DMSAI

497 1 sai.htm DEVELOPING MARKETS SAI DMSAI

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Oppenheimer Developing Markets Fund
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6803 South Tucson Way, Englewood, Colorado 80112
1.800.525.7048

Statement of Additional Information dated December 20, 2000, Revised August 13, 2001

This Statement of Additional Information is not a Prospectus. This document contains additional
information about the Fund and supplements information in the Prospectus dated December 20, 2000. It should be
read together with the Prospectus. You can obtain the Prospectus by writing to the Fund's Transfer Agent,
OppenheimerFunds Services, at P.O. Box 5270, Denver, Colorado 80217, or by calling the Transfer Agent at the
toll-free number shown above, or by downloading it from the OppenheimerFunds Internet web site at
www.oppenheimerfunds.com.

Contents
Page
About the Fund
Additional Information About the Fund's Investment Policies and Risks................................... 2
The Fund's Investment Policies..................................................................... 2
Other Investment Techniques and Strategies......................................................... 7
Investment Restrictions............................................................................ 24
How the Fund is Managed ................................................................................ 26
Organization and History........................................................................... 26
Trustees and Officers.............................................................................. 28
The Manager........................................................................................ 33
Brokerage Policies of the Fund.......................................................................... 35
Distribution and Service Plans.......................................................................... 37
Performance of the Fund................................................................................. 40

About Your Account
How To Buy Shares....................................................................................... 45
How To Sell Shares...................................................................................... 54
How To Exchange Shares.................................................................................. 58
Dividends, Capital Gains and Taxes...................................................................... 61
Additional Information About the Fund................................................................... 63

Financial Information About the Fund
Independent Auditors' Report............................................................................ 64
Financial Statements.................................................................................... 66

Appendix A: Industry Classifications.................................................................... A-1
Appendix B: Special Sales Charge Arrangements and Waivers............................................... B-1

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A B O U T T H E F U N D
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Additional Information About the Fund's Investment Policies and Risks

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

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

In selecting securities for the Fund's portfolio, the Manager evaluates the merits of securities primarily
through the exercise of its own investment analysis. That analysis includes a number of factors, some of which are
discussed in the Prospectus. Additionally, the Manager may evaluate
o the strength of an issuer's management and the history of its operations,
o the soundness of its financial and accounting policies and its financial condition,
o the issuer's pending product developments and developments by competitors,
o the effect of general market conditions on the issuer's business and the prospects for the industry
of which the issuer is a part, and
o legislative proposals that might affect the issuer.

In addition, the Manager ordinarily looks for one of the following characteristics: an above-average
earnings growth per share; high return on invested capital; effective research and product development; pricing
flexibility; and general operating characteristics that might enable the issuer to compete successfully in its
intended markets.

The Fund intends to spread its investments among at least three developing markets under normal market
conditions. In determining an appropriate distribution of investments among the various countries and geographic
regions in which the Fund may invest, the Manager generally considers the following factors:
o prospects for relative economic growth, the balance of payments,
o anticipated levels of inflation,
o governmental policies influencing business conditions,
o the outlook for currency relationships and
o the range of individual investment opportunities available to international investors among the various
counties and geographic regions.

The percentage of the Fund's assets invested in particular developing markets will vary from time to time based on
the Manager's assessment of these factors, the appreciation possibilities of particular issuers and social and
political factors that may affect specific markets.

The portion of the Fund's assets allocated to securities selected for capital appreciation and the
investment techniques used will depend upon the judgment of the Fund's Manager as to the future movement of the
equity securities markets. If the Manager believes that economic conditions favor a rising market, the Fund will
emphasize securities and investment methods selected for high capital growth. If the Manager believes that a
market decline is likely, defensive securities and investment methods may be emphasized.

Current income is not a consideration in the selection of portfolio securities for the Fund. The fact that
a security has a low yield or does not pay current income will not be an adverse factor in considering it for the
Fund's portfolio unless the Manager believes that the lack of yield might adversely affect appreciation
possibilities.

|X| Growth Companies. Growth companies are those companies that the Manager believes are entering into a
growth cycle in their business, with the expectation that their stock will increase in value. They may be
established companies as well as newer companies in the development stage.

Growth companies may have a variety of characteristics that in the Manager's view define them as "growth"
issuers. They may be generating or applying new technologies, new or improved distribution techniques or new
services. They may own or develop natural resources. They may be companies that can benefit from changing consumer
demands or lifestyles, or companies that have projected earnings in excess of the average for their sector or
industry. In each case, they have
prospects that the Manager believes are favorable for the long term. The portfolio manager of the Fund looks for
growth companies with strong, capable management sound financial and accounting policies, successful product
development and marketing and other factors.

|X| Investments in Equity Securities. The Fund focuses its investments in equity securities of foreign
companies whose principal activities are in developing markets. Equity securities include common stocks, preferred
stocks, rights and warrants, and securities convertible into common stock. The Fund's investment primarily include
stocks of what the Manager believes are growth companies. They may have a market capitalization of any range,
small, medium or large.

The Manager selects securities primarily on the basis of its view of a security's potential for capital
appreciation.

Small-cap growth companies may offer greater opportunities for capital appreciation than securities of
large, more established companies. However, these securities also involve greater risks than securities of larger
companies. Securities of small capitalization issuers may be subject to greater price volatility in general than
securities of large-cap and mid-cap companies. Therefore, to the degree that the Fund has investments in smaller
capitalization companies at times of market volatility, the Fund's share price may fluctuate more. As noted below,
the Fund may invest without limit in unseasoned small cap issuers.

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

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

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

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

|X| Foreign Securities. The Fund emphasizes investments in equity securities issued or guaranteed by
foreign companies. "Foreign securities" include equity and debt securities of companies organized under the laws
of countries other than the United States and of governments other than the U.S. government. They also include
securities of companies (including those that are located in the U.S. or organized under U.S. law) that derive a
significant portion of their revenue or profits from foreign businesses, investments or sales, or that have a
significant portion of their assets abroad. They may be traded on foreign securities exchanges or in the foreign
over-the-counter markets.

Securities of foreign issuers that are represented by American Depository Receipts or that are listed on a
U.S. securities exchange or traded in the U.S. over-the-counter markets are considered "foreign securities" for the
purpose of the Fund's investment allocations. They are subject to some of the special considerations and risks,
discussed below, that apply to foreign securities traded and held abroad.

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

|_| Risks of Foreign Investing. Investments in foreign securities may offer special
opportunities for investing but also present special additional risks and considerations not typically associated
with investments in domestic securities. Some of these additional risks are:

o reduction of income by foreign taxes;
o fluctuation in value of foreign investments due to changes in currency rates or currency control
regulations (for example, currency blockage);
o transaction charges for currency exchange;
o lack of public information about foreign issuers;
o lack of uniform accounting, auditing and financial reporting standards in foreign countries comparable to
those applicable to domestic issuers;
o less volume on foreign exchanges than on U.S. exchanges;
o greater volatility and less liquidity on foreign markets than in the U.S.;
o less governmental regulation of foreign issuers, stock exchanges and brokers than in the U.S.;
o greater difficulties in commencing lawsuits;
o higher brokerage commission rates than in the U.S.;
o increased risks of delays in settlement of portfolio transactions or loss of certificates for portfolio
securities;
o possibilities in some countries of expropriation, confiscatory taxation, political, financial or social
instability or adverse diplomatic developments; and
o unfavorable differences between the U.S. economy and foreign economies.

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

|_| Developing Markets and Their Special Risks. Emerging and developing markets abroad may also
offer special opportunities for growth investing but have greater risks than markets in the United States or more
developed foreign markets, such as those in Western Europe, Canada, Australia, New Zealand and Japan. Some of those
special risks are described below.

|_| Settlement of Transactions. Settlement procedures in developing markets may differ from
those of more established securities markets. Settlements may also be delayed by operational problems, including
"Year 2000" problems caused by a failure to adapt computers to using four-digit years after 1999. Securities issued
by developing countries and by issuers located in those countries may be subject to extended settlement periods.
Delays in settlement could result in temporary periods during which a portion of the Fund's assets is uninvested
and no return is earned on those assets. The inability of the Fund to make intended purchases of securities due to
settlement problems could cause the Fund to miss investment opportunities. The Fund could suffer losses from the
inability to dispose of portfolio securities due to settlement problems. As a result there could be subsequent
declines in the value of the portfolio security, a decrease in the level of liquidity of the Fund's portfolio or,
if the Fund has entered into a contract to sell the security, a possible liability to the purchaser.

|_| Price Volatility. Securities prices in developing markets may be significantly more volatile
than is the case in more developed nations of the world. In particular, countries with emerging markets may have
relatively unstable governments. That presents the risk of nationalization of businesses, restrictions on foreign
ownership or prohibitions of repatriation of assets. These countries may have less protection of property rights
than more developed countries. The economies of developing countries may be predominantly based on only a few
industries and, as such, may be highly vulnerable to changes in local or global trade conditions.

|_| Less Developed Securities Markets. Developing market countries may have less well-developed
securities markets and exchanges. Consequently they have lower trading volume than the securities markets of more
developed countries. These markets may be unable to respond effectively to increases in trading volume. Therefore,
prompt liquidation of substantial portfolio holdings may be difficult at times. As a result, these markets may be
substantially less liquid than those of more developed countries, and the securities of issuers located in these
markets may have limited marketability.

|_| Government Restrictions. In certain developing countries, government approval may be required
for the repatriation of investment income, capital or the proceeds of sales of securities by foreign investors,
such as the Fund. Also, a government might impose temporary restrictions on remitting capital abroad if the
country's balance of payments deteriorates, or it might do so for other reasons. If government approval were delayed
or refused, the Fund could be adversely affected. Additionally, the Fund could be adversely affected by the
imposition of restrictions on investments by foreign entities.

Among the countries that the Manager has identified as developing or emerging markets in which the Fund
will consider investing are the following countries. The Fund might not invest in all of these countries and the
list may change.

Algeria Guyana Myanmar Tanzania
Argentina Hong Kong Namibia Thailand
Bangladesh HungaryIndia Nigeria Tunisia
Bolivia Indonesia Pakistan Turkey
Botswana Iran Paraguay Ukraine
Brazil Israel Peru Uruguay
Bulgaria Ivory Coast Philippines Venezuela
Chile Jamaica Poland Vietnam
China Jordan Portugal Zambia
Colombia Kenya Russia Zimbabwe
Costa Rica Latvia Singapore
Cyprus Lebanon Slovakia Republic
Czech Republic Lithuania Slovenia
Ecuador Malaysia South Africa
Egypt Mauritius South Korea
Estonia Mexico Sri Lanka
Ghana Morocco Swaziland
Greece Taiwan

|X| Portfolio Turnover. "Portfolio turnover" describes the rate at which the Fund traded its portfolio
securities during its last fiscal year. For example, if a fund sold all of its securities during the year, its
portfolio turnover rate would have been 100%. The Fund's portfolio turnover rate will fluctuate from year to year,
although the Fund does not expect to have a portfolio turnover rate of more than 100% annually.

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

The Fund may engage in short-term trading to try to achieve its objective, but does not expect to have a
portfolio turnover rate in excess of 100% annually. Portfolio turnover affects brokerage costs the Fund pays. If
the Fund realizes capital gains when it sells its portfolio investments, it must generally pay those gains out to
shareholders, increasing their taxable distributions. The Financial Highlights table below shows the Fund's
portfolio turnover rates during prior fiscal years.

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

|X| Investing in Small, Unseasoned Companies. The Fund may invest in securities of small, unseasoned
companies. These are companies that have been in operation for less than three years, including the operations of
any predecessors. Securities of these companies may be subject to volatility in their prices. They may have a
limited trading market, which may adversely affect the Fund's ability to dispose of them and can reduce the price
the Fund might be able to obtain for them. Other investors that own a security issued by a small, unseasoned issuer
for which there is limited liquidity might trade the security when the Fund is attempting to dispose of its
holdings of that security. In that case the Fund might receive a lower price for its holdings than might otherwise
be obtained. The Fund has no limit on the amount of its net assets that may be invested in those securities.

|X| Debt Securities. While the Fund does not invest for the purpose of seeking current income, at times
certain debt securities (other than convertible debt securities described above under the description of equity
investments) may be selected for investment by the Fund for investment or defensive purposes, as described below.
Certain debt securities may be selected for the Fund's portfolio for defensive purposes (including debt securities
that the Manager believes may offer some opportunities for capital appreciation when stocks are disfavored). Up to
35% of the Fund's assets may be invested in any combination of debt securities of government or corporate issuers
in developing countries, equity and debt securities of issuers in developed countries (including the United States)
and cash and money market instruments. For example, when the stock market is volatile, or when the portfolio
manager believes that growth opportunities in stocks are not attractive, certain debt securities might provide not
only offer defensive opportunities but also some opportunities for capital appreciation. These investments could
include corporate bonds and notes of foreign or U.S. companies, as well as U.S. and foreign government securities.
It is not expected that this will be a significant portfolio strategy of the Fund under normal market circumstances.

While the Fund will not invest in debt securities rates less than C or that are in default, the Fund can
invest in below-investment grade debt securities. Often, debt securities of developing markets issuers are below
investment grade or are unrated by rating organizations. Below investment grade securities are subject to a number
of risks, including a greater risk of default by the issuer in making timely payments of interest and principal
(this is called "credit risk"). As debt securities, they are also subject to changes in value from fluctuations in
prevailing interest rates, which means that their value could go down when interest rates rise, or go up when
interest rates fall (this is called "interest rate risk"). A discussion of these risks and rating categories of
rating agencies is in the Statement of Additional Information.

|_| Credit Risk. Debt securities are subject to credit risk. 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. If the
issuer fails to pay interest, the Fund's income may be reduced and if the issuer fails to repay principal, the
value of that bond and of the Fund's shares may be reduced. The Manager may rely to some extent on credit ratings
by nationally recognized rating agencies in evaluating the credit risk of securities selected for the Fund's
portfolio. It may also use its own research and analysis. Many factors affect an issuer's ability to make timely
payments, and the credit risks of a particular security may change over time. The Fund may invest in
higher-yielding lower-grade debt securities (that is, securities below investment grade), which have special risks.
Those are securities rated below the four highest rating categories of Standard & Poor's Rating Service or Moody's
Investors Service, Inc., or equivalent ratings of other rating agencies or ratings assigned to a security by the
Manager.

|_| Special Risks of Lower-Grade Securities. "Lower-grade" debt securities are those rated
below "investment grade" which means they have a rating lower than "Baa" by Moody's or lower than "BBB" by Standard
& Poor's or Fitch, or similar ratings by other rating organizations. If they are unrated, and are determined by the
Manager to be of comparable quality to debt securities rated below investment grade, they are included in
limitation on the percentage of the Fund's assets that can be invested in lower-grade securities. The Fund will
not invest in securities rated "C" or "D" or which are in default.

Among the special credit risks of lower-grade securities is the greater risk that the issuer may default on
its obligation to pay interest or to repay principal than in the case of investment grade securities. The issuer's
low creditworthiness may increase the potential for its insolvency. An overall decline in values in the high yield
bond market is also more likely during a period of a general economic downturn. An economic downturn or an increase
in interest rates could severely disrupt the market for high yield bonds, adversely affecting the values of
outstanding bonds as well as the ability of issuers to pay interest or repay principal. In the case of foreign high
yield bonds, these risks are in addition to the special risk of foreign investing discussed in the Prospectus and
in this Statement of Additional Information. To the extent they can be converted into stock, convertible securities
may be less subject to some of these risks than non-convertible high yield bonds, since stock may be more liquid
and less affected by some of these risk factors.

While securities rated "Baa" by Moody's or "BBB" by Standard & Poor's or Fitch are investment grade and are
not regarded as junk bonds, those securities may be subject to special risks, and have some speculative
characteristics.

|_| Interest Rate Risks. In addition to credit risks, debt securities are subject to changes in
value when prevailing interest rates change. When interest rates fall, the values of outstanding debt securities
generally rise, and the bonds may sell for more than their face amount. When interest rates rise, the values of
outstanding debt securities generally decline, and the bonds may sell at a discount from their face amount. The
magnitude of these price changes is generally greater for bonds with longer maturities. Therefore, when the average
maturity of the Fund's debt securities is longer, its share price may fluctuate more when interest rates change.

|X| Privatization Programs. The governments in some developing countries have been engaged in programs to
sell all or part of their interests in government-owned or controlled enterprises. Privatization programs may
offer opportunities for significant capital appreciation, and the Manager may invest Fund assets in privatization
programs in what it considers to be appropriate circumstances. In certain developing countries, the ability of
foreign entities such as the Fund to participate in privatization programs may be limited by local law.
Additionally, the terms on which the Fund might be permitted to participate may be less advantageous than those
afforded local investors. There can be no assurance that privatization programs will be successful.

|X| Investments in Other Investment Companies. The Fund may be able to invest in certain developing
countries solely or primarily through governmentally-authorized investment vehicles or companies. The Fund can
invest up to 10% of its total assets in shares of other investment companies. It can invest up to 5% of its total
assets in any one investment company. Each investment must not represent more than 3% of the outstanding voting
securities of the acquired investment company. These limitations do not apply in the case of investment company
securities that the Fund purchases or acquires as part of a plan of merger, consolidation, reorganization or
acquisition.

Investing in another investment company may involve the payment of substantial premiums above the value of
the investment company's portfolio securities. These investments are subject to limitations under the Investment
Company Act and market availability. The Fund does not intend to invest in other investment companies unless, in
the judgment of the Manager, the potential benefits of the investment justify the payment of any applicable
premiums or sales charge. As a shareholder in an investment company, the Fund would bear its ratable share of that
investment company's expenses, including its advisory and administration fees. At the same time, the Fund would
continue to pay its own management fees and other expenses.

|X| "When-Issued" and Delayed-Delivery Transactions. The Fund can purchase securities on a "when-issued"
basis and may purchase or sell securities on a "delayed-delivery" or "forward commitment 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.

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

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

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

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

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

|X| Repurchase Agreements. The Fund can acquire securities subject to repurchase agreements. It may do so

o for liquidity purposes to meet anticipated redemptions of Fund shares, or pending the investment of the
proceeds from sales of Fund shares, or
o pending the settlement of portfolio securities transactions, or
o for temporary defensive purposes, as described below.

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

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

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

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

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

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

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

|X| Loans of Portfolio Securities. To raise cash for liquidity purposes, the Fund can lend its portfolio
securities to brokers, dealers and other types of financial institutions approved by the Fund's Board of Trustees.
These loans are limited to not more than 10% of the value of the Fund's total assets. The Fund currently does not
intend to engage in loans of securities in the coming year, but if it does so, such loans will not likely exceed 5%
of the Fund's total assets.

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

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

|X| Borrowing for Leverage and Liquidity. The Fund has the ability to borrow up to 10% of the value of its
net assets from banks on an unsecured basis to invest the borrowed funds in portfolio securities. This speculative
technique is known as "leverage." The Fund can also borrow from banks for temporary or emergency purposes. The Fund
may borrow only from banks. Under current regulatory requirements, borrowings can 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). If the value of the Fund's assets fails to meet this 300% asset
coverage requirement, the Fund will reduce its bank debt within three days to meet the requirement. To do so, the
Fund might have to sell a portion of its investments at a disadvantageous time.

The Fund will pay interest on these loans, and that interest expense will raise the overall expenses of the
Fund and reduce its returns. The Fund does not expect to borrow for leverage as a normal investment technique. If
it does borrow, its expenses will be greater than comparable funds that do not borrow for leverage. Additionally,
the Fund's net asset value per share might fluctuate more than that of funds that do not borrow.

|X| Derivatives. The Fund can invest in a variety of derivative investments to seek income for liquidity
needs or for hedging purposes. Some derivative investments the Fund can use are the hedging instruments described
below in this Statement of Additional Information. However, the Fund does not use, and does not currently
contemplate using, derivatives or hedging instruments to a significant degree in the coming year.

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

|X| Hedging. Although the Fund does not anticipate the extensive use of hedging instruments, the Fund can
use hedging instruments. 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 could:
o sell futures contracts,
o buy puts on such futures or on securities, or
o write covered calls on securities or futures. Covered calls can also be used to increase the Fund's
income, but the Manager does not expect to engage extensively in that practice.

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

The Fund is not obligated to use hedging instruments, even though it is permitted to use them in the
Manager's discretion, as described below. The Fund's strategy of hedging with futures and options on futures will
be incidental to the Fund's activities in the underlying cash market. The particular hedging instruments the Fund
can use are described below. The Fund may employ new hedging instruments and strategies when they are developed,
if those investment methods are consistent with the Fund's investment objective and are permissible under
applicable regulations governing the Fund.

|_| Futures. The Fund can buy and sell futures contracts that relate to (1) broadly-based stock
indices (these are referred to as stock index futures), (2) other broadly based securities indices (these are
referred to as financial futures), (3) debt securities (these are referred to as interest rate futures), (4)
foreign currencies (these are referred to as forward contracts), and (5) commodities (these are referred to as
commodity futures).

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

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

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

No money is paid or received by the Fund on the purchase or sale of a future. Upon entering into a futures
transaction, the Fund will be required to deposit an initial margin payment with the futures commission merchant
(the "futures broker"). Initial margin payments will be deposited with

the Fund's custodian bank in an account registered in the futures broker's name. However, the futures broker can
gain access to that account only under specified conditions. As the future is marked to market (that is, its value
on the Fund's books is changed) to reflect changes in its market value, subsequent margin payments, called
variation margin, will be paid to or by the futures broker daily.
At any time prior to expiration of the future, the Fund may elect to close out its position by taking an
opposite position, at which time a final determination of variation margin is made and any additional cash must be
paid by or released to the Fund. Any loss or gain on the future is then realized by the Fund for tax purposes.
All futures transactions are effected through a clearinghouse associated with the exchange on which the contracts
are traded.

|_| Put and Call Options. The Fund may buy and sell certain kinds of put options ("puts") and
call options ("calls"). The Fund may buy and sell exchange-traded and over-the-counter put and call options,
including index options, securities options, currency options, commodities options, and options on the other types
of futures described above.

|_| Writing Covered Call Options. The Fund can write (that is, sell) covered calls. If the Fund
sells a call option, it must be covered. That means the Fund must own the security subject to the call while the
call is outstanding, or, for certain types of calls, the call may be covered by liquid assets identified on the
Fund's books to enable the Fund to satisfy its obligations if the call is exercised. Up to 25% of the Fund's total
assets may be subject to calls the Fund writes.

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

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

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

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

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

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

|_| Writing Put Options. The Fund can sell put options. A put option on securities gives the
purchaser the right to sell, and the writer the obligation to buy, the underlying investment at the exercise price
during the option period. The Fund will not write puts if, as a result, more than 50% of the Fund's net assets
would be required to be identified on the Fund's books to cover such put options.

If the Fund writes a put, the put must be covered by liquid assets identified on the Fund's books. The
premium the Fund receives from writing a put represents a profit, as long as the price of the underlying investment
remains equal to or above the exercise price of the put. However, the Fund also assumes the obligation during the
option period to buy the underlying investment from the buyer of the put at the exercise price, even if the value
of the investment falls below the exercise price. If a put the Fund has written expires unexercised, the Fund
realizes a gain in the amount of the premium less the transaction costs incurred. If the put is exercised, the
Fund must fulfill its obligation to purchase the underlying investment at the exercise price. That price will
usually exceed the market value of the investment at that time. In that case, the Fund may incur a loss if it
sells the
underlying investment. That loss will be equal to the sum of the sale price of the underlying investment and the
premium received minus the sum of the exercise price and any transaction costs the Fund incurred.

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

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

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

|_| Purchasing Calls and Puts. The Fund can purchase calls to protect against the possibility
that the Fund's portfolio will not participate in an anticipated rise in the securities market. When the Fund buys
a call (other than in a closing purchase transaction), it pays a premium. The Fund then has the right to buy the
underlying investment from a seller of a corresponding call on the same investment during the call period at a
fixed exercise price. The Fund benefits only if it sells the call at a profit or if, during the call period, the
market price of the underlying investment is above the sum of the call price plus the transaction costs and the
premium paid for the call and the Fund exercises the call. If the Fund does not exercise the call or sell it
(whether or not at a profit), the call will become worthless at its expiration date. In that case the Fund will
have paid the premium but lost the right to purchase the underlying investment.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Under the Investment Company Act, when the Fund purchases a future, it must maintain cash or readily
marketable short-term debt instruments in an amount equal to the market value of the securities underlying the
future, less the margin deposit applicable to it.

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

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

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

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

|X| Temporary Defensive Investments. When market conditions are unstable, or the Manager believes it is
otherwise appropriate to reduce holdings in stocks, the Fund can invest in a variety of debt securities for
defensive purposes. The Fund can also purchase these securities for liquidity purposes to meet cash needs due to
the redemption of Fund shares, or to hold while waiting reinvest cash received from the sale of other portfolio
securities. The Fund can hold cash or buy:
o high-quality (rated in the top rating categories of nationally-recognized rating organizations or deemed by
the Manager to be of comparable quality), short-term money market instruments, including those issued
by the U. S. Treasury or other government agencies,
o commercial paper (short-term, unsecured, promissory notes of domestic or foreign companies) rated in the
top two rating categories of a nationally recognizes rating organization,
o debt obligations of corporate or foreign government issuers, rated investment grade (rated at least Baa by
Moody's Investors Service, Inc. or at least BBB by Standard & Poor's Corporation, or a comparable
rating by another rating organization), or unrated securities judge by the Manager to have a
comparable quality to rated securities in those categories,
o certificates of deposit and bankers' acceptances of domestic and foreign banks and savings and loan
associations, and
o repurchase agreements.

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

Investment Restrictions

|X| What Are "Fundamental Policies?" Fundamental policies are those policies that the Fund has adopted to
govern its investments that can be changed only by the vote of a "majority" of the Fund's outstanding voting
securities. Under the Investment Company Act, a "majority" vote is defined as the vote of the holders of the
lesser of:

o 67% or more of the shares present or represented by proxy at a shareholder meeting, if the holders of more
than 50% of the outstanding shares are present or represented by proxy, or
o more than 50% of the outstanding shares.

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

|X| What Are The Fund's Additional Fundamental Policies? The following investment restrictions are
fundamental policies of the Fund.

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

o The Fund cannot concentrate investments in any particular industry. That means it cannot invest 25% or more
of its total assets in companies in any one industry.

o The Fund cannot lend money. However, the Fund can enter into repurchase transactions and can invest in all
or a portion of an issue of bonds, debentures, commercial paper or other similar corporate
obligations, whether or not they are publicly distributed. Investments in obligations that are not
publicly distributed are subject to any applicable percentage limitation on the Fund's holdings of
illiquid and restricted securities. The Fund may also lend its portfolio securities subject to any
restrictions adopted by the Board of Trustees.

o The Fund cannot invest in real estate or interests in real estate. However, the Fund can purchase
readily-marketable securities of companies holding real estate or interests in real estate.

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

o The Fund cannot underwrite securities of other companies. A permitted exception is in case it is deemed to
be an underwriter under the Securities Act of 1933 when reselling any securities held in its own
portfolio

o The Fund cannot invest in commodities or commodity contracts, other than the hedging instruments permitted
by any of its other investment policies. It does not matter whether the hedging instrument is
considered to be a commodity or commodity contract.

Another fundamental policy adopted by the Fund permits it to invest all of its assets in the securities of
a single open-end management investment company for which the Manager, one of its subsidiaries or a successor is
the investment Advisor or sub-Advisor. That fund must have substantially the same fundamental investment objective,
policies and limitations as the Fund. This policy would permit the Fund to adopt a "master-feeder" structure. Under
that structure, the Fund would be a "feeder" fund and would invest all of its assets in a single pooled "master
fund" in which other feeder funds could also invest. This could enable the Fund to take advantage of potential
operational and cost efficiencies in the master-feeder structure. The Fund has no present intention of adopting the
master-feeder structure. If it did so, the Prospectus and this Statement of Additional Information would be revised
accordingly. In addition, the Fund may invest in funds selected by a Trustee of the Fund under its Deferred
Compensation Plan for Disinterested Trustees.

|X| Does the Fund Have Any Restrictions That Are Not Fundamental? The Fund has a number of other investment
restrictions that are not fundamental policies, which means that they can be changed by the Board of Trustees
without shareholder approval.

o The Fund cannot invest in companies for the purpose of acquiring control or management of them.

o The Fund cannot purchase securities on margin. However, the Fund may make margin deposits in connection
with any of the hedging instruments permitted by any of its other investment policies.

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

o The Fund cannot mortgage or pledge any of its assets. However, this does not prohibit the escrow
arrangements contemplated by the writing of covered call options or other collateral or margin
arrangements in connection with any of the hedging instruments permitted by any of its other
investment policies.

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

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

How the Fund is Managed

Organization and History. The Fund is an open-end, diversified management investment company with an unlimited
number of authorized shares of beneficial interest. The Fund was organized as a Massachusetts business trust in
May, 1996.
The Fund is governed by a Board of Trustees, which is responsible for protecting the interests of
shareholders under Massachusetts law. The Trustees meet periodically throughout the year to oversee the Fund's
activities, review its performance, and review the actions of the Manager.

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

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

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

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

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

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

The Fund's contractual arrangements state that any person doing business with the Fund (and each
shareholder of the Fund) agrees under its Declaration of Trust to look solely to the assets of the Fund for
satisfaction of any claim or demand that may arise out of any dealings with the Fund. Additionally, 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 and occupations during the past five years are listed below. Trustees denoted with an asterisk (*)
below are deemed to be "interested persons" of the Fund under the Investment Company Act. All of the Trustees are
Trustees or Directors of the following New York-based Oppenheimer funds1:

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

Ms. Macaskill and Messrs. Donohue, Wixted, Zack, Bishop and Farrar respectively hold the same offices with
the other New York-based Oppenheimer funds as with the Fund. As of December 1, 2000, the Trustees and officers of
the Fund as a group owned of record or beneficially less than 1% of each class of shares. The foregoing statement
does not reflect ownership of shares of the Fund held of record by an employee benefit plan for employees of the
Manager, other than the shares beneficially owned under the plan by the officers of the Fund listed above. Mr.
Donohue is a trustee of that plan.

Leon Levy, Chairman of the Board of Trustees, Age: 75.
280 Park Avenue, New York, NY 10017
General Partner of Odyssey Partners, L.P. (investment partnership) (since 1982) and Chairman of Avatar Holdings,
Inc. (real estate development).

Robert G. Galli, Trustee, Age: 67.
19750 Beach Road, Jupiter, FL 33469
A Trustee or Director of other Oppenheimer funds. Formerly he held the following positions: Vice Chairman (October
1995 - December 1997) and Executive Vice President (December 1977 - October 1995) of the Manager; Executive Vice
President and a director (April 1986 - October 1995) of HarbourView Asset Management Corporation.

Phillip A. Griffiths, Trustee, Age: 62.
97 Olden Lane, Princeton, N. J. 08540
The Director of the Institute for Advanced Study, Princeton, N.J. (since 1991) and a member of the National Academy
of Sciences (since 1979); formerly (in descending chronological order) a director of Bankers Trust Corporation,
Provost and Professor of Mathematics at Duke University, a director of Research Triangle Institute, Raleigh, N.C.,
and a Professor of Mathematics at Harvard University.

Benjamin Lipstein, Trustee, Age: 77.
591 Breezy Hill Road, Hillsdale, N.Y. 12529
Professor Emeritus of Marketing, Stern Graduate School of Business Administration, New York University.

Bridget A. Macaskill*, President and Trustee, Age: 53.
Two World Trade Center, New York, New York 10048-0203
Formerly Chairman (August 2000 - July 2001), Chief Executive Officer (September 1995 - July 2001), President (June
1991 - August 2000) and a director (December 1994 - July 2001) of the Manager; President (September 1995 - July
2001) and a director (October 1990 - July 2001) of Oppenheimer Acquisition Corp., the Manager's parent holding
company; President, Chief Executive Officer and a director (March 2000 - July 2001) of OFI Private Investments,
Inc., an investment adviser subsidiary of the Manager; Chairman and a director of Shareholder Services, Inc.
(August 1994 - July 2001) and Shareholder Financial Services, Inc. (September 1995 - July 2001), transfer agent
subsidiaries of the Manager; President (September 1995 - July 2001) and a director (November 1989 - July 2001) of
Oppenheimer Partnership Holdings, Inc., a holding company subsidiary of the Manager; President and a director
(October 1997 - July 2001) of OppenheimerFunds International Ltd., an offshore fund management subsidiary of the
Manager and of Oppenheimer Millennium Funds plc; a director of HarbourView Asset Management Corporation (July 1991
- July 2001) and of Oppenheimer Real Asset Management, Inc. (July 1996 - July 2001), investment adviser subsidiaries
of the Manager; a director (April 2000 - July 2001) of OppenheimerFunds Legacy Program, a charitable trust program
established by the Manager. President and a trustee of other Oppenheimer funds.

Elizabeth B. Moynihan, Trustee, Age: 71.
801 Pennsylvania Avenue, N.W., Washington, D.C. 20004
Author and architectural historian; a trustee of the Freer Gallery of Art (Smithsonian Institute), Executive
Committee of Board of Trustees of the National Building Museum; a member of the Trustees Council, Preservation
League of New York State.

Kenneth A. Randall, Trustee, Age: 73.
6 Whittaker's Mill, Williamsburg, Virginia 23185
A director of Dominion Resources, Inc. (electric utility holding company), Dominion Energy, Inc. (electric power
and oil & gas producer), and Prime Retail, Inc. (real estate investment trust); formerly President and Chief
Executive Officer of The Conference Board, Inc. (international economic and business research) and a director of
Lumbermens Mutual Casualty Company, American Motorists Insurance Company and American Manufacturers Mutual
Insurance Company.

Edward V. Regan, Trustee, Age: 70.
40 Park Avenue, New York, New York 10016
Chairman of Municipal Assistance Corporation for the City of New York; Senior Fellow of Jerome Levy Economics
Institute, Bard College; a director of RBAsset (real estate manager); a director of OffitBank; Trustee, Financial
Accounting Foundation (FASB and GASB); President, Baruch College of the City University of New York; formerly New
York State Comptroller and trustee, New York State and Local Retirement Fund.

Russell S. Reynolds, Jr., Trustee, Age: 68.
8 Sound Shore Drive, Greenwich, Connecticut 06830
Chairman of The Directorship Search Group, Inc. (corporate governance consulting and executive recruiting); a
director of Professional Staff Limited (a U.K. temporary staffing company); a life trustee of International House
(non-profit educational organization), and a trustee of the Greenwich Historical Society.

Donald W. Spiro, Vice Chairman of the Board of Trustees, Age: 74.
399 Ski Trail, Smoke Rise, New Jersey 07405
Formerly he held the following positions: Chairman Emeritus (August 1991 - August 1999), Chairman (November 1987 -
January 1991) and a director (January 1969 - August 1999) of the Manager; President and Director of
OppenheimerFunds Distributor, Inc., a subsidiary of the Manager and the Fund's Distributor (July 1978 - January
1992).

Clayton K. Yeutter, Trustee, Age: 69.
10475 E. Laurel Lane, Scottsdale, Arizona 85259
Of Counsel, Hogan & Hartson (a Washington, D.C. law firm). Other directorships: Allied Zurich Pl.c; ConAgra, Inc.;
FMC Corporation; Farmers Group Inc.; Oppenheimer Funds; Texas Instruments Incorporated; Weyerhaeuser Co. and Zurich
Allied AG.

Rajeev Bhaman, Vice President and Portfolio Manager, Age: 37.
Two World Trade Center, New York, New York 10048-0203
Vice President of the Manager (since January 1997); formerly Assistant Vice President of the Manager (March 1996 -
January 1997); prior to joining the Manager in March 1996 he was Vice President for Asian Equities of Barclays de
Zoete Wedd, Inc. (October 1989 - February 1996).

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

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

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

Scott T. Farrar, Assistant Treasurer, Age: 36.
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); Assistant Treasurer of Oppenheimer
Millennium Funds plc (since October 1997); an officer of other Oppenheimer Funds; formerly an Assistant Vice
President of the Manager/Mutual Fund Accounting (April 1994 - May 1996), and a Fund Controller of the Manager. Vice
President of OppenheimerFunds, Inc. (since May 1996); Assistant Treasurer of Oppenheimer Millennium Funds plc
(since October 1997); an officer of other Oppenheimer funds; formerly an Assistant Vice President (April 1994 - May
1996) and a Fund Controller of OppenheimerFunds, Inc.

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

|X| Remuneration of Trustees. The officers of the Fund and a Trustee of the Fund (Ms. Macaskill) who is
affiliated with the Manager receives no salary or fee from the Fund. The remaining Trustees of the Fund received
the compensation shown below. The compensation from the Fund was paid during its fiscal period ended August 31,
2000. The compensation from all of the New York-based Oppenheimer funds (including the Fund) was received as a
director, trustee or member of a committee of the boards of those funds during the calendar year 1999.

------------------------------------ -------------------------- ------------------------- ----------------------------
Total
Retirement Compensation
Benefits from all
Aggregate Compensation Accrued as Part New York based Oppenheimer
Trustee's Name From Fund 1 Of Fund Funds (30 Funds)2
And Position Expenses
------------------------------------ -------------------------- ------------------------- ----------------------------
------------------------------------ -------------------------- ------------------------- ----------------------------
Leon Levy $3,237 $2,091 $166,700
Chairman
------------------------------------ -------------------------- ------------------------- ----------------------------
------------------------------------ -------------------------- ------------------------- ----------------------------
Robert G. Galli $698 $0 $177,7153
Study Committee Member
------------------------------------ -------------------------- ------------------------- ----------------------------
------------------------------------ -------------------------- ------------------------- ----------------------------
Phillip Griffths4 $252 $0 $5,125
------------------------------------ -------------------------- ------------------------- ----------------------------
------------------------------------ -------------------------- ------------------------- ----------------------------
Benjamin Lipstein $3,439 $2,448 $144,100
Study Committee Chairman,
Audit Committee Member
------------------------------------ -------------------------- ------------------------- ----------------------------
------------------------------------ -------------------------- ------------------------- ----------------------------
Elizabeth B. Moynihan $787 $107 $101,500
Study Committee
Member
------------------------------------ -------------------------- ------------------------- ----------------------------
------------------------------------ -------------------------- ------------------------- ----------------------------
Edward V. Regan $617 $0 $92,100
Proxy Committee Chairman, Audit
Committee Member
------------------------------------ -------------------------- ------------------------- ----------------------------
------------------------------------ -------------------------- ------------------------- ----------------------------
Russell S. Reynolds, Jr. $850 $389 $68,900
Proxy Committee
Member
------------------------------------ -------------------------- ------------------------- ----------------------------
------------------------------------ -------------------------- ------------------------- ----------------------------
Donald W. Spiro $296 $0 $10,250
------------------------------------ -------------------------- ------------------------- ----------------------------
------------------------------------ -------------------------- ------------------------- ----------------------------
Clayton K. Yeutter(5) $4193 $0 $51,675
Proxy Committee
Member
------------------------------------ -------------------------- ------------------------- ----------------------------

1. Aggregate compensation includes fees, deferred compensation, if any, and retirement plan benefits accrued
for a Trustee.
2. For the 1999 calendar year.
3. Calendar year 1999 figures include compensation from the Oppenheimer New York, Quest and Rochester Funds.
4. Includes $252 deferred under Deferred Compensation Plan described below.
5. Includes $105 deferred under Deferred Compensation Plan described below.

|X| Retirement Plan for Trustees. The Fund has adopted a retirement plan that provides for payments to
retired Trustees. Payments are up to 80% of the average compensation paid during a Trustee's five years of service
in which the highest compensation was received. A Trustee must serve as trustee for any of the New York-based
Oppenheimer funds for at least 15 years to be eligible for the maximum payment. Each Trustee's retirement benefits
will depend on the amount of the
Trustee's future compensation and length of service. Therefore the amount of those benefits cannot be determined at
this time, nor can we estimate the number of years of credited service that will be used to determine those
benefits.

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

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

|X| Major Shareholders. As of December 1, 2000, the only person who owned of record or was known by the
Fund to own beneficially 5% or more of any class of the Fund's outstanding securities was the following: Charles
Schwab & Co., Inc., 101 Montgomery Street, San Francisco, California, which owned 481,238.606 Class A shares (6.01%
of the Class A shares then outstanding) for the benefit of their customers.

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

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

The code of Ethics is an exhibit to the Fund's registration statement filed with the Securities and Exchange
Commission and can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. You can obtain
information about the hours of operation of the Public Reference Room by calling the SEC at 1.800.202.942.8090. The
Code of Ethics can also be viewed as part of
the Fund's registration statement on the SEC's EDGAR database at the SEC's Internet web site at
http://www.sec.gov. Copies may be obtained, after paying a duplicating fee, by electronic request at the following
E-mail address: publicinfo@sec.gov, or by writing to the SEC's Public Reference Section, Washington, D.C.
20549-0102.

|X| The Investment Advisory Agreement. The Manager provides investment advisory and management services to
the Fund under an investment advisory agreement between the Manager and the Fund. The Manager selects securities
for the Fund's portfolio and handles its day-to-day business. The portfolio manager of the Fund is employed by the
Manager and is the person who is principally responsible for the day-to-day management of the Fund's portfolio.
Other members of the Manager's Equity Portfolio Team, in particular, Frank Jennings, who is a Vice President of the
Manager, and William Wilby, who is a Senior Vice President of the Manager, provide the portfolio manager with
counsel and support in managing the Fund's portfolio.

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

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

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

Fiscal Years ended 8/31: Management Fees Paid to OppenheimerFunds, Inc.
---------------------------------------- ----------------------------------------------------------------------------
---------------------------------------- ----------------------------------------------------------------------------

1998 $588,067
---------------------------------------- ----------------------------------------------------------------------------
---------------------------------------- ----------------------------------------------------------------------------

1999 $495,616
---------------------------------------- ----------------------------------------------------------------------------
---------------------------------------- ----------------------------------------------------------------------------

2000 $1,251,751
---------------------------------------- ----------------------------------------------------------------------------

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

The agreement permits the Manager to act as investment Advisor 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
Advisor or general distributor. If the Manager shall no longer act as investment Advisor to the Fund, the Manager
may withdraw the right of the Fund to use the name "Oppenheimer" as part of its name.

Brokerage Policies of the Fund

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

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

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

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

Other funds advised by the Manager have investment policies similar to those of the Fund. Those other funds
may purchase or sell the same securities as the Fund at the same time as the Fund, which could affect the supply
and price of the securities. If two or more funds advised by the Manager purchase the same security on the same day
from the same dealer, the transactions under those combined orders are averaged as to price and allocated in
accordance with the purchase or sale orders actually placed for each account.

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

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

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

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

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

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

Fiscal Years Ended 8/31: Total Brokerage Commissions Paid by the Fund1
---------------------------------------- ----------------------------------------------------------------------
---------------------------------------- ----------------------------------------------------------------------
1998 $285,539
---------------------------------------- ----------------------------------------------------------------------
---------------------------------------- ----------------------------------------------------------------------
1999 $179,494
---------------------------------------- ----------------------------------------------------------------------
---------------------------------------- ----------------------------------------------------------------------
2000 $552,6682
---------------------------------------- ----------------------------------------------------------------------
1. Amounts do not include spreads or concessions on principal transactions on a net trade basis.
2. In the fiscal year ended 8/31/00, the amount of transactions directed to brokers for research services was
$47,072,968 and the amount of the commissions paid to broker-dealers for those services was $290,642.

Distribution and Service Plans

The  Distributor.  Under its  General  Distributor's  Agreement  with the Fund,  the  Distributor  acts as the Fund's
principal  underwriter in the continuous  public  offering of the Fund's  classes of shares.  The  Distributor is not
obligated  to  sell a  specific  number  of  shares.  Expenses  normally  attributable  to  sales  are  borne  by the
Distributor.

      The  compensation  paid to (or retained by) the  Distributor  from the sale of shares or on the  redemption  of
shares since the Fund's inception is shown in the table below.

--------------- ------------------- ------------------- -------------------- ------------------- -------------------
                Aggregate           Class A Front-End   Concessions on       Concessions on      Concessions on
Fiscal Year     Front-End Sales     Sales Charges       Class A Shares       Class B Shares      Class C Shares
Ended 8/31:     Charges on Class    Retained by         Advanced by          Advanced by         Advanced by
                A Shares            Distributor         Distributor1         Distributor1        Distributor1
--------------- ------------------- ------------------- -------------------- ------------------- -------------------
--------------- ------------------- ------------------- -------------------- ------------------- -------------------
     1998            $297,560            $91,264              $12,542             $370,774            $31,465
--------------- ------------------- ------------------- -------------------- ------------------- -------------------
--------------- ------------------- ------------------- -------------------- ------------------- -------------------
     1999            $129,143            $37,678              $13,821             $150,610            $13,447
--------------- ------------------- ------------------- -------------------- ------------------- -------------------
--------------- ------------------- ------------------- -------------------- ------------------- -------------------
     2000                                                                         $582,519
                     $544,323            $140,127            $101,596                                 $90,600
--------------- ------------------- ------------------- -------------------- ------------------- -------------------
1.       The Distributor  advances  concession  payments to dealers for certain sales of Class A shares and for sales
     of Class B and Class C shares from its own resources at the time of sale.

----------------------- ----------------------------- ------------------------------ -------------------------------
                        Class A Contingent Deferred   Class B Contingent Deferred    Class C Contingent Deferred
Fiscal Years Ended      Sales Charges Retained by     Sales Charges Retained by      Sales Charges Retained by
8/31:                   Distributor                   Distributor                    Distributor
----------------------- ----------------------------- ------------------------------ -------------------------------
----------------------- ----------------------------- ------------------------------ -------------------------------
         2000                      $1,719                        $80,424                         $2,363
----------------------- ----------------------------- ------------------------------ -------------------------------

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

Distribution  and  Service  Plans.  The Fund has  adopted a  Service  Plan for Class A shares  and  Distribution  and
Service  Plans for Class B, Class C and Class N shares under Rule 12b-1 of the  Investment  Company Act.  Under those
plans the Fund pays the Distributor  for all or a portion of its costs incurred in connection  with the  distribution
and/or servicing of the shares of the particular class.

      Each plan has been  approved  by a vote of the Board of  Trustees,  including  a  majority  of the  Independent
Trustees2, cast in person at a meeting called for the purpose of voting on that plan.

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

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

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

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

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

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

      For the fiscal period ended August 31, 2000 payments under the Class A Plan totaled $180,696,  all of which was
paid by the  Distributor  to  recipients.  That  included  $14,119 paid to an affiliate of the  Distributor's  parent
company.  Any unreimbursed  expenses the Distributor  incurs with respect to Class A shares in any fiscal year cannot
be recovered in subsequent  years.  The Distributor  may not use payments  received under the Class A Plan to pay any
of its interest expenses, carrying charges, or other financial costs, or allocation of overhead.

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

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

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

      The  asset-based  sales charges on Class B, Class C and Class N shares allow  investors to buy shares without a
front-end  sales charge while allowing the  Distributor to compensate  dealers that sell those shares.  The Fund pays
the  asset-based  sales charges to the Distributor  for its services  rendered in  distributing  Class B, Class C and
Class N shares. The payments are made to the Distributor in recognition that the Distributor:

o        pays sales  concessions  to  authorized  brokers  and dealers at the time of sale and pays  service  fees as
           described above,

o        may finance payment of sales  concessions  and/or the advance of the service fee payment to recipients under
           the plans, or may provide such financing from its own resources or from the resources of an affiliate,
o        employs personnel to support distribution of Class B, Class C and Class N shares, and
o        bears the costs of sales  literature,  advertising and  prospectuses  (other than those furnished to current
           shareholders) and state "blue sky" registration fees and certain other distribution expenses.

 --------------------------------------------------------------------------------------------------------------------
 Distribution Fees Paid to the Distributor in the Fiscal Year Ended 8.31.00
 --------------------------------------------------------------------------------------------------------------------
 ---------------------- -------------------- ---------------------- ------------------------ ------------------------
 Class:                 Total Payments       Amount Retained by     Distributor's            Distributor's
                                                                                             Unreimbursed Expenses
                                                                    Aggregate Unreimbursed   as % of Net Assets of
                        Under Plan           Distributor            Expenses Under Plan      Class
 ---------------------- -------------------- ---------------------- ------------------------ ------------------------
 ---------------------- -------------------- ---------------------- ----------------------- -------------------------
 Class B Plan           $372,804             $305,627               $1,011,561                       2.10%
 ---------------------- -------------------- ---------------------- ----------------------- -------------------------
 ---------------------- -------------------- ---------------------- ----------------------- -------------------------
 Class C Plan           $102,045             $42,975                $149,787                         0.92%
 ---------------------- -------------------- ---------------------- ----------------------- -------------------------
      All  payments  under the Class B, Class C and the Class N plans are subject to the  limitations  imposed by the
Conduct Rules of the National  Association of Securities  Dealers,  Inc. on payments of asset-based sales charges and
service  fees.  Because no Class N shares were issued prior to 8.31.00,  no payments were made under the Class N Plan
prior to that date.

Performance of the Fund

Explanation of Performance  Terminology.  The Fund uses a variety of terms to illustrate its investment  performance.
Those terms include  "cumulative  total return,"  "average annual total return,"  "average annual total return at net
asset value" and "total return at net asset value." An  explanation  of how total returns are calculated is set forth
below.  The charts  below show the Fund's  performance  as of the Fund's most recent  fiscal year end. You can obtain
current  performance  information  by  calling  the  Fund's  Transfer  Agent at  1.800.525.7048  or by  visiting  the
OppenheimerFunds Internet web site at http://www.oppenheimerfunds.com.

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

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

o        Total returns measure the performance of a hypothetical  account in the Fund over various periods and do not
              show the  performance of each  shareholder's  account.  Your account's  performance  will vary from the
              model performance data if your dividends are received
o        in cash,  or you buy or sell  shares  during the period,  or you bought your shares at a different  time and
              price than the shares used in the model.
o        The  Fund's  performance  returns  do not  reflect  the  effect  of taxes on  dividends  and  capital  gains
              distributions.
o        An investment in the Fund is not insured by the FDIC or any other government agency.
o        The principal  value of the Fund's shares and total returns are not  guaranteed  and normally will fluctuate
              on a daily basis.
o        When an investor's shares are redeemed, they may be worth more or less than their original cost.
o        Total  returns for any given past period  represent  historical  performance  information  and are not,  and
              should not be considered, a prediction of future returns.

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

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

         In calculating total returns for Class A shares,  the current maximum sales charge of 5.75% (as a percentage
of the offering  price) is deducted  from the initial  investment  ("P")  (unless the return is shown  without  sales
charge,  as described  below).  For Class B shares,  payment of the  applicable  contingent  deferred sales charge is
applied, depending on the period for which the return is shown:



5.0% in the first year,  4.0% in the second year,  3.0% in the third and fourth years,  2.0% in the fifth year,  1.0%
in the sixth year and none thereafter.  For Class C shares,  the 1% contingent  deferred sales charge is deducted for
returns for the 1-year period.  For Class N shares,  the 1% contingent  deferred sales charge is deducted for returns
for the 18 month period.

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


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

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

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


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

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

                               The Fund's Total Returns for the Periods Ended 8.31.004
----------------------------------------------------------------------------------------------------------------------
-------------- ------------------------- -----------------------------------------------------------------------------
               Cumulative Total                                  Average Annual Total Returns
Class      of  Returns (Life of Class)
Shares
-------------- ------------------------- -----------------------------------------------------------------------------
-------------- ------------------------- --------------------------------- -------------------------------------------

                                                      1-Year                             Life-of-Class
-------------- ------------------------- --------------------------------- -------------------------------------------
-------------- ------------ ------------ ----------------- --------------- -------------------- ----------------------
               After        Without      After Sales       Without Sales   After Sales Charge   Without Sales Charge
               Sales        Sales        Charge            Charge
               Charge       Charge
-------------- ------------ ------------ ----------------- --------------- -------------------- ----------------------
-------------- ------------ ------------ ----------------- --------------- -------------------- ----------------------
Class A        71.98%1      82.47%1      40.55%            49.12%          15.40% 1             17.22%1
-------------- ------------ ------------ ----------------- --------------- -------------------- ----------------------
-------------- ------------ ------------ ----------------- --------------- -------------------- ----------------------
Class B        74.29%2      77.29%2      43.20%            48.20%          15.80% 2             16.33% 2
-------------- ------------ ------------ ----------------- --------------- -------------------- ----------------------
-------------- ------------ ------------ ----------------- --------------- -------------------- ----------------------
Class C        77.23%3      77.23%3      46.93%            47.93%          16.32% 3             16.32% 3
-------------- ------------ ------------ ----------------- --------------- -------------------- ----------------------

1.       Inception of Class A:      11/18/96
2.       Inception of Class B:      11/18/96
3.    Inception of Class C:         11/18/96
4.  Class N shares  were not  offered  for sale  during  the  Fund's  fiscal  year  ended  8.31.00.  Therefore,  this
Statement of        Additional Information does not contain any performance information for that class.

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

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

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

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

The Fund may also compare its total return ranking to that of other funds in its Morningstar category, in
addition to its star ratings. Those total return rankings are percentages from one percent to one hundred percent
and are not risk adjusted. For example, if a fund is in the 94th percentile, that means that 94% of the funds in
the same category performed better than it did.

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

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

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

From time to time, the Fund may include in its advertisements and sales literature the total return
performance of a hypothetical investment account that includes shares of the fund and other Oppenheimer funds. The
combined account may be part of an illustration of an asset allocation model or similar presentation. The account
performance may combine total return performance of the fund and the total return performance of other Oppenheimer
funds included in the account. Additionally, from time to time, the Fund's advertisements and sales literature may
include, for illustrative or comparative purposes, statistical data or other information about general or specific
market and economic conditions. That may include, for example,
o information about the performance of certain securities or commodities markets or segments of those markets,
o information about the performance of the economics of particular countries or regions,
o the earnings of companies included in segments of particular industries, sectors, securities markets,
countries or regions,
o the availability of different types of securities or offerings of securities,
o information relating to the gross national or gross domestic product of the United States or other
countries or regions,
o comparisons of various market sectors or indices to demonstrate performance, risk or other characteristics
of the Fund.

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A B O U T Y O U R A C C O U N T
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How to Buy Shares

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

AccountLink. When shares are purchased through AccountLink, each purchase must be at least $25. Shares will be
purchased two regular business days following the regular business day you instruct the Distributor to initiate the
Automated Clearing House ("ACH") transfer to buy the shares. That instruction must be received prior to the close
of The New York Stock Exchange that day. Dividends will begin to accrue on shares purchased with the proceeds of
ACH transfers on the business day after the shares are purchased. The Exchange normally closes at 4:00 P.M., but
may close earlier on certain days. The proceeds of ACH transfers are normally received by the Fund 3 days after
the transfers are initiated. If the proceeds of the ACH transfer are not received on a timely basis, the
Distributor reserves the right to cancel the purchase order. The Distributor and the Fund are not responsible for
any delays in purchasing shares resulting from delays in ACH transmissions.

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

|X| Right of Accumulation. To qualify for the lower sales charge rates that apply to larger purchases of
Class A shares, you and your spouse can add together:

o Class A, Class B and Class N shares you purchase for your individual accounts (including IRAs and 403(b)
plans), or for your joint accounts, or for trust or custodial accounts on behalf of your children who
are minors, and
o current purchases of Class A, Class B and Class N shares of the Fund and other Oppenheimer funds to reduce
the sales charge rate that applies to current purchases of Class A shares, and
o Class A, Class B and Class N shares of Oppenheimer funds you previously purchased subject to an initial or
contingent deferred sales charge to reduce the sales charge rate for current purchases of Class A
shares, provided that you still hold your investment in one of the Oppenheimer funds.

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

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

Oppenheimer Bond Fund Oppenheimer Main Street Growth & Income Fund
Oppenheimer California Municipal Fund Oppenheimer Main Street Opportunity Fund
Oppenheimer Capital Appreciation Fund Oppenheimer Main Street Small Cap Fund
Oppenheimer Capital Preservation Fund Oppenheimer MidCap Fund
Oppenheimer Capital Income Fund Oppenheimer Multiple Strategies Fund
Oppenheimer Champion Income Fund Oppenheimer Municipal Bond Fund
Oppenheimer Convertible Securities Fund OSM1 - Mercury Advisors S&P 500 Index
Oppenheimer Developing Markets Fund OSM1 - Mercury Advisors Focus Growth Fund
Oppenheimer Disciplined Allocation Fund Oppenheimer New York Municipal Fund
Oppenheimer Value Fund Oppenheimer New Jersey Municipal Fund
Oppenheimer Discovery Fund Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Emerging Growth Fund OSM1 - QM Active Balanced Fund
Oppenheimer Emerging Technologies Fund Oppenheimer Quest Balanced Value Fund
Oppenheimer Enterprise Fund Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Europe Fund Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Florida Municipal Fund Oppenheimer Quest Opportunity Value Fund
OSM1- Gartmore Millennium Growth Fund Oppenheimer Quest Value Fund, Inc.
Oppenheimer Global Fund Oppenheimer Real Asset Fund
Oppenheimer Global Growth & Income Fund OSM1 - Salomon Brothers Capital Fund
Oppenheimer Gold & Special Minerals Fund Oppenheimer Senior Floating Rate Fund
Oppenheimer Growth Fund Oppenheimer Small Cap Value Fund
Oppenheimer High Yield Fund Oppenheimer Strategic Income Fund
Oppenheimer Intermediate Municipal Fund Oppenheimer Total Return Fund, Inc.
Oppenheimer International Bond Fund Oppenheimer Trinity Core Fund
Oppenheimer International Growth Fund Oppenheimer Trinity Growth Fund
Oppenheimer International Small Company Fund Oppenheimer Trinity Value Fund
OSM1 -Jennison Growth Fund Oppenheimer U.S. Government Trust
Oppenheimer Large Cap Growth Fund Limited-Term New York Municipal Fund
Oppenheimer Limited-Term Government Fund Rochester Fund Municipals

and the following money market funds:

Centennial America Fund, L. P. Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust Centennial Tax Exempt Trust
Centennial Government Trust Oppenheimer Cash Reserves
Centennial Money Market Trust Oppenheimer Money Market Fund, Inc.
1 - "OSM" is Oppenheimer Select Managers

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

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

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

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

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

Statement of Additional Information and the Application used for a Letter of Intent. If those terms are amended, as
they may be from time to time by the Fund, the investor agrees to be bound by the amended terms and that those
amendments will apply automatically to existing Letters of Intent.

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

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

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

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

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

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

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

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

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

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

Asset Builder Plans. To establish an Asset Builder Plan to buy shares directly from a bank account, you must
enclose a check (the minimum is $25) for the initial purchase with your application. Shares purchased by Asset
Builder Plan payments from bank accounts are subject to the redemption restrictions for recent purchases described
in the Prospectus. Asset Builder Plans are available only if your bank is an ACH member. Asset Builder Plans may
not be used to buy shares for OppenheimerFunds employer-sponsored qualified retirement accounts. Asset Builder
Plans also enable shareholders of Oppenheimer Cash Reserves to use their fund account to make monthly automatic
purchases of shares of up to four other Oppenheimer funds.

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

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

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

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

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

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

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

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

|X| Availability of Class N Shares. In addition to the description of the types of retirement plans which
may purchase Class N shares contained in the prospectus, Class N shares also are offered to the following:

o to all rollover IRAs,
o to all direct rollovers from OppenheimerFunds-sponsored Pinnacle and Ascender retirement plans,
o to all trustee-to-trustee IRA transfers,
o to all 90-24 type 403(b) transfers,
o to Group Retirement Plans (as defined in Appendix _ to this Statement of Additional Information) which have
entered into a special agreement with the Distributor for that purpose,
o to Retirement Plans qualified under Sections 401(a) or 401(k) of the Internal Revenue Code, the
recordkeeper or the plan sponsor for which has entered into a special agreement with the
Distributor,
o to Retirement Plans of a plan sponsor where the aggregate assets of all such plans invested in the
Oppenheimer funds is $500,000 or more,
o to OppenheimerFunds-sponsored Ascender 401(k) plans that pay for the purchase with the redemption proceeds
of Class A shares of one or more Oppenheimer funds.

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

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

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

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

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

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

|X| Securities Valuation. The Fund's Board of Trustees has established procedures for the valuation of the
Fund's securities. In general those procedures are as follows:
|_| Equity securities traded on a U.S. securities exchange or on NASDAQ are valued as
follows:
1. if last sale information is regularly reported, they are valued at the last reported sale price on
the principal exchange on which they are traded or on NASDAQ, as applicable, on that day, or
2. if last sale information is not available on a valuation date, they are valued at the last
reported sale price preceding the valuation date if it is within the spread of the closing "bid" and
"asked" prices on the valuation date or, if not, at the closing "bid" price on the valuation date.

|_| Equity securities traded on a foreign securities exchange generally are valued in one of
the following ways:
1. at the last sale price available to the pricing service approved by the Board of Trustees, or
2. at the last sale price obtained by the Manager from the report of the principal exchange on which
the security is traded at its last trading session on or immediately before the valuation date, or
3. at the mean between the "bid" and "asked" prices obtained from the principal exchange on which the
security is traded or, on the basis of reasonable inquiry, from two market makers in the security.

Long-term debt securities having a remaining maturity in excess of 60 days are valued based on the
mean between the "bid" and "asked" prices determined by a portfolio pricing service approved by the Fund's Board of
Trustees or obtained by the Manager from two active market makers in the security on the basis of reasonable
inquiry.

The following securities are valued at the mean between the "bid" and "asked" prices determined by
a pricing service approved by the Fund's Board of Trustees or obtained by the Manager from two active market makers
in the security on the basis of reasonable inquiry:
1. debt instruments that have a maturity of more than 397 days when issued,
2. debt instruments that had a maturity of 397 days or less when issued and have a remaining
maturity of more than 60 days, and
3. non-money market debt instruments that had a maturity of 397 days or less when issued and which have a
remaining maturity of 60 days or less.

The following securities are valued at cost, adjusted for amortization of premiums and accretion
of discounts:
1. money market debt securities held by a non-money market fund that had a maturity of less than 397 days
when issued that have a remaining maturity of 60 days or less, and
2. debt instruments held by a money market fund that have a remaining maturity of 397 days or less.

|_| Securities (including restricted securities) not having readily-available market quotations are
valued at fair value determined under the Board's procedures. If the Manager is unable to locate two market makers
willing to give quotes, a security may be priced at the mean between the "bid" and "asked" prices provided by a
single active market maker (which in certain cases may be the "bid" price if no "asked" price is available).

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

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

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

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

How to Sell Shares

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

Reinvestment Privilege. Within six months of a redemption, a shareholder may reinvest all or part of the
redemption proceeds of:
o Class A shares purchased subject to an initial sales charge or Class A shares on which a contingent
deferred sales charge was paid, or

o Class B shares that were subject to the Class B contingent deferred sales charge when redeemed.

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

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

Payments "In Kind". The Prospectus states that payment for shares tendered for redemption is ordinarily made in
cash. However, the Board of Trustees of the Fund may determine that it would

be detrimental to the best interests of the remaining shareholders of the Fund to make payment of a redemption
order wholly or partly in cash. In that case, the Fund may pay the redemption proceeds in whole or in part by a
distribution "in kind" of liquid securities from the portfolio of the Fund, in lieu of cash.

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

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

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

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

Distributions From Retirement Plans. Requests for distributions from OppenheimerFunds-sponsored IRAs, 403(b)(7)
custodial plans, 401(k) plans or pension or profit-sharing plans should be addressed to "Trustee, OppenheimerFunds
Retirement Plans," c/o the Transfer Agent at its address listed in "How To Sell Shares" in the Prospectus or on the
back cover of this Statement of Additional Information. The request must:
(1) state the reason for the distribution;
(2) state the owner's awareness of tax penalties if the distribution is premature; and
(3) conform to the requirements of the plan and the Fund's other redemption requirements.
Participants (other than self-employed persons) in OppenheimerFunds-sponsored pension or profit-sharing
plans with shares of the Fund held in the name of the plan or its fiduciary may not directly request redemption of
their accounts. The plan administrator or fiduciary must sign the request.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

How to Exchange Shares

As stated in the Prospectus, shares of a particular class of Oppenheimer funds having more than one class
of shares may be exchanged only for shares of the same class of other Oppenheimer funds. Shares of Oppenheimer
funds that have a single class without a class designation are deemed "Class A" shares for this purpose. You can
obtain a current list showing which funds offer which classes by calling the Distributor at 1.800.525.7048.
o All of the Oppenheimer funds currently offer Class A, B and C shares except Oppenheimer Money Market Fund,
Inc., Centennial Money Market Trust, Centennial Tax Exempt Trust, Centennial Government Trust, Centennial New
York Tax Exempt Trust, Centennial California Tax Exempt Trust, and Centennial America Fund, L.P., which only
offer Class A shares.
o Class B, Class C and Class N shares of Oppenheimer Cash Reserves are generally available only by exchange
from the same class of shares of other Oppenheimer funds or through OppenheimerFunds-sponsored 401(k) plans.
o Only certain Oppenheimer funds currently offer Class Y shares. Class Y shares of Oppenheimer Real Asset
Fund may not be exchanged for shares of any other fund.
o Only certain Oppenheimer funds currently offer Class N shares, which are only offered to retirement plans
as described in the Prospectus. Class N shares can be exchanged only for Class N shares of other Oppenheimer
funds.
o Class M shares of Oppenheimer Convertible Securities Fund may be exchanged only for Class A shares of other
Oppenheimer funds. They may not be acquired by exchange of shares of any class of any other Oppenheimer funds
except Class A shares of Oppenheimer Money Market Fund or Oppenheimer Cash Reserves acquired by exchange of
Class M shares.
o Class A shares of Senior Floating Rate Fund are not available by exchange of Class A shares of other
Oppenheimer funds. Class A shares of Senior Floating Rate Fund that are exchanged for shares of the other
Oppenheimer funds may not be exchanged back for Class A shares of Senior Floating Rate Fund.
o Class X shares of Limited Term New York Municipal Fund can be exchanged only for Class B shares of other
Oppenheimer funds and no exchanges may be made to Class X shares.
o Shares of Oppenheimer Capital Preservation Fund may not be exchanged for shares of Oppenheimer Money Market
Fund, Inc., Oppenheimer Cash Reserves or Oppenheimer Limited-Term Government Fund. Only participants in
certain retirement plans may purchase shares of Oppenheimer Capital Preservation Fund, and only those
participants may exchange shares of other Oppenheimer funds for shares of Oppenheimer Capital Preservation Fund.
o Class A shares of Oppenheimer Senior Floating Rate Fund are not available by exchange of shares of
Oppenheimer Money Market Fund or Class A shares of Oppenheimer Cash Reserves. If any Class A shares of another
Oppenheimer fund that are exchanged for Class A shares of Oppenheimer Senior Floating Rate Fund are subject to
the Class A contingent deferred sales charge of the other Oppenheimer fund at the time of exchange, the holding
period for that Class A contingent deferred sales charge will carry over to the Class A shares of Oppenheimer
Senior Floating Rate Fund acquired in the exchange. The Class A shares of Oppenheimer Senior Floating Rate Fund
acquired in that exchange will be subject to the Class A Early Withdrawal Charge of Oppenheimer Senior Floating
Rate Fund if they are repurchased before the expiration of the holding period.
o Class A, Class B, Class C and Class Y Shares of Oppenheimer Select Managers Mercury Advisors S&P Index Fund
and Oppenheimer Select Managers QM Active Balanced Fund are only available to retirement plans and are
available only by exchange from the same class of shares of other Oppenheimer funds held by retirement plans.

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

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

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

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

How Exchanges Affect Contingent Deferred Sales Charges. No contingent deferred sales charge is imposed on
exchanges of shares of any class purchased subject to a contingent deferred sales charge. However, when Class A
shares acquired by exchange of Class A shares of other Oppenheimer funds purchased subject to a Class A contingent
deferred sales charge are redeemed within 18 months of the end of the calendar month of the initial purchase of the
exchanged Class A shares, the Class A contingent deferred sales charge is imposed on the redeemed shares. The Class
B contingent deferred sales charge is imposed on Class B shares acquired by exchange if they are redeemed within 6
years of the initial purchase of the exchanged Class B shares. The Class C contingent deferred sales charge is
imposed on Class C shares acquired by exchange if they are redeemed within 12 months of the initial purchase of the
exchanged Class C shares. With respect to Class N shares, a 1% contingent deferred sales charge will be imposed if
the retirement plan (not including IRAs and 403(b) plans) is terminated or Class N shares of all Oppenheimer funds
are terminated as an investment option of the plan and Class N shares are redeemed within 18 months after the
plan's first purchase of Class N shares of any Oppenheimer fund or with respect to an individual retirement plan or
403(b) plan, Class N shares are redeemed within 18 months of the plan's first purchase of Class N shares of any
Oppenheimer fund.

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

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

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

Telephone Exchange Requests. When exchanging shares by telephone, a shareholder must have an existing account in
the fund to which the exchange is to be made. Otherwise, the investors must obtain a Prospectus of that fund before
the exchange request may be submitted. If all telephone lines are busy (which might occur, for example, during
periods of substantial market fluctuations), shareholders might not be able to request exchanges by telephone and
would have to submit written exchange requests.

Processing Exchange Requests. Shares to be exchanged are redeemed on the regular business day the Transfer Agent
receives an exchange request in proper form (the "Redemption Date"). Normally, shares of the fund to be acquired
are purchased on the Redemption Date, but such purchases may be delayed by either fund up to five business days if
it determines that it would be disadvantaged by an immediate transfer of the redemption proceeds. The Fund
reserves the right, in its discretion, to refuse any exchange request that may disadvantage it. For example, if the
receipt of multiple exchange requests from a dealer might require the disposition of portfolio securities at a time
or at a price that might be disadvantageous to the Fund, the Fund may refuse the request. When you exchange some
or all of your shares from one fund to another, any special account feature such as an Asset Builder Plan or
Automatic Withdrawal Plan, will be switched to the new fund account unless you tell the Transfer Agent not to do
so. However, special redemption and exchange features such as Automatic Exchange Plans and Automatic Withdrawal
Plans cannot be switched to an account in Oppenheimer Senior Floating Rate Fund.

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

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

Dividends, Capital Gains and Taxes

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

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

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

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

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

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

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

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

Additional Information About the Fund

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

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

The Custodian Bank. The Bank of New York is the custodian bank of the Fund's assets. The custodian bank's
responsibilities include safeguarding and controlling the Fund's portfolio securities and handling the delivery of
such securities to and from the Fund. It will be the practice of the Fund to deal with the custodian bank in a
manner uninfluenced by any banking relationship the custodian bank may have with the Manager and its affiliates.
The Fund's cash balances with the custodian bank in excess of $100,000 are not protected by federal deposit
insurance. Those uninsured balances at times may be substantial.

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

INDEPENDENT AUDITORS' REPORT


================================================================================
THE BOARD OF TRUSTEES AND SHAREHOLDERS OF
OPPENHEIMER DEVELOPING MARKETS FUND:

We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppenheimer Developing Markets Fund as of
August 31, 2000, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the years in the
two-year period then ended and the financial highlights for each of the years in
the three-year period then ended and the period from November 18, 1996
(commencement of operations) to August 31, 1997. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.

       We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of August 31, 2000, by correspondence with the custodian and
brokers; and where confirmations were not received from brokers, we performed
other auditing procedures. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

       In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Oppenheimer Developing Markets Fund as of August 31, 2000, the
results of its operations for the year then ended, the changes in its net assets
for each of the years in the two-year period then ended, and the financial
highlights for each of the years in the three-year period then ended and the
period from November 18, 1996 (commencement of operations) to August 31, 1997,
in conformity with accounting principles generally accepted in the United States
of America.


KPMG LLP

/s/ KPMG LLP
Denver, Colorado
September 22, 2000

STATEMENT OF INVESTMENTS  August 31, 2000

                                                                                         MARKET VALUE
                                                                            SHARES         SEE NOTE 1
=====================================================================================================

 COMMON STOCKS--94.9%
-----------------------------------------------------------------------------------------------------
 BASIC MATERIALS--4.4%
-----------------------------------------------------------------------------------------------------
 METALS--4.4%
 Antofagasta plc                                                           553,180        $ 3,565,605
-----------------------------------------------------------------------------------------------------
 Caemi Mineracao e Metalurgia SA, Preference                            16,300,000          2,329,211
-----------------------------------------------------------------------------------------------------
 Freeport-McMoRan Copper & Gold, Inc., Cl. B(1)                            210,000          2,060,625
                                                                                          -----------
                                                                                            7,955,441


-----------------------------------------------------------------------------------------------------
 CAPITAL GOODS--10.6%
-----------------------------------------------------------------------------------------------------
 AEROSPACE/DEFENSE--7.2%
 Empresa Brasileira de Aeronautica SA (Embraer), Preference              1,900,000         12,917,285
-----------------------------------------------------------------------------------------------------
 INDUSTRIAL SERVICES--2.3%
 Cia de Saneamento Basico do Estado de Sao Paulo                        25,083,207          2,690,982
-----------------------------------------------------------------------------------------------------
 Hyundai Heavy Industries Co. Ltd.                                          75,000          1,488,162
                                                                                          -----------
                                                                                            4,179,144


-----------------------------------------------------------------------------------------------------
 MANUFACTURING--1.1%
 Haci Omer Sabanci Holding AS, ADR, Registered S Shares                    800,000          1,940,000
-----------------------------------------------------------------------------------------------------
 COMMUNICATION SERVICES--8.9%
-----------------------------------------------------------------------------------------------------
 TELECOMMUNICATIONS: LONG DISTANCE--2.7%
 Videsh Sanchar Nigam Ltd.                                                  82,150          1,456,426
-----------------------------------------------------------------------------------------------------
 Videsh Sanchar Nigam Ltd., GDR(2)                                         302,600          3,305,905
                                                                                          -----------
                                                                                            4,762,331


-----------------------------------------------------------------------------------------------------
 TELEPHONE UTILITIES--5.0%
 Tele Norte Leste Participacoes SA (Telemar)                           305,222,897          6,122,911
-----------------------------------------------------------------------------------------------------
 Tele Norte Leste Participacoes SA (Telemar), Preference                35,738,257            907,451
-----------------------------------------------------------------------------------------------------
 Telecomunicacoes do Rio de Janeiro SA, Preference(1)                   50,018,554          1,528,459
-----------------------------------------------------------------------------------------------------
 Telefonica SA, BDR(1)                                                      20,308            381,717
                                                                                          -----------
                                                                                            8,940,538


-----------------------------------------------------------------------------------------------------
 TELECOMMUNICATIONS: WIRELESS--1.2%
 Partner Communications Co. Ltd., Sponsored ADR(1)                         180,750          1,717,125
-----------------------------------------------------------------------------------------------------
 Telesp Celular Participacoes SA, Preference(1)                         32,907,240            486,510
                                                                                          -----------





N>
                                                                                     MARKET VALUE
                                                                        SHARES         SEE NOTE 1
=================================================================================================

 CONSUMER CYCLICALS--14.6%
-------------------------------------------------------------------------------------------------
 AUTOS & HOUSING--5.3%
 Brazil Realty SA, GDR(3)                                               63,580        $  898,068
-------------------------------------------------------------------------------------------------
 Corporacion GEO SA de CV, Cl. B(1)                                  1,543,000         2,916,539
-------------------------------------------------------------------------------------------------
 G. Accion SA de CV, Cl. B(1,3)                                      3,443,000         1,645,668
-------------------------------------------------------------------------------------------------
 Madinet Nasr for Housing & Development Co.                            220,000         1,528,421
-------------------------------------------------------------------------------------------------
 Solidere, GDR(1,2)                                                    360,900         2,445,098
                                                                                      -----------
                                                                                       9,433,794


-------------------------------------------------------------------------------------------------
 CONSUMER SERVICES--0.4%
 Art Marketing Syndicate SA(1)                                          52,830           632,298
-------------------------------------------------------------------------------------------------
 LEISURE & ENTERTAINMENT--2.3%
 Danubius Hotel & Spa Rt.                                               77,300         1,443,631
-------------------------------------------------------------------------------------------------
 Hongkong & Shanghai Hotels Ltd. (The)                               4,177,000         2,624,248
                                                                                      -----------
                                                                                        4,067,879


-------------------------------------------------------------------------------------------------
 MEDIA--5.3%
 Hurriyet Gazetecilik ve Matbaacilik AS(1)                          90,610,000           996,383
-------------------------------------------------------------------------------------------------
 Impresa-Sociedade Gestora de Participacoes SA(1)                      145,000         1,415,536
-------------------------------------------------------------------------------------------------
 MacMillan India MC                                                     21,500           408,674
-------------------------------------------------------------------------------------------------
 Naspers Ltd., N Shares                                                170,000         1,557,978
-------------------------------------------------------------------------------------------------
 Primedia Ltd., N Shares                                               845,600           727,659
-------------------------------------------------------------------------------------------------
 Singapore Press Holdings Ltd.                                         111,000         1,786,266
-------------------------------------------------------------------------------------------------
 Times Publishing Ltd.                                               1,140,000         2,516,702
                                                                                      -----------
                                                                                       9,409,198

-------------------------------------------------------------------------------------------------
 RETAIL: SPECIALTY--1.3%
 Courts (Singapore) Ltd.                                             6,815,000         2,355,734
-------------------------------------------------------------------------------------------------
 CONSUMER STAPLES--17.2%
-------------------------------------------------------------------------------------------------
 BEVERAGES--2.4%
 Cia Cervejaria Brahma, Sponsored ADR                                  169,200         3,510,900
-------------------------------------------------------------------------------------------------
 Serm Suk Public Co. Ltd.(3)                                           300,000           697,248
                                                                                      -----------
                                                                                       4,208,148


-------------------------------------------------------------------------------------------------
 BROADCASTING--7.6%
 Grupo Radio Centro SA de CV, Sponsored ADR                            322,100         2,919,031
-------------------------------------------------------------------------------------------------
 Grupo Televisa SA, Sponsored GDR(1)                                    85,900         5,562,025
-------------------------------------------------------------------------------------------------
 LG Home Shopping, Inc.                                                 20,000         2,020,293
-------------------------------------------------------------------------------------------------
 Television Broadcasts Ltd.                                            333,000         1,882,900
-------------------------------------------------------------------------------------------------
 Tiletipos SA                                                          100,000         1,242,792
                                                                                      -----------
                                                                                      13,627,041



                     15 OPPENHEIMER DEVELOPING MARKETS FUND


STATEMENT OF INVESTMENTS  Continued

                                                                                     MARKET VALUE
                                                                        SHARES         SEE NOTE 1
=================================================================================================

 ENTERTAINMENT--1.0%
 Shaw Brothers (Hong Kong) Ltd.                                      2,000,000       $ 1,846,320
-------------------------------------------------------------------------------------------------
 FOOD & DRUG RETAILERS--2.8%
 Dairy Farm International Holdings Ltd.                              4,142,100         1,905,366
-------------------------------------------------------------------------------------------------
 Jeronimo Martins & Filho SA                                           160,000         2,284,631
-------------------------------------------------------------------------------------------------
 PT Hero Supermarket Tbk(1)                                          4,916,000           904,568
                                                                                      -----------
                                                                                       5,094,565


-------------------------------------------------------------------------------------------------
 HOUSEHOLD GOODS--2.5%
 Grupo Casa Saba SA de CV, Sponsored ADR(1)                            297,000         3,044,250
-------------------------------------------------------------------------------------------------
 Hindustan Lever Ltd.                                                      380             1,981
-------------------------------------------------------------------------------------------------
 Marico Industries Ltd.                                                222,000         1,367,796
                                                                                      -----------
                                                                                       4,414,027


-------------------------------------------------------------------------------------------------
 TOBACCO--0.9%
 Eastern Tobacco Co.                                                    80,000         1,684,438
-------------------------------------------------------------------------------------------------
 ENERGY--2.7%
-------------------------------------------------------------------------------------------------
 OIL: INTERNATIONAL--2.7%
 Bharat Petroleum Corp. Ltd.                                         1,271,500         4,878,204
-------------------------------------------------------------------------------------------------
 FINANCIAL--19.4%
-------------------------------------------------------------------------------------------------
 BANKS--7.1%
 BBV Banco BHIF, Sponsored ADR                                         123,600         1,807,650
-------------------------------------------------------------------------------------------------
 Commercial International Bank, Sponsored GDR                          238,000         2,272,900
-------------------------------------------------------------------------------------------------
 Grupo Financiero Banorte SA de CV(1)                                3,138,000         4,090,598
-------------------------------------------------------------------------------------------------
 Grupo Financiero Inbursa SA de CV(1)                                  578,770         2,187,952
-------------------------------------------------------------------------------------------------
 Unibanco-Uniao de Bancos Brasileiros SA, Sponsored GDR                 68,000         2,312,000
                                                                                      -----------
                                                                                      12,671,100


-------------------------------------------------------------------------------------------------
 DIVERSIFIED FINANCIAL--7.6%
 Administradora de Fondos de Pensiones Provida SA, Sponsored ADR        75,000         1,565,625
-------------------------------------------------------------------------------------------------
 Espirito Santo Financial Group, ADR                                   160,550         3,130,725
-------------------------------------------------------------------------------------------------
 Housing Development Finance Corp. Ltd.                                272,800         3,140,746
-------------------------------------------------------------------------------------------------
 ICICI Ltd., Sponsored ADR                                             390,375         5,514,047
-------------------------------------------------------------------------------------------------
 Kotak Mahindra Finance Ltd.(1)                                        112,711           187,770
                                                                                      -----------
                                                                                      13,538,913


-------------------------------------------------------------------------------------------------
 INSURANCE--4.7%
 Adamjee Insurance Co. Ltd.                                            745,442           862,720
-------------------------------------------------------------------------------------------------
 Aksigorta AS                                                      140,298,000         2,678,424
-------------------------------------------------------------------------------------------------
 Fubon Insurance Co., GDR                                              269,677         1,806,836



                     16 OPPENHEIMER DEVELOPING MARKETS FUND
                                                                                     MARKET VALUE
                                                                        SHARES         SEE NOTE 1
=================================================================================================

 INSURANCE Continued
 Liberty Group Ltd.(1)                                                  76,144      $    709,840
-------------------------------------------------------------------------------------------------
 Sanlam Ltd.                                                           700,000           843,313
-------------------------------------------------------------------------------------------------
 Towarzystwo Ubezpieczen i Reasekuracji Warta SA                        48,263         1,441,343
                                                                                      -----------
                                                                                       8,342,476
-------------------------------------------------------------------------------------------------
 HEALTHCARE--7.1%
-------------------------------------------------------------------------------------------------
 HEALTHCARE/DRUGS--7.1%
 Cheminor Drugs Ltd.                                                   420,608         3,979,097
-------------------------------------------------------------------------------------------------
 Dr. Reddy's Laboratories Ltd.                                          61,750         1,788,214
-------------------------------------------------------------------------------------------------
 Haw Par Healthcare Ltd.                                             1,362,000         1,194,806
-------------------------------------------------------------------------------------------------
 Pliva d.d., Sponsored GDR(2)                                          473,900         5,035,188
-------------------------------------------------------------------------------------------------
 Sun Pharmaceutical Industries Ltd.                                     55,800           679,426
                                                                                      -----------
                                                                                      12,676,731


-------------------------------------------------------------------------------------------------
 TECHNOLOGY--6.7%
-------------------------------------------------------------------------------------------------
 COMPUTER HARDWARE--0.3%
 GVC Corp., GDR(1)                                                     200,000           588,960
-------------------------------------------------------------------------------------------------
 COMPUTER SERVICES--1.7%
 CCT Telecom Holdings Ltd.(1)                                       14,114,000         2,967,825
-------------------------------------------------------------------------------------------------
 COMPUTER SOFTWARE--4.4%
 NIIT Ltd.                                                              97,700         4,024,335
-------------------------------------------------------------------------------------------------
 ParaRede-SGPS, SA(1)                                                  600,000         2,880,684
-------------------------------------------------------------------------------------------------
 Software Solution Integrated Ltd.(1)                                   15,000           927,480
                                                                                      -----------
                                                                                       7,832,499


-------------------------------------------------------------------------------------------------
 ELECTRONICS--0.3%
 DVB (Holdings) Ltd.(1)                                              1,150,000           479,210


-------------------------------------------------------------------------------------------------
 UTILITIES--3.3%
-------------------------------------------------------------------------------------------------
 ELECTRIC UTILITIES--2.7%
 Cia Paranaense Energia, Sponsored ADR, Preference, B Shares           498,300         4,827,281
-------------------------------------------------------------------------------------------------
 GAS UTILITIES--0.6%
 Aygaz AS                                                           23,684,000         1,030,903
                                                                                      -----------
 Total Common Stocks (Cost $152,228,319)                                             169,505,918



                     17 OPPENHEIMER DEVELOPING MARKETS FUND


STATEMENT OF INVESTMENTS  Continued

                                                                                    MARKET VALUE
                                                                         UNITS        SEE NOTE 1
=================================================================================================

 RIGHTS, WARRANTS AND CERTIFICATES--0.8%
 Queenbee Resources Corp./Jollibee Foods Corp. Wts., Exp. 3/24/03    5,337,460      $  1,419,380
-------------------------------------------------------------------------------------------------
 Telesp Celular Participacoes SA Rts., Exp. 10/5/00                  3,290,724             1,989
                                                                                    -------------
 Total Rights, Warrants and Certificates (Cost $1,495,032)                             1,421,369

                                                                     PRINCIPAL
                                                                     AMOUNT(5)
=================================================================================================
 CORPORATE BONDS AND NOTES--0.5%
 Grupo Financiero Banorte SA de CV, 19.02% Nts., 12/5/02(3,4)
 [MXN](Cost $892,218)                                                7,730,000           822,921


=================================================================================================
 REPURCHASE AGREEMENTS--3.9%
 Repurchase agreement with Banc One Capital Markets, Inc.,
 6.57%, dated 8/31/00, to be repurchased at $7,073,291 on
 9/1/00, collateralized by U.S. Treasury Bonds, 6.25%-12%,
 11/15/03-8/15/23, with a value of $3,027,174, U.S.
 Treasury Nts., 4.25%-7.50%, 12/31/00-2/15/07, with a
 value of $3,456,779 and U.S. Treasury Bills, 11/30/00,
 with a value of $740,302 (Cost $7,072,000)                          7,072,000         7,072,000
-------------------------------------------------------------------------------------------------
 TOTAL INVESTMENTS, AT VALUE (COST $161,687,569)                         100.1%      178,822,208
-------------------------------------------------------------------------------------------------
 LIABILITIES IN EXCESS OF OTHER ASSETS                                    (0.1)         (177,433)
                                                                     ----------------------------
 NET ASSETS                                                              100.0%     $178,644,775
                                                                     ============================



FOOTNOTES TO STATEMENT OF INVESTMENTS

1. Non-income-producing security.

2. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $10,786,191 or 6.04% of the Fund's net
assets as of August 31, 2000.

3. Identifies issues considered to be illiquid or restricted--See Note 6 of
Notes to Financial Statements.

4. Represents the current interest rate for a variable or increasing rate
security.

5. Principal amount is reported in U.S. Dollars, except for those denoted in the
following currency:

MXN--Mexican Nuevo Peso

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                     18 OPPENHEIMER DEVELOPING MARKETS FUND



FOOTNOTES TO STATEMENT OF INVESTMENTS Continued

 DISTRIBUTION OF INVESTMENTS REPRESENTING GEOGRAPHIC DIVERSIFICATION, AS A PERCENTAGE OF TOTAL INVESTMENTS
 AT VALUE, IS AS FOLLOWS:

 GEOGRAPHIC DIVERSIFICATION                                       MARKET VALUE             PERCENT
----------------------------------------------------------------------------------------------------


 Brazil                                                          $  38,533,045                21.5%
 India                                                              31,660,099                17.7
 Mexico                                                             23,188,985                13.0
 Hong Kong                                                           9,800,503                 5.5
 Singapore                                                           9,758,875                 5.5
 Portugal                                                            9,711,577                 5.4
 United States                                                       9,132,625                 5.1
 Turkey                                                              6,645,711                 3.7
 Egypt                                                               5,485,759                 3.1
 Croatia                                                             5,035,188                 2.8
 South Africa                                                        3,838,790                 2.1
 Great Britain                                                       3,565,605                 2.0
 Korea, Republic of (South)                                          3,508,455                 2.0
 Chile                                                               3,373,275                 1.9
 Lebanon                                                             2,445,098                 1.4
 Taiwan                                                              2,395,796                 1.3
 Poland                                                              2,073,641                 1.2
 Israel                                                              1,717,125                 1.0
 Hungary                                                             1,443,631                 0.8
 Philippines                                                         1,419,380                 0.8
 Greece                                                              1,242,792                 0.7
 Indonesia                                                             904,568                 0.5
 Pakistan                                                              862,720                 0.5
 Thailand                                                              697,248                 0.4
 Spain                                                                 381,717                 0.1
                                                                 -----------------------------------
 Total                                                            $178,822,208               100.0%
                                                                 ===================================


SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                     19 OPPENHEIMER DEVELOPING MARKETS FUND


STATEMENT OF ASSETS AND LIABILITIES  August 31, 2000


==================================================================================================
 ASSETS

 Investments, at value (cost $161,687,569)--see accompanying statement             $178,822,208
--------------------------------------------------------------------------------------------------
 Cash                                                                                    12,691
--------------------------------------------------------------------------------------------------
 Cash--foreign currencies (cost $8,903)                                                   8,689
--------------------------------------------------------------------------------------------------
 Unrealized appreciation on foreign currency contracts                                        3
--------------------------------------------------------------------------------------------------
 Receivables and other assets:
 Shares of beneficial interest sold                                                   1,826,335
 Interest and dividends                                                                 491,360
 Other                                                                                    5,829
                                                                                 -----------------
 Total assets                                                                       181,167,115


==================================================================================================
 LIABILITIES
 Unrealized depreciation on foreign currency contracts                                      696
--------------------------------------------------------------------------------------------------
 Payables and other liabilities:
 Investments purchased                                                                1,472,109
 Shares of beneficial interest redeemed                                                 631,657
 Transfer and shareholder servicing agent fees                                          122,108
 Foreign capital gains taxes                                                            116,787
 Distribution and service plan fees                                                      68,120
 Trustees' compensation                                                                  34,375
 Other                                                                                   76,488
                                                                                 -----------------
 Total liabilities                                                                    2,522,340

==================================================================================================
 NET ASSETS                                                                        $178,644,775
                                                                                 =================


==================================================================================================
 COMPOSITION OF NET ASSETS
 Paid-in capital                                                                   $155,769,653
--------------------------------------------------------------------------------------------------
 Undistributed net investment income                                                  1,180,759
--------------------------------------------------------------------------------------------------
 Accumulated net realized gain on investments and
 foreign currency transactions                                                        4,565,686
--------------------------------------------------------------------------------------------------
 Net unrealized appreciation on investments and translation of
 assets and liabilities denominated in foreign currencies                            17,128,677
                                                                                 -----------------
 NET ASSETS                                                                        $178,644,775
                                                                                 =================


==================================================================================================
 NET ASSET VALUE PER SHARE
 Class A Shares:
 Net asset value and redemption price per share (based on net assets of
 $114,136,507 and 6,775,383 shares of beneficial interest outstanding)                   $16.85
 Maximum offering price per share (net asset value plus sales charge of 5.75% of
 offering price)                                                                         $17.88
--------------------------------------------------------------------------------------------------
 Class B Shares:
 Net asset value, redemption price (excludes applicable contingent deferred
 sales charge) and offering price per share (based on net assets of
 $48,145,651 and 2,883,276 shares of beneficial interest outstanding)                    $16.70
--------------------------------------------------------------------------------------------------
 Class C Shares:
 Net asset value, redemption price (excludes applicable contingent deferred
 sales charge) and offering price per share (based on net assets of
 $16,362,617 and 981,251 shares of beneficial interest outstanding)                      $16.68


SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                     20 OPPENHEIMER DEVELOPING MARKETS FUND


STATEMENT OF OPERATIONS  For the Year Ended August 31, 2000

==================================================================================================

 INVESTMENT INCOME
 Dividends (net of foreign withholding taxes of $174,410)                          $  3,889,285
--------------------------------------------------------------------------------------------------
 Interest (net of foreign withholding taxes of $11,340)                                 511,451
                                                                                 -----------------
 Total income                                                                         4,400,736


==================================================================================================
 EXPENSES
 Management fees                                                                      1,251,751
--------------------------------------------------------------------------------------------------
 Distribution and service plan fees:
 Class A                                                                                180,696
 Class B                                                                                372,804
 Class C                                                                                102,045
--------------------------------------------------------------------------------------------------
 Transfer and shareholder servicing agent fees                                          470,303
--------------------------------------------------------------------------------------------------
 Custodian fees and expenses                                                            155,041
--------------------------------------------------------------------------------------------------
 Foreign capital gains taxes                                                            116,787
--------------------------------------------------------------------------------------------------
 Shareholder reports                                                                     96,947
--------------------------------------------------------------------------------------------------
 Trustees' compensation                                                                  12,511
--------------------------------------------------------------------------------------------------
 Other                                                                                   60,352
                                                                                 -----------------
 Total expenses                                                                       2,819,237
 Less expenses paid indirectly                                                           (6,760)
                                                                                 -----------------
 Net expenses                                                                         2,812,477


==================================================================================================
 NET INVESTMENT INCOME                                                                1,588,259


==================================================================================================
 REALIZED AND UNREALIZED GAIN (LOSS)
 Net realized gain (loss) on:
 Investments                                                                         14,571,606
 Foreign currency transactions                                                       (2,455,784)
                                                                                 -----------------
 Net realized gain                                                                   12,115,822
--------------------------------------------------------------------------------------------------
 Net change in unrealized appreciation (depreciation) on:
 Investments                                                                         20,067,364
 Translation of assets and liabilities denominated in foreign currencies             (1,069,826)
                                                                                 -----------------
 Net change                                                                          18,997,538
                                                                                 -----------------
 Net realized and unrealized gain                                                    31,113,360


==================================================================================================
 NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS                               $32,701,619
                                                                                 =================



SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                     21 OPPENHEIMER DEVELOPING MARKETS FUND


STATEMENTS OF CHANGES IN NET ASSETS


 YEAR ENDED AUGUST 31,                                                      2000           1999
==================================================================================================

 OPERATIONS
 Net investment income                                           $     1,588,259  $     401,591
--------------------------------------------------------------------------------------------------
 Net realized gain (loss)                                             12,115,822     (1,959,816)
--------------------------------------------------------------------------------------------------
 Net change in unrealized appreciation                                18,997,538     20,753,634
                                                                 ---------------  ----------------
 Net increase in net assets resulting from operations                 32,701,619     19,195,409


==================================================================================================
 DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
 Dividends from net investment income:
 Class A                                                                (474,878)      (299,233)
 Class B                                                                 (72,621)       (57,849)
 Class C                                                                 (20,349)        (9,462)
--------------------------------------------------------------------------------------------------
 Distributions from net realized gain:
 Class A                                                                      --       (217,044)
 Class B                                                                      --       (123,480)
 Class C                                                                      --        (27,449)


==================================================================================================
 BENEFICIAL INTEREST TRANSACTIONS
 Net increase in net assets resulting from
 beneficial interest transactions:
 Class A                                                              53,825,278      5,563,014
 Class B                                                              17,625,360      2,081,959
 Class C                                                               8,922,257        519,729

==================================================================================================
 NET ASSETS
 Total increase                                                      112,506,666     26,625,594
--------------------------------------------------------------------------------------------------
 Beginning of period                                                  66,138,109     39,512,515
                                                                 ---------------  ----------------
 End of period (including undistributed net investment
 income of $1,180,759 and $272,716, respectively)                $   178,644,775  $  66,138,109
                                                                 ===============  ================



SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                     22 OPPENHEIMER DEVELOPING MARKETS FUND


FINANCIAL HIGHLIGHTS


 CLASS A      YEAR ENDED AUGUST 31,                         2000       1999        1998     1997(1)
=====================================================================================================

 PER SHARE OPERATING DATA
 Net asset value, beginning of period                     $11.40      $7.76      $12.82      $10.00
-----------------------------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment income                                       .20        .10         .11         .07
 Net realized and unrealized gain (loss)                    5.37       3.71       (4.62)       2.75
                                                          -------------------------------------------
 Total income (loss) from investment operations             5.57       3.81       (4.51)       2.82
-----------------------------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income                       (.12)      (.10)       (.09)         --
 Distributions from net realized gain                         --       (.07)       (.46)         --
                                                          -------------------------------------------
 Total dividends and/or distributions
 to shareholders                                            (.12)      (.17)       (.55)         --
-----------------------------------------------------------------------------------------------------
 Net asset value, end of period                           $16.85     $11.40      $ 7.76      $12.82
                                                          ===========================================


=====================================================================================================
 TOTAL RETURN, AT NET ASSET VALUE(2)                       49.12%     49.92%     (36.33)%     28.20%


=====================================================================================================
 RATIOS/SUPPLEMENTAL DATA
 Net assets, end of period (in thousands)               $114,137    $40,046     $23,663     $37,613
-----------------------------------------------------------------------------------------------------
 Average net assets (in thousands)                      $ 77,848    $29,183     $35,864     $17,852
-----------------------------------------------------------------------------------------------------
 Ratios to average net assets:(3)
 Net investment income                                      1.56%      1.11%       0.87%       1.45%
 Expenses                                                   1.96%      2.36%       2.18%(4)    1.94%(4)
-----------------------------------------------------------------------------------------------------
 Portfolio turnover rate                                      22%        37%         78%         27%




1. For the period from November 18, 1996 (commencement of operations) to August
31, 1997.

2. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or commencement of operations), 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.

3. Annualized for periods of less than one full year.

4. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                     23 OPPENHEIMER DEVELOPING MARKETS FUND


FINANCIAL HIGHLIGHTS  Continued



 CLASS B      YEAR ENDED AUGUST 31,                         2000       1999        1998     1997(1)
=======================================================================================================

 PER SHARE OPERATING DATA
 Net asset value, beginning of period                     $11.30    $  7.69      $12.73     $ 10.00
-------------------------------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment income                                       .11        .04         .01         .03
 Net realized and unrealized gain (loss)                    5.33       3.68       (4.57)       2.70
                                                          ---------------------------------------------
 Total income (loss) from investment operations             5.44       3.72       (4.56)       2.73
-------------------------------------------------------------------------------------------------------
 Dividends and/or distributions to Shareholders:
 Dividends from net investment income                       (.04)      (.04)       (.02)         --
 Distributions from net realized gain                         --       (.07)       (.46)         --
                                                          ---------------------------------------------
 Total dividends and/or distributions
 to shareholders                                            (.04)      (.11)       (.48)         --
-------------------------------------------------------------------------------------------------------
 Net asset value, end of period                           $16.70     $11.30       $7.69      $12.73
                                                          =============================================


=======================================================================================================
 TOTAL RETURN, AT NET ASSET VALUE(2)                       48.20%     48.81%     (36.85)%     27.30%


=======================================================================================================
 RATIOS/SUPPLEMENTAL DATA
 Net assets, end of period (in thousands)                $48,146    $21,028     $12,788     $20,470
-------------------------------------------------------------------------------------------------------
 Average net assets (in thousands)                       $37,333    $16,430     $18,673     $ 7,802
-------------------------------------------------------------------------------------------------------
 Ratios to average net assets:(3)
 Net investment income                                      0.78%      0.37%       0.07%       0.87%
 Expenses                                                   2.72%      3.10%       2.95%(4)    2.78%(4)
-------------------------------------------------------------------------------------------------------
 Portfolio turnover rate                                      22%        37%         78%         27%




1. For the period from November 18, 1996 (commencement of operations) to August
31, 1997.

2. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or commencement of operations), 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.

3. Annualized for periods of less than one full year.

4. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                     24 OPPENHEIMER DEVELOPING MARKETS FUND



 CLASS C        YEAR ENDED AUGUST 31,                       2000       1999        1998     1997(1)
======================================================================================================

 PER SHARE OPERATING DATA
 Net asset value, beginning of period                    $ 11.31     $ 7.68      $12.74     $ 10.00
------------------------------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment income                                       .09        .04         .02         .04
 Net realized and unrealized gain (loss)                    5.32       3.69       (4.58)       2.70
                                                          --------------------------------------------
 Total income (loss) from investment operations             5.41       3.73       (4.56)       2.74
------------------------------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income                       (.04)      (.03)       (.04)         --
 Distributions from net realized gain                         -        (.07)       (.46)         --
                                                          --------------------------------------------
 Total dividends and/or distributions
 to shareholders                                            (.04)      (.10)       (.50)         --
------------------------------------------------------------------------------------------------------
 Net asset value, end of period                           $16.68     $11.31       $7.68      $12.74
                                                          ============================================


======================================================================================================
 TOTAL RETURN, AT NET ASSET VALUE(2)                       47.93%     48.98%     (36.88)%     27.40%

======================================================================================================
 RATIOS/SUPPLEMENTAL DATA
 Net assets, end of period (in thousands)                $16,363     $5,064      $3,061      $3,713
------------------------------------------------------------------------------------------------------
 Average net assets (in thousands)                       $10,230     $4,022      $4,206      $1,560
------------------------------------------------------------------------------------------------------
 Ratios to average net assets:(3)
 Net investment income                                      0.82%      0.41%       0.24%       0.98%
 Expenses                                                   2.71%      3.08%       2.95%(4)    2.77%(4)
------------------------------------------------------------------------------------------------------
 Portfolio turnover rate                                      22%        37%         78%         27%




1. For the period from November 18, 1996 (commencement of operations) to August
31, 1997.

2. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or commencement of operations), 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.

3. Annualized for periods of less than one full year.

4. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                     25 OPPENHEIMER DEVELOPING MARKETS FUND



NOTES TO FINANCIAL STATEMENTS

================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES

Oppenheimer Developing Markets Fund (the Fund) is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company. The Fund's investment objective is to aggressively seek capital
appreciation. The Fund's investment advisor is OppenheimerFunds, Inc. (the
Manager).

       The Fund offers Class A, Class B and Class C shares. Class A shares are
sold at their offering price, which is normally net asset value plus a front-end
sales charge. Class B and Class C shares are sold without a front-end sales
charge but may be subject to a contingent deferred sales charge (CDSC). All
classes of shares have identical rights to earnings, assets and voting
privileges, except that each class has its own expenses directly attributable to
that class and exclusive voting rights with respect to matters affecting that
class. Classes A, B and C have separate distribution and/or service plans. 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.

--------------------------------------------------------------------------------
SECURITIES VALUATION. Securities listed or traded on National Stock Exchanges or
other domestic or foreign exchanges are valued based on the last sale price of
the security traded on that exchange prior to the time when the Fund's assets
are valued. In the absence of a sale, the security is valued at the last sale
price on the prior trading day, if it is within the spread of the closing bid
and asked prices, and if not, at the closing bid price. Securities (including
restricted securities) for which quotations are not readily available are valued
primarily using dealer-supplied valuations, a portfolio pricing service
authorized by the Board of Trustees, or at their fair value. Fair value is
determined in good faith under consistently applied procedures under the
supervision of the Board of Trustees. Short-term "money market type" debt
securities with remaining maturities of sixty days or less are valued at
amortized cost (which approximates market value).

--------------------------------------------------------------------------------
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 foreign securities and investment income are
translated at the rates of exchange prevailing on the respective dates of such
transactions.

       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 Statement of Operations.


                     26 OPPENHEIMER DEVELOPING MARKETS FUND



--------------------------------------------------------------------------------
REPURCHASE AGREEMENTS. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.

--------------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than
those attributable to a specific class), 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.

--------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Fund has adopted an unfunded retirement plan for the
Fund's independent Board of Trustees. Benefits are based on years of service and
fees paid to each trustee during the years of service. During the year ended
August 31, 2000, a provision of $6,333 was made for the Fund's projected benefit
obligations and payments of $460 were made to retired trustees, resulting in an
accumulated liability of $32,845 as of August 31, 2000.

       The Board of Trustees has adopted a deferred compensation plan for
independent trustees that enables trustees to elect to defer receipt of all or a
portion of annual compensation they are entitled to receive from the Fund. Under
the plan, the compensation deferred is periodically adjusted as though an
equivalent amount had been invested for the Board of Trustees in shares of one
or more Oppenheimer funds selected by the trustee. The amount paid to the Board
of Trustees under the plan will be determined based upon the performance of the
selected funds. Deferral of trustees' fees under the plan will not affect the
net assets of the Fund, and will not materially affect the Fund's assets,
liabilities or net investment income per share.

--------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date.


                     27 OPPENHEIMER DEVELOPING MARKETS FUND



NOTES TO FINANCIAL STATEMENTS  Continued

================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES  Continued

CLASSIFICATION OF DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Net investment
income (loss) and net realized gain (loss) may differ for financial statement
and tax purposes primarily because of paydown gains and losses and the
recognition of certain foreign currency gains (losses) as ordinary income (loss)
for tax purposes. The character of dividends and distributions made during the
fiscal year from net investment income or net realized gains may differ from its
ultimate characterization for federal income tax purposes. Also, due to timing
of dividends and distributions, the fiscal year in which amounts are distributed
may differ from the fiscal year in which the income or realized gain was
recorded by the Fund.

       The Fund adjusts the classification of distributions to shareholders to
reflect the differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly, during the
year ended August 31, 2000, amounts have been reclassified to reflect an
increase in paid-in capital of $3,357,116, a decrease in undistributed net
investment income of $112,368, and a decrease in accumulated net realized gain
on investments of $3,244,748. This reclassification includes $3,362,892
distributed in connection with Fund share redemptions which increased paid-in
capital and reduced accumulated net realized gain. Net assets of the Fund were
unaffected by the reclassifications.

--------------------------------------------------------------------------------
EXPENSE OFFSET ARRANGEMENTS. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Fund.

--------------------------------------------------------------------------------
OTHER. Investment transactions are accounted for as of trade date and dividend
income is recorded on the ex-dividend date. Certain dividends from foreign
securities will be recorded as soon as the Fund is informed of the dividend if
such information is obtained subsequent to the ex-dividend date. Realized gains
and losses on investments and unrealized appreciation and depreciation are
determined on an identified cost basis, which is the same basis used for federal
income tax purposes.

       The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.


                     28 OPPENHEIMER DEVELOPING MARKETS FUND



================================================================================
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:


                                  YEAR ENDED AUGUST 31, 2000         YEAR ENDED AUGUST 31, 1999
                                     SHARES           AMOUNT            SHARES           AMOUNT
------------------------------------------------------------------------------------------------

CLASS A
Sold                             10,550,933    $ 174,937,404         4,371,002     $ 42,720,089
Dividends and/or
distributions reinvested             31,540          440,912            59,038          498,873
Redeemed                         (7,319,699)    (121,553,038)       (3,967,426)     (37,655,948)
                                 ---------------------------------------------------------------
Net increase                      3,262,774    $  53,825,278           462,614     $  5,563,014
                                 ===============================================================


------------------------------------------------------------------------------------------------
CLASS B
Sold                              2,289,199    $  37,593,902         1,618,428     $ 16,240,189
Dividends and/or
distributions reinvested              4,985           69,291            20,507          172,670
Redeemed                         (1,271,347)     (20,037,833)       (1,441,572)     (14,330,900)
                                 ---------------------------------------------------------------
Net increase                      1,022,837    $  17,625,360           197,363     $  2,081,959
                                 ===============================================================


------------------------------------------------------------------------------------------------
CLASS C
Sold                                819,660    $  13,558,912           392,347     $  3,833,222
Dividends and/or
distributions reinvested              1,334           18,568             4,083           34,424
Redeemed                           (287,683)      (4,655,223)         (346,893)      (3,347,917)
                                 ---------------------------------------------------------------
Net increase                        533,311    $   8,922,257            49,537     $    519,729
                                 ===============================================================



================================================================================
3. PURCHASES AND SALES OF SECURITIES

The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the year ended August 31, 2000, were
$102,209,885 and $26,818,835, respectively.

       As of August 31, 2000, unrealized appreciation (depreciation) based on
cost of securities for federal income tax purposes of $163,928,405 was:


           Gross unrealized appreciation             $ 32,676,628
           Gross unrealized depreciation              (17,783,040)
                                                     -------------
           Net unrealized appreciation               $ 14,893,588
                                                     =============



================================================================================
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES

MANAGEMENT FEES. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for an annual fee of
1.00% of the first $250 million of average annual net assets of the Fund, 0.95%
of the next $250 million, 0.90% of the next $500 million, and 0.85% of average
annual net assets over $1 billion. The Fund's management fee for the year ended
August 31, 2000, was an annualized rate of 1.00%, before any waiver by the
Manager if applicable.


                     29 OPPENHEIMER DEVELOPING MARKETS FUND


NOTES TO FINANCIAL STATEMENTS  Continued


================================================================================
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued

TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Fund on an
"at-cost" basis. OFS also acts as the transfer and shareholder servicing agent
for the other Oppenheimer funds.

--------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN FEES. Under its General Distributor's Agreement
with the Manager, the Distributor acts as the Fund's principal underwriter in
the continuous public offering of the different classes of shares of the Fund.

The compensation paid to (or retained by) the Distributor from the sale of
shares or on the redemption of shares is shown in the table below for the period
indicated.

                            AGGREGATE        CLASS A      COMMISSIONS     COMMISSIONS     COMMISSIONS
                            FRONT-END      FRONT-END       ON CLASS A      ON CLASS B      ON CLASS C
                        SALES CHARGES  SALES CHARGES           SHARES          SHARES          SHARES
                           ON CLASS A    RETAINED BY      ADVANCED BY     ADVANCED BY     ADVANCED BY
YEAR ENDED                     SHARES    DISTRIBUTOR   DISTRIBUTOR(1)  DISTRIBUTOR(1)  DISTRIBUTOR(1)
------------------------------------------------------------------------------------------------------

August 31, 2000              $544,323       $140,127         $101,596        $582,519         $90,600


1. The Distributor advances commission payments to dealers for certain sales of
Class A shares and for sales of Class B and Class C shares from its own
resources at the time of sale.

                                    CLASS A                        CLASS B                         CLASS C
                        CONTINGENT DEFERRED            CONTINGENT DEFERRED             CONTINGENT DEFERRED
                              SALES CHARGES                  SALES CHARGES                   SALES CHARGES
YEAR ENDED          RETAINED BY DISTRIBUTOR        RETAINED BY DISTRIBUTOR         RETAINED BY DISTRIBUTOR
----------------------------------------------------------------------------------------------------------

August 31, 2000                $1,719                        $80,424                          $2,363


       The Fund has adopted a Service Plan for Class A shares and Distribution
and Service Plans for Class B and Class C shares under Rule 12b-1 of the
Investment Company Act. Under those plans the Fund pays the Distributor for all
or a portion of its costs incurred in connection with the distribution and/or
servicing of the shares of the particular class.

--------------------------------------------------------------------------------
CLASS A SERVICE PLAN FEES. Under the Class A service plan, the Distributor
currently uses the fees it receives from the Fund to pay brokers, dealers and
other financial institutions. The Class A service plan permits reimbursements to
the Distributor at a rate of up to 0.25% of average annual net assets of Class A
shares purchased. The Distributor makes payments to plan recipients quarterly at
an annual rate not to exceed 0.25% of the average annual net assets consisting
of Class A shares of the Fund. For the year ended August 31, 2000, payments
under the Class A plan totaled $180,696 prior to Manager waivers if applicable,
all of which were paid by the Distributor to recipients, and included $14,119
paid to an affiliate of the Manager. Any unreimbursed expenses the Distributor
incurs with respect to Class A shares in any fiscal year cannot be recovered in
subsequent years.


                     30 OPPENHEIMER DEVELOPING MARKETS FUND



--------------------------------------------------------------------------------
CLASS B AND CLASS C DISTRIBUTION AND SERVICE PLAN FEES. Under each plan, service
fees and distribution fees are computed on the average of the net asset value of
shares in the respective class, determined as of the close of each regular
business day during the period. The Class B and Class C plans provide for the
Distributor to be compensated at a flat rate, whether the Distributor's
distribution expenses are more or less than the amounts paid by the Fund under
the plan during the period for which the fee is paid.

       The Distributor retains the asset-based sales charge on Class B shares.
The Distributor retains the asset-based sales charge on Class C shares during
the first year the shares are outstanding. The asset-based sales charges on
Class B and Class C shares allow investors to buy shares without a front-end
sales charge while allowing the Distributor to compensate dealers that sell
those shares.

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

Distribution fees paid to the Distributor for the year ended August 31, 2000,
were as follows:

                                                                 DISTRIBUTOR'S       DISTRIBUTOR'S
                                                                     AGGREGATE        UNREIMBURSED
                                                                  UNREIMBURSED       EXPENSES AS %
                              TOTAL PAYMENTS  AMOUNT RETAINED         EXPENSES       OF NET ASSETS
                                  UNDER PLAN   BY DISTRIBUTOR       UNDER PLAN            OF CLASS
---------------------------------------------------------------------------------------------------

Class B Plan                        $372,804         $305,627       $1,011,561                2.10%
Class C Plan                         102,045           42,975          149,787                0.92



================================================================================
5. FOREIGN CURRENCY CONTRACTS

A foreign currency contract is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate. The Fund may enter into foreign
currency contracts for operational purposes and to seek to protect against
adverse exchange rate fluctuations. Risks to the Fund include the potential
inability of the counterparty to meet the terms of the contract.

       The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates as provided by
a reliable bank, dealer or pricing service. Unrealized appreciation and
depreciation on foreign currency contracts are reported in the Statement of
Assets and Liabilities.


                     31 OPPENHEIMER DEVELOPING MARKETS FUND


NOTES TO FINANCIAL STATEMENTS  Continued


================================================================================
5. FOREIGN CURRENCY CONTRACTS  Continued

       The Fund may realize a gain or loss upon the closing or settlement of the
foreign currency transactions. Realized gains and losses are reported with all
other foreign currency gains and losses in the Statement of Operations.

       Securities denominated in foreign currency to cover net exposure on
outstanding foreign currency contracts are noted in the Statement of Investments
where applicable.

As of August 31, 2000, the Fund had outstanding foreign currency contracts as
follows:

                               EXPIRATION       CONTRACT   VALUATION AS OF    UNREALIZED    UNREALIZED
CONTRACT DESCRIPTION                 DATE  AMOUNT (000s)   AUGUST 31, 2000  APPRECIATION  DEPRECIATION
-------------------------------------------------------------------------------------------------------

CONTRACTS TO PURCHASE
Euro (EUR)                         9/4/00         EUR482          $428,483           $--         $ 684
Indian Rupee (INR)                 9/4/00         INR263             5,752            --            12
Singapore Dollar (SGD)             9/1/00          SGD12             7,054             3            --
                                                                            ---------------------------
Total Unrealized Appreciation and Depreciation                                       $ 3          $696
                                                                            ===========================



================================================================================
6. ILLIQUID SECURITIES

As of August 31, 2000, investments in securities included issues that are
illiquid. A security may be considered illiquid if it lacks a readily available
market or if its valuation has not changed for a certain period of time. The
Fund intends to invest no more than 15% of its net assets (determined at the
time of purchase and reviewed periodically) in illiquid securities. The
aggregate value of illiquid securities subject to this limitation as of August
31, 2000, was $4,063,905, which represents 2.27% of the Fund's net assets.
Certain restricted securities, eligible for resale to qualified institutional
investors, are not subject to that limit.

================================================================================
7. BANK BORROWINGS

The Fund may borrow from a bank for temporary or emergency purposes including,
without limitation, funding of shareholder redemptions provided asset coverage
for borrowings exceeds 300%. The Fund has entered into an agreement which
enables it to participate with other Oppenheimer funds in an unsecured line of
credit with a bank, which permits borrowings up to $400 million, collectively.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the Federal Funds Rate plus 0.45%. Borrowings are payable 30 days after such
loan is executed. The Fund also pays a commitment fee equal to its pro rata
share of the average unutilized amount of the credit facility at a rate of 0.08%
per annum.

       The Fund had no borrowings outstanding during the year ended August 31,
2000.


                                                     Appendix A

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

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











                                                     Appendix B
                           OppenheimerFunds Special Sales Charge Arrangements and Waivers

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

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

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

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


Waivers that apply at the time shares are redeemed must be requested by the shareholder and/or dealer in the
redemption request.
I.                       Applicability of Class A Contingent Deferred Sales Charges in Certain Cases

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

         There is no initial sales charge on purchases of Class A shares of any of the Oppenheimer funds in the
cases listed below. However, these purchases may be subject to the Class A contingent deferred sales charge if
redeemed within 18 months of the end of the calendar month of their purchase, as described in the Prospectus
(unless a waiver described elsewhere in this Appendix applies to the redemption). Additionally, on shares purchased
under these waivers that are subject to the Class A contingent deferred sales charge, the Distributor will pay the
applicable concession described in the Prospectus under "Class A Contingent Deferred Sales Charge."5 This waiver
provision applies to:
-        Purchases of Class A shares aggregating $1 million or more.
-        Purchases of Class A shares by a Retirement Plan that was permitted to purchase such shares at net asset
         value but subject to a contingent deferred sales charge prior to March 1, 2001.
-        Purchases by an OppenheimerFunds-sponsored Rollover IRA, if the purchases are made:
(1)      through a broker, dealer, bank or registered investment adviser that has made special arrangements with the
              Distributor for those purchases, or
(2)      by a direct rollover of a distribution from a qualified Retirement Plan if the administrator of that Plan
              has made special arrangements with the Distributor for those purchases.
      -           Purchases  of Class A shares by  Retirement  Plans  that have any of the  following  record-keeping
      arrangements:
(1)      The record keeping is performed by Merrill Lynch Pierce Fenner & Smith, Inc. ("Merrill Lynch") on a daily
              valuation basis for the Retirement Plan. On the date the plan sponsor signs the record-keeping service
              agreement with Merrill Lynch, the Plan must have $3 million or more of its assets invested in (a)
              mutual funds, other than those advised or managed by Merrill Lynch Investment Management, L.P.
              ("MLIM"), that are made available under a Service Agreement between Merrill Lynch and the mutual
              fund's principal underwriter or distributor, and  (b)  funds advised or managed by MLIM (the funds
              described in (a) and (b) are referred to as "Applicable Investments").
(2)      The record keeping for the Retirement Plan is performed on a daily valuation basis by a record keeper whose
              services are provided under a contract or arrangement between the Retirement Plan and Merrill Lynch.
              On the date the plan sponsor signs the record keeping service agreement with Merrill Lynch, the Plan
              must have $3 million or more of its assets (excluding assets invested in money market funds) invested
              in Applicable Investments.
(3)      The record keeping for a Retirement Plan is handled under a service agreement with Merrill Lynch and on the
              date the plan sponsor signs that agreement, the Plan has 500 or more eligible employees (as determined
              by the Merrill Lynch plan conversion manager).
      -           Purchases  by a  Retirement  Plan whose  record  keeper had a  cost-allocation  agreement  with the
      Transfer Agent on or before March 1, 2001.

II.                                 Waivers of Class A Sales Charges of Oppenheimer Funds

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

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

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

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

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

The Class A contingent deferred sales charge is also waived if shares that would otherwise be subject to the
contingent deferred sales charge are redeemed in the following cases:
      -           To make  Automatic  Withdrawal  Plan payments that are limited  annually to no more than 12% of the
      account value adjusted annually.
-        Involuntary redemptions of shares by operation of law or involuntary redemptions of small accounts (please
         refer to "Shareholder Account Rules and Policies," in the applicable fund Prospectus).
-        For distributions from Retirement Plans, deferred compensation plans or other employee benefit plans for
         any of the following purposes:


(1)      Following the death or disability (as defined in the Internal Revenue Code) of the participant or
                beneficiary. The death or disability must occur after the participant's account was established.
(2)      To return excess contributions.
(3)      To return contributions made due to a mistake of fact.
(4)      Hardship withdrawals, as defined in the plan.6
(5)      Under a Qualified Domestic Relations Order, as defined in the Internal Revenue Code, or, in the case of an
                IRA, a divorce or separation agreement described in Section 71(b) of the Internal Revenue Code.
(6)      To meet the minimum distribution requirements of the Internal Revenue Code.
(7)      To make "substantially equal periodic payments" as described in Section 72(t) of the Internal Revenue Code.
(8)      For loans to participants or beneficiaries.
(9)      Separation from service.7
(10)     Participant-directed redemptions to purchase shares of a mutual fund (other than a fund managed by the
                Manager or a subsidiary of the Manager) if the plan has made special arrangements with the
                Distributor.
(11)     Plan termination or "in-service distributions," if the redemption proceeds are rolled over directly to an
                OppenheimerFunds-sponsored IRA.
      -           For distributions  from 401(k) plans sponsored by  broker-dealers  that have entered into a special
      agreement with the Distributor allowing this waiver.

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

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

A.  Waivers for Redemptions in Certain Cases.

The Class B, Class C and Class N contingent deferred sales charges will be waived for redemptions of shares in the
following cases:
-        Shares redeemed involuntarily, as described in "Shareholder Account Rules and Policies," in the applicable
         Prospectus.
-        Redemptions from accounts other than Retirement Plans following the death or disability of the last
         surviving shareholder, including a trustee of a grantor trust or revocable living trust for which the
         trustee is also the sole beneficiary. The death or disability must have occurred after the account was
         established, and for disability you must provide evidence of a determination of disability by the Social
         Security Administration.
-        Distributions from accounts for which the broker-dealer of record has entered into a special agreement with
         the Distributor allowing this waiver.
-        Redemptions of Class B shares held by Retirement Plans whose records are maintained on a daily valuation
         basis by Merrill Lynch or an independent record keeper under a contract with Merrill Lynch.


-        Redemptions of Class C shares of Oppenheimer U.S. Government Trust from accounts of clients of financial
         institutions that have entered into a special arrangement with the Distributor for this purpose.
      -  Redemptions requested in writing by a Retirement Plan sponsor of Class C shares of an Oppenheimer fund in
         amounts of $500,000 or more and made more than 12 months after the Retirement Plan's first purchase of
         Class C shares, if the redemption proceeds are invested in Class N shares of one or more Oppenheimer funds.
-        Distributions8 from Retirement Plans or other employee benefit plans for any of the following purposes:
(1)      Following the death or disability (as defined in the Internal Revenue Code) of the participant or
                beneficiary. The death or disability must occur after the participant's account was established in
                an Oppenheimer fund.
(2)      To return excess contributions made to a participant's account.
(3)      To return contributions made due to a mistake of fact.
(4)      To make hardship withdrawals, as defined in the plan.9
(5)      To make distributions required under a Qualified Domestic Relations Order or, in the case of an IRA, a
                divorce or separation agreement described in Section 71(b) of the Internal Revenue Code.
(6)      To meet the minimum distribution requirements of the Internal Revenue Code.
(7)      To make "substantially equal periodic payments" as described in Section 72(t) of the Internal Revenue Code.
(8)      For loans to participants or beneficiaries.10
(9)      On account of the participant's separation from service.11
(10)     Participant-directed redemptions to purchase shares of a mutual fund (other than a fund managed by the
                Manager or a subsidiary of the Manager) offered as an investment option in a Retirement Plan if the
                plan has made special arrangements with the Distributor.
(11)     Distributions made on account of a plan termination or "in-service" distributions, if the redemption
                proceeds are rolled over directly to an OppenheimerFunds-sponsored IRA.
(12)     For distributions from a participant's account under an Automatic Withdrawal Plan after the participant
                reaches age 59 1/2, as long as the aggregate value of the distributions does not exceed 10% of the
                account's value, adjusted annually.
         (13)   Redemptions of Class B shares under an Automatic Withdrawal Plan for an account other than a
                Retirement Plan, if the aggregate value of the redeemed shares does not exceed 10% of the account's
                value, adjusted annually.
         (14)   For distributions from 401(k) plans sponsored by broker-dealers that have entered into a special
                arrangement with the Distributor allowing this waiver.
         -    Redemptions  of Class B shares or Class C shares  under an  Automatic  Withdrawal  Plan from an account
other than a  Retirement  Plan if the  aggregate  value of the redeemed  shares does not exceed 10% of the  account's
value annually.

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

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

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

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

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

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

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

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

A.  Reductions or Waivers of Class A Sales Charges.

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



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

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

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

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

         - -  Waiver of Class A Sales Charges for Certain Shareholders.  Class A shares purchased by the following
investors are not subject to any Class A initial or contingent deferred sales charges:
              -   Shareholders who were shareholders of the AMA Family of Funds on February 28, 1991 and who
                  acquired shares of any of the Former Quest for Value Funds by merger of a portfolio of the AMA
                  Family of Funds.
              -   Shareholders who acquired shares of any Former Quest for Value Fund by merger of any of the
                  portfolios of the Unified Funds.
         - -  Waiver of Class A Contingent Deferred Sales Charge in Certain Transactions.  The Class A contingent
deferred sales charge will not apply to redemptions of Class A shares purchased by the following investors who were
shareholders of any Former Quest for Value Fund:

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

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

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

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

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


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

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

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



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

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

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

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

         -    Class A Sales Charge Waivers. Additional Class A shares of a Fund may be purchased without a sales
charge, by a person who was in one (or more) of the categories below and acquired Class A shares prior to March 18,
1996, and still holds Class A shares:
(1)      any purchaser, provided the total initial amount invested in the Fund or any one or more of the Former
                Connecticut Mutual Funds totaled $500,000 or more, including investments made pursuant to the
                Combined Purchases, Statement of Intention and Rights of Accumulation features available at the time
                of the initial purchase and such investment is still held in one or more of the Former Connecticut
                Mutual Funds or a Fund into which such Fund merged;
(2)      any participant in a qualified plan, provided that the total initial amount invested by the plan in the
                Fund or any one or more of the Former Connecticut Mutual Funds totaled $500,000 or more;
(3)      Directors of the Fund or any one or more of the Former Connecticut Mutual Funds and members of their
                immediate families;
(4)      employee benefit plans sponsored by Connecticut Mutual Financial Services, L.L.C. ("CMFS"), the prior
                distributor of the Former Connecticut Mutual Funds, and its affiliated companies;
(5)




         one or more members of a group of at least 1,000 persons (and persons who are retirees from such group)
                engaged in a common business, profession, civic or charitable endeavor or other activity, and the
                spouses and minor dependent children of such persons, pursuant to a marketing program between CMFS
                and such group; and
(6)      an institution acting as a fiduciary on behalf of an individual or individuals, if such institution was
                directly compensated by the individual(s) for recommending the purchase of the shares of the Fund or
                any one or more of the Former Connecticut Mutual Funds, provided the institution had an agreement
                with CMFS.

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

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

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

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









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


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

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

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



















---------------------------------------------------------------------------------------------------------------------
Oppenheimer Developing Markets Fund
---------------------------------------------------------------------------------------------------------------------

Internet Web Site:
         WWW.OPPENHEIMERFUNDS.COM
         ------------------------

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

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

Transfer Agent
         OppenheimerFunds Services
         P.O. Box 5270
         Denver, Colorado 80217
         1.800.525.7048

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

Independent Auditors
         KPMG LLP
         707 Seventeenth Street
         Denver, Colorado 80202

Legal Counsel
      Mayer, Brown & Platt
      1675 Broadway
      New York, NY 10019-5820
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