Oppenheimer Global Growth & Income Fund
-------------------------------------------------------------------------------------------------------------------

6803 South Tucson Way, Englewood, CO 80112
1.800.525.7048


Statement of Additional Information dated January 28, 2002

         This  Statement  of  Additional  Information  is  not a  Prospectus.  This  document  contains  additional
information  about the Fund and  supplements  information  in the  Prospectus  dated January 28, 2002. 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.........................................................  10
     Investment Restrictions............................................................................  28

How the Fund is Managed ................................................................................  30
     Organization and History...........................................................................  30
     Trustees and Officers..............................................................................  31
     The Manager........................................................................................  37
Brokerage Policies of the Fund..........................................................................  39
Distribution and Service Plans..........................................................................  41
Performance of the Fund.................................................................................  45

About Your Account

How To Buy Shares.......................................................................................  50
How To Sell Shares......................................................................................  61
How To Exchange Shares..................................................................................  66
Dividends, Capital Gains and Taxes......................................................................  69
Additional Information About the Fund...................................................................  71


Financial Information About the Fund

Independent Auditors' Report............................................................................  72
Financial Statements....................................................................................  73
Appendix A: Ratings Definitions.........................................................................  A-1
Appendix B: Industry Classifications....................................................................  B-1
Appendix C: Special Sales Charge Arrangements and Waivers...............................................  C-1

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





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

Additional Information About the Fund's Investment Policies and Risks

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

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

Growth  Companies.  The Fund may invest in securities of "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 both
foreign and U.S. companies.  Equity securities include common stocks,  preferred stocks,  rights and warrants,  and
securities  convertible  into common stock.  The Fund's  investments  can include stocks of companies in any market
capitalization  range, if the Manager  believes the investment is consistent with the Fund's  objective,  including
the  preservation  of  principal.  Certain  equity  securities  may be  selected  not only for  their  appreciation
possibilities but because they may provide dividend income.

         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. Those  investments may be limited to the extent the Manager  believes that such  investments  would
be  inconsistent  with the goal of  preservation  of  principal.  As noted below,  the Fund limits  investments  in
unseasoned small cap issuers.

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

         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  Manager  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.

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

                  |_|  Rights  and  Warrants.  The Fund may  invest up to 10% of its total  assets in  warrants  or
rights.  That limit does not apply to warrants and rights the Fund has acquired as part of units of  securities  or
that are  attached  to other  securities  that the Fund buys.  The Fund does not  expect  that its  investments  in
warrants and rights will exceed 5% of its net assets.

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

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

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

         Investing  in foreign  securities  offers  potential  benefits  not  available  from  investing  solely in
securities of domestic  issuers.  They include the  opportunity  to invest in foreign  issuers that appear to offer
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.

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






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


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


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

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

o        possibilities in some countries of expropriation,  confiscatory taxation,  political,  financial or social
              instability or adverse diplomatic developments; and
o        unfavorable differences between the U.S. economy and foreign economies.

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

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

         The Fund intends to invest less than 5% of its total assets in securities  of issuers of Eastern  European
countries.  The social,  political  and economic  reforms in most  Eastern  European  countries  are still in their
early stages,  and there can be no assurance that these reforms will continue.  Eastern European  countries in many
cases do not have a  sophisticated  or  well-established  capital  market  structure  for the sale and  trading  of
securities.  Participation  in the  investment  markets in some of those  countries  may be available  initially or
solely through investment in joint ventures,  state enterprises,  private placements,  unlisted securities or other
similar illiquid investment vehicles.

         In addition,  although  investment  opportunities may exist in Eastern European  countries,  any change in
the leadership or policies of the governments of those  countries,  or changes in the leadership or policies of any
other  government  that  exercises a  significant  influence  over those  countries,  may halt the  expansion of or
reverse the  liberalization of foreign  investment  policies now occurring.  As a result  investment  opportunities
which may currently exist may be threatened.

         The  prior  authoritarian   governments  of  a  number  of  the  Eastern  European  countries   previously
expropriated large amounts of real and personal  property,  which may include property which will be represented by
or held by entities  issuing  the  securities  the Fund might wish to  purchase.  In many cases,  the claims of the
prior property  owners against those  governments  were never finally  settled.  There can be no assurance that any
property  represented  by or  held  by  entities  issuing  securities  purchased  by the  Fund  will  not  also  be
expropriated,  nationalized,  or confiscated. If that property were confiscated,  the Fund could lose a substantial
portion  of its  investments  in such  countries.  The  Fund's  investments  could also be  adversely  affected  by
exchange control regulations imposed in any of those countries.

              |X| Debt  Securities.  The Fund can invest in a variety of domestic and foreign debt  securities  for
current  income.  Foreign  debt  securities  are subject to the risks of foreign  securities  described  above.  In
general,  domestic and foreign  fixed-income  securities are also subject to two additional  types of risk:  credit
risk and interest rate risk.

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

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

                  In making  investments in debt securities,  the Manager may rely to some extent on the ratings of
ratings  organizations  or it may  use  its  own  research  to  evaluate  a  security's  credit-worthiness.  If the
securities are unrated, to be considered part of the Fund's holdings of investment-grade  securities,  they must be
judged by the Manager to be of comparable quality to bonds rated as investment grade by a rating organization.

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

              Fluctuations  in the  market  value of  fixed-income  securities  after  the Fund  buys them will not
affect  the  interest  payable  on  those  securities,  nor  the  cash  income  from  them.  However,  those  price
fluctuations  will be reflected in the  valuations  of the  securities,  and  therefore the Fund's net asset values
will be affected by those fluctuations.

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

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

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

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

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

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

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

                  |_| Special Risks of  Lower-Grade  Securities.  While it is not  anticipated  currently  that the
Fund will invest a substantial  portion of its assets in lower-grade  debt  securities,  the Fund can do so to seek
current income.  Because lower-grade  securities tend to offer higher yields than investment grade securities,  the
Fund may invest in lower-grade securities if the Manager is trying


to achieve  greater  income.  In some cases,  the  appreciation  possibilities  of lower-grade  securities may be a
reason they are selected for the Fund's  portfolio.  However,  these  investments will be made only when consistent
with the goal of preservation of principal that is part of the Fund's objective.

         The Fund may invest up to 25% of its total  assets in "lower  grade" debt  securities  but does not intend
currently  to invest more than 15% of its total  assets in  securities  rated  below "BBB" or "Baa."  "Lower-grade"
debt  securities  are those  rated below  "investment  grade"  which  means they have a rating  lower than "Baa" by
Moody's  or lower  than  "BBB"  by  Standard  &  Poor's  or Duff &  Phelps,  or  similar  ratings  by other  rating
organizations.  If they are  unrated,  and are  determined  by the  Manager  to be of  comparable  quality  to debt
securities  rated below  investment  grade,  they are included in limitation on the percentage of the Fund's assets
that can be invested in  lower-grade  securities.  The Fund can invest in securities  rated as low as "C" or "D" or
which may be in default at the time the Fund buys them.

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

         However,  the Fund's  limitations on these  investments  may reduce some of the risks to the Fund, as will
the Fund's policy of diversifying  its investments.  Additionally,  to the extent they can be converted into stock,
convertible  securities  may be less subject to some of these risks than  non-convertible  high yield bonds,  since
stock may be more liquid and less affected by some of these risk factors.

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

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

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

Other  Investment  Techniques  and  Strategies.  In seeking its  objective,  the Fund may from time to time 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|  Zero  Coupon  Securities.  The  Fund  may  buy  zero-coupon  and  delayed  interest  securities,  and
"stripped"  securities.  Stripped  securities are debt  securities  whose  interest  coupons are separated from the
security and sold separately.  The Fund can buy different types of zero-coupon or stripped  securities,  including,
among others,  U.S. Treasury notes or bonds that have been stripped of their interest coupons,  U.S. Treasury bills
issued without interest coupons, and certificates representing interests in stripped securities.

         Zero-coupon  securities do not make periodic  interest payments and are sold at a deep discount from their
face value. The buyer  recognizes a rate of return  determined by the gradual  appreciation of the security,  which
is  redeemed  at face value on a  specified  maturity  date.  This  discount  depends on the time  remaining  until
maturity,  as well as  prevailing  interest  rates,  the  liquidity of the  security and the credit  quality of the
issuer.  In the  absence of threats to the  issuer's  credit  quality,  the  discount  typically  decreases  as the
maturity date approaches.  Some zero-coupon  securities are  convertible,  in that they are zero-coupon  securities
until a predetermined date, at which time they convert to a security with a specified coupon rate.

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

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

         |X|  Commercial  (Privately-Issued)  Mortgage  Related  Securities.  The Fund  may  invest  in  commercial
mortgage  related  securities  issued by private  entities.  Generally these are  multi-class  debt or pass through
certificates  secured by  mortgage  loans on  commercial  properties.  They are  subject to the credit  risk of the
issuer.  These  securities  typically  are  structured to provide  protection  to investors in senior  classes from
possible losses on the underlying loans.  They do so by having holders of subordinated  classes take the first loss
if there are defaults on the underlying  loans.  They may also be protected to some extent by  guarantees,  reserve
funds or additional collateralization mechanisms.

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

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

         The  yields  to  maturity  of I/Os  and  P/Os  are  very  sensitive  to  principal  repayments  (including
prepayments)  on the  underlying  mortgages.  If the  underlying  mortgages  experience  greater  than  anticipated
prepayments  of  principal,  the Fund might not fully recoup its  investment  in an I/O based on those  assets.  If
underlying  mortgages  experience less than  anticipated  prepayments of principal,  the yield on the P/Os based on
them could  decline  substantially.  The market for some of these  securities  may be limited,  making it difficult
for the Fund to dispose of its holdings at an acceptable price.

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

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

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

         |X| 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 may not invest more than 5% of its net assets in those securities.

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

         When such  transactions are negotiated,  the price (which is generally  expressed in yield terms) is fixed
at the  time the  commitment  is  made.  Delivery  and  payment  for the  securities  take  place  at a later  date
(generally  within 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.  No income  begins to accrue to the Fund on a  when-issued  security  until the Fund  receives the
security at settlement of the trade.

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

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

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

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

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

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

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

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

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


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


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

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

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

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

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

         |X|  Borrowing  for  Leverage.  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 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.  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.  Currently,  the Fund does not  contemplate  using this technique in the next year but if
it does so, it will not likely be to a substantial degree.

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

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

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

         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.

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

         |X| Hedging.  Although the Fund does not  anticipate  the extensive use of hedging  instruments,  the Fund
can use  hedging  instruments.  It is not  obligated  to use them in seeking its  objective.  To attempt to protect
against  declines in the market value of the Fund's  portfolio,  to permit the Fund to retain  unrealized  gains in
the value of portfolio  securities  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'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) bond indices (these are referred to as "bond
index  futures"),  (3) debt  securities  (these are  referred  to as  "interest  rate  futures"),  and (4)  foreign
currencies (these are referred to as "forward contracts").

         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.  Bond index  futures are similar
contracts based on the future value of the basket of securities that comprise the index.  These contracts  obligate
the seller to deliver,  and the  purchaser to take,  cash to settle the futures  transaction.  There is no delivery
made of the underlying  securities to settle the futures  obligation.  Either party may also settle the transaction
by entering into an offsetting contract.

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


         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 can buy and sell certain  kinds of put options  ("puts") and
call options  ("calls").  The Fund can 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  identifying  liquid
assets on the Fund's books to enable the Fund to satisfy its  obligations  if the call is  exercised.  Up to 50% 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 of difference.  If the value of the underlying  investment  does not rise above the call price,  it is likely
that the call will lapse without being exercised. In that case, the Fund would keep the cash premium.

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

         When the Fund  writes an  over-the-counter  ("OTC")  option,  it will  enter  into an  arrangement  with a
primary U.S.  government  securities  dealer which will  establish a formula  price at which the Fund will have the
absolute  right to  repurchase  that OTC option.  The formula  price will  generally  be based on a multiple of the
premium received for the option,  plus the amount by which the option is exercisable  below the market price of the
underlying  security (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  deposit  in escrow  liquid  assets  with a value  equal to or  greater  than the  exercise  price of the
underlying  securities.  The Fund therefore  forgoes the opportunity of investing the 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.


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


         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 held in an identified account by
its Custodian bank) upon conversion or exchange of other foreign currency held in its portfolio.

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

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

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

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

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

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

         There is a risk in using short hedging by selling futures or purchasing puts on  broadly-based  indices or
futures to attempt to protect against  declines in the value of the Fund's portfolio  securities.  The risk is that
the prices of the futures or the applicable  index will correlate  imperfectly with the behavior of the cash prices
of the Fund's  securities.  For  example,  it is possible  that while the Fund has used  hedging  instruments  in a
short hedge,  the market 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
may use hedging  instruments  in a greater  dollar  amount than the dollar  amount of  portfolio  securities  being
hedged.  It might do so if the  historical  volatility  of the prices of the portfolio  securities  being hedged is
more than the historical volatility of the applicable index.

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

         The Fund can use hedging  instruments  to  establish a position in the  securities  markets as a temporary
substitute  for the  purchase of  individual  securities  (long  hedging) by buying  futures  and/or  calls on such
futures,  broadly-based  indices or on  securities.  It is  possible  that when the Fund does so the  market  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 could enter into a forward  contract to sell a different  foreign  currency for a fixed U.S.  dollar amount if
the Fund believes that the U.S.  dollar value of the foreign  currency to be sold pursuant to its forward  contract
will fall whenever  there is a decline in the U.S.  dollar value of the currency in which  portfolio  securities of
the Fund are denominated. That is referred to as a "cross hedge."

         The Fund will cover its short  positions  in these  cases by  identifying  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.

                  |_| Interest Rate Swap  Transactions.  The Fund can enter into interest rate swap agreements.  In
an interest  rate swap,  the Fund and another  party  exchange  their right to receive or their  obligation  to pay
interest on a security.  For example,  they might swap the right to receive  floating  rate payments for fixed rate
payments.  The Fund can enter  into  swaps  only on  securities  that it owns.  The Fund will not enter  into swaps
with respect to more than 25% of its total assets.  Also, the Fund will identify  liquid assets on the Fund's books
(such as cash or U.S.  government  securities)  to cover any  amounts  it could owe under  swaps  that  exceed  the
amounts it is entitled to receive, and it will adjust that amount daily, as needed.

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

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

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

         Transactions in options by the Fund are subject to limitations  established by the option  exchanges.  The
exchanges  limit the  maximum  number of  options  that may be  written  or held by a single  investor  or group of
investors  acting in concert.  Those  limits apply  regardless  of whether the options were written or purchased on
the same or different  exchanges or are held in one or more accounts or through one or more different  exchanges or
through  one or more  brokers.  Thus,  the number of  options  that the Fund may write or hold may be  affected  by
options written or held by other  entities,  including other  investment  companies  having the same 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  to  reinvest  cash  received  from the sale of other
portfolio securities. The Fund can buy:

o        obligations issued or guaranteed by the U. S. government or its instrumentalities or agencies,
o        commercial paper (short-term,  unsecured,  promissory notes of domestic or foreign companies) rated in the
              three top rating categories of a nationally recognized rating organization,

o        short-term debt  obligations of corporate  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  judged 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 having total assets in
              excess of $1 billion, 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| Does the Fund  Have  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 lend money.  However, it can invest in all or a portion of an issue of bonds,  debentures,
              commercial paper or other similar  corporate  obligations of the types that are usually  purchased by
              institutions,  whether or not they are publicly distributed.  The Fund may also enter into repurchase
              agreements.
         o        The Fund cannot  concentrate  investments.  That means it cannot  invest 25% or more of its total
              assets in  companies  in any one  industry.  Obligations  of the U.S.  government,  its  agencies and
              instrumentalities  are  not  considered  to be  part  of an  "industry"  for  the  purposes  of  this
              restriction.
o        The Fund cannot buy or sell real estate.  However,  the Fund can purchase debt securities  secured by real
              estate or  interests  in real  estate,  or issued by  companies,  including  real  estate  investment
              trusts, which invest in real estate or interests in real estate.
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  fundamental  policies.  It  does  not  matter  whether  the  hedging
              instrument is considered to be a commodity or commodity contract.
o        The Fund cannot invest in the  securities  issued by any company for the purpose of exercising  management
              control of that company.
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 Fund from
              pledging  its  assets  for  the  collateral  arrangements  in  connection  with  the  use of  hedging
              instruments.
o        The Fund cannot buy securities on margin.  However,  the Fund can make margin  deposits in connection with
              its use of hedging instruments.
o        The Fund cannot invest in oil, gas or other mineral exploration or development programs.
o        The Fund cannot  invest more than 5% of its total assets  through  open-market  purchases of securities of
              other investment  companies,  except in connection with a merger,  consolidation,  reorganization  or
              acquisition of assets.
o        The Fund cannot issue "senior  securities",  but this does not prohibit certain investment  activities for
              which assets of the Fund are designated as identified on the Fund's books,  or margin,  collateral or
              escrow arrangements are established,  to cover the related obligations.  Examples of those activities
              include  borrowing  money,   reverse   repurchase   agreements,   delayed-delivery   and  when-issued
              arrangements  for  portfolio  securities  transactions,  and  contracts  to buy or sell  derivatives,
              hedging instruments, options or futures.

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


         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 B to this  Statement of Additional  Information.  This
is not a fundamental policy.

         As a  non-fundamental  restriction,  the  Fund  cannot  sell  securities  short  except  in  "short  sales
"against-the-box."  However,  the Fund does not  engage in this type of  transaction  at all  because of changes in
applicable tax laws.

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
1990.

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


         |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 five
classes of  shares:  Class A, Class B,  Class C,  Class N and Class Y. All  classes  invest in the same  investment
portfolio.  Only retirement plans may purchase Class N shares.  Only certain  institutional  investors may elect to
purchase Class Y shares. Each class of shares:

o        has its own dividends and distributions,
o        pays certain expenses which may be different for the different classes,
o        may have a different net asset value,
o        may have separate  voting rights on matters in which  interests of one 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.

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

         The  Fund's  contractual  arrangements  state  that any  person  doing  business  with the Fund  (and each
shareholder  of the  Fund)  agrees  under its  Declaration  of Trust to look  solely to the  assets of the Fund for
satisfaction  of any claim or demand that may arise out of any dealings with the Fund.  Additionally,  the Trustees
shall have no personal liability to any such person, to the 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 Money Market Fund, Inc.
Oppenheimer Capital Preservation Fund                     Oppenheimer Multiple Strategies Fund
Oppenheimer Concentrated Growth Fund                      Oppenheimer Multi-Sector Income Trust
Oppenheimer Developing Markets Fund                       Oppenheimer Multi-State Municipal Trust
Oppenheimer Discovery Fund                                Oppenheimer Municipal Bond Fund
Oppenheimer Emerging Growth Fund                          Oppenheimer New York Municipal Fund
Oppenheimer Emerging Technologies Fund                    Oppenheimer Series Fund, Inc.
Oppenheimer Enterprise Fund                               Oppenheimer Special Value Fund
Oppenheimer Europe Fund                                   Oppenheimer Trinity Core Fund
Oppenheimer Global Fund                                   Oppenheimer Trinity Large Cap Growth Fund
Oppenheimer Global Growth & Income Fund                   Oppenheimer Trinity Value Fund
Oppenheimer Gold & Special Minerals Fund                  Oppenheimer U.S. Government Trust
Oppenheimer Growth Fund
Oppenheimer International Growth Fund

         FarrarMessrs.  Spiro,  Murphy,  Wixted,  Zack,  Bishop,  Farrar  and  Molleur  and  Mses.  Feld  and  Ives
respectively  hold the same  offices  with the  other New  York-based  Oppenheimer  funds as with the  Fund.  As of
January 3, 2002, the Trustees and officers of the Fund as a group owned of record or  beneficially  less than 1% of
each class of shares of the Fund.  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. Murphy is a trustee of that plan.

Leon Levy, Chairman of the Board of Trustees, Age: 76.
6803 South Tucson Way, Englewood, Colorado 80112
General  Partner of Odyssey  Partners,  L.P.  (investment  partnership)  (since  1982) and Chairman of the Board of
Avatar Holdings, Inc. (real estate development) (since 1981).
Avatar Holdings, Inc. (real estate development).

Robert G. Galli, Trustee, Age: 68.
6803 South Tucson Way, Englewood, Colorado 80112

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: 63.
6803 South Tucson Way, Englewood, Colorado 80112
The Director of the Institute for Advanced Study,  Princeton,  N.J.  (since 1991),  director of GSI Lumonics (since
2001) 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.

John V. Murphy*, President and Trustee, Age: 52
498 Seventh Avenue, New York, New York 10018
Chairman, Chief Executive Officer and director (since June 30, 2001) and President (since September 2000) of the
Manager; President and a trustee of other Oppenheimer funds; President and a director (since July 2001) of
Oppenheimer Acquisition Corp., the Manager's parent holding company, and of Oppenheimer Partnership Holdings,
Inc. (since July 2001), a holding company subsidiary of the Manager; Chairman and a director (since July 2001) of
Shareholder Services, Inc. and of Shareholder Financial Services, Inc., transfer agent subsidiaries of the
Manager; President (since November 1, 2001) and a director (since July 2001) of Oppenheimer Real Asset
Management, Inc., an investment advisor subsidiary of the Manager; President and a director (since July 2001) of
OppenheimerFunds Legacy Program, a charitable trust program established by the Manager; a director (since
November 2001) of Trinity Investment Management Corp. and Tremont Advisers, Inc., investment advisory affiliates
of the Manager, and of OAM Institutional, Inc. (since November 2001), an investment advisory subsidiary of the
Manager, and of HarbourView Asset Management Corporation and OFI Private Investments, Inc. (since July 2001),
investment advisor subsidiaries of the Manager; formerly President and trustee (from November 1999 to November
2001) of MML Series Investment Fund and MassMutual Institutional Funds, open-end investment companies; Chief
Operating Officer (September 2000 - July 2001) of the Manager; Executive Vice President of Massachusetts Mutual
Life Insurance Company (from February 1997 to August 2000); a director (from 1999 to 2000) of C.M. Life Insurance
Company; President, Chief Executive Officer and a director (from 1999 to 2000) of MML Bay State Life Insurance
Company; Executive Vice President, director and Chief Operating Officer (from 1995 to 1997) of David L. Babson &
Company, Inc., an investment advisor; Senior Vice President and director (from 1995 to 1997) of Potomac Babson
Inc., an investment advisor subsidiary of David L. Babson & Company, Inc.; Senior Vice President (from 1995-1997)
and director (from 1995 to 1999) of DBL Acquisition Corporation, a holding company for investment advisers; a
director (from 1989 - 1998) of Emerald Isle Bancorp and Hibernia Savings Bank, wholly-owned subsidiary of Emerald
Isle Bancorp; and Chief Operating Officer (from 1993 to 1996) of Concert Capital Management, Inc., an investment
advisor.

Benjamin Lipstein, Trustee, Age: 78.
6803 South Tucson Way, Englewood, Colorado 80112

Professor Emeritus of Marketing, Stern Graduate School of Business Administration, New York University.


Elizabeth B. Moynihan, Trustee, Age: 72.
6803 South Tucson Way, Englewood, Colorado 80112
Author  and  architectural  historian;  a trustee  of the  Freer  Gallery  of Art and  Arthur  M.  Sackler  Gallery
(Smithsonian  Institute),  Trustees  Council of the National  Building  Museum;  a member of the Trustees  Council,
Preservation League of New York State.





Kenneth A. Randall, Trustee, Age: 74.
6803 South Tucson Way, Englewood, Colorado 80112
A director of Dominion Resources, Inc. (electric utility holding company) and Prime Retail, Inc. (real
estate investment  trust);  formerly a director of Dominion Energy.  Inc.  (electric power and oil & gas producer),
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: 71.
6803 South Tucson Way, Englewood, Colorado 80112
President,  Baruch College,  CUNY; a director of RBAsset (real estate manager);  a director of OffitBank;  formerly
Trustee,  Financial Accounting  Foundation (FASB and GASB); Senior Fellow of Jerome Levy Economics Institute,  Bard
College;  Chairman of Municipal  Assistance  Corporation  for the City of New York; New York State  Comptroller and
Trustee of New York State and Local Retirement Fund.

Russell S. Reynolds, Jr., Trustee, Age: 70.
6803 South Tucson Way, Englewood, Colorado 80112
Chairman of The Directorship Search Group, Inc. (corporate  governance  consulting and executive recruiting) (since
1993); a director of Professional  Staff Limited (a U.K.  temporary  staffing company) (since 1995); a life trustee
of International House (non-profit  educational  organization),  and a trustee of the Greenwich  Historical Society
(since 1996).

Donald W. Spiro, Vice Chairman of the Board of Trustees, Age: 76.
6803 South Tucson Way, Englewood, Colorado 80112
Formerly he held the following  positions:  Chairman  Emeritus  (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: 71.
6803 South Tucson Way, Englewood, Colorado 80112
Of Counsel,  Hogan & Hartson (a law firm) (since  1993).  Other  directorships:  Caterpillar,  Inc.  (since  1993);
Zurich  Financial  Services  (since  1998);  ConAgra,  Inc.  (since 1993);  FMC  Corporation  (since  1993);  Texas
Instruments  Incorporated  (since 1993); and  Weyerhaeuser  Co. (since 1999);  formerly a director of Farmers Group
Inc. (1994-2000), Zurich Allied AG (1998-2000) and of Allied Zurich Plc (1998-2000).

Frank Jennings, Vice President and Portfolio Manager, Age: 54.
498 Seventh Avenue, New York, New York 10018
Vice President (since September 1995) of the Manager.




Brian W. Wixted, Treasurer, Principal Financial and Accounting Officer, Age: 42.
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  Oppenheimer  Trust  Company;
Assistant  Treasurer (since March 1999) of Oppenheimer  Acquisition  Corp.; 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: 42.
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.

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.


Robert G. Zack, Secretary, Age: 53.
498 Seventh Avenue, New York, New York 10018
Senior Vice President  (since May 1985) and Acting General Counsel (since November 2001) 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.

Denis R. Molleur, Assistant Secretary, Age: 44.
498 Seventh Avenue, New York, New York 10018
Vice  President  and Senior  Counsel of the  Manager  (since  July 1999);  an officer of other  Oppenheimer  funds;
formerly a Vice President and Associate Counsel of the Manager (September 1995 - July 1999).

Katherine P. Feld, Assistant Secretary, Age: 43.
498 Seventh Avenue, New York, New York 10018
Vice  President  and Senior  Counsel of the  Manager  (since  July 1999);  an officer of other  Oppenheimer  funds;
formerly a Vice President and Associate Counsel of the Manager (June 1990 - July 1999).

Kathleen T. Ives, Assistant Secretary, Age: 36.
6803 South Tucson Way, Englewood, Colorado 80112
Vice  President and Assistant  Counsel of the Manager  (since June 1998);  an officer of other  Oppenheimer  funds;
formerly an  Assistant  Vice  President  and  Assistant  Counsel of the  Manager  (August  1997 - June  1998);  and
Assistant Counsel of the Manager (August 1994-August 1997).

         |X|  Remuneration  of Trustees.  The  officers of the Fund and a Trustee of the Fund (Mr.  Murphy) who are
affiliated  with the Manager  receive no salary or fee from the Fund.  The remaining  Trustees of the Fund received
the compensation  shown below.  The compensation  from the Fund was paid during its fiscal year ended September 30,
2001. 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 2001.






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

                                                                                                     Total
                                                                       Retirement                Compensation
                                                                        Benefits                   From all
                                      Aggregate Compensation        Accrued as Part       New York based Oppenheimer
Trustee's Name                              from Fund1                  of Fund                Funds (32 Funds)2
and Other Positions                                                     Expenses

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

Leon Levy
Chairman                                      $18,306                        $5,648                $173,700

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

Robert G. Galli3
Study Committee Member                        $7,923                         $                     $202,886
                                                                216

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

Philip A. Griffiths4                          $4,298                         $                      $54,889
                                                                57

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

Benjamin Lipstein
Study Committee Chairman,                     $14,907                       $3,965                 $150,152
Audit Committee Member

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

Elizabeth B. Moynihan
Study Committee                               $9,739                        $2,032                 $105,760
Member

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

Kenneth A. Randall
Audit Committee Chairman                      $10,166                       $3,096                  $97,012

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

Edward V. Regan
Proxy Committee Chairman, Audit
Committee Member                              $8,466                        $1,473                  $95,960

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

Russell S. Reynolds, Jr.
Proxy Committee
Member                                        $6,435                       $1,203                   $71,792

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

Donald W. Spiro
Vice Chairman                                 $4,738                       $     68                 $64,080


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

Clayton K. Yeutter5
Proxy Committee
Member                                        $6,390                     $1,158                     $71,792

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


1 Aggregate  compensation  includes fees, deferred  compensation,  if any, and retirement plan benefits accrued for
a       Trustee/Director if any, for the fiscal year ended 9/30/01.
2 For the 2001 calendar year.
3 Total  compensation for the 2001 calendar year includes $97,126  compensation  received for serving as Trustee or
Director of   10 other Oppenheimer funds.
4 Includes $4,241 deferred under Deferred Compensation Plan described below.
5  Includes $1,308 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  January 3, 2002,  the only  persons  who owned of record or were known by
the Fund to own beneficially 5% or more of any class of the Fund's  outstanding  shares, and their holdings of that
class as of that date, were the following:  (i) Charles Schwab & Co., Inc., 101 Montgomery  Street,  San Francisco,
CA 94104, which owned 13,439,670.208  Class A shares (22.50% of the Class A shares then outstanding);  (ii) Merrill
Lynch Pierce Fenner and Smith for the Sole Benefit of its Customers,  4437 Lady Banks Lane,  Murrells Inlet,  South
Carolina 29576,  which owned  2,501,507.537  Class B shares (6.55% of the Class B shares then  outstanding);  (iii)
Merrill,  Lynch,  Pierce  Fenner  & Smith,  for the Sole  Benefit  of its  Customers,  4800  Deerlake  Drive  East,
Jacksonville,  Florida  32246,  which  owned  1,980,273.326  Class C shares  (11.01%  of the  Class C  shares  then
outstanding);  (iv) Del  Charter  Guaranty & Trust TR,  P.O.  Box 8704,  Wilmington,  Delaware  19899,  which owned
51,937.037  Class N shares (22.11% of the Class N shares then  outstanding);  (v) RPSS TR for VML Inc. 401(k) Plan,
250 NW Richards Road,  Kansas City,  Missouri 64116,  which owned  19,225.311  Class N shares (8.18% of the Class N
shares then  outstanding);  (vi) RPSS TR for Salem  Heating & Sheet  Metal,  Inc.  401(k)  Plan,  , P.O. Box 12005,
Salem,  Oregon 97309, which owned 18,145.769 Class N shares (7.72% of the Class N shares then  outstanding);  (vii)
Persumma Financial Services, 1295 State Street,  Springfield,  Massachusetts 01111, which owned 231,125.865 Class Y
shares (95.06% of the Class Y shares then outstanding).


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


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

         The Code of Ethics is an exhibit to the  Fund's  registration  statement  filed  with the  Securities  and
Exchange  Commission  and can be reviewed and copied at the SEC's Public  Reference  Room in  Washington,  D.C. You
can  obtain  information  about  the  hours  of  operation  of the  Public  Reference  Room by  calling  the SEC at
1.202.942.8090. The Code of Ethics can also be viewed as
part of the  Fund's  registration  statement  on the  SEC's  EDGAR  database  at the  SEC's  Internet  web  site at
http://www.sec.gov. Copies may be obtained, after paying a duplicating fee, by electronic
request at the following E-mail address:  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,  particularly  William Wilby,  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 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.

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


                                                       Management Fees Paid to OppenheimerFunds, Inc.



Fiscal Year ended 9/30:

---------------------------------------- ----------------------------------------------------------------------------
---------------------------------------- ----------------------------------------------------------------------------
                 1999                                                             $4,277,769
---------------------------------------- ----------------------------------------------------------------------------
---------------------------------------- ----------------------------------------------------------------------------
                 2000                                                             $16,141,590
---------------------------------------- ----------------------------------------------------------------------------
---------------------------------------- ----------------------------------------------------------------------------

                 2001                                                             $20,036,232

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

      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 on its part 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  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 Year Ended 9/30:                         Total Brokerage Commissions Paid by the Fund1

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


                 1999                                                              $2,286,649

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

                 2000                                                     $5,369,016

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

                 2001                                                    $4,275,7992

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

1.       Amounts do not include spreads or concessions on principal transactions on a net trade basis.
2.       In the fiscal year ended 9/30/01,  the amount of  transactions  directed to brokers for research  services
     was $32,147,217 and the amount of the commissions paid to broker-dealers for those services was $81,038.



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  different  classes  of  shares.  The
Distributor bears the expenses normally  attributable to sales,  including advertising and the cost of printing and
mailing  prospectuses,  other than those  furnished to existing  shareholders.  The Distributor is not obligated to
sell a specific number of shares.  Expenses normally attributable to sales are borne by the Distributor.

      The sales charges and  concessions  paid to, or retained by, the  Distributor  from the sale of shares during
the Fund's three most recent fiscal years,  and the contingent  deferred sales charges  retained by the Distributor
on the redemption of shares for the most recent fiscal year are shown in the tables below.







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

                Aggregate           Class A Front-End   Concessions on       Concessions on      Concessions         Concessions on Class N Shares Advanced by Distributor3
Fiscal Year     Front-End Sales     Sales Charges       Class A Shares       Class B Shares      on Class C Shares
Ended 9/30:     Charges on Class    Retained by         Advanced by          Advanced by         Advanced by
                A Shares            Distributor         Distributor1         Distributor1        Distributor1

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

     1999           $1,478,727           $450,307             $93,740            $2,976,814           $433,138                                                               N/A

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

     2000           $9,517,783          $2,451,701           $826,132           $21,027,298          $2,595,948                                                              N/A

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

    2001        $5,150,951        $1,273,791           $639,327          $9,723,064         $1,208,795           $16,174

------------- ---------------- ------------------ ------------------- ------------------ ------------------ -------------------
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.
Includes amounts retained by a broker-dealer that is an affiliate or a parent of the Distributor.
----------------- ----------------------------------------------------------------------------------------------------

3.       The      Class A Contingent Deferred     Class B Contingent Deferred      Class C Contingent                Class N Contingent Deferred Sales Charges Retained by Distributor
     inception    Sales Charges Retained by       Sales Charges Retained by        Deferred Sales
     date     of  Distributor                     Distributor                      Charges Retained
     Class     N                                                                   by Distributor
     shares  was
     March    1,
     2001.



Fiscal Years
Ended 9/30:

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

      2001                   $35,970                        $1,910,682                         $160,509                                                                       0

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


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.  The  shareholder  votes for
the Class B,  Class C and Class N plans  were cast by the  Manager  as the sole  initial  holder of shares of those
respective classes.

      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 year ended  September  30, 2001  payments  under the Class A Plan totaled  $3,599,519,  all of
which was paid by the Distributor to recipients.  That included  $172,233 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 plan  provides  for the
Distributor to be  compensated at a flat rate,  whether the  Distributor's  distribution  expenses are more or less
than the  amounts  paid by the Fund under the plan  during  the  period for which the fee is paid.  The Class C and
Class N plans allow the Distributor to be reimbursed for its services and costs in  distributing  Class C and Class
N shares and  servicing  accounts.  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 on Class N shares.  The  Distributor
retains the asset-based  sales charge on Class C shares during the first year the shares are  outstanding.  It pays
the  asset-based  sales charge as an ongoing  commission to the recipient on Class C shares  outstanding for a year
or more. If a dealer has a special  agreement with the  Distributor,  the Distributor will pay the Class B, 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.

o        may not be able to adequately compensate dealers that sell Class B, Class C and Class N shares without
              receiving payment under the plans and therefore may not be able to offer such Classes for sale
              absent the plans,
o        receives payments under the plans consistent with the service fees and asset-based sales charges paid by
              other non-proprietary funds that charge 12b-1 fees,
o        may use the payments under the plan to include the Fund in various third-party distribution programs
              that may increase sales of Fund shares,
o        may experience increased difficulty selling the Fund's shares if payments under the plan are
              discontinued because most competitor funds have plans that pay dealers for rendering distribution
              services as much or more than the amounts currently being paid by the Fund, and
o        may not be able to continue providing, at the same or at a lesser cost, the same quality distribution
              sales efforts and services, or to obtain such services from brokers and dealers, if the plan
              payments were to be discontinued.

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


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

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

                    Distribution Fees Paid to the Distributor in the Fiscal Year Ended 9/30/01

--------------------------------------------------------------------------------------------------------------------
------------------------ -------------------- --------------------- ------------------------- ----------------------
                                                                         Distributor's            Distributor's
                                                                           Aggregate              Unreimbursed
                                Total                Amount               Unreimbursed            Expenses as %
                              Payments            Retained by               Expenses              of Net Assets
         Class               Under Plan           Distributor              Under Plan               of Class
------------------------ -------------------- --------------------- ------------------------- ----------------------
------------------------ -------------------- --------------------- ------------------------- ----------------------

Class B Plan                 $9,226,019              $7,808,869              $26,752,135              3.97%

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

Class C Plan                 $4,465,624              $1,700,805              $3,832,652               1.20%

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

Class N Plan                   $1,203                $1,203                  $33,779                  1.98%

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

      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.

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 website 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 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        An investment in the Fund is not insured by the FDIC or any other government agency.
o        The Fund's  performance  returns  do not  reflect  the  effect of taxes on  dividends  and  capital  gains
              distributions.
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 one-year
period.  For  Class  N  shares,  the  1%  contingent  deferred  sales  charge  is  deducted  for  returns  for  the
life-of-class 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 Returm
                                           P



                  |_| Total  Returns at Net Asset  Value.  From time to time the Fund may also  quote a  cumulative
or an average  annual total return "at net asset value"  (without  deducting  sales  charges) for Class A, Class B,
Class C or Class N  shares.  There is no sales  charge on Class Y shares.  Each is based on the  difference  in net
asset value per share at the  beginning  and the end of the period for a  hypothetical  investment in that class of
shares  (without  considering  front-end or contingent  deferred  sales charges) and takes into  consideration  the
reinvestment of dividends and capital gains distributions.



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









                               The Fund's Total Returns for the Periods Ended 9/30/01

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

               Cumulative Total                                  Average Annual Total Returns
Class      of  Returns (10 years or
Shares         Life of Class if less)

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

                                                                                                     10-Years
                                                  1-Year                   5-Years             (or life-of-class if
                                                                                                      less)

-------------- ------------------------- ------------------------- ------------------------- -------------------------
-------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
                  After       Without       After       Without       After       Without       After       Without
                  Sales        Sales        Sales        Sales        Sales        Sales        Sales        Sales
                 Charge       Charge       Charge       Charge       Charge       Charge       Charge       Charge
-------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
-------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------

Class A1         181.98%      199.18%      -41.84%      -38.30%      11.33%       12.66%       10.92%       11.58%

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

Class B          98.76%(2)    99.76%(2)    -41.72%      -38.74%      11.55%       11/.81%     -12.19%(2)    12.28%(2)

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

Class C         125.00%(3)   125.00%(3)    -39.35%      -38.75%      11.81%       11.81%       10.91%(3)    10.91%(3)

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

Class N         -29.49%4     -28.78%4        N/A          N/A          N/A          N/A          N/A          N/A

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

Class Y         -36.66%5     -36.66%5        N/A          N/A          N/A          N/A          N/A          N/A

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


1. Inception of Class A:   10/22/90
2. Inception of Class B:   10/10/95
3. Inception of Class C:   12/1/93
4. Inception of Class N:   3/1/01
5. Inception of Class Y:   2/1/01


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 based on categories  relating to investment  styles.  The performance
of the Fund is ranked by Lipper  against all other  global  flexible  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  Ratings and  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 included in the
domestic stock funds category.

         Morningstar  proprietary star rankings reflect historical  risk-adjusted total investment return. For each
fund with at least a  three-year  history,  Morningstar  calculates  a  Morningstar  RatingTM  metric each month by
subtracting  the return on a 90-day U.S.  Treasury Bill from the fund's  load-adjusted  return for the same period,
and then  adjusting  this excess  return for risk.  The top 10% of funds in each broad asset class receive 5 stars,
the next 22.5%  receive 4 stars,  the next 35% receive 3 stars,  the next 22.5%  receive 2 stars and the bottom 10%
receive 1 star. The Overall  Morningstar  Rating for a fund is derived from a weighted  average of the  performance
figures associated with its three-, five- and ten-year (if applicable) Morningstar Rating metrics.


         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,  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.



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

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

OSM1 - Gartmore Millennium Growth Fund II                     Rochester Fund Municipals
OSM1  - Mercury Advisors S&P 500 Index
OSM1  - Mercury Advisors Focus Growth Fund
OSM1  - QM Active Balanced Fund
OSM1 - Salomon Brothers Capital Fund
Oppenheimer Trinity Large Cap Growth Fund
Oppenheimer Limited-Term Government Fund


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" stands for 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 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 C to this  Statement of Additional  Information.
Certain special sales charge  arrangements  described in that Appendix apply to retirement  plans whose records are
maintained  on a daily  valuation  basis by Merrill  Lynch  Pierce  Fenner & Smith,  Inc.  ("Merrill  Lynch") or an
independent  record keeper that has a contract or special  arrangement  with Merrill Lynch. If on the date the plan
sponsor  signed the Merrill  Lynch record  keeping  service  agreement  the plan has less than $3 million in assets
(other than assets  invested in money market funds)  invested in applicable  investments,  then the retirement plan
may purchase only Class B shares of the  Oppenheimer  funds.  Any retirement  plans in that category that currently
invest in Class B shares of the Fund will have their  Class B shares  converted  to Class A shares of the Fund when
the plan's applicable investments reach $5 million.


Cancellation  of Purchase  Orders.  Cancellation  of purchase  orders for the Fund's  shares (for  example,  when a
purchase  check is  returned  to the Fund  unpaid)  causes a loss to be  incurred  when the net asset  value of the
Fund's shares on the  cancellation  date is less than on the purchase date. That loss is equal to the amount of the
decline in the net asset value per share  multiplied  by the number of shares in the purchase  order.  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, Class N or Class Y shares  and the  dividends  payable on Class B, Class C, Class N or Class Y
shares  will be  reduced  by  incremental  expenses  borne  solely  by  that  class.  Those  expenses  include  the
asset-based sales charges to which Class B, Class C and Class N shares are subject.

         The  availability  of different  classes of shares  permits an investor to choose the method of purchasing
shares that is more  appropriate  for the investor.  That may depend on the amount of the  purchase,  the length of
time the investor  expects to hold  shares,  and other  relevant  circumstances.  Class A shares  normally are sold
subject to an initial  sales charge.  While Class B, Class C and Class N shares have no initial  sales charge,  the
purpose of the  deferred  sales charge and  asset-based  sales charge on Class B, Class C and Class N shares is the
same as that of the initial sales charge on Class A shares - to compensate  the  Distributor  and brokers,  dealers
and  financial  institutions  that sell shares of the Fund. A salesperson  who is entitled to receive  compensation
from his or her firm for selling Fund shares may receive  different  levels of  compensation  for selling one class
of shares 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 A Shares Subject to a Contingent Deferred Sales Charge. For purchases of Class A shares subject to
     a contingent deferred sales charge as described in the Prospectus, no sales concessions will be paid to the
     broker-dealer of record, as described in the Prospectus, on sales of Class A shares purchased with the
     redemption proceeds of shares of another mutual fund offered as an investment option in a retirement plan in
     which Oppenheimer funds are also offered as investment options under a special arrangement with the
     Distributor, if the purchase occurs more than 30 days after the Oppenheimer funds are added as an investment
     option under that plan. Additionally, that concession will not be paid on purchases of shares by a
     retirement plan made with the redemption proceeds of Class N shares of one or more Oppenheimer funds held by
     the plan for more than 18 months.


         |X| Class B  Conversion.  Under  current  interpretations  of  applicable  federal  income  tax law by the
Internal  Revenue  Service,  the conversion of Class B shares to Class A shares after six years is not treated as a
taxable  event for the  shareholder.  If those laws or the IRS  interpretation  of those laws  should  change,  the
automatic  conversion  feature may be  suspended.  In the event,  no further  conversions  of Class B shares  would
occur while that  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.
o        to certain customers of broker-dealers and financial advisors that are identified in a special agreement
              between the broker-dealer or financial advisor and the Distributor for that purpose.

              The sales concession and the advance of the service fee, as described in the Prospectus, will not
     be paid to dealers of record on sales of Class N shares on:
o        purchases of Class N shares in amounts of $500,000 or more by a retirement plan that pays for the
                  purchase with the redemption proceeds of Class A shares of one or more Oppenheimer funds (other
                  than rollovers from an OppenheimerFunds-sponsored Pinnacle or Ascender 401(k) plan to any IRA
                  invested in the Oppenheimer funds),
o        purchases of Class N shares in amounts of $500,000 or more by a retirement plan that pays for the
                  purchase with the redemption proceeds of  Class C shares of one or more Oppenheimer funds held
                  by the plan for more than one year (other than rollovers from an OppenheimerFunds-sponsored
                  Pinnacle or Ascender 401(k) plan to any IRA invested in the Oppenheimer funds), and
o        on purchases of Class N shares by an OppenheimerFunds-sponsored Pinnacle or Ascender 401(k) plan made
                  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
fees,  Trustees'  fees,  transfer agency fees,  legal fees and auditing  costs.  Those expenses are paid out of the
Fund's assets and are not paid directly by  shareholders.  However,  those  expenses  reduce the net asset value of
shares, and therefore are indirectly borne by shareholders through their investment.

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

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

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

         Dealers  other than  Exchange  members  may  conduct  trading in certain  securities  on days on which the
Exchange is closed  (including  weekends  and U.S.  holidays)  or after 4:00 P.M. 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.
Additionally,  trading on European and Asian stock  exchanges and  over-the-counter  markets  normally is completed
before the close of The New York Stock Exchange.


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


security.  The  Manager,  or an internal  valuation  committee  established  by the  Manager,  as  applicable,  may
establish a valuation,  under  procedures  established by the Board and subject to the approval,  ratification  and
confirmation by the Board at its next ensuing meeting.


         |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:

         o    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.

o        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.
o        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.
o        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.
o        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.
o        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


         The  information  below  supplements  the terms  and  conditions  for  redeeming  shares  set forth in the
Prospectus.


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,  Class N or Class Y
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,  under  certain  circumstances,  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
automatic  withdrawal plans,  because of the potential  imposition of the contingent  deferred sales charge on such
withdrawals  (except where the Class B, Class C or Class N contingent  deferred sales charge is waived as described
in Appendix C of this Statement of Additional Information).


         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 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.

         |X| How Exchanges  Affect  Contingent  Deferred  Sales  Charges.  No contingent  deferred  sales charge is
imposed on exchanges of shares of any class  purchased  subject to a contingent  deferred  sales  charge.  However,
when Class A shares  acquired by  exchange  of Class A shares of other  Oppenheimer  funds  purchased  subject to a
Class A contingent  deferred  sales charge are  redeemed  within 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, Class C or Class N shares are redeemed to effect an exchange,  the  priorities  described in
"How To Buy  Shares"  in the  Prospectus  for the  imposition  of the Class B,  Class C or the  Class N  contingent
deferred  sales  charge  will be  followed  in  determining  the order in which the  shares are  exchanged.  Before
exchanging  shares,  shareholders  should take into  account how the exchange  may affect any  contingent  deferred
sales charge that might be imposed in the subsequent redemption of remaining shares.

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

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

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

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

         |X|  Processing  Exchange  Requests.  Shares to be exchanged are redeemed on the regular  business day the
Transfer Agent receives an exchange request in proper form (the "Redemption  Date").  Normally,  shares of the fund
to be acquired are purchased on the  Redemption  Date,  but such purchases may be delayed by either fund up to five
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 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 and Class Y shares.  That is  because  of the  effect of the  asset-based  sales
charge on Class B, Class C and Class N shares.  Those  dividends  will also  differ in amount as a  consequence  of
any difference in the net asset values of the different classes of shares.

              The Fund's  practice of attempting to pay  dividends on Class A shares at a targeted  level  requires
the Manager to monitor the Fund's  portfolio and, if necessary,  to select  higher-yielding  securities  when it is
deemed  appropriate  to seek income at the level  needed to meet the target.  Those  securities  must be within the
Fund's investment parameters however.

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

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

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

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

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

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


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




Additional Information About the Fund


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

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

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

INDEPENDENT AUDITORS' REPORT
--------------------------------------------------------------------------------


================================================================================
THE BOARD OF TRUSTEES AND SHAREHOLDERS OF
OPPENHEIMER GLOBAL GROWTH & INCOME FUND:

We have audited the accompanying statement of assets and liabilities of
Oppenheimer Global Growth & Income Fund, including the statement of investments,
as of September 30, 2001, and the related statement of operations for the year
then ended, the statements of changes in net assets for each of the two years in
the period then ended, and the financial highlights for each of the five years
in the period then ended. 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 September 30, 2001, by correspondence with the custodian
and brokers or by other appropriate auditing procedures where replies from
brokers were not received. 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 Global Growth & Income Fund as of September 30, 2001, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended, and the financial highlights for each
of the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America.




/s/ KPMG LLP

 KPMG LLP

 Denver, Colorado
 October 19, 2001


 STATEMENT OF INVESTMENTS  SEPTEMBER 30, 2001
--------------------------------------------------------------------------------
                                                                      MARKET VALUE
                                                           SHARES       SEE NOTE 1
==================================================================================

 COMMON STOCKS--95.4%
----------------------------------------------------------------------------------
 BASIC MATERIALS--1.1%
----------------------------------------------------------------------------------
 METALS--1.1%
 Cameco Corp.                                             1,000,000   $ 22,789,137
----------------------------------------------------------------------------------
 CAPITAL GOODS--17.7%
----------------------------------------------------------------------------------
 ELECTRICAL EQUIPMENT--6.4%
 Halma plc(1)                                            20,000,000     40,837,379
----------------------------------------------------------------------------------
 Murata Manufacturing Co. Ltd.                              600,000     34,399,396
----------------------------------------------------------------------------------
 Toshiba Corp.                                           15,000,000     57,416,268
                                                                      ------------
                                                                       132,653,043

----------------------------------------------------------------------------------
 INDUSTRIAL SERVICES--6.2%
 Eurotunnel SA(1,2)                                     109,000,000     84,376,355
----------------------------------------------------------------------------------
 Mitsubishi Corp.                                         6,000,000     42,911,105
                                                                      ------------
                                                                       127,287,460

----------------------------------------------------------------------------------
 MANUFACTURING--5.1%
 Coherent, Inc.(1,2)                                      3,100,000     88,040,000
----------------------------------------------------------------------------------
 Corning, Inc.                                            2,000,000     17,640,000
                                                                      ------------
                                                                       105,680,000

----------------------------------------------------------------------------------
 COMMUNICATION SERVICES--0.4%
----------------------------------------------------------------------------------
 TELECOMMUNICATIONS-LONG DISTANCE--0.4%
 Corvis Corp.(2)                                          5,000,000      7,600,000
----------------------------------------------------------------------------------
 CONSUMER CYCLICALS--28.8%
----------------------------------------------------------------------------------
 AUTOS & HOUSING--7.0%
 Bayerische Motoren Werke AG (BMW)                          800,000     20,421,537
----------------------------------------------------------------------------------
 Porsche AG, Preferred                                      300,000     77,810,208
----------------------------------------------------------------------------------
 Rodamco Europe NV                                        1,000,000     36,245,860
----------------------------------------------------------------------------------
 Solidere, GDR(2,3)                                       2,750,000      9,900,000
                                                                      ------------
                                                                       144,377,605

----------------------------------------------------------------------------------
 LEISURE & ENTERTAINMENT--4.4%
 Host Marriott Corp.                                      5,000,000     35,250,000
----------------------------------------------------------------------------------
 Six Continents plc                                       6,000,000     54,672,841
                                                                      ------------
                                                                        89,922,841

----------------------------------------------------------------------------------
 MEDIA--9.1%
 Reed International plc                                   7,000,000     57,766,559
----------------------------------------------------------------------------------
 Telewest Communications plc(2)                          30,000,000     13,227,300
----------------------------------------------------------------------------------
 Wiley (John) & Sons, Inc., Cl. A(1)                      2,800,000     58,464,000
----------------------------------------------------------------------------------
 Wolters Kluwer NV                                        2,600,000     57,632,739
                                                                      ------------
                                                                       187,090,598
                                                                      MARKET VALUE
                                                           SHARES       SEE NOTE 1
----------------------------------------------------------------------------------

 RETAIL: SPECIALTY--7.0%
----------------------------------------------------------------------------------
 Boots Co. plc                                            8,000,000  $  73,367,425
----------------------------------------------------------------------------------
 Borders Group, Inc.(2)                                   1,500,000     28,725,000
----------------------------------------------------------------------------------
 Circuit City Stores, Inc./Circuit City Group             3,500,000     42,000,000
                                                                      ------------
                                                                       144,092,425

----------------------------------------------------------------------------------
 TEXTILE/APPAREL & HOME FURNISHINGS--1.3%
 Hermes International SA                                    220,000     25,845,666
----------------------------------------------------------------------------------
 CONSUMER STAPLES--16.1%
----------------------------------------------------------------------------------
 BEVERAGES--2.7%
 Allied Domecq plc                                       10,000,000     55,701,631
----------------------------------------------------------------------------------
 BROADCASTING--2.5%
 Sirius Satellite Radio, Inc.(1,2)                        6,500,000     23,335,000
----------------------------------------------------------------------------------
 XM Satellite Radio Holdings, Inc.(1,2)                   5,500,000     28,820,000
                                                                      ------------
                                                                        52,155,000

----------------------------------------------------------------------------------
 FOOD--1.4%
 Hain Celestial Group, Inc.(2)                            1,200,000     22,092,000
----------------------------------------------------------------------------------
 Thorntons plc(1)                                         6,265,000      7,550,290
                                                                      ------------
                                                                        29,642,290

----------------------------------------------------------------------------------
 HOUSEHOLD GOODS--9.5%
 Reckitt Benckiser plc                                    3,999,800     57,491,790
----------------------------------------------------------------------------------
 Shiseido Co. Ltd.                                        5,000,000     43,062,201
----------------------------------------------------------------------------------
 Wella AG, Preference, Non-Vtg.                           2,000,000     94,348,520
                                                                      ------------
                                                                       194,902,511

----------------------------------------------------------------------------------
 ENERGY--0.0%
----------------------------------------------------------------------------------
 ENERGY SERVICES--0.0%
 Electrofuel, Inc.(2)                                       750,000        332,341
----------------------------------------------------------------------------------
 FINANCIAL--1.5%
----------------------------------------------------------------------------------
 DIVERSIFIED FINANCIAL--1.5%
 Edinburgh Fund Managers Group                              900,000      5,132,192
----------------------------------------------------------------------------------
 Van der Moolen Holding NV                                1,400,000     26,455,835
                                                                      ------------
                                                                        31,588,027

----------------------------------------------------------------------------------
 HEALTHCARE--9.8%
----------------------------------------------------------------------------------
 HEALTHCARE/DRUGS--9.8%
 Alexion Pharmaceuticals, Inc.(1,2)                       2,000,000     34,040,000
----------------------------------------------------------------------------------
 Banyu Pharmaceutical Co.                                 2,000,000     37,270,209
----------------------------------------------------------------------------------
 Delta & Pine Land Co.                                    1,300,000     22,074,000
----------------------------------------------------------------------------------
 Inhale Therapeutic Systems, Inc.(1,2)                    6,000,000     79,800,000
----------------------------------------------------------------------------------
 Neurogen Corp.(1,2)                                      1,575,000     25,845,750
----------------------------------------------------------------------------------
 Neurogen Corp.(1,2,4)                                      200,000      3,117,900
                                                                      ------------
                                                                       202,147,859
 STATEMENT OF INVESTMENTS  SEPTEMBER 30, 2001  Continued
--------------------------------------------------------------------------------

                                                                            MARKET VALUE
                                                               SHARES         SEE NOTE 1
-----------------------------------------------------------------------------------------

 TECHNOLOGY--20.0%
-----------------------------------------------------------------------------------------
 COMPUTER HARDWARE--4.4%
 SanDisk Corp.(1,2)                                           4,000,000   $   39,440,000
-----------------------------------------------------------------------------------------
 Three-Five Systems, Inc.(1,2)                                3,200,000       51,008,000
                                                                          ---------------
                                                                              90,448,000

-----------------------------------------------------------------------------------------
 COMPUTER SOFTWARE--3.2%
 Sybase, Inc.(1,2)                                            7,000,000       65,100,000
-----------------------------------------------------------------------------------------
 COMMUNICATIONS EQUIPMENT--0.7%
 Toyo Communication Equipment Co. Ltd.(1)                     4,000,000       15,143,121
-----------------------------------------------------------------------------------------
 ELECTRONICS--11.5%
 Cree, Inc.(2)                                                  400,000        5,912,000
-----------------------------------------------------------------------------------------
 Hamamatsu Photonics K.K.                                       800,000       18,165,030
-----------------------------------------------------------------------------------------
 Keyence Corp.                                                   50,000        6,715,353
-----------------------------------------------------------------------------------------
 Kyocera Corp.                                                  600,000       39,184,084
-----------------------------------------------------------------------------------------
 National Semiconductor Corp.(2)                              7,600,000      167,580,000
                                                                          ---------------
                                                                             237,556,467

-----------------------------------------------------------------------------------------
 PHOTOGRAPHY--0.2%
 Polaroid Corp.(1)                                            5,500,000        2,860,000
-----------------------------------------------------------------------------------------
 Total Common Stocks (Cost $2,884,322,897)                                 1,964,916,022

                                                                  UNITS
=========================================================================================
 RIGHTS, WARRANTS AND CERTIFICATES--0.0%

 CD Radio, Inc. Wts., Exp. 5/15/09(2,4) (Cost $880,147)          18,000          324,000

                                                              PRINCIPAL
                                                                 AMOUNT
=========================================================================================
 NON-CONVERTIBLE CORPORATE BONDS AND NOTES--0.3%

 Sirius Satellite Radio, Inc., 14.50% Sr. Sec. Nts.,
   5/15/09(1,5) (Cost $14,704,611)                         $ 16,500,000        6,600,000
=========================================================================================
 REPURCHASE AGREEMENTS--5.8%

 Repurchase agreement with Banque Nationale De Paris,
 3.20%, dated 9/28/01, to be repurchased at
 $120,289,069 on 10/1/01, collateralized by U.S.
 Treasury Bonds, 5.375%-13.75%, 8/15/04-2/15/31,
 with a value of $71,343,709 and U.S. Treasury Nts.,
 6.25%-6.75%, 1/31/02-5/15/05, with a value of
 $51,819,847 (Cost $120,257,000)                            120,257,000      120,257,000
-----------------------------------------------------------------------------------------
 TOTAL INVESTMENTS, AT VALUE (COST $3,020,164,655)                101.5%   2,092,097,022
-----------------------------------------------------------------------------------------
 LIABILITIES IN EXCESS OF OTHER ASSETS                             (1.5)     (31,862,500)
                                                            -----------------------------
 NET ASSETS                                                       100.0%  $2,060,234,522
                                                            =============================


FOOTNOTES TO STATEMENT OF INVESTMENTS

1. Affiliated company. Represents ownership of at least 5% of the voting
securities of the issuer, and is or was an affiliate, as defined in the
Investment Company Act of 1940, at or during the period ended September 30,
2001. The aggregate fair value of securities of affiliated companies held by
the Fund as of September 30, 2001, amounts to $654,377,795. Transactions
during the period in which the issuer was an affiliate are as follows:

                                      SHARES/                                      SHARES/
                                    PRINCIPAL                                    PRINCIPAL        UNREALIZED         DIVIDEND/
                                 SEPTEMBER 30,          GROSS         GROSS   SEPTEMBER 30,     APPRECIATION         INTEREST
                                         2000       ADDITIONS    REDUCTIONS           2001    (DEPRECIATION)           INCOME
------------------------------------------------------------------------------------------------------------------------------

 STOCKS AND WARRANTS
 Alexion Pharmaceuticals, Inc.              --      2,000,000            --      2,000,000     $ (29,153,220)     $        --
 Coherent, Inc.                      2,580,100        519,900            --      3,100,000         6,521,378               --
 Eurotunnel SA                      65,000,000     44,000,000            --    109,000,000       (39,203,122)              --
 Halma plc                          20,000,000             --            --     20,000,000         4,060,325        1,338,041
 Inhale Therapeutic Systems, Inc.           --      6,000,000            --      6,000,000       (98,867,228)              --
 Neurogen Corp.                      1,475,000        100,000            --      1,575,000         2,855,351               --
 Neurogen Corp.                        200,000             --            --        200,000        (1,882,100)              --
 Polaroid Corp.                      1,800,000      3,700,000            --      5,500,000       (72,764,353)         825,000
 SanDisk Corp.                              --      4,000,000            --      4,000,000       (58,255,528)              --
 Sirius Satellite Radio, Inc.        1,000,000      5,500,000            --      6,500,000      (144,461,214)              --
 Sybase, Inc.                        7,000,000             --            --      7,000,000       (37,958,701)              --
 Thorntons plc                       6,265,000             --            --      6,265,000       (12,025,051)         605,808
 Three-Five Systems, Inc.            2,800,000        400,000            --      3,200,000      (127,351,037)              --
 Toyo Communication
 Equipment Co. Ltd.                  2,800,000      1,200,000            --      4,000,000       (44,754,177)         350,821
 Wiley (John) & Sons, Inc., Cl. A    2,800,000             --            --      2,800,000         2,510,266          462,000
 XM Satellite Radio Holdings, Inc.          --      5,500,000            --      5,500,000       (49,239,580)              --

 BONDS AND NOTES
 Sirius Satellite Radio, Inc.,
 14.50% Sr. Sec. Nts., 5/15/09     $16,500,000             --            --    $16,500,000        (8,104,611)       2,392,500
                                                                                                               ---------------
                                                                                                                   $5,974,170
                                                                                                               ===============


2. Non-income-producing security.
3. 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 $9,900,000 or 0.48% of the Fund's net
assets as of September 30, 2001.
4. Identifies issues considered to be illiquid or restricted--See Note 6 of
Notes to Financial Statements.
5. A sufficient amount of securities has been designated to cover outstanding
foreign currency contracts. See Note 5 of Notes to Financial Statements.

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

 GEOGRAPHICAL DIVERSIFICATION                                                                     MARKET VALUE        PERCENT
--------------------------------------------------------------------------------------------------------------------------------

 United States                                                                                   $ 975,924,649            46.6%
 Great Britain                                                                                     365,747,407            17.5
 Japan                                                                                             294,266,767            14.1
 Germany                                                                                           192,580,265             9.2
 The Netherlands                                                                                   120,334,434             5.7
 France                                                                                            110,222,021             5.3
 Canada                                                                                             23,121,479             1.1
 Lebanon                                                                                             9,900,000             0.5

                                                                                              ----------------------------------
 Total                                                                                          $2,092,097,022           100.0%
                                                                                              ==================================


SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.



STATEMENT OF ASSETS AND LIABILITIES  SEPTEMBER 30, 2001
--------------------------------------------------------------------------------

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

ASSETS

 Investments, at value--see accompanying statement:
 Unaffiliated companies (cost $1,657,714,259)                                          $   1,437,719,227
 Affiliated companies (cost $1,362,450,396)                                                  654,377,795
                                                                                       ----------------------
                                                                                           2,092,097,022
-------------------------------------------------------------------------------------------------------------
 Cash                                                                                             15,144
-------------------------------------------------------------------------------------------------------------
 Receivables and other assets:
 Shares of beneficial interest sold                                                            8,182,890
 Interest and dividends                                                                        5,079,855
 Other                                                                                            14,510
                                                                                       ----------------------
 Total assets                                                                              2,105,389,421

==============================================================================================================
 LIABILITIES

 Unrealized depreciation on foreign currency contracts                                         3,714,351
-------------------------------------------------------------------------------------------------------------
 Payables and other liabilities:
 Investments purchased                                                                        23,671,694
 Shares of beneficial interest redeemed                                                       14,915,328
 Distribution and service plan fees                                                            1,578,740
 Closed foreign currency contracts                                                               701,220
 Trustees' compensation                                                                          380,669
 Transfer and shareholder servicing agent fees                                                     2,037
 Other                                                                                           190,860
                                                                                       ----------------------
 Total liabilities                                                                            45,154,899

==============================================================================================================
 NET ASSETS                                                                               $2,060,234,522
                                                                                       ----------------------

==============================================================================================================
 COMPOSITION OF NET ASSETS

 Paid-in capital                                                                         $ 3,076,614,180
-------------------------------------------------------------------------------------------------------------
 Undistributed (overdistributed) net investment income                                         3,216,140
-------------------------------------------------------------------------------------------------------------
 Accumulated net realized gain (loss) on investments and
 foreign currency transactions                                                               (87,841,660)
-------------------------------------------------------------------------------------------------------------
 Net unrealized appreciation (depreciation) on investments and translation
 of assets and liabilities denominated in foreign currencies                                (931,754,138)
                                                                                       ----------------------
 NET ASSETS                                                                               $2,060,234,522
                                                                                       ======================



==============================================================================================================
 NET ASSET VALUE PER SHARE

 Class A Shares:
 Net asset value and redemption price per share (based on net assets of
 $1,061,527,078 and 59,112,416 shares of beneficial interest outstanding)                               $17.96
 Maximum offering price per share (net asset value plus sales charge of 5.75% of
 offering price)                                                                                        $19.06
---------------------------------------------------------------------------------------------------------------
 Class B Shares:
 Net asset value, redemption price (excludes applicable contingent deferred
 sales charge) and offering price per share (based on net assets of $674,706,793
 and 38,339,919 shares of beneficial interest outstanding)                                              $17.60
---------------------------------------------------------------------------------------------------------------
 Class C Shares:
 Net asset value, redemption price (excludes applicable contingent deferred
 sales charge) and offering price per share (based on net assets of $318,081,799
 and 18,063,038 shares of beneficial interest outstanding)                                              $17.61
---------------------------------------------------------------------------------------------------------------
 Class N Shares:
 Net asset value, redemption price (excludes applicable contingent deferred
 sales charge) and offering price per share (based on net assets of $1,704,242
 and 95,003 shares of beneficial interest outstanding)                                                  $17.94
---------------------------------------------------------------------------------------------------------------
 Class Y Shares:
 Net asset value, redemption price and offering price per share (based on net
 assets of $4,214,610 and 234,333 shares of beneficial interest
 outstanding)                                                                                           $17.99




SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.



STATEMENT OF OPERATIONS  FOR THE YEAR ENDED SEPTEMBER 30, 2001
--------------------------------------------------------------------------------

================================================================================================
INVESTMENT INCOME

 Dividends:
 Unaffiliated companies (net of foreign withholding taxes of $2,537,612)       $    28,419,190
 Affiliated companies (net of foreign withholding taxes of $277,893)                 3,581,670
------------------------------------------------------------------------------------------------
 Interest:
 Unaffiliated companies                                                             10,570,432
 Affiliated companies                                                                2,392,500
                                                                               -----------------
 Total income                                                                       44,963,792


================================================================================================
 EXPENSES

 Management fees                                                                    20,036,232
------------------------------------------------------------------------------------------------
 Distribution and service plan fees:
 Class A                                                                             3,599,519
 Class B                                                                             9,226,019
 Class C                                                                             4,465,624
 Class N                                                                                 1,203
------------------------------------------------------------------------------------------------
 Transfer and shareholder servicing agent fees:
 Class A                                                                             2,804,623
 Class B                                                                             1,783,792
 Class C                                                                               860,371
 Class N                                                                                   721
 Class Y                                                                                 2,512
------------------------------------------------------------------------------------------------
 Shareholder reports                                                                 1,069,199
------------------------------------------------------------------------------------------------
 Custodian fees and expenses                                                           364,773
------------------------------------------------------------------------------------------------
 Trustees' compensation                                                                 91,368
------------------------------------------------------------------------------------------------
 Other                                                                                 304,619
                                                                               -----------------
 Total expenses                                                                     44,610,575
 Less reduction to custodian expenses                                                  (33,102)
 Less voluntary waiver of transfer and shareholder servicing agent fees--Class Y          (182)
                                                                               -----------------
 Net expenses                                                                       44,577,291

================================================================================================
 NET INVESTMENT INCOME                                                                 386,501

================================================================================================
 REALIZED AND UNREALIZED GAIN (LOSS)

 Net realized gain (loss) on:
 Investments                                                                       (55,961,785)
 Foreign currency transactions                                                     (22,221,637)
                                                                               -----------------
 Net realized gain (loss)                                                          (78,183,422)

------------------------------------------------------------------------------------------------
 Net change in unrealized appreciation (depreciation) on:
 Investments                                                                    (1,199,264,791)
 Translation of assets and liabilities donominated in foreign currencies           (16,723,859)
                                                                               -----------------
 Net change                                                                     (1,215,988,650)
                                                                               -----------------
 Net realized and unrealized gain (loss)                                        (1,294,172,072)

================================================================================================
 NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS                          $(1,293,785,571)
                                                                               =================


SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------

YEAR ENDED SEPTEMBER 30,                                                    2001                    2000
===============================================================================================================
 OPERATIONS

 Net investment income (loss)                                           $ 386,501             $  7,750,070
---------------------------------------------------------------------------------------------------------------
 Net realized gain (loss)                                             (78,183,422)              94,384,350
---------------------------------------------------------------------------------------------------------------
 Net change in unrealized appreciation (depreciation)              (1,215,988,650)             137,855,042
                                                                  ---------------------------------------------
 Net increase (decrease) in net assets resulting from operations   (1,293,785,571)             239,989,462

===============================================================================================================
 DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS

 Dividends from net investment income:
 Class A                                                               (2,889,876)              (7,835,342)
 Class B                                                                       --               (3,084,311)
 Class C                                                                       --               (1,772,302)
 Class N                                                                       --                       --
 Class Y                                                                       --                       --
---------------------------------------------------------------------------------------------------------------
 Distributions from net realized gain:
 Class A                                                              (44,129,018)             (31,271,081)
 Class B                                                              (28,912,108)             (16,981,850)
 Class C                                                              (14,056,017)             (10,491,491)
 Class N                                                                       --                       --
 Class Y                                                                       --                       --

===============================================================================================================
 BENEFICIAL INTEREST TRANSACTIONS

 Net increase (decrease) in net assets resulting from
 beneficial interest transactions:
 Class A                                                              201,841,746              981,112,803
 Class B                                                              117,445,042              744,119,129
 Class C                                                               42,319,649              306,336,156
 Class N                                                                2,043,613                       --
 Class Y                                                                5,360,407                       --

===============================================================================================================
 NET ASSETS

 Total increase (decrease)                                         (1,014,762,133)           2,200,121,173
---------------------------------------------------------------------------------------------------------------
 Beginning of period                                                3,074,996,655              874,875,482
                                                                  ---------------------------------------------
 End of period [including undistributed (overdistributed) net
 investment income of $3,216,140 and $2,930,760, respectively]     $2,060,234,522           $3,074,996,655
                                                                  ---------------------------------------------


SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------

CLASS A      YEAR ENDED SEPTEMBER 30,                     2001            2000       1999         1998          1997
=========================================================================================================================

PER SHARE OPERATING DATA

 Net asset value, beginning of period                  $ 30.02         $ 23.37    $ 16.03      $ 19.36       $ 15.62
-------------------------------------------------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment income                                     .08(1)          .11        .41          .29           .40
 Net realized and unrealized gain (loss)                (11.28)(1)        8.19       9.64        (1.90)         5.12
                                                       ------------------------------------------------------------------
 Total income (loss) from
 investment operations                                  (11.20)           8.30      10.05        (1.61)         5.52
-------------------------------------------------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income                     (.05)           (.33)      (.15)        (.63)         (.40)
 Dividends in excess of net investment income               --              --         --         (.02)           --
 Distributions from net realized gain                     (.81)          (1.32)     (2.56)       (1.07)        (1.38)
                                                       ------------------------------------------------------------------
 Total dividends and/or distributions
 to shareholders                                          (.86)          (1.65)     (2.71)       (1.72)        (1.78)
-------------------------------------------------------------------------------------------------------------------------
 Net asset value, end of period                         $17.96          $30.02     $23.37       $16.03        $19.36
                                                       ==================================================================

=========================================================================================================================
 TOTAL RETURN, AT NET ASSET VALUE(2)                    (38.30)%         36.54%     70.06%       (8.77)%       38.83%

=========================================================================================================================
 RATIOS/SUPPLEMENTAL DATA

 Net assets, end of period (in thousands)           $1,061,527      $1,566,609   $482,481     $212,765      $181,716
-------------------------------------------------------------------------------------------------------------------------
 Average net assets (in thousands)                  $1,444,832      $1,159,085   $309,772     $216,009      $141,582
-------------------------------------------------------------------------------------------------------------------------
 Ratios to average net assets:(3)
 Net investment income                                    0.38%(1)        0.72%      2.51%        1.62%         2.47%
 Expenses                                                 1.22%           1.20%      1.33%        1.36%(4)      1.43%(4)
-------------------------------------------------------------------------------------------------------------------------
 Portfolio turnover rate                                    53%             48%        98%         117%           91%


1. Without the adoption of the change in amortization method as discussed in
Note 1 in the Notes to Financial Statements, these amounts would have been:

Net investment income                    Change less than $0.005
Net realized and unrealized gain(loss)   Change less than $0.005
Net investment income ratio              Change less than 0.005%

2. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at
the net asset value calculated on the last business day of the fiscal period.
Sales charges are not reflected in the total returns. Total returns are not
annualized for periods of less than one full year.

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

4. Expense ratio has been calculated without adjustment for the reduction to
custodian expenses.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

CLASS B    YEAR ENDED SEPTEMBER 30,                      2001              2000         1999       1998          1997
========================================================================================================================

 PER SHARE OPERATING DATA

 Net asset value, beginning of period                  $ 29.59          $ 23.15      $ 15.95    $ 19.27       $ 15.57
-------------------------------------------------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment income (loss)                             (.08)(1)         (.02)         .29        .23           .30
 Net realized and unrealized gain (loss)                (11.10)(1)         8.02         9.55      (1.96)         5.06
                                                      -------------------------------------------------------------------
 Total income (loss) from
 investment operations                                  (11.18)            8.00         9.84      (1.73)         5.36
-------------------------------------------------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income                       --             (.24)        (.08)      (.51)         (.28)
 Dividends in excess of net investment income               --               --           --       (.01)           --
 Distributions from net realized gain                     (.81)           (1.32)       (2.56)     (1.07)        (1.38)
                                                      -------------------------------------------------------------------
 Total dividends and/or distributions
 to shareholders                                          (.81)           (1.56)       (2.64)     (1.59)        (1.66)
-------------------------------------------------------------------------------------------------------------------------
 Net asset value, end of period                         $17.60           $29.59       $23.15     $15.95        $19.27
                                                      -------------------------------------------------------------------

=========================================================================================================================
 TOTAL RETURN, AT NET ASSET VALUE(2)                    (38.74)%          35.48%       68.80%     (9.42)%       37.69%

=========================================================================================================================
 RATIOS/SUPPLEMENTAL DATA
 Net assets, end of period (in thousands)             $674,707       $1,013,614     $235,032    $81,866       $37,071
-------------------------------------------------------------------------------------------------------------------------
 Average net assets (in thousands)                    $922,355       $  711,304     $134,974    $63,012       $17,474
                                                      -------------------------------------------------------------------
 Ratios to average net assets:(3)
 Net investment income (loss)                            (0.37)%(1)       (0.05)%       1.76%      1.42%         1.77%
 Expenses                                                 1.97%            1.97%        2.08%      2.11%(4)      2.15%(4)
-------------------------------------------------------------------------------------------------------------------------
 Portfolio turnover rate                                    53%              48%          98%       117%           91%


1. Without the adoption of the change in amortization method as discussed in
Note 1 in the Notes to Financial Statements, these amounts would have been:

Net investment income                  Change less than $0.005
Net realized and unrealized gain(loss) Change less than $0.005
Net investment income ratio            Change less than 0.005%

2. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at
the net asset value calculated on the last business day of the fiscal period.
Sales charges are not reflected in the total returns. Total returns are not
annualized for periods of less than one full year.

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

4. Expense ratio has been calculated without adjustment for the reduction to
custodian expenses.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

FINANCIAL HIGHLIGHTS  CONTINUED
--------------------------------------------------------------------------------

 CLASS C    YEAR ENDED SEPTEMBER 30,                          2001          2000       1999     1998       1997
====================================================================================================================

 PER SHARE OPERATING DATA

 Net asset value, beginning of period                       $ 29.61      $ 23.15    $ 15.95 $   19.26    $ 15.55
--------------------------------------------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment income (loss)                                  (.09)(1)     (.07)       .29       .17        .28
 Net realized and unrealized gain (loss)                     (11.10)(1)     8.07       9.55     (1.91)      5.08
                                                      --------------------------------------------------------------
 Total income (loss) from
 investment operations                                       (11.19)        8.00       9.84     (1.74)      5.36
--------------------------------------------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income                            --         (.22)      (.08)     (.48)      (.27)
 Dividends in excess of net investment income                    --           --         --      (.02)        --
 Distributions from net realized gain                          (.81)       (1.32)     (2.56)    (1.07)     (1.38)
                                                      --------------------------------------------------------------
 Total dividends and/or distributions
 to shareholders                                               (.81)       (1.54)     (2.64)    (1.57)     (1.65)
--------------------------------------------------------------------------------------------------------------------
 Net asset value, end of period                              $17.61       $29.61     $23.15    $15.95     $19.26
                                                      --------------------------------------------------------------

====================================================================================================================
 TOTAL RETURN, AT NET ASSET VALUE(2)                         (38.75)%      35.49%     68.79%    (9.43)%    37.74%

====================================================================================================================
 RATIOS/SUPPLEMENTAL DATA

 Net assets, end of period (in thousands)                  $318,082     $494,774   $157,362   $70,822    $56,278
--------------------------------------------------------------------------------------------------------------------
 Average net assets (in thousands)                         $446,283     $377,158   $104,560   $65,502    $43,338

 Ratios to average net assets:(3)
 Net investment income (loss)                                 (0.36)%(1)   (0.05)%     1.76%     0.86%      1.71%
 Expenses                                                      1.97%        1.98%      2.08%     2.12%(4)   2.18%(4)
--------------------------------------------------------------------------------------------------------------------
 Portfolio turnover rate                                         53%          48%        98%      117%        91%


1. Without the adoption of the change in amortization method as discussed in
Note 1 in the Notes to Financial Statements, these amounts would have been:

Net investment income                    Change less than $0.005
Net realized and unrealized gain(loss)   Change less than $0.005
Net investment income ratio              Change less than  0.005%

2. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at
the net asset value calculated on the last business day of the fiscal period.
Sales charges are not reflected in the total returns. Total returns are not
annualized for periods of less than one full year.

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

4. Expense ratio has been calculated without adjustment for the reduction to
custodian expenses.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                                                              CLASS N                CLASS Y
                                                               PERIOD                 PERIOD
                                                                ENDED                  ENDED
                                                         SEPTEMBER 30,          SEPTEMBER 30,
                                                               2001(1)                2001(2)
===============================================================================================================

 PER SHARE OPERATING DATA

 Net asset value, beginning of period                         $ 25.19                $ 28.40
---------------------------------------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment loss                                             (.06)(3)               (.05)(3)
 Net realized and unrealized gain (loss)                        (7.19)(3)             (10.36)(3)
                                                            ---------------------------------------------------
 Total income (loss) from
 investment operations                                          (7.25)                (10.41)
---------------------------------------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income                              --                     --
 Dividends in excess of net investment income                      --                     --
 Distributions from net realized gain                              --                     --
                                                            ---------------------------------------------------
 Total dividends and/or distributions
 to shareholders                                                   --                     --
---------------------------------------------------------------------------------------------------------------
 Net asset value, end of period                                $17.94                 $17.99
                                                            ===================================================

===============================================================================================================
 TOTAL RETURN, AT NET ASSET VALUE(4)                           (28.78)%               (36.66)%

===============================================================================================================
 RATIOS/SUPPLEMENTAL DATA

 Net assets, end of period (in thousands)                      $1,704                 $4,215
---------------------------------------------------------------------------------------------------------------
 Average net assets (in thousands)                              $ 407                 $1,240
---------------------------------------------------------------------------------------------------------------
 Ratios to average net assets:(5)
 Net investment loss                                            (2.44)%(3)             (1.52)%(3)
 Expenses                                                        1.58%                  1.08%
 Expenses, net of voluntary waiver of transfer agent fees        N/A                    1.06%
---------------------------------------------------------------------------------------------------------------
 Portfolio turnover rate                                           53%                    53%


1. For the period from March 1, 2001 (inception of offering) to September 30,
2001.

2. For the period from February 1, 2001 (inception of offering) to September
30, 2001.

3. Without the adoption of the change in amortization method as discussed in
Note 1 in the Notes to Financial Statements, these amounts would have been:

Net investment income                    Change less than $0.005
Net realized and unrealized gain(loss)   Change less than $0.005
Net investment income ratio              Change less than 0.005%

4. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or inception of offering), 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.

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


NOTES TO FINANCIAL STATEMENTS
-------------------------------------------------------------------------------


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

 Oppenheimer Global Growth & Income 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 seek capital
 appreciation consistent with preservation of principal, while providing
 current income. The Fund's investment advisor is OppenheimerFunds, Inc. (the
 Manager).

   The Fund offers Class A, Class B, Class C, Class N and Class Y shares.
 Class A shares are sold at their offering price, which is normally net asset
 value plus a front-end sales charge. Class B, Class C and Class N shares are
 sold without a front-end sales charge but may be subject to a contingent
 deferred sales charge (CDSC). Class N shares are sold only through retirement
 plans. Retirement plans that offer Class N shares may impose charges on those
 accounts. Class Y shares are sold to certain institutional investors without
 either a front-end sales charge or a 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, C
 and N have separate distribution and/or service plans. No such plan has been
 adopted for Class Y shares. Class B shares will automatically convert to
 Class A shares six years after the date of purchase. Beginning September 1,
 2001, the Fund assesses a 2% fee on the proceeds of Fund shares that are
 redeemed (either by selling or exchanging to another Oppenheimer fund) within
 30 days of their 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.



 ------------------------------------------------------------------------------
 REPURCHASE AGREEMENTS. The Fund requires its custodian bank 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.

   As of September 30, 2001, the Fund had approximately $83,080,000 of
 post-October losses available to offset future capital gains, if any. Such
 losses, if unutilized, will expire in 2010. Additionally, the Fund had
 approximately $4,761,000 of post-October foreign currency losses which were
 deferred. If unutilized by the Fund in the following fiscal year, such losses
 will expire.

 ------------------------------------------------------------------------------
 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 September 30, 2001, the Fund's projected benefit obligations were
 increased by $18,916 and payments of $4,455 were made to retired trustees,
 resulting in an accumulated liability of $357,135 as of September 30, 2001.

   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.


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 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 their 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 September 30, 2001, amounts have been reclassified to reflect a
 decrease in paid-in capital of $250,674, an increase in undistributed net
 investment income of $2,788,755, and an increase in accumulated net realized
 loss on investments of $2,538,081. Net assets of the Fund were unaffected by
 the reclassifications.

 ------------------------------------------------------------------------------
 INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or
 upon ex-dividend notification in the case of certain foreign dividends where
 the ex-dividend date may have passed. Non-cash dividends included in dividend
 income, if any, are recorded at the fair market value of the securities
 received. Interest income, which includes accretion of discount and
 amortization of premium, is accrued as earned.

 ------------------------------------------------------------------------------
 SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
 date. Gains and losses on securities sold are determined on the basis of
 identified cost.

 ------------------------------------------------------------------------------
 OTHER. The Fund adopted the provisions of the AICPA Audit and Accounting
 Guide for Investment Companies, as revised, effective for fiscal years
 beginning after December 15, 2000. The Fund elected to begin amortizing
 premiums on debt securities effective January 1, 2001. Prior to this date,
 the Fund did not amortize premiums on debt securities. The cumulative effect
 of this accounting change had no impact on the total net assets of the Fund,
 but resulted in a $29,103 decrease to cost of securities and a corresponding
 $29,103 increase in net unrealized appreciation, based on securities held as
 of December 31, 2000. For the year ended September 30, 2001, interest income
 decreased by $109, net realized loss on investments increased by $4,100, and
 the change in net unrealized depreciation on investments decreased by $4,209.

   The preparation of financial statements in conformity with accounting
 principles generally accepted in the United States of America 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.


================================================================================
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 SEPTEMBER 30, 2001(1)             YEAR ENDED SEPTEMBER 30, 2000
                                      SHARES               AMOUNT               SHARES               AMOUNT
--------------------------------------------------------------------------------------------------------------

CLASS A
Sold                              30,120,207      $   758,088,010           48,249,256      $ 1,508,567,020
Dividends and/or
distributions reinvested           1,568,822           43,032,825            1,338,610           35,178,235
Redeemed                         (24,765,391)        (599,279,089)         (18,041,825)        (562,632,452)
                                 -----------------------------------------------------------------------------
Net increase (decrease)            6,923,638      $   201,841,746           31,546,041      $   981,112,803
                                 =============================================================================

--------------------------------------------------------------------------------------------------------------
CLASS B
Sold                              11,685,759      $   293,240,151           27,033,503      $   838,239,307
Dividends and/or
distributions reinvested             943,043           25,499,887              726,294           18,934,489
Redeemed                          (8,538,576)        (201,294,996)          (3,662,042)        (113,054,667)
                                 -----------------------------------------------------------------------------
Net increase (decrease)            4,090,226      $   117,445,042           24,097,755      $   744,119,129
                                 =============================================================================

--------------------------------------------------------------------------------------------------------------
CLASS C
Sold                               7,421,397      $   184,428,840           11,521,419      $   358,605,578
Dividends and/or
distributions reinvested             433,208           11,722,630              441,189           11,506,213
Redeemed                          (6,499,830)        (153,831,821)          (2,051,674)         (63,775,635)
                                 -----------------------------------------------------------------------------
Net increase (decrease)            1,354,775      $    42,319,649            9,910,934      $   306,336,156
                                 =============================================================================

--------------------------------------------------------------------------------------------------------------
CLASS N
Sold                                  96,048      $     2,061,847                   --      $            --
Dividends and/or
distributions reinvested                  --                   --                   --                   --
Redeemed                              (1,045)             (18,234)                  --                   --
                                 -----------------------------------------------------------------------------
Net increase (decrease)               95,003      $     2,043,613                   --      $            --
                                 =============================================================================

--------------------------------------------------------------------------------------------------------------
CLASS Y
Sold                                 245,608      $     5,601,130                   --      $            --
Dividends and/or
distributions reinvested                  --                   --                   --                   --
Redeemed                             (11,275)            (240,723)                  --                   --
                                 -----------------------------------------------------------------------------
Net increase (decrease)              234,333      $     5,360,407                   --      $            --
                                 =============================================================================



1. For the year ended September 30, 2001, for Class A, B and C shares, for the
period from March 1, 2001 (inception of offering) to September 30, 2001, for
Class N shares and for the period from February 1, 2001 (inception of offering)
to September 30, 2001, for Class Y shares.




NOTES TO FINANCIAL STATEMENTS CONTINUED
--------------------------------------------------------------------------------


================================================================================
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 September 30, 2001, were
 $1,707,147,699 and $1,396,560,053, respectively.

   As of September 30, 2001, unrealized appreciation (depreciation) based on
 cost of securities for federal income tax purposes of $3,020,305,728 was:

               Gross unrealized appreciation                  $   114,173,660
               Gross unrealized depreciation                   (1,042,382,366)
                                                              ---------------
               Net unrealized appreciation (depreciation)     $  (928,208,706)
                                                              ===============
================================================================================
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 a fee of 0.80% of
the first $250 million of average annual net assets of the Fund, 0.77% of the
next $250 million, 0.75% of the next $500 million, 0.69% of the next $1 billion,
0.67% of the next $1.5 billion, and 0.65% of average annual net assets in excess
of $3.5 billion. The Fund's management fee for the year ended September 30,
2001, was an annualized rate of 0.71%.

--------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Fund. The Fund pays
OFS an agreed-upon per account fee. Effective January 1, 2001, OFS has
voluntarily undertaken to waive a portion of its transfer agent fee for Class Y
shares, whereby the class pays a fee not to exceed 0.25% of average net assets.

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

September 30, 2001          $5,150,951        $1,273,791          $639,327          $9,723,064         $1,208,795           $16,174


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

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

September 30, 2001                    $35,970                   $1,910,682                    $160,509                          $--




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.

--------------------------------------------------------------------------------
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 a specified percent 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 a specified percent of the
average annual net assets consisting of Class A shares of the Fund. For the year
ended September 30, 2001, payments under the Class A plan totaled $3,599,519,
all of which were paid by the Distributor to recipients, and included $172,233
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.

--------------------------------------------------------------------------------
CLASS B, CLASS C AND CLASS N 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, 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 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 Distributor retains the asset-based
sales charge on Class N shares. 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 Distributor's actual expenses in selling Class B, Class C and Class N
shares may be more than the payments it receives from the contingent deferred
sales charges collected on redeemed shares and 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.



NOTES TO FINANCIAL STATEMENTS CONTINUED
--------------------------------------------------------------------------------


================================================================================
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES CONTINUED Distribution fees paid
to the Distributor for the year ended September 30, 2001, were as follows:

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

 Class B Plan                      $9,226,019                   $7,808,869                 $26,752,135                        3.97%
 Class C Plan                       4,465,624                    1,700,805                   3,832,652                        1.20
 Class N Plan                           1,203                        1,203                      33,779                        1.98


================================================================================
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 as a receivable or payable and in the Statement of
Operations with the change in unrealized appreciation or depreciation.

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

As of September 30, 2001, the Fund had outstanding foreign currency contracts as
follows:

                                                                  CONTRACT             VALUATION AS OF                   UNREALIZED
CONTRACT DESCRIPTION          EXPIRATION DATE                AMOUNT (000S)          SEPTEMBER 30, 2001                 DEPRECIATION
------------------------------------------------------------------------------------------------------------------------------------

CONTRACTS TO PURCHASE
Japanese Yen (JPY)                    5/15/02                JPY33,000,000                $281,439,543                   $3,714,351


================================================================================
6. ILLIQUID OR RESTRICTED SECURITIES

As of September 30, 2001, investments in securities included issues that are
illiquid or restricted. Restricted securities are often purchased in private
placement transactions, are not registered under the Securities Act of 1933, may
have contractual restrictions on resale, and are valued under methods approved
by the Board of Trustees as reflecting fair value. A security may also 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 10% of its net assets (determined at the time of purchase and reviewed
periodically) in illiquid or restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors, are not
subject to that limitation. The aggregate value of illiquid or restricted
securities subject to this limitation as of September 30, 2001, was $3,441,900,
which represents 0.17% of the Fund's net assets, of which $3,117,900 is
considered restricted. Information concerning restricted securities is as
follows:

                                                                                       VALUATION AS OF                   UNREALIZED
SECURITY                     ACQUISITION DATE                         COST          SEPTEMBER 30, 2001                 DEPRECIATION
------------------------------------------------------------------------------------------------------------------------------------

STOCKS AND WARRANTS
Neurogen Corp.                        6/26/00                   $5,000,000                  $3,117,900                   $1,882,100



================================================================================
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 or at
September 30, 2001.





                                                    Appendix A
-------------------------------------------------------------------------------------------------------------------
                                                 RATINGS DEFINITIONS
-------------------------------------------------------------------------------------------------------------------

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

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

Long-Term (Taxable) Bond Ratings

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

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

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

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

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

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

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

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

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

Con. (...): Bonds for which the security  depends on the completion of some act or the  fulfillment of some condition
are rated  conditionally.  These bonds are secured by (a) earnings of projects under construction,  (b) earnings of
projects  unseasoned  in  operating  experience,  (c) rentals  that begin when  facilities  are  completed,  or (d)
payments to which some other  limiting  condition  attaches.  The  parenthetical  rating  denotes  probable  credit
stature upon completion of construction or elimination of the basis of the condition.

Moody's applies numerical modifiers 1, 2, and 3 in each generic rating classification from "Aa" through "Caa."
The modifier "1" indicates that the obligation ranks in the higher end of its generic rating category; the
modifier "2" indicates a mid-range ranking; and the modifier "3" indicates a ranking in the lower end of that
generic rating category. Advanced refunded issues that are secured by certain assets are identified with a #
symbol.

Short-Term Ratings - Taxable Debt

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

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

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

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

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


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

Long-Term Credit Ratings

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

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

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

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

BB, B, CCC, CC, and C

Bonds rated "BB", "B", "CCC", "CC" and "C" are regarded as having  significant  speculative  characteristics.  "BB"
indicates  the least degree of  speculation,  and "C" the  highest.  While such  obligations  will likely have some
quality and  protective  characteristics,  these may be outweighed  by large  uncertainties  or major  exposures to
adverse conditions.
BB: Bonds rated "BB" are less vulnerable to nonpayment than other  speculative  issues.  However,  these face major
ongoing  uncertainties or exposure to adverse business,  financial,  or economic conditions which could lead to the
obligor's inadequate capacity to meet its financial commitment on the obligation.

B: Bonds rated "B" are more vulnerable to nonpayment  than  obligations  rated "BB", but the obligor  currently has
the  capacity  to meet its  financial  commitment  on the  obligation.  Adverse  business,  financial,  or economic
conditions  will likely  impair the  obligor's  capacity or  willingness  to meet its  financial  commitment on the
obligation.

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

CC:  Bonds rated "CC" are currently highly vulnerable to nonpayment.

C: A subordinated  debt or preferred stock obligation rated "C" is currently highly  vulnerable to nonpayment.  The
"C" rating may be used to cover a situation  where a bankruptcy  petition has been filed or similar action has been
taken,  but  payments on this  obligation  are being  continued.  A "C" also will be assigned to a preferred  stock
issue in arrears on dividends or sinking fund payments, but that is currently paying.

D:  Bonds  rated "D" are in  default.  Payments  on the  obligation  are not being made on the date due even if the
applicable  grace period has not expired,  unless  Standard and Poor's  believes  that such  payments  will be made
during such grace period.  The "D" rating will also be used upon the filing of a bankruptcy  petition or the taking
of a similar action if payments on an obligation are jeopardized.

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

Short-Term Issue Credit Ratings

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

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

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

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


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

D: Obligation is in payment default. Payments on the obligation have not been made on the due date even if the
applicable grace period has not expired, unless Standard and Poor's believes that such payments will be made
during such grace period. The "D" rating will also be used upon the filing of a bankruptcy petition or the taking
of a similar action if payments on an obligation are jeopardized.

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

International Long-Term Credit Ratings

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

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

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

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

Speculative Grade:

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

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

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

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

Entities rated in this category have defaulted on some or all of their obligations. Entities rated "DDD" have the
highest prospect for resumption of performance or continued operation with or without a formal reorganization
process. Entities rated "DD" and "D" are generally undergoing a formal reorganization or liquidation process;
those rated "DD" are likely to satisfy a higher portion of their outstanding obligations, while entities rated
"D" have a poor prospect for repaying all obligations.
Plus (+) and minus (-) signs may be appended to a rating symbol to denote relative status within the major rating
categories.  Plus and minus signs are not added to the "AAA" category or to categories below "CCC," nor to
short-term ratings other than "F1" (see below).

International Short-Term Credit Ratings

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

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

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

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

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

D:     Default. Denotes actual or imminent payment default.






                                                        B-1
                                                    Appendix B


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

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







                                                    Appendix C
                          OppenheimerFunds Special Sales Charge Arrangements and Waivers

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

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

For the purposes of some of the waivers described below and in the Prospectus and Statement of Additional
Information of the applicable Oppenheimer funds, the term "Retirement Plan" refers to the following types of
plans:

(1)      plans qualified under Sections 401(a) or 401(k) of the Internal Revenue Code,
(2)      non-qualified deferred compensation plans,
(3)      employee benefit plans3
(4)      Group Retirement Plans4
(5)      403(b)(7) custodial plan accounts
(6)      Individual Retirement Accounts ("IRAs"), including traditional IRAs, Roth IRAs, SEP-IRAs, SARSEPs or

                SIMPLE plans

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

Waivers that apply at the time shares are redeemed must be requested by the shareholder and/or dealer in the
redemption request.
                    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.


                               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.
         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
         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.

Special Sales Charge Arrangements for Shareholders of Certain Oppenheimer Funds Who Were Shareholders of FormerIV.
                                                    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.                                               o                            Sales Charge as a % of Net Amount Invested
       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 or Members                  IConcessioneasC%aofeOffering Priceering Price    Initial

                               ---------------------------- ---------------------------- ----------------------------
------------------------------ ---------------------------- ---------------------------- ----------------------------
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.

          Special Reduced Sales Charge for Former Shareholders
                   VI. 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 Global Growth & Income Fund
---------------------------------------------------------------

Internet WebSite:
         WWW.OPPENHEIMERFUNDS.COM
         ------------------------


Investment Advisor
         OppenheimerFunds, Inc.
         498 Seventh Avenue
         New York, New York 10018


Distributor

         OppenheimerFunds Distributor, Inc.
         OppenheimerFunds, Inc.
         498 Seventh Avenue


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



(OppenheimerFunds logo)