Oppenheimer
Capital Appreciation Fund


Prospectus dated December 27, 2002

                                          Oppenheimer Capital Appreciation
                                          Fund is a mutual fund that seeks
                                          capital appreciation to make your
                                          investment grow. It emphasizes
                                          investments in common stocks.
                                             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
As with all mutual funds, the             account.
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.



                                                       [OppenheimerFunds logo]




CONTENTS





                    ABOUT THE FUND

            3       The Fund's Investment Objective and Strategies
            3       Main Risks of Investing in the Fund
            6       The Fund's Performance
            7       Fees and Expenses of the Fund
            9       About the Fund's Investments
                    How the Fund is Managed

                    ABOUT YOUR ACCOUNT

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

                    Special Investor Services
22                  AccountLink
                    PhoneLink
                    OppenheimerFunds Internet Website
                    Retirement Plans

                    How to Sell Shares
            24      By Mail
                    By Telephone

                    How to Exchange Shares
            27      Shareholder Account Rules and Policies
            28      Dividends, Capital Gains and Taxes
            30      Financial Highlights
            32




ABOUT THE FUND

The Fund's Investment Objective and Strategies
WHAT IS THE FUND'S INVESTMENT OBJECTIVE? The Fund seeks capital appreciation.

WHAT DOES THE FUND MAINLY INVEST IN? The Fund invests mainly in common stocks
of "growth companies." These may be newer companies or established companies
of any capitalization range that the portfolio manager believes may
appreciate in value over the long term.


HOW DOES THE MANAGER DECIDE WHAT SECURITIES TO BUY OR SELL? The Fund's
portfolio manager looks for growth companies with stock prices that she
believes are reasonable in relation to overall stock market valuations. The
portfolio manager focuses on factors that may vary in particular cases and
over time in seeking broad diversification of the Fund's portfolio among
industries and market sectors.  Currently, the portfolio manager looks for:

      o  Companies with above-average growth potential,
      o  Companies with increasing earnings momentum and a history of
         positive earnings growth,
      o  Stocks with reasonable valuations relative to their growth potential,
      o  Companies with the potential for positive earnings surprises,
      o  Growth rates that the portfolio manager believes are sustainable
          over time.


The Manager may sell companies from the Fund that it believes no longer meets
the above criteria.


WHO IS THE FUND DESIGNED FOR? The Fund is designed for investors seeking
capital appreciation in their investment over the long term. Those investors
should be willing to assume the risks of short-term share price fluctuations
that are typical for a growth fund focusing on stock investments.  Since the
Fund does not seek income and its income from its investments will likely be
small, it is not designed for investors needing current income. Because of
its focus on long-term growth, the Fund may be appropriate for a portion of a
retirement plan investment. 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 underperform other funds
having a similar objective.

RISKS OF INVESTING IN STOCKS. Stocks fluctuate in price, and their short-term
volatility at times may be great. Because the Fund currently invests
primarily in common stocks of U.S. companies, the value of the Fund's
portfolio will be affected by changes in the U.S. stock markets. Market risk
will affect the Fund's net asset values per share, which will fluctuate as
the values of the Fund's portfolio securities change. A variety of factors
can affect the price of a particular stock and the prices of individual
stocks do not all move in the same direction uniformly or at the same time.
Different stock markets may behave differently from each other.

      Other factors can affect a particular stock's price, such as poor
earnings reports by the issuer, loss of major customers, major litigation
against the issuer, or changes in government regulations affecting the issuer
or its industry.

     The Manager may increase the relative emphasis of the Fund's investments
in a particular industry from time to time. Stocks of issuers in a particular
industry may be affected by changes in economic conditions, government
regulations, availability of basic resources or supplies,  or other events
that affect that industry more than others. To the extent that the Fund
increases the relative emphasis of its investments in a particular industry,
its share values may fluctuate in response to events affecting that industry.


      Stocks of growth companies, particularly newer or smaller companies,
may offer opportunities for greater capital appreciation but may be more
volatile than other stocks. They have greater risks of loss and may be less
liquid than stocks of larger, more established companies. That means the Fund
could have greater difficulty selling a security of a smaller company at an
acceptable price, especially in periods of market volatility. That factor
increases the potential for losses to the Fund. Also, it may take a
substantial period of time before the Fund realizes a gain on its investment
in a small-cap company if it realizes any gain at all.


RISKS OF FOREIGN INVESTING. The change in value of a foreign currency against
the U.S. dollar will result in a change in the U.S. dollar value of
securities denominated in that foreign currency. Foreign issuers are not
subject to the same accounting and disclosure requirements that U.S.
companies are subject to. The value of foreign investments may be affected by
exchange control regulations, expropriation or nationalization of a company's
assets, foreign taxes, delays in settlement of transactions, changes in
governmental economic or monetary policy in the U.S. or abroad, or other
economic or political factors.

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 its price per share.  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 short term, the stock markets can be volatile, and the price of
the Fund's shares can go up and down substantially. Growth stocks may be more
volatile than other equity investments. The Fund generally does not use
income-oriented investments to help cushion the Fund's total return from
changes in stock prices. In the OppenheimerFunds spectrum, the Fund is
generally more aggressive than funds that invest in both stocks and bonds or
in investment grade debt securities, but may be less volatile than small-cap
and emerging markets stock funds.

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

The Fund's Past Performance


The bar chart and table below show one measure of the risks of investing in
the Fund, by showing the Fund's performance from year to year (for its Class
A shares) 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.  In certain cases, the
figure representing "Return After Taxes on Distributions and Sale of Fund
Shares" may be higher than the other return figures for the same period.  A
higher after-tax return results when a capital loss occurs upon redemption
and translates into an assumed tax deduction that benefits the shareholder.
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 after-tax returns set forth
below are not relevant to investors who hold their fund shares through
tax-deferred arrangements such as 401(k) plans or IRAs or to institutional
investors not subject to tax.  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 and taxes were included, the returns may
be less than those shown.

For the period  from  1/1/02  through  9/30/02,  the  cumulative  return  (not
annualized)  before  taxes for Class A shares was  -30.89%.  During the period
shown in the bar chart, the highest return (not  annualized)  before taxes for
a  calendar  quarter  was  28.86%  (4th Qtr `99) and the  lowest  return  (not
annualized) before taxes for a calendar quarter was -19.89% (3rd Qtr `01).

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

Average Annual Total Returns
for    the    periods    ended
December 31, 2001                   1 Year            5 Years          10 Years

-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Class  A   Shares   (inception
1/22/81)                            -17.71%           12.58%            13.64%
  Return Before Taxes               -18.10%           10.22%            11.13%
  Return After Taxes on             -10.40%            9.63%            10.51%
  Distributions
  Return    After   Taxes   on
  Distributions  and  Sale  of
  Fund Shares
-------------------------------------------------------------------------------------
S&P 500 Index (reflects no
deduction for fees, expenses        -11.88%           10.70%            12.93%1
or taxes)
-------------------------------------------------------------------------------------
Class  B   Shares   (inception      -17.58%           12.77%            15.11%
11/1/95)
-------------------------------------------------------------------------------------
Class  C   Shares   (inception      -14.19%           13.02%            15.23%
12/1/93)
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Class  N   Shares   (inception       N/A2               N/A               N/A
3/1/01)
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Class  Y   Shares   (inception      -12.41%           10.58%              N/A
11/3/97)
-------------------------------------------------------------------------------------
1  From 12/31/91.
2  Because this is a new class of shares, return data for the period
specified is not available.


The Fund's average annual total returns include applicable sales charges as
follows: for Class A, the current maximum initial sales charge of 5.75%; for
Class B, the contingent deferred sales charge of 5% (for 1-year) and 2% (for
5-year); and for Class C, the 1% contingent deferred sales charge for the
1-year period. There is no sales charge for Class Y shares. Because Class B
shares convert to Class A shares 72 months after purchase, Class B
"life-of-class" performance does not include any 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 S&P 500 Index, an unmanaged index of equity securities. The index
performance includes reinvestment of income but does not reflect transaction
costs. The Fund's investments may vary from securities in the index.
Fees and Expenses of the Fund

The  following  tables  are  provided  to help  you  understand  the  fees and
expenses  you may pay if you buy and hold shares 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 transaction expenses directly,  such as sales charges. The numbers below
are based on the  Fund's  expenses  during its  fiscal  year ended  August 31,
2002.


Shareholder Fees (charges paid directly from your investment):

 ------------------------------------------------------------------------------
                        Class A     Class B   Class C   Class N4     Class Y
                         Shares     Shares     Shares    Shares      Shares
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Maximum Sales Charge
 (Load) on purchases      5.75%      None       None      None        None
 (as % of offering
 price)
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Maximum Deferred
 Sales Charge (Load)
 (as % of the lower of    None1       5%2       1%3        1%4        None
 the original offering
 price or redemption
 proceeds)
 ------------------------------------------------------------------------------


Annual Fund Operating Expenses (deducted from Fund assets):
(% of average daily net assets)


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

                               Class A   Class B   Class C  Class N   Class Y
                                Shares    Shares    Shares   Shares    Shares

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

 Management Fees                 0.58%     0.58%    0.58%     0.58%    0.58%

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

 Distribution and/or Service
 (12b-1) Fees                    0.24%     1.00%    1.00%     0.50%     N/A

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

 Other Expenses                  0.40%     0.41%    0.36%     0.38%    0.31%

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

 Total Annual Operating          1.22%     1.99%    1.94%     1.46%    0.89%
 Expenses

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

  1. A contingent deferred sales charge may apply to redemptions of
  investments of $1 million or more ($500,000 for certain retirement plan
  accounts) 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.
  4. Applies to shares redeemed within 18 months of a retirement plan's first
  purchase of Class N shares.


Expenses  may  vary in  future 1 Year 3 Years 5 Years  10  Years  years.  "Other
expenses" include transfer agent fees,  custodial fees, and accounting and legal
expenses that the Fund pays.  The Transfer Agent has  voluntarily  undertaken to
the Fund to limit the transfer  agent fees to 0.25% of average  daily net assets
per fiscal  year for Class Y shares  and 0.35% of  average  daily net assets per
fiscal  year for all other  classes.  That  undertaking  for Class Y shares  was
effective  January 1, 2001 through October 31, 2002 and all  undertakings may be
amended or  withdrawn at any time.  For the Fund's  fiscal year ended August 31,
2002,  the transfer agent fees did not exceed the expense  limitation  described
above for Class Y shares. For the Fund's fiscal year ended October 31, 2002, the
transfer  agency fee for each class of shares  exceeded  the expense  limitation
described above by less than 0.001% for each class.


Effective  November 1, 2002, the limit on transfer agent fees for Class Y shares
increased to 0.35% of average  daily net assets per fiscal year.  Had that limit
been in effect  during the Fund's  prior fiscal  year,  the transfer  agent fees
would not have exceeded the expense limitation described above.

     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  that 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:
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Class A Shares           $692          $940         $1,207        $1,967
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Class B Shares           $702          $924         $1,273        $1,9361
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Class C Shares           $297          $609         $1,047        $2,264
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Class N Shares           $249          $462         $797          $1,746
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Class Y Shares           $91           $284         $493          $1,096
 -------------------------

 -------------------------
 If shares are not        1 Year        3 Years      5 Years       10 Years
 redeemed:
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Class A Shares           $692          $940         $1,207        $1,967
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Class B Shares           $202          $624         $1,073        $1,9361
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Class C Shares           $197          $609         $1,047        $2,264
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Class N Shares           $149          $462         $797          $1,746
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Class Y Shares           $91           $284         $493          $1,096
 -------------------------

  In the first example, expenses include the initial sales charge for Class A
  and the applicable Class B, Class C or Class N contingent deferred sales
  charges. In the second example, the Class A expenses include the sales
  charge, but Class B, Class C and Class N expenses do not include the
  contingent deferred sales charges.   There is no sales charge on Class Y
  shares.

1.    Class B expenses for years 7 through 10 are based on Class A expenses,
  since Class B shares automatically convert to Class A shares after 6 years.


About the Fund's Investments

THE FUND'S PRINCIPAL INVESTMENT POLICIES. The allocation of the Fund's
portfolio among different investments will vary over time based upon 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. The Statement of Additional Information contains more detailed
information about the Fund's investment policies and risks.

      The Manager tries to reduce risks by carefully researching securities
before they are purchased. The Fund attempts to reduce its exposure to market
risks by diversifying its investments, that is, by not holding a substantial
amount of stock of any one company and by not investing too great a
percentage of the Fund's assets in any one company. Also, the Fund does not
concentrate 25% or more of its assets in investments in any one industry.

      However, changes in the overall market prices of securities can occur
at any time. The share prices of the Fund will change daily based on changes
in market prices of securities and market conditions and in response to other
economic events.

Stock Investments. The Manager looks for stocks of companies that have growth
      potential. Growth companies may be developing new products or services
      or may be expanding into new markets for their products. They may be
      newer companies or more established companies entering a growth cycle.
      The Fund's investments are not limited to issuers in a specific
      capitalization range, such as large-cap or small-cap companies, and the
      Fund can invest in issuers in all capitalization ranges. Market
      capitalization refers to the market value of all of a company's issued
      and outstanding stock. Currently, the Fund's stock investments are
      focused on mid-cap and large-cap issuers, but that emphasis can change
      over time. Because the stocks of companies that have smaller market
      capitalizations tend to be more volatile, to the extent that the Fund
      holds small-cap stocks, its share prices may fluctuate more and the
      risks of loss are greater.

      Newer growth companies tend to retain a large part of their earnings
      for research, development or investment in capital assets. Therefore,
      they do not tend to emphasize paying dividends, and may not pay any
      dividends for a protracted period. They are selected for the Fund's
      portfolio because the Manager believes the price of the stock will
      increase over time.

Foreign Securities. The Fund can buy foreign equity and debt securities. It
      would buy debt securities primarily for liquidity or defensive
      purposes, including debt securities issued by foreign companies or by
      foreign governments and their agencies. The Fund currently does not
      expect to have more than 35% of its assets invested in foreign
      securities, although it has the ability to invest in them without limit.

CAN THE FUND'S INVESTMENT OBJECTIVE AND POLICIES CHANGE? The Fund's Board of
Trustees can change non-fundamental investment 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. Other investment restrictions that are
fundamental policies are listed in the Statement of Additional Information.
An investment policy is not fundamental unless this Prospectus or the
Statement of Additional Information says that it is.

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

Other Equity Securities. While the Fund mainly buys common stocks, it can
      also buy preferred stocks and securities convertible into common stock.
      The Manager considers some convertible securities to be "equity
      equivalents" because of the conversion feature and in that case their
      rating has less impact on the Manager's investment decision than in the
      case of other debt securities.

Illiquid and Restricted 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. Restricted
      securities may have terms that limit their resale to other investors or
      may require registration under federal securities laws before they can
      be sold publicly. The Fund will not invest more than 10% of its net
      assets in illiquid or restricted securities. The Board can increase
      that limit to 15%. Certain restricted securities that are eligible for
      resale to qualified institutional purchasers may not be subject to that
      limit. The Manager monitors holdings of illiquid securities on an
      ongoing basis to determine whether to sell any holdings to maintain
      adequate liquidity.

Derivative Investments. The Fund can invest in a number of different kinds of
      "derivative" investments. 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. In the broadest
      sense, options, futures contracts, and other hedging instruments the
      Fund might use may be considered "derivative" investments. In addition
      to using derivatives for hedging, the Fund might use other derivative
      investments because they offer the potential for increased value. The
      Fund currently does not use derivatives to a significant degree and is
      not required to use them in seeking its objective.

      Derivatives have risks. If the issuer of the derivative investment does
      not pay the amount due, the Fund can lose money on the investment. The
      underlying security or investment on which a derivative is based, and
      the derivative itself, may not perform the way the Manager expected it
      to. As a result of these risks the Fund could realize less principal or
      income from the investment than expected or its hedge might be
      unsuccessful. As a result, the Fund's share prices could fall. Certain
      derivative investments held by the Fund might be illiquid.

Hedging. The Fund can buy and sell futures contracts, put and call options,
      and forward contracts. These are all referred to as "hedging
      instruments."  The Fund does not currently use hedging extensively nor
      for speculative purposes. It has limits on its use of hedging
      instruments and is not required to use them in seeking its objective.


      Some of these hedging strategies would hedge the Fund's portfolio
      against price fluctuations. Other hedging strategies, such as buying
      futures and call options, would tend to increase the Fund's exposure to
      the securities market.


      There are also special risks in particular hedging strategies. Options
      trading involves the payment of premiums and can increase portfolio
      turnover. If the Manager used a hedging instrument at the wrong time or
      judged market conditions incorrectly, the strategy could reduce the
      Fund's return.


Temporary Defensive and Interim Investments. In times of unstable or adverse
      market or economic conditions, the Fund can invest up to 100% of its
      assets in temporary defensive investments. Generally they would be cash
      equivalents (such as commercial paper), money market instruments,
      short-term debt securities, U.S. government securities, or repurchase
      agreements. The Fund could also hold these types of securities pending
      the investment of proceeds from the sale of Fund shares or portfolio
      securities or to meet anticipated redemptions of Fund shares. To the
      extent the Fund invests defensively in these securities, it might not
      achieve its investment objective of capital appreciation.

Portfolio Turnover. A change in the securities held by the Fund is known as
      "portfolio turnover." The Fund can engage in active and frequent
      trading to try to achieve its objective, and may have a high portfolio
      turnover rate (for example, over 100%), although the Manger does not
      expect turnover to be high.  Increased portfolio turnover creates
      higher brokerage and transaction costs for the Fund.  If the Fund
      realizes capital gains when it sells its portfolio investments, it must
      generally pay those gains out to shareholders, increasing their taxable
      distributions. The Financial Highlights table at the end of this
      Prospectus shows the Fund's portfolio turnover rate during prior fiscal
      years.


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 operated as an investment adviser since January 1960.
The Manager and its subsidiaries and controlled affiliates managed more than
$120 billion in assets as of September 30, 2002, including other Oppenheimer
funds with more than 7 million shareholder accounts. The Manager is located
at 498 Seventh Avenue, New York, New York 10018.

Portfolio Manager. The portfolio manager of the Fund is Jane Putnam. She has
      been principally responsible for the day-to-day management of the
      Fund's portfolio since July 1995 and is a Vice President of the Fund
      and the Manager. Before joining the Manager in May 1994 she was a
      portfolio manager and equity research analyst for Chemical Bank.

Advisory Fees. Under the investment advisory agreement, the Fund pays the
      Manager an advisory fee at an annual rate that declines as the Fund's
      assets grow: 0.75% of the first $200 million of aggregate net assets;
      0.72% of the next $200 million; 0.69% of the next $200 million, 0.66%
      of the next $200 million; 0.60% of the next $700 million; 0.58% of the
      next $1.0 billion; 0.56% of the next $2.0 billion; 0.54% of the next
      $4.0 billion; and 0.52% of aggregate net assets over $8.5 billion.  The
      Fund's management fee for its last fiscal year ended August 31, 2002
      was 0.58% of average annual net assets for each class of shares.

ABOUT your account

How to 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 is
      $2,500. Before sending a wire, call the Distributor's Wire Department
      at 1.800.225.5677 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 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.


WHAT IS THE MINIMUM AMOUNT YOU MUST INVEST? In most cases, you can buy Fund
shares with a minimum initial investment of $1,000 and make additional
investments at any time with as little as $50. There are reduced minimums
available under the following special investment plans:
If you establish one of the many types of retirement plan accounts that
   OppenheimerFunds offers, more fully described below under "Special
   Investor Services," you can start your account with as little as $500.
By using an Asset Builder Plan or Automatic Exchange Plan (details are in the
   Statement of Additional Information), or government allotment plan, you
   can make subsequent investments (after making the initial investment of
   $500) for as little as $50. For any type of account established under one
   of these plans prior to November 1, 2002, the minimum additional
   investment will remain $25.

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 Colorado, or after
any agent appointed by the Distributor receives the order.

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.,
      Eastern time, but may close earlier on some days. All references to
      time in this Prospectus mean "Eastern 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 and restricted securities and
      obligations for which market values cannot be readily obtained. Because
      some foreign securities trade in markets and on exchanges that operate
      on weekends and U.S. holidays, the values of some of the Fund's foreign
      investments may change on days when investors cannot buy or redeem Fund
      shares.

      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.  A security's valuation may
      differ depending on the method used for determining value.

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 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, unless your dealer has
      made alternative arrangements with the Distributor.  Otherwise, the
      order will receive the next offering price that is determined.

------------------------------------------------------------------------------
WHAT CLASSES OF SHARES DOES THE FUND OFFER? The Fund offers investors five
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 the class of 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 for regular accounts or lesser amounts
      for certain retirement plans). 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 6 years of buying them, you will
      normally pay a contingent deferred sales charge. That contingent
      deferred 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 1.0%, as described
      in "How Can You Buy Class C Shares?" below.
------------------------------------------------------------------------------
Class N Shares. If you buy Class N shares (available only through certain
      retirement plans), 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 18 months of the retirement plan's first purchase of
      Class N shares, you may pay a contingent deferred sales charge of 1.0%,
      as described in "How Can You Buy Class N Shares?" below.
Class Y Shares. Class Y shares are offered only to certain institutional
      investors that have special agreements with the Distributor.

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 effects 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, Class C or Class N. For retirement plans
      that qualify to purchase Class N shares, Class N shares will generally
      be more advantageous than Class B and Class C shares.

   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 non-retirement plan 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  may  not  be  available  to  Class  B,  Class  C and  Class  N
      shareholders.  Other  features  may  not be  advisable  (because  of the
      effect of the  contingent  deferred  sales  charge) for Class B, Class C
      and Class N 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, Class C and Class N
      shareholders will be reduced by the additional expenses borne by those
      classes that are not borne by Class A or Class Y shares, such as the
      Class B, Class C and Class N asset-based sales charge described below
      and in the Statement of Additional Information. Share certificates are
      only available for Class A shares. If you are considering using your
      shares as collateral for a loan, that may be a factor to consider.

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, Class
      C and Class N 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 concessions 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 B 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 a special condition applies.


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 a concession. The Distributor reserves the right to reallow
the entire concession to dealers. The current sales charge rates and
concessions paid to dealers and brokers are as follows:

 ------------------------------------------------------------------------------
 Amount of Purchase       Front-End Sales  Front-End Sales   Concession As
                                           Charge As a
                          Charge As a      Percentage of
                          Percentage of    Net Amount        Percentage of
                          Offering Price   Invested          Offering Price
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Less than $25,000             5.75%             6.10%             4.75%
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 $25,000 or more but           5.50%             5.82%             4.75%
 less than $50,000
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 $50,000 or more but           4.75%             4.99%             4.00%
 less than $100,000
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 $100,000 or more but          3.75%             3.90%             3.00%
 less than $250,000
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 $250,000 or more but          2.50%             2.56%             2.00%
 less than $500,000
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 $500,000 or more but          2.00%             2.04%             1.60%
 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.

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
      0.75% of the first $2.5 million of purchases plus 0.25% of purchases in
      excess of $2.5 million. 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.

Purchases by Certain Retirement Plans. There is no initial sales charge on
      purchases of Class A shares of any one or more Oppenheimer funds by
      retirement plans that have $10 million or more in plan assets and that
      have entered into a special agreement with the Distributor and by
      retirement plans which are part of a retirement plan product or
      platform offered by certain banks, broker-dealers, financial advisors,
      insurance companies or recordkeepers which have entered into a special
      agreement with the Distributor. The Distributor currently pays dealers
      of record concessions in an amount equal to 0.25% of the purchase price
      of Class A shares by those retirement plans from its own resources at
      the time of sale, subject to certain exceptions as described in the
      Statement of Additional Information. There is no contingent deferred
      sales charge upon the redemption of such shares.

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 six 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 Month in       Contingent Deferred Sales Charge on
Which Purchase Order was Accepted       Redemptions in That Year
                                        (As % of Amount Subject to Charge)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
0 - 1                                   5.0%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
1 - 2                                   4.0%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
2 - 3                                   3.0%
-------------------------------------------------------------------------------
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3 - 4                                   3.0%
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4 - 5                                   2.0%
-------------------------------------------------------------------------------
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5 - 6                                   1.0%
-------------------------------------------------------------------------------
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More than 6                             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 that you hold convert, any other
      Class B shares that were acquired by reinvesting dividends and
      distributions on the converted shares will also convert to Class A
      shares. For further information on the conversion feature and its tax
      implications, see "Class B Conversion" 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.

HOW CAN YOU BUY CLASS N SHARES? Class N shares are offered for sale to
retirement plans (including IRAs and 403(b) plans) that purchase $500,000 or
more of Class N shares of one or more Oppenheimer funds or to group
retirement plans (which do not include IRAs and 403(b) plans) that have
assets of $500,000 or more or 100 or more eligible participants. See
"Availability of Class N shares" in the Statement of Additional Information
for other circumstances where Class N shares are available for purchase.

      A contingent deferred sales charge of 1.0% will be imposed upon the
redemption of Class N shares, if:
o     The group retirement plan is terminated or Class N shares of all
      Oppenheimer funds are terminated as an investment option of the plan
      and Class N shares are redeemed within 18 months after the plan's first
      purchase of Class N shares of any Oppenheimer fund, or
o     With respect to an IRA or 403(b) plan, Class N shares are redeemed
      within 18 months of the plan's first purchase of Class N shares of any
      Oppenheimer fund.

      Retirement plans that offer Class N shares may impose charges on plan
participant accounts. The procedures for buying, selling, exchanging and
transferring the Fund's other classes of shares (other than the time those
orders must be received by the Distributor or Transfer Agent in Colorado) and
the special account features applicable to purchasers of those other classes
of shares described elsewhere in this prospectus do not apply to Class N
shares offered through a group retirement plan. Instructions for buying,
selling, exchanging or transferring Class N shares offered through a group
retirement plan must be submitted by the plan, not by plan participants for
whose benefit the shares are held.

Who Can Buy Class Y Shares? Class Y shares are sold at net asset value per
share without a sales charge directly to institutional investors that have
special agreements with the Distributor for this purpose. They may include
insurance companies, registered investment companies and employee benefit
plans. Individual investors cannot buy Class Y shares directly.


      An institutional investor that buys Class Y shares for its customers'
accounts may impose charges on those accounts. The procedures for buying,
selling, exchanging and transferring the Fund's other classes of shares
(other than the time those orders must be received by the Distributor or
Transfer Agent at their Colorado office) and the special account features
available to investors buying those other classes of shares do not apply to
Class Y shares. Instructions for buying, selling, exchanging or transferring
Class Y shares held by an institutional investor must be submitted by the
institutional investor, not by its customers for whose benefit the shares are
held.


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 pay dealers,
      brokers, banks and other financial institutions quarterly for providing
      personal service and maintenance of accounts of their customers that
      hold Class A shares. With respect to Class A shares subject to a Class
      A contingent deferred sales charge purchased by grandfathered
      retirement accounts, the Distributor pays the 0.25% service fee to
      dealers in advance for the first year after the shares are sold by the
      dealer.  During the first year the shares are sold, the Distributor
      retains the service fee.  After the shares have been held for a year,
      the Distributor pays the service fee to dealers on a quarterly basis.


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

      The asset-based sales charge and service fees increase Class B and
      Class C expenses by 1.0% and increase Class N expenses by 0.50% of the
      net assets per year of the respective class. Because these fees are
      paid out of the Fund's assets on an on-going 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, Class C or
      Class N 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 services.

      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.  See the
      Statement of Additional Information for exceptions.

      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 1.0% of the purchase price. The Distributor
      pays 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.

      The Distributor currently pays a sales concession of 0.75% of the
      purchase price of Class N 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 N shares is therefore 1.0% of the purchase price. The Distributor
      retains the asset-based sales charge on Class N shares. See the
      Statement of Additional Information for exceptions.

Special Investor Services

ACCOUNTLINK. 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 transmit dividends
      and distributions directly to your bank account. Please call the
      Transfer Agent for more information.

      You may 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 1.800.225.5677. 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 and proper documentation 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 PhoneLink number, 1.800.225.5677.
Purchasing Shares. You may purchase shares in amounts up to $100,000 by
      phone, by calling 1.800.225.5677. 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 1.800.225.5677 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
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 1.800.225.5677. 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
OppenheimerFunds 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 six 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, Class N or Class Y
shares. You must be sure to ask the Distributor for this privilege when you
send your payment.


RETIREMENT PLANS. You may buy shares of the Fund for your retirement plan
account. If you participate in a plan sponsored by your employer, the plan
trustee or administrator must buy the shares for your plan account. The
Distributor also offers a number of different retirement plans that
individuals and employers can use:
Individual Retirement Accounts (IRAs). These include regular IRAs, Roth IRAs,
      SIMPLE IRAs and rollover IRAs.
SEP-IRAs. These are Simplified Employee Pension Plan IRAs for small business
      owners or self-employed individuals.
403(b)(7) Custodial Plans. These are tax-deferred plans for employees of
      eligible tax-exempt organizations, such as schools, hospitals and
      charitable organizations.
401(k) Plans. These are special retirement plans for businesses.
Pension and Profit-Sharing Plans. These plans are designed for businesses and
      self-employed individuals.
      Please call the Distributor for OppenheimerFunds retirement plan
documents, which include applications and important plan information.

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 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 or from a retirement plan account, please call the Transfer Agent
first, at 1.800.225.5677, 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):
   o  You wish to redeem more than $100,000 and receive a check
   o  The redemption check is not payable to all shareholders listed on the
      account statement
   o  The redemption check is not sent to the address of record on your
      account statement
   o  Shares are being transferred to a Fund account with a different owner
      or name
   o  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.

Retirement Plan Accounts. There are special procedures to sell shares in an
      OppenheimerFunds retirement plan account. Call the Transfer Agent for a
      distribution request form. Special income tax withholding requirements
      apply to distributions from retirement plans. You must submit a
      withholding form with your redemption request to avoid delay in getting
      your money and if you do not want tax withheld. If your employer holds
      your retirement plan account for you in the name of the plan, you must
      ask the plan trustee or administrator to request the sale of the Fund
      shares in your plan account.

HOW DO you SELL SHARES BY MAIL? Write a letter of instruction 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            Send courier or express mail
requests by mail:                        requests to:
OppenheimerFunds Services                OppenheimerFunds Services
P.O. Box 5270                            10200 E. Girard Avenue, Building D
Denver, Colorado 80217                   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 in an OppenheimerFunds retirement plan account or
under a share certificate by telephone.
   o  To redeem shares through a service representative or automatically on
      PhoneLink, call 1.800.225.5677
      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 seven-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.

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, Class C or Class N 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 B 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 B 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 the 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 seven days before you can exchange them. After the account is
      open seven 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 1.800.225.5677. That list can change from time to
time.

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

Written Exchange Requests. Submit an OppenheimerFunds Exchange Request form,
      signed by all owners of the account. Send it to the Transfer Agent at
      the address on the back cover. Exchanges of shares held under
      certificates cannot be processed unless the Transfer Agent receives the
      certificates with the request.
Telephone  Exchange  Requests.  Telephone exchange requests may be made either
      by calling a service  representative or by using PhoneLink for automated
      exchanges by calling  1.800.225.5677.  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 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.
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


More information about the Fund's policies and procedures for buying, selling
and exchanging shares is contained in the Statement of Additional Information.
A $12 annual fee is accessed on any account valued at less than $500.  The
      fee is automatically deducted from accounts annually on or about the
      second to last business day of September.  See the Statement of
      Additional Information or visit the OppenheimerFunds website, to learn
      how you can avoid this fee and for circumstances when this fee will not
      be accessed.

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 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 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, or through AccountLink 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 processing any type of redemption payment as
      described under "How to Sell Shares" 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 1.800.225.5677. You may also notify the Transfer
      Agent in writing. Individual copies of prospectuses, reports and
      privacy notices will be sent to you commencing within 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 each class of
shares  from net  investment  income  on an  annual  basis  and to pay them to
shareholders  in  December  on a date  selected  by  the  Board  of  Trustees.
Dividends and distributions  paid to Class A and Class Y shares will generally
be  higher  than  dividends  for Class B,  Class C and  Class N shares,  which
normally have higher  expenses than Class A and Class Y. The Fund has no fixed
dividend  rate  and  cannot  guarantee  that it  will  pay  any  dividends  or
distributions.

Capital Gains. The Fund 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. There can be no assurance that the Fund will pay any
capital gains distributions in a particular year.

WHAT CHOICES DO YOU 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. If your shares are not held in a tax-deferred retirement account, you
should be aware of the following tax implications of investing in the Fund.
Distributions are subject to federal income tax and may be subject to state
or local taxes. Dividends paid from short-term capital gains and net
investment income are taxable as ordinary income. Long-term capital gains are
taxable as long-term capital gains when distributed to shareholders. It does
not matter how long you have held your shares. 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. Any
long-term capital gains will be separately identified in the tax information
the Fund sends you after the end of the calendar year.

Avoid "Buying a Dividend." If you buy shares on or just before the
      ex-dividend date, or just before the Fund declares a capital gains
      distribution, you will pay the full price for the shares and then
      receive a portion of the price back as a taxable dividend or capital
      gain.
Remember, There May be Taxes on Transactions. Because the Fund's share prices
      fluctuate, 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 advisor
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 fiscal 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.

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

CLASS A  YEAR ENDED AUGUST 31,                  2002        2001
2000        1999        1998
=====================================================================================================


PER SHARE OPERATING DATA
-----------------------------------------------------------------------------------------------------
 Net asset value, beginning of period        $ 41.11     $ 62.12     $
44.73     $ 32.53     $ 38.63
-----------------------------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment income (loss)                   (.09)        .10
(.02)       (.04)        .17
 Net realized and unrealized gain (loss)       (9.31)     (15.86)
20.63       14.87       (1.55)

--------------------------------------------------------
 Total from investment operations              (9.40)     (15.76)
20.61       14.83       (1.38)
-----------------------------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income             --          --
--        (.09)       (.15)
 Distributions from net realized gain           (.99)      (5.25)
(3.22)      (2.54)      (4.57)

-------------------------------------------------------
 Total dividends and/or
 distributions to shareholders                  (.99)      (5.25)
(3.22)      (2.63)      (4.72)
-----------------------------------------------------------------------------------------------------
 Net asset value, end of period               $30.72      $41.11
$62.12      $44.73      $32.53

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

=====================================================================================================
 TOTAL RETURN, AT NET ASSET VALUE(1)          (23.48)%    (26.38)%
48.01%      47.36%      (4.06)%

=====================================================================================================
 RATIOS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------
 Net assets, end of period
   (in thousands)                         $3,219,391  $3,055,197  $3,648,961
$2,071,317  $1,233,958
-----------------------------------------------------------------------------------------------------
 Average net assets (in thousands)        $3,204,793  $3,255,995  $2,898,088
$1,788,774  $1,352,628
-----------------------------------------------------------------------------------------------------
 Ratios to average net assets:(2)
 Net investment income (loss)                  (0.15)%      0.28%
0.00%      (0.05)%      0.48%
 Expenses                                       1.22%       1.03%
1.06%       1.04%       1.00%(3)
-----------------------------------------------------------------------------------------------------
 Portfolio turnover rate                          28%         46%
44%         59%         60%


1. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year.
2. Annualized for periods of less than one full year.
3. Expense ratio has been calculated without adjustment for the reduction to
custodian expenses.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

FINANCIAL HIGHLIGHTS  Continued


CLASS B  YEAR ENDED AUGUST 31,                  2002        2001
2000        1999        1998
=====================================================================================================


PER SHARE OPERATING DATA
-----------------------------------------------------------------------------------------------------
 Net asset value, beginning of period        $ 39.09     $ 59.80     $
43.48     $ 31.85     $ 38.07
-----------------------------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment loss                            (.26)       (.07)
(.20)       (.21)       (.02)
 Net realized and unrealized gain (loss)       (8.89)     (15.39)
19.74       14.38       (1.62)

-----------------------------------------------------------
 Total from investment operations              (9.15)     (15.46)
19.54       14.17       (1.64)
-----------------------------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income             --          --
--          --        (.01)
 Distributions from net realized gain           (.99)      (5.25)
(3.22)      (2.54)      (4.57)

-----------------------------------------------------------
 Total dividends and/or
 distributions to shareholders                  (.99)      (5.25)
(3.22)      (2.54)      (4.58)
-----------------------------------------------------------------------------------------------------
 Net asset value, end of period               $28.95      $39.09
$59.80      $43.48      $31.85

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

=====================================================================================================
 TOTAL RETURN, AT NET ASSET VALUE(1)          (24.07)%    (26.95)%
46.88%      46.20%      (4.86)%
-----------------------------------------------------------------------------------------------------

=====================================================================================================
 RATIOS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------
 Net assets, end of period (in thousands) $1,029,322  $1,242,098  $1,333,387
$531,625    $193,638
-----------------------------------------------------------------------------------------------------
 Average net assets (in thousands)        $1,221,005  $1,265,753  $  922,480
$372,157    $132,908
-----------------------------------------------------------------------------------------------------
 Ratios to average net assets:(2)
 Net investment loss                           (0.92)%     (0.48)%
(0.76)%     (0.86)%     (0.37)%
 Expenses                                       1.99%       1.80%
1.83%       1.84%       1.81%(3)
-----------------------------------------------------------------------------------------------------
 Portfolio turnover rate                          28%         46%
44%         59%         60%


1. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year.
2. Annualized for periods of less than one full year.
3. Expense ratio has been calculated without adjustment for the reduction to
custodian expenses.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

CLASS C  YEAR ENDED AUGUST 31,                  2002        2001
2000        1999        1998
=====================================================================================================


PER SHARE OPERATING DATA
-----------------------------------------------------------------------------------------------------
 Net asset value, beginning of period        $ 38.64     $ 59.19     $
43.06     $ 31.57     $ 37.76
-----------------------------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment loss                            (.11)       (.01)
(.18)       (.23)       (.03)
 Net realized and unrealized gain (loss)       (8.91)     (15.29)
19.53       14.26       (1.59)

-----------------------------------------------------------
 Total from investment operations              (9.02)     (15.30)
19.35       14.03       (1.62)
-----------------------------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income             --          --
--          --          --
 Distributions from net realized gain           (.99)      (5.25)
(3.22)      (2.54)      (4.57)

-----------------------------------------------------------
 Total dividends and/or
 distributions to shareholders                  (.99)      (5.25)
(3.22)      (2.54)      (4.57)
-----------------------------------------------------------------------------------------------------
 Net asset value, end of period               $28.63      $38.64
$59.19      $43.06      $31.57

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

=====================================================================================================
 TOTAL RETURN, AT NET ASSET VALUE(1)          (24.01)%    (26.95)%
46.89%      46.16%      (4.84)%

=====================================================================================================
 RATIOS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------
 Net assets, end of period (in thousands)   $450,989    $426,476    $402,442
$165,231     $76,058
-----------------------------------------------------------------------------------------------------
 Average net assets (in thousands)          $477,369    $400,009    $278,800
$126,443     $61,503
-----------------------------------------------------------------------------------------------------
 Ratios to average net assets:(2)
 Net investment loss                           (0.87)%     (0.48)%
(0.76)%     (0.86)%     (0.36)%
 Expenses                                       1.94%       1.80%
1.83%       1.85%       1.82%(3)
-----------------------------------------------------------------------------------------------------
 Portfolio turnover rate                          28%         46%
44%         59%         60%


1. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year.
2. Annualized for periods of less than one full year.
3. Expense ratio has been calculated without adjustment for the reduction to
custodian expenses.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

FINANCIAL HIGHLIGHTS  Continued


CLASS N  YEAR ENDED AUGUST 31,                              2002        2001(1)
================================================================================

PER SHARE OPERATING DATA
--------------------------------------------------------------------------------
 Net asset value, beginning of period                    $ 41.05     $ 45.58
--------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment income (loss)                               (.07)(2)    (.01)
 Net realized and unrealized loss                          (9.39)(2)   (4.52)
                                          --------------------------------------
 Total from investment operations                          (9.46)      (4.53)
--------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income                         --          --
 Distributions from net realized gain                       (.99)         --
                                          --------------------------------------
 Total dividends and/or distributions to shareholders       (.99)         --
--------------------------------------------------------------------------------
 Net asset value, end of period                           $30.60      $41.05
                                          ======================================

================================================================================
 TOTAL RETURN, AT NET ASSET VALUE(3)                      (23.67)%     (9.94)%
--------------------------------------------------------------------------------

================================================================================
 RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
 Net assets, end of period (in thousands)                $72,178      $6,791
--------------------------------------------------------------------------------
 Average net assets (in thousands)                       $38,232      $3,173
--------------------------------------------------------------------------------
 Ratios to average net assets:(4)
 Net investment loss                                       (0.37)%     (0.11)%
 Expenses                                                   1.46%       1.36%
--------------------------------------------------------------------------------
 Portfolio turnover rate                                      28%         46%


1. For the period from March 1, 2001 (inception of offering) to August 31, 2001.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. Assumes an investment on the business day before the first day of the fiscal
period (or inception of offering), with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at the
net asset value calculated on the last business day of the fiscal period. Sales
charges are not reflected in the total returns. Total returns are not annualized
for periods of less than one full year.
4. Annualized for periods of less than one full year.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


CLASS Y  YEAR ENDED AUGUST 31,                  2002        2001
2000        1999        1998(1)
=====================================================================================================


PER SHARE OPERATING DATA
-----------------------------------------------------------------------------------------------------
 Net asset value, beginning of period        $ 41.55     $ 62.51     $
44.81     $ 32.56     $ 40.15
-----------------------------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment income (loss)                    .02(2)      .27
.13         .13         .30
 Net realized and unrealized gain (loss)       (9.42)(2)  (15.98)
20.79       14.85       (3.11)

---------------------------------------------------------
 Total from investment operations              (9.40)     (15.71)
20.92       14.98       (2.81)
-----------------------------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income             --          --
--        (.19)       (.21)
 Distributions from net realized gain           (.99)      (5.25)
(3.22)      (2.54)      (4.57)

---------------------------------------------------------
 Total dividends and/or
 distributions to shareholders                  (.99)      (5.25)
(3.22)      (2.73)      (4.78)
-----------------------------------------------------------------------------------------------------
 Net asset value, end of period               $31.16      $41.55
$62.51      $44.81      $32.56

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

=====================================================================================================
 TOTAL RETURN, AT NET ASSET VALUE(3)          (23.23)%    (26.12)%
48.64%      47.90%      (7.45)%
-----------------------------------------------------------------------------------------------------

=====================================================================================================
 RATIOS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------
 Net assets, end of period (in thousands)   $864,437  $  974,820  $1,295,087
$420,455    $180,512
-----------------------------------------------------------------------------------------------------
 Average net assets (in thousands)          $968,867  $1,095,575  $  855,270
$307,498    $139,050
-----------------------------------------------------------------------------------------------------
 Ratios to average net assets:(4)
 Net investment income                          0.17%       0.66%
0.45%       0.30%       0.75%
 Expenses                                       0.89%       0.66%
0.64%       0.68%       0.69%(5)
-----------------------------------------------------------------------------------------------------
 Portfolio turnover rate                          28%         46%
44%         59%         60%


1. For the period from November 3, 1997 (inception of offering) to August 31,
1998.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. Assumes an investment on the business day before the first day of the fiscal
period (or inception of offering), with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at the
net asset value calculated on the last business day of the fiscal period. Sales
charges are not reflected in the total returns. Total returns are not annualized
for periods of less than one full year.
4. Annualized for periods of less than one full year.
5. Expense ratio has been calculated without adjustment for the reduction to
custodian expenses.

                        APPENDIX TO THE PROSPECTUS OF
                    OPPENHEIMER CAPITAL APPRECIATION FUND

      Graphic material included in the Prospectus of Oppenheimer Capital
Appreciation Fund ("the Fund") "Annual Total Returns (Class A) (% as of 12/31
each year)":

      A bar chart will be included in the Prospectus of the Fund depicting
the annual total returns of a hypothetical investment in Class A shares of
the Fund for each of the ten most recent calendar years, without deducting
sales charges.  Set forth below are the relevant data points that will appear
in the bar chart:


--------------------------------------------------------------------
      Calendar Year Ended:              Annual Total Returns
--------------------------------------------------------------------
--------------------------------------------------------------------
12/31/92                                       10.27%
--------------------------------------------------------------------
--------------------------------------------------------------------
12/31/93                                       3.93%
--------------------------------------------------------------------
--------------------------------------------------------------------
12/31/94                                                    0.46%
--------------------------------------------------------------------
--------------------------------------------------------------------
12/31/95                                       34.85%
--------------------------------------------------------------------
--------------------------------------------------------------------
12/31/96                                       27.96%
--------------------------------------------------------------------
--------------------------------------------------------------------
12/31/97                                       26.33%
--------------------------------------------------------------------
--------------------------------------------------------------------
12/31/98                                       24.04%
--------------------------------------------------------------------
--------------------------------------------------------------------
12/31/99                                       42.09%
--------------------------------------------------------------------
--------------------------------------------------------------------
12/31/00                                       -1.29%
--------------------------------------------------------------------
--------------------------------------------------------------------
12/31/01                                      -12.69%
--------------------------------------------------------------------

INFORMATION AND SERVICES

For More Information on Oppenheimer Capital Appreciation 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, the notice explaining the Fund's privacy policy and
other information about the Fund or your account:

------------------------------------------------------------------------------
By Telephone:                 Call OppenheimerFunds Services toll-free:
                              1.800.CALL.OPP (225.5677)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
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 or read or
                              down-load documents on the OppenheimerFunds
                              website: 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 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. 811-3105
PR0320.001.1202
Printed on recycled paper

Oppenheimer Capital Appreciation Fund
6803 South Tucson Way, Centennial, Colorado 80112-3924
1.800.CALL.OPP (225.5677)


Statement of Additional Information dated December 27, 2002

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

Contents
                                                                        Page
About the Fund

Additional Information About the Fund's Investment Policies and Risks.. 2
    The Fund's Investment Policies..................................... 2
    Other Investment Techniques and Strategies......................... 4
    Investment Restrictions............................................ 21
How the Fund is Managed ............................................... 22
    Organization and History........................................... 22
    Trustees and Officers of the Fund.................................. 24
    The Manager........................................................ 33
Brokerage Policies of the Fund......................................... 35
Distribution and Service Plans......................................... 37
Performance of the Fund................................................ 41


About Your Account

How To Buy Shares...................................................... 46
How To Sell Shares..................................................... 57
How To Exchange Shares................................................. 61
Dividends, Capital Gains and Taxes..................................... 65
Additional Information About the Fund.................................. 70


Financial Information About the Fund

Independent Auditors' Report........................................... 71
Financial Statements................................................... 72

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



ABOUT THE FUND

Additional Information About the Fund's Investment Policies and Risks

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

The Fund's Investment Policies

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

|X|   Cyclical  Opportunities.  The Fund might also seek to take  advantage of
changes in the business  cycle by investing in companies that are sensitive to
those  changes  if the  Manager  believes  they  have  growth  potential.  For
example,  when the economy is  expanding,  companies in the consumer  durables
and   technology   sectors   might   benefit   and  offer   long-term   growth
opportunities.  Other cyclical industries include insurance,  for example. The
Fund  focuses on  seeking  growth  over the long term,  but could seek to take
tactical   advantage  of  short-term  market  movements  or  events  affecting
particular issuers or industries.

|X|   Investments in Equity  Securities.  The Fund focuses its  investments in
equity securities.  Equity securities include common stocks, preferred stocks,
rights and warrants,  and securities convertible into common stock. The Fund's
investments  may  include  stocks of  companies  of all market  capitalization
ranges: small-cap,  mid-cap and large-cap. At times, the Fund may increase its
emphasis on equity  investments  in securities  of one or more  capitalization
ranges,  based  upon  the  Manager's  judgment  of where  are the best  market
opportunities  to seek the Fund's  objective.  It may use some of the specific
investment techniques and strategies some times or not at all.

      In selecting securities for the Fund's portfolio,  the Manager evaluates
a number of factors, including among them:

|_|   the history of the issuer's operations and financial results,
|_|   prospects for the industry of which the issuer is part,
|_|   pending product developments and those of competitors,
|_|   the effect of general  market and  economic  conditions  on the issuer's
            business,
|_|   legislative proposals that might affect the issuer, and
|_|   the issuer's current financial condition.

      Current  income is not a  criterion  used to select  equity  securities.
However,  certain debt securities may be selected for the Fund's portfolio for
defensive  purposes  (including debt securities that the Manager  believes may
offer some opportunities for capital appreciation when stocks are disfavored).
      The Fund can invest in  securities of small cap issuers  (having  market
capitalizations of less than $1 billion).  Securities of small  capitalization
issuers may be subject to greater price  volatility in general than securities
of large-cap  and mid-cap  companies.  Therefore,  to the degree that the Fund
has  investments  in  smaller  capitalization  companies  at times  of  market
volatility,  the Fund's share price may fluctuate  more.  As noted below,  the
Fund limits investments in unseasoned small cap issuers.

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

|_|   Rights and  Warrants.  The Fund may invest up to 5% of its total  assets
in  warrants or rights.  That 5% limit does not apply to  warrants  and rights
the Fund has acquired as part of units of  securities  or that are attached to
other  securities  that the Fund  buys.  Warrants  basically  are  options  to
purchase  equity  securities at specific prices valid for a specific period of
time.  Their  prices do not  necessarily  move  parallel  to the prices of the
underlying  securities.  Rights are similar to warrants,  but normally  have a
short   duration   and  are   distributed   directly  by  the  issuer  to  its
shareholders.  Rights and warrants have no voting rights, receive no dividends
and have no rights with respect to the assets of the issuer.


|X|   Foreign  Securities.  The Fund can purchase equity  securities issued or
guaranteed  by  foreign   companies  or  debt  securities  issued  by  foreign
governments.  "Foreign  securities"  include  equity  and debt  securities  of
companies  organized under the laws of countries other than the United States.
They  may  be  traded  on  foreign  securities  exchanges  or in  the  foreign
over-the-counter  markets.  The Fund  currently  does not  expect to have more
than 35% of its assets  invested  in foreign  securities,  although it has the
ability to invest in them without limit.


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

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

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

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

|X|   Portfolio  Turnover.  "Portfolio  turnover"  describes the rate at which
the Fund traded its  portfolio  securities  during its last fiscal  year.  For
example,  if a fund sold all of its securities  during the year, its portfolio
turnover rate would have been 100%.  The Fund's  portfolio  turnover rate will
fluctuate  from  year to year,  although  the Fund  does not  expect to have a
portfolio  turnover  rate of more  than  100%  annually.  Increased  portfolio
turnover  creates higher  brokerage and transaction  costs for the Fund, which
may reduce its overall performance.  Additionally,  the realization of capital
gains  from  selling  portfolio  securities  may  result in  distributions  of
taxable long-term capital gains to shareholders,  since the Fund will normally
distribute  all of its capital gains realized each year, to avoid excise taxes
under the Internal Revenue Code.

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

|X|   Investing  in  Small,  Unseasoned  Companies.  The  Fund can  invest  in
securities of small, unseasoned companies.  These are companies that have been
in  operation  for less than three  years,  including  the  operations  of any
predecessors.  Securities  of these  companies may be subject to volatility in
their  prices.  They may have a limited  trading  market,  which may adversely
affect  the  Fund's  ability  to  dispose of them and can reduce the price the
Fund might be able to obtain  for them.  Other  investors  that own a security
issued by a small,  unseasoned  issuer for which  there is  limited  liquidity
might  trade  the  security  when the Fund is  attempting  to  dispose  of its
holdings of that  security.  In that case the Fund might receive a lower price
for its holdings than might otherwise be obtained.  The Fund currently intends
to invest no more than 5% of its net assets in those securities.


|X|   Investment in Other  Investment  Companies.  The Fund can also invest in
the  securities  of other  investment  companies,  which can include  open-end
funds,  closed-end funds and unit investment trusts, subject to the limits set
forth in the  Investment  Company  Act of 1940,  as amended  (the  "Investment
Company  Act") that apply to those  types of  investments.  For  example,  the
Fund can invest in  Exchange-Traded  Funds, which are typically open-end funds
or unit investment  trusts,  listed on a stock exchange.  The Fund might do so
as a way of gaining  exposure to the  segments  of the equity or  fixed-income
markets  represented by the  Exchange-Traded  Funds' portfolio,  at times when
the Fund may not be able to buy those portfolio securities directly.

      Investing  in another  investment  company  may  involve  the payment of
substantial  premiums above the value of such investment  company's  portfolio
securities  and is subject to limitations  under the  Investment  Company Act.
The Fund does not intend to invest in other  investment  companies  unless the
Manager  believes that the potential  benefits of the  investment  justify the
payment of any premiums or sales  charges.  As a shareholder  of an investment
company,  the Fund would be subject to its  ratable  share of that  investment
company's expenses,  including its advisory and administration  expenses.  The
Fund does not anticipate  investing a substantial  amount of its net assets in
shares of other investment companies.


|X|   Repurchase  Agreements.  The  Fund can  acquire  securities  subject  to
repurchase  agreements.  It  might  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  transactions,  or for temporary defensive  purposes,  as described
below.


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


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

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


      Pursuant to an  Exemptive  Order issued by the  Securities  and Exchange
Commission,  the Fund,  along with other  affiliated  entities  managed by the
Manager,  may  transfer  uninvested  cash  balances  into  one or  more  joint
repurchase  agreement  accounts.  These  balances  are invested in one or more
repurchase  agreements,  secured  by U.S.  Government  securities.  Securities
that  are  pledged  as  collateral  for  repurchase  agreements  are held by a
custodian bank until the agreements mature. Each joint repurchase  arrangement
requires  that the  market  value of the  collateral  be  sufficient  to cover
payments of interest and  principal;  however,  in the event of default by the
other  party to the  agreement,  retention  or sale of the  collateral  may be
subject to legal proceedings.

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


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


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


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

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

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

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

      |    Interfund Borrowing and Lending  Arrangements.  Consistent with its
fundamental  policies  and  pursuant  to an  exemptive  order  issued  by  the
Securities and Exchange Commission  ("SEC"),  the Fund may engage in borrowing
and  lending  activities  with other  funds in the  OppenheimerFunds  complex.
Borrowing money from  affiliated  funds may afford the Fund the flexibility to
use  the  most   cost-effective   alternative   to   satisfy   its   borrowing
requirements.  Lending  money  to an  affiliated  fund may  allow  the Fund to
obtain  a  higher  rate of  return  than  it  could  from  interest  rates  on
alternative short-term  investments.  Implementation of interfund lending will
be accomplished consistent with applicable regulatory requirements,  including
the provisions of the SEC order.

o     Interfund  Borrowing.  The Fund will not borrow  from  affiliated  funds
unless the terms of the  borrowing  arrangement  are at least as  favorable as
the terms the Fund could  otherwise  negotiate  with a third party.  To assure
that the Fund will not be  disadvantaged by borrowing from an affiliated fund,
certain  safeguards may be implemented.  Examples of these safeguards  include
the following:
o     the Fund will not borrow money from affiliated funds unless the
               interest rate is more favorable than available bank loan
               rates;
o     the Fund's borrowing from affiliated funds must be consistent with its
               investment objective and investment policies;
o     the loan rates will be the average of the overnight repurchase
               agreement rate available through the OppenheimerFunds joint
               repurchase agreement account and  a pre-established formula
               based on quotations from independent banks to approximate the
               lowest interest rate at which bank loans would be available to
               the Fund;
o     if the Fund has outstanding borrowings from all sources greater than
               10% of its total assets, then the Fund must secure each
               additional outstanding interfund loan by segregating liquid
               assets of the Fund as collateral;
o     the Fund cannot borrow from an affiliated fund in excess of 125% of its
               total redemptions for the preceding seven days;
o     each interfund loan may be repaid on any day by the Fund; and
o     the Trustees will be provided with a report of all interfund loans and
               the Trustees will monitor all such borrowings to ensure that
               the Fund's participation is appropriate.

      There is a risk that a borrowing fund could have a loan called on one
day's notice.  In that circumstance, the Fund might have to borrow from a
bank at a higher interest cost if money to lend were not available from
another Oppenheimer fund.

o     Interfund Lending. To assure that the Fund will not be disadvantaged by
making loans to affiliated funds, certain safeguards will be implemented.
Examples of these safeguards include the following:

o     the Fund will not lend money to affiliated funds unless the interest
               rate on such loan is determined to be reasonable under the
               circumstances;
o     the Fund may not make interfund loans in excess of 15% of its net
               assets;
o     an interfund loan to any one affiliated fund shall not exceed 5% of the
               Fund's net assets;
o     an interfund loan may not be outstanding for more than seven days;
o     each interfund loan may be called on one business day's notice; and
o     the Manager will provide the Trustees reports on all interfund loans
               demonstrating that the Fund's participation is appropriate and
               that the loan is consistent with its investment objectives and
               policies.

      When the Fund  lends  assets to  another  affiliated  fund,  the Fund is
subject to the credit that the borrowing fund fails to repay the loan.

      |    Borrowing.  Currently,  under  the  1940  Act,  a  mutual  fund may
borrow  only  from  banks  and  the  maximum  amount  it may  borrow  is up to
one-third of its total assets (including the amount  borrowed),  except that a
fund may borrow up to 5% of its total assets for  temporary  purposes from any
person.  Under the 1940 Act, there is a rebuttable  presumption that a loan is
temporary  if it is repaid  within 60 days and not  extended or renewed.  As a
matter of fundamental  policy,  the Fund is authorized to borrow up to 33 1/3%
of its total assets.  During periods of substantial  borrowings,  the value of
the Fund's  assets  would be reduced  due to the added  expense of interest on
borrowed  monies.  The Fund is authorized  to borrow,  and to pledge assets to
secure such borrowings,  up to the maximum extent  permissible  under the 1940
Act (i.e.,  presently  50% of net  assets).  Any such  borrowing  will be made
only  pursuant  to the  requirements  of the 1940 Act and will be made only to
the extent that the value of each Fund's  assets less its  liabilities,  other
than  borrowings,  is equal to at least 300% of all  borrowings  including the
proposed  borrowing.  If the value of a Fund's  assets,  so  computed,  should
fail to meet the  300%  asset  coverage  requirement,  the  Fund is  required,
within three business days to reduce its bank debt to the extent  necessary to
meet such  requirement  and may have to sell a portion of its investments at a
time when  independent  investment  judgment  would  not  dictate  such  sale.
Interest on money  borrowed is an expense the Fund would not otherwise  incur,
so that it may have  little or no net  investment  income  during  periods  of
substantial  borrowings.  Since substantially all of a Fund's assets fluctuate
in value,  but borrowing  obligations  are fixed when the Fund has outstanding
borrowings,  the net asset value per share of a Fund correspondingly will tend
to increase and decrease more when the Fund's  assets  increase or decrease in
value than would otherwise be the case.

         The Fund has the ability to borrow from banks on an  unsecured  basis
to  invest  the  borrowed  funds in  portfolio  securities.  This  speculative
technique is known as  "leverage."  The Fund may not borrow  money,  except to
the  extent  permitted  under  the  Investment   Company  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 will pay interest on these  loans,  and that  interest  expense
will raise the  overall  expenses  of the Fund and reduce its  returns.  If it
does borrow,  its expenses will be greater than  comparable  funds that do not
borrow for leverage.  Additionally, the Fund's net asset value per share might
fluctuate  more than that of funds  that do not  borrow.  Currently,  the Fund
does not  contemplate  using  this  technique,  but if it does so, it will not
likely do so to a substantial degree.

|X|   Debt  Securities.  While the Fund does not  invest  for the  purpose  of
seeking current  income,  at times certain debt securities may be selected for
investment  by the  Fund for  defensive  purposes,  as  described  below.  For
example,  when the stock market is  volatile,  or when the  portfolio  manager
believes that growth opportunities in stocks are not attractive,  certain debt
securities might provide not only offer defensive  opportunities but also some
opportunities  for  capital  appreciation.  These  investments  could  include
corporate  bonds  and  notes  of U.S.  companies,  as well as U.S.  government
securities,  especially zero-coupon or "stripped" U. S. government securities.
It is not expected that this will be a significant  portfolio  strategy of the
Fund under normal market circumstances.

|_|   Zero-Coupon  Securities.  The  Fund  may  buy  zero-coupon  and  delayed
interest debt securities of U.S. issuers.  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.

      Investing in  zero-coupon  securities  could 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 might 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.

|_|   Credit Risk.  Debt  securities  are subject to credit risk.  Credit risk
relates to the ability of the issuer of a debt  security  to make  interest or
principal  payments on the security as they become due. If the issuer fails to
pay  interest,  the Fund's  income may be reduced  and if the issuer  fails to
repay  principal,  the  value of that  bond and of the  Fund's  shares  may be
reduced.  The Manager may rely to some extent on credit  ratings by nationally
recognized  rating  agencies  in  evaluating  the  credit  risk of  securities
selected  for the  Fund's  portfolio.  It may  also use its own  research  and
analysis.  Many factors  affect an issuer's  ability to make timely  payments,
and the credit risks of a particular security may change over time.

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

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

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

|X|   Hedging.  Although the Fund does not  anticipate  the  extensive  use of
hedging  instruments,  the Fund can use  hedging  instruments.  To  attempt to
protect  against  declines  in the market  value of the Fund's  portfolio,  to
permit  the  Fund  to  retain  unrealized  gains  in the  value  of  portfolio
securities which have  appreciated,  or to facilitate  selling  securities for
investment reasons, the Fund could:
|_|   sell futures contracts,
|_|   buy puts on such futures or on securities, or
|_|   write covered calls on securities or futures.  Covered calls may also be
            used to  increase  the Fund's  income,  but the  Manager  does not
            expect to engage extensively in that practice.

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

      The Fund's  strategy of hedging with futures and options on futures will
be incidental  to the Fund's  activities in the  underlying  cash market.  The
particular hedging  instruments the Fund can use are described below. The Fund
may employ new hedging instruments and strategies when they are developed,  if
those investment  methods are consistent with the Fund's investment  objective
and are permissible under applicable regulations governing the Fund.

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

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

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

      No payment is paid or received by the Fund on the  purchase or sale of a
future.  Upon entering into a futures  transaction,  the Fund will be required
to deposit an initial  margin  payment  with the futures  commission  merchant
(the "futures  broker").  Initial  margin  payments will be deposited with the
Fund's  custodian bank in an account  registered in the futures broker's name.
However,  the  futures  broker  can gain  access to that  account  only  under
specified  conditions.  As the future is marked to market  (that is, its value
on the  Fund's  books is  changed)  to reflect  changes  in its market  value,
subsequent  margin payments,  called variation  margin,  will be paid to or by
the futures broker daily.

      At any time prior to  expiration  of the  future,  the Fund may elect to
close out its position by taking an opposite  position,  at which time a final
determination  of  variation  margin is made and any  additional  cash must be
paid by or  released  to the  Fund.  Any  loss or gain on the  future  is then
realized  by the Fund  for tax  purposes.  All  futures  transactions  (except
forward  contracts) are effected  through a clearinghouse  associated with the
exchange on which the contracts are traded.

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

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

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

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

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

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

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

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

|_|   Writing  Put  Options.  The Fund may sell put  options.  A put option on
securities  gives  the  purchaser  the  right  to  sell,  and the  writer  the
obligation to buy, the underlying  investment at the exercise price during the
option period. The Fund will not write puts if, as a result,  more than 25% of
the Fund's net assets  would be  required to be  segregated  to cover such put
options.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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


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

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

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

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

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

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

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

      Transactions   in  options  by  the  Fund  are  subject  to  limitations
established by the option  exchanges.  The exchanges  limit the maximum number
of  options  that  may be  written  or held by a single  investor  or group of
investors  acting in concert.  Those  limits apply  regardless  of whether the
options were  written or  purchased on the same or different  exchanges or are
held in one or more  accounts or through one or more  different  exchanges  or
through one or more  brokers.  Thus,  the number of options  that the Fund may
write or hold may be  affected by options  written or held by other  entities,
including other  investment  companies having the same 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 a future,  it
must maintain cash or readily  marketable  short-term  debt  instruments in an
amount  equal to the market  value of the  securities  underlying  the future,
less the margin  deposit  applicable  to it. The account  must be a segregated
account or accounts held by the Fund's custodian bank.

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

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

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

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

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

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

Investment Restrictions

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

|X|   Does  the Fund  Have  Additional  Fundamental  Policies?  The  following
investment  restrictions are fundamental  policies of the Fund as contemplated
by the Investment  Company Act. The limitations of the following  policies may
be changed to the extent that the  corresponding  policies  of the  Investment
Company Act are changed by amendment, exemptive or interpretive relief.

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

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

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

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

|_|   The Fund cannot  invest in real estate,  except to the extent  permitted
under the Investment  Company Act, the rules or regulations  thereunder or any
exemption therefrom,  as such statute,  rules or regulations may be amended or
interpreted from time to time.

|_|   The Fund cannot invest in physical  commodities or commodity  contracts,
except to the extent permitted under the Investment  Company Act, the rules or
regulations  thereunder or any exemption therefrom,  as such statute, rules or
regulations may be amended or interpreted from time to time.

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

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

|X|   Does the Fund Have Any Restrictions  That Are Not Fundamental?  The Fund
has an investment  restriction that is not a fundamental  policy,  which means
it can be changed by the Board of Trustees without shareholder approval.

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


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


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

How the Fund is Managed

Organization  and  History.  The Fund is an open-end,  diversified  management
investment   company  with  an  unlimited  number  of  authorized   shares  of
beneficial interest.  The Fund was organized as a Maryland corporation in 1980
and reorganized as a Massachusetts business trust in 1987.

|X|   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 five classes of shares: Class A, Class B, Class
C, Class N and Class Y.  All classes invest in the same investment
portfolio.  Only retirement plans may purchase Class N shares. Only certain
institutional investors may elect to purchase Class Y shares.   Each class of
shares:
o     has its own dividends and distributions,
o     pays certain expenses which may be different for the different classes,
o     may have a different net asset value,
o     may have separate voting rights on matters in which interests of one
      class are different from interests of another class, and
o     votes as a class on matters that affect that class alone.

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

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

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

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

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

Board of Trustees and Oversight Committees. 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.


      The Board of Trustees has an Audit Committee, a Study Committee and a
Proxy Committee.  The Audit Committee is comprised solely of Independent
Trustees.  The members of the Audit Committee are Kenneth Randall (Chairman),
Benjamin Lipstein and Edward Regan.  The Audit Committee held five meetings
during the Fund's fiscal year ended August 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 eight meetings
during the Fund's fiscal year ended August 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 and other applicable law, among other duties as set forth in the
Committee's charter.

      The members of the Proxy Committee are Edward Regan (Chairman), Russell
Reynolds and Clayton Yeutter.  The Proxy Committee held one meeting during
the Fund's fiscal year ended August 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. Except Mr. Murphy, each of the Trustees 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.

      The Fund's Trustees and officers, their positions held with the Fund,
the length of service in such position(s) and their principal occupations and
business affiliations during the past five years are listed in the chart
below. The information for the Trustees also includes the dollar range of
shares of the Fund as well as the aggregate dollar range of shares
beneficially owned in any of the Oppenheimer funds overseen by the Trustees.
All of the Trustees are trustees or directors of the following Oppenheimer
funds (referred to as "Board I Funds"):

Oppenheimer California Municipal Fund   Oppenheimer International Growth Fund
                                        Oppenheimer  International  Small Company
Oppenheimer Capital Appreciation Fund   Fund

Oppenheimer Capital Preservation Fund   Oppenheimer Money Market Fund, Inc.
Oppenheimer Developing Markets Fund     Oppenheimer Multiple Strategies Fund
Oppenheimer Discovery Fund              Oppenheimer Multi-Sector Income Trust
Oppenheimer Emerging Growth Fund        Oppenheimer Multi-State Municipal Trust
Oppenheimer Emerging Technologies Fund  Oppenheimer Municipal Bond Fund
Oppenheimer Enterprise Fund             Oppenheimer New York Municipal Fund
Oppenheimer Europe Fund                 Oppenheimer Series Fund, Inc.
Oppenheimer Global Fund                 Oppenheimer Trinity Core Fund
Oppenheimer Global Growth & Income Fund Oppenheimer Trinity Large Cap Growth Fund
Oppenheimer  Gold  &  Special  Minerals
Fund                                    Oppenheimer Trinity Value Fund
Oppenheimer Growth 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. Present or former officers,  directors, trustees and
employees (and their  immediate  family  members) of the Fund, the Manager and
its affiliates,  and retirement plans  established by them for their employees
are  permitted  to  purchase  Class  A  shares  of  the  Fund  and  the  other
Oppenheimer  funds at net asset value without sales charge.  The sales charges
on Class A shares is waived for that group  because of the  economies of sales
efforts realized by the Distributor.


      Messrs. Murphy, Masterson, Molleur, Vottiero, Wixted and Zack, and
Mses. Putnam, Feld, and Ives respectively hold the same offices with one or
more of the other Board I Funds as with the Fund.  As of November 27, 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.

|X|   Affiliated Transactions and Material Business Relationships. Mr.
Reynolds has reported that he has a controlling interest in The Directorship
Search Group, Inc. ("The Directorship Search Group"), a director recruiting
firm that provided consulting services to Massachusetts Mutual Life Insurance
Company (which controls the Manager) for fees aggregating $110,000 from
January 1, 2000 through December 31, 2001, an amount representing less than
5% of the annual revenues of The Directorship Search Group. Mr. Reynolds
estimates that The Directorship Search Group will bill Massachusetts Mutual
Life Insurance Company $150,000 for services to be provided during the
calendar year 2002.


      The Independent Trustees have unanimously (except for Mr. Reynolds, who
abstained) determined that the consulting arrangements between The
Directorship Search Group and Massachusetts Mutual Life Insurance Company
were not material business or professional relationships that would
compromise Mr. Reynolds' status as an Independent Trustee. Nonetheless, to
assure certainty as to determinations of the Board and the Independent
Trustees as to matters upon which the 1940 Act or the rules thereunder
require approval by a majority of Independent 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.

     The address of each Trustee in the chart below is 6803 S. Tucson Way,
Centennial, CO 80112-3924. Each Trustee serves for an indefinite term, until
his or her resignation, retirement, death or removal.

-------------------------------------------------------------------------------------
                                Independent Trustees
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

Name,             Principal Occupation(s) During Past 5       Dollar     Aggregate
                                                                         Dollar
                                                                         Range Of
                                                                         Shares
                                                                         Beneficially
                                                                         Owned in
Position(s) Held  Years;                                      Range of   Any of the
with Fund,        Other Trusteeships/Directorships Held by    Shares     Oppenheimer
Length of         Trustee;                                    BeneficiallFunds
Service,          Number of Portfolios in Fund Complex        Owned in   Overseen
Age               Currently Overseen by Trustee               the Fund   by Trustee

-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
                                                                As of December 31,
                                                                       2001
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

Leon Levy,        General  Partner  (since  1982) of  Odyssey $0         None
Chairman of the
Board of          Partners,  L.P.  (investment   partnership)
Trustees,         and  Chairman of the Board  (since 1981) of
Trustee since     Avatar   Holdings,    Inc.   (real   estate
1981              development).  Oversees  31  portfolios  in
Age: 77           the OppenheimerFunds complex.

-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Robert G. Galli,  A trustee or director of other  Oppenheimer
Trustee since     funds.   Formerly  Vice  Chairman  (October
1993              1995-December   1997)   of   the   Manager. $0         Over
Age: 69           Oversees    41     portfolios     in    the            $100,000
                  OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

Phillip A.        The Director  (since 1991) of the Institute Over       Over
Griffiths,        for  Advanced   Study,   Princeton,   N.J.,
Trustee, since    director  (since  2001) of GSI Lumonics and
1999              a  member  of  the   National   Academy  of
Age: 64           Sciences   (since   1979);   formerly   (in
                  descending  chronological order) a director
                  of Bankers Trust  Corporation,  Provost and
                  Professor    of    Mathematics    at   Duke $100,000   $100,000
                  University,    a   director   of   Research
                  Triangle  Institute,  Raleigh,  N.C., and a
                  Professor   of   Mathematics   at   Harvard
                  University.  Oversees 31  portfolios in the
                  OppenheimerFunds complex.

-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Benjamin          Professor  Emeritus  of  Marketing,   Stern
Lipstein,         Graduate       School      of      Business
Trustee since     Administration,    New   York   University. $0         Over
1981              Oversees    31     portfolios     in    the            $100,000
Age: 79           OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

Joel W. Motley,   Director (January 2002-present), Columbia   None1      None1
Trustee since     Equity Financial Corp. (privately-held
2002              financial adviser); Managing Director
Age: 50           (January 2002-present), Carmona Motley,
                  Inc. (privately-held financial adviser);
                  Formerly he held the following positions:
                  Managing Director (January 1998-December
                  2001), Carmona Motley Hoffman Inc.
                  (privately-held financial adviser);
                  Managing Director (January 1992-December
                  1997), Carmona Motley & Co.
                  (privately-held financial adviser).
                  Oversees 31 portfolios in the
                  OppenheimerFunds complex.

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

Elizabeth B.      Author  and  architectural   historian;   a $10,001-$50$50,001-$100,000
Moynihan,         trustee  of the  Freer  Gallery  of Art and
Trustee since     Arthur  M.  Sackler  Gallery   (Smithsonian
1992              Institute),   Trustees   Council   of   the
Age: 73           National  Building  Museum; a member of the
                  Trustees  Council,  Preservation  League of
                  New York State.  Oversees 31  portfolios in
                  the OppenheimerFunds complex.

-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Kenneth A.        A  director  of  Dominion  Resources,  Inc.
Randall, Trustee  (electric   utility  holding  company)  and
since 1981        Prime Retail,  Inc. (real estate investment
Age: 75           trust);  formerly  a director  of  Dominion
                  Energy,  Inc. (electric power and oil & gas
                  producer),  President  and Chief  Executive
                  Officer  of  The  Conference   Board,  Inc. Over       Over
                  (international    economic   and   business $100,000   $100,000
                  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 $1-        $50,001-$100,000
Trustee since     director of RBAsset (real estate  manager);
1993              a director of OffitBank;  formerly Trustee,
Age: 72           Financial  Accounting  Foundation (FASB and
                  GASB),   Senior   Fellow  of  Jerome   Levy
                  Economics    Institute,    Bard    College,
                  Chairman    of     Municipal     Assistance $10,000
                  Corporation  for the City of New York,  New
                  York State  Comptroller  and Trustee of New
                  York  State  and  Local   Retirement  Fund.
                  Oversees  31  investment  companies  in the
                  OppenheimerFunds complex.

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

Russell S.        Chairman  (since 1993) of The  Directorship $1         $10,001-$50,000
Reynolds, Jr.,    Search Group,  Inc.  (corporate  governance
Trustee since     consulting  and  executive  recruiting);  a
1989              life   trustee   of   International   House
Age: 70           (non-profit educational organization),  and -$10,000
                  a  trustee  (since  1996) of the  Greenwich
                  Historical Society.  Oversees 31 portfolios
                  in the OppenheimerFunds complex.

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

Donald W. Spiro,  Chairman  Emeritus  (since January 1991) of Over       Over
Vice Chairman of
the Board of      the Manager.  Formerly a director  (January
Trustees,         1969-August 1999) of the Manager.  Oversees
Trustee since     31  portfolios   in  the   OppenheimerFunds $100,000   $100,000
1985              complex.
Age: 77

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

Clayton K.        Of Counsel  (since  1993),  Hogan & Hartson $0         $50,001-$100,000
Yeutter, Trustee  (a   law   firm).   Other    directorships:
since 1991        Caterpillar,    Inc.   (since   1993)   and
Age: 72           Weyerhaeuser Co. (since 1999).  Oversees 31
                  portfolios in the OppenheimerFunds complex.

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

      The address of Mr. Murphy in the chart below is 498 Seventh Avenue, New
York, NY 10018. Mr. Murphy serves for an indefinite term, until his
resignation, death or removal.

-------------------------------------------------------------------------------------
                           Interested Trustee and Officer
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

Name,             Principal Occupation(s) During Past 5       Dollar     Aggregate
                                                                         Dollar
                                                                         Range Of
                                                                         Shares
                                                                         Beneficially
                                                                         Owned in
                  Years;                                      Range of   Any of the
Position(s) Held  Other Trusteeships/Directorships Held by    Shares     Oppenheimer
with Fund,        Trustee;                                    BeneficiallFunds
Length of Service Number of Portfolios in Fund Complex        Owned in   Overseen
Age               Currently Overseen by Trustee               the Fund   by Trustee

-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
                                                                As of December 31,
                                                                       2001
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

John V. Murphy,   Chairman,   Chief  Executive   Officer  and $0            Over
President and     director  (since  June 2001) and  President             $100,000
Trustee,          (since  September  2000)  of  the  Manager;
Trustee since     President  and a  director  or  trustee  of
2001              other  Oppenheimer  funds;  President and a
Age: 53           director  (since July 2001) of  Oppenheimer
                  Acquisition  Corp.  (the  Manager's  parent
                  holding   company)   and   of   Oppenheimer
                  Partnership   Holdings,   Inc.  (a  holding
                  company  subsidiary  of  the  Manager);   a
                  director    (since    November   2001)   of
                  OppenheimerFunds   Distributor,   Inc.   (a
                  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
                  and  a  director   (since   July  2001)  of
                  OppenheimerFunds    Legacy    Program    (a
                  charitable  trust  program  established  by
                  the Manager);  a director of the investment
                  advisory  subsidiaries of the Manager:  OFI
                  Institutional  Asset  Management,  Inc. and
                  Centennial  Asset  Management   Corporation
                  (since  November 2001),  HarbourView  Asset
                  Management   Corporation  and  OFI  Private
                  Investments,   Inc.   (since   July  2001);
                  President  (since  November  1, 2001) and a
                  director  (since July 2001) of  Oppenheimer
                  Real  Asset  Management,  Inc.;  a director
                  (since    November    2001)   of    Trinity
                  Investment  Management  Corp.  and  Tremont
                  Advisers,    Inc.    (Investment   advisory
                  affiliates of the Manager);  Executive Vice
                  President    (since   February   1997)   of
                  Massachusetts    Mutual   Life    Insurance
                  Company (the Manager's parent  company);  a
                  director   (since   June   1995)   of   DLB
                  Acquisition  Corporation (a holding company
                  that owns the  shares of David L.  Babson &
                  Company,  Inc.); formerly,  Chief Operating
                  Officer  (September  2000-June 2001) of the
                  Manager;  President  and trustee  (November
                  1999-November    2001)   of   MML    Series
                  Investment      Fund     and     MassMutual
                  Institutional  Funds  (open-end  investment
                  companies);     a    director    (September
                  1999-August  2000) of C.M.  Life  Insurance
                  Company;    President,    Chief   Executive
                  Officer     and     director     (September
                  1999-August  2000)  of MML Bay  State  Life
                  Insurance   Company;   a   director   (June
                  1989-June  1998) of  Emerald  Isle  Bancorp
                  and Hibernia  Savings Bank (a  wholly-owned
                  subsidiary   of  Emerald   Isle   Bancorp).
                  Oversees    69     portfolios     in    the
                  OppenheimerFunds complex.

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


      The address of the Officers in the chart below is as follows: for
Messrs. Molleur and Zack and Mses. Feld and Putnam, 498 Seventh Avenue, New
York, NY 10018, for Messrs. Masterson, Vottiero and Wixted and Mses. Bechtolt
and Ives, 6803 S. Tucson Way, Centennial, CO 80112-3924. Each Officer serves
for an annual term or until his or her earlier resignation, death or removal.


-------------------------------------------------------------------------------------
                                Officers of the Fund
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

Name,                   Principal Occupation(s) During Past 5 Years
Position(s) Held with
Fund, Length of
Service,
Age

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

Jane Putnam, Vice       Vice  President  of the Manager  (since  October  1995);  an
President and           officer of 2  portfolios  in the  OppenheimerFunds  complex;
Portfolio Manager       before  joining the Manager in May 1994, she was a portfolio
since 1995              manager and equity research  analyst for Chemical Bank (June
Age:  41                1989 - May 1994).

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

Brian W. Wixted,        Senior Vice  President and  Treasurer  (since March 1999) of
Treasurer, Principal    the Manager;  Treasurer  (since  March 1999) of  HarbourView
Financial and           Asset Management  Corporation,  Shareholder Services,  Inc.,
Accounting Officer      Oppenheimer Real Asset Management  Corporation,  Shareholder
since 1999              Financial Services,  Inc., Oppenheimer Partnership Holdings,
Age: 43                 Inc.,  OFI Private  Investments,  Inc.  (since  March 2000),
                        OppenheimerFunds    International   Ltd.   and   Oppenheimer
                        Millennium Funds plc (since May 2000) and OFI  Institutional
                        Asset Management,  Inc. (since November 2000) (offshore fund
                        management  subsidiaries  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);  formerly  Principal and Chief Operating
                        Officer    (March    1995-March    1999),    Bankers   Trust
                        Company-Mutual  Fund  Services  Division.  An  officer of 85
                        portfolios in the OppenheimerFunds complex.

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

Connie Bechtolt,        Assistant Vice President of the Manager  (since September
Assistant Treasurer     1998); formerly Manager/Fund Accounting (September
since 2002              1994-September 1998) of the Manager. An officer of 85
Age: 39                 portfolios in the OppenheimerFunds complex.

-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
                        Vice  President/Fund  Accounting of the Manager (since March
Philip Vottiero,        2002;  formerly Vice  President/Corporate  Accounting of the
Assistant Treasurer     Manager (July  1999-March  2002) prior to which he was Chief
since 2002              Financial  Officer at Sovlink  Corporation  (April 1996-June
Age: 39                 1999).  An officer of 85 portfolios in the  OppenheimerFunds
                        complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

Robert G. Zack,         Senior Vice President  (since May 1985) and General  Counsel
Secretary since 2001    (since February 2002) of the Manager;  General Counsel and a
Age: 54                 director   (since   November   2001)   of   OppenheimerFunds
                        Distributor,   Inc.;   Senior  Vice  President  and  General
                        Counsel  (since   November   2001)  of   HarbourView   Asset
                        Management  Corporation;   Vice  President  and  a  director
                        (since November 2000) of Oppenheimer  Partnership  Holdings,
                        Inc.; Senior Vice President,  General Counsel and a director
                        (since  November  2001)  of  Shareholder   Services,   Inc.,
                        Shareholder   Financial   Services,    Inc.,   OFI   Private
                        Investments,   Inc.,   Oppenheimer  Trust  Company  and  OFI
                        Institutional   Asset  Management,   Inc.;  General  Counsel
                        (since  November  2001)  of  Centennial   Asset   Management
                        Corporation;   a   director   (since   November   2001)   of
                        Oppenheimer   Real   Asset   Management,   Inc.;   Assistant
                        Secretary   and  a  director   (since   November   2001)  of
                        OppenheimerFunds  International  Ltd.; Vice President (since
                        November   2001)   of   OppenheimerFunds   Legacy   Program;
                        Secretary  (since November 2001) of Oppenheimer  Acquisition
                        Corp.;    formerly   Acting   General   Counsel    (November
                        2001-February  2002)  and  Associate  General  Counsel  (May
                        1981-October  2001) of the Manager;  Assistant  Secretary of
                        Shareholder   Services,   Inc.  (May  1985-November   2001),
                        Shareholder     Financial    Services,     Inc.    (November
                        1989-November  2001);  OppenheimerFunds  International  Ltd.
                        And Oppenheimer  Millennium Funds plc (October 1997-November
                        2001).  An officer of 85 portfolios in the  OppenheimerFunds
                        complex.

-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Katherine P. Feld,      Vice  President and Senior  Counsel (since July 1999) of the
Assistant Secretary     Manager;    Vice    President    (since    June   1990)   of
since 2001              OppenheimerFunds    Distributor,    Inc.;   Director,   Vice
Age: 44                 President  and  Assistant  Secretary  (since  June  1999) of
                        Centennial  Asset  Management  Corporation;  Vice  President
                        (since 1997) of  Oppenheimer  Real Asset  Management,  Inc.;
                        formerly  Vice  President  and  Associate   Counsel  of  the
                        Manager (June  1990-July  1999). An officer of 85 portfolios
                        in the OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Kathleen T. Ives,       Vice  President and Assistant  Counsel  (since June 1998) of
Assistant Secretary     the    Manager;    Vice    President    (since    1999)   of
since 2001              OppenheimerFunds  Distributor,   Inc.;  Vice  President  and
Age: 36                 Assistant  Secretary  (since 1999) of Shareholder  Services,
                        Inc.;   Assistant   Secretary   (since   December  2001)  of
                        OppenheimerFunds  Legacy Program and  Shareholder  Financial
                        Services,   Inc.;  formerly  Assistant  Vice  President  and
                        Assistant  Counsel of the Manager (August  1997-June  1998);
                        Assistant Counsel of the Manager (August  1994-August 1997).
                        An officer of 85 portfolios in the OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

Philip T. Masterson,    Vice President and Assistant Counsel of the Manager (since
Assistant Secretary     July 1998); formerly, an associate with Davis, Graham, &
since 2002              Stubbs LLP (January 1997-June 1998). An officer of 85
Age: 38                 portfolios in the OppenheimerFunds complex.

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

Denis R. Molleur,       Vice  President  and Senior  Counsel of the  Manager  (since
Assistant Secretary     July 1999);  formerly a Vice President and Associate Counsel
since 2001              of the Manager (September  1995-July 1999). An officer of 82
Age: 45                 portfolios in the OppenheimerFunds complex.

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

Remuneration of Trustees.  The officers of the Fund and one of the Trustees 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 from the Fund with respect to the Fund's fiscal year
ended  August  31,  2002.  The  compensation  from  all of the  Board  I Funds
(including the Fund) represents  compensation received as a director,  trustee
or member of a committee of the Board during the calendar year 2001.

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

Trustee Name and   AgTotalte Compensation Retiremen Estimated Annual Retirement Benefits Paid at Retirement from all Board I Funds
                       Compensation F                                                                                 (33 Funds) 2
                         From All    und1
                        Oppenheimer
                         Funds For
                           Which
                        Individual
      Other Fund         Serves As
     Position(s)       Trustee/Direct              Benefits Accrued as Part of Fund
   (as applicable)      (33 Funds)   or                        Expenses

-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Leon Levy                 $37,845       $6,434        $137,560         $173,700
Chairman
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Robert G. Galli           $23,043       $19,056       $32,7662        $202,8863
Study Committee Member
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Phillip Griffiths        $12,9644       $5,031         $6,803          $54,889
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Benjamin Lipstein         $32,715         $0          $118,911         $150,152
Study Committee
Chairman, Audit
Committee Member
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Joel W. Motley5             $0            $0             $0               $0
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Elizabeth B. Moynihan     $23,043       $24,607       $52,348          $105,760
Study Committee Member
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Kenneth A. Randall        $21,137       $14,973       $76,827          $97,012
Audit Committee
Chairman
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Edward V. Regan           $20,907       $26,076       $42,748          $95,960
Proxy Committee
Chairman, Audit
Committee Member
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Russell S. Reynolds,      $15,642       $16,133       $46,197          $71,792
Jr.
Proxy Committee Member
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Donald Spiro              $15,755       $6,053         3,625           $64,080
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Clayton K. Yeutter       $15,6426       $12,314       $31,982          $71,792
Proxy Committee
Member
-------------------------------------------------------------------------------------
1.    Aggregate   compensation  from  the  Fund  includes  fees  and  deferred
 compensation, if any.

2.    Estimated  annual  retirement  benefits paid at retirement is based on a
 straight life payment plan election.  The amount for Mr. Galli includes  $24,989
 for  serving  as a trustee  or  director  of 10  Oppenheimer  funds that are not
 Board I Funds.

3.    Includes  $97,126 for Mr. Galli for serving as trustee or director of 10
 Oppenheimer funds that are not Board I Funds.
4.    Aggregate total  compensation  from the Fund includes  $12,964  deferred
 under Deferred Compensation Plan described below.

Elected  to the Board on October  10,  2002 and  therefore  did not  receive  any
 compensation.

6.    Aggregate  compensation  from the Fund includes  $3,911  deferred  under
 Deferred Compensation Plan described below.


|X|   Retirement  Plan for  Trustees.  The Fund has adopted a retirement  plan
that provides for payments to retired Trustees.  Payments are up to 80% of the
average  compensation  paid during a Trustee's  five years of service in which
the highest  compensation  was  received.  A Trustee must serve as trustee for
any of the Board I 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 November 27, 2002, the only persons who owned
of record  or were  known by the Fund to own of record 5% or more of any class
of the Fund's outstanding shares were:

     MLPF&S for the sole benefit of its customers,  Attn. Fund  Admn/#98756,
4800 Deer Lake Drive E, Floor 3,  Jacksonville,  Florida  32246-6484 which owned
10,309,227.361 Class A shares (8.80% of the Class A shares then outstanding)

     Great-West Life & Annuity Insurance Company,  Attn. Mutual Fund Trading
2T2,  8515  E  Orchard  Rd,  Greenwood  Village,   CO,  80111-5037  which  owned
13,048,978.893 Class A shares (11.15% of the Class A shares then outstanding)

     MLPF&S for the sole benefit of its customers,  Attn: Fund  Admn/#97C27,
4800 Deer Lake Drive E, Floor 3,  Jacksonville,  Florida  32246-6484 which owned
1,814,461.648 Class C shares (11.36% of the Class C shares then outstanding)

      Smith Barney House Acct  00109801250,  Attn: Cindy Tempesta,  7th Floor,
333 West 34th Street,  New York, New York 10001-2483  which owned  798,860.433
Class C shares (5.00% of the Class C shares then outstanding)

     Torchmark Corporation Svgs & Trust, 2001 3rd Avenue South,  Birmingham,
Alabama 35233-2115,  which owned 270,373,159 Class N shares (10.25% of the Class
N shares then outstanding)

      Mark Curran Tr, Boeing Co Master Trust,  200 Newport  Avenue Ext,  North
Quincy, MA 02171-2102,  which owned  18,578,687.194  Class Y shares (64.79% of
the Class Y shares then outstanding)

      Mass Mutual Life Insurance Co, Separate  Investment  Acct,  Attn:  N225,
1295 State  Street,  Springfield,  MA  01111-0001  which  owned  9,310,965.911
Class Y shares (32.47% of the Class Y shares then outstanding)


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

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


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


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

 ----------------------------------------------------------------------------
    Fiscal Year ended 8/31:      Management Fees Paid to OppenheimerFunds,
                                                   Inc.
 ----------------------------------------------------------------------------
 ----------------------------------------------------------------------------
             2000
                               $29,201,218
 ----------------------------------------------------------------------------
 ----------------------------------------------------------------------------
             2001
                               $35,024,076
 ----------------------------------------------------------------------------
 ----------------------------------------------------------------------------
             2002                               $34,456,425
 ----------------------------------------------------------------------------

      The investment  advisory agreement states that in the absence of willful
misfeasance,  bad faith,  gross negligence in the performance of its duties or
reckless  disregard  of  its  obligations  and  duties  under  the  investment
advisory agreement,  the Manager is not liable for any loss. The Fund sustains
for any investment,  adoption of any investment policy, or the purchase,  sale
or retention of any security.


    The  investment   advisory   agreement  permits  the  Manager  to  act  as
investment  adviser for any other person,  firm or corporation  and to use the
name "Oppenheimer" in connection with other investment  companies for which it
may act as investment adviser or general distributor.  If the Manager shall no
longer act as  investment  adviser to the Fund,  the Manager may  withdraw the
right of the Fund to use the name "Oppenheimer" as part of its name.


|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
   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.


      After careful deliberation the Board of Trustees concluded that it was
in the best interest of shareholders to continue the investment advisory
agreement for another year. 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 investment advisory agreement, including the
investment advisory fee, in light of all of the surrounding circumstances.

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

      The Code of Ethics is an exhibit to the  Fund's  registration  statement
filed with the  Securities  and  Exchange  Commission  and can be reviewed and
copied at the SEC's Public  Reference Room in Washington,  D.C. You can obtain
information  about the hours of  operation  of the  Public  Reference  Room by
calling  the SEC at  1-202-942-8090.  The Code of Ethics can also be viewed as
part of the Fund's  registration  statement on the SEC's EDGAR database at the
SEC's Internet web site at www.sec.gov.  Copies may be obtained,  after paying
a duplicating  fee, by electronic  request at the  following  E-mail  address:
publicinfo@sec.gov.,  or by writing  to the SEC's  Public  Reference  Section,
Washington, D.C. 20549-0102.

Brokerage Policies of the Fund

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

      Under the investment advisory agreement,  the Manager may select brokers
(other than  affiliates) that provide  brokerage and/or research  services for
the Fund and/or the other  accounts  over which the Manager or its  affiliates
have  investment  discretion.  The  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  considerations,  as a
factor  in  selecting  brokers  for the  Fund's  portfolio  transactions,  the
Manager  may also  consider  sales of shares of the Fund and other  investment
companies for which the Manager or an affiliate serves as investment adviser.

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

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

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

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

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

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

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

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

 ------------------------------------------------------------------------------
  Fiscal Year Ended 8/31:     Total Brokerage Commissions Paid by the Fund1
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
           2000                                $4,345,771
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
           2001                                $5,996,124
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
           20022                               $5,238,458
 ------------------------------------------------------------------------------
 1 Amounts do not include spreads or commissions on principal  transactions on
 a net trade basis.
 2 In the fiscal year ended 8/31/02,  the amount of  transactions  directed to
 brokers  for  research  services  was  $1,498,315,552,  and the amount of the
 commissions paid to broker-dealers for those services was $2,138,013.

Distribution and Service Plans

The Distributor.  Under its General Distributor's Agreement with the Fund, the
Distributor acts as the Fund's principal  underwriter in the continuous public
offering of the Fund's classes of shares.  The Distributor  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.


      The  sales  charge  and   concession   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 three most  recent  fiscal
years are shown in the table below.


-------------------------------------------
Fiscal    Aggregate        Class A
                           Front-End
Year      Front-End Sales  Sales Charges
Ended     Charges on       Retained by
08/31:    Class A Shares   Distributor
-------------------------------------------
-------------------------------------------
  2000       $9,222,674      $2,675,878
-------------------------------------------
-------------------------------------------
  2001      $10,082,655      $2,828,156
-------------------------------------------
-------------------------------------------
  2002      $11,107,427      $2,473,8671
-------------------------------------------
1.    Includes  amounts  retained by a  broker-dealer  that is an affiliate of
    the parent of the Distributor.


-----------------------------------------------------------------------------
Fiscal    Concessions on   Concessions on   Concessions on  Concessions on
Year      Class A Shares   Class B Shares   Class C Shares  Class N Shares
Ended     Advanced by      Advanced by      Advanced by     Advanced by
08/31:    Distributor1     Distributor1     Distributor1    Distributor1
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
  2000       $1,710,262      $12,986,219      $1,180,044          N/A
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
  2001       $1,634,569      $16,125,855      $1,835,899          N/A
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
  2002       $2,999,939      $13,196,558      $2,463,444        $755,491
-----------------------------------------------------------------------------
1.    The  Distributor  advances  concession  payments  to dealers for certain
   sales of  Class A shares  and for  sales  of Class B,  Class C and  Class N
   shares from its own resources at the time of sale.
-----------------------------------------------------------------------------

Fiscal    Class A          Class B          Class C          Class N
          Contingent       Contingent       Contingent       Contingent
Year      Deferred Sales   Deferred Sales   Deferred Sales   Deferred Sales
Ended     Charges          Charges          Charges          Charges
08/31     Retained by      Retained by      Retained by      Retained by
          Distributor      Distributor      Distributor      Distributor1

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

  2000        $35,205         $1,325,150        $46,952            N/A

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

  2001        $99,138         $2,111,146        $116,686           $47

-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
  2002        $93,365         $3,072,069        $152,225         $2,557
-----------------------------------------------------------------------------

   1The inception date of Class N shares was March 1, 2001.


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

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

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

      The Board of Trustees  and the  Independent  Trustees  must  approve all
material  amendments to a plan. An amendment to increase materially the amount
of payments to be made under a plan must be  approved by  shareholders  of the
class  affected  by  the  amendment.  Because  Class  B  shares  of  the  Fund
automatically  convert  into  Class A shares  after six  years,  the Fund must
obtain the  approval of both Class A and Class B  shareholders  for a proposed
material  amendment  to  the  Class  A Plan  that  would  materially  increase
payments under the Plan.  That approval must be by a "majority" (as defined in
the Investment Company Act) of the shares of each Class,  voting separately by
class.

      While the Plans are in effect,  the  Treasurer of the Fund shall provide
separate  written  reports  on the  plans to the  Board of  Trustees  at least
quarterly for its review.  The Reports shall detail the amount of all payments
made  under a plan,  the  purpose  for  which the  payments  were made and the
identity of each  recipient of a payment.  The reports on the Class B Plan and
Class C Plan shall also include the Distributor's  distribution costs for that
quarter  and in the case of the  Class B plan the  amount  of those  costs for
previous  fiscal  periods that have been carried  forward.  Those  reports are
subject to the review and approval of the Independent Trustees.

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

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


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

      With  respect to  purchases  of Class A shares  subject to a  contingent
deferred sales charge by certain  retirement  plans that purchased such shares
prior to March 1, 2001 ("grandfathered  retirement accounts"), the Distributor
currently  intends to pay the  service  fee to  Recipients  in advance for the
first year after the shares  are  purchased.  After the first year  shares are
outstanding,   the  Distributor  makes  service  fee  payments  to  Recipients
quarterly  on those  shares.  The  advance  payment  is based on the net asset
value of shares  sold.  Shares  purchased  by  exchange do not qualify for the
advance  service fee  payment.  While the plan  permits the Board to authorize
payments to the  Distributor to reimburse  itself for services under the plan,
the Board has not yet done so,  except in the case of the special  arrangement
described  below.  If Class A shares  purchased  by  grandfathered  retirement
accounts  are  redeemed  during  the first  year  after  their  purchase,  the
Recipient  of the service  fees on those shares will be obligated to repay the
Distributor a pro rata portion of the advance  payment of the service fee made
on those shares.

    For the fiscal year ended August 31, 2002 payments  under the Class A Plan
totaled  $7,599,340,  of which $93, 365 was retained by the Distributor  under
the arrangement  described above and included $401,632 paid to an affiliate of
the Distributor's  parent company.  During the first year the shares are sold,
the Distributor  retains the service fee to reimburse  itself for the costs of
distributing  the shares.  Any  unreimbursed  expenses the Distributor  incurs
with  respect  to Class A shares in any fiscal  year  cannot be  recovered  in
subsequent  years.  The  Distributor  may not use payments  received under the
Class A Plan to pay any of its interest expenses,  carrying charges,  or other
financial costs, or allocation of overhead.


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

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

      The  asset-based  sales  charge and service  fees  increase  Class B and
Class C expenses by 1.00%,  and increase  Class N expenses by 0.50% of the net
assets per year of the respective class.

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

    The  asset-based  sales  charges  on Class B,  Class C and  Class N shares
allow  investors to buy shares without a front-end sales charge while allowing
the  Distributor to compensate  dealers that sell those shares.  The Fund pays
the asset-based  sales charges to the Distributor for its services rendered in
distributing  Class B, Class C and Class N shares.  The  payments  are made to
the Distributor in recognition that the Distributor:
o     pays sales commissions to authorized  brokers and dealers at the time of
         sale and pays service fees as described above,
o     may  finance  payment of sales  commissions  and/or  the  advance of the
         service fee  payment to  recipients  under the plans,  or may provide
         such  financing  from its own  resources or from the  resources of an
         affiliate,
o     employs personnel to support  distribution of Class B, Class C and Class
         N shares, and
o     bears  the  costs  of sales  literature,  advertising  and  prospectuses
         (other than those furnished to current  shareholders) and state "blue
         sky" registration fees and certain other distribution expenses.
o     may not be able to adequately compensate dealers that sell Class B,
         Class C and Class N shares without receiving payment under the plans
         and therefore may not be able to offer such Classes for sale absent
         the plans,
o     receives payments under the plans consistent with the service fees and
         asset-based sales charges paid by other non-proprietary funds that
         charge 12b-1 fees,
o     may use the payments under the plan to include the Fund in various
         third-party distribution programs that may increase sales of Fund
         shares,
o     may experience increased difficulty selling the Fund's shares if
         payments under the plan are discontinued because most competitor
         funds have plans that pay dealers for rendering distribution
         services as much or more than the amounts currently being paid by
         the Fund, and
o     may not be able to continue providing, at the same or at a lesser cost,
         the same quality distribution sales efforts and services, or to
         obtain such services from brokers and dealers, if the plan payments
         were to be discontinued.

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


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


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

  Distribution Fees Paid to the Distributor in the Fiscal Year Ended 8/31/02
                                              Distributor's    Distributor's
-----------------                               Aggregate       Unreimbursed
                     Total        Amount       Unreimbursed    Expenses as %
                    Payments    Retained by   Expenses Under   of Net Assets
                   Under Plan   Distributor        Plan           of Class
Class:

-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class B Plan      $12,215,841  $10,030,5371    $30,841,033         3.00%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class C Plan       $4,579,140   $1,724,1702     $6,987,737         1.55%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class N Plan        $190,265     $185,9253      $1,268,502         1.76%
-------------------------------------------------------------------------------
1.    Includes  $164,812  paid to an  affiliate  of the  Distributor's  parent
   company.
2.    Includes  $115,184  paid to an  affiliate  of the  Distributor's  parent
   company.
3.    Includes $134 paid to an affiliate of the Distributor's parent company.

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

Performance of the Fund

Explanation  of Performance  Terminology.  The Fund uses a variety of terms to
illustrate its investment  performance.  Those terms include "cumulative total
return,"  "average  annual total return,"  "average annual total return at net
asset  value" and "total  return at net asset  value." An  explanation  of how
total  returns are  calculated  is set forth below.  The charts below show the
Fund's  performance  as of the Fund's  most recent  fiscal  year end.  You can
obtain current  performance  information by calling the Fund's  Transfer Agent
at  1.800.225.5677  or by visiting the  OppenheimerFunds  Internet  website at
www.oppenheimerfunds.com.
------------------------

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

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

|_|   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  may not reflect the effect of taxes on
          dividends and capital gains 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 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.
|_|   Total   returns   for  any  given  past  period   represent   historical
          performance  information  and are not, and should not be considered,
          a prediction of future returns.

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

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


      In  calculating  total returns for Class A shares,  the current  maximum
sales  charge of 5.75% (as a  percentage  of the  offering  price) is deducted
from the initial  investment  ("P")  (unless the return is shown without sales
charge,  as described  below).  For Class B shares,  payment of the applicable
contingent  deferred  sales  charge is  applied,  depending  on the period for
which the return is shown:  5.0% in the first year,  4.0% in the second  year,
3.0% in the third and fourth years,  2.0% in the fifth year, 1.0% in the sixth
year and none  thereafter.  For Class C  shares,  the 1%  contingent  deferred
sales  charge is  deducted  for  returns  for the 1-year  period.  For Class N
shares,  the 1% contingent  deferred  sales charge is deducted for returns for
the one  year and life of class  periods.  Class N total  returns  may also be
calculated  for the periods  prior to 3/1/01 (the  inception  date for Class N
shares)  based on the Fund's  Class A returns,  adjusted to reflect the higher
Class N 12b-1 fees.  There is no sales charge for Class Y shares.


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

                        ERV - 1 = AVERAGE ANNUAL TOTAL RETURN
                       -----
                         P
|_|   Average Annual Total Return (After Taxes on Distributions). The
"average annual total return (after taxes on distributions)" of Class A
shares is an average annual compounded rate of return for each year in a
specified number of years, adjusted to show the effect of federal taxes
(calculated using the highest individual marginal federal income tax rates in
effect on any reinvestment date) on any distributions made by the Fund during
the specified period. It is the rate of return based on the change in value
of a hypothetical initial investment of $1,000 ("P" in the formula below)
held for a number of years ("n" in the formula) to achieve an ending value
("ATVD" in the formula) of that investment, after taking into account the
effect of taxes on Fund distributions, but not on the redemption of Fund
shares, according to the following formula:

ATVD        - 1=  Average Annual Total Return (After Taxes on
----
1/n         Distributions)
  P

|_|   Average Annual Total Return (After Taxes on Distributions and
Redemptions).  The "average annual total return (after taxes on distributions
and redemptions)" of Class A shares is an average annual compounded rate of
return for each year in a specified number of years, adjusted to show the
effect of federal taxes (calculated using the highest individual marginal
federal income tax rates in effect on any reinvestment date) on any
distributions made by the Fund during the specified period and the effect of
capital gains taxes or capital loss tax benefits (each calculated using the
highest federal individual capital gains tax rate in effect on the redemption
date) resulting from the redemption of the shares at the end of the period.
It is the rate of return based on the change in value of a hypothetical
initial investment of $1,000 ("P" in the formula below) held for a number of
years ("n" in the formula) to achieve an ending value ("ATVDR" in the
formula) of that investment, after taking into account the effect of taxes on
fund distributions and on the redemption of Fund shares, according to the
following formula:

ATVDR       - 1=  Average Annual Total Return (After Taxes on
-----
1/n         Distributions and Redemption)
  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, Class C or Class N
shares.  There is no sales  charge  on  Class Y  shares.  Each is based on the
difference  in net asset value per share at the  beginning  and the end of the
period  for a  hypothetical  investment  in  that  class  of  shares  (without
considering  front-end or contingent  deferred  sales  charges) and takes into
consideration the reinvestment of dividends and capital gains distributions.

---------------------------------------------------------------------------------
             The Fund's Total Returns for the Periods Ended 8/31/02
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
           Cumulative Total              Average Annual Total Returns
           Returns (10 years
  Class    or Life of Class)
Of Shares
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
                                                   5-Year           10-Year
                                  1-Year            (or               (or
                                               life-of-class)   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 A   184.06%(1)201.39%(1)-27.89% -23.48%  2.13%    3.34%   11.00%   11.66%
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class B   80.35%(2) 80.35%(2) -27.77% -24.07%  2.26%    2.53%   9.01%2   9.01%2
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Class C   137.21%   137.21%   -24.75% -24.01%  2.55%    2.55%  10.38%3  10.38%3
             (3)       (3)

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class N   -31.93%(4)-31.25%(4)-24.41% -23.67% -22.61%  -22.11%   N/A      N/A
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class Y   15.41%    15.41%    -23.23% -23.23%  3.01%    3.01%    N/A      N/A
             (5)       (5)
---------------------------------------------------------------------------------
1. Inception A:   01/22/81
2. Inception B:   11/01/95
3. Inception C:   12/01/93
4. Inception N:   03/01/01
5. Inception Y:   11/03/97

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

            Average Annual Total Returns for Class A Shares (After Taxes)
                            For the Periods Ended 8/31/02

      --------------------------------------------------------------------------
      --------------------------------------------------------------------------
                                       1-Year         5-Year        10-Year
                                                                  (or life of
                                                                     class)
      --------------------------------------------------------------------------
      --------------------------------------------------------------------------
      After Taxes on Distributions    -28.22%         -0.01%         8.55%1
      --------------------------------------------------------------------------
      --------------------------------------------------------------------------
      After Taxes on                  -16.48%         1.32%          8.42%1
      Distributions and
      Redemption of Fund Shares
      --------------------------------------------------------------------------
   Inception date of Class A: 1/22/81

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  based on categories
relating to investment  styles.  Lipper currently ranks the Fund's performance
against all other capital  appreciation funds. The Lipper performance rankings
are based on total  returns  that  include the  reinvestment  of capital  gain
distributions  and income  dividends  but do not take  sales  charges or taxes
into  consideration.   Lipper  also  publishes  "peer-group"  indices  of  the
performance  of all mutual  funds in a category  that it monitors and averages
of the performance of the funds in particular categories.


|X|   Morningstar Ratings. From time to time the Fund may publish the star
rating of the performance of its classes of shares by Morningstar, Inc., an
independent mutual fund monitoring service.  Morningstar rates mutual funds
in their specialized market sector.  The Fund is rated among the Large Blend
category within the domestic stock funds.

      Morningstar proprietary star ratings reflect historical risk-adjusted
total investment return. For each fund with at least a three-year history,
Morningstar calculates a Morningstar Rating(TM)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 redemption
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.


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

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

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

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

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 B 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  $50 and shareholders must invest at least $500 before an
                      ---
Asset Builder Plan (described below) can be established on a new account.
Accounts established prior to November 1, 2002 will remain at $25 for
additional purchases. 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").  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 three days after the transfers are initiated. If the proceeds of the ACH
transfer are not received on a timely basis, the Distributor reserves the
right to cancel the purchase order. The Distributor and the Fund are not
responsible for any delays in purchasing shares resulting from delays in ACH
transmissions.


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

|X|   Right of Accumulation. To qualify for the lower sales charge rates that
      apply to larger purchases of Class A shares, you and your spouse can
      add together:
o     Class A and Class B shares you purchase for your individual accounts
            (including IRAs and 403(b) plans), or for your joint accounts, or
            for trust or custodial accounts on behalf of your children who
            are minors, and
o     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
o     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.

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

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

And the following money market funds:
Centennial America Fund, L. P.            Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust    Centennial Tax Exempt Trust
Centennial Government Trust               Oppenheimer Cash Reserves
Centennial Money Market Trust             Oppenheimer Money Market Fund, Inc.
1 - "OSM" stands for Oppenheimer Select Managers

      There is an initial sales charge on the purchase of Class A shares of
each of the Oppenheimer funds described above except the money market funds
and Oppenheimer Senior Floating Rate Fund. 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.  Letters of
Intent do not consider Class C or Class N shares you purchase or may have
purchased.

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

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

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

      If the total eligible purchases made during the Letter of Intent period
do not equal or exceed the intended purchase amount, the concessions
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 concessions allowed or paid to the
dealer over the amount of concessions that apply to the actual amount of
purchases.  The excess concessions returned to the Distributor will be used
to purchase additional shares for the investor's account at the net asset
value per share in effect on the date of such purchase, promptly after the
Distributor's receipt thereof.

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

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


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

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

      2. If the total minimum investment specified under the Letter is
completed within the 13-month Letter of Intent period, the escrowed shares
will be promptly released to the investor.

      3. If, at the end of the 13-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. As explained in the Prospectus, you must initially
establish your account with $500. Subsequently, you can establish an Asset
Builder Plan to automatically purchase additional shares directly from a bank
account for as little as $50. For those accounts established prior to
November 1, 2002 and which have previously established Asset Builder Plans,
additional purchases will remain at $25. Shares purchased by Asset Builder
Plan payments from bank accounts are subject to the redemption restrictions
for recent purchases described in the Prospectus.  Asset Builder Plans are
available only if your bank is an ACH member.  Asset Builder Plans may not be
used to buy shares for OppenheimerFunds employer-sponsored qualified
retirement accounts. Asset Builder Plans also enable shareholders of
Oppenheimer Cash Reserves to use their fund account to make monthly automatic
purchases of shares of up to four other Oppenheimer funds.

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

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


      Before you establish Asset Builder payments, you should obtain a
prospectus of the selected fund(s) from your financial advisor (or the
Distributor) and request an application from the Distributor.  Complete the
application and return it.  You may change the amount of your Asset Builder
payment or 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.

Retirement Plans. Certain types of retirement plans are entitled to purchase
shares of the Fund without sales charge or at reduced sales charge rates, as
described in Appendix B to this Statement of Additional Information. Certain
special sales charge arrangements described in that Appendix apply to
retirement plans whose records are maintained on a daily valuation basis by
Merrill Lynch Pierce Fenner & Smith, Inc. ("Merrill Lynch") or an independent
record keeper that has a contract or special arrangement with Merrill Lynch.
If on the date the plan sponsor signed the Merrill Lynch record keeping
service agreement the plan has less than $3 million in assets (other than
assets invested in money market funds) invested in applicable investments,
then the retirement plan may purchase only Class B shares of the Oppenheimer
funds. Any retirement plans in that category that currently invest in Class B
shares of the Fund will have their Class B shares converted to Class A shares
of the Fund when the plan's applicable investments reach $5 million.
OppenheimerFunds has entered into arrangements with certain record keepers
whereby the Transfer Agent compensates the record keeper for its record
keeping and account servicing functions that it performs on behalf of the
participant level accounts of a retirement plan.  While such compensation may
act to reduce the record keeping fees charged by the retirement plan's record
keeper, that compensation arrangement may be terminated at any time,
potentially affecting the record keeping fees charged by the retirement
plan's record keeper.

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 values of the Fund's
shares on the cancellation date is less than on the purchase date. That loss
is equal to the amount of the decline in the net asset value per share
multiplied by the number of shares in the purchase order. The investor is
responsible for that loss. If the investor fails to compensate the Fund for
the loss, the Distributor will do so. The Fund may reimburse the Distributor
for that amount by redeeming shares from any account registered in that
investor's name, or the Fund or the Distributor may seek other redress.

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

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

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

|X|   Class A Shares Subject to a Contingent Deferred Sales Charge. For
purchases of Class A shares at net asset value whether or not subject to a
contingent deferred sales charge as described in the Prospectus, no sales
concessions will be paid to the broker-dealer of record, as described in the
Prospectus, on sales of Class A shares purchased with the redemption proceeds
of shares of another mutual fund offered as an investment option in a
retirement plan in which Oppenheimer funds are also offered as investment
options under a special arrangement with the Distributor, if the purchase
occurs more than 30 days after the Oppenheimer funds are added as an
investment option under that plan. Additionally, that concession will not be
paid on purchases of Class A shares by a retirement plan made with the
redemption proceeds of Class N shares of one or more Oppenheimer funds held
by the plan for more than 18 months.

|X|   Class B Conversion. Under current interpretations of applicable federal
income tax law by the Internal Revenue Service, the conversion of Class B
shares to Class A shares after six years is not treated as a taxable event
for the shareholder. If those laws or the IRS interpretation of those laws
should change, the automatic conversion feature may be suspended. In 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 shareholder, and absent such
exchange, Class B shares might continue to be subject to the asset-based
sales charge for longer than six years.

|X|   Availability of Class N Shares.  In addition to the description of the
types of retirement plans which may purchase Class N shares contained in the
prospectus, Class N shares also are offered to the following:
o     to all rollover IRAs (including SEP IRAs and SIMPLE IRAs),
o     to all rollover contributions made to Individual 401(k) plans,
            Profit-Sharing Plans and Money Purchase Pension Plans,
o     to all direct rollovers from OppenheimerFunds-sponsored Pinnacle and
            Ascender retirement plans,
o     to all trustee-to-trustee IRA transfers,
o     to all 90-24 type 403(b) transfers,
o     to Group Retirement Plans (as defined in Appendix B to this Statement
            of Additional Information) which have entered into a special
            agreement with the Distributor for that purpose,
o     to Retirement Plans qualified under Sections 401(a) or 401(k) of the
            Internal Revenue Code, the recordkeeper or the plan sponsor for
            which has entered into a special agreement with the Distributor,
o     to Retirement Plans of a plan sponsor where the aggregate assets of all
            such plans invested in the Oppenheimer funds is $500,000 or more,
o     to OppenheimerFunds-sponsored Ascender 401(k) plans that pay for the
            purchase with the redemption proceeds of Class A shares of one or
            more Oppenheimer funds.
o     to certain customers of broker-dealers and financial advisors that are
            identified in a special agreement between the broker-dealer or
            financial advisor and the Distributor for that purpose.

      The sales concession and the advance of the service fee, as described
in the Prospectus, will not be paid to dealers of record on sales of Class N
shares on:
o     purchases of Class N shares in amounts of $500,000 or more by a
            retirement plan that pays for the purchase with the redemption
            proceeds of Class A shares of one or more Oppenheimer funds
            (other than rollovers from an OppenheimerFunds-sponsored Pinnacle
            or Ascender 401(k) plan to any IRA invested in the Oppenheimer
            funds),
o     purchases of Class N shares in amounts of $500,000 or more by a
            retirement plan that pays for the purchase with the redemption
            proceeds of  Class C shares of one or more Oppenheimer funds held
            by the plan for more than one year (other than rollovers from an
            OppenheimerFunds-sponsored Pinnacle or Ascender 401(k) plan to
            any IRA invested in the Oppenheimer funds), and
o     on purchases of Class N shares by an OppenheimerFunds-sponsored
            Pinnacle or Ascender 401(k) plan made with the redemption
            proceeds of Class A shares of one or more Oppenheimer funds.

      No sales concessions will be paid to the broker-dealer of record, as
described in the Prospectus, on sales of Class N shares purchased with the
redemption proceeds of shares of another mutual fund offered as an investment
option in a retirement plan in which Oppenheimer funds are also offered as
investment options under a special arrangement with the Distributor, if the
purchase occurs more than 30 days after the Oppenheimer funds are added as an
investment option under that plan.

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

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

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


Account Fees. As stated in the Prospectus, a $12 annual fee is accessed on
any account valued at less than $500.  This fee will not be accessed on the
following accounts:

o     Accounts that have balances below $500 due to the automatic conversion
      of shares from Class B to Class A shares;
o     Accounts with an active Asset Builder Plan, payroll deduction plan or a
      military allotment plan;
o     OppenheimerFunds-sponsored group retirement accounts that are making
      continuing purchases;
o     Certain accounts held by broker-dealers through the National Securities
      Clearing Corporation; and
o     Accounts that fall below the $500 threshold due solely to market
      fluctuations within the 12-month period preceding the date the fee is
      deducted.


      The fee is automatically deducted from qualifying accounts annually on
or about the second to last business day of September.  This is will be
waived for any shareholders who elect to access their account documents
through electronic document delivery rather than in paper copy and who elect
to utilize the Internet or PhoneLink as their primary source for their
general servicing needs.  To sign up to access account documents
electronically via eDocs Direct, please visit the Service Center on our
website at www.oppenheimerfunds.com or call 1.888.470.0862 for instructions.
           ------------------------

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 Exchange on each day that the Exchange is open. The
calculation is done by dividing the value of the Fund's net assets
attributable to a class by the number of shares of that class that are
outstanding.  The Exchange normally closes at 4:00 P.M., Eastern 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).  All references to
time in this Statement of Additional Information mean "Eastern time." 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.,
Presidents' Day, Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.  It may also close on other days.

      Dealers other than Exchange members may conduct trading in certain
securities on days on which the Exchange is closed (including weekends and
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. Additionally, trading on European and
Asian stock exchanges and over-the-counter markets normally is completed
before the close of the Exchange.

      Changes in the values of securities traded on foreign exchanges or
markets as a result of events that occur after the prices of those securities
are determined, but before the close of the Exchange, will not be reflected
in the Fund's calculation of its net asset values that day unless the Manager
determines that the event is likely to effect a material change in the value
of the security. The Manager, or an internal valuation committee established
by the Manager, as applicable, may establish a valuation, under procedures
established by the Board and subject to the approval, ratification and
confirmation by the Board at its next ensuing meeting.


|X|   Securities Valuation.  The Fund's Board of Trustees has established
procedures for the valuation of the Fund's securities. In general those
procedures are as follows:
o     Equity securities traded on a U.S. securities exchange or on Nasdaq(R)
are valued as follows:
(1)   if last sale information is regularly reported, they are valued at the
               last reported sale price on the principal exchange on which
               they are traded or on Nasdaq, as applicable, on that day, or
(2)   if last sale information is not available on a valuation date, they are
               valued at the last reported sale price preceding the valuation
               date if it is within the spread of the closing "bid" and
               "asked" prices on the valuation date or, if not,  at the
               closing "bid" price on the valuation date.
o     Equity securities traded on a foreign securities exchange generally are
valued in one of the following ways:
(1)   at the last sale price available to the pricing service approved by the
               Board of Trustees, or
(2)   at the last sale price obtained by the Manager from the report of the
               principal exchange on which the security is traded at its last
               trading session on or immediately before the valuation date, or
(3)   at the mean between the "bid" and "asked" prices obtained from the
               principal exchange on which the security is traded or, on the
               basis of reasonable inquiry, from two market makers in the
               security.
o     Long-term debt securities having a remaining maturity in excess of 60
days are valued based on the mean between the "bid" and "asked" prices
determined by a portfolio pricing service approved by the Fund's Board of
Trustees or obtained by the Manager from two active market makers in the
security on the basis of reasonable inquiry.
o     The following securities are valued at the mean between the "bid" and
"asked" prices determined by a pricing service approved by the Fund's Board
of Trustees or obtained by the Manager from two active market makers in the
security on the basis of reasonable inquiry:
(1)   debt instruments that have a maturity of more than 397 days when
               issued,
(2)   debt instruments that had a maturity of 397 days or less when issued
               and have a remaining maturity of more than 60 days, and
(3)   non-money market debt instruments that had a maturity of 397 days or
               less when issued and which have a remaining maturity of 60
               days or less.
o     The following securities are valued at cost, adjusted for amortization
of premiums and accretion of discounts:
(1)   money market debt securities held by a non-money market fund that had a
               maturity of less than 397 days when issued that have a
               remaining maturity of 60 days or less, and
(2)   debt instruments held by a money market fund that have a remaining
               maturity of 397 days or less.
o     Securities (including restricted securities) not having
readily-available market quotations are valued at fair value determined under
the Board's procedures.  If the Manager is unable to locate two market makers
willing to give quotes, a security may be priced at the mean between the
"bid" and "asked" prices provided by a single active market maker (which in
certain cases may be the "bid" price if no "asked" price is available).


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


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

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

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

How to Sell Shares

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

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

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

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

Payments "In Kind". The Prospectus states that payment for shares tendered
for redemption is ordinarily made in cash. However, under certain
circumstances, the Board of Trustees of the Fund may determine that it would
be detrimental to the best interests of the remaining shareholders of the
Fund to make payment of a redemption order wholly or partly in cash. In that
case, the Fund may pay the redemption proceeds in whole or in part by a
distribution "in kind" of liquid securities from the portfolio of the Fund,
in lieu of cash.


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


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

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

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

Distributions From Retirement Plans.  Requests for distributions from
OppenheimerFunds-sponsored IRAs, SEP-IRAs, SIMPLE IRAs, 403(b)(7) custodial
plans, 401(k) plans or pension or profit-sharing plans should be addressed to
"Trustee, OppenheimerFunds Retirement Plans," c/o the Transfer Agent at its
address listed in "How To Sell Shares" in the Prospectus or on the back cover
of this Statement of Additional Information.  The request must:
(1)   state the reason for the distribution;
(2)   state the owner's awareness of tax penalties if the distribution is
      premature; and
(3)   conform to the requirements of the plan and the Fund's other redemption
      requirements.

      Participants (other than self-employed plan sponsors) in
OppenheimerFunds-sponsored pension or profit-sharing plans with shares of the
Fund held in the name of the plan or its fiduciary may not directly request
redemption of their accounts.  The plan administrator or fiduciary must sign
the request.

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


Special Arrangements for Repurchase of Shares from Dealers and Brokers.  The
Distributor is the Fund's agent to repurchase its shares from authorized
dealers or brokers on behalf of their customers.  Shareholders should contact
their broker or dealer to arrange this type of redemption. The repurchase
price per share will be the net asset value next computed after the
Distributor receives an order placed by the dealer or broker. However, if the
Distributor receives a repurchase order from a dealer or broker after the
close of the 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, Class C and Class N shareholders should not establish automatic
withdrawal plans, because of the potential imposition of the contingent
deferred sales charge on such withdrawals (except where the Class B, Class C
or Class N contingent deferred sales charge is waived as described in
Appendix B 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
$50. 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 of shares by calling the Distributor.

o     All of the Oppenheimer funds currently offer Class A, B, C, N and Y
      shares with the following exceptions:

      The following funds only offer Class A shares:
      Centennial America Fund, L.P.           Centennial New York Tax Exempt
                                              Trust
      Centennial California Tax Exempt Trust  Centennial Tax Exempt Trust
      Centennial Government Trust             Oppenheimer Money Market Fund, Inc.
      Centennial Money Market Trust
                                              Oppenheimer Pennsylvania Municipal
      The following funds do not offer        Fund
      Class N shares:
      Oppenheimer California Municipal Fund
      Oppenheimer Limited Term Municipal Fund Oppenheimer Rochester National
                                              Municipals
      Oppenheimer Municipal Bond Fund         Rochester Fund Municipals
      Oppenheimer New Jersey Municipal Fund   Oppenheimer Senior Floating Rate
                                              Fund
      Oppenheimer New York Municipal Fund     Limited Term New York Municipal
                                              Fund

      The following funds do not offer Class Y shares:
      Oppenheimer California Municipal Fund   Oppenheimer Limited Term Municipal
                                              Fund

      Oppenheimer Capital Income Fund         Oppenheimer Multiple Strategies
                                              Fund
      Oppenheimer Cash Reserves               Oppenheimer New Jersey Municipal
                                              Fund
      Oppenheimer Champion Income Fund        Oppenheimer New York Municipal Fund
      Oppenheimer Convertible Securities Fund Oppenheimer Pennsylvania Municipal
                                              Fund
      Oppenheimer Disciplined Allocation Fund Oppenheimer Quest Capital Value
                                              Fund, Inc.
      Oppenheimer Gold & Special Minerals     Oppenheimer Quest Global Value
      Fund                                    Fund, Inc.
      Oppenheimer International Bond Fund     Oppenheimer Rochester National
                                              Municipals
      Oppenheimer International Growth Fund   Oppenheimer Senior Floating Rate
                                              Fund
      Oppenheimer International Small         Oppenheimer Small Cap Value Fund
      Company Fund
                                              Limited Term New York Municipal
                                              Fund


o     Class Y shares of Oppenheimer Real Asset Fund may not be exchanged for
      shares of any other fund.
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     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 may be exchanged
      only for Class B shares of other Oppenheimer funds and no exchanges may
      be made to Class X shares.
o     Shares of Oppenheimer Capital Preservation Fund may not be exchanged
      for shares of Oppenheimer Money Market Fund, Inc., Oppenheimer Cash
      Reserves or Oppenheimer Limited-Term Government Fund.  Only
      participants in certain retirement plans may purchase shares of
      Oppenheimer Capital Preservation Fund, and only those participants may
      exchange shares of other Oppenheimer funds for shares of Oppenheimer
      Capital Preservation Fund.
o     Class A shares of Oppenheimer Senior Floating Rate Fund are not
      available by exchange of shares of Oppenheimer Money Market Fund or
      Class A shares of Oppenheimer Cash Reserves.
o     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.
o     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.
o     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.
o     Shares of the Fund acquired by reinvestment of dividends or
      distributions from any of the other Oppenheimer funds or from any unit
      investment trust for which reinvestment arrangements have been made
      with the Distributor may be exchanged at net asset value for shares of
      any of the Oppenheimer funds.

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

|X|   How Exchanges Affect Contingent Deferred Sales Charges. No contingent
deferred sales charge is imposed on exchanges of shares of any class
purchased subject to a contingent deferred sales charge, with the following
exceptions:

o     When Class A shares of any Oppenheimer fund (other than Rochester
National Municipals and Rochester Fund Municipals) acquired by exchange of
Class A shares of any Oppenheimer fund purchased subject to a Class A
contingent deferred sales charge are redeemed within 18 months measured from
the beginning 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.

o     When Class A shares of Rochester National Municipals and Rochester Fund
Municipals acquired by exchange of Class A shares of any Oppenheimer fund
purchased subject to a Class A contingent deferred sales charge are redeemed
within 24 months of the beginning 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.

o     If any Class A shares of another Oppenheimer fund that are exchanged
for Class A shares of Oppenheimer Senior Floating Rate Fund are subject to
the Class A contingent deferred sales charge of the other Oppenheimer fund at
the time of exchange, the holding period for that Class A contingent deferred
sales charge will carry over to the Class A shares of Oppenheimer Senior
Floating Rate Fund acquired in the exchange. The Class A shares of
Oppenheimer Senior Floating Rate Fund acquired in that exchange will be
subject to the Class A Early Withdrawal Charge of Oppenheimer Senior Floating
Rate Fund if they are repurchased before the expiration of the holding period.

o     When Class A shares of Oppenheimer Cash Reserves and Oppenheimer Money
Market Fund, Inc. acquired by exchange of Class A shares of any Oppenheimer
fund purchased subject to a Class A contingent deferred sales charge are
redeemed within the Class A holding period of the fund from which the shares
were exchanged, the Class A contingent deferred sales charge of the fund from
which the shares were exchanged is imposed on the redeemed shares.


         With respect to Class B shares, the Class B contingent deferred
sales charge is imposed on Class B shares acquired by exchange if they are
redeemed within six years of the initial purchase of the exchanged Class B
shares.

         With respect to Class C 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.

o     With respect to Class N shares, a 1% contingent deferred sales charge
will be imposed if the retirement plan (not including IRAs and 403(b) plans)
is terminated or Class N shares of all Oppenheimer funds are terminated as an
investment option of the plan and Class N shares are redeemed within 18
months after the plan's first purchase of Class N shares of any Oppenheimer
fund or with respect to an individual retirement plan or 403(b) plan, Class N
shares are redeemed within 18 months of the plan's first purchase of Class N
shares of any Oppenheimer fund.

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


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

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

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

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

      When you exchange some or all of your shares from one fund to another,
any special account feature such as an Asset Builder Plan or Automatic
Withdrawal Plan, will be switched to the new fund account unless you tell the
Transfer Agent not to do so.  However, special redemption and exchange
features such as Automatic Exchange Plans and Automatic Withdrawal Plans
cannot be switched to an account in Oppenheimer Senior Floating Rate Fund.
      In connection with any exchange request, the number of shares exchanged
may be less than the number requested if the exchange or the number requested
would include shares subject to a restriction cited in the Prospectus or this
Statement of Additional Information, or would include shares covered by a
share certificate that is not tendered with the request.  In those cases,
only the shares available for exchange without restriction will be exchanged.

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

Dividends, Capital Gains and Taxes

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

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

Tax Status of the Fund's Dividends, 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
net investment income (that is, taxable interest, dividends, and other
taxable ordinary income, net of expenses) 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 12 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  (including  receivables),  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.

      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 a long-term capital gain and will be properly identified in reports sent
to shareholders in January of each year. Such treatment will apply no 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, the Fund will provide to shareholders of record
on the last day of its taxable year information regarding their pro rata
share of the gain and tax paid. 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 30% (29% for
payments after December 31, 2003) of ordinary income dividends, capital gains
distributions and the proceeds of the redemption of shares, paid to any
shareholder (1) who has failed to provide a correct taxpayer identification
                                            -------
number or to properly certify that number when required, (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). All income and any tax withheld by the
Fund is remitted by the Fund to the U.S. Treasury and is identified in
reports mailed to shareholders in January of each year.

|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.  Under U.S. tax law, taxation of a shareholder
who is a foreign person (to include, but not limited to, a nonresident alien
individual, a foreign trust, a foreign estate, a foreign corporation, or a
foreign partnership) primarily depends on whether the foreign person's income
from the Fund is effectively connected with the conduct of a U.S. trade or
business. Typically, ordinary income dividends paid from a mutual fund are
not considered "effectively connected" income.

      Ordinary income dividends that are paid by the Fund (and are deemed not
"effectively connected income") to foreign persons will be subject to a U.S.
tax withheld by the Fund at a rate of 30%, provided the Fund obtains a
properly completed and signed Certificate of Foreign Status. The tax rate may
be reduced if the foreign person's country of residence has a tax treaty with
the U.S. allowing for a reduced tax rate on ordinary income dividends paid by
the Fund. All income and any tax withheld by the Fund is remitted by the Fund
to the U.S. Treasury and is identified in reports mailed to shareholders in
March of each year.

      If the ordinary income dividends from the Fund are effectively
                                                     ---
connected with the conduct of a U.S. trade or business, then the foreign
person may claim an exemption from the U.S. tax described above provided the
Fund obtains a properly completed and signed Certificate of Foreign Status.

      If the foreign person fails to provide a certification of his/her
foreign status, the Fund will be required to withhold U.S. tax at a rate of
30% (29% for payments after December 31, 2003) on ordinary income dividends,
capital gains distributions and the proceeds of the redemption of shares,
paid to any foreign person. All income and any tax withheld (in this
situation) by the Fund is remitted by the Fund to the U.S. Treasury and is
identified in reports mailed to shareholders in January of each year.

      The tax consequences to foreign persons 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 advisors or the U.S.
Internal Revenue Service with respect to the particular tax consequences to
them of an investment in the Fund, including the applicability of the U.S.
withholding taxes described above.

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

Additional Information About the Fund


The Distributor.  The Fund's shares are sold through dealers, brokers and
other financial institutions that have a sales agreement with
OppenheimerFunds Distributor, Inc., a subsidiary of the Manager that acts as
the Fund's Distributor.  The Distributor located at 498 Seventh Avenue, New
York, New York 10018 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
located at P.O. Box 5270, Denver, Colorado, 80217, 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. JPMorgan Chase Bank located at 4 Chase MetroTech Center,
Brooklyn, New York, 11245 is the custodian of the Fund's assets.  The
custodian's responsibilities include safeguarding and controlling the Fund's
portfolio securities and handling the delivery of such securities to and from
the Fund.  It is the practice of the Fund to deal with the custodian in a
manner uninfluenced by any banking relationship the custodian may have with
the Manager and its affiliates.  The Fund's cash balances with the custodian
in excess of $100,000 are not protected by federal deposit insurance.  Those
uninsured balances at times may be substantial.

Independent Auditors. KPMG LLP located at 707 Seventeenth Street, Denver,
Colorado, 80202 are the independent auditors of the Fund. They audit the
Fund's financial statements and perform other related audit services.  They
also act as auditors for certain other funds advised by the Manager and its
affiliates.

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

================================================================================
THE BOARD OF TRUSTEES AND SHAREHOLDERS OF
OPPENHEIMER CAPITAL APPRECIATION FUND:

We have  audited  the  accompanying  statement  of  assets  and  liabilities  of
Oppenheimer Capital  Appreciation Fund,  including the statement of investments,
as of August 31, 2002, and the related statement of operations for the year then
ended,  the statements of changes in net assets for each of the two years in the
period then ended,  and the financial  highlights  for each of the five years in
the period then ended. These financial  statements and financial  highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these  financial  statements  and financial  highlights  based on our
audits.

     We conducted our audits in accordance  with  auditing  standards  generally
accepted in the United States of America.  Those standards  require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of August 31, 2002, by correspondence with the custodian and
brokers or by other appropriate  auditing  procedures where replies from brokers
were not received.  An audit also includes  assessing the accounting  principles
used and  significant  estimates made by  management,  as well as evaluating the
overall financial statement  presentation.  We believe that our audits provide a
reasonable basis for our opinion.

     In our opinion,  the financial statements and financial highlights referred
to above present fairly,  in all material  respects,  the financial  position of
Oppenheimer Capital  Appreciation Fund as of August 31, 2002, the results of its
operations  for the year then  ended,  the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the  five  years  in the  period  then  ended,  in  conformity  with  accounting
principles generally accepted in the United States of America.

/S/KPMG LLP
-----------------
KPMG LLP

Denver, Colorado
September 23, 2002

OPPENHEIMER CAPITAL APPRECIATION FUND

STATEMENT OF INVESTMENTS  August 31, 2002
--------------------------------------------------------------------

                                                        MARKET VALUE
                                                SHARES    SEE NOTE 1
====================================================================
 COMMON STOCKS--88.4%
--------------------------------------------------------------------
 CONSUMER DISCRETIONARY--24.8%
--------------------------------------------------------------------
 AUTOMOBILES--0.7%
 Harley-Davidson, Inc.                         841,400  $ 41,422,122
--------------------------------------------------------------------
 HOTELS, RESTAURANTS & LEISURE--3.5%
 Brinker International,
 Inc.(1)                                     1,093,300    30,306,276
--------------------------------------------------------------------
 Carnival Corp.                              3,301,300    80,782,811
--------------------------------------------------------------------
 Mandalay Resort
 Group(1)                                      294,600     8,867,460
--------------------------------------------------------------------
 Royal Caribbean
 Cruises Ltd.                                3,486,500    61,711,050
--------------------------------------------------------------------
 Ruby Tuesday, Inc.                            248,600     4,957,084
--------------------------------------------------------------------
 Starwood Hotels
 & Resorts
 Worldwide, Inc.                               335,200     8,641,456
                                                       -------------
                                                         195,266,137

--------------------------------------------------------------------
 HOUSEHOLD DURABLES--0.4%
 Ethan Allen
 Interiors, Inc.                               713,460    24,243,371
--------------------------------------------------------------------
 INTERNET & CATALOG RETAIL--0.1%
 ValueVision Media,
 Inc., Cl. A(1)                                364,600     5,188,258
--------------------------------------------------------------------
 LEISURE EQUIPMENT & PRODUCTS--0.5%
 Mattel, Inc.                                1,452,000    28,212,360
--------------------------------------------------------------------
 MEDIA--14.8%
 AOL Time Warner,
 Inc.(1)                                     7,477,800    94,594,170
--------------------------------------------------------------------
 Cablevision Systems
 New York Group,
 Cl. A(1)                                    1,197,900    11,415,987
--------------------------------------------------------------------
 Clear Channel
 Communications,
 Inc.(1)                                     2,044,000    69,863,920
--------------------------------------------------------------------
 Comcast Corp.,
 Cl. A Special(1)                            6,816,750   162,443,152
--------------------------------------------------------------------
 Fox Entertainment
 Group, Inc., A Shares(1)                      928,200    20,726,706
--------------------------------------------------------------------
 Hispanic Broadcasting
 Corp.(1)                                      979,000    18,943,650
--------------------------------------------------------------------
 McGraw-Hill Cos.,
 Inc. (The)                                  1,771,100   112,305,451
 --------------------------------------------------------------------
 New York Times Co.,
 Cl. A                                         764,300    36,074,960
--------------------------------------------------------------------
 News Corp. Ltd. (The),
 Sponsored ADR                               2,610,600    56,127,900

                                                        MARKET VALUE
                                                SHARES    SEE NOTE 1
====================================================================
 MEDIA Continued
 Omnicom Group, Inc.                           809,200  $ 48,956,600
--------------------------------------------------------------------
 Univision
 Communications,
 Inc., Cl. A(1)                                816,700    19,029,110
--------------------------------------------------------------------
 Viacom, Inc., Cl. B(1)                      4,516,400   183,817,480
                                                       -------------
                                                         834,299,086

--------------------------------------------------------------------
 MULTILINE RETAIL--3.2%
 BJ's Wholesale
 Club, Inc.(1)                                 220,400     5,410,820
--------------------------------------------------------------------
 Costco Wholesale
 Corp.(1)                                    1,216,700    40,649,947
--------------------------------------------------------------------
 Kohl's Corp.(1)                               665,200    46,377,744
--------------------------------------------------------------------
 Sears Roebuck & Co.                           690,200    31,411,002
--------------------------------------------------------------------
 Target Corp.                                1,670,300    57,124,260
                                                        ------------
                                                         180,973,773
--------------------------------------------------------------------
 SPECIALTY RETAIL--1.3%
 AutoNation, Inc.(1)                           402,300     5,310,360
--------------------------------------------------------------------
 Gap, Inc. (The)                             2,291,800    26,882,814
--------------------------------------------------------------------
 Limited Brands, Inc.                        1,869,800    28,589,242
--------------------------------------------------------------------
 Tiffany & Co.                                 597,200    14,810,560
                                                         -----------
                                                          75,592,976
--------------------------------------------------------------------
 TEXTILES & APPAREL--0.3%
 Nike, Inc., Cl. B                             360,900    15,583,662
--------------------------------------------------------------------
 CONSUMER STAPLES--6.8%
--------------------------------------------------------------------
 BEVERAGES--3.7%
 Anheuser-Busch
 Cos., Inc.                                  2,292,000   121,842,720
--------------------------------------------------------------------
 PepsiCo, Inc.                               2,136,000    84,478,800
                                                        ------------
                                                         206,321,520
--------------------------------------------------------------------
 FOOD & DRUG RETAILING--1.5%
 Kroger Co. (The)(1)                         1,461,800    26,429,344
--------------------------------------------------------------------
 Rite Aid Corp.(1)                             591,500     1,242,150
--------------------------------------------------------------------
 Safeway, Inc.(1)                            1,468,400    37,914,088
--------------------------------------------------------------------
 Sysco Corp.                                   666,900    18,913,284
                                                        ------------
                                                          84,498,866
--------------------------------------------------------------------
 FOOD PRODUCTS--1.4%
 Dean Foods Co.(1)                           1,146,100    43,379,885
--------------------------------------------------------------------
 General Mills, Inc.                           840,900    35,393,481
                                                        ------------
                                                          78,773,366

                                                      MARKET VALUE

                                                SHARES    SEE NOTE 1
====================================================================
 PERSONAL PRODUCTS--0.2%
 Estee Lauder Cos.,
 Inc. (The), Cl. A                             437,400  $ 13,100,130
--------------------------------------------------------------------
 ENERGY--6.5%
--------------------------------------------------------------------
 ENERGY EQUIPMENT & SERVICES--1.6%
 BJ Services Co.(1)                          1,169,700    35,675,850
--------------------------------------------------------------------
 Halliburton Co.                               968,600    14,722,720
--------------------------------------------------------------------
 Noble Corp.(1)                                507,510    15,768,336
--------------------------------------------------------------------
 Rowan Cos., Inc.                              638,400    13,138,272
--------------------------------------------------------------------
 Varco International,
 Inc.(1)                                       651,600    11,487,708
                                                        ------------
                                                          90,792,886

--------------------------------------------------------------------
 OIL & GAS--4.9%
 Amerada Hess Corp.                            833,200    60,906,920
--------------------------------------------------------------------
 Encana Corp.                                1,145,510    33,616,312
 Exxon Mobil Corp.                           2,794,800    99,075,660
 TotalFinaElf SA,
 Sponsored ADR                               1,137,400    81,119,368
                                                        ------------
                                                         274,718,260

--------------------------------------------------------------------
 FINANCIALS--14.8%
--------------------------------------------------------------------
 BANKS--2.3%
 Bank of America
 Corp                                          748,400    52,447,872
--------------------------------------------------------------------
 Bank One Corp.                              1,925,400    78,845,130
                                                        ------------
                                                         131,293,002
--------------------------------------------------------------------
 DIVERSIFIED FINANCIALS--9.4%
 American
 Express Co.                                 1,511,900    54,519,114
--------------------------------------------------------------------
 Citigroup, Inc.                             3,629,800   118,875,950
--------------------------------------------------------------------
 Countrywide Credit
 Industries, Inc.                              621,800    32,638,282
--------------------------------------------------------------------
 Fannie Mae                                    492,700    37,336,806
--------------------------------------------------------------------
 Freddie Mac                                 1,269,500    81,374,950
--------------------------------------------------------------------
 Goldman Sachs
 Group, Inc. (The)                             393,600    30,425,280
--------------------------------------------------------------------
 J.P. Morgan Chase
 & Co.                                       1,435,400    37,894,560
--------------------------------------------------------------------
 Merrill Lynch
 & Co., Inc.                                   852,800    30,888,416
--------------------------------------------------------------------
 Morgan Stanley                              1,802,900    77,019,888
--------------------------------------------------------------------
 Schwab (Charles)
 Corp.                                       3,132,600    28,757,268
                                                        ------------
                                                         529,730,514

                                                        MARKET VALUE
                                                SHARES    SEE NOTE 1
====================================================================
 INSURANCE--2.4%
--------------------------------------------------------------------
 American
 International
 Group, Inc.                                 1,299,900  $ 81,633,720
--------------------------------------------------------------------
 Everest Re
 Group Ltd.                                    222,500    12,059,500
--------------------------------------------------------------------
 St. Paul Cos., Inc.                           451,000    13,719,420
--------------------------------------------------------------------
 Travelers Property
 Casualty Corp., Cl. A(1)                      156,856     2,465,776
--------------------------------------------------------------------
 Travelers Property
 Casualty Corp., Cl. B(1)                      322,266     5,249,713
--------------------------------------------------------------------
 XL Capital Ltd., Cl. A                        254,000    18,696,940
                                                       -------------
                                                         133,825,069

--------------------------------------------------------------------
 REAL ESTATE--0.7%
 Boston Properties,
 Inc.                                          292,200    11,068,536
--------------------------------------------------------------------
 Host Marriott Corp.                         2,795,600    28,347,384
                                                        ------------
                                                          39,415,920
--------------------------------------------------------------------
 HEALTH CARE--9.5%
--------------------------------------------------------------------
 BIOTECHNOLOGY--1.7%
 Amgen, Inc.(1)                                437,400    19,696,122
--------------------------------------------------------------------
 Genzyme Corp.
 (General Division)(1)                       1,325,700    27,415,476
--------------------------------------------------------------------
 IDEC Pharmaceuticals
 Corp.(1)                                      625,590    25,136,206
--------------------------------------------------------------------
 Medimmune, Inc.(1)                            106,800     2,741,556
--------------------------------------------------------------------
 Serono SA,
 Sponsored ADR                               1,346,100    18,912,705
                                                        ------------
                                                          93,902,065
--------------------------------------------------------------------
 HEALTH CARE EQUIPMENT & SUPPLIES--1.5%
 Applera Corp./
 Applied Biosystems
 Group                                       1,596,500    31,626,665
--------------------------------------------------------------------
 Medtronic, Inc.                               677,100    27,882,978
--------------------------------------------------------------------
 Stryker Corp.                                 429,800    24,227,826
                                                       -------------
                                                          83,737,469
--------------------------------------------------------------------
 HEALTH CARE PROVIDERS & SERVICES--2.7%
 Anthem, Inc.(1)                               309,800    19,551,478
--------------------------------------------------------------------
 Apria Healthcare
 Group, Inc.(1)                                270,400     6,240,832
--------------------------------------------------------------------
 Caremark Rx, Inc.(1)                        1,388,600    22,495,320
--------------------------------------------------------------------
 Covance, Inc.(1)                            1,124,300    21,946,336
--------------------------------------------------------------------
 Humana, Inc.(1)                               996,900    13,258,770


STATEMENT OF INVESTMENTS  Continued
---------------------------------------------------------------------
                                                        MARKET VALUE
                                                SHARES    SEE NOTE 1
====================================================================
 HEALTH CARE PROVIDERS & SERVICES Continued
--------------------------------------------------------------------
 McKesson Corp.                              1,042,900   $34,978,866
--------------------------------------------------------------------
 Oxford Health
 Plans, Inc.(1)                                593,400    24,062,370
--------------------------------------------------------------------
 Quest Diagnostics,
 Inc.(1)                                       198,100    11,103,505
                                                        ------------
                                                         153,637,477
--------------------------------------------------------------------
 PHARMACEUTICALS--3.6%
 Abbott Laboratories                           874,700    35,014,241
--------------------------------------------------------------------
 Johnson & Johnson                             970,800    52,724,148
--------------------------------------------------------------------
 Perrigo Co.(1)                              1,418,370    15,165,212
--------------------------------------------------------------------
 Pfizer, Inc.                                3,027,200   100,139,776
                                                        ------------
                                                         203,043,377
--------------------------------------------------------------------
 INDUSTRIALS--5.8%
--------------------------------------------------------------------
 AEROSPACE & DEFENSE--1.9%
 Boeing Co.                                    358,200    13,278,474
--------------------------------------------------------------------
 Honeywell
 International, Inc.                         1,767,600    52,939,620
--------------------------------------------------------------------
 Northrop Grumman
 Corp.                                         350,900    43,090,520
                                                        ------------
                                                         109,308,614
--------------------------------------------------------------------
 COMMERCIAL SERVICES & SUPPLIES--2.5%
 Automatic Data
 Processing, Inc.                              619,100    23,383,407
--------------------------------------------------------------------
 Concord EFS, Inc.(1)                        1,754,040    35,799,956
--------------------------------------------------------------------
 First Data Corp.                              575,900    20,012,525
--------------------------------------------------------------------
 Waste Management,
 Inc.                                        2,435,600    61,937,308
                                                        ------------
                                                         141,133,196
--------------------------------------------------------------------
 INDUSTRIAL CONGLOMERATES--0.3%
 Tyco International
 Ltd.                                        1,174,479    18,427,576
--------------------------------------------------------------------
 MACHINERY--0.8%
 Dover Corp.                                   402,300    11,558,079
--------------------------------------------------------------------
 Ingersoll-Rand Co.,
 Cl. A                                         837,700    31,455,635
                                                        ------------
                                                          43,013,714
--------------------------------------------------------------------
 ROAD & RAIL--0.3%
 Canadian Pacific Ltd.                         663,400    13,778,308

                                                        MARKET VALUE
                                                SHARES    SEE NOTE 1
====================================================================
 INFORMATION TECHNOLOGY--14.8%
--------------------------------------------------------------------
 COMMUNICATIONS EQUIPMENT--2.9%
 Cisco Systems, Inc.(1)                      3,972,500  $ 54,899,950
--------------------------------------------------------------------
 Lucent Technologies,
 Inc.(1)                                     5,178,000     8,957,940
--------------------------------------------------------------------
 Nokia Corp.,
 Sponsored ADR,
 A Shares                                    6,058,300    80,514,807
--------------------------------------------------------------------
 QUALCOMM, Inc.(1)                             678,600    18,804,006
                                                        ------------
                                                         163,176,703
--------------------------------------------------------------------
 COMPUTERS & PERIPHERALS--0.0%
 Seagate Technology
 International, Inc.
 Escrow Shares(1,2)                          1,000,000            --
--------------------------------------------------------------------
 ELECTRONIC EQUIPMENT & INSTRUMENTS--1.4%
 Flextronics
 International Ltd.(1)                       2,137,100    20,238,337
--------------------------------------------------------------------
 Millipore Corp.                               304,600    10,749,334
--------------------------------------------------------------------
 Sanmina-SCI Corp.(1)                        4,386,500    15,528,210
--------------------------------------------------------------------
 Vishay
 Intertechnology,
 Inc.(1)                                     2,138,000    30,616,160
                                                        ------------
                                                          77,132,041
--------------------------------------------------------------------
 INTERNET SOFTWARE & SERVICES--0.2%
 Check Point
 Software
 Technologies Ltd.(1)                          770,750    12,910,833
--------------------------------------------------------------------
 SEMICONDUCTOR EQUIPMENT & PRODUCTS--4.5%
 Analog Devices, Inc.(1)                       510,600    12,305,460
--------------------------------------------------------------------
 Atmel Corp.(1)                                312,100       720,951
--------------------------------------------------------------------
 Cypress
 Semiconductor
 Corp.(1)                                    2,364,000    24,892,920
--------------------------------------------------------------------
 Intel Corp.                                 4,121,000    68,697,070
--------------------------------------------------------------------
 International
 Rectifier Corp.(1)                          1,078,100    23,459,456
--------------------------------------------------------------------
 Micron Technology,
 Inc.(1)                                     2,045,600    35,286,600
--------------------------------------------------------------------
 National
 Semiconductor
 Corp.(1)                                    1,183,500    18,924,165
--------------------------------------------------------------------
 QLogic Corp.(1)                               959,500    32,191,225
--------------------------------------------------------------------
 RF Micro Devices,
 Inc.(1)                                     1,993,000    13,333,170
--------------------------------------------------------------------
 Texas Instruments,
 Inc.                                        1,126,100    22,184,170


                                                        MARKET VALUE
                                                SHARES    SEE NOTE 1
====================================================================
 SEMICONDUCTOR EQUIPMENT & PRODUCTS Continued
 Vitesse
 Semiconductor
 Corp.(1)                                    2,028,000  $  2,697,240
                                                        ------------
                                                         254,692,427
--------------------------------------------------------------------
 SOFTWARE--5.8%
 Cadence Design
 Systems, Inc.(1)                            1,810,500    24,387,435
--------------------------------------------------------------------
 Electronic Arts, Inc.(1)                      946,930    59,902,792
--------------------------------------------------------------------
 Microsoft Corp.(1)                          3,880,300   190,445,124
--------------------------------------------------------------------
 Peoplesoft, Inc.(1)                         1,246,500    20,043,720
--------------------------------------------------------------------
 Reynolds &
 Reynolds Co., Cl. A                           117,200     2,912,420
--------------------------------------------------------------------
 SAP AG (Systeme,
 Anwendungen,
 Produkte in der
 Datenverarbeitung),
 Sponsored ADR                                 850,500    16,372,125
--------------------------------------------------------------------
 Veritas Software
 Corp.(1)                                      752,700    12,186,213
                                                        ------------
                                                         326,249,829
--------------------------------------------------------------------
 MATERIALS--2.8%
--------------------------------------------------------------------
 CHEMICALS--2.2%
 Air Products &
 Chemicals, Inc.                               623,100    29,229,621
--------------------------------------------------------------------
 International Flavors
 & Fragrances, Inc.                          1,084,400    34,971,900
--------------------------------------------------------------------
 PPG Industries, Inc.                          198,100    11,147,087
--------------------------------------------------------------------
 Praxair, Inc.                                 857,900    48,068,137
                                                         -----------
                                                         123,416,745
--------------------------------------------------------------------
 PAPER & FOREST PRODUCTS--0.6%
 International
 Paper Co.                                     970,800    36,550,620
--------------------------------------------------------------------
 TELECOMMUNICATION SERVICES--0.6%
--------------------------------------------------------------------
 DIVERSIFIED TELECOMMUNICATION SERVICES--0.1%
 Sprint Corp.
 (Fon Group)                                   437,400     5,073,840
--------------------------------------------------------------------
 WIRELESS TELECOMMUNICATION SERVICES--0.5%
 Sprint Corp.
 (PCS Group)(1)                                563,900     2,233,044
--------------------------------------------------------------------
 Vodafone Group
 plc, Sponsored ADR                          1,578,700    25,243,413
                                                         -----------
                                                          27,476,457

                                                        MARKET VALUE
                                                SHARES    SEE NOTE 1
====================================================================
 UTILITIES--2.0%
--------------------------------------------------------------------
 ELECTRIC UTILITIES--0.9%
 Duke Energy Corp.                           1,856,500  $ 49,809,895
--------------------------------------------------------------------
 GAS UTILITIES--1.1%
 El Paso Corp.                               2,435,900    41,191,069
--------------------------------------------------------------------
 Kinder Morgan
 Management LLC                                635,900    20,355,159
                                                        ------------
                                                          61,546,228
--------------------------------------------------------------------
 WATER UTILITIES--0.0%
 Philadelphia
 Suburban Corp.                                201,975     3,809,249
                                                        ------------
 Total Common Stocks
 (Cost $6,539,672,072)                                 4,985,077,941

--------------------------------------------------------------------
 OTHER SECURITIES--0.4%
--------------------------------------------------------------------
 Nasdaq-100 Unit
 Investment Trust(1)
 (Cost $26,132,356)                            933,400    21,925,566

                                             PRINCIPAL
                                                AMOUNT
================================================================================
 SHORT-TERM NOTES--3.9%
--------------------------------------------------------------------
 Barton Capital Corp.,
 1.75%, 9/20/02                            $30,000,000    29,972,291
--------------------------------------------------------------------
 New Center
 Asset Trust:
 2%, 9/13/02                                25,000,000    24,985,500
 2%, 9/16/02                                25,000,000    24,981,667
 2%, 10/10/02                               30,000,000    29,942,475
--------------------------------------------------------------------
 Old Line Funding
 Corp., 1.75%,
 9/25/02                                    35,000,000    34,959,167
--------------------------------------------------------------------
 Sheffield
 Receivables Corp.:
 2%, 9/19/02                                25,000,000    24,978,125
 2%, 9/25/02                                50,000,000    49,941,000
                                                        ------------
 Total Short-Term Notes
 (Cost $219,760,225)                                     219,760,225


STATEMENT OF INVESTMENTS  Continued
----------------------------------------------------------------------
                                             PRINCIPAL    MARKET VALUE
                                                AMOUNT      SEE NOTE 1
======================================================================
 JOINT REPURCHASE AGREEMENTS--8.5%
----------------------------------------------------------------------

 Undivided interest of 49.40% in joint
 repurchase agreement with PaineWebber,
 Inc., 1.85%, dated 8/30/02, to be repurchased
 at $969,046,152 on 9/3/02, collateralized by
 Federal National Mortgage Assn., 5.50%--6%,
 1/1/32--5/1/32, with a value of $989,261,165
 (Cost $478,618,000)
                                          $478,618,000  $  478,618,000

----------------------------------------------------------------------
 TOTAL INVESTMENTS,
 AT VALUE
 (COST $7,264,182,653)                           101.2%  5,705,381,732
----------------------------------------------------------------------
 LIABILITIES IN
 EXCESS OF
 OTHER ASSETS                                     (1.2)    (69,064,867)
                                                ----------------------
 NET ASSETS                                      100.0% $5,636,316,865
                                                ======================

FOOTNOTES TO STATEMENT OF INVESTMENTS

1. Non-income producing security.

2. Identifies issues considered to be illiquid--See Note 6 of Notes to
Financial
Statements.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


STATEMENT OF ASSETS AND LIABILITIES  August 31, 2002
----------------------------------------------------------------------------

============================================================================
 ASSETS
----------------------------------------------------------------------------
 Investments, at value (cost $7,264,182,653) --
   see accompanying statement                                $ 5,705,381,732
----------------------------------------------------------------------------
 Receivables and other assets:
 Shares of beneficial interest sold                               18,361,605
 Investments sold                                                  7,971,498
 Interest and dividends                                            5,091,612
 Other                                                                35,777
                                                             ---------------
 Total assets                                                  5,736,842,224
============================================================================
 LIABILITIES
----------------------------------------------------------------------------
 Bank overdraft                                                    3,371,208
----------------------------------------------------------------------------
 Unrealized depreciation on foreign currency contracts                   437
----------------------------------------------------------------------------
 Payables and other liabilities:
 Investments purchased                                            82,270,723
 Shares of beneficial interest redeemed                            8,522,340
 Transfer and shareholder servicing agent fees                     2,407,796
 Distribution and service plan fees                                1,856,026
 Trustees' compensation                                              890,621
 Shareholder reports                                                 763,370
 Other                                                               442,838
                                                             ---------------
 Total liabilities                                               100,525,359
============================================================================
 NET ASSETS                                                  $ 5,636,316,865
----------------------------------------------------------------------------

============================================================================
 COMPOSITION OF NET ASSETS
----------------------------------------------------------------------------
 Paid-in capital                                             $ 7,541,100,541
----------------------------------------------------------------------------
 Accumulated net investment loss                                    (858,396)
----------------------------------------------------------------------------
 Accumulated net realized loss on investments and
   foreign currency transactions                                (345,124,729)
----------------------------------------------------------------------------
 Net unrealized depreciation on investments and translation
 of assets and liabilities denominated in foreign currencies  (1,558,800,551)
                                                             ---------------
 NET ASSETS                                                  $ 5,636,316,865
                                                             ===============


STATEMENT OF ASSETS AND LIABILITIES  Continued
--------------------------------------------------------------------------------

================================================================================
 NET ASSET VALUE PER SHARE
--------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$3,219,390,747 and 104,798,231 shares of beneficial interest
outstanding)
$30.72
Maximum offering price per share (net asset value
plus sales charge of 5.75% of offering price)
$32.59
--------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets of $1,029,321,686 and 35,554,056 shares of beneficial interest
outstanding)
$28.95
--------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets of $450,988,827 and 15,754,851 shares of beneficial interest
outstanding)
$28.63
--------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets of $72,178,153 and 2,358,575 shares of beneficial interest
outstanding)
$30.60
--------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based
on net assets of $864,437,452 and 27,744,518 shares of beneficial
interest outstanding)
$31.16

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


STATEMENT OF OPERATIONS  For the Year Ended August 31, 2002
--------------------------------------------------------------------------------

================================================================================
 INVESTMENT INCOME
--------------------------------------------------------------------------------
 Dividends (net of foreign withholding taxes of $620,443)       $
46,807,925
--------------------------------------------------------------------------------
 Interest
15,848,731

---------------
 Total investment income
62,656,656

================================================================================
 EXPENSES
--------------------------------------------------------------------------------
 Management fees
34,456,425
--------------------------------------------------------------------------------
 Distribution and service plan fees:
 Class A
7,599,340
 Class B
12,215,841
 Class C
4,579,140
 Class N
190,265
--------------------------------------------------------------------------------
 Transfer and shareholder servicing agent fees:
 Class A
10,642,784
 Class B
4,112,807
 Class C
1,576,970
 Class N
118,011
 Class Y
2,362,403
--------------------------------------------------------------------------------
 Shareholder reports
2,596,951
--------------------------------------------------------------------------------
 Trustees' compensation
349,369
--------------------------------------------------------------------------------
 Custodian fees and expenses
119,785
--------------------------------------------------------------------------------
 Other
665,078

----------------
 Total expenses
81,585,169
 Less reduction to custodian expenses
(13,476)
 Less voluntary waiver of transfer and shareholder
 servicing agent fees --
 Classes A, B, C and N
(243,040)

----------------
 Net expenses
81,328,653
================================================================================
 NET INVESTMENT LOSS
(18,671,997)

================================================================================
 REALIZED AND UNREALIZED LOSS
--------------------------------------------------------------------------------
 Net realized loss on:
 Investments
(329,805,868)
 Foreign currency transactions
(266,185)

----------------
 Net realized loss
(330,072,053)
--------------------------------------------------------------------------------
 Net change in unrealized depreciation on:
 Investments
(1,276,079,992)
 Translation of assets and liabilities
    denominated in foreign currencies
(63,266)

----------------
 Net change
(1,276,143,258)

----------------
 Net realized and unrealized loss
(1,606,215,311)

--------------------------------------------------------------------------------
 NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS
$(1,624,887,308)

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


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

 YEAR ENDED AUGUST 31,                                    2002
2001
================================================================================
 OPERATIONS
--------------------------------------------------------------------------------

 Net investment income (loss)                  $   (18,671,997) $
8,427,191
--------------------------------------------------------------------------------
 Net realized gain (loss)                         (330,072,053)
216,477,612
--------------------------------------------------------------------------------
 Net change in unrealized depreciation          (1,276,143,258)
(2,129,854,386)

---------------------------------
 Net decrease in net assets
    resulting from operations                   (1,624,887,308)
(1,904,949,583)

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

 Distributions from net realized gain:
 Class A                                           (78,925,210)
(315,580,814)
 Class B                                           (32,881,006)
(125,027,291)
 Class C                                           (12,072,075)
(38,476,846)
 Class N                                              (448,693)
--
 Class Y                                           (23,930,560)
(110,054,951)

================================================================================
 BENEFICIAL INTEREST TRANSACTIONS
--------------------------------------------------------------------------------
 Net increase in net assets resulting from
 beneficial interest transactions:
 Class A                                         1,117,051,404
742,228,163
 Class B                                           155,846,095
436,276,561
 Class C                                           173,690,841
189,865,151
 Class N                                            78,890,789
7,285,737
 Class Y                                           178,600,006
143,938,999

================================================================================
 NET ASSETS
--------------------------------------------------------------------------------
 Total decrease                                    (69,065,717)
(974,494,874)
--------------------------------------------------------------------------------
 Beginning of period                             5,705,382,582
6,679,877,456

--------------------------------
 End of period [including accumulated
 net investment losses of $858,396 and
 $739,767, respectively]                        $5,636,316,865
$5,705,382,582

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

                                  Appendix A

                           Industry Classifications

Aerospace & Defense                Household Durables
Air Freight & Couriers             Household Products
Airlines                           Industrial Conglomerates
Auto Components                    Insurance
Automobiles                        Internet & Catalog Retail
Banks                              Internet Software & Services
Beverages                          Information Technology Consulting &
                                   Services
Biotechnology                      Leisure Equipment & Products
Building Products                  Machinery
Chemicals                          Marine
Commercial Services & Supplies     Media
Communications Equipment           Metals & Mining
Computers & Peripherals            Multiline Retail
Construction & Engineering         Multi-Utilities
Construction Materials             Office Electronics
Containers & Packaging             Oil & Gas
Distributors                       Paper & Forest Products
Diversified Financials             Personal Products
Diversified Telecommunication      Pharmaceuticals
Services
Electric Utilities                 Real Estate
Electrical Equipment               Road & Rail
Electronic Equipment & Instruments Semiconductor Equipment & Products
Energy Equipment & Services        Software
Food & Drug Retailing              Specialty Retail
Food Products                      Textiles & Apparel
Gas Utilities                      Tobacco
Health Care Equipment & Supplies   Trading Companies & Distributors
Health Care Providers & Services   Transportation Infrastructure
Hotels Restaurants & Leisure       Water Utilities
                                   Wireless Telecommunication Services

                                  Appendix B

OppenheimerFunds Special Sales Charge Arrangements and Waivers
--------------------------------------------------------------

In certain cases, the initial sales charge that applies to purchases of Class
A shares2 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.3  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 plans4
         4) Group Retirement Plans5
         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."6 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).
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.7
         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.8
         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. 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.
|_|   The contingent deferred sales charges are generally not waived
         following the death or disability of a grantor or trustee for a
         trust account. The contingent deferred sales charges will only be
         waived in the limited case of the death of the 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.
|_|   Distributions9 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.10
         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.11
         9) On account of the participant's separation from service.12
         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.

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

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

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

|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 Capital Appreciation Fund
------------------------------------------------------------------------------


Internet Website:

      www.oppenheimerfunds.com
      ------------------------

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

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

Transfer Agent
      OppenheimerFunds Services
      P.O. Box 5270
      Denver, Colorado 80217
      1.800.CALL.OPP (225.5677)

Custodian Bank

      JPMorgan Chase Bank
      4 Chase Metro Tech Center
      Brooklyn, NY  11245


Independent Auditors
      KPMG LLP
      707 Seventeenth Street
      Denver, Colorado 80202

Legal Counsel
      Mayer, Brown, Rowe & Maw
      1675 Broadway
      New York, New York 10019-5820


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