24% 1.27% -6.15% -3.24%

Class B -5.63 -2.71 -8.52 -3.99

Class C -2.84 -2.84 -5.11 -4.20
<FN>
* The Global Equity Fund commenced operations on July 2, 1990; the Global
Income Fund on December 2, 1991. Class B and C shares of the Funds were
initially offered on September 2, 1993.

(1) Reflects the waiver of certain advisory fees for the Global Equity Fund and
the waiver of advisory fees and reimbursement of certain operating expenses
for the Global Income Fund. Without such waivers and reimbursements, the
average annual total returns would have been lower.

(2) Effective May 4, 1992, the maximum sales load on purchases of shares of
Class A shares the Global Income Fund was changed from 4.75% to 3.00%. In
accordance with SEC guidelines, the performance quoted above was calculated
as if the new sales load had been in effect from the inception of the Fund.
</TABLE>

The preceding table assumes that a $1,000 payment was made at the beginning
of the period shown, that no further payments were made, that any distributions
from the assets of each Fund were reinvested. The table reflects the historical
rates of return and deductions for all charges, expenses and fees of each Fund.

In addition to the foregoing, each Fund may advertise its total return over
different periods of time by means of aggregate, average, year by year or other
types of total return figures.

Total returns quoted in advertising reflect all aspects of a Fund's return,
including the effect of reinvesting dividends and capital gain distributions,
and any change in the Fund's net asset value per share over the period. Average
annual returns are calculated by determining the growth or decline in

<PAGE>

value of a hypothetical investment in a fund over a stated period, and then
calculating the annually compounded percentage rate that would have produced the
same result if the rate of growth or decline in value had been constant over the
period. For example, a cumulative return of 100% over ten years would produce
an average annual return of 7.18%, which is the steady annual return that would
equal 100% growth on a compounded basis in ten years.

In addition to average annual returns, each Fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an investment
over a stated period. Average annual and cumulative total returns may be quoted
as a percentage or as a dollar amount and may be calculated for a single
investment, a series of investments and/or a series of redemptions over any time
period. Total returns and other performance information may be quoted
numerically or in a table, graph or similar illustration. Total returns may be
quoted with or without taking a Fund's sales charge into account. Excluding a
Fund's sales charge from a total return calculation produces a higher total
return figure.

The total return on an investment made in Class A, B and C shares of the Funds
for the period from commencement of public sale through November 30, 1994 is as
follows:

AGGREGATE TOTAL RETURN

FROM COMMENCEMENT OF OPERATIONS* TO NOVEMBER 30, 1994 (2)

Reflecting Deduction of Without Deduction of
Maximum Sales Charge(1) Maximum Sales Charge
----------------------- --------------------
<S> <C> <C>
Global Equity Fund

Class A 26.66% 34.04%

Class B(3) 2.04% 6.04%

Class C(3) 5.97% 5.97%

Global Income Fund

Class A .73% 3.84%

Class B(3) -6.97% -3.36%

Class C(3) -3.52% -3.52%
<FN>
* The Global Equity Fund commenced operations on 7/2/90; the Global
Income Fund on 12/2/91. Class B and C shares of the Funds were
initially offered on 9/2/93.

(1) Effective May 4, 1992, the maximum sales load on purchases of shares of the
Global Income Fund was changed from 4.75% to 3.00%. In accordance with SEC
guidelines, the performance quoted above was calculated as if the new sales
load had been in effect from the inception of the Fund.

(2) Reflects the waiver of certain advisory fees and the reimbursement of
certain expenses. Without such waiver, the inception to date total return
for the Global Equity and Global Income Funds would have been lower.
</TABLE>

<PAGE>

From time to time the Funds may refer in advertisements to rankings and
performance statistics published by (1) recognized mutual fund performance
rating services including but not limited to Lipper Analytical Services, Inc.
and Morningstar, Inc., (2) recognized indexes including but not limited to the
Standard & Poors Composite Stock Price Index, Dow Jones Industrial Average,
Consumer Price Index, EAFE Index, J.P. Morgan Emerging Markets Bond Index, the
Morgan Stanley World Index, J.P. Morgan Latin Eurobond Index, Lehman Brothers
Global Bond Index, Lehman Brothers Global Intermediate Bond Index, Salomon
Brothers World Government Bond Index and Salomon Brothers Hedged World
Government Bond Index, and (3) Money Magazine and other financial publications
including but not limited to magazines, newspapers and newsletters. Performance
statistics may include total returns, measures of volatility or other methods of
portraying performance based on the method used by the publishers of the
information. In addition, comparisons may be made between yields on
certificates of deposit and U.S. government securities and corporate bonds, and
may refer to current or historic financial or economic trends or conditions.
The Global Income Fund also may publish its distribution rate, which is computed
in the same manner as yield except that actual income dividends declared per
share during the period in question is substituted for net investment income per
share.

The performance of the Funds may be compared to the performance of other
mutual funds in general, or to the performance of particular types of mutual
funds. These comparisons may be expressed as mutual fund rankings prepared by
Lipper Analytical Services, Inc. ("Lipper"), and Morningstar, Inc.
("Morningstar"), independent services located in Summit, New Jersey and Chicago,
Illinois, respectively, that monitor the performance of mutual funds. Lipper
and Morningstar generally rank funds on the basis of total return, assuming
reinvestment of distributions, but do not take sales charges or redemption fees
into consideration, and are prepared without regard to tax consequences. In
addition to the mutual fund rankings, performance may be compared to mutual fund
performance indices prepared by Lipper.

From time to time, a Fund's performance also may be compared to other
mutual funds tracked by financial or business publications and periodicals. For
example, the Fund may quote Morningstar in its advertising materials .
Morningstar rates mutual funds on a one star to five star scale on the basis of
risk-adjusted performance.

Quest For Value Distributors may provide information designed to help
individuals understand their investment goals and explore various financial
strategies such as general principles of investing, such as asset allocation,
diversification, risk tolerance, goal setting, and a questionnaire designed to
help create a personal financial profile.

Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical
returns of the capital markets in the United States, including common stocks,
small capitalization stocks, long-term corporate bonds, intermediate-term
government bonds, long-term government bonds, Treasury bills,

<PAGE>

the U.S. rate of inflation (based on CPI), and combinations of various capital
markets. The performance of these capital markets is based on the returns of
different indices.

Quest for Value Distributors may use the performance of these capital
markets in order to demonstrate general risk-versus-reward investment scenarios.
Performance comparisons may also include the value of a hypothetical investment
in any of these capital markets. The risks associated with the security types
in any capital market may or may not correspond directly to those of the Funds.
The Funds may also compare performance to that of other compilations or indices
that may be developed and made available in the future.

In advertising materials, Quest For Value Distributors may reference or
discuss its products and services, which may include: other Quest funds;
retirement investing; brokerage products and services; the effects of dollar-
cost averaging and saving for college; and the risk of marketing timing. In
addition, Quest for Value Distributors may quote financial or business
publications and periodicals, including model portfolios or allocations, as they
relate to fund management, investment philosophy, and investment techniques.
Quest for Value Distributors may also reprint, and use as advertising and sales
literature, articles from RE: QUEST, a quarterly magazine provided free of
charge to Quest fund shareholders.

The Funds may present their fund number, Quotron symbol, CUSIP number, and
discuss or quote their current portfolio manager.

VOLATILITY. The Funds may quote various measures of volatility and
benchmark correlation in advertising. In addition, the Funds may compare these
measures to those of other funds. Measures of volatility seek to compare a
fund's historical share price fluctuations or total returns to those of a
benchmark. Measures of benchmark correlation indicate how valid a comparative
benchmark may be. All measures of volatility and correlation are calculated
using averages of historical data.

Momentum Indicators indicate the Fund's price movements over specific
periods of time. Each point on the momentum indicator represents the Fund's
percentage change in price movements over that period.

The Funds may advertise examples of the effects of periodic investment
plans, including the principle of dollar cost averaging. In such a program, an
investor invests a fixed dollar amount in a fund at periodic intervals, thereby
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against a loss in
a declining market, the investor's average cost per share can be lower than if
fixed numbers of shares are purchased at the same intervals. In evaluating such
a plan, investors should consider their ability to continue purchasing shares
during period of low price levels.

The Fund may be available for purchase through retirement plans or other
programs offering deferral of or exemption from income taxes, which may produce
superior after-tax returns over time.

<PAGE>

For example, a $1,000 investment earning a taxable return of 10% annually would
have an after-tax of $1,949 after ten years, assuming tax was deducted from the
return each year at a 28% rate. An equivalent tax-deferred investment would
have an after-tax value of $2,100 after ten years, assuming tax was deducted at
a 31% rate from the tax-deferred earnings at the end of the ten-year plan.

DISTRIBUTION EXPENSE PLAN

Each class of shares of each Fund has a Plan and Agreement of Distribution
(the "Plan(s)") pursuant to which it is permitted to compensate the Distributor
in connection with the distribution of shares. Each Plan was adopted in
accordance with the requirements of Rule 12b-1 under the 1940 Act, and was
initially approved by the Fund's Board of Directors (who found that there is a
reasonable likelihood that the Plan will benefit the Fund and its shareholders),
including a majority of the Directors who are not "interested persons" of the
Fund as defined in the 1940 Act and who have no direct or indirect financial
interest in the operation of the Plan or in any agreement related to the Plan
("Disinterested Directors") and by Oppenheimer Capital as then sole shareholder
of each Fund on June 21, 1990 with respect to the Global Equity Fund and on July
29, 1991 with respect to the Global Income Fund. The shareholders of the Global
Equity Fund approved the Plan on January 13, 1992.

Under each Plan, each class of shares of each Fund pays the Distributor a
monthly fee for services and expenses in connection with the distribution of the
Fund's shares at the following percentage rates of average daily net assets on
an annual basis: Global Equity Fund, Class A shares - .25%, Class B and C shares
- .75%; Global Income Fund, Class A shares - .05%, Class B and C shares - .75%.
Each class of shares of each Fund also pays a service fee of .25% of average
daily net assets. For the fiscal year ended November 30, 1994, the total
distribution fee accrued or paid by Class A, B and C shares of the Global Equity
Fund were $742,304, $59,822 and $11,502, respectively. For the fiscal year
ended November 30, 1994, the total distribution fees accrued or paid by the
Class A, B and C shares of Global Income Fund were $46,739, $10,182 and $1,874,
respectively.

The activities, services and expenditures authorized to be provided by the
Distributor under each Plan shall include one or more of the following: (1)
compensation to sales representatives, to the Distributor and other broker-
dealers for activities related to sales of Shares and servicing existing
shareholders; (2) sales incentives and bonuses to the Distributor's sales
representatives and to marketing personnel in connection with promoting sales of
Shares; (3) expenses incurred in connection with promoting sales of Shares and
servicing existing shareholders; (4) printing reports and prospectuses for
potential investors in the Shares; (5) preparing and distributing sales
literature; and (6) providing advertising and promotional activities, including
direct mail solicitation and television, radio, newspaper, magazine and other
media advertisements.

Each Plan states the Treasurer of the Fund shall provide, and that the
Disinterested Directors shall review, quarterly reports setting forth the
amounts expended pursuant to the Plan in connection with the distribution of the
Fund's shares and the purpose for which the amounts were expended. It further
provides that, as long as the Plan remains in effect, the selection and
nomination of Directors of the

<PAGE>

Fund who are not "interested persons" shall be committed to the discretion of
the Directors then in office who are not "interested persons" of the Fund. The
Plans can be terminated at any time, without penalty by the vote of a majority
of the Disinterested Directors or by the vote of the holders of a majority of
the outstanding voting securities of the Fund. Finally, each Plan cannot be
amended to increase materially the amount to be spent by the Fund without
shareholder approval, and all material amendments are required to be approved by
the vote of the Board of Directors of that Fund, including a majority of the
Disinterested Directors, cast in person at a meeting called for that purpose. A
rule of the National Association of Securities Dealers, Inc. limits the total
aggregate asset based, front end and deferred sales charges (excluding service
fees) to 6.25% of a fund's new gross sales.

It is estimated that the Distributor spent approximately the following
amounts with respect to Class A, B and C shares of the Global Equity and Global
Income Funds for the fiscal year ended November 30, 1994.
<TABLE>
<CAPTION>

Printing and
mailing of
Prospectuses to
Sales Material other than
and current Compensation to Compensation
to
Advertising shareholders Dealers Sales Personnel
Other (1)
----------- ------------ ------- ---------------
---------
<S> <C> <C> <C> <C>
<C>
Global Equity Fund

Class A $154,958 $94,017 $590,774 $360,944
$204,049

Class B 40,559 26,237 343,744 97,485
55,223

Class C 28,114 17,762 17,122 66,896
37,844

Global Income Fund

Class A $40,474 $24,666 $47,993 $93,776
$87,219

Class B 26,620 16,253 42,666 62,207
35,177

Class C 24,720 15,196 832 58,143
32,801

<FN>
(1) Includes costs of telephone and overhead.
</TABLE>

During the fiscal year ended November 30, 1994, the Distributor received
the following compensation with repect to the Funds:

PORTION OF SALES COMPENSATION ON
FUND CHARGE ON CLASS A SHARES REDEMPTIONS (CDSC'S)
Global Equity 84,018 $7,300
Global Income 9,504 $ 600

<PAGE>

ADDITIONAL INFORMATION

DESCRIPTION OF THE FUNDS. The Global Equity Fund is a corporation formed
under the laws of Maryland on April 25, 1990. The Global Income Fund is the
only existing series of the Quest for Value Global Funds, Inc., a corporation
formed under the laws of Maryland on June 12, 1991. It is not contemplated that
regular annual meetings of shareholders of either corporation will be held;
however, a meeting will be held if requested by the holders of 10% of each
corporation's voting securities. In addition, 10 shareholders holding the
lesser of shares having a net asset value of at least $25,000 or 1% of a Fund's
outstanding shares may advise the Board of Directors in writing that they wish
to communicate with other shareholders of that Fund for the purpose of
requesting a meeting to remove a director. The Board of Directors will then
either give the applicants access to the Fund's shareholder list or mail the
applicant's communication to all other shareholders at the applicant's expense.

When issued, the shares of each class of the Fund are fully paid and have no
preemptive, conversion, or other subscription rights. Each class of shares
represents identical interests in the applicable Fund's investment portfolio.
As such, they have the same rights, privileges and preferences, except with
respect to: (a) the designation of each class, (b) the effect of the respective
sales charges, if any, for each class, (c) the distribution fees borne by each
class, (d) the expenses allocable exclusively to each class, (e) voting rights
on matters exclusively affecting a single class and (f) the exchange privilege
of each class. Upon liquidation of the Fund, shareholders are entitled to share
pro rata in the net assets available for distribution to shareholders after all
debts and expenses have been paid. The shares do not have cumulative voting
rights.

Each of the Funds may in the future seek to achieve its investment objective
by investing all of its investable assets in a no-load diversified open-end
management investment company with the same portfolio manager, investment
objective and investment restrictions as the respective Fund. The shareholders
of the Funds authorized such investment by approving changes to the investment
restrictions of the Fund at a Special Meeting of Shareholders held in 1994.
Such investment would only be made if the Directors feel that the aggregate per
share expenses of the Fund and such other investment company would be less than
or approximately equal to the expenses which the Fund would incur if the Fund
were to continue its present investment policies. It is expected that such an
investment in another investment company will have no preference, preemptive,
conversion or similar rights, and will be fully-paid and non-assessable. It is
expected that the investment company will not be required to hold annual
meetings, but will hold special meetings of shareholders when, in the judgment
of the Directors, it is necessary or desirable to submit matters for shareholder
vote.

REDUCED SALES CHARGES. Sales are made at reduced sales charges to certain
persons described under "Reduced Sales Charges" in the Prospectus because of
economies of scale and/or because there is little or no sales effort required to
make sales to such persons.

<PAGE>

POSSIBLE ADDITIONAL PORTFOLIO SERIES. The Boards of Directors are empowered
to create additional portfolios of each corporation. If additional portfolios
are created by the Board of Directors, shares of each such portfolio will be
entitled to vote as a class only to the extent permitted by the 1940 Act (see
below) or as permitted by the Board of Directors. Expenses not otherwise
identified with a particular portfolio will be allocated fairly among two or
more portfolios by the Board of Directors.

Under Rule 18f-2 of the 1940 Act, any matter required to be submitted to a
vote of shareholders of any investment company which has two or more series
outstanding is not deemed to have been effectively acted upon unless approved by
the holders of a "majority" (as defined in that Rule) of the voting securities
of each series affected by the matter. Such separate voting requirements do not
apply to the election of directors or the ratification of the selection of
accountants. Approval of an investment management or distribution plan and a
change in fundamental policies would be regarded as matters requiring separate
voting by each portfolio. The Rule contains special provisions for cases in
which an advisory contract is approved by one or more, but not all, series. A
change in investment policy may go into effect as to one or more series whose
holders so approve the change even though the required vote is not obtained as
to the holders of other affected series.

DISTRIBUTION AGREEMENT. Under the Distribution Agreement between each Fund
and the Distributor, the Distributor acts as the Fund's agent in the continuous
public offering of its shares. Expenses normally attributable to sales, other
than those paid under the Distribution Expense Plan, are borne by the
Distributor.

INDEPENDENT ACCOUNTANTS. Price Waterhouse LLP, 1177 Avenue of the Americas,
New York, New York, are the independent accountant of the Funds; their services
include examining the annual financial statements of the Funds as well as other
related services. Price Waterhouse LLP also serves as independent accountants
for Quest Advisors and some of its affiliates.

CUSTODIAN. State Street Bank and Trust Company acts as custodian of the
assets, transfer agent and shareholder servicing agent of the Funds.

DISTRIBUTION OPTIONS. Shareholders may change their distribution options by
giving the Transfer Agent three days prior notice in writing.

SHAREHOLDER SERVICING AGENT FOR CERTAIN SHAREHOLDERS. Unified
Management
Corporation (1-800-346-4601) is the shareholder servicing agent for former
shareholders of the AMA Family of Funds and clients of AMA Investment Advisers,
Inc. (which acted as the investment advisor to the AMA Family of Funds) who
acquire shares of any Quest Fund, and for former shareholders of the Unified
Funds and Liquid Green Trusts, accounts which participated or participate in a
retirement plan for which Unified Investment Advisers, Inc. or an affiliate acts
as custodian or trustee, accounts which have a Money Manager brokerage account,
and other accounts for which Unified Management Corporation is the dealer of
record.

<PAGE>

TAX INFORMATION. The Federal tax treatment of the Funds' dividends and
distributions is explained in the Prospectus under the heading "Tax Status."
Each Fund will be subject to a nondeductible 4% excise tax to the extent that it
fails to distribute by the end of any calendar year substantially all of its
ordinary income for that year and capital gains net income for the one year
period ending on October 31 of that year.

CAPITAL LOSS CARRYOVERS. For the year ended November 30, 1994, Global Income
had net capital loss carryovers of $1,077,004, of which $204,539, $214,944 and
$657,521 will be available to offset future net capital gains realized through
fiscal years ending 1998, 2001 and 2002, to the extent provided by regulations.
Capital and currency losses incurred after October 31, 1994 are deemed to arise
on the first business day of the following tax year. Accordingly, for the
fiscal year ended November 30, 1994, Global Income incurred and elected to defer
$52,073 and $127,100 in net capital and net currency losses, respectively.

RETIREMENT PLANS. Quest for Value Distributors may print advertisements and
brochures concerning retirement plans, lump sum distributions and 401-k plans.
These materials may include descriptions of tax rules, strategies for reducing
risk and descriptions of the 401-k program offered by Quest for Value
Distributors. From time to time hypothetical investment programs illustrating
various tax-deferred investment strategies will be used in brochures, sales
literature, and omitting prospectuses. The following examples illustrate the
general approaches that will be followed. These hypotheticals will be modified
with different investment amounts, reflecting the amounts that can be invested
in different types of retirement programs, different assumed tax rates, and
assumed rates of return. They should not be viewed as indicative of past or
future performance of any Quest for Value product.

<PAGE>

EXAMPLES
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
Benefits of Long Term Tax-Free Compounding - Benefits of Long Term Tax-Free Compounding
-
Single Sum Periodic Investment
---------------------------------------------------------------------------------------------------
Amount of Contribution: $100,000 Amount Invested Annually: $2,000
---------------------------------------------------------------------------------------------------
Rates of Return Rates of Return
Years ----------------------------------------- Years -----------------------------------------
8.00% 10.00% 12.00% 8.00% 10.00% 12.00%
----------------------------------------- -----------------------------------------
Value at End Value at End
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
5 $ 146,933 $ 161,051 $ 176,234 5 $ 12,672 $ 13,431 $ 14,230
---------------------------------------------------------------------------------------------------
10 $ 215,892 $ 259,374 $ 310,585 10 $ 31,291 $ 35,062 $ 39,309
---------------------------------------------------------------------------------------------------
15 $ 317,217 $ 417,725 $ 547,357 15 $ 58,649 $ 69,899 $ 83,507
---------------------------------------------------------------------------------------------------
20 $ 466,096 $ 672,750 $ 964,629 20 $ 98,846 $126,005 $161,397
---------------------------------------------------------------------------------------------------
25 $ 684,848 $1,083,471 $1,700,006 25 $157,909 $216,364 $298,668
---------------------------------------------------------------------------------------------------
30 $1,006,266 $1,744,940 $2,995,992 30 $244,692 $361,887 $540,585
---------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------
Comparison of Taxable and Tax-Free Investing -- Periodic Investments
(Assumed Tax Rate : 28%)
---------------------------------------------------------------------------------------------------
Amount of Annual Contribution (Pre-Tax):$2,000 Annual Contribution (After Tax): $1,440
---------------------------------------------------------------------------------------------------
Tax Deferred Rates of Return Fully Taxed Rates of Return
Years ----------------------------------------- Years -----------------------------------------
8.00% 10.00% 12.00% 5.76% 7.20% 8.64%
----------------------------------------- -----------------------------------------
Value at End Value at End
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
5 $ 12,672 $ 13,431 $ 14,230 5 $ 8,544 $ 8,913 $ 9,296
---------------------------------------------------------------------------------------------------
10 $ 31,291 $ 35,062 $ 39,309 10 $ 19,849 $ 21,531 $ 23,364
---------------------------------------------------------------------------------------------------
15 $ 58,649 $ 69,899 $ 83,507 15 $ 34,807 $ 39,394 $ 44,654
---------------------------------------------------------------------------------------------------
20 $ 98,846 $126,005 $161,397 20 $ 54,598 $ 64,683 $ 76,874
---------------------------------------------------------------------------------------------------
25 $157,909 $216,364 $298,668 25 $ 80,785 $100,485 $125,635
---------------------------------------------------------------------------------------------------
30 $244,692 $361,887 $540,585 30 $115,435 $151,171 $199,429
---------------------------------------------------------------------------------------------------

---------------------------------------------------------
Comparison of Tax Deferred Investing
-- Deducting Taxes at End
(Assumed Tax Rate at End: 28%)
---------------------------------------------------------
Amount of Annual Contribution: $2,000
---------------------------------------------------------
Tax Deferred Rates of Return
Years -------------------------------------------------
8.00% 10.00% 12.00%
-------------------------------------------------
Value at End
---------------------------------------------------------
<S> <C> <C> <C>
5 $ 11,924 $ 12,470 $ 13,046
---------------------------------------------------------
10 $ 28,130 $ 30,485 $ 33,903
---------------------------------------------------------
15 $ 50,627 $ 58,728 $ 68,525
---------------------------------------------------------
20 $ 82,369 $101,924 $127,406
---------------------------------------------------------
25 $127,694 $169,782 $229,041
---------------------------------------------------------
30 $192,978 $277,359 $406,021
---------------------------------------------------------
</TABLE>

<PAGE>

APPENDIX A -- RATINGS

DESCRIPTION OF MOODY'S CORPORATE RATINGS

Aaa. Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." 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, such changes as can be visualized 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 in Aaa securities, or fluctuation of
protective elements may be of greater amplitude, or there may be other elements
present which made the long-term risks appear somewhat larger than in 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 as 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 in
fact have speculative characteristics as well.

Ba. Bonds which are rated Ba are judges to have speculative elements and
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate, and therefore not well
safeguarded during both good and bad times. Uncertainty of position
characterizes bonds in this class.

B. Bonds which are rated B generally lack the characteristics of a
desirable investment. Assurance of interest and principal payments or of other
terms of the contract over long periods may be small.

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

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

A-1

<PAGE>

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

DESCRIPTION OF S&P'S CORPORATE RATINGS

AAA. Debt rated AAA has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.

AA. Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree.

A. Debt rated A has a strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.

BBB. Debt rated BBB is regarded as having adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category.

BB. Debt rated BB has less near-term vulnerability to default than other
speculative grade debt. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payment. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.

B. Debt rated B has a greater vulnerability to default but presently has
the capacity to meet interest and principal payments. Adverse business,
financial or economic conditions would likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or BB-
rating

CCC. Debt rated CCC has a current identifiable vulnerability to default
and is dependent upon favorable business, financial and economic conditions to
meet timely payments of principal. In the event of adverse business, financial
or economic conditions, it is not likely to have the capacity to pay interest
and repay principal. The CCC rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied CCC rating.

CC. The rating CC is typically applied to debt subordinated to senior debt
that is assigned an actual or implied CCC rating.

A-2

<PAGE>

C. The rating C is typically applied to debt subordinated to senior debt
that is assigned an actual or implied CCC- debt rating. The C rating may be
used to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.

CI. The rating CI is reserved for income bonds on which no interest is
being paid.

D. Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S & P believes that such
payments will be made during such grace period. The D rating also will be used
upon the filing of a bankruptcy petition if debt service payments are
jeopardized.

DESCRIPTION OF COMMERCIAL PAPER RATINGS

Commercial paper rated Prime-1 by Moody's are judged by Moody's to be of
the best quality. Their short-term debt obligations carry the smallest degree
of investment risk. Margins of support for current indebtedness are large or
stable with cash flow and asset protection well assured. Current liquidity
provides ample coverage of near-term liabilities and unused alternative
financing arrangements are generally available. While protective elements may
change over the intermediate or longer term, such changes are most unlikely to
impair the fundamentally strong position of short-term obligations.

Issuers (or related supporting institutions) rated Prime-2 have a strong
capacity for repayment of short-term promissory obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.

Commercial paper rated A by S&P have the following characteristics.
Liquidity ratios are better than industry average. Long-term debt rating is A
or better. The issuer has access to at least two additional channels of
borrowing. Basic earnings and cash flow are in an upward trend. Typically, the
issuer is a strong company in a well-established industry and has superior
management. Issuers rated A are further refined by use of numbers 1, 2, and 3
to denote relative strength within this highest classification. Those issuers
rated A-1 that are determined by S&P to possess overwhelming safety
characteristics are denoted with a plus (+) sign designation.

Fitch's commercial paper ratings represent Fitch's assessment of the
issuer's ability to meet its obligations in a timely manner. The assessment
places emphasis on the existence of liquidity. Ratings range from F-1+ which
represents exceptionally strong credit quality to F-4 which represents weak
credit quality.

Duff & Phelps' short-term ratings apply to all obligations with maturities
of under one year, including commercial paper, the uninsured portion of
certificates of deposit, unsecured bank loans, master notes, bankers
acceptances, irrevocable letters of credit and current maturities of long-term

A-3

<PAGE>

debt. Emphasis is placed on liquidity. Ratings range from Duff 1+ for the
highest quality to Duff 5 for the lowest, issuers in default. Issues rated Duff
1+ are regarded as having the highest certainty of timely payment. Issues rated
Duff 1 are regarded as having very high certainty of timely payment.

A-4

<PAGE>

NOVEMBER 30, 1994

SCHEDULES OF INVESTMENTS

GLOBAL EQUITY FUND

SHARES VALUE
--------------------------------------------------------------------------------
<S> <C>

COMMON STOCKS--86.6%
ARGENTINA--1.3%
--------------------------------------------------------------------------------
ENERGY--0.6%
40,000 YPF Sociedad Anonima ADR . . . . . . . . . $ 905,000
------------
TOBACCO/BEVERAGES/FOOD PRODUCTS--0.7%
46,000 Quilmes Industrial SA ADR. . . . . . . . . 1,216,700
------------
Total Argentinean Common Stocks. . . . . . . . . . . . . . . . . 2,121,700
------------

AUSTRALIA--2.7%
--------------------------------------------------------------------------------
METALS/MINING--1.9%
405,000 Comalco Ltd. . . . . . . . . . . . . . . . 1,510,381
280,000 Western Mining Corp. Holdings Ltd. . . . . 1,593,233
------------
3,103,614
------------
PUBLIC SERVICES--0.8%
250,000 Mayne Nickless Ltd.. . . . . . . . . . . . 1,207,228
------------

Total Australian Common Stocks . . . . . . . . . . . . . . . . . 4,310,842
------------

AUSTRIA--1.5%
--------------------------------------------------------------------------------
BUILDING & CONSTRUCTION
35,000 Flughafen Wien AG. . . . . . . . . . . . . 1,503,504
2,800 Wienerberger Baustoffindustrie AG. . . . . 964,522
------------
Total Austrian Common Stocks . . . . . . . . . . . . . . . . . . 2,468,026
------------

DENMARK--2.1%
--------------------------------------------------------------------------------
CONGLOMERATES--1.1%
20,000 Sophus Berendsen AS. . . . . . . . . . . . 1,667,074
------------
TELECOMMUNICATIONS--1.0%
31,200 Tele Danmark AS (Class B). . . . . . . . . 1,630,476
------------
Total Danish Common Stocks . . . . . . . . . . . . . . . . . . . 3,297,550
------------

FINLAND--2.6%
--------------------------------------------------------------------------------
EXPORTING--1.7%
20,000 Oy Nokia AB. . . . . . . . . . . . . . . . 2,730,263
------------
RETAIL--0.9%
30,700 Oy Stockmann AB. . . . . . . . . . . . . . 1,439,063
------------
Total Finnish Common Stocks. . . . . . . . . . . . . . . . . . . 4,169,326
------------

FRANCE--4.5%
--------------------------------------------------------------------------------
AEROSPACE--0.7%
2,410 Sagem. . . . . . . . . . . . . . . . . . . 1,184,394
------------
AUTOMOTIVE--0.6%
27,000 Renault SA . . . . . . . . . . . . . . . . 909,368
------------
ENERGY--1.8%
38,340 Elf Aquitaine, Inc. ADS. . . . . . . . . . 1,303,560
24,710 Total SA . . . . . . . . . . . . . . . . . 1,547,820
------------
2,851,380
------------
MACHINERY & ENGINEERING--1.4%
30,000 Michelin (CGDE). . . . . . . . . . . . . . 1,154,275
15,300 Schneider SA . . . . . . . . . . . . . . . 1,103,420
------------
2,257,695
------------
Total French Common Stocks.. . . . . . . . . . . . . . . . . . . 7,202,837
------------

GERMANY--4.3%
--------------------------------------------------------------------------------
BANKING--1.6%
4,000 Deutsche Bank AG . . . . . . . . . . . . . 1,889,583
2,700 Dresdner Bank AG . . . . . . . . . . . . . 704,004
------------
2,593,587
------------
COMPUTER SERVICES--0.9%
2,500 SAP AG . . . . . . . . . . . . . . . . . . 1,467,073
------------
HEALTH & PERSONAL CARE--1.1%
2,700 Schering AG. . . . . . . . . . . . . . . . 1,692,018
------------
MACHINERY & ENGINEERING--0.7%
2,000 Linde AG . . . . . . . . . . . . . . . . . 1,142,420
------------
Total German Common Stocks . . . . . . . . . . . . . . . . . . . 6,895,098
------------

INDONESIA--0.9%
--------------------------------------------------------------------------------
TELECOMMUNICATIONS
37,500 Indonesian Satellite ADR . . . . . . . . . 1,425,000
------------

ITALY--1.9%
--------------------------------------------------------------------------------
TELECOMMUNICATIONS--0.9%
690,000 Telecom Italia . . . . . . . . . . . . . . 1,430,118
------------
TEXTILES/APPAREL--0.7%
170,000 Marzotto & Figli . . . . . . . . . . . . . 1,167,481
------------
UTILITIES--0.3%
114,000 Edison S.p.A.. . . . . . . . . . . . . . . 476,087
------------
Total Italian Common Stocks. . . . . . . . . . . . . . . . . . . 3,073,686
------------

JAPAN--17.2%
--------------------------------------------------------------------------------
AEROSPACE--1.1%
250,000 Mitsubishi Heavy Industries Ltd. . . . . . 1,855,597
------------
APPLIANCES & HOUSEHOLD DURABLES--2.0%
101,000 Sharp Corp.. . . . . . . . . . . . . . . . 1,756,699
29,000 Sony Corp. . . . . . . . . . . . . . . . . 1,539,590
------------
3,296,289
------------
AUTOMOTIVE--0.9%
145,000 Mitsubishi Motors. . . . . . . . . . . . . 1,373,900
------------

B-1
<PAGE>

NOVEMBER 30, 1994

SCHEDULES OF INVESTMENTS

GLOBAL EQUITY FUND (CONT'D)

SHARES VALUE
--------------------------------------------------------------------------------
<S> <C>

JAPAN (CONT'D)
BANKING--1.0%
160,000 The Mitsui Trust & Banking Co., Ltd. . . . $ 1,634,139
------------
BUILDING & CONSTRUCTION--0.8%
114,000 Sekisui House Ltd. . . . . . . . . . . . . 1,325,716
------------
CONSUMER PRODUCTS--0.9%
91,000 Yakult Honsha Co.. . . . . . . . . . . . . 1,407,928
------------
DRUGS & MEDICAL PRODUCTS--1.0%
150,000 Fujisawa Pharmaceutical Co.. . . . . . . . 1,638,184
------------
ELECTRONICS--3.6%
80,000 Hitachi Maxell Co. . . . . . . . . . . . . 1,391,445
24,000 Kyocera Corp.. . . . . . . . . . . . . . . 1,781,373
88,000 NEC Corp.. . . . . . . . . . . . . . . . . 1,023,359
75,000 Nippondenso Co., Ltd.. . . . . . . . . . . 1,532,005
------------
5,728,182
------------
INSURANCE--1.1%
150,000 Tokio Marine & Fire Insurance Co., Ltd.. . 1,729,194
------------
MERCHANDISING--2.1%
45,000 Ito Yokado Co., Ltd. . . . . . . . . . . . 2,389,018
85,400 Simree Co., Ltd. . . . . . . . . . . . . . 1,001,760
------------
3,390,778
------------
MISCELLANEOUS FINANCIAL SERVICES--1.5%
8,000 Japan Associated Finance Co., Ltd. . . . . 1,100,212
85,000 Toyo Tec Co., Ltd. . . . . . . . . . . . . 1,246,334
------------
2,346,546
------------
RECREATION--1.2%
110,000 Canon, Inc.. . . . . . . . . . . . . . . . 1,902,114
------------
Total Japanese Common Stocks . . . . . . . . . . . . . . . . . . 27,628,567
------------

MEXICO--0.9%
--------------------------------------------------------------------------------
MISCELLANEOUS FINANCIAL SERVICES--0.3%
125,000 Grupo Finance Del Norte (Class B). . . . . 494,330
------------
RETAIL--0.2%
120,000 Cifra SA de CV . . . . . . . . . . . . . . 324,513
------------
TELECOMMUNICATIONS--0.4%
13,000 Telefonos De Mexico SA ADR . . . . . . . . 689,000
------------
Total Mexican Common Stocks. . . . . . . . . . . . . . . . . . . 1,507,843
------------

NETHERLANDS--5.5%
--------------------------------------------------------------------------------
BUILDING & CONSTRUCTION--1.0%
19,500 Kondor Wessels Groep NV. . . . . . . . . . 505,296
46,000 NBM Amstelland NV. . . . . . . . . . . . . 484,652
22,500 Sphinx Kon Gustavsberg--CVA. . . . . . . . 694,516
------------
1,684,464
------------
ELECTRONICS--1.0%
50,833 Getronics NV . . . . . . . . . . . . . . . 1,676,195
------------
INSURANCE--1.3%
44,127 International Nederlanden. . . . . . . . . 2,075,796
------------
MISCELLANEOUS FINANCIAL SERVICES--1.0%
19,855 Hagemeyer. . . . . . . . . . . . . . . . . 1,566,101
------------
PUBLISHING--1.2%
26,844 Wolters Kluwer . . . . . . . . . . . . . . 1,895,698
------------
Total Netherlands Common Stocks. . . . . . . . . . . . . . . . . 8,898,254
------------

SINGAPORE--0.3%
--------------------------------------------------------------------------------
ELECTRONICS
700,000 IPC Corp . . . . . . . . . . . . . . . . . 497,268
------------

SPAIN--1.7%
--------------------------------------------------------------------------------
BUILDING & CONSTRUCTION--1.1%
17,000 Fomento de Construcione Y Contra . . . . . 1,684,082
------------
UTILITIES--0.6%
200,000 Sevillana De Electric. . . . . . . . . . . 970,762
------------
Total Spanish Common Stocks. . . . . . . . . . . . . . . . . . . 2,654,844
------------

SWEDEN--3.8%
--------------------------------------------------------------------------------
DRUGS & MEDICAL PRODUCTS--1.0%
60,000 ASTRA AB . . . . . . . . . . . . . . . . . 1,616,757
------------
MACHINERY & ENGINEERING--2.8%
20,000 ASEA AB. . . . . . . . . . . . . . . . . . 1,422,958
125,000 Atlas Copco AB . . . . . . . . . . . . . . 1,609,456
130,000 Kalmar Industries. . . . . . . . . . . . . 1,527,158
------------
4,559,572
------------
Total Swedish Common Stocks. . . . . . . . . . . . . . . . . . . 6,176,329
------------

SWITZERLAND--1.9%
--------------------------------------------------------------------------------
BANKING--0.8%
2,900 Bil GT Gruppe AG . . . . . . . . . . . . . 1,345,023
------------
BUILDING & CONSTRUCTION--1.1%
2,300 Holderbank Financiere Glaris AG. . . . . . 1,784,842
------------
Total Swiss Common Stocks. . . . . . . . . . . . . . . . . . . . 3,129,865
------------

B-2
<PAGE>

SHARES VALUE
--------------------------------------------------------------------------------
<S> <C>

UNITED KINGDOM--3.1%
--------------------------------------------------------------------------------
PUBLIC SERVICES--1.2%
240,000 British Airport Authority PLC. . . . . . . $ 1,892,807
------------
TOBACCO/BEVERAGES/FOOD PRODUCTS--1.0%
221,000 Guinness PLC . . . . . . . . . . . . . . . 1,582,777
------------
UTILITIES--0.9%
187,400 National Power PLC . . . . . . . . . . . . 1,456,675
------------
Total United Kingdom Common Stocks . . . . . . . . . . . . . . . 4,932,259
------------

UNITED STATES--30.4%
--------------------------------------------------------------------------------
AEROSPACE--3.5%
35,000 McDonnell Douglas Corp.. . . . . . . . . . 4,882,500
15,300 Sundstrand Corp. . . . . . . . . . . . . . 654,075
------------
5,536,575
------------
BANKING--6.4%
20,000 First Interstate Bancorp.. . . . . . . . . 1,410,000
169,215 Mellon Bank Corp.. . . . . . . . . . . . . 5,605,247
23,000 Wells Fargo & Co.. . . . . . . . . . . . . 3,320,625
------------
10,335,872
------------
CHEMICALS--2.9%
21,000 Hercules, Inc. . . . . . . . . . . . . . . 2,401,875
31,000 Monsanto Co. . . . . . . . . . . . . . . . 2,232,000
------------
4,633,875
------------
CONGLOMERATES--1.1%
20,000 General Electric Co. . . . . . . . . . . . 920,000
10,000 ITT Corp.. . . . . . . . . . . . . . . . . 796,250
------------
1,716,250
------------
CONSUMER PRODUCTS--1.3%
35,000 Avon Products, Inc.. . . . . . . . . . . . 2,165,625
------------
DRUGS & MEDICAL PRODUCTS--3.7%
70,000 Becton, Dickinson & Co.. . . . . . . . . . 3,307,500
34,000 Warner-Lambert Co. . . . . . . . . . . . . 2,630,750
------------
5,938,250
------------
ENERGY--0.6%
20,000 MAPCO, Inc.. . . . . . . . . . . . . . . . 1,002,500
------------
INSURANCE--3.4%
70,000 EXEL Ltd.. . . . . . . . . . . . . . . . . 2,625,000
61,000 Transamerica Corp. . . . . . . . . . . . . 2,889,875
------------
5,514,875
------------
METALS/MINING--0.8%
875 Freeport McMoRan Copper & Gold
(Class A) . . . . . . . . . . . . . . . . 17,609
70,000 Freeport McMoRan, Inc. . . . . . . . . . . 1,198,750
------------
1,216,359
------------
MISCELLANEOUS FINANCIAL SERVICES--4.7%
110,000 American Express Co. . . . . . . . . . . . 3,258,750
87,000 Federal Home Loan Mortgage Corp. . . . . . 4,339,125
------------
7,597,875
------------
TECHNOLOGY--1.2%
30,000 Intel Corp.. . . . . . . . . . . . . . . . 1,893,750
------------
TELECOMMUNICATIONS--0.8%
44,000 Sprint Corp. . . . . . . . . . . . . . . . 1,314,500
------------
Total United States Common Stocks. . . . . . . . . . . . . . . . 48,866,306
------------

Total Common Stocks (cost--$121,902,041) . . . . . . . . . . . . $139,255,600
------------

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

WARRANTS VALUE
--------------------------------------------------------------------------------
<S> <C>

WARRANTS--0.0%
SWITZERLAND
--------------------------------------------------------------------------------
Building & Construction
11,500 Holderbank Financiere Glaris AG,
12/20/94, strike @ CHF 620 *. . . . . . . $ 17,779
------------

B-3
<PAGE>

NOVEMBER 30, 1994

SCHEDULES OF INVESTMENTS

GLOBAL EQUITY FUND (CONT'D)

PRINCIPAL
AMOUNT VALUE
--------------------------------------------------------------------------------
<S> <C>

CONVERTIBLE BONDS--0.3%
SWEDEN
--------------------------------------------------------------------------------
MISCELLANEOUS FINANCIAL SERVICES
2,200,000 SEK Investor AB 8.00%, 6/21/01
(cost--$359,464). . . . . . . . . . . . . $ 385,473
------------

REPURCHASE AGREEMENT--13.0%
20,800,000 US$ Prudential Securities, 5.65%, 12/01/94,
(proceeds at maturity: $20,803,264,
collateralized by $21,445,000 par,
$21,219,828 value, U.S. Treasury Notes
3.875%, 8/31/95) (cost--$20,800,000). . . $ 20,800,000
------------

LOCAL
CURRENCY VALUE
--------------------------------------------------------------------------------
<S> <C>

FOREIGN CURRENCY
CALL ACCOUNTS**--0.5%
--------------------------------------------------------------------------------
STATE STREET BANK & TRUST CO.
966,524,112 Italian Lira 7.25% . . . . . . . . . . . . . $ 597,986
159,642 Pound Sterling 4.25% . . . . . . . . . . . . 250,183
9,431 Australian Dollar 5.50%. . . . . . . . . . . 7,252
11,966 Danish Krone 3.50% . . . . . . . . . . . . . 1,948
------------
TOTAL FOREIGN CURRENCY CALL ACCOUNTS (cost--$856,895). . . . . . $ 857,369
------------

TOTAL INVESTMENTS (cost--$143,918,400) . . . . . . 100.4% $161,316,221
OTHER LIABILITIES IN EXCESS OF OTHER ASSETS. . . . (0.4) (589,606)
----- ------------
TOTAL NET ASSETS . . . . . . . . . . . . . . . . . 100.0% $160,726,615
----- ------------
----- ------------

<FN>
* Non-income producing security.
** Variable rate accounts have interest reset twice a week.

</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

B-4
<PAGE>

GLOBAL INCOME FUND

PRINCIPAL
AMOUNT VALUE
--------------------------------------------------------------------------------
<S> <C>

AUSTRALIA--11.3%
--------------------------------------------------------------------------------
GOVERNMENT NOTES--4.7%
100,000 A$ Queensland Treasury Corp. 8.00%, 5/14/97 . $ 73,673
1,000,000 Western Australia Treasury Corp.
10.00%, 1/15/97 . . . . . . . . . . . . . 769,753
------------
843,426
------------

EURONOTES--6.6%
500,000 Mobil Australia Finance, Ltd.
12.00%, 4/18/97 . . . . . . . . . . . . . 398,164
1,000,000 Unilever Australia, Ltd.
12.00%, 4/08/98 . . . . . . . . . . . . . 802,576
------------
1,200,740
------------
Total Australia. . . . . . . . . . . . . . . . . . . . . . . . . 2,044,166
------------

BELGIUM--3.0%
--------------------------------------------------------------------------------
GOVERNMENT NOTE
17,000,000 BEL Kingdom of Belgium 9.00%, 6/27/01 (A). . . 551,169
------------

CANADA--4.8%
--------------------------------------------------------------------------------
GOVERNMENT NOTE
1,200,000 CD$ Government of Canada 8.50%, 3/01/00 (A). . 861,670
------------

DENMARK--7.1%
--------------------------------------------------------------------------------
GOVERNMENT NOTE
7,750,000 DKK Kingdom of Denmark 9.00%, 11/15/98 (A) . . 1,295,136
------------

GERMANY--5.6%
--------------------------------------------------------------------------------
Government Notes
1,000,000 DM German Unity Fund 8.50%, 2/20/01 (A) . . . 674,487
500,000 Republic of Germany 8.50%, 8/21/00 (A) . . 337,881
------------
Total Germany. . . . . . . . . . . . . . . . . . . . . . . . . . 1,012,368
------------

IRELAND--2.5%
--------------------------------------------------------------------------------
GOVERNMENT NOTE
325,000 IEP Irish Treasury Bond 6.25%, 4/01/99 . . . . 460,151
------------

NEW ZEALAND--4.3%
--------------------------------------------------------------------------------
GOVERNMENT NOTE
1,250,000 NZD Government of New Zealand 9.00%,
11/15/96. . . . . . . . . . . . . . . . . 779,042
------------

PORTUGAL--5.3%
--------------------------------------------------------------------------------
GOVERNMENT NOTE
950,000 ECU Republic of Portugal 6.00%, 2/16/04. . . . 970,283
------------

SPAIN--9.8%
--------------------------------------------------------------------------------
GOVERNMENT NOTES
Government of Spain
95,000,000 Pt 9.00%, 2/28/97 (A). . . . . . . . . . . . 709,459
137,000,000 11.85%, 8/30/96 (A) . . . . . . . . . . . 1,076,836
------------
Total Spain. . . . . . . . . . . . . . . . . . . . . . . . . . . 1,786,295
------------

UNITED KINGDOM--4.5%
--------------------------------------------------------------------------------
GOVERNMENT NOTE
500,000 L U.K. Exchequer 9.50%, 1/15/99 (A). . . . . 813,205
------------

UNITED STATES--39.0%
--------------------------------------------------------------------------------
CORPORATE NOTES--5.3%
500,000 US$ Healthtrust, Inc. 10.25%, 4/15/04. . . . . 527,500
500,000 Wheeling-Pittsburg Corp. 9.375%,
11/15/03. . . . . . . . . . . . . . . . . 433,750
------------
961,250
------------
GOVERNMENT NOTE--4.7%
900,000 U.S. Treasury Note 4.75%, 2/15/97. . . . . 850,077
------------

EURONOTES--28.0%
500,000 Colombia Financiera Energetica Nacional
6.625%, 12/13/96. . . . . . . . . . . . . 480,500
500,000 Grupo Industrial Durango
12.00%, 7/15/01 . . . . . . . . . . . . . 487,500
500,000 Minas Gerais 7.875%, 2/10/99 . . . . . . . 407,500
500,000 National Power Corp. (Philippines)
7.625%, 11/15/00. . . . . . . . . . . . . 440,000
500,000 Philippine Long Distance Telephone
10.625%, 6/02/04. . . . . . . . . . . . . 496,875

B-5
<PAGE>

NOVEMBER 30, 1994

SCHEDULES OF INVESTMENTS

GLOBAL INCOME FUND (CONT'D)

PRINCIPAL
AMOUNT VALUE
--------------------------------------------------------------------------------
<S> <C>

EURONOTES (CONT'D)
1,000,000 US$ Republic of Argentina
6.50%, 3/31/05 (B). . . . . . . . . . . . $ 710,625
490,000 Republic of Brazil (IDU's)
6.0625%, 1/01/01 (B). . . . . . . . . . . 414,050
500,000 Republic of the Philippines
5.25%, 12/01/17 (C) . . . . . . . . . . . 310,625
500,000 Telefonica de Argentina
11.875%, 11/01/04 . . . . . . . . . . . . 486,250
United Mexican States
500,000 5.8125%, 12/31/19 Series D (B). . . . . . 433,125
500,000 6.76563%, 12/31/19 Series B (B) . . . . . 433,125
------------
5,100,175
------------
REPURCHASE AGREEMENT--1.0%
184,000 US$ Prudential Securities, 5.65%, 12/01/94,
(proceeds at maturity: $184,029,
collateralized by $195,000 par,
$191,685 value, U.S. Treasury
Notes, 5.125%, 3/31/96) . . . . . . . . . 184,000
------------
TOTAL UNITED STATES. . . . . . . . . . . . . . . . . . . . . . . 7,095,502
------------

Total Investments (cost--$17,865,440). . . . . . . 97.2% $17,668,987
Other Assets in Excess of Other Liabilities. . . . 2.8 508,032
----- ------------
Total Net Assets . . . . . . . . . . . . . . . . . 100.0% $18,177,019
----- ------------
----- ------------

<FN>
(A) Securities segregated (full or partial) as collateral for open forward
currency contracts. The market value of such segregated securities is
$6,319,844.
(B) Represents a floating interest rate bond, subject to change on respective
semi-annually coupon dates, based on the current six month LIBOR rate plus
81.25 basis points.
(C) Coupon will pay quarterly at 5.25% until 12/94, then will "step-up" and pay
semi-annually at the following annual rates; 5.75% until 12/95, 6.25% until
12/97 and 6.50% until maturity.

</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

B-6
<PAGE>

NOVEMBER 30, 1994

STATEMENTS OF ASSETS AND LIABILITIES

Global Equity Global
Income
Fund Fund
------------- -------------
<S> <C>
<C>

ASSETS
Investments, at value (cost--$123,118,400 and $17,865,440, respectively) . . . . .
$140,516,221 $ 17,668,987
Repurchase Agreement (cost--$20,800,000 and $0, respectively). . . . . . . . . . .
20,800,000 --
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,774
467
Receivable for fund shares sold. . . . . . . . . . . . . . . . . . . . . . . . . . 266,353
2,815
Dividends receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201,011
--
Withholding taxes reclaimable. . . . . . . . . . . . . . . . . . . . . . . . . . . 146,744
7,029
Deferred organization expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 22,859
48,826
Interest receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,453
537,677
Receivable from adviser. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
8,493
Deposits for securities loaned . . . . . . . . . . . . . . . . . . . . . . . . . . 7,186,089
--
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83,662
75,301
------------ ------------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169,268,166
18,349,595
------------ ------------

LIABILITIES
Payable for investments purchased. . . . . . . . . . . . . . . . . . . . . . . . . 1,162,467
--
Payable for fund shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . 96,431
70,515
Investment advisory fee payable... . . . . . . . . . . . . . . . . . . . . . . . . 16,487
--
Withholding taxes payable... . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,929
2,928
Distribution fee payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,858
763
Administration fee payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,496
620
Net unrealized depreciation on forward currency contracts. . . . . . . . . . . . . --
34,888
Deposits for securities loaned . . . . . . . . . . . . . . . . . . . . . . . . . . 7,186,089
--
Other payables and accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . 48,794
62,862
------------ ------------
Total Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,541,551
172,576
------------ ------------

NET ASSETS
Capital stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113,533
21,411
Paid-in-surplus. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130,055,046
20,502,349
Accumulated undistributed net investment income. . . . . . . . . . . . . . . . . . 44,024
--
Accumulated undistributed net realized gain (loss) on investments. . . . . . . . . 14,611,225
(1,129,077)
Accumulated net realized loss on foreign currency transactions . . . . . . . . . . (1,391,636)
(989,174)
Distributions in excess of net realized gains. . . . . . . . . . . . . . . . . . . (110,149)
--
Net unrealized appreciation (depreciation) on investments and translation of
other assets and liabilities denominated in foreign currencies. . . . . . . . . . 17,404,572
(228,490)
------------ ------------
Total Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $160,726,615
$ 18,177,019
------------ ------------
------------ ------------

CLASS A:
Fund shares outstanding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,451,819
1,976,697
------------ ------------
Net asset value per share. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14.16 $
8.49
------------ ------------
------------ ------------
Maximum offering price per share*. . . . . . . . . . . . . . . . . . . . . . . . . $ 14.98
$ 8.75
------------ ------------
------------ ------------

CLASS B:
Fund shares outstanding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 729,671
138,425
------------ ------------
Net asset value and offering price per share . . . . . . . . . . . . . . . . . . . $ 14.07
$ 8.49
------------ ------------
------------ ------------

CLASS C:
Fund shares outstanding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171,805
25,963
------------ ------------
Net asset value and offering price per share . . . . . . . . . . . . . . . . . . . $ 14.06
$ 8.49
------------ ------------
------------ ------------

<FN>
* Sales charges decrease on purchases of $50,000 or higher for the Global
Equity Fund and $100,000 or higher for the Global Income Fund.

</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

B-7
<PAGE>

YEAR ENDED NOVEMBER 30, 1994

STATEMENTS OF OPERATIONS

Global Equity Global
Income
Fund Fund
------------- -------------
<S> <C>
<C>

INVESTMENT INCOME
Dividends (net of foreign withholding taxes of $123,756 and $0, respectively). . . $
2,432,732 $ --
Interest (net of foreign withholding taxes of $0 and $5,395, respectively) . . . . 642,446
1,613,541
------------ ------------
Total investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,075,178
1,613,541
------------ ------------

OPERATING EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment advisory fees (note 2a) . . . . . . . . . . . . . . . . . . . . . . . . 1,166,949
99,506
Distribution fees (note 2d). . . . . . . . . . . . . . . . . . . . . . . . . . . . 813,628
58,795
Administration fees (note 2c). . . . . . . . . . . . . . . . . . . . . . . . . . . 388,983
49,753
Transfer and dividend disbursing agent fees (note 1k). . . . . . . . . . . . . . . 215,541
37,527
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186,082
59,220
Registration fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76,349
78,747
Auditing, consulting and tax return preparation fees . . . . . . . . . . . . . . . 58,509
35,551
Reports and notices to shareholders. . . . . . . . . . . . . . . . . . . . . . . . 58,063
21,071
Amortization of deferred organization expenses (note 1c) . . . . . . . . . . . . . 39,179
24,356
Directors' fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,219
--
Legal fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,973
11,229
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,028
2,400
------------ ------------
Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,046,503
478,155
Less: Investment advisory fees waived and expense reimbursements (note 2a) . . .
(15,349) (139,836)
------------ ------------
Net operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,031,154
338,319
------------ ------------
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,024
1,275,222
------------ ------------

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS--NET
Net realized gain (loss) on investments. . . . . . . . . . . . . . . . . . . . . . 14,460,917
(654,971)
Net realized loss on foreign currency transactions . . . . . . . . . . . . . . . . (1,391,636)
(989,174)
Net realized gain (loss) on futures transactions . . . . . . . . . . . . . . . . . 150,308
(33,622)
------------ ------------
Net realized gain (loss) on investments and foreign currency transactions. . . .. 13,219,589
(1,677,767)

Net change in unrealized appreciation (depreciation) on investments and translation
of other assets and liabilities denominated in foreign currencies . . . . . . . . . (1,833,491)
(267,788)
------------ ------------

Net realized gain (loss) and change in unrealized appreciation (depreciation)
on investments and translation of other assets and liabilities denominated in
foreign currencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,386,098
(1,945,555)
------------ ------------

Net increase (decrease) in net assets resulting from operations. . . . . . . . . . $ 11,430,122
$ (670,333)
------------ ------------
------------ ------------

</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

B-8
<PAGE>

STATEMENTS OF CHANGES IN NET ASSETS

Global Equity Fund Global
Income Fund
Year Ended November 30, Year Ended
November 30,
--------------------------- --------------------------
1994 1993* 1994
1993
------------ ------------ ----------- -----------
<S> <C> <C> <C>
<C>

OPERATIONS
Net investment income. . . . . . . . . . . . . . . . . . . . . $ 44,024 $ 46,115 $
1,275,222 $ 1,423,757
Net realized gain (loss) on investments. . . . . . . . . . . . 14,611,225 5,952,817
(688,593) 252,205
Net realized loss on foreign currency transactions . . . . . . (1,391,636) (107,988)
(989,174) (748,097)
Net change in unrealized appreciation (depreciation) on
investments and translation of other assets and liabilities
denominated in foreign currencies . . . . . . . . . . . . . . (1,833,491) 15,536,595
(267,788) 1,082,353
------------ ------------ ----------- -----------
Net increase (decrease) in net assets resulting from
operations. . . . . . . . . . . . . . . . . . . . . . . . . . 11,430,122 21,427,539 (670,333)
2,010,218
------------ ------------ ----------- -----------

DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income -- Class A . . . . . . . . . . . . . . . -- (1,133,661)
(179,857) (378,564)
Net investment income -- Class B . . . . . . . . . . . . . . . -- -- (8,671)
(974)
Net investment income -- Class C . . . . . . . . . . . . . . . -- -- (1,531)
(372)
Net realized gain -- Class A . . . . . . . . . . . . . . . . . (4,944,320) (7,944,237) --
--
Net realized gain -- Class B . . . . . . . . . . . . . . . . . (66,298) -- --
--
Net realized gain -- Class C . . . . . . . . . . . . . . . . . (10,738) -- --
--
Distributions in excess of net realized gains -- Class A . . . -- (179,902)
-- --
Distributions in excess of net realized gains -- Class B . . . -- -- --
--
Distributions in excess of net realized gains -- Class C . . . -- -- --
--
Tax return of capital -- Class A . . . . . . . . . . . . . . . -- -- (1,026,915)
(1,158,775)
Tax return of capital -- Class B . . . . . . . . . . . . . . . -- -- (49,507)
(2,983)
Tax return of capital -- Class C . . . . . . . . . . . . . . . -- -- (8,741)
(1,139)
------------ ------------ ----------- -----------
Total dividends and distributions to shareholders. . . . . . (5,021,356) (9,257,800)
(1,275,222) (1,542,807)
------------ ------------ ----------- -----------

FUND SHARE TRANSACTIONS
CLASS A
Net proceeds from sales. . . . . . . . . . . . . . . . . . . . 30,817,260 30,701,048
2,641,672 5,441,056
Reinvestment of dividends and distributions. . . . . . . . . . 4,682,941 8,963,937
1,088,618 1,341,142
Cost of shares redeemed. . . . . . . . . . . . . . . . . . . . (29,503,784) (27,477,571)
(7,582,775) (4,259,950)
------------ ------------ ----------- -----------
Net increase (decrease) -- Class A . . . . . . . . . . . . . 5,996,417 12,187,414
(3,852,485) 2,522,248
------------ ------------ ----------- -----------

CLASS B
Net proceeds from sales. . . . . . . . . . . . . . . . . . . . 9,192,969 1,868,775
745,568 762,602
Reinvestment of dividends and distributions. . . . . . . . . . 64,143 -- 45,001
3,572
Cost of shares redeemed. . . . . . . . . . . . . . . . . . . . (659,275) (146,699)
(217,068) (61,617)
------------ ------------ ----------- -----------
Net increase -- Class B. . . . . . . . . . . . . . . . . . . 8,597,837 1,722,076 573,501
704,557
------------ ------------ ----------- -----------

CLASS C
Net proceeds from sales. . . . . . . . . . . . . . . . . . . . 2,476,331 249,911 91,369
150,714
Reinvestment of dividends and distributions. . . . . . . . . . 10,736 -- 9,804
1,510
Cost of shares redeemed. . . . . . . . . . . . . . . . . . . . (299,932) -- (15,084)
--
------------ ------------ ----------- -----------
Net increase -- Class C. . . . . . . . . . . . . . . . . . . 2,187,135 249,911 86,089
152,224
------------ ------------ ----------- -----------
Total increase (decrease) in net assets from fund share
transactions. . . . . . . . . . . . . . . . . . . . . . . 16,781,389 14,159,401 (3,192,895)
3,379,029
------------ ------------ ----------- -----------
Total increase (decrease) in net assets. . . . . . . . . . . . 23,190,155 26,329,140
(5,138,450) 3,846,440

NET ASSETS
Beginning of year. . . . . . . . . . . . . . . . . . . . . . . 137,536,460 111,207,320
23,315,469 19,469,029
------------ ------------ ----------- -----------
End of year (including undistributed net investment income
(loss) of $44,024, ($344,025), $0 and $1,341,754,
respectively) . . . . . . . . . . . . . . . . . . . . . . . . $160,726,615 $137,536,460
$18,177,019 $23,315,469
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------

<FN>
* Dividends and Distributions to Shareholders has been restated to reflect
Statement of Position 93-2. See note 1e in the notes to financial
statements.

</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

B-9
<PAGE>

NOVEMBER 30, 1994

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Quest for Value Global Funds (collectively, the "Funds") are registered
under the Investment Company Act of 1940 as diversified, open-end management
investment companies. The Quest for Value Global Equity Fund, Inc. ("Global
Equity") commenced investment operations on July 2, 1990. The Global Income Fund
("Global Income"), a series of Quest for Value Global Funds, Inc., commenced
investment operations on December 2, 1991. Quest for Value Advisors (the
"Adviser") serves as the Funds' investment adviser and administrator. Quest for
Value Distributors (the "Distributor") serves as the Funds' distributor. Both
the Adviser and Distributor are majority-owned (99%) subsidiaries of Oppenheimer
Capital. Clay Finlay, Inc. (the "Sub-Adviser") had primary responsibility for
non-U.S. investment decisions for Global Equity through December 31, 1993.
Effective January 1, 1994, the Adviser assumed responsibility for all non-U.S.
investment decisions for Global Equity.

Prior to September 1, 1993, the Funds issued only one class of shares which
were redesignated Class A shares. Subsequent to that date, the Funds were
authorized to issue Class A, Class B and Class C shares. Shares of each Class
represent an identical interest in the investment portfolio of their respective
fund and generally have the same rights, but are offered under different sales
charge and distribution fee arrangements. Furthermore, Class B shares will
automatically convert to Class A shares of the same fund eight years after their
respective purchase.

The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements:

(a) VALUATION OF INVESTMENTS

Investment securities listed on a U.S. or foreign stock exchange and
securities traded in the over-the-counter National Market System are valued at
the last reported sale price on the valuation date; if there are no such sales,
the securities are valued at their last quoted bid price. Other investments
traded over-the-counter and not part of the National Market System are valued at
the last quoted bid price. Investment debt securities (other than short-term
obligations) are valued each day by an independent pricing service (approved by
the Board of Directors) using methods which include current market quotations
from a major market maker in the securities and trader reviewed "matrix" prices.
Short-term debt securities having a remaining maturity of sixty days or less are
valued at amortized cost or amortized value, which approximates market value.
Any security or other asset for which market quotations are not readily
available is valued at its fair value as determined under procedures established
by the Funds' Board of Directors. Investments in countries in which the Funds
may invest may involve certain considerations and risks not typically associated
with domestic investments as a result of, among others, the possibility of
future political and economic developments and the level of governmental
supervision and regulation of foreign securities markets.

(b) FEDERAL INCOME TAXES

It is the Funds' policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of their taxable income to their shareholders; accordingly, no
Federal income tax provision is required.

Costs incurred by Global Equity and Global Income in connection with their
organization approximated $194,000 and $122,000, respectively. These costs have
been deferred and are being amortized to expense on a straight line basis over
sixty months from commencement of the Funds' operations.

(d) INVESTMENT TRANSACTIONS AND OTHER INCOME

Investment transactions are accounted for on the trade date. In determining
the gain or loss from the sale of investments, the cost of investments sold is
determined on the basis of identified cost. Dividend income and other
distributions are recorded on the ex-dividend date, except certain dividends or
other distributions from foreign securities which are recorded as soon as the
information is available after the ex-dividend date. Interest income is accrued
as earned. Discounts on debt securities purchased are accreted to interest
income over the lives of the respective securities.

B-10
<PAGE>

(e) DIVIDENDS AND DISTRIBUTIONS

Each fund records dividends and distributions to its shareholders on the
ex-dividend date.The following table summarizes the Funds' income dividend and
capital gain declaration policy:

INCOME SHORT-TERM LONG-TERM
DIVIDENDS CAPITAL GAINS CAPITAL GAINS
--------- ------------- -------------
<S> <C> <C> <C>
Global Equity. . . . annually annually annually
Global Income. . . . daily* annually annually

<FN>
* paid monthly.
</TABLE>

During the fiscal year ended November 30, 1994, the Funds' adopted
Statement of Position 93-2: Determination, Disclosure and Financial Statement
Presentation of Income, Capital Gain and Return of Capital Distributions by
Investment Companies. The amount of dividends and distributions from net
investment income, net realized foreign currency gains and net realized capital
gains are determined in accordance with Federal income tax regulations, which
may differ from generally accepted accounting principles. These "book-tax"
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within the capital accounts based on their Federal tax-basis treatment;
temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income, net realized foreign currency
gains and net realized capital gains for financial reporting purposes but not
for tax purposes are reported as dividends in excess of net investment income,
dividends in excess of net realized foreign currency gains or distributions in
excess of net realized capital gains, respectively. To the extent distributions
exceed current and accumulated earnings and profits for Federal income tax
purposes, they are reported as distributions of paid-in-surplus or tax return of
capital. Accordingly, permanent book-tax differences relating to shareholder
distributions have been reclassified to paid-in-surplus. Net investment
income(loss), net realized foreign currency gain(loss), net realized gain(loss)
and net assets were not affected by this change. The following table discloses
the cumulative effect of such differences reclassified from accumulated
undistributed net investment income(loss), accumulated undistributed net
realized foreign currency gain(loss) and accumulated undistributed net realized
gain(loss) on investments to paid-in-surplus:

ACCUMULATED ACCUMULATED
ACCUMULATED
UNDISTRIBUTED NET REALIZED
UNDISTRIBUTED PAID
NET INVESTMENT FOREIGN CURRENCY NET
REALIZED IN
INCOME LOSS GAIN (LOSS)
SURPLUS
-------------- ---------------- ------------- -------
<S> <C> <C> <C>
<C>

Global Equity. . . . . . . . . $344,025 $397,015 ($83,763)
($657,277)
Global Income. . . . . . . . . (1,341,754) 1,310,676 --
31,078

</TABLE>

(f) FOREIGN CURRENCY TRANSLATION

The books and records of the Funds are maintained in U.S. dollars as
follows: (1) the foreign currency market value of investment securities, other
assets and liabilities and forward contracts stated in foreign currencies are
translated at the exchange rates at the end of the period; and (2) purchases,
sales, income and expenses are translated at the rate of exchange prevailing on
the respective dates of such transactions. The resultant exchange gains and
losses are included in the Funds' Statements of Operations. Since the net assets
of the Funds are presented at the foreign exchange rates and market prices at
the close of the period, the Funds do not isolate that portion of the results of
operations arising as a result of changes in the exchange rates from
fluctuations arising from changes in the market prices of securities.

(g) FORWARD CURRENCY CONTRACTS

As part of its investment program, the Funds may utilize forward currency
contracts for hedging purposes. The use of these contracts involves, to varying
degrees, elements of market risk. Risks arise from the possible movements in
foreign exchange rates and security values underlying these instruments. In
addition, credit risk may arise from the potential inability of counterparties
to meet the terms of their contracts. Forward currency contracts are recorded at
market value. Realized gains and losses arising from such transactions are
included in net realized gain or loss on foreign currency transactions in the
results of operations. At November 30, 1994, there were no forward currency
contracts outstanding for Global Equity. Outstanding contracts at November 30,
1994 for Global Income are as follows:

B-11
<PAGE>

NOVEMBER 30, 1994

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Contract to
Settlement -------------------------------------------------- Unrealized
Date Deliver Receive Gain (Loss)
---------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C>
<C>

12/09/94 DM 1,000,000 US$ 644,870 US$
7,249
12/14/94 DM 1,300,000 US$ 847,126 US$
18,135
01/09/95 CD$ 700,000 US$ 515,806 US$
6,585
01/27/95 DM 1,500,000 US$ 944,912 US$
(4,170)
01/27/95 US$ 653,240 DM 1,000,000 US$
(23,299)
02/06/95 DM 1,000,000 US$ 658,892 US$
20,450
02/17/95 Ffr 2,900,000 US$ 546,345 US$
6,638
02/27/95 DM 460,000 US$ 296,315 US$
2,449
02/28/95 ESP 90,000,000 US$ 685,767 US$
714
02/28/95 Ffr 4,000,000 US$ 746,129 US$
1,555
04/20/95 DM 1,140,000 US$ 660,985 US$
(8,455)
04/20/95 US$ 642,550 DM 1,000,000 US$
(62,739)
--------------------
US$ (34,888)
--------------------
--------------------

</TABLE>

Net unrealized depreciation of $34,888 on these contracts at November 30,
1994 is included in the accompanying financial statements.

(h) FUTURES ACCOUNTING POLICIES

Futures contracts are agreements between two parties to buy and sell a
financial instrument at a set price on a future date. Upon entering into such a
contract, a fund is required to pledge to the broker an amount of cash or U.S.
Government securities equal to the minimum "initial margin" requirements of the
exchange. Pursuant to the contract, a fund agrees to receive from or pay to the
broker an amount of cash equal to the daily fluctuation in the value of the
contract. Such receipts or payments are known as "variation margin" and are
recorded by the fund as unrealized appreciation or depreciation. When a contract
is closed, the fund records a realized gain or loss equal to the difference
between the value of the contract at the time it was opened and the value at the
time it was closed and reverses any unrealized appreciation or depreciation
previously recorded.

(i) REPURCHASE AGREEMENTS

The Funds' custodian takes possession of the collateral pledged for
investments in repurchase agreements. The underlying collateral is valued daily
on a mark-to-market basis to ensure that the value, including accrued interest,
is at least equal to the repurchase price. In the event of default of the
obligor to repurchase, the Funds have the right to liquidate the collateral and
apply the proceeds in satisfaction of the obligation. Under certain
circumstances, in the event of default or bankruptcy by the other party to the
agreement, realization and/or retention of the collateral or proceeds may be
subject to legal proceedings.

(j) SECURITY LENDING PROCEDURES

Global Equity periodically lends securities through a lending program run
by its custodian, State Street Bank and Trust Company, for its participating
clients. Under the program, the bank makes available to select qualified
brokerage firms or other borrowing institutions the use of the participants
securities for a period of time. Security loans are collateralized with U.S.
Government securities or cash equal to at least 105% of the market value of the
securities at the time of the loan. The securities loaned are marked-to-market
daily and collateral is adjusted daily to reflect any fluctuations in value.

Global Equity earns income from the borrower which is generally the
difference between the interest earned on the collateral and the rebate paid to
the borrower. Global Equity pays State Street Bank and Trust Company 35% of the
net interest earned as a fee for administering the security lending program. For
the year ended November 30, 1994, Global Equity earned $2,247 from security
lending. At November 30, 1994, Global Equity had the following securities on
loan:
B-12
<PAGE>

MARKET VALUE MARKET
VALUE
SECURITY SHARES OF SHARES COLLATERAL
OF COLLATERAL
----------------------------- -------- ------------ --------------- -------------
<S> <C> <C> <C> <C>

Linde Ag (Germany) 1,960 $1,119,572 U.S. Dollars
$1,174,530
Mitsubishi Motors (Japan) 142,000 1,345,474 U.S. Dollars 1,420,000
Nippondenso Co., Ltd. (Japan) 30,000 612,802 U.S. Dollars
645,000
Scheinder SA (France) 14,994 1,081,352 U.S. Dollars 1,135,796
Telecom Italia (Italy) 676,200 1,401,516 U.S. Dollars 1,521,450
Total SA (France) 19,677 1,232,556 U.S. Treasuries 1,289,313
---------- ----------
$6,793,272 $7,186,089
---------- ----------
---------- ----------

</TABLE>

(k) ALLOCATION OF EXPENSES

Expenses specifically identifiable to a particular fund or class are borne
by that fund or class. Other expenses are allocated to each fund or class based
on its net assets in relation to the total net assets of all applicable funds or
classes or on another reasonable basis. For the year ended November 30, 1994,
transfer and dividend disbursing agent fees accrued to classes A, B and C were
$198,935, $12,410 and $4,196, respectively, for Global Equity, and $34,699,
$1,941 and $887, respectively, for Global Income.

2. INVESTMENT ADVISORY FEE, SUB-ADVISORY FEE, ADMINISTRATION FEE AND
OTHER
TRANSACTIONS WITH AFFILIATES

(a) The investment advisory fee is payable monthly to the Adviser and is
computed as a percentage of each fund's net assets as of the close of business
each day at the following annual rates: .75% for Global Equity and .50% for
Global Income. For the year ended November 30, 1994, the Adviser voluntarily
waived $15,349 and $99,506 in investment advisory fees for Global Equity and
Global Income, respectively. The Adviser also reimbursed Global Income $40,330
in other operating expenses. Effective January 7, 1994, the Adviser discontinued
its voluntary waiver of investment advisory fees for Global Equity.

(b) The Adviser paid the Sub-Adviser fees through December 31, 1993 at an
annual rate of .375% of Global Equity's average net assets.

(c) The administration fees are payable monthly to the Adviser and are
computed on each fund's average daily net assets at the annual rate of .25%.

(d) The Funds have adopted a Plan and Agreement of Distribution (the
"Plan") pursuant to which they are permitted to compensate the Distributor in
connection with the distribution of fund shares. Under the Plan, the Distributor
has entered into agreements with securities dealers and other financial
institutions and organizations to obtain various sales-related services in
rendering distribution assistance. To compensate the Distributor for the
services it and other dealers under the Plan provide and for the expenses they
bear under the Plan, the Funds pay the Distributor compensation, accrued daily
and payable monthly, on the daily net assets for Class A shares at the following
annual rates: .25% for Global Equity and .05% for Global Income. The Funds'
Class A shares also pay a service fee at an annual rate of .25%. Although Global
Income's Plan for Class A shares authorizes it to pay a maximum service fee of
.25% and a distribution fee of .05%, the Board of Directors has set a maximum
.25% total fee under the Plan. Compensation for Class B and Class C shares of
each fund is at an annual rate of .75% of average daily net assets. Each fund's
Class B and Class C shares also pay a service fee at the annual rate of .25% of
average daily net assets. Distribution and service fees may be paid by the
Distributor to broker-dealers or others for providing personal service,
maintenance of accounts and ongoing sales or shareholder support functions in
connection with the distribution of fund shares. While payments under the plan
may not exceed the stated percentage of average daily net assets on an annual
basis, the payments are not limited to the amounts actually paid or expenses
actually incurred by the Distributor. For the year ended November 30, 1994,
distribution and service fees charged to classes A, B and C were $742,304,
$59,822 and $11,502, respectively, for Global Equity, and $46,739, $10,182 and
$1,874, respectively, for Global Income.

B-13
<PAGE>

NOVEMBER 30, 1994

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(e) Total brokerage commissions paid by Global Equity during the year
ended November 30, 1994 amounted to $566,615, of which $16,402 was paid to
Oppenheimer & Co., Inc., an affiliate of the Adviser.

(f) Oppenheimer & Co., Inc. has informed the Funds that it received
approximately $252,000 and $24,000, from Global Equity and Global Income,
respectively, in connection with the sale of Class A shares for the year ended
November 30, 1994.

(g) The Distributor has informed the funds that it received contingent
deferred sales charges on the redemption of Class B and Class C shares of
approximately $7,300 and $600 for Global Equity and Global Income, respectively,
for the year ended November 30, 1994.

3. FUND SHARE TRANSACTIONS

The following table summarizes the fund share activity for the two years
ended November 30, 1994:

GLOBAL EQUITY FUND
GLOBAL INCOME FUND
YEAR ENDED NOVEMBER 30,
YEAR ENDED NOVEMBER 30,
--------------------------- --------------------------
1994 1993* 1994
1993
------------ ------------ ----------- -----------
<S> <C> <C> <C>
<C>

CLASS A
Issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,167,814 2,374,953 290,147
585,048
Dividends and distributions reinvested . . . . . . . . . . . . 344,081 758,804
123,568 144,981
Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,079,717) (2,156,199) (837,949)
(458,116)
------------ ------------ ----------- -----------
Net increase (decrease)--Class A . . . . . . . . . . . . . . 432,178 977,558
(424,234) 271,913
------------ ------------ ----------- -----------

CLASS B *
Issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . 647,583 134,395 82,174
80,836
Dividends and distributions reinvested . . . . . . . . . . . . 4,716 -- 5,164
381
Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . (46,590) (10,433) (23,568)
(6,562)
------------ ------------ ----------- -----------
Net increase--Class B. . . . . . . . . . . . . . . . . . . . 605,709 123,962 63,770
74,655
------------ ------------ ----------- -----------

CLASS C *
Issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174,051 18,037 10,411
15,993
Dividends and distributions reinvested . . . . . . . . . . . . 789 -- 1,118
161
Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . (21,072) -- (1,720)
--
------------ ------------ ----------- -----------
Net increase--Class C. . . . . . . . . . . . . . . . . . . . 153,768 18,037 9,809
16,154
------------ ------------ ----------- -----------
Total net increase (decrease). . . . . . . . . . . . . . . 1,191,655 1,119,557
(350,655) 362,722
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------

<FN>
* Initial offering September 2, 1993.

</TABLE>

B-14
<PAGE>

4. DIVIDENDS AND DISTRIBUTIONS

The following table summarizes the per share dividends and distributions
made for the two years ended November 30, 1994:

NET INVESTMENT INCOME:
Class A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- $0.119 $0.085
$0.168
Class B *. . . . . . . . . . . . . . . . . . . . . . . . . . . . -- -- 0.075
0.030
Class C *. . . . . . . . . . . . . . . . . . . . . . . . . . . . -- -- 0.072
0.031

NET REALIZED GAINS:
Class A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0.494 0.900 --
--
Class B *. . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.494 -- --
--
Class C *. . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.494 -- --
--

TAX RETURN OF CAPITAL:
Class A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- -- 0.485
0.513
Class B *. . . . . . . . . . . . . . . . . . . . . . . . . . . . -- -- 0.426
0.091
Class C *. . . . . . . . . . . . . . . . . . . . . . . . . . . . -- -- 0.411
0.095

<FN>
* Initial offering September 2, 1993.

</TABLE>

5. PURCHASES AND SALES OF SECURITIES

For the year ended November 30, 1994, purchases and sales of investment
securities, other than short-term securities, were as follows:

PURCHASES SALES
----------- ------------
<S> <C> <C>

Global Equity. . . . . . . . . . . $97,066,487 $98,504,257
Global Income. . . . . . . . . . . 26,188,485 28,990,912

</TABLE>

6. UNREALIZED APPRECIATION (DEPRECIATION) AND COST OF INVESTMENTS FOR
FEDERAL
INCOME TAX PURPOSES

At November 30, 1994, the composition of unrealized appreciation
(depreciation) of investment securities and the cost of investments for Federal
income tax purposes were as follows:

APPRECIATION (DEPRECIATION)
NET TAX COST
------------ -------------- ----------- ------------
<S> <C> <C> <C>
<C>

Global Equity. . . . . . . . . . . . . . . . . . . . . $20,499,912 ($3,260,543)
$17,239,369 $144,076,852
Global Income. . . . . . . . . . . . . . . . . . . . . 178,922 (375,375) (196,453)
17,865,440

</TABLE>

7. AUTHORIZED FUND SHARES AND PAR VALUE PER SHARE

AUTHORIZED PAR VALUE
FUND SHARES PER SHARE
----------- -----------
<S> <C> <C>

Global Equity. . . . . . . . . . . 100,000,000 $0.01
Global Income. . . . . . . . . . . 100,000,000 0.01

</TABLE>

B-15
<PAGE>

NOVEMBER 30, 1994

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

8. CAPITAL LOSS CARRYFORWARDS

For the year ended November 30, 1994, Global Income had net capital loss
carryfowards of $1,077,004, of which $204,539, $214,944 and $657,521 will be
available to offset future net capital gains realized through fiscal years
ending 1998, 2001 and 2002, respectively, to the extent provided by regulations.
Capital and currency losses incurred after October 31, 1994 are deemed to arise
on the first business day of the following tax year. Accordingly, for the fiscal
year ended November 30, 1994, Global Income incurred and elected to defer
$52,073 and $127,100 in net capital and net currency losses, respectively.

9. SUBSEQUENT EVENTS

On December 5, 1994, Global Equity declared net realized short-term and
long-term capital gain distributions of $0.3296 and $0.8985, respectively, per
share, for each class, payable December 5, 1994 to shareholders of record on the
opening of business December 5, 1994.

B-16
<PAGE>

FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

GLOBAL EQUITY FUND

INCOME FROM
INVESTMENT OPERATIONS
--------------------------------------------------
NET REALIZED
NET ASSET NET AND
VALUE, INVESTMENT UNREALIZED
TOTAL FROM
BEGINNING INCOME GAIN (LOSS)
INVESTMENT
OF PERIOD (LOSS) ON INVESTMENTS
OPERATIONS
<S> <C> <C> <C>
<C>

CLASS A
YEAR ENDED
NOVEMBER 30,
1994 $13.54 $0.01 $1.10 $1.11
1993 12.30 -- 2.26 2.26
1992 11.25 0.12 0.93 1.05
1991 10.57 (0.04) 0.85 0.81

JULY 2, 1990 (3)
TO NOV. 30, 1990 12.05 (4) 0.05 (1.53)
(1.48)

CLASS B
YEAR ENDED
NOV. 30, 1994 13.52 (0.06) 1.10 1.04

SEPT. 2, 1993 (5)
TO NOV. 30, 1993 13.75 (4) (0.02) (0.21)
(0.23)

CLASS C
YEAR ENDED
NOV. 30, 1994 13.52 (0.08) 1.11 1.03
SEPT. 2, 1993 (5)
TO NOV. 30, 1993 13.75 (4) (0.02) (0.21)
(0.23)

DIVIDENDS AND DISTRIBUTIONS
--------------------------------------------------------
DIVIDENDS TO DISTRIBUTIONS TO
SHAREHOLDERS SHAREHOLDERS TAX
TOTAL
FROM NET FROM NET RETURN
DIVIDENDS
INVESTMENT REALIZED GAIN OF
AND
INCOME ON INVESTMENTS CAPITAL
DISTRIBUTIONS
<S> <C> <C> <C>
<C>

CLASS A
YEAR ENDED
NOVEMBER 30,
1994 -- ($0.49) -- ($0.49)
1993 ($0.12) (0.90) -- (1.02)
1992 -- -- -- --
1991 (0.05) (0.08) -- (0.13)

JULY 2, 1990 (3)
TO NOV. 30, 1990 -- -- -- --

CLASS B
YEAR ENDED
NOV. 30, 1994 -- (0.49) -- (0.49)

SEPT. 2, 1993 (5)
TO NOV. 30, 1993 -- -- -- --

CLASS C
YEAR ENDED
NOV. 30, 1994 -- (0.49) -- (0.49)
SEPT. 2, 1993 (5)
TO NOV. 30, 1993 -- -- -- --

RATIOS
------------------------------------------
RATIO OF NET RATIO OF
NET
NET ASSET NET ASSETS OPERATING
INVESTMENT
VALUE, END OF EXPENSES
INCOME (LOSS) PORTFOLIO
END OF TOTAL PERIOD TO AVERAGE
TO AVERAGE TURNOVER
PERIOD RETURN* (000'S) NET ASSETS
NET ASSETS RATE
<S> <C> <C> <C> <C>
<C> <C>

CLASS A
YEAR ENDED
NOVEMBER 30,
1994 $14.16 8.37% $148,044 1.92%(1,2)
0.05%(1,2) 70%
1993 13.54 19.72% 135,616 1.76%(2)
0.04%(2) 46%
1992 12.30 9.33% 111,207 1.76%(2) 0.72%(2)
62%
1991 11.25 7.72% 46,937 2.09% (0.27%)
41%

JULY 2, 1990 (3)
TO NOV. 30, 1990 10.57 (12.28%) 58,087 2.11%(6)
0.92%(6) 2%

CLASS B
YEAR ENDED
NOV. 30, 1994 14.07 7.84% 10,268 2.50%(1,2)
(0.44%)(1,2) 70%

SEPT. 2, 1993 (5)
TO NOV. 30, 1993 13.52 (1.67%) 1,676 2.26%(2,6)
(0.76%)(2,6) 46%

CLASS C
YEAR ENDED
NOV. 30, 1994 14.06 7.77% 2,415 2.66%(1,2)
(0.59%)(1,2) 70%
SEPT. 2, 1993 (5)
TO NOV. 30, 1993 13.52 (1.67%) 244 2.26%(2,6)
(0.69%)(2,6) 46%

<FN>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED NOVEMBER 30, 1994 FOR CLASS A,
CLASS
B AND CLASS C WERE $148,460,823, $5,982,186 AND $1,150,224, RESPECTIVELY.
(2) DURING THE PERIODS PRESENTED ABOVE, THE ADVISER VOLUNTARILY WAIVED
A
PORTION OF ITS FEES. IF SUCH WAIVERS HAD NOT BEEN IN EFFECT, THE RATIOS
OF
NET OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET
INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS FOR CLASS A WOULD
HAVE BEEN
1.93% AND 0.04%, RESPECTIVELY, FOR THE YEAR ENDED NOVEMBER 30, 1994,
1.91%
AND (0.11%), RESPECTIVELY, FOR THE YEAR ENDED NOVEMBER 30, 1993 AND
1.84%
AND 0.64%, RESPECTIVELY, FOR THE YEAR ENDED NOVEMBER 30, 1992. THE
RATIOS
OF NET OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF
NET
INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS WOULD HAVE BEEN
2.51% AND
(0.45%), RESPECTIVELY, FOR CLASS B AND 2.66% AND (0.59%), RESPECTIVELY,
FOR
CLASS C, FOR THE YEAR ENDED NOVEMBER 30, 1994 AND 2.32% AND (0.82%),
ANNUALIZED, RESPECTIVELY, FOR CLASS B AND 2.35% AND (0.78%), ANNUAL-
IZED,
RESPECTIVELY, FOR CLASS C, FOR THE PERIOD SEPTEMBER 2, 1993 (INITIAL
OFFERING) TO NOVEMBER 30, 1993.
(3) COMMENCEMENT OF OPERATIONS.
(4) INITIAL OFFERING PRICE.
(5) INITIAL OFFERING OF CLASS B AND CLASS C SHARES, RESPECTIVELY.
(6) ANNUALIZED.
---------------
* ASSUMES REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS, BUT DOES
NOT
REFLECT DEDUCTIONS FOR SALES CHARGES. AGGREGATE (NOT ANNUALIZED)
TOTAL
RETURN IS SHOWN FOR ANY PERIOD SHORTER THAN ONE YEAR.

</TABLE>

B-17
<PAGE>

FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
(CONTINUED)

GLOBAL INCOME FUND

CLASS A
YEAR ENDED
NOVEMBER 30,
1994 $9.36 $0.57 ($0.87) ($0.30)
1993 9.14 0.63 0.27 0.90
DEC. 2, 1991(3)
TO NOV. 30, 1992 10.00(4) 0.77 (1.00)
(0.23)
CLASS B
YEAR ENDED
NOV. 30, 1994 9.36 0.50 (0.87) (0.37)
SEPT. 2, 1993 (5)
TO NOV. 30, 1993 9.42(4) 0.12 (0.06)
0.06
CLASS C
YEAR ENDED
NOV. 30, 1994 9.36 0.48 (0.87) (0.39)
SEPT. 2, 1993 (5)
TO NOV. 30, 1993 9.42(4) 0.13 (0.06)
0.07

CLASS A
YEAR ENDED
NOVEMBER 30,
1994 ($0.08) -- ($0.49) ($0.57)
1993 (0.17) -- (0.51) (0.68)
DEC. 2, 1991(3)
TO NOV. 30, 1992 (0.63) -- -- (0.63)
CLASS B
YEAR ENDED
NOV. 30, 1994 (0.07) -- (0.43) (0.50)
SEPT. 2, 1993 (5)
TO NOV. 30, 1993 (0.03) -- (0.09)
(0.12)
CLASS C
YEAR ENDED
NOV. 30, 1994 (0.07) -- (0.41) (0.48)
SEPT. 2, 1993 (5)
TO NOV. 30, 1993 (0.03) -- (0.10)
(0.13)

CLASS A
YEAR ENDED
NOVEMBER 30,
1994 $8.49 (3.24%) $16,781 1.65%(1,2)
6.45%(1,2) 144%
1993 9.36 10.20% 22,465 1.70%(2) 6.73%(2)
114%
DEC. 2, 1991(3)
TO NOV. 30, 1992 9.14 (2.60%) 19,469 1.84%(2,6)
7.93%(2,6) 360%
CLASS B
YEAR ENDED
NOV. 30, 1994 8.49 (3.99%) 1,176 2.41%(1,2)
5.71%(1,2) 144%
SEPT. 2, 1993 (5)
TO NOV. 30, 1993 9.36 0.65% 699 2.45%(2,6)
4.38%(2,6) 114%
CLASS C
YEAR ENDED
NOV. 30, 1994 8.49 (4.20%) 220 2.70%(1,2)
5.48%(1,2) 144%
SEPT. 2, 1993 (5)
TO NOV. 30, 1993 9.36 0.71% 151 2.45%(2,6)
5.16%(2,6) 114%

<FN>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED NOVEMBER 30, 1994 FOR CLASS A,
CLASS
B AND CLASS C WERE $18,695,485, $1,018,251 AND $187,397, RESPECTIVELY.
(2) DURING THE PERIODS PRESENTED ABOVE, THE ADVISER VOLUNTARILY WAIVED
ALL OR A
PORTION OF ITS FEES AND REIMBURSED THE FUND FOR A PORTION OF ITS
OPERATING
EXPENSES. IF SUCH WAIVERS AND REIMBURSMENTS HAD NOT BEEN IN EFFECT,
THE
RATIOS OF NET OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE
RATIOS OF
NET INVESTMENT INCOME TO AVERAGE NET ASSETS FOR CLASS A WOULD HAVE
BEEN
2.35% AND 5.75%, RESPECTIVELY, FOR THE YEAR ENDED NOVEMBER 30, 1994,
2.09%
AND 6.34%, RESPECTIVELY, FOR THE YEAR ENDED NOVEMBER 30, 1993 AND
1.88% AND
7.89%, ANNUALIZED, RESPECTIVELY, FOR THE PERIOD DECEMBER 2, 1991
(COMMENCEMENT OF OPERATIONS) TO NOVEMBER 30, 1992. THE RATIOS OF NET
OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET
INVESTMENT
INCOME TO AVERAGE NET ASSETS WOULD HAVE BEEN 3.12% AND 5.00%,
RESPECTIVELY,
FOR CLASS B AND 3.39% AND 4.79%, RESPECTIVELY, FOR CLASS C, FOR YEAR
ENDED
NOVEMBER 30, 1994 AND 2.88% AND 3.95%, ANNUALIZED, RESPECTIVELY, FOR
CLASS
B AND 2.84% AND 4.77%, ANNUALIZED, RESPECTIVELY, FOR CLASS C, FOR THE
PERIOD SEPTEMBER 2, 1993 (INITIAL OFFERING) TO NOVEMBER 30, 1993.
(3) COMMENCEMENT OF OPERATIONS.
(4) INITIAL OFFERING PRICE.
(5) INITIAL OFFERING OF CLASS B AND CLASS C SHARES, RESPECTIVELY.
(6) ANNUALIZED.
---------------
* ASSUMES REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS, BUT DOES
NOT
REFLECT DEDUCTIONS FOR SALES CHARGES. AGGREGATE (NOT ANNUALIZED)
TOTAL
RETURN IS SHOWN FOR ANY PERIOD SHORTER THAN ONE YEAR.

</TABLE>

B-18
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders and Board of Directors
of Quest for Value Global Equity Fund, Inc.:

In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Quest for Value Global Equity Fund,
Inc. (the "Fund") at November 30, 1994, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the four years in the
period then ended and for the period July 2, 1990 (commencement of operations)
to November 30, 1990, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsiblilty of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at November 30, 1994 by correspondence with the
custodian and brokers and the application of alternative auditing procedures
where confirmations from brokers were not received, provide a reasonable basis
for the opinion expressed above.

New York, New York
January 25, 1995

To the Shareholders and Board of Directors
of Global Income Fund:

In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Global Income Fund (a series of
Quest for Value Global Funds, Inc. hereafter referred to as the "Fund") at
November 30, 1994, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended and
the financial highlights for each of the two years in the period then ended and
for the period December 2, 1991 (commencement of operations) to November 30,
1992, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsiblilty of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
November 30, 1994 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.

PRICE WATERHOUSE LLP
1177 Avenue of Americas
New York, New York
January 25, 1995

B-19
<PAGE>

TAX INFORMATION

We are required by Subchapter M of the Internal Revenue Code of 1986, as
amended, to advise you within 60 days of the Funds' fiscal year end
(November 30, 1994) as to the Federal tax status of dividends and distributions
received by shareholders during such fiscal year. Accordingly, we are advising
you that during the fiscal year ended November 30, 1994, the Funds paid per
share dividends and distributions to shareholders as follows:

TAXABLE AS ORDINARY INCOME
--------------------------------- TAX
NET INVESTMENT SHORT-TERM
LONG-TERM RETURN OF
INCOME CAPITAL GAINS CAPITAL
GAINS CAPITAL
-------------- ------------- ------------- ---------
<S> <C> <C> <C>
<C>

GLOBAL EQUITY FUND
Class A. . . . . . . . . . . . . . -- $0.0707 $0.4228
--
Class B. . . . . . . . . . . . . . -- 0.0707 0.4228
--
Class C. . . . . . . . . . . . . . -- 0.0707 0.4228
--

GLOBAL INCOME FUND
Class A. . . . . . . . . . . . . . $0.0850 -- --
$0.4853
Class B. . . . . . . . . . . . . . 0.0747 -- --
0.4264
Class C. . . . . . . . . . . . . . 0.0719 -- --
0.4106

</TABLE>

Since each fund's fiscal year is not the calendar year, another
notification will be sent in respect to calendar year 1994. In January 1995, you
will be advised on IRS Form 1099 DIV as to the Federal tax status of the
dividends and distributions received by you in calendar 1994. The amounts that
will be reported, will be the amounts to use on your 1994 Federal income tax
return and probably will differ from the amounts which we must report for each
fund's fiscal year ended November 30, 1994. Shareholders are advised to consult
with their own tax advisers as to the Federal, state and local tax status of
each funds' income and realized gain distributions received.

B-20

(Letterhead of Price Waterhouse LLP)

The parties shall have received a favorable opinion from Price Waterhouse
LLP (based on such representations as such firm shall reasonably request),
addressed to Oppenheimer Fund and Quest Portfolio, which opinion may be
relied upon by the shareholders of Oppenheimer Fund and Quest Portfolio,
substantially to the effect that, for federal income tax purposes:

(1) The transfer of substantially all of Quest Portfolio's assets in
exchange for Oppenheimer Fund Shares and the assumption by
Oppenheimer Fund of certain identified liabilities of Quest Portfolio
followed by the distribution by Quest Portfolio of Oppenheimer Fund
Shares to the Quest Portfolio Shareholders in exchange for their
Quest Portfolio Shares will constitute a "reorganization" within the
meaning of Section 368(a)(1) of the Code and Quest Portfolio and
Oppenheimer Fund will each be a "party to the reorganization" within
the meaning of Section 368(b) of the Code;

(2) Pursuant to Section 1032 of the Code, no gain or loss will be
recognized by Oppenheimer Fund upon the receipt of the assets of
Quest Portfolio solely in exchange for Oppenheimer Fund Shares and
the assumption by Oppenheimer Fund of the identified liabilities of
Quest Portfolio;

(3) Pursuant to Section 361(a) of the Code, no gain or loss will be
recognized by Quest Portfolio upon the transfer of the assets of
Quest Portfolio to Oppenheimer Fund in exchange for Oppenheimer Fund
Shares and the assumption by Oppenheimer Fund of the identified
liabilities of Quest Portfolio, or upon the distribution of
Oppenheimer Fund Shares to the Quest Portfolio Shareholders in
exchange for the Quest Portfolio shares;

(4) Pursuant to Section 354(a) of the Code, no gain or loss will be
recognized by the Quest Portfolio Shareholders upon the exchange of
the Quest Portfolio Shares for the Oppenheimer Fund Shares;

(5) Pursuant to Section 358 of the Code, the aggregate tax basis for
Oppenheimer Fund Shares received by each Quest Portfolio Shareholder
pursuant to the Reorganization will be the same as the aggregate tax
basis of the Quest Portfolio Shares held by each such Quest Portfolio
Shareholder immediately prior to the Reorganization;

(6) Pursuant to Section 1223 of the Code, the holding period of
Oppenheimer Fund Shares to be received by each Quest Portfolio
Shareholder will include the period during which the Quest Portfolio
Shares surrendered in exchange therefor were held (provided such
Quest Portfolio Shares were held as capital assets on the date of the
Reorganization);

(7) Pursuant to Section 362(b) of the Code, the tax basis of the assets
of Quest Portfolio acquired by Oppenheimer Fund will be the same as
the tax basis of such assets to Quest Portfolio immediately prior to
the Reorganization;

(8) Pursuant to Section 1223 of the Code, the holding period of the
assets of Quest Portfolio in the hands of Oppenheimer Fund will
include the period during which those assets were held by Quest
Portfolio; and

(9) Oppenheimer Fund will succeed to and take into account the items of
Quest Portfolio described in Section 381(c) of the Code, including
the earnings and profits, or deficit in earnings and profits, of
Quest Portfolio as of the date of the transaction. Oppenheimer Fund
will take those items into account subject to the conditions and
limitations specified in Sections 381, 382, 383 and 384 of the Code
and applicable regulations thereunder.

Rule 24f-2 Notice for Oppenheimer Strategic Funds Trust
3410 S. Galena Street, Denver, Colorado 80231
(Registration No. 33-28598, File No. 811-5724)

NOTICE IS HEREBY GIVEN that Oppenheimer Strategic Funds Trust having
previously filed in its registration statement a declaration that an
indefinite number of its shares of beneficial interest were being
registered pursuant to Rule 24f-2 of the Investment Company Act of 1940,
now elects to continue such indefinite registration.

(i) This Notice is being filed for the fiscal year ended September 30,
1994.

(ii) No shares which had been registered other than pursuant to this
Rule remained unsold at the beginning of the above fiscal year.

(iii) No shares were registered other than pursuant to this Rule during
the above fiscal year.

(iv) The number of shares sold during the above fiscal year was as
follows(1):

Oppenheimer Strategic Income Fund: Class A 236,638,548
Class B 211,514,941

Oppenheimer Strategic Diversified Income Fund*: Class C 9,579,653

(v) Shares sold during the above fiscal year in reliance upon
registration pursuant to this Rule were as follows:

Oppenheimer Strategic Income Fund: Class A 236,638,548
Class B 211,514,941

Oppenheimer Strategic Diversified Income Fund*: Class C 9,579,653

Pursuant to the requirements of the Investment Company Act of 1940,
the undersigned registrant has caused this Notice to be signed on its
behalf this 28th day of November, 1994.

Oppenheimer Strategic Funds Trust

By:/s/ Andrew J. Donohue
Andrew J. Donohue, Vice President
(1)The calculation of the aggregate sales price is made pursuant to Rule
24f-2 of the Investment Company Act of 1940 as follows:

<TABLE>
<CAPTION> Value of
Value of Shares Filing
Shares Sold Redeemed Net Fee
<S> <C> <C> <C> <C>

Strategic Income Fund
Class A $1,229,167,439$(747,309,868) $481,857,571 $166,158
Class B $1,074,296,304$(123,334,817) $950,961,487 $327,918
Strategic Diversified Income Fund
lass C $ 46,855,355 $( 3,742,571) $ 43,112,784 $ 14,866
$508,942
</TABLE>

*For the period from February 1, 1994 (inception of offering) to September
30, 1994.
SEC/230

<PAGE>

Myer, Swanson & Adams, P.C.
Attorneys At Law
The Colorado State Bank Building
Rendle Myer 1600 Broadway - Suite 1850 of counsel
Allan B. Adams Denver, Colorado 80202-4918 Robert Swanson
Robert K. Swanson Telephone (303) 866-9800 ----
Thomas J. Wolf* Facsimile (303) 866-9818 Fredd E. Neef
*Board Certified Civil (1910-1986)
Trial Advocate by the
National Board of Trial
Advocacy

November 28, 1994

Oppenheimer Strategic Funds Trust
3410 South Galena Street
Denver, Colorado 80231

Gentlemen:

In connection with the public offering of the no par value Class A and
Class B shares of beneficial interest in the Oppenheimer Strategic Income
Fund series and the Class C shares of the Oppenheimer Strategic
Diversified Income Fund series of Oppenheimer Strategic Funds Trust
(formerly known as Oppenheimer Strategic Income Fund), a business trust
organized under the laws of the Commonwealth of Massachusetts (the
"Trust"), we have examined such records and documents and have made such
further investigation and examination as we deem necessary for the
purposes of this opinion.

We are advised that during the fiscal period ended September 30, 1994,
the following shares of beneficial interest of the Trust were sold in
reliance on the registration of an indefinite number of shares pursuant
to Rule 24f-2 of the Investment Company Act of 1940:

Oppenheimer Strategic Income Fund:

Class A 236,638,548
Class B 211,514,941

Oppenheimer Strategic Diversified
Income Fund

Class C 9,579,653

It is our opinion that the said shares of beneficial interest of each
class of the Trust sold in reliance on Rule 24f-2 of the Investment
Company Act of 1940 are legally issued and, subject to the matters
mentioned in the next paragraph, fully paid and nonassessable by the
Trust.

Under Massachusetts law, shareholders of the Trust may, under certain
circumstances, be held personally liable as partners for the obligations
of the Trust. The Declaration of Trust does, however, contain an express
disclaimer of shareholder liability for acts or obligations of the Trust
and requires that notice of such disclaimer be given in each agreement,
obligation, or instrument entered into or executed by the Trust or the
Trustees. The Declaration of Trust provides for indemnification out of
the Trust property of any shareholder held personally liable for the
obligations of the Trust. The Declaration of Trust also provides that the
Trust shall, upon request, assume the defense of any claim made against
any shareholder for any act or obligation of the Trust and satisfy any
judgment thereon.

Sincerely,

MYER, SWANSON & ADAMS, P.C.

By /s/ Allan B. Adams
--------------------------
Allan B. Adams

<ARTICLE> 6
<CIK> 0000850134
<NAME> OPPENHEIMER STRATEGIC INCOME FUND

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-START> OCT-01-1993
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 333489354
<SHARES-COMMON-PRIOR> 133234537
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1586091400
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 119419105
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 33582801
<NUMBER-OF-SHARES-SOLD> 211514941
<NUMBER-OF-SHARES-REDEEMED> 24975699
<SHARES-REINVESTED> 13715575
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 1236000000
<PER-SHARE-NAV-BEGIN> 5.22
<PER-SHARE-NII> .42
<PER-SHARE-GAIN-APPREC> (.36)
<PER-SHARE-DIVIDEND> .39
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> .13
<PER-SHARE-NAV-END> 4.76
<EXPENSE-RATIO> 1.71
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 366177811
<SHARES-COMMON-PRIOR> 333489354
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1652677216
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 69583464
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 54907870
<NUMBER-OF-SHARES-REDEEMED> 30552322
<SHARES-REINVESTED> 8332909
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 1603000
<PER-SHARE-NAV-BEGIN> 4.76
<PER-SHARE-NII> .21
<PER-SHARE-GAIN-APPREC> (.26)
<PER-SHARE-DIVIDEND> .20
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 4.51
<EXPENSE-RATIO> 1.69
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>