PSP 497(E) BOND FUND

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FoBbyr4VT6BGhku4ei0ZDWHHgpjLIOMczKbqLewCYrg9WTyyki+N8ECqmFn42SWM 5zh7pj6lVDBfmyBREwEj7w== 0000728889-02-000375.txt : 20020501 0000728889-02-000375.hdr.sgml : 20020501 ACCESSION NUMBER: 0000728889-02-000375 CONFORMED SUBMISSION TYPE: 497 PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20020501 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPPENHEIMER INTEGRITY FUNDS CENTRAL INDEX KEY: 0000701265 IRS NUMBER: 042912220 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 002-76547 FILM NUMBER: 02629928 BUSINESS ADDRESS: STREET 1: 6803 S TUCSON WAY CITY: ENGLEWOOD STATE: CO ZIP: 80112 BUSINESS PHONE: 3036713200 MAIL ADDRESS: STREET 1: 3410 SOUTH GALENA STREET 3RD FL STREET 2: 3410 SOUTH GALENA STREET 3RD FL CITY: DENVER STATE: CO ZIP: 80231 FORMER COMPANY: FORMER CONFORMED NAME: MASSMUTUAL INTEGRITY FUNDS DATE OF NAME CHANGE: 19910329 FORMER COMPANY: FORMER CONFORMED NAME: MASSMUTUAL LIQUID ASSETS TRUST DATE OF NAME CHANGE: 19880403 497 1 psp497e28502.htm PSP 497(E) BOND FUND 2002 PSP 497(E) BOND FUND

Oppenheimer
Bond Fund

Prospectus dated April 30, 2002

Oppenheimer Bond Fund is a mutual fund that seeks a
high level of current income. It invests primarily in
investment-grade debt securities and U.S. government
securities.
This Prospectus contains important information
about the Fund's objective, and its investment
policies, strategies and risks. It also contains
important information about how to buy and sell shares
of the Fund and other account features. Please read
this Prospectus carefully before you invest and keep it
for future reference about your account.
As with all mutual funds, the Securities and Exchange
Commission has not approved or disapproved the Fund's
securities nor has it determined that this Prospectus is
accurate or complete. It is a criminal offense to
represent otherwise.

[logo] OppenheimerFunds(R)
The Right Way to Invest

CONTENTS

ABOUT THE FUND

The Fund's Investment Objective and Strategies

Main Risks of Investing in the Fund

The Fund's Past Performance

Fees and Expenses of the Fund

About the Fund's Investments

How the Fund is Managed

ABOUT YOUR ACCOUNT

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

Special Investor Services
AccountLink
PhoneLink
OppenheimerFunds Internet Website
Retirement Plans

How to Sell Shares
By Mail
By Telephone
By Checkwriting

How to Exchange Shares

Shareholder Account Rules and Policies

Dividends, Capital Gains and Taxes

Financial Highlights

ABOUT THE FUND

The Fund's Investment Objective and Strategies

WHAT IS THE FUND'S INVESTMENT OBJECTIVE? The Fund seeks a high level of current income by investing mainly in debt instruments.

WHAT DOES THE FUND MAINLY INVEST IN? The Fund invests at least 65% of its total assets in investment-grade debt securities, U.S.
government securities and money market instruments, under normal market conditions. Those investment-grade debt securities can
include:

o domestic and foreign corporate debt obligations,
o domestic and foreign government bonds,
o mortgage-related securities (including collateralized mortgage obligations ("CMOs")) issued by private issuers, and
o other debt obligations.

In general, these debt securities are referred to as "bonds." The Fund's investments in U.S. government securities include
securities issued or guaranteed by the U.S. government or its agencies or federally-chartered corporate entities referred to as
"instrumentalities." These include mortgage-related U.S. government securities and CMOs.

There is no set allocation of the Fund's assets among the classes of securities the Fund buys to meet the 65%
investment-grade securities requirement, but currently the Fund focuses mainly on U.S. government securities and investment-grade
debt securities. However, if market conditions change, the Fund's portfolio managers might change the relative allocation of the
Fund's assets. Effective July 31, 2002, the Fund will invest at least 80% of its net assets (plus borrowings) in debt securities.

The Fund has no limitations on the range of maturities of the debt securities in which it can invest and therefore may hold
bonds with short-, medium- or long-term maturities. The Fund can invest up to 35% of its total assets in high-yield debt securities
that are below investment grade (commonly referred to as "junk bonds"). These investments are more fully explained in "About the
Fund's Investments," below.

HOW DO THE PORTFOLIO MANAGERS DECIDE WHAT SECURITIES TO BUY OR SELL? In selecting securities for the Fund, the Fund's portfolio
managers analyze the overall investment opportunities and risks in different sectors of the debt securities markets by focusing on
business cycle analysis and relative values between the corporate and government sectors. The portfolio managers' overall strategy is
to build a broadly diversified portfolio of corporate and government bonds. The portfolio managers currently focus on the factors
below (which may vary in particular cases and may change over time), looking for:

o Debt securities in market sectors that offer attractive relative value,
o Investment-grade securities that offer more income than U.S. treasury obligations with a good balance of risk and return,
o High income potential from different types of corporate and government securities, and
o Broad portfolio diversification to help reduce the volatility of the Fund's share prices.

WHO IS THE FUND DESIGNED FOR? The Fund is designed for investors seeking high current income from a fund that invests primarily in
investment-grade debt securities but which can also hold high-yield debt securities below investment grade to seek higher income.
Those investors should be willing to assume the credit risks of a fund that typically invests a significant amount of its assets in
corporate-debt securities, and the changes in share prices that can occur when interest rates change. The Fund is intended as a
long-term investment, not a short-term trading vehicle, and may be appropriate for a part of an investor's retirement plan portfolio.
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 value from a number of factors described
below. They include changes in general bond market movements in the U.S. and abroad (this is referred to as "market risk"). 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.

Credit Risk. Debt securities are subject to credit risk. Credit risk is the risk that the issuer of a debt security might not make
interest and principal payments on the security as they become due. A downgrade in an issuer's credit rating or other adverse news
about an issuer can reduce the value of that issuer's securities. Securities directly issued by the U.S. Treasury and certain
agencies that are backed by the full faith and credit of the U.S. government have little credit risk, and securities issued by other
agencies of the U.S. government generally have low credit risks. Securities issued by private issuers have greater credit risks. If
an issuer fails to pay interest, the Fund's income may be reduced. If an issuer fails to repay principal, the value of that security
and of the Fund's shares may be reduced.

o Special Risks of Lower-Grade Securities. Because the Fund can invest up to 35% of its total assets in securities (including
convertible securities) below investment grade to seek higher income, the Fund's credit risks are greater than those of
funds that buy only investment-grade securities. Lower-grade debt securities 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. Those risks can reduce the Fund's share prices and the income it earns. The market for lower-grade securities
may be less liquid, especially during times of economic distress, and therefore they may be harder to value or to sell at an
acceptable price.

Interest Rate Risks. Debt securities are subject to changes in value when prevailing interest rates change. When interest rates fall,
the values of outstanding debt securities generally rise. When interest rates rise, the values of outstanding debt securities
generally fall, and those securities may sell at a discount from their face amount. The magnitude of these fluctuations is generally
greater for securities having longer maturities than for short-term securities. However, interest rate changes may have different
effects on the values of mortgage-related securities because of prepayment risks, discussed below.

At times, the Fund may buy longer-term debt securities to seek higher income. When the average maturity of the Fund's
portfolio is longer, its share prices may fluctuate more when interest rates change. The Fund can buy zero-coupon or "stripped"
securities, which are particularly sensitive to interest rate changes and the rate of principal payments (and prepayments). These are
derivative securities that have prices that may go up or down more than other types of debt securities in response to interest rate
changes. The Fund's share prices can go up or down when interest rates change, because of the effect of the change on the value of
the Fund's investments. Also, if interest rates fall, the Fund's investments in new securities at lower yields will reduce the Fund's
income.

Prepayment Risk. Mortgage-related securities are subject to the risks of unanticipated prepayment. The risk is that when interest
rates fall, borrowers under the mortgages that underlie these securities will prepay their mortgages more quickly than expected,
causing the issuer of the security to pay the principal to the Fund prior to the security's expected maturity. The Fund may be
required to reinvest the proceeds at a lower interest rate, reducing its income. Mortgage-related securities subject to prepayment
risk generally offer less potential for gains when prevailing interest rates fall and have greater potential for loss when prevailing
interest rates rise. The impact of prepayments on the price of a security may be difficult to predict and may increase the volatility
of the price. If the Fund buys mortgage-related securities at a premium, accelerated prepayments on those securities could cause the
Fund to lose a portion of its principal investment represented by the premium.

If interest rates rise rapidly, prepayments of mortgages may occur at a slower rate than expected, and the expected maturity
of short- or medium-term mortgage-related securities could lengthen as a result. That could cause their values to fluctuate more, and
the prices of the Fund's shares, to fluctuate more and to fall.

risks of Using Derivative Investments. The Fund can use derivatives to seek increased returns or to try to hedge investment risks. In
general terms, a derivative investment is an investment contract whose value depends on (or is derived from) the value of an
underlying asset, interest rate or index. Options, futures, interest-only and principal-only securities, structured notes,
interest-rate swap agreements and mortgage-related securities are examples of derivatives the Fund can use.

If the issuer of the derivative does not pay the amount due, the Fund can lose money on the investment. Also, the underlying
security or investment on which the derivative is based, and the derivative itself, may not perform the way the Manager expected it
to perform. If that happens, the Fund's share prices could fall and the Fund could get less income than expected, or its hedge might
be unsuccessful. Some derivatives may be illiquid, making it difficult to value or to sell them at an acceptable price. The Fund has
limits on the amount of certain types of derivatives it can hold. However, using derivatives can cause the Fund to lose money on its
investments and/or increase the volatility of its share prices.

HOW RISKY IS THE FUND OVERALL? The risks described above collectively form the overall risk profile of the Fund, and can affect the
value of the Fund's investments, its investment performance and the prices of its shares. Particular investments and investment
strategies also have risks. These risks mean that you can lose money by investing in the Fund. When you redeem your shares, they may
be worth more or less than what you paid for them. The share price of the Fund will change daily based on changes in interest rates,
market prices of securities and market conditions, and in response to other economic events. There is no assurance that the Fund will
achieve its investment objective.

Debt securities are subject to market, credit and interest rate risks that can affect their values and the share prices of
the Fund. Prepayment risks of mortgage-backed securities can cause the Fund to reinvest proceeds of its investments in lower-yielding
securities. In the OppenheimerFunds spectrum, the Fund generally has more risks than bond funds that focus primarily on U. S.
government securities, but the Fund's emphasis on investment-grade securities may make its share prices less volatile than high-yield
bond funds or funds that focus on foreign bonds.

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

The Fund's Past Performance

The bar chart and table below show one measure of the risks of investing in the Fund, by showing changes in the Fund's performance
(for its Class A shares) from year to year for the last 10 calendar years and by showing how the average annual total returns of the
Fund's shares, both before and after taxes, compare to those of a broad-based market index. The after-tax returns are shown for Class
A shares only and are calculated using the historical highest individual federal marginal income tax rates in effect during the
periods shown, and do not reflect the impact of state or local taxes. The after-tax returns for the other classes of shares will
vary. The after-tax returns are calculated based on certain assumptions mandated by regulation and your actual after-tax returns may
differ from those shown, depending on your individual tax situation. The after-tax returns set forth below are not relevant to
investors who hold their Fund shares through tax-deferred arrangements such as 401(k) plans or IRAs or to institutional investors not
subject to tax. The Fund's past investment performance, before and after taxes, is not necessarily an indication of how the Fund will
perform in the future.

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

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

For the period from 1/1/2002 through 3/31/2002, the cumulative return (not annualized) of Class A shares was -0.42%.
Sales charges and taxes are not included in the calculations of return in this bar chart, and if those charges were included, the
returns would be less than those shown.
During the period shown in the bar chart, the highest return (not annualized) for a calendar quarter was 6.24% (2Qtr '95) and the
lowest return (not annualized) for a calendar quarter was -3.16% (1Qtr '94).

- --------------------------------------------- ------------------------- ------------------------- -------------------------
1 Year 5 Years 10 Years
Average Annual Total Returns (or life of class, if (or life of class, if (or life of class, if
for the periods ended December 31, 2001 less) less) less)
- --------------------------------------------- ------------------------- ------------------------- -------------------------
- --------------------------------------------- ------------------------- ------------------------- -------------------------
Class A Shares (inception 4/15/88)
Return Before Taxes 1.96% 4.29% 5.53%
Return After Taxes on Distributions -0.92% 1.43% 2.76%
Return After Taxes on Distributions and 1.16% 1.98% 3.03%
Sale of Fund Shares
- --------------------------------------------- ------------------------- ------------------------- -------------------------
Lehman Brothers Corporate Bond Index
(reflects no deduction for fees, expenses 10.40% 7.22% 7.68%1
or taxes)
- --------------------------------------------- ------------------------- ------------------------- -------------------------
Class B Shares (inception 5/3/93) 1.17% 4.21% 4.94%
- --------------------------------------------- ------------------------- ------------------------- -------------------------
Class C Shares (inception 7/11/95) 5.15% 4.52% 4.70%
- --------------------------------------------- ------------------------- ------------------------- -------------------------
- --------------------------------------------- ------------------------- ------------------------- -------------------------
Class N Shares (inception 3/1/01) 2.21%2 N/A N/A
- --------------------------------------------- ------------------------- ------------------------- -------------------------
- --------------------------------------------- ------------------------- ------------------------- -------------------------
Class Y Shares (inception 4/27/98) 7.30% 4.69% N/A
- --------------------------------------------- ------------------------- ------------------------- -------------------------
1. From 12/31/91.
2. Total returns for Class N shares are cumulative and are not annualized.
The Fund's average annual total returns include the applicable sales charge: for Class A, the current maximum initial sales charge of
4.75%; for Class B, the contingent deferred sales charge of 5% (1-year) and 2% (5 years); and for Class C and Class N, the 1%
contingent deferred sales charge for the 1-year period for Class C shares and life-of-class period for Class N shares. Because Class
B shares convert to Class A shares 72 months after purchase, Class B "life-of-class" performance does not include any contingent
deferred sales charge and uses Class A performance for the period after conversion. There is no sales charge for Class Y shares. The
Fund's returns measure the performance of a hypothetical account and assume that all dividends and capital gains distributions have
been reinvested in additional shares. The performance of the Fund's Class A shares is compared to the Lehman Brothers Corporate Bond
Index, which measures the performance of non-convertible investment-grade domestic corporate debt securities. The index performance
includes the reinvestment of income but does not reflect transaction costs. The Fund's investments vary from the securities in the
index.

Fees and Expenses of the Fund

The Fund pays a variety of expenses directly for management of its assets, administration, distribution of its shares and other
services. Those expenses are subtracted from the Fund's assets to calculate the Fund's net asset values per share. All shareholders
therefore pay those expenses indirectly. Shareholders pay other expenses directly, such as sales charges and account transaction
charges. The following tables are provided to help you understand the fees and expenses you may pay if you buy and hold shares of the
Fund. The numbers below are based on the Fund's expenses during its fiscal year ended December 31, 2001, as restated to reflect the
reduction in Management Fees and the change in Distribution and/or Service (12b-1) Fees for Class N.

Shareholder Fees (charges paid directly from your investment):

- --------------------------------------------- -------------- ------------ ------------ ------------- --------------
Class A Class B Class C Class N Class Y
Shares Shares Shares Shares Shares
- --------------------------------------------- -------------- ------------ ------------ ------------- --------------
- --------------------------------------------- -------------- ------------ ------------ ------------- --------------
Maximum Sales Charge (Load) on 4.75% None None None None
Purchases (as % of offering price)
- --------------------------------------------- -------------- ------------ ------------ ------------- --------------
- --------------------------------------------- -------------- ------------ ------------ ------------- --------------
Maximum Deferred Sales Charge
(Load) (as % of the lower of the None1 5%2 1%3 1%4 None
original offering 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 twelve (12) months of purchase.
4. Applies to shares redeemed within eighteen (18) months of retirement plan's first purchase.
Annual Fund Operating Expenses (deducted from Fund assets):
(% of average daily net assets)

- --------------------------------------------- -------------- ------------ ------------ ------------- --------------
Class A Class B Class C Class N Class Y
Shares Shares Shares Shares Shares
- --------------------------------------------- -------------- ------------ ------------ ------------- --------------
- --------------------------------------------- -------------- ------------ ------------ ------------- --------------
Management Fees 0.58% 0.58% 0.58% 0.58% 0.58%
- --------------------------------------------- -------------- ------------ ------------ ------------- --------------
- --------------------------------------------- -------------- ------------ ------------ ------------- --------------
Distribution and/or Service (12b-1) Fees 0.25% 1.00% 1.00% 0.50% None
- --------------------------------------------- -------------- ------------ ------------ ------------- --------------
- --------------------------------------------- -------------- ------------ ------------ ------------- --------------
Other Expenses 0.25% 0.26% 0.25% 0.27% 0.21%
- --------------------------------------------- -------------- ------------ ------------ ------------- --------------
- --------------------------------------------- -------------- ------------ ------------ ------------- --------------
Total Annual Operating Expenses 1.08% 1.84% 1.83% 1.35% 0.79%
- --------------------------------------------- -------------- ------------ ------------ ------------- --------------
Effective January 1, 2002, the Management Fee rate has been reduced as described in "How the Fund is Managed - The Manager - Advisory
Fees." Prior to such change, Management Fees were 0.73% of average annual net assets for each Class. Accordingly, the Management Fees
and Total Annual Operating Expenses set forth above have been restated to reflect the reduced fees. Effective November 1, 2001, the
Distribution and/or Service (12b-1) Fees for Class N shares increased from 0.25% to 0.50%. For the period from March 1, 2001 when
Class N shares were first offered until the Fund's fiscal year-end of December 31, 2001, the Class N shares "Distribution and/or
Service (12b-1) Fees" and "Total Annual Operating Expenses" were 0.37% and 1.37%, respectively.

"Other Expenses" include transfer agent fees, custodial expenses, and accounting and legal expenses the Fund pays.
The "Other Expenses" in the table are based on, among other things, the fees the Fund would have paid if the transfer agent had not
waived a portion of its fee under a voluntary undertaking to the Fund to limit these fees to 0.25% per annum for Class Y shares and
0.35% per annum for all other classes. After the waiver, the actual "Other Expenses" and "Total Annual Operating Expenses" as
percentages of average daily net assets were 0.19% and 0.77%, respectively, for Class Y shares. Expenses may vary in future years.

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                     $580                  $802                 $1,042              $1,730
- ---------------------------------- --------------------- -------------------- ------------------- -------------------
- ---------------------------------- --------------------- -------------------- ------------------- -------------------
Class B Shares                     $687                  $879                 $1,196              $1,777
- ---------------------------------- --------------------- -------------------- ------------------- -------------------
- ---------------------------------- --------------------- -------------------- ------------------- -------------------
Class C Shares                     $286                  $576                 $990                $2,148
- ---------------------------------- --------------------- -------------------- ------------------- -------------------
- ---------------------------------- --------------------- -------------------- ------------------- -------------------
Class N Shares                     $237                  $428                 $739                $1,624
- ---------------------------------- --------------------- -------------------- ------------------- -------------------
- ---------------------------------- --------------------- -------------------- ------------------- -------------------
Class Y Shares                     $81                   $252                 $439                $978
- ---------------------------------- --------------------- -------------------- ------------------- -------------------

- ---------------------------------- --------------------- -------------------- ------------------- -------------------
If shares are not redeemed:        1 Year                3 Years              5 Years             10 Years1
- ---------------------------------- --------------------- -------------------- ------------------- -------------------
- ---------------------------------- --------------------- -------------------- ------------------- -------------------
Class A Shares                     $580                  $802                 $1,042              $1,730
- ---------------------------------- --------------------- -------------------- ------------------- -------------------
- ---------------------------------- --------------------- -------------------- ------------------- -------------------
Class B Shares                     $187                  $579                 $996                $1,777
- ---------------------------------- --------------------- -------------------- ------------------- -------------------
- ---------------------------------- --------------------- -------------------- ------------------- -------------------
Class C Shares                     $186                  $576                 $990                $2,148
- ---------------------------------- --------------------- -------------------- ------------------- -------------------
- ---------------------------------- --------------------- -------------------- ------------------- -------------------
Class N Shares                     $137                  $428                 $739                $1,624
- ---------------------------------- --------------------- -------------------- ------------------- -------------------
- ---------------------------------- --------------------- -------------------- ------------------- -------------------
Class Y Shares                     $81                   $252                 $439                $978
- ---------------------------------- --------------------- -------------------- ------------------- -------------------
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 contingent deferred sales charges.  There are no sales charges on Class Y shares.
1. Class B expenses for years 7 through 10 are based on Class A expenses, because Class B shares automatically convert to Class A
shares after 6 years.

About the Fund's Investments

THE FUND'S PRINCIPAL INVESTMENT POLICIES. The allocation of the Fund's portfolio among the different types of investments will vary
over time based upon the 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 securities of any one
issuer 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 any income they may pay can occur at any time. The share
price and yield of the Fund will change daily based on changes in market prices of securities and market conditions, and in response
to other economic events.

In selecting debt securities 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 or Standard & Poor's Rating
Services, or they may be unrated securities assigned an equivalent rating by the Manager. "Investment-grade" rated securities are
those in the four highest rating categories of national ratings organizations. A description of those ratings definitions is included
in Appendix A to the Statement of Additional Information.

U.S. Government Securities. Not all of the U.S. government securities the Fund buys are backed by the full faith and credit of the
U.S. government as to payment of interest and repayment of principal. Some are backed by the right of the entity to borrow
from the U.S. Treasury. Others are backed only by the credit of the instrumentality. All of these different types of
securities described below are generally referred to as "U.S. government securities" in this Prospectus.
o U.S. Treasury Obligations. These include Treasury bills (having maturities of one year or less when issued), Treasury notes
(having maturities of more than one year and up to ten years when issued), and Treasury bonds (having 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. The Fund can buy U. S. Treasury securities that have been "stripped" of
their coupons and zero-coupon securities described below.
o 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 U.S. government. Some are supported by the
full faith and credit of the U.S. government, such as Government National Mortgage Association ("Ginnie Mae") pass-through
mortgage certificates. 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 ("Fannie Mae") bonds. Others are supported only by the credit
of the entity that issued them, such as Federal Home Loan Mortgage Corporation ("Freddie Mac") obligations.
o Mortgage-Related U.S. Government Securities. These include interests in pools of residential or commercial mortgages, in the
form of CMOs and other "pass-through" mortgage securities. CMOs that are U.S. government securities have collateral to
secure payment of interest and principal. They may be issued in different series with different interest rates and
maturities. The collateral is either in the form of mortgage pass-through certificates issued or guaranteed by a U.S. agency
or instrumentality or mortgage loans insured by a U.S. government agency. The Fund can have substantial amounts of its
assets invested in mortgage-related U.S. government securities.
The prices and yields of CMOs are determined, in part, by assumptions about the cash flows from the rate of payments of the
underlying mortgages. Changes in interest rates may cause the rate of expected prepayments of those mortgages to change.
These prepayment risks can make the prices of CMOs very volatile when interest rates change. That volatility will affect the
Fund's share prices.
Other Debt Securities. While the Fund invests primarily in investment-grade debt securities, it is not required to dispose of debt
securities that fall below investment grade after the Fund buys them. However, the portfolio managers will monitor those
holdings to determine whether the Fund should sell them. While securities rated "Baa" by Moody's or "BBB" by S&P are
considered "investment grade," they have some speculative characteristics.
While investment-grade securities are subject to risks of non-payment of interest and principal, in general, higher-yielding
lower-grade bonds, 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 value and sell at an acceptable price. These risks can reduce the Fund's
share prices and the income it earns.
o Private-Issuer Securities. The Fund can invest in securities issued by private issuers that do not offer the credit backing
of the U.S. government. These include multi-class debt or pass-through certificates secured by mortgage loans. They may be
issued by banks, savings and loans, mortgage bankers or special trusts. The Fund can buy other types of asset-backed
securities collateralized by loans or other assets or receivables. Private-issuer mortgage-backed securities are subject to
the credit risks of the issuers (as well as the interest rate risks and prepayment risks discussed above). There is the risk
that private issuers may not make timely payment of interest or repay principal when due, although in some cases those
payment obligations may be supported by insurance or guarantees.
Foreign Securities. The Fund typically invests a portion of its assets in foreign debt securities, and it has no limit on the amount
of its assets that can be invested in foreign securities that are investment grade. The Fund can buy debt securities issued
by foreign governments or companies. The Fund can buy securities of governments and companies in both developed markets and
emerging markets. Debt securities issued or guaranteed by a foreign government or its agencies might not be backed by the
"full faith and credit" of the government.
The Fund's foreign debt investments can be denominated in U.S. dollars or in foreign currencies. The Fund will buy foreign
currency only in connection with the purchase and sale of foreign securities and not for speculation.
o Risks of Foreign Investing. While foreign securities offer special investment opportunities, there are also special risks
that can reduce the Fund's share prices and returns. 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. Currency rate changes can
also affect the distributions the Fund makes from the income it receives from foreign securities as foreign currency values
change against the U.S. dollar. Foreign investing can result in higher transaction and operating costs for the Fund. Foreign
issuers are not subject to the same accounting and disclosure requirements that U.S. companies are subject to.
The value of foreign investments may be affected by exchange control regulations, currency devaluation, 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.
Portfolio Turnover. The Fund can engage in short-term trading to try to achieve its objective, and will likely have a high portfolio
turnover rate. Portfolio turnover increases the Fund's brokerage and transaction costs (and reduces the Fund's performance).
However, most of the Fund's portfolio transactions are principal trades that do not entail brokerage fees. If the Fund
realizes capital gains when it sells its portfolio investments, it must generally pay those gains out to shareholders,
increasing their taxable distributions. The Financial Highlights table at the end of this Prospectus shows the Fund's
portfolio turnover rates during recent fiscal years.

CAN THE FUND'S INVESTMENT OBJECTIVE AND POLICIES CHANGE? The Fund's Board of Trustees can change non-fundamental investment policies
without shareholder approval, although significant changes will be described in amendments to this Prospectus. Fundamental policies
cannot be changed without the approval of a majority of the Fund's outstanding voting shares. The Fund's investment objective is a
fundamental policy. Investment restrictions that are fundamental policies are listed in the Statement of Additional Information. An
investment policy is not fundamental unless this Prospectus or the Statement of Additional Information says that it is. The Fund's
policy to invest at least 80% of its net assets (plus borrowings) in debt securities is not a fundamental policy; however, it cannot
be changed without 60 days prior notice to shareholders.

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

Forward Rolls. The Fund can enter into "forward roll" transactions with respect to mortgage-related securities. In this type of
transaction, the Fund sells a mortgage-related security to a buyer and simultaneously agrees to repurchase a similar
security at a later date at a set price.
During the period between the sale and the repurchase, the Fund will not be entitled to receive interest and principal
payments on the securities that have been sold. It is possible that the market value of the securities the Fund sells may
decline below the price at which the Fund is obligated to repurchase securities, or that the counterparty might default in
its obligation.
Zero-Coupon and "Stripped" Securities. Some of the debt securities the Fund buys are zero-coupon bonds that pay no interest. They are
issued at a substantial discount from their face value. They may be securities issued by the U.S. government or private
issuers. "Stripped" securities are the separate income or principal components of a debt security. Some CMOs or other
mortgage-related securities may be stripped, with each component having a different proportion of principal or interest
payments. One class might receive all the interest and the other all the principal payments.
Zero-coupon and stripped securities are subject to greater fluctuations in price from interest rate changes than typical
debt securities that pay interest on a regular basis. The Fund may have to pay out the imputed income on zero-coupon
securities without receiving the cash currently. Stripped securities are particularly sensitive to changes in interest rates.
The values of interest-only and principal-only mortgage-related securities are very sensitive to changes in interest rates
and prepayments of underlying mortgages. The market for these securities may be limited, making it difficult for the Fund to
value or to sell its holdings at an acceptable price.
Preferred Stock. Unlike common stock, preferred stock typically has a stated dividend rate. Preferred stock dividends may be
cumulative (they remain a liability of the company until they are paid) or non-cumulative. When 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 is
generally subordinate to the rights of a corporation's debt securities.
Asset-Backed Securities. The Fund can buy asset-backed securities, which are fractional interests in pools of loans collateralized by
the loans or other assets or receivables. They are typically issued by trusts and special purpose corporations that pass the
income from the underlying pool to the buyer of the interest. These securities are subject to prepayment risks and the risk
of default by the issuer as well as by the borrowers of the underlying loans in the pool.
Illiquid and Restricted Securities. Investments may be illiquid because they do not have an active trading market, making it
difficult to value them or sell them 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 Fund's Board of Trustees can increase that
limit to 15%). Certain restricted securities that are eligible for resale to qualified institutional purchasers may not be
subject to that limit. The Manager monitors holdings of illiquid securities on an ongoing basis to determine whether to sell
any holdings to maintain adequate liquidity.
"Structured" Notes. The Fund can buy "structured" notes, which are specially-designed derivative debt investments whose payments of
principal or interest payments are linked to the value of an index (such as a currency or securities index) or commodity.
The terms of the instrument may be "structured" by the purchaser (the Fund) and the borrower issuing the note.
The principal and/or interest payments depend on the performance of one or more other securities or indices, and the values
of these notes will therefore fall or rise in response to the changes in the values of the underlying security or index.
They are subject to both credit and interest rate risks and therefore the Fund could receive more or less than it originally
invested when the notes mature, or it might receive less interest than the stated coupon payment if the underlying
investment or index does not perform as anticipated. Their values may be very volatile and they may have a limited trading
market, making it difficult for the Fund to sell its investment at an acceptable price.
Hedging. The Fund can buy and sell certain kinds of futures contracts, put and call options, interest rate swaps and forward
contracts to hedge investment risks. The Fund is not required to use hedging instruments to seek its objective and does not
currently use them to a significant degree.
There are special risks in particular hedging strategies. If the Manager used a hedging instrument at the wrong time or
judged market conditions incorrectly, the strategy could reduce the Fund's return. The Fund could also experience losses if
the prices of its futures and options positions were not correlated with its other investments or if it could not close out
a position because of an illiquid market.
Short-Term Debt Securities. The Fund can buy high-quality, short-term money market instruments, including obligations of the U.S.
Government and its agencies, short-term corporate debt obligations, bank certificates of deposit and bankers' acceptances,
and commercial paper, which are short-term, negotiable promissory notes of companies. Because these instruments tend to
offer lower yields than other debt securities, the Fund ordinarily does not invest in them to seek high current income, and
uses them more for liquidity and cash management purposes or for defensive purposes when market conditions are unstable.

How the Fund Is Managed

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

The Manager has been an investment advisor since January 1960. The Manager and its subsidiaries and affiliates managed more
than $130 billion in assets as of March 31, 2002, including other Oppenheimer funds, with more than 6.3 million shareholder accounts.
The Manager is located at 498 Seventh Avenue, 10th Floor, New York, New York 10018.

Portfolio Managers. Since April 23, 2002, the Fund has been managed by a portfolio management team comprised of Angelo Manioudakis
and other investment professionals selected from the Manager's high-grade team in its fixed-income department. This
portfolio management team is primarily responsible for the day-to-day management of the Fund's portfolio. Mr. Manioudakis is
a Vice President of the Fund and Senior Vice President of the Manager. He is also an officer and portfolio manager of other
Oppenheimer funds. Certain members of the Fund's portfolio management team have portfolio management responsibilities for
other Oppenheimer funds. Prior to joining the Manager in April 2002, Mr. Manioudakis was a portfolio manager at Morgan
Stanley Investment Management (since August 1993).

Advisory Fees. Under the Investment Advisory Agreement, effective January 1, 2002, the Fund pays the Manager an advisory fee at an
annual rate that declines on additional assets as the Fund grows: 0.60% of the first $200 million of average annual net
assets of the Fund, 0.57% of the next $200 million, 0.54% of the next $200 million, 0.51% of the next $200 million, 0.45% of
the next $200 million and 0.35% of average annual net assets in excess of $1 billion. Prior to January 1, 2002 the annual
advisory fee was: 0.75% of the first $200 million of average annual net assets of the Fund, 0.72% of the next $200 million,
0.69% of the next $200 million, 0.66% of the next $200 million, 0.60% of the next $200 million and 0.50% of average annual
net assets in excess of $1 billion. The Fund's management fee for its last fiscal year ended December 31, 2001 was 0.73% 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 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 as an Asset Builder Plan, the $25 minimum applies. Additional purchases may be for 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 Fund calculates the net asset value of each class of shares as of the close of The New York Stock Exchange, on
         each day the Exchange is open for trading (referred to in this Prospectus as a "regular business day"). The Exchange
         normally closes at 4:00 P.M., New York time, but may close earlier on some days. All references to time in this Prospectus
         mean "New York time."
         The net asset value per share is determined by dividing the value of the Fund's net assets attributable to a class by the
         number of shares of that class that are outstanding. To determine net asset value, the Fund's Board of Trustees has
         established procedures to value the Fund's securities, in general, based on market value. The Board has adopted special
         procedures for valuing illiquid and restricted securities and obligations for which market values cannot be readily
         obtained. Because some foreign securities trade in markets and on exchanges that operate on weekends and U.S. holidays, the
         values of some of the Fund's foreign investments may change on days when investors cannot buy or redeem Fund shares.
         If, after the close of the principal market on which a security held by the Fund is traded, and before the time the Fund's
         securities are priced that day, an event occurs that the Manager deems likely to cause a material change in the value of such
         security, the Fund's Board of Trustees has authorized the Manager, subject to the Board's review, to ascertain a fair value
         for such security.
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 five different classes of shares. The different classes of
shares represent investments in the same portfolio of securities, but the classes are subject to different expenses and will likely
have different share prices. When you buy shares, be sure to specify the class of shares. If you do not choose a class, your
investment will be made in Class A shares.
- ---------------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------------
Class A Shares. If you buy Class A shares, you pay an initial sales charge (on investments up to $1 million). The amount of that
         sales charge will vary depending on the amount you invest. The sales charge rates are listed in "How Can You Buy Class A
         Shares?" below.
- ---------------------------------------------------------------------------------------------------------------------------------------
Class B Shares. If you buy Class B shares, you pay no sales charge at the time of purchase, but you will pay an annual asset-based
         sales charge. If you sell your shares within 6 years of buying them, you will normally pay a contingent deferred sales
         charge. That contingent deferred sales charge varies depending on how long you own your shares, as described in "How Can You
         Buy Class B Shares?" below.
- ---------------------------------------------------------------------------------------------------------------------------------------
Class C Shares. If you buy Class C shares, you pay no sales charge at the time of purchase, but you will pay an annual asset-based
         sales charge. If you sell your shares within 12 months of buying them, you will normally pay a contingent deferred sales
         charge of 1.0%, as described in "How Can You Buy Class C Shares?" below.
- ---------------------------------------------------------------------------------------------------------------------------------------
Class N Shares. If you buy Class N shares (available only through certain retirement plans), you pay no sales charge at the time of
         purchase, but you will pay an annual asset-based sales charge. If you sell your shares within 18 months of the retirement
         plan's first purchase of Class N shares, you may pay a contingent deferred sales charge of 1.0%, as described in "How Can
         You Buy Class N Shares?" below.
Class Y Shares. Class Y shares are offered only to certain institutional investors that have special agreements with the Distributor.

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

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

How Long Do You Expect to Hold Your Investment? While future financial needs cannot be predicted with certainty, knowing how long you
         expect to hold your investment will assist you in selecting the appropriate class of shares. Because of the effect of
         class-based expenses, your choice will also depend on how much you plan to invest. For example, the reduced sales charges
         available for larger purchases of Class A shares may, over time, offset the effect of paying an initial sales charge on your
         investment, compared to the effect over time of higher class-based expenses on shares of Class B, Class C or Class N. For
         retirement plans that qualify to purchase Class N shares, Class N shares will generally be more advantageous than Class B and
         Class C shares.
     o   Investing for the Shorter Term. While the Fund is meant to be a long-term investment, if you have a relatively short-term
         investment horizon (that is, you plan to hold your shares for not more than six years), you should probably consider
         purchasing Class A or Class C shares rather than Class B shares. That is because of the effect of the Class B contingent
         deferred sales charge if you redeem within six years, as well as the effect of the Class B asset-based sales charge on the
         investment return for that class in the short-term. Class C shares might be the appropriate choice (especially for
         investments of less than $100,000), because there is no initial sales charge on Class C shares, and the contingent deferred
         sales charge does not apply to amounts you sell after holding them one year.
         However, if you plan to invest more than $100,000 for the shorter term, then as your investment horizon increases toward six
         years, Class C shares might not be as advantageous as Class A shares. That is because the annual asset-based sales charge on
         Class C shares will have a greater impact on your account over the longer term than the reduced front-end sales charge
         available for larger purchases of Class A shares.
         And for non-retirement plan investors who invest $1 million or more, in most cases Class A shares will be the most
         advantageous choice, no matter how long you intend to hold your shares. For that reason, the Distributor normally will not
         accept purchase orders of $500,000 or more of Class B shares or $1 million or more of Class C shares from a single investor.
o        Investing for the Longer Term. If you are investing less than $100,000 for the  longer-term,  for example for retirement,  and
         do not expect to need access to your money for seven years or more, Class B shares may be appropriate.
Are There  Differences  in Account  Features  That Matter to You?  Some  account  features may not be available to Class B, Class C and
         Class N  shareholders.  Other features may not be advisable  (because of the effect of the  contingent  deferred sales charge)
         for Class B, Class C and Class N  shareholders.  Therefore,  you should  carefully  review how you plan to use your investment
         account before deciding which class of shares to buy.
         Additionally, the dividends payable to Class B, Class C and Class N shareholders will be reduced by the additional expenses
         borne by those classes that are not borne by Class A or Class Y shares, such as the Class B, Class C and Class N asset-based
         sales charge described below and in the Statement of Additional Information. Share certificates are only available on Class A
         shares. If you are considering using your shares as collateral for a loan, that may be a factor to consider.
How Do Share Classes Affect Payments to Your Broker? A financial advisor may receive different compensation for selling one class of
         shares than for selling another class. It is important to remember that Class B, Class C and Class N contingent deferred
         sales charges and asset-based sales charges have the same purpose as the front-end sales charge on sales of Class A shares:
         to compensate the Distributor for concessions and expenses it pays to dealers and financial institutions for selling shares.
         The Distributor may pay additional compensation from its own resources to securities dealers or financial institutions based
         upon the value of shares of the Fund owned by the dealer or financial institution for its own account or for its customers.

SPECIAL SALES CHARGE ARRANGEMENTS AND WAIVERS. Appendix 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 a concession. The Distributor reserves the right to reallow the entire concession to
dealers. The current sales charge rates and concessions paid to dealers and brokers are as follows:

  ------------------------------------ ------------------------ ------------------------- -------------------------
  Amount of Purchase                   Front-End Sales          Front-End Sales           Concession As
                                       Charge As a              Charge As a
                                       Percentage of            Percentage of Net         Percentage of
                                       Offering Price           Amount Invested           Offering Price
  ------------------------------------ ------------------------ ------------------------- -------------------------
  ------------------------------------ ------------------------ ------------------------- -------------------------
  Less than $50,000                             4.75%                    4.98%                     4.00%
  ------------------------------------ ------------------------ ------------------------- -------------------------
  ------------------------------------ ------------------------ ------------------------- -------------------------
  $50,000 or more but less than                 4.50%                    4.71%                     3.75%
  $100,000
  ------------------------------------ ------------------------ ------------------------- -------------------------
  ------------------------------------ ------------------------ ------------------------- -------------------------
  $100,000 or more but less than                3.50%                    3.63%                     2.75%
  $250,000
  ------------------------------------ ------------------------ ------------------------- -------------------------
  ------------------------------------ ------------------------ ------------------------- -------------------------
  $250,000 or more but less than                2.50%                    2.56%                     2.00%
  $500,000
  ------------------------------------ ------------------------ ------------------------- -------------------------
  ------------------------------------ ------------------------ ------------------------- -------------------------
  $500,000 or more but less than $1             2.00%                    2.04%                     1.60%
  million
  ------------------------------------ ------------------------ ------------------------- -------------------------

Can You Reduce Class A Sales Charges? You may be eligible to buy Class A shares at reduced sales charge rates under the Fund's "Right
of Accumulation" or a Letter of Intent, as described in "Reduced Sales Charges" in the Statement of Additional Information.
Class A Contingent Deferred Sales Charge. There is no initial sales charge on purchases of Class A shares of any one or more of the
Oppenheimer funds aggregating $1 million or more, or for certain purchases by particular types of retirement plans that were
permitted to purchase such shares prior to March 1, 2001 ("grandfathered retirement accounts"). Retirement plans are not
permitted to make initial purchases of Class A shares subject to a contingent deferred sales charge. The Distributor pays
dealers of record concessions in an amount equal to 1.0% of purchases of $1 million or more other than by grandfathered
retirement accounts. For grandfathered retirement accounts, the concession is 1.0% of the first $2.5 million, plus 0.50% of
the next $2.5 million, plus 0.25% of purchases over $5 million, calculated on a calendar year basis. In either case, the
concession will not be paid on purchases of shares by exchange or that were previously subject to a front-end sales charge
and dealer concession.
If you redeem any of those shares within an 18-month "holding period" measured from the beginning of the calendar month of
their purchase, a contingent deferred sales charge (called the "Class A contingent deferred sales charge") may be deducted
from the redemption proceeds. That sales charge will be equal to 1.0% of the lesser of:
o the aggregate net asset value of the redeemed shares at the time of redemption (excluding shares purchased by reinvestment
of dividends or capital gain distributions) or
o the original net asset value of the redeemed shares.
The Class A contingent deferred sales charge will not exceed the aggregate amount of the concessions the Distributor paid to
your dealer on all purchases of Class A shares of all Oppenheimer funds you made that were subject to the Class A contingent
deferred sales charge.
Purchases by Certain Retirement Plans. There is no initial sales charge on purchases of Class A shares of any one or more Oppenheimer
funds by retirement plans that have $10 million or more in plan assets and that have entered into a special agreement with
the Distributor and by retirement plans which are part of a retirement plan product or platform offered by certain banks,
broker-dealers, financial advisors, insurance companies or recordkeepers which have entered into a special agreement with
the Distributor. The Distributor currently pays dealers of record concessions in an amount equal to 0.25% of the purchase
price of Class A shares by those retirement plans from its own resources at the time of sale, subject to certain exceptions
as described in the Statement of Additional Information. There is no contingent deferred sales charge upon the redemption of
such shares.

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

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

- ----------------------------------------------------------- --------------------------------------------------------
Years Since Beginning of Month in Which Purchase Order Contingent Deferred Sales Charge on Redemptions in
was Accepted That Year
(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 that you hold convert, any other Class B
shares that were acquired by reinvesting dividends and distributions on the converted shares will also convert to Class A
shares. For further information on the conversion feature and its tax implications, see "Class B Conversion" in the
Statement of Additional Information.

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

HOW CAN YOU BUY CLASS N SHARES? Class N shares are offered 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 1.0% will be imposed upon the redemption of Class N shares, if:
o The group retirement plan is terminated or Class N shares of all Oppenheimer funds are terminated as an investment option of
the plan and Class N shares are redeemed within 18 months after the plan's first purchase of Class N shares of any
Oppenheimer fund, or
o With respect to an IRA or 403(b) plan, Class N shares are redeemed within 18 months of the plan's first purchase of Class N
shares of any Oppenheimer fund.
Retirement plans that offer Class N shares may impose charges on plan participant accounts. The procedures for buying,
selling, exchanging and transferring the Fund's other classes of shares (other than the time those orders must be received by the
Distributor or Transfer Agent in Colorado) and the special account features applicable to purchasers of those other classes of shares
described elsewhere in this prospectus do not apply to Class N shares offered through a group retirement plan. Instructions for
buying, selling, exchanging or transferring Class N shares offered through a group retirement plan must be submitted by the plan, not
by plan participants for whose benefit the shares are held.

Who Can Buy Class Y Shares? Class Y shares are sold at net asset value per share without a sales charge directly to institutional
investors that have special agreements with the Distributor for this purpose. They may include insurance companies, registered
investment companies and employee benefit plans. For example, Massachusetts Mutual Life Insurance Company ("MassMutual"), an
affiliate of the Manager, may purchase Class Y shares of the Fund and other Oppenheimer funds (as well as Class Y shares of funds
advised by MassMutual) for asset allocation programs, investment companies or separate investment accounts it sponsors and offers to
its customers. Individual investors cannot buy Class Y shares directly.

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

DISTRIBUTION AND SERVICE (12b-1) PLANS.

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

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

The asset-based sales charge and service fees increase Class B and Class C expenses by 1.0% and increase Class N expenses by
0.50% of the net assets per year of the respective class. Because these fees are paid out of the Fund's assets on an
on-going basis, over time these fees will increase the cost of your investment and may cost you more than other types of
sales charges.
The Distributor uses the service fees to compensate dealers for providing personal services for accounts that hold Class B,
Class C or Class N shares. The Distributor pays the 0.25% service fees to dealers in advance for the first year after the
shares are sold by the dealer. After the shares have been held for a year, the Distributor pays the service fees to dealers
on a quarterly basis. The Distributor retains the service fees for accounts for which it renders the required personal
services.

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

The Distributor currently pays a sales concession of 0.75% of the purchase price of Class C shares to dealers from its own
resources at the time of sale. Including the advance of the service fee, the total amount paid by the Distributor to the
dealer at the time of sale of Class C shares is therefore 1.0% of the purchase price. The Distributor pays the asset-based
sales charge as an ongoing concession to the dealer on Class C shares that have been outstanding for a year or more. See the
Statement of Additional Information for exceptions.

The Distributor currently pays a sales concession of 0.75% of the purchase price of Class N shares to dealers from its own
resources at the time of sale. Including the advance of the service fee, the total amount paid by the Distributor to the
dealer at the time of sale of Class N shares is therefore 1.0% of the purchase price. The Distributor retains the
asset-based sales charge on Class N shares. See the Statement of Additional Information for exceptions.

Special Investor Services

ACCOUNTLINK. You can use our AccountLink feature to link your Fund account with an account at a U.S. bank or other financial
institution. It must be an Automated Clearing House (ACH) member. AccountLink lets you:
o transmit funds electronically to purchase shares by telephone (through a service representative or by PhoneLink) or
automatically under Asset Builder Plans, or
o have the Transfer Agent send redemption proceeds or transmit dividends and distributions directly to your bank account.
Please call the Transfer Agent for more information.
You may purchase shares by telephone only after your account has been established. To purchase shares in amounts up to
$250,000 through a telephone representative, call the Distributor at 1.800.852.8457. The purchase payment will be debited from your
bank account.

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

PHONELINK. PhoneLink is the OppenheimerFunds automated telephone system that enables shareholders to perform a number of account
transactions automatically using a touch-tone phone. PhoneLink may be used on already-established Fund accounts after you obtain a
Personal Identification Number (PIN), by calling the special PhoneLink number, 1.800.533.3310.
Purchasing Shares. You may purchase shares in amounts up to $100,000 by phone, by calling 1.800.533.3310. You must have established
AccountLink privileges to link your bank account with the Fund to pay for these purchases.
Exchanging Shares. With the OppenheimerFunds Exchange Privilege, described below, you can exchange shares automatically by phone from
your Fund account to another OppenheimerFunds account you have already established by calling the special PhoneLink number.
Selling Shares. You can redeem shares by telephone automatically by calling the PhoneLink number and the Fund will send the proceeds
directly to your AccountLink bank account. Please refer to "How to Sell Shares," below for details.

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

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

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

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

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

How to Sell Shares

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

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

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

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

HOW DO you SELL SHARES BY TELEPHONE? You and your dealer representative of record may also sell your shares by telephone. To receive
the redemption price calculated on a particular regular business day, your call must be received by the Transfer Agent by the close
of The New York Stock Exchange that day, which is normally 4:00 P.M., but may be earlier on some days. You may not redeem shares held
in an OppenheimerFunds retirement plan account or under a share certificate by telephone.
o To redeem shares through a service representative, call 1.800.852.8457
o To redeem shares automatically on PhoneLink, call 1.800.533.3310
Whichever method you use, you may have a check sent to the address on the account statement, or, if you have linked your
Fund account to your bank account on AccountLink, you may have the proceeds sent to that bank account.

Are There Limits on Amounts Redeemed by Telephone?
Telephone Redemptions Paid by Check. Up to $100,000 may be redeemed by telephone in any seven-day period. The check must be payable
to all owners of record of the shares and must be sent to the address on the account statement. This service is not
available within 30 days of changing the address on an account.
Telephone Redemptions Through AccountLink. There are no dollar limits on telephone redemption proceeds sent to a bank account
designated when you establish AccountLink. Normally the ACH transfer to your bank is initiated on the business day after the
redemption. You do not receive dividends on the proceeds of the shares you redeemed while they are waiting to be
transferred.

CAN YOU SELL SHARES THROUGH your DEALER? The Distributor has made arrangements to repurchase Fund shares from dealers and brokers on
behalf of their customers. Brokers or dealers may charge for that service. If your shares are held in the name of your dealer, you
must redeem them through your dealer.

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

A contingent deferred sales charge will be based on the lesser of the net asset value of the redeemed shares at the time of
redemption or the original net asset value. A contingent deferred sales charge is not imposed on:
o the amount of your account value represented by an increase in net asset value over the initial purchase price,
o shares purchased by the reinvestment of dividends or capital gains distributions, or
o shares redeemed in the special circumstances described in Appendix C to the Statement of Additional Information
To determine whether a contingent deferred sales charge applies to a redemption, the Fund redeems shares in the following
order:
1. shares acquired by reinvestment of dividends and capital gains distributions,
2. shares held for the holding period that applies to the class, and
3. shares held the longest during the holding period.

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

How to Exchange Shares

Shares of the Fund may be exchanged for shares of certain Oppenheimer funds at net asset value per share at the time of exchange,
without sales charge. Shares of the Fund can be purchased by exchange of shares of other Oppenheimer funds on the same basis. To
exchange shares, you must meet several conditions:
o Shares of the fund selected for exchange must be available for sale in your state of residence.
o The prospectuses of both funds must offer the exchange privilege.
o You must hold the shares you buy when you establish your account for at least seven days before you can exchange them. After
the account is open seven days, you can exchange shares every regular business day.
o You must meet the minimum purchase requirements for the fund whose shares you purchase by exchange.
o Before exchanging into a fund, you must obtain and read its prospectus
Shares of a particular class of the Fund may be exchanged only for shares of the same class in the other Oppenheimer funds.
For example, you can exchange Class A shares of this Fund only for Class A shares of another fund. In some cases, sales charges may
be imposed on exchange transactions. For tax purposes, exchanges of shares involve a sale of the shares of the fund you own and a
purchase of the shares of the other fund, which may result in a capital gain or loss. Please refer to "How to Exchange Shares" in the
Statement of Additional Information for more details.

You can find a list of Oppenheimer funds currently available for exchanges in the Statement of Additional Information or
obtain one by calling a service representative at 1.800.525.7048. 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 certificates 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, but it may impose changes at any time for emergency purposes.
o If the Transfer Agent cannot exchange all the shares you request because of a restriction cited above, only the shares
eligible for exchange will be exchanged.

Shareholder Account Rules and Policies

More information about the Fund's policies and procedures for buying, selling and exchanging shares is contained in the Statement of
Additional Information.
The offering of shares may be suspended during any period in which the determination of net asset value is suspended, and the
offering may be suspended by the Board of Trustees at any time the Board believes it is in the Fund's best interest to do so.
Telephone transaction privileges for purchases, redemptions or exchanges may be modified, suspended or terminated by the Fund at any
time. The Fund will provide you notice whenever it is required to do so by applicable law. If an account has more than one
owner, the Fund and the Transfer Agent may rely on the instructions of any one owner. Telephone privileges apply to each
owner of the account and the dealer representative of record for the account unless the Transfer Agent receives cancellation
instructions from an owner of the account.
The Transfer Agent will record any telephone calls to verify data concerning transactions and has adopted other procedures to confirm
that telephone instructions are genuine, by requiring callers to provide tax identification numbers and other account data
or by using PINs, and by confirming such transactions in writing. The Transfer Agent and the Fund will not be liable for
losses or expenses arising out of telephone instructions reasonably believed to be genuine.
Redemption or transfer requests will not be honored until the Transfer Agent receives all required documents in proper form. From
time to time, the Transfer Agent in its discretion may waive certain of the requirements for redemptions stated in this
Prospectus.
Dealers that perform account transactions for their clients by participating in NETWORKING through the National Securities Clearing
Corporation are responsible for obtaining their clients' permission to perform those transactions, and are responsible to
their clients who are shareholders of the Fund if the dealer performs any transaction erroneously or improperly.
The redemption price for shares will vary from day to day because the value of the securities in the Fund's portfolio fluctuates. The
redemption price, which is the net asset value per share, will normally differ for each class of shares. The redemption
value of your shares may be more or less than their original cost.
Payment for redeemed shares ordinarily is made in cash. It is forwarded by check, or through AccountLink (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 $1,000 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 within 30 days after the Transfer Agent receives your request to stop householding.

Dividends, Capital Gains and Taxes

Dividends. The Fund intends to declare dividends separately for each class of shares from net investment income each regular business
day and pay those dividends to shareholders monthly on a date selected by the Board of Trustees. Daily dividends will not be declared
or paid on newly purchased shares until Federal Funds are available to the Fund from the purchase payment for shares. Dividends and
distributions paid to Class A and Class Y shares will generally be higher than dividends for Class B, Class C and Class N shares,
which normally have higher expenses than Class A and Class Y shares. The Fund has no fixed dividend rate and cannot guarantee that it
will pay any dividends or distributions.

Capital Gains. The Fund may realize capital gains on the sale of portfolio securities. If it does, it may make distributions out of
any net short-term or long-term capital gains in December of each year. The Fund may make supplemental distributions of dividends and
capital gains following the end of its fiscal year. There can be no assurance that the Fund will pay any capital gains distributions
in a particular year.

WHAT CHOICES DO YOU HAVE FOR RECEIVING DISTRIBUTIONS? When you open your account, specify on your application how you want to receive
your dividends and distributions. You have four options:
Reinvest All Distributions in the Fund. You can elect to reinvest all dividends and capital gains distributions in additional shares
of the Fund.
Reinvest Dividends or Capital Gains. You can elect to reinvest some distributions (dividends, short-term capital gains or long-term
capital gains distributions) in the Fund while receiving the other types of distributions by check or having them sent to
your bank account through AccountLink.
Receive All Distributions in Cash. You can elect to receive a check for all dividends and capital gains distributions or have them
sent to your bank through AccountLink.
Reinvest Your Distributions in Another OppenheimerFunds Account. You can reinvest all distributions in the same class of shares of
another OppenheimerFunds account you have established.

TAXES. If your shares are not held in a tax-deferred retirement account, you should be aware of the following tax implications of
investing in the Fund. Distributions are subject to federal income tax and may be subject to state or local taxes. Dividends paid
from short-term capital gains and net investment income are taxable as ordinary income. Long-term capital gains are taxable as
long-term capital gains when distributed to shareholders. It does not matter how long you have held your shares. Whether you reinvest
your distributions in additional shares or take them in cash, the tax treatment is the same.

Every year the Fund will send you and the IRS a statement showing the amount of any taxable distribution you received in the
previous year. Any long-term capital gains will be separately identified in the tax information the Fund sends you after the end of
the calendar year.
Avoid "Buying a Dividend." If you buy shares on or just before the Fund declares a capital gains distribution, you will pay the full
price for the shares and then receive a portion of the price back as a taxable capital gain.
Remember, There May be Taxes on Transactions. Because the Fund's share prices fluctuate, you may have a capital gain or loss when you
sell or exchange your shares. A capital gain or loss is the difference between the price you paid for the shares and the
price you received when you sold them. Any capital gain is subject to capital gains tax.
Returns of Capital Can Occur. In certain cases, distributions made by the Fund may be considered a non-taxable return of capital to
shareholders. If that occurs, it will be identified in notices to shareholders.

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

Financial Highlights

The Financial Highlights Table is presented to help you understand the Fund's financial performance for the past five fiscal years.
Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an
investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by 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 December 31,                      2001         2000         1999         1998         1997
- ------------------------------------------------------------------------------------------------------------------

Per Share Operating Data

Net asset value, beginning of period                     $9.79        $9.97       $10.86       $10.97       $10.70
- ------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                      .73/1/       .73          .71          .71          .77
Net realized and unrealized gain (loss)                   (.05)/1/     (.18)        (.89)        (.11)         .27
                                                         ---------------------------------------------------------
Total income (loss)
from investment operations                                 .68          .55         (.18)         .60         1.04
- ------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                      (.73)        (.73)        (.71)        (.71)
(.77)
                                                         ---------------------------------------------------------
Total dividends and/or distributions
to shareholders                                           (.73)        (.73)        (.71)        (.71)
(.77)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                           $9.74        $9.79        $9.97       $10.86       $10.97
                                                         =========================================================

- ------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value/2/                       7.05%        5.80%       (1.65)%       5.61%
10.13%

- ------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data

Net assets, end of period (in thousands)              $280,132     $202,833     $220,502     $246,668     $190,706
- ------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                     $237,232     $205,883     $251,190     $217,944     $187,458
- ------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:/3/
Net investment income   7.31%/1/ 7.48%        6.88%        6.46%        7.20%
Expenses                1.23%    1.31%        1.24%        1.22%/4/     1.27%/4/
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 162%     255%         238%          67%          51%


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                      $ .74
Net realized and unrealized gain (loss)    $(.06)
Net investment income ratio                 7.43%

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 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 BOND FUND


FINANCIAL HIGHLIGHTS Continued




Class B      Year Ended December 31,                      2001         2000         1999         1998         1997
- ------------------------------------------------------------------------------------------------------------------

Per Share Operating Data

Net asset value, beginning of period                     $9.79        $9.96       $10.86       $10.97       $10.69
- ------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                      .65/1/       .66          .63          .62          .69
Net realized and unrealized gain (loss)                   (.05)/1/     (.17)        (.90)        (.10)         .28
                                                         ---------------------------------------------------------
Total income (loss)
from investment operations                                 .60          .49         (.27)         .52          .97
- ------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                      (.66)        (.66)        (.63)        (.63)
(.69)
                                                         ---------------------------------------------------------
Total dividends and/or distributions
to shareholders                                           (.66)        (.66)        (.63)        (.63)
(.69)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                           $9.73        $9.79        $9.96       $10.86       $10.97
                                                         =========================================================

- ------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value/2/                       6.14%        5.11%       (2.48)%       4.81%
9.41%

- ------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data

Net assets, end of period (in thousands)              $161,998      $83,637      $94,845      $88,061      $48,255
- ------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                     $118,521      $83,394      $95,285      $64,330      $41,439
- ------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:/3/
Net investment income                                     6.60%/1/     6.71%        6.13%        5.68%
6.42%
Expenses                                                  1.99%        2.07%        1.99%        1.97%/4/
2.02%/4/
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                    162%         255%         238%          67%
51%


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                      $ .66
Net realized and unrealized gain (loss)    $(.06)
Net investment income ratio                 6.72%

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 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 BOND FUND





Class C      Year Ended December 31,                      2001         2000         1999         1998         1997
- ------------------------------------------------------------------------------------------------------------------

Per Share Operating Data

Net asset value, beginning of period                     $9.80        $9.97       $10.87       $10.98       $10.70
- ------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                      .65/1/       .66          .63          .62          .69
Net realized and unrealized gain (loss)                   (.05)/1/     (.17)        (.90)        (.10)         .28
                                                         ---------------------------------------------------------
Total income (loss)
from investment operations                                 .60          .49         (.27)         .52          .97
- ------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                      (.66)        (.66)        (.63)        (.63)
(.69)
                                                         ---------------------------------------------------------
Total dividends and/or distributions
to shareholders                                           (.66)        (.66)        (.63)        (.63)
(.69)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                           $9.74        $9.80        $9.97       $10.87       $10.98
                                                         =========================================================

- ------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value/2/                       6.14%        5.11%       (2.47)%       4.81%
9.39%

- ------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data

Net assets, end of period (in thousands)               $57,049      $24,303      $24,143      $21,796       $9,188
- ------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                      $36,886      $22,605      $24,218      $15,198       $6,134
- ------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:/3/
Net investment income                                     6.65%/1/     6.71%        6.13%        5.66%
6.36%
Expenses                                                  1.98%        2.07%        1.99%        1.96%/4/
2.02%/4/
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                    162%         255%         238%          67%
51%


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                      $ .66
Net realized and unrealized gain (loss)    $(.06)
Net investment income ratio                 6.77%

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 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 BOND FUND


FINANCIAL HIGHLIGHTS Continued



                                                       Class N                                             Class Y
                                                        Period                                                Year
                                                         Ended                                               Ended
                                                      Dec. 31,                                            Dec. 31,
                                                          2001/1/      2001         2000         1999
1998/2/
- ------------------------------------------------------------------------------------------------------------------

Per Share Operating Data

Net asset value, beginning of period                    $10.02        $9.78        $9.95       $10.86       $10.88
- ------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                     .61/3/       .76/4/        .85          .76          .49
Net realized and unrealized gain (loss)                   (.29)/3/     (.05)/4/     (.18)        (.91)
(.02)

- ----------------------------------------------------------
Total income (loss) from
investment operations                                      .32          .71          .67         (.15)         .47
- ------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                      (.61)        (.77)        (.84)        (.76)
(.49)

- ----------------------------------------------------------
Total dividends and/or distributions
to shareholders                                           (.61)        (.77)        (.84)        (.76)
(.49)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                          $ 9.73       $ 9.72        $9.78       $ 9.95       $10.86

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

- ------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value5                         3.18%        7.30%        7.13%       (1.37)%
4.40%

- ------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data

Net assets, end of period (in thousands)                $2,176       $4,067         $877         $186           $1
- ------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                       $  768       $2,286         $340          $31           $1
- ------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:6
Net investment income                                     7.87%/3/     7.85%/4/     7.92%        7.94%
6.84%
Expenses                                                  1.37%        0.94%        0.83%        0.83%
0.74%/7/
Expenses, net of reduction to custodian
expenses and/or voluntary waiver
of transfer agent fees                                     N/A         0.92%         N/A          N/A          N/A
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                    162%         162%         255%         238%
67%


1. For the period from March 1, 2001 (inception of offering) to December 31,
2001.
2. For the period from April 27,1998 (inception of offering) to December 31,
1998.
3. Without the adoption of the change in amortization method as discussed in
Note 1 in the Notes to Financial Statements, these amounts would have been:

Net investment income                      Change less than $0.005 per share
Net realized and unrealized gain (loss)    Change less than $0.005 per share
Net investment income ratio 7.99%

4. 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                      $ .77
Net realized and unrealized gain (loss)    $(.06)
Net investment income ratio                 7.97%

5. 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.
6. Annualized for periods of less than one full year.
7. Expense ratio has been calculated without adjustment for the reduction to
custodian expenses.



                           | OPPENHEIMER BOND FUND





INFORMATION AND SERVICES

For More Information on Oppenheimer Bond 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 download
                                            documents on the OppenheimerFunds website:
                                            WWW.OPPENHEIMERFUNDS.COM
                                            ------------------------
- ------------------------------------------- ------------------------------------------------------------------

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


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

The Fund's SEC File No.: 811-3420                             The Fund's shares are distributed by:
PR0285.001.0402                                               [logo] OppenheimerFunds Distributor, Inc.
Printed on recycled paper.

                                                       Appendix to Prospectus of
                                                         Oppenheimer Bond Fund

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

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

         Calendar             Annual
         Year                 Total
         Ended                Returns

         12/31/92               6.77%
         12/31/93               10.30%
         12/31/94               -3.87%
         12/31/95               16.94%
         12/31/96               4.87%
         12/31/97               10.13%
         12/31/98               5.61%
         12/31/99               -1.65%
         12/31/00               5.80%
         12/31/01               7.05%

EX-99 4 sai497e28502.htm SAI 497(E) BOND FUND 2002 SAI 497(E) BOND FUND

Oppenheimer Bond Fund

6803 South Tucson Way, Englewood, Colorado 80112
1-800-525-7048

Statement of Additional Information dated April 30, 2002

This Statement of Additional Information is not a Prospectus. This document contains additional information
about the Fund and supplements information in the Prospectus dated April 30, 2002. It should be read together with
the Prospectus. You can obtain the Prospectus by writing to the Fund's Transfer Agent, OppenheimerFunds Services, at
P.O. Box 5270, Denver, Colorado 80217, or by calling the Transfer Agent at the toll-free number shown above, or by
downloading it from the OppenheimerFunds Internet web site at www.oppenheimerfunds.com.

Contents
Page
About the Fund
Additional Information About the Fund's Investment Policies and Risks........................................ 2
The Fund's Investment Policies.......................................................................... 2
Other Investment Techniques and Strategies.............................................................. 9
Investment Restrictions................................................................................. 29
How the Fund is Managed ..................................................................................... 30
Organization and History................................................................................ 30
Trustees and Officers................................................................................... 33
The Manager............................................................................................. 40
Brokerage Policies of the Fund............................................................................... 42
Distribution and Service Plans............................................................................... 44
Performance of the Fund...................................................................................... 49

About Your Account
How To Buy Shares............................................................................................ 54
How To Sell Shares........................................................................................... 64
How To Exchange Shares....................................................................................... 69
Dividends, Capital Gains and Taxes........................................................................... 72
Additional Information About the Fund........................................................................ 77

Financial Information About the Fund
Independent Auditors' Report................................................................................. 78
Financial Statements......................................................................................... 79

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

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

Additional Information About the Fund's Investment Policies and Risks

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

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

In selecting securities for the Fund's portfolio, the Manager evaluates the merits of particular securities
primarily through the exercise of its own investment analysis. In the case of non-governmental issues, that process
may include, among other things, evaluation of the issuer's historical operations, prospects for the industry of
which the issuer is part, the issuer's financial condition, its pending product developments and business (and those
of competitors), the effect of general market and economic conditions on the issuer's business, and legislative
proposals that might affect the issuer. In the case of foreign issuers, the Manager may consider general economic
conditions, the conditions of a particular country's economy in relation to the U.S. economy or other foreign
economies, general political conditions in a country or region, the effect of taxes, the efficiencies and costs of
particular markets (as well as their liquidity) and other factors.

|X| Debt Securities. The Fund can invest in a variety of debt securities to seek its objective. Foreign
debt securities are subject to the risks of foreign securities described below. In general, debt securities are also
subject to two additional types of risk: credit risk and interest rate risk.

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

The Fund's investments primarily are investment-grade debt securities and U.S. government securities. U.S.
government securities, although unrated, are generally considered to be equivalent to securities in the highest
rating categories. Investment-grade bonds are bonds rated at least "Baa" by Moody's Investors Service, Inc., or at
least "BBB" by Standard & Poor's Rating Service or Fitch, Inc., or that have comparable ratings by another
nationally-recognized rating organization. The Fund can also buy non-investment-grade debt securities (commonly
referred to as "junk bonds").

In making investments in debt securities, the Manager may rely to some extent on the ratings of ratings
organizations or it may use its own research to evaluate a security's credit-worthiness. If 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.

o 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 having longer maturities tend to offer higher yields, but
are subject to potentially greater fluctuations in value from changes in interest rates than obligations having
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 security pays interest at a variable rate pegged to interest rate
changes). 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.

o Special Risks of Lower-Grade Securities. The Fund can invest in lower-grade debt securities. Because
lower-grade securities tend to offer higher yields than investment-grade securities, the Fund might invest in
lower-grade securities if the Manager is trying to achieve higher income.

"Lower-grade" debt securities are those rated below "investment grade," which means they have a rating
lower than "Baa" by Moody's or lower than "BBB" by Standard & Poor's or Fitch, or similar ratings by other rating
organizations. If they are unrated, and are determined by the Manager to be of comparable quality to debt securities
rated below investment grade, they are considered part of the Fund's portfolio of lower-grade securities.

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

To the extent they can be converted into stock, convertible securities may be less subject to some of the
risks of volatility than non-convertible high yield bonds, since stock may be more liquid and less affected by some
of these risk factors.

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

|X| Mortgage-Related Securities. Mortgage-related securities are a form of derivative investment
collateralized by pools of commercial or residential mortgages. Pools of mortgage loans are assembled as securities
for sale to investors by government agencies or entities or by private issuers. These securities include
collateralized mortgage obligations ("CMOs"), mortgage pass-through securities, stripped mortgage pass-through
securities, interests in real estate mortgage investment conduits ("REMICs") and other real estate-related
securities.

Mortgage-related securities that are issued or guaranteed by agencies or instrumentalities of the U.S.
government have relatively little credit risk (depending on the nature of the issuer) but are subject to interest
rate risks and prepayment risks, as described in the Prospectus.

As with other debt securities, the prices of mortgage-related securities tend to move inversely to changes
in interest rates. The Fund can buy mortgage-related securities that have interest rates that move inversely to
changes in general interest rates, based on a multiple of a specific index. Although the value of a mortgage-related
security may decline when interest rates rise, the converse is not always the case.

In periods of declining interest rates, mortgages are more likely to be prepaid. Therefore, a
mortgage-related security's maturity can be shortened by unscheduled prepayments on the underlying mortgages.
Therefore, it is not possible to predict accurately the security's yield. The principal that is returned earlier
than expected may have to be reinvested in other investments having a lower yield than the prepaid security.
Therefore, these securities may be less effective as a means of "locking in" attractive long-term interest rates,
and they may have less potential for appreciation during periods of declining interest rates, than conventional
bonds with comparable stated maturities.

Prepayment risks can lead to substantial fluctuations in the value of a mortgage-related security. In turn,
this can affect the value of the Fund's shares. If a mortgage-related security has been purchased at a premium, all
or part of the premium the Fund paid may be lost if there is a decline in the market value of the security, whether
that results from interest rate changes or prepayments on the underlying mortgages. In the case of stripped
mortgage-related securities, if they experience greater rates of prepayment than were anticipated, the Fund may fail
to recoup its initial investment on the security.

During periods of rapidly rising interest rates, prepayments of mortgage-related securities may occur at
slower than expected rates. Slower prepayments effectively may lengthen a mortgage-related security's expected
maturity. Generally, that would cause the value of the security to fluctuate more widely in responses to changes in
interest rates. If the prepayments on the Fund's mortgage-related securities were to decrease broadly, the Fund's
sensitivity to interest rate changes would increase.

As with other debt securities, the values of mortgage-related securities may be affected by changes in the
market's perception of the creditworthiness of the entity issuing the securities or guaranteeing them. Their values
may also be affected by changes in government regulations and tax policies.

o Collateralized Mortgage Obligations. Collateralized mortgage obligations or "CMOs," are multi-class
bonds that are backed by pools of mortgage loans or mortgage pass-through certificates. They may be collateralized
by:
(1) pass-through certificates issued or guaranteed by Government National Mortgage Association (Ginnie Mae),
Federal National Mortgage Association (Fannie Mae), or Federal Home Loan Mortgage Corporation
(Freddie Mac),
(2) unsecuritized mortgage loans insured by the Federal Housing Administration or guaranteed by the Department
of Veterans' Affairs,
(3) unsecuritized conventional mortgages,
(4) other mortgage-related securities, or
(5) any combination of these.

Each class of CMO, referred to as a "tranche," is issued at a specific coupon rate and has a stated
maturity or final distribution date. Principal prepayments on the underlying mortgages may cause the CMO to be
retired much earlier than the stated maturity or final distribution date. The principal and interest on the
underlying mortgages may be allocated among the several classes of a series of a CMO in different ways. One or more
tranches may have coupon rates that reset periodically at a specified increase over an index. These are floating
rate CMOs, and typically have a cap on the coupon rate. Inverse floating rate CMOs have a coupon rate that moves in
the reverse direction to an applicable index. The coupon rate on these CMOs will increase as general interest rates
decrease. These are usually much more volatile than fixed rate CMOs or floating rate CMOs.

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

o U.S. Treasury Obligations. These include Treasury bills (which have maturities of one year or less
when issued), Treasury notes (which have maturities of more than one year and up to ten years when issued), and
Treasury bonds (which have 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. Other U.S.
Treasury obligations 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").

o 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.
Others are supported only by the credit of the entity that issued them, such as Federal Home Loan Mortgage
Corporation obligations.

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

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

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

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

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

|X| Asset-Backed Securities. Asset-backed securities are fractional interests in pools of assets,
typically accounts receivable or consumer loans. They are issued by trusts or special-purpose corporations. These
securities are subject to prepayment risks and the risk of default by the issuer as well as by the borrowers of the
underlying loans in the pool. They are similar to mortgage-backed securities, described above, and are backed by a
pool of assets that consist of obligations of individual borrowers. The income from the pool is passed through to
the holders of participation interest in the pools. The pools may offer a credit enhancement, such as a bank letter
of credit, to try to reduce the risks that the underlying debtors will not pay their obligations when due.

The value of an asset-backed security is affected by changes in the market's perception of the asset
backing the security, the creditworthiness of the servicing agent for the loan pool, the originator of the loans, or
the financial institution providing any credit enhancement, and is also affected if any credit enhancement has been
exhausted. The risks of investing in asset-backed securities are ultimately related to payment of consumer loans by
the individual borrowers. As a purchaser of an asset-backed security, the Fund would generally have no recourse to
the entity that originated the loans in the event of default by a borrower. The underlying loans are subject to
prepayments, which may shorten the weighted average life of asset-backed securities and may lower their return, in
the same manner as in the case of mortgage-backed securities and CMOs, described above.

|X| Participation Interests. The Fund can invest in participation interests, subject to the Fund's
limitation on investments in illiquid investments. A participation interest is an undivided interest in a loan made
by the issuing financial institution in the proportion that the buyer's participation interest bears to the total
principal amount of the loan. Not more than 5% of the Fund's net assets can be invested in participation interests
of the same borrower. The issuing financial institution may have no obligation to the Fund other than to pay the
Fund the proportionate amount of the principal and interest payments it receives.

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

|X| Foreign Securities. "Foreign securities" include equity and debt securities issued or guaranteed by
companies organized under the laws of countries other than the United States and debt securities issued or
guaranteed by governments other than the U.S. government or by foreign supra-national entities, such as the World
Bank. Those securities may be traded on foreign securities exchanges or in the foreign over-the-counter markets.
Securities denominated in foreign currencies issued by U.S. companies are also considered to be "foreign
securities." The Fund expects to have investments in foreign securities as part of its normal investment strategy.

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

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 income
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 securities 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.

o Foreign Debt Obligations. 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. The Fund can
buy securities issued by certain "supra-national" entities, which include entities designated or supported by
governments to promote economic reconstruction or development, international banking organizations and related
government agencies. Examples are the International Bank for Reconstruction and Development (commonly called the
"World Bank"), the Asian Development bank and the Inter-American Development Bank.

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

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

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

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

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

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

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

o Special Risks of Emerging Markets. Emerging and developing markets abroad may also offer special
opportunities for investing but have greater risks than more developed foreign markets, such as those in Europe,
Canada, Australia, New Zealand and Japan. There may be even less liquidity in their securities markets, and
settlements of purchases and sales of securities may be subject to additional delays. They are subject to greater
risks of limitations on the repatriation of income and profits because of currency restrictions imposed by local
governments. Those countries may also be subject to the risk of greater political and economic instability, which
can greatly affect the volatility of prices of securities in those countries. The Manager will consider these
factors when evaluating securities in these markets, and the Fund currently does not expect to invest a substantial
portion of its assets in emerging markets.

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

|X| Zero-Coupon Securities. The Fund 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 different types of zero-coupon or stripped securities, including, among others, foreign
debt securities and U.S. Treasury notes or bonds that have been stripped of their interest coupons, U.S. Treasury
bills issued without interest coupons, and certificates representing interests in stripped securities.
Zero-coupon securities do not make periodic interest payments and are sold at a deep discount from their
face value. The buyer recognizes a rate of return determined by the gradual appreciation of the security, which is
redeemed at face value on a specified maturity date. This discount depends on the time remaining until maturity, as
well as prevailing interest rates, the liquidity of the security and the credit quality of the issuer. In the
absence of threats to the issuer's credit quality, the discount typically decreases as the maturity date approaches.
Some zero-coupon securities are convertible, in that they are zero-coupon securities until a predetermined date, at
which time they convert to a security with a specified coupon rate.

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

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

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

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

The yields to maturity of I/Os and P/Os are very sensitive to principal repayments (including prepayments)
on the underlying mortgages. If the underlying mortgages experience greater than anticipated prepayments of
principal, the Fund might not fully recoup its investment in an I/O based on those assets. If underlying mortgages
experience less than anticipated prepayments of principal, the yield on the P/Os based on them could decline
substantially.

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

The interest rate on a floating rate note is adjusted automatically according to a stated prevailing market
rate, such as a bank's prime rate, the 91-day U.S. Treasury Bill rate, or some other standard. The instrument's rate
is adjusted automatically each time the base rate is adjusted. The interest rate on a variable rate note is also
based on a stated prevailing market rate but is adjusted automatically at specified intervals. Generally, the
changes in the interest rate on such securities reduce the fluctuation in their market value. As interest rates
decrease or increase, the potential for capital appreciation or depreciation is less than that for fixed-rate
obligations of the same maturity. The Manager may determine that an unrated floating rate or variable rate
obligation meets the Fund's quality standards by reason of being backed by a letter of credit or guarantee issued by
a bank that meets those quality standards.

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

Step-coupon bonds have a coupon interest rate that changes periodically during the life of the security on
predetermined dates that are set when the security is issued.

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

When such transactions are negotiated, the price (which is generally expressed in yield terms) is fixed at
the time the commitment is made. Delivery and payment for the securities take place at a later date. 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 may engage in when-issued transactions to secure what the Manager considers to be an advantageous
price and yield at the time the obligation is entered into. 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 may dispose of a commitment
prior to settlement. If the Fund chooses to dispose of the right to acquire a when-issued security prior to its
acquisition or to dispose of its right to delivery or receive against a forward commitment, it may incur a gain or
loss.

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

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

|X| Repurchase Agreements. The Fund can acquire securities subject to repurchase agreements. It might do so
for liquidity purposes to meet anticipated redemptions of Fund shares, or pending the investment of the proceeds
from sales of Fund shares, or pending the settlement of portfolio securities transactions, or for temporary
defensive purposes.

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 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 for defensive purposes.

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

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

The Fund may also acquire restricted securities through private placements. Those securities have
contractual restrictions on their public resale. Those restrictions may make it more difficult to value them, and
might limit the Fund's ability to dispose of the securities and might lower the amount the Fund could realize upon
the sale.

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

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

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

The Fund will only enter into "covered" rolls. To assure its future payment of the purchase price, the Fund
will identify on its books liquid assets in an amount equal to the payment obligation under the roll.

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

|X| Investments in Equity Securities. Under normal market conditions the Fund can invest a portion of
assets in common stocks, preferred stocks, warrants (which might be acquired as part of a "unit" of securities that
includes debt securities) and convertible debt securities, which in some cases are considered "equity equivalents."
However, it does not currently anticipate investing significant amounts of its assets in equity securities as part
of its normal investment strategy. Certain equity securities may be selected because they may provide dividend
income.

o Risks of Investing in Stocks. Stocks fluctuate in price, and their short-term volatility at
times may be great. To the extent that the Fund invests in equity securities, the value of the Fund's portfolio will
be affected by changes in the stock markets. Market risk can affect the Fund's net asset value per share, which will
fluctuate as the values of the Fund's portfolio securities change. The prices of individual stocks do not all move
in the same direction uniformly or at the same time. Different stock markets may behave differently from each other.

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

The Fund can invest in securities of large companies and mid-size companies, but may also buy stocks of
small companies, which may have more volatile stock prices than large companies.

o Convertible Securities. While some convertible securities are a form of debt security, in
certain cases their conversion feature (allowing conversion into equity securities) causes them to be regarded by
the Manager more as "equity equivalents." As a result, the rating assigned to the security might have less impact
on the Manager's investment decision with respect to convertible securities than in the case of non-convertible
fixed-income securities. Convertible debt securities are subject to the credit risks and interest rate risks
described above in "Debt Securities."

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

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

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

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

|_| Preferred Stocks. 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 on the issuer's common stock. Preferred stock may be "participating" stock, which means that
it 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 calls or redemptions prior to maturity, which also have a negative impact on prices when interest rates
decline. 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. 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.

|X| Loans of Portfolio Securities. To raise cash for income or liquidity purposes, the Fund can lend its
portfolio securities to brokers, dealers and other types of financial institutions approved by the Fund's Board of
Trustees.

These loans are limited to not more than 25% of the value of the Fund's total assets. The Fund currently
does not intend to engage in loans of securities, but if it does so, such loans will not likely exceed 5% of the
Fund's total assets.

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

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

|X| Money Market Instruments. The following is a brief description of the types of the U.S. dollar
denominated money market securities the Fund can invest in. Money market securities are high-quality, short-term
debt instruments that may be issued by the U.S. government, corporations, banks or other entities. They may have
fixed, variable or floating interest rates.

o U.S. Government Securities. These include obligations issued or guaranteed by the U.S. government or
any of its agencies or instrumentalities, described above.

o Bank Obligations. The Fund can buy time deposits, certificates of deposit and bankers' acceptances.
They must be:

o obligations issued or guaranteed by a domestic bank (including a foreign branch of a domestic
bank) having total assets of at least U.S. $1 billion, or
o obligations of a foreign bank with total assets of at least U.S. $1 billion.

"Banks" include commercial banks, savings banks and savings and loan associations, which may or may not be
members of the Federal Deposit Insurance Corporation.

o Commercial Paper. The Fund can invest in commercial paper if it is rated within the top three rating
categories of Standard & Poor's and Moody's or other rating organizations.

If the paper is not rated, it may be purchased if the Manager determines that it is comparable to rated
commercial paper in the top three rating categories of national rating organizations.

The Fund can buy commercial paper, including U.S. dollar-denominated securities of foreign branches of U.S.
banks, issued by other entities if the commercial paper is guaranteed as to principal and interest by a bank,
government or corporation whose certificates of deposit or commercial paper may otherwise be purchased by the Fund.

o Variable Amount Master Demand Notes. Master demand notes are corporate obligations that permit
the investment of fluctuating amounts by the Fund at varying rates of interest under direct arrangements between the
Fund, as lender, and the borrower. They permit daily changes in the amounts borrowed. The Fund has the right to
increase the amount under the note at any time up to the full amount provided by the note agreement, or to decrease
the amount. The borrower may prepay up to the full amount of the note without penalty. These notes may or may not be
backed by bank letters of credit.

Because these notes are direct lending arrangements between the lender and borrower, it is not expected
that there will be a trading market for them. There is no secondary market for these notes, although they are
redeemable (and thus are immediately repayable by the borrower) at principal amount, plus accrued interest, at any
time. Accordingly, the Fund's right to redeem such notes is dependent upon the ability of the borrower to pay
principal and interest on demand.

The Fund has no limitations on the type of issuer from whom these notes will be purchased. However, in
connection with such purchases and on an ongoing basis, the Manager will consider the earning power, cash flow and
other liquidity ratios of the issuer, and its ability to pay principal and interest on demand, including a situation
in which all holders of such notes made demand simultaneously. Investments in master demand notes are subject to the
limitation on investments by the Fund in illiquid securities, described in the Prospectus. Currently, the Fund does
not intend that its investments in variable amount master demand notes will exceed 5% of its total assets.

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

Among the derivative investments the Fund can invest in are "index-linked" or "currency-linked" notes.
Principal and/or interest payments on index-linked notes depend on the performance of an underlying index.
Currency-indexed securities are typically 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 instruments although it is not obligated to use them in seeking its
objective. To attempt to protect against declines in the market value of the Fund's portfolio, to permit the Fund to
retain unrealized gains in the value of portfolio securities which have appreciated, or to facilitate selling
securities for investment reasons, the Fund could:
o sell futures contracts,
o buy puts on futures or on securities, or
o write covered calls on securities or futures. Covered calls may also be used to increase the Fund's income,
but the Manager does not expect to engage extensively in that practice.

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

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

o Futures. The Fund can buy and sell futures contracts that relate to (1) broadly-based bond or
other security indices (these are referred to as "financial futures"), (2) commodities (these are referred to as
"commodity futures"), (3) debt securities (these are referred to as "interest rate futures"), and (4) foreign
currencies (these are referred to as "forward contracts").

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

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

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

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

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

o 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.

o 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 calls on futures and indices, the call may be covered by segregating liquid assets to
enable the Fund to satisfy its obligations if the call is exercised. Up to 50% of the Fund's total assets may be
subject to calls.

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

The Fund may also write calls on a futures contract without owning the futures contract or securities
deliverable under the contract. To do so, at the time the call is written, the Fund must cover the call by
identifying on it books an equivalent dollar amount of liquid assets. The Fund will identify additional liquid
assets on its books to cover the call if the value of the identified assets drops below 100% of the current value of
the future. Because of this asset coverage 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.

o Writing Put Options. The Fund can sell put options on securities, broadly-based securities
indices, foreign currencies and futures. A put option on securities gives the purchaser the right to sell, and the
writer the obligation to buy, the underlying investment at the exercise price during the option period. The Fund
will not write puts if, as a result, more than 50% of the Fund's net assets would be required to be 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 may decide to effect a closing purchase transaction to realize a profit on an outstanding put
option it has written or to prevent the underlying security from being put. Effecting a closing purchase transaction
will also permit the Fund to write another put option on the security, or to sell the security and use the proceeds
from the sale for other investments. The Fund will realize a profit or loss from a closing purchase transaction
depending on whether the cost of the transaction is less or more than the premium received from writing the put
option. Any profits from writing puts are considered short-term capital gains for federal tax purposes, and when
distributed by the Fund, are taxable as ordinary income.

o Purchasing Calls and Puts. The Fund can purchase calls on securities, broadly-based securities
indices, foreign currencies and futures. It may do so 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 on securities, broadly-based securities indices, foreign currencies and futures,
whether or not it owns the underlying investment. When the Fund purchases a put, it pays a premium and, except as to
puts on indices, has the right to sell the underlying investment to a seller of a put on a corresponding investment
during the put period at a fixed exercise price.

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

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

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

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

o 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 identifying
liquid assets on its books having a value equal to its obligation under the option.

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

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

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

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

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

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

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

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

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

o 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 may also use
"cross-hedging" where the Fund hedges against changes in currencies other than the currency in which a security it
holds is denominated.

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

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

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

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

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

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

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

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

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

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

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

o 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 on its book liquid assets (such as cash or U.S.
government securities) to cover any amounts it could owe under swaps that exceed the amounts it is entitled to
receive, and it will adjust that amount daily, as needed.

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 may 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."

o 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 liquid assets in an
amount equal to the market value of the securities underlying the future, less the margin deposit applicable to it.

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

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

Under the Internal Revenue Code, the following gains or losses are treated as ordinary income or loss:

(1) gains or losses attributable to fluctuations in exchange rates that occur between the time the Fund accrues
interest or other receivables or accrues expenses or other liabilities denominated in a foreign
currency and the time the Fund actually collects such receivables or pays such liabilities, and
(2) gains or losses attributable to fluctuations in the value of a foreign currency between the date of
acquisition of a debt security denominated in a foreign currency or foreign currency forward contracts
and the date of disposition.

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

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

Increased portfolio turnover may result in 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.

|X| Temporary Defensive and Interim Investments. In times of unstable or adverse market or economic
conditions, the Fund can invest up to 100% of its assets in temporary defensive investments that are inconsistent
with the Fund's principal investment strategies. Generally, they would be cash equivalents (such as commercial
paper), money market instruments, short-term debt securities, U.S. Government securities, or repurchase agreements.
They could include other investment-grade debt securities. The Fund might also hold these types of securities
pending the investment of proceeds from the sale of Fund shares or portfolio securities or to meet anticipated
redemptions of Fund shares. To the extent the Fund invests defensively in these securities, it might not achieve
its investment objective of seeking a high level of current income.

Investment Restrictions

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

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

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

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

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

o The Fund cannot concentrate its investments (that means it cannot invest 25% or more of its total
assets) in any one industry. Gas, water, electric and telephone utilities are considered to be separate industries
for this purpose.

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

o The Fund cannot invest in real estate or real estate mortgage loans. However, the Fund can purchase
and sell securities issued or secured by companies that invest in or deal in real estate or interests in real
estate.

o The Fund cannot underwrite securities. 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 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 borrowings at all times in the manner set forth in the
Investment Company Act of 1940.

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.

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

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

|X| Does the Fund Have Additional Restrictions That Are Not "Fundamental" Policies?

The Fund has an additional operating policy that is not "fundamental," and which can be changed by the
Board of Trustees without shareholder approval:

o The Fund cannot invest in securities of other investment companies, except if it acquires them as part of
a merger, consolidation or acquisition of assets.

How the Fund is Managed

Organization and History. The Fund is a series of Oppenheimer Integrity Funds (referred to as the Fund's parent
Trust in this document). The Fund's parent Trust was established in 1982 as MassMutual Liquid Assets Trust, an
open-end diversified management investment company, with an unlimited number of authorized shares of beneficial
interest. The Fund was reorganized from a closed-end investment company called MassMutual Income Investors, Inc.
into a series of the Trust on April 15, 1988. The Fund and the Trust were originally managed by Massachusetts Mutual
Life Insurance Company, the Manager's indirect parent company. On March 29, 1991, the Manager became the Fund's
investment advisor, and the Trust changed its name to Oppenheimer Integrity Funds. The Fund was then called
Oppenheimer Investment Grade Bond Fund and changed its name to Oppenheimer Bond Fund on July 10, 1995.

The Fund is governed by the Board of Trustees of its parent Trust. The Board is responsible for protecting
the interests of shareholders under Massachusetts law. The Trustees meet periodically throughout the year to oversee
the Fund's activities, review its performance, and review the actions of the Manager.

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

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

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

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

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

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

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

Board of Trustees

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

The Board of Trustees has an Audit Committee and a Review Committee. The members of the Audit Committee
are Edward L. Cameron (Chairman), C. Howard Kast and F. William Marshall, Jr. The Audit Committee held six meetings
during the fiscal year ended December 31, 2001. The Audit Committee furnishes the Board with recommendations
regarding the selection of the Fund's independent auditors. Other main functions of the Audit Committee include, but
are not limited to: (i) reviewing the scope and results of audits and the audit fees charged; (ii) reviewing reports
from the Fund's independent auditors regarding the Fund's internal accounting procedures and controls; and (iii)
establishing a separate line of communication between the Fund's independent auditors and its independent Trustees.

The Audit Committee's functions include selecting and nominating to the full Board, Independent nominees
for election as Independent Trustees. The Audit Committee may, but need not consider the advice and recommendation
of the Manager and its affiliates in selecting nominees. The full Board elects new Trustees except for those
instances when a shareholder vote is required. To date, the Audit Committee has been able to identify from its own
resources an ample number of qualified candidates. Nonetheless, shareholders may submit names of individuals,
accompanied by complete and properly supported resumes, for the Audit Committee's consideration by mailing such
information to the Committee in care of the Fund. The Committee may consider such persons at such time as it meets
to consider possible nominees. The Committee, however, reserves sole discretion to determine the candidates to
present to the Board and/or shareholders and when it meets for the purpose of considering potential nominees.

The members of the Review Committee are Jon S. Fossel (Chairman), Sam Freedman, William L. Armstrong,
Robert G. Avis and George C. Bowen. The Review Committee held six meetings during the fiscal year ended December 31,
2001. Among other functions, the Review Committee reviews reports and makes recommendations to the Board concerning
the fees paid to the Fund's transfer agent and the services provided to the Fund by the transfer agent. The Review
Committee also reviews the Fund's investment performance and policies and procedures adopted by the Fund to comply
with the Investment Company Act of 1940 and other applicable law.

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

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.  Murphy,  Farrar,  Molleur,  Wixted, Zack, and Negri, and Mses. Feld and Ives who are officers of the
Fund,  respectively  hold the same offices with one or more of the other Board II Funds as with the Fund.  As of April
1, 2002, the Trustees and officers of the Fund as a group owned of record or  beneficially  less than 1% of each class
of shares of the Fund.  The  foregoing  statement  does not reflect  ownership of shares held of record by an employee
benefit plan for employees of the Manager,  other than the shares  beneficially  owned under that plan by the officers
of the Fund listed above. In addition,  each  Independent  Trustee,  and his family members,  do not own securities of
either the Manager or Distributor of the Board II Funds or any person directly or indirectly  controlling,  controlled
by or under common control with the Manager or Distributor.

         Mr.  Swain has  reported  that he sold a  residential  property to Mr.  Freedman on October 23, 2001 for $1.2
million. An independent appraisal of the property supported the sale price.

Independent Trustees and Officer

- --------------------------- ----------------------------------------------------------- -------------- ----------------
                                                                                                          Aggregate
                                                                                                        Dollar Range
Name, Address, 2  Age,                                                                  Dollar Range      of Shares
Position(s) Held with       Principal Occupation(s) During Past 5 Years / Other           of Shares     Owned in any
Fund and Length of Time     Trusteeships Held by Trustee / Number of Portfolios in      Owned in the    of the Board
Served3                     Fund Complex Overseen by Trustee                                Fund          II Funds
- --------------------------- ----------------------------------------------------------- -------------- ----------------
- --------------------------- ----------------------------------------------------------- -------------- ----------------
James C. Swain, Chairman,   Formerly  Vice Chairman of the Manager  (until  January 2,       $0         Over $100,000
Chief Executive Officer     2002) and  President  and a director of  Centennial  Asset
and Trustee, since 1991     Management  Corporation  (the Fund's  Distributor)  (until
Age: 68                     1997).  Oversees  41  portfolios  in the  OppenheimerFunds
                            complex.
- --------------------------- ----------------------------------------------------------- -------------- ----------------
- --------------------------- ----------------------------------------------------------- -------------- ----------------
William L. Armstrong,       Chairman  of  the  following   private   mortgage  banking
Trustee since 1999          companies:  Cherry Creek  Mortgage  Company  (since 1991),
Age: 65                     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);   a  director  of  the   following   public
                            companies:   Storage  Technology   Corporation   (computer
                            equipment  company) (since 1991),  Helmerich & Payne, Inc.                    $50,001-
                            (oil and gas  drilling/production  company)  (since 1992),       $0           $100,000
                            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);
                            a U.S. Senator (January  1979-January  1991).  Oversees 40
                            portfolios in the OppenheimerFunds complex.
- --------------------------- ----------------------------------------------------------- -------------- ----------------
- --------------------------- ----------------------------------------------------------- -------------- ----------------
Robert G. Avis, Trustee     Formerly Mr. Avis held the following  positions:  Director
since 1993                  and  President  of A.G.  Edwards  Capital,  Inc.  (General
Age: 70                     Partner of private  equity funds) (until  February  2001);
                            Chairman,  President and Chief  Executive  Officer of A.G.
                            Edwards  Capital,  Inc. (until March 2000);  Vice Chairman
                            and Director of A.G.  Edwards,  Inc. and Vice  Chairman of
                            A.G.   Edwards  &  Sons,   Inc.  (its  brokerage   company       $0         $1 - $10,000
                            subsidiary)  (until  -  March  1999);   Chairman  of  A.G.
                            Edwards   Trust  Company  and  A.G.E.   Asset   Management
                            (investment  advisor) (until - March 1999); and a Director
                            of A.G.  Edwards  & Sons and A.G.  Edwards  Trust  Company
                            (until  -  March  2000).  Oversees  41  portfolios  in the
                            OppenheimerFunds complex.
- --------------------------- ----------------------------------------------------------- -------------- ----------------
- --------------------------- ----------------------------------------------------------- -------------- ----------------
George C. Bowen, Trustee    Formerly  (until April 1999) Mr. Bowen held the  following
since 2001                  positions:  Senior Vice President  (from  September  1987)
Age: 65                     and  Treasurer  (from  March  1985) of the  Manager;  Vice
                            President  (from June  1983) and  Treasurer  (since  March
                            1985) of  OppenheimerFunds  Distributor,  Inc., the Fund's
                            Sub-Distributor;  Senior Vice  President  (since  February
                            1992),  Treasurer  (since July 1991)  Assistant  Secretary
                            and a director (since December 1991) of the Manager;  Vice
                            President  (since October 1989) and Treasurer (since April
                            1986)  of  HarbourView  Asset  Management  Corporation  an
                            investment advisory subsidiary of the Manager;  President,
                            Treasurer   and   a   director   of   Centennial   Capital
                            Corporation  (June  1989 - January  1990),  an  investment
                            advisory  subsidiary  of the Manager;  Vice  President and
                            Treasurer  (since August 1978) and Secretary  (since April
                            1981) of  Shareholder  Services,  Inc.,  a transfer  agent
                            subsidiary of the Manager;  Vice President,  Treasurer and    $10,001 -     Over $100,000
                            Secretary of Shareholder  Financial Services,  Inc. (since     $50,000
                            November  1989),  a  transfer  agent   subsidiary  of  the
                            Manager;  Assistant  Treasurer of Oppenheimer  Acquisition
                            Corp.   (since   March   1998),   the   Manager's   parent
                            corporation;    Treasurer   of   Oppenheimer   Partnership
                            Holdings,  Inc.  (since  November 1989), a holding company
                            subsidiary  of the Manager;  Vice  President and Treasurer
                            of Oppenheimer  Real Asset  Management,  Inc.  (since July
                            1996), an investment  advisory  subsidiary of the Manager;
                            Chief  Executive   Officer  and  director  of  MultiSource
                            Services,  Inc., a broker-dealer subsidiary of the Manager
                            (since   March  1996);   Treasurer   of   OppenheimerFunds
                            International  Ltd. and Oppenheimer  Millennium  Funds plc
                            (since   October   1997),    offshore   fund    management
                            subsidiaries  of the Manager.  Oversees 36  portfolios  in
                            the OppenheimerFunds complex.
- --------------------------- ----------------------------------------------------------- -------------- ----------------
- --------------------------- ----------------------------------------------------------- -------------- ----------------
Edward L. Cameron,          Director  of Genetic  ID,  Inc.  and its  subsidiaries,  a
Trustee since 2001          privately  held biotech  company  (since  March  2001);  a
Age: 63                     member  of  The  Life  Guard  of  Mount   Vernon,   George
                            Washington's  home (since  June 2000).  Formerly a partner
                            with   PricewaterhouseCoopers  LLP  (an  accounting  firm)       $0         Over $100,000
                            (from  1974-1999)  and  Chairman,   Price  Waterhouse  LLP
                            Global  Investment   Management  Industry  Services  Group
                            (from   1994-1998).   Oversees   36   portfolios   in  the
                            OppenheimerFunds complex.
- --------------------------- ----------------------------------------------------------- -------------- ----------------
- --------------------------- ----------------------------------------------------------- -------------- ----------------
Jon S. Fossel,              Chairman and Director of Rocky Mountain Elk Foundation,  a
Trustee since 1997          not-for-profit  foundation (since 1998); and a director of
Age: 60                     P.R.  Pharmaceuticals,  a privately  held  company  (since
                            October  1999).  Formerly  Mr.  Fossel held the  following
                            positions:  Chairman and a director  (until  October 1996)
                            and President and Chief  Executive  Officer (until October       $0         Over $100,000
                            1995) of the Manager;  President,  Chief Executive Officer
                            and  a  director   of   Oppenheimer   Acquisition   Corp.,
                            Shareholder  Services,   Inc.  and  Shareholder  Financial
                            Services,   Inc.   (until  October   1995).   Oversees  40
                            portfolios in the OppenheimerFunds complex.
- --------------------------- ----------------------------------------------------------- -------------- ----------------
- --------------------------- ----------------------------------------------------------- -------------- ----------------
Sam Freedman,               Formerly  (until  October  1994)  Mr.  Freedman  held  the
Trustee since 1996          following positions:  Chairman and Chief Executive Officer
Age: 61                     of   OppenheimerFunds   Services   (from   August   1980);
                            Chairman,  Chief  Executive  Officer  and  a  director  of
                            Shareholder Services,  Inc. (from August 1980);  Chairman,
                            Chief  Executive   Officer  and  director  of  Shareholder       $0         Over $100,000
                            Financial  Services,   Inc.  (from  November  1989);  Vice
                            President and director of  Oppenheimer  Acquisition  Corp.
                            (from  October  1990) and a director of the Manager  (from
                            October    1990).    Oversees   41   portfolios   in   the
                            OppenheimerFunds complex.
- --------------------------- ----------------------------------------------------------- -------------- ----------------
- --------------------------- ----------------------------------------------------------- -------------- ----------------
C. Howard Kast,             Formerly  (until June 1984) Managing  Partner of Deloitte,
Trustee since 1991          Haskins  &  Sells  (an  accounting   firm).   Oversees  41       $0         Over $100,000
Age: 80                     portfolios in the OppenheimerFunds complex.
- --------------------------- ----------------------------------------------------------- -------------- ----------------
- --------------------------- ----------------------------------------------------------- -------------- ----------------
Robert M. Kirchner,         President   (since   1977)   of   The   Kirchner   Company
Trustee since 1991          (management  consultants);  Director of Andrisen Marten Co
Age: 80                     (a privately  held men's  clothing  company).  Oversees 41       $0         Over $100,000
                            portfolios in the OppenheimerFunds complex.
- --------------------------- ----------------------------------------------------------- -------------- ----------------
- --------------------------- ----------------------------------------------------------- -------------- ----------------
F. William Marshall, Jr.,   Trustee  (since 1996) of  MassMutual  Institutional  Funds       $0         Over $100,000
Trustee since 2001          and of MML Series  Investment  Fund  (open-end  investment
Age: 59                     companies).  Formerly  Chairman  of  SIS  &  Family  Bank,
                            F.S.B.  (formerly  SIS Bank)  (January  1999 - July 1999);
                            President,  Chief  Executive  Officer and  Director of SIS
                            Bankcorp.,   Inc.  and  SIS  Bank  (formerly   Springfield
                            Institution  for  Savings)  (May  1993 -  December  1998);
                            Executive  Vice  President of Peoples  Heritage  Financial
                            Group,  Inc.  (January  1999 - July  1999);  Chairman  and
                            Chief Executive  Office of Bank of Ireland First Holdings,
                            Inc.  and  First  New  Hampshire  Banks  (June  1990 - May
                            1993).  Oversees  36  portfolios  in the  OppenheimerFunds
                            complex.
- --------------------------- ----------------------------------------------------------- -------------- ----------------

Interested Trustee and Officer

- -------------------------- ------------------------------------------------------------- ------------- ----------------
Name, Address,4 Age,       Principal Occupation(s) During Past 5 Years / Other              Dollar        Aggregate
                                                                                                        Dollar Range
                                                                                                          of Shares
                                                                                           Range of     Owned in any
Position(s) Held with                                                                       Shares         of the
Fund and Length of Time    Trusteeships Held by Trustee / Number of Portfolios in Fund     Owned in      Oppenheimer
Served5                    Complex Overseen by Trustee                                     the Fund    Funds6
- -------------------------- ------------------------------------------------------------- ------------- ----------------
- -------------------------- ------------------------------------------------------------- ------------- ----------------
John V. Murphy,            Chairman,  Chief Executive  Officer and director (since June
President and Trustee      2001) and President  (since  September 2000) of the Manager;
Trustee since October      President  and a director  or  trustee of other  Oppenheimer       $0        Over $100,000
2001                       funds;  President  and  a  director  (since  July  2001)  of
Age: 52                    Oppenheimer    Acquisition    Corp.   and   of   Oppenheimer
                           Partnership  Holdings,  Inc.;  a  director  (since  November
                           2001) of OppenheimerFunds Distributor,  Inc.; Chairman and a
                           director  (since July 2001) of  Shareholder  Services,  Inc.
                           and of Shareholder  Financial Services,  Inc.; President and
                           a  director  (since  July 2001) of  OppenheimerFunds  Legacy
                           Program,  a  charitable  trust  program  established  by the
                           Manager;  a director of the  following  investment  advisory
                           subsidiaries of OFI: OAM Institutional,  Inc. and Centennial
                           Asset   Management   Corporation   (since   November  2001),
                           HarbourView  Asset  Management  Corporation  and OFI Private
                           Investments,   Inc.  (since  July  2001);  President  (since
                           November  1,  2001)  and a  director  (since  July  2001) of
                           Oppenheimer Real Asset  Management,  Inc.; a director (since
                           November 2001) of Trinity  Investment  Management  Corp. and
                           Tremont Advisers,  Inc.,  investment  advisory affiliates of
                           the Manager;  Executive Vice President (since February 1997)
                           of  Massachusetts   Mutual  Life  Insurance   Company,   the
                           Manager's  parent  company;  a director (since June 1995) of
                           DBL  Acquisition  Corporation;   formerly,  Chief  Operating
                           Officer (from  September  2000 to June 2001) of the Manager;
                           President and trustee (from  November 1999 to November 2001)
                           of MML Series  Investment Fund and MassMutual  Institutional
                           Funds,  open-end  investment  companies;  a  director  (from
                           September  1999  to  August  2000)  of C.M.  Life  Insurance
                           Company;  President,  Chief  Executive  Officer and director
                           (from  September  1999 to August 2000) of MML Bay State Life
                           Insurance  Company; a director (from June 1989 to June 1998)
                           of  Emerald  Isle  Bancorp  and  Hibernia  Savings  Bank,  a
                           wholly-owned  subsidiary of Emerald Isle  Bancorp.  Oversees
                           63 portfolios in the OppenheimerFunds complex.
- -------------------------- ------------------------------------------------------------- ------------- ----------------

Officers of the Fund

- ----------------------------------------------- -----------------------------------------------------------------------
Name, Address,7 Age, Position(s) Held with      Principal Occupation(s) During Past 5 Years
Fund and Length of Time Served8
- ----------------------------------------------- -----------------------------------------------------------------------
- ----------------------------------------------- -----------------------------------------------------------------------
Angelo   Manioudakis,   Vice   President   and  Senior Vice President of the Manager (since April 2002); an officer
Portfolio Manager (since April 2002)            and portfolio manager of other Oppenheimer funds; formerly Executive
Age: 35                                         Director and portfolio manager for Miller, Anderson & Sherrerd, a
                                                division of Morgan Stanley Investment Management (August 1993-April
                                                2002).
- ----------------------------------------------- -----------------------------------------------------------------------
- ----------------------------------------------- -----------------------------------------------------------------------
Brian W. Wixted, Treasurer, Principal           Senior  Vice  President  and  Treasurer  (since  March  1999)  of  the
Financial and Accounting Officer (since April   Manager;  Treasurer (since March 1999) of HarbourView Asset Management
1999)                                           Corporation,   Shareholder  Services,  Inc.,  Oppenheimer  Real  Asset
Age: 42                                         Management   Corporation,   Shareholder   Financial  Services,   Inc.,
                                                Oppenheimer Partnership Holdings, Inc., OFI Private Investments,  Inc.
                                                (since   March   2000),   OppenheimerFunds   International   Ltd.  and
                                                Oppenheimer  Millennium  Funds plc  (since May  2000),  offshore  fund
                                                management  subsidiaries of the Manager,  and OAM Institutional,  Inc.
                                                (since  November  2000),  an  investment  advisory  subsidiary  of the
                                                Manager;  Treasurer and Chief  Financial  Officer  (since May 2000) of
                                                Oppenheimer Trust Company,  a trust company subsidiary of the Manager;
                                                Assistant  Treasurer  (since  March 1999) of  Oppenheimer  Acquisition
                                                Corp.  and  OppenheimerFunds  Legacy  Program  (since April 2000);  an
                                                officer  of other  Oppenheimer  funds;  formerly  Principal  and Chief
                                                Operating  Officer,  Bankers  Trust  Company  - Mutual  Fund  Services
                                                Division (March 1995 - March 1999).
- ----------------------------------------------- -----------------------------------------------------------------------
- ----------------------------------------------- -----------------------------------------------------------------------
Robert G. Zack,                                 Senior  Vice  President  (since May 1985) and General  Counsel  (since
Vice President and Secretary (since November    February  2002) of the Manager;  Assistant  Secretary  of  Shareholder
1, 2001)                                        Services, Inc. (since May 1985),  Shareholder Financial Services, Inc.
Age: 53                                         (since  November  1989);   OppenheimerFunds   International  Ltd.  and
                                                Oppenheimer  Millennium  Funds plc (since October 1997); an officer of
                                                other Oppenheimer  funds;  formerly,  Acting General Counsel (November
                                                2001-February  2002) and  Associate  General  Counsel  (1984 - October
                                                2001)
- ----------------------------------------------- -----------------------------------------------------------------------
- ----------------------------------------------- -----------------------------------------------------------------------
Denis R. Molleur, Assistant Secretary (since    Vice  President and Senior  Counsel of the Manager  (since July 1999);
November 1, 2001)                               an officer of other Oppenheimer  funds;  formerly a Vice President and
Age: 44                                         Associate Counsel of the Manager (September 1995 - July 1999).
- ----------------------------------------------- -----------------------------------------------------------------------
- ----------------------------------------------- -----------------------------------------------------------------------
Katherine P. Feld, Assistant Secretary (since   Vice  President and Senior  Counsel of the Manager  (since July 1999);
November 1, 2001)                               an officer of other Oppenheimer  funds;  formerly a Vice President and
Age: 43                                         Associate Counsel of the Manager (June 1990 - July 1999).
- ----------------------------------------------- -----------------------------------------------------------------------
- ----------------------------------------------- -----------------------------------------------------------------------
Kathleen T. Ives, Assistant Secretary (since    Vice  President  and  Assistant  Counsel of the  Manager  (since  June
November 1, 2001)                               1998); an officer of other  Oppenheimer  funds;  formerly an Assistant
Age: 36                                         Vice  President  and Assistant  Counsel of the Manager  (August 1997 -
                                                June 1998); and Assistant  Counsel of the Manager (August  1994-August
                                                1997).
- ----------------------------------------------- -----------------------------------------------------------------------

Renumeration  of Trustees.  The officers of the Fund and one Trustee of the Fund (Mr.  Murphy) 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.  The  compensation  from the  Fund was paid  during  its  fiscal  year  ended  December  31,  2001.  The
compensation  from all of the Board II funds  includes  the  compensation  from the Fund and  represents  compensation
received as a director,  trustee,  managing  general partner or member of a committee of the Board during the calendar
year 2001.  Mr. Swain was affiliated with the Manager until January 2, 2002.

- --------------------------------------------------------- -------------------------- -------------------------------
                                                           Aggregate Compensation          Total Compensation
Trustee Name and                                                                        From All Board II Funds
Other Fund Positions                                             from Fund1                   (41 Funds)2
- --------------------------------------------------------- -------------------------- -------------------------------
- --------------------------------------------------------- -------------------------- -------------------------------
William L. Armstrong                                               $1,500                       $78,865
   Review Committee Member
- --------------------------------------------------------- -------------------------- -------------------------------
- --------------------------------------------------------- -------------------------- -------------------------------
Robert G. Avis                                                     $1,511                       $79,452
   Review Committee Member
- --------------------------------------------------------- -------------------------- -------------------------------
- --------------------------------------------------------- -------------------------- -------------------------------
George Bowen                                                       $1,444                       $75,936
   Review Committee Member
- --------------------------------------------------------- -------------------------- -------------------------------
- --------------------------------------------------------- -------------------------- -------------------------------
Edward L. Cameron                                                  $1,441                       $75,794
    Audit Committee Chairman
- --------------------------------------------------------- -------------------------- -------------------------------
- --------------------------------------------------------- -------------------------- -------------------------------
Jon. S. Fossel                                                     $1,601                       $84,177
   Review Committee Chairman
- --------------------------------------------------------- -------------------------- -------------------------------
- --------------------------------------------------------- -------------------------- -------------------------------
Sam Freedman                                                       $1,586                       $83,402
   Review Committee Member
- --------------------------------------------------------- -------------------------- -------------------------------
- --------------------------------------------------------- -------------------------- -------------------------------
C. Howard Kast                                                     $1,663                       $87,452
   Audit Committee Member
- --------------------------------------------------------- -------------------------- -------------------------------
                                                                                                                                                                                                                                                                       -------------------------------------------------------- -------------------------- --------------------------------
                                                                                                                                                                                                                                                                       Robert M. Kirchner                                                $1,511                        $79,452
                                                                                                                                                                                                                                                                       -------------------------------------------------------- -------------------------- --------------------------------
- --------------------------------------------------------- -------------------------- -------------------------------
F. William Marshall, Jr.                                           $1,330                       $69,922
   Audit Committee Member
- --------------------------------------------------------- -------------------------- -------------------------------
1.  For the  Fund's  fiscal  year  ended  December  31,  2001.  Aggregate  compensation  includes  fees  and  deferred
compensation, if any, accrued for a Trustee.
2. For the 2001 calendar year.

|X| Deferred Compensation Plan for Trustees. The Board of Trustees has adopted a Deferred Compensation Plan
for Independent Trustees that enables them to elect to defer receipt of all or a portion of the annual fees they are
entitled to receive from the Fund. Under the plan, the compensation deferred by a Trustee is periodically adjusted
as though an equivalent amount had been invested in shares of one or more Oppenheimer funds selected by the Trustee.
The amount paid to the Trustee under the plan will be determined based upon the performance of the selected funds.
As of the December 31, 2001 none of the Independent Trustees has elected to participate in the plan.

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

|X| Major Shareholders. As of April 1, 2002 the only persons who owned of record or were known by the Fund
to own beneficially 5% or more of any class of the Fund's outstanding securities were:

Merrill Lynch Pierce Fenner & Smith, Attn: Fund Admin./#97BJ1, 4800 Deer Lake Drive East, Floor 3,
Jacksonville, Florida 32246-6484 which owned for the sole benefit of its customers 1,231,716.967 Class B
shares (representing 7.01% of the Class B shares then outstanding);

Merrill Lynch Pierce Fenner & Smith, Attn: Fund Admin./#97G56, 4800 Deer Lake Drive East, Floor 3,
Jacksonville, Florida 32246-6484 which owned for the benefit of its customers 620,394.388 Class C shares
(representing 9.37% of the Class C shares then outstanding);

RPSS TR Dick Broadcasting Co. Inc., 401k Plan, Attn.: Cindy Evans, 192 East Lewis Street, Greensboro, North
Carolina 27406-1459 which owned 43,088.441 Class N shares (representing 8.56% of the Class N shares then
outstanding);

Sterling Trust Co Tr., Plasmon IDE 401k PSP, 1380 Lawrence Street, Suite 1400, Denver, Colorado 80204-2060
which owned 33,207.720 Class N shares (representing 6.59% of the Class N shares then outstanding);

Alexander C. Shafer Tr., Shafer Insurance Agency Inc., Profit Sharing 401k plan, 1100 Marion Street, Suite
100, Knoxville, Tennessee 37921-6869 which owned 26,722.519 Class N shares (representing 5.31% of the Class N
shares then outstanding);

Oppenheimer Capital Preservation Fund, Attn.: Brian Wixted, 6803 S. Tucson Way, Englewood, Colorado
80112-3924 which owned 590,670.212 Class Y shares (representing 90.96% of the Class Y shares then
outstanding);

Persumma Financial Services, Massachusetts Mutual Financial Group, 1295 State Street #N328, Springfield,
Massachusetts 01111 which owned 58,602.904 (representing 9.02% of the Class Y shares 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 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 managers of the Fund are employed by the
Manager and are the persons who are principally responsible for the day-to-day management of the Fund's portfolio.
Other members of the Manager's Fixed-Income Portfolio Team provide the portfolio managers 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 advisory agreement lists examples of expenses paid by the Fund. The major categories relate to
interest, taxes, brokerage commissions, fees to certain Trustees, legal and audit expenses, custodian and transfer
agent expenses, share issuance costs, certain printing and registration costs and non-recurring expenses, including
litigation costs. The management fees paid by the Fund to the Manager are calculated at the rates described in the
Prospectus, which are applied to the assets of the Fund as a whole. The fees are allocated to each class of shares
based upon the relative proportion of the Fund's net assets represented by that class.

- ------------------------------------------- -----------------------------------------------------------------------
Fiscal Year ended 12/31: Management Fees Paid to OppenheimerFunds, Inc.
- ------------------------------------------- -----------------------------------------------------------------------
- ------------------------------------------- -----------------------------------------------------------------------
1999 $2,729,532
- ------------------------------------------- -----------------------------------------------------------------------
- ------------------------------------------- -----------------------------------------------------------------------
2000 $2,308,545
- ------------------------------------------- -----------------------------------------------------------------------
- ------------------------------------------- -----------------------------------------------------------------------
2001 $2,896,294
- ------------------------------------------- -----------------------------------------------------------------------

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 by reason of good faith errors or
omissions on its part with respect to any of its duties under the agreement.

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

Until March 1991, Massachusetts Mutual Life Insurance Company was the Fund's investment advisor. The
Manager became the Fund's investment advisor March 28, 1991, and the Manager engaged MassMutual as sub-advisor from
March 28, 1991 until July 10, 1995.

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

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

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

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

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

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

Brokerage Policies of the Fund

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

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

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

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

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

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

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

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

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

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

- ------------------------------------------- ----------------------------------------------------------------------
         Fiscal Year Ended 12/31:                       Total Brokerage Commissions Paid by the Fund1
- ------------------------------------------- ----------------------------------------------------------------------
- ------------------------------------------- ----------------------------------------------------------------------
                   1999                                                   $165,966
- ------------------------------------------- ----------------------------------------------------------------------
- ------------------------------------------- ----------------------------------------------------------------------
                   2000                                                   $145,105
- ------------------------------------------- ----------------------------------------------------------------------
- ------------------------------------------- ----------------------------------------------------------------------
                   2001                                                   $480,1602
- ------------------------------------------- ----------------------------------------------------------------------
1. Amounts do not include spreads or concessions on principal transactions on a net trade basis.
2. During the fiscal year ended  12/31/01,  the amount of transactions  directed to brokers for research  services was
$0 and the amount of the commissions paid to broker-dealers for those services was $0.

Distribution and Service Plans

The  Distributor.  Under its  General  Distributor's  Agreement  with the Fund,  the  Distributor  acts as the  Fund's
principal  underwriter  in the  continuous  public  offering  of the  different  classes  of shares  of the Fund.  The
Distributor  bears the expenses  normally  attributable to sales,  including  advertising and the cost of printing and
mailing prospectuses,  other than those furnished to existing  shareholders.  The Distributor is not obligated to sell
a specific number of shares. Expenses normally attributable to sales are borne by the Distributor.

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

- --------------- ----------------------- -----------------------
 Fiscal Year     Aggregate Front-End      Class A Front-End
                                            Sales Charges
 Ended 12/31:      Sales Charges on          Retained by
                    Class A Shares           Distributor
- --------------- ----------------------- -----------------------
- --------------- ----------------------- -----------------------
     1999              $782,752               $223,0351
- --------------- ----------------------- -----------------------
- --------------- ----------------------- -----------------------
     2000              $392,363               $114,4541
- --------------- ----------------------- -----------------------
- --------------- ----------------------- -----------------------
     2001             $1,391,486              $501,7931
- --------------- ----------------------- -----------------------
1. Includes amounts retained by a broker-dealer that is an affiliate or a parent of the Distributor.

- --------------- ----------------------- ----------------------- ------------------------- -----------------------
 Fiscal Year     Concessions on Class    Concessions on Class    Concessions on Class C    Concessions on Class
 Ended 12/31:    A Shares Advanced by    B Shares Advanced by      Shares Advanced by      N Shares Advanced by
                     Distributor1            Distributor1             Distributor1             Distributor1
- --------------- ----------------------- ----------------------- ------------------------- -----------------------
- --------------- ----------------------- ----------------------- ------------------------- -----------------------
     1999              $184,997               $1,411,106                $114,046                   N/A
- --------------- ----------------------- ----------------------- ------------------------- -----------------------
- --------------- ----------------------- ----------------------- ------------------------- -----------------------
     2000              $77,167                 $621,176                 $64,587                    N/A
- --------------- ----------------------- ----------------------- ------------------------- -----------------------
- --------------- ----------------------- ----------------------- ------------------------- -----------------------
     2001              $156,331               $2,403,539                $286,901                 $20,4212
- --------------- ----------------------- ----------------------- ------------------------- -----------------------
1.  The  Distributor  advances  concession  payments to dealers  for certain  sales of Class A shares and for sales of
    Class B, Class C and Class N shares from its own resources at the time of sale.
2.  The inception date of Class N shares was March 1, 2001.

- --------------- ----------------------- ------------------------ ------------------------ -----------------------
                       Class A                  Class A                  Class A                 Class A
 Fiscal Year          Contingent              Contingent               Contingent               Contingent
 Ended 12/31        Deferred Sales          Deferred Sales           Deferred Sales           Deferred Sales
                   Charges Retained        Charges Retained         Charges Retained         Charges Retained
                    By Distributor          By Distributor           By Distributor           By Distributor
- --------------- ----------------------- ------------------------ ------------------------ -----------------------
- --------------- ----------------------- ------------------------ ------------------------ -----------------------
     2001              $26,759                 $285,551                  $13,163                   $45
- --------------- ----------------------- ------------------------ ------------------------ -----------------------

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

         Each plan has been  approved by a vote of the Board of  Trustees,  including  a majority  of the  Independent
Trustees9, 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  from  time to time from  their own
resources,  in their sole discretion,  to brokers,  dealers or other financial  institutions  including affiliates for
distribution  and  administrative  services they perform,  at no direct cost to the Fund to make those  payments.  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.

         The  reports  on the  Class B Plan,  Class C Plan and  Class N Plan  shall  also  include  the  Distributor's
distribution  costs for that  quarter.  Those  reports  are  subject  to the review and  approval  of the  Independent
Trustees.

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

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

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

         For the fiscal year ended December 31, 2001,  payments  under the Class A Plan totaled  $582,277 all of which
was paid by the  Distributor  to recipients.  An affiliate of the  Distributor  received  $110,787.  Any  unreimbursed
expenses the  Distributor  incurs with respect to Class A shares in any fiscal year cannot be recovered in  subsequent
years.  The  Distributor  may not use payments  received  under the Class A Plan to pay any of its interest  expenses,
carrying charges, or other financial costs, or allocation of overhead.

         |X| Class B, Class C and Class N Service and  Distribution  Plan Fees. Under the Class B, Class C and Class N
plans,  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.  Each plan provides for
the Distributor to be compensated at a flat rate,  whether the  Distributor's  distribution  expenses are more or less
than the amounts  paid by the Fund under the plan  during the period for which the fee is paid.  The types of services
that  recipients  provide  for the service fee 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  asset-based  sales charge and service fees increase  Class B and Class C expenses by 1.00% and effective
November 1, 2001 the  asset-based  sales charge and service fees increases Class N expenses by 0.50% of the net assets
per year of the respective class.

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

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

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

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

         The  Distributor's  actual  expenses  in  selling  Class B,  Class C and Class N shares  may be more than the
payments it receives from the contingent  deferred sales charges  collected on redeemed shares and from the Fund under
the plans.  If either the Class B, Class C or Class N plan is terminated by the Fund,  the Board of Trustees may allow
the Fund to continue  payments of the  asset-based  sales charge to the  Distributor to compensate it for its expenses
incurred 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 in the Fiscal Year Ended 12/31/01
- ----------------------------------------------------------------------------------------------------------------------
- ------------------- -------------------- ----------------------- --------------------------- -------------------------
Class:                Total Payments       Amount Retained by     Distributor's Aggregate         Distributor's
                                                                                              Unreimbursed Expenses
                                                                   Unreimbursed Expenses             as % of
                        Under Plan            Distributor                Under Plan            Net Assets of Class
- ------------------- -------------------- ----------------------- --------------------------- -------------------------
- ------------------- -------------------- ----------------------- --------------------------- -------------------------
Class B Plan            $1,183,059             $965,7051                 $5,048,135                   3.12%
- ------------------- -------------------- ----------------------- --------------------------- -------------------------
- ------------------- -------------------- ----------------------- --------------------------- -------------------------
Class C Plan             $367,964              $135,9952                  $939,972                    1.65%
- ------------------- -------------------- ----------------------- --------------------------- -------------------------
- ------------------- -------------------- ----------------------- --------------------------- -------------------------
Class N Plan              $2,413                 $2,413                   $44,095                     2.03%
- ------------------- -------------------- ----------------------- --------------------------- -------------------------
1. Includes $11,630 paid to an affiliate of the Distributor's parent company.
2. Includes $8,022 paid to an affiliate of the Distributor's parent company.

Performance of the Fund

Explanation of Performance  Terminology.  The Fund uses a variety of terms to illustrate its performance.  These terms
include  "standardized  yield," "dividend  yield," "average annual total return,"  "cumulative total return," "average
annual  total  return at net asset  value" and "total  return at net asset  value." An  explanation  of how yields and
total returns are  calculated is set forth below.  The charts below show the Fund's  performance 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 www.oppenheimerfunds.com.

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

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

         o Yields and total  returns  measure  the  performance  of a  hypothetical  account in the Fund over  various
periods and do not show the performance of each shareholder's  account.  Your account's performance will vary from the
model  performance  data if your  dividends are received in cash, or you buy or sell shares during the period,  or you
bought your shares at a different time and price than the shares used in the model.

         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 its  yields  and total  returns  are not  guaranteed  and
normally will fluctuate on a daily basis.

         o When an investor's shares are redeemed, they may be worth more or less than their original cost.

         o Yields and total returns for any given past period  represent  historical  performance  information and are
not, and should not be considered, a prediction of future yields or returns.

         The  performance  of each  class of shares is shown  separately,  because  the  performance  of each class of
shares will usually be different. That is because of the different kinds of expenses each class bears.

The yields and total  returns of each class of shares of the Fund are  affected by market  conditions,  the quality of
the  Fund's  investments,  the  maturity  of those  investments,  the types of  investments  the Fund  holds,  and its
operating expenses that are allocated to the particular class.

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

              o Standardized  Yield. The "standardized  yield" (sometimes  referred to just as "yield") is shown for a
class of shares for a stated 30-day period. It is not based on actual  distributions  paid by the Fund to shareholders
in the 30-day period,  but is a  hypothetical  yield based upon the net  investment  income from the Fund's  portfolio
investments  for that  period.  It may  therefore  differ  from the  "dividend  yield"  for the same  class of shares,
described below.

         Standardized  yield is calculated  using the following  formula set forth in rules adopted by the  Securities
and Exchange Commission, designed to assure uniformity in the way that all funds calculate their yields:


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

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

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

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

                       Dividend Yield=dividends paid x 12/maximum offering price (payment date)

         The maximum  offering  price for Class A shares  includes  the current  maximum  initial  sales  charge.  The
maximum offering price for Class B, Class C and Class N shares is the net asset value per share,  without  considering
the effect of contingent  deferred  sales  charges.  There is no sales charge on Class Y shares.  The Class A dividend
yield may also be quoted without deducting the maximum initial sales charge.

   -----------------------------------------------------------------------------------------------------------------
                               The Fund's Yields for the 30-Day Periods Ended 12/31/01
   -----------------------------------------------------------------------------------------------------------------
   ---------------- ----------------------------------------------- ------------------------------------------------
   Class of Shares                Standardized Yield                                Dividend Yield
   ---------------- ----------------------------------------------- ------------------------------------------------
   ---------------- ----------------------- ----------------------- ----------------------- ------------------------
                           Without                  After                  Without                   After
                            Sales                   Sales                   Sales                    Sales
                            Charge                  Charge                  Charge                  Charge
   ---------------- ----------------------- ----------------------- ----------------------- ------------------------
   ---------------- ----------------------- ----------------------- ----------------------- ------------------------
   Class A                  9.16%                   8.71%                   9.17%                    8.73%
   ---------------- ----------------------- ----------------------- ----------------------- ------------------------
   ---------------- ----------------------- ----------------------- ----------------------- ------------------------
   Class B                  8.39%                    N/A                    8.45%                     N/A
   ---------------- ----------------------- ----------------------- ----------------------- ------------------------
   ---------------- ----------------------- ----------------------- ----------------------- ------------------------
   Class C                  8.40%                    N/A                    8.44%                     N/A
   ---------------- ----------------------- ----------------------- ----------------------- ------------------------
   ---------------- ----------------------- ----------------------- ----------------------- ------------------------
   Class N                  8.92%                    N/A                    8.96%                     N/A
   ---------------- ----------------------- ----------------------- ----------------------- ------------------------
   ---------------- ----------------------- ----------------------- ----------------------- ------------------------
   Class Y                  9.48%                    N/A                    9.51%                     N/A
   ---------------- ----------------------- ----------------------- ----------------------- ------------------------

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

         In calculating  total returns for Class A shares,  the current maximum sales charge of 4.75% (as a percentage
of the  offering  price) is deducted  from the initial  investment  ("P")  (unless the return is shown  without  sales
charge,  as described  below).  For Class B shares,  payment of the  applicable  contingent  deferred  sales charge is
applied,  depending  on the period for which the return is shown:  5.0% in the first  year,  4.0% in the second  year,
3.0% in the third and fourth years,  2.0% in the fifth year, 1.0% in the sixth year and none  thereafter.  For Class C
shares,  the 1% contingent  deferred sales charge is deducted for returns for the 1-year  period.  For Class N shares,
the 1% contingent  deferred sales charge is deducted for returns for the  life-of-class  periods as applicable.  There
is no sales charge for Class Y shares.


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


              o 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:

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


                                                   ERV - P = TOTAL RETURN
                                                  --------
                                                      P

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

- ---------------------------------------------------------------------------------------------------------------------
                              The Fund's Total Returns for the Periods Ended 12/31/01
- ---------------------------------------------------------------------------------------------------------------------
- ---------------- -------------------------- -------------------------------------------------------------------------
Class of         Cumulative Total Returns                         Average Annual Total Returns
                       (10 Years or
Shares            Life-of-Class, if Less)
- ---------------- -------------------------- -------------------------------------------------------------------------
- ---------------- -------------------------- ----------------------- ------------------------- -----------------------
                                                    1-Year                   5-Year                  10-Year
                                                                       (or Life-of-Class,       (or Life-of-Class,
                                                                            if Less)                 if Less)
- ---------------- -------------------------- ----------------------- ------------------------- -----------------------
- ---------------- ------------ ------------- ----------- ----------- ----------- ------------- ---------- ------------
                 After        Without       After       Without     After       Without       After      Without
                 Sales                      Sales       Sales       Sales                     Sales      Sales
                 Charge       Sales Charge  Charge      Charge      Charge      Sales Charge  Charge     Charge
- ---------------- ------------ ------------- ----------- ----------- ----------- ------------- ---------- ------------
- ---------------- ------------ ------------- ----------- ----------- ----------- ------------- ---------- ------------
Class A1           71.33%        79.87%       1.96%       7.05%       4.29%        5.31%        5.53%       6.05%
- ---------------- ------------ ------------- ----------- ----------- ----------- ------------- ---------- ------------
- ---------------- ------------ ------------- ----------- ----------- ----------- ------------- ---------- ------------
Class B            51.84%2      51.84%2       1.17%       6.14%       4.21%        4.52%       4.94%2      4.94%2
- ---------------- ------------ ------------- ----------- ----------- ----------- ------------- ---------- ------------
- ---------------- ------------ ------------- ----------- ----------- ----------- ------------- ---------- ------------
Class C            34.62%3      34.62%3       5.15%       6.14%       4.52%3       4.52%3      4.70%3      4.70%3
- ---------------- ------------ ------------- ----------- ----------- ----------- ------------- ---------- ------------
- ---------------- ------------ ------------- ----------- ----------- ----------- ------------- ---------- ------------
Class N            2.21%4        3.18%4        N/A         N/A         N/A          N/A          N/A         N/A
- ---------------- ------------ ------------- ----------- ----------- ----------- ------------- ---------- ------------
- ---------------- ------------ ------------- ----------- ----------- ----------- ------------- ---------- ------------
Class Y             N/A5        18.36%5        N/A        7.30%        N/A5        4.69%5        N/A         N/A
- ---------------- ------------ ------------- ----------- ----------- ----------- ------------- ---------- ------------
1. Inception of Class A:  4/15/88.
2.  Inception of Class B: 5/3/93.  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:  7/11/95.
4. Inception of Class N: 3/1/01.
5. Inception of Class Y:  4/27/98.

         |X| Lipper  Rankings.  From time to time the Fund may publish the ranking of the  performance  of its classes
of shares by Lipper,  Inc.  ("Lipper").  Lipper is a  widely-recognized  independent  mutual fund monitoring  service.
Lipper monitors the performance of regulated  investment  companies,  including the Fund, and ranks their  performance
for various  periods in categories  based on investment  styles.  The 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.

              o  Morningstar  Ratings and  Rankings.  From time to time the Fund may  publish the ranking  and/or star
rating of the  performance  of its classes of shares by  Morningstar,  Inc.,  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 taxable bond
funds category.

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

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

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

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

         From time to time,  the Fund may  include  in its  advertisements  and  sales  literature  the  total  return
performance of a hypothetical  investment  account that includes shares of the fund and other  Oppenheimer  funds. The
combined  account may be part of an illustration of an asset  allocation  model or similar  presentation.  The account
performance  may combine total return  performance of the fund and the total return  performance of other  Oppenheimer
funds included in the account.  Additionally,  from time to time, the Fund's  advertisements  and sales literature may
include,  for illustrative or comparative  purposes,  statistical data or other  information about general or specific
market and economic conditions. That may include, for example,

o        information  about the  performance  of  certain  securities  or  commodities  markets or  segments  of those
              markets,
o        information about the performance of the economies of particular countries or regions,
o        the  earnings of  companies  included in segments of  particular  industries,  sectors,  securities  markets,
              countries or regions,
o        the availability of different types of securities or offerings of securities,
o        information  relating  to the  gross  national  or gross  domestic  product  of the  United  States  or other
              countries or regions,
o        comparisons of various market sectors or indices to demonstrate  performance,  risk, or other characteristics
              of the Fund.

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

How to Buy Shares

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

AccountLink.  When shares are  purchased  through  AccountLink,  each  purchase  must be at least $25.  Shares will be
purchased 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:

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

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

         |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 Real Estate Fund
Oppenheimer Emerging Growth Fund                               Oppenheimer Rochester National Municipals
Oppenheimer Emerging Technologies Fund                         Oppenheimer Senior Floating Rate Fund
Oppenheimer Enterprise Fund                                    Oppenheimer Small Cap Value Fund
Oppenheimer Europe Fund                                        Oppenheimer Special Value Fund
Oppenheimer Global Fund                                        Oppenheimer Strategic Income Fund
Oppenheimer Global Growth & Income Fund                        Oppenheimer Total Return Fund, Inc.
Oppenheimer Gold & Special Minerals Fund                       Oppenheimer Trinity Core Fund
Oppenheimer Growth Fund                                        Oppenheimer Trinity Large Cap Growth Fund
Oppenheimer High Yield Fund                                    Oppenheimer Trinity Value Fund
Oppenheimer Intermediate Municipal Fund                        Oppenheimer U.S. Government Trust
Oppenheimer International Bond Fund                            Oppenheimer Value Fund
Oppenheimer International Growth Fund                          Limited-Term New York Municipal Fund
Oppenheimer International Small Company Fund                   Rochester Fund Municipals
Oppenheimer Limited-Term Government Fund                       OSM1- Gartmore Millennium Growth Fund II
Oppenheimer Main Street Growth & Income Fund                   OSM1 - Jennison Growth Fund
Oppenheimer Main Street Opportunity Fund                       OSM1 - Mercury Advisors S&P 500 Index
Oppenheimer Main Street Small Cap Fund                         OSM1 - Mercury Advisors Focus Growth Fund
Oppenheimer MidCap Fund                                        OSM1 - QM Active Balanced Fund
Oppenheimer Multiple Strategies Fund                           OSM1 - Salomon Brothers Capital Fund

and the following money market funds:
Centennial America Fund, L. P.                                 Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust                         Centennial Tax Exempt Trust
Centennial Government Trust                                    Oppenheimer Cash Reserves
Centennial Money Market Trust                                  Oppenheimer Money Market Fund, Inc.

1"OSM" stands for Oppenheimer Select Managers

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

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

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

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

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

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

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

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

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

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

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

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

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

5. The shares eligible for purchase under the Letter (or the holding of which may be counted toward
completion of a Letter) include:

(a) Class A shares sold with a front-end sales charge or subject to a Class A contingent deferred sales charge,
(b) Class B shares of other Oppenheimer funds acquired subject to a contingent deferred sales charge, and
(c) Class A or Class B shares acquired by exchange of either (1) Class A shares of one of the other Oppenheimer
funds that were acquired subject to a Class A initial or contingent deferred sales charge or
(2) Class B shares of one of the other Oppenheimer funds that were acquired subject to a
contingent deferred sales charge.

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

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

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

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

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

|X| Class B Conversion. Under current interpretations of applicable federal income tax law by the Internal
Revenue Service, the conversion of Class B shares to Class A shares after six years is not treated as a taxable
event for the shareholder. If those laws or the IRS interpretation of those laws should change, the automatic
conversion feature may be suspended. In that event, no further conversions of Class B shares would occur while that
suspension remained in effect. Although Class B shares could then be exchanged for Class A shares on the basis of
relative net asset value of the two classes, without the imposition of a sales charge or fee, such exchange could
constitute a taxable event for the shareholder, and absent such exchange, Class B shares might continue to be
subject to the asset-based sales charge for longer than six years.

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

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

The sales concession and the advance of the service fee, as described in the Prospectus, will not be paid
to dealers of record on sales of Class N shares on:

o purchases of Class N shares in amounts of $500,000 or more by a retirement plan that pays for the purchase
with the redemption proceeds of Class A shares of one or more Oppenheimer funds (other than
rollovers from an OppenheimerFunds-sponsored Pinnacle or Ascender 401(k) plan to any IRA invested in
the Oppenheimer funds),
o purchases of Class N shares in amounts of $500,000 or more by a retirement plan that pays for the purchase
with the redemption proceeds of Class C shares of one or more Oppenheimer funds held by the plan
for more than one year (other than rollovers from an OppenheimerFunds-sponsored Pinnacle or Ascender
401(k) plan to any IRA invested in the Oppenheimer funds), and
o on purchases of Class N shares by an OppenheimerFunds-sponsored Pinnacle or Ascender 401(k) plan made with
the redemption proceeds of Class A shares of one or more Oppenheimer funds.

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

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

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

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

Dealers other than Exchange members may conduct trading in certain securities on days on which the Exchange
is closed (including weekends and U.S. holidays) or after 4:00 P.M. on a regular business day. 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. If such determination is made, the Manager,
acting through an internal valuation committee, will establish a valuation for such security. Some of the securities
the Fund buys may not have readily available market quotations. For these securities, the Board of Trustees has
authorized the Manager's valuation committee to establish values for them. All valuation determinations by the
valuation committee are subject to the approval, ratification and confirmation by the Board at its next ensuing
meeting.

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

o Equity securities traded on a U.S. securities exchange or on Nasdaq are valued as follows:

(1) if last sale information is regularly reported, they are valued at the last reported sale price on the
principal exchange on which they are traded or on Nasdaq, as applicable, on that day, or
(2) if last sale information is not available on a valuation date, they are valued at the last reported sale
price preceding the valuation date if it is within the spread of the closing "bid" and "asked"
prices on the valuation date or, if not, at the closing "bid" price on the valuation date.

o Equity securities traded on a foreign securities exchange generally are valued in one of the
following ways:

(1) at the last sale price available to the pricing service approved by the Board of Trustees, or
(2) at the last sale price obtained by the Manager from the report of the principal exchange on which the
security is traded at its last trading session on or immediately before the valuation date, or
(3) at the mean between the "bid" and "asked" prices obtained from the principal exchange on which the security
is traded or, on the basis of reasonable inquiry, from two market makers in the security.

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

o The following securities are valued at the mean between the "bid" and "asked" prices determined by a
pricing service approved by the Fund's Board of Trustees or obtained by the Manager from two active market makers in
the security on the basis of reasonable inquiry:

(1) debt instruments that have a maturity of more than 397 days when issued,
(2) debt instruments that had a maturity of 397 days or less when issued and have a remaining maturity of more
than 60 days, and
(3) non-money market debt instruments that had a maturity of 397 days or less when issued and which have a
remaining maturity of 60 days or less.

o The following securities are valued at cost, adjusted for amortization of premiums and accretion of
discounts:

(1) money market debt securities held by a non-money market fund that had a maturity of less than 397 days when
issued that have a remaining maturity of 60 days or less, and
(2) debt instruments held by a money market fund that have a remaining maturity of 397 days or less.

o 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.

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

In choosing to take advantage of the Checkwriting privilege, by signing the Account Application or by
completing a Checkwriting card, each individual who signs:

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

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

o Class A shares purchased subject to an initial sales charge or Class A shares on which a contingent
deferred sales charge was paid, or

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

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

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

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

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

Involuntary Redemptions. The Fund's Board of Trustees has the right to cause the involuntary redemption of the
shares held in any account if the aggregate net asset value of those shares is less than $1,000 or such lesser
amount as the Board may fix. The Board will not cause the involuntary redemption of shares in an account if the
aggregate net asset value of such shares has fallen below the stated minimum solely as a result of market
fluctuations. If the Board exercises this right, it may also fix the requirements for any notice to be given to the
shareholders in question (not less than 30 days). The Board may alternatively set requirements for the shareholder
to increase the investment, or set other terms and conditions so that the shares would not be involuntarily redeemed.

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

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

Distributions From Retirement Plans. Requests for distributions from OppenheimerFunds-sponsored IRAs, 403(b)(7)
custodial plans, 401(k) plans or pension or profit-sharing plans should be addressed to "Trustee, OppenheimerFunds
Retirement Plans," c/o the Transfer Agent at its address listed in "How To Sell Shares" in the Prospectus or on the
back cover of this Statement of Additional Information. The request must

(1) state the reason for the distribution;
(2) state the owner's awareness of tax penalties if the distribution is premature; and
(3) conform to the requirements of the plan and the Fund's other redemption requirements.

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

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

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

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

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

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

The Fund cannot guarantee receipt of a payment on the date requested. The Fund reserves the right to amend,
suspend or discontinue offering these plans at any time without prior notice. Because of the sales charge assessed
on Class A share purchases, shareholders should not make regular additional Class A share purchases while
participating in an Automatic Withdrawal Plan. Class B, 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 and 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.

o All of the Oppenheimer funds currently offer Class A, B and C shares except Oppenheimer Money Market Fund,
Inc., Centennial Money Market Trust, Centennial Tax Exempt Trust, Centennial Government Trust, Centennial New
York Tax Exempt Trust, Centennial California Tax Exempt Trust, and Centennial America Fund, L.P., which only
offer Class A shares.
o Class B, Class C and Class N shares of Oppenheimer Cash Reserves are generally available only by exchange
from the same class of shares of other Oppenheimer funds or through OppenheimerFunds-sponsored 401(k) plans.
o Only certain Oppenheimer funds currently offer Class Y shares. Class Y shares of Oppenheimer Real Asset
Fund may not be exchanged for shares of any other fund.
o Only certain Oppenheimer funds currently offer Class N shares, which are only offered to retirement plans
as described in the Prospectus. Class N shares can be exchanged only for Class N shares of other Oppenheimer
funds.
o Class M shares of Oppenheimer Convertible Securities Fund may be exchanged only for Class A shares of other
Oppenheimer funds. They may not be acquired by exchange of shares of any class of any other Oppenheimer funds
except Class A shares of Oppenheimer Money Market Fund or Oppenheimer Cash Reserves acquired by exchange of
Class M shares.
o Class X shares of Limited Term New York Municipal Fund can be exchanged only for Class B shares of other
Oppenheimer funds and no exchanges may be made to Class X shares.
o Shares of Oppenheimer Capital Preservation Fund may not be exchanged for shares of Oppenheimer Money Market
Fund, Inc., Oppenheimer Cash Reserves or Oppenheimer Limited-Term Government Fund. Only participants in certain
retirement plans may purchase shares of Oppenheimer Capital Preservation Fund, and only those participants may
exchange shares of other Oppenheimer funds for shares of Oppenheimer Capital Preservation Fund.
o Class A shares of Oppenheimer Senior Floating Rate Fund are not available by exchange of shares of
Oppenheimer Money Market Fund or Class A shares of Oppenheimer Cash Reserves. Shares of Oppenheimer Senior
Floating Rate Fund may only be sold or exchanged in a quarterly repurchase offer. If any Class A shares of
another Oppenheimer fund that are exchanged for Class A shares of Oppenheimer Senior Floating Rate Fund are
subject to the Class A contingent deferred sales charge of the other Oppenheimer fund at the time of exchange,
the holding period for that Class A contingent deferred sales charge will carry over to the Class A shares of
Oppenheimer Senior Floating Rate Fund acquired in the exchange. The Class A shares of Oppenheimer Senior
Floating Rate Fund acquired in that exchange will be subject to the Class A Early Withdrawal Charge of
Oppenheimer Senior Floating Rate Fund if they are repurchased before the expiration of the holding period.
o Class A, Class B, Class C, Class N and Class Y Shares of Oppenheimer Select Managers Mercury Advisors S&P
Index Fund and Oppenheimer Select Managers QM Active Balanced Fund are only available to retirement plans and
are available only by exchange from the same class of shares of other Oppenheimer funds held by retirement
plans.

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

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

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

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

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

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

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

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

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

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

When you exchange some or all of your shares from one fund to another, any special account feature such as
an Asset Builder Plan or Automatic Withdrawal Plan, will be switched to the new fund account unless you tell the
Transfer Agent not to do so. However, special redemption and exchange features such as Automatic Exchange Plans and
Automatic Withdrawal Plans cannot be switched to an account in Oppenheimer Senior Floating Rate Fund.

In connection with any exchange request, the number of shares exchanged may be less than the number
requested if the exchange or the number requested would include shares subject

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

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

Dividends, Capital Gains and Taxes

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

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

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

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

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

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

|X| Qualification as a Regulated Investment Company. The Fund has elected to be taxed as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as amended. As a regulated investment
company, the Fund is not subject to federal income tax on the portion of its investment company taxable income (that
is, taxable interest, dividends, and other taxable ordinary income net of expenses, and net short-term capital gain
in excess of long-term capital loss) and capital gain net income (that is, the excess of net long-term capital gains
over net short-term capital losses) that it distributes to shareholders. That qualification enables the Fund to
"pass through" its income and realized capital gains to shareholders without having to pay tax on them. This avoids a
"double tax" on that income and capital gains, since shareholders normally will be taxed on the dividends and
capital gains they receive from the Fund (unless their Fund shares are held in a retirement account or the
shareholder is otherwise exempt from tax). The Internal Revenue Code contains a number of complex tests relating to
qualification that the Fund might not meet in a particular year. If it did not qualify as a regulated investment
company, the Fund would be treated for tax purposes as an ordinary corporation and would receive no tax deduction
for payments made to shareholders.

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

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

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

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

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

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

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

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

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

Distributions by the Fund that do not constitute ordinary income dividends or capital gain distributions
will be treated as a return of capital to the extent of the shareholder's tax basis in their shares. Any excess will
be treated as gain from the sale of those shares, as discussed below. Shareholders will be advised annually as to
the U.S. federal income tax consequences of distributions made (or deemed made) during the year. If prior
distributions made by the Fund must be re-characterized as a non-taxable return of capital at the end of the fiscal
year as a result of the effect of the Fund's investment policies, they will be identified as such in notices sent to
shareholders.

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

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

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

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

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

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

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

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

Dividend Reinvestment in Another Fund. Shareholders of the Fund may elect to reinvest all dividends and/or capital
gains distributions in shares of the same class of any of the other Oppenheimer funds listed above. Reinvestment
will be made 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. The Bank of New York is the custodian of the Fund's assets. The custodian bank's responsibilities
include safeguarding and controlling the Fund's portfolio securities and handling the delivery of such securities to
and from the Fund. It will be the practice of the Fund to deal with the custodian bank in a manner uninfluenced by
any banking relationship the custodian bank may have with the Manager and its affiliates. The Fund's cash balances
with the custodian bank in excess of $100,000 are not protected by federal deposit insurance. Those uninsured
balances at times may be substantial.

Independent Auditors. 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 Bond Fund:

We have audited the accompanying statement of assets and liabilities of
Oppenheimer Bond Fund, including the statement of investments, as of December
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 December 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 Bond Fund as of December 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
January 23, 2002



STATEMENT OF INVESTMENTS December 31, 2001



                                                                                         Principal
Market Value
                                                                                            Amount            See
Note 1
- ------------------------------------------------------------------------------------------------------------------------

Asset-Backed Securities--5.6%
AQ Finance NIM Trust, Home Equity Collateralized Mtg. Obligations,
Series 2001-3A, 8.835%, 2/25/32/1/                                                     $ 4,000,000           $
4,000,000
- ------------------------------------------------------------------------------------------------------------------------
LBFTC I, Home Equity Collateralized Mtg. Obligations,
Series 2000-1A, Cl. D, 10%, 2/25/30/2/                                                     901,468
886,538
- ------------------------------------------------------------------------------------------------------------------------
Lease Investment Flight Trust, Collateralized Plane Obligations,
Series 1A, Cl. D2, 8%, 7/15/31/1/                                                        3,150,000
1,260,000
- ------------------------------------------------------------------------------------------------------------------------
Liberte American Loan Master Trust, Collateralized Loan Obligations,
Series 1999-1A, Cl. D2, 7.162%, 11/25/06/1/,/3/                                          6,000,000
4,800,000
- ------------------------------------------------------------------------------------------------------------------------
Litigation Settlement Monetized Fee Trust, Asset-Backed Certificates,
Series 2001-1A, Cl. A1, 8.33%, 4/25/31/1/                                                2,971,896
3,057,339
- ------------------------------------------------------------------------------------------------------------------------
Long Beach Asset Holdings Corp. NIM Trust, Home Equity Asset-Backed
Pass-Through Certificates, Series 2001-3, 7.87%, 9/25/31                                 4,275,535
4,251,486
- ------------------------------------------------------------------------------------------------------------------------
MSF Funding LLC, Collateralized Mtg. Obligations,
Series 2000-1, Cl. C, 9.45%, 7/25/07/1/,/3/                                                905,261
901,866
- ------------------------------------------------------------------------------------------------------------------------
NC Finance Trust, Collateralized Mtg. Obligations,
Series 1999-I, Cl. ECFD, 8.75%, 12/25/28                                                 2,838,124
2,613,735
- ------------------------------------------------------------------------------------------------------------------------
Option One Mortgage Securities Corp., Home Equity
Collateralized Mtg. Obligations:
Series 1999-1, Cl. CTFS, 10.06%, 3/26/29/1/                                              1,537,621
1,459,539
Series 1999-3, Cl. CTFS, 10.80%, 12/26/29                                                  860,818
834,053
- ------------------------------------------------------------------------------------------------------------------------
Seneca Funding I Ltd., Commercial Bond Obligations,
Cl. A, 4.843%, 5/31/29/3/                                                                4,060,000
2,966,845
- ------------------------------------------------------------------------------------------------------------------------
Tobacco Settlement Authority, Asset-Backed Securities,
Series 2001-A, 6.79%, 6/1/10                                                             1,400,000
1,376,375

- -----------
Total Asset-Backed Securities (Cost $30,111,379)
28,407,776

- ------------------------------------------------------------------------------------------------------------------------
Corporate Loans--0.2%
Ferrell Cos., Inc., Sr. Sec. Credit Facilities Term Loan,
Tranche B, 5.924%, 6/17/06/1/,/3/ (Cost $880,594)                                          889,488
867,252

- ------------------------------------------------------------------------------------------------------------------------
Mortgage-Backed Obligations--88.5%
- ------------------------------------------------------------------------------------------------------------------------
Government Agency--69.6%
- ------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/Sponsored--69.3%
Federal Home Loan Mortgage Corp.:
9%, 3/1/17                                                                                 130,901
141,235
12.50%, 4/1/14
8,292                 9,648
13.50%, 11/1/10                                                                             17,838
21,212
- ------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Gtd. Multiclass Mtg. Participation
Certificates:
Series 151, Cl. F, 9%, 5/15/21                                                             302,840
319,497
Series 1843, Cl. VB, 7%, 4/15/03                                                            56,886
57,989
Series 1849, Cl. VA, 6%, 12/15/10                                                           52,060
52,581
- ------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Series 2054, Cl. TE, 6.25%, 4/15/24                     850,000
863,541
- ------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Interest-Only Stripped Mtg.-
Backed Security:
Series 192, Cl. IO, 9.768%, 2/1/28/4/                                                   32,400,591
7,619,202

                          12 | OPPENHEIMER BOND FUND






                                                                                         Principal
Market Value
                                                                                            Amount            See
Note 1
- -------------------------------------------------------------------------------------------------------------------------

FHLMC/FNMA/Sponsored Continued
Series 194, Cl. IO, 9.265%, 4/1/28/4/                                                 $ 24,207,052          $
5,968,551
Series 197, Cl. IO, 6.765%, 4/1/28/4/                                                    6,192,009
1,598,312
Series 202, Cl. IO, 7.264%, 4/1/29/4/                                                   20,318,854
5,181,308
Series 203, Cl. IO, 10.022%, 6/15/29/4/                                                  9,912,410
2,598,910
Series 204, Cl. IO, 12.517%, 5/15/29/4/                                                 32,379,076
8,469,152
Series 205, Cl. IO, 7.277%, 9/15/29/4/                                                   8,392,447
1,964,357
Series 206, Cl. IO, 20.217%, 12/15/29/4/                                                10,871,150
2,252,366
Series 207, Cl. IO, 8.765%, 4/15/30/4/                                                   8,881,103
1,826,177
Series 214, Cl. IO, 25.176%, 6/1/31/4/                                                  41,951,967
11,595,786
Series 303, Cl. IO, 15.082%, 11/1/29/4/                                                  3,565,214
741,453
- ------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Real Estate Mtg. Investment
Conduit Multiclass Certificates:
Series 1711, Cl. EA, 7%, 3/15/24                                                           200,000
205,936
Series 2351, Cl. EF, 6.50%, 12/15/24                                                    10,000,000
10,312,500
Series 2355, Cl. CQ, 6.50%, 7/15/26                                                      7,200,000
7,398,000
- ------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
6%, 2/25/30/5/                                                                         127,000,000
124,181,870
6.50%, 1/25/28/5/                                                                      149,450,000
149,450,000
7%, 1/1/09--11/1/25                                                                        336,792
348,798
7.50%, 2/1/08--3/1/08                                                                      129,591
136,675
- ------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Collateralized Mtg. Obligations, Gtd
Real Estate Mtg. Investment Conduit Pass-Through Certificates, Trust
1992-34, Cl. G, 8%, 3/25/22/6/                                                             363,389
386,781
- ------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Gtd. Mtg. Pass-Through Certificates,
8%, 8/1/17                                                                                  83,466
87,921
- ------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Interest-Only Stripped Mtg.-Backed
Security, Trust 311, Cl. 2, 9.321%, 6/1/304                                              6,211,118
1,626,537
- ------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security:
Trust 299, Cl. 2, 18.035%, 5/1/28/4/                                                     2,921,507
698,879
Trust 313, Cl. 2, 13.31%, 6/25/31/4/                                                    14,718,473
4,029,182

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

350,144,356

- ------------------------------------------------------------------------------------------------------------------------
GNMA/Guaranteed--0.3%
Government National Mortgage Assn.:
6.75%, 7/20/25                                                                             173,934
178,555
7%, 7/15/09                                                                                114,725
119,987
7.75%, 7/20/27                                                                              34,588
35,502
8%, 6/15/05--10/15/06                                                                      403,097
425,484
9%, 2/15/09--6/15/09                                                                       150,512
162,993
10%, 11/15/09                                                                               47,121
51,564
10.50%, 12/15/17--5/15/21                                                                  151,174
172,009
11%, 10/20/19                                                                              240,991
276,902
12%, 5/15/14
832                   965
13%, 12/15/14                                                                               11,326
13,485

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

1,437,446

- ------------------------------------------------------------------------------------------------------------------------
Private--18.9%
- ------------------------------------------------------------------------------------------------------------------------
Commercial--14.0%
AMRESCO Commercial Mortgage Funding I Corp., Multiclass Mtg
Pass-Through Certificates, Series 1997-C1, Cl. G, 7%, 6/17/29/1/                           150,000
133,348


                            13 | OPPENHEIMER BOND FUND


STATEMENT OF INVESTMENTS Continued


                                                                                        Principal
Market Value
                                                                                           Amount             See
Note 1
- ------------------------------------------------------------------------------------------------------------------------

Commercial Continued
Asset Securitization Corp., Commercial Mtg. Pass-Through Certificates:
Series 1996-D2, Cl. A3, 7.38%, 2/14/29/3/                                              $ 6,067,127           $
5,915,449
Series 1996-MD6, Cl. A3, 7.09%, 11/13/29/3/                                                800,000
816,875
Series 1997-D4, Cl. B1, 7.525%, 4/14/29/3/                                                 115,000
93,132
Series 1997-D4, Cl. B2, 7.525%, 4/14/29/3/                                                 115,000
89,700
Series 1997-D4, Cl. B3, 7.525%, 4/14/29/3/                                                 115,000
81,398
Series 1997-D5, Cl. B1, 6.93%, 2/14/41                                                   2,000,000
1,090,000
- ------------------------------------------------------------------------------------------------------------------------
Asset Securitization Corp., Interest-Only Stripped Mtg.-Backed Security,
Series 1997-D5, Cl. PS1, 8.05%, 2/14/41/4/                                               5,895,639
427,434
- ------------------------------------------------------------------------------------------------------------------------
Capital Lease Funding Securitization LP, Interest-Only Corporate-
Backed Pass-Through Certificates, Series 1997-CTL1, 10.015%, 6/22/24/1/,/4/             12,174,381
369,036
- ------------------------------------------------------------------------------------------------------------------------
CBA Mortgage Corp., Commercial Mtg. Pass-Through Certificates,
Series 1993-C1, Cl. E, 6.72%, 12/25/03/1/,/3/                                              250,000
247,998
- ------------------------------------------------------------------------------------------------------------------------
Commercial Mortgage Acceptance Corp., Commercial Mtg. Obligations:
Series 1996-C1, Cl. D, 7.35%, 12/25/20/1/,/3/                                              875,000
873,359
Series 2000-FL2A, Cl. J-NS, 4.20%, 7/15/02/3/                                            1,400,000
1,379,219
- ------------------------------------------------------------------------------------------------------------------------
Commercial Mortgage Acceptance Corp., Interest-Only Stripped Mtg.-
Backed Security, Series 1996-C1, Cl. X-2, 164.795%, 12/25/20/1/,/4/
9,061,582                 2,832
- ------------------------------------------------------------------------------------------------------------------------
Commercial Mortgage Asset Trust, Commercial Mtg. Pass-Through
Certificates, Series 1999-C1, Cl. C, 7.35%, 8/17/13                                        362,600
371,552
- ------------------------------------------------------------------------------------------------------------------------
CRIIMI MAE Commercial Mortgage Trust I, Collateralized Mtg.
Obligations, Series 1998-C1, Cl. A2, 7%, 3/2/11/2/                                       7,250,000
7,173,195
- ------------------------------------------------------------------------------------------------------------------------
CS First Boston Mortgage Securities Corp., Mtg. Pass-Through
Certificates, Series 1998-C1, Cl. F, 6%, 5/17/40/2/                                      2,500,000
1,532,638
- ------------------------------------------------------------------------------------------------------------------------
DLJ Commercial Mortgage Corp., Commercial Mtg.
Pass-Through Certificates:
Series 1999-STF1, Cl. B6, 6.511%, 7/5/08/1/,/3/                                          1,143,219
1,080,080
Series 1999-STF1, Cl. B6, 6.511%, 7/5/08/1/,/3/
21,426,668                    --
- ------------------------------------------------------------------------------------------------------------------------
FDIC Trust, Gtd. Real Estate Mtg. Investment Conduit
Pass-Through Certificates:
Series 1994-C1, Cl. 2D, 8.70%, 9/25/25                                                   1,000,000
978,906
Series 1994-C1, Cl. 2E, 8.70%, 9/25/25                                                   1,000,000
978,906
- ------------------------------------------------------------------------------------------------------------------------
First Chicago/Lennar Trust 1, Commercial Mtg.
Pass-Through Certificates:
Series 1997-CHL1, Cl. C, 8.111%, 7/25/06/1/,/3/                                          1,478,000
1,444,976
Series 1997-CHL1, Cl. D, 8.111%, 5/25/08/1/,/3/                                            750,000
686,016
Series 1997-CHL1, Cl. E, 8.111%, 2/25/11/1/,/3/                                            750,000
583,125
- ------------------------------------------------------------------------------------------------------------------------
First Union National Bank Commercial Mortgage Trust, Commercial
Mtg. Pass-Through Certificates, Series 2001-C2, Cl. E, 7.003%, 1/12/43                   3,200,000
3,249,000
- ------------------------------------------------------------------------------------------------------------------------
First Union-Lehman Brothers Commercial Mortgage Trust, Interest-Only
Stripped Mtg.-Backed Security, Series 1998-C2, 10.106%, 5/18/28/4/                       9,988,150
306,082
- ------------------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., Collateralized Mtg. Obligations,
Series 1998-C1, Cl. E, 7.096%, 3/15/11/3/                                                1,500,000
1,488,750
- ------------------------------------------------------------------------------------------------------------------------
GMAC Commercial Mortgage Securities, Inc., Interest-Only Stripped
Mtg.-Backed Security Pass-Through Certificates, Series 1997-C1, Cl. X,
8.203%, 7/15/27/4/                                                                       7,647,538
514,416
- ------------------------------------------------------------------------------------------------------------------------
GMAC Commercial Mortgage Securities, Inc., Mtg. Pass-Through
Certificates, Series 1997-C2, Cl. F, 6.75%, 4/16/29                                      1,000,000
574,648


                            14 | OPPENHEIMER BOND FUND




                                                                                         Principal
Market Value
                                                                                            Amount            See
Note 1
- ------------------------------------------------------------------------------------------------------------------------

Commercial Continued
GS Mortgage Securities Corp. II, Commercial Mtg. Obligations:
Series 2001-Rock, Cl. C, 6.878%, 5/3/18/2/                                             $ 3,200,000           $
3,155,750
Series 2001-Rock, Cl. E, 6.878%, 5/3/18/2/                                               2,200,000
2,093,436
- ------------------------------------------------------------------------------------------------------------------------
Hotel First Mortgage Trust, Commercial Mtg. Obligations,
Series 1993-A, Cl. A, 8.52%, 8/5/08/1/                                                   1,144,124
1,192,750
- ------------------------------------------------------------------------------------------------------------------------
J.P. Morgan Chase Commercial Mortgage Securities, Commercial Mtg.
Pass-Through Obligations, Series 2001-FL1A, Series G, 3.895%, 7/13/13/1/,/3/             3,020,085
2,963,341
- ------------------------------------------------------------------------------------------------------------------------
LB-UBS Securities Commercial Mortgage Trust, Commercial Mtg
Pass-Through Certificates, Series 2000-C3, Cl. C, 7.95%, 2/15/10                         3,137,400
3,372,705
- ------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Commercial Conduit Mortgage Trust, Interest-Only
Stripped Mtg.-Backed Security, Series 1998-C1, Cl. IO, 8.017%, 2/18/28/4/               16,895,837
725,993
- ------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Capital I, Inc., Commercial Mtg.
Pass-Through Certificates:
Series 1996-C1, Cl. E, 7.377%, 3/15/06/1/,/3/                                              385,000
366,479
Series 1997-HF1, Cl. F, 6.86%, 2/15/10/2/                                                  225,000
198,422
Series 1997-RR, Cl. D, 7.751%, 4/30/39/2/,/3/                                            1,720,092
1,487,998
Series 1997-RR, Cl. E, 7.751%, 4/30/39/2/,/3/                                              400,021
292,827
Series 1997-RR, Cl. F, 7.751%, 4/30/39/2/,/3/                                              400,021
245,227
Series 1998-WF1, Cl. F, 7.30%, 3/15/30/1/                                                2,000,000
1,786,250
- ------------------------------------------------------------------------------------------------------------------------
Mortgage Capital Funding, Inc., Commercial Mtg. Pass-Through
Certificates, Series 1997-MC1, Cl. F, 7.452%, 5/20/07/2/                                   254,890
224,622
- ------------------------------------------------------------------------------------------------------------------------
Mortgage Capital Funding, Inc., Multifamily Mtg. Pass-Through
Certificates, Series 1996-MC1, Cl. G, 7.15%, 6/15/06/2/                                    875,000
793,840
- ------------------------------------------------------------------------------------------------------------------------
NationsBank Trust, Lease Pass-Through Certificates, Series 1997A-1,
7.442%, 1/10/11/3/                                                                         446,562
471,333
- ------------------------------------------------------------------------------------------------------------------------
Nomura Asset Securities Corp., Commercial Mtg. Obligations,
Series 1996-MD5, Cl. A3, 7.638%, 4/13/39/3/                                              5,600,000
5,910,688
- ------------------------------------------------------------------------------------------------------------------------
PNC Mortgage Securities Corp., Collateralized Mtg. Obligations Pass-
Through Certificates, Series 1998-12, Cl. 1A2, 5.75%, 1/25/29                            6,000,000
5,439,360
- ------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VII, Inc., Commercial Mtg. Pass-
Through Certificates, Series 2001-CDCA, Cl. GSA, 3.896%, 2/15/13/2/,/3/                  3,261,200
3,265,277
- ------------------------------------------------------------------------------------------------------------------------
Structured Asset Securities Corp., Sub. Multiclass Pass-Through
Certificates, Series 1996-CFL, Cl. G, 7.75%, 2/25/28                                     4,500,000
4,517,578

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

70,985,946

- ------------------------------------------------------------------------------------------------------------------------
Other--0.0%
Salomon Brothers Mortgage Securities VI, Inc., Principal-Only Stripped
Mtg.-Backed Security, Series 1987-3, Cl. A, 12.945%, 10/23/17/1/,/7/                        53,878
44,315
- ------------------------------------------------------------------------------------------------------------------------
Residential--4.9%
ARC Net Interest Margin Trust, Collateralized Mtg. Obligations,
Series 2001-6A, Cl. A, 7.25%, 10/27/31/1/                                                4,893,386
4,836,807
- ------------------------------------------------------------------------------------------------------------------------
NC Finance Trust, Collateralized Mtg. Obligations, Series 2001-1,
Cl. ECFD, 7.25%, 10/22/02                                                                2,303,485
2,303,486
- ------------------------------------------------------------------------------------------------------------------------
Residential Funding Mortgage Securities I, Inc., Mtg. Pass-Through
Certificates, Series 1993-S10, Cl. A9, 8.50%, 2/25/23                                       16,775
16,729
- ------------------------------------------------------------------------------------------------------------------------
Ryland Mortgage Securities Corp. III, Sub. Bonds, Series 1992-A,
Cl. 1A, 8.25%, 3/29/30/3/                                                                   66,975
68,063


                          15 | OPPENHEIMER BOND FUND


STATEMENT OF INVESTMENTS Continued



                                                                                         Principal
Market Value
                                                                                            Amount            See
Note 1
- ------------------------------------------------------------------------------------------------------------------------

Residential Continued
Salomon Brothers Mortgage Securities VII, Inc., Commercial Mtg.
Pass-Through Certificates:
Series 1996-B, Cl. 1, 7.11%, 4/25/26/1/,/3/                                           $  1,688,737          $
1,207,447
Series 1999-NC2, Cl. M3, 5.35%, 4/25/29/3/                                               1,654,000
1,661,236
- ------------------------------------------------------------------------------------------------------------------------
Structured Asset Securities Corp., Collateralized Mtg. Obligations, Mtg.
Pass-Through Certificates, Series 1998-8, Cl. B, 3.40%, 8/25/28/3/                       1,853,067
1,827,877
- ------------------------------------------------------------------------------------------------------------------------
Washington Mutual Finance Corp., Collateralized Mtg. Obligations,
Series 2000-1, Cl. B1, 5.93%, 1/25/40/3/                                                 2,800,000
2,775,938
- ------------------------------------------------------------------------------------------------------------------------
Washington Mutual Mortgage Loan Trust, Commercial Mtg. Obligations,
Series 2001-S9, Cl. A12, 6.75%, 9/25/31                                                  9,711,174
9,847,738

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

24,545,321

- ------------
Total Mortgage-Backed Obligations (Cost $443,105,554)
447,157,384

- ------------------------------------------------------------------------------------------------------------------------
U.S. Government Obligations--2.1%

U.S. Treasury Bonds, 5.375%, 2/15/31                                                     6,500,000
6,410,632
- ------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 5%, 8/15/11                                                          4,400,000
4,390,377

- ------------
Total U.S. Government Obligations (Cost $10,844,312)
10,801,009

- ------------------------------------------------------------------------------------------------------------------------
Loan Participations--0.1%
Shoshone Partners Loan Trust Sr. Nts., 4.03%, 4/28/02 (representing a
basket of reference loans and a total return swap between Chase
Manhattan Bank and the Trust)1,3 (Cost $750,000)                                           750,000
331,302
- ------------------------------------------------------------------------------------------------------------------------
Corporate Bonds and Notes--48.7%
- ------------------------------------------------------------------------------------------------------------------------
Aerospace/Defense--0.1%
Alliant Techsystems, Inc., 8.50% Sr. Unsec. Sub. Nts., 5/15/11                             200,000
209,000
- ------------------------------------------------------------------------------------------------------------------------
SC International Services, Inc., 9.25% Sr. Sub. Nts., Series B, 9/1/07                     100,000
70,000

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

279,000

- ------------------------------------------------------------------------------------------------------------------------
Chemicals--0.4%
Avecia Group plc, 11% Sr. Unsec. Nts., 7/1/09                                              200,000
192,000
- ------------------------------------------------------------------------------------------------------------------------
ISP Chemco, Inc., 10.25% Sr. Sub. Nts., 7/1/11/2/                                          300,000
315,000
- ------------------------------------------------------------------------------------------------------------------------
Lyondell Chemical Co.:
9.50% Sec. Nts., 12/15/08/2/                                                               200,000
199,000
9.625% Sr. Sec. Nts., Series A, 5/1/07                                                     300,000
303,750
- ------------------------------------------------------------------------------------------------------------------------
Morton International, Inc., 9.25% Credit Sensitive Nts., 6/1/20                             85,000
99,441
- ------------------------------------------------------------------------------------------------------------------------
NL Industries, Inc., 11.75% Sr. Sec. Nts., 10/15/03                                        383,000
381,085
- ------------------------------------------------------------------------------------------------------------------------
OM Group, Inc., 9.25% Sr. Sub. Nts., 12/15/11/2/                                           250,000
256,250
- ------------------------------------------------------------------------------------------------------------------------
Pioneer Americas Acquisition Corp., 9.25% Sr. Nts., 6/15/07/8/,/9/                         100,000
28,625
- ------------------------------------------------------------------------------------------------------------------------
Polymer Group, Inc., 9% Sr. Unsec. Sub. Nts., Series B, 7/1/07/8/                          150,000
44,250
- ------------------------------------------------------------------------------------------------------------------------
Sterling Chemicals, Inc., 12.375% Sr. Sec. Nts., Series B, 7/15/06/8/                      200,000
167,000

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

1,986,401

- ------------------------------------------------------------------------------------------------------------------------
Consumer Non-Durables--0.1%
Pennzoil-Quaker State Co., 10% Sr. Nts., 11/1/08/2/                                        200,000
210,000


                            16 | OPPENHEIMER BOND FUND




                                                                                        Principal
Market Value
                                                                                           Amount             See
Note 1
- ------------------------------------------------------------------------------------------------------------------------

Consumer Non-Durables Continued
Playtex Products, Inc., 9.375% Sr. Unsec. Sub. Nts., 6/1/11                            $  250,000          $
265,000
- ------------------------------------------------------------------------------------------------------------------------
Revlon Consumer Products Corp., 12% Sr. Sec. Nts., 12/1/05/2/                             250,000
249,687
- ------------------------------------------------------------------------------------------------------------------------
Styling Technology Corp., 10.875% Sr. Unsec. Sub. Nts., 7/1/08/1/,/8/,/9/
145,000                     --

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

724,687

- ------------------------------------------------------------------------------------------------------------------------
Energy--3.7%
Devon Financing Corp., 7.875% Debs., 9/30/31/2/                                          6,400,000
6,496,314
- ------------------------------------------------------------------------------------------------------------------------
El Paso Energy Partners LP, 8.50% Sr. Unsec. Sub. Nts., Series B, 6/1/11                   650,000
659,750
- ------------------------------------------------------------------------------------------------------------------------
Hornbeck-Leevac Marine Services, Inc., 10.625% Sr. Nts., 8/1/08/2/                         500,000
510,000
- ------------------------------------------------------------------------------------------------------------------------
Kinder Morgan Energy Partners LP, 6.75% Sr. Unsec. Nts., 3/15/11                         4,500,000
4,507,119
- ------------------------------------------------------------------------------------------------------------------------
McDermott, Inc., 9.375% Nts., 3/15/02                                                      100,000
90,500
- ------------------------------------------------------------------------------------------------------------------------
Ocean Rig Norway AS, 10.25% Sr. Sec. Nts., 6/1/08                                          200,000
175,000
- ------------------------------------------------------------------------------------------------------------------------
P&L Coal Holdings Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08                       242,000
260,755
- ------------------------------------------------------------------------------------------------------------------------
PanCanadian Energy Corp., 7.20% Bonds, 11/1/31                                           5,000,000
4,884,290
- ------------------------------------------------------------------------------------------------------------------------
SESI LLC, 8.875% Sr. Unsec. Nts., 5/15/11                                                  250,000
236,250
- ------------------------------------------------------------------------------------------------------------------------
Stone Energy Corp.:
8.25% Sr. Sub. Nts., 12/15/11/2/                                                           200,000
204,000
8.75% Sr. Sub. Nts., 9/15/07                                                               300,000
307,500
- ------------------------------------------------------------------------------------------------------------------------
Westport Resources Corp., 8.25% Sr. Unsec. Sub. Nts., 11/1/11/2/                           500,000
507,500

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

18,838,978

- ------------------------------------------------------------------------------------------------------------------------
Financial--15.7%
Brascan Corp., 8.125% Nts., 12/15/08                                                     6,025,000
6,020,764
- ------------------------------------------------------------------------------------------------------------------------
BT Institutional Cap Trust A, 8.09% Bonds, 12/1/26/2/                                    5,200,000
5,209,360
- ------------------------------------------------------------------------------------------------------------------------
Colonial Bank, 9.375% Sub. Nts., 6/1/11                                                  4,600,000
4,847,655
- ------------------------------------------------------------------------------------------------------------------------
Credit Suisse First Boston (USA), Inc., 6.125% Nts., 11/15/11                            4,000,000
3,911,292
- ------------------------------------------------------------------------------------------------------------------------
Dime Capital Trust I, 9.33% Capital Securities, Series A, 5/6/27                         6,300,000
6,694,040
- ------------------------------------------------------------------------------------------------------------------------
Lion Connecticut Holdings, Inc., 8% Debs., 1/15/17                                         553,000
561,569
- ------------------------------------------------------------------------------------------------------------------------
Nationwide CSN Trust, 9.875% Sec. Nts., 2/15/25/2/                                       8,000,000
8,321,768
- ------------------------------------------------------------------------------------------------------------------------
Ocwen Capital Trust I, 10.875% Capital Nts., 8/1/27/1/                                     300,000
241,500
- ------------------------------------------------------------------------------------------------------------------------
Ohio National Financial Services, Inc., 7% Nts., 7/15/11/2/                             10,600,000
10,740,280
- ------------------------------------------------------------------------------------------------------------------------
Osprey Trust/Osprey I, Inc., 8.31% Sr. Sec. Nts., 1/15/03/2/,/8/                        26,200,000
5,371,000
- ------------------------------------------------------------------------------------------------------------------------
Oversea-Chinese Banking Corp. Ltd., 7.75% Unsec. Sub. Nts., 9/6/11                       5,300,000
5,544,097
- ------------------------------------------------------------------------------------------------------------------------
Popular North America, Inc. 6.80% Medium-Term Nts., Series C, 12/21/05                   3,100,000
3,138,052
- ------------------------------------------------------------------------------------------------------------------------
Sears Roebuck Acceptance Corp., 6.75% Nts., 8/15/11                                      6,000,000
5,995,476
- ------------------------------------------------------------------------------------------------------------------------
Stilwell Financial, Inc., 7% Nts., 11/1/06                                               8,000,000
7,838,944
- ------------------------------------------------------------------------------------------------------------------------
Unicredito Italiano Capital Trust, 9.20% Non-Cum. Trust Preferred
Securities, 10/5/49/2,3/                                                                 4,400,000
4,902,150

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

79,337,947

- ------------------------------------------------------------------------------------------------------------------------
Food/Tobacco--0.7%
Canandaigua Brands, Inc., 8.625% Sr. Unsec. Nts., 8/1/06                                   300,000
310,500
- ------------------------------------------------------------------------------------------------------------------------
Great Atlantic & Pacific Tea Co., Inc. (The), 9.125% Sr. Nts., 12/15/11                    250,000
251,875
- ------------------------------------------------------------------------------------------------------------------------
Kraft Foods, Inc., 6.50% Bonds, 11/1/31                                                  2,400,000
2,356,723


                            17 | OPPENHEIMER BOND FUND


STATEMENT OF INVESTMENTS Continued



                                                                                         Principal
Market Value
                                                                                            Amount            See
Note 1
- ------------------------------------------------------------------------------------------------------------------------

Food/Tobacco Continued
Smithfield Foods, Inc., 7.625% Sr. Unsec. Sub. Nts., 2/15/08/1/                        $   250,000           $
246,250
- ------------------------------------------------------------------------------------------------------------------------
Winn-Dixie Stores, Inc., 8.875% Sr. Nts., 4/1/08                                           200,000
192,000

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

3,357,348

- ------------------------------------------------------------------------------------------------------------------------
Forest Products/Containers--2.0%
Riverwood International Corp., 10.625% Sr. Unsec. Nts., 8/1/07                             200,000
211,000
- ------------------------------------------------------------------------------------------------------------------------
Scotia Pacific Co. LLC, 7.71% Sec. Nts., Series B, Cl. A-3, 1/20/14                     11,811,000
9,711,240
- ------------------------------------------------------------------------------------------------------------------------
Stone Container Corp., 9.75% Sr. Unsec. Nts., 2/1/11                                       200,000
213,500

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

10,135,740

- ------------------------------------------------------------------------------------------------------------------------
Gaming/Leisure--0.8%
Aztar Corp., 9% Sr. Sub. Nts., 8/15/11/2/                                                  400,000
414,000
- ------------------------------------------------------------------------------------------------------------------------
Capstar Hotel Co., 8.75% Sr. Sub. Nts., 8/15/07                                            150,000
126,375
- ------------------------------------------------------------------------------------------------------------------------
Felcor Lodging LP, 8.50% Sr. Nts., 6/1/11                                                  184,000
177,560
- ------------------------------------------------------------------------------------------------------------------------
HMH Properties, Inc., 8.45% Sr. Nts., Series C, 12/1/08                                    300,000
286,500
- ------------------------------------------------------------------------------------------------------------------------
Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07                                        100,000
106,625
- ------------------------------------------------------------------------------------------------------------------------
Host Marriott LP, 9.50% Sr. Nts., 1/15/07/2/                                               400,000
402,500
- ------------------------------------------------------------------------------------------------------------------------
Intrawest Corp., 9.75% Sr. Nts., 8/15/08                                                   250,000
245,000
- ------------------------------------------------------------------------------------------------------------------------
Meristar Hospitality Corp.:
8.75% Sr. Unsec. Sub. Nts., 8/15/07                                                        700,000
589,750
9.125% Sr. Nts., 1/15/11                                                                   200,000
189,000
- ------------------------------------------------------------------------------------------------------------------------
Meristar Hospitality Operating Partnership/Finance Corp. II,
10.50% Sr. Nts., 6/15/09/2/                                                                350,000
352,187
- ------------------------------------------------------------------------------------------------------------------------
MGM Mirage, Inc., 8.375% Sr. Unsec. Sub. Nts., 2/1/11                                      400,000
397,000
- ------------------------------------------------------------------------------------------------------------------------
Mohegan Tribal Gaming Authority:
8.125% Sr. Nts., 1/1/06/1/                                                                 200,000
206,500
8.375% Sr. Sub. Nts., 7/1/11                                                               300,000
310,500
8.75% Sr. Unsec. Sub. Nts., 1/1/09                                                         100,000
104,000
- ------------------------------------------------------------------------------------------------------------------------
Premier Parks, Inc., 9.75% Sr. Nts., 6/15/07                                               200,000
209,750
- ------------------------------------------------------------------------------------------------------------------------
Station Casinos, Inc., 9.75% Sr. Sub. Nts., 4/15/07                                        150,000
153,375

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

4,270,622

- ------------------------------------------------------------------------------------------------------------------------
Healthcare--0.4%
Fresenius Medical Care Capital Trust II, 7.875% Nts., 2/1/08                               150,000
150,750
- ------------------------------------------------------------------------------------------------------------------------
Fresenius Medical Care Capital Trust IV, 7.875% Trust Preferred Nts., 6/15/11              400,000
400,000
- ------------------------------------------------------------------------------------------------------------------------
ICN Pharmaceuticals, Inc.:
8.75% Sr. Nts., 11/15/08/1/                                                                125,000
140,625
9.75% Sr. Nts., 11/15/08/2/                                                                140,000
157,500
- ------------------------------------------------------------------------------------------------------------------------
Magellan Health Services, Inc., 9.375% Sr. Nts., 11/15/07/2/                               200,000
204,000
- ------------------------------------------------------------------------------------------------------------------------
Mallinckroot, Inc., 6% Nts., 10/15/03                                                      500,000
520,288
- ------------------------------------------------------------------------------------------------------------------------
Tenet Healthcare Corp., 8.125% Sr. Unsec. Sub. Nts., Series B, 12/1/08/1/                  400,000
424,000

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

1,997,163

- ------------------------------------------------------------------------------------------------------------------------
Housing--3.7%
CB Richard Ellis Services, Inc., 11.25% Sr. Unsec. Sub. Nts., 6/15/11                      200,000
172,000


                          18 | OPPENHEIMER BOND FUND




                                                                                         Principal
Market Value
                                                                                            Amount            See
Note 1
- ------------------------------------------------------------------------------------------------------------------------

Housing Continued
CPG Partners LP, 8.25% Unsec. Unsub. Nts., 2/1/11                                      $ 4,200,000           $
4,258,460
- ------------------------------------------------------------------------------------------------------------------------
D.R. Horton, Inc.:
7.875% Sr. Nts., 8/15/11                                                                   300,000
294,000
9.75% Sr. Sub. Nts., 9/15/10                                                               300,000
310,500
- ------------------------------------------------------------------------------------------------------------------------
KB Home:
8.65% Sr. Sub. Nts., 12/15/08                                                              400,000
404,000
9.50% Sr. Unsec. Sub. Nts., 2/15/11                                                        200,000
205,000
- ------------------------------------------------------------------------------------------------------------------------
Nortek, Inc.:
9.125% Sr. Unsec. Nts., Series B, 9/1/07                                                   250,000
255,000
9.25% Sr. Nts., Series B, 3/15/07                                                          450,000
461,250
- ------------------------------------------------------------------------------------------------------------------------
Pulte Corp., 8.125% Sr. Unsec. Nts., 3/1/11                                              1,900,000
1,880,253
- ------------------------------------------------------------------------------------------------------------------------
Socgen Real Estate LLC, 7.64% Bonds, 12/29/49/2/                                         9,000,000
9,291,501
- ------------------------------------------------------------------------------------------------------------------------
Toll Corp., 8.25% Sr. Sub. Nts., 12/1/11                                                 1,000,000
995,000

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

18,526,964

- ------------------------------------------------------------------------------------------------------------------------
Information Technology--0.2%
Amkor Technology, Inc., 9.25% Sr. Unsec. Sub. Nts., 2/15/08                                200,000
190,000
- ------------------------------------------------------------------------------------------------------------------------
Communications & Power Industries, Inc., 12% Sr. Sub. Nts., Series B, 8/1/05/1/            500,000
237,500
- ------------------------------------------------------------------------------------------------------------------------
Fairchild Semiconductor Corp., 10.50% Sr. Unsec. Sub. Nts., 2/1/09                         200,000
213,500
- ------------------------------------------------------------------------------------------------------------------------
Fisher Scientific International, Inc.:
9% Sr. Unsec. Sub. Nts., 2/1/08                                                            175,000
180,250
9% Sr. Unsec. Sub. Nts., 2/1/08                                                             50,000
51,500

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

872,750

- ------------------------------------------------------------------------------------------------------------------------
Manufacturing--0.1%
Grove Worldwide LLC, 9.25% Sr. Sub. Nts., 5/1/08/1/,/8/,/9/
100,000                 2,500
- ------------------------------------------------------------------------------------------------------------------------
Hydrochem Industrial Services, Inc., 10.375% Sr. Sub. Nts., 8/1/07/1/                      150,000
108,750
- ------------------------------------------------------------------------------------------------------------------------
Roller Bearing Co. of America, Inc., 9.625% Sr. Sub. Nts., Series B, 6/15/07/1/            300,000
264,000
- ------------------------------------------------------------------------------------------------------------------------
Terex Corp.:
8.875% Sr. Unsec. Sub. Nts., Series C, 4/1/08                                              150,000
148,500
9.25% Sr. Sub. Nts., 7/15/112                                                              250,000
251,250
- ------------------------------------------------------------------------------------------------------------------------

775,000

- ------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Broadcasting--0.4%
AMFM Operating, Inc., 12.625% Sr. Sub. Debs., Series E, 10/31/06/1/,/10/                    24,000
25,650
- ------------------------------------------------------------------------------------------------------------------------
Chancellor Media Corp., 8.75% Sr. Unsec. Sub. Nts., Series B, 6/15/07                    1,200,000
1,254,000
- ------------------------------------------------------------------------------------------------------------------------
Emmis Communications Corp., 8.125% Sr. Unsec. Sub. Nts., Series B, 3/15/09                 300,000
288,750
- ------------------------------------------------------------------------------------------------------------------------
Radio One, Inc., 8.875% Sr. Unsec. Sub. Nts., Series B, 7/1/11                             150,000
155,625
- ------------------------------------------------------------------------------------------------------------------------
Young Broadcasting, Inc., 8.50% Sr. Unsec. Nts., 12/15/08/2/                               400,000
404,000

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

2,128,025

- ------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Cable/Wireless Video--1.1%
Adelphia Communications Corp.:
8.375% Sr. Nts., Series B, 2/1/08                                                          700,000
651,875
9.25% Sr. Nts., 10/1/02                                                                    150,000
151,687


                            19 | OPPENHEIMER BOND FUND


STATEMENT OF INVESTMENTS Continued



                                                                                         Principal
Market Value
                                                                                            Amount            See
Note 1
- ------------------------------------------------------------------------------------------------------------------------

Media/Entertainment: Cable/Wireless Video Continued
Charter Communications Holdings LLC/Charter Communications
Holdings Capital Corp.:
8.25% Sr. Unsec. Nts., 4/1/07                                                          $ 1,500,000           $
1,449,375
10% Sr. Unsec. Sub. Nts., 5/15/11                                                          400,000
409,000
10.75% Sr. Unsec. Nts., 10/1/09                                                            400,000
424,000
- ------------------------------------------------------------------------------------------------------------------------
Diamond Holdings plc, 9.125% Sr. Nts., 2/1/08                                              100,000
71,500
- ------------------------------------------------------------------------------------------------------------------------
EchoStar Broadband Corp., 10.375% Sr. Unsec. Nts., 10/1/07                                 600,000
631,500
- ------------------------------------------------------------------------------------------------------------------------
EchoStar DBS Corp., 9.375% Sr. Unsec. Nts., 2/1/09                                         750,000
776,250
- ------------------------------------------------------------------------------------------------------------------------
Insight Midwest LP/Insight Capital, Inc., 9.75% Sr. Nts., 10/1/09                          300,000
318,000
- ------------------------------------------------------------------------------------------------------------------------
Mediacom LLC/Mediacom Capital Corp., 9.50% Sr. Unsec. Nts., 1/15/13                        400,000
417,000
- ------------------------------------------------------------------------------------------------------------------------
NTL Communications Corp., 11.50% Sr. Unsec. Nts., Series B, 10/1/08                        400,000
142,000
- ------------------------------------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc., 8.75% Sr. Sub. Nts., 12/15/11/2/                           250,000
251,250

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

5,693,437

- ------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Diversified Media--0.4%
Adelphia Communications Corp., 10.25% Sr. Unsec. Nts., 11/1/06                             300,000
307,500
- ------------------------------------------------------------------------------------------------------------------------
AMC Entertainment, Inc., 9.50% Sr. Unsec. Sub. Nts., 2/1/11                                150,000
146,438
- ------------------------------------------------------------------------------------------------------------------------
Imax Corp., 7.875% Sr. Nts., 12/1/05                                                       400,000
153,000
- ------------------------------------------------------------------------------------------------------------------------
Key3Media Group, Inc., 11.25% Sr. Sub. Nts., 6/15/11                                       600,000
507,000
- ------------------------------------------------------------------------------------------------------------------------
Lamar Advertising Co.:
8.625% Sr. Sub. Nts., 9/15/07                                                              400,000
419,000
9.625% Sr. Unsec. Sub. Nts., 12/1/06                                                       150,000
157,313
- ------------------------------------------------------------------------------------------------------------------------
Mail-Well I Corp., 8.75% Sr. Unsec. Sub. Nts., Series B, 12/15/08                          100,000
78,500
- ------------------------------------------------------------------------------------------------------------------------
Penton Media, Inc., 10.375% Sr. Unsec. Sub. Nts., 6/15/11                                  400,000
230,000

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

1,998,751

- ------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Telecommunications--5.4%
Cable & Wire Optus Ltd., 8.125% Nts., 6/15/09/2/                                         4,750,000
5,213,353
- ------------------------------------------------------------------------------------------------------------------------
Calpoint Receivable Strip Trust 2001, 7.44% Bonds, 12/10/06/2/                           8,000,000
7,859,704
- ------------------------------------------------------------------------------------------------------------------------
COLT Telecom Group plc, 12% Sr. Unsec. Disc. Nts., 12/15/06/1/                             350,000
309,750
- ------------------------------------------------------------------------------------------------------------------------
Global Crossing Holdings Ltd., 8.70% Sr. Unsec. Nts., 8/1/07/8/
100,000                 9,500
- ------------------------------------------------------------------------------------------------------------------------
International CableTel, Inc., 11.50% Sr. Deferred Coupon
Nts., Series B, 2/1/06                                                                     750,000
266,250
- ------------------------------------------------------------------------------------------------------------------------
Metromedia Fiber Network, Inc., 10% Sr. Unsec. Nts., Series B, 11/15/08                    300,000
88,500
- ------------------------------------------------------------------------------------------------------------------------
Qwest Capital Funding, Inc., 7.625% Bonds, 8/3/21/2/                                     1,500,000
1,434,344
- ------------------------------------------------------------------------------------------------------------------------
Qwest Communications International, Inc., 7.50% Sr. Unsec. Nts.,
Series B, 11/1/08                                                                        6,710,000
6,793,741
- ------------------------------------------------------------------------------------------------------------------------
Teleglobe, Inc., 7.70% Unsec. Debs., 7/20/29                                             4,275,000
3,597,430
- ------------------------------------------------------------------------------------------------------------------------
Triton PCS, Inc., 8.75% Sr. Sub. Nts., 11/15/11/2/                                         400,000
402,000
- ------------------------------------------------------------------------------------------------------------------------
WorldCom, Inc., 8.25% Bonds, 5/15/31                                                     1,280,000
1,356,900
- ------------------------------------------------------------------------------------------------------------------------
XO Communications, Inc.:
9% Sr. Unsec. Nts., 3/15/08/8/                                                             150,000
18,750
9.625% Sr. Nts., 10/1/078                                                                  500,000
62,500

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

27,412,722


                            20 | OPPENHEIMER BOND FUND




                                                                                         Principal
Market Value
                                                                                            Amount            See
Note 1
- ------------------------------------------------------------------------------------------------------------------------

Media/Entertainment: Wireless Communications--1.8%
American Cellular Corp., 9.50% Sr. Sub. Nts., 10/15/09                                  $  600,000            $
585,000
- ------------------------------------------------------------------------------------------------------------------------
American Tower Corp., 9.375% Sr. Nts., 2/1/09                                              600,000
486,000
- ------------------------------------------------------------------------------------------------------------------------
Loral Space & Communications Ltd., 9.50% Sr. Nts., 1/15/06                                 100,000
55,500
- ------------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., 9.375% Sr. Unsec. Nts., 11/15/09                              900,000
713,250
- ------------------------------------------------------------------------------------------------------------------------
Omnipoint Corp., 11.50% Sr. Nts., 9/15/09/2/                                               350,000
406,000
- ------------------------------------------------------------------------------------------------------------------------
Orion Network Systems, Inc., 0%/12.50% Sr. Disc. Nts., 1/15/07/11/                         200,000
98,000
- ------------------------------------------------------------------------------------------------------------------------
Price Communications Wireless, Inc., 9.125% Sr. Sec. Nts., Series B, 12/15/06/1/           500,000
532,500
- ------------------------------------------------------------------------------------------------------------------------
Real Time Data Co., 13% Disc. Nts., 5/31/09/1/,/10/                                        476,601
491,628
- ------------------------------------------------------------------------------------------------------------------------
Rural Cellular Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08                              500,000
517,500
- ------------------------------------------------------------------------------------------------------------------------
SBA Communications Corp.:
0%/12% Sr. Unsec. Disc. Nts., 3/1/08/11/                                                   800,000
604,000
10.25% Sr. Unsec. Nts., 2/1/09                                                             100,000
86,000
- ------------------------------------------------------------------------------------------------------------------------
Spectrasite Holdings, Inc., 0%/12% Sr. Disc. Nts., 7/15/08/11/                             300,000
94,500
- ------------------------------------------------------------------------------------------------------------------------
Triton PCS, Inc., 9.375% Sr. Unsec. Sub. Nts., 2/1/11                                      250,000
260,000
- ------------------------------------------------------------------------------------------------------------------------
VoiceStream Wireless Corp., 10.375% Sr. Unsec. Nts., 11/15/09                            3,795,000
4,326,300

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

9,256,178

- ------------------------------------------------------------------------------------------------------------------------
Metals/Minerals--1.4%
AK Steel Corp.:
7.875% Sr. Unsec. Nts., 2/15/09                                                            500,000
492,500
9.125% Sr. Nts., 12/15/06                                                                  300,000
308,250
- ------------------------------------------------------------------------------------------------------------------------
Alcoa, Inc., 6% Bonds, 1/15/12                                                           5,750,000
5,718,939
- ------------------------------------------------------------------------------------------------------------------------
Great Lakes Carbon Corp., 10.25% Sr. Sub. Nts., Series B, 5/15/08                          264,687
160,136
- ------------------------------------------------------------------------------------------------------------------------
National Steel Corp., 9.875% First Mtg. Bonds, Series D, 3/1/09                            200,000
71,000
- ------------------------------------------------------------------------------------------------------------------------
United States Steel LLC, 10.75% Sr. Nts., 8/1/08                                           200,000
192,000

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

6,942,825

- ------------------------------------------------------------------------------------------------------------------------
Retail--0.3%
Amazon.com, Inc., 0%/10% Sr. Unsec. Disc. Nts., 5/1/08/11/                                 200,000
149,000
- ------------------------------------------------------------------------------------------------------------------------
CSK Auto, Inc., 12% Sr. Nts., 6/15/06/2/                                                   200,000
202,500
- ------------------------------------------------------------------------------------------------------------------------
Finlay Enterprises, Inc., 9% Debs., 5/1/08                                                 100,000
89,500
- ------------------------------------------------------------------------------------------------------------------------
Finlay Fine Jewelry Corp., 8.375% Sr. Nts., 5/1/08/1/                                      200,000
180,000
- ------------------------------------------------------------------------------------------------------------------------
Ingram Micro, Inc., 9.875% Sr. Unsec. Sub. Nts., 8/15/08/1/                                200,000
203,500
- ------------------------------------------------------------------------------------------------------------------------
May Department Stores Co., 10.625% Debs., 11/1/10                                          405,000
508,740

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

1,333,240

- ------------------------------------------------------------------------------------------------------------------------
Service--1.8%
Allied Waste North America, Inc.:
8.50% Sr. Nts., 12/1/08/2/                                                                 300,000
304,500
8.875% Sr. Nts., Series B, 4/1/08                                                          600,000
621,000
10% Sr. Unsec. Sub. Nts., Series B, 8/1/09                                                 600,000
621,000
- ------------------------------------------------------------------------------------------------------------------------
Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07                                                 250,000
256,250
- ------------------------------------------------------------------------------------------------------------------------
Great Lakes Dredge & Dock Corp., 11.25% Sr. Unsec. Sub. Nts., 8/15/08                      150,000
153,938
- ------------------------------------------------------------------------------------------------------------------------
Integrated Electrical Services, Inc., 9.375% Sr. Sub. Nts., Series C, 2/1/09               300,000
267,000


                            21 | OPPENHEIMER BOND FUND


STATEMENT OF INVESTMENTS Continued



                                                                                         Principal
Market Value
                                                                                            Amount            See
Note 1
- ------------------------------------------------------------------------------------------------------------------------

Service Continued
MMCaps Funding I Ltd., Inc., 8.03% Sr. Nts., 6/15/31/2/                               $  3,850,000          $
3,743,297
- ------------------------------------------------------------------------------------------------------------------------
PHH Corp., 8.125% Nts., 2/3/03                                                           2,450,000
2,450,039
- ------------------------------------------------------------------------------------------------------------------------
Protection One, Inc./Protection One Alarm Monitoring, Inc.,
7.375% Sr. Unsec. Nts., 8/15/05                                                            100,000
82,500
- ------------------------------------------------------------------------------------------------------------------------
Safety-Kleen Corp., 9.25% Sr. Unsec. Nts., 5/15/09/1/,/8/,/9/
500,000                    50
- ------------------------------------------------------------------------------------------------------------------------
URS Corp., 12.25% Sr. Sub. Nts., Series B, 5/1/09                                          500,000
514,375

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

9,013,949

- ------------------------------------------------------------------------------------------------------------------------
Transportation--0.4%
Amtran, Inc., 9.625% Nts., 12/15/05                                                        200,000
140,500
- ------------------------------------------------------------------------------------------------------------------------
Atlas Air, Inc.:
8.01% Pass-Through Certificates, Series 1998-1C, 1/2/10                                    786,421
762,844
9.375% Sr. Unsec. Nts., 11/15/06                                                           500,000
417,500
- ------------------------------------------------------------------------------------------------------------------------
Dura Operating Corp., 9% Sr. Unsec. Sub. Nts., Series D, 5/1/09                            300,000
283,500
- ------------------------------------------------------------------------------------------------------------------------
Federal-Mogul Corp., 7.375% Nts., 1/15/06/8/                                               375,000
52,500
- ------------------------------------------------------------------------------------------------------------------------
Hayes Lemmerz International, Inc., 11.875% Sr. Nts., 6/15/06/2/,/8/,/9/                    200,000
96,000
- ------------------------------------------------------------------------------------------------------------------------
Navigator Gas Transport plc, 10.50% First Priority Ship Mtg. Nts., 6/30/07/2/              300,000
148,875

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

1,901,719

- ------------------------------------------------------------------------------------------------------------------------
Utility--7.8%
AES Corp. (The):
8.75% Sr. Unsec. Unsub. Nts., 6/15/08                                                      500,000
442,500
8.875% Sr. Unsec. Nts., 2/15/11                                                            300,000
265,500
9.375% Sr. Unsec. Nts., 9/15/10                                                            400,000
362,000
- ------------------------------------------------------------------------------------------------------------------------
AGL Capital Corp., 7.125% Sr. Unsec. Nts., 1/14/116                                      3,750,000
3,710,438
- ------------------------------------------------------------------------------------------------------------------------
Alliant Energy Resources, Inc., 7% Nts., 12/1/11                                        10,000,000
9,560,980
- ------------------------------------------------------------------------------------------------------------------------
Chesapeake Energy Corp., 8.375% Sr. Nts., 11/1/082                                         600,000
595,500
- ------------------------------------------------------------------------------------------------------------------------
CMS Energy Corp., 9.875% Sr. Unsec. Nts., 10/15/07                                         400,000
424,875
- ------------------------------------------------------------------------------------------------------------------------
Kansas City Power & Light Co., 6.50% Sr. Nts., 11/15/11                                  5,000,000
4,838,105
- ------------------------------------------------------------------------------------------------------------------------
PSEG Energy Holdings, Inc., 8.625% Sr. Unsec. Nts., 2/15/08                              3,000,000
3,052,683
- ------------------------------------------------------------------------------------------------------------------------
PSEG Power LLC, 8.625% Sr. Unsec. Nts., 4/15/31                                          3,500,000
3,897,768
- ------------------------------------------------------------------------------------------------------------------------
Qwest Corp., 6.875% Unsec. Debs., 9/15/33                                                4,800,000
4,039,070
- ------------------------------------------------------------------------------------------------------------------------
South Carolina Electric & Gas Co., 9% Mtg. Bonds, 7/15/06                                  500,000
526,261
- ------------------------------------------------------------------------------------------------------------------------
Williams Cos., Inc. (The), 7.50% Sr. Unsec. Unsub. Debs., Cl. A, 1/15/31                 2,100,000
2,051,776
- ------------------------------------------------------------------------------------------------------------------------
Xcel Energy, Inc., 7% Sr. Unsec. Sub. Nts., 12/1/10                                      5,600,000
5,665,458

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

39,432,914

- -------------
Total Corporate Bonds and Notes (Cost $266,330,180)
246,216,360

                                                                                            Shares
- ------------------------------------------------------------------------------------------------------------------------
Preferred Stocks--0.9%
CRIIMI MAE, Inc., 10.875% Cum. Cv., Series B, Non-Vtg                                       13,000
176,800
- ------------------------------------------------------------------------------------------------------------------------
Pacific Gas & Electric Co., $14.75 Cum./9/                                                 112,000
2,289,000
- ------------------------------------------------------------------------------------------------------------------------
Southern California Edison Co., 6.45% Cum., Non-Vtg./9/                                     20,000
1,899,376

- -------------
Total Preferred Stocks (Cost $4,377,000)
4,365,176


                          22 | OPPENHEIMER BOND FUND





Market Value
                                                                                            Shares            See
Note 1
- ------------------------------------------------------------------------------------------------------------------------

Common Stocks--0.0%
COLT Telecom Group plc, ADR                                                                  2,730          $
18,728
- ------------------------------------------------------------------------------------------------------------------------
CRIIMI MAE, Inc./9/                                                                         15,232
61,385
- ------------------------------------------------------------------------------------------------------------------------
Geotek Communications, Inc., Series B (Escrowed)/1/,/9/
25                    --
- ------------------------------------------------------------------------------------------------------------------------
OpTel, Inc., Non-Vtg./1/,/9/
100                     1
- ------------------------------------------------------------------------------------------------------------------------
Pathmark Stores, Inc./9/                                                                     2,867
70,700
- ------------------------------------------------------------------------------------------------------------------------
Price Communications Corp./9/                                                                1,657
31,632
- ------------------------------------------------------------------------------------------------------------------------
Star Gas Partners LP
330                 6,735

- ------------
Total Common Stocks (Cost $248,622)
189,181

                                                                                             Units
- ------------------------------------------------------------------------------------------------------------------------
Rights, Warrants and Certificates--0.0%

Chesapeake Energy Corp. Wts.:
Exp. 1/23/03/1/,/9/
1,668                    --
Exp. 1/23/03/1/,/9/
953                    --
Exp. 9/1/04/1/,/9/
2,800                    --
- ------------------------------------------------------------------------------------------------------------------------
Concentric Network Corp. Wts., Exp. 12/15/07/1/,/9/
50                     1
- ------------------------------------------------------------------------------------------------------------------------
e.spire Communications, Inc. Wts., Exp. 11/1/05/1/,/9/
300                     6
- ------------------------------------------------------------------------------------------------------------------------
HF Holdings, Inc. Wts., Exp. 9/27/09/1/,/9/
1,062                   106
- ------------------------------------------------------------------------------------------------------------------------
ICG Communications, Inc. Wts., Exp. 9/15/05/1/,/9/
1,980                    20
- ------------------------------------------------------------------------------------------------------------------------
Long Distance International, Inc. Wts., Exp. 4/13/08/1/,/9/
150                    --
- ------------------------------------------------------------------------------------------------------------------------
Loral Space & Communications Ltd. Wts., Exp. 1/15/07/1/,/9/
200                     2
- ------------------------------------------------------------------------------------------------------------------------
Pathmark Stores, Inc. Wts., Exp. 9/19/10/9/                                                  2,028
18,455
- ------------------------------------------------------------------------------------------------------------------------
Real Time Data Co. Wts., Exp. 5/31/04/1/,/9/
121,440                 1,214
- ------------------------------------------------------------------------------------------------------------------------
Signature Brands USA, Inc. Wts., Exp. 8/15/02/1/,/9/
50                    --

- ------------
Total Rights, Warrants and Certificates (Cost $26,229)
19,804

                                                                    Date       Strike    Contracts
- ------------------------------------------------------------------------------------------------------------------------
Options Purchased--0.3%
U.S. Treasury Bonds, 5.375%, 2/15/31 Call/1/,/9/                 1/31/02         100%       80,000
890,625
- ------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts. Futures, 10 yr., 3/19/02 Call/9/              1/25/02         105%          720
821,250

- ------------
Total Options Purchased (Cost $1,164,850)
1,711,875

                                                                                         Principal
                                                                                            Amount
- ------------------------------------------------------------------------------------------------------------------------
Repurchase Agreements--6.1%
Repurchase agreement with Banc One Capital Markets, Inc., 1.45%,
dated 12/31/01, to be repurchased at $30,941,492 on 1/2/02,
collateralized by U.S. Treasury Nts., 4.75%--7.875%, 2/28/02--11/15/08,
with a value of $15,007,569 and U.S. Treasury Bonds, 7.25%--11.125%,
8/15/03--5/15/16, with a value of $16,589,750 (Cost $30,939,000)                       $30,939,000
30,939,000
- ------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $788,777,720)                                              152.5%
771,006,119
- ------------------------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets                                                        (52.5)
(265,583,838)

- ---------------------------------
Net Assets                                                                                   100.0%
$505,422,281

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



                          23 | OPPENHEIMER BOND FUND


STATEMENT OF INVESTMENTS Continued


Footnotes to Statement of Investments

1. Identifies issues considered to be illiquid or restricted. See Note 8 of
Notes to Financial Statements.
2. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $96,976,340 or 19.19% of the Fund's net
assets as of December 31, 2001.
3. Represents the current interest rate for a variable or increasing rate
security.
4. Interest-Only Strips represent the right to receive the monthly
interest payments on an underlying pool of mortgage loans. These securities
typically decline in price as interest rates decline. Most other fixed income
securities increase in price when interest rates decline. The principal amount
of the underlying pool represents the notional amount on which current interest
is calculated. The price of these securities is typically more sensitive to
changes in prepayment rates than traditional mortgage-backed securities (for
example, GNMA pass-throughs). Interest rates disclosed represent current yields
based upon the current cost basis and estimated timing and amount of future cash
flows.
5. When-issued security to be delivered and settled after December 31, 2001.
6. Securities with an aggregate market value of $3,885,478 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 6 of Notes to Financial Statements.
7. Principal-Only Strips represent the right to receive the monthly principal
payments on an underlying pool of mortgage loans. The value of these securities
generally increases as interest rates decline and prepayment rates rise. The
price of these securities is typically more volatile than that of coupon-bearing
bonds of the same maturity. Interest rates disclosed represent current yields
based upon the current cost basis and estimated timing of future cash flows.
8. Issuer is in default.
9. Non-income-producing security.
10. Interest or dividend is paid in kind.
11. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.

See accompanying Notes to Financial Statements.

                          24 | OPPENHEIMER BOND FUND


STATEMENT OF ASSETS AND LIABILITIES December 31, 2001


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

Assets

Investments, at value (cost $788,777,720)--see accompanying statement                $ 771,006,119
- --------------------------------------------------------------------------------------------------
Cash                                                                                       490,490
- --------------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold on a when-issued basis                                                 35,443,251
Interest, dividends and principal paydowns                                               7,777,558
Shares of beneficial interest sold                                                       2,072,226
Daily variation on futures contracts                                                     1,253,734
Other                                                                                        5,134
                                                                                     -------------
Total assets                                                                           818,048,512

- --------------------------------------------------------------------------------------------------
Liabilities

Payables and other liabilities:
Investments purchased (including $308,927,724 purchased on a                           311,090,272
when-issued basis)
Shares of beneficial interest redeemed                                                   1,127,432
Distribution and service plan fees                                                         303,454
Shareholder reports                                                                         69,762
Trustees' compensation                                                                       1,028
Transfer and shareholder servicing agent fees                                                  562
Other                                                                                       33,721
                                                                                     -------------
Total liabilities                                                                      312,626,231

- --------------------------------------------------------------------------------------------------
Net Assets                                                                           $ 505,422,281
                                                                                     =============

- --------------------------------------------------------------------------------------------------
Composition of Net Assets

Paid-in capital                                                                      $ 550,241,393
- --------------------------------------------------------------------------------------------------
Undistributed (overdistributed) net investment income                                      (87,221)
- --------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments and
foreign currency transactions                                                          (27,050,280)
- --------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on investments and
translation of assets and liabilities denominated in foreign currencies                (17,681,611)
                                                                                     -------------
Net Assets                                                                           $ 505,422,281
                                                                                     =============


                          25 | OPPENHEIMER BOND 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
$280,131,741 and 28,771,379 shares of beneficial interest outstanding)                       $9.74
Maximum offering price per share (net asset value plus sales charge
of 4.75%of offering price)                                                                  $10.23
- --------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value,redemption price (excludes applicable contingent deferred
sales charge)and offering price per share (based on net assets of $161,998,462
and 16,646,774 shares of beneficial interest outstanding)                                    $9.73
- --------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value,redemption price (excludes applicable contingent deferred
sales charge)and offering price per share (based on net assets of $57,049,290
and 5,856,213 shares of beneficial interest outstanding)                                     $9.74
- --------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value,redemption price (excludes applicable contingent deferred
sales charge)and offering price per share (based on net assets of $2,175,645
and 223,548 shares of beneficial interest outstanding)                                       $9.73
- --------------------------------------------------------------------------------------------------
Class Y hares:
Net asset value,redemption price and offering price per share (based on
net assets of $4,067,143 and 418,469 shares of beneficial interest outstanding)              $9.72


See accompanying Notes to Financial Statements.

                          26 | OPPENHEIMER BOND FUND


STATEMENT OF OPERATIONS For the Year Ended December 31, 2001


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

Investment Income

Interest                                                                              $ 33,387,137
- --------------------------------------------------------------------------------------------------
Dividends                                                                                  464,705
                                                                                      ------------
Total income                                                                            33,851,842

- --------------------------------------------------------------------------------------------------
Expenses

Management fees                                                                          2,896,294
- --------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A                                                                                    582,277
Class B                                                                                  1,183,059
Class C                                                                                    367,964
Class N                                                                                      2,413
- --------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A                                                                                    438,127
Class B                                                                                    222,200
Class C                                                                                     68,220
Class N                                                                                      1,293
Class Y                                                                                      3,171
- --------------------------------------------------------------------------------------------------
Shareholder reports                                                                        158,718
- --------------------------------------------------------------------------------------------------
Custodian fees and expenses                                                                 48,088
- --------------------------------------------------------------------------------------------------
Trustees' compensation                                                                      16,266
- --------------------------------------------------------------------------------------------------
Other                                                                                       40,041
                                                                                      ------------
Total expenses                                                                           6,028,131
Less reduction to custodian expenses                                                       (18,965)
Less voluntary waiver of transfer and shareholder servicing agent
fees--Class Y                                                                                 (537)
                                                                                      ------------
Net expenses                                                                             6,008,629

- --------------------------------------------------------------------------------------------------
Net Investment Income                                                                   27,843,213

- --------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:
Investments (including premiums on options exercised)                                    6,330,904
Closing of futures contracts                                                            (4,592,493)
Closing and expiration of option contracts written                                       2,008,237
Foreign currency transactions                                                              (48,805)
                                                                                      ------------
Net realized gain (loss)                                                                 3,697,843

- --------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on:

Investments                                                                            (11,624,911)
Translation of assets and liabilities denominated in foreign currencies                     25,999
                                                                                      ------------
Net change                                                                             (11,598,912)
                                                                                      ------------
Net realized and unrealized gain (loss)                                                 (7,901,069)

- --------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations                                  $ 19,942,144
                                                                                      ============


See accompanying Notes to Financial Statements.

                          27 | OPPENHEIMER BOND FUND


STATEMENTS OF CHANGES IN NET ASSETS



Year Ended December 31,                                                                  2001              2000
- ---------------------------------------------------------------------------------------------------------------

Operations
Net investment income (loss)                                                    $  27,843,213     $  22,539,614
- ---------------------------------------------------------------------------------------------------------------
Net realized gain (loss)                                                            3,697,843       (16,099,577)
- ---------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation)                              (11,598,912)       10,311,300
                                                                                -------------------------------
Net increase (decrease) in net assets resulting from operations                    19,942,144        16,751,337

- ---------------------------------------------------------------------------------------------------------------
Dividends and/or Distributions to Shareholders

Dividends from net investment income:
Class A                                                                           (17,585,602)      (15,456,296)
Class B                                                                            (7,889,070)       (5,548,538)
Class C                                                                            (2,470,735)       (1,505,221)
Class N                                                                               (50,649)             --
Class Y                                                                              (180,125)          (31,117)

- ---------------------------------------------------------------------------------------------------------------
Beneficial Interest Transactions

Net increase (decrease) in net assets resulting from
beneficial interest transactions:

Class A                                                                            81,188,197       (13,836,138)
Class B                                                                            81,353,784        (9,643,604)
Class C                                                                            33,926,102           548,199
Class N                                                                             2,250,053              --
Class Y                                                                             3,288,451           694,579

- ---------------------------------------------------------------------------------------------------------------
Net Assets

Total increase (decrease)                                                         193,772,550       (28,026,799)
- ---------------------------------------------------------------------------------------------------------------
Beginning of period                                                               311,649,731       339,676,530
                                                                                -------------------------------
End of period [including undistributed (overdistributed) net
investment income of $(87,221) and $(35,046), respectively]                     $ 505,422,281     $ 311,649,731
                                                                                ===============================


See accompanying Notes to Financial Statements.

                          28 | OPPENHEIMER BOND FUND


FINANCIAL HIGHLIGHTS



Class A      Year Ended December 31,                      2001         2000         1999         1998         1997
- ------------------------------------------------------------------------------------------------------------------

Per Share Operating Data

Net asset value, beginning of period                     $9.79        $9.97       $10.86       $10.97       $10.70
- ------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                      .73/1/       .73          .71          .71          .77
Net realized and unrealized gain (loss)                   (.05)/1/     (.18)        (.89)        (.11)         .27
                                                         ---------------------------------------------------------
Total income (loss)
from investment operations                                 .68          .55         (.18)         .60         1.04
- ------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                      (.73)        (.73)        (.71)        (.71)
(.77)
                                                         ---------------------------------------------------------
Total dividends and/or distributions
to shareholders                                           (.73)        (.73)        (.71)        (.71)
(.77)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                           $9.74        $9.79        $9.97       $10.86       $10.97
                                                         =========================================================

- ------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value/2/                       7.05%        5.80%       (1.65)%       5.61%
10.13%

- ------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data

Net assets, end of period (in thousands)              $280,132     $202,833     $220,502     $246,668     $190,706
- ------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                     $237,232     $205,883     $251,190     $217,944     $187,458
- ------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:/3/
Net investment income                                     7.31%/1/     7.48%        6.88%        6.46%
7.20%
Expenses                                                  1.23%        1.31%        1.24%        1.22%/4/
1.27%/4/
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                    162%         255%         238%          67%
51%


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                      $ .74
Net realized and unrealized gain (loss)    $(.06)
Net investment income ratio                 7.43%

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 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 BOND FUND


FINANCIAL HIGHLIGHTS Continued




Class B      Year Ended December 31,                      2001         2000         1999         1998         1997
- ------------------------------------------------------------------------------------------------------------------

Per Share Operating Data

Net asset value, beginning of period                     $9.79        $9.96       $10.86       $10.97       $10.69
- ------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                      .65/1/       .66          .63          .62          .69
Net realized and unrealized gain (loss)                   (.05)/1/     (.17)        (.90)        (.10)         .28
                                                         ---------------------------------------------------------
Total income (loss)
from investment operations                                 .60          .49         (.27)         .52          .97
- ------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                      (.66)        (.66)        (.63)        (.63)
(.69)
                                                         ---------------------------------------------------------
Total dividends and/or distributions
to shareholders                                           (.66)        (.66)        (.63)        (.63)
(.69)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                           $9.73        $9.79        $9.96       $10.86       $10.97
                                                         =========================================================

- ------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value/2/                       6.14%        5.11%       (2.48)%       4.81%
9.41%

- ------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data

Net assets, end of period (in thousands)              $161,998      $83,637      $94,845      $88,061      $48,255
- ------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                     $118,521      $83,394      $95,285      $64,330      $41,439
- ------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:/3/
Net investment income                                     6.60%/1/     6.71%        6.13%        5.68%
6.42%
Expenses                                                  1.99%        2.07%        1.99%        1.97%/4/
2.02%/4/
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                    162%         255%         238%          67%
51%


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                      $ .66
Net realized and unrealized gain (loss)    $(.06)
Net investment income ratio                 6.72%

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 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.

                          30 | OPPENHEIMER BOND FUND





Class C      Year Ended December 31,                      2001         2000         1999         1998         1997
- ------------------------------------------------------------------------------------------------------------------

Per Share Operating Data

Net asset value, beginning of period                     $9.80        $9.97       $10.87       $10.98       $10.70
- ------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                      .65/1/       .66          .63          .62          .69
Net realized and unrealized gain (loss)                   (.05)/1/     (.17)        (.90)        (.10)         .28
                                                         ---------------------------------------------------------
Total income (loss)
from investment operations                                 .60          .49         (.27)         .52          .97
- ------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                      (.66)        (.66)        (.63)        (.63)
(.69)
                                                         ---------------------------------------------------------
Total dividends and/or distributions
to shareholders                                           (.66)        (.66)        (.63)        (.63)
(.69)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                           $9.74        $9.80        $9.97       $10.87       $10.98
                                                         =========================================================

- ------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value/2/                       6.14%        5.11%       (2.47)%       4.81%
9.39%

- ------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data

Net assets, end of period (in thousands)               $57,049      $24,303      $24,143      $21,796       $9,188
- ------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                      $36,886      $22,605      $24,218      $15,198       $6,134
- ------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:/3/
Net investment income                                     6.65%/1/     6.71%        6.13%        5.66%
6.36%
Expenses                                                  1.98%        2.07%        1.99%        1.96%/4/
2.02%/4/
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                    162%         255%         238%          67%
51%


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                      $ .66
Net realized and unrealized gain (loss)    $(.06)
Net investment income ratio                 6.77%

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 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.

                          31 | OPPENHEIMER BOND FUND


FINANCIAL HIGHLIGHTS Continued



                                                       Class N                                             Class Y
                                                        Period                                                Year
                                                         Ended                                               Ended
                                                      Dec. 31,                                            Dec. 31,
                                                          2001/1/      2001         2000         1999
1998/2/
- ------------------------------------------------------------------------------------------------------------------

Per Share Operating Data

Net asset value, beginning of period                    $10.02        $9.78        $9.95       $10.86       $10.88
- ------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                     .61/3/       .76/4/        .85          .76          .49
Net realized and unrealized gain (loss)                   (.29)/3/     (.05)/4/     (.18)        (.91)
(.02)

- ----------------------------------------------------------
Total income (loss) from
investment operations                                      .32          .71          .67         (.15)         .47
- ------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                      (.61)        (.77)        (.84)        (.76)
(.49)

- ----------------------------------------------------------
Total dividends and/or distributions
to shareholders                                           (.61)        (.77)        (.84)        (.76)
(.49)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                          $ 9.73       $ 9.72        $9.78       $ 9.95       $10.86

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

- ------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value5                         3.18%        7.30%        7.13%       (1.37)%
4.40%

- ------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data

Net assets, end of period (in thousands)                $2,176       $4,067         $877         $186           $1
- ------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                       $  768       $2,286         $340          $31           $1
- ------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:6
Net investment income                                     7.87%/3/     7.85%/4/     7.92%        7.94%
6.84%
Expenses                                                  1.37%        0.94%        0.83%        0.83%
0.74%/7/
Expenses, net of reduction to custodian
expenses and/or voluntary waiver
of transfer agent fees                                     N/A         0.92%         N/A          N/A          N/A
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                    162%         162%         255%         238%
67%


1. For the period from March 1, 2001 (inception of offering) to December 31,
2001.
2. For the period from April 27,1998 (inception of offering) to December 31,
1998.
3. Without the adoption of the change in amortization method as discussed in
Note 1 in the Notes to Financial Statements, these amounts would have been:

Net investment income                      Change less than $0.005 per share
Net realized and unrealized gain (loss)    Change less than $0.005 per share
Net investment income ratio 7.99%

4. 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                      $ .77
Net realized and unrealized gain (loss)    $(.06)
Net investment income ratio                 7.97%

5. 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.
6. Annualized for periods of less than one full year.
7. Expense ratio has been calculated without adjustment for the reduction to
custodian expenses.

See accompanying Notes to Financial Statements.

                          32 | OPPENHEIMER BOND FUND


NOTES TO FINANCIAL STATEMENTS

- -------------------------------------------------------------------------------
1.Significant Accounting Policies

Oppenheimer Bond Fund (the Fund) is a separate fund of Oppenheimer Integrity
Funds, an open-end management investment company registered under the Investment
Company Act of 1940, as amended. The Fund's investment objective is to seek a
high level of current income by investing mainly in debt instruments. The Fund's
investment advisor is OppenheimerFunds, Inc. (the Manager).

   The Fund offers Class A, Class B, Class C, Class N and Class Y shares. Class
A shares are sold at their offering price, which is normally net asset value
plus a front-end sales charge. Class B, Class C and Class N shares are sold
without a front-end sales charge but may be subject to a contingent deferred
sales charge (CDSC). Class N shares are sold only through retirement plans.
Retirement plans that offer Class N shares may impose charges on those accounts.
Class Y shares are sold to certain institutional investors without either a
front-end sales charge or a CDSC. All classes of shares have identical rights to
earnings, assets and voting privileges, except that each class has its own
expenses directly attributable to that class and exclusive voting rights with
respect to matters affecting that class. Classes A, B, C and N have separate
distribution and/or service plans. No such plan has been adopted for Class Y
shares. Class B shares will automatically convert to Class A shares six years
after the date of purchase. 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).

Securities Purchased on a When-Issued 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 basis may increase the volatility of the Fund's net
asset value to the extent the Fund makes such purchases while remaining
substantially

                          33 | OPPENHEIMER BOND FUND


NOTES TO FINANCIAL STATEMENTS Continued

- -------------------------------------------------------------------------------
1. Significant Accounting Policies Continued
fully invested. As of December 31, 2001, the Fund had entered into net
outstanding when-issued commitments of $273,484,473.

   In connection with its ability to purchase securities on a when-issued basis,
the Fund may enter into forward roll transactions with respect to mortgage-
related securities. Forward roll transactions require the sale of securities for
delivery in the current month, and a simultaneous agreement with the same
counterparty to repurchase similar (same type, coupon and maturity) but not
identical securities on a specified future date. The forward roll may not extend
for a period of greater than one year. The Fund generally records the
incremental difference between the forward purchase and sell of each forward
roll as interest income.

   Risks to the Fund of entering into forward roll transactions include the
potential inability of the counterparty to meet the terms of the agreement; the
potential of the Fund to receive inferior securities to what was sold to the
counterparty at redelivery; counterparty credit risk; and the potential pay down
speed variance between the mortgage-related pools.

- -------------------------------------------------------------------------------
Security Credit Risk. The Fund invests in high-yield securities, which may be
subject to a greater degree of credit risk, greater market fluctuations and risk
of loss of income and principal, and may be more sensitive to economic
conditions than lower yielding, higher rated fixed income securities. The Fund
may acquire securities in default, and is not obligated to dispose of securities
whose issuers subsequently default. As of December 31, 2001, securities with an
aggregate market value of $5,852,675, representing 1.16% of the Fund's net
assets, were in default.

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

                          34 | OPPENHEIMER BOND FUND


- --------------------------------------------------------------------------------
Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated daily to
each class of shares based upon the relative proportion of net assets
represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
Federal Taxes. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required.

As of December 31, 2001, the Fund had available for federal income tax purposes
unused capital loss carryovers as follows:

Expiring
- ----------------------------------
2003                  $   748,553
2004                    1,106,500
2007                   10,208,297
2008                   13,887,954
                      ------------
Total                 $25,951,304
                      ============

During the fiscal year ended December 31, 2001, the Fund utilized $4,380,862 of
capital loss carryover to offset capital gains realized in the current fiscal
year.
- --------------------------------------------------------------------------------
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 paydown gains and losses and the
recognition of certain foreign currency gains (losses) as ordinary income (loss)
for tax purposes. The character of dividends and distributions made during the
fiscal year from net investment income or net realized gains may differ from
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 December 31, 2001, amounts have been reclassified to reflect an
increase in paid-in capital of $2,663,544, a decrease in undistributed net
investment income of $280,793 and an increase in accumulated net realized loss
on investments of $2,944,337. Net assets of the Fund were unaffected by the
reclassifications.

                          35 | OPPENHEIMER BOND FUND


NOTES TO FINANCIAL STATEMENTS Continued


- --------------------------------------------------------------------------------
 1.Significant Accounting Policies Continued

 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. Noncash 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
 $331,883 decrease to cost of securities and a corresponding $331,883 decrease
 in net unrealized depreciation, based on securities held as of December 31,
 2000. For the year ended December 31, 2001, interest income decreased by
 $489,625, net realized gain on investments decreased by $220,994, and the
 change in net unrealized depreciation on investments decreased by $710,619.

    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.

                          36 | OPPENHEIMER BOND FUND


2. Shares of Beneficial Interest

The Fund has authorized an unlimited number of no par value shares of beneficial
interest of each class. Transactions in shares of beneficial interest were as
follows:




                                Year Ended December 31, 2001/1/      Year Ended December 31, 2000
                                    Shares            Amount             Shares            Amount
- ----------------------------------------------------------------------------------------------------

Class A
Sold                            16,363,435      $163,919,591          5,364,030      $ 52,505,691
Dividends and/or
distributions reinvested         1,295,039        12,926,638          1,143,508        11,181,770
Redeemed                        (9,595,307)      (95,658,032)        (7,922,476)      (77,523,599)
                               ---------------------------------------------------------------------
Net increase (decrease)          8,063,167      $ 81,188,197         (1,414,938)     $(13,836,138)
                               =====================================================================

- ----------------------------------------------------------------------------------------------------
Class B
Sold                            11,714,972      $117,368,490          2,480,901      $ 24,274,682
Dividends and/or
distributions reinvested           543,150         5,415,992            393,278         3,845,596
Redeemed                        (4,154,269)      (41,430,698)        (3,851,482)      (37,763,882)
                               ---------------------------------------------------------------------
Net increase (decrease)          8,103,853      $ 81,353,784           (977,303)     $ (9,643,604)
                               =====================================================================

- ----------------------------------------------------------------------------------------------------
Class C
Sold                             4,852,582      $ 48,669,011          1,110,309      $ 10,840,387
Dividends and/or
distributions reinvested           166,771         1,663,973            102,745         1,005,571
Redeemed                        (1,643,106)      (16,406,882)        (1,154,175)      (11,297,759)
                               ---------------------------------------------------------------------
Net increase (decrease)          3,376,247      $ 33,926,102             58,879      $    548,199
                               =====================================================================

- ----------------------------------------------------------------------------------------------------
Class N
Sold                               232,768      $  2,343,541                 --      $         --
Dividends and/or
distributions reinvested             5,140            50,529                 --                --
Redeemed                           (14,360)         (144,017)                --                --
                               ---------------------------------------------------------------------
Net increase (decrease)            223,548      $  2,250,053                 --      $         --
                               =====================================================================

- ----------------------------------------------------------------------------------------------------
Class Y
Sold                               376,114      $  3,760,382             99,175      $    970,113
Dividends and/or
distributions reinvested             1,285            12,769                 --                --
Redeemed                           (48,603)         (484,700)           (28,221)         (275,534)
                               ---------------------------------------------------------------------
Net increase (decrease)            328,796      $  3,288,451             70,954      $    694,579
                               =====================================================================



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

                          37 | OPPENHEIMER BOND FUND


NOTES TO FINANCIAL STATEMENTS Continued


- --------------------------------------------------------------------------------
3. Purchases and Sales of Securities

The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the year ended December 31, 2001, were
$1,070,280,490 and $868,751,966, respectively.
     As of December 31, 2001, unrealized appreciation (depreciation) based on
cost of securities for federal income tax purposes of $791,674,153 was:

           Gross unrealized appreciation              $13,956,275
           Gross unrealized depreciation              (34,624,309)
                                                    -------------
           Net unrealized appreciation               $(20,668,034)
                                                    =============

- --------------------------------------------------------------------------------
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 $200 million of average annual net assets of the Fund, 0.72% of the
next $200 million, 0.69% of the next $200 million, 0.66% of the next $200
million, 0.60% of the next $200 million and 0.50% of average annual net assets
in excess of $1 billion. The Fund's management fee for the year ended December
31, 2001, was an annualized rate of 0.73%.
- --------------------------------------------------------------------------------
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. Additionally, Class Y shares are subject to
minimum fees of $5,000 for assets of less than $10 million and $10,000 for
assets of $10 million or more. The Class Y shares are subject to the minimum fee
in the event that the per account fee does not equal or exceed the applicable
minimum fee.
     OFS has voluntarily agreed to limit transfer and shareholder servicing
agent fees to 0.25% per annum of Class Y shares, effective January 1, 2001, and
for all other classes, 0.35% per annum, effective October 1, 2001. This
undertaking may be amended or withdrawn at any time.
- --------------------------------------------------------------------------------
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.

                          38 | OPPENHEIMER BOND 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      Concessions      Concessions      Concessions
Concessions
                 Front-End Sales       Front-End       on Class A       on Class B       on Class C       on
Class N
                      Charges on   Sales Charges           Shares           Shares           Shares
Shares
                         Class A     Retained by      Advanced by      Advanced by      Advanced by      Advanced
by
Year Ended                Shares     Distributor   Distributor/1/   Distributor/1/   Distributor/1/
Distributor/1/
- ----------------------------------------------------------------------------------------------------------------------

December
31, 2001              $1,391,486        $501,793         $156,331       $2,403,539         $286,901
$20,421



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





                  Class A Contingent    Class B Contingent    Class C Contingent    Class N Contingent
                      Deferred Sales        Deferred Sales        Deferred Sales        Deferred Sales
                    Charges Retained      Charges Retained      Charges Retained      Charges Retained
Year Ended            by Distributor        by Distributor        by Distributor        by Distributor
- --------------------------------------------------------------------------------------------------------

December
31, 2001                     $26,759              $285,551               $13,163                   $45



The Fund has adopted a Service Plan for Class A shares and Distribution and
Service Plans for Class B, Class C and Class N shares under Rule 12b-1 of the
Investment Company Act. Under those plans the Fund pays the Distributor for all
or a portion of its costs incurred in connection with the distribution and/or
servicing of the shares of the particular class.
- --------------------------------------------------------------------------------
Class A Service Plan Fees. Under the Class A service plan, the Distributor
currently uses the fees it receives from the Fund to pay brokers, dealers and
other financial institutions. The Class A service plan permits reimbursements to
the Distributor at a rate of up to a specified percent of average annual net
assets of Class A shares purchased. The Distributor makes payments to plan
recipients quarterly at an annual rate not to exceed a specified percent of the
average annual net assets consisting of Class A shares of the Fund. For the year
ended December 31, 2001, payments under the Class A plan totaled $582,277, all
of which were paid by the Distributor to recipients, and included $110,787 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

                          39 | OPPENHEIMER BOND FUND


NOTES TO FINANCIAL STATEMENTS Continued

- --------------------------------------------------------------------------------
4. Fees and Other Transactions with Affiliates Continued
on redeemed shares and asset-based sales charges from the Fund under the plans.
If any plan is terminated by the Fund, the Board of Trustees may allow the Fund
to continue payments of the asset-based sales charge to the Distributor for
distributing shares before the plan was terminated. The plans allow for the
carryforward of distribution expenses, to be recovered from asset-based sales
charges in subsequent fiscal periods.

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




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

Class B Plan                     $1,183,059       $965,705       $5,048,135             3.12%
Class C Plan                        367,964        135,995          939,972             1.65
Class N Plan                          2,413          2,413           44,095             2.03



- --------------------------------------------------------------------------------
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. Futures Contracts

A futures contract is a commitment to buy or sell a specific amount of a
commodity or financial instrument at a particular price on a stipulated future
date at a negotiated price. Futures contracts are traded on a commodity
exchange. The Fund may buy and sell futures contracts that relate to broadly
based securities indices "financial futures" or debt securities "interest rate
futures" in order to gain exposure to or to seek to protect against changes in
market value of stock and bonds or interest rates. The Fund may also buy or
write put or call options on these futures contracts.
     The Fund generally sells futures contracts to hedge against increases in
interest rates and decreases in market value of portfolio securities. The Fund
may also purchase futures

                          40 | OPPENHEIMER BOND FUND


contracts to gain exposure to market changes as it may be more efficient or cost
effective than actually buying fixed income securities.
     Upon entering into a futures contract, the Fund is required to deposit
either cash or securities (initial margin) in an amount equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Fund each day. The variation margin payments are equal
to the daily changes in the contract value and are recorded as unrealized gains
and losses. The Fund recognizes a realized gain or loss when the contract is
closed or expires.
     Securities held in collateralized accounts to cover initial margin
requirements on open futures contracts are noted in the Statement of
Investments. The Statement of Assets and Liabilities reflects a receivable
and/or payable for the daily mark to market for variation margin. Realized gains
and losses are reported on the Statement of Operations as closing and expiration
of futures contracts.
     Risks of entering into futures contracts (and related options) include the
possibility that there may be an illiquid market and that a change in the value
of the contract or option may not correlate with changes in the value of the
underlying securities.

     As of December 31, 2001, the Fund had outstanding futures contracts as
follows:




                                                                                    Unrealized
                            Expiration         Number of     Valuation as of      Appreciation
Contract Description             Dates         Contracts   December 31, 2001    (Depreciation)
- ------------------------------------------------------------------------------------------------

Contracts to Purchase
U.S. Long Bond                 3/19/02               925         $93,916,406         $(525,978)
U.S. Treasury Nts., 5 yr.      3/19/02               400          42,331,250           293,750
U.S. Treasury Nts., 10 yr.     3/19/02               201          21,133,266           322,218
                                                                                     -----------
                                                                                     $  89,990
                                                                                     ===========



- --------------------------------------------------------------------------------
7. 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.
     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.

                          41 | OPPENHEIMER BOND FUND


NOTES TO FINANCIAL STATEMENTS Continued

- --------------------------------------------------------------------------------
7. Option Activity Continued

     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 December 31, 2001, was as
follows:




                                                    Call Options                            Put Options
                              ----------------------------------------------------------------------------
                              Principal (000s)/                      Principal (000s)/
                                      Number of        Amount of             Number of        Amount of
                                      Contracts         Premiums             Contracts         Premiums
- ----------------------------------------------------------------------------------------------------------

Options outstanding as of
December 31, 2000                            --      $        --                   --       $        --
Options written                         136,601        2,230,802                5,544         1,794,999
Options closed or expired              (136,201)      (2,095,302)              (4,594)       (1,625,843)
Options exercised                          (400)        (135,500)                (950)         (169,156)
                              ----------------------------------------------------------------------------
Options outstanding as of
December 31, 2001                            --      $        --                   --       $        --
                              ============================================================================



- --------------------------------------------------------------------------------
8. Illiquid or Restricted Securities

As of December 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 December 31, 2001, was $39,002,135,
which represents 7.72% of the Fund's net assets, of which $1,214 is considered
restricted. Information concerning restricted securities is as follows:




                                                                                               Unrealized
                                            Acquisition                 Valuation as of      Appreciation
Security                                          Dates        Cost    December 31, 2001    (Depreciation)
- -----------------------------------------------------------------------------------------------------------

Stocks and/or Warrants
Geotek Communications, Inc.,
Series B (Escrowed)                              1/4/01      $  100              $   --            $(100)
Real Time Data Co. Wts., Exp. 5/31/04           6/30/99       1,214               1,214               --



                          42 | OPPENHEIMER BOND FUND


- --------------------------------------------------------------------------------
9. 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 December
31, 2001.

Appendix A

RATINGS DEFINITIONS

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

Moody's Investors Service, Inc. ("Moody's")

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 Ratings Services, a division of The McGraw-Hill Companies, Inc. ("Standard & Poor's")

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 bonds 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

Obligations 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, they 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 bonds 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: Subordinated debt or preferred stock obligations rated "C" are 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 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 payment default. The "D" rating category is used when payments on an obligation are not
made on the date due even if the applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The "D" rating also will 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: A short-term bond rated "A-1" is rated in the highest category by Standard & Poor's. The obligor's capacity to
meet its financial commitment on the obligation is strong. Within this category, certain obligations are designated
with a plus sign (+). This indicates that the obligor's capacity to meet its financial commitment on these
obligations is extremely strong.

A-2: A short-term bond rated "A-2" 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: A short-term bond rated "A-3" 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: A short-term bond rated "B" 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: A short-term bond rated "C" 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: A short-term bond rated "D" is in payment default. The "D" rating category is used when payments on an obligation
are not made on the date due even if the applicable grace period has not expired, unless Standard & Poor's believes
that such payments will be made during such grace period. The "D" rating also will 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.

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

Appendix B

Industry Classifications

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

Appendix 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.
I.

Applicability of Class A Contingent Deferred Sales Charges in Certain Cases
- ----------------------------------------------------------------------------------------------------------------------

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

There is no initial sales charge on purchases of Class A shares of any of the Oppenheimer funds in the
cases listed below. However, these purchases may be subject to the Class A contingent deferred sales charge if
redeemed within 18 months (24 months in the case of Oppenheimer Rochester National Municipals and Rochester Fund
Municipals) of the beginning of the calendar month of their purchase, as described in the Prospectus (unless a
waiver described elsewhere in this Appendix applies to the redemption). Additionally, on shares purchased under
these waivers that are subject to the Class A contingent deferred sales charge, the Distributor will pay the
applicable concession described in the Prospectus under "Class A Contingent Deferred Sales Charge."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.
II.

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

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

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

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

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

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

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

The Class A contingent deferred sales charge is also waived if shares that would otherwise be subject to the
contingent deferred sales charge are redeemed in the following cases:
|_| To make Automatic Withdrawal Plan payments that are limited annually to no more than 12% of the account
value adjusted annually.
|_| Involuntary redemptions of shares by operation of law or involuntary redemptions of small accounts (please
refer to "Shareholder Account Rules and Policies," in the applicable fund Prospectus).
|_| For distributions from Retirement Plans, deferred compensation plans or other employee benefit plans for
any of the following purposes:
1) Following the death or disability (as defined in the Internal Revenue Code) of the participant or
beneficiary. The death or disability must occur after the participant's account was established.
2) To return excess contributions.
3) To return contributions made due to a mistake of fact.
4) Hardship withdrawals, as defined in the plan.6
5) Under a Qualified Domestic Relations Order, as defined in the Internal Revenue Code, or, in the
case of an IRA, a divorce or separation agreement described in Section 71(b) of the Internal
Revenue Code.
6) To meet the minimum distribution requirements of the Internal Revenue Code.
7) To make "substantially equal periodic payments" as described in Section 72(t) of the Internal
Revenue Code.
8) For loans to participants or beneficiaries.
9) Separation from service.7
10) Participant-directed redemptions to purchase shares of a mutual fund (other than a fund managed by
the Manager or a subsidiary of the Manager) if the plan has made special arrangements with the
Distributor.
11) Plan termination or "in-service distributions," if the redemption proceeds are rolled over
directly to an OppenheimerFunds-sponsored IRA.
|_| For distributions from 401(k) plans sponsored by broker-dealers that have entered into a special agreement
with the Distributor allowing this waiver.
|_| For distributions from retirement plans that have $10 million or more in plan assets and that have entered
into a special agreement with the Distributor.
|_| For distributions from retirement plans which are part of a retirement plan product or platform offered by
certain banks, broker-dealers, financial advisors, insurance companies or record keepers which have
entered into a special agreement with the Distributor.
III. Waivers of Class B, Class C and Class N Sales Charges of Oppenheimer Funds
- ----------------------------------------------------------------------------------------------------------------------

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

A. Waivers for Redemptions in Certain Cases.

The Class B, Class C and Class N contingent deferred sales charges will be waived for redemptions of shares in the
following cases:
|_| Shares redeemed involuntarily, as described in "Shareholder Account Rules and Policies," in the applicable
Prospectus.
|_| Redemptions from accounts other than Retirement Plans following the death or disability of the last
surviving shareholder, including a trustee of a grantor trust or revocable living trust for which the
trustee is also the sole beneficiary. The death or disability must have occurred after the account was
established, and for disability you must provide evidence of a determination of disability by the
Social Security Administration.
|_| Distributions from accounts for which the broker-dealer of record has entered into a special agreement with
the Distributor allowing this waiver.
|_| Redemptions of Class B shares held by Retirement Plans whose records are maintained on a daily valuation
basis by Merrill Lynch or an independent record keeper under a contract with Merrill Lynch.
|_| Redemptions of Class C shares of Oppenheimer U.S. Government Trust from accounts of clients of financial
institutions that have entered into a special arrangement with the Distributor for this purpose.
|_| Redemptions requested in writing by a Retirement Plan sponsor of Class C shares of an Oppenheimer fund in
amounts of $500,000 or more and made more than 12 months after the Retirement Plan's first purchase of
Class C shares, if the redemption proceeds are invested in Class N shares of one or more Oppenheimer
funds.
|_| Distributions8 from Retirement Plans or other employee benefit plans for any of the following purposes:
1) Following the death or disability (as defined in the Internal Revenue Code) of the participant or
beneficiary. The death or disability must occur after the participant's account was established in
an Oppenheimer fund.
2) To return excess contributions made to a participant's account.
3) To return contributions made due to a mistake of fact.
4) To make hardship withdrawals, as defined in the plan.9
5) To make distributions required under a Qualified Domestic Relations Order or, in the case of an
IRA, a divorce or separation agreement described in Section 71(b) of the Internal Revenue Code.
6) To meet the minimum distribution requirements of the Internal Revenue Code.
7) To make "substantially equal periodic payments" as described in Section 72(t) of the Internal
Revenue Code.
8) For loans to participants or beneficiaries.10
9) On account of the participant's separation from service.11
10) Participant-directed redemptions to purchase shares of a mutual fund (other than a fund managed by
the Manager or a subsidiary of the Manager) offered as an investment option in a Retirement Plan
if the plan has made special arrangements with the Distributor.
11) Distributions made on account of a plan termination or "in-service" distributions, if the
redemption proceeds are rolled over directly to an OppenheimerFunds-sponsored IRA.
12) For distributions from a participant's account under an Automatic Withdrawal Plan after the
participant reaches age 59 1/2, as long as the aggregate value of the distributions does not exceed
10% of the account's value, adjusted annually.
13) Redemptions of Class B shares under an Automatic Withdrawal Plan for an account other than a
Retirement Plan, if the aggregate value of the redeemed shares does not exceed 10% of the
account's value, adjusted annually.
14) For distributions from 401(k) plans sponsored by broker-dealers that have entered into a special
arrangement with the Distributor allowing this waiver.
|_| Redemptions of Class B shares or Class C shares under an Automatic Withdrawal Plan from an account other
than a Retirement Plan if the aggregate value of the redeemed shares does not exceed 10% of the
account's value annually.

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

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

IV.

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

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

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

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

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

A. Reductions or Waivers of Class A Sales Charges.

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

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

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

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

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

|X| Waiver of Class A Sales Charges for Certain Shareholders. Class A shares purchased by the following
investors are not subject to any Class A initial or contingent deferred sales charges:
o Shareholders who were shareholders of the AMA Family of Funds on February 28, 1991 and who acquired shares
of any of the Former Quest for Value Funds by merger of a portfolio of the AMA Family of Funds.
o Shareholders who acquired shares of any Former Quest for Value Fund by merger of any of the portfolios of
the Unified Funds.

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

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

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

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

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

A shareholder's account will be credited with the amount of any contingent deferred sales charge paid on
the redemption of any Class A, Class B or Class C shares of the Oppenheimer fund described in this section if the
proceeds are invested in the same Class of shares in that fund or another Oppenheimer fund within 90 days after
redemption.
V. Special Sales Charge Arrangements for Shareholders of Certain Oppenheimer Funds Who Were Shareholders of
Connecticut Mutual Investment Accounts, Inc.
- ------------------------------------------------------------------------------------------------------------------------

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

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

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

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

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

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

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

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

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

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

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

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

Oppenheimer Bond Fund

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

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

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

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

Custodian Bank
The Bank of New York
23 William Street
New York, New York 10286

Independent Auditors
Deloitte & Touche LLP
555 Seventeenth Street
Denver, Colorado 80202

Legal Counsel
Myer, Swanson, Adams & Wolf, P.C.
1600 Broadway
Denver, Colorado 80202

1234

PX285.0402

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