485BPOS

                                                                                           Registration No. 2-33043
                                                                                                  File No. 811-1512

                                        SECURITIES AND EXCHANGE COMMISSION
                                               WASHINGTON, DC 20549

                                                     FORM N-1A


REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933                                                        [X]

Pre-Effective Amendment No. __                                                                                 [ ]


Post-Effective Amendment No. 56                                                                                [X]


                                                      and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940                                                                                                    [X]


Amendment No. 40                                                                                               [X]



                                          OPPENHEIMER CAPITAL INCOME FUND
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                                (Exact Name of Registrant as Specified in Charter)

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

                                                   303-768-3200
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                               (Registrant's Telephone Number, including Area Code)


                                               Robert G. Zack, Esq.

                                              OppenheimerFunds, Inc.

                                   498 Seventh Avenue, New York, New York 10018

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                                      (Name and Address of Agent for Service)

It is proposed that this filing will become effective (check appropriate box):


[   ]    Immediately upon filing pursuant to paragraph (b)
[X]      On December 28, 2001 pursuant to paragraph (b)
[   ]    60 days after filing pursuant to paragraph (a)(1)
[   ]    On _______________ pursuant to paragraph (a)(1)
[   ]    75 days after filing pursuant to paragraph (a)(2)
[   ]    On _______________ pursuant to paragraph (a)(2) of Rule 485


If appropriate, check the following box:

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

EX-99

Oppenheimer
Capital Income Fund



Prospectus dated December 28, 2001




                                                             Oppenheimer Capital Income Fund is a mutual fund that
                                                             seeks current income compatible with prudent
                                                             investment. As a secondary objective it attempts to
                                                             conserve principal while providing an opportunity for
                                                             capital appreciation. It invests in both equity and
                                                             debt securities.
                                                                  This Prospectus contains important information
                                                             about the Fund's objectives, its investment policies,
                                                             strategies and risks. It also contains important
                                                             information about how to buy and sell shares of the
                                                             Fund and other account features. Please read this
                                                             Prospectus carefully before you invest and keep it for
                                                             future reference about your account.

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


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CONTENTS



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

                           The Fund's Investment Objectives and Strategies

                           Main Risks of Investing in the Fund

                           The Fund's Past Performance

                           Fees and Expenses of the Fund

                           About the Fund's Investments

                           How the Fund is Managed


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

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

                           Special Investor Services
                           AccountLink
                           PhoneLink
                           OppenheimerFunds Internet Web Site
                           Retirement Plans

                           How to Sell Shares
                           By Mail
                           By Telephone

                           How to Exchange Shares

                           Shareholder Account Rules and Policies

                           Dividends, Capital Gains and Taxes

                           Financial Highlights







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

The Fund's Investment Objectives and Strategies

WHAT ARE THE FUND'S INVESTMENT OBJECTIVES? The Fund's primary objective is to seek as much current income as is
compatible with prudent investment. The Fund has a secondary objective to conserve principal while providing an
opportunity for capital appreciation.

WHAT DOES THE FUND MAINLY INVEST IN? Under normal market conditions, the Fund invests 65% of its total assets in
equity and debt securities that are expected to generate income. The Fund focuses its investments mainly in equity
securities, such as dividend-paying common stocks, preferred stocks and securities convertible into common stock, of
domestic and foreign issuers of different capitalization ranges. The Fund also buys debt securities, such as
corporate and government bonds and debentures of domestic and foreign issuers. The Fund can hold debt securities
having short, intermediate or long maturities.


HOW DOES THE PORTFOLIO MANAGER DECIDE WHAT SECURITIES TO BUY OR SELL? In selecting securities for the Fund, the
portfolio manager mainly relies on a value-oriented investing style for equity securities. Value investing focuses
on companies that may be currently out of favor in the market, or on opportunities in cyclical industries. The
portfolio manager looks for stocks trading at lower prices relative to the market and what is believed to be their
real worth. They may offer higher-than average dividends. Value investors hope to realize appreciation as other
investors recognize the security's intrinsic value and the stock price rises as a result.

         The portfolio manager generally uses a fundamental approach to analyzing issuers (for example,
price/earnings ratios and current balance sheet information), to select stocks he thinks are undervalued. While this
process and the factors used may change over time and its implementation may vary in particular cases, the portfolio
manager typically searches for:

     o   stocks of established issuers that have under-performed the market for a year or more, but have begun to
         recover
     o   stocks that have high current income and are believed to have substantial earnings possibilities
     o   stocks with low price/earnings ratios relative to other securities
     o   stocks with a low price relative to the underlying value of the issuer's assets, earnings, cash flow or
         other factors


         In value investing there is always the risk that the market will not recognize a security's intrinsic value
or that the portfolio manager has not correctly assessed the relative value of the issuer's securities or the
issuer's worth.

         In selecting debt securities, the portfolio manager looks for high current yields without taking undue
credit risks, although the Fund can invest in debt securities below investment grade.


WHO IS THE FUND DESIGNED FOR? The Fund is designed primarily for investors seeking current income with the
opportunity for some capital growth in their investment over the long term. Those investors should have a longer
investing horizon and be willing to assume the risks of short-term share price fluctuations that are typical for a
fund with substantial investments in equity securities. Since the Fund's income level will fluctuate, it is not
designed for investors needing an assured level of current income. Because of its primary focus on income and
long-term growth secondarily, the Fund may be appropriate for moderately conservative investors and for retirement
plans. However, 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 similar objectives.


RISKS OF INVESTING IN STOCKS. Stocks fluctuate in price, and their short-term volatility at times may be great.
Because the Fund typically invests a substantial portion of its assets in common stocks and other equity securities,
the value of the Fund's portfolio will be affected by changes in the 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.  In particular,  because the Fund currently  focuses its stock  investments  in U.S.  issuers,  it will be
primarily affected by changes in U.S. stock markets.

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

         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 Fund currently invests primarily in securities of large companies for their dividend income but
can also buy securities of small and medium-size companies, which may have more volatile prices than stocks of large
companies.

CREDIT RISK. Debt securities are subject to credit risk. Credit risk is the risk that the issuer of a security might
not make interest and principal payments on the security as they become due. If the issuer fails to pay interest,
the Fund's income might be reduced and if the issuer fails to repay principal, the value of that security and of the
Fund's shares may be reduced. While the Fund's investments in U.S. government securities are subject to little
credit risk, the Fund's other investments in debt securities, particularly high-yield lower-grade debt securities
and debt securities of foreign governments and of domestic and foreign companies, are subject to risks of default. A
downgrade in an issuer's credit rating or other adverse news about an issuer can reduce the value of that issuer's
securities.

Special Risks of Lower-Grade Securities. Because the Fund can invest in securities below investment-grade to seek
         high income, the Fund's credit risks are greater than those of funds that buy only investment-grade bonds.
         Lower-grade debt securities (commonly called "junk bonds") may be subject to greater market fluctuations
         and greater risks of loss of income and principal than investment-grade debt securities. Securities that
         are (or that have fallen) below investment grade are exposed to a greater risk that the issuers of those
         securities might not meet their debt obligations. These risks can reduce the Fund's share prices and the
         income it earns.

INTEREST RATE RISKS. The values of debt securities are subject to change when prevailing interest rates change. When
interest rates fall, the values of already-issued debt securities generally rise. When interest rates rise, the
values of already-issued debt securities generally fall, and they may sell at a discount from their face amount. The
magnitude of these fluctuations will often be greater for longer-term debt securities than shorter-term debt
securities and at times the average maturity of the Fund's debt investments may be relatively long-term. The Fund's
share prices can go up or down when interest rates change because of the effect of the changes on the value of the
Fund's investments in debt securities.

HOW RISKY IS THE FUND OVERALL? In the short term, the stock markets can be volatile, and the price of the Fund's
shares can go up and down. The Fund's income-oriented investments may help cushion the Fund's total return from
changes in stock prices, but fixed-income securities have their own risks and changes in their values can also
affect the Fund's share prices. In the OppenheimerFunds spectrum, the Fund is generally less aggressive than growth
stock funds, but may be more volatile than investment-grade bond funds.


         These risks collectively form the overall risk profile of the Fund and can affect the value of the Fund's
investments, its investment performance, and the prices of its shares. Particular investments and investment
strategies also have risks. These risks mean that you can lose money by investing in the Fund. When you redeem your
shares, they may be worth more or less than what you paid for them. There is no assurance that the Fund will achieve
its investment objectives.

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

The bar chart and table below show one measure of the risks of investing in the Fund, by showing changes in the
Fund's performance (for its Class A shares) from year to year for the past ten calendar years and by showing how the
average annual total returns of the Fund's shares compare to those of a broad-based market index. The Fund's past
investment performance 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]


For the period from January 1, 2001 through September 30, 2001, the cumulative return (not annualized) for Class A
shares was -6.91%. Sales charges are not included in the calculations of return in this bar chart, and if those
charges were included, the returns would be less than those shown.
During the period shown in the bar chart, the highest return (not annualized) for a calendar quarter was 11.30% (2nd
Q `97) and the lowest return (not annualized) for a calendar quarter was -9.58% (3rd Q `99).

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

Average Annual Total Returns
For the periods ended December 31, 2000

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Class A Shares (inception 12/1/70)                        10.11%             12.14%                 12.23%

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

S&P 500 Index                                            -9.10%1             18.33%1                17.44%1

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Class B Shares (inception 8/17/93)                        10.97%             12.30%                 11.77%

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

Class C Shares (inception 11/1/95)                        14.99%             12.56%                 13.02%

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

1. From 12/31/89
The Fund's average annual total returns include the applicable sales charge: for Class A, the current maximum
initial sales charge of 5.75%; for Class B, the contingent deferred sales charges of 5% (1-year) and 1% (6-years),
and for Class C, the 1% contingent deferred sales charge for the 1-year period. Because Class B shares convert to
Class A shares 72 months after purchase, Class B "life-of-class" performance does not include the contingent
deferred sales charge and uses Class A performance for the period after conversion.
Class N shares were not publicly offered during the period shown.

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 Fund's performance of Class A shares is compared to the
S&P 500 Index, an unmanaged index of equity securities. The index performance reflects the reinvestment of dividends
but does not consider the effects of capital gains or transaction costs, and the Fund also invests  in debt
securities, which are not included in the index.

Fees and Expenses of the Fund


The following tables are meant to help you understand the fees and expenses you may pay if you buy and hold shares
of the Fund.  The Fund pays a variety of expenses directly for management of its assets, administration,
distribution of its shares and other services. Those expenses are subtracted from the Fund's assets to calculate the
Fund's net asset values per share. All shareholders therefore pay those expenses indirectly. Shareholders pay other
expenses directly, such as sales charges and account transaction charges.  The numbers below are based on the Fund's
expenses during its fiscal year ended August 31, 2001, except that the numbers for Class N shares, which is a new
class, are based on the Fund's anticipated expenses for Class N shares during the upcoming year.


Shareholder Fees (charges paid directly from your investment):

- ---------------------------------------------------
                                                    Class A        Class B         Class C Shares  Class N
                                                    Shares         Shares                          Shares
- --------------------------------------------------- -------------- --------------- --------------- ----------------
Maximum Sales Charge (Load) on purchases            5.75%          None            None            None
(as % of offering price)
- --------------------------------------------------- -------------- --------------- --------------- ----------------

Maximum Deferred Sales Charge (Load)
(as % of the lower of the original offering         None1          5%2             1%3             1%4
price or redemption proceeds)

- --------------------------------------------------- -------------- --------------- --------------- ----------------
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 retirement plan's first purchase of Class N shares.

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

                                                       Class A        Class B        Class C       Class N
                                                       Shares         Shares         Shares        Shares*

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

Management Fees                                        0.52%          0.52%          0.52%         0.52%

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

Distribution and/or Service (12b-1) Fees               0.23%          1.00%          1.00%         0.50%

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Other Expenses                                         0.16%          0.16%          0.16%         0.15%

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

Total Annual Operating Expenses                        0.91%          1.68%          1.68%         1.17%

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


Expenses may vary in future years. "Other expenses" include transfer agent fees, custodial expenses, and accounting
and legal expenses the Fund pays.
* Amounts are annualized based on inception date of 3/1/01.


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:                   1 Year             3 Years          5 Years           10 Years1
- ----------------------------------------- ------------------ ---------------- ----------------- -----------------

Class A Shares                            $663               $848             $1,050            $1,630

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

Class B Shares                            $671               $830             $1,113            $1,594

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Class C Shares                            $271               $530             $913              $1,987

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

Class N Shares                            $219               $372             $644              $1,420

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

If shares are not redeemed:               1 Year             3 Years          5 Years           10 Years1
- ----------------------------------------- ------------------ ---------------- ----------------- ------------------

Class A Shares                            $663               $848             $1,050            $1,630

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

Class B Shares                            $171               $530             $913              $1,594

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

Class C Shares                            $171               $530             $913              $1,987

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

Class N Shares                            $119               $372             $644              $1,420

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

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

About the Fund's Investments

THE FUND'S PRINCIPAL INVESTMENT POLICIES. The allocation of the Fund's portfolio among different types of
investments will vary over time based on the Manager's evaluation of economic and market trends. The Fund's
portfolio might not always include all of the different types of investments described below. 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 investments in any one industry. However,
changes in the overall market prices of securities and the income they pay can occur at any time. The share price of
the Fund will change daily based on changes in market prices of securities and market conditions and in response to
other economic events.

Equity Securities. The Fund's investments in equity securities are mainly common stocks but also include preferred
         stocks and securities convertible into common stocks. The Fund currently focuses on securities of issuers
         that have large capitalizations. They may pay higher dividends than small or medium capitalization
         companies and their stock prices have tended to be less volatile than securities of smaller issuers.
         However, the Fund can buy stocks of issuers in all capitalization ranges.

         The Fund may invest in equity securities both for current income from dividends as well as secondarily for
         growth opportunities. The mix of equities and debt securities in the Fund's portfolio will vary over time
         depending on the Manager's judgment about market and economic conditions.

         Equity securities include common stocks, as well as "equity equivalents" such as preferred stocks and
         securities convertible into common stock. They can include securities issued by domestic or foreign
         companies. Preferred stock has a set dividend rate and ranks after bonds and before common stocks in its
         claim for dividends and on assets if the issuer is liquidated or becomes bankrupt. 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 investment decision than in the case of debt securities.


Convertible Securities. Convertible debt securities pay interest and convertible preferred stocks pay dividends
         until they mature or are converted, exchanged or redeemed. Because of the conversion feature, the price of
         a convertible security will normally vary in some proportion to changes in the price of the underlying
         common stock. In general, convertible securities:

o        have higher yields than common stocks but lower yields than comparable non-convertible securities,
o        may be subject to less fluctuation in value than the underlying stock because of their income, and
o        provide potential for capital appreciation if the market price of the underlying common stock increases
              (and in those cases may be thought of as "equity substitutes").

         The Fund does not invest only in securities of issuers in a particular  market  capitalization  range, and at
         times  the  Manager  might  increase  the  relative  emphasis  of  securities  of  issuers  in  a  particular
         capitalization range if the Manager believes they offer greater opportunities for total return.

         Securities of smaller,  newer  companies may offer greater  potential for higher  returns,  but they are also
         subject  to greater  risks of  default  than  larger,  more  established  issuers.  They may have  unseasoned
         management,  they may lack established  markets for their products or services and may be dependent on only a
         few  customers or suppliers for a greater  amount of their  business.  Also,  they may not have the financial
         strength to sustain them through business downturns or adverse market  conditions.  These securities may have
         less of a trading market than  securities of larger  issuers,  and it might be harder for the Fund to dispose
         of its holdings at an acceptable  price when it wants to sell them. As a result,  the Fund's  investments  in
         securities of these  issuers have greater  risks.  The Fund might not achieve its expected  returns from them
         and its share price may fluctuate more to the extent that it holds these investments.

         In selecting  securities for the Fund's  portfolio and evaluating  their yield potential and credit risk, the
         Manager does not rely solely on ratings by rating  organizations but evaluates  business and economic factors
         affecting an issuer as well. The debt securities the Fund buys may be rated by  nationally-recognized  rating
         organizations  such as Moody's Investors  Service,  Inc. or Standard & Poor's Rating Service,  or they may be
         unrated securities  assigned an equivalent rating by the Manager.  Credit ratings evaluate the expectation of
         scheduled  payments of interest and  principal,  not market risks.  Rating  agencies  might not always change
         their  credit  ratings of an issuer in a timely  manner to reflect the events  that could  affect an issuer's
         ability to make timely payments on its obligations.

         The Fund can invest in debt  securities  that are above or below  investment  grade in credit  quality and at
         times will invest  substantial  amounts of its assets in  securities  below  investment  grade to seek higher
         income  as part of its  goal.  "Investment-grade"  rated  securities  are  those in the four  highest  rating
         categories  of  national  ratings   organizations.   The  ratings   definitions  of  the  principal   ratings
         organizations are included in Appendix A to the Statement of Additional Information.

Convertible  Preferred  Stock.  Unlike common  stock,  preferred  stock  typically has a stated  dividend  rate.  When
         prevailing  interest  rates rise,  the value of preferred  stock having a fixed  dividend rate tends to fall.
         The right to  payment  of  dividends  on  preferred  stock  generally  is  subordinate  to the  rights of the
         company's  debt  securities.  Preferred  stock  dividends may be  cumulative  (they remain a liability of the
         company until paid) or non-cumulative.

         Some  convertible  preferred  stock  with a  mandatory  conversion  feature  has a set call  price to buy the
         underlying  common stock. If the underlying  common stock price is less than the call price,  the holder will
         pay more for the  common  stock  than its market  price.  The  issuer  might also be able to redeem the stock
         prior to the mandatory  conversion date,  which could diminish the potential for capital  appreciation on the
         investment.


Debt Securities. The Fund's investments in debt securities include securities issued or guaranteed by the U.S.
         government or its agencies and instrumentalities, and foreign and domestic corporate bonds, notes and
         debentures. These are selected primarily for their income possibilities and to help cushion fluctuations in
         the Fund's net asset values.

     o   U.S. Treasury Obligations. These include Treasury bills (maturities of one year or less when issued),
         Treasury notes (maturities of from one to ten years when issued), and Treasury bonds (maturities of more
         than ten years when issued). Treasury securities are backed by the full faith and credit of the United
         States as to timely payments of interest and repayments of principal. Although not rated, Treasury
         obligations have little credit risk but are subject to interest rate risk.

     o   Special Credit Risks of Lower-Grade Securities. The Fund can invest up to 25% of its total assets in
         "lower-grade" securities commonly known as "junk bonds."  These are securities rated below "Baa" by Moody's
         Investors Service, Inc. or "BBB" by Standard & Poors Ratings Service or having similar ratings by other
         ratings organizations, or if unrated, assigned a comparable rating by the Manager. However, the Fund cannot
         invest more than 10% of its total assets in lower-grade securities that are not convertible.

         While all debt securities are subject to risks of non-payment of interest and principal, debt securities
         below investment grade, whether rated or unrated, have greater risks than investment grade securities.
         There may be less of a market for them and therefore they may be harder to sell at an acceptable price.
         There is a relatively greater possibility that the issuer's earnings may be insufficient to make the
         payments of interest and principal when due.

CAN THE FUND'S INVESTMENT OBJECTIVES 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 objectives are fundamental policies. Other investment restrictions that are
fundamental policies are listed in the Statement of Additional Information. An investment policy or technique is not
fundamental unless this Prospectus or the Statement of Additional Information says that it is.

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

Zero-Coupon and "Stripped" Securities. Some of the debt securities the Fund buys are zero-coupon bonds (including
         U.S. Treasury bonds) that pay no interest and are issued at a substantial discount from their face value.
         Others are debt securities that have been "stripped" of their interest coupons, such as Treasury Securities
         whose coupons have been stripped by a Federal Reserve Bank. They may also include securities issued by
         private issuers. Zero-coupon and stripped securities are subject to greater fluctuations in price from
         interest rate changes than interest-paying securities. The Fund may have to pay out the imputed income on
         zero coupon securities without receiving the actual cash currently.

Foreign Securities. There is no limit on the amount of the Fund's assets that can be invested in foreign securities.
         However, the Fund currently does not invest a significant portion of its assets in foreign securities and
         does not intend to invest more than 35% of its total assets in foreign securities. The Fund can buy foreign
         equity securities as well as debt securities issued by foreign companies or governments and their agencies
         in any country, developed or undeveloped.

     o   Risks of Foreign Investing. While foreign securities offer special investment opportunities, they also have
         special risks. 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 to which U.S. companies are subject. 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 political and economic factors. Securities in emerging
         market countries may be more difficult to sell and their prices may be more volatile.

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. A restricted security
         is one that has a contractual restriction on its resale or which cannot be sold publicly until it is
         registered under the Securities Act of 1933. The Fund will not invest more than 10% of its net assets in
         illiquid or restricted securities. The Board can increase that limit to 15%. Certain restricted securities
         that are eligible for resale to qualified institutional purchasers are not 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.


     o   Hedging. The Fund can buy and sell futures contracts, put and call options, forward contracts, interest
         rate swaps and options on futures and broadly-based securities indices. 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 objectives.


         Some of these 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 adverse or unstable market, economic or political
         conditions, the Fund can invest up to 100% of its assets in temporary defensive investments.  Generally,
         they would be high-quality, short-term money market instruments such as U.S. government securities, highly
         rated commercial paper, short-term corporate debt obligations, bank deposits or repurchase agreements. To
         the extent the Fund invests defensively in these securities, it might not achieve its investment objectives.


How the Fund is Managed

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


         The Manager has been an investment adviser since January 1960. The Manager and its subsidiaries and
affiliates managed more than $120 billion in assets as of November 30, 2001, including other Oppenheimer funds with
more than 5 million shareholder accounts. The Manager is located at 498 Seventh Avenue, New York, NY 10018.


Portfolio Manager. The portfolio manager of the Fund is Michael Levine. He is the person principally responsible for
         the day -to-day management of the Fund's portfolio. Mr. Levine became a Vice President and portfolio
         manager of the Fund on June 1, 1999 and has been a Vice President of the Manager since June 1998. Prior to
         joining the Manager in June 1994, Mr. Levine was a portfolio manager and research associate for Amas
         Securities, Inc. Mr. Levine is portfolio manager and an officer of other Oppenheimer funds.


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 $100 million of average annual net assets of
         the Fund, 0.70% of the next $100 million, 0.65% of the next $100 million, 0.60% of the next $100 million,
         0.55% of the next $100 million and 0.50% of average annual net assets in excess of $500 million. The Fund's
         management fee for its last fiscal year ended August 31, 2001 was 0.52% of average annual net assets for
         each class of shares.


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

How to Buy Shares

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

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

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

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

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

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

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

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

     o   Under retirement plans, such as IRAs, pension and profit-sharing plans and 401(k) plans, you can start your
         account with as little as $250. If your IRA is started under an Asset Builder Plan, the $25 minimum
         applies. Additional purchases may be as little as $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 and sends it to the
Distributor.

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

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


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


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

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

- ----------------------------------------------------------------------------------------------------------------------
WHAT CLASSES OF SHARES DOES THE FUND OFFER? The Fund offers investors four 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 $500,000 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 six 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%, 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%, as described in "How Can You Buy Class N Shares," below.

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

         The discussion below is not intended to be investment advice or a recommendation, because each investor's
financial considerations are different. The discussion below assumes that you will purchase only one class of shares
and not a combination of shares of different classes. Of course, these examples are based on approximations of the
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 shares. For retirement plans
         that qualify to purchase Class N shares, Class N shares generally will be more advantageous than Class C
         shares. Class B shares are not available for purchase by such retirement plans.

     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 or Class N shareholders. Other features may not be advisable (because of the effect of the
         contingent deferred sales charge) for Class B, Class C or 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 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 not available for Class B, Class C and Class N shares, and 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 C to the Statement of Additional Information details the
conditions for the waiver of sales charges that apply in certain cases, and the special sales charge rates that
apply to purchases of shares of the Fund by certain groups, or under specified retirement plan arrangements or in
other special types of transactions. To receive a waiver or special sales charge rate, you must advise the
Distributor when purchasing shares or the Transfer Agent when redeeming shares that the special conditions apply.

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

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

  Amount of Purchase                      Front-End Sales           Front-End Sales
                                            Charge As a               Charge As a              Concession As
                                           Percentage of           Percentage of Net           Percentage of
                                          Offering Price            Amount 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, except as provided below. The Distributor pays
         dealers of record concessions in an amount equal to 1.0% of purchases of $1 million or more other than by
         grandfathered retirement accounts. For grandfathered retirement accounts, the concession is 1.0% of the
         first $2.5 million, plus 0.50% of the next $2.5 million, plus 0.25% of purchases over $5 million,
         calculated on a calendar year basis. In either case, the concession will be paid on purchases of shares by
         exchange or that were not 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 (1) 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 (2) 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.  There is no
         contingent deferred sales charge upon the redemption of such shares.  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 6 years from the beginning of the calendar month of their
purchase, a contingent deferred sales charge will be deducted from the redemption proceeds. The Class B contingent
deferred sales charge is paid to compensate the Distributor for its expenses of providing distribution-related
services to the Fund in connection with the sale of Class B shares.


         To determine whether the contingent deferred sales charge applies to a redemption, the Fund redeems shares
in the following order:
     1.  shares acquired by reinvestment of dividends and capital gains distributions,
     2.  shares held for over 6 years, and
     3.  shares held the longest during the 6-year period.

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

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

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

Automatic Conversion of Class B Shares. Class B shares automatically convert to Class A shares 72 months after you
         purchase them. This conversion feature relieves Class B shareholders of the asset-based sales charge that
         applies to Class B shares under the Class B Distribution and Service Plan, described below. The conversion
         is based on the relative net asset value of the two classes, and no sales load or other charge is imposed.
         When any Class B shares you hold convert, any other Class B shares that were acquired by the reinvesting of
         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 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.


         To determine whether the contingent deferred sales charge applies to a redemption, the Fund redeems shares
in the following order:
     1.  shares acquired by reinvestment of dividends and capital gains distributions,
     2.  shares held for over 12 months, and
     3.  shares held the longest during the 12-month period.


HOW CAN YOU BUY CLASS N SHARES? Class N shares are offered only through 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 through 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 1.00% 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 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.


         Retirement  plans that offer Class N shares may impose charges on plan participant  accounts.  The procedures
for purchasing,  redeeming,  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  purchasing,  redeeming,  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.

DISTRIBUTION AND SERVICE (12b-1) PLANS. 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.


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.

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% per year on Class B shares  and on Class C shares
         and the Fund pays the  Distributor  an annual  asset-based  sales charge of 0.25% per year on Class N shares.
         The Distributor also receives a service fee of 0.25% per year under each plan.

         The  asset-based  sales  charge and  service  fees  increase  Class B and Class C expenses by up to 1.00% and
         increase  Class N expenses by up to 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 ongoing  basis,  over time these fees will increase the cost of
         your investment and may cost you more than other types of sales charges.


         The  Distributor  uses the service fees to compensate  dealers for providing  personal  services for accounts
         that hold Class B,  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  were 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.

         The  Distributor  currently  pays a sales  concession  of 0.75% of the  purchase  price of Class C shares  to
         dealers  from its own  resources  at the time of sale.  Including  the advance of the service  fee, the total
         amount  paid by the  Distributor  to the dealer at the time of sale of Class C shares is  therefore  1.00% of
         the purchase  price.  The  Distributor  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.

         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  1.00% of
         the purchase  price.  The  Distributor  retains the  asset-based  sales charge on Class N shares.  That sales
         concession  on the sale of Class N shares will not be paid on (i)  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),  (ii)  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),  and (iii) 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.

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 1.800.852.8457. The purchase
payment will be debited from your bank account.

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

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

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

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

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

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

OPPENHEIMERFUNDS INTERNET WEB SITE. You can obtain information about the Fund, as well as your account balance, on
the OppenheimerFunds Internet web site, 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 web site. To perform account transactions or obtain account information online, you must first obtain a user
I.D. and password on that web site. If you do not want to have Internet account transaction capability for your
account, please call the Transfer Agent at 1.800.525.7048. At times, the web site 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 6
months to reinvest all or part of the redemption proceeds in Class A shares of the Fund or other Oppenheimer funds
without paying a sales charge. This privilege applies only to Class A shares that you purchased subject to an
initial sales charge and to Class A or Class B shares on which you paid a contingent deferred sales charge when you
redeemed them. This privilege does not apply to Class C and Class N 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, rollover IRAs and
         Education IRAs.
SEP-IRAs. These are Simplified Employee Pensions 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
1.800.525.7048, for assistance.

Certain Requests Require a Signature Guarantee. To protect you and the Fund from fraud, the following redemption
         requests must be in writing and must include a signature guarantee (although there may be other situations
         that also require a signature guarantee):
     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.

Sending Redemption Proceeds by Wire. While the Fund normally sends your money by check, you can arrange to have the
         proceeds of the shares you sell sent by Federal Funds wire to a bank account you designate. It must be a
         commercial bank that is a member of the Federal Reserve wire system. The minimum redemption you can have
         sent by wire is $2,500. There is a $10 fee for each wire. To find out how to set up this feature on your
         account or to arrange a wire, call the Transfer Agent at 1.800.852.8457.

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

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

HOW DO YOU SELL SHARES BY TELEPHONE? You and your dealer representative of record may also sell your shares by
telephone. To receive the redemption price calculated on a particular 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, call 1.800.852.8457
     o   To redeem shares automatically on PhoneLink, call 1.800.533.3310

         Whichever method you use, you may have a check sent to the address on the account statement, or, if you
have linked your Fund account to your bank account on AccountLink, you may have the proceeds sent to that bank
account.
Are There Limits on Amounts Redeemed by Telephone?
     o   Telephone Redemptions Paid by Check. Up to $100,000 may be redeemed by telephone in any 7-day period. The
         check must be payable to all owners of record of the shares and must be sent to the address on the account
         statement. This service is not available within 30 days of changing the address on an account.

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

         If you have requested  Federal Funds wire  privileges for your account,  the wire of the redemption  proceeds
         will  normally  be  transmitted  on the next bank  business  day after the  shares are  redeemed.  There is a
         possibility  that the wire may be delayed up to seven days to enable the Fund to sell  securities  to pay the
         redemption  proceeds.  No dividends are accrued or paid on the proceeds of shares that have been redeemed and
         are awaiting transmittal by wire.

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 you own, the  contingent  deferred  sales charge will be deducted  from the  redemption
proceeds,  unless you are eligible for a waiver of that sales charge based on the  categories  listed in Appendix C to
the Statement of Additional  Information  and you advise the Transfer  Agent of your  eligibility  for the waiver when
you place your  redemption  request.  With respect to Class N shares,  a 1% contingent  deferred  sales charge will be
imposed if:


o        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,

o        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.

         A contingent deferred sales charge will be based on the lesser of the net asset value of the redeemed
shares at the time of redemption or the original net asset value. A contingent deferred sales charge is not imposed
on:
o        the amount of your account value represented by an increase in net asset value over the initial purchase
              price,

o        shares purchased by the reinvestment of dividends or capital gains distributions, or
o        shares redeemed in the special circumstances described in Appendix C to the Statement of Additional

              Information.

         To determine whether a contingent deferred sales charge applies to a redemption, the Fund redeems shares in
the following order:
(1)      shares acquired by reinvestment of dividends and capital gains distributions,
(2)      shares held for the holding period that applies to that class, and
(3)      shares held the longest during the holding period.

         Contingent deferred sales charges are not charged when you exchange shares of the Fund for shares of other
Oppenheimer funds. However, if you exchange them within the applicable contingent deferred sales change 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 prospectus of both funds must offer the exchange privilege.
     o   You must hold the shares you buy when you establish your account for at least 7 days before you can
         exchange them. After the account is open 7 days, you can exchange shares every regular business day.
     o   You must meet the minimum purchase requirements for the fund whose shares you purchase by exchange.
     o   Before exchanging into a fund, you must obtain and read its prospectus.

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

         You can find a list of Oppenheimer funds currently available for exchanges in the Statement of Additional
Information or obtain one by calling a service representative at 1.800.525.7048. That list can change from time to
time.

HOW DO 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 certificate with the request.

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

ARE THERE LIMITATIONS ON EXCHANGES? There are certain exchange policies you should be aware of:

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

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

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

Telephone transaction privileges for purchases, redemptions or exchanges may be modified, suspended or terminated by
         the Fund at any time. If an account has more than one owner, the Fund and the Transfer Agent may rely on
         the instructions of any one owner. Telephone privileges apply to each owner of the account and the dealer
         representative of record for the account unless 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 can perform account transactions for their clients by participating in NETWORKING through the National
         Securities Clearing Corporation are responsible for obtaining their clients' permission to perform those
         transactions, and are responsible to their clients who are shareholders of the Fund if the dealer performs
         any transaction erroneously or improperly.

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

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

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

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

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

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

To avoid sending duplicate copies of materials to households, the Fund will mail only one copy of each prospectus,
         annual and semi-annual report and annual notice of the Fund's privacy policy to shareholders having the
         same last name and address on the Fund's records. The consolidation of these mailings, called householding,
         benefits the Fund through reduced mailing expense.

         If you want to receive multiple copies of these materials, you may call the Transfer Agent at
         1.800.525.7048. You may also notify the Transfer Agent in writing. Individual copies of prospectuses,
         reports and privacy notices will be sent to you commencing 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 a
quarterly basis in March, June, September and December and to pay them on a date selected by the Board of Trustees.
Dividends and distributions paid on Class A shares will generally be higher than dividends for Class B, Class C and
Class N shares, which normally have higher expenses than Class A.

         The Fund  attempts to pay  dividends on Class A shares at a constant  level.  There is no  assurance  that it
will be able to do so. The Board of Trustees may change the targeted  dividend  rate at any time without  prior notice
to  shareholders.  The amount of those  dividends  and the  dividends  paid on Class B, Class C and Class N shares may
vary over time,  depending on market  conditions,  the composition of the Fund's portfolio,  and expenses borne by the
particular class of shares. There can be no guarantee that the Fund will pay dividends.

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 Dividend or Capital Gains Only. You can elect to reinvest some distributions (dividends, short-term capital
         gains or long-term capital gains distributions) in the Fund while receiving 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 gain 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 price  fluctuates,  you may have a capital gain
         or loss when you sell or exchange  your shares.  A capital gain or loss is the  difference  between the price
         you paid for the  shares  and the price you  received  when you sold  them.  Any  capital  gain is subject to
         capital gains tax.
Returns of Capital Can Occur. In certain cases, distributions made by the Fund may be considered a non-taxable
         return of capital to shareholders. If that occurs, it will be identified in notices to shareholders.

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


Financial Highlights

The Financial Highlights Table is presented to help you understand the Fund's financial performance for the past 5
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 Deloitte & Touche 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,                 2001             2000          1999
1998             1997
==================================================================================================================================

PER SHARE OPERATING DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period                    $12.88           $13.63        $13.75
$14.12           $11.36
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                      .42(1)           .49           .51
 .50              .47
Net realized and unrealized gain (loss)                    .41(1)           .32          1.03
 .41             3.17

- --------------------------------------------------------------------------
Total income (loss)
from investment operations                                 .83              .81          1.54
 .91             3.64
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                      (.48)            (.49)         (.49)
(.49)            (.48)
Distributions from net realized gain                      (.51)           (1.07)        (1.17)
(.79)            (.40)

- --------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders                                           (.99)           (1.56)        (1.66)
(1.28)            (.88)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                          $12.72           $12.88        $13.63
$13.75           $14.12

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

==================================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(2)                       6.84%            7.24%        11.03%
6.17%           33.39%
- ----------------------------------------------------------------------------------------------------------------------------------

==================================================================================================================================
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)            $2,458,272       $2,395,444    $2,926,923
$2,889,472       $2,721,672
- ----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                   $2,432,151       $2,502,535    $3,156,294
$3,071,928       $2,446,081
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income                                     3.21%(1)         3.78%         3.51%
3.47%            3.97%
Expenses                                                  0.91%            0.93%         0.89%
0.87%(4)         0.88%(4)
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                     74%              37%           40%
18%              24%



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



Net investment income                                   Unchanged
Net realized and unrealized gain (loss)                 Unchanged
Net investment income ratio                                 3.24%


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

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

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





                        OPPENHEIMER CAPITAL INCOME FUND

>


FINANCIAL HIGHLIGHTS  Continued
- --------------------------------------------------------------------------------




CLASS B         YEAR ENDED AUGUST 31,                  2001             2000          1999
1998             1997
===============================================================================================================================

PER SHARE OPERATING DATA
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period                 $12.76           $13.51        $13.63
$14.01           $11.29
- -------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                   .32(1)           .38           .39
 .39              .37
NET REALIZED AND UNREALIZED GAIN (LOSS)                 .41(1)           .32          1.03
 .40             3.13

- --------------------------------------------------------------------------
Total income (loss) from
investment operations                                   .73              .70          1.42
 .79             3.50
- -------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                   (.38)            (.38)         (.37)
(.38)            (.38)
Distributions from net realized gain                   (.51)           (1.07)        (1.17)
(.79)            (.40)

- --------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders                                        (.89)           (1.45)        (1.54)
(1.17)            (.78)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                       $12.60           $12.76        $13.51
$13.63           $14.01

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

===============================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(2)                    6.05%            6.34%        10.22%
5.32%           32.17%
- -------------------------------------------------------------------------------------------------------------------------------

===============================================================================================================================
RATIOS/SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)           $477,223         $472,222      $720,721
$634,775         $431,481
- -------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                  $469,690         $546,390      $749,020
$574,986         $344,254
- -------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income                                  2.44%(1)         3.01%         2.71%
2.68%            3.16%
Expenses                                               1.68%            1.70%         1.69%
1.67%(4)         1.69%(4)
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                  74%              37%           40%
18%              24%



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



Net investment income                                       Unchanged
Net realized and unrealized gain (loss)                     Unchanged
Net investment income ratio                                     2.47%


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

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

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





                        OPPENHEIMER CAPITAL INCOME FUND

>




CLASS C          YEAR ENDED AUGUST 31,                2001            2000            1999
1998            1997
==============================================================================================================================

PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period                $12.76          $13.50          $13.63
$14.02          $11.30
- ------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                  .32(1)          .38             .39
 .39             .40
Net realized and unrealized gain (loss)                .40(1)          .32            1.02
 .40            3.12

- --------------------------------------------------------------------------
Total income (loss) from
investment operations                                  .72             .70            1.41
 .79            3.52
- ------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                  (.38)           (.37)           (.38)
(.39)           (.40)
Distributions from net realized gain                  (.51)          (1.07)          (1.16)
(.79)           (.40)

- --------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders                                       (.89)          (1.44)          (1.54)
(1.18)           (.80)
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD                      $12.59          $12.76          $13.50
$13.63          $14.02

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

==============================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(2)                   6.00%           6.40%          10.15%
5.30%          32.31%
- ------------------------------------------------------------------------------------------------------------------------------

==============================================================================================================================
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)           $89,547         $73,346        $119,284
$94,995         $48,368
- ------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                  $80,390         $84,898        $119,594
$77,052         $24,514
- ------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income                                 2.44%(1)        3.01%           2.70%
2.68%           3.15%
Expenses                                              1.68%           1.70%           1.69%
1.67%(4)        1.69%(4)
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                 74%             37%             40%
18%             24%



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



Net investment income                                           Unchanged
Net realized and unrealized gain (loss)                         Unchanged
Net investment income ratio                                         2.47%


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

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

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





                        OPPENHEIMER CAPITAL INCOME FUND

>


FINANCIAL HIGHLIGHTS  Continued
- --------------------------------------------------------------------------------




                                                                              PERIOD ENDED
CLASS N                                                                 AUGUST 31, 2001(1)
=============================================================================================

PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                                                $12.96
- ---------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                                                  .28 (2)
Net realized and unrealized gain (loss)                                               (.30)(2)
                                                                                    ---------
Total income (loss) from
investment operations                                                                 (.02)
- ---------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                                                  (.25)
Distributions from net realized gain                                                    --
                                                                                    ---------
Total dividends and/or distributions
to shareholders                                                                       (.25)
- ---------------------------------------------------------------------------------------------
Net asset value, end of period                                                      $12.69
                                                                                    =========

=============================================================================================
TOTAL RETURN, AT NET ASSET VALUE(3)                                                  (0.18)%
- ---------------------------------------------------------------------------------------------

=============================================================================================
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)                                              $648
- ---------------------------------------------------------------------------------------------
Average net assets (in thousands)                                                     $214
- ---------------------------------------------------------------------------------------------
Ratios to average net assets:(4)
Net investment income                                                                 2.94%(2)
Expenses                                                                              1.17%
- ---------------------------------------------------------------------------------------------
Portfolio turnover rate                                                                 74%




1.  For the period from March 1, 2001 (inception of offering) to August 31,
    2001.

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



Net investment income                                           Unchanged
Net realized and unrealized gain (loss)                         Unchanged
Net investment income ratio                                         2.97%


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

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





                        OPPENHEIMER CAPITAL INCOME FUND





                                            APPENDIX TO THE PROSPECTUS OF
                                           OPPENHEIMER CAPITAL INCOME FUND

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

         A bar chart will be included in the Prospectus of Oppenheimer Capital Income Fund (the "Fund") depicting
the annual total returns of a hypothetical $10,000 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:



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

                                                 Oppenheimer   Capital   Income  Fund
         Calendar Year Ended:                    Class A Shares

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

         12/31/91                                17.27%

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

         12/31/92                                7.06%

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

         12/31/93                                14.57%

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

         12/31/94                                -2.79%

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

         12/31/95                                27.92%

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

         12/31/96                                20.06%

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

         12/31/97                                29.68%

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

         12/31/98                                10.32%

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

         12/31/99                                -6.25%

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

         12/31/00                                16.82%

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







INFORMATION AND SERVICES

For More Information on Oppenheimer Capital Income 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:  1.800.525.7048
- ------------------------------------------------------ ------------------------------------------------------------
- ------------------------------------------------------ ------------------------------------------------------------
By Mail:                                               Write to:
                                                       OppenheimerFunds Services
                                                       P.O. Box 5270
                                                       Denver, Colorado 80217-5270
- ------------------------------------------------------ ------------------------------------------------------------
- ------------------------------------------------------ ------------------------------------------------------------

On the Internet:                                       You can send us a request by e-mail or read or down-load
                                                       documents on the OppenheimerFunds web site:
                                                       WWW.OPPENHEIMERFUNDS.COM
                                                       ------------------------

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

Information about the Fund including the Statement of Additional Information can be reviewed and copied at the SEC's
Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained
by calling the SEC at 1.202.942.8090.  Reports and other information about the Fund are available on the EDGAR
database on the SEC's Internet website at HTTP://WWW.SEC.GOV. Copies may be obtained after payment of a duplicating
                                          ------------------
fee by electronic request at the SEC's e-mail address: publicinfo@sec.gov or by writing to the SEC's Public
Reference Section, Washington, D.C. 20549-0102.
No one has been authorized to provide any information about the Fund or to make any representations about the Fund
other than what is contained in this Prospectus. This Prospectus is not an offer to sell shares of the Fund, nor a
solicitation of an offer to buy shares of the Fund, to any person in any state or other jurisdiction where it is
unlawful to make such an offer.

                                                                  The Fund's shares are distributed by:

The Fund's SEC File No. 811-1512                                  (logo)OppenheimerFunds(R)
PR0300.001.1201 Printed on recycled paper                               Distributor, Inc.

EX-99

Oppenheimer Capital Income Fund
6803 South Tucson Way, Englewood, Colorado 80112
1-800-525-7048

Statement of Additional Information dated December 28, 2001

This Statement of Additional Information is not a Prospectus. This document contains additional information about the Fund and
supplements information in the Prospectus dated December 28, 2001. It should be read together with the Prospectus, which may be
obtained by writing to the Fund's Transfer Agent, OppenheimerFunds Services, at P.O. Box 5270, Denver, Colorado 80217, or by calling
the Transfer Agent at the toll-free number shown above, or by downloading it from the OppenheimerFunds Internet web site at
www.oppenheimerfunds.com.

Contents
                                                                                               Page
About the Fund

Additional Information About the Fund's Investment Policies and Risks                            2
The Fund's Investment Policies                                                                   2
Other Investment Techniques and Strategies                                                       8
Investment Restrictions                                                                          22
How the Fund is Managed                                                                          24
Organization and History                                                                         24
Trustees and Officers                                                                            25
The Manager                                                                                      30
Brokerage Policies of the Fund                                                                   31
Distribution and Service Plans                                                                   33
Performance of the Fund                                                                          37


About Your Account

How To Buy Shares                                                                                41
How To Sell Shares                                                                               50
How To Exchange Shares                                                                           55
Dividends, Capital Gains and Taxes                                                               58
Additional Information About the Fund                                                            59


Financial Information About the Fund

Independent Auditors' Report                                                                     61
Financial Statements                                                                             62


Appendix A: Ratings Definitions                                                                  A-1
Appendix B: Industry Classifications                                                             B-1
Appendix C: Special Sales Charge Arrangements and Waivers                                        C-1


ABOUT THE FUND

Additional Information About the Fund's Investment Policies and Risks

The investment objectives, 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 can 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 any of the investment techniques and
strategies described below at all times in seeking its goals. It can use some of the special investment techniques and strategies at
some times or not at all.

         |X| Investments in Equity Securities. In selecting equity investments for the Fund's portfolio, the portfolio manager
currently uses a value investing style. In using a value approach, the manager looks for stock and other securities that appear to be
temporarily undervalued, by various measures, such as price/earnings ratios. This approach is subject to change and may not
necessarily be used in all cases. Value investing seeks stocks having prices that are low in relation to their real worth or future
prospects, in the hope that the Fund will realize appreciation in the value of its holdings when other investors realize the
intrinsic value of the stock.

         Using value investing requires research as to the issuer's underlying financial condition and prospects. Some of the
measures used to identify these securities include, among others:
o        Price/Earnings ratio, which is the stock's price divided by its earnings per share. A stock having a price/earnings ratio
lower than its historical range, or lower than the market as a whole or that of similar companies may offer attractive investment
opportunities.
o        Price/book value ratio, which is the stock price divided by the book value of the company per share. It measures the
company's stock price in relation to its asset value.
o        Dividend Yield, which is measured by dividing the annual dividend by the stock price per share.
o        Valuation of Assets, which compares the stock price to the value of the company's underlying assets, including their
projected value in the marketplace and liquidation value.

         While the Fund currently focuses on securities of issuers having large capitalizations, it does not limit its investments in
equity securities to issuers having a market capitalization of a specified size or range, and therefore can invest in securities of
small-, mid- and large-capitalization issuers. At times, the Fund can focus its equity investments in securities of one or more
capitalization ranges, based upon the Manager's judgment of where the best market opportunities are to seek the Fund's objective.

         At times, the market may favor or disfavor securities of issuers of a particular capitalization range, and securities of
small capitalization issuers may be subject to greater price volatility in general than securities of larger companies. Therefore, if
the Fund has substantial investments in smaller capitalization companies at times of market volatility, the Fund's share price may
fluctuate more than that of funds focusing on larger capitalization issuers.
         |_|      Rights and Warrants. Warrants are options to purchase stock at set prices. They are generally valid for a limited
period of time. Their prices do not necessarily move parallel to the prices of the underlying securities. Rights are similar to
warrants and generally have a short duration. They are distributed directly by the issuer to its shareholders.

         As a non-fundamental policy, the Fund cannot invest more than 5% of its total assets in warrants or rights, and not more
than 2% of its total assets may be invested in warrants and rights that are not listed on The New York Stock Exchange or The American
Stock Exchange. That limitation does not apply to warrants and rights the Fund acquires attached to other securities or as part of
investments in units of securities that are issued with other securities. Rights and warrants have no voting rights, receive no
dividends and have no rights with respect to the assets of the issuer.

         |_|      Preferred Stock. Preferred stock, unlike common stock, has a stated dividend rate payable from the corporation's
earnings. Preferred stock dividends may be cumulative or non-cumulative, participating, or auction rate. "Cumulative" dividend
provisions require all or a portion of prior unpaid dividends to be paid before dividends can be paid to the issuer's common stock.
"Participating" preferred stock may be entitled to a dividend exceeding the stated dividend in certain cases.

If interest rates rise, the fixed dividend on preferred stocks may be less attractive, causing the price of preferred stocks to
decline. Preferred stock may have mandatory sinking fund provisions, as well as provisions allowing the stock to be called or
redeemed prior to its maturity, which can have a negative impact on the stock's price when interest rates decline. Preferred stock
generally has a preference over common stock on the distribution of a corporation's assets in the event of liquidation of the
corporation. The rights of preferred stock on distribution of a corporation's assets in the event of a liquidation are generally
subordinate to the rights associated with a corporation's debt securities.

         |_|      Convertible Securities. Convertible securities are debt securities that are convertible into an issuer's common
stock. Convertible securities rank senior to common stock in a corporation's capital structure and therefore are subject to less risk
than common stock in case of the issuer's bankruptcy or liquidation.

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

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

To determine whether convertible securities should be regarded as "equity equivalents," the Manager examines the following factors:
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,
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
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.

|X| Investments in Bonds and Other Debt Securities. The Fund can invest in bonds, debentures and other debt securities to seek
current income as part of its investment objective.

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

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

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

Fluctuations in the market value of debt securities after the Fund buys them will not affect the interest income payable on those
securities (unless the coupon rate is a floating rate pegged to an index or other measure) . However, those price fluctuations will
be reflected in the valuations of the securities, and therefore the Fund's net asset values will be affected by those fluctuations.

|X| U.S. Government Securities. The Fund can buy securities issued or guaranteed by the U.S. government or its agencies and
instrumentalities. Securities issued by the U.S. Treasury are backed by the full faith and credit of the U.S. government and are
subject to very little credit risk. Obligations of U.S. government agencies or instrumentalities (including mortgage-backed
securities) may or may not be guaranteed or supported by the "full faith and credit" of the United States. Some are backed by the
right of the issuer to borrow from the U.S. Treasury; others, by discretionary authority of the U.S. government to purchase the
agencies' obligations; while others are supported only by the credit of the instrumentality. If a security is not backed by the full
faith and credit of the United States, the owner of the security must look principally to the agency issuing the obligation for
repayment and might not be able to assert a claim against the United States in the event that the agency or instrumentality does not
meet its commitment.


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

                  |_| Treasury Inflation-Protection Securities. The Fund can buy these U.S. Treasury securities, called "TIPS," that
are designed to provide an investment vehicle that is not vulnerable to inflation. The interest rate paid by TIPS is fixed. The
principal value rises or falls semi-annually based on changes in the published Consumer Price Index. If inflation occurs, the
principal and interest payments on TIPS are adjusted to protect investors from inflationary loss. If deflation occurs, the principal
and interest payments will be adjusted downward, although the principal will not fall below its face amount at maturity.

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

                  |_| Special Risks of Lower-Grade Securities. The Fund can invest up to 25% of its total assets in "lower grade" debt
securities. "Lower-grade" debt securities are those rated below "investment grade," which means they have a rating lower than "Baa"
by Moody's or lower than "BBB" by Standard & Poor's or Fitch, Inc., or similar ratings by other rating organizations. If they are
unrated, and are determined by the Manager to be of comparable quality to debt securities rated below investment grade, they are
included in the limitation on the percentage of the Fund's assets that can be invested in lower-grade securities. The Fund can invest
in securities rated as low as "C" or "D" or which may be in default at the time the Fund buys them. The Fund may invest no more than
10% of its total assets in lower-grade debt securities that are not convertible

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


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

         While securities rated "Baa" by Moody's or "BBB" by Standard & Poor's or Fitch, Inc. are investment grade and are not
regarded as junk bonds, those securities may be subject to special risks, and have some speculative characteristics. Definitions of
the debt security ratings categories of Moody's, S&P and Fitch, Inc. are included in Appendix A to this Statement of Additional
Information.


|_| Zero Coupon Securities. The Fund can buy zero-coupon and delayed interest securities, and "stripped" securities. Stripped
securities are debt securities whose interest coupons are separated from the security and sold separately. The Fund can buy the
following types of zero-coupon or stripped securities, among others: U.S. Treasury notes or bonds that have been stripped of their
interest coupons, U.S. Treasury bills issued without interest coupons, and certificates representing interests in stripped
securities.


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

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

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

         |X| Real Estate Investment Trusts (REITs). The Fund can invest in real estate investment trusts, as well as real estate
development companies and operating companies. It can also buy shares of companies engaged in other real estate businesses. REITs are
trusts that sell shares to investors and use the proceeds to invest in real estate. A REIT may focus on a particular project, such as
a shopping center or apartment complex, or may buy many properties or properties located in a particular geographic region.


         |X| Foreign Securities. The Fund can purchase equity and debt securities issued or guaranteed by foreign companies or
foreign governments or their agencies. "Foreign securities" include equity and debt securities of companies organized under the laws
of countries other than the United States and debt securities of foreign governments. They may be traded on foreign securities
exchanges or in the foreign over-the-counter markets. The debt obligations of a foreign government and its agencies and
instrumentalities may or may not be supported by the full faith and credit of the foreign government.

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


|_| Risks of Conversion to Euro. On January 1, 1999, eleven countries in the European Union adopted the euro as their official
currency. However, their current currencies (for example, the franc, the mark, and the lira) will also continue in use until January
1, 2002. After that date, it is expected that only the euro will be used in those countries. A common currency is expected to confer
some benefits in those markets, by consolidating the government debt market for those countries and reducing some currency risks and
costs. But the conversion to the new currency will affect the Fund operationally and also has potential risks, some of which are
listed below. Among other things, the conversion will affect:
issuers in which the Fund invests, because of changes in the competitive environment from a consolidated currency market and greater
operational costs from converting to the new currency. This might depress securities values.
vendors the Fund depends on to carry out its business, such as its custodian bank (which holds the foreign securities the Fund buys),
the Manager (which must price the Fund's investments to deal with the conversion to the euro) and brokers, foreign markets and
securities depositories. If they are not prepared, there could be delays in settlements and additional costs to the Fund.
exchange contracts and derivatives that are outstanding during the transition to the euro. The lack of currency rate calculations
between the affected currencies and the need to update the Fund's contracts could pose extra costs to the Fund.

         The Manager has upgraded (at its expense) its computer and bookkeeping systems to deal with the conversion. The Fund's
custodian bank has advised the Manager of its plans to deal with the conversion, including how it will update its record keeping
systems and handle the redenomination of outstanding foreign debt. The Fund's portfolio managers will also monitor the effects of the
conversion on the issuers in which the Fund invests. The possible effect of these factors on the Fund's investments cannot be
determined with certainty at this time, but they may reduce the value of some of the Fund's holdings and increase its operational
costs.

         |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. The Fund does not expect to have a portfolio turnover rate
of 100% or more. Increased portfolio turnover creates higher brokerage and transaction costs for the Fund, which may reduce its
overall performance. Additionally, the realization of capital gains from selling portfolio securities may result in distributions of
taxable long-term capital gains to shareholders, since the Fund will normally distribute all of its capital gains realized each year,
to avoid excise taxes under the Internal Revenue Code. The Financial Highlights table at the end of the Prospectus shows the Fund's
portfolio turnover rates during prior fiscal years.

Other Investment Techniques and Strategies. In seeking its objective, the Fund can from time to time employ 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.
|X| "When-Issued" and "Delayed-Delivery" Transactions. The Fund can invest in securities on a "when-issued" basis and can purchase or
sell securities on a "delayed-delivery" basis. When-issued and delayed-delivery are terms that refer to securities whose terms and
indenture have been created, but the securities are not available for immediate delivery even though the market for them exists.

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

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

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

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

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


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

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

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

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

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

|X| Loans of Portfolio Securities. The Fund can lend its portfolio securities to certain types of eligible borrowers approved by the
Board of Trustees. It might do so to try to provide income or to raise cash for liquidity purposes. These loans are limited to not
more than 10% of the value 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. The Fund
presently does not intend to lend its securities in the coming year, but if it does, the value of the loaned securities is not
expected to exceed 5% of the value of the Fund's total assets.

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.

         |X| Derivatives. The Fund can invest in a variety of derivative investments for income, for capital appreciation or for
hedging purposes. Some derivative investments the Fund can use are the hedging instruments described below in this Statement of
Additional Information.

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

Other derivative investments the Fund can use include "debt exchangeable for common stock" of an issuer or "equity-linked debt
securities" of an issuer. At maturity, the debt security is exchanged for common stock of the issuer or it is payable in an amount
based on the price of the issuer's common stock at the time of maturity. Both alternatives present a risk that the amount payable at
maturity will be less than the principal amount of the debt because the price of the issuer's common stock might not be as high as
the Manager expected.
|X| Hedging. The Fund can use hedging to attempt to protect against declines in the market value of the Fund's portfolio, to permit
the Fund to retain unrealized gains in the value of portfolio securities which have appreciated, or to facilitate selling securities
for investment reasons. To do so, the Fund could:
o        sell futures contracts,
o        buy puts on futures or on securities, or
o        write covered calls on securities or futures. Covered calls can also be used to increase the Fund's income, but the Manager
does not expect to engage extensively in that practice.

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

The Fund is not obligated to use hedging instruments, even though it is permitted to use them in the Manager's discretion, as
described below. The Fund's strategy of hedging with futures and options on futures will be incidental to the Fund's activities in
the underlying cash market. The particular hedging instruments the Fund can use are described below. The Fund can 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) debt securities (these are referred to as "interest rate
futures"), (2) broadly-based stock indices (these are referred to as "stock index futures") or other indices (referred to as
"financial futures"), (3) foreign currencies (these are referred to as "forward contracts"), or (4) commodities (these are referred to
as "commodity futures").

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

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

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

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

|_| Commodity Futures. The Fund can invest a portion of its assets in commodity futures contracts. They may be based upon commodities
in five main commodity groups: energy, livestock, agriculture, industrial metals and precious metals, on individual commodities
within these groups, or on other commodities. For hedging purposes, the Fund can buy and sell commodity futures contracts, options on
commodity futures contracts, and options and futures on commodity indices.


         Under a commodity futures contract, the buyer agrees to take delivery of a specified amount of a commodity at a future date
at a price agreed upon when the contract is made. In the United States, commodity contracts are traded on futures exchanges. The
exchanges offer a central marketplace for transactions, a clearing corporation to process trades, standardization of contract sizes
and expiration dates, and the liquidity of a secondary market. Futures markets also regulate the terms and conditions of delivery and
the maximum permissible price movement of a contract during a trading session. The exchanges have rules on position limits. Those
rules limit the amount of futures contracts that any one party may hold in a particular commodity at one time. Those rules are
designed to prevent any one party from controlling a significant portion of the market.


         Despite the daily price limits imposed by the futures exchanges, historically the short-term price volatility of commodity
futures contracts has been greater than that for stocks and bonds. To the extent that the Fund invests in these futures contracts,
its share price may be subject to greater volatility.

|_| 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 liquid assets identifying on the Fund's books to enable the Fund to satisfy its obligations if the call is
exercised. Up to 25% of the Fund's total assets can 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 bank, or a securities depository acting for the custodian bank, will act as the Fund's escrow agent, through the
facilities of the Options Clearing Corporation ("OCC"), as to the investments on which the Fund has written calls traded on exchanges
or as to other acceptable escrow securities. In that way, no margin will be required for such transactions. OCC will release the
securities on the expiration of the option or when the Fund enters into a closing transaction.

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

To terminate its obligation on a call it has written, the Fund can 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 can also write calls on a futures contract without owning the futures contract or securities deliverable under the contract.
To do so, at the time the call is written, the Fund must cover the call by identifying an equivalent dollar amount of liquid assets
on the Fund's books. The Fund will identify additional liquid assets on its books if the value of the identified 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 can sell put options. A put option on securities gives the purchaser the right to sell, and the
writer the obligation to buy, the underlying investment at the exercise price during the option period. The Fund will not write puts
if, as a result, more than 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 liquid assets identified on the Fund's books. The premium the Fund receives from
writing a put represents a profit, as long as the price of the underlying investment remains equal to or above the exercise price of
the put. However, the Fund also assumes the obligation during the option period to buy the underlying investment from the buyer of
the put at the exercise price, even if the value of the investment falls below the exercise price. If a put the Fund has written
expires unexercised, the Fund realizes a gain in the amount of the premium less the transaction costs incurred. If the put is
exercised, the Fund must fulfill its obligation to purchase the underlying investment at the exercise price. That price will usually
exceed the market value of the investment at that time. In that case, the Fund may incur a loss if it sells the underlying
investment. That loss will be equal to the sum of the sale price of the underlying investment and the premium received minus the sum
of the exercise price and any transaction costs the Fund incurred.

When writing a put option on a security, to secure its obligation to pay for the underlying security the Fund will deposit in escrow
liquid assets with a value equal to or greater than the exercise price of the underlying securities. The Fund therefore forgoes the
opportunity of investing the 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 can 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 can sell the put prior to its expiration. That sale may or may not be at a profit.

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

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

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

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

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


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

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

The Fund can use hedging instruments to establish a position in the securities markets as a temporary substitute for the purchase of
individual securities (long hedging) by buying futures and/or calls on such futures, broadly-based indices or on securities. It is
possible that when the Fund does so the market might decline. If the Fund then concludes not to invest in securities because of
concerns that the market may 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 can 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 can 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 may suffer a substantial decline against
a foreign currency, it might enter into a forward contract to buy that foreign currency for a fixed dollar amount. Alternatively, the
Fund might enter into a forward contract to sell a different foreign currency for a fixed U.S. dollar amount if the Fund believes
that the U.S. dollar value of the foreign currency to be sold pursuant to its forward contract will fall whenever there is a decline
in the U.S. dollar value of the currency in which portfolio securities of the Fund are denominated. That is referred to as a "cross
hedge."

The Fund will cover its short positions in these cases by identifying to its custodian bank assets having a value equal to the
aggregate amount of the Fund's commitment under forward contracts. The Fund will not enter into forward contracts or maintain a net
exposure to such contracts if the consummation of the contracts would obligate the Fund to deliver an amount of foreign currency in
excess of the value of the Fund's portfolio securities or other assets denominated in that currency or another currency that is the
subject of the hedge. However, to avoid excess transactions and transaction costs, the Fund can 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 can 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 can
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 can convert foreign currency from time to time, and will incur costs in doing so.
Foreign exchange dealers do not charge a fee for conversion, but they do seek to realize a profit based on the difference between the
prices at which they buy and sell various currencies. Thus, a dealer might offer to sell a foreign currency to the Fund at one rate,
while offering a lesser rate of exchange if the Fund desires to resell that currency to the dealer.

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

Swap agreements entail both interest rate risk and credit risk. There is a risk that, based on movements of interest rates in the
future, the payments made by the Fund under a swap agreement will be greater than the payments it received. Credit risk arises from
the possibility that the counterparty will default. If the counterparty defaults, the Fund's loss will consist of the net amount of
contractual interest payments that the Fund has not yet received. The Manager will monitor the creditworthiness of counterparties to
the Fund's interest rate swap transactions on an ongoing basis.
The Fund can enter into swap transactions with certain counterparties pursuant to master netting agreements. A master netting
agreement provides that all swaps done between the Fund and that counterparty shall be regarded as parts of an integral agreement. If
amounts are payable on a particular date in the same currency in respect of one or more swap transactions, the amount payable on that
date in that currency shall be the net amount. In addition, the master netting agreement may provide that if one party defaults
generally or on one swap, the counterparty can terminate all of the swaps with that party. Under these agreements, if a default
results in a loss to one party, the measure of that party's damages is calculated by reference to the average cost of a replacement
swap for each swap. It is measured by the mark-to-market value at the time of the termination of each swap. The gains and losses on
all swaps are then netted, and the result is the counterparty's gain or loss on termination. The termination of all swaps and the
netting of gains and losses on termination is generally referred to as "aggregation."

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

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

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

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

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

Under the Internal Revenue Code, the following gains or losses are treated as ordinary income or loss:
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
gains or losses attributable to fluctuations in the value of a foreign currency between the date of acquisition of a debt security
denominated in a foreign currency or foreign currency forward contracts and the date of disposition.

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

         |X| Temporary Defensive Investments. The Fund's temporary defensive investments can include debt securities such as: (i)
U.S. Treasury bills or other obligations issued or guaranteed by the U.S. government, its agencies or instrumentalities; (ii)
commercial paper rated A-3 or higher by Standard & Poor's or P-3 or higher by Moody's; (iii) certificates of deposit or bankers'
acceptances or other obligations of domestic banks with assets of $1 billion or more; and (iv) repurchase agreements.

Investment Restrictions

         |X| What Are "Fundamental Policies?"  Fundamental policies are those policies that the Fund has adopted to govern its
investments that can be changed only by the vote of a "majority" of the Fund's outstanding voting securities. Under the Investment
Company Act, a "majority" vote is defined as the vote of the holders of the lesser of:
o        67% or more of the shares present or represented by proxy at a shareholder meeting, if the holders of more than 50% of the
outstanding shares are present or represented by proxy, or
o        more than 50% of the outstanding shares.


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


         |X| Does the Fund Have Additional Fundamental Policies? The following investment restrictions are fundamental policies of
the Fund.

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

o        The Fund cannot invest in physical commodities or physical commodity contracts. However, the Fund can buy and sell hedging
instruments that are permitted by any of its other investment policies. The Fund can also buy and sell options, futures and other
instruments backed by physical commodities or the investment return from which is linked to changes in the price of physical
commodities.

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

         o        The Fund cannot borrow money in excess of 33-1/3% of the value of its total assets. The Fund may borrow only from
banks and/or affiliated investment companies. With respect to this fundamental policy, the Fund can borrow only if it maintains a
300% ratio of assets to borrowing at all times in the manner set forth in the Investment Company Act of 1940.

         o        The Fund cannot make loans except (a) through lending of securities, (b) through the purchase of debt instruments or
similar evidence of indebtedness, (c) through an interfund lending program with other affiliated funds, and (d) through repurchase
agreements.

o        The Fund cannot invest in real estate or in interests in real estate. However, the Fund can purchase securities of issuers
holding real estate or interests in real estate (including securities of real estate investment trusts).

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

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

         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 with the exception of the borrowing policy. The Fund need not sell
securities to meet the percentage limits if the value of the investment increases in proportion to the size of the Fund.

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

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 corporation in 1967 but was reorganized as a Massachusetts business trust
in July 1986.

         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.


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


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

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

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


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

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

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


Trustees and Officers of the Fund. The Fund's Trustees, officers and their principal occupations and business affiliations during the
past five years are listed below. Trustees denoted with an asterisk (*) below are deemed to be "interested persons" of the Fund under
the Investment Company Act.  All of the Trustees are also trustees, directors or managing general partners of the following
Denver-based Oppenheimer funds1:

Oppenheimer Cash Reserves                                   Oppenheimer Select Managers
Oppenheimer Champion Income Fund                            Oppenheimer Senior Floating Rate Fund
Oppenheimer Capital Income Fund                             Oppenheimer Strategic Income Fund
Oppenheimer High Yield Fund                                 Oppenheimer Total Return Fund, Inc.
Oppenheimer International Bond Fund                         Oppenheimer Variable Account Funds
Oppenheimer Integrity Funds                                 Panorama Series Fund, Inc.
Oppenheimer Limited-Term Government Fund                    Centennial America Fund, L. P.
Oppenheimer Main Street Funds, Inc.                         Centennial California Tax Exempt Trust
Oppenheimer Main Street Opportunity Fund                    Centennial Government Trust
Oppenheimer Main Street Small Cap Fund                      Centennial Money Market Trust
Oppenheimer Municipal Fund                                  Centennial New York Tax Exempt Trust
Oppenheimer Real Asset Fund                                 Centennial Tax Exempt Trust

         Messrs. Swain, Murphy, Wixted, Zack, Bishop, Molleur and Farrar, and Mses. Feld and Ives who are officers of the Fund,
respectively hold the same offices with the other Denver-based Oppenheimer funds. As of December 10, 2001, the Trustees and officers
of the Fund as a group owned less than 1% of the outstanding shares of the Fund. The foregoing statement does not reflect shares held
of record by an employee benefit plan for employees of the Manager other than shares beneficially owned under that plan by the
officers of the Fund listed below. Mr. Murphy is a trustee of that plan.


James C. Swain*, Chairman, Chief Executive Officer and Trustee, Age: 68.
6803 South Tucson Way, Englewood, Colorado 80112
Vice Chairman of the Manager (since September 1988); formerly President and a director of Centennial Asset Management Corporation, a
wholly-owned subsidiary of the Manager and Chairman of the Board of Shareholder Services, Inc., a transfer agent subsidiary of the
Manager.


John V. Murphy*, President and Trustee; Age: 52.
498 Seventh Avenue, New York, New York 10018
Chairman, Chief Executive Officer and a director (since July 2001) and President (since August 2000) of the Manager; President and a
director (since July 2001) of Oppenheimer Acquisition Corp., the Manager's parent holding company, Oppenheimer Partnership Holdings,
Inc., a holding company subsidiary of the Manager and OppenheimerFunds Legacy Program, a charitable trust program established by the
Manager; President, Chief Executive Officer and a director (since July 2001) of OFI Private Investments, Inc., an investment adviser
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; a director (since July 2001) of HarbourView Asset Management Corporation
and of Oppenheimer Real Asset Management, Inc., investment adviser subsidiaries of the Manager; a director (since November 2001) of
Trinity Investment Management Corporation, an investment adviser subsidiary of the Manager; President and a trustee of other
Oppenheimer funds. Formerly Chief Operating Officer of the Manager (August 2000-July 2001); Executive Vice President of Massachusetts
Life Insurance Company, the Manager's parent company (February 1997-August 2000); President and director of MassMutual Institutional
Funds, MML Series Funds, open-end investment companies and a director of David L. Babson Acquisition Corporation (February
1997-October 2001); Executive Vice President and Chief Operating Officer of David L. Babson & Company (1995-1997), an investment
advisor; Chief Operating Officer of Concert Capital Management, Inc., an investment advisor (1993-1996).


William L. Armstrong, Trustee, Age: 64.
6803 South Tucson Way, Englewood, Colorado 80112
Chairman of the following private mortgage banking companies: Cherry Creek Mortgage Company (since 1991), Centennial State Mortgage
Company (since 1994), The El Paso Mortgage Company (since 1993), Transland Financial Services, Inc. (since 1997); Chairman of the
following private companies: Great Frontier Insurance (insurance agency) (since 1995) and Ambassador Media Corporation (since 1984);
Director of the following public companies: Storage Technology Corporation (computer equipment company) (since 1991), Helmerich &
Payne, Inc. (oil and gas drilling/production company) (since 1992), UNUMProvident (insurance company) (since 1991); formerly Director
of International Family Entertainment (television channel) (1992 - 1997) and Natec Resources, Inc. (air pollution control equipment
and services company) (1991-1995), Frontier Real Estate, Inc. (residential real estate brokerage) (1994-1999), and Frontier Title
(title insurance agency) (1995-June 1999); formerly U.S. Senator (January 1979-January 1991).
Robert G. Avis, Trustee, Age: 70.
6803 South Tucson Way, Englewood, Colorado 80112

Formerly, (until February 2001) Director and President of A.G. Edwards Capital, Inc. (General Partner of private equity funds),
formerly, (until March 2000) Chairman, President and Chief Executive Officer of A.G. Edwards Capital, Inc.; formerly, (until March
1999) Vice Chairman and Director of A.G. Edwards, Inc. and Vice Chairman of A.G. Edwards &Sons, Inc. (its brokerage company
subsidiary); (until March 1999) Chairman of A.G. Edwards Trust Company and A.G.E. Asset Management (investment advisor); (until March
2000) a Director of A.G. Edwards & Sons and A.G. Edwards Trust Company.


George C. Bowen, Trustee, Age: 65.
6803 South Tucson Way, Englewood, Colorado 80112
Formerly (until April 1999) Mr. Bowen held the following positions: Senior Vice President (from September 1987) and Treasurer (from
March 1985) of the Manager; Vice President (from June 1983) and Treasurer (since March 1985) of OppenheimerFunds, Distributor, Inc.,
a subsidiary of the Manager and the Fund's Distributor; Senior Vice President (since February 1992), Treasurer (since July 1991)
Assistant Secretary and a director (since December 1991) of Centennial Asset Management Corporation; Vice President (since October
1989) and Treasurer (since April 1986) of HarbourView Asset Management Corporation; President, Treasurer and a director of Centennial
Capital Corporation (since June 1989); Vice President and Treasurer (since August 1978) and Secretary (since April 1981) of
Shareholder Services, Inc.; Vice President, Treasurer and Secretary of Shareholder Financial Services, Inc. (since November 1989);
Assistant Treasurer of Oppenheimer Acquisition Corp. (since March 1998); Treasurer of Oppenheimer Partnership Holdings, Inc. (since
November 1989); Vice President and Treasurer of Oppenheimer Real Asset Management, Inc. (since July 1996); Treasurer of
OppenheimerFunds International Ltd. and Oppenheimer Millennium Funds plc (since October 1997).

Jon S. Fossel, Trustee, Age: 59.
6803 South Tucson Way, Englewood, Colorado 80112
Formerly (until October 1996) Chairman and a director of the Manager; President and a director of Oppenheimer Acquisition Corp.,
Shareholder Services, Inc. and Shareholder Financial Services, Inc.

Sam Freedman, Trustee, Age: 61.
6803 South Tucson Way, Englewood, Colorado 80112
Formerly (until October 1994) Chairman and Chief Executive Officer of OppenheimerFunds Services, Chairman, Chief Executive Officer
and a director of Shareholder Services, Inc., Chairman, Chief Executive Officer and director of Shareholder Financial Services, Inc.,
Vice President and director of Oppenheimer Acquisition Corp. and a director of OppenheimerFunds, Inc.

C. Howard Kast, Trustee, Age: 80.
6803 South Tucson Way, Englewood, Colorado 80112
Formerly Managing Partner of Deloitte, Haskins & Sells (an accounting firm).

Robert M. Kirchner, Trustee, Age: 80.
6803 South Tucson Way, Englewood, Colorado 80112
President of The Kirchner Company (management consultants).



Michael S. Levine, Vice President and Portfolio Manager, Age: 35
498 Seventh Avenue, New York, New York 10018

Vice President (since June 1998) of the Manager; an officer and portfolio manager of other Oppenheimer funds; formerly Assistant Vice
President and Portfolio Manager of the Manager (April 1996 - June 1998); prior to joining the Manager in June 1994, he was a
portfolio manager and research associate for Amas Securities, Inc. (February 1990 - February 1994).


Robert G. Zack, Vice President and Secretary, Age: 53.
498 Seventh Avenue, New York, New York 10018
Acting General Counsel (since November 1, 2001), Senior Vice President (since May 1985) of the Manager; Assistant Secretary of
Shareholder Services, Inc. (since May 1985), Shareholder Financial Services, Inc. (since November 1989); OppenheimerFunds
International Ltd. and Oppenheimer Millennium Funds plc (since October 1997); an officer of other Oppenheimer funds; formerly
Associate General Counsel of the Manager (May 1981-October 2001).

Katherine P. Feld, Assistant Secretary; Age: 42
498 Seventh Avenue, New York, New York 10018
Vice President and Senior Counsel of the Manager (since July 1999); an officer of other Oppenheimer funds; formerly a Vice President
and Associate Counsel of the Manager (June 1990 - July 1999).

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

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


Brian W. Wixted, Treasurer and Principal Financial and Accounting Officer, Age: 42.
6803 South Tucson Way, Englewood, Colorado 80112
Senior Vice President and Treasurer (since March 1999) of the Manager; Treasurer (since March 1999) of HarbourView Asset Management
Corporation, Shareholder Services, Inc., Oppenheimer Real Asset Management Corporation, Shareholder Financial Services, Inc. and
Oppenheimer Partnership Holdings, Inc., of OFI Private Investments, Inc. (since March 2000) and of OppenheimerFunds International
Ltd. and Oppenheimer Millennium Funds plc (since May 2000); Treasurer and Chief Financial Officer (since May 2000) of Oppenheimer
Trust Company; Assistant Treasurer (since March 1999) of Oppenheimer Acquisition Corp.; an officer of other Oppenheimer funds;
formerly Principal and Chief Operating Officer, Bankers Trust Company - Mutual Fund Services Division (March 1995 - March 1999); Vice
President and Chief Financial Officer of CS First Boston Investment Management Corp. (September 1991 - March 1995).



Robert J. Bishop, Assistant Treasurer, Age: 43.
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); an officer of other Oppenheimer funds; formerly an Assistant
Vice President of the Manager/Mutual Fund Accounting (April 1994 - May 1996) and a Fund Controller of the Manager.

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


|X| Remuneration of Trustees. The officers of the Fund and two Trustees of the Fund (Messrs. Murphy and Swain) are affiliated with
the Manager and receive no salary or fee from the Fund. The remaining Trustees of the Fund received the compensation shown below
during the Fund's fiscal period ending August 31, 2001. The compensation from all of the Oppenheimer funds represents that
compensation which was received as a director, trustee, or member of a committee of the boards of those funds during the calendar
year 2001.







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

                                                                                  Total Compensation
                                                     Aggregate                    From all Denver-based
Trustee's Name                                       Compensation                 Oppenheimer Funds
and Position                                         From Fund1                   (40 funds)2

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

William L. Armstrong                                 $5,125                       $49,270
Review Committee Member

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

Robert G. Avis                                       $5,650                       $72,000
Review Committee Member

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

George C. Bowen                                      $5,075                       $55,948
Review Committee Member

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

Edward L. Cameron                                    $4,342                       $26,709
Audit Committee Chairman

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

Jon S. Fossel                                        $6,078                       $77,880
Review Committee Chairman

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

Sam Freedman                                         $6,273                       $80,100
Review Committee Member

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

C. Howard Kast                                       $6,570                       $86,150
Audit Committee Member

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

Robert M. Kirchner                                   $5,988                       $76,950

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

F. William Marshall                                  $3,440                       $3,768
Audit Committee Member

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

* Effective July 1, 2000, William A. Baker and Ned M. Steel resigned as Trustees of the Fund and subsequently became Trustees
Emeritus of the Fund. For the fiscal year ended August 31, 2001, Messrs. Baker and Steel each received  $4,394 aggregate compensation
from the Fund and for the calendar year ended December 31, 2000, they each received $63,999 total compensation from all Denver-based
Oppenheimer funds. Effective April 5, 2001 Raymond Kalinowski resigned as Trustee of the Fund. For the fiscal year ended August 31,
2001, Mr. Kalinowski received $3,386 aggregate compensation from the Fund and for the calendar year ended December 31, 2000, he
received $73,500 total compensation from all Denver-based Oppenheimer funds.
1. For the Fund's fiscal year ended August 31, 2001.
2. For the 2000 calendar year.

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


         |X| Major Shareholders.  As of December 10, 2001, the only persons who owned of record or who were known by the Fund to own
beneficially 5% or more of the Fund's outstanding Class A, Class B, Class C, Class N and Class Y shares were:

RPSS TR Mull Group 401K PSP, Attention: Diana Lontz, P.O Box 6561, Wheeling WV 26003-0627 which owned 59,524.198 Class N shares,
representing 35.39% of the Class N shares then outstanding.

RPSS TR The NEFFS National Bank, 401K PSP, Attention: Kevin A. Schmidt, P.O. Box 10, NEFFS, PA 18065-0010 which owned 24,071.795
Class N shares, representing 14.31% of the Class N shares then outstanding.

RPSS TR Rollover IRA, FBO John B Schamel, P.O. Box 250, Chemung, NY 14825-0250 which owned 15,904.592 Class N shares, representing
9.45% of the Class N shares then outstanding.

Donaldson Lufkin Jenrette, Securities Corporation Inc., Acct. No. 3030000066, P.O. Box 2052, Jersey City, NJ 07303-9998 which owned
15,632.218 Class N shares, representing 9.29% of the Class N shares then outstanding.

Donaldson Lufkin Jenrette, Securities Corporation Inc., Acct. No. 3030000099, P.O. Box 2052, Jersey City, NJ 07303-9998 which owned
13,426.571 Class N shares, representing 7.98% of the Class N shares then outstanding.

Donaldson Lufkin Jenrette, Securities Corporation Inc., Acct. No. 30300000143, P.O. Box 2052, Jersey City, NJ 07303-9998 which owned
12,781.103 Class N shares, representing 7.60% of the Class N shares then outstanding.

Donaldson Lufkin Jenrette, Securities Corporation Inc., Acct. No. 30300000209, P.O. Box 2052, Jersey City, NJ 07303-9998 which owned
11,274.070 Class N shares, representing 6.70% of the Class N shares then outstanding.


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


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

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


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


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

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









- ------------------------------------- --------------------------------------------------------
Fiscal Year                           Management Fees Paid to
Ended 8/31:                           OppenheimerFunds, Inc.
- ------------------------------------- --------------------------------------------------------
- ------------------------------------- --------------------------------------------------------

1999                                  $20,872,455

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

2000                                  $16,447,234

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

2001                                  $15,646,888

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


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

Brokerage Policies of the Fund

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

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

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

         Transactions in securities other than those for which an exchange is the primary market are generally done with principals
or market makers. In transactions on foreign exchanges, the Fund may be required to pay fixed brokerage commissions and therefore
would not have the benefit of negotiated commissions available in U.S. markets. Brokerage commissions are paid primarily for
transactions in listed securities or for certain fixed-income agency transactions in the secondary market. Otherwise brokerage
commissions are paid only if it appears likely that a better price or execution can be obtained by doing so. In an option
transaction, the Fund ordinarily uses the same broker for the purchase or sale of the option and any transaction in the securities to
which the option relates. Other funds advised by the Manager have investment policies similar to those of the Fund. Those other funds
may purchase or sell the same securities as the Fund at the same time as the Fund, which could affect the supply and price of the
securities. If two or more funds advised by the Manager purchase the same security on the same day from the same dealer, the
transactions under those combined orders are averaged as to price and allocated in accordance with the purchase or sale orders
actually placed for each account.

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

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

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

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

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

      ----------------------------------- ---------------------------------------------------------------------
      Fiscal Year                         Total Brokerage Commissions
      Ended 8/31:                         Paid by the Fund1
      ----------------------------------- ---------------------------------------------------------------------
      ----------------------------------- ---------------------------------------------------------------------

      1999                                $1,803,930

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

      2000                                $2,894,461

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

      2001                                $3,134,3552

      ----------------------------------- ---------------------------------------------------------------------
1. Amounts do not include spreads or concessions on principal transactions on a net trade basis.

2. In the fiscal year ended 8/31/01, the amount of transactions directed to brokers for research services was $311,110,969 and the
amount of the commissions paid to broker-dealers for those services was $520,095.


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 shares 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. Expenses normally attributable to sales are borne by the
Distributor. They exclude payments under the Fund's Distribution and Service Plans but include advertising and the cost of printing
and mailing prospectuses (other than prospectuses furnished to current shareholders).

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


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

             Aggregate       Class A
Fiscal       Front-End       Front-End
Year Ended   Sales           Sales Charges
8/31         Charges on      Retained by
             Class A Shares  Distributor

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

1999         $5,280,270      $1,692,621

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

2000         $2,190,051      $631,452

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

2001                         $2,709,328                     $813,1981

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

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


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

                       Concessions on Class A    Concessions on Class    Concessions on       Concessions on Class
                       Shares Advanced by        B Shares Advanced by    Class C Shares       N Shares Advanced by
Fiscal Year            Distributor!              Distributor1            Advanced by          Distributor1
Ended8/31:                                                               Distributor1

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

1999                   $533,123                  $5,659,987              $484,484             N/a

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

2000                   $300,262                  $1,621,384              $96,086              N/A

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

2001                   $286,624                  $2,326,642              $173,514             $6,5632

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

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


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

Fiscal       Class A Contingent         Class B Contingent       Class C Contingent        Class N Contingent
Year         Deferred Sales             Deferred Sales           Deferred Sales            Deferred Sales
Ended        Charges Retained           Charges Retained         Charges Retained          Charges Retained
8/31:        by Distributor             by Distributor           by Distributor            By Distributor

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

2001         $7,594                     $643,432                 $24,027                   0

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

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

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

         Each plan has been approved by a vote of the Board of Trustees, including a majority of the Independent Trustees,2 cast in
person at a meeting called for the purpose of voting on that plan.

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

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

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

         While the Plans are in effect, the Treasurer of the Fund shall provide separate written reports on the plans to the Board of
Trustees at least quarterly for its review. The Reports shall detail the amount of all payments made under a plan and the purpose for
which the payments were made. Those reports are subject to the review and approval of the Independent Trustees.

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

Under the plans 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.

         The Class A service plan permits reimbursements to the Distributor at a rate of up to 0.25% of average annual net assets of
Class A shares. While the plan permits the Board to authorize payments to the Distributor to reimburse itself for services under the
plan, the Board has not yet done so. The Distributor makes payments to plan recipients quarterly at an annual rate not to exceed
0.25% of the average annual net assets consisting of Class A shares and held in the accounts of the recipients or their customers.


         For the fiscal year ended August 31, 2001 payments under the Class A Plan totaled $5,698,019, all of which was paid by the
Distributor to recipients. That included $370,332 paid to an affiliate of the Distributor's parent company. Any unreimbursed expenses
the Distributor incurs with respect to Class A shares in any fiscal year cannot be recovered in subsequent years. The Distributor may
not use payments received under the Class A Plan to pay any of its interest expenses, carrying charges, or other financial costs, or
allocation of overhead.


                  |_| Class B, Class C and Class N Service and Distribution Plan Fees. Under each plan, service fees and distribution
fees are computed on the average of the net asset value of shares in the respective class, determined as of the close of each regular
business day during the period. The Class B, Class C and Class N plans provide for the Distributor to be compensated at a flat rate,
whether the Distributor's distribution expenses are more or less than the amounts paid by the Fund under the 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 Class N plans permit the Distributor to retain both the asset-based sales charges and the service
fees or to pay recipients the service fee on a quarterly basis, without payment in advance. However, the Distributor currently
intends to pay the service fee to recipients in advance for the first year after the shares are purchased. After the first year
shares are outstanding, the Distributor makes service fee payments quarterly on those shares. The advance payment is based on the net
asset value of shares sold. Shares purchased by exchange do not qualify for the advance service fee payment. If Class B, Class C or
Class N shares are redeemed during the first year after their purchase, the recipient of the service fees on those shares will be
obligated to repay the Distributor a pro rata portion of the advance payment of the service fee made on those shares.

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

pays sales concessions to authorized brokers and dealers at the time of sale and pays service fees as described above,
may finance payment of sales concessions and/or the advance of the service fee payment to recipients under the plans, or may provide
such financing from its own resources or from the resources of an affiliate,
employs personnel to support distribution of Class B, Class C and Class N shares, and
bears the costs of sales literature, advertising and prospectuses (other than those furnished to current shareholders) and state
"blue sky" registration fees and certain other distribution expenses.
may not be able to adequately compensate dealers that sell Class B, 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,
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,
may use the payments under the plan to include the Fund in various third-party distribution programs that may increase sales of Fund
shares,
may experience increased difficulty selling the Fund's shares if payments under the plan are discontinued because most competitor
funds have plans that pay dealers for rendering distribution services as much or more than the amounts currently being paid by the
Fund, and
may not be able to continue providing, at the same or at a lesser cost, the same quality distribution sales efforts and services, or
to obtain such services from brokers and dealers, if the plan payments were to be discontinued.

         When Class B, 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 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.

         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.

- ---------------------------------------------------------------------------------------------------------------------
Distribution Fees Paid to the Distributor for the Year Ended 8/31/01
- ---------------------------------------------------------------------------------------------------------------------
- --------------------- ------------------ -------------------- ----------------------------- -------------------------
Class:                Total              Amount               Distributor's                 Distributor's
                                                              Aggregate                     Unreimbursed
                                                              Unreimbursed                  Expenses as
                      Payments           Retained by          Expenses                      % of Net Assets
                      Under Plan         Distributor          Under Plan                    of Class
- --------------------- ------------------ -------------------- ----------------------------- -------------------------
- -------------------- ------------------- -------------------- ----------------------------- -------------------------

Class B Plan         $4,692,665          $3,631,050           $11,679,144                   2.45%

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

Class C Plan         $802,801            $97,524              $1,835,823                    2.05%

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

Class N Plan         $530                $337                 0                             0

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

Performance of the Fund

Explanation of Performance Terminology. The Fund uses a variety of terms to illustrate its investment performance. Those terms
include "cumulative total return," "average annual total return," "average annual total return at net asset value" and "total return
at net asset value." An explanation of how total returns are calculated is set forth below. The charts below show the Fund's
performance as of the Fund's most recent fiscal year end. You can obtain current performance information by calling the Fund's
Transfer Agent at 1-800-525-7048 or by visiting the OppenheimerFunds Internet web site at http://www.oppenheimerfunds.com.

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

         Use of standardized performance calculations enables an investor to compare the Fund's performance to the performance of
other funds for the same periods. However, a number of factors should be considered before using the Fund's performance information
as a basis for comparison with other investments:
         o        Total returns measure the performance of a hypothetical account in the Fund over various periods and do not show the
performance of each shareholder's account. Your account's performance will vary from the model performance data if your dividends are
received in cash, or you buy or sell shares during the period, or you bought your shares at a different time and price than the
shares used in the model.
o        The Fund's performance returns do not reflect the effect of taxes on dividends and capital gains distributions.
o        An investment in the Fund is not insured by the FDIC or any other government agency.
o        The principal value of the Fund's shares and total returns are not guaranteed and normally will fluctuate on a daily basis.
o        When an investor's shares are redeemed, they may be worth more or less than their original cost.

Total returns for any given past period represent historical performance information and are not, and should not be considered, a
prediction of future returns.

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

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


In calculating total returns for Class A shares, the current maximum sales charge of 5.75% (as a percentage of the offering price) is
deducted from the initial investment ("P") (unless the return is shown without sales charge, as described below). For Class B shares,
payment of the applicable contingent deferred sales charge is applied, depending on the period for which the return is shown: 5.0% in
the first year, 4.0% in the second year, 3.0% in the third and fourth years, 2.0% in the fifth year, 1.0% in the sixth year and none
thereafter. For Class C shares, the 1% contingent deferred sales charge is deducted for returns for the one-year period. For Class N
shares, the 1% contingent deferred sales charge is deducted for returns for the one-year and life-of-class periods as applicable.


         |_| 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:

[OBJECT OMITTED]

         |_| 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:

[OBJECT OMITTED]

         |_| Total Returns at Net Asset Value. From time to time the Fund may also quote a cumulative or an average annual total
return "at net asset value" (without deducting sales charges) for Class A, Class B or Class N 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 8/31/01
- ---------------------------------------------------------------------------------------------------------------------------
- ------------- -------------------------------------------------------------------------------------------------------------

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

- ------------- -------------------------------------------------------------------------------------------------------------
- --------------- --------------------------- -------------------------- ------------------------ ---------------------------
                                            1-Year                     5-Year                   10-Year
                                                                       (or life-of-class)       (or life-of-class)
- --------------- --------------------------- -------------------------- ------------------------ ---------------------------
- --------------- ------------- ------------- ------------ ------------- ----------- ------------ ------------ --------------
                After         Without       After        Without       After       Without      After        Without
                Sales         Sales         Sales        Sales         Sales       Sales        Sales        Sales
                Charge        Charge        Charge       Charge        Charge      Charge       Charge       Charge
- --------------- ------------- ------------- ------------ ------------- ----------- ------------ ------------ --------------
- ------------- -------------------------------------------------------------------------------------------------------------

Class A       186.19%      203.64%      0.70%        6.84%        11.17%       12.49%       11.09%       11.75%

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

Class B       131.05%2     131.05%2     1.11%        6.05%        11.33%       11.59%       10.98%2      10.98%2

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

Class C       90.42%3      90.42%3      5.01%        6.00%        11.60%       11.60%       11.67%3      11.67%3

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

Class N         -1.16%4       -0.18%4       -0.16%4      -0.18%4       N/A         N/A          N/A          N/A

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

1. Inception of Class A: 12/1/70
2. Inception of Class B:  8/17/93. Because Class B shares convert to Class A shares 72 months after purchase, the "Life-of-Class"
return for Class B shares uses Class A performance for the period after conversion.
3. Inception of Class C: 11/1/95
4. Inception of Class N: 3/1/01. For the period from 3/1/01 (inception of offering) to August 31, 2001.


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 Analytical Services, Inc. Lipper is a widely-recognized independent mutual fund monitoring service. Lipper monitors the
performance of regulated investment companies, including the Fund, and ranks their performance for various periods in categories
based on investment styles. Lipper currently ranks the Fund's performance against all other equity income funds. The Lipper
performance rankings are based on total returns that include the reinvestment of capital gain distributions and income dividends but
do not take sales charges or taxes into consideration. Lipper also publishes "peer-group" indices of the performance of all mutual
funds in a category that it monitors and averages of the performance of the funds in particular categories.



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


         Morningstar proprietary star rankings reflect historical risk-adjusted total investment return.  For each fund with at least
a three-year history, Morningstar calculates a Morningstar RatingTM metric each month by subtracting the return on a 90-day U.S.
Treasury Bill from the fund's load-adjusted return for the same period, and then adjusting this excess return for risk.  The top 10%
of funds in each broad asset class receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5%
receive 2 stars and the bottom 10% receive 1 star.  The Overall Morningstar Rating for a fund is derived from a weighted average of
the performance figures associated with its three-, five- and ten-year (if applicable) Morningstar Ratings metrics.
The Fund may also compare its total return ranking to that of other funds in its Morningstar category, in addition to its star
ratings. Those total return rankings are percentages from one percent to one hundred percent and are not risk adjusted. For example
if a fund is in the 94th percentile, that means that 94% of the funds in the same category performed better than it did.


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

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

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


From time to time the Fund may include in its advertisements and sales literature the total return performance of a hypothetical
investment account that includes shares of the Fund and other Oppenheimer funds. The combined account may be part of an illustration
of an asset allocation model or similar presentation. The account performance may combine total return performance of the Fund and
the total return performance of other Oppenheimer funds included in the account. Additionally, from time to time, the Fund's
advertisements and sales literature may include, for illustrative or comparative purposes, statistical data or other information
about general or specific market and economic conditions. That may include, for example,
information about the performance of certain securities or commodities markets or segments of those markets,
information about the performance of the economies of particular countries or regions,
the earnings of companies included in segments of particular industries, sectors, securities markets, countries or regions,
the availability of different types of securities or offerings of securities,
information relating to the gross national or gross domestic product of the United States or other countries or regions,
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 C contains more
information about the special sales charge arrangements offered by the Fund, and the circumstances in which sales charges may be
reduced or waived for certain classes of investors.

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

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


         |X| Right of Accumulation. To qualify for the lower sales charge rates that apply to larger purchases of Class A shares, you
and your spouse can add together:
Class A and Class B shares you purchase for your individual accounts (including IRAs and 403(b) plans), or for your joint accounts,
or for trust or custodial accounts on behalf of your children who are minors, and
Current purchases of Class A and Class B shares of the Fund and other Oppenheimer funds to reduce the sales charge rate that applies
to current purchases of Class A shares, and
Class A and Class B shares of Oppenheimer funds you previously purchased subject to an initial or contingent deferred sales charge to
reduce the sales charge rate for current purchases of Class A shares, provided that you still hold your investment in one of the
Oppenheimer funds.


         A fiduciary can count all shares purchased for a trust, estate or other fiduciary account (including one or more employee
benefit plans of the same employer) that has multiple accounts. The Distributor will add the value, at current offering price, of the
shares you previously purchased and currently own to the value of current purchases to determine the sales charge rate that applies.
The reduced sales charge will apply only to current purchases. You must request it when you buy shares.
|X| The Oppenheimer Funds. The Oppenheimer funds are those mutual funds for which the Distributor acts as the distributor or the
sub-distributor and currently include the following:

Oppenheimer Bond Fund                                         Oppenheimer Municipal Bond Fund
Oppenheimer California Municipal Fund                         Oppenheimer New York Municipal Fund
Oppenheimer Capital Appreciation Fund                         Oppenheimer New Jersey Municipal Fund
Oppenheimer Capital Preservation Fund                         Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Capital Income Fund                               Oppenheimer Quest Balanced Value Fund
Oppenheimer Champion Income Fund                              Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Concentrated Growth Fund                          Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Convertible Securities Fund                       Oppenheimer Quest Opportunity Value Fund
Oppenheimer Developing Markets Fund                           Oppenheimer Quest Value Fund, Inc.
Oppenheimer Disciplined Allocation Fund                       Oppenheimer Real Asset Fund
Oppenheimer Discovery Fund                                    Oppenheimer Rochester National Municipals
Oppenheimer Emerging Growth Fund                              Oppenheimer Senior Floating Rate Fund
Oppenheimer Emerging Technologies Fund                        Oppenheimer Small Cap Value Fund
Oppenheimer Enterprise Fund                                   Oppenheimer Special 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 Gold & Special Minerals Fund                  Oppenheimer Trinity Large Cap Growth Fund
Oppenheimer Growth Fund                                       Oppenheimer Trinity Value Fund
Oppenheimer High Yield Fund                                   Oppenheimer U.S. Government Trust
Oppenheimer Intermediate Municipal Fund                       Oppenheimer Value Fund
Oppenheimer International Bond Fund                           Limited-Term New York Municipal Fund
Oppenheimer International Growth Fund                         Rochester Fund Municipals
Oppenheimer International Small Company Fund                  OSM1- Gartmore Millennium Growth Fund II
Oppenheimer Limited-Term Government Fund                      OSM1 - Jennison Growth Fund
Oppenheimer Main Street Growth& Income Fund               OSM1 - Mercury Advisors S&P 500 Index
Oppenheimer Main Street Opportunity Fund                      OSM1 - Mercury Advisors Focus Growth Fund
Oppenheimer Main Street Small Cap Fund                        OSM1 - QM Active Balanced Fund
Oppenheimer MidCap Fund                                       OSM1 - Salomon Brothers Capital 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 except the money market funds.
Under certain circumstances described in this Statement of Additional Information, redemption proceeds of certain money market fund
shares may be subject to a contingent deferred sales charge.

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

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

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

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

If the total eligible purchases made during the Letter of Intent period do not equal or exceed the intended purchase amount, the
commissions previously paid to the dealer of record for the account and the amount of sales charge retained by the Distributor will
be adjusted to the rates applicable to actual total purchases. If total eligible purchases during the Letter of Intent period exceed
the intended purchase amount and exceed the amount needed to qualify for the next sales charge rate reduction set forth in the
Prospectus, the sales charges paid will be adjusted to the lower rate. That adjustment will be made only if and when the dealer
returns to the Distributor the excess of the amount of 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.

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

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

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

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

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

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

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

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

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

Before you establish Asset Builder payments, you should obtain a prospectus of the selected fund(s) from your financial advisor (or
the Distributor) and request an application from the Distributor. Complete the application and return it. You may change the amount
of the 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 C to this Statement of Additional Information. Certain special sales charge arrangements
described in that Appendix apply to retirement plans whose records are maintained on a daily valuation basis by Merrill Lynch Pierce
Fenner & Smith, Inc. ("Merrill Lynch") or an independent record keeper that has a contract or special arrangement with Merrill Lynch.
If on the date the plan sponsor signed the Merrill Lynch record keeping service agreement the Plan has less than $3 million in assets
(other than assets invested in money market funds) invested in applicable investments, then the retirement plan may purchase only
Class B shares of the Oppenheimer funds. Any retirement plans in that category that currently invest in Class B shares of the Fund
will have their Class B shares converted to Class A shares of the Fund when the Plan's applicable investments reach $5 million.


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

Classes of Shares. Each class of shares of the Fund represents an interest in the same portfolio of investments of the Fund. However,
each class has different shareholder privileges and features. The net income attributable to Class B, Class C 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.


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


         |_| Class B Conversion. Under current interpretation of applicable federal 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.  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 conversion 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:

to all rollover IRAs,
to all direct rollovers from OppenheimerFunds-sponsored Pinnacle and Ascender retirement plans,
to all trustee-to-trustee IRA transfers,
to all 90-24 type 403(b) transfers,

to Group Retirement Plans (as defined in Appendix C to this Statement of Additional Information) which have entered into a special
agreement with the Distributor for that purpose,
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,
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,
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,
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:
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),
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.


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

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

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

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


         Dealers other than Exchange members may conduct trading in certain securities on days on which the Exchange is closed
(including weekends and U. S. holidays) or after 4:00 P.M. on a regular business day. 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 New York Stock Exchange.

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


|X| Securities Valuation. The Fund's Board of Trustees has established procedures for the valuation of the Fund's securities. In
general those procedures are as follows:

o        Equity securities traded on a U.S. securities exchange or on NASDAQ are valued as follows:
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
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:
at the last sale price available to the pricing service approved by the Board of Trustees, or
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
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:
debt instruments that have a maturity of more than 397 days when issued,
debt instruments that had a maturity of 397 days or less when issued and have a remaining maturity of more than 60 days, and
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:
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
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 shares. The Fund may amend, suspend or cease offering
this reinvestment privilege at any time as to shares redeemed after the date of such amendment, suspension or cessation.

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


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


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

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

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

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

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

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

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

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

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

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

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


         The Fund cannot guarantee receipt of a payment on the date requested. The Fund reserves the right to amend, suspend or
discontinue offering these plans at any time without prior notice. 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 C to this Statement of
Additional Information


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

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

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

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

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

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

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

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

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

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

How to Exchange Shares

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

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



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

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

The Fund may amend, suspend or terminate the exchange privilege at any time.  Although the Fund may impose these changes at any time,
it will provide you with notice of those changes whenever it is required to do so by applicable law.  It may be required to provide
60 days notice prior to materially amending or terminating the exchange privilege.  That 60 day notice is not required in
extraordinary circumstances.
|_| How Exchanges Affect Contingent Deferred Sales Charges. No contingent deferred sales charge is imposed on exchanges of shares of
any class purchased subject to a contingent deferred sales charge. However, when Class A shares acquired by exchange of Class A
shares of other Oppenheimer funds purchased subject to a Class A contingent deferred sales charge are redeemed within 18 months of
the end of the calendar month of the initial purchase of the exchanged Class A shares, the Class A contingent deferred sales charge
is imposed on the redeemed shares. The Class B contingent deferred sales charge is imposed on Class B shares acquired by exchange if
they are redeemed within 6 years of the initial purchase of the exchanged Class B shares. The Class C contingent deferred sales
charge is imposed on Class C shares acquired by exchange if they are redeemed within 12 months of the initial purchase of the
exchanged Class C shares. With respect to Class N shares, if you redeem your shares within 18 months of the retirement plan's first
purchase or the retirement plan eliminates the Fund as a plan investment option within 18 months of selecting the Fund, a 1%
contingent deferred sales charge will be imposed on the plan. With respect to Class N shares, a 1% contingent deferred sales charge
will be imposed if the retirement plan (not including IRAs and 403(b) plans) is terminated or Class N shares of all Oppenheimer funds
are terminated as an investment option of the plan and Class N shares are redeemed within 18 months after the plan's first purchase
of Class N shares of any Oppenheimer fund or with respect to an individual retirement plan or 403(b) plan, Class N shares are
redeemed within 18 months of the plan's first purchase of Class N shares of any Oppenheimer fund.

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

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

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

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

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

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

Dividends, Capital Gains and Taxes

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

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

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

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

         If prior distributions made by the Fund must be re-characterized as a non-taxable return of capital at the end of the fiscal
year as a result of the effect of the Fund's investment policies, they will be identified as such in notices sent to shareholders.
Dividend Reinvestment in Another Fund. Shareholders of the Fund may elect to reinvest all dividends and/or capital gains
distributions in shares of the same class of any of the other Oppenheimer funds listed above. Reinvestment will be made without sales
charge at the net asset value per share in effect at the close of business on the payable date of the dividend or distribution. To
elect this option, the shareholder must notify the Transfer Agent in writing and must have an existing account in the fund selected
for reinvestment. Otherwise the shareholder first must obtain a prospectus for that fund and an application from the Distributor to
establish an account. Dividends and/or distributions from shares of certain other Oppenheimer funds (other than Oppenheimer Cash
Reserves) may be invested in shares of this Fund on the same basis.

Additional Information About the Fund

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

The Transfer Agent. OppenheimerFunds Services, the Fund's Transfer Agent, is a division of the Manager.  It is responsible for
maintaining the Fund's shareholder registry and shareholder accounting records, and for paying dividends and distributions to
shareholders. It also handles shareholder servicing and administrative functions. It 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 Bank. The Bank of New York is the custodian bank of the Fund's assets. The custodian bank's responsibilities include
safeguarding and controlling the Fund's portfolio securities and handling the delivery of such securities to and from the Fund. It is
the practice of the Fund to deal with the custodian bank in a manner uninfluenced by any banking relationship the custodian bank may
have with the Manager and its affiliates. The Fund's cash balances with the custodian bank in excess of $100,000 are not protected by
federal deposit insurance. Those uninsured balances at times may be substantial.


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


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

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

We have audited the accompanying statement of assets and liabilities of
Oppenheimer Capital Income Fund, including the statement of investments, as of
August 31, 2001, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for the periods indicated. 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, 2001, by correspondence with the custodian and
brokers; where replies were not received from brokers, we performed other
auditing procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
     In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer Capital Income Fund as of August 31, 2001, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for the
periods indicated, in conformity with accounting principles generally accepted
in the United States of America.



/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP

Denver, Colorado
September 24, 2001






STATEMENT OF INVESTMENTS  AUGUST 31, 2001
- --------------------------------------------------------------------------------

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

COMMON STOCKS--67.8%
- ----------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS--0.5%
- ----------------------------------------------------------------------------------------------------------------------------
PAPER--0.5%
Sappi Ltd., Sponsored ADR                                                                1,600,000        $
16,576,000
- ----------------------------------------------------------------------------------------------------------------------------
CAPITAL GOODS--5.4%
- ----------------------------------------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE--0.2%
Boeing Co.                                                                                 107,500
5,504,000
- ----------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL SERVICES--0.6%
Republic Services, Inc.(1)                                                                 960,000
19,056,000
- ----------------------------------------------------------------------------------------------------------------------------
MANUFACTURING--4.6%
Honeywell International, Inc.                                                              437,500
16,301,250
- ----------------------------------------------------------------------------------------------------------------------------
Packaging Corp. of America(1)                                                            1,500,000
27,570,000
- ----------------------------------------------------------------------------------------------------------------------------
Pall Corp.                                                                                 610,000
13,639,600
- ----------------------------------------------------------------------------------------------------------------------------
Titan Corp. (The)(1)                                                                       500,000
9,275,000
- ----------------------------------------------------------------------------------------------------------------------------
Tyco International Ltd.                                                                  1,412,500
73,379,375

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

140,165,225

- ----------------------------------------------------------------------------------------------------------------------------
COMMUNICATION SERVICES--1.6%
- ----------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-LONG DISTANCE--1.0%
Sprint Corp. (Fon Group)                                                                   400,000
9,336,000
- ----------------------------------------------------------------------------------------------------------------------------
Verizon Communications, Inc.                                                               400,000
20,000,000

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

29,336,000

- ----------------------------------------------------------------------------------------------------------------------------
TELEPHONE UTILITIES--0.6%
SBC Communications, Inc.                                                                   410,000
16,773,100
- ----------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS--2.5%
- ----------------------------------------------------------------------------------------------------------------------------
AUTOS & HOUSING--0.9%
KB Home                                                                                    530,000
17,156,100
- ----------------------------------------------------------------------------------------------------------------------------
Snap-On, Inc.                                                                              250,000
6,365,000
- ----------------------------------------------------------------------------------------------------------------------------
Visteon Corp.                                                                              270,000
4,617,000

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

28,138,100

- ----------------------------------------------------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT--0.1%
Host Marriott Corp.                                                                        287,500
3,680,000
- ----------------------------------------------------------------------------------------------------------------------------
MEDIA--0.4%
Deluxe Corp.                                                                               350,000
11,487,000
- ----------------------------------------------------------------------------------------------------------------------------
RETAIL: GENERAL--0.3%
Federated Department Stores, Inc.(1)                                                       140,000
5,083,400
- ----------------------------------------------------------------------------------------------------------------------------
May Department Stores Co.                                                                  140,000
4,711,000

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

9,794,400

- ----------------------------------------------------------------------------------------------------------------------------
RETAIL: SPECIALTY--0.8%
AutoNation, Inc.(1)                                                                        550,000
5,918,000
- ----------------------------------------------------------------------------------------------------------------------------
CSK Auto Corp.(1,2)                                                                      1,839,300
15,726,015
- ----------------------------------------------------------------------------------------------------------------------------
Gap, Inc.                                                                                  125,000
2,456,250

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

24,100,265




                       12 OPPENHEIMER CAPITAL INCOME FUND







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

CONSUMER STAPLES--8.3%
- ----------------------------------------------------------------------------------------------------------------------------
BROADCASTING--2.0%
Charter Communications, Inc., Cl. A(1)                                                     700,000        $
14,140,000
- ----------------------------------------------------------------------------------------------------------------------------
Clear Channel Communications, Inc.(1)                                                      775,000
38,959,250
- ----------------------------------------------------------------------------------------------------------------------------
Comcast Corp., Cl. A Special(1)                                                            200,000
7,326,000

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

60,425,250

- ----------------------------------------------------------------------------------------------------------------------------
ENTERTAINMENT--0.4%
McDonald's Corp.                                                                           150,000
4,504,500
- ----------------------------------------------------------------------------------------------------------------------------
Viacom, Inc., Cl. B(1)                                                                     200,000
8,480,000

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

12,984,500

- ----------------------------------------------------------------------------------------------------------------------------
FOOD & DRUG RETAILERS--1.8%
Kroger Co. (The)(1)                                                                      1,097,500
29,215,450
- ----------------------------------------------------------------------------------------------------------------------------
SUPERVALU, Inc.                                                                          1,025,000
21,504,500
- ----------------------------------------------------------------------------------------------------------------------------
Winn-Dixie Stores, Inc.                                                                    145,000
3,255,250

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

53,975,200

- ----------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD GOODS--0.0%
Kimberly-Clark Corp.                                                                         5,000
310,250
- ----------------------------------------------------------------------------------------------------------------------------
TOBACCO--4.1%
Philip Morris Cos., Inc.                                                                 2,500,000
118,500,000
- ----------------------------------------------------------------------------------------------------------------------------
UST, Inc.                                                                                  200,000
6,600,000

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

125,100,000

- ----------------------------------------------------------------------------------------------------------------------------
ENERGY--6.5%
- ----------------------------------------------------------------------------------------------------------------------------
ENERGY SERVICES--1.6%
BJ Services Co.(1)                                                                         435,000
9,757,050
- ----------------------------------------------------------------------------------------------------------------------------
Cooper Cameron Corp.(1)                                                                     85,000
3,676,250
- ----------------------------------------------------------------------------------------------------------------------------
ENSCO International, Inc.                                                                  525,000
9,576,000
- ----------------------------------------------------------------------------------------------------------------------------
Global Marine, Inc.(1)                                                                     325,000
4,680,000
- ----------------------------------------------------------------------------------------------------------------------------
Santa Fe International Corp.                                                               600,000
15,180,000
- ----------------------------------------------------------------------------------------------------------------------------
Tidewater, Inc.                                                                            200,000
6,222,000

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

49,091,300

- ----------------------------------------------------------------------------------------------------------------------------
OIL: DOMESTIC--4.9%
Conoco, Inc., Cl. A                                                                        850,000
25,202,500
- ----------------------------------------------------------------------------------------------------------------------------
EOG Resources, Inc.                                                                        200,000
6,324,000
- ----------------------------------------------------------------------------------------------------------------------------
Kerr/McGee Corp.                                                                           150,000
8,761,500
- ----------------------------------------------------------------------------------------------------------------------------
Occidental Petroleum Corp.                                                               1,000,000
27,520,000
- ----------------------------------------------------------------------------------------------------------------------------
Texaco, Inc.                                                                               100,000
6,965,000
- ----------------------------------------------------------------------------------------------------------------------------
Unocal Corp.                                                                               500,000
17,650,000
- ----------------------------------------------------------------------------------------------------------------------------
USX-Marathon Group, Inc.                                                                 1,075,000
33,873,250
- ----------------------------------------------------------------------------------------------------------------------------
Valero Energy Corp.(3)                                                                     500,000
20,750,000

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

147,046,250




                       13 OPPENHEIMER CAPITAL INCOME FUND




STATEMENT OF INVESTMENTS  Continued
- --------------------------------------------------------------------------------




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

FINANCIAL--29.6%
- ----------------------------------------------------------------------------------------------------------------------------
BANKS--14.6%
AmSouth Bancorp                                                                            425,000        $
8,083,500
- ----------------------------------------------------------------------------------------------------------------------------
Bank of America Corp.(3)                                                                 1,250,000
76,875,000
- ----------------------------------------------------------------------------------------------------------------------------
Bank of New York Co., Inc. (The)(3)                                                        675,000
26,797,500
- ----------------------------------------------------------------------------------------------------------------------------
Bank One Corp.(3)                                                                          875,000
30,353,750
- ----------------------------------------------------------------------------------------------------------------------------
Charter One Financial, Inc.                                                              1,150,000
33,580,000
- ----------------------------------------------------------------------------------------------------------------------------
First Union Corp.(3)                                                                     1,192,500
41,045,850
- ----------------------------------------------------------------------------------------------------------------------------
FleetBoston Financial Corp.(3)                                                           1,945,250
71,643,558
- ----------------------------------------------------------------------------------------------------------------------------
J.P. Morgan Chase & Co.                                                                  1,325,000
52,205,000
- ----------------------------------------------------------------------------------------------------------------------------
KeyCorp                                                                                    550,000
13,805,000
- ----------------------------------------------------------------------------------------------------------------------------
Mellon Financial Corp.(3)                                                                  725,000
25,556,250
- ----------------------------------------------------------------------------------------------------------------------------
PNC Financial Services Group                                                               287,500
19,144,625
- ----------------------------------------------------------------------------------------------------------------------------
U.S. Bancorp(3)                                                                          1,200,000
29,088,000
- ----------------------------------------------------------------------------------------------------------------------------
Union Planters Corp.(3)                                                                    330,000
14,685,000

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

442,863,033

- ----------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL--5.8%
Anthracite Capital, Inc.                                                                   850,000
9,333,000
- ----------------------------------------------------------------------------------------------------------------------------
Capital One Financial Corp.(3)                                                             100,000
5,561,000
- ----------------------------------------------------------------------------------------------------------------------------
Citigroup, Inc.                                                                          2,225,000
101,793,750
- ----------------------------------------------------------------------------------------------------------------------------
Fannie Mae                                                                                  52,500
4,001,025
- ----------------------------------------------------------------------------------------------------------------------------
Household International, Inc.(3)                                                           600,000
35,460,000
- ----------------------------------------------------------------------------------------------------------------------------
John Hancock Financial Services, Inc.                                                      400,000
15,980,000
- ----------------------------------------------------------------------------------------------------------------------------
Smith (Charles E.) Residential Realty, Inc.                                                 59,275
3,143,353

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

175,272,128

- ----------------------------------------------------------------------------------------------------------------------------
INSURANCE--3.6%
Allstate Corp.                                                                             250,000
8,482,500
- ----------------------------------------------------------------------------------------------------------------------------
Everest Re Group Ltd.                                                                      450,000
29,205,000
- ----------------------------------------------------------------------------------------------------------------------------
Hartford Financial Services Group, Inc.                                                     50,000
3,240,000
- ----------------------------------------------------------------------------------------------------------------------------
Protective Life Corp.                                                                      300,000
8,949,000
- ----------------------------------------------------------------------------------------------------------------------------
Radian Group, Inc.                                                                         625,000
25,068,750
- ----------------------------------------------------------------------------------------------------------------------------
St. Paul Cos., Inc.                                                                        300,000
12,609,000
- ----------------------------------------------------------------------------------------------------------------------------
XL Capital Ltd., Cl. A                                                                     250,000
20,750,000

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

108,304,250




                       14 OPPENHEIMER CAPITAL INCOME FUND







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

REAL ESTATE INVESTMENT TRUSTS--3.3%
Archstone Communities Trust                                                                655,000        $
17,685,000
- ----------------------------------------------------------------------------------------------------------------------------
Avalonbay Communities, Inc.                                                                300,000
15,147,000
- ----------------------------------------------------------------------------------------------------------------------------
Boston Properties, Inc.                                                                    200,000
7,880,000
- ----------------------------------------------------------------------------------------------------------------------------
Equity Office Properties Trust                                                           1,100,000
35,299,000
- ----------------------------------------------------------------------------------------------------------------------------
Equity Residential Properties Trust                                                        385,000
22,680,350

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

98,691,350

- ----------------------------------------------------------------------------------------------------------------------------
SAVINGS & LOANS--2.3%
Greenpoint Financial Corp.                                                                 500,000
19,750,000
- ----------------------------------------------------------------------------------------------------------------------------
Washington Mutual, Inc.                                                                  1,350,000
50,544,000

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

70,294,000

- ----------------------------------------------------------------------------------------------------------------------------
HEALTHCARE--2.5%
- ----------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/DRUGS--2.5%
Abbott Laboratories(3)                                                                      77,500
3,851,750
- ----------------------------------------------------------------------------------------------------------------------------
American Home Products Corp.                                                               400,000
22,400,000
- ----------------------------------------------------------------------------------------------------------------------------
Bristol-Myers Squibb Co.                                                                   225,000
12,631,500
- ----------------------------------------------------------------------------------------------------------------------------
Johnson & Johnson(3)                                                                       220,500
11,622,555
- ----------------------------------------------------------------------------------------------------------------------------
Merck & Co., Inc.                                                                          162,500
10,578,750
- ----------------------------------------------------------------------------------------------------------------------------
Pharmacia Corp.                                                                            150,000
5,940,000
- ----------------------------------------------------------------------------------------------------------------------------
Schering-Plough Corp.                                                                      200,000
7,626,000
- ----------------------------------------------------------------------------------------------------------------------------
Zimmer Holdings, Inc.(1)                                                                    10,000
272,000

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

74,922,555

- ----------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY--1.0%
- ----------------------------------------------------------------------------------------------------------------------------
COMPUTER SERVICES--0.2%
First Data Corp.(3)                                                                        100,000
6,585,000
- ----------------------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE--0.8%
Microsoft Corp.(1)                                                                         400,000
22,820,000
- ----------------------------------------------------------------------------------------------------------------------------
ELECTRONICS--0.0%
Waters Corp.(1,3)                                                                           25,000
828,250
- ----------------------------------------------------------------------------------------------------------------------------
UTILITIES--9.9%
- ----------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--2.9%
Constellation Energy Group, Inc.                                                           700,000
21,014,000
- ----------------------------------------------------------------------------------------------------------------------------
Exelon Corp.                                                                               500,000
27,300,000
- ----------------------------------------------------------------------------------------------------------------------------
TXU Corp.                                                                                  800,000
37,984,000

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

86,298,000

- ----------------------------------------------------------------------------------------------------------------------------
GAS UTILITIES--7.0%
Dynegy, Inc.                                                                             1,225,000
51,658,250
- ----------------------------------------------------------------------------------------------------------------------------
El Paso Corp.                                                                              225,000
10,932,750
- ----------------------------------------------------------------------------------------------------------------------------
Enron Corp.                                                                                650,000
22,743,500
- ----------------------------------------------------------------------------------------------------------------------------
Kinder Morgan Management LLC                                                               558,160
40,996,852




                       15 OPPENHEIMER CAPITAL INCOME FUND




STATEMENT OF INVESTMENTS  Continued
- --------------------------------------------------------------------------------




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

GAS UTILITIES Continued
Kinder Morgan, Inc.                                                                        925,000        $
51,430,000
- ----------------------------------------------------------------------------------------------------------------------------
Sempra Energy                                                                              325,000
8,804,250
- ----------------------------------------------------------------------------------------------------------------------------
Williams Cos., Inc. (The)                                                                  775,000
25,226,250

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

211,791,852

- ------------------
Total Common Stocks (Cost $1,447,170,445)
2,052,213,258

============================================================================================================================
PREFERRED STOCKS--10.6%
- ----------------------------------------------------------------------------------------------------------------------------
ACE Ltd., 8.25% Cv. Preferred Redeemable Increased Dividend Equity
Securities, Non-Vtg.                                                                       287,500
20,412,500
- ----------------------------------------------------------------------------------------------------------------------------
Adelphia Communications Corp., 5.50% Cv., Series D, Non-Vtg.                               375,000
40,453,125
- ----------------------------------------------------------------------------------------------------------------------------
California Federal Preferred Capital Corp., 9.125% Non-Cum. Exchangeable,
Series A, Non-Vtg.                                                                         100,000
2,577,000
- ----------------------------------------------------------------------------------------------------------------------------
CMS Energy Trust III, 7.25% Cv. Premium Equity Participating Security Units                200,000
5,150,000
- ----------------------------------------------------------------------------------------------------------------------------
Coastal Corp., $37.75 Cv. Preferred Redeemable Increased Dividend
Equity Securities                                                                          725,000
24,331,000
- ----------------------------------------------------------------------------------------------------------------------------
Duke Energy Corp., 8.25% Cv. Equity Units, Non-Vtg. (each equity unit
consists of units referred to as corporate units which consist of $25
principal amount of Duke Energy Corp., 5.87% sr. nts., due 2006 and a
contract to purchase Duke Energy Corp. common stock)(4)                                    325,000
8,645,000
- ----------------------------------------------------------------------------------------------------------------------------
Emmis Communications Corp., 6.25% Cum. Cv., A Shares, Non-Vtg.                             300,000
12,450,000
- ----------------------------------------------------------------------------------------------------------------------------
Enron Corp., 7% Cv. Exchangeable, Non-Vtg.                                                 183,050
5,231,569
- ----------------------------------------------------------------------------------------------------------------------------
Fresenius Medical Care Capital Trust III, 9% Trust Securities                            5,985,000
6,209,438
- ----------------------------------------------------------------------------------------------------------------------------
Global Crossing Ltd., 7% Cum. Cv.                                                          200,000
11,300,000
- ----------------------------------------------------------------------------------------------------------------------------
Hercules Trust II, Units (each unit consists of one preferred security of the
Trust and one warrant to purchase 23.4192 shares of Hercules, Inc.
common stock)(4)                                                                             7,500
3,823,500
- ----------------------------------------------------------------------------------------------------------------------------
McLeodUSA, Inc., 6.75% Cv., Series A, Non-Vtg.                                              55,000
3,190,000
- ----------------------------------------------------------------------------------------------------------------------------
National Australia Bank Ltd., ExCaps (each ExCap consists of $25 principal
amount of 7.875% Perpetual Capital Security and a purchase contract
entitling the holder to exchange ExCaps for ordinary shares of the bank)(4)                500,000
16,100,000
- ----------------------------------------------------------------------------------------------------------------------------
Nisource, Inc., 7.75% Cv. Premium Income Equity Securities, Non-Vtg.                       200,000
9,720,000
- ----------------------------------------------------------------------------------------------------------------------------
NRG Energy, Inc., Equity Units, Non-Vtg. (each equity unit consists of units
referred to as corporate units which consist of $25 principal amount of
NRG Energy, Inc., 6.50% sr. debs., 5/16/01 and a purchase contract to
purchase NRG Energy, Inc. common stock)(4)                                                 225,000
4,722,750
- ----------------------------------------------------------------------------------------------------------------------------
Pharmacia Corp., 6.50% Cv. Adjustable Conversion-rate Equity Security                      228,800
8,545,680
- ----------------------------------------------------------------------------------------------------------------------------
Qwest Trends Trust, 5.75% Cv.(5)                                                           250,000
10,187,500
- ----------------------------------------------------------------------------------------------------------------------------
Reliant Energy, Inc., 2% Zero-Premium Exchangeable Sub. Nts.                               100,000
5,935,000
- ----------------------------------------------------------------------------------------------------------------------------
Six Flags, Inc., 7.25% Cum. Cv. Preferred Income Equity Redeemable Stock                   715,000
17,875,000
- ----------------------------------------------------------------------------------------------------------------------------
Sovereign Capital Trust II, 7.50% Cv. Preferred Income Equity Redeemable
Stock, Units (each unit consists of one preferred plus one warrant to
purchase 5.3355 shares of Sovereign Bancorp common stock)(4)                               475,000
30,780,000




                       16 OPPENHEIMER CAPITAL INCOME FUND







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

PREFERRED STOCKS Continued
- ----------------------------------------------------------------------------------------------------------------------------
Sprint Corp., Equity Units [each equity unit consists of units referred to
as corporate units which consist of $25 principal amount of
Sprint Capital Corp., 6% sr. nts., 8/17/06 and a purchase contract to
purchase Sprint Corp. (PCS Group) common stock](1,4)                                       760,000        $
19,790,400
- ----------------------------------------------------------------------------------------------------------------------------
Tribune Co., 2% Unsec. Participation Hybrid Option Note Exchangeable
Securities (exchangeable for shares of America Online, Inc.)                               225,000
21,150,000
- ----------------------------------------------------------------------------------------------------------------------------
Union Pacific Capital Trust, 6.25% Cum. Cv. Term Income Deferrable
Equity Securities, Non-Vtg.                                                                135,000
6,395,625
- ----------------------------------------------------------------------------------------------------------------------------
United Rental Trust I, 6.50% Cv. Quarterly Income Preferred Securities,
Non-Vtg.                                                                                   350,000
12,337,500
- ----------------------------------------------------------------------------------------------------------------------------
Valero Energy Corp., 7.75% Cv. Premium Equity Participating Security                       312,500
10,296,875
- ----------------------------------------------------------------------------------------------------------------------------
WorldCom, Inc., 7% Cum. Cv., Series E                                                      200,000
4,525,000

- ------------------
Total Preferred Stocks (Cost $332,203,404)
322,134,462





                                                                                         PRINCIPAL
                                                                                            AMOUNT

============================================================================================================================
MORTGAGE-BACKED OBLIGATIONS--4.9%
- ----------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
6%, 9/25/31(6)                                                                      $  126,000,000
123,834,060
6.50%, 9/1/28(6)                                                                        25,000,000
25,093,750

- ------------------
Total Mortgage-Backed Obligations (Cost $147,347,188)
148,927,810

============================================================================================================================
U.S. GOVERNMENT OBLIGATIONS--4.6%
- ----------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, STRIPS, 6.33%, 2/15/15(7)                                         150,000,000
72,226,350
- ----------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 5%, 2/15/11                                                         65,000,000
65,446,940

- ------------------
Total U.S. Government Obligations (Cost $128,872,494)
137,673,290

============================================================================================================================
FOREIGN GOVERNMENT OBLIGATIONS--0.6%
- ----------------------------------------------------------------------------------------------------------------------------
Banco Nac de Desen Econo Cv. Sr. Nts., 6.50%, 6/15/06 [cv. into Empresa
Brasileira de Aeronautica SA (Embraer), ADR common stock](5)                             7,750,000
6,897,500
- ----------------------------------------------------------------------------------------------------------------------------
South Africa (Republic of) Bonds, Series 153, 13%, 8/31/10 [ZAR]                        14,800,000
1,975,525
- ----------------------------------------------------------------------------------------------------------------------------
United Mexican States Sec. Nts., Fideicomiso Petacalco Trust,
10.16%, 12/23/09(5)                                                                      7,650,000
8,300,250

- ------------------
Total Foreign Government Obligations (Cost $18,112,991)
17,173,275

============================================================================================================================
LOAN PARTICIPATIONS--0.3%
- ----------------------------------------------------------------------------------------------------------------------------
Shoshone Partners Loan Trust Sr. Nts., 3.696%, 4/28/02 (representing
a basket of reference loans and a total return swap between Chase
Manhattan Bank and the Trust)(8,9) (Cost $16,849,811)                                   16,800,000
10,269,221

============================================================================================================================
NON-CONVERTIBLE CORPORATE BONDS AND NOTES--4.9%
- ----------------------------------------------------------------------------------------------------------------------------
AK Steel Corp., 9.125% Sr. Nts., 12/15/06                                                4,000,000
4,130,000
- ----------------------------------------------------------------------------------------------------------------------------
Allied Waste North America, Inc., 7.875% Sr. Unsec. Nts., Series B, 1/1/09               4,995,000
5,057,438
- ----------------------------------------------------------------------------------------------------------------------------
Amtran, Inc., 9.625% Nts., 12/15/05(8)                                                   3,000,000
2,595,000




                       17 OPPENHEIMER CAPITAL INCOME FUND




STATEMENT OF INVESTMENTS  Continued
- --------------------------------------------------------------------------------



                                                                                         PRINCIPAL
MARKET VALUE
                                                                                            AMOUNT
SEE NOTE 1
============================================================================================================================

NON-CONVERTIBLE CORPORATE BONDS AND NOTES Continued
- ----------------------------------------------------------------------------------------------------------------------------
Auburn Hills Trust, 12% Gtd. Exchangeable Certificates, 5/1/20(9)                   $    5,000,000        $
7,303,520
- ----------------------------------------------------------------------------------------------------------------------------
Bank Plus Corp., 12% Sr. Nts., 7/18/07                                                   2,500,000
2,715,625
- ----------------------------------------------------------------------------------------------------------------------------
Charter Communications Holdings LLC/Charter Communications
Holdings Capital Corp., 8.625% Sr. Unsec. Nts., 4/1/09                                   9,250,000
9,018,750
- ----------------------------------------------------------------------------------------------------------------------------
Comcast Corp., 10.25% Sr. Sub. Debs., 10/15/01                                           6,000,000
6,034,014
- ----------------------------------------------------------------------------------------------------------------------------
Cott Corp., 9.375% Sr. Nts., 7/1/05                                                      6,350,000
6,492,875
- ----------------------------------------------------------------------------------------------------------------------------
CSC Holdings, Inc., 7.625% Sr. Unsec. Debs., 7/15/18                                     3,000,000
2,828,337
- ----------------------------------------------------------------------------------------------------------------------------
EchoStar DBS Corp., 9.375% Sr. Unsec. Nts., 2/1/09                                       4,000,000
4,145,000
- ----------------------------------------------------------------------------------------------------------------------------
Emmis Communications Corp., 8.125% Sr. Unsec. Sub. Nts., Series B, 3/15/09               9,000,000
8,752,500
- ----------------------------------------------------------------------------------------------------------------------------
Fairchild Corp., 10.75% Sr. Unsec. Sub. Nts., 4/15/09                                    1,750,000
1,408,750
- ----------------------------------------------------------------------------------------------------------------------------
Fairchild Semiconductor Corp., 10.375% Sr. Unsec. Nts., 10/1/07                          2,500,000
2,525,000
- ----------------------------------------------------------------------------------------------------------------------------
Ferrellgas Partners LP, 9.375% Sr. Sec. Nts., Series B, 6/15/06                          5,000,000
5,056,250
- ----------------------------------------------------------------------------------------------------------------------------
HMH Properties, Inc., 8.45% Sr. Nts., Series C, 12/1/08                                 10,000,000
10,125,000
- ----------------------------------------------------------------------------------------------------------------------------
Hollinger International Publishing, Inc.:
8.625% Sr. Unsec. Nts., 3/15/05(8)                                                       4,210,000
4,146,850
9.25% Sr. Unsec. Sub. Nts., 2/1/06                                                       4,200,000
4,137,000
- ----------------------------------------------------------------------------------------------------------------------------
ICN Pharmaceuticals, Inc., 9.75% Sr. Nts., 11/15/08(5)                                   2,000,000
2,290,000
- ----------------------------------------------------------------------------------------------------------------------------
Imax Corp., 7.875% Sr. Nts., 12/1/05                                                     5,000,000
1,775,000
- ----------------------------------------------------------------------------------------------------------------------------
Intrawest Corp., 9.75% Sr. Nts., 8/15/08                                                 2,000,000
2,040,000
- ----------------------------------------------------------------------------------------------------------------------------
Kindercare Learning Centers, Inc., 9.50% Sr. Sub. Nts., 2/15/09(8)                       6,000,000
5,910,000
- ----------------------------------------------------------------------------------------------------------------------------
McLeodUSA, Inc., 8.125% Sr. Unsec. Nts., 2/15/09                                        25,000,000
11,312,500
- ----------------------------------------------------------------------------------------------------------------------------
Metromedia Fiber Network, Inc.:
10% Sr. Nts., 12/15/09                                                                   4,000,000
980,000
10% Sr. Nts., 12/15/09 [EUR]                                                             2,000,000
472,368
- ----------------------------------------------------------------------------------------------------------------------------
Nortek, Inc., 9.125% Sr. Unsec. Nts., Series B, 9/1/07                                   7,500,000
7,537,500
- ----------------------------------------------------------------------------------------------------------------------------
NTL Communications Corp., 11.50% Sr. Unsec. Nts., Series B, 10/1/08                      7,650,000
4,513,500
- ----------------------------------------------------------------------------------------------------------------------------
P&L Coal Holdings Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08                         3,224,000
3,449,680
- ----------------------------------------------------------------------------------------------------------------------------
RCN Corp., 10.125% Sr. Unsec. Nts., 1/15/10                                             14,284,000
5,499,340
- ----------------------------------------------------------------------------------------------------------------------------
Rite Aid Corp., 11.25% Sr. Nts., 7/1/08(5)                                               2,500,000
2,637,500
- ----------------------------------------------------------------------------------------------------------------------------
Riverwood International Corp.:
10.625% Sr. Unsec. Nts., 8/1/07                                                          1,000,000
1,045,000
10.875% Sr. Sub. Nts., 4/1/08                                                            1,000,000
990,000
- ----------------------------------------------------------------------------------------------------------------------------
Tenet Healthcare Corp.:
7.625% Sr. Unsec. Nts., Series B, 6/1/08                                                 2,150,000
2,327,375
8.625% Sr. Sub. Nts., 1/15/07                                                            2,000,000
2,110,000
- ----------------------------------------------------------------------------------------------------------------------------
Tenneco, Inc., 11.625% Sr. Unsec. Sub. Nts., Series B, 10/15/09                          1,000,000
500,000
- ----------------------------------------------------------------------------------------------------------------------------
Tribasa Toll Road Trust I, 10.50% Sr. Asset-Backed Securities,
Series 1993-A, 12/1/11(8)                                                                1,745,919
1,104,294
- ----------------------------------------------------------------------------------------------------------------------------
VoiceStream Wireless Corp., 10.375% Sr. Unsec. Nts., 11/15/09                               96,000
110,880
- ----------------------------------------------------------------------------------------------------------------------------
Williams Communications Group, Inc., 10.875% Sr. Unsec. Nts., 10/1/09                    3,000,000
1,380,000




                       18 OPPENHEIMER CAPITAL INCOME FUND






                                                                                         PRINCIPAL
MARKET VALUE
                                                                                            AMOUNT
SEE NOTE 1
============================================================================================================================

NON-CONVERTIBLE CORPORATE BONDS AND NOTES Continued
- ----------------------------------------------------------------------------------------------------------------------------
World Color Press, Inc., 7.75% Sr. Unsec. Sub. Nts., 2/15/09                        $    1,000,000        $
1,012,684
- ----------------------------------------------------------------------------------------------------------------------------
XO Communications, Inc., 10.75% Sr. Unsec. Nts., 6/1/09                                  5,000,000
1,950,000

- ------------------
Total Non-Convertible Corporate Bonds and Notes (Cost $165,714,418)
147,419,530

============================================================================================================================
CONVERTIBLE CORPORATE BONDS AND NOTES--9.3%
- ----------------------------------------------------------------------------------------------------------------------------
Adelphia Communications Corp., 6% Cv. Unsec. Nts., 2/15/06                              40,000,000
34,350,000
- ----------------------------------------------------------------------------------------------------------------------------
American Tower Corp.:
5% Cv. Nts., 2/15/10(5)                                                                  7,000,000
5,398,750
5% Cv. Nts., 2/15/10                                                                     5,500,000
4,241,875
- ----------------------------------------------------------------------------------------------------------------------------
Amkor Technology, Inc.:
5% Cv. Sub. Nts., 3/15/07(5)                                                            23,000,000
15,898,750
5% Cv. Unsec. Sub. Nts., 3/15/07                                                         7,000,000
4,838,750
- ----------------------------------------------------------------------------------------------------------------------------
Charter Communications, Inc., 4.75% Cv. Sr. Unsec. Nts., 6/1/06                          7,500,000
7,434,375
- ----------------------------------------------------------------------------------------------------------------------------
Clear Channel Communications, Inc., 2.625% Cv. Sr. Nts., 4/1/03                         10,000,000
10,300,000
- ----------------------------------------------------------------------------------------------------------------------------
Commscope, Inc., 4% Cv. Unsec. Sub. Nts., 12/15/06                                      10,500,000
8,859,375
- ----------------------------------------------------------------------------------------------------------------------------
CSK Auto Corp., 7% Cv. Sub. Nts., 8/1/06(2,8)                                           30,000,000
40,044,600
- ----------------------------------------------------------------------------------------------------------------------------
Enron Corp., Zero Coupon Cv. Sr. Unsec. Nts., 2.68%, 2/7/21(7)                          15,000,000
8,981,250
- ----------------------------------------------------------------------------------------------------------------------------
Juniper Networks, Inc., 4.75% Cv. Unsec. Sub. Nts., 3/15/07                              6,250,000
4,500,000
- ----------------------------------------------------------------------------------------------------------------------------
Level 3 Communications, Inc., 6% Cv. Nts., 9/15/09                                      52,500,000
16,012,500
- ----------------------------------------------------------------------------------------------------------------------------
Liberty Media Corp., 3.25% Cv. Sr. Nts., 3/15/31 (cv. into Viacom, Inc.,
Cl. B common stock)(5)                                                                  20,000,000
18,925,000
- ----------------------------------------------------------------------------------------------------------------------------
LSI Logic Corp., 4% Cv. Unsec. Sub. Nts., 2/15/05                                       17,500,000
14,896,875
- ----------------------------------------------------------------------------------------------------------------------------
Mutual Risk Management Ltd., Zero Coupon Exchangeable
Sub. Debs., 5.25%, 10/30/15(5,7)                                                        19,500,000
8,214,375
- ----------------------------------------------------------------------------------------------------------------------------
Network Associates, Inc., Zero Coupon Cv. Unsec
Sub. Debs., 3.94%, 2/13/18(7)                                                           25,000,000
11,000,000
- ----------------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc.:
5.25% Cv. Sr. Nts., 1/15/10(5)                                                          12,500,000
7,328,125
5.25% Cv. Sr. Nts., 1/15/10                                                             25,000,000
14,656,250
- ----------------------------------------------------------------------------------------------------------------------------
Nortel Networks Corp., 4.25% Cv. Sr. Nts., 9/1/08(5)                                     6,500,000
6,150,625
- ----------------------------------------------------------------------------------------------------------------------------
Rite Aid Corp., 5.25% Cv. Sub. Nts., 9/15/02                                            20,000,000
19,300,000
- ----------------------------------------------------------------------------------------------------------------------------
Royal Carribean Cruises Ltd., Zero Coupon Cv. Sr. Unsec. Unsub
Liquid Yield Option Nts., 5.15%, 2/2/21(7)                                              36,000,000
13,320,000
- ----------------------------------------------------------------------------------------------------------------------------
Solectron Corp., Zero Coupon Cv. Sr. Unsec. Unsub. Liquid Yield
Option Nts., 3.63%, 5/8/20(7)                                                           15,000,000
7,650,000

- ------------------
Total Convertible Corporate Bonds and Notes (Cost $290,924,388)
282,301,475




                       19 OPPENHEIMER CAPITAL INCOME FUND




STATEMENT OF INVESTMENTS  Continued
- --------------------------------------------------------------------------------



                                                                                         PRINCIPAL
MARKET VALUE
                                                                                            AMOUNT
SEE NOTE 1
============================================================================================================================

STRUCTURED INSTRUMENTS--0.7%
- ----------------------------------------------------------------------------------------------------------------------------
Credit Suisse First Boston Corp. (New York Branch), Carnival Corp.
Equity Linked Nts., 7%, 7/17/02(8)                                                  $   11,558,946        $
16,182,524
- ----------------------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., Medium-Term Stock Linked Nts., Series B,
7%, 7/8/02 (linked to the performance of The Gap, Inc. common stock)                     7,500,000
5,250,000

- ------------------
Total Structured Instruments (Cost $19,615,358)
21,432,524

============================================================================================================================
REPURCHASE AGREEMENTS--0.3%
- ----------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with Deutsche Bank Securities, Inc., 3.62%,
dated 8/31/01, to be repurchased at $7,664,081 on 9/4/01, collateralized
by U.S. Treasury Bonds, 6.50%-8.125%, 8/15/21-11/15/26, with a value of
$7,839,821 (Cost $7,661,000)                                                           7,661,000
7,661,000
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $2,574,471,497)                                          104.0%
3,147,205,845
- ----------------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS                                                       (4.0)
(121,516,039)

- ----------------------------------------
NET ASSETS                                                                                 100.0%         $
3,025,689,806

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




FOOTNOTES TO STATEMENT OF INVESTMENTS

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

EUR    Euro
ZAR    South African Rand

1.  Non-income-producing security.

2.  Affiliated company. Represents ownership of at least 5% of the voting
    securities of the issuer, and is or was an affiliate, as defined in the
    Investment Company Act of 1940, at or during the period ended August 31,
    2001. The aggregate fair value of securities of affiliated companies held by
    the Fund as of August 31, 2001, amounts to $55,770,615. Transactions during
    the period in which the issuer was an affiliate are as follows:



                                           SHARES/                                  SHARES/
                                         PRINCIPAL                                PRINCIPAL       UNREALIZED
                                        AUGUST 31,         GROSS        GROSS    AUGUST 31,     APPRECIATION
INTEREST
                                              2000     ADDITIONS   REDUCTIONS          2001
(DEPRECIATION)       INCOME
- --------------------------------------------------------------------------------------------------------------------------

STOCKS AND WARRANTS
CSK Auto Corp.                           1,500,000       339,300           --     1,839,300    $(18,737,975)
$     --

BONDS AND NOTES
CSK Auto Corp., 7% Cv. Sub.
Nts., 8/1/06                                    --   $30,000,000           --   $30,000,000
10,044,600        93,333

- ---------

$ 93,333

=========




                       20 OPPENHEIMER CAPITAL INCOME FUND




FOOTNOTES TO STATEMENT OF INVESTMENTS Continued

3.  A sufficient amount of liquid assets has been designated to cover
    outstanding written call and put options, as follows:



                                            CONTRACTS  EXPIRATION     EXERCISE       PREMIUM  MARKET VALUE
                                      SUBJECT TO CALL        DATE        PRICE      RECEIVED    SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------

Abbott Laboratories                               500     9/24/01          $55    $   33,249    $    5,000
Bank of America Corp.                             500     9/24/01           70        13,250            --
Bank of America Corp.                             250    10/22/01           70        17,249         2,500
Bank of America Corp.                             875    11/19/01           70        79,622        30,625
Bank of New York Co., Inc. (The)                1,500    10/22/01           60       266,241            --
Bank of New York Co., Inc. (The)                4,500     1/21/02           70       402,511            --
Bank One Corp.                                  1,000    11/19/01           43        57,499            --
Capital One Financial Corp.                       375     9/24/01           65        50,123         7,500
First Data Corp.                                  875     9/24/01           65       417,611       210,000
First Data Corp.                                  125     9/24/01           70        17,224         5,000
First Union Corp.                                 725     9/24/01           35        98,947        25,375
First Union Corp.                               1,325     9/24/01           38        48,233        19,875
First Union Corp.                                 950    10/22/01           35       150,395        90,250
FleetBoston Financial Corp.                     1,750    10/22/01           50       129,996            --
Household International, Inc.                   1,000     9/24/01           70        88,497            --
Household International, Inc.                     250    10/22/01           65       119,246        22,500
Johnson & Johnson                               1,200    10/22/01           58       112,046        54,000
Johnson & Johnson                               1,000    10/22/01           55       114,496        70,000
Mellon Financial Corp.                            750     9/24/01           55        54,248            --
U.S. Bancorp                                      250     9/24/01           25        11,000         6,250
Union Planters Corp.                            3,300    11/19/01           48       217,793        82,500
Valero Energy Corp.                               500     9/24/01           40       264,991       100,000
Valero Energy Corp.                               250     9/24/01           45        89,247        10,000
Valero Energy Corp.                             1,500     9/24/01           50       676,027            --
Valero Energy Corp.                               750     9/24/01           55       235,692            --
Waters Corp.                                       25     9/24/01           35         3,050         1,750
                                                                                  --------------------------
                                                                                   3,768,483       743,125
                                                                                  --------------------------





                                            CONTRACTS  EXPIRATION     EXERCISE       PREMIUM  MARKET VALUE
                                       SUBJECT TO PUT        DATE        PRICE      RECEIVED    SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------

Charter Communications, Inc., Cl. A               250     9/24/01          $20    $   30,499    $   21,250
Cisco Systems, Inc.                                86     1/21/02           18        26,401        25,800
Comcast Corp., Cl. A                              500     9/24/01           35        19,499        27,500
Comcast Corp., Cl. A                            1,750    10/22/01           40       654,478       647,500
EMC Corp.                                         130    10/22/01           23        42,075        93,600
Gap, Inc.                                         500     9/24/01           23        48,498       140,000
JDS Uniphase Corp.                                  5     9/24/01           40         8,953        16,300
Kinder Morgan, Inc.                               250     9/24/01           50        13,500         1,250
Kinder Morgan, Inc.                             1,000     9/24/01           55       244,992       110,000
Merck & Co., Inc.                                 375     9/24/01           70        86,996       191,250
Morgan Stanley Dean Witter & Co.                1,000    10/22/01           60       658,235       790,000
Providian Financial Corp.                         500    10/22/01           35        73,498        90,000
Washington Mutual, Inc.                           500    10/22/01           35        58,499        32,500
                                                                                  --------------------------
                                                                                   1,966,123     2,186,950
                                                                                  --------------------------
                                                                                  $5,734,606    $2,930,075
                                                                                  ==========================




                       21 OPPENHEIMER CAPITAL INCOME FUND




STATEMENT OF INVESTMENTS  Continued
- --------------------------------------------------------------------------------

FOOTNOTES TO STATEMENT OF INVESTMENTS Continued

4.  Units may be comprised of several components, such as debt and equity and/or
    warrants to purchase equity at some point in the future. For units which
    represent debt securities, principal amount disclosed represents total
    underlying principal.

5.  Represents securities sold under Rule 144A, which are exempt from
    registration under the Securities Act of 1933, as amended. These securities
    have been determined to be liquid under guidelines established by the Board
    of Trustees. These securities amount to $92,228,375 or 3.05% of the Fund's
    net assets as of August 31, 2001.

6.  When-issued security to be delivered and settled after August 31, 2001.

7.  Zero coupon bond reflects the effective yield on the date of purchase.

8.  Identifies issues considered to be illiquid or restricted--See Note 7 of
    Notes to Financial Statements.

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.



                       22 OPPENHEIMER CAPITAL INCOME FUND




STATEMENT OF ASSETS AND LIABILITIES  August 31, 2001
- --------------------------------------------------------------------------------




============================================================================================================
ASSETS
- ------------------------------------------------------------------------------------------------------------
Investments, at value--see accompanying statement:
Unaffiliated companies (cost $2,510,007,507)                                               $ 3,091,435,230
Affiliated companies (cost $64,463,990)                                                         55,770,615
                                                                                           -----------------
                                                                                             3,147,205,845

- ------------------------------------------------------------------------------------------------------------
Cash                                                                                               137,765
- ------------------------------------------------------------------------------------------------------------
Cash used for collateral on written puts                                                        25,098,169
- ------------------------------------------------------------------------------------------------------------
Receivables and other assets:
Interest and dividends                                                                          12,434,517
Shares of beneficial interest sold                                                               2,308,573
Investments sold                                                                                   729,917
Other                                                                                              276,015
                                                                                           -----------------
Total assets                                                                                 3,188,190,801

============================================================================================================
LIABILITIES
- ------------------------------------------------------------------------------------------------------------
Options written, at value (premiums received $5,734,606)--see accompanying statement             2,930,075
- ------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased (including $147,755,410 purchased on a when-issued basis)                155,216,909
Shares of beneficial interest redeemed                                                           2,362,912
Distribution and service plan fees                                                               1,243,098
Shareholder reports                                                                                404,922
Transfer and shareholder servicing agent fees                                                      227,863
Trustees' compensation                                                                              10,918
Other                                                                                              104,298
                                                                                           -----------------
Total liabilities                                                                              162,500,995

============================================================================================================
NET ASSETS                                                                                 $ 3,025,689,806
                                                                                           =================

============================================================================================================
COMPOSITION OF NET ASSETS
- ------------------------------------------------------------------------------------------------------------
Paid-in capital                                                                            $ 2,361,915,750
- ------------------------------------------------------------------------------------------------------------
Undistributed (overdistributed) net investment income                                            9,104,384
- ------------------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments and
foreign currency transactions                                                                   79,129,526
- ------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on investments and
translation of assets and liabilities denominated in foreign currencies                        575,540,146
                                                                                           -----------------
NET ASSETS                                                                                 $ 3,025,689,806
                                                                                           =================




                       23 OPPENHEIMER CAPITAL INCOME FUND




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
$2,458,271,634 and 193,273,281 shares of beneficial interest outstanding)                   $12.72
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price)                                                                 $13.50
- ----------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $477,223,195
and 37,866,936 shares of beneficial interest outstanding)                                   $12.60
- ----------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $89,547,438
and 7,110,374 shares of beneficial interest outstanding)                                    $12.59
- ----------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $647,539
and 51,035 shares of beneficial interest outstanding)                                       $12.69




SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.



                       24 OPPENHEIMER CAPITAL INCOME FUND




STATEMENT OF OPERATIONS  For the Year Ended August 31, 2001
- --------------------------------------------------------------------------------



====================================================================================================
INVESTMENT INCOME
- ----------------------------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $4,199)                               $  69,370,606
- ----------------------------------------------------------------------------------------------------
Interest:
Unaffiliated companies                                                                  53,259,685
Affiliated companies                                                                        93,333
                                                                                     ---------------
Total income                                                                           122,723,624

====================================================================================================
EXPENSES
- ----------------------------------------------------------------------------------------------------
Management fees                                                                         15,646,888
- ----------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A                                                                                  5,698,019
Class B                                                                                  4,692,665
Class C                                                                                    802,801
Class N                                                                                        530
- ----------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees                                            2,881,669
- ----------------------------------------------------------------------------------------------------
Shareholder reports                                                                        883,004
- ----------------------------------------------------------------------------------------------------
Custodian fees and expenses                                                                210,276
- ----------------------------------------------------------------------------------------------------
Trustees' compensation                                                                      60,715
- ----------------------------------------------------------------------------------------------------
Other                                                                                      451,241
                                                                                     ---------------
Total expenses                                                                          31,327,808
Less reduction to custodian expenses                                                       (35,920)
                                                                                     ---------------
Net expenses                                                                            31,291,888

====================================================================================================
NET INVESTMENT INCOME                                                                   91,431,736

====================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS)
- ----------------------------------------------------------------------------------------------------
Net realized gain (loss) on:
Investments (including premiums on options exercised)                                   98,645,690
Closing and expiration of option contracts written                                       8,284,419
Foreign currency transactions                                                           (8,366,175)
                                                                                     ---------------
Net realized gain (loss)                                                                98,563,934

- ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on:
Investments                                                                             (7,378,735)
Translation of assets and liabilities denominated in foreign currencies                  5,919,722
                                                                                     ---------------
Net change                                                                              (1,459,013)
                                                                                     ---------------
Net realized and unrealized gain (loss)                                                 97,104,921

====================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS                                 $ 188,536,657
                                                                                     ===============




SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.



                       25 OPPENHEIMER CAPITAL INCOME FUND




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




YEAR ENDED AUGUST 31,                                                                     2001
2000
=======================================================================================================================

OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------
Net investment income (loss)                                                   $    91,431,736        $
113,528,852
- -----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss)                                                            98,563,934
173,626,281
- -----------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation)                                (1,459,013)
(130,279,295)

- ----------------------------------------
Net increase (decrease) in net assets resulting from operations                    188,536,657
156,875,838

=======================================================================================================================
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A                                                                            (89,710,614)
(98,446,434)
Class B                                                                            (13,856,744)
(17,009,478)
Class C                                                                             (2,367,695)
(2,657,808)
Class N
(1,361)                    --
- -----------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A                                                                            (92,805,879)
(220,897,327)
Class B                                                                            (17,996,313)
(51,201,679)
Class C                                                                             (2,930,775)
(8,187,175)
Class N
- --                     --

=======================================================================================================================
BENEFICIAL INTEREST TRANSACTIONS
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from beneficial interest
transactions:
Class A                                                                             88,120,939
(348,332,169)
Class B                                                                              9,692,620
(198,760,762)
Class C                                                                             17,337,172
(37,298,949)
Class N
659,783                     --

=======================================================================================================================
NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------
Total increase (decrease)                                                           84,677,790
(825,915,943)
- -----------------------------------------------------------------------------------------------------------------------
Beginning of period                                                              2,941,012,016
3,766,927,959

- ----------------------------------------
End of period [including undistributed (overdistributed) net
investment income of $9,104,384 and $23,286,164, respectively]                 $ 3,025,689,806        $
2,941,012,016

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




SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.



                       26 OPPENHEIMER CAPITAL INCOME FUND



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




CLASS A             YEAR ENDED AUGUST 31,                 2001             2000          1999
1998             1997
==================================================================================================================================

PER SHARE OPERATING DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period                    $12.88           $13.63        $13.75
$14.12           $11.36
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                      .42(1)           .49           .51
 .50              .47
Net realized and unrealized gain (loss)                    .41(1)           .32          1.03
 .41             3.17

- --------------------------------------------------------------------------
Total income (loss)
from investment operations                                 .83              .81          1.54
 .91             3.64
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                      (.48)            (.49)         (.49)
(.49)            (.48)
Distributions from net realized gain                      (.51)           (1.07)        (1.17)
(.79)            (.40)

- --------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders                                           (.99)           (1.56)        (1.66)
(1.28)            (.88)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                          $12.72           $12.88        $13.63
$13.75           $14.12

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

==================================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(2)                       6.84%            7.24%        11.03%
6.17%           33.39%
- ----------------------------------------------------------------------------------------------------------------------------------

==================================================================================================================================
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)            $2,458,272       $2,395,444    $2,926,923
$2,889,472       $2,721,672
- ----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                   $2,432,151       $2,502,535    $3,156,294
$3,071,928       $2,446,081
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income                                     3.21%(1)         3.78%         3.51%
3.47%            3.97%
Expenses                                                  0.91%            0.93%         0.89%
0.87%(4)         0.88%(4)
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                     74%              37%           40%
18%              24%



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



Net investment income                                   Unchanged
Net realized and unrealized gain (loss)                 Unchanged
Net investment income ratio                                 3.24%


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

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

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.



                       27 OPPENHEIMER CAPITAL INCOME FUND




FINANCIAL HIGHLIGHTS  Continued
- --------------------------------------------------------------------------------




CLASS B         YEAR ENDED AUGUST 31,                  2001             2000          1999
1998             1997
===============================================================================================================================

PER SHARE OPERATING DATA
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period                 $12.76           $13.51        $13.63
$14.01           $11.29
- -------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                   .32(1)           .38           .39
 .39              .37
NET REALIZED AND UNREALIZED GAIN (LOSS)                 .41(1)           .32          1.03
 .40             3.13

- --------------------------------------------------------------------------
Total income (loss) from
investment operations                                   .73              .70          1.42
 .79             3.50
- -------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                   (.38)            (.38)         (.37)
(.38)            (.38)
Distributions from net realized gain                   (.51)           (1.07)        (1.17)
(.79)            (.40)

- --------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders                                        (.89)           (1.45)        (1.54)
(1.17)            (.78)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                       $12.60           $12.76        $13.51
$13.63           $14.01

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

===============================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(2)                    6.05%            6.34%        10.22%
5.32%           32.17%
- -------------------------------------------------------------------------------------------------------------------------------

===============================================================================================================================
RATIOS/SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)           $477,223         $472,222      $720,721
$634,775         $431,481
- -------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                  $469,690         $546,390      $749,020
$574,986         $344,254
- -------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income                                  2.44%(1)         3.01%         2.71%
2.68%            3.16%
Expenses                                               1.68%            1.70%         1.69%
1.67%(4)         1.69%(4)
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                  74%              37%           40%
18%              24%



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



Net investment income                                       Unchanged
Net realized and unrealized gain (loss)                     Unchanged
Net investment income ratio                                     2.47%


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

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

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.



                       28 OPPENHEIMER CAPITAL INCOME FUND






CLASS C          YEAR ENDED AUGUST 31,                2001            2000            1999
1998            1997
==============================================================================================================================

PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period                $12.76          $13.50          $13.63
$14.02          $11.30
- ------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                  .32(1)          .38             .39
 .39             .40
Net realized and unrealized gain (loss)                .40(1)          .32            1.02
 .40            3.12

- --------------------------------------------------------------------------
Total income (loss) from
investment operations                                  .72             .70            1.41
 .79            3.52
- ------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                  (.38)           (.37)           (.38)
(.39)           (.40)
Distributions from net realized gain                  (.51)          (1.07)          (1.16)
(.79)           (.40)

- --------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders                                       (.89)          (1.44)          (1.54)
(1.18)           (.80)
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD                      $12.59          $12.76          $13.50
$13.63          $14.02

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

==============================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(2)                   6.00%           6.40%          10.15%
5.30%          32.31%
- ------------------------------------------------------------------------------------------------------------------------------

==============================================================================================================================
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)           $89,547         $73,346        $119,284
$94,995         $48,368
- ------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                  $80,390         $84,898        $119,594
$77,052         $24,514
- ------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income                                 2.44%(1)        3.01%           2.70%
2.68%           3.15%
Expenses                                              1.68%           1.70%           1.69%
1.67%(4)        1.69%(4)
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                 74%             37%             40%
18%             24%



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



Net investment income                                           Unchanged
Net realized and unrealized gain (loss)                         Unchanged
Net investment income ratio                                         2.47%


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

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

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.



                       29 OPPENHEIMER CAPITAL INCOME FUND




FINANCIAL HIGHLIGHTS  Continued
- --------------------------------------------------------------------------------




                                                                              PERIOD ENDED
CLASS N                                                                 AUGUST 31, 2001(1)
=============================================================================================

PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                                                $12.96
- ---------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                                                  .28 (2)
Net realized and unrealized gain (loss)                                               (.30)(2)
                                                                                    ---------
Total income (loss) from
investment operations                                                                 (.02)
- ---------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                                                  (.25)
Distributions from net realized gain                                                    --
                                                                                    ---------
Total dividends and/or distributions
to shareholders                                                                       (.25)
- ---------------------------------------------------------------------------------------------
Net asset value, end of period                                                      $12.69
                                                                                    =========

=============================================================================================
TOTAL RETURN, AT NET ASSET VALUE(3)                                                  (0.18)%
- ---------------------------------------------------------------------------------------------

=============================================================================================
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)                                              $648
- ---------------------------------------------------------------------------------------------
Average net assets (in thousands)                                                     $214
- ---------------------------------------------------------------------------------------------
Ratios to average net assets:(4)
Net investment income                                                                 2.94%(2)
Expenses                                                                              1.17%
- ---------------------------------------------------------------------------------------------
Portfolio turnover rate                                                                 74%




1.  For the period from March 1, 2001 (inception of offering) to August 31,
    2001.

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



Net investment income                                           Unchanged
Net realized and unrealized gain (loss)                         Unchanged
Net investment income ratio                                         2.97%


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

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.



                       30 OPPENHEIMER CAPITAL INCOME FUND


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


================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Capital Income Fund (the Fund) is registered under the Investment
Company Act of 1940, as amended, as an open-end management investment company.
The Fund's investment objective is to seek as much current income as is
compatible with prudent investment. The Fund's investment advisor is
OppenheimerFunds, Inc. (the Manager).
     The Fund offers Class A, Class B, Class C and Class N shares. Class A
shares are sold at their offering price, which is normally net asset value plus
a front-end sales charge. Class B, Class C and Class N shares are sold without a
front-end sales charge but may be subject to a contingent deferred sales charge
(CDSC). Class N shares are sold only through retirement plans. Retirement plans
that offer Class N shares may impose charges on those accounts. All classes of
shares have identical rights to earnings, assets and voting privileges, except
that each class has its own expenses directly attributable to that class and
exclusive voting rights with respect to matters affecting that class. Classes A,
B, C and N have separate distribution and/or service plans. Class B shares will
automatically convert to Class A shares six years after the date of purchase.
The following is a summary of significant accounting policies consistently
followed by the Fund.
- --------------------------------------------------------------------------------
SECURITIES VALUATION. Securities listed or traded on National Stock Exchanges or
other domestic or foreign exchanges are valued based on the last sale price of
the security traded on that exchange prior to the time when the Fund's assets
are valued. In the absence of a sale, the security is valued at the last sale
price on the prior trading day, if it is within the spread of the closing bid
and asked prices, and if not, at the closing bid price. Securities (including
restricted securities) for which quotations are not readily available are valued
primarily using dealer-supplied valuations, a portfolio pricing service
authorized by the Board of Trustees, or at their fair value. Fair value is
determined in good faith under consistently applied procedures under the
supervision of the Board of Trustees. Short-term "money market type" debt
securities with remaining maturities of sixty days or less are valued at
amortized cost (which approximates market value).
- --------------------------------------------------------------------------------
STRUCTURED NOTES. The Fund invests in structured notes whose market values and
redemption prices are linked to the market value of specific securities. The
structured notes are leveraged, which increases the Fund's exposure to changes
in prices of the underlying securities and increases the volatility of each
note's market value relative to the change in the underlying security prices.
Fluctuations in value of these securities are recorded as unrealized gains and
losses in the accompanying financial statements. The Fund records a realized
gain or loss when a structured note is sold or matures. As of August 31, 2001,
the market value of these securities comprised 0.7% of the Fund's net assets,
and resulted in unrealized gains in the current period of $1,817,166.



                       31 OPPENHEIMER CAPITAL INCOME FUND




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


================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES Continued
SECURITIES PURCHASED ON A WHEN-ISSUED OR FORWARD COMMITMENT BASIS. Delivery and
payment for securities that have been purchased by the Fund on a when-issued
basis can take place a month or more after the trade date. Normally the
settlement date occurs within six months after the trade date; however, the Fund
may, from time to time, purchase securities whose settlement date extends beyond
six months or more beyond trade date. During this period, such securities do not
earn interest, are subject to market fluctuation and may increase or decrease in
value prior to their delivery. The Fund maintains segregated assets with a
market value equal to or greater than the amount of its purchase commitments.
The purchase of securities on a when-issued or forward commitment basis may
increase the volatility of the Fund's net asset value to the extent the Fund
makes such purchases while remaining substantially fully invested. As of August
31, 2001, the Fund had entered into outstanding net when-issued or forward
commitments of $147,755,410.
     In connection with its ability to purchase securities on a when-issued
basis, the Fund may enter into mortgage dollar-rolls in which the Fund sells
securities for delivery in the current month and simultaneously contracts with
the same counterparty to repurchase similar (same type, coupon and maturity) but
not identical securities on a specified future date. The Fund records each
dollar-roll as a sale and a new purchase transaction.
- --------------------------------------------------------------------------------
FOREIGN CURRENCY TRANSLATION. The accounting records of the Fund are maintained
in U.S. dollars. Prices of securities denominated in foreign currencies are
translated into U.S. dollars at the closing rates of exchange. Amounts related
to the purchase and sale of foreign securities and investment income are
translated at the rates of exchange prevailing on the respective dates of such
transactions.
     The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS. The Fund requires its custodian bank to take possession,
to have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
- --------------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated daily to
each class of shares based upon the relative proportion of net assets
represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.



                       32 OPPENHEIMER CAPITAL INCOME FUND




- --------------------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required.
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date.
- --------------------------------------------------------------------------------
CLASSIFICATION OF DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Net investment
income (loss) and net realized gain (loss) may differ for financial statement
and tax purposes primarily because of the recognition of certain foreign
currency gains (losses) as ordinary income (loss) for tax purposes. The
character of dividends and distributions made during the fiscal year from net
investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to timing of
dividends and distributions, the fiscal year in which amounts are distributed
may differ from the fiscal year in which the income or realized gain was
recorded by the Fund.
     The Fund adjusts the classification of distributions to shareholders to
reflect the differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly, during the
year ended August 31, 2001, amounts have been reclassified to reflect an
increase in paid-in capital of $7,018,298, an increase in undistributed net
investment income of $322,898, and a decrease in accumulated net realized gain
on investments of $7,341,196. This reclassification includes $7,018,298
distributed in connection with Fund share redemptions which increased paid-in
capital and reduced accumulated net realized gain. Net assets of the Fund were
unaffected by the reclassifications.
- --------------------------------------------------------------------------------
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, which includes accretion of discount and amortization
of premium, is accrued as earned.
- --------------------------------------------------------------------------------
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade date.
Gains and losses on securities sold are determined on the basis of identified
cost.
- --------------------------------------------------------------------------------
OTHER. The Fund adopted the provisions of the AICPA Audit and Accounting Guide
for Investment Companies, as revised, effective for fiscal years beginning after
December 15, 2000. The Fund elected to begin amortizing premiums on debt
securities effective January 1, 2001. Prior to this date, the Fund did not
amortize premiums on debt securities. The cumulative effect of this accounting
change had no impact on the total net assets of the Fund, but resulted in a
$1,761,642 decrease to cost of securities and a corresponding $1,761,642
increase in net unrealized appreciation, based on securities held as of December
31, 2000. For the year ended August 31, 2001, interest income decreased by



                       33 OPPENHEIMER CAPITAL INCOME FUND




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


================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES Continued
$846,086, net realized gain on investments decreased by $1,068,218, and the
change in net unrealized depreciation on investments decreased by $1,914,304.
     The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates.

================================================================================
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of no par value shares of
beneficial interest of each class. Transactions in shares of beneficial
interest were as follows:



                                          YEAR ENDED AUGUST 31, 2001(1)                YEAR ENDED AUGUST 31, 2000
                                            SHARES               AMOUNT               SHARES               AMOUNT
- -------------------------------------------------------------------------------------------------------------------

CLASS A
Sold                                    19,693,851        $ 253,926,557           19,575,634        $ 241,088,319
Dividends and/or
distributions reinvested                13,680,385          168,977,357           25,370,714          299,536,203
Redeemed                               (26,145,434)        (334,782,975)         (73,658,611)        (888,956,691)

- ----------------------------------------------------------------------------
Net increase (decrease)                  7,228,802        $  88,120,939          (28,712,263)       $(348,332,169)

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

- -------------------------------------------------------------------------------------------------------------------
CLASS B
Sold                                     7,837,432        $  99,951,476            5,302,692        $  64,844,082
Dividends and/or
distributions reinvested                 2,479,247           30,352,277            5,572,573           65,132,048
Redeemed                                (9,451,946)        (120,611,133)         (27,234,627)        (328,736,892)

- ----------------------------------------------------------------------------
Net increase (decrease)                    864,733        $   9,692,620          (16,359,362)       $(198,760,762)

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

- -------------------------------------------------------------------------------------------------------------------
CLASS C
Sold                                     3,211,146        $  41,111,852            1,053,764        $  13,049,521
Dividends and/or
distributions reinvested                   401,329            4,914,815              882,449           10,315,715
Redeemed                                (2,251,323)         (28,689,495)          (5,023,386)         (60,664,185)

- ----------------------------------------------------------------------------
Net increase (decrease)                  1,361,152        $  17,337,172           (3,087,173)       $ (37,298,949)

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

- -------------------------------------------------------------------------------------------------------------------
CLASS N
Sold                                        50,932        $     658,442                   --        $          --
Dividends and/or
distributions reinvested                       103                1,341                   --                   --
Redeemed                                        --                   --                   --                   --

- ----------------------------------------------------------------------------
Net increase (decrease)                     51,035        $     659,783                   --        $          --

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



1.   For the year ended August 31, 2001, for Class A, B and C shares and for the
     period from March 1, 2001 (inception of offering) to August 31, 2001, for
     Class N shares.



                       34 OPPENHEIMER CAPITAL INCOME FUND





================================================================================
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the year ended August 31, 2001, were
$2,426,890,936 and $2,243,512,209, respectively.

As of August 31, 2001, unrealized appreciation (depreciation) based on cost of
securities for federal income tax purposes of $2,576,810,842 was:



     Gross unrealized appreciation                      $ 714,693,283
     Gross unrealized depreciation                       (144,298,280)
                                                        -------------
     Net unrealized appreciation (depreciation)         $ 570,395,003
                                                        =============



================================================================================
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee of 0.75% of
the first $100 million of average annual net assets, 0.70% of the next $100
million, 0.65% of the next $100 million, 0.60% of the next $100 million, 0.55%
of the next $100 million and 0.50% of average annual net assets in excess of
$500 million. The Fund's management fee for the year ended August 31, 2001, was
an annualized rate of 0.52%.
- --------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Fund. The Fund pays
OFS an agreed-upon per account fee.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN FEES. Under its General Distributor's Agreement
with the Manager, the Distributor acts as the Fund's principal underwriter in
the continuous public offering of the different classes of shares of the Fund.

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



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

August 31, 2001           $2,709,328        $813,198           $286,624         $2,326,642         $173,514
$6,563


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



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

August 31, 2001                               $7,594           $643,432           $24,027               $--




                       35 OPPENHEIMER CAPITAL INCOME FUND




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


================================================================================
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
     The Fund has adopted a Service Plan for Class A shares and Distribution and
Service Plans for Class B, Class C and Class N shares under Rule 12b-1 of the
Investment Company Act. Under those plans the Fund pays the Distributor for all
or a portion of its costs incurred in connection with the distribution and/or
servicing of the shares of the particular class.
- --------------------------------------------------------------------------------
CLASS A SERVICE PLAN FEES. Under the Class A service plan, the Distributor
currently uses the fees it receives from the Fund to pay brokers, dealers and
other financial institutions. The Class A service plan permits reimbursements to
the Distributor at a rate of up to 0.25% of average annual net assets of Class A
shares purchased. The Distributor makes payments to plan recipients quarterly at
an annual rate not to exceed 0.25% of the average annual net assets consisting
of Class A shares of the Fund. For the year ended August 31, 2001, payments
under the Class A plan totaled $5,698,019, all of which were paid by the
Distributor to recipients, and included $370,332 paid to an affiliate of the
Manager. Any unreimbursed expenses the Distributor incurs with respect to Class
A shares in any fiscal year cannot be recovered in subsequent years.
- --------------------------------------------------------------------------------
CLASS B, CLASS C AND CLASS N DISTRIBUTION AND SERVICE PLAN FEES. Under each
plan, service fees and distribution fees are computed on the average of the net
asset value of shares in the respective class, determined as of the close of
each regular business day during the period. The Class B, Class C and Class N
plans provide for the Distributor to be compensated at a flat rate, whether the
Distributor's distribution expenses are more or less than the amounts paid by
the Fund under the plan during the period for which the fee is paid.
     The Distributor retains the asset-based sales charge on Class B shares. The
Distributor retains the asset-based sales charge on Class C shares during the
first year the shares are outstanding. The Distributor retains the asset-based
sales charge on Class N shares. The asset-based sales charges on Class B, Class
C and Class N shares allow investors to buy shares without a front-end sales
charge while allowing the Distributor to compensate dealers that sell those
shares.
     The Distributor's actual expenses in selling Class B, Class C and Class N
shares may be more than the payments it receives from the contingent deferred
sales charges collected on redeemed shares and asset-based sales charges from
the Fund under the plans. If any plan is terminated by the Fund, the Board of
Trustees may allow the Fund to continue payments of the asset-based sales charge
to the Distributor for distributing shares before the plan was terminated. The
plans allow for the carryforward of distribution expenses, to be recovered from
asset-based sales charges in subsequent fiscal periods.



                       36 OPPENHEIMER CAPITAL INCOME FUND




Distribution fees paid to the Distributor for the year ended August 31, 2001,
were as follows:



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

Class B Plan                     $4,692,665       $3,631,050      $11,679,144              2.45%
Class C Plan                        802,801           97,524        1,835,823              2.05
Class N Plan                            530              337               --                --



================================================================================
5. FOREIGN CURRENCY CONTRACTS
A foreign currency contract is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate. The Fund may enter into foreign
currency contracts for operational purposes and to seek to protect against
adverse exchange rate fluctuations. Risks to the Fund include the potential
inability of the counterparty to meet the terms of the contract.
     The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates as provided by
a reliable bank, dealer or pricing service. Unrealized appreciation and
depreciation on foreign currency contracts are reported in the Statement of
Assets and Liabilities as a receivable or payable and in the Statement of
Operations with the change in unrealized appreciation or depreciation.
     The Fund may realize a gain or loss upon the closing or settlement of the
foreign currency transactions. Such realized gains and losses are reported with
all other foreign currency gains and losses in the Statement of Operations.


================================================================================
6. OPTION ACTIVITY
The Fund may buy and sell put and call options, or write put and covered call
options on portfolio securities in order to produce incremental earnings or
protect against changes in the value of portfolio securities.
     The Fund generally purchases put options or writes covered call options to
hedge against adverse movements in the value of portfolio holdings. When an
option is written, the Fund receives a premium and becomes obligated to sell or
purchase the underlying security at a fixed price, upon exercise of the option.
     Options are valued daily based upon the last sale price on the principal
exchange on which the option is traded and unrealized appreciation or
depreciation is recorded. The Fund will realize a gain or loss upon the
expiration or closing of the option transaction. When an option is exercised,
the proceeds on sales for a written call option, the purchase cost for a written
put option, or the cost of the security for a purchased put or call option is
adjusted by the amount of premium received or paid.



                       37 OPPENHEIMER CAPITAL INCOME FUND





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


================================================================================
6. OPTION ACTIVITY Continued
     Securities designated to cover outstanding call options are noted in the
Statement of Investments where applicable. Shares subject to call, expiration
date, exercise price, premium received and market value are detailed in a note
to the Statement of Investments. Options written are reported as a liability in
the Statement of Assets and Liabilities. Realized gains and losses are reported
in the Statement of Operations.
     The risk in writing a call option is that the Fund gives up the opportunity
for profit if the market price of the security increases and the option is
exercised. The risk in writing a put option is that the Fund may incur a loss if
the market price of the security decreases and the option is exercised. The risk
in buying an option is that the Fund pays a premium whether or not the option is
exercised. The Fund also has the additional risk of not being able to enter into
a closing transaction if a liquid secondary market does not exist.

Written option activity for the year ended August 31, 2001, was as follows:



                                                CALL OPTIONS                        PUT OPTIONS
                                 -----------------------------------------------------------------
                                  NUMBER OF        AMOUNT OF        NUMBER OF         AMOUNT OF
                                  CONTRACTS         PREMIUMS        CONTRACTS          PREMIUMS
- --------------------------------------------------------------------------------------------------

Options outstanding as of
August 31, 2000                      10,000     $  4,440,182              291       $   475,623
Options written                     112,191       24,138,451           45,429        13,892,033
Options closed or expired           (93,891)     (24,070,668)         (34,564)       (9,379,793)
Options exercised                    (2,275)        (739,482)          (4,310)       (3,021,740)
                                 -----------------------------------------------------------------
Options outstanding as of
August 31, 2001                      26,025     $  3,768,483            6,846       $ 1,966,123
                                 =================================================================



================================================================================
7. ILLIQUID OR RESTRICTED SECURITIES
As of August 31, 2001, investments in securities included issues that are
illiquid or restricted. Restricted securities are often purchased in private
placement transactions, are not registered under the Securities Act of 1933, may
have contractual restrictions on resale, and are valued under methods approved
by the Board of Trustees as reflecting fair value. A security may also be
considered illiquid if it lacks a readily available market or if its valuation
has not changed for a certain period of time. The Fund intends to invest no more
than 10% of its net assets (determined at the time of purchase and reviewed
periodically) in illiquid or restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors, are not
subject to that limitation. The aggregate value of illiquid or restricted
securities subject to this limitation as of August 31, 2001, was $80,252,489,
which represents 2.65% of the Fund's net assets, of which $40,044,600 is
considered restricted. Information concerning restricted securities is as
follows:



                                                                       VALUATION        UNREALIZED
                                                                           AS OF      APPRECIATION
SECURITY                     ACQUISITION DATE             COST   AUGUST 31, 2001    (DEPRECIATION)
- ----------------------------------------------------------------------------------------------------

BONDS
CSK Auto Corp.,
7% Cv. Sub. Nts., 8/1/06              8/14/01      $30,000,000       $40,044,600       $10,044,600




                       38 OPPENHEIMER CAPITAL INCOME FUND




================================================================================
8. BANK BORROWINGS
The Fund may borrow from a bank for temporary or emergency purposes including,
without limitation, funding of shareholder redemptions provided asset coverage
for borrowings exceeds 300%. The Fund has entered into an agreement which
enables it to participate with other Oppenheimer funds in an unsecured line of
credit with a bank, which permits borrowings up to $400 million, collectively.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the Federal Funds Rate plus 0.45%. Borrowings are payable 30 days after such
loan is executed. The Fund also pays a commitment fee equal to its pro rata
share of the average unutilized amount of the credit facility at a rate of 0.08%
per annum.
     The Fund had no borrowings outstanding during the year ended or at August
31, 2001.



                       39 OPPENHEIMER CAPITAL INCOME FUND












                                                              Appendix A

                                                          RATINGS DEFINITIONS

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

Moody's Investors Service, Inc.

Long-Term (Taxable) Bond Ratings

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

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

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

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

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

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

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

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

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

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

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

Short-Term Ratings - Taxable Debt

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

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

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

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

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

Standard & Poor's Rating Services

Long-Term Credit Ratings

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

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

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

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

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

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

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

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

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

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

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

Short-Term Issue Credit Ratings

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

A-2:  Obligation is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than
obligations in higher rating categories. However, the obligor's capacity to meet its financial commitment on the obligation is
satisfactory.
A-3: Obligation exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation.

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

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

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

Fitch, Inc.

International Long-Term Credit Ratings

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

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

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

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

Speculative Grade:

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

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

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

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

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

International Short-Term Credit Ratings

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

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

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

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

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

D:     Default. Denotes actual or imminent payment default.









                                                              Appendix B

                                                       Industry Classifications

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








                                                                 C-13
                                                              Appendix C

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

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

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


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


The interpretation of these provisions as to the applicability of a special arrangement or waiver in a particular case is in the sole
discretion of the Distributor or the transfer agent (referred to in this document as the "Transfer Agent") of the particular
Oppenheimer fund. These waivers and special arrangements may be amended or terminated at any time by a particular fund, the
Distributor, and/or OppenheimerFunds, Inc. (referred to in this document as the "Manager").
Waivers that apply at the time shares are redeemed must be requested by the shareholder and/or dealer in the redemption request.
Applicability of Class A Contingent Deferred Sales Charges in Certain Cases

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


         There is no initial sales charge on purchases of Class A shares of any of the Oppenheimer funds in the cases listed below.
However, these purchases may be subject to the Class A contingent deferred sales charge if redeemed within 18 months (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."5 This
waiver provision applies to:

Purchases of Class A shares aggregating $1 million or more.

Purchases of Class A shares by a Retirement Plan that was permitted to purchase such shares at net asset value but subject to a
contingent deferred sales charge prior to March 1, 2001. That included plans (other than IRA or 403(b)(7) Custodial Plans) that: 1)
bought shares costing $500,000 or more, 2) had at the time of purchase 100 or more eligible employees or total plan assets of
$500,000 or more, or 3) certified to the Distributor that it projects to have annual plan purchases of $200,000 or more.
Purchases by an OppenheimerFunds-sponsored Rollover IRA, if the purchases are made:
1)       through a broker, dealer, bank or registered investment adviser that has made special arrangements with the Distributor for
those purchases, or
2)       by a direct rollover of a distribution from a qualified Retirement Plan if the administrator of that Plan has made special
arrangements with the Distributor for those purchases.

Purchases of Class A shares by Retirement Plans that have any of the following record-keeping arrangements:

1)       The record keeping is performed by Merrill Lynch Pierce Fenner & Smith, Inc. ("Merrill Lynch") on a daily valuation basis
for the Retirement Plan. On the date the plan sponsor signs the record-keeping service agreement with Merrill Lynch, the Plan must
have $3 million or more of its assets invested in (a) mutual funds, other than those advised or managed by Merrill Lynch Investment
Management, L.P. ("MLIM"), that are made available under a Service Agreement between Merrill Lynch and the mutual fund's principal
underwriter or distributor, and  (b)  funds advised or managed by MLIM (the funds described in (a) and (b) are referred to as
"Applicable Investments").
2)       The record keeping for the Retirement Plan is performed on a daily valuation basis by a record keeper whose services are
provided under a contract or arrangement between the Retirement Plan and Merrill Lynch. On the date the plan sponsor signs the record
keeping service agreement with Merrill Lynch, the Plan must have $3 million or more of its assets (excluding assets invested in money
market funds) invested in Applicable Investments.
3)       The record keeping for a Retirement Plan is handled under a service agreement with Merrill Lynch and on the date the plan
sponsor signs that agreement, the Plan has 500 or more eligible employees (as determined by the Merrill Lynch plan conversion
manager).

Purchases by a Retirement Plan whose record keeper had a cost-allocation agreement with the Transfer Agent on or before March 1, 2001.
Waivers of Class A Sales Charges of Oppenheimer Funds


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


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


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


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


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


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

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

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

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


A.       Waivers for Redemptions in Certain Cases.


The Class B, Class C and Class N contingent deferred sales charges will be waived for redemptions of shares in the following cases:
Shares redeemed involuntarily, as described in "Shareholder Account Rules and Policies," in the applicable Prospectus.
Redemptions from accounts other than Retirement Plans following the death or disability of the last surviving shareholder, including
a trustee of a grantor trust or revocable living trust for which the trustee is also the sole beneficiary. The death or disability
must have occurred after the account was established, and for disability you must provide evidence of a determination of disability
by the Social Security Administration.
Distributions from accounts for which the broker-dealer of record has entered into a special agreement with the Distributor allowing
this waiver.
Redemptions of Class B shares held by Retirement Plans whose records are maintained on a daily valuation basis by Merrill Lynch or an
independent record keeper under a contract with Merrill Lynch.
Redemptions of Class C shares of Oppenheimer U.S. Government Trust from accounts of clients of financial institutions that have
entered into a special arrangement with the Distributor for this purpose.
Redemptions requested in writing by a Retirement Plan sponsor of Class C shares of an Oppenheimer fund in amounts of $500,000 or more
and made more than 12 months after the Retirement Plan's first purchase of Class C shares, if the redemption proceeds are invested in
Class N shares of one or more Oppenheimer funds.
Distributions8 from Retirement Plans or other employee benefit plans for any of the following purposes:

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

Redemptions of Class B shares or Class C shares under an Automatic Withdrawal Plan from an account other than a Retirement Plan if
the aggregate value of the redeemed shares does not exceed 10% of the account's value annually.


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

The contingent deferred sales charge is also waived on Class B and Class C shares sold or issued in the following cases:
Shares sold to the Manager or its affiliates.
Shares sold to registered management investment companies or separate accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose.

Shares issued in plans of reorganization to which the Fund is a party.
Shares sold to present or former officers, directors, trustees or employees (and their "immediate families" as defined above in
Section I.A.) of the Fund, the Manager and its affiliates and retirement plans established by them for their employees.
Special Sales Charge Arrangements for Shareholders of Certain Oppenheimer Funds Who Were Shareholders of Former Quest for Value Funds

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

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

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

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


A.       Reductions or Waivers of Class A Sales Charges.


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

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

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

Number of Eligible Employees   Initial Sales Charge as a    Initial Sales Charge as a    Concession as % of
or Members                     % of Offering Price          % of Net Amount Invested     Offering Price

- ------------------------------ --------------------------------------------------------------------------------------
- -------------------------------- ---------------------------- --------------------------------- ---------------------
9 or Fewer                       2.50%                        2.56%                             2.00%
- -------------------------------- ---------------------------- --------------------------------- ---------------------
- -------------------------------- ---------------------------- --------------------------------- ---------------------
At least 10 but not more than    2.00%                        2.04%                             1.60%
49
- -------------------------------- ---------------------------- --------------------------------- ---------------------

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

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

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

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

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


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


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

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

A shareholder's account will be credited with the amount of any contingent deferred sales charge paid on the redemption of any Class
A, Class B or Class C shares of the Oppenheimer fund described in this section if the proceeds are invested in the same Class of
shares in that fund or another Oppenheimer fund within 90 days after redemption.
Special Sales Charge Arrangements for Shareholders of Certain Oppenheimer Funds Who Were Shareholders of Connecticut Mutual
Investment Accounts, Inc.

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


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


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

Those shareholders who are eligible for the prior Class A CDSC are:

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


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


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


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

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


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


In addition to the waivers set forth in the Prospectus and in this Appendix, above, the contingent deferred sales charge will be
waived for redemptions of Class A and Class B shares of a Fund and exchanges of Class A or Class B shares of a Fund into Class A or
Class B shares of a Former Connecticut Mutual Fund provided that the Class A or Class B shares of the Fund to be redeemed or
exchanged were (i) acquired prior to March 18, 1996 or (ii) were acquired by exchange from an Oppenheimer fund that was a Former
Connecticut Mutual Fund. Additionally, the shares of such Former Connecticut Mutual Fund must have been purchased prior to March 18,
1996:

1)       by the estate of a deceased shareholder;
2)       upon the disability of a shareholder, as defined in Section 72(m)(7) of the Internal Revenue Code;
3)       for retirement distributions (or loans) to participants or beneficiaries from retirement plans qualified under Sections
401(a) or 403(b)(7)of the Code, or from IRAs, deferred compensation plans created under Section 457 of the Code, or other employee
benefit plans;
4)       as tax-free returns of excess contributions to such retirement or employee benefit plans;
5)       in whole or in part, in connection with shares sold to any state, county, or city, or any instrumentality, department,
authority, or agency thereof, that is prohibited by applicable investment laws from paying a sales charge or concession in connection
with the purchase of shares of any registered investment management company;
6)       in connection with the redemption of shares of the Fund due to a combination with another investment company by virtue of a
merger, acquisition or similar reorganization transaction;
7)       in connection with the Fund's right to involuntarily redeem or liquidate the Fund;
8)       in connection with automatic redemptions of Class A shares and Class B shares in certain retirement plan accounts pursuant
to an Automatic Withdrawal Plan but limited to no more than 12% of the original value annually; or
9)       as involuntary redemptions of shares by operation of law, or under procedures set forth in the Fund's Articles of
Incorporation, or as adopted by the Board of Directors of the Fund.
Special Reduced Sales Charge for Former Shareholders 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%.
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 Income Fund

Internet Web Site:
         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 80217-5270
         1-800-525-7048

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

Independent Auditors
         Deloitte & Touche LLP
         555 Seventeenth Street, Suite 3600
         Denver, Colorado 80202-3942

Legal Counsel
         Myer, Swanson, Adams & Wolf, P.C.
         1600 Broadway
         Denver, Colorado 80202
1234

PX0300SAI.1201

EX-99

                                                    OPPENHEIMER CAPITAL INCOME FUND

                                                               FORM N-1A

                                                                PART C

                                                           OTHER INFORMATION


Item 23. Exhibits

Amended and Restated Declaration of Trust dated November 22, 2000: Previously filed with Registrant's Post-Effective Amendment No.
54, 12/18/00, to Registrant's Registration Statement No. 2-33043 and incorporated herein by reference.


(b)      By-Laws as amended through October 24, 2000: Filed with Registrant's Post-Effective Amendment No. 55, 10/22/01, and
incorporated herein by reference.


(c)      (i) Specimen Class A Share Certificate: Filed herewith.

         (ii) Specimen Class B Share Certificate: Filed herewith.

         (iii) Specimen Class C Share Certificate: Filed herewith.

         (iv) Specimen Class N Share Certificate: Filed herewith.

(d)      Investment Advisory Agreement, dated April 16, 1998. Previously filed with Registrant's Post-Effective amendment No. 50,
10/23/98, and incorporated herein by reference.

(e)      (i) General Distributor's Agreement dated October 13, 1992: Previously filed with Registrant's Post-Effective Amendment No.
42, 10/28/94, and incorporated herein by reference.


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

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

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

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

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


Form of Deferred Compensation Plan for Disinterested Trustees/Directors: Previously Filed with Post-Effective Amendment No. 40 to the
Registration Statement of Oppenheimer High Yield Fund (Reg. No. 2-62076), 10/27/98, and incorporated herein by reference.

(i) Custody Agreement dated October 6, 1992: Filed with Post-Effective Amendment No. 37, to Registrant's Registration Statement dated
10/28/92, and refiled with Post-Effective Amendment No. 42, 10/28/94, pursuant to Item 102 of Regulation S-T, and incorporated herein
by reference.


(ii) Amended and Restated Foreign Custody Manager Agreement dated April 3, 2001 between Registrant and The Bank of New York:
Previously filed with Post-Effective Amendment No. 34 to the Registration Statement of Oppenheimer Gold & Special Minerals Fund (Reg.
2-82590), 10/26/01, and incorporated herein by reference.

(iii) Amendment dated April 3, 2001 to Custody Agreement dated 11/12/92: Previously filed with Post-Effective Amendment No. 34 to the
Registration Statement of Oppenheimer Gold & Special Minerals Fund (Reg. No. 2-82590), October 26, 2001, and incorporated herein by
reference.


(h)      Not applicable.

(i)      Opinion and Consent of Counsel dated September 30, 1970: Previously filed with Registrant's Initial Registration Statement
and refiled with Post Effective amendment No. 42, 10/28/94, pursuant to Item 102 of Regulation S-T.


(j)Independent Auditors Consent: Filed herewith.


(k) Not applicable.

(l) Not applicable.

(m)      (i) Service Plan and Agreement for Class A shares under Rule 12b-1 of the Investment Company Act dated June 22, 1993:
Previously filed with Post-Effective Amendment No. 38 to Registrant's Registration Statement, 8/3/93, and incorporated herein by
reference.

         (ii) Amended and Restated Distribution and Service Plan and Agreement for Class B shares under Rule 12b-1 of the Investment
Company Act dated July 16, 1997: Previously filed with Registrant's Post-Effective Amendment No. 49, 12/16/97, and incorporated
herein by reference.

         (iii) Amended and Restated Distribution and Service Plan and Agreement for Class C shares under Rule 12b-1 of the Investment
Company Act dated July 16, 1997: Previously filed with Registrant's Post-Effective Amendment No. 49, 12/16/97, and incorporated
herein by reference.

         (iv) Distribution and Service Plan and Agreement for Class N shares under Rule 12b-1 of the Investment Company Act dated
October 24, 2000: Previously filed with Registrant's Post-Effective Amendment No. 54, 12/18/00, to Registrant's Registration
Statement No. 2-33043 and incorporated herein by reference.

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


(o)      (i) Powers of Attorney for all Trustees/Directors and Officers except for John Murphy (including Certified Board
Resolutions): Previously filed with Pre-Effective Amendment No. 2 to the Registration Statement of Oppenheimer Select Managers (Reg.
No. 333-49774), 2/8/01, and incorporated herein by reference.

         (ii) Power of Attorney for John Murphy: Previously filed with Post-Effective Amendment No. 45 to the Registration Statement
of Oppenheimer High Yield Fund (Reg. No. 2-62076), 10/26/01, and incorporated herein by reference.

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


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

None.

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

Reference is made to the provisions of Article Seven of Registrant's Amended and Restated Declaration of Trust filed as Exhibit 23(a)
to this Registration Statement, and incorporated herein by reference.

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

Item 26. - Business and Other Connections of the Investment Adviser

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

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

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

Timothy L. Abbuhl,
Assistant Vice President   None.

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

Charles E. Albers,
Senior Vice President      None.

Edward J. Amberger,
Assistant Vice President   None.

Janette Aprilante,

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


Hany S. Ayad,
Assistant Vice President   None.

Victor W. Babin,
Senior Vice President      None.

Bruce L. Bartlett,
Senior Vice President      None.

Victoria Baska,
Assistant Vice President   None.

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

Kevin Baum,
Assistant Vice President   None.

Connie Bechtolt,
Assistant Vice President   None.


Robert Behal
Assistant Vice President   None.


Kathleen Beichert,
Vice President             None.

Rajeev Bhaman,
Vice President             None.

Mark Binning,
Assistant Vice President   None.

Robert J. Bishop,
Vice President             None.

John R. Blomfield,
Vice President             None.

Chad Boll,
Assistant Vice President   None

Lowell Scott Brooks,
Vice President             None.

Scott Burroughs
Vice President             None.


Claudia Calich
Assistant Vice President   None.


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

Michael A. Carbuto,
Vice President             None


Ronald G. Chibnik
Assistant Vice President   None.

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



Peter V. Cocuzza,
Vice President    None.

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


John Damian
Vice President    None.

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

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

John M. Davis,
Assistant Vice President   None.

Robert A. Densen,
Senior Vice President      None.

Ruggero de'Rossi,
Vice President    Formerly, Chief Strategist at ING Barings (July
1998 - March 2000).

Craig P. Dinsell,
Executive Vice President   None.

Randall C. Dishmon,
Assistant Vice President   None.

Steven D. Dombrower,
Vice President    None.

Bruce C. Dunbar,
Vice President    None.

Richard Edmiston,
Assistant Vice President   None.

Daniel R. Engstrom,
Assistant Vice President   None.

Armand B. Erpf,
Assistant Vice President   None.

George R. Evans,
Vice President    None.

Edward N. Everett,
Vice President    None.

George Fahey,
Vice President    None.

Leslie A. Falconio,

Vice President    Vice President of HarbourView Asset Management Corporation.


Scott T. Farrar,

Vice President    Assistant Treasurer of OppenheimerFunds International Ltd. And Oppenheimer Millennium Funds plc; an officer of other
Oppenheimer funds.


Katherine P. Feld,

Vice President, Senior Counsel      Assistant Secretary of the Denver-based Oppenheimer funds; Vice President of OppenheimerFunds
Distributor, Inc.; Director of Centennial Asset Management Corporation; Vice President of Oppenheimer Real Asset Management, Inc.


Ronald H. Fielding,
Chairman: Rochester Division        Director of ICI Mutual Insurance Company; Governor of St. John's College; Director of
International Museum of Photography at George Eastman House; an officer and/or portfolio manager of certain Oppenheimer funds.


Paul Fitzsimmons
Assistant Vice President   None.


P. Lyman Foster,
Senior Vice President      Formerly, Vice President of Prudential Investments (August 1999-April 2000).

David J. Foxhoven,

Assistant Vice President   Assistant Vice President of OppenheimerFunds Legacy Program.


Colleen M. Franca,
Assistant Vice President   None.

Crystal French,
Vice President    None.

Dan P. Gangemi,
Vice President    None.

Subrata Ghose,
Assistant Vice President   Formerly, Equity Analyst at Fidelity Investments (1995 - March 2000).

Charles W. Gilbert,
Assistant Vice President   None.

Alan C. Gilston,
Vice President    None.

Jill E. Glazerman,
Vice President    None.

Paul M. Goldenberg,
Vice President    None.


Mikhail Y. Goldverg,
Assistant Vice President   None.


Laura Granger,

Vice President    Formerly, Portfolio Manager at Fortis Advisors +-(July 1998-October 2000).


Jeremy H. Griffiths,
Executive Vice President,
Chief Financial Officer and

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


Robert Grill,
Senior Vice President      None.

Robert Guy,
Senior Vice President      None.

Robert Haley,
Assistant Vice President   None.

Kelly Haney,
Assistant Vice President   None.

Thomas B. Hayes,
Vice President    None.

Dorothy F. Hirshman,
Vice President    None.

Merryl I. Hoffman,

Vice President    Secretary of HarbourView Asset Management Corporation, OFI Private Investments, Inc. and OAM Institutional, Inc.;
Assistant Secretary of OppenheimerFunds Legacy Program


Merrell I. Hora,
Vice President    None.

Scott T. Huebl,

Vice President    Assistant Vice President of OppenheimerFunds Legacy Program.

Margaret Hui,
Assistant Vice President   None.


James G. Hyland,
Assistant Vice President   None.

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

Kathleen T. Ives,

Vice President    Assistant Secretary of the Denver-based Oppenheimer funds, Vice President of OppenheimerFunds Distributor, Inc; Vice
President and Assistant Secretary of Shareholder Services, Inc.; Assistant Secretary of Shareholder Financial Services, Inc. and
OppenheimerFunds Legacy Program


William Jaume,

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


Frank V. Jennings,
Vice President    None.

Lewis A. Kamman,
Vice President    None.

Jennifer E. Kane,
Assistant Vice President   None.

Lynn O. Keeshan,
Senior Vice President      None.

Thomas W. Keffer,
Senior Vice President      None.

Kristina J. Keller,
Vice President    None.

Michael Keogh,
Vice President    None.

Michael Kirkpatrick,
Assistant Vice President   None.


Theresa Kong,
Assistant Vice President   None.


Walter G. Konops,
Assistant Vice President   None.

Avram D. Kornberg,
Senior Vice President      None.

Dimitrios Kourkoulakos,
Assistant Vice President.  None.

John S. Kowalik,

Senior Vice President      Senior Vice President of HarbourView Asset Management Corporation; Vice President of Oppenheimer Real Asset
Management, Inc.


Joseph Krist,
Assistant Vice President   None.


Guy E. Leaf,
Vice President    None.


Christopher M. Leavy,
Senior Vice President      Formerly Vice President and Portfolio Manager at Morgan Stanley Investment Management (1997-September 2000).

Dina C. Lee,
Assistant Vice President and

Assistant Counsel Formerly an attorney and Assistant Secretary at Van Eck Global (until December 2000).

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


Michael S. Levine
Vice President    None.


Gang Li,
Assistant Vice President   None.


Shanquan Li,
Vice President    None.

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


Bill Linden,
Assistant Vice President   None.


Malissa B. Lischin,
Assistant Vice President   Formerly Associate Manager, Investment Management Analyst at Prudential (1996 - March 2000).


David P. Lolli,
Assistant Vice President   None.


Daniel G. Loughran
Vice President: Rochester Division  None.


Patricia Lovett,
Vice President    Vice President of Shareholder Financial Services, Inc.


David M. Mabry,

Vice President    Vice President of Oppenheimer Trust Company.


Steve Macchia,
Vice President    None.

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

Philip T. Masterson,
Vice President and
Associate Counsel None.

Lisa Migan,
Assistant Vice President   None.


Andrew J. Mika,
Senior Vice President      None.


Joy Milan,
Vice President    None.

Denis R. Molleur,
Vice President and

Senior Counsel    Assistant Secretary of the Denver-based Oppenheimer funds.


Nikolaos D. Monoyios,
Vice President    None.

John Murphy,
Chairman, President, Chief

Executive Officer and Director      Director (since July 2001) of OppenheimerFunds Distributor, Inc., Centennial Asset Management
Corporation and HarbourView Asset Management Corporation; President and a director (since July 2001) of Oppenheimer Acquisition
Corp., Oppenheimer Partnership Holdings, Inc. and Oppenheimer Real Asset Management, Inc.; Chairman and a director (since July 2001)
of Shareholder Financial Services, Inc. and Shareholder Services, Inc.; a director (Class A) (since November 2001) of Trinity
Investment Management Corporation; a director (since July 2001) of OFI Private Investments, Inc., OAM Institutional, Inc. and Tremont
Advisers, Inc.; formerly Trustee (1999-2001) of MML Series Investment Fund, an open-end investment company; Chief Operating Officer
(August 2000 - July 2001) of OppenheimerFunds, Inc.


Thomas J. Murray,
Vice President    None.

Kenneth Nadler,
Vice President    None.

David Negri,

Senior Vice President      Senior Vice President of HarbourView Asset Management Corporation


Barbara Niederbrach,

Assistant Vice President   Assistant Vice President of Shareholder Services, Inc..


Robert A. Nowaczyk,
Vice President    None.

Raymond C. Olson,

Assistant Vice President   Treasurer of Centennial Asset Management Corporation


Gina M. Palmieri,

Vice President    Vice President of HarbourView Asset Management Corporation.

Mark Paris,
Assistant Vice President   None.


Frank J. Pavlak,
Vice President    None.

David P. Pellegrino,
Vice President    None.

James F. Phillips,
Assistant Vice President   None.

Jane C. Putnam,
Vice President    None.

Michael E. Quinn,
Vice President    None.

Julie S. Radtke,
Vice President    None.

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

Thomas P. Reedy,
Vice President    Vice President of HarbourView Asset Management Corporation.

John Reinhardt,
Vice President: Rochester Division  None

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


Rob Robis,
Assistant Vice President   None.


Antoinette Rodriguez,
Assistant Vice President   None.

Jeffrey S. Rosen,
Vice President    None.

Richard H. Rubinstein,
Senior Vice President      None.

James H. Ruff,

Executive Vice President   President and director of OppenheimerFunds Distributor, Inc. and Centennial Asset Management Corporation;
Executive Vice President (since March 2000) of OFI Private Investments, Inc.


Andrew Ruotolo

Executive Vice President   President and director of Shareholder Services, Inc. and Shareholder Financial Services, Inc.; director of
Tremont Advisers, Inc.


Rohit Sah,
Assistant Vice President   None.

Valerie Sanders,
Vice President    None.

Kenneth Schlupp
Vice President    Vice President of OFI Private Investments, Inc.

Jeffrey R. Schneider,
Vice President    None.

Ellen P. Schoenfeld,
Vice President    None.

Allan P. Sedmak
Assistant Vice President   None.

Jennifer L. Sexton,

Vice President    Vice President of OFI Private Investments, Inc.


Martha A. Shapiro,
Vice President    None.

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


Bonnie Sherman,
Assistant Vice President   None.

Enrique H. Smith,
Assistant Vice President   None.


Richard A. Soper,
Vice President    None.

Keith J. Spencer,
Vice President    None.

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

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

Arthur P. Steinmetz,

Senior Vice President      Senior Vice President of HarbourView Asset Management Corporation.


Jayne M. Stevlingson,
Vice President    None.

Gregory J. Stitt,
Vice President    None.

John P. Stoma,
Senior Vice President      None.


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


Deborah A. Sullivan,
Assistant Vice President,

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


Mary Sullivan,
Assistant Vice President   None.

Kevin L. Surrett,
Assistant Vice President   None.

James C. Swain,
Vice Chairman of the Board Chairman, CEO and Trustee, Director or Managing Partner of the Denver-based Oppenheimer Funds; formerly,
President and Director of Centennial Asset Management Corporation and Chairman of the Board of Shareholder Services, Inc.

Susan B. Switzer,
Vice President    None.

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


Eamon Tubridy,
Assistant Vice President   None.

Cameron Ullyat,
Assistant Vice President   None.


Mark S. Vandehey,

Vice President    Vice President of Centennial Asset Management Corporation and Shareholder Service, Inc.,

Maureen VanNorstrand,
Assistant Vice President   None.


Phillip F. Vottiero,
Vice President    None.

Samuel Sloan Walker,

Vice President    Vice President of HarbourView Asset Management Corporation.


Teresa M. Ward,
Vice President    None.

Jerry A. Webman,

Senior Vice President      Senior Vice President of HarbourView Asset Management Corporation.


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

Barry D. Weiss,
Vice President    Formerly with Fitch IBCA (1996 - January 2000).

Christine Wells,
Vice President    None.

Joseph J. Welsh,
Vice President    None.

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

William L. Wilby,
Senior Vice President      Senior Investment Officer, Director of International Equities; Senior Vice President of HarbourView Asset
Management Corporation.

Donna M. Winn,

Senior Vice President      Director and President (since April 2000) of OppenheimerFunds Legacy Program; President, Chief Executive
Officer and director (since March 2000) of OFI Private Investments, Inc.


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

Brian W. Wixted,
Senior Vice President and
Treasurer         Treasurer (since March 1999) of HarbourView Asset Management Corporation, Shareholder Services, Inc., Oppenheimer
Real Asset Management Corporation, Shareholder Financial Services, Inc. and Oppenheimer Partnership Holdings, Inc., of OFI Private
Investments, Inc. (since March 2000) and of OppenheimerFunds International Ltd. and of Oppenheimer Millennium Funds plc (since May
2000), of OAM Institutional, Inc. (since February 2001); Treasurer and Chief Financial Officer (since May 2000) of Oppenheimer Trust
Company; Assistant Treasurer (since March 1999) of Oppenheimer Acquisition Corp. and of OppenheimerFunds Legacy Program (since April
2000); an officer of other Oppenheimer funds.


Carol E. Wolf,

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

Kurt Wolfgruber,
Senior Vice President      Senior Investment Officer, Director of Domestic Equities; member of the Investment Product Review Committee
and the Executive Committee of HarbourView Asset Management Corporation.

Caleb C. Wong,
Vice President    None.


Jill M. Zachman,
Vice President: Rochester Division  None.

Robert G. Zack,
Senior Vice President and
Acting General Counsel     General Counsel and director of OppenheimerFunds Distributor, Inc., General Counsel of Centennial Asset
Management Corporation; Senior Vice President and General Counsel of HarbourView Asset Management Corporation and OAM Institutional,
Inc.; Assistant Secretary of OppenheimerFunds International Ltd. And Oppenheimr Millennium Funds plc; Vice President and director of
Oppenheimer Partnership Holdings, Inc.; director of Oppenheimer Real Asset Management, Inc.; Senior Vice President, General Counsel
and director of Shareholder Financial Services, Inc., Shareholder Services, Inc., OFI Private Investments, Inc. and Oppenheimer Trust
Company; Vice President of OppenheimerFunds Legacy Program; an officer of other Oppenheimer funds; formerly Associate General Counsel
(May 1981-October 2001).


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

Mark D. Zavanelli,
Vice President    None.

Alex Zhou,
Assistant Vice President   None.

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

Susan Zimmerman,
Vice President    None.

The Oppenheimer Funds include the New York-based Oppenheimer Funds, the Denver-based Oppenheimer Funds and the Oppenheimer Quest
/Rochester Funds, as set forth below:

New York-based Oppenheimer Funds
- --------------------------------

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

Quest/Rochester Funds
- ---------------------

Limited Term New York Municipal Fund
Oppenheimer Convertible Securities Fund
Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Quest For Value Funds
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Rochester Fund Municipals

Denver-based Oppenheimer Funds
- ------------------------------

Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Oppenheimer Cash Reserves
Oppenheimer Champion Income Fund
Oppenheimer Capital Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer International Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Opportunity Fund
Oppenheimer Main Street Small Cap Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Municipal Fund
Oppenheimer Real Asset Fund
Oppenheimer Select Managers
Oppenheimer Senior Floating Rate Fund
Oppenheimer Strategic Income Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
Panorama Series Fund, Inc.

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

The address of the New York-based Oppenheimer Funds, the Quest Funds, the Rochester-based funds, the Denver-based Oppenheimer Funds,
Shareholder Financial Services, Inc., Shareholder Services, Inc., OppenheimerFunds Services, Centennial Asset Management Corporation,
Centennial Capital Corp., and Oppenheimer Real Asset Management, Inc. is 6803 South Tucson Way, Englewood, Colorado 80112

Item 27. Principal Underwriter

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

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

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

Robert Agan (1)          Vice President            None

Janette Aprilante (2)      Secretary               None

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

William M. Beardsley     Vice President            None
1521 Arrow Wood Land
Downers Grove, IL 60515

Kathleen Beichert (1)      Vice President          None

Gabriella Bercze (2)       Vice President          None

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

Tracey Blinzler (1)      Assistant Vice President  None

Kevin Bonner (2)           Vice President          None

L. Scott Brooks (2)        Vice President          None

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

Jeffrey W. Bryan (2)       Vice President          None

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

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

Jill Crockett (2) Assistant Vice Presdent   None

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

Jeffrey D. Damia (2)       Vice President   None

John Davis (2)    Assistant Vice President  None

Stephen J. Demetrovits (2) Vice President   None

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

Joseph A. DiMauro Vice President    None
244 McKinley Avenue
Grosse Pointe Farms, MI 48236

Steven Dombrower (2)       Vice President   None

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

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

John Eiler (2)    Vice President    None

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

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

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

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

Katherine P. Feld (2)      Vice President and        Assistant Secretary

Mark J. Ferro (2) Vice President    None

Ronald H. Fielding (3)     Vice President   None

Patrick W. Flynn (1)       Senior Vice President     None

John E. Forrest (2)        Senior Vice President     None

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

P. Lyman Foster (2)        Senior Vice President     None

Victoria Friece (1)        Assistant Vice President  None

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

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

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

Raquel Granahan (2)        Vice President   None

Ralph Grant (2)   Senior Vice President     None

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

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

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

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

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

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

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

William E. Hortz (2)       Vice President   None

Edward Hrybenko (2)        Vice President   None

Brian F. Husch (2)         Vice President   None

Richard L. Hymes (2)       Assistant Vice President  None

Kathleen T. Ives (1)       Vice President   Assistant Secretary

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

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

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

Christina J. Keller (2)    Vice President   None

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

Michael Keogh (2) Vice President    None

Lisa Klassen (1)  Assistant Vice President  None

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

Richard Knott (2) Vice President    None

Dean Kopperud (2) Senior Vice President     None

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

David T. Kuzia    Vice President    None
9697 S. Golden Eagle Dr.
Highlands, CO 80126

Tracey Lange (2)  Vice President    None

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

Malissa Lischin (2)        Assistant Vice President  None

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

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

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

Michael Magee (2) Vice President    None

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

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

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

LuAnn Mascia (2)  Assistant Vice President  None

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

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

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

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

John Murphy       Director President & Trustee

Charles Murray (2)         Senior Vice President     None

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

Christina Nasta (2)        Assistant Vice President  None

John W. Nesnay    Vice President    None
9511 S. Hackberry Street
Highlands Ranch, CO 80126

Kevin P. Neznek (2)        Vice President   None

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

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

Raymond Olsen (1) Assistant Vice President  None
         & Treasurer

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

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

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

William L. Presutti        Vice President   None
238 Kemp Avenue
Fair Haven, NJ 07704

Elaine Puleo-Carter (2)    Senior Vice President     None

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

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

Heather Rabinowitz (2)     Assistant Vice President  None

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

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

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

Michelle Simone Richter (2)         Vice President   None

Ruxandra Risko(2) Vice President    None

David R. Robertson (2)     Senior Vice President     None

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

James H. Ruff (2) President & Director      None

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

Thomas Sabow (2)  Vice President    None

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

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

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

Debbie Simon (2)  Vice President    None

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

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

Byron D. Stein    Vice President    None
7000 Island Blvd., Apt. 1408
Aventura, FL 33160

John Stoma (2)    Senior Vice President     None

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

Michael Sussman(2)         Assistant Vice President  None

Andrew E. Sweeny  Vice President    None
5967 Bayberry Drive
Cincinnati, OH 45242

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

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

James Taylor (2)  Assistant Vice President  None

Martin Telles (2) Senior Vice President     None

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

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

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

Tanya Valency (2) Vice President    None

Mark Vandehey (1) Vice President    None

Andrea Walsh (1)  Vice President    None

Suzanne Walters (1)        Assistant Vice President  None

Teresa Ward (1)   Vice President    None

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

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

Catherine White (2)        Assistant Vice President  None

Marjorie J. Williams       Vice President   None
6930 East Ranch Road
Cave Creek, AZ 85331

Thomas Wilson (2) Vice President    None

Donna Winn (2)    Senior Vice President     None

Philip Witkower (2)        Senior Vice President     None

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

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

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

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

(c)      Not applicable.

Item 28. Location of Accounts and Records

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

Item 29. Management Services

Not applicable

Item 30. Undertakings

Not applicable.

                                   SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and/or the Investment
Company Act of 1940, the Registrant certifies that it meets all requirements for
effectiveness of this Registration  Statement  pursuant to Rule 485(b) under the
Securities  Act of 1933 and has duly caused this  Registration  Statement  to be
signed on its  behalf by the  undersigned,  thereunto  duly  authorized,  in the
County of Arapahoe and State of Colorado on the 21st day of December 2001.

         OPPENHEIMER CAPITAL INCOME FUND

         By: /s/ James C. Swain*
         -----------------------------------
         James C. Swain, Chairman

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

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

/s/ James C. Swain*        Chairman of the Board,
- -----------------------    Chief Executive Officer   December 21, 2001
James C. Swain             and Trustee

/s/ John V. Murphy*        President and Trustee     December 21, 2001
- -----------------------
John V. Murphy

/s/ Brian W. Wixted*       Treasurer and Principal   December 21, 2001
- -------------------------  Financial and
Brian W. Wixted            Accounting Officer

/s/ William L. Armstrong*  Trustee                   December 21, 2001
- -------------------------------
William L. Armstrong

/s/ Robert G. Avis*        Trustee                   December 21, 2001
- ----------------------
Robert G. Avis

/s/ George Bowen* Trustee                            December 21, 2001
- ----------------------
George Bowen

/s/ Edward Cameron*        Trustee                   December 21, 2001
- ------------------------
Edward Cameron

/s/ Jon S. Fossel*         Trustee                   December 21, 2001
- --------------------
Jon S. Fossel

/s/ Sam Freedman* Trustee                            December 21, 2001
- ----------------------
Sam Freedman

/s/ C. Howard Kast*        Trustee                   December 21, 2001
- ------------------------
C. Howard Kast

/s/ Robert M. Kirchner*    Trustee                   December 21, 2001
- ----------------------------
Robert M. Kirchner

/s/ F.William Marshall,Jr.*Trustee                   December 21, 2001
- --------------------------------
F. William Marshall, Jr.

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

OPPENHEIMER CAPITAL INCOME FUND


Post-Effective Amendment No. 56


EXHIBIT INDEX
- -------------

Exhibit No.       Description
- -----------       -----------

23(c)(i)          Specimen Class A Share Certificate
23(c)(ii)         Specimen Class B Share Certificate
23(c)(iii)        Specimen Class C Share Certificate
23(c)(iv)         Specimen Class N Share Certificate

23(j)    Independent Auditors Consent

EX-99

                                                                                                        Exhibit 23(c) (i)


                                          OPPENHEIMER CAPITAL INCOME FUND
                                          -------------------------------
                                   Class A Share Certificate (8-1/2" x 12-5/8")
                                   --------------------------------------------


I.       FRONT OF CERTIFICATE (All text and other matter lies within 7-1/4" x 11-1/4" decorative border)
         --------------------

                                 (upper left) box with heading: NUMBER (OF SHARES)
                                  (upper right) box with heading: CLASS A SHARES
                                              (centered below boxes)
                                          OPPENHEIMER CAPITAL INCOME FUND
                                          A MASSACHUSETTS BUSINESS TRUST


(at left) THIS IS TO CERTIFY THAT                             (at right) SEE REVERSE FOR CERTAIN DEFINITIONS

                                                                       box with CUSIP number
                                                                       683793103
(at left) ______________________ is the owner of

                          (centered) FULLY PAID CLASS A SHARES OF BENEFICIAL INTEREST OF
                                          OPPENHEIMER CAPITAL INCOME FUND

                           A  series  of  Oppenheimer   Capital  Income  Fund  (hereinafter   called  the  "Fund"),
                           transferable  only on the  books of the Fund by the  holder  hereof in person or by duly
                           authorized  attorney,  upon  surrender  of  this  certificate  properly  endorsed.  This
                           Certificate  and the shares  represented  hereby are issued and shall be held subject to
                           all of the  provisions  of the  Declaration  of Trust  of the  Fund to all of which  the
                           holder  by   acceptance   hereof   assents.   This   certificate   is  not  valid  until
                           countersigned by the Transfer Agent.

                           WITNESS  the  facsimile  seal of the Fund  and the  signatures  of its  duly  authorized
                           officers.

(at left of seal)                                                               (at right of seal)
(signature)                                                                     (signature)

                                            Dated:
/s/ Brian W. Wixted                                                             /s/ Robert G. Zack
- -----------------------                                                -------------------
TREASURER                                                                       SECRETARY

                                               (centered at bottom)
                                          1-1/2" diameter facsimile seal
                                                    with legend
                                          OPPENHEIMER CAPITAL INCOME FUND
                                                       SEAL
                                                       1986
                                           COMMONWEALTH OF MASSACHUSETTS



(at lower right, printed vertically)                 Countersigned
                                                     OPPENHEIMERFUNDS SERVICES
                                                     (A DIVISION OF OPPENHEIMERFUNDS, INC.
                                                     Denver (Colo) Transfer Agent

                                                     By ____________________________
                                                              Authorized Signature

(at lower left corner, outside ornamental border)
300-000000 [certificate number]

II.      BACK OF CERTIFICATE (text reads from top to bottom of 12-5/8" dimension)
         -------------------

         The  following  abbreviations  when  used in the  inscription  on the face of this  certificate,  shall be
construed as though they were written out in full according to applicable laws or regulations.

TEN COM - as tenants in common
TEN ENT - as tenants by the entirety
JT TEN WROS NOT TC - as joint tenants with
rights of survivorship and not
as tenants in common

UNIF GIFT/TRANSFER MIN ACT - __________________  Custodian _______________
                                                     (Cust)                             (Minor)

UNDER UGMA/UTMA ___________________
                                    (State)

Additional abbreviations may also be used though not in the above list.

For Value Received ................ hereby sell(s), assign(s) and transfer(s) unto

PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
AND PROVIDE CERTIFICATION BY TRANSFEREE

(box for identifying number)

- -----------------------------------------------------------------------
(Please print or type name and address of assignee)

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

________________________________________________  Class A Shares of beneficial  interest  represented by the within
Certificate, and do
hereby  irrevocably  constitute  and appoint  ___________________________  Attorney to transfer  the said shares on
the books of the within named Fund with full power of substitution in the premises.

Dated: ______________________

                                                     Signed: __________________________

                                                     -----------------------------------
                                                     (Both must sign if joint owners)

                                                     Signature(s) __________________________
                                                     guaranteed        Name of Guarantor
                                                     by:               _____________________________
                                                                       Signature of Officer/Title

(text printed     NOTICE:  The  signature(s)  to this  assignment  must  vertically  to right  correspond  with the
name(s) as written upon the of above paragraph) face of the certificate in every particular  without  alteration or
enlargement or any change whatever.

(text printed in  Signatures must be guaranteed by a financial
box to left of institution of the type described in the current signature(s)) prospectus of the Fund.

                      -----------------------------------------------------------------------
                                     THIS SPACE MUST NOT BE COVERED IN ANY WAY

                                                                                                  Exhibit 24(c)(ii)


                                          OPPENHEIMER CAPITAL INCOME FUND
                                          -------------------------------
                                   Class B Share Certificate (8-1/2" x 12-5/8")
                                   --------------------------------------------


I.       FRONT OF CERTIFICATE (All text and other matter lies within 7-1/4" x 11-1/4" decorative border)
         --------------------

                                 (upper left) box with heading: NUMBER (OF SHARES)
                                  (upper right) box with heading: CLASS B SHARES
                                              (centered below boxes)
                                          OPPENHEIMER CAPITAL INCOME FUND
                                          A MASSACHUSETTS BUSINESS TRUST


(at left) THIS IS TO CERTIFY THAT                             (at right) SEE REVERSE FOR CERTAIN DEFINITIONS

                                                                       box with CUSIP number
                                                                       683793202
(at left) is the owner of


                          (centered) FULLY PAID CLASS b SHARES OF BENEFICIAL INTEREST OF
                                          OPPENHEIMER CAPITAL INCOME FUND

                           A  series  of  Oppenheimer   Capital  Income  Fund  (hereinafter   called  the  "Fund"),
                           transferable  only on the  books of the Fund by the  holder  hereof in person or by duly
                           authorized  attorney,  upon  surrender  of  this  certificate  properly  endorsed.  This
                           certificate  and the shares  represented  hereby are issued and shall be held subject to
                           all of the  provisions  of the  Declaration  of Trust  of the  Fund to all of which  the
                           holder  by   acceptance   hereof   assents.   This   certificate   is  not  valid  until
                           countersigned by the Transfer Agent.

                           WITNESS  the  facsimile  seal of the Fund  and the  signatures  of its  duly  authorized
                           officers.

(at left of seal)                                                               (at right of seal)
(signature)                                                                     (signature)

                                            Dated:
/s/ Brian W. Wixted                                                             /s/ Robert G. Zack
- -----------------------                                                -------------------
TREASURER                                                                       SECRETARY

                                          1-1/2" diameter facsimile seal
                                                    with legend
                                          OPPENHEIMER CAPITAL INCOME FUND
                                                       SEAL
                                                       1986
                                           COMMONWEALTH OF MASSACHUSETTS



(at lower right, printed vertically)                 Countersigned
                                                     OPPENHEIMERFUNDS SERVICES
                                                     (A DIVISION OF OPPENHEIMERFUNDS, INC.
                                                     Denver (Colo) Transfer Agent

                                                     By ____________________________
                                                              Authorized Signature

(at lower left corner, outside ornamental border)
301-000000 [certificate number]


II.      BACK OF CERTIFICATE (text reads from top to bottom of 12-5/8" dimension)
         -------------------

         The  following  abbreviations,  when used in the  inscription  on the face of this  certificate,  shall be
construed as though they were written out in full according to applicable laws or regulations.

TEN COM - as tenants in common
TEN ENT - as tenants by the entirety
JT TEN WROS NOT TC - as tenants with
rights of survivorship and not
as tenants in common

UNIF GIFT/TRANSFER MIN ACT - __________________  Custodian _______________
                                                     (Cust)                             (Minor)

UNDER UGMA/UTMA ___________________
                                    (State)

Additional abbreviations may also be used though not in the above list.

For Value Received ................ hereby sell(s), assign(s) and transfer(s) unto

PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
AND PROVIDE CERTIFICATION BY TRANSFEREE

(box for identifying number)

_______________________________________________________________________(Please  print or type name and  address  of
assignee)

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

________________________________________________  Class B Shares of beneficial  interest  represented by the within
certificate, and do
hereby  irrevocably  constitute  and appoint  ___________________________  Attorney to transfer  the said shares on
the books of the within named Fund with full power of substitution in the premises.

Dated: ______________________

                                                     Signed: __________________________

                                                     -----------------------------------
                                                     (Both must sign if joint owners)

                                                     Signature(s) __________________________
                                                     guaranteed        Name of Guarantor
                                                     by:               _____________________________
                                                                       Signature of Officer/Title

(text printed     NOTICE:  The  signature(s)  to this  assignment  must  vertically  to right  correspond  with the
name(s) as written upon the of above paragraph) face of the certificate in every particular  without  alteration or
enlargement or any change whatever.

(text printed in  Signatures must be guaranteed by a financial
box to left of institution of the type described in the current signature(s)) prospectus of the Fund.


                      -----------------------------------------------------------------------
                                     THIS SPACE MUST NOT BE COVERED IN ANY WAY

                                                                                                 Exhibit 24(c)(iii)


                                          OPPENHEIMER CAPITAL INCOME FUND
                                          -------------------------------
                                   Class C Share Certificate (8-1/2" x 12-5/8")
                                   --------------------------------------------


I.       FRONT OF CERTIFICATE (All text and other matter lies within 7-1/4" x 11-1/4" decorative border)
         --------------------

                                 (upper left) box with heading: NUMBER (OF SHARES)
                                  (upper right) box with heading: CLASS C SHARES
                                              (centered below boxes)
                                          OPPENHEIMER CAPITAL INCOME FUND
                                          A MASSACHUSETTS BUSINESS TRUST

(at left) THIS IS TO CERTIFY THAT                             (at right) SEE REVERSE FOR CERTAIN DEFINITIONS

                                                              box with CUSIP number
                                                              683793301
(at left) is the owner of

                          (centered) FULLY PAID CLASS C SHARES OF BENEFICIAL INTEREST OF
                                          OPPENHEIMER CAPITAL INCOME FUND

                           A  series  of  Oppenheimer   Equity  Income  Fund   (hereinafter   called  the  "Fund"),
                           transferable  only on the  books of the Fund by the  holder  hereof in person or by duly
                           authorized  attorney,  upon  surrender  of  this  certificate  properly  endorsed.  This
                           certificate  and the shares  represented  hereby are issued and shall be held subject to
                           all of the  provisions  of the  Declaration  of Trust  of the  Fund to all of which  the
                           holder  by   acceptance   hereof   assents.   This   certificate   is  not  valid  until
                           countersigned by the Transfer Agent.

                           WITNESS  the  facsimile  seal of the Fund  and the  signatures  of its  duly  authorized
                           officers.

(at left of seal)                                                               (at right of seal)
(signature)                                                                     (signature)

                                            Dated:
/s/ Brian W. Wixted                                                             /s/ Robert G. Zack
- -----------------------                                                -------------------
TREASURER                                                                       SECRETARY

                                               (centered at bottom)
                                          1-1/2" diameter facsimile seal
                                                    with legend
                                          OPPENHEIMER CAPITAL INCOME FUND
                                                       SEAL
                                                       1986
                                           COMMONWEALTH OF MASSACHUSETTS



(at lower right, printed vertically)                 Countersigned
                                                     OPPENHEIMERFUNDS SERVICES
                                                     (A DIVISION OF OPPENHEIMERFUNDS, INC.
                                                     Denver (Colo) Transfer Agent

                                                     By ____________________________
                                                              Authorized Signature

(at lower left corner, outside ornamental border)
301-000000 [certificate number]


II.      BACK OF CERTIFICATE (text reads from top to bottom of 12-5/8" dimension)
         -------------------

         The  following  abbreviations,  when used in the  inscription  on the face of this  certificate,  shall be
construed as though they were written out in full according to applicable laws or regulations.

TEN COM - as tenants in common
TEN ENT - as tenants by the entirety
JT TEN WROS NOT TC - as tenants with
rights of survivorship and not
as tenants in common

UNIF GIFT/TRANSFER MIN ACT - __________________  Custodian _______________
                                                     (Cust)                             (Minor)

UNDER UGMA/UTMA ___________________
                                    (State)

Additional abbreviations may also be used though not in the above list.

For Value Received ................ hereby sell(s), assign(s) and transfer(s) unto

PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
AND PROVIDE CERTIFICATION BY TRANSFEREE

(box for identifying number)

- -----------------------------------------------------------------------
(Please print or type name and address of assignee)

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

________________________________________________  Class C Shares of beneficial  interest  represented by the within
certificate,  and do hereby  irrevocably  constitute and appoint  ___________________________  Attorney to transfer
the said shares on the books of the within named Fund with full power of substitution in the premises.

Dated: ______________________

                                                     Signed: __________________________

                                                     -----------------------------------
                                                     (Both must sign if joint owners)

                                                     Signature(s) __________________________
                                                     guaranteed        Name of Guarantor
                                                     by:               _____________________________
                                                                       Signature of Officer/Title

(text printed     NOTICE:  The  signature(s)  to this  assignment  must  vertically  to right  correspond  with the
name(s) as written upon the of above paragraph) face of the certificate in every particular  without  alteration or
enlargement or any change whatever.

(text printed in Signatures  must be guaranteed by a financial box to left of  institution of the type described in
the current signature(s)) prospectus of the Fund.

                      -----------------------------------------------------------------------
                                     THIS SPACE MUST NOT BE COVERED IN ANY WAY

                                                                                                  Exhibit 24(c)(iv)


                                          OPPENHEIMER CAPITAL INCOME FUND
                                          -------------------------------
                                   Class N Share Certificate (8-1/2" x 12-5/8")
                                   --------------------------------------------


I.       FRONT OF CERTIFICATE (All text and other matter lies within 7-1/4" x 11-1/4" decorative border)
         --------------------

                                 (upper left) box with heading: NUMBER (OF SHARES)
                                  (upper right) box with heading: CLASS N SHARES
                                              (centered below boxes)
                                          OPPENHEIMER CAPITAL INCOME FUND
                                          A MASSACHUSETTS BUSINESS TRUST

(at left) THIS IS TO CERTIFY THAT                             (at right) SEE REVERSE FOR CERTAIN DEFINITIONS

                                                              box with CUSIP number
                                                              683793400
(at left) is the owner of

                          (centered) FULLY PAID CLASS N SHARES OF BENEFICIAL INTEREST OF
                                          OPPENHEIMER CAPITAL INCOME FUND

                           A  series  of  Oppenheimer   Capital  Income  Fund  (hereinafter   called  the  "Fund"),
                           transferable  only on the  books of the Fund by the  holder  hereof in person or by duly
                           authorized  attorney,  upon  surrender  of  this  certificate  properly  endorsed.  This
                           certificate  and the shares  represented  hereby are issued and shall be held subject to
                           all of the  provisions  of the  Declaration  of Trust  of the  Fund to all of which  the
                           holder  by   acceptance   hereof   assents.   This   certificate   is  not  valid  until
                           countersigned by the Transfer Agent.

                           WITNESS  the  facsimile  seal of the Fund  and the  signatures  of its  duly  authorized
                           officers.

(at left of seal)                                                               (at right of seal)
(signature)                                                                     (signature)

                                            Dated:
/s/ Brian W. Wixted                                                             /s/ Robert G. Zack
- -----------------------                                                -------------------
TREASURER                                                                       SECRETARY

                                               (centered at bottom)
                                          1-1/2" diameter facsimile seal
                                                    with legend
                                          OPPENHEIMER CAPITAL INCOME FUND
                                                       SEAL
                                                       2000
                                           COMMONWEALTH OF MASSACHUSETTS



(at lower right, printed vertically)                 Countersigned
                                                     OPPENHEIMERFUNDS SERVICES
                                                     (A DIVISION OF OPPENHEIMERFUNDS, INC.
                                                     Denver (Colo) Transfer Agent

                                                     By ____________________________
                                                              Authorized Signature

(at lower left corner, outside ornamental border)
301-000000 [certificate number]


II.      BACK OF CERTIFICATE (text reads from top to bottom of 12-5/8" dimension)
         -------------------

         The  following  abbreviations,  when used in the  inscription  on the face of this  certificate,  shall be
construed as though they were written out in full according to applicable laws or regulations.

TEN COM - as tenants in common
TEN ENT - as tenants by the entirety
JT TEN WROS NOT TC - as tenants with
rights of survivorship and not
as tenants in common

UNIF GIFT/TRANSFER MIN ACT - __________________  Custodian _______________
                                                     (Cust)                             (Minor)

UNDER UGMA/UTMA ___________________
                                    (State)

Additional abbreviations may also be used though not in the above list.

For Value Received ................ hereby sell(s), assign(s) and transfer(s) unto

PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
AND PROVIDE CERTIFICATION BY TRANSFEREE

(box for identifying number)

- -----------------------------------------------------------------------
(Please print or type name and address of assignee)

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

________________________________________________  Class N Shares of beneficial  interest  represented by the within
certificate,  and do hereby  irrevocably  constitute and appoint  ___________________________  Attorney to transfer
the said shares on the books of the within named Fund with full power of substitution in the premises.

Dated: ______________________

                                                     Signed: __________________________

                                                     -----------------------------------
                                                     (Both must sign if joint owners)

                                                     Signature(s) __________________________
                                                     guaranteed        Name of Guarantor
                                                     by:               _____________________________
                                                                       Signature of Officer/Title

(text printed     NOTICE:  The  signature(s)  to this  assignment  must  vertically  to right  correspond  with the
name(s) as written upon the of above paragraph) face of the certificate in every particular  without  alteration or
enlargement or any change whatever.

(text printed in Signatures  must be guaranteed by a financial box to left of  institution of the type described in
the current signature(s)) prospectus of the Fund.

                      -----------------------------------------------------------------------
                                     THIS SPACE MUST NOT BE COVERED IN ANY WAY

EX-99.2N

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Post-Effective Amendment No. 56 to Registration Statement No. 2-33043 of Oppenheimer
Capital Income Fund on Form N-1A of our report dated September 24, 2001, appearing in the Statement of Additional
Information, which is part of such Registration Statement, and to the reference to us under the headings
"Independent Auditors" in the Statement of Additional Information and "Financial Highlights" in the Prospectus, which
is also part of such Registration Statement.


/s/DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP

Denver, Colorado
December 21, 2002