485(A) PSP/SAI/PART C - CALIFORNIA MUNICIPAL FUND

485APOS 1 cali485apspsaiptc0702.htm CALI MUNI FUND-485A N1A-PSP/SAI/PARTC 485(A) PSP/SAI/PART C - CALIFORNIA MUNICIPAL FUND


                                                                                         Registration No. 33-23566
                                                                                                  File No. 811-5586

                                        SECURITIES AND EXCHANGE COMMISSION
                                              WASHINGTON, D.C. 20549
                                                     FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933                                                         /X/

       PRE-EFFECTIVE AMENDMENT NO. ___                                                                         /  /


       POST-EFFECTIVE AMENDMENT NO. 21                                                                          /X/


                                    and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940                                                                                                     /X/


       AMENDMENT NO. 22                                                                                         /X/



                                       OPPENHEIMER CALIFORNIA MUNICIPAL FUND
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                                (Exact Name of Registrant as Specified in Charter)

                                 6803 South Tucson Way, Englewood, Colorado 80112
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                                     (Address of Principal Executive Offices)

                                                  (303) 768-3200
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                                          (Registrant's Telephone Number)

                                               ROBERT G. ZACK, ESQ.
                                              OppenheimerFunds, Inc.
                                      498 Seventh Avenue, New York, NY 10018
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                                      (Name and Address of Agent for Service)

It is proposed that this filing will become effective:


      /   / immediately upon filing pursuant to paragraph (b)
      /   / on _________________, pursuant to paragraph (b)
      /   / 60 days after filing pursuant to paragraph (a)(1)
      / X / on July 24, 2002, pursuant to paragraph (a)(1)
      /   / 75 days after filing pursuant to paragraph (a)(2)
      /   / on _______, pursuant to paragraph (a)(2) of Rule (485)


If appropriate, check the following box:

      /   /This post-effective amendment designates a new effective date for a previously filed post-amendment.


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Oppenheimer California Municipal Fund
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Prospectus dated September 24, 2002


                                                              Oppenheimer California Municipal Fund is a mutual
                                                              fund.  It seeks current income exempt from federal
                                                              and California income taxes by investing in municipal
                                                              securities, while attempting to preserve capital.

                                                                   This Prospectus contains important information
                                                              about the Fund's objective and its investment
                                                              policies, strategies and risks. It also contains
                                                              important information about how to buy and sell
                                                              shares of the Fund and other account features. Please
                                                              read this Prospectus carefully before you invest and
                                                              keep it for future reference about your account.




As with all mutual funds, the Securities and
Exchange Commission has not approved or disapproved
the Fund's securities nor has it determined that
this Prospectus is accurate or complete. It is a
criminal offense to represent otherwise.




Contents
                  ABOUT THE FUND
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                  The Fund's Investment Objective and Strategies

                  Main Risks of Investing in the Fund

                  The Fund's Past Performance

                  Fees and Expenses of the Fund

                  About the Fund's Investments

                  How the Fund is Managed


                  ABOUT YOUR ACCOUNT
--------------------------------------------------------------------------------------------------------------------

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

                  Special Investor Services
                  AccountLink
                  PhoneLink
                  OppenheimerFunds Internet Web Site

                  How to Sell Shares
                  By Mail
                  By Telephone
                  By Checkwriting

                  How to Exchange Shares

                  Shareholder Account Rules and Policies

                  Dividends and Taxes

                  Financial Highlights

ABOUT THE FUND

The Fund's Investment Objective and Strategies

WHAT IS THE FUND'S INVESTMENT OBJECTIVE? The Fund seeks as high a level of current interest income exempt from
federal and California income taxes for individual investors as is consistent with preservation of capital.

WHAT DOES THE FUND MAINLY INVEST IN? The Fund invests mainly in California municipal securities that pay interest
exempt from federal and California individual income taxes. These primarily include municipal bonds (which are
long-term obligations), municipal notes (short-term obligations), and interests in municipal leases. Most of the
securities the Fund buys must be "investment grade" (the four highest rating categories of national rating
organizations, such as Moody's).

The Fund does not limit its investments to securities of a particular maturity range, and may hold both
short- and long-term securities. However, it currently focuses on longer-term securities to seek higher yields.
These investments are more fully explained in "About the Fund's Investments," below.

HOW DO THE PORTFOLIO MANAGERS DECIDE WHAT SECURITIES TO BUY OR SELL?
In selecting securities for the Fund, the portfolio managers look primarily throughout California for municipal
securities using a variety of factors which may change over time and may vary in particular cases. The portfolio
managers currently look for:
o Securities that provide high current income
o A wide range of securities of different issuers within the state, including different agencies and
municipalities, to spread risk
o Securities having favorable credit characteristics
o Special situations that provide opportunities for value

WHO IS THE FUND DESIGNED FOR? The Fund is designed for individual investors who are seeking income exempt from
federal and California income taxes. The Fund does not seek capital gains or growth. Because it invests in
tax-exempt securities, the Fund is not appropriate for retirement plan accounts or for investors seeking capital
growth. The Fund is not a complete investment program.

Main Risks of Investing in the Fund

All investments have risks to some degree. The Fund's investments are subject to changes in their value
from a number of factors, described below. There is also the risk that poor security selection by the Fund's
investment Manager, OppenheimerFunds, Inc., will cause the Fund to under perform other funds having a similar
objective.

CREDIT RISK. Municipal securities are subject to credit risk. Credit risk is the risk that the issuer
of a municipal security might not make interest and principal payments on the security as they become due. If the
issuer fails to pay interest, the Fund's income may be reduced and if the issuer fails to repay principal, the
value of that security and of the Fund's shares may be reduced. Because the Fund can invest as much as 25% of its
assets in municipal securities below investment grade to seek higher income, the Fund's credit risks are greater
than those of funds that buy only investment-grade bonds. A downgrade in an issuer's credit rating or other
adverse news about an issuer can reduce the value of that issuer's securities.

Special Credit Risks of Lower-Grade Securities. Municipal securities that are rated below investment grade (these
are sometimes called "junk bonds") may be subject to greater price fluctuations and risks of loss of income and
principal than investment-grade municipal securities. Securities that are (or that have fallen) below investment
grade have a greater risk that the issuers might not meet their debt obligations.

INTEREST RATE RISKS. Municipal securities are debt securities that are subject to changes in value when
prevailing interest rates change. When interest rates fall, the values of already issued municipal securities
generally rise. When interest rates rise, the values of already issued municipal securities generally fall, and
the bonds may sell at a discount from their face amount. The magnitude of these price changes is generally greater
for bonds with longer maturities. The Fund currently focuses on longer-term securities to seek higher income.
Therefore, its share prices may fluctuate more when interest rates change.

RISKS OF NON-DIVERSIFICATION. The Fund is "non-diversified." That means that compared to funds that are
diversified, it can invest a greater portion of its assets in the securities of one issuer, such as bonds issued
by the state of California. Having a higher percentage of its assets invested in the securities of fewer issuers,
particularly obligations of government issuers of one state, could result in greater fluctuations of the Fund's
share prices due to economic, regulatory or political problems in California.

RISKS IN USING DERIVATIVE INVESTMENTS. The Fund can use derivatives to seek increased returns or to try to hedge
investment risks. In general terms, a derivative investment is an investment contract whose value depends on (or
is derived from) the value of an underlying asset, interest rate or index. Options, futures, "inverse floaters"
and variable rate obligations are examples of derivatives.

If the issuer of the derivative investment does not pay the amount due, the Fund can lose money on its
investment. Also, the underlying security or investment on which the derivative is based, and the derivative
itself, may not perform the way the Manager expected it to perform. If that happens, the Fund will get less
income than expected or its share price could decline. To try to preserve capital, the Fund has limits on the
amount of particular types of derivatives it can hold.

HOW RISKY IS THE FUND OVERALL? The risks described above collectively form the overall risk profile of the Fund
and can affect the value of the Fund's investments, its investment performance, and the prices of its shares.
Particular investments and investment strategies also have risks. These risks mean that you can lose money by
investing in the Fund. When you redeem your shares, they may be worth more or less than what you paid for them.
There is no assurance that the Fund will achieve its investment objective. In the OppenheimerFunds spectrum, the
Fund is more conservative than some types of taxable bond funds, such as high yield bond funds, but has greater
risk than money market funds.

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

The bar chart and table below show one measure of the risks of investing in the Fund, by showing changes in the
Fund's performance (for its Class A shares) from year to year for the last 10 calendar years and by showing how
the average annual total returns of the Fund's shares, both before and after taxes, compare to those of a
-
broad-based market index. The after-tax returns are shown for Class A shares only and are calculated using the
historical highest individual federal marginal income tax rates in effect during the periods shown, and do not
reflect the impact of state or local taxes. The after-tax returns for the other classes of shares will vary. The
after-tax returns are calculated based on certain assumptions mandated by regulation and your actual after-tax
returns may differ from those shown, depending on your individual tax situation. The Fund's past investment
performance, before and after taxes, is not necessarily an indication of how the Fund will perform in the future.

Annual Total Returns (Class A) (as of 12/31 each year)

[See appendix to prospectus for data in bar chart showing annual total returns]

Sales charges and taxes are not included in the calculations of return in this bar chart, and if those
charges were included, the returns would be less than those shown.
During the period shown in the bar chart, the highest return (not annualized) for a calendar quarter was
_____% (_Qtr__) and the lowest return (not annualized) for a calendar quarter was ________% (_Qtr__).

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

Average Annual Total Returns 1 Year 5 Years 1
for the periods ended December 31, (or life of class, if (or life of class, if (or life of0 Years
2001 less) less) class, if less)

==================================== ===========-------------------------=------------------------- -------------------------
------------------------- -------------------------=-------------------------

Class A Shares (inception
11/3/88)
Return Before Taxes
Return After Taxes on ______% ______% ______%
Distributions ______% ______% ______%
Return After Taxes on ______% ______% ______%
Distributions and Sale of
Fund Shares

Lehman Brothers Municipal Bond ______% ______% ______%1
Index (reflects no deduction for
fees, expenses or taxes)

Class B Shares (inception 5/3/93) ______% ______% ______%

Class C Shares (inception 11/1/95) ______% ______% ______%

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

1 From 12/31/92.
2 Total returns for Class N shares are cumulative and are not annualized.

The Fund's average annual total returns include the applicable sales charge: for Class A, the current maximum
initial sales charge of 4.75%; for Class B, the applicable contingent deferred sales charges of 5% (1-year) and 1%
(life-of-class); and for Class C, the 1% contingent deferred sales charge for the 1-year period. Because Class B
shares convert to Class A shares 72 months after purchase, Class B "life-of-class" performance does not include
the contingent deferred sales charge and uses Class A performance for the period after conversion.

The returns measure the performance of a hypothetical account and assume that all dividends and capital gains
distributions have been reinvested in additional shares. The performance of the Fund's Class A shares is compared
to the Lehman Brothers Municipal Bond Index, an unmanaged index of a broad range of investment-grade municipal
bonds. The index performance does not consider the effects of capital gains or transaction costs, and the Fund's
investment may vary from the securities in the index.

Fees and Expenses of the Fund

The Fund pays a variety of expenses directly for management of its assets, administration, distribution
of its shares and other services. Those expenses are subtracted from the Fund's assets to calculate the Fund's net
asset values per share. All shareholders therefore pay those expenses indirectly. Shareholders pay other expenses
directly, such as sales charges and account transaction charges. The following tables are meant to help you
understand the fees and expenses you may pay if you buy and hold shares of the Fund. The numbers below are based
on the Fund's expenses during the fiscal year ended July 31, 2002.

Shareholder Fees (charges paid directly from your investment):

Class A Shares Class B Shares Class C Shares
---------------------- ----------------------- ---------------------
Maximum Sales Charge (Load) on purchases (as a 4.75% None None
% of offering price)
------------------------------------------------- ---------------------- ----------------------- ---------------------
Maximum Deferred Sales Charge (Load) (as % of None1 5%2 1%3
the lower of the original offering price or
redemption proceeds)

1. A 1% contingent deferred sales charge may apply to redemptions of investments of $1 million or more of Class
A shares. See "How to Buy Shares" for details.
2. Applies to redemptions in first year after purchase. The contingent deferred sales charge declines to 1%
in the sixth year and is eliminated after that.
3. Applies to shares redeemed within 12 months of purchase.

Annual Fund Operating Expenses (deducted from Fund assets):
(% of average daily net assets)
Class A Class B Class C
Shares Shares Shares
-----------------------------------------------------------------------------------------------------------
Management Fees 0.55% 0.55% 0.55%
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
Distribution and/or Service (12b-1) Fees 0.25% 1.00% 1.00%
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------

Other Expenses % % %

Total Annual Operating Expenses % % %

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

Effective January 1, 2000, the Manager has voluntarily undertaken to limit its management fees to a maximum annual
rate of 0.55% of average annual net assets for each class of shares. The Manager can withdraw that waiver at any
time.

The "Other Expenses" in the table are based on, among other things, the fees the Fund would have paid if the
transfer agent had not waived a portion of its fee under a voluntary undertaking to the Fund to limit those fees
to 0.35% of average daily net assets per annum for all classes. That undertaking is effective October 1, 2001, is
pro-rated for the remainder of the fiscal year ending after that date, and may be amended or withdrawn at any
time. After the waiver, the actual "Other Expenses" and "Total Annual Operating Expenses" as percentages of
average daily net assets were ____% and ____% for Class A shares, ____% and ____% for Class B shares, and ____%
and ____% for Class C shares.

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

The first example assumes that you redeem all of your shares at the end of those periods. The second example
assumes you keep your shares. Both examples also assume that your investment has a 5% return each year and that
the class's operating expenses remain the same. Your actual costs may be higher or lower because expenses will
vary over time. Based on these assumptions your expenses would be as follows:

-------------------------------------- ---------------- ------------------ ------------------ ------------------------
If shares are redeemed: 1 year 3 years 5 years 10 years1
-------------------------------------- ---------------- ------------------ ------------------ ------------------------
-------------------------------------- ---------------- ------------------ ------------------ ------------------------

Class A Shares $ $ $ $

Class B Shares $ $ $ $

Class C Shares $ $ $ $

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

-------------------------------------- ---------------- ------------------ ------------------ ------------------------
If shares are not redeemed: 1 year 3 years 5 years 10 years1
-------------------------------------- ---------------- ------------------ ------------------ ------------------------
-------------------------------------- ---------------- ------------------ ------------------ ------------------------

Class A Shares $ $ $ $

Class B Shares $ $ $ $

Class C Shares $ $ $ $

-------------------------------------- ---------------- ------------------ ------------------ ------------------------
In the first example, expenses include the initial sales charge for Class A and the applicable Class B or Class C
contingent deferred sales charges. In the second example, the Class A expenses include the sales charge, but Class
B and Class C expenses do not include contingent deferred sales charges.
1. Class B expense for years 7 through 10 are based on Class A expenses, since Class B shares automatically
convert to Class A after 6 years.

About the Fund's Investments

THE FUND'S PRINCIPAL INVESTMENT POLICIES. The allocation of the Fund's portfolio among different types of
investments will vary over time based on the Manager's evaluation of economic and market trends. The Fund's
portfolio might not always include all of the different types of investments described below. Under normal market
conditions, the Fund:

o attempts to invest 100% of its assets in municipal securities,

o as a fundamental policy, invests at least 80% of its assets in municipal securities, and

o invests at least 80% of its net assets in California municipal securities.

Securities that generate income subject to alternative minimum tax (AMT) will count towards the 80% municipal
securities requirement.

The Manager tries to reduce risks by selecting a wide variety of municipal investments and by carefully
researching securities before they are purchased. However, changes in the overall market prices of municipal
securities and the income they pay can occur at any time. The yield and share prices of the Fund will change daily
based on changes in interest rates and market conditions and in response to other economic events. The Statement
of Additional Information contains more detailed information about the Fund's investment policies and risks.

MUNICIPAL SECURITIES. The Fund buys municipal bonds and notes, certificates of participation in municipal leases
and other debt obligations.

The Fund mainly invests in California municipal securities, which are municipal securities that are not
subject (in the opinion of bond counsel to the issuer at the time they are issued) to California individual income
tax. These debt obligations are issued by the state of California and its political subdivisions (such as cities,
towns, counties, agencies and authorities). The term "California municipal securities" may also include debt
securities of the governments of certain possessions, territories and commonwealths of the United States if the
interest is not subject to California individual income tax.

The Fund can also buy other municipal securities, issued by the governments of the District of Columbia
and of other states as well as their political subdivisions, authorities and agencies, and securities issued by
any commonwealths, territories or possessions of the United States, or their respective agencies,
instrumentalities or authorities, if the interest paid on the security is not subject to federal individual income
tax (in the opinion of bond counsel to the issuer at the time the security is issued).

Municipal securities are issued to raise money for a variety of public or private purposes, including
financing state or local governments, financing specific projects or financing public facilities. The Fund can buy
both long-term and short-term municipal securities. Long-term securities have a maturity of more than one year.
The Fund generally focuses on longer-term securities, to seek higher income.

The Fund can buy municipal securities that are "general obligations," secured by the issuer's pledge of
its full faith, credit and taxing power for the payment of principal and interest. The Fund can also buy "revenue
obligations," payable only from the revenues derived from a particular facility or class of facilities, or a
specific excise tax or other revenue source. Some revenue obligations are private activity bonds that pay
interest that may be a tax preference item for investors subject to alternative minimum tax.

Municipal Lease Obligations. Municipal leases are used by state and local governments to obtain funds to acquire
land, equipment or facilities. The Fund can invest in certificates of participation that represent a
proportionate interest in payments made under municipal lease obligations. Most municipal leases, while secured by
the leased property, are not general obligations of the issuing municipality. They often contain
"non-appropriation" clauses under which the municipal government has no obligation to make lease or installment
payments in future years unless money is appropriated on a yearly basis. If the government stops making payments
or transfers its payment obligations to a private entity, the obligation could lose value or become taxable.

Ratings of Municipal Securities The Fund Buys. Most of the municipal securities the Fund buys are "investment
grade" at the time of purchase. The Fund does not invest more than 25% of its total assets in municipal securities
that are not "investment grade" at the time of purchase. "Investment grade" securities are those rated within the
four highest rating categories of Moody's, Standard & Poor's, Fitch or Duff & Phelps or another nationally
recognized rating organization, or (if unrated) judged by the Manager to be comparable to rated investment grade
securities. Rating categories are described in the Statement of Additional Information. A reduction in the rating
of a security after the Fund buys it will not automatically require the Fund to dispose of that security.
However, the Manager will evaluate those securities to determine whether to keep them in the Fund's portfolio.

The Manager may rely to some extent on credit ratings by nationally recognized rating agencies in
evaluating the credit risk of securities selected for the Fund's portfolio. It may also use its own research and
analysis. Many factors affect an issuer's ability to make timely payments, and the credit risks of a particular
security may change over time.

CAN THE FUND'S INVESTMENT OBJECTIVE AND POLICIES CHANGE? The Fund's Board of Trustees can change non-fundamental
policies without shareholder approval, although significant changes will be described in amendments to this
Prospectus. Fundamental policies cannot be changed without the approval of a majority of the Fund's outstanding
voting shares. The Fund's investment objective is a fundamental policy. An investment policy and technique is
not fundamental unless this Prospectus or the Statement of Additional Information says it is.

OTHER INVESTMENT STRATEGIES. To seek its objective, the Fund can use the investment techniques and strategies
described below. The Fund might not always use all of them. These techniques have risks, although some of them
are designed to help reduce overall investment or market risks.

Floating Rate/Variable Rate Obligations. Some municipal securities have variable or floating interest rates.
Variable rates are adjustable at stated periodic intervals. Floating rates are automatically adjusted according
to a specified market rate for such investments, such as the percentage of the prime rate of a bank, or the 91-day
U.S. Treasury Bill rate.

Certain variable rate bonds known as "inverse floaters" pay interest rates that move in the opposite
direction of yields on short-term bonds in response to market changes. As interest rates rise, inverse floaters
produce less current income, and their market value can become volatile. Inverse floaters are a type of
"derivative security." Some have a "cap," so that if interest rates rise above the "cap," the security pays
additional interest income. If rates do not rise above the "cap," the Fund will have paid an additional amount
for a feature that proves worthless. The Fund cannot invest more than 20% of its total assets in inverse
floaters.

Other Derivatives. The Fund can also invest in other derivative securities that pay interest that depend on the
change in value of an underlying asset, interest rate or index. Examples are interest rate swaps, municipal bond
indices or swap indices.

Hedging. The Fund can buy and sell futures contracts, put and call options, or enter into interest rate swap
agreements. These are all referred to as "hedging instruments." The Fund does not use hedging instruments for
speculative purposes, and has limits on the use of them. The Fund does not use hedging instruments to a
substantial degree and is not required to use them in seeking its goal.

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

When-Issued and Delayed-Delivery Transactions. The Fund may purchase municipal securities on a "when-issued"
basis and may purchase or sell such securities on a "delayed-delivery" basis. Between the purchase and
settlement, no payment is made for the security and no interest accrues to the buyer from the investment. There
is a risk of loss to the Fund if the value of the security declines prior to the settlement date.

Puts and Stand-By Commitments. The Fund can acquire "stand-by commitments" or "puts" with respect to municipal
securities. The Fund obtains the right to sell specified securities at a set price on demand to the issuing
broker-dealer or bank. However, this feature may result in a lower interest rate on the security. The Fund
acquires stand-by commitments or puts solely to enhance portfolio liquidity.

Illiquid Securities. Investments may be illiquid because they do not have an active trading market, making it
difficult to value them or dispose of them promptly at an acceptable price. The Fund will not invest more than
15% of its net assets in illiquid securities. The Manager monitors holdings of illiquid securities on an ongoing
basis to determine whether to sell any holdings to maintain adequate liquidity. The Fund cannot buy securities
that have a restriction on resale.

Temporary Defensive and Interim Investments. In times of unstable adverse market or economic conditions, the Fund
can invest up to 100% of its total assets in temporary investments that are inconsistent with the Fund's principal
investment strategies. Generally, they would be short-term municipal securities but could be U.S. Government
securities or highly-rated corporate debt securities. The income from some temporary defensive investments may not
be tax-exempt, and therefore when making those investments the Fund might not achieve its objective. The Fund can
also hold cash and cash equivalents pending the investment of proceeds from the sale of Fund shares or portfolio
securities or to meet anticipated redemptions of Fund shares.

How the Fund is Managed

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

The Manager has been an investment advisor since January 1960. The Manager and its subsidiaries and
controlled affiliates manage more than $130 billion in assets as of June 30, 2002, including other Oppenheimer
funds with more than 6.3 million shareholder accounts. The Manager is located at 498 Seventh Avenue, New York, NY
10018.

Portfolio Managers. The Portfolio Managers of the Fund are Jerry Webman and Merrell Hora. Mr. Webman is Senior
Vice President, Senior Investment Officer and Director of the Fixed Income Department of the Manager. Mr. Hora is
an Assistant Vice President and Portfolio Manager of the Manager. They are the persons principally responsible for
the day-to-day management of the Fund's portfolio, and became the Fund's Portfolio Managers on August 28, 2000.

Mr. Hora is a portfolio manager of other Oppenheimer funds and was formerly a Senior Quantitative Analyst for the
Manager's Fixed Income Department's Quantitative Analysis Team from July 1998 until August 2000. Before joining
the Manager in July 1998, Mr. Hora had been a quantitative analyst for Access Financial, a subsidiary of Cargill
Financial Services Group since 1997, and was a teaching assistant, instructor and research assistant at the
University of Minnesota from 1991 to 1998.

Advisory Fees. Under the investment advisory agreement, the Fund pays the Manager an advisory fee at an annual
rate which declines as the Fund's assets grow: 0.60% of the first $200 million of average annual net assets, 0.55%
of the next $100 million, 0.50% of the next $200 million, 0.45% of the next $250 million, 0.40% of the next $250
million, and 0.35% of average annual net assets over $1 billion. The Fund's management fee for its last fiscal
year ended July 31, 2001, was 0.55% of average annual net assets for each class of shares.

At a meeting held on December 13, 2001, the Board of Trustees/Directors of the Fund approved various
changes to the Fund's fundamental investment policies and submission of an amended and restated declaration of
trust. Approval of the Fund's shareholders is required before the Fund's fundamental investment policies can be
changed and before an amended and restated declaration of trust can be adopted. On or about June 10, 2002,
shareholders of the Fund on the record date will be mailed proxy material explaining the reasons for the proposed
changes. In addition, on or about June 10, 2002, a copy of the proxy statement will be available for information
purposes on the OppenheimerFunds website at www.oppenheimerfunds.com. After that date, shareholders may also call
1.800.708.7780 to request a copy of the proxy statement. If the proposals are approved by shareholders, the
Fund's prospectus and/or Statement of Additional Information will be revised to reflect the approved changes.

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ABOUT YOUR ACCOUNT
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How to Buy Shares

HOW DO YOU BUY SHARES? You can buy shares several ways, as described below. The Fund's Distributor,
OppenheimerFunds Distributor, Inc., may appoint servicing agents to accept purchase (and redemption) orders. The
Distributor, in its sole discretion, may reject any purchase order for the Fund's shares.

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

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

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

o Buying Shares Through OppenheimerFunds AccountLink. With AccountLink, you pay for shares by electronic
funds transfers from your bank account. Shares are purchased for your account by a transfer of money from
your bank account through the Automated Clearing House (ACH) system. You can provide those instructions
automatically, under an Asset Builder Plan, described below, or by telephone instructions using
OppenheimerFunds PhoneLink, also described below. Please refer to "AccountLink," below for more details.

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

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

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

o The minimum investment requirement does not apply to reinvesting dividends from the Fund or other
Oppenheimer funds (a list of them appears in the Statement of Additional Information, or you can ask your
dealer or call the Transfer Agent), or reinvesting distributions from unit investment trusts that have made
arrangements with the Distributor.

AT WHAT PRICE ARE SHARES SOLD? Shares are sold at their offering price, which is the net asset value per share
plus any initial sales charge that applies. The offering price that applies to a purchase order is based on the
next calculation of the net asset value per share that is made after the Distributor receives the purchase order
at its offices in Denver, Colorado, or after any agent appointed by the Distributor receives the order and sends
it to the Distributor.

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

The net asset value per share is determined by dividing the value of the Fund's net assets attributable
to a class by the number of shares of that class that are outstanding. To determine net asset value, the Fund's
Board of Trustees has established procedures to value the Fund's securities, in general based on market value.
The Board has adopted special procedures for valuing illiquid securities and obligations for which market values
cannot be readily obtained.

If, after the close of the principal market on which a security held by the Fund is traded, and before
the time the Fund's securities are priced that day, an event occurs that the Manager deems likely to cause a
material change in the value of such security, the Fund's Board of Trustees has authorized the Manager, subject to
the Board's review, to ascertain a fair value for such security.

The Offering Price. To receive the offering price for a particular day, in most cases the Distributor or its
designated agent must receive your order by the time of day The New York Stock Exchange closes that day. If your
order is received on a day when the Exchange is closed or after it has closed, the order will receive the next
offering price that is determined after your order is received.

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

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

WHAT CLASSES OF SHARES DOES THE FUND OFFER? The Fund offers investors three different classes of shares. The
different classes of shares represent investments in the same portfolio of securities, but the classes are subject
to different expenses and will likely have different share prices. When you buy shares, be sure to specify Class
A, Class B or Class C shares. If you do not choose a class, your investment will be made in Class A shares.
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------
Class A Shares. If you buy Class A shares, you pay an initial sales charge (on investments up to $1 million).
The amount of that sales charge will vary depending on the amount you invest. The sales charge rates are listed in
"How Can You Buy Class A Shares?" below.

Class B Shares. If you buy Class B shares, you pay no sales charge at the time of purchase, but you will pay an
annual asset-based sales charge. If you sell your shares within six years of buying them, you will normally pay a
contingent deferred sales charge. That sales charge varies depending on how long you own your shares, as
described in "How Can You Buy Class B Shares?" below.
--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------
Class C Shares. If you buy Class C shares, you pay no sales charge at the time of purchase, but you will pay an
annual asset-based sales charge. If you sell your shares within 12 months of buying them, you will normally pay a
contingent deferred sales charge of 1%, as described in "How Can You Buy Class C Shares?" below.

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

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

How Long Do You Expect to Hold Your Investment? While future financial needs cannot be predicted with certainty,
knowing how long you expect to hold your investment will assist you in selecting the appropriate class of shares.
Because of the effect of class-based expenses, your choice will also depend on how much you plan to invest. For
example, the reduced sales charges available for larger purchases of Class A shares may, over time, offset the
effect of paying an initial sales charge on your investment, compared to the effect over time of higher
class-based expenses on shares of Class B or Class C.

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

However, if you plan to invest more than $100,000 for the shorter term, then as your investment horizon
increases toward six years, Class C shares might not be as advantageous as Class A shares. That is because the
annual asset-based sales charge on Class C shares will have a greater impact on your account over the longer term
than the reduced front-end sales charge available for larger purchases of Class A shares.

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

o Investing for the Longer Term. If you are investing less than $100,000 for the longer term,
for example for retirement, and do not expect to need access to your money for seven years or more, Class B shares
may be appropriate.

Are There Differences In Account Features That Matter To You? Some account features (such as checkwriting) may
not be available to Class B or Class C shareholders. Other features may not be advisable (because of the effect of
the contingent deferred sales charge) for Class B or Class C shareholders. Therefore, you should carefully review
how you plan to use your investment account before deciding which class of shares to buy. Additionally, the
dividends payable to Class B and Class C shareholders will be reduced by the additional expenses borne by those
classes that are not borne by Class A shares, such as the Class B and Class C asset-based sales charge described
below and in the Statement of Additional Information. Share certificates and checkwriting privileges are not
available for Class B and Class C shares, and if you are considering using your shares as collateral for a loan,
that may be a factor to consider. Also, checkwriting is not available for Class B or Class C shares.

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

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

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

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

----------------------------------------------------------------------------------------------------------------------
Front-End Sales Front-End Sales Concession As a
Charge As a Charge As a Percentage of
Percentage of Percentage of Net Offering
Amount of Purchase Offering Price Amount Invested Price
----------------------------------------------------------------------------------------------------------------------

Less than $50,000 4.75% 4.98% 4.00%
----------------------------------------------------------------------------------------------------------------------

$50,000 or more but 4.50% 4.71% 4.00%
less than $100,000
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------

$100,000 or more but 3.50% 3.63% 3.00%
less than $250,000
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------

$250,000 or more but 2.50% 2.56% 2.25%
less than $500,000
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------

$500,000 or more but 2.00% 2.04% 1.80%
less than $1 million
----------------------------------------------------------------------------------------------------------------------

CAN YOU REDUCE CLASS A SALES CHARGES? You may be eligible to buy Class A shares at reduced sales charge rates
under the Fund's "Right of Accumulation" or a Letter of Intent, as described in "Reduced Sales Charges" in the
Statement of Additional Information. The Class A initial and contingent deferred sales charges are not imposed in
the circumstances described in "Reduced Sales Charges" in the Statement of Additional Information.

Class A Contingent Deferred Sales Charge. There is no initial sales charge on purchases of Class A shares of any
one or more of the Oppenheimer funds aggregating $1 million or more, or for certain purchases by particular types
of retirement plans that were permitted to purchase such shares prior to March 1, 2001 ("grandfathered retirement
accounts"). Retirement plans are not permitted to make initial purchases of Class A shares subject to a contingent
deferred sales charge. The Distributor pays dealers of record concessions in an amount equal to 1.0% of purchases
of $1 million or more other than by grandfathered retirement accounts. For grandfathered retirement accounts, the
concession is 1.0% of the first $2.5 million, plus 0.50% of the next $2.5 million, plus 0.25% of purchases over $5
million, calculated on a calendar year basis. In either case, the concession will not be paid on purchases of
shares by exchange or that were previously subject to a front-end sales charge and dealer concession.

If you redeem any of those shares within an 18 month "holding period" measured from the beginning of the
calendar month of their purchase, a contingent deferred sales charge (called the "Class A contingent deferred
sales charge") may be deducted from the redemption proceeds. That sales charge will be equal to 1.0% of the
lesser of:

o the aggregate net asset value of the redeemed shares at the time of redemption (excluding shares
purchased by reinvestment of dividends or capital gain distributions) or
o the original net asset value of the redeemed shares.

The Class A contingent deferred sales charge will not exceed the aggregate amount of the concessions the
Distributor paid to your dealer on all purchases of Class A shares of all Oppenheimer funds you made that were
subject to the Class A contingent deferred sales charge.

HOW CAN YOU BUY CLASS B SHARES? Class B shares are sold at net asset value per share without an initial sales
charge. However, if Class B shares are redeemed within 6 years from the beginning of the calendar month of their
purchase, a contingent deferred sales charge will be deducted from the redemption proceeds. The Class B contingent
deferred sales charge is paid to compensate the Distributor for its expenses of providing distribution-related
services to the Fund in connection with the sale of Class B shares.

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

----------------------------------------------------------------------------------------------------------------------
Years Since Beginning of Contingent Deferred Sales Charge
Month in which Purchase On Redemptions in That Year
Order Was Accepted (As % of Amount Subject to Charge)
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
0-1 5.0%
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
1-2 4.0%
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
2-3 3.0%
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
3-4 3.0%
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
4-5 2.0%
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
5-6 1.0%
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
6 and following None
----------------------------------------------------------------------------------------------------------------------

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

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

HOW CAN YOU BUY CLASS C SHARES? Class C shares are sold at net asset value per share without an initial sales
charge. However, if Class C shares are redeemed within a holding period of 12 months from the beginning of the
calendar month of their purchase, a contingent deferred sales charge of 1.0% will be deducted from the redemption
proceeds. The Class C contingent deferred sales charge is paid to compensate the Distributor for its expenses of
providing distribution-related services to the Fund in connection with the sale of Class C shares.

DISTRIBUTION AND SERVICE (12b-1) PLANS

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

Distribution and Service Plans for Class B and Class C Shares. The Fund has adopted Distribution and Service
Plans for Class B and Class C shares to compensate the Distributor for its services and costs in distributing
Class B and Class C shares and servicing accounts. Under the plans, the Fund pays the Distributor an annual
asset-based sales charge of 0.75% per year on Class B shares and on Class C shares. The Distributor also receives
a service fee of 0.25% per year under each plan.

The asset-based sales charge and service fees increase Class B and Class C expenses by up to 1.00% of the
net assets per year of the respective class. Because these fees are paid out of the Fund's assets on an ongoing
basis, over time these fees will increase the cost of your investment and may cost you more than other types of
sales charges.

The Distributor uses the service fees to compensate dealers for providing personal services for accounts
that hold Class B or Class C shares. The Distributor pays the 0.25% service fees to dealers in advance for the
first year after the shares are sold by the dealer. After the shares have been held for a year, the Distributor
pays the service fees to dealers on a quarterly basis. The Distributor retains the service fees for accounts for
which it renders the required personal service.

The Distributor currently pays a sales concession of 3.75% of the purchase price of Class B shares to
dealers from its own resources at the time of sale. Including the advance of the service fee, the total amount
paid by the Distributor to the dealer at the time of sale of Class B shares is therefore 4.00% of the purchase
price. The Distributor retains the Class B asset-based sales charge.

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

Special Investor Services

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

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

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

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

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

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

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

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

OPPENHEIMERFUNDS INTERNET WEBSITE. You can obtain information about the Fund, as well as your account balance, on
the OppenheimerFunds Internet website, at HTTP://WWW.OPPENHEIMERFUNDS.COM. Additionally, shareholders listed in
-------------------------------
the account registration (and the dealer of record) may request certain account transactions through a special
section of that website. To perform account transactions or obtain account information online, you must first
obtain a user I.D. and password on that website. If you do not want to have Internet account transaction
capability for your account, please call the Transfer Agent at 1.800.525.7048. At times, the website may be
inaccessible or its transaction features may be unavailable.

AUTOMATIC WITHDRAWAL AND EXCHANGE PLANS. The Fund has several plans that enable you to sell shares automatically
or exchange them to another Oppenheimer fund account on a regular basis. Please call the Transfer Agent or consult
the Statement of Additional Information for details.

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

How to Sell Shares

You can sell (redeem) some or all of your shares on any regular business day. Your shares will be sold
at the next net asset value calculated after your order is received in proper form (which means that it must
comply with the procedures described below) and is accepted by the Transfer Agent. The Fund lets you sell your
shares by writing a letter, by using the Fund's checkwriting privilege or by telephone. You can also set up
Automatic Withdrawal Plans to redeem shares on a regular basis. If you have questions about any of these
procedures, and especially if you are redeeming shares in a special situation, such as due to the death of the
owner, please call the Transfer Agent first, at 1.800.525.7048, for assistance.

Certain Requests Require a Signature Guarantee. To protect you and the Fund from fraud, the following redemption
requests must be in writing and must include a signature guarantee (although there may be other situations that
also require a signature guarantee):
You wish to redeem more than $100,000 and receive a check
The redemption check is not payable to all shareholders listed on the account statement
The redemption check is not sent to the address of record on your account statement
Shares are being transferred to a Fund account with a different owner or name
Shares are being redeemed by someone (such as an Executor) other than the owners

Where Can You Have Your Signature Guaranteed? The Transfer Agent will accept a guarantee of your signature by a
number of financial institutions, including:
o a U.S. bank, trust company, credit union or savings association,
o a foreign bank that has a U.S. correspondent bank,
o a U.S. registered dealer or broker in securities, municipal securities or government securities, or
o a U.S. national securities exchange, a registered securities association or a clearing agency.

If you are signing on behalf of a corporation, partnership or other business or as a fiduciary, you must
also include your title in the signature.

HOW DO YOU SELL SHARES BY MAIL? Write a "letter of instructions" that includes:
o Your name
o The Fund's name
o Your Fund account number (from your account statement)
o The dollar amount or number of shares to be redeemed
o Any special payment instructions
o Any share certificates for the shares you are selling
o The signatures of all registered owners exactly as the account is registered, and
o Any special documents requested by the Transfer Agent to assure proper authorization of the person asking
to sell the shares.

--------------------------------------------------------------------------------------------------------------------
Use the following address for requests by mail: Send courier or express mail requests to:
--------------------------------------------------------------------------------------------------------------------
OppenheimerFunds Services OppenheimerFunds Services
P.O. Box 5270 10200 E. Girard Avenue, Building D
Denver, Colorado 80217-5270 Denver, Colorado 80231

How Do You Sell Shares By Telephone? You and your dealer representative of record may also sell your shares by
telephone. To receive the redemption price calculated on a particular regular business day, your call must be
received by the Transfer Agent by the close of The New York Stock Exchange that day, which is normally 4:00 P.M.,
but may be earlier on some days. You may not redeem shares held under a share certificate by telephone.
o To redeem shares through a service representative, call 1.800.852.8457
o To redeem shares automatically on PhoneLink, call 1.800.533.3310

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

ARE THERE LIMITS ON AMOUNTS REDEEMED BY TELEPHONE?

Telephone Redemptions Paid by Check. Up to $100,000 may be redeemed by telephone in any 7-day period. The check
must be payable to all owners of record of the shares and must be sent to the address on the account statement.
This service is not available within 30 days of changing the address on an account.

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

CHECKWRITING. To write checks against your Fund account, request that privilege on your account Application, or
contact the Transfer Agent for signature cards. They must be signed (with a signature guarantee) by all owners of
the account and returned to the Transfer Agent so that checks can be sent to you to use. Shareholders with joint
accounts can elect in writing to have checks paid over the signature of one owner. If you previously signed a
signature card to establish checkwriting in another Oppenheimer fund, simply call 1.800.525.7048 to request
checkwriting for an account in this Fund with the same registration as the other account.
o Checks can be written to the order of whomever you wish, but may not be cashed at the bank the checks are
payable through or the Fund's bank or the Custodian bank.
o Checkwriting privileges are not available for accounts holding shares that are subject to a contingent
deferred sales charge.
o Checks must be written for at least $100.
o Checks cannot be paid if they are written for more than your account value. Remember, your shares
fluctuate in value and you should not write a check close to the total account value.
o You may not write a check that would require the Fund to redeem shares that were purchased by check or
Asset Builder Plan payments within the prior 10 days.
o Don't use your checks if you changed your Fund account number, until you receive new checks.

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

HOW CONTINGENT DEFERRED SALES CHARGES AFFECT REDEMPTIONS. If you purchase shares subject to a Class A, Class B or
Class C contingent deferred sales charge and redeem any of those shares during the applicable holding period for
the class of shares, the contingent deferred sales charge will be deducted from the redemption proceeds, unless
you are eligible for a waiver of that sales charge based on the categories listed in Appendix C to the Statement
of Additional Information and you advise the Transfer Agent of your eligibility for the waiver when you place your
redemption request.

A contingent deferred sales charge will be based on the lesser of the net asset value of the redeemed
shares at the time of redemption or the original net asset value. A contingent deferred sales charge is not
imposed on:
o the amount of your account value represented by an increase in net asset value over the initial purchase
price,
o shares purchased by the reinvestment of dividends or capital gains distributions, or
o shares redeemed in the special circumstances described in Appendix C to the Statement of Additional
Information

To determine whether a contingent deferred sales charge applies to a redemption, the Fund redeems shares
in the following order:

(1) shares acquired by reinvestment of dividends and capital gains distributions,
(2) shares held for the holding period that applies to that class, and
(3) shares held the longest during the holding period.

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

How to Exchange Shares

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

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

You can find a list of Oppenheimer funds currently available for exchanges in the Statement of Additional
Information or obtain one by calling a service representative at 1-800-525-7048. That list can change from time
to time.

HOW DO I SUBMIT EXCHANGE REQUESTS? Exchanges may be requested in writing or by telephone:

o Written Exchange Requests. Submit an OppenheimerFunds Exchange Request form, signed by all owners of the
account. Send it to the Transfer Agent at the address on the Back Cover.

o Telephone Exchange Requests. Telephone exchange requests may be made either by calling a service
representative at 1.800.852.8457, or by using PhoneLink for automated exchanges by calling 1.800.533.3310.
Telephone exchanges may be made only between accounts that are registered with the same name(s) and address.
Shares held under certificates may not be exchanged by telephone.

ARE THERE LIMITATIONS ON EXCHANGES? There are certain exchange policies you should be aware of:
o Shares are normally redeemed from one fund and purchased from the other fund in the exchange transaction

on the same regular business day on which the Transfer Agent receives an exchange request that conforms to
the policies described above. It must be received by the close of The New York Stock Exchange that day,
which is normally 4:00 P.M. but may be earlier on some days. However, either fund may delay the purchase of
shares of the fund you are exchanging into up to seven days if it determines it would be disadvantaged by the
same day exchange.

o The interests of the Fund's long-term shareholders and its ability to manage its investments may be
adversely affected when its shares are repeatedly bought and sold in response to short-term market
fluctuations--also known as "market timing." When large dollar amounts are involved, the Fund may have
difficulty implementing long-term investment strategies, because it cannot predict how much cash it will have
to invest. Market timing also may force the Fund to sell portfolio securities at disadvantageous times to
raise the cash needed to buy a market timer's Fund shares. These factors may hurt the Fund's performance and
its shareholders. When the Manager believes frequent trading would have a disruptive effect on the Fund's
ability to manage its investments, the Manager and the Fund may reject purchase orders and exchanges into the
Fund by any person, group or account that the Manager believes to be a market timer.
o The Fund may amend, suspend or terminate the exchange privilege at any time. The Fund will provide you
notice whenever it is required to do so by applicable law, but it may impose changes at any time for
emergency purposes.
o If the Transfer Agent cannot exchange all the shares you request because of a restriction cited above,
only the shares eligible for exchange will be exchanged.

Shareholder Account Rules and Policies

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

Telephone Transaction Privileges for purchases, redemptions or exchanges may be modified, suspended or terminated
by the Fund at any time. The Fund will provide you notice whenever it is required to do so by applicable law. If
an account has more than one owner, the Fund and the Transfer Agent may rely on the instructions of any one owner.
Telephone privileges apply to each owner of the account and the dealer representative of record for the account
unless the Transfer Agent receives cancellation instructions from an owner of the account.

The Transfer Agent will record any telephone calls to verify data concerning transactions and has adopted other
procedures to confirm that telephone instructions are genuine, by requiring callers to provide tax identification
numbers and other account data or by using PINs, and by confirming such transactions in writing. The Transfer
Agent and the Fund will not be liable for losses or expenses arising out of telephone instructions where
reasonably believed to be genuine.

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

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

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

Payment for redeemed shares ordinarily is made in cash. It is forwarded by check, through AccountLink (as elected
by the shareholder) within seven days after the Transfer Agent receives redemption instructions in proper form.
However, under unusual circumstances determined by the Securities and Exchange Commission, payment may be delayed
or suspended. For accounts registered in the name of a broker-dealer, payment will normally be forwarded within
three business days after redemption.

The Transfer Agent may delay forwarding a check or processing a payment via AccountLink for recently purchased
shares, but only until the purchase payment has cleared. That delay may be as much as 10 days from the date the
shares were purchased. That delay may be avoided if you purchase shares by federal funds wire or certified check,
or arrange with your bank to provide telephone or written assurance to the Transfer Agent that your purchase
payment has cleared.

Involuntary redemptions of small accounts may be made by the Fund if the account value has fallen below $200 for
reasons other than the fact that the market value of shares has dropped. In some cases involuntary redemptions may
be made to repay the Distributor for losses from the cancellation of share purchase orders.

Shares may be "redeemed in kind" under unusual circumstances (such as a lack of liquidity in the Fund's portfolio
to meet redemptions). This means that the redemption proceeds will be paid with liquid securities from the Fund's
portfolio.

"Backup Withholding" of federal income tax may be applied against taxable dividends, distributions and redemption
proceeds (including exchanges) if you fail to furnish the Fund your correct, certified Social Security or Employer
Identification Number when you sign your application, or if you under-report your income to the Internal Revenue
Service.

To avoid sending duplicate copies of materials to households, the Fund will mail only one copy of each prospectus,
annual and semi-annual report and annual notice of the Fund's privacy policy to shareholders having the same last
name and address on the Fund's records. The consolidation of these mailings, called householding, benefits the
Fund through reduced mailing expense. If you want to receive multiple copies of these materials, you may call the
Transfer Agent at 1.800.525.7048. You may also notify the Transfer Agent in writing. Individual copies of
prospectuses and reports and privacy notices commencing will be sent to you 30 days after the Transfer Agent
receives your request to stop householding.

Dividends, Capital Gains and Taxes

DIVIDENDS. The Fund intends to declare dividends separately for Class A, Class B and Class C shares from net
tax-exempt income and/or net investment income each regular business day and to pay those dividends to
shareholders monthly on a date selected by the Board of Trustees. Daily dividends will not be declared or paid on
newly purchased shares until Federal Funds are available to the Fund from the purchase payment for such shares.

The Fund attempts to pay dividends on Class A shares at a constant level. There is no assurance that it
will be able to do so. The Board of Trustees may change the targeted dividend level at any time, without prior
notice to shareholders. Additionally, the amount of those dividends and the distributions paid on class B and C
shares may vary over time, depending on market conditions, the composition of the Fund's portfolio, and expenses
borne by the particular class of shares. Dividends and distributions paid on Class A shares will generally be
higher than for Class B and Class C shares, which normally have higher expenses than Class A. The Fund cannot
guarantee that it will pay any dividends or distributions.

CAPITAL GAINS. Although the Fund does not seek capital gains, it may realize capital gains on the sale of
portfolio securities. If it does, it may make distributions out of any net short-term or long-term capital gains
in December of each year. The Fund may make supplemental distributions of dividends and capital gains following
the end of its fiscal year. Long-term capital gains will be separately identified in the tax information the Fund
sends you after the end of the calendar year.

WHAT CHOICES DO I HAVE FOR RECEIVING DISTRIBUTIONS? When you open your account, specify on your application how
you want to receive your dividends and distributions. You have four options:

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

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

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

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

TAXES. Dividends paid from net investment income earned by the Fund on municipal securities will be excludable
from gross income for federal individual income tax purposes. A portion of a dividend that is derived from
interest paid on certain "private activity bonds" may be an item of tax preference if you are subject to the
federal alternative minimum tax. If the Fund earns interest on taxable investments, any dividends derived from
those earnings will be taxable as ordinary income to shareholders.

Dividends paid by the Fund from interest on California municipal securities will be exempt from
California individual income taxes, if at the close of each quarter at least 50% of the value of the Fund's assets
are invested in debt obligations that pay interest exempt from California individual income taxes. Dividends paid
from income from municipal securities of issuers outside California will normally be subject to California
individual income taxes.

Dividends and capital gains distributions may be subject to state or local taxes. Long-term capital gains
are taxable as long-term capital gains for federal income tax purposes when distributed to shareholders, and may
be taxable at different rates depending on how long the Fund holds the asset. It does not matter how long you
have held your shares. Dividends paid from short-term capital gains are taxable as ordinary income. Whether you
reinvest your distributions in additional shares or take them in cash, the tax treatment is the same. Every year
the Fund will send you and the IRS a statement showing the amount of any taxable distribution you received in the
previous year as well as the amount of your tax-exempt income.

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

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

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

Financial Highlights

The Financial Highlights Table is presented to help you understand the Fund's financial performance for the past
five years. Certain information reflects financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned (or lost) on an investment in the Fund, (assuming
reinvestment of all dividends and distributions). This information has been audited by KPMG LLP, the Fund's
independent auditors, whose report, along with the Fund's financial statements, is included in the Statement of
Additional Information, which is available on request.

                                             Appendix to Prospectus of
                                       Oppenheimer California Municipal Fund

                                    Graphic Material included in the Prospectus of Oppenheimer California
Municipal Fund: "Annual Total Returns (Class A) (as of 12/31 each year)":

         A bar chart will be included in the Prospectus of Oppenheimer California Municipal Fund (the "Fund")
depicting the annual total returns of a hypothetical investment in Class A shares of the Fund for each of the last
ten calendar years, without deducting sales charges. Set forth below are the relevant data points that will appear
on the bar chart.


                           Calendar         Oppenheimer California
                           Year                      Municipal Fund
                           Ended                     Class A Shares
                           -----                     --------------
                           12/31/01                         ____%
                           12/31/00                         12.72%
                           12/31/99                         -6.54%
                           12/31/98                          5.91%
                           12/31/97                          9.66%
                           12/31/96                          4.78%
                           12/31/95                         19.76%
                           12/31/94                         -8.49%
                           12/31/93                         13.26%
                           12/31/92                          8.28%

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Oppenheimer California Municipal Fund
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6803 South Tucson Way, Englewood, CO 80112
1-800-525-7048

Statement of Additional Information dated September 24, 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 November 28, 2001. It should be
read together with the Prospectus, which may be obtained by writing to the Fund's Transfer Agent,
OppenheimerFunds Services, at P.O. Box 5270, Denver, Colorado 80217 or by calling the Transfer Agent at the
toll-free number shown above or by downloading it from the OppenheimerFunds Internet web site at
www.oppenheimerfunds.com.

Contents Page
About the Fund
Additional Information About the Fund's Investment Policies and Risks..............................................
The Fund's Investment Policies..............................................................................
Municipal Securities........................................................................................
Other Investment Techniques and Strategies..................................................................
Investment Restrictions.....................................................................................
How the Fund is Managed............................................................................................
Organization and History....................................................................................
Trustees and Officers of the Fund...........................................................................
The Manager ................................................................................................
Brokerage Policies of the Fund.....................................................................................
Distribution and Service Plans.....................................................................................
Performance of the Fund............................................................................................
About Your Account
How To Buy Shares..................................................................................................
How To Sell Shares.................................................................................................
How to Exchange Shares.............................................................................................
Dividends, Capital Gains and Taxes.................................................................................
Additional Information About the Fund..............................................................................

Financial Information About the Fund
Independent Auditors' Report.......................................................................................
Financial Statements ..............................................................................................
Appendix A: Municipal Bond Ratings..............................................................................A-1
Appendix B: Industry Classifications............................................................................B-1
Appendix C: Special Sales Charge Arrangements and Waivers.......................................................C-1

-------------------------------------------------------------------------------------------------------------------
ABOUT THE FUND
-------------------------------------------------------------------------------------------------------------------

Additional Information About the Fund's Investment Policies and Risks

The investment objective and 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 the types of securities that the Fund's investment manager, OppenheimerFunds, Inc., (the
"Manager") will select for the Fund. Additional explanations are also provided about the strategies the Fund may
use to try to achieve its objective.

The Fund's Investment Policies. The Fund does not make investments with the objective of seeking capital growth,
since that would generally be inconsistent with its goal of seeking tax-exempt income. However, the value of the
securities held by the Fund may be affected by changes in general interest rates. Because the current value of
debt securities varies inversely with changes in prevailing interest rates, if interest rates increased after a
security was purchased, that security would normally decline in value. Conversely, should interest rates
decrease after a security was purchased, normally its value would rise.

However, those fluctuations in value will not generally result in realized gains or losses to the Fund
unless the Fund sells the security prior to maturity. A debt security held to maturity is redeemable by its
issuer at full principal value plus accrued interest. The Fund does not usually intend to dispose of securities
prior to their maturity, but may do so for liquidity, or because of other factors affecting the issuer that cause
the Manager to sell the particular security. In that case, the Fund could experience a capital gain or loss on
the sale.

There are variations in the credit quality of municipal securities, both within a particular rating
classification and between classifications. These variations depend on numerous factors. The yields of municipal
securities depend on a number of factors, including general conditions in the municipal securities market, the
size of a particular offering, the maturity of the obligation and rating (if any) of the issue. These factors are
discussed in greater detail below.

Municipal Securities. The types of municipal securities in which the Fund may invest are described in the
Prospectus under "About the Fund's Investments." Municipal securities are generally classified as general
obligation bonds, revenue bonds and notes. A discussion of the general characteristics of these principal types
of municipal securities follows below.

|X| Municipal Bonds. We have classified longer term municipal securities as "municipal bonds." The
principal classifications of long-term municipal bonds are "general obligation" and "revenue" (including
"industrial development") bonds. They may have fixed, variable or floating rates of interest, as described below.

Some bonds may be "callable," allowing the issuer to redeem them before their maturity date. To protect
bondholders, callable bonds may be issued with provisions that prevent them from being called for a period of
time. Typically, that is 5 to 10 years from the issuance date. When interest rates decline, if the call
protection on a bond has expired, it is more likely that the issuer may call the bond. If that occurs, the Fund
might have to reinvest the proceeds of the called bond in bonds that pay a lower rate of return.

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

|_| Revenue Bonds. The principal security for a revenue bond is generally the net revenues
derived from a particular facility, group of facilities, or, in some cases, the proceeds of a special excise tax
or other specific revenue source. Revenue bonds are issued to finance a wide variety of capital projects.
Examples include electric, gas, water and sewer systems; highways, bridges, and tunnels; port and airport
facilities; colleges and universities; and hospitals.

Although the principal security for these types of bonds may vary from bond to bond, many
provide additional security in the form of a debt service reserve fund that may be used to make principal and
interest payments on the issuer's obligations. Housing finance authorities have a wide range of security,
including partially or fully insured mortgages, rent subsidized and/or collateralized mortgages, and/or the net
revenues from housing or other public projects. Some authorities provide further security in the form of a
state's ability (without obligation) to make up deficiencies in the debt service reserve fund.

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

|_| Mello-Roos Bonds. These are bonds issued under the California Mello-Roos Community
Facilities Act. They are used to finance infrastructure projects, such as roads or sewage treatment plants. In
most cases they are secured by real estate taxes levied on property located in the same community as the project.
This type of financing was created in response to statutory limits on real property taxes that were enacted in
California. The bonds do not constitute an obligation of a municipal government. Timely payment of principal and
interest depends on the ability of the developer of the project or other property owners to pay their real estate
taxes. Therefore these bonds are subject to risks of nonpayment as a result of a general economic decline or
decline in the real estate market, as well as the credit risk that of the developer.

|_| Private Activity Municipal Securities. The Tax Reform Act of 1986 (the "Tax Reform Act")
reorganized, as well as amended, the rules governing tax exemption for interest on certain types of municipal
securities. The Tax Reform Act generally did not change the tax treatment of bonds issued in order to finance
governmental operations. Thus, interest on general obligation bonds issued by or on behalf of state or local
governments, the proceeds of which are used to finance the operations of such governments, continues to be
tax-exempt. However, the Tax Reform Act limited the use of tax-exempt bonds for non-governmental (private)
purposes. More stringent restrictions were placed on the use of proceeds of such bonds. Interest on certain
private activity bonds is taxable under the revised rules. There is an exception for "qualified" tax-exempt
private activity bonds, for example, exempt facility bonds including certain industrial development bonds,
qualified mortgage bonds, qualified Section 501(c)(3) bonds, and qualified student loan bonds.

In addition, limitations as to the amount of private activity bonds which each state may issue were
revised downward by the Tax Reform Act, which will reduce the supply of such bonds. The value of the Fund's
portfolio could be affected if there is a reduction in the availability of such bonds.

Interest on certain private activity bonds issued after August 7, 1986, which continues to be
tax-exempt, will be treated as a tax preference item subject to the federal alternative minimum tax (discussed
below) to which certain taxpayers are subject. The Fund may hold municipal securities the interest on which (and
thus a proportionate share of the exempt-interest dividends paid by the Fund) will be subject to the federal
alternative minimum tax on individuals and corporations.

The federal alternative minimum tax is designed to ensure that all persons who receive income pay some
tax, even if their regular tax is zero. This is accomplished in part by including in taxable income certain tax
preference items that are used to calculate alternative minimum taxable income. The Tax Reform Act made
tax-exempt interest from certain private activity bonds a tax preference item for purposes of the alternative
minimum tax on individuals and corporations. Any exempt-interest dividend paid by a regulated investment company
will be treated as interest on a specific private activity bond to the extent of the proportionate relationship
the interest the investment company receives on such bonds bears to all its exempt interest dividends.

In addition, corporate taxpayers subject to the alternative minimum tax may, under some circumstances,
have to include exempt-interest dividends in calculating their alternative minimum taxable income. That could
occur in situations where the "adjusted current earnings" of the corporation exceeds its alternative minimum
taxable income.

To determine whether a municipal security is treated as a taxable private activity bond, it is subject
to a test for: (a) a trade or business use and security interest, or (b) a private loan restriction. Under the
trade or business use and security interest test, an obligation is a private activity bond if: (i) more than 10%
of the bond proceeds are used for private business purposes and (ii) 10% or more of the payment of principal or
interest on the issue is directly or indirectly derived from such private use or is secured by the privately used
property or the payments related to the use of the property. For certain types of uses, a 5% threshold is
substituted for this 10% threshold.

The term "private business use" means any direct or indirect use in a trade or business carried on by an
individual or entity other than a state or municipal governmental unit. Under the private loan restriction, the
amount of bond proceeds that may be used to make private loans is limited to the lesser of 5% or $5.0 million of
the proceeds. Thus, certain issues of municipal securities could lose their tax-exempt status retroactively if
the issuer fails to meet certain requirements as to the expenditure of the proceeds of that issue or the use of
the bond-financed facility. The Fund makes no independent investigation of the users of such bonds or their use
of proceeds of the bonds. If the Fund should hold a bond that loses its tax-exempt status retroactively, there
might be an adjustment to the tax-exempt income previously distributed to shareholders.

Additionally, a private activity bond that would otherwise be a qualified tax-exempt private activity
bond will not, under Internal Revenue Code Section 147(a), be a qualified bond for any period during which it is
held by a person who is a "substantial user" of the facilities or by a "related person" of such a substantial
user. This "substantial user" provision applies primarily to exempt facility bonds, including industrial
development bonds. The Fund may invest in industrial development bonds and other private activity bonds.
Therefore, the Fund may not be an appropriate investment for entities which are "substantial users" (or persons
related to "substantial users") of such exempt facilities. Those entities and persons should consult their tax
advisers before purchasing shares of the Fund.

A "substantial user" of such facilities is defined generally as a "non-exempt person who regularly uses
part of a facility" financed from the proceeds of exempt facility bonds. Generally, an individual will not be a
"related person" under the Internal Revenue Code unless such individual or the individual's immediate family
(spouse, brothers, sisters and immediate descendants) own directly or indirectly in the aggregate more than 50%
in value of the equity of a corporation or partnership which is a "substantial user" of a facility financed from
the proceeds of exempt facility bonds.

|X| Municipal Notes. Municipal securities having a maturity (when the security is issued) of less than
one year are generally known as municipal notes. Municipal notes generally are used to provide for short-term
working capital needs. Some of the types of municipal notes the Fund can invest in are described below.

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

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

|_| Bond Anticipation Notes. Bond anticipation notes are issued to provide interim financing
until long-term financing can be arranged. The long-term bonds that are issued typically also provide the money
for the repayment of the notes.

|_| Construction Loan Notes. These are sold to provide project construction financing until
permanent financing can be secured. After successful completion and acceptance of the project, it may receive
permanent financing through public agencies, such as the Federal Housing Administration.

|_| Tax-Exempt Commercial Paper. This type of short-term obligation (usually having a
maturity of 270 days or less is issued by a municipality to meet current working capital needs.

|X| Municipal Lease Obligations. The Fund's investments in municipal lease obligations may be through
certificates of participation that are offered to investors by public entities. Municipal leases may take the
form of a lease or an installment purchase contract issued by a state or local government authority to obtain
funds to acquire a wide variety of equipment and facilities.

Some municipal lease securities may be deemed to be "illiquid" securities. Their purchase by the Fund
would be limited as described below in "Illiquid Securities." From time to time the Fund may invest more than 5%
of its net assets in municipal lease obligations that the Manager has determined to be liquid under guidelines
set by the Board of Trustees.

Those guidelines require the Manager to evaluate:

|_| the frequency of trades and price quotations for such securities;

|_| the number of dealers or other potential buyers willing to purchase or sell such securities;

|_| the availability of market-makers; and

|_| the nature of the trades for such securities.

While the Fund holds such securities, the Manager will also evaluate the likelihood of a continuing
market for these securities and their credit quality.

Municipal leases have special risk considerations. Although lease obligations do not constitute general
obligations of the municipality for which the municipality's taxing power is pledged, a lease obligation is
ordinarily backed by the municipality's covenant to budget for, appropriate and make the payments due under the
lease obligation. However, certain lease obligations contain "non-appropriation" clauses which provide that the
municipality has no obligation to make lease or installment purchase payments in future years unless money is
appropriated for that purpose on a yearly basis. While the obligation might be secured by the lease, it might be
difficult to dispose of that property in case of a default.

Projects financed with certificates of participation generally are not subject to state constitutional
debt limitations or other statutory requirements that may apply to other municipal securities. Payments by the
public entity on the obligation underlying the certificates are derived from available revenue sources. That
revenue might be diverted to the funding of other municipal service projects. Payments of interest and/or
principal with respect to the certificates are not guaranteed and do not constitute an obligation of a state or
any of its political subdivisions.

In addition to the risk of "non-appropriation," municipal lease securities do not have as highly liquid
a market as conventional municipal bonds. Municipal leases, like other municipal debt obligations, are subject to
the risk of non-payment of interest or repayment of principal by the issuer. The ability of issuers of municipal
leases to make timely lease payments may be adversely affected in general economic downturns and as relative
governmental cost burdens are reallocated among federal, state and local governmental units. A default in
payment of income would result in a reduction of income to the Fund. It could also result in a reduction in the
value of the municipal lease and that, as well as a default in repayment of principal, could result in a decrease
in the net asset value of the Fund.

|X| Ratings of Municipal Securities. Ratings by ratings organizations such as Moody's Investors
Service, Standard & Poor's Corporation and Fitch IBCA, Inc. represent the respective rating agency's opinions of
the credit quality of the municipal securities they undertake to rate. However, their ratings are general
opinions and are not guarantees of quality. Municipal securities that have the same maturity, coupon and rating
may have different yields, while other municipal securities that have the same maturity and coupon but different
ratings may have the same yield.

Lower grade securities may have a higher yield than securities rated in the higher rating categories.
In addition to having a greater risk of default than higher-grade, securities, there may be less of a market for
these securities. As a result they may be harder to sell at an acceptable price. The additional risks mean that
the Fund may not receive the anticipated level of income from these securities, and the Fund's net asset value
may be affected by declines in the value of lower-grade securities. However, because the added risk of lower
quality securities might not be consistent with the Fund's policy of preservation of capital, the Fund limits its
investments in lower quality securities.

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

The Fund may buy municipal securities that are "pre-refunded." The issuer's obligation to repay the
principal value of the security is generally collateralized with U.S. government securities placed in an escrow
account. This causes the pre-refunded security to have essentially the same risks of default as a AAA-rated
security.

A list of the rating categories of Moody's, S&P and Fitch for municipal securities is contained in
Appendix A to this Statement of Additional Information. Because the Fund may purchase securities that are
unrated by nationally recognized rating organizations, the Manager will make its own assessment of the credit
quality of unrated issues the Fund buys. The Manager will use criteria similar to those used by the rating
agencies, and assigning a rating category to a security that is comparable to what the Manager believes a rating
agency would assign to that security. However, the Manager's rating does not constitute a guarantee of the
quality of a particular issue.

Special Risks of Investing Primarily in California Municipal Securities. Because the Fund focuses its
investments primarily on California municipal securities, the value of its portfolio investments will be highly
sensitive to events affecting the fiscal stability of the state of California and its municipalities, authorities
and other instrumentalities that issue securities. There have been a number of political developments, voter
initiatives, state constitutional amendments and legislation in California in recent years that may affect the
ability of the state government and municipal governments to pay interest and repay principal on the securities
they have issued. In addition, in recent years, the state of California has derived a significant portion of its
revenues from personal income and sales taxes. Because the amount collected from these taxes is particularly
sensitive to economic conditions, the State's revenues have been volatile.

It is not possible to predict the future impact of the legislation and economic considerations described
below on the long-term ability of the state of California or California municipal issuers to pay interest or
repay principal on their obligations. In part that is because of possible inconsistencies in the terms of the
various laws and Propositions and the applicability of other statutes to these issues. The budgets of California
counties and local governments may be significantly affected by state budget decisions beyond their control. The
information below about these conditions is only a brief summary, based upon information the Fund has drawn from
sources that it believes are reliable.

Changes to the State Constitution. Changes to the state constitution in recent years have raised
general concerns about the ability of the state and municipal governments in California to obtain sufficient
revenues to pay their bond obligations. In 1978, California voters approved Proposition 13, an amendment to the
state constitution. The Proposition added a new section to the constitution that limits ad valorem taxes on real
property and restricts the ability of local taxing entities to increase real property taxes. However,
legislation enacted after Proposition 13 provided help to California municipal issuers to raise revenue to pay
their bond obligations. During the severe recession California experienced from 1991 to 1993, the state
legislature eliminated significant components of its aid to local governments. The state has since increased aid
to local governments and reduced certain mandates for local services. Whether legislation will be enacted in the
future to either increase or reduce the redistribution of state revenues to local governments, or to make them
less dependent on state budget decisions, cannot be predicted. Even if legislation increasing such
redistribution is passed, it cannot be predicted whether in every instance it will provide sufficient revenue for
local municipal issuers to pay their bond obligations.

Another amendment to the state constitution may also have an adverse impact on state and municipal bond
obligations. That amendment restricts the state government from spending amounts in excess of appropriation
limits imposed on each state and local government entity. If revenues exceed the appropriation limit, one-half
of those revenues must be returned, in the form of a revision in the tax rates or fee schedules.

Voter Initiatives. California voters have approved a number of initiatives that affect the ability
of the state and municipalities to finance their bond obligations. In 1988, California voters approved
Proposition 98, which requires a minimum level of funding for public schools and community colleges.

In 1996, California voters approved Proposition 218. It requires that all taxes levied by local
governments for general purposes be approved by a simple majority of the popular vote, and that taxes levied by
local governments for special purposes must be approved by a two-thirds majority vote. Proposition 218 also
limits the authority of local governments to impose property-related assessments, fees and charges. It requires
that such assessments be limited to the special benefit conferred and prohibits their use for general
governmental services.

Effect of other State Laws on Bond Obligations. Some of the tax-exempt securities that the Fund
can invest in may be obligations payable solely from the revenues of a specific institution or secured by
specific properties. These are subject to provisions of California law that could adversely affect the holders
of such obligations. For example, the revenues of California health care institutions may be adversely affected
by state laws, and California law limits the remedies of a creditor secured by a mortgage or deed of trust on
real property. Debt obligations payable solely from revenues of health care institutions may also be insured by
the state but no guarantee exists that adequate reserve funds will be appropriated by the state legislature for
such purpose.

The Effect of General Economic Conditions in the state. The California economy and general
financial condition affect the ability of the state and local government to raise and redistribute revenues to
assist issuers of municipal securities to make timely payments on their obligations. California is the most
populous state in the nation with a total population estimated at 34 million. California has a diverse economy,
with major employment in the agriculture, manufacturing, high technology, services, trade, entertainment and
construction sectors. After experiencing strong growth throughout much of the 1980s, from 1990-1993 the state
suffered through a severe recession, the worst since the 1930's, heavily influenced by large cutbacks in
defense/aerospace industries, military base closures and a major drop in real estate construction. The recession
reduced state revenues while its health and welfare costs were increasing. Consequently, the state had a lengthy
period of budget imbalance. During the recession, the state legislature eliminated significant components of its
aid to local government.

With the end of the recession, the state's financial condition has improved, with a combination of
better than expected revenues, slowdown in growth of social welfare programs, and continued spending restraint.
The accumulated budget deficit from the recession years has been eliminated and no deficit borrowing has occurred
at the end of the last five fiscal years. The state has also increased aid to local governments and reduced
certain mandates for local services.

In mid-2000, wholesale electricity prices in California began to rise, swiftly and dramatically. Retail
electricity rates permitted to be charged by California's investor-owned utilities ("IOU') had previously been
frozen by California law. The resulting shortfall between revenues and costs adversely affected the
creditworthiness of the IOUs and their ability to purchase electricity. In the face of those difficulties and
serious shortages of electricity, the Governor proclaimed a state of emergency to exist in California and
directed the Department of Water Resources ("DWR") to enter into contracts and arrangements for the purchase and
sale of electric power using advances from the state's General Fund, as necessary to assist in mitigating the
effects of the emergency. The DWR's power supply program is designed to cover the shortfall between the amount of
electricity required by retail electric customers of California's IOUs and the amount of electricity produced by
the IOUs and purchased by the IOUs under existing contracts.

Between January 17, 2001 and October 15, 2001, DWR committed approximately $11.3 billion under the power
supply program. DWR has announced plans to issue approximately $12.5 billion in revenue bonds to purchase
electricity, which would be repaid over time by ratepayers. Neither the faith and credit nor the taxing power of
the state will be pledged to pay the revenue bonds. The timing of the DWR bond sales is dependent on action by
the California Public Utilities Commission and other factors, including potential legal challenges. Although this
crisis has moderated in the past few months, the State Department of Finance believes that short-and long-term
business investment and location decisions may be adversely affected by the energy crisis.

Although California's growth continues to outpace the nation, the early months of 2001 revealed a
significant moderation in the state's economic growth. The May 2001-02 Revision published by a Legislative
Analyst's Office disclosed a reversal of the recent General Fund financial trend as a result of the slowdown in
economic growth in the state starting in the first quarter of 2001 and most particularly the steep drop in market
levels since early 2000.

Certain of the state's significant industries, such as high technology, are sensitive to economic
disruptions in their export markets and the state's rate of economic growth, therefore, could be adversely
affected by any such disruption. A significant downturn in U.S. stock market prices could adversely affect
California's economy by reducing household spending and business investment, particularly in the important high
technology sector. Moreover, a large and increasing share of the state's General Fund revenue in the form of
income and capital gains taxes is directly related to, and would be adversely affected by a significant downturn
in the performance of, the stock markets.

In addition, it is impossible to predict the time, magnitude or location of a major earthquake or its
effect on the California economy. In January 1994, a major earthquake struck the Los Angeles area, causing
significant damage in a four county area. The possibility exists that another such earthquake could create a
major dislocation of the California economy and significantly affect state and local government budgets.

On July 26, 2001, the Governor signed the 2001 Budget Act enacting the state's fiscal year 2001-02
budget. The spending plan projects General Fund revenues of $75.1 billion, a drop of $2.9 billion from revised
2000-01 estimates. The 2001 Budget Act includes General Fund expenditures of $78.8 billion, a reduction of $1.3
billion from the prior year, which could be accomplished without serious program cuts because such a large part
of the 2000 Budget Act was comprised of one-time expenditures. The 2001 Budget Act also includes Special Fund
expenditures of $21.3 billion and Bond Fund expenditures of $3.2 billion. The Governor held back $500 million as
a set aside for litigation costs and vetoed almost $500 million in General Fund expenditures from the Budget
passed by the legislature.

The state issued approximately $5.7 billion of revenue anticipation notes on October 4, 2001 as part of
its cash management program. The Department of Finance estimated in the 2001 Budget Act that the June 30, 2001
Special Fund for Economic Uncertainties ("SFEU") balance, the budget reserve, will be approximately $6.3 billion,
although this reserve has been virtually entirely used to provide advances to support the DWR power purchase
program. The 2001 Budget Act uses more than half of the budget surplus as of June 30, 2001, but has a projected
balance in the SFEU at June 30, 2002 of $2.6 billion. The 2001 Budget Act assumes the $6.1 billion advanced by
the General Fund to the Department of Water Resources for power purchases will be repaid with interest.

Since the enactment of the 2001 Budget Act, the Governor has signed into law several spending bills or
tax credits totaling an estimated $110 million for the General Fund for 2001-02, which would in the absence of
offsetting expenditure reductions reduce the budgeted reserve in the SFEU of $2.6 billion. In preparing the
2002-03 Proposed Budget, the Governor has informed all State agencies (other than public safety activities and
other mandatory expenditures) to prepare 15% reduction proposals.

The terrorist attacks of September 11, 2001 have resulted in increased uncertainty regarding the
economic outlook of the State. Past experience suggests that shocks to American society of far lesser severity
have resulted in a temporary loss in consumer and business confidence and a reduction in the rate of economic
growth. With the U.S. economy already on the edge of recession before the attacks, a downturn in the economy in
now a distinct possibility, with a corresponding reduction in state General Fund revenues which has already
started to appear before September 11, 2001. It is not possible at this time to project how much the state's
economy may be further affected as a result of the attacks. The most recent economic report form the Department
of Finance, issued in October 2001, excludes any impact from the September 11 attacks.

During the recession the state experienced reductions in the overall credit ratings assigned to its
General Obligation bonds by several major rating agencies. In July 1994, the ratings of those bonds were
downgraded from Aa to A1 by Moody's, from A+ to A by Standard & Poor's and from AA to A by Fitch, the
international rating agency. The state's improved economy and budget, however, have resulted in several upgrades
in its general obligation bond ratings. Worsening economic conditions, in combination with the energy crises,
have resulted in downgrades in calendar 2001. As of November 7, 2001, the state's general obligation bonds were
rated Aa3 by Moody's, A+ by Standard & Poor's, and AA by Fitch. It is not presently possible to determine
whether, or the extent to which, Moody's S&P or Fitch will change such ratings in the future. It should be noted
that the creditworthiness of obligations issued by local California issuers may be unrelated to the
creditworthiness of obligations issued by the state, and there is no obligation on the part of the state to make
payment on such local obligations in the event of default.

Financial Problems of Local Governments. It is not possible to predict the future impact of
the voter initiatives. State constitutional amendments, legislation or economic considerations described above,
or of such initiatives, amendments or legislation that may be enacted in the future, on the long-term ability of
California municipal issuers to pay interest or repay principal on their obligations. There is no assurance that
any California issuer will make full or timely payments of principal or interest or remain solvent. For example,
in December 1994, Orange County, California, together with its pooled investment funds, which included investment
funds from other local governments, filed for bankruptcy. The County has since emerged from bankruptcy. Los
Angeles County, the nation's largest county, in the recent past has also experienced financial difficulty and its
financial condition will continue to be affected by the large number of County residents who are dependent on
government services and by a structural deficit in its health department. Moreover, California's improved
economy has caused Los Angeles County, and other local governments, to come under increased pressure from public
employee unions for improved compensation and retirement benefits.

Other Investment Techniques and Strategies. In seeking its objective, the Fund may from time to time
employ the types of investment strategies and investments described below.

|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| Inverse Floaters and Other Derivative Investments. Inverse floaters may offer relatively high
current income, reflecting the spread between short-term and long-term tax exempt interest rates. As long as the
municipal yield curve remains relatively steep and short term rates remain relatively low, owners of inverse
floaters will have the opportunity to earn interest at above-market rates because they receive interest at the
higher long-term rates but have paid for bonds with lower short-term rates. If the yield curve flattens and
shifts upward, an inverse floater will lose value more quickly than a conventional long-term bond. The Fund will
invest in inverse floaters to seek higher tax-exempt yields than are available from fixed-rate bonds that have
comparable maturities and credit ratings. In some cases, the holder of an inverse floater may have an option to
convert the floater to a fixed-rate bond, pursuant to a "rate-lock" option.

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

Inverse floaters are a form of derivative investment. Certain derivatives, such as options, futures,
indexed securities and entering into swap agreements, can be used to increase or decrease the Fund's exposure to
changing security prices, interest rates or other factors that affect the value of securities. However, these
techniques could result in losses to the Fund, if the Manager judges market conditions incorrectly or employs a
strategy that does not correlate well with the Fund's other investments. These techniques can cause losses if the
counterparty does not perform its promises. An additional risk of investing in municipal securities that are
derivative investments is that their market value could be expected to vary to a much greater extent than the
market value of municipal securities that are not derivative investments but have similar credit quality,
redemption provisions and maturities.

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

When such transactions are negotiated the price (which is generally expressed in yield terms) is fixed
at the time the commitment is made. Delivery and payment for the securities take place at a later date.
Normally the settlement date is within six months of the purchase of municipal bonds and notes. However, the
Fund may, from time to time, purchase municipal securities having a settlement date more than six months and
possibly as long as two years or more after the trade date. The securities are subject to change in value from
market fluctuation during the settlement period. 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 loss to the Fund.

The Fund will engage in when-issued transactions in order to secure what is considered to be an
advantageous price and yield at the time of entering into the obligation. When the Fund engages in when-issued
or delayed-delivery transactions, it relies on the buyer or seller, as the case may be, to complete the
transaction. Their failure to do so may cause the Fund to lose the opportunity to obtain the security at a price
and yield it considers 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 purposes of investment leverage.
Although the Fund will enter into when-issued or delayed-delivery purchase transactions to acquire securities,
the Fund 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 deliver or receive against a
forward commitment, it may incur a gain or loss.

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

When-issued transactions and forward commitments 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
forward commitment basis, to obtain the benefit of currently higher cash yields.

|X| Zero-Coupon Securities. The Fund may buy zero-coupon and delayed interest municipal 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| Puts and Standby Commitments. When the Fund buys a municipal security subject to a standby
commitment to repurchase the security, the Fund is entitled to same-day settlement from the purchaser. The Fund
receives an exercise price equal to the amortized cost of the underlying security plus any accrued interest at
the time of exercise. A put purchased in conjunction with a municipal security enables the Fund to sell the
underlying security within a specified period of time at a fixed exercise price.

The Fund might purchase a standby commitment or put separately in cash or it might acquire the security
subject to the standby commitment or put (at a price that reflects that additional feature). The Fund will enter
into these transactions only with banks and securities dealers that, in the Manager's opinion, present minimal
credit risks. The Fund's ability to exercise a put or standby commitment will depend on the ability of the bank
or dealer to pay for the securities if the put or standby commitment is exercised. If the bank or dealer should
default on its obligation, the Fund might not be able to recover all or a portion of any loss sustained from
having to sell the security elsewhere.

Puts and standby commitments are not transferable by the Fund. They terminate if the Fund sells the
underlying security to a third party. The Fund intends to enter into these arrangements to facilitate portfolio
liquidity, although such arrangements might enable the Fund to sell a security at a pre-arranged price that may
be higher than the prevailing market price at the time the put or standby commitment is exercised. However, the
Fund might refrain from exercising a put or standby commitment if the exercise price is significantly higher than
the prevailing market price, to avoid imposing a loss on the seller that could jeopardize the Fund's business
relationships with the seller.

A put or standby commitment increases the cost of the security and reduces the yield otherwise available
from the security. Any consideration paid by the Fund for the put or standby commitment will be reflected on the
Fund's books as unrealized depreciation while the put or standby commitment is held, and a realized gain or loss
when the put or commitment is exercised or expires. Interest income received by the Fund from municipal
securities subject to puts or stand-by commitments may not qualify as tax exempt in its hands if the terms of the
put or stand-by commitment cause the Fund not to be treated as the tax owner of the underlying municipal
securities.

|X| Repurchase Agreements. The Fund may acquire securities subject to repurchase agreements. It may do
so for liquidity purposes to meet anticipated redemptions of Fund shares, or pending the investment of the
proceeds from sales of Fund shares, or pending the settlement of portfolio securities. In a repurchase
transaction, the Fund acquires 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
a primary dealer in government securities, which meet the credit requirements set by the Fund's Manager from time
to time. The Manager will monitor the vendor's creditworthiness to confirm that the vendor is financially sound
and will continuously monitor the collateral's value. They must meet credit requirements set by the Manager from
time to time.

The majority of these transactions run from day to day. Delivery pursuant to resale typically will
occur 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. There is no limit on the amount of the Fund's net
assets that may be subject to repurchase agreements of seven days or less.
Repurchase agreements, considered "loans" under the Investment Company Act of 1940 (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 collateral's value must equal or exceed the repurchase
price to fully collateralize the repayment obligation. Additionally, the Manager will impose creditworthiness
requirements to confirm that the vendor is financially sound and will continuously monitor the collateral's
value. 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.

|X| Illiquid Securities. The Fund has percentage limitations that apply to purchases of illiquid
securities, as stated in the Prospectus. As a matter of fundamental policy, the Fund cannot purchase any
securities that are subject to restrictions on resale.

|X| Loans of Portfolio Securities. To attempt to raise income or raise cash for liquidity purposes, the
Fund may lend its portfolio securities to brokers, dealers and other financial institutions. These loans are
limited to not more than 25% of the value of the Fund's total assets. There are risks in connection with
securities lending. The Fund might experience a delay in receiving additional collateral to secure a loan, or a
delay in recovery of the loaned securities. The Fund presently does not intend to engage in loans of securities
that will exceed 5% of the value of the Fund's total assets in the coming year. Income from securities loans
does not constitute exempt-interest income for the purpose of paying tax-exempt dividends.

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

When it lends securities, the Fund receives amounts equal to the dividends or interest on the loaned
securities, It also receives one or more of (a) negotiated loan fees, (b) interest on securities used as
collateral, and (c) interest on short-term debt securities purchased with the loan collateral. Either type of
interest may be shared with the borrower. The Fund may pay reasonable finder's, administrative or other 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| Hedging. The Fund may use hedging to attempt to protect against declines in the market value of its
portfolio, to permit the Fund to retain unrealized gains in the value of portfolio securities that have
appreciated, or to facilitate selling securities for investment reasons. To do so, the Fund may:

|_| sell interest rate futures or municipal bond index futures,
|_| buy puts on such futures or securities, or
|_| write covered calls on securities, broadly-based municipal bond indices, interest rate futures or
municipal bond index futures. Covered calls may also be written on debt securities to attempt to
increase the Fund's income, but that income would not be tax-exempt. Therefore it is unlikely that the
Fund would write covered calls for that purpose.

The Fund may also use hedging to establish a position in the debt securities market as a temporary
substitute for purchasing individual debt securities. In that case the Fund will normally seek to purchase the
securities, and then terminate that hedging position. For this type of hedging, the Fund may:

|_| buy interest rate futures or municipal bond index futures, or
|_| buy calls on such futures or on securities.

The Fund is not obligated to use hedging instruments, even though it is permitted to use them in the
Manager's discretion, as described below. The Fund's strategy of hedging with futures and options on futures
will be incidental to the Fund's investment 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 may buy and sell futures contracts relating to debt securities (these are called
"interest rate futures") and municipal bond indices (these are referred to as "municipal bond index futures").

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

A "municipal bond index" assigns relative values to the municipal bonds in the index, and is used as the
basis for trading long-term municipal bond futures contracts. Municipal bond index futures are similar to
interest rate futures except that settlement is made only in cash. The obligation under the contract may also be
satisfied by entering into an offsetting contract. The strategies which the Fund employs in using municipal bond
index futures are similar to those with regard to interest rate futures.

Upon entering into a futures transaction, the Fund will be required to deposit an initial margin payment
in cash or U.S. government securities 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 certain 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 the expiration of the future, the Fund may elect to close out its position by
taking an opposite position at which time a final determination of variation margin is made and additional cash
is required to be paid by or released to the Fund. Any gain or loss is then realized by the Fund on the future
for tax purposes. Although Interest Rate Futures by their terms call for settlement by the delivery of debt
securities, in most cases the obligation is fulfilled without such delivery by entering into an offsetting
transaction. All futures transactions are effected through a clearing house associated with the exchange on
which the contracts are traded.

The Fund may concurrently buy and sell futures contracts in a strategy anticipating that the future the
Fund purchased will perform better than the future the Fund sold. For example, the Fund might buy municipal bond
futures and concurrently sell U.S. Treasury Bond futures (a type of interest rate future). The Fund would
benefit if municipal bonds outperform U.S. Treasury Bonds on a duration-adjusted basis.

Duration is a volatility measure that refers to the expected percentage change in the value of a bond
resulting from a change in general interest rates (measured by each 1% change in the rates on U.S. Treasury
securities). For example, if a bond has an effective duration of three years, a 1% increase in general interest
rates would be expected to cause the value of the bond to decline about 3%. There are risks that this type of
futures strategy will not be successful. U.S. Treasury bonds might perform better on a duration-adjusted basis
than municipal bonds, and the assumptions about duration that were used might be incorrect (in this case, the
duration of municipal bonds relative to U.S. Treasury Bonds might have been greater than anticipated).

|_| Put and Call Options. The Fund may buy and sell certain kinds of put options (puts) and call
options (calls). These strategies are described below.

|_| Writing Covered Call Options. The Fund may write (that is, sell) call options. The Fund's call
writing is subject to a number of restrictions:

(1) After the Fund writes a call, not more than 25% of the Fund's total assets may be subject to calls.
(2) Calls the Fund sells must be listed on a securities or commodities exchange or quoted on NASDAQ, the
automated quotation system of The Nasdaq Stock Market, Inc. or traded in the over-the-counter
market.
(3) Each call the Fund writes must be "covered" while it is outstanding. That means the Fund must own the
investment on which the call was written.
(4) The Fund may write calls on futures contracts whether or not it owns them.

When the Fund writes a call on a security, it receives cash (a premium).The Fund agrees to sell the
underlying investment 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 retained 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.

The Fund's custodian bank, or a securities depository acting for the custodian bank, will act as the
Fund's escrow agent through the facilities of the Options Clearing Corporation ("OCC"), as to the investments on
which the Fund has written calls traded on exchanges, or as to other acceptable escrow securities. In that way,
no margin will be required for such transactions. OCC will release the securities on the expiration of the calls
or upon the Fund's entering into a closing purchase 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 would generally be based on a multiple of the
premium received for the option, plus the amount by which the option is exercisable below the market price of the
underlying security (that is, the option is "in-the-money"). When the Fund writes an OTC option, it will treat as
illiquid (for purposes of its restriction on illiquid securities) the mark-to-market value of any OTC option held
by it, unless the option is subject to a buy-back agreement by the executing broker. The Securities and Exchange
Commission is evaluating whether OTC options should be considered liquid securities. The procedure described
above could be affected by the outcome of that evaluation.

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 was more or less
than the price of the call the Fund purchased to close out the transaction. A profit may also be realized if the
call lapses unexercised, because the Fund retains the underlying investment and the premium received. Any such
profits are considered short-term capital gains for federal tax purposes, as are premiums on lapsed calls. When
distributed by the Fund they are taxable as ordinary income.

The Fund may also write calls on futures contracts without owning the futures contract or securities
deliverable under the contract. To do so, at the time the call is written, the Fund must cover the call by
segregating in escrow an equivalent dollar value of liquid assets. The Fund will segregate additional liquid
assets if the value of the escrowed assets drops below 100% of the current value of the future. Because of this
escrow requirement, in no circumstances would the Fund's receipt of an exercise notice as to that future put the
Fund in a "short" futures position.

|_| Purchasing Calls and Puts. The Fund may buy calls only on securities, broadly-based municipal bond
indices, municipal bond index futures and interest rate futures. It may also buy calls to close out a call it has
written, as discussed above. Calls the Fund buys must be listed on a securities or commodities exchange, or
quoted on NASDAQ, or traded in the over-the-counter market. A call or put option may not be purchased if the
purchase would cause the value of all the Fund's put and call options to exceed 5% of its total assets.

When the Fund purchases a call (other than in a closing purchase transaction), it pays a premium. For
calls on securities that the Fund buys, it 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 (1) the call is sold at a profit or (2) the call is exercised when the market price of the underlying
investment is above the sum of the exercise price plus the transaction costs and premium paid for the call. If
the call is not either exercised or sold (whether or not at a profit), it will become worthless at its expiration
date. In that case the Fund will lose its premium payment and the right to purchase the underlying investment.

Calls on municipal bond indices, interest rate futures and municipal bond index futures are settled in
cash rather than by delivering the underlying investment. Gain or loss depends on changes in the securities
included in the index in question (and thus on price movements in the debt securities market generally) rather
than on changes in price of the individual futures contract.

The Fund may buy only those puts that relate to securities that the Fund owns, broadly-based municipal
bond indices, municipal bond index futures or interest rate futures (whether or not the Fund owns the futures).
The Fund may not sell puts other than puts it has previously purchased.

When the Fund purchases a put, it pays a premium. The Fund then has the right to sell the underlying
investment to a seller of a corresponding put on the same investment during the put period at a fixed exercise
price. Puts on municipal bond indices are settled in cash. Buying a put on a debt security, interest rate future
or municipal bond index future the Fund owns enables it to protect itself during the put period against a decline
in the value of the underlying investment below the exercise price. 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 lose its premium payment and the right
to sell the underlying investment. A put may be sold prior to expiration (whether or not at a profit).

|_| 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 returns.

The Fund's option activities may affect its portfolio turnover rate and brokerage commissions. The
exercise of calls written by the Fund may cause the Fund to sell related portfolio securities, thus increasing
its turnover rate. 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 may pay a brokerage commission each time it buys a call or put, sells a call, or buys or sells
an underlying investment in connection with the exercise of a call or put. Such commissions may 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.

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

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 debt 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 debt securities being hedged. It might
do so if the historical volatility of the prices of the debt securities being hedged is greater 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 natures of those markets. All participants in the futures markets are subject to margin
deposit and maintenance requirements. Rather than meeting additional margin deposit requirements, investors may
close out futures contracts through offsetting transactions which could distort the normal relationship between
the cash and futures markets. From the point of view of speculators, the deposit requirements in the futures
markets are less onerous than margin requirements in the securities markets. Therefore, increased participation
by speculators in the futures markets may cause temporary price distortions.

The Fund may use hedging instruments to establish a position in the municipal securities markets as a
temporary substitute for the purchase of individual securities (long hedging). It is possible that the market may
decline. If the Fund then concludes not to invest in such securities because of concerns that there may be
further market decline or for other reasons, the Fund will realize a loss on the hedging instruments that is not
offset by a reduction in the purchase price of the securities.

An option position may be closed out only on a market that provides secondary trading for options of the
same series. There is no assurance that a liquid secondary market will exist for a particular option. If the
Fund could not effect a closing purchase transaction due to a lack of a market, it would have to hold the
callable investment until the call lapsed or was exercised.

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

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

The Fund will enter into swap transactions with appropriate counterparties pursuant to master netting
agreements. A master netting agreement provides that all swaps done between the Fund and that counterparty under
the master agreement shall be regarded as parts of an integral agreement. If on any date amounts are payable
under one or more swap transactions, the net amount payable on that date shall be paid. In addition, the master
netting agreement may provide that if one party defaults generally or on one swap, the counterparty may terminate
the swaps with that party. Under master netting agreements, if there is a default resulting in a loss to one
party, that party's damages are calculated by reference to the average cost of a replacement swap with respect to
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 established by the Commodity 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. That 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 no 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 also must use short futures and
options on futures positions solely for bona fide hedging purposes within the meaning and intent of the
applicable provisions of the Commodity Exchange Act.

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

Under the Investment Company Act, when the Fund purchases an interest rate future or municipal bond
index future, it must maintain cash or readily marketable short-term debt instruments in an amount equal to the
market value of the investments underlying the future, less the margin deposit applicable to it. The account
must be a segregated account or accounts held by its custodian bank.

|X| Temporary Defensive Investments. The securities the Fund may invest in for temporary defensive
purposes include the following:
|_| short-term municipal securities;

|_| obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities;
|_| corporate debt securities rated within the three highest grades by a nationally recognized
rating agency;
|_| commercial paper rated "A-1" by S&P, or a comparable rating by another nationally
recognized rating agency; and
|_| certificates of deposit of domestic banks with assets of $1 billion or more.

Portfolio Turnover. A change in the securities held by the Fund from buying and selling investments is
known as "portfolio turnover." Short-term trading increases the rate of portfolio turnover and could increase
the Fund's transaction costs. However, the Fund ordinarily incurs little or no brokerage expense because most of
the Fund's portfolio transactions are principal trades that do not require payment of brokerage commissions.

The Fund ordinarily does not trade securities to achieve short-term capital gains, because they would
not be tax-exempt income. To a limited degree, the Fund may engage in short-term trading to attempt to take
advantage of short-term market variations. It may also do so to dispose of a portfolio security prior to its
maturity. That might be done if, on the basis of a revised credit evaluation of the issuer or other
considerations, the Fund believes such disposition advisable or it needs to generate cash to satisfy requests to
redeem Fund shares. In those cases, the Fund may realize a capital gain or loss on its investments. The Fund's
annual portfolio turnover rate normally is not expected to exceed 100%.

|X| Taxable Investments. While the Fund can invest up to 20% of its total assets in investments that
generate income subject to income taxes, it does not anticipate investing substantial amounts of its assets in
taxable investments under normal market conditions or as part of its normal trading strategies and policies. To
the extent it invests in taxable securities, the Fund would not be able to meet its objective of providing tax
exempt income to its shareholders. Taxable investments include, for example, hedging instruments, repurchase
agreements, and the types of securities the Fund would buy for temporary defensive purposes.

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, such a "majority" vote is defined as the vote of the holders of
the lesser of:

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

The Fund's investment 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.

o Does the Fund Have Additional Fundamental Policies? The following investment restrictions are
fundamental policies of the Fund:

|_| The Fund cannot invest in securities or other investments other than municipal securities, the
temporary investments described in its Prospectus, repurchase agreements, covered calls, private activity
municipal securities and hedging instruments described in "About the Fund" in the Prospectus or this Statement of
Additional Information.

|_| The Fund cannot make loans, except to the extent permitted under the 1940 Act, the rules or
regulations thereunder or any exemption therefrom that is applicable to the Fund, as such statute, rules or
regulations may be amended or interpreted from time to time.

|_| The Fund may not borrow money, except to the extent permitted under the 1940 Act, the rules or
regulations thereunder or any exemption therefrom that is applicable to the Fund, as such statute, rules or
regulations may be amended or interpreted from time to time.

|_| The Fund cannot invest 25% or more of its total assets in any one industry. That limit does not
apply to securities issued or guaranteed by the U.S. government or its agencies and intrumentalities or
securities issued by investment companies. Nor does that limit apply to municipal securities in general or to
California Municipal Securities.

|_| The Fund cannot invest in real estate, physical commodities or commodity contracts, except to the
extent permitted under the 1940 Act, the rules and regulations thereunder or any exemption therefrom, as such
statute, rules or regulations may be amended or interpreted from time to time. This restriction shall not prevent
the Fund from investing in municipal securities or other permitted securities that are secured by real estate or
interests in real estate.

|_| The Fund cannot underwrite securities or invest in securities that are subject to restrictions on
resale.

|_| The Fund cannot invest in securities of other investment companies, except to the extent permitted
under the 1940 Act, the rules and regulations thereunder or any exemption therefrom, as such statute, rules and
regulations may be amended or interpreted from time to time.

|_| The Fund cannot buy or sell futures contracts other than interest rate futures and municipal bond
index futures.

The Fund currently has an operating policy (which is not a fundamental policy but will not be changed
without the approval of a shareholder vote) that prohibits the Fund from issuing senior securities. However, the
policy does not prohibit certain activities that are permitted by the Fund's other policies, including borrowing
money for emergency purposes as permitted by its other investment policies and applicable regulations, entering
into delayed-delivery and when-issued arrangements for portfolio securities transactions, and entering into
contracts to buy or sell derivatives, hedging instruments, options, futures and the related margin, collateral or
escrow arrangements permitted under its other investment policies.

Unless the Prospectus or 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. In that case 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.

Non-Diversification of the Fund's Investments. The Fund is "non-diversified" as defined in the Investment
Company Act. Funds that are diversified have restrictions against investing too much of their assets in the
securities of any one "issuer." That means that the Fund can invest more of its assets in the securities of a
single issuer than a fund that is diversified.

Being non-diversified poses additional investment risks, because if the Fund invests more of its assets
in fewer issuers, the value of its shares is subject to greater fluctuations from adverse conditions affecting
any one of those issuers. However, the Fund does limit its investments in the securities of any one issuer to
qualify for tax purposes as a "regulated investment company" under the Internal Revenue Code. By qualifying, it
does not have to pay federal income taxes if more than 90% of its earnings are distributed to shareholders. To
qualify, the Fund must meet a number of conditions. First, not more than 25% of the market value of the Fund's
total assets may be invested in the securities of a single issuer. Second, with respect to 50% of the market
value of its total assets, (1) no more than 5% of the market value of its total assets may be invested in the
securities of a single issuer, and (2) the Fund must not own more than 10% of the outstanding voting securities
of a single issuer.

The identification of the issuer of a municipal security depends on the terms and conditions of the
security. When the assets and revenues of an agency, authority, instrumentality or other political subdivision
are separate from those of the government creating it and the security is backed only by the assets and revenues
of the subdivision, agency, authority or instrumentality, the latter would be deemed to be the sole issuer.
Similarly, if an industrial development bond is backed only by the assets and revenues of the non-governmental
user, then that user would be deemed to be the sole issuer. However, if in either case the creating government
or some other entity guarantees a security, the guarantee would be considered a separate security and would be
treated as an issue of such government or other entity.

Applying the Restriction Against Concentration. To implement its policy not to concentrate its investments, the
Fund has adopted the industry classifications set forth in Appendix B to this Statement of Additional
Information. Those industry classifications are not a fundamental policy.
In implementing the Fund's policy not to concentrate its investments, the Manager will consider a
non-governmental user of facilities financed by industrial development bonds as being in a particular industry.
That is done even though the bonds are municipal securities, as to which the Fund has no concentration
limitation. Although this application of the concentration restriction is not a fundamental policy of the Fund,
it will not be changed without shareholder approval.

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
July 1988.

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.

|_| Classes of Shares. The Trustees are authorized, without shareholder approval, 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.

The Fund currently has three classes of shares: Class A, Class B and Class C. All classes invest in the
same investment portfolio. Each class of shares:
has its own dividends and distributions,
pays certain expenses which may be different for the different classes,
may have a different net asset value,
may have separate voting rights on matters in which the interests of one class are different from the interests

of another class, and
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 proportinately equal to the interest of each other share of the same class.

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

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

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

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

Board of Trustees

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 performances, 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.

The Board of Trustees has an Audit Committee, a Study Committee and a Proxy Committee. The members of
the Audit Committee are Kenneth Randall (Chairman), Benjamin Lipstein and Edward Regan. The Audit Committee held
four meetings during the Fund's fiscal year ended July 31, 2002. The Audit Committee provides the board with
recommendations regarding the selection of the Fund's independent auditor. The Audit Committee also reviews the
scope and results of audits and the audit fees charged, reviews reports from the Fund's independent auditor
concerning the Fund's internal accounting procedures, and controls and reviews reports of the Manager's internal
auditor, among other duties as set forth in the Committee's charter.

The members of the Study Committee are Benjamin Lipstein (Chairman), Robert Galli and Elizabeth
Moynihan. The Study Committee held seven meetings during the Fund's fiscal year ended July 31, 2002. The Study
Committee evaluates and reports to the Board on the Fund's contractual arrangements, including the Investment
Advisory and Distribution Agreements, transfer and shareholder service agreements and custodian agreements as
well as the policies and procedures adopted by the Fund to comply with the Investment Company Act of 1940 and
other applicable law, among other duties as set forth in the Committee charter.

The members of the Proxy Committee are Edward Regan (Chairman), Russell Reynolds and Clayton Yeutter.
The Proxy Committee held one meeting during the fiscal year ended July 31, 2002. The Proxy Committee provides the
Board with recommendations for proxy voting and monitors proxy voting by the Fund.

Trustees and Officers of the Fund. The Fund's Trustees and officers and their positions held with the Fund and
length of service in such position(s) and their principal occupations and business affiliations during the past
five years are listed below. Each of the Trustees, except Mr. Murphy, is an "Independent Trustee," as defined in
the Investment Company Act. Mr. Murphy is an "Interested Trustee," because he is affiliated with the Manager by
virtue of his positions as an officer and director of the Manager, and as a shareholder of its parent company.
Mr. Murphy was elected as a Trustee of the Fund with the understanding that in the event he ceases to be the
chief executive officer of the Manager, he will resign as a trustee of the Fund and the other Board I Funds for
which he is a trustee or director. The information for the Trustees also includes the dollar range of shares of
the Fund as well as the aggregate dollar range of shares of the Board I Funds beneficially owned by the Trustee.
All information is as of December 31, 2001. All of the Trustees are also trustees of directors of the following
Oppenheimer funds1 (referred to as "Board I Funds").

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

In addition to being a trustee or director of the Board I Funds, Mr. Galli is also a director or trustee
of 10 other portfolios in the OppenheimerFunds complex.

Messrs. Murphy, Molleur, Wixted, Zack, Webman and Hora and Mses.Feld and Ives respectively hold the same
offices with one or more of the other Board I Funds as with the Fund. As of April 22, 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. In addition, each Independent Trustee, and his or her family members, do not own securities of
either the Manager or Distributor of the Board I Funds or any person directly or indirectly controlling,
controlled by or under common control with the Manager or Distributor.

Mr. Reynolds has reported that he has a controlling interest in The Directorship Search Group, Inc., a
director recruiting firm that provided consulting services to Massachusetts Mutual Life Insurance Company (which
controls the Manager and the Distributor) aggregating $100,000 for the calendar year ended December 31, 2001, an
amount representing less than 5% of the firm's annual revenues. The Independent Trustees have unanimously
(except for Mr. Reynolds' abstention) determined that the consulting arrangements between The Directorship Group,
Inc. and Massachusetts Mutual Life Insurance Company were not material business or professional relationships
that would compromise Mr. Reynolds' status as an Independent Trustee. However, to assure certainty as to the
determinations of the Board and the Independent Trustees as to matters upon which the Investment Company Act or
the rules thereunder require approval by a majority of disinterested Trustees, Mr. Reynolds will not be counted
for purposes of determining whether a quorum of Independent Trustees was present or whether a majority of
Independent Trustees approved the matter.

Independent Trustees

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

Dollar Aggregate Dollar
Name, Address,1 Age, Range of Range of Shares
Position(s) Held with Principal Occupation(s) During Past 5 Years / Other Shares Beneficially
Fund and Length of Trusteeships/Directorships Held by Trustee / Number of Owned in Owned in any of
Service2 Portfolios in Fund Complex Overseen by Trustee the Fund the Board I Funds

Leon Levy, Chairman of General Partner of Odyssey Partners, L.P. (investment $0 None
the Board of Trustees partnership) (since 1982) and Chairman of the Board of
Trustee since 1988 Avatar Holdings, Inc. (real estate development) (since
Age: 76 1981). Oversees 31 portfolios in the OppenheimerFunds
complex.

Robert G. Galli, A Trustee or Director of other Oppenheimer funds. Formerly $0 Over $100,000
Trustee since 1993 Vice Chairman of the Manager (October 1995 - December
Age: 68 1997). Oversees 41 portfolios in the OppenheimerFunds
complex.

Phillip A. Griffiths, The Director of the Institute for Advanced Study, $0 Over $100,000
Trustee since 1999 Princeton, N.J. (since 1991), director of GSI Lumonics
Age: 63 (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. Oversees 30 portfolios in the OppenheimerFunds
complex.

Benjamin Lipstein, Professor Emeritus of Marketing, Stern Graduate School of $0 Over $100,000
Trustee since 1988 Business Administration, New York University. Oversees 31
Age: 79 portfolios in the OppenheimerFunds complex.

Elizabeth B. Moynihan, Author and architectural historian; a trustee of the Freer $0 $50,001 -
Trustee since 1992 Gallery of Art and Arthur M. Sackler Gallery (Smithsonian
Age: 72 Institute), Trustees Council of the National Building
Museum; a member of the Trustees Council, Preservation $100,000
League of New York State. Oversees 31 portfolios in the
OppenheimerFunds complex.

Kenneth A. Randall, A director of Dominion Resources, Inc. (electric utility $0 Over $100,000
Trustee since 1988 holding company) and Prime Retail, Inc. (real estate
Age: 75 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. Oversees 31 portfolios in the
OppenheimerFunds complex.

Edward V. Regan, President, Baruch College, CUNY; a director of RBAsset $0 $50,001 -
Trustee since 1993 (real estate manager); a director of OffitBank; formerly
Age: 72 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 $100,000
Trustee of New York State and Local Retirement Fund.
Director/trustee of 31 investment companies in the
OppenheimerFunds complex.

------------------------- ------------------------------------------------------------- ----------- ------------------
------------------------- ------------------------------------------------------------- ----------- ------------------
Russell S. Reynolds, Chairman of The Directorship Search Group, Inc. (corporate $0 $10,001 - $50,000
Jr., governance consulting and executive recruiting) (since
Trustee since 1989 1993); a life trustee of International House (non-profit
Age: 70 educational organization), and a trustee of the Greenwich
Historical Society (since 1996). Oversees 31 portfolios in
the OppenheimerFunds complex.
------------------------- ------------------------------------------------------------- ----------- ------------------
------------------------- ------------------------------------------------------------- ----------- ------------------
Donald W. Spiro, Vice Chairman Emeritus (since January 1991) of the Manager. $0 Over $100,000
Chairman of the Board Formerly he held the following positions: Chairman
of Trustees, (November 1987 - January 1991) and a director (January 1969
Trustee since 1988 - August 1999) of the Manager; President and Director of
Age: 76 OppenheimerFunds Distributor, Inc., a subsidiary of the
Manager and the Fund's Distributor (July 1978 - January
1992). Oversees 31 portfolios in the OppenheimerFunds
complex.
------------------------- ------------------------------------------------------------- ----------- ------------------
------------------------- ------------------------------------------------------------- ----------- ------------------
Clayton K. Yeutter, Of Counsel, Hogan & Hartson (a law firm) (since 1993). $0 $50,001 -
Trustee since 1991 Other directorships: Caterpillar, Inc. (since 1993) and
Age: 71 Weyerhaeuser Co. (since 1999). Oversees 31 portfolios in $100,000
the OppenheimerFunds complex.
------------------------- ------------------------------------------------------------- ----------- ------------------

Interested Trustee and Officer

----------------------- ---------------------------------------------------------------- ----------- -----------------
Name, Address,,3 Age, Principal Occupation(s) During Past 5 Years / Other Dollar Aggregate
Dollar Range of
Shares
Range of Beneficially
Position(s) Held with Shares Owned in any of
Fund and Length of Trusteeships/Directorships Held by Trustee / Number of Owned in the Oppenheimer
Service4 Portfolios in Fund Complex Overseen by Trustee the Fund Funds
----------------------- ---------------------------------------------------------------- ----------- -----------------
----------------------- ---------------------------------------------------------------- ----------- -----------------
John V. Murphy, Chairman, Chief Executive Officer and director (since June 30,
President and Trustee 2001) and President (since September 2000) of the Manager;
since October 2001 President and a director or trustee of other Oppenheimer None Over $100,000
Age: 53 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. Oversees 63
portfolios in the OppenheimerFunds complex.
----------------------- ---------------------------------------------------------------- ----------- -----------------

Officers of the Fund

----------------------------------------------- -----------------------------------------------------------------------
Name, Address,5 Age, Position(s) Held with Principal Occupation(s) During Past 5 Years
Fund and Length of Service6
----------------------------------------------- -----------------------------------------------------------------------
----------------------------------------------- -----------------------------------------------------------------------
Merrell Hora, Vice President and Portfolio Assistant Vice President of the Manager (since July 1999); a
Manager (since July 1999) portfolio manager of other Oppenheimer funds; formerly a Senior
Age: 34 Quantitative Analyst for the Fixed Income Department's Quantitative
Analysis Team (July 1998 - August 2000); prior to joining the Manager
in July 1998 he was a quantitative analyst with a subsidiary of the
Cargill Financial Services Group (January 1997 - September 1997) and
also held numerous positions at the University of Minnesota from
which he obtained his Ph.D. in Economics.
----------------------------------------------- -----------------------------------------------------------------------
----------------------------------------------- -----------------------------------------------------------------------
Senior Vice President and Senior Investment Officer and Director of
Jerry Webman, Vice President and Portfolio the Fixed Income Department of the Manager (since February 1996);
Manager (since 1996) Senior Vice President of HarbourView Asset Management Corporation
Age: 53 (since May 1999); a portfolio manager of other Oppenheimer funds;
before joining the Manager in February 1996, he was a Vice President
and portfolio manager with Prudential Investment Corporation (March
1986 - February 1996).
----------------------------------------------- -----------------------------------------------------------------------
----------------------------------------------- -----------------------------------------------------------------------
Brian W. Wixted, Senior Vice President and Treasurer (since March 1999) of the
Treasurer, Principal Financial and Accounting Manager; Treasurer (since March 1999) of HarbourView Asset Management
Officer (since April 1999) Corporation, Shareholder Services, Inc., Oppenheimer Real Asset
Age: 42 Management Corporation, Shareholder Financial Services, Inc.,
Oppenheimer Partnership Holdings, Inc., OFI Private Investments, Inc.
(since March 2000), OppenheimerFunds International Ltd. and
Oppenheimer Millennium Funds plc (since May 2000), offshore fund
management subsidiaries of the Manager, and OAM Institutional, Inc.
(since November 2000), an investment advisory subsidiary of the
Manager; Treasurer and Chief Financial Officer (since May 2000) of
Oppenheimer Trust Company, a trust company subsidiary of the Manager;
Assistant Treasurer (since March 1999) of Oppenheimer Acquisition
Corp. and OppenheimerFunds Legacy Program (since April 2000); an
officer of other Oppenheimer funds; formerly Principal and Chief
Operating Officer, Bankers Trust Company - Mutual Fund Services
Division (March 1995 - March 1999).
----------------------------------------------- -----------------------------------------------------------------------
----------------------------------------------- -----------------------------------------------------------------------
Robert G. Zack, Senior Vice President (since May 1985) and General Counsel (since
Secretary (since November 1, 2001) February 2002) of the Manager; Assistant Secretary of Shareholder
Age: 53 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; formerly, Acting General Counsel (November
2001-February 2002) and Associate General Counsel (1984 - October
2001)
----------------------------------------------- -----------------------------------------------------------------------
----------------------------------------------- -----------------------------------------------------------------------
Denis R. Molleur, Vice President and Senior Counsel of the Manager (since July 1999);
Assistant Secretary (since November 1, 2001) an officer of other Oppenheimer funds; formerly a Vice President and
Age: 44 Associate Counsel of the Manager (September 1995 - July 1999).
----------------------------------------------- -----------------------------------------------------------------------
----------------------------------------------- -----------------------------------------------------------------------
Katherine P. Feld, Vice President and Senior Counsel of the Manager (since July 1999);
Assistant Secretary (since November 1, 2001) an officer of other Oppenheimer funds; formerly a Vice President and
Age: 43 Associate Counsel of the Manager (June 1990 - July 1999).
----------------------------------------------- -----------------------------------------------------------------------
----------------------------------------------- -----------------------------------------------------------------------
Kathleen T. Ives, Vice President and Assistant Counsel of the Manager (since June
Assistant Secretary (since November 1, 2001) 1998); an officer of other Oppenheimer funds; formerly an Assistant
Age: 36 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 one 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 July 31,
2002. The compensation from all of the Board I Oppenheimer funds (including the Fund) was paid to the trustees
for their service as a director, trustee or member of a committee of the boards of those funds during the
calendar year 2001.

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

Trustee/ Director Name Aggregate Compensation Retirement Total Compensation
And other Positions From Fund 1 Benefits Accrued as Part from all Board I Oppenheimer
of Fund Expenses* Funds (30 Funds)2
------------------------------- ---------------------------- ----------------------------- ---------------------------------
------------------------------- ---------------------------- ----------------------------- ---------------------------------
Leon Levy $0
Chairman
------------------------------- ---------------------------- ----------------------------- ---------------------------------
------------------------------- ---------------------------- ----------------------------- ---------------------------------
Robert G. Galli3 $0
Study Committee Member
------------------------------- ---------------------------- ----------------------------- ---------------------------------
------------------------------- ---------------------------- ----------------------------- ---------------------------------
Phillip Griffiths4 $0

------------------------------- ---------------------------- ----------------------------- ---------------------------------
------------------------------- ---------------------------- ----------------------------- ---------------------------------
Benjamin Lipstein
Study Committee Chairman, $0
Audit Committee Member
------------------------------- ---------------------------- ----------------------------- ---------------------------------
------------------------------- ---------------------------- ----------------------------- ---------------------------------
Elizabeth B. Moynihan
Study Committee $0
Member
------------------------------- ---------------------------- ----------------------------- ---------------------------------
------------------------------- ---------------------------- ----------------------------- ---------------------------------
Kenneth A. Randall $0
Audit Committee Member
------------------------------- ---------------------------- ----------------------------- ---------------------------------
------------------------------- ---------------------------- ----------------------------- ---------------------------------
Edward V. Regan
Proxy Committee Chairman, $0
Audit Committee Member
------------------------------- ---------------------------- ----------------------------- ---------------------------------
------------------------------- ---------------------------- ----------------------------- ---------------------------------
Russell S. Reynolds, Jr.
Proxy Committee $0
Member
------------------------------- ---------------------------- ----------------------------- ---------------------------------
------------------------------- ---------------------------- ----------------------------- ---------------------------------
Donald Spiro $0

|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 Board I
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.

|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 _________________, the only persons who owned of record or who were known
by the Fund to own beneficially 5% or more of the Fund's outstanding Class A, Class B or Class C shares were:

The Manager. The Manager is wholly-owned by Oppenheimer Acquisition Corp., a holding company controlled by
Massachusetts Mutual Life Insurance Company. The Manager and the Fund have a Code of Ethics. It is designed to
detect and prevent improper personal trading by certain employees, including portfolio managers, that would
compete with or take advantage of the Fund's portfolio transactions. Compliance with the Code of Ethics is
carefully monitored and strictly enforced by the Manager.

The portfolio managers of the Fund are principally responsible for the day-to-day management of the
Fund's investment portfolio. Other members of the Manager's fixed-income portfolio department, particularly
security analysts, traders and other portfolio managers have broad experience with fixed-income securities. They
provide the Fund's portfolio managers with research and support in managing the Fund's investments.

|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 Ehtics 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
------------------
duplication 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| Annual Approval of Investment Advisory Agreement. Each year, the Board of Trustees, including a
majority of the Independent Trustees, is required to approve the renewal of the investment advisory agreement.
The Investment Company Act requires that the Board request and evaluate and the Manager provide such information
as may be reasonably necessary to evaluate the terms of the investment advisory agreement. The board employs an
independent consultant to prepare a report that provides such information as the Board requests for this
purpose.

The Board also receives information about the 12b-1 distribution fees the Fund pays. These distribution
fees are reviewed and approved at a different time of the year.

The Board reviewed the foregoing information in arriving at its decision to renew the investment
advisory agreement. Among other factors, the Board considered:
o The nature, cost, and quality of the services provided to the Fund and its shareholders;
o The profitability of the Fund to the Manager;
o The investment performance of the Fund in comparison to regular market indices
o Economies of scale that may be available to the Fund from the Manager;
o Fees paid by other mutual funds for similar services;
o The value and quality of any other benefits or services received by the Fund from its relationship with
the Manager, and
o The direct and indirect benefits the Manager received from its relationship with the Fund. These
included services provided by the General Distributor and the Transfer Agent, and brokerage and soft dollar
arrangements permissible under Section 28(e) of the Securities Exchange Act.

The Board considered that the Manager must be able to pay and retain high quality personnel at
competitive rates to provide services to the Fund. The Board also considered that maintaining the financial
viability of the Manager is important so that the Manager will be able to continue to provide quality services to
the Fund and its shareholders in adverse times. The Board also considered the investment performance of other
mutual funds advised by the Manager. The Board is aware that there are alternatives to the use of the Manager.

These matters were also considered by the Independent Trustees, meeting separately from the full Board
with experienced Counsel to the Fund who assisted the Board in its deliberations. The Fund's Counsel is
independent of the Manager within the meaning and intent of the SEC Rules regarding the independence of counsel.

In arriving at a decision, the Board did not single out any one factor or group of factors as being more
important than other factors, but considered all factors together. The Board judged the terms and conditions of
the Agreement, including the investment advisory fee, in light of all of the surrounding circumstances.

|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. That 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 corporate administration for the Fund. Those responsibilities include the compilation and maintenance
of records with respect to the Fund's operations, the preparation and filing of specified reports, and the
composition of proxy materials and registration statements for continuous public sale of shares of the Fund.

Expenses not expressly assumed by the Manager under the advisory agreement are paid by the Fund. The
investment advisory agreement lists examples of expenses paid by the Fund. The major categories relate to
interest, taxes, fees to disinterested Trustees, legal and audit expenses, custodian and transfer agent expenses,
share issuance costs, certain printing and registration costs, brokerage commissions, and non-recurring expenses,
including litigation cost. 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. The
management fees paid by the Fund to the Manager during its last three fiscal years are listed below. Effective
January 1, 2000, the Manager has voluntarily undertaken to limit its management fees to a maximum annual rate of
0.55% of average annual net assets for each class of shares, which waiver aggregated $18,696 (0.0039%) in
management fee expenses for the fiscal year ended July 31, 2001. This voluntary waiver can be withdrawn by the
Manager at any time.

---------------------- --------------------------------------------------------
Fiscal Year Ended Management Fee Paid to
7/31 OppenheimerFunds, Inc.
---------------------- --------------------------------------------------------
---------------------- --------------------------------------------------------
2000 $2,310,800(1)
---------------------- --------------------------------------------------------
---------------------- --------------------------------------------------------
2001 $2,660,807(2)
---------------------- --------------------------------------------------------
---------------------- --------------------------------------------------------
2002 $
---------------------- --------------------------------------------------------

-------------------------------------------------------------------------
1. Does not include waiver of $31,818.
2. Does not include waiver of $18,696.

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 for its obligations and duties under the
investment advisory agreement, the Manager is not liable for any loss sustained by reason of good faith errors or
omissions the Fund sustains for any investment, adoption of any investment policy, or the purchase, sale or
retention of any security.

|X| Annual Approval of Investment Advisory Agreement. Each year, the Board of Trustees, including a
majority of the Independent Trustees, is required to approve the renewal of the investment advisory agreement.
The Investment Company Act requires that the Board request and evaluate and the Manger provide such information
as may be reasonably necessary to evaluate the terms of the investment advisory agreement. The board employs an
independent consultant to prepare a report that provides such information as the Board requests for this purpose.

The Board also receives information about the 12b-1 distribution fees the Fund pays. These distribution
fees are reviewed and approved at a different time of the year.

The Board reviewed the foregoing information in arriving at its decision to renew the investment
advisory agreement. Among other factors, the Board considered:
o The nature, cost, and quality of the services provided to the Fund and its shareholders;
o The profitability of the Fund to the Manager;
o The investment performance of the Fund in comparison to regular market indices
o Economies of scale that may be available to the fund from the Manager;
o Fees paid by other mutual funds for similar services;
o The value and quality of any other benefits or services received by the Fund from its relationship with
the Manager, and
o The direct and indirect benefits the Manager received from its relationship with the Agent, and
brokerage and soft dollar arrangements permissible under Section 28(e) of the Securities Exchange
Act.

The Board considered that the Manager must be able to pay and retain high quality personnel at
competitive rates to provide services to the Fund. The Board also considered that maintaining the financial
viability of the Manager is important so that the Manager will be able to continue to provide quality services to
the Fund and its shareholders in adverse times. The Board alsoconsidered the investment performance of other
mutual funds advised by the Manager. The Board is aware that there are alternatives to the use of the Manager.

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 buy and sell portfolio securities for the Fund. The investment advisory agreement
allows the Manager to use broker-dealers to effect the Fund's portfolio transactions. Under the agreement, the
Manager may employ those broker-dealers (including "affiliated" brokers, as that term is defined in the
Investment Company Act) that, in the Manager's best judgment based on all relevant factors, will implement the
Fund's policy to obtain, at reasonable expense, the "best execution" of portfolio transactions. "Best execution"
refers to prompt and reliable execution at the most favorable price obtainable. The Manager need not seek
competitive commission bidding. However, the Manager is expected to minimize the commissions paid to the extent
consistent with the interest and policies of the Fund as established by its Board of Trustees.

Under the investment advisory agreement, the Manager may select brokers 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 concessions paid to such brokers may be higher than another qualified broker would charge, if
the Manager makes a good faith determination that the concession is fair and reasonable in relation to the
services provided. Subject to those other 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 managed by the Manager or its
affiliates.

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 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.

Most securities purchases made by the Fund are in principal transactions at net prices. The Fund usually
deals directly with the selling or purchasing principal or market maker without incurring charges for the
services of a broker on its behalf unless the Manager determines that a better price or execution may be obtained
by using the services of a broker. Therefore, the Fund does not incur substantial brokerage costs. Portfolio
securities purchased from underwriters include a commission or concession paid by the issuer to the underwriter
in the price of the security. Portfolio securities purchased from dealers include a spread between the bid and
asked price.

The Fund seeks to obtain prompt execution of orders at the most favorable net prices. In an option
transaction, the Fund ordinarily uses the same broker for the purchase or sale of the option and any transaction
in the investment to which the option relates. When possible, the Manager tries to combine concurrent orders to
purchase or sell the same security by more than one of the accounts managed by the Manager or its affiliates.
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.

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. Investment research received by the Manager for the commissions paid by those
other accounts may be useful both to the Fund and one or more of the Manager's other accounts. Investment
research services 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 analyses 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 has permitted the Manager to use concessions on fixed-price offerings to obtain
research, in the same manner as is permitted for agency transactions. The Board has also permitted 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 research services provided by brokers broaden the scope and supplement 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 of the Fund about the commissions
paid to brokers furnishing research services, together with the Manager's representation that the amount of such
commissions was reasonably related to the value or benefit of such services.

Other funds advised by the Manager have investment objectives and 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 of funds advised by the Manager purchase the
same security on the same day from the same dealer, the Manager may average the price of the transactions and
allocate the average among the funds.

Distribution and Service Plans

The Distributor. Under its General Distributor's Agreement with the Fund, the Distributor, whose primary address
is P.O. Box 5270, Denver, CO 80217, acts as the Fund's principal underwriter in the continuous public offering of
the Fund's Class A, Class B and Class C 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. They exclude payments under the Distribution and Service
Plans but include advertising and the cost of printing and mailing prospectuses (other than those furnished to
existing shareholders).

The sales charge 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 on
Fiscal Year Front-End Sales Sales Charges Class A Shares Class B Shares Class C Shares
Ended 7/31: Charges on Class Retained by Advanced by Advanced by Advanced by
A Shares Distributor2 Distributor1 Distributor1 Distributor1
------------- ------------------ ------------------- -------------------- ------------------- -------------------
------------- ------------------ ------------------- -------------------- ------------------- -------------------
2000 $423,400 $90,950 $28,185 $415,444 $28,818
------------- ------------------ ------------------- -------------------- ------------------- -------------------
------------- ------------------ ------------------- -------------------- ------------------- -------------------
2001 $614,244 $126,239 $21,272 $624,812 $64,953
------------- ------------------ ------------------- -------------------- ------------------- -------------------
------------- ------------------ ------------------- -------------------- ------------------- -------------------
2002 $ $ $ $ $
------------- ------------------ ------------------- -------------------- ------------------- -------------------
1. The Distributor advances concession payments to dealers for certain sales of Class A shares and for
sales of Class B and Class C shares from its own resources at the time of sale. Because Class B shares
convert to Class A shares 72 months after purchase, the "life-of-class" return for Class B uses Class A
performance for the period after conversion.
2. Includes amounts retained by a broker-dealer that is an affiliate or a parent of the distributor.

------------------------------- ---------------------------- ---------------------------- ----------------------------
Class A Contingent Class B Contingent Class C Contingent
Fiscal Year Deferred Sales Deferred Sales Deferred Sales
Ended 7/31: Charges Retained by Charges Retained by Charges Retained by
Distributor Distributor Distributor

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

Distribution and Service Plans. The Fund has adopted a Service Plan for its Class A shares and Distribution and
Service Plans for its Class B and Class C shares under Rule 12b-1 of the Investment Company Act. Under those
plans, the Fund makes payments to the Distributor 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 of the Fund, including a majority of the
Independent Trustees, cast in person at a meeting called for the purpose of voting on that plan. The Manager
cast the vote to approve the Class C plan as the sole initial holder of Class C shares.

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 profits from the advisory fee it receives from the Fund. The Distributor and the Manager may, in
their sole discretion, increase or decrease the amount of payments they make to plan recipients from their own
resources.

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 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 the plan must be approved by shareholders of the
class affected by the amendment. Because Class B shares automatically convert into Class A shares after six
years, the Fund must obtain the approval of both Class A and Class B shareholders for an amendment to the Class A
plan that would materially increase the amount to be paid under that 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 Fund's 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 in the exercise of their fiduciary duty.

Each plan states that while it is in effect, the selection or replacement 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 provision 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 plans, no payment will be made to any recipient in any quarter in which the aggregate net
asset value of all Fund shares 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 Fund's Independent Trustees. Initially,
the Board of Trustees has set the fees at the maximum rate allowed under the plans and has set no minimum asset
amount needed to qualify for payments.

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

For the fiscal year ended July 31, 2001, payments under the Plan for Class A shares totaled $844,784,
all of which was paid by the Distributor to recipients. That included $29,165 paid to an affiliate of the
Distributor. Any unreimbursed expenses the Distributor incurs with respect to Class A shares for any fiscal year
may not 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, other financial costs, or allocation of overhead.

|_| Class B and Class C Service and Distribution Plans. Under each plan, service fees and distribution
fees are computed on the average of the net asset value of shares in the respective class, determined as of the
close of each regular business day during the period. The Class B and Class C plans provide for the Distributor
to be compensated at a flat rate, whether the Distributor's distribution expenses are more or less than the
amounts paid by the Fund under the plans during that period. The Class B and Class C plans permit the Distributor
to retain both the asset-based sales charges and the service fee on shares or to pay recipients the service fee
on a quarterly basis, without payment in advance.

The Distributor presently intends to pay recipients the service fee on Class B and Class C shares in
advance for the first year the shares are outstanding. After the first year shares are outstanding, the
Distributor makes 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 an advance service fee payment. If Class B or
Class C shares are redeemed during the first year after their purchase, the recipient of the service fees on
those shares will be obligated to repay the Distributor a pro rata portion of the advance payment made on those
shares.

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

The asset-based sales charge on Class B and Class C shares allows investors to buy shares without a
front-end sales charge while allowing the Distributor to compensate dealers that sell those shares. The
Distributor's actual expenses in selling Class B and Class C shares may be more than the payments it receives
from contingent deferred sales charges collected on redeemed shares and from the Fund under the plans. The Fund
pays the asset-based sales charge to the Distributor for its services rendered in distributing Class B and Class
C shares. The payments are made to the Distributor in recognition that the Distributor:
|_| pays sales concessions to authorized brokers and dealers at the time of sale and pays service fees as
described in the Prospectus,
|_| 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,
|_| employs personnel to support distribution of shares, and
|_| 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.
|_| may not be able to adequately compensate dealers that sell Class B and Class C shares without receiving
payment under the plans and therefore may not be able to offer such Classes for sale absent the plans,
|_| receives payment under the plans consistent with the service fees and asset-based sales charges paid by
other non-proprietary funds that charge 12b-1 fees,
|_| may use the payments under the plan to include the Fund in various third-party distribution programs
that may increase sales of Fund shares,
|_| 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
|_| 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 and Class C 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 and Class C shares.

The Distributor's actual expenses in selling Class B and Class C shares may be more that 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 or Class C 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 Class B and Class C plans allow for the carry-forward of distribution expenses, to be
recovered from asset based sales charges in subsequent fiscal periods.

----------------------------------------------------------------------------------------------------------------------------------
Distribution Fees Paid to the Distributor in the Fiscal Year Ended 7/31/01
----------------------------------------------------------------------------------------------------------------------------------
------------------- ---------------------- ------------------------- ------------------------------- -----------------------------
Class Distributor's Unreimbursed
Distributor's Aggregate Expenses as % of Net Assets
Total Payments Under Amount Retained by Unreimbursed Expenses Under of Class
Plan Distributor Plan
------------------- ---------------------- ------------------------- ------------------------------- -----------------------------
------------------- ---------------------- ------------------------- ------------------------------- -----------------------------
Class B Plan $1,258,468 $981,848 $4,084,207 2.97%
------------------- ---------------------- ------------------------- ------------------------------- -----------------------------
------------------- ---------------------- ------------------------- ------------------------------- -----------------------------
Class C Plan $144,599 $29,723 $258,340 1.43%
------------------- ---------------------- ------------------------- ------------------------------- -----------------------------

All payments under the Class B and Class C plans are subject to the limitations imposed by the Conduct
Rules of the National Association of Securities Dealers, Inc. on payments of asset-based sales charges and
service fees to NASD members.

Performance of the Fund

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

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

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

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

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

|X| Yields. The Fund uses a variety of different yields to illustrate its current returns. Each class
of shares calculates its yield separately because of the different expenses that affect each class.

|X| Standardized Yield. The "standardized yield" (sometimes referred to just as "yield") is shown for a
class of shares for a stated 30-day period. It is not based on actual distributions paid by the Fund to
shareholders in the 30-day period, but is a hypothetical yield based upon the net investment income from the
Fund's portfolio investments for that period. It may therefore differ from the "dividend yield" for the same
class of shares, described below.
Standardized yield is calculated using the following formula set forth in rules adopted by the
Securities and Exchange Commission, designed to assure uniformity in the way that all funds calculate their
yields:

STANDARDIZED YIELD = 2 (A-B + 1)-1
---
CD

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

The standardized yield for a particular 30-day period may differ from the yield for other periods. The
SEC formula assumes that the standardized yield for a 30-day period occurs at a constant rate for a six-month
period and is annualized at the end of the six-month period. Additionally, because each class of shares is
subject to different expenses, it is likely that the standardized yields of the Fund's classes of shares will
differ for any 30-day period.

|X| Dividend Yield. The Fund may quote a "dividend yield" for each class of its shares. Dividend yield
is based on the dividends paid on a class of shares during the actual dividend period. To calculate dividend
yield, the dividends of a class declared during a stated period are added together, and the sum is multiplied by
12 (to annualize the yield) and divided by the maximum offering price on the last day of the dividend period.
The formula is shown below:

Dividend Yield = Distribution Paid / No. of Days in the Period x No. of Days in the Calendar Year
Maximum Offering Price (Payment date)

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

|X| Tax-Equivalent Yield. The "tax-equivalent yield" of a class of shares is the equivalent yield that
would have to be earned on a taxable investment to achieve the after-tax results represented by the Fund's
tax-equivalent yield. It adjusts the Fund's standardized yield, as calculated above, by a stated federal tax
rate. Using different tax rates to show different tax equivalent yields shows investors in different tax
brackets the tax equivalent yield of the Fund based on their own tax bracket.

The tax-equivalent yield is based on a 30-day period, and is computed by dividing the tax-exempt portion
of the Fund's current yield (as calculated above) by one minus a stated income tax rate. The result is added to
the portion (if any) of the Fund's current yield that is not tax-exempt.

The tax-equivalent yield may be used to compare the tax effects of income derived from the Fund with
income from taxable investments at the tax rates stated. Your tax bracket is determined by your federal and state
taxable income (the net amount subject to federal and state income tax after deductions and exemptions). The
tax-equivalent yield table assumes that the investor is taxed at the highest bracket, regardless of whether a
switch to non-taxable investments would cause a lower bracket to apply.

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

The Fund's Yields for the 30-Day Periods Ended 7/31/01
----------------------------------------------------------------------------------------------------------------------
------------------ --------------------------------- -------------------------------- --------------------------------
Standardized Yield Dividend Yield Tax-Equivalent Yield (45.22%
Combined Federal/California
Tax Bracket)

Without Sales After Sales Without Sales After Sales Without Sales After Sales
Charge (NAV) Charge (MOP) Charge (NAV) Charge (MOP) Charge (NAV) Charge (MOP)
------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
Class A 4.60% 4.38% 5.12% 4.87% 8.39% 7.99%
------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
Class B 3.84% N/A 4.37% N/A 7.01% N/A
------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
Class C 3.84% N/A 4.38% N/A 7.01% N/A
------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------

|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.

Standard Dividend
-------- --------

----------------------- ---------------------- -------------------- ------------------
4.60% 4.38% 5.12% 4.87%
----------------------- ---------------------- -------------------- ------------------
----------------------- ---------------------- -------------------- ------------------
3.84% N/A 4.37% N/A
----------------------- ---------------------- -------------------- ------------------
----------------------- ---------------------- -------------------- ------------------
3.84% N/A 4.38% N/A
----------------------- ---------------------- -------------------- ------------------

In calculating total returns for Class A shares, the current maximum sales charge of 4.75% (as a
percentage of the offering price) is deducted from the initial investment ("P") (unless the return is shown
without sales charge, as described below). For Class B shares, payment of the applicable contingent deferred
sales charge is applied, depending on the period for which the return is shown: 5.0% in the first year, 4.0% in
the second year, 3.0% in the third and fourth years, 2.0% in the fifth year, 1.0% in the sixth year and none
thereafter. For Class C shares, the 1% contingent deferred sales charge is deducted for returns for the 1-year
period.

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

ERV - 1 = AVERAGE ANNUAL TOTAL RETURN
----
P

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

ERV - P = TOTAL RETURN
----
P

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

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

The Fund's Total Returns for the Periods Ended 7/31/01
----------------------------------------------------------------------------------------------------------------------
-------------- ------------------------- -----------------------------------------------------------------------------
Cumulative Total Average Annual Total Returns
Returns (10 years or
life of class)

Class of
Shares
-------------- ------------------------- -----------------------------------------------------------------------------
-------------- ------------------------- ------------------------- ------------------------- -------------------------
5-Year 10-Year
1-Year (or life of class) (or life of class)
-------------- ------------------------- ------------------------- ------------------------- -------------------------
-------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
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 78.05% 86.93% 3.99% 9.17% 4.58% 5.60% 5.94% 6.46%
-------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
-------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Class B2 47.56% 47.56% 3.46% 8.46% 4.49% 4.83% 4.83% 4.83%
-------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
-------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Class C3 29.91% 29.91% 7.48% 8.48% 4.81% 4.81% 4.66% 4.66%
-------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
1. Inception of Class A: 11/03/88
2. Inception of Class B: 05/03/93
3. Inception of Class C: 11/01/95

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.

|_| Lipper Rankings. From time to time the Fund may publish the ranking of the performance of its
classes of shares by Lipper, Inc. ("Lipper"). Lipper is a widely recognized independent mutual fund monitoring
service. Lipper monitors the performance of regulated investment companies, including the Fund, and ranks their
performance for various periods in categories based on investment styles. The performance of the Fund is ranked
by Lipper against all other bond funds, other than money market funds, and all general municipal bond 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.

|_| Morningstar Ratings and Rankings. From time to time the Fund may publish the star ranking of the
performance of its classes of shares by Morningstar, Inc., an independent mutual fund monitoring service.
Morningstar ranks mutual funds in their specialized market sector. The Fund is ranked in the municipal bond
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 based on a Morningstar
Risk-Adjusted Return measure that accounts for variation in a fund's monthly performance (including the effects
of sales charges, loads, and redemptions fees), placing more emphasis on downward variations and rewarding
consistent performance. The top 10% of funds in each category 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. (Each share
class is counted as a fraction of one fund within this scale and rated separately, which may cause slight
variations in the distribution percentages). 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 ranking 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.

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

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

-------------------------------------------------------------------------------------------------------------------
ABOUT YOUR ACCOUNT
-------------------------------------------------------------------------------------------------------------------

How to Buy Shares

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

AccountLink. When shares are purchased through AccountLink, each purchase must be at least $25. Shares will be
purchased on the regular business day the Distributor is instructed to initiate the Automated Clearing House
("ACH") transfer to buy the shares. Dividends will begin to accrue on shares purchased with the proceeds of ACH
transfers on the business day the Fund receives Federal Funds for the purchase through the ACH system before the
close of The New York Stock Exchange. The Exchange normally closes at 4:00 P.M., but may close earlier on certain
days. If Federal Funds are received on a business day after the close of the Exchange, the shares will be
purchased and dividends will begin to accrue on the next regular business day. The proceeds of ACH transfers are
normally received by the Fund 3 days after the transfers are initiated. The Distributor and the Fund are not
responsible for any delays in purchasing shares resulting from delays in ACH transmissions.

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

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

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

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

Oppenheimer Bond Fund Oppenheimer Limited-Term Government Fund
Oppenheimer California Municipal Fund Oppenheimer Main Street Growth & Income Fund
Oppenheimer Capital Appreciation Fund Oppenheimer Main Street Opportunity Fund
Oppenheimer Capital Preservation Fund Oppenheimer Main Street Small Cap Fund
Oppenheimer Capital Income Fund Oppenheimer MidCap Fund
Oppenheimer Champion Income Fund Oppenheimer Multiple Strategies Fund
Oppenheimer Concentrated Growth Fund Oppenheimer Municipal Bond Fund
Oppenheimer Convertible Securities Fund Oppenheimer New York Municipal Fund
Oppenheimer Developing Markets Fund Oppenheimer New Jersey Municipal Fund
Oppenheimer Disciplined Allocation Fund Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Disciplined Value Fund Oppenheimer Quest Balanced Value Fund
Oppenheimer Discovery Fund Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Emerging Growth Fund Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Emerging Technologies Fund Oppenheimer Quest Opportunity Value Fund

Oppenheimer Enterprise Fund Oppenheimer Quest Value Fund, Inc.
Oppenheimer Europe Fund Oppenheimer Rochester National Municipals
Oppenheimer Global Fund Oppenheimer Real Asset Fund
Oppenheimer Global Growth & Income Fund Oppenheimer Senior Floating Rate Fund
Oppenheimer Gold & Special Minerals Fund Oppenheimer Strategic Income Fund
Oppenheimer Growth Fund Oppenheimer Small Cap Value Fund
Oppenheimer High Yield Fund Oppenheimer Special Value Fund
Oppenheimer Intermediate Municipal Fund Oppenheimer Total Return Fund, Inc.
Oppenheimer International Bond Fund Oppenheimer Trinity Core Fund
Oppenheimer International Growth Fund Oppenheimer Trinity Large Cap Growth Fund
Oppenheimer International Small Company Fund Oppenheimer Trinity Value Fund
Oppenheimer U.S. Government Trust
Oppenheimer Value Fund
Limited-Term New York Municipal Fund
Rochester Fund Municipals
OSM1 - Gartmore Millennium Growth Fund II
And the following money market funds: OSM1 - Jennison Growth Fund
OSM1 - Mercury Advisors S&P 500 Index
Centennial America Fund, L. P. OSM1 - Mercury Advisors Focus Growth Fund
Centennial California Tax Exempt Trust OSM1 - QM Active Balanced Fund
Centennial Government Trust OSM1 - Salomon Brothers Capital Fund
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Oppenheimer Cash Reserves
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 public 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 bounded 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.

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

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

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

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

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

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

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

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

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

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

Before you establish Asset Builder payments, you should obtain a prospectus of the selected fund(s) from
your financial advisor (or the Distributor) and request an application from the Distributor. Complete the
application and return it. You may change the amount of your Asset Builder payment or you can terminate these
automatic investments at any time by writing to the Transfer Agent. The Transfer Agent requires a reasonable
period (approximately 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.

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 or Class C shares and the dividends payable on Class B or Class C shares will be reduced by
incremental expenses borne solely by that class. Those expenses include the asset-based sales charges to which
Class B and Class C are subject.

The availability of three 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 in general are sold
subject to an initial sales charge. While Class B and Class C shares have no initial sales charge, the purpose
of the deferred sales charge and asset-based sales charge on Class B and Class C 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 for selling
Fund shares may receive different levels of compensation for selling to 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.

|_| 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 that 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 holder, and absent such exchange, Class B shares
might continue to be subject to the asset-based sales charge for longer than six years.

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

Dealers other than Exchange members may conduct trading in municipal 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. Because
the Fund's net asset values will not be calculated on those days, the Fund's net asset values per share may be
significantly affected on such days when shareholders may not purchase or redeem shares. 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 a
Portfolio's calculation of its net asset values that day unless the Manager determines that the events is likely
to effect a material change in the value of the security. If such determination made, the Manager, acting through
an internal valuation committee, will establish a valuation for such security. Some of the securities the
Portfolios buy may not have readily available market quotations. For these securities, the Board of Directors has
authorized the Manager's valuation committee to establish values for them. All valuation determinations by the
valuation committee are 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:

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

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

Puts, calls, interest rate futures and municipal bond index 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.

Checkwriting. When a check is presented to the Fund's bank for clearance, the bank will ask the Fund to redeem a
sufficient number of full and fractional shares in the shareholder's account to cover the amount of the check.
This enables the shareholder to continue to receive dividends on those shares until the check is presented to the
Fund. Checks may not be presented for payment at the offices of the bank listed on the check or at the Fund's
custodian bank. That limitation does not affect the use of checks for the payment of bills or to obtain cash at
other banks. The Fund reserves the right to amend, suspend or discontinue offering checkwriting privileges at
any time. The Fund will provide you notice whenever it is required to do so by applicable law.

In choosing to take advantage of the Checkwriting privilege by signing the Account Application or by
completing a Checkwriting card, each individual who signs:
(1) for individual accounts, represents that they are the registered owner(s) of the shares of the Fund in
that account;
(2) for accounts for corporations, partnerships, trusts and other entities, represents that they are an
officer, general partner, trustee or other fiduciary or agent, as applicable, duly authorized to
act on behalf of such registered owner(s);
(3) authorizes the Fund, its Transfer Agent and any bank through which the Fund's drafts (checks) are
payable to pay all checks drawn on the Fund account of such person(s) and to redeem a sufficient
amount of shares from that account to cover payment of each check;
(4) specifically acknowledges that if they choose to permit checks to be honored if there is a single
signature on checks drawn against joint accounts, or accounts for corporations, partnerships,
trusts or other entities, the signature of any one signatory on a check will be sufficient to
authorize payment of that check and redemption from the account, even if that account is registered
in the names of more than one person or more than one authorized signature appears on the
Checkwriting card or the Application, as applicable;
(5) understands that the Checkwriting privilege may be terminated or amended at any time by the Fund and/or
the Fund's bank; and
(6) acknowledges and agrees that neither the Fund nor its bank shall incur any liability for that amendment
or termination of checkwriting privileges or for redeeming shares to pay checks reasonably believed
by them to be genuine, or for returning or not paying checks that have not been accepted for any
reason.

Reinvestment Privilege. Within six months of a redemption, a shareholder may reinvest all or part of the
redemption proceeds of :

|_| Class A shares that you purchased subject to an initial sales charge or Class A shares on which a
contingent deferred sales charge was paid, or
|_| Class B shares that were subject to the Class B contingent deferred sales charge when redeemed.

The reinvestment may be made without sales charge only in Class A shares of the Fund or any of the other
Oppenheimer funds into which shares of the Fund are exchangeable as described in "How to Exchange Shares" below.
Reinvestment will be at the net asset value next computed after the Transfer Agent receives the reinvestment
order. The shareholder must ask the Transfer Agent for that privilege at the time of reinvestment. This
privilege does not apply to Class C 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 of Trustees 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 or Class C contingent
deferred sales charge will be followed in determining the order in which shares are transferred.

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 contingent deferred sales charge is waived as described in Appendix C to 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 Oppenheimer Main Street California Municipal Fund currently offers only Class A and Class B 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, 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 the time. Although the Fund may
impose these changes at any time, it will provide you with notice of those changes whenever it is required to do
so by applicable law. It may be required to provide 60 days notice prior to materially amending or terminating
the exchange privilege. That 60 day notice is not required in extraordinary circumstances.

|_| How Exchanges Affect Contingent Deferred Sales Charges. No contingent deferred sales charge is
imposed on exchanges of shares of any class purchased subject to a contingent deferred sales charge. However,
when Class A shares acquired by exchange of Class A shares of other Oppenheimer funds purchased subject to a
Class A contingent deferred sales charge are redeemed within 18 months of the end of the calendar month of the
initial purchase of the exchanged Class A shares, the Class A contingent deferred sales charge is imposed on the
redeemed shares. The Class B contingent deferred sales charge is imposed on Class B shares acquired by exchange
if they are redeemed within 6 years of the initial purchase of the exchanged Class B shares. The Class C
contingent deferred sales charge is imposed on Class C shares acquired by exchange if they are redeemed within 12
months of the initial purchase of the exchanged Class C shares.

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

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

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

|_| Processing Exchange Requests. Shares to be exchanged are redeemed on the regular business day the
Transfer Agent receives an exchange request in proper form (the "Redemption Date"). Normally, shares of the fund
to be acquired are purchased on the Redemption Date, but such purchases may be delayed by either fund up to five
business days if it determines that it would be disadvantaged by an immediate transfer of the redemption
proceeds. The Fund reserves the right, in its discretion, to refuse any exchange request that may disadvantage
it. For example, if the receipt of multiple exchange requests from a dealer might require the disposition of
portfolio securities at a time or at a price that might be disadvantageous to the Fund, the Fund may refuse the
request.

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

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

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

Dividends, distributions and the proceeds of the redemption of Fund shares represented by checks
returned to the Transfer Agent by the Postal Service as undeliverable will be invested in shares of Oppenheimer
Money Market Fund, Inc. 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.

The amount of a distribution paid on a class of shares may vary from time to time depending on market
conditions, the composition of the Fund's portfolio, and expenses borne by the Fund or borne separately by a
class. Dividends are calculated in the same manner, at the same time and on the same day for shares of each
class. However, dividends on Class B and Class C shares are expected to be lower than dividends on Class A
shares. That is due to the effect of the asset-based sales charge on Class B and Class C shares. Those dividends
will also differ in amount as a consequence of any difference in net asset value among Class A, Class B and Class
C shares.

Tax Status of the Fund's Dividends, Distributions and Redemptions of Shares. The federal tax treatment of the
Fund's dividends and capital gains distributions is briefly highlighted in the Prospectus. The following is only
a summary of certain additional tax considerations generally affecting the Fund and its shareholders.

The tax discussion in the Prospectus and this Statement of Additional Information is based on tax
law in effect on the date of the Prospectus and this Statement of Additional Information. Those laws and
regulations may be changed by legislative, judicial, or administrative action, sometimes with retroactive effect.
State and local tax treatment of ordinary income dividends and capital gain dividends from regulated investment
companies may differ from the treatment under the Internal Revenue Code described below. Potential purchasers of
shares of the Fund are urged to consult their tax advisers with specific reference to their own tax circumstances
as well as the consequences of federal, state and local tax rules affecting an investment in the Fund.

|X| Qualification as a Regulated Investment Company. The Fund has elected to be taxed as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as amended. As a regulated
investment company, the Fund is not subject to federal income tax on the portion of its investment company
taxable income (that is, taxable interest, dividends, other taxable ordinary income net of expenses, and net
short-term capital gain in excess of long-term capital loss) and capital gain net income (that is, the excess of
net long-term capital gains over net short-term capital losses) that it distributes to shareholders. 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 their Fund shares
are held in a retirement account or the shareholder is otherwise exempt from tax). The Internal Revenue Code
contains a number of complex tests relating to qualification that the Fund might not meet in a particular year.
If it did not qualify as a regulated investment company, the Fund would be treated for tax purposes as an
ordinary corporation and would receive no tax deduction for payments made to shareholders.

To qualify as a regulated investment company, the Fund must distribute at least 90% of its investment
company taxable income (in brief, net investment income and the excess of net short-term capital gain over net
long-term capital loss) for the taxable year. The Fund must also satisfy certain other requirements of the
Internal Revenue Code, some of which are described below. Distributions by the Fund made during the taxable year
or, under specified circumstances, within twelve months after the close of the taxable year, will be considered
distributions of income and gains for the taxable year and will therefore count toward satisfaction of the
above-mentioned requirement.

To qualify as a regulated investment company, the Fund must derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans, gains from the sale or other disposition
of stock or securities or foreign currencies (to the extent such currency gains are directly related to the
regulated investment company's principal business of investing in stock or securities) and certain other income.

In addition to satisfying the requirements described above, the Fund must satisfy an asset
diversification test in order to qualify as a regulated investment company. Under that test, at the close of
each quarter of the Fund's taxable year, at least 50% of the value of the Fund's assets must consist of cash and
cash items, U.S. government securities, securities of other regulated investment companies, and securities of
other issuers. As to each of those issuers, the Fund must not have invested more than 5% of the value of the
Fund's total assets in securities of each such issuer and the Fund must not hold more than 10% of the outstanding
voting securities of each such issuer. No more than 25% of the value of its total assets may be invested in the
securities of any one issuer (other than U.S. government securities and securities of other regulated investment
companies), or in two or more issuers which the Fund controls and which are engaged in the same or similar trades
or businesses. For purposes of this test, obligations issued or guaranteed by certain agencies or
instrumentalities of the U.S. government are treated as U.S. government securities.

|X| Excise Tax on Regulated Investment Companies. 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. To meet this requirement, in certain
circumstances the Fund might be required to liquidate portfolio investments to make sufficient distributions to
avoid excise tax liability. 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.

|X| Taxation of Fund Distributions. The Fund anticipates distributing substantially all of its
investment company taxable income for each taxable year. Those distributions will be taxable to shareholders as
ordinary income and treated as dividends for federal income tax purposes.

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. Since it is anticipated that most
of the Fund's income will be derived from interest it receives on its investments, the Fund does not anticipate
that its distributions will qualify for this deduction.

The Fund may either retain or distribute to shareholders its net capital gain for each taxable year.
The Fund currently intends to distribute any such amounts. If net long term capital gains are distributed and
designated as a capital gain distribution, it will be taxable to shareholders as long-term capital gain. It does
not matter how long the shareholder has held his or her shares or whether that gain was recognized by the Fund
before the shareholder acquired his or her shares.

If the Fund elects to retain its net capital gain, the Fund will be subject to tax on it at the 35%
corporate tax rate. If the Fund elects to retain its net capital gain, it is expected that the Fund also will
elect to have shareholders of record on the last day of its taxable year treated as if each received a
distribution of their pro rata share of such gain. As a result, each shareholder will be required to report his
or her pro rata share of such gain on their tax return as long-term capital gain, will receive a refundable tax
credit for his/her pro rata share of tax paid by the Fund on the gain, and will increase the tax basis for
his/her shares by an amount equal to the deemed distribution less the tax credit.

Investment income that may be received by the Fund from sources within foreign countries may be subject
to foreign taxes withheld at the source. The United States has entered into tax treaties with many foreign
countries which entitle the Fund to a reduced rate of, or exemption from, taxes on such income.

Distributions by the Fund that do not constitute ordinary income dividends or capital gain distributions
will be treated as a return of capital to the extent of the shareholder's tax basis in their shares. Any excess
will be treated as gain from the sale of those shares, as discussed below. Shareholders will be advised annually
as to the U.S. federal income tax consequences of distributions made (or deemed made) during the year. 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.

Distributions by the Fund will be treated in the manner described above regardless of whether the
distributions are paid in cash or reinvested in additional shares of the Fund (or of another fund). Shareholders
receiving a distribution in the form of additional shares will be treated as receiving a distribution in an
amount equal to the fair market value of the shares received, determined as of the reinvestment date.

The Fund will be required in certain cases to withhold and remit to the U.S. Treasury 31% of ordinary
income dividends and capital gains distributions and the proceeds of the redemption of shares, paid to any
shareholder (1) who has failed to provide a correct, certified taxpayer identification number, (2) who is subject
to backup withholding for failure to report the receipt of interest or dividend income properly, or (3) who has
failed to certify to the Fund that the shareholder is not subject to backup withholding or is an "exempt
recipient" (such as a corporation).

|X| Tax Effects of Redemptions of Shares. If a shareholder redeems all or a portion of his/her shares,
-
the shareholder will recognize a gain or loss on the redeemed shares in an amount equal to the difference between
the proceeds of the redeemed shares and the shareholder's adjusted tax basis in the shares. All or a portion of
any loss recognized in that manner may be disallowed if the shareholder purchases other shares of the Fund within
30 days before or after the redemption.

In general, any gain or loss arising from the redemption of shares of the Fund will be considered
capital gain or loss, if the shares were held as a capital asset. It will be long-term capital gain or loss if
the shares were held for more than one year. However, any capital loss arising from the redemption of shares
held for six months or less will be treated as a long-term capital loss to the extent of the amount of capital
gain dividends received on those shares. Special holding period rules under the Internal Revenue Code apply in
this case to determine the holding period of shares and there are limits on the deductibility of capital losses
in any year.

|X| Foreign Shareholders. Taxation of a shareholder who under United States law is a nonresident alien
individual, foreign trust or estate, foreign corporation, or foreign partnership depends on whether the
shareholder's income from the Fund is effectively connected with a U.S. trade or business carried on by such
shareholder.

If the income from the Fund is not effectively connected with a U.S. trade or business carried on by a
foreign shareholder, ordinary income dividends paid to such foreign shareholder will be subject to U.S.
withholding tax. The rate of the tax depends on a number of factors. If the income from the Fund is effectively
connected with a U.S. trade or business carried on by a foreign shareholder, then ordinary income dividends,
capital gain dividends, and any gains realized upon the sale of shares of the Fund will be subject to U.S.
federal income tax at the rates applicable to U.S. citizens or domestic corporations.

In the case of a foreign non-corporate shareholder, the Fund may be required to withhold U.S. federal
income tax at a rate of 31% on distributions that are otherwise exempt from withholding tax (or taxable at a
reduced treaty rate) unless the shareholder furnishes the Fund with proper notification of their foreign status.

The tax consequences to a foreign shareholder entitled to claim the benefits of an applicable tax treaty
may be different from those described herein. Foreign shareholder s are urged to consult their own tax advisers
with respect to the particular tax consequences to them of an investment in the Fund, including the applicability
of foreign taxes.

The tax consequences to a foreign shareholder entitled to claim the benefits of an applicable tax treaty
may be different from those described herein. Foreign shareholders are urged to consult their own tax advisers
with respect to the particular tax consequences to them of an investment in the Fund, including the applicability
of foreign taxes.

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 at net asset value without sales charge. 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 must first obtain a prospectus for that fund and an application from the Transfer Agent
to establish an account. The investment will be made at the net asset value per share in effect at the close of
business on the payable date of the dividend or distribution. Dividends and/or distributions from certain of the
other Oppenheimer funds 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 serves as the Transfer Agent for an annual per account fee. 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. Citibank, N.A. is the custodian bank of the Fund's assets. The custodian bank's responsibilities
include safeguarding and controlling the Fund's portfolio securities, and handling the delivery of such
securities to and from the Fund. It will be the practice of the Fund to deal with the custodian bank in a manner
uninfluenced by any banking relationship the custodian 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 may at times 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.

Appendix A

MUNICIPAL BOND RATINGS DEFINITIONS

Below are summaries of the rating definitions used by the nationally-recognized rating agencies listed below for
municipal securities. 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 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 the of
risk "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 - U.S. Tax-Exempt Municipals

There are three ratings for short-term obligations that are investment grade. Short-term speculative obligations
are designated "SG." For variable rate demand obligations, a two-component rating is assigned. The first (MIG)
element represents an evaluation by Moody's of the degree of risk associated with scheduled principal and
interest payments. The second element (VMIG) represents an evaluation of the degree of risk associated with the
demand feature.

MIG 1/VMIG 1: Denotes superior credit quality. Excellent protection is afforded by established cash flows, highly
reliable liquidity support or demonstrated broad-based access to the market for refinancing.

MIG 2/VMIG 2: Denotes strong credit quality. Margins of protection are ample although not as large as in the
preceding group.

MIG 3/VMIG 3: Denotes acceptable credit quality. Liquidity and cash-flow protection may be narrow, and market
access for refinancing is likely to be less well established.

SG: Denotes speculative-grade credit quality. Debt instruments in this category may lack margins of protection.

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 by a 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: 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.

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 "p" symbol indicates that the rating is provisional. The "r"
symbol is attached to the ratings of instruments with significant noncredit risks.

Short-Term Issue Credit Ratings

SP-1: Strong capacity to pay principal and interest. An issue with a very strong capacity to pay debt service is
given a (+) designation.
SP-2: Satisfactory capacity to pay principal and interest, with some vulnerability to adverse financial and
economic changes over the term of the notes.

SP-3: Speculative capacity to pay principal and interest.

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.

1 The address of each Trustee is 6803 S. Tucson Way, Englewood, CO 80112-3924.
2 Each Trustee serves for an indefinite term, until his or her resignation, death or removal.
3 The address of Mr. Murphy is 498 Seventh Avenue, New York, NY 10018.
4 Mr. Murphy serves for an indefinite term, until his or her resignation, death or removal.
5 The address of each Officer is 498 Seventh Avenue, New York, NY 10018 except for Mr. Wixted and Ms. Ives, whose
address is 6803 S. Tucson Way, Englewood, CO 80112-3924.
6 Each Officer serves for an annual term or until his or her resignation, death or removal.
*
7 Certain waivers also apply to Class M shares of Oppenheimer Convertible Securities Fund.
8 In the case of Oppenheimer Senior Floating Rate Fund, a continuously-offered closed-end fund, references to
contingent deferred sales charges mean the Fund's Early Withdrawal Charges and references to "redemptions" mean
"repurchases" of shares.
9 An "employee benefit plan" means any plan or arrangement, whether or not it is "qualified" under the Internal
Revenue Code, under which Class N shares of an Oppenheimer fund or funds are purchased by a fiduciary or other
administrator for the account of participants who are employees of a single employer or of affiliated employers.
These may include, for example, medical savings accounts, payroll deduction plans or similar plans. The fund
accounts must be registered in the name of the fiduciary or administrator purchasing the shares for the benefit
of participants in the plan.
10 The term "Group Retirement Plan" means any qualified or non-qualified retirement plan for employees of a
corporation or sole proprietorship, members and employees of a partnership or association or other organized
group of persons (the members of which may include other groups), if the group has made special arrangements with
the Distributor and all members of the group participating in (or who are eligible to participate in) the plan
purchase shares of an Oppenheimer fund or funds through a single investment dealer, broker or other financial
institution designated by the group. Such plans include 457 plans, SEP-IRAs, SARSEPs, SIMPLE plans and 403(b)
plans other than plans for public school employees. The term "Group Retirement Plan" also includes qualified
retirement plans and non-qualified deferred compensation plans and IRAs that purchase shares of an Oppenheimer
fund or funds through a single investment dealer, broker or other financial institution that has made special
arrangements with the Distributor.
11 However, that concession will not be paid on purchases of shares in amounts of $1 million or more (including
any right of accumulation) by a Retirement Plan that pays for the purchase with the redemption proceeds of Class
C shares of one or more Oppenheimer funds held by the Plan for more than one year.
12 This provision does not apply to IRAs.
13 This provision does not apply to 403(b)(7) custodial plans if the participant is less than age 55, nor to IRAs.
14 The distribution must be requested prior to Plan termination or the elimination of the Oppenheimer funds as an
investment option under the Plan.
15 This provision does not apply to IRAs.
16 This provision does not apply to loans from 403(b)(7) custodial plans.
17 This provision does not apply to 403(b)(7) custodial plans if the participant is less than age 55, nor to IRAs.

                                                    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 shares7 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.8
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 plans9
              4)  Group Retirement Plans10
              5)  403(b)(7) custodial plan accounts
              6)  Individual Retirement Accounts ("IRAs"), including traditional IRAs, Roth IRAs, SEP-IRAs,
                  SARSEPs or SIMPLE plans

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

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

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

         There is no initial sales charge on purchases of Class A shares of any of the Oppenheimer funds in the
cases listed below. However, these purchases may be subject to the Class A contingent deferred sales charge if
redeemed within 18 months (24 months in the case of Oppenheimer Rochester National Municipals and Rochester Fund
Municipals) of the beginning 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."11 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. That included plans
              (other than IRA or 403(b)(7) Custodial Plans) that: 1) bought shares costing $500,000 or more, 2)
              had at the time of purchase 100 or more eligible employees or total plan assets of $500,000 or
              more, or 3) certified to the Distributor that it projects to have annual plan purchases of $200,000
              or more.
|_|      Purchases by an OppenheimerFunds-sponsored Rollover IRA, if the purchases are made:
              1)  through a broker, dealer, bank or registered investment adviser that has made special
                  arrangements with the Distributor for those purchases, or
              2)  by a direct rollover of a distribution from a qualified Retirement Plan if the administrator of
                  that Plan has made special arrangements with the Distributor for those purchases.
|_|      Purchases of Class A shares by Retirement Plans that have any of the following record-keeping
              arrangements:
              1)  The record keeping is performed by Merrill Lynch Pierce Fenner & Smith, Inc. ("Merrill Lynch")
                  on a daily valuation basis for the Retirement Plan. On the date the plan sponsor signs the
                  record-keeping service agreement with Merrill Lynch, the Plan must have $3 million or more of
                  its assets invested in (a) mutual funds, other than those advised or managed by Merrill Lynch
                  Investment Management, L.P. ("MLIM"), that are made available under a Service Agreement between
                  Merrill Lynch and the mutual fund's principal underwriter or distributor, and  (b)  funds
                  advised or managed by MLIM (the funds described in (a) and (b) are referred to as "Applicable
                  Investments").
              2)  The record keeping for the Retirement Plan is performed on a daily valuation basis by a record
                  keeper whose services are provided under a contract or arrangement between the Retirement Plan
                  and Merrill Lynch. On the date the plan sponsor signs the record keeping service agreement with
                  Merrill Lynch, the Plan must have $3 million or more of its assets (excluding assets invested
                  in money market funds) invested in Applicable Investments.
              3)  The record keeping for a Retirement Plan is handled under a service agreement with Merrill
                  Lynch and on the date the plan sponsor signs that agreement, the Plan has 500 or more eligible
                  employees (as determined by the Merrill Lynch plan conversion manager).
|_|      Purchases  by a Retirement  Plan whose record  keeper had a  cost-allocation  agreement  with the Transfer
              Agent on or before March 1, 2001.
II.


                               Waivers of Class A Sales Charges of Oppenheimer Funds
-------------------------------------------------------------------------------------------------------------------

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

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

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

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

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

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

The Class A contingent deferred sales charge is also waived if shares that would otherwise be subject to the
contingent deferred sales charge are redeemed in the following cases:
|_|      To make Automatic Withdrawal Plan payments that are limited annually to no more than 12% of the account
              value adjusted annually.
|_|      Involuntary redemptions of shares by operation of law or involuntary redemptions of small accounts
              (please refer to "Shareholder Account Rules and Policies," in the applicable fund Prospectus).
|_|      For distributions from Retirement Plans, deferred compensation plans or other employee benefit plans for
              any of the following purposes:
              1)  Following the death or disability (as defined in the Internal Revenue Code) of the participant
                  or beneficiary. The death or disability must occur after the participant's account was
                  established.
              2)  To return excess contributions.
              3)  To return contributions made due to a mistake of fact.
              4)  Hardship withdrawals, as defined in the plan.12
              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.13
              10) Participant-directed redemptions to purchase shares of a mutual fund (other than a fund managed
                  by the Manager or a subsidiary of the Manager) if the plan has made special arrangements with
                  the Distributor.
              11) Plan termination or "in-service distributions," if the redemption proceeds are rolled over
                  directly to an OppenheimerFunds-sponsored IRA.
|_|      For distributions from 401(k) plans sponsored by broker-dealers that have entered into a special
              agreement with the Distributor allowing this waiver.
|_|      For distributions from retirement plans that have $10 million or more in plan assets and that have
              entered into a special agreement with the Distributor.
|_|      For distributions from retirement plans which are part of a retirement plan product or platform offered
              by certain banks, broker-dealers, financial advisors, insurance companies or record keepers which
              have entered into a special agreement with the Distributor.
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.
|_|      Distributions14 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.15
              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.16
              9)  On account of the participant's separation from service.17
              10) Participant-directed redemptions to purchase shares of a mutual fund (other than a fund managed
                  by the Manager or a subsidiary of the Manager) offered as an investment option in a Retirement
                  Plan if the plan has made special arrangements with the Distributor.
              11) Distributions made on account of a plan termination or "in-service" distributions, if the
                  redemption proceeds are rolled over directly to an OppenheimerFunds-sponsored IRA.
              12) For distributions from a participant's account under an Automatic Withdrawal Plan after the
                  participant reaches age 59 1/2, as long as the aggregate value of the distributions does not
                  exceed 10% of the account's value, adjusted annually.
              13) Redemptions of Class B shares under an Automatic Withdrawal Plan for an account other than a
                  Retirement Plan, if the aggregate value of the redeemed shares does not exceed 10% of the
                  account's value, adjusted annually.
              14) For distributions from 401(k) plans sponsored by broker-dealers that have entered into a
                  special arrangement with the Distributor allowing this waiver.
|_|      Redemptions of Class B shares or Class C shares under an Automatic Withdrawal Plan from an account other
              than a Retirement Plan if the aggregate value of the redeemed shares does not exceed 10% of the
              account's value annually.

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

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

IV.


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

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

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

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

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

A.   Reductions or Waivers of Class A Sales Charges.

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

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

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

|X|      Waiver of Class A Sales Charges for Certain Shareholders.  Class A shares purchased by the following
investors are not subject to any Class A initial or contingent deferred sales charges:
o        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.
o        Shareholders who acquired shares of any Former Quest for Value Fund by merger of any of the portfolios
                  of the Unified Funds.

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

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

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

|X|      Waivers for Redemptions of Shares Purchased Prior to March 6, 1995.  In the following cases, the
contingent deferred sales charge will be waived for redemptions of Class A, Class B or Class C shares of an
Oppenheimer fund. The shares must have been acquired by the merger of a Former Quest for Value Fund into the fund
or by exchange from an Oppenheimer fund that was a Former Quest for Value Fund or into which such fund merged.
Those shares must have been purchased prior to March 6, 1995 in connection with:
o        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
o        liquidation of a shareholder's account if the aggregate net asset value of shares held in the account is
                  less than the required minimum value of such accounts.

|X|      Waivers for Redemptions of Shares Purchased on or After March 6, 1995 but Prior to November 24, 1995.
In the following cases, the contingent deferred sales charge will be waived for redemptions of Class A, Class B
or Class C shares of an Oppenheimer fund. The shares must have been acquired by the merger of a Former Quest for
Value Fund into the fund or by exchange from an Oppenheimer fund that was a Former Quest For Value Fund or into
which such Former Quest for Value Fund merged. Those shares must have been purchased on or after March 6, 1995,
but prior to November 24, 1995:
o        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);
o        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
o        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.

|X|      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.

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

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

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

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

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

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

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

|_|      dealers, brokers or registered investment advisors that had entered into an agreement with the
              Distributor or prior distributor of the Fund's shares to sell shares to defined contribution
              employee retirement plans for which the dealer, broker, or investment advisor provides
              administrative services.

|-|


-------------------------------------------------------------------------------------------------------------------
Oppenheimer California Municipal Fund
-------------------------------------------------------------------------------------------------------------------

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

Investment Adviser
       OppenheimerFunds, Inc.
       498 Seventh Avenue
       New York, NY 10018

Distributor
       OppenheimerFunds Distributor, Inc.
       498 Seventh Avenue
       New York, NY 10018

Transfer Agent
       OppenheimerFunds Services
       P.O. Box 5270
       Denver, Colorado 80217
       1-800-525-7048

Custodian Bank
       Citibank, N.A.
       399 Park Avenue
       New York, New York 10043

Independent Auditors
       KPMG LLP
       707 Seventeenth Street
       Denver, Colorado 80202

Legal Counsel
       Mayer, Brown, Rowe & Maw
       1675 Broadway
       New York, New York 10019

1234

INFORMATION AND SERVICES

For More Information About Oppenheimer California Municipal Fund
The following additional information about the Fund is available without charge upon request:

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

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

How to Get More Information
You can request the Statement of Additional Information, the Annual and Semi-Annual Reports, and other
information about the Fund or your account:

------------------------------------------------ ------------------------------------------------------------------
By Telephone:                                    Call OppenheimerFunds Services toll-free:
                                                 1.800.525.7048
------------------------------------------------ ------------------------------------------------------------------
------------------------------------------------ ------------------------------------------------------------------
By Mail:                                         Write to:
                                                 OppenheimerFunds Services
                                                 P.O. Box 5270
                                                 Denver, Colorado 80217-5270
------------------------------------------------ ------------------------------------------------------------------
------------------------------------------------ ------------------------------------------------------------------
On the Internet:                                 You can send us a request by e-mail, read or down-load
                                                 documents on the OppenheimerFunds web site:
                                                 WWW.OPPENHEIMERFUNDS.COM
                                                 ------------------------
------------------------------------------------ ------------------------------------------------------------------

Information about the Fund including the Statement of Additional Information can be reviewed and copied at
the SEC's Public Reference Room in Washington, D.C. Information on the operation of the Public Reference
Room may be obtained by calling the SEC at 1.202.942.8090. Reports and other information about the Fund are
available on the EDGAR database on the SEC's Internet website at HTTP://WWW.SEC.GOV. Copies may be obtained
                                                                 ------------------
after payment of a duplicating fee by electronic request at the SEC's e-mail address: PUBLICINFO@SEC.GOV. or
                                                                                      ------------------
by writing to the SEC's  Public Reference Section, Washington, D.C. 20549-0102.

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

                                                              The Fund's shares are distributed by:
                                                              (logo) OppenheimerFunds, Distributor, Inc.
The Fund's SEC File No. 811-5586

PR0790.0902  Printed on recycled paper.[OBJECT OMITTED]
[OBJECT OMITTED]

OPPENHEIMER CALIFORNIA MUNICIPAL FUND

FORM N-1A

PART C

OTHER INFORMATION

Item 23. Exhibits

(a) Amended and Restated Declaration of Trust dated June 7, 2002: Filed herewith.

(b) (i) Amended and Restated By-Laws dated as of December 14, 2000: Previously filed with Registrant's
Post-Effective Amendment No. 21 (11/28/01) and incorporated herein by reference.

(c) (i) Specimen Class A Share Certificate: Previously filed with Registrant's Post-Effective Amendment No.
21 (11/28/01) and incorporated herein by reference.

(ii) Specimen Class B Share Certificate: Previously filed with Registrant's Post-Effective Amendment No.
21 (11/28/01) and incorporated herein by reference.

(iii) Specimen Class C Share Certificate: Previously filed with Registrant's Post-Effective Amendment No. 21
(11/28/01) and incorporated herein by reference.

(d) Investment Advisory Agreement dated October 22, 1990: Previously filed with Registrant's Post-Effective
Amendment No. 3 (2/2/91), refiled with Registrant's Post-Effective Amendment No. 10 (4/25/95) pursuant to Item
102 of Regulation S-T and incorporated herein by reference.

(i) General Distributor's Agreement dated December 10, 1992: Previously filed with Registrant's
Post-Effective Amendment No. 6 (4/28/93), refiled with Registrant's Post-Effective Amendment No. 10 (4/25/95)
pursuant to Item 102 of Regulation S-T and incorporated herein by reference.

(ii) Form of Dealer Agreement of OppenheimerFunds Distributor, Inc.: Previously filed with Pre-Effective
Amendment No. 45 to the Registration Statement of Oppenheimer High Yield Fund (Reg. No. 2-62076), 10/26/01, and
incorporated herein by reference.

(iii) Form of Broker Agreement of OppenheimerFunds Distributor, Inc.: Previously filed with Post-Effective
Amendment No. 45 to the Registration Statement of Oppenheimer High Yield Fund (Reg. No. 2-62076), 10/26/01, and
incorporated herein by reference.
(iv) Form of Agency Agreement of OppenheimerFunds Distributor, Inc.: Previously filed with Post-Effective
Amendment No. 45 to the Registration Statement of Oppenheimer High Yield Fund (Reg. No. 2-62076), 10/26/01, and
incorporated herein by reference.

Form of Trust Company Fund/SERV Purchase Agreement of OppenheimerFunds Distributor, Inc.: Previously filed with
Post-Effective Amendment No. 45 to the Registration Statement of Oppenheimer High Yield Fund (Reg. No. 2-62076),
10/26/01, and incorporated herein by reference.

Form of Trust Company Agency Agreement of OppenheimerFunds Distributor, Inc.: Previously filed with
Post-Effective Amendment No. 45 to the Registration Statement of Oppenheimer High Yield Fund (Reg. No. 2-62076),
10/26/01, and incorporated herein by reference.

(f) (i) Amended and Reinstated Retirement Plan for Non-Interested Trustees or Directors dated August 9,
2001: Previously filed with Post-Effective Amendment No. 34 to the Registration Statement of Oppenheimer Gold &
Special Minerals Fund (Reg. No. 2-82590), 10/25/01, and incorporated herein by reference.

(ii) Form of Deferred Compensation Plan for Disinterested Trustees/Directors: Filed with Post-Effective
Amendment No. 26 to the Registration Statement of Oppenheimer Gold & Special Minerals Fund (Reg. No. 2-82590),
10/28/98, and incorporated by reference.

(g) Global Custodial Services Agreement dated May 3, 2001 between Registrant and Citibank, N.A.: Previously
filed with Registrant's Post-Effective Amendment No. 33 to the Registration Statement of Centennial Money Market
Trust (Reg. No. 2-65245), 10/25/01, and incorporated herein by reference.

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

(h) Not applicable.

(i) Opinion and Consent of Counsel dated October 6, 1988: Previously filed with Registrant's Post-Effective
Amendment No. 1 to Registrant's Registration Statement (10/7/88), refiled with Registrant's Post-Effective
Amendment No. 10, (4/25/95) pursuant to Item 102 of Regulation S-T and incorporated herein by reference.

(j) Independent Auditors Consent: to be filed be amendment.
Not applicable.

(l) Investment Letter from OppenheimerFunds, Inc. to Registrant dated September 7, 1988: Previously filed
with Registrant's Post-Effective Amendment No. 17 (11/28/98), and incorporated herein by reference.

(m) (i) Service Plan and Agreement for Class A shares dated June 10, 1993: Previously filed with
Registrant's Post-Effective Amendment No. 8 (4/29/94), and incorporated herein by reference.

(ii) Distribution and Service Plan and Agreement for Class B shares dated February 12, 1998: Previously
filed with Registrant's Post-Effective Amendment No. 17, (11/24/98).

(iii) Distribution and Service Plan and Agreement for Class C shares dated February 12, 1998: Previously
filed with Registrant's Post-Effective Amendment No. 17 (11/28/98), and incorporated herein by reference.

(n) Oppenheimer Funds Multiple Class Plan under Rule 18f-3 March 18, 1996 and updated through 8/21/01:
Previously filed with Post-Effective Amendment No. 20 to the Registration Statement of Oppenheimer Cash Reserves
(Reg. No. 33-23223), 9/27/01, and incorporated herein by reference.

(o) Powers of Attorney for all Trustees/Directors and Officers except John V. Murphy (including certified
Board Resolutions): Previously filed with Pre-Effective Amendment No. 1 to the Registration Statement of
Oppenheimer Emerging Growth Fund (Reg. No. 333-44176), 10/5/00, and incorporated herein by reference.

(i) Power of Attorney for John V. Murphy (including certified Board Resolution): Previously filed with
Post-Effective Amendment No. 45 to the Registration Statement of Oppenheimer U.S. Government Trust Fund (Reg. No.
2-76645), 10/22/01, and incorporated herein by reference.

(p) Amended and Restated Code of Ethics of the Oppenheimer Funds dated March 1, 2000 under Rule 17j-1 of the
Investment Company Act of 1940: Filed with the Initial Registration Statement of Oppenheimer Emerging Growth Fund
(Reg. No. 333-44176), 8/21/00, and incorporated herein by reference.

Item 24. Persons Controlled by or Under Common Control with the Fund
---------------------------------------------------------------------

None.

Item 25. Indemnification
-------------------------

Reference is made to the provisions of Article Seven of Registrant's Amended and Restated Declaration of Trust
filed as Exhibit 23(a) to this Registration Statement, and incorporated herein by reference.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to trustees,
officers and controlling persons of Registrant pursuant to the foregoing provisions or otherwise, Registrant has
been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by Registrant of expenses incurred or paid
by a trustee, officer or controlling person of Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person, Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as expressed in the Securities Act of
1933 and will be governed by the final adjudication of such issue.

Item 26. Business and Other Connections of the Investment Adviser

(a) OppenheimerFunds, Inc. is the investment adviser of the Registrant; it and certain subsidiaries and
affiliates act in the same capacity to other investment companies, including without limitation those described
in Parts A and B hereof and listed in Item 26(b) below.

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

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

Timothy L. Abbuhl,
Assistant Vice President None.

Amy B. Adamshick,
Vice President Formerly at Scudder Kemper Investments (July 1998 - May 2000)

Charles E. Albers,
Senior Vice President None.

Edward J. Amberger,
Assistant Vice President None.

Janette Aprilante,

Vice President and Secretary As of January 2002: Secretary of OppenheimerFunds, Distributor, Inc.,
Centennial Asset Management Corporation, Oppenheimer Partnership Holdings, Inc., Oppenheimer Real Asset
Management, Inc., Shareholder Financial Services, Inc., Shareholder Services, Inc.; Assistant Secretary of
HarbourView Asset Management Corporation, OFI Private Investments, Inc., Oppenheimer Trust Company and OAM
Institutional, Inc.

Hany S. Ayad,
Assistant Vice President None.

Victor W. Babin,
Senior Vice President None.

Bruce L. Bartlett,
Senior Vice President None.

John Michael Banta,
Assistant Vice President None.

Lerae A. Barela,

Assistant Vice President None.

George Batejan,
Executive Vice President/
Chief Information Officer None.

Kevin Baum,
Vice President None.

Connie Bechtolt,
Assistant Vice President None.

Robert Behal
Assistant Vice President Formerly, Associate Director at MetLife (Jan 2000-May 2000).

Kathleen Beichert,

Vice President Vice President of OppenheimerFunds Distributor, Inc.

Erik S. Berg,
Assistant Vice President None.

Rajeev Bhaman,
Vice President None.

Mark Binning,
Assistant Vice President None.

Robert J. Bishop,

Vice President An officer of other Oppenheimer funds.

John R. Blomfield,
Vice President None.

Chad Boll,
Assistant Vice President None

Lowell Scott Brooks,

Vice President Vice President of OppenheimerFunds Distributor, Inc.

Richard Buckmaster,
Vice President None.

Bruce Burroughs

Vice President None.

Claudia Calich,
Assistant Vice President None.

Adele A. Campbell,
Assistant Vice President & Assistant
Treasurer: Rochester Division None.

Michael A. Carbuto,
Vice President None

Ronald G. Chibnik,
Assistant Vice President Director of technology for Sapient Corporation (July, 2000-August 2001); software
architect for Sapient Corporation (March 1997-July 2000).

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

Peter V. Cocuzza,
Vice President None.
Julie C. Cusker,
Assistant Vice President:
Rochester Division None.

John Damian,
Vice President Formerly senior analyst/director for Citigroup Asset Management (November 1999-September 2001).

O. Leonard Darling,
Vice Chairman, Executive Vice
President, Chief Investment

Officer and Director Chairman of the Board and a director (since June 1999) and Senior Managing Director
(since December 1998) of HarbourView Asset Management Corporation; a director (since July 2001) of Oppenheimer
Acquisition Corp.; a director (since March 2000) of OFI Private Investments, Inc.; Chairman of the Board, Senior
Managing Director and director (since February 2001) of OAM Institutional, Inc.; Trustee (since 1993) of Awhtolia
College - Greece.

John M. Davis,

Assistant Vice President Assistant Vice President of OppenheimerFunds Distributor, Inc.

Robert A. Densen,
Senior Vice President None.

Ruggero de'Rossi,

Vice President Formerly Chief Strategist at ING Barings (July
1998 - March 2000).

Craig P. Dinsell,
Executive Vice President None.

Randall C. Dishmon,

Assistant Vice President Associate with Booz Allen & Hamilton (1998-June 2001).

Rebecca K. Dolan
Vice President None.

Steven D. Dombrower,

Vice President Vice President of OppenheimerFunds, Inc.

Bruce C. Dunbar,
Vice President None.

Richard Edmiston,
Assistant Vice President None.

Daniel R. Engstrom,
Assistant Vice President None.

Armand B. Erpf,
Assistant Vice President None.

George R. Evans,
Vice President None.

Edward N. Everett,
Vice President None.

George Fahey,

Vice President Vice President of OppenheimerFunds Distributor, Inc.

Scott T. Farrar,
Vice President Assistant Treasurer of Oppenheimer Millennium Funds plc; an officer of other Oppenheimer funds.

Katherine P. Feld,

Vice President, Senior Counsel Vice President OppenheimerFunds, Distributor, Inc.; Vice President, Assistant
Secretary and Director of Centennial Asset Management Corporation; Vice President of Oppenheimer Real Asset
Management, Inc.

Ronald H. Fielding,
Senior Vice President;

Chairman: Rochester Division Vice President of OppenheimerFunds Distributor, Inc.; Director of ICI Mutual
Insurance Company; Governor of St. John's College; Chairman of the Board of Directors of International Museum of
Photography at George Eastman House.
Paul Fitzsimmons,
Assistant Vice President None.

P. Lyman Foster,

Senior Vice President Senior Vice President of OppenheimerFunds Distributor, Inc. Formerly Vice President of
Prudential Investments (August 1999-April 2000).

David Foxhoven,

Assistant Vice President Assistant Vice President of OppenheimerFunds Legacy Program.

Colleen M. Franca,
Assistant Vice President None.

Crystal French,
Vice President None.

Dan P. Gangemi,
Vice President None.

Dan Gagliardo,
Assistant Vice President Formerly Assistant Vice President at Mitchell Hutchins (January 2000-October 2000).

Subrata Ghose,

Assistant Vice President Formerly equity analyst at Fidelity Investments (1995 - March 2000).

Charles W. Gilbert,
Assistant Vice President None.

Alan C. Gilston,
Vice President None.

Jill E. Glazerman,
Vice President None.

Paul M. Goldenberg,
Vice President None.

Mike Goldverg,
Assistant Vice President None.

Laura Granger,

Vice President Formerly a portfolio manager at Fortis Advisors (July 1998-October 2000).

Jeremy H. Griffiths,
Executive Vice President,
Chief Financial Officer and
Director Chief Financial Officer, Treasurer and director of Oppenheimer Acquisition Corp.; Executive Vice
President of HarbourView Asset Management Corporation; President and director of OppenheimerFunds International
Ltd.; President. Chief Executive Officer, Chairman of the Board and director of Oppenheimer Trust Company;
director of Trinity Investment Management Corp., Secretary/Treasurer of OppenheimerFunds Legacy Program (a
Colorado non-profit corporation); Executive Vice President of OFI Private Investments, Inc.; Executive Vice
President of OAM Institutional, Inc. and a Member and Fellow of the Institute of Chartered Accountants.

Robert Grill,
Senior Vice President None.

Robert Guy,
Senior Vice President None.

David Hager,
Vice President None.

Robert Haley,
Assistant Vice President None.

Marilyn Hall,
Vice President None.

Kelly Haney,
Assistant Vice President None.

Thomas B. Hayes,
Vice President None.

Dorothy F. Hirshman,
Vice President None.

Merryl I. Hoffman,

Vice President and Senior Counsel As of December 2001: Secretary of HarbourView Asset Management Corporation,
OFI Private Investments, Inc. and OAM Institutional, Inc.; Assistant Secretary of OppenheimerFunds Legacy Program.

Merrell I. Hora,
Vice President None.
Scott T. Huebl,

Vice President Assistant Vice President of OppenheimerFunds Legacy Program.

Margaret Hui,
Assistant Vice President None.

James G. Hyland,
Assistant Vice President None.

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

Kathleen T. Ives,

Vice President and Assistant Counsel Vice President of OppenheimerFunds Distributor, Inc.; Assistant
Secretary of Shareholder Financial Services, Inc. and OppenheimerFunds Legacy Program; Vice President and
Assistant Secretary of Shareholder Services, Inc.; an officer of other Oppenheimer funds.

William Jaume,

Vice President Senior Vice President and Chief Compliance Officer (since April 2000) of HarbourView Asset
Management Corporation; and of OAM Institutional, Inc. (since February 2001).

Frank V. Jennings,
Vice President None.

John Jennings,
Vice President None.

Lewis A. Kamman,
Vice President None.

Jennifer E. Kane,
Assistant Vice President None.

Lynn O. Keeshan,
Senior Vice President None.

Thomas W. Keffer,
Senior Vice President None.

Cristina J. Keller,
Vice President Vice President of OppenheimerFunds Distributor, Inc.

Michael Keogh,
Vice President None.

Michael P. Kirkpatrick,
Assistant Vice President None.

Garrett K. Kolb,
Assistant Vice President None.

Teresa Kong,
Assistant Vice President None.

Walter G. Konops,
Assistant Vice President None.

Avram D. Kornberg,
Senior Vice President None.

James Kourkoulakos,
Vice President. None.

Joseph Krist,
Assistant Vice President None.

Guy E. Leaf,
Vice President Vice President of Merrill Lynch (January 2000-September 2001.
Christopher M. Leavy,
Senior Vice President Formerly Vice President and portfolio manager at Morgan Stanley Investment Management
(1997-September 2000).

Dina C. Lee,
Assistant Vice President and

Assistant Counsel Formerly an attorney with Van Eck Global (until December 2000).

Laura Leitzinger,
Vice President Vice President of Shareholder Financial Services, Inc.

Michael S. Levine,

Vice President None.

Gang Li,
Assistant Vice President None.

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

Bill Linden,
Assistant Vice President None.

Malissa B. Lischin,

Assistant Vice President Assistant Vice President of OppenheimerFunds Distributor, Inc Formerly an associate
manager with Investment Management Analyst at Prudential (1996 - March 2000).

Reed Litcher,
Vice President None.

David P. Lolli,

Assistant Vice President None.

Daniel G. Loughran

Vice President: Rochester Division None.
Patricia Lovett,
Vice President Vice President of Shareholder Financial Services, Inc. and Senior Vice President of Shareholder
Services, Inc.

David M. Mabry,

Vice President Vice President of Oppenheimer Trust Company.

Steve Macchia,
Vice President None.

Marianne Manzolillo,
Assistant Vice President Formerly Vice President for DLJ High Yield Research Department (February 1993 - July
2000).

Philip T. Masterson,
Vice President and

Assistant Counsel None.

Lisa Migan,
Assistant Vice President None.

Andrew J. Mika,
Senior Vice President None.

Joy Milan,
Vice President None.

Denis R. Molleur,
Vice President and

Senior Counsel An officer of other Oppenheimer funds.

Nikolaos D. Monoyios,
Vice President None.

John Murphy,

Chairman, President, Chief Executive
Officer and Director Director of OppenheimerFunds Distributor, Inc., President of Centennial Asset
Management Corporation, HarbourView Asset Management Corporation, Trinity Investments Management Corporation, OFI
Private Investments, Inc., OAM Institutional, Inc. and Tremont Advisers, Inc.; President and Director of
Oppenheimer Acquisition Corp., Oppenheimer Partnership Holdings, Inc., Oppenheimer Real Asset Management, Inc.;
Chairman and Director of Shareholder Financial Services, Inc. and Shareholder Services, Inc.; President and a
trustee of other Oppenheimer funds; Executive Vice President of MassMutual Life Insurance Company; director of
DLB Acquisition Corp.

Thomas J. Murray,
Vice President None.

Kenneth Nadler,
Vice President None.

David Negri,
Senior Vice President Senior Vice President of HarbourView Asset Management Corporation.

Richard Nichols,
Vice President None.

Barbara Niederbrach,
Assistant Vice President None.

Robert A. Nowaczyk,
Vice President None.

Raymond C. Olson,
Assistant Vice President Assistant Vice President and Treasurer of OppenheimerFunds Distributor, Inc.;
Treasurer of Centennial Asset Management Corporation.

Mark Paris,
Assistant Vice President None.

Frank J. Pavlak,
Vice President None.

David P. Pellegrino,
Vice President None.

Allison C. Pells,
Assistant Vice President None.
James F. Phillips,
Vice President None.

Raghaw Prasad,
Assistant Vice President

Jane C. Putnam,
Vice President None.

Michael E. Quinn,
Vice President None.

Julie S. Radtke,
Vice President None.

Norma J. Rapini,
Assistant Vice President:
Rochester Division None.

Thomas P. Reedy,
Vice President Vice President (since April 1999) of HarbourView Asset Management Corporation.

Kristina Richardson,
Assistant Vice President None.

David Robertson,
Senior Vice President Senior Vice President of OppenheimerFunds Distributor, Inc. Formerly Director of Sales
& Marketing at Schroder Investment Management North America (March 1998-March 2000).

Rob Robis,
Assistant Vice President None.

Antoinette Rodriguez,
Assistant Vice President None.

Jeffrey S. Rosen,
Vice President None.

Richard H. Rubinstein,
Senior Vice President None.

James H. Ruff,
Executive Vice President President and director of OppenheimerFunds Distributor, Inc. and Centennial Asset
Management Corporation; Executive Vice President of OFI Private Investments, Inc.

Andrew Ruotolo
Executive Vice President President and director of Shareholder Services, Inc. and Shareholder Financial
Services, Inc.

Rohit Sah,
Assistant Vice President None.

Valerie Sanders,
Vice President None.

Jeffrey R. Schneider,
Vice President None.

Ellen P. Schoenfeld,
Vice President None.

Scott A. Schwegel,
Assistant Vice President None.

Allan P. Sedmak
Assistant Vice President None.

Jennifer L. Sexton,
Vice President Vice President of OFI Private Investments, Inc.

Martha A. Shapiro,
Vice President None.

Steven J. Sheerin,
Vice President Formerly consultant with Pricewaterhouse Coopers (November 2000-May 2001) prior to which he was
a Vice President of Merrill Lynch Pierce Fenner & Smith, Inc. (July 1998-October 2000).

Bonnie Sherman,
Assistant Vice President None.

David C. Sitgreaves,
Assistant Vice President None.

Enrique H. Smith,
Assistant Vice President Formerly a business analyst with Goldman Sachs (August 1999-August 2001).

Richard A. Soper,
Vice President None.

Louis Sortino,
Assistant Vice President:
Rochester Division None.

Keith J. Spencer,
Vice President None.

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

Richard A. Stein,
Vice President: Rochester Division None.

Arthur P. Steinmetz,
Senior Vice President Senior Vice President of HarbourView Asset Management Corporation.

Jayne M. Stevlingson,
Vice President None.

Gregory J. Stitt,
Vice President None.
John P. Stoma,
Senior Vice President Senior Vice President of OppenheimerFunds Distributor, Inc.

Wayne Strauss,
Assistant Vice President:
Rochester Division None.

Michael Stricker,
Vice President

Deborah A. Sullivan,
Assistant Vice President,
Assistant Counsel Since December 2001, Secretary of Oppenheimer Trust Company. Formerly, Associate General
Counsel, Chief Compliance Officer, Corporate Secretary and Vice President of Winmill & Co. Inc. (formerly Bull &
Bear Group, Inc.), CEF Advisers, Inc. (formerly Bull & Bear Advisers, Inc.), Investor Service Center, Inc. and
Midas Management Corporation (November 1997 - March 2000).

Mary Sullivan,
Assistant Vice President None.

Kevin L. Surrett,
Assistant Vice President None.

Susan B. Switzer,
Vice President None.

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

Paul Temple,
Vice President

Eamon Tubridy,
Assistant Vice President None.

James F. Turner,
Vice President Formerly portfolio manager for Technology Crossover Ventures (May 2000-March 2001); Assistant
Vice President and Associate Portfolio Manager (August 1999-May 2000) for OppenheimerFunds, Inc.

Cameron Ullyat,
Assistant Vice President None.

Mark S. Vandehey,
Vice President Vice President of OppenheimerFunds Distributor, Inc., Centennial Asset Management Corporation
and Shareholder Services, Inc.

Maureen Van Norstrand,
Assistant Vice President None.

Phillip F. Vottiero,
Vice President None.

Samuel Sloan Walker,
Vice President Vice President of HarbourView Asset Management Corporation.

Teresa M. Ward,
Vice President Vice President of OppenheimerFunds Distributor, Inc.

Darrin L. Watts,
Assistant Vice President None.

Jerry A. Webman,
Senior Vice President Senior Vice President of HarbourView Asset Management Corporation.

Christopher D. Weiler,
Assistant Vice President:
Rochester Division None.

Barry D. Weiss,
Vice President None.

Christine Wells,
Vice President None.

Joseph J. Welsh,
Vice President None.

Catherine M. White,
Assistant Vice President Assistant Vice President of OppenheimerFunds Distributor, Inc. Formerly, Assistant
Vice President with Gruntal & Co. LLC (September 1998 - October 2000); member of the American Society of Pension
Actuaries (ASPA) since 1995.

William L. Wilby,
Senior Vice President Senior Vice President (since May 1999) of HarbourView Asset Management Corporation.

Donna M. Winn,
Senior Vice President President, Chief Executive Officer and Director of OFI Private Investments, Inc.;
Director and President of OppenheimerFunds Legacy Program; Senior Vice President of OppenheimerFunds Distributor,
Inc.

Kenneth Winston,
Senior Vice President Principal at Richards & Tierney, Inc. (until June 2001).

Brian W. Wixted,
Senior Vice President and
Treasurer Treasurer of HarbourView Asset Management Corporation; OppenheimerFunds International Ltd.,
Oppenheimer Partnership Holdings, Inc., Oppenheimer Real Asset Management Corporation, Shareholder Services,
Inc., Shareholder Financial Services, Inc., OFI Private Investments, Inc. and OAM Institutional, Inc.; Treasurer
and Chief Financial Officer of Oppenheimer Trust Company; Assistant Treasurer of Oppenheimer Acquisition Corp.
and OppenheimerFunds Legacy Program; an officer of other Oppenheimer funds.

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

Kurt Wolfgruber,
Senior Vice President Director of Tremont Advisers, Inc. (as of January 2002).

Caleb C. Wong,
Vice President None.

Edward C. Yoensky,
Assistant Vice President None.

Robert G. Zack
Senior Vice President and
General Counsel General Counsel and Director of OppenheimerFunds Distributor, Inc.; General Counsel of
Centennial Asset Management Corporation; Senior Vice President and General Counsel of HarbourView Asset
Management Corporation and OAM Institutional, Inc.; Senior Vice President, General Counsel and Director of
Shareholder Financial Services, Inc., Shareholder Services, Inc., OFI Private Investments, Inc. and Oppenheimer
Trust Company; Vice President and Director of Oppenheimer Partnership Holdings, Inc.; Secretary of OAC
Acquisition Corp.; Director and Assistant Secretary of OppenheimerFunds International Ltd.; Director of
Oppenheimer Real Asset Management, Inc.; Vice President of OppenheimerFunds Legacy Program; an officer of other
Oppenheimer funds.

Jill Zachman,
Vice President: Rochester Division None.

Neal A. Zamore,
Vice President Formerly (until May 2000) Vice President at GE Capital.

Mark D. Zavanelli,
Vice President None.

Alex Zhou,
Assistant Vice President None.

Arthur J. Zimmer,
Senior Vice President Senior Vice President (since April 1999) of HarbourView Asset Management Corporation.

Susan Zimmerman,
Vice President None.

The Oppenheimer Funds include the following:

Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Limited Term New York Municipal Fund (Rochester Portfolio Series)
Oppenheimer Bond Fund (a series of Oppenheimer Integrity Funds)
Oppenheimer California Municipal Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Capital Income Fund
Oppenheimer Capital Preservation Fund
Oppenheimer Cash Reserves
Oppenheimer Champion Income Fund
Oppenheimer Concentrated Growth Fund
Oppenheimer Convertible Securities Fund (Bond Fund Series)
Oppenheimer Developing Markets Fund
Oppenheimer Discovery Fund
Oppenheimer Emerging Growth Fund
Oppenheimer Emerging Technologies Fund
Oppenheimer Enterprise Fund
Oppenheimer Europe Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer High Yield Fund
Oppenheimer Intermediary Municipal Fund (a series of Oppenheimer Municipal Fund)
Oppenheimer International Bond Fund
Oppenheimer International Growth Fund
Oppenheimer International Small Company Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Growth & Income Fund (a series of Oppenheimer Main
Street Funds, Inc.
Oppenheimer Main Street Opportunity Fund
Oppenheimer Main Street Small Cap Fund
Oppenheimer MidCap Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Multiple Strategies Fund
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Municipal Trust (3 series):
Oppenheimer New Jersey Municipal Fund
Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Rochester National Municipals
Oppenheimer Municipal Bond Fund
Oppenheimer New York Municipal Fund
Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Quest For Value Funds (3 series)
Oppenheimer Quest Balanced Value Fund
Oppenheimer Quest Opportunity Value Fund
Oppenheimer Small Cap Value Fund
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Real Asset Fund
Oppenheimer Real Estate Fund
Oppenheimer Select Managers (6 series):
Gartmore Millennium Growth Fund II
Jennison Growth Fund
Mercury Advisors Focus Growth Fund
Mercury Advisors S&P 500 Index Fund
QM Active Balanced Fund
Salomon Brothers Capital Fund
Oppenheimer Senior Floating Rate Fund
Oppenheimer Series Fund, Inc. (2 series):
Oppenheimer Disciplined Allocation Fund
Oppenheimer Value Fund
Oppenheimer Special Value Fund
Oppenheimer Strategic Income Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Tremont Market Neutral Fund LLC
Oppenheimer Tremont Opportunity Fund LLC
Oppenheimer Trinity Core Fund
Oppenheimer Trinity Large Cap Growth Fund
Oppenheimer Trinity Value Fund
Oppenheimer U.S. Government Trust
Oppenheimer Variable Account Funds (10 series):
Oppenheimer Aggressive Growth Fund/VA
Oppenheimer Bond Fund/VA
Oppenheimer Capital Appreciation Fund/VA
Oppenheimer Global Securities Fund/VA
Oppenheimer High Income Fund/VA
Oppenheimer Main Street Growth & Income Fund/VA
Oppenheimer Main Street Small Cap Fund/VA
Oppenheimer Money Fund/VA
Oppenheimer Multiple Strategies Fund/VA
Oppenheimer Strategic Bond Fund/VA
Panorama Series Fund, Inc. (4 series):
Growth Portfolio
Government Securities Portfolio
International Growth Fund/VA
Total Return Portfolio
Rochester Fund Municipals

The address of the Oppenheimer funds listed above, Shareholder Financial Services, Inc., Shareholder Services,
Inc., OppenheimerFunds Services, Centennial Asset Management Corporation, Centennial Capital Corp., Oppenheimer
Real Asset Management, Inc. and OppenheimerFunds Legacy Program is 6803 South Tucson Way, Englewood, Colorado
80112.

The address of OppenheimerFunds, Inc., OppenheimerFunds Distributor, Inc., HarbourView Asset Management Corp.,
Oppenheimer Partnership Holdings, Inc., Oppenheimer Acquisition Corp., OFI Private Investments, Inc., OAM
Institutional, Inc. and Oppenheimer Trust Company is 498 Seventh Avenue, New York, New York 10018.

The address of Tremont Advisers, Inc. is 555 Theodore Fremd Avenue, Suite 206-C, Rye, New York 10580.

The address of OppenheimerFunds International Ltd. is Bloc C, Irish Life Center, Lower Abbey Street, Dublin 1,
Ireland.

Item 27. Principal Underwriter

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

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

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

Robert Agan (1) Vice President None

Janette Aprilante (1) Secretary None

Jason R. Bach Vice President None
3264 Winthrop Circle
Marietta, GA 30067

Kathleen Beichert (1) Vice President None

Gabriella Bercze (2) Vice President None

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

Tracey Blinzler (1) Assistant Vice President None

Kevin Bonner (1) Vice President None

L. Scott Brooks (2) Vice President None

Kevin E. Brosmith Senior Vice President None
170 Phillip Court
Lake Bluff, IL 60044

Jeffrey W. Bryan (2) Vice President None

Susan Burton Vice President None
4127 Towne Green Circle
Addison, TX 75001

Kathleen Mary Byron Vice President None
6 Dahlia Drive
Irvine, CA 92618

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

Jill E. Crockett (2) Assistant Vice President None

Jeffrey D. Damia (2) Vice President None

John Davis (2) Assistant Vice President None

Stephen J. Demetrovits (2) Vice President None

Michael W. Dickson Vice President None
21 Trinity Avenue
Glastonbury, CT 06033

Joseph A. DiMauro Vice President None
244 McKinley Avenue
Grosse Pointe Farms, MI 48236
Steven Dombrower (2) Vice President None

George P. Dougherty Vice President None
4090 Redbud Circle
Doylestown, PA 18901

Cliff H. Dunteman Vice President None
1196 Fieldstone Dr.
Crystal Lake, IL 60014-1642

John Eiler (2) Vice President None

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

Gregg A. Everett Vice President None
7124 Trysail Circle
Tampa, FL 33607

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

Eric C. Fallon Vice President None
10 Worth Circle
Newton, MA 02458

Katherine P. Feld (2) Vice President
Assistant Secretary

Mark J. Ferro (2) Vice President None

Ronald H. Fielding (3) Vice President None

Patrick W. Flynn (1) Senior Vice President None

John E. Forrest (2) Senior Vice President None

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

P. Lyman Foster (2) Senior Vice President None

Victoria Friece (1) Assistant Vice President None

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

Michelle M. Gans Vice President None
2700 Polk Street, Apt. #9
San Francisco, CA 94109

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

Raquel Granahan (2) Vice President None

Ralph Grant (2) Senior Vice President None

Michael D. Guman Vice President None
3913 Pleasant Avenue
Allentown, PA 18103

Tonya N. Hammet Assistant Vice President None
2612 W. Grand Reserve Circle #227
Clearwater, FL 33759

Clifford W. Heidinger Vice President None
90 Gates Street
Portsmouth, NH 03801

Phillipe D. Hemery Vice President None
184 Park Avenue
Rochester, NY 14607

Elyse R. Jurman Herman Vice President None
1194 Hillsboro Mile, Villa 51
Hillsboro Beach, FL 33062

Wendy G. Hetson Vice President None
4 Craig Street
Jericho, NY 11753

Kristen L. Heyburn Vice President None
2315 Mimosa Drive #2
Houston, TX 77019

William E. Hortz (2) Vice President None
Edward Hrybenko (2) Vice President None

Brian F. Husch (2) Vice President None

Richard L. Hymes (2) Assistant Vice President None

Kathleen T. Ives (1) Vice President
Assistant Secretary

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

Mark D. Johnson Vice President None
15792 Scenic Green Court
Chesterfield, MO 63017

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

Christina J. Keller (2) Vice President None

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

Michael Keogh (2) Vice President None

Lisa Klassen (1) Assistant Vice President None

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

Richard Knott (2) Vice President None

Dean Kopperud (2) Senior Vice President None

Brent A. Krantz Senior Vice President None
P. O. Box 1313
Seahurst, WA 98062

David T. Kuzia Vice President None
9697 S. Golden Eagle Dr.
Highlands, CO 80126
Tracey Lange (2) Vice President None

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

Malissa Lischin (2) Assistant Vice President None

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

John J. Lynch Vice President None
5341 Ellsworth
Dallas, TX 75206

Mark Macken Vice President None
462 Lincoln Avenue
Sayville, NY 11782

Michael Magee (2) Vice President None

Steven C. Manns Vice President None
1941 W. Wolfram
Chicago, IL 60657

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

David M. Martin Vice President None
10155 S. Woodrose Lane
Highlands Ranch, CO 80126

LuAnn Mascia (2) Assistant Vice President None

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

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

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

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

John V. Murphy (2) Director President and Trustee
President

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

Christina Nasta (2) Assistant Vice President None

Kevin P. Neznek (2) Vice President None

Patrick J. Noble Vice President None
1155 Wellesley Avenue #204
Los Angeles, CA 90049

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

Raymond Olson (1) Assistant Vice President None
& Treasurer

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

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

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

William L. Presutti Vice President None
238 Kemp Avenue
Fair Haven, NJ 07704
Elaine Puleo-Carter (2) Senior Vice President None

Christopher L. Quinson Vice President None
19 Cayuga Street
Rye, NY 10580

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

Heather Rabinowitz (2) Assistant Vice President None

Gary D. Rakan Vice President None
25031 Woodridge Triangle
Farmington, MI 48335

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

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

Michelle Simone Richter (2)Vice President None

Ruxandra Risko(2) Vice President None

David R. Robertson (2) Senior Vice President None

Kenneth A. Rosenson Vice President None
24753 Bantage Point Terr.
Malibu, CA 90265

James H. Ruff (2) President & Director None

William R. Rylander Vice President None
85 Evergreen Road
Vernon, CT 06066

Thomas Sabow (2) Vice President None

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

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

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

Debbie Simon (2) Vice President None

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

William A. Spetrino Vice President None
7631 Yennicook Way
Hudson, OH 44236

Bryan Stein (2) Vice President None

John Stoma (2) Senior Vice President None

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

Michael Sussman(2) Assistant Vice President None

George T. Sweeney Senior Vice President None
5 Smoke House Lane
Hummelstown, PA 17036

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

James Taylor (2) Assistant Vice President None

Martin Telles (2) Senior Vice President None

David G. Thomas Vice President None
1328 N. Cleveland Street
Arlington, VA 22201

Bryan K.Toma Vice President None
14575 S. Gallery
Olathe, KS 66062

Floyd A. Tucker Vice President None
1930 W. Barry Ave., #2
Chicago, IL 60657

Tanya Valency (2) Vice President None

Mark Vandehey (1) Vice President None

Vince Vermette Assistant Vice President None

Teresa Ward (1) Vice President None

Michael J. Weigner Vice President None
4905 W. San Nicholas Street
Tampa, FL 33629

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

Catherine White (2) Assistant Vice President None

Thomas Wilson (2) Vice President None

Donna Winn (2) Senior Vice President None

Philip Witkower (2) Senior Vice President None

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

Gregor D. Yuska Vice President None
16035 Canterbury Estates Dr.
Ellisville, MO 63021

Robert G. Zack (2) General Counsel Secretary
and Director Vice President and Secretary

(1)6803 South Tucson Way, Englewood, CO 80112
(2)498 Seventh Avenue, New York, NY 10018
(3)350 Linden Oaks, Rochester, NY 14623

Item 28. Location of Accounts and Records

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

Item 29. Management Services

Not applicable

Item 30. Undertakings

Not applicable.

OPPENHEIMER CALIFORNIA MUNICIPAL FUND

Index to Exhibits

Exhibit No. Description
----------- -----------
23 (a) Amended and Restated Declaration of Trust

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and/or the Investment Company Act of 1940, the
Registrant certifies that it meets all the requirements for effectiveness of this Registration Statement pursuant
to Rule 485(a) under the Securities Act of 1933 and has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of New York and State of New York on the
24th day of July, 2002

OPPENHEIMER CALIFORNIA MUNICIPAL FUND

/s/ John V. Murphy
--------------------------------------
John V. Murphy, President

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

Signatures Title Date
---------- ----- ----

/s/ Leon Levy* Chairman of the July 24, 2002
-------------- Board of Trustees
Leon Levy

/s/ Donald W. Spiro* Vice Chairman of the July 24, 2002
-------------- Board of Trustees
Donald W. Spiro

/s/ John V. Murphy* President, July 24, 2002
------------------------ Principal Executive
John V. Murphy Officer, Trustee

/s/ Brian W. Wixted* Treasurer and Chief Financial July 24, 2002
----------------------- Officer/Principal Accounting
Brian W. Wixted Officer

/s/ Robert G. Galli* Trustee July 24, 2002
-------------------
Robert G. Galli

/s/ Phillip A. Griffiths* Trustee July 24, 2002
-------------------
Phillip A. Griffiths*
/s/ Benjamin Lipstein* Trustee July 24, 2002
----------------------
Benjamin Lipstein

/s/ Elizabeth B. Moynihan* Trustee July 24, 2002
--------------------------
Elizabeth B. Moynihan

/s/ Kenneth A. Randall* Trustee July 24, 2002
-----------------------
Kenneth A. Randall

/s/ Edward V. Regan* Trustee July 24, 2002
------------------
Edward V. Regan

/s/ Russell S. Reynolds, Jr.* Trustee July 24, 2002
-----------------------------
Russell S. Reynolds, Jr.

/s/ Clayton K. Yeutter* Trustee July 24, 2002
-----------------------
Clayton K. Yeutter

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