Registration No. 2-76547
                                                             File No. 811-3420


                                UNITED STATES

                      SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, DC 20549

                                  FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933                   [X]

Pre-Effective Amendment No. __                                           [   ]


Post-Effective Amendment No. 42                                            [X]

                                    and/or

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


Amendment No. 40                                                           [X]

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                         OPPENHEIMER INTEGRITY FUNDS
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              (Exact Name of Registrant as Specified in Charter)

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            6803 South Tucson Way, Centennial, Colorado 80112-3924
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             (Address of Principal Executive Offices) (Zip Code)

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

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                             Robert G. Zack, Esq.
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                            OppenheimerFunds, Inc.

Two World Financial Center, 225 Liberty Street, New York, New York 10281-1008

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                   (Name and Address of Agent for Service)

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


[X]   Immediately upon filing pursuant to paragraph (b)
[   ] On _____________ pursuant to paragraph (b)
[   ] 60 days after filing pursuant to paragraph (a)(1)
[   ] On _____________ pursuant to paragraph (a)(1)
[   ] 75 days after filing pursuant to paragraph (a)(2)
[   ] On _____________ pursuant to paragraph (a)(2) of Rule 485

If appropriate, check the following box:

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

Oppenheimer
Bond Fund



Prospectus dated February 24, 2004




                                         Oppenheimer Bond Fund is a mutual fund
                                         that seeks a high level of current
                                         income. It invests primarily in
                                         investment-grade bonds 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
As with all mutual funds, the            the Fund and other account features.
Securities and Exchange Commission has   Please read this Prospectus carefully
not approved or disapproved the Fund's   before you invest and keep it for
securities nor has it determined that    future reference about your account.
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 Principal Investment
                  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 Checkwriting
                  By Mail
                  By Telephone


                  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 Principal Investment 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? As a non-fundamental policy (which will
not be changed without providing 60 days notice to Fund shareholders) under
normal market conditions, the Fund invests at least 80% of its net assets
(plus borrowings) in bonds.  Additionally, the Fund invests at least 65% of
its total assets in investment grade 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 types of
securities the Fund buys, 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. 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.

      In addition to the above, the Fund generally limits its investments in
high-yield debt securities that are below investment grade (commonly referred
to as "junk bonds") to no more than 35% of the Fund's total assets. 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 it becomes 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 share prices 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 certain mortgage-related securities,
including CMOs, 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.

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

The bar chart and table below show one measure of the risks of investing in
the Fund, by showing changes in the Fund's performance (for its Class A
shares) from year to year for the last 10 calendar years and by showing how
the average annual total returns of the Fund's shares, both before and after
taxes, compare to those of a broad-based market index. The after-tax returns
for the other classes of shares will vary.


      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. In certain cases, the figure representing "Return
After Taxes on Distributions and Sale of Fund Shares" may be higher than the
other return figures for the same period. A higher after-tax return may
result when a capital loss occurs upon redemption and translates into an
assumed tax deduction that benefits the shareholder. The after-tax returns
are calculated based on certain assumptions mandated by regulation and your
actual after-tax returns may differ from those shown, depending on your
individual tax situation.  The after-tax returns set forth below are not
relevant to investors who hold their fund shares through tax-deferred
arrangements such as 401(k) plans or IRAs or to institutional investors not
subject to tax. The Fund's past investment performance, before and after
taxes, is not necessarily an indication of how the Fund will perform in the
future.


Annual Total Returns (Class A) (as of 12/31 each year)
[See appendix to prospectus for data in bar chart showing the annual total
return]

Sales  charges  and taxes are not  included in the  calculations  of return in
this bar chart, and if those charges and taxes were included,  the returns may
be less than those shown.


During the period shown in the bar chart,  the highest return (not annualized)
before  taxes for a  calendar  quarter  was 6.24%  (2nd Qtr 95) and the lowest
return (not  annualized)  before taxes for a calendar  quarter was -3.16% (1st
Qtr 94).






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Average Annual Total Returns                        5 Years            10 Years
for    the    periods    ended                    (or life of        (or life of
December 31, 2003                  1 Year       class, if less)    class, if less)

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Class  A   Shares   (inception

4/15/88)                            0.84%            4.33%              5.42%
  Return Before Taxes              -0.34%            1.89%              2.79%
  Return After Taxes on
  Distributions                     0.53%            2.12%              2.91%
  Return    After   Taxes   on
  Distributions  and  Sale  of
  Fund Shares

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Lehman Brothers Credit Index
(reflects no deduction for
fees, expenses or taxes)            7.69%            7.10%              7.42%1

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Class  B   Shares   (inception      0.05%            4.22%              5.47%

5/3/93)
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Class  C   Shares   (inception      4.18%            4.57%              5.29%

7/11/95)
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Class  N   Shares   (inception      4.51%            6.47%               N/A

3/1/01)
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Class  Y   Shares   (inception      6.35%            5.92%              6.00%

4/27/98)
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1  From 12/31/93.

The Fund's average annual total returns include applicable sales charges:  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-year);  and for
Class C and Class N, the 1%  contingent  deferred  sales charge for the 1-year
period.  There is no sales charge for Class Y shares.  Because  Class B shares
convert to Class A shares 72 months after  purchase,  Class B  "life-of-class"
performance  does not include any  contingent  deferred  sales charge and uses
Class A performance for the period after  conversion.  The returns measure the
performance  of a  hypothetical  account  and assume  that all  dividends  and
capital gains  distributions  have been reinvested in additional  shares.  The
performance  of the  Fund's  Class A shares is  compared  to  Lehman  Brothers
Credit Index  (formerly  named Lehman  Brothers  Corporate Bond Index),  which
measures  the  performance  of   non-convertible   investment-grade   domestic
corporate debt  securities.  The index  performance  includes  reinvestment of
income but does not reflect  transaction costs,  fees,  expenses or taxes. The
Fund's investments vary from those in the index.


Fees and Expenses of the Fund


The following tables are provided to help you understand the fees and
expenses you may pay if you buy and hold shares of the Fund. The Fund pays a
variety of expenses directly for management of its assets, administration,
distribution of its shares and other services. Those expenses are subtracted
from the Fund's assets to calculate the Fund's net asset values per share.
All shareholders therefore pay those expenses indirectly.  Shareholders pay
other transaction expenses directly, such as sales charges. The numbers below
are based on the Fund's expenses during its fiscal year ended December 31,
2003.


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Shareholder Fees (charges paid directly from your investment):

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                           Class A      Class B   Class C    Class N    Class Y
                             Shares     Shares      Shares     Shares     Shares
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Maximum Sales Charge         4.75%       None        None       None       None
(Load) on purchases (as %
of offering price)
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Maximum Deferred Sales       None1        5%2        1%3        1%4        None
Charge (Load) (as % of
the lower of the original
offering price or
redemption proceeds)
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Annual Fund Operating Expenses (deducted from Fund assets):
(% of average daily net assets)
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                           Class A    Class B    Class C     Class N      Class Y
                             Shares     Shares   Shares        Shares     Shares
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Management Fees              0.56%      0.56%       0.56%      0.56%      0.56%

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Distribution and/or          0.25%      1.00%       1.00%      0.50%      None
Service (12b-1) Fees
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Other Expenses               0.29%      0.31%       0.28%      0.44%      0.07%

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Total Annual Operating       1.10%      1.87%       1.84%      1.50%      0.63%
Expenses

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Expenses may vary in future years.  "Other  expenses"  include  transfer agent
fees,  custodial  fees,  and accounting and legal expenses that 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
0.35% of  average  daily net  assets per  fiscal  year for all  classes.  That
undertaking  may be  amended  or  withdrawn  at any  time  without  notice  to
shareholders.  After the waiver, the actual "Other Expenses" and "Total Annual
Operating  Expenses" as percentages of average daily net assets were 0.38% and
1.44%,  for Class N  shares.  Class A,  Class B,  Class C and Class Y were the
same as shown above.


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 gradually declines from 5% to 1% in years one
   through six and is eliminated after that.

3.    Applies to shares redeemed within 12 months of purchase.
4.    Applies to shares redeemed within 18 months of a retirement plan's
   first purchase of Class N shares.

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:

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If shares are redeemed: 1 Year         3 Years       5 Years       10 Years
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Class A Shares          $582           $808          $1,052        $1,752
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Class B Shares          $690           $888          $1,211        $1,8051

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Class C Shares          $287           $579          $996          $2,159

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Class N Shares          $253           $474          $818          $1,791

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Class Y Shares          $64            $202          $351          $786
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If shares are not       1 Year         3 Years       5 Years       10 Years
redeemed:
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Class A Shares          $582           $808          $1,052        $1,752
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Class B Shares          $190           $588          $1,011        $1,8051

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Class C Shares          $187           $579          $996          $2,159

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Class N Shares          $153           $474          $818          $1,791

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Class Y Shares          $64            $202          $351          $786
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In the first example, expenses include the initial sales charge for Class A
and the applicable Class B, Class C and 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
since Class B shares automatically convert to Class A shares 72 months after
purchase.



About the Fund's Investments


THE FUND'S PRINCIPAL INVESTMENT POLICIES AND RISKS. 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.  CMOs and other types of
      mortgage-related securities may be considered to be derivative
      investments.
      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.

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.

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 active and frequent trading to try
      to achieve its objective, and will likely have a high portfolio
      turnover rate. Increased portfolio turnover creates higher brokerage
      and transaction costs for the Fund (and may reduce 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 may enter into "forward rolls" (also referred to as
      "mortgage dollar rolls") 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 purchase, 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.

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.

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 value them or 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.


Temporary Defensive and Interim Investments.  In times of adverse or unstable
      market, economic or political conditions, the Fund can invest up to
      100% of its assets in temporary defensive investments that are
      inconsistent with the Fund's principal investment strategies. Generally
      they would be cash or cash equivalents, such as U.S. Treasury Bills and
      other short-term U.S. government obligations or high-grade commercial
      paper. The Fund could also hold these types of securities pending the
      investment of proceeds from the sale of Fund shares or portfolio
      securities or to meet anticipated redemptions of Fund shares.  To the
      extent the Fund invests defensively in these securities, it might not
      achieve its investment objectives.

Loans of Portfolio Securities. The Fund has entered into a Securities Lending
      Agreement with JP Morgan Chase. Under that agreement portfolio
      securities of the Fund may be loaned to brokers, dealers and other
      financial institutions.  The Securities Lending Agreement provides that
      loans must be adequately collateralized and may be made only in
      conformity with the Fund's Securities Lending Guidelines, adopted by
      the Fund's Board of Trustees. The value of the securities loaned may
      not exceed 25% of the value of the Fund's net assets.


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 1960. The Manager and
its subsidiaries and controlled affiliates managed more than $150 billion in
assets as of December 31, 2003, including other Oppenheimer funds, with more
than 7 million shareholder accounts. The Manager is located at Two World
Financial Center, 225 Liberty Street, 11th Floor, New York, New York
10281-1008.

Portfolio Managers. Since April 23, 2002, the portfolio managers of the Fund
      are Angelo Manioudakis, Charles Moon and Benjamin Gord. 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.  Prior to joining the Manager in April 2002, Mr.
      Manioudakis was a portfolio manager at Morgan Stanley Investment
      Management (since August 1993). Messrs. Gord and Moon are Vice
      Presidents of the Manager. Prior to joining the Manager in April 2002,
      Mr. Gord was an executive director and senior fixed income analyst at
      Morgan Stanley Investment Management (since April 1992). Prior to
      joining the Manager in April 2002, Mr. Moon was an executive director
      and portfolio manager at Morgan Stanley Investment Management (since
      June 1999) and a Vice President of Citicorp Securities Inc. (June
      1993-May 1999).

Advisory Fees. Under the Investment Advisory Agreement, 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. The Fund's management fee for its last fiscal year ended
      December 31, 2003 was 0.56% of average annual net assets for each class
      of shares.


ABOUT your account

How to Buy Shares

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

Buying Shares Through Your Dealer. You can buy shares through any dealer,
      broker or financial institution that has a sales agreement with the
      Distributor. Your dealer will place your order with the Distributor on
      your behalf.
Buying Shares Through the Distributor. Complete an OppenheimerFunds New
      Account Application and return it with a check payable to
      "OppenheimerFunds Distributor, Inc." Mail it to P.O. Box 5270, Denver,
      Colorado 80217. If you don't list a dealer on the application, the
      Distributor will act as your agent in buying the shares. However, we
      recommend that you discuss your investment with a financial advisor
      before you make a purchase to be sure that the Fund is appropriate for
      you.
o     Paying by Federal Funds Wire. Shares purchased through the Distributor
      may be paid for by Federal Funds wire. The minimum investment is
      $2,500. Before sending a wire, call the Distributor's Wire Department
      at 1.800.225.5677 to notify the Distributor of the wire and to receive
      further instructions.
o     Buying Shares Through OppenheimerFunds AccountLink. With AccountLink,
      you pay for shares by electronic funds transfers from your bank
      account. Shares are purchased for your account by a transfer of money
      from your bank account through the Automated Clearing House (ACH)
      system. You can provide those instructions automatically, under an
      Asset Builder Plan, described below, or by telephone instructions using
      OppenheimerFunds PhoneLink, also described below. Please refer to
      "AccountLink," below for more details.
o     Buying Shares Through Asset Builder Plans. You may purchase shares of
      the Fund automatically each month from your account at a bank or other
      financial institution under an Asset Builder Plan with AccountLink.
      Details are in the Asset Builder Application and the Statement of
      Additional Information.

WHAT IS THE MINIMUM AMOUNT YOU MUST INVEST? In most cases, you can buy Fund
shares with a minimum initial investment of $1,000 and make additional
investments at any time with as little as $50. There are reduced minimums
available under the following special investment plans:
o     If you establish one of the many types of retirement plan accounts that
      OppenheimerFunds offers, more fully described below under "Special
      Investor Services," you can start your account with as little as $500.
o     By using an Asset Builder Plan or Automatic Exchange Plan (details are
      in the Statement of Additional Information), or government allotment
      plan, you can make subsequent investments (after making the initial
      investment of $500) for as little as $50. For any type of account
      established under one of these plans prior to November 1, 2002, the
      minimum additional investment will remain $25.
o     The minimum investment requirement does not apply to reinvesting
      dividends from the Fund or other Oppenheimer funds (a list of them
      appears in the Statement of Additional Information, or you can ask your
      dealer or call the Transfer Agent), or reinvesting distributions from
      unit investment trusts that have made arrangements with the Distributor.

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

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


      The net asset value per share is determined by dividing the value of
      the Fund's net assets attributable to a class by the number of shares
      of that class that are outstanding. To determine net asset value, the
      Fund's Board of Trustees  has established procedures to value the
      Fund's securities, in general, based on market value. The Board has
      adopted special procedures for valuing illiquid and restricted
      securities and obligations for which market values cannot be readily
      obtained. Because some foreign securities trade in markets and on
      exchanges that operate on weekends and U.S. holidays, the values of
      some of the Fund's foreign investments may change on days when
      investors cannot buy or redeem Fund shares.

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


The Offering Price. To receive the offering price for a particular day, in
      most cases the Distributor or its designated agent must receive your
      order by the time the 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 Exchange and transmit it to the
      Distributor so that it is received before the Distributor's close of
      business on a regular business day (normally 5:00 P.M.) to receive that
      day's offering price, unless your dealer has made alternative
      arrangements with the Distributor. Otherwise, the order will receive
      the next offering price that is determined.

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

------------------------------------------------------------------------------
------------------------------------------------------------------------------
Class A Shares. If you buy Class A shares, you pay an initial sales charge
      (on investments up to $1 million for regular accounts or lesser amounts
      for certain retirement plans). The amount of that sales charge will
      vary depending on the amount you invest. The sales charge rates are
      listed in "How Can You Buy Class A Shares?" below.
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Class B Shares. If you buy Class B shares, you pay no sales charge at the
      time of purchase, but you will pay an annual asset-based sales charge.
      If you sell your shares within 6 years of buying them, you will
      normally pay a contingent deferred sales charge. That contingent
      deferred sales charge varies depending on how long you own your shares,
      as described in "How Can You Buy Class B Shares?" below.
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Class C Shares. If you buy Class C shares, you pay no sales charge at the
      time of purchase, but you will pay an annual asset-based sales charge.
      If you sell your shares within 12 months of buying them, you will
      normally pay a contingent deferred sales charge of 1.0%, as described
      in "How Can You Buy Class C Shares?" below.
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Class N Shares. If you buy Class N shares (available only through certain
      retirement plans), you pay no sales charge at the time of purchase, but
      you will pay an annual asset-based sales charge. If you sell your
      shares within 18 months of the retirement plan's first purchase of
      Class N shares, you may pay a contingent deferred sales charge of 1.0%,
      as described in "How Can You Buy Class N Shares?" below.
------------------------------------------------------------------------------

Class Y Shares. Class Y shares are offered only to certain institutional
      investors that have a special agreement 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 most likely invest in 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 $250,000 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. Also, checkwriting is
      not available on accounts subject to a contingent deferred sales
      charge.


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 a special condition applies.

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

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

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

Can You Reduce Class A Sales Charges? You may be eligible to buy Class A
      shares at reduced sales charge rates under the Fund's "Right of
      Accumulation" or a Letter of Intent, as described in "Reduced Sales
      Charges" in the Statement of Additional Information.


Class A Contingent Deferred Sales Charge. There is no initial sales charge on
      purchases of Class A shares of any one or more of the Oppenheimer funds
      aggregating $1 million or more, or on purchases of Class A shares of
      any one or more of the Oppenheimer funds by certain retirement plans
      that satisfied certain requirements prior to March 1, 2001
      ("grandfathered retirement accounts"). However, those Class A shares
      may be subject to a Class A contingent deferred sales charge, as
      described below. Qualified retirement plans (other than grandfathered
      retirement accounts, single 401(k) plans, SEP IRAs and SIMPLE IRAs) are
      not permitted to purchase Class A shares without an initial sales
      charge that are subject to a Class A contingent deferred sales charge.
      The Distributor pays dealers of record concessions in an amount equal
      to 1.0% of purchases of $1 million or more other than by grandfathered
      retirement accounts. For grandfathered retirement accounts, the
      concession is 0.75% of the first $2.5 million of purchases plus 0.25%
      of purchases in excess of $2.5 million. In either case, the concession
      will not be paid on purchases of shares by exchange or that were
      previously subject to a front-end sales charge and dealer concession.


      If you redeem any of those shares within an 18-month "holding period"
      measured from the beginning of the calendar month of their purchase, a
      contingent deferred sales charge (called the "Class A contingent
      deferred sales charge") may be deducted from the redemption proceeds.
      That sales charge will be equal to 1.0% of the lesser of:
o     the aggregate net asset value of the redeemed shares at the time of
      redemption (excluding shares purchased by reinvestment of dividends or
      capital gain distributions) or
o     the original net asset value of the redeemed shares.

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

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

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

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

-------------------------------------------------------------------------------
Years Since Beginning of Month in       Contingent Deferred Sales Charge on
Which Purchase Order was Accepted       Redemptions in That Year
                                        (As % of Amount Subject to Charge)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
0 - 1                                   5.0%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
1 - 2                                   4.0%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
2 - 3                                   3.0%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
3 - 4                                   3.0%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
4 - 5                                   2.0%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
5 - 6                                   1.0%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
More than 6                             None
-------------------------------------------------------------------------------
In the table,  a "year" is a  12-month  period.  In  applying  the  contingent
deferred  sales charge,  all purchases are considered to have been made on the
first regular business day of the month in which the purchase was made.

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

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

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


      Class N shares are sold at net asset value without an initial sales
charge. A contingent deferred sales charge of 1.0% will be imposed upon the
redemption of Class N shares, if:

o     The group retirement plan is terminated or Class N shares of all
      Oppenheimer funds are terminated as an investment option of the plan
      and Class N shares are redeemed within 18 months after the plan's first
      purchase of Class N shares of any Oppenheimer fund, or
o     With respect to an IRA or 403(b) plan, Class N shares are redeemed
      within 18 months of the plan's first purchase of Class N shares of any
      Oppenheimer fund.

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

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

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

DISTRIBUTION AND SERVICE (12b-1) PLANS.


Service Plan for Class A Shares. The Fund has adopted a Service Plan for
      Class A shares. It reimburses the Distributor for a portion of its
      costs incurred for services provided to accounts that hold Class A
      shares. Reimbursement is made quarterly at an annual rate of up to
      0.25% of the average annual net assets of Class A shares of the Fund.
      The Distributor currently uses all of those fees to pay dealers,
      brokers, banks and other financial institutions quarterly for providing
      personal service and maintenance of accounts of their customers that
      hold Class A shares. With respect to Class A shares subject to a Class
      A contingent deferred sales charge purchased by grandfathered
      retirement accounts, the Distributor pays the 0.25% service fee to
      dealers in advance for the first year after the shares are sold by the
      dealer. The Distributor retains the first year's service fee paid by
      the Fund. After the shares have been held by grandfathered retirement
      accounts for a year, the Distributor pays the service fee to dealers on
      a quarterly basis.

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


      The asset-based sales charge and service fees increase Class B and
      Class C expenses by 1.0% and increase Class N expenses by 0.50% of the
      net assets per year of the respective class. Because these fees are
      paid out of the Fund's assets on an on-going basis, over time these
      fees will increase the cost of your investment and may cost you more
      than other types of sales charges.


      The Distributor uses the service fees to compensate dealers for
      providing personal services for accounts that hold Class B, Class C or
      Class N shares. The Distributor normally 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 normally 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.
      The Distributor normally retains the asset-based sales charge on Class
      C shares during the first year after the purchase of Class C shares.
      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
      normally retains the asset-based sales charge on Class N shares. See
      the Statement of Additional Information for exceptions.

      Under certain circumstances, the Distributor will pay the full Class B,
      Class C or Class N asset-based sales charge and service fee to the
      dealer beginning in the first year after purchase of such shares in
      lieu of paying the dealer the sales concession and the advance of the
      first year's service fee at the time of purchase.


Special Investor Services

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

      You may purchase shares by telephone only after your account has been
established. To purchase shares in amounts up to $250,000 through a telephone
representative, call the Distributor at 1.800.225.5677. The purchase payment
will be debited from your bank account.

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

PHONELINK. PhoneLink is the OppenheimerFunds automated telephone system that
enables shareholders to perform a number of account transactions
automatically using a touch-tone phone. PhoneLink may be used on
already-established Fund accounts after you obtain a Personal Identification
Number (PIN), by calling the PhoneLink number, 1.800.225.5677.
Purchasing Shares. You may purchase shares in amounts up to $100,000 by
      phone, by calling 1.800.225.5677. You must have established AccountLink
      privileges to link your bank account with the Fund to pay for these
      purchases.
Exchanging Shares. With the OppenheimerFunds Exchange Privilege, described
      below, you can exchange shares automatically by phone from your Fund
      account to another OppenheimerFunds account you have already
      established by calling the special PhoneLink number.
Selling Shares. You can redeem shares by telephone automatically by calling
      the PhoneLink number and the Fund will send the proceeds directly to
      your AccountLink bank account. Please refer to "How to Sell Shares,"
      below for details.

CAN YOU SUBMIT TRANSACTION REQUESTS BY FAX? You may send requests for certain
types of account transactions to the Transfer Agent by fax (telecopier).
Please call 1.800.225.5677 for information about which transactions may be
handled this way. Transaction requests submitted by fax are subject to the
same rules and restrictions as written and telephone requests described in
this Prospectus.

OPPENHEIMERFUNDS INTERNET WEBSITE. You can obtain information about the Fund,
as well as your account balance, on the OppenheimerFunds Internet website, at
www.oppenheimerfunds.com. Additionally, shareholders listed in the account
------------------------
registration (and the dealer of record) may request certain account
transactions through a special section of that website. To perform account
transactions or obtain account information online, you must first obtain a
user I.D. and password on that website. If you do not want to have Internet
account transaction capability for your account, please call the Transfer
Agent at 1.800.225.5677. At times, the website may be inaccessible or its
transaction features may be unavailable.

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

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

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

How to Sell Shares

You can sell (redeem) some or all of your shares on any regular business day.
Your shares will be sold at the next net asset value calculated after your
order is received in proper form (which means that it must comply with the
procedures described below) and is accepted by the Transfer Agent. The Fund
lets you sell your shares by writing a letter, 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
1.800.225.5677, for assistance.

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

Where Can You Have Your Signature Guaranteed? The Transfer Agent will accept
      a guarantee of your signature by a number of financial institutions,
      including:
o     a U.S. bank, trust company, credit union or savings association,
o     a foreign bank that has a U.S. correspondent bank,
o     a U.S. registered dealer or broker in securities, municipal securities
      or government securities, or
o     a U.S. national securities exchange, a registered securities
      association or a clearing agency.
      If you are signing on behalf of a corporation, partnership or other
      business or as a fiduciary, you must also include your title in the
      signature.

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

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 1.800.225.5677 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 $500. Checks written below the
      stated amount on the check will not be accepted. However, if you have
      existing checks indicating a $100 minimum, you may still use them for
      amounts of $100 or more.
o     Checks cannot be paid if they are written for more than your account
      value. Remember, your shares fluctuate in value and you should not
      write a check close to the total account value.
o     You may not write a check that would require the Fund to redeem shares
      that were purchased by check or Asset Builder Plan payments within the
      prior 10 days.
o     Don't use your checks if you changed your Fund account number, until
      you receive new checks.

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 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-sponsored qualified retirement plan
account or under a share certificate by telephone.

   o  To redeem shares through a service representative or automatically on
      PhoneLink, call 1.800.225.5677.
      Whichever method you use, you may have a check sent to the address on
the account statement, or, if you have linked your Fund account to your bank
account on AccountLink, you may have the proceeds sent to that bank account.

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

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

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

HOW CONTINGENT DEFERRED SALES CHARGES AFFECT REDEMPTIONS. If you purchase
shares subject to a Class A, Class B, Class C or Class N contingent deferred
sales charge and redeem any of those shares during the applicable holding
period for the class of shares, the contingent deferred sales charge will be
deducted from the redemption proceeds (unless you are eligible for a waiver
of that sales charge based on the categories listed in Appendix 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 1.800.225.5677. That list can change from time to
time.

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

Written Exchange Requests. Submit an OppenheimerFunds Exchange Request form,
      signed by all owners of the account. Send it to the Transfer Agent at
      the address on the back cover. Exchanges of shares held under
      certificates cannot be processed unless the Transfer Agent receives the
      certificates with the request.
Telephone  Exchange  Requests.  Telephone exchange requests may be made either
      by calling a service  representative or by using PhoneLink for automated
      exchanges by calling  1.800.225.5677.  Telephone  exchanges  may be made
      only  between  accounts  that are  registered  with the same name(s) and
      address.  Shares  held  under  certificates  may  not  be  exchanged  by
      telephone.

ARE THERE LIMITATIONS ON EXCHANGES? There are certain exchange policies you
should be aware of:
o     Shares are redeemed from one fund and purchased from the other fund in
      the exchange transaction on the same regular business day on which the
      Transfer Agent receives an exchange request that conforms to the
      policies described above. It must be received by the close of the
      Exchange that day, which is normally 4:00 P.M. but may be earlier on
      some days.

o     The interests of the Fund's 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.  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. Frequent trading of Fund shares
      also may force the Fund to sell portfolio securities at disadvantageous
      times to raise the cash needed to redeem 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.  All accounts under common ownership or control within the
      Oppenheimer funds complex may be counted together with respect to any
      exchange involving this Fund.
   o  The Fund may amend, suspend or terminate the exchange privilege at any
      time. The Fund may refuse any exchange order and is currently not
      obligated to provide notice before rejecting an exchange order.

   o  If the Transfer Agent cannot exchange all the shares you request
      because of a restriction cited above, only the shares eligible for
      exchange will be exchanged.

Shareholder Account Rules and Policies

More information about the Fund's policies and procedures for buying, selling
and exchanging shares is contained in the Statement of Additional Information.
A $12 annual fee is assessed on any account valued at less than $500. The fee

      is automatically deducted from accounts annually on or about the second
      to last business day of September. See the Statement of Additional
      Information, or existing shareholders may visit the OppenheimerFunds
      website, to learn how you can avoid this fee and for circumstances when
      this fee will not be assessed.

The offering of shares may be suspended during any period in which the
      determination of net asset value is suspended, and the offering may be
      suspended by the Board of Trustees at any time the Board believes it is
      in the Fund's best interest to do so.
Telephone transaction privileges for purchases, redemptions or exchanges may
      be modified, suspended or terminated by the Fund at any time. The Fund
      will provide you notice whenever it is required to do so by applicable
      law. If an account has more than one owner, the Fund and the Transfer
      Agent may rely on the instructions of any one owner. Telephone
      privileges apply to each owner of the account and the dealer
      representative of record for the account unless the Transfer Agent
      receives cancellation instructions from an owner of the account.
The Transfer Agent will record any telephone calls to verify data concerning
      transactions and has adopted other procedures to confirm that telephone
      instructions are genuine, by requiring callers to provide tax
      identification numbers and other account data or by using PINs, and by
      confirming such transactions in writing. The Transfer Agent and the
      Fund will not be liable for losses or expenses arising out of telephone
      instructions reasonably believed to be genuine.
Redemption or transfer requests will not be honored until the Transfer Agent
      receives all required documents in proper form. From time to time, the
      Transfer Agent in its discretion may waive certain of the requirements
      for redemptions stated in this Prospectus.
Dealers that perform account transactions for their clients by participating
      in NETWORKING through the National Securities Clearing Corporation are
      responsible for obtaining their clients' permission to perform those
      transactions, and are responsible to their clients who are shareholders
      of the Fund if the dealer performs any transaction erroneously or
      improperly.
The redemption price for shares will vary from day to day because the value
      of the securities in the Fund's portfolio fluctuates. The redemption
      price, which is the net asset value per share, will normally differ for
      each class of shares. The redemption value of your shares may be more
      or less than their original cost.
Payment for redeemed shares ordinarily is made in cash. It is forwarded by
      check, or through AccountLink within seven days after the Transfer
      Agent receives redemption instructions in proper form. However, under
      unusual circumstances determined by the Securities and Exchange
      Commission, payment may be delayed or suspended. For accounts
      registered in the name of a broker-dealer, payment will normally be
      forwarded within three business days after redemption.
The Transfer Agent may delay processing any type of redemption payment as
      described under "How to Sell Shares" for recently purchased shares, but
      only until the purchase payment has cleared. That delay may be as much
      as 10 days from the date the shares were purchased. That delay may be
      avoided if you purchase shares by Federal Funds wire or certified
      check, or arrange with your bank to provide telephone or written
      assurance to the Transfer Agent that your purchase payment has cleared.
Involuntary redemptions of small accounts may be made by the Fund if the
      account value has fallen below $1,000 for reasons other than the fact
      that the market value of shares as 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. If the Fund redeems your shares in kind, you may
      bear transaction costs and will bear market risks until such time as
      such securities are converted into cash.
Federal regulations may require the Fund to obtain your name, your date of
      birth (for a natural person), your residential street address or
      principal place of business and your Social Security Number, Employer
      Identification Number or other government issued identification when
      you open an account. Additional information may be required in certain
      circumstances or to open corporate accounts.  The Fund or the Transfer
      Agent may use this information to attempt to verify your identity.  The
      Fund may not be able to establish an account if the necessary
      information is not received.  The Fund may also place limits on account
      transactions while it is in the process of attempting to verify your
      identity.  Additionally, if the Fund is unable to verify your identity
      after your account is established, the Fund may be required to redeem
      your shares and close your account.

"Backup withholding" of federal income tax may be applied against taxable
      dividends, distributions and redemption proceeds (including exchanges)
      if you fail to furnish the Fund your correct, certified Social Security
      or Employer Identification Number when you sign your application, or if
      you under-report your income to the Internal Revenue Service.
To avoid sending duplicate copies of materials to households, the Fund will
      mail only one copy of each prospectus, annual and semi-annual report
      and annual notice of the Fund's privacy policy to shareholders having
      the same last name and address on the Fund's records. The consolidation
      of these mailings, called householding, benefits the Fund through
      reduced mailing expense.

      If you want to receive multiple copies of these materials, you may call
      the Transfer Agent at 1.800.225.5677. You may also notify the Transfer
      Agent in writing. Individual copies of prospectuses, reports and
      privacy notices will be sent to you commencing within 30 days after the
      Transfer Agent receives your request to stop householding.

Dividends, Capital Gains and Taxes

Dividends. The Fund intends to declare dividends separately for each class of
shares from net investment income 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 Distribution." 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.

OPPENHEIMER EQUITY FUND, INC.

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

 CLASS A           YEAR ENDED DECEMBER 31                2003
2002            2001            2000           1999
--------------------------------------------------------------------------------------------------------------------------------
 PER SHARE OPERATING DATA
--------------------------------------------------------------------------------------------------------------------------------

 Net asset value, beginning of period                  $ 8.53
$10.40          $11.78          $13.25         $12.23
--------------------------------------------------------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment income                                    .02
.03             .08             .15            .14
 Net realized and unrealized gain (loss)                 2.22
(1.88)          (1.31)           (.84)          2.01

-------------------------------------------------------------------------
 Total from investment operations                        2.24
(1.85)          (1.23)           (.69)          2.15
--------------------------------------------------------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income                      --
(.02)           (.11)           (.15)          (.12)
 Distributions from net realized gain                      --
--            (.04)           (.63)         (1.01)

-------------------------------------------------------------------------
 Total dividends and/or
 distributions to shareholders                             --
(.02)           (.15)           (.78)         (1.13)
--------------------------------------------------------------------------------------------------------------------------------
 Net asset value, end of period                        $10.77           $
8.53          $10.40          $11.78         $13.25

--------------------------------------------------------------------------------------------------------------------------------
 TOTAL RETURN, AT NET ASSET VALUE 1                     26.26%
(17.80)%        (10.43)%         (5.62)%        18.34%
--------------------------------------------------------------------------------------------------------------------------------

 RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------------------------------------
 Net assets, end of period (in thousands)          $2,283,036
$1,933,397      $2,665,614      $3,161,399     $3,157,204
--------------------------------------------------------------------------------------------------------------------------------
 Average net assets (in thousands)                 $2,035,816
$2,255,746      $2,847,999      $3,382,139     $2,756,760
--------------------------------------------------------------------------------------------------------------------------------
 Ratios to average net assets: 2
 Net investment income                                   0.19%
0.29%           0.66%           1.17%          1.12%
 Total Expenses                                          0.90% 3,4
0.96% 3         0.90% 3         0.87% 3        0.87% 3
--------------------------------------------------------------------------------------------------------------------------------
 Portfolio turnover rate                                  108%
95%            116%             61%            34%

1. Assumes a 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. Returns do not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or the redemption of
Fund shares.
2. Annualized for periods of less than one full year.
3. Reduction to custodian expenses less than 0.01%.
4. Voluntary waiver of transfer agent fees less than 0.01%.


SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


 CLASS B          YEAR ENDED DECEMBER 31                 2003
2002            2001            2000          1999
-------------------------------------------------------------------------------------------------------------------------------
 PER SHARE OPERATING DATA
-------------------------------------------------------------------------------------------------------------------------------
 Net asset value, beginning of period                  $ 8.39
$10.30          $11.65          $13.10        $12.10
-------------------------------------------------------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment income (loss)                            (.08)
(.05)           (.01)            .05           .04
 Net realized and unrealized gain (loss)                 2.20
(1.86)          (1.29)           (.84)         1.98

------------------------------------------------------------------------
 Total from investment operations                        2.12
(1.91)          (1.30)           (.79)         2.02
-------------------------------------------------------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income                      --
--            (.01)           (.03)         (.01)
 Distributions from net realized gain                      --
--            (.04)           (.63)        (1.01)

------------------------------------------------------------------------
 Total dividends and/or
 distributions to shareholders                             --
--            (.05)           (.66)        (1.02)
-------------------------------------------------------------------------------------------------------------------------------
 Net asset value, end of period                        $10.51           $
8.39          $10.30          $11.65        $13.10
---------------------------------------------------------------------------------------------------------
 TOTAL RETURN, AT NET ASSET VALUE 1                     25.27%
(18.54)%        (11.15)%         (6.36)%       17.37%
-------------------------------------------------------------------------------------------------------------------------------
 RATIOS/SUPPLEMENTAL DATA
-------------------------------------------------------------------------------------------------------------------------------
 Net assets, end of period (in thousands)            $327,809
$334,345        $570,715        $800,063    $1,152,235
-------------------------------------------------------------------------------------------------------------------------------
 Average net assets (in thousands)                   $315,065
$430,844        $658,336        $964,967    $1,196,118
-------------------------------------------------------------------------------------------------------------------------------
 Ratios to average net assets: 2
 Net investment income (loss)                           (0.73)%
(0.55)%         (0.13)%          0.37%         0.32%
 Total Expenses                                          1.83% 3,4
1.80% 3         1.69% 3         1.66% 3       1.67% 3
-------------------------------------------------------------------------------------------------------------------------------
 Portfolio turnover rate                                  108%
95%            116%             61%           34%

1. Assumes a 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. Returns do not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or the redemption of
Fund shares.
2. Annualized for periods of less than one full year.
3. Reduction to custodian expenses less than 0.01%.
4. Voluntary waiver of transfer agent fees less than 0.01%.


SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

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

 CLASS C           YEAR ENDED DECEMBER 31                2003
2002            2001           2000           1999
----------------------------------------------------------------------------------------------------------------------------
 PER SHARE OPERATING DATA
----------------------------------------------------------------------------------------------------------------------------


 Net asset value, beginning of period                  $ 8.40
$10.30          $11.67         $13.13         $12.13
----------------------------------------------------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment income (loss)                            (.07)
(.06)           (.01)           .04            .04
 Net realized and unrealized gain (loss)                 2.18
(1.84)          (1.30)          (.82)          1.98

---------------------------------------------------------------------
 Total from investment operations                        2.11
(1.90)          (1.31)          (.78)          2.02
----------------------------------------------------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income                      --
--            (.02)          (.05)          (.02)
 Distributions from net realized gain                      --
--            (.04)          (.63)         (1.00)

---------------------------------------------------------------------
 Total dividends and/or
 distributions to shareholders                             --
--            (.06)          (.68)         (1.02)
----------------------------------------------------------------------------------------------------------------------------
 Net asset value, end of period                        $10.51        $
8.40          $10.30         $11.67         $13.13

----------------------------------------------------------------------------------------------------------------------------
 TOTAL RETURN, AT NET ASSET VALUE 1                     25.12%
(18.45)%        (11.24)%        (6.33)%        17.37%
----------------------------------------------------------------------------------------------------------------------------

 RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------------------------------
 Net assets, end of period (in thousands)             $75,620
$62,561         $90,440       $108,522        $75,886
----------------------------------------------------------------------------------------------------------------------------
 Average net assets (in thousands)                    $66,739
$74,785         $98,104       $ 97,172        $66,185
----------------------------------------------------------------------------------------------------------------------------
 Ratios to average net assets: 2
 Net investment income (loss)                           (0.74)%
(0.56)%         (0.13)%         0.37%          0.31%
 Total Expenses                                          1.84% 3,4     1.81%
3         1.69% 3        1.67% 3        1.68% 3
----------------------------------------------------------------------------------------------------------------------------
 Portfolio turnover rate                                  108%
95%            116%            61%            34%


1. Assumes a 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. Returns do not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or the redemption of
Fund shares.
2. Annualized for periods of less than one full year.
3. Reduction to custodian expenses less than 0.01%.
4. Voluntary waiver of transfer agent fees less than 0.01%.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

 CLASS N          YEAR ENDED DECEMBER 31                   2003
2002        2001 1
----------------------------------------------------------------------------------------------
 PER SHARE OPERATING DATA
----------------------------------------------------------------------------------------------

 Net asset value, beginning of period                    $ 8.48
$10.36        $11.38
----------------------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment income                                       -- 2
.07           .02
 Net realized and unrealized gain (loss)                   2.20
(1.95)         (.88)

-------------------------------------
 Total from investment operations                          2.20
(1.88)         (.86)
----------------------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income                        --
--          (.12)
 Distributions from net realized gain                        --
--          (.04)

-------------------------------------
 Total dividends and/or
 distributions to shareholders                               --
--          (.16)
----------------------------------------------------------------------------------------------
 Net asset value, end of period                          $10.68         $
8.48        $10.36

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

----------------------------------------------------------------------------------------------
 TOTAL RETURN, AT NET ASSET VALUE 3                       25.94%
(18.15)%       (7.54)%
----------------------------------------------------------------------------------------------

RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------
 Net assets, end of period (in thousands)               $13,145
$4,278        $1,368
----------------------------------------------------------------------------------------------
 Average net assets (in thousands)                      $ 9,062
$3,519        $  593
----------------------------------------------------------------------------------------------
 Ratios to average net assets: 4
 Net investment income (loss)                             (0.20)%
(0.10)%        0.20%
 Expenses                                                  1.33% 5,6
1.30% 5       1.23% 5
----------------------------------------------------------------------------------------------
 Portfolio turnover rate                                    108%
95%          116%

1. For the period from March 1, 2001 (inception of offering) to December 31,
2001.
2. Less than $0.005 per share.
3. Assumes an investment on the business day before the first day of the
fiscal period with all dividends and distributions reinvested in additional
shares on the reinvestment date, and redemption at the net asset value
calculated on the last business day of the fiscal period. Sales charges are
not reflected in the total returns. Total returns are not annualized for
periods of less than one full year. Returns do not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or the redemption of
Fund shares.
4. Annualized for periods of less than one full year.
5. Reduction to custodian expenses less than 0.01%.
6. Voluntary waiver of transfer agent fees less than 0.01%.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

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

 CLASS Y          YEAR ENDED DECEMBER 31                 2003
2002          2001           2000         1999
-----------------------------------------------------------------------------------------------------------------------
 PER SHARE OPERATING DATA
-----------------------------------------------------------------------------------------------------------------------


 Net asset value, beginning of period                  $ 8.52
$10.40        $11.78         $13.26       $12.24
-----------------------------------------------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment income                                    .03
.03           .09            .17          .17
 Net realized and unrealized gain (loss)                 2.23
(1.88)        (1.31)          (.84)        2.00

----------------------------------------------------------------
 Total from investment operations                        2.26
(1.85)        (1.22)          (.67)        2.17
-----------------------------------------------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income                      --
(.03)         (.12)          (.18)        (.14)
 Distributions from net realized gain                      --
--          (.04)          (.63)       (1.01)
----------------------------------------------------------------
 Total dividends and/or
 distributions to shareholders                             --
(.03)         (.16)          (.81)       (1.15)
-----------------------------------------------------------------------------------------------------------------------
 Net asset value, end of period                        $10.78
$8.52        $10.40         $11.78       $13.26

================================================================
-----------------------------------------------------------------------------------------------------------------------
 TOTAL RETURN, AT NET ASSET VALUE 1                     26.53%
(17.79)%      (10.29)%        (5.54)%      18.53%
-----------------------------------------------------------------------------------------------------------------------
 RATIOS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------------------------
 Net assets, end of period (in thousands)             $56,098
$43,016       $49,223        $55,685      $52,442
-----------------------------------------------------------------------------------------------------------------------
 Average net assets (in thousands)                    $48,017
$45,669       $50,147        $57,358      $47,152
-----------------------------------------------------------------------------------------------------------------------
 Ratios to average net assets: 2
 Net investment income                                   0.27%
0.36%         0.80%          1.29%        1.32%
 Total Expenses                                          0.84%
0.97%         0.80%          0.75%        0.67%
 Expenses after expense reimbursement or fee
 waiver and reduction to custodian expenses               N/A 3,4      0.88%
3       0.76% 3         N/A% 3       N/A 3
-----------------------------------------------------------------------------------------------------------------------
 Portfolio turnover rate                                  108%
95%          116%            61%          34%

1. Assumes a 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. Returns do not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or the redemption of
Fund shares.
2. Annualized for periods of less than one full year.
3. Reduction to custodian expenses less than 0.01%.
4. Voluntary waiver of transfer agent fees less than 0.01%.

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.CALL OPP (225.5677)

------------------------------------------------------------------------------
------------------------------------------------------------------------------
By Mail:                      Write to:
                              OppenheimerFunds Services
                              P.O. Box 5270
                              Denver, Colorado 80217-5270
------------------------------------------------------------------------------
------------------------------------------------------------------------------
On the Internet:              You can send us a request by e-mail or read or
                              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 shares are distributed by:                [logo]   OppenheimerFunds
Distributor, Inc.

The Fund's SEC File No.: 811-3420
PR0285.001.0204
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


      12/31/94      -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%
      12/31/02      10.06%
      12/31/03       5.87%

Oppenheimer Bond Fund

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


Statement of Additional Information dated February 24, 2004

      This  Statement of  Additional  Information  is not a  Prospectus.  This
document  contains  additional  information  about  the Fund  and  supplements
information  in the  Prospectus  dated  February 24,  2004.  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 website
at www.oppenheimerfunds.com.


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

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

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

Appendix A: 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 Credit  Derivatives.  The Fund may enter into credit default swaps,
both  directly  ("unfunded  swaps")  and  indirectly  in  the  form  of a swap
embedded  within a structured  note ("funded  swaps"),  to protect against the
risk that a security  will default.  Unfunded and funded credit  default swaps
may be on a single  security,  or on a basket of  securities.  The Fund pays a
fee to enter  into the swap and  receives a fixed  payment  during the life of
the  swap.  The Fund may take a short  position  in the  credit  default  swap
(also known as "buying  credit  protection"),  or may take a long  position in
the credit default swap note (also known as "selling credit protection").

      The Fund  would  take a short  position  in a credit  default  swap (the
"unfunded  swap")  against a long portfolio  position to decrease  exposure to
specific  high yield  issuers.  If the short credit  default swap is against a
corporate  issue,  the Fund must own that  corporate  issue.  However,  if the
short credit default swap is against  sovereign debt, the Fund may own either:
(i) the  reference  obligation,  (ii)  any  sovereign  debt  of  that  foreign
country,  or (iii)  sovereign debt of any country that the Manager  determines
is closely correlated as an inexact bona fide hedge.

      If the Fund takes a short  position  in the  credit  default  swap,  and
there is a credit event (including bankruptcy,  failure to timely pay interest
or principal,  or a restructuring),  the Fund will deliver the defaulted bonds
and  the  swap  counterparty  will  pay  the  par  amount  of  the  bonds.  An
associated  risk is adverse  pricing  when  purchasing  bonds to  satisfy  the
delivery  obligation.  If the swap is on a basket of securities,  the notional
amount of the swap is  reduced by the par amount of the  defaulted  bond,  and
the fixed payments are then made on the reduced notional amount.

      Taking  a  long  position  in  the  credit   default  swap  note  (i.e.,
purchasing the "funded  swap") would increase the Fund's  exposure to specific
high yield  corporate  issuers.  The goal would be to  increase  liquidity  in
that  market  sector  via the swap  note and its  associated  increase  in the
number of trading  instruments,  the  number and type of market  participants,
and market capitalization.

      If the Fund takes a long position in the credit  default swap note,  and
there is a credit  event,  the Fund  will pay the par  amount of the bonds and
the swap  counterparty  will deliver the bonds.  If the swap is on a basket of
securities,  the  notional  amount of the swap is reduced by the par amount of
the  defaulted  bond,  and the fixed  payments  are then  made on the  reduced
notional amount.

      The Fund will invest no more than 25% of its total assets in  "unfunded"
   credit default
swaps.

      The Fund will limit its  investments  in "funded"  credit  default  swap
notes to no more than 10% of its total assets.

      Other  risks of credit  default  swaps  include  the cost of paying  for
credit  protection if there are no credit events,  pricing  transparency  when
assessing the cost of a credit default swap,  counterparty  risk, and the need
to  fund  the  delivery  obligation  (either  cash  or  the  defaulted  bonds,
depending on whether the Fund is long or short the swap, respectively).

         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,  Inc. or similar  ratings by other rating
organizations.  If they are unrated,  and are  determined by the Manager to be
of comparable  quality to debt securities rated below investment  grade,  they
are 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, Inc. are investment grade and are not regarded as junk bonds,  those
securities  may  be  subject  to  special  risks  and  have  some  speculative
characteristics.  Definitions  of the  debt  security  ratings  categories  of
Moody's,  Standard & Poor's,  and Fitch,  Inc.  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 response 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.


         o  Passive   Foreign   Investment   Companies.   Some  securities  of
corporations  domiciled  outside the U.S. which the Fund may purchase,  may be
considered  passive  foreign  investment  companies  ("PFICs")  under U.S. tax
laws. PFICs are those foreign  corporations  which generate  primarily passive
income. They tend to be growth companies or "start-up" companies.  For federal
tax  purposes,  a  corporation  is deemed a PFIC if 75% or more of the foreign
corporation's  gross income for the income year is passive income or if 50% or
more of  average  percent of its assets  (as  defined  by IRCss.1297(e))  held
during  the  taxable  year are  assets  that  produce  or are held to  produce
passive  income.  Passive  income  is  further  defined  as any  income  to be
considered  foreign  personal  holding  company  income  within the  subpart F
provisions defined by IRCss.954.

      Investing  in PFICs  involves  the risks  associated  with  investing in
foreign  securities,  as  described  above.  There are also the risks that the
Fund may not realize  that a foreign  corporation  it invests in is a PFIC for
federal  tax  purposes.  Federal  tax laws  impose  severe tax  penalties  for
failure to properly report  investment income from PFICs.  Following  industry
standards,  the Fund makes every effort to ensure  compliance with federal tax
reporting of these  investments.  PFICs are considered  foreign securities for
the purposes of the Fund's minimum  percentage  requirements or limitations of
investing in foreign securities.



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  of  1940  (the  "Investment  Company  Act"),  are  collateralized  by the
underlying  security.  The Fund's  repurchase  agreements  require that at all
times  while  the  repurchase  agreement  is  in  effect,  the  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.

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


      |X|  Illiquid  and  Restricted   Securities.   Under  the  policies  and
procedures   established  by  the  Fund's  Board  of  Trustees,   the  Manager
determines the liquidity of certain of the Fund's  investments.  To enable the
Fund to sell its holdings of a restricted  security not  registered  under 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  (also  referred to as "mortgage
dollar   rolls").   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 may 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.  The  Fund may lend its  portfolio
securities  to brokers,  dealers and  financial  institutions  pursuant to the
Securities  Lending  Agreement (the  "Securities  Lending  Agreement") with JP
Morgan Chase,  subject to the restrictions stated in the Prospectus.  The Fund
would  lend such  portfolio  securities  to  attempt  to  increase  the Fund's
income.  Under the  Securities  Lending  Agreement and  applicable  regulatory
requirements (which are subject to change),  the loan collateral must, on each
business  day,  be at least  equal to the value of the loaned  securities  and
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 to JP Morgan  Chase,  as agent,
amounts  demanded  by the Fund if the  demand  meets the terms of the  letter.
Such terms of the letter of credit and the issuing  bank must be  satisfactory
to JP Morgan  Chase  and the Fund.  The Fund  will  receive,  pursuant  to the
Securities  Lending  Agreement,  80% of all annual net  income  (i.e.,  net of
rebates to the  Borrower)  from  securities  lending  transactions.  JP Morgan
Chase has agreed,  in general,  to guarantee the  obligations  of borrowers to
return  loaned  securities  and to be  responsible  for  expenses  relating to
securities  lending.  The  Fund  will  be  responsible,   however,  for  risks
associated  with the  investment of cash  collateral,  including the risk that
the issuer of the  security  in which the cash  collateral  has been  invested
defaults.  The  Securities  Lending  Agreement  may be terminated by either JP
Morgan Chase or the Fund on 30 days' written  notice.  The terms of the Fund's
loans must also meet  applicable  tests under the  Internal  Revenue  Code and
permit the Fund to reacquire  loaned  securities on five business days' notice
or in time to vote on any important  matter.  The Fund may lend  securities in
amounts up to 25% of the value of the Fund's net assets.


      |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 payment is paid or received by the Fund on the  purchase or sale of a
future.  Upon entering into a futures  transaction,  the Fund will be required
to deposit an initial  margin  payment  with the futures  commission  merchant
(the "futures  broker").  Initial  margin  payments will be deposited with the
Fund's  custodian bank in an account  registered in the futures broker's name.
However,  the  futures  broker  can gain  access to that  account  only  under
specified  conditions.  As the future is marked to market  (that is, its value
on the  Fund's  books is  changed)  to reflect  changes  in its market  value,
subsequent  margin payments,  called variation  margin,  will be paid to or by
the futures broker daily.


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

            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 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  Swaption  Transactions.  The Fund  may  enter  into a  swaption
transaction,  which is a  contract  that  grants  the  holder,  in return  for
payment of the purchase price (the  "premium") of the option,  the right,  but
not the  obligation,  to enter  into an  interest  rate swap at a preset  rate
within a  specified  period  of time,  with the  writer of the  contract.  The
writer of the contract  receives the premium and bears the risk of unfavorable
changes in the preset rate on the  underlying  interest rate swap.  Unrealized
gains/losses  on swaptions are reflected in investment  assets and  investment
liabilities in the Fund's statement of financial condition.

            o  Regulatory  Aspects of  Hedging  Instruments.  The  Commodities
Futures Trading  Commission (the "CFTC")  recently  eliminated  limitations on
futures trading by certain regulated entities including registered  investment
companies  and  consequently  registered  investment  companies  may engage in
unlimited  futures  transactions  and options  thereon  provided that the Fund
claims an exclusion from  regulation as a commodity  pool  operator.  The Fund
has claimed such an exclusion from  registration  as a commodity pool operator
under  the  Commodity  Exchange  Act  ("CEA").  The Fund may use  futures  and
options for hedging and  non-hedging  purposes to the extent  consistent  with
its investment  objective,  internal risk management guidelines adopted by the
Fund's  investment  advisor (as they may be amended from time to time), and as
otherwise set forth in the Fund's  prospectus or this  statement of additional
information.


      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.

         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  (except  in the  case of
borrowing  and  investments  in illiquid  securities).  The Fund need not sell
securities  to meet the  percentage  limits  if the  value  of the  investment
increases in proportion to the size of the Fund.


      |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  the  securities  of  other  registered
investment  companies  or  registered  unit  investment  trusts in reliance on
sub-paragraph (F) or (G) of section 12(d)(1) of the Investment  Company Act of
1940.

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, but may do so from time to time on important
matters or when required to do so by the Investment Company Act or other
applicable law.  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 or to take other action described in the Fund's Declaration of Trust.


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

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

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

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


      The Board of Trustees  has an Audit  Committee  and a Review  Committee.
The Audit Committee is comprised solely of Independent  Trustees.  The members
of the Audit Committee are Edward L. Cameron (Chairman),  F. William Marshall,
Jr.,  George  C.  Bowen and  Robert J.  Malone.  The  Audit  Committee  held 6
meetings  during the fiscal year ended December 31, 2003. 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
financial statement audits and the audit fees charged;  (ii) reviewing reports
from the Fund's independent  auditors regarding the Fund's internal accounting
procedures  and controls;  (iii) review  reports from the  Manager's  Internal
Audit  Department;  (iv) maintaining a separate line of communication  between
the  Fund's  independent  auditors  and  its  Independent  Trustees;  and  (v)
exercise  all  other  functions  outlined  in  the  Audit  Committee  Charter,
including  but  not  limited  to  reviewing  the  independence  of the  Fund's
independent  auditors and the  pre-approval  of the  performance by the Fund's
independent auditors of any non-audit service,  including tax service, for the
Fund and the Manager and certain affiliates of the Manager.

      The Audit Committee's  functions  include  selecting and nominating,  to
the  full  Board,  nominees  for  election  as  Trustees,  and  selecting  and
nominating  Independent  Trustees for election.  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 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  when it meets for the  purpose of
considering potential nominees.

      The  members  of the  Review  Committee  are Jon S.  Fossel  (Chairman),
Robert G. Avis, Sam Freedman and Beverly  Hamilton.  The Review Committee held
6 meetings  during the  fiscal  year ended  December  31,  2003.  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  Investment  Company  Act  and  other
applicable law.

Trustees  and  Officers of the Fund.  Except for Messrs.  Murphy,  each of the
Trustees are  "Independent  Trustees"  under 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  (defined  below)  for  which  he is a  trustee  or
director.

      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 in the chart
below.  The  information  for the Trustees  also  includes the dollar range of
shares  of  the  Fund  as  well  as  the  aggregate  dollar  range  of  shares
beneficially  owned in any of the Oppenheimer  funds overseen by the Trustees.
All  of  the  Trustees  are  also  trustees  or  directors  of  the  following
Oppenheimer  funds  (except  for Mrs.  Hamilton  and Mr.  Malone,  who are not
Trustees of Oppenheimer  Senior  Floating Rate Fund) (referred to as "Board II
Funds"):

                                           Oppenheimer   Principal   Protected
Oppenheimer Cash Reserves                  Trust II
Oppenheimer Champion Income Fund           Oppenheimer Real Asset Fund
                                           Oppenheimer  Senior  Floating  Rate

Oppenheimer Capital Income Fund            Fund

Oppenheimer Equity Fund, Inc.              Oppenheimer Strategic Income Fund
Oppenheimer High Yield Fund                Oppenheimer Variable Account Funds
Oppenheimer International Bond Fund        Panorama Series Fund, Inc.
Oppenheimer Integrity Funds
Oppenheimer Limited-Term Government Fund   Centennial America Fund, L. P.

                                           Centennial  California  Tax  Exempt
Oppenheimer Main Street Funds, Inc.        Trust
Oppenheimer Main Street Opportunity Fund   Centennial Government Trust
Oppenheimer Main Street Small Cap Fund     Centennial Money Market Trust
                                           Centennial   New  York  Tax  Exempt
Oppenheimer Municipal Fund                 Trust

Oppenheimer Principal Protected Trust      Centennial Tax Exempt Trust


      Present or former  officers,  directors,  trustees  and  employees  (and
their  immediate  family members) of the Fund, the Manager and its affiliates,
and retirement plans  established by them for their employees are permitted to
purchase  Class A shares  of the Fund and the other  Oppenheimer  funds at net
asset  value  without  sales  charge.  The sales  charges on Class A shares is
waived for that group because of the  economies of sales  efforts  realized by
the Distributor.


      Messrs.  Manioudakis,  Murphy, Molleur,  Vottiero,  Wixted and Zack, and
Mses. Bechtolt,  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 January  28, 2004 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.

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

-------------------------------------------------------------------------------------
                                Independent Trustees
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Name,               Principal Occupation(s) During Past 5     Dollar     Aggregate
                                                                         Dollar
                                                                         Range Of
                                                                         Shares
                                                                         Beneficially
                                                                         Owned in
                    Years;                                    Range of   Any of the
Position(s) Held    Other Trusteeships/Directorships Held by  Shares     Oppenheimer
with Fund,          Trustee;                                  BeneficiallFunds
Length of Service,  Number of Portfolios in Fund Complex      Owned in   Overseen
Age                 Currently Overseen by Trustee             the Fund   by Trustee
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
                                                                As of December 31,

                                                                       2003

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

William L.          Chairman   of   the   following   private $0         $50,001-
Armstrong,          mortgage banking companies:  Cherry Creek            $100,000
Chairman of the     Mortgage     Company     (since    1991),
Board since 2003    Centennial  State Mortgage Company (since
and Trustee since   1994),   The  El  Paso  Mortgage  Company
1999                (since  1993),  Chairman of the following
Age: 66             private   companies:,   Ambassador  Media
                    Corporation and Broadway  Ventures (since
                    1984);  and a director  of the  following
                    public  companies:   Helmerich  &  Payne,
                    Inc.  (oil  and  gas  drilling/production
                    company)  (since 1992) and  UNUMProvident
                    (insurance  company)  (since  1991).  Mr.
                    Armstrong is also a  director/trustee  of
                    Campus Crusade for Christ  (1991-present)
                    and      the      Bradley      Foundation
                    (2002-present).  Formerly a  director  of
                    the following:  Great Frontier  Insurance
                    (insurance      agency)      (1995-2000);
                    Transland   Financial   Services,    Inc.
                    (1997-2003);      Storage      Technology
                    Corporation  (a  publicly-held   computer
                    equipment company)  (1991-February 2003),
                    International     Family    Entertainment
                    (television channel)  (1992-1997),  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); and
                    a  U.S.  Senator  (January   1979-January
                    1991).  Oversees  38  portfolios  in  the
                    OppenheimerFunds complex.

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

Robert G. Avis,     Formerly,  Director and President of A.G. $0         $Over
Trustee since 1993  Edwards  Capital,  Inc.  (General Partner            $100,000
Age: 72             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
                    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
                    (until  March  2000)  of A.G.  Edwards  &
                    Sons  and  A.G.  Edwards  Trust  Company.
                    Oversees    38    portfolios    in    the
                    OppenheimerFunds complex.

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

George C. Bowen,    Formerly (until April 1999):  Senior Vice $50,001-$10Over0
Trustee since 2001  President   (from   September  1987)  and            $100,000
Age: 67             Treasurer   (from   March  1985)  of  the
                    Manager;  Vice President (from June 1983)
                    and  Treasurer   (since  March  1985)  of
                    OppenheimerFunds   Distributor,  Inc.  (a
                    subsidiary of the  Manager);  Senior Vice
                    President    (since    February    1992),
                    Treasurer  (since  July  1991)  Assistant
                    Secretary and a director  (since December
                    1991)  of  Centennial   Asset  Management
                    Corporation;    Vice   President   (since
                    October 1989) and Treasurer  (since April
                    1986)  of  HarbourView  Asset  Management
                    Corporation   (an   investment   advisory
                    subsidiary  of the  Manager);  President,
                    Treasurer    and   a    director    (June
                    1989-January  1990) of Centennial Capital
                    Corporation   (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
                    Secretary   (since   November   1989)  of
                    Shareholder  Financial Services,  Inc. (a
                    transfer   agent    subsidiary   of   the
                    Manager);   Assistant   Treasurer  (since
                    March  1998) of  Oppenheimer  Acquisition
                    Corp.      (the     Manager's      parent
                    corporation);  Treasurer  (since November
                    1989)    of    Oppenheimer    Partnership
                    Holdings,   Inc.   (a   holding   company
                    subsidiary   of   the   Manager);    Vice
                    President  and   Treasurer   (since  July
                    1996)   of    Oppenheimer    Real   Asset
                    Management,  Inc. (an investment advisory
                    subsidiary   of   the   Manager);   Chief
                    Executive  Officer  and  director  (since
                    March  1996)  of  MultiSource   Services,
                    Inc. (a  broker-dealer  subsidiary of the
                    Manager);  Treasurer (since October 1997)
                    of  OppenheimerFunds  International  Ltd.
                    and  OppenheimerFunds  plc (offshore fund
                    management  subsidiaries of the Manager).
                    Oversees    38    portfolios    in    the
                    OppenheimerFunds complex.

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

Edward L. Cameron,  A  member  of The  Life  Guard  of  Mount $0         Over
Trustee since 2001  Vernon,  George  Washington's home (since            $100,000
Age: 65             June  2000).  Formerly  (March 2001 - May
                    2002)  Director of Genetic  ID, Inc.  and
                    its   subsidiaries   (a  privately   held
                    biotech   company);    a   partner   with
                    PricewaterhouseCoopers      LLP     (from
                    1974-1999)  (an   accounting   firm)  and
                    Chairman    (from    1994-1998),    Price
                    Waterhouse    LLP    Global    Investment
                    Management   Industry   Services   Group.
                    Oversees    38    portfolios    in    the
                    OppenheimerFunds complex.

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

Jon S. Fossel,      Director  (since 1998) of Rocky  Mountain $0         Over
Trustee since 1997  Elk    Foundation    (a    not-for-profit            $100,000
Age: 62             foundation);  UNUMProvident (an insurance
                    company)  (since June 1, 2002) and Putnam
                    Lovell Finance  (finance  company) (since
                    1997).  Formerly  Chairman and a director
                    (until  October  1996) and  President and
                    Chief  Executive  Officer  (until October
                    1995) of the  Manager;  President,  Chief
                    Executive   Officer  and  a  director  of
                    Oppenheimer       Acquisition      Corp.,
                    Shareholders     Services     Inc.    and
                    Shareholder   Financial  Services,   Inc.
                    (until  October  1995),   director  (from
                    October 1999 until  October 2003) of P.R.
                    Pharmaceuticals    (a   privately    held
                    company).  Oversees 38  portfolios in the
                    OppenheimerFunds complex.

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

Sam Freedman,       Director    of    Colorado    Uplift   (a $0         Over
Trustee since 1996  non-profit   charity)  (since   September            $100,000
Age: 63             1984).  Formerly (until October 1994) Mr.
                    Freedman   held   several   positions  in
                    subsidiary  or  affiliated  companies  of
                    the Manager.  Oversees 38  portfolios  in
                    the OppenheimerFunds complex.

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

Beverly          L. Trustee   (since   1996)  of   MassMutual $          $10,001 -
Hamilton,           Institutional  Funds  and of  MML  Series            $50,000
Trustee since 2002  Investment   Fund  (open-end   investment
Age: 57             companies);   Director  of  MML  Services
                    (since  April  1987)  and  America  Funds
                    Emerging   Markets   Growth  Fund  (since
                    October   1991)   (both  are   investment
                    companies),  The California  Endowment (a
                    philanthropy  organization)  (since April
                    2002),   and   Community    Hospital   of
                    Monterey   Peninsula,   (since   February
                    2002);  a trustee  (since  February 2000)
                    of  Monterey  International  Studies  (an
                    educational organization),  and to Credit
                    Suisse  First  Boston's   Sprout  venture
                    capital  unit.  Mrs.  Hamilton  also is a
                    member of the  investment  committees  of
                    the   Rockefeller   Foundation   and  the
                    University    of   Michigan.    Formerly,
                    President   (February   1991-April  2000)
                    ARCO Investment  Management  Company,  an
                    advisor to Unilever  (Holland)'s  pension
                    fund  (2000-2003)  and a  member  of  the
                    investment    committee    of    Hartford
                    Hospital    (2000-2003).    Oversees   37
                    portfolios   in   the    OppenheimerFunds
                    complex.

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

Robert J. Malone,   Director    (since    2001)    of   Jones Over       Over
Trustee since 2002  Knowledge,   Inc.   (a   privately   held $100,000   $100,000
Age: 59             company),  U.S.  Exploration,  Inc., (oil
                    and  gas   exploration)   (since   1997),
                    Colorado     UpLIFT     (a     non-profit
                    organization)  (since  1986) State Street
                    State Bank (since  2003) and a trustee of
                    the    Gallagher    Family     Foundation
                    (non-profit  organization)  (since 2000).
                    Formerly,  Chairman of U.S. Bank Colorado
                    (a   subsidiary   of  U.S.   Bancorp  and
                    formerly  Colorado  National Bank,) (July
                    1996-April  1,  1999) and a  director  of
                    Commercial   Assets,    Inc.   (a   REIT)
                    (1993-2000).  Oversees 37  portfolios  in
                    the OppenheimerFunds complex.

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

F. William          Trustee   (since   1996)  of   MassMutual $0         Over
Marshall, Jr.,      Institutional  Funds  and of  MML  Series            $100,000
Trustee since 2001  Investment   Fund  (open-end   investment
Age: 61             companies);    Trustee    (since   1987),
                    Chairman  of the Board  (since  2003) and
                    Chairman  of  the  investment   committee
                    (since 1994) for the  Worcester  Polytech
                    Institute      (private      university);
                    President  and Treasurer  (since  January
                    1999) of the SIS Fund (a private  not for
                    profit charitable  fund);  Trustee (since
                    1995)  of  the  Springfield  Library  and
                    Museum  Association   (museum);   Trustee
                    (since  1996)  of  the  Community   Music
                    School  of  Springfield  (music  school).
                    Formerly,   member   of  the   investment
                    committee of the Community  Foundation of
                    Western   Massachusetts  (1998  -  2003);
                    Chairman (January  1999-July 1999) of SIS
                    &  Family  Bank,  F.S.B.   (formerly  SIS
                    Bank);    President,    Chief   Executive
                    Officer and Director  (May  1993-December
                    1998) of SIS Bankcorp,  Inc. and SIS Bank
                    (formerly  Springfield   Institution  for
                    Savings)  and  Executive  Vice  President
                    (January   1999-July   1999)  of  Peoples
                    Heritage     Financial    Group,     Inc.
                    (commercial    banks).     Oversees    38
                    portfolios   in   the    OppenheimerFunds
                    complex.

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

     The address of Mr. Murphy in the chart below is Two World Financial Center,
225 Liberty Street, New York, NY 10281-1008. Mr. Murphy serves for an indefinite
term, until his resignation, death or removal.

Interested Trustee and Officer
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Name,              Principal Occupation(s) During Past 5      Dollar     Aggregate
                                                                         Dollar
                                                                         Range Of
                                                                         Shares
                   Years;                                     Range of   Beneficially
Position(s) Held   Other Trusteeships/Directorships Held by   Shares     Owned in
with Fund,         Trustee;                                   BeneficiallAny of the
Length of Service, Number of Portfolios in Fund Complex       Owned in   Oppenheimer
Age                Currently Overseen by Trustee              the Fund   Funds
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
                                                                As of December 31,

                                                                       2003

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

John V. Murphy,    Chairman,   Chief  Executive  Officer  and $0         Over
President and      director  (since June 2001) and  President            $100,000
Trustee since 2001 (since  September  2000)  of the  Manager;
Age: 54            President  and a  director  or  trustee of
                   other Oppenheimer  funds;  President and a
                   director  (since July 2001) of 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
                   OppenheimerFunds,  Inc.: OFI Institutional
                   Asset  Management,   Inc.  and  Centennial
                   Asset   Management    Corporation   (since
                   November    2001),    HarbourView    Asset
                   Management  Corporation  and  OFI  Private
                   Investments,   Inc.   (since  July  2001);
                   President  (since  November 1, 2001) and a
                   director  (since July 2001) of Oppenheimer
                   Real Asset  Management,  Inc.;  a director
                   (since    November    2001)   of   Trinity
                   Investment  Management  Corp.  and Tremont
                   Advisers,    Inc.   (investment   advisory
                   affiliates  of  the  Manager);   Executive
                   Vice  President  (since  February 1997) of
                   Massachusetts    Mutual   Life   Insurance
                   Company (the Manager's parent company);  a
                   director   (since   June   1995)   of  DLB
                   Acquisition    Corporation    (a   holding
                   company  that  owns  shares  of  David  L.
                   Babson & Company,  Inc.); formerly,  Chief
                   Operating  Officer  (September   2000-June
                   2001)  of  the  Manager;   President   and
                   trustee (November  1999-November  2001) of
                   MML Series  Investment Fund and MassMutual
                   Institutional  Funds (open-end  investment
                   companies);    a    director    (September
                   1999-August  2000) of C.M. Life  Insurance
                   Company;    President,   Chief   Executive
                   Officer    and     director     (September
                   1999-August  2000) of MML Bay  State  Life
                   Insurance   Company;   a  director   (June
                   1989-June  1998) of Emerald  Isle  Bancorp
                   and Hibernia  Savings Bank (a wholly-owned
                   subsidiary   of  Emerald  Isle   Bancorp).
                   Oversees     72     portfolios     as    a
                   Trustee/Officer  and 10  portfolios  as an
                   Officer in the OppenheimerFunds complex.

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


The address of the  Officers  in the chart  below is as  follows:  for Messrs.
Manioudakis,  Molleur  and  Zack,  Two World  Financial  Center,  225  Liberty
Street,  New York, NY  10281-1008,  for Messrs.  Vottiero and Wixted and Mses.
Bechtolt  and Ives,  6803 S.  Tucson  Way,  Centennial,  CO  80112-3924.  Each
Officer  serves for an annual  term or until his or her  earlier  resignation,
death or removal.


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

Angelo Manioudakis,     Senior Vice President of the Manager (since April 2002);  an
Vice President and      officer of 12  portfolios in the  OppenheimerFunds  complex;
Portfolio Manager       formerly   Executive  Director  and  portfolio  manager  for
since 2002              Miller,  Anderson & Sherrerd,  a division of Morgan  Stanley
Age:  37                Investment Management (August 1993-April 2002).

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

Brian W. Wixted,        Senior Vice  President and  Treasurer  (since March 1999) of
Treasurer,    Principal the Manager;  Treasurer  (since  March 1999) of  HarbourView
Financial           and Asset Management  Corporation,  Shareholder Services,  Inc.,
Accounting      Officer Oppenheimer Real Asset Management  Corporation,  Shareholder
since 1999              Financial Services,  Inc., Oppenheimer Partnership Holdings,
Age: 44                 Inc.,  OFI Private  Investments,  Inc.  (since  March 2000),
                        OppenheimerFunds  International  Ltd.  and  OppenheimerFunds
                        plc (offshore fund  management  subsidiaries of the Manager)
                        (since  May 2000) and OFI  Institutional  Asset  Management,
                        Inc. (since  November  2000);  Treasurer and Chief Financial
                        Officer  (since  May  2000) of OFI  Trust  Company  (a trust
                        company  subsidiary  of the  Manager);  Assistant  Treasurer
                        (since  March 1999) of  Oppenheimer  Acquisition  Corp.  and
                        OppenheimerFunds   Legacy   Program   (since   April  2000);
                        formerly   Principal  and  Chief  Operating  Officer  (March
                        1995-March   1999),   Bankers  Trust   Company-Mutual   Fund
                        Services  Division.  An  officer  of 82  portfolios  in  the
                        OppenheimerFunds complex.

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

Connie Bechtolt,        Assistant  Vice  President of the Manager  (since  September
Assistant Treasurer     1998);   formerly    Manager/Fund    Accounting   (September
since 2002              1994-September  1998)  of  the  Manager.  An  officer  of 82
Age: 40                 portfolios in the OppenheimerFunds complex.

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

Philip Vottiero,        Vice  President/Fund  Accounting of the Manager (since March
Assistant Treasurer     2002); formerly Vice  President/Corporate  Accounting of the
since 2002              Manager (July  1999-March  2002) prior to which he was Chief
Age: 40                 Financial  Officer at Sovlink  Corporation  (April 1996-June
                        1999).  An officer of 82 portfolios in the  OppenheimerFunds
                        complex.

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

Robert G. Zack,         Executive  Vice  President  (since January 2004) and General

Vice President &        Counsel  (since  February  2002)  of  the  Manager;  General
Secretary since 2001    Counsel   and  a   director   (since   November   2001)   of

Age: 55                 OppenheimerFunds  Distributor,  Inc.;  Senior Vice President
                        and General  Counsel  (since  November  2001) of HarbourView
                        Asset Management Corporation;  Vice President and a director
                        (since November 2000) of Oppenheimer  Partnership  Holdings,
                        Inc.; Senior Vice President,  General Counsel and a director
                        (since  November  2001)  of  Shareholder   Services,   Inc.,
                        Shareholder   Financial   Services,    Inc.,   OFI   Private
                        Investments,   Inc.,   Oppenheimer  Trust  Company  and  OFI
                        Institutional   Asset  Management,   Inc.;  General  Counsel
                        (since  November  2001)  of  Centennial   Asset   Management
                        Corporation;   a   director   (since   November   2001)   of
                        Oppenheimer   Real   Asset   Management,   Inc.;   Assistant
                        Secretary   and  a  director   (since   November   2001)  of
                        OppenheimerFunds  International  Ltd.; Vice President (since
                        November   2001)   of   OppenheimerFunds   Legacy   Program;
                        Secretary  (since November 2001) of Oppenheimer  Acquisition
                        Corp.;  formerly  Senior Vice President (May 1985 - December
                        2003), Acting General Counsel (November  2001-February 2002)
                        and Associate  General  Counsel (May  1981-October  2001) of
                        the Manager;  Assistant  Secretary of Shareholder  Services,
                        Inc.  (May  1985-November   2001),   Shareholder   Financial
                        Services,     Inc.    (November     1989-November     2001);
                        OppenheimerFunds  International  Ltd.  and  OppenheimerFunds
                        plc (October  1997-November  2001).  An officer of 82 in the
                        OppenheimerFunds complex.

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

Kathleen T. Ives,       Vice  President  (since June 1998) and Senior Counsel (since
Assistant Secretary     October 2003) of the Manager;  Vice  President  (since 1999)
since 2001              of  OppenheimerFunds  Distributor,  Inc.; Vice President and
Age: 38                 Assistant  Secretary  (since 1999) of Shareholder  Services,
                        Inc.;   Assistant   Secretary   (since   December  2001)  of
                        OppenheimerFunds  Legacy Program and  Shareholder  Financial
                        Services,   Inc.;  formerly  an  Assistant  Counsel  (August
                        1994-October  2003)  and  Assistant  Vice  President  of the
                        Manager   (August   1997-June   1998).   An  officer  of  82
                        portfolios in the OppenheimerFunds complex.

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

Denis R. Molleur,       Vice  President  and Senior  Counsel of the  Manager  (since
Assistant Secretary     July 1999);  formerly a Vice President and Associate Counsel
since 2001              of the Manager (September  1995-July 1999). An officer of 73
Age: 46                 portfolios in the OppenheimerFunds complex.

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

     |X| Remuneration of Trustees.  The officers of the Fund and Mr. Murphy (who
is an officer  and  Trustee of the Fund) 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 from the Fund with respect to the Fund's
fiscal year ended December 31, 2003. The  compensation  from all 44 of the Board
II Funds (including the Fund) represents  compensation received for serving as a
director or trustee and member of a committee (if  applicable)  of the boards of
those funds during the calendar year ended December 31, 2003.

-------------------------------------------------------------------------------------
Trustee Name and Other               Aggregate Compensation from Fund1
Fund Position(s) (as                Total Compensation From Fund and Fund Complex Paid to Trustees*
applicable)
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------

William L. Armstrong                      $1,921                $118,649

Chairman of the Board
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

Robert G. Avis                            $1,643                $101,499
Review Committee Member

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

George C. Bowen                           $1,643                $101,499
Audit Committee Member

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

Edward L. Cameron                         $1,870                $115,503
Audit Committee Chairman

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

Jon S. Fossel                             $1,870                $115,503
Review Committee Chairman

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

Sam Freedman                              $1,643                $101,499
Review Committee Member

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

Beverly Hamilton                          $1,6222             $150,5423,4

Review Committee Member
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

Robert J. Malone                          $1,6225              $100,1793
Audit Committee Member

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

F. William Marshall, Jr.                  $1,643               $149,4996

Audit Committee Member
-------------------------------------------------------------------------------


Effective December 15, 2003, James C. Swain retired as Trustee from the Board II
Funds.  For the fiscal year ended December 31, 2003,  Mr. Swain received  $2,881
aggregate  compensation from the Trust. For the calendar year ended December 31,
2003, Mr. Swain received $178,000 total compensation from all of the Oppenheimer
funds for which he served as Trustee.  Aggregate Compensation from Fund includes
fees and deferred compensation, if any, for a Trustee.

Includes $1,622 deferred under Deferred  Compensation  Plan described  below. 3.
"Total  Compensation  From Fund and Fund Complex" paid to Mrs.  Hamilton and Mr.
Malone was paid by all the Board II Funds,  with the  exception  of  Oppenheimer
Senior  Floating  Rate Fund for which they  currently  do not serve as  Trustees
(total of 37 Oppenheimer funds at December 31, 2003).

     Includes $50,363  compensation (of which 100% was deferred under a deferred
compensation  plan)  paid to Mrs.  Hamilton  for  serving  as a  trustee  by two
open-end  investment  companies  (MassMutual  Institutional Funds and MML Series
Investment Fund) the investment adviser for which is the indirect parent company
of the  Fund's  Manager.  The  Manager  also  serves as the  Sub-Advisor  to the
MassMutual  International  Equity  Fund,  a series of  MassMutual  Institutional
Funds.

Includes  $1,622  deferred  under
   Deferred   Compensation   Plan
   described below.
Includes   $48,000   compensation
   paid  to  Mr.   Marshall   for
   serving  as a  trustee  by two
   open-end investment  companies
   (MassMutual      Institutional
   Funds    and    MML     Series
   Investment      Fund)      the
   investment  adviser  for which
   is   the    indirect    parent
   company    of    the    Fund's
   Manager.   The  Manager   also
   serves as the  Sub-Advisor  to
   the  MassMutual  International
   Equity   Fund,   a  series  of
   MassMutual       Institutional
   Funds.

*  For  purposes of this  section
   only, "Fund Complex"  includes
   the     Oppenheimer     funds,
   MassMutual       Institutional
   Funds    and    MML     Series
   Investment  Fund in accordance
   with  the   instructions   for
   Form N-1A.  The  Manager  does
   not    consider     MassMutual
   Institutional  Funds  and  MML
   Series  Investment  Fund to be
   part  of the  OppenheimerFunds
   "Fund  Complex"  as that  term
   may be otherwise interpreted.

      Deferred  Compensation Plan
for   Trustees.   The   Board  of
Trustees  has  adopted a Deferred
Compensation       Plan       for
disinterested    Trustees    that
enables  them to  elect  to defer
receipt  of all or a  portion  of
the   annual    fees   they   are
entitled  to  receive   from  the
Fund.   Under   the   plan,   the
compensation    deferred   by   a
Trustee is periodically  adjusted
as  though an  equivalent  amount
had been  invested  in  shares of
one  or  more  Oppenheimer  funds
selected  by  the  Trustee.   The
amount paid to the Trustee  under
the  plan   will  be   determined
based  upon  the  performance  of
the selected funds.

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

      |X|   Major   Shareholders.
As of January 28, 2004,  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:

MLPF&S For the Sole Benefit of its Customers,  Attn.: Fund  Admin./#97G56,  4800
Deer Lake  Drive E.,  Floor 3,  Jacksonville,  Florida  32246-6484  which  owned
441,744.162  Class C  shares  (representing  5.11% of the  Class C  shares  then
outstanding);

R.E. Svensk & M. Reynolds TR, Exporters Insurance Services,  335 Madison Avenue,
New York, New York 10017 which owned  111,489.834  Class N shares ( representing
6.49% of the Class N shares then outstanding);

Oppenheimer Capital  Preservation Fund, Attn.: Brian Wixted, 6803 S. Tucson Way,
Englewood,   Colorado  80112-3924  which  owned  3,458,747.448  Class  Y  shares
(representing 88.23% of the Class Y shares then outstanding).

OFI Trust Co. TR,  OppenheimerFunds,  Inc.  Deferred  Compensation  Plan, Attn.:
Susan Cisneros,  225 Liberty Street,  New York, New York 10281-1008  which owned
360,749.191  Class Y  shares  (representing  9.20% of the  Class Y  shares  then
outstanding).

The Manager.  The Manager is  wholly-owned by Oppenheimer  Acquisition  Corp., a
holding company  controlled by Massachusetts  Mutual Life Insurance  Company,  a
global, diversified insurance and financial services organization.

|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 SEC 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 website 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| Portfolio Proxy Voting. The Fund has adopted Portfolio Proxy Voting Policies
and  Procedures  under  which the Fund  votes  proxies  relating  to  securities
("portfolio  proxies")  held by the Fund. The Fund's  primary  consideration  in
voting  portfolio  proxies  is the  financial  interests  of the  Fund  and  its
shareholders.  The Fund has retained an unaffiliated third-party as its agent to
vote  portfolio  proxies in accordance  with the Fund's  Portfolio  Proxy Voting
Guidelines  and to maintain  records of such portfolio  proxy voting.  The Proxy
Voting Guidelines  include  provisions to address conflicts of interest that may
arise  between  the Fund  and OFI  where  an OFI  directly-controlled  affiliate
manages or administers the assets of a pension plan of a company  soliciting the
proxy. The Fund's  Portfolio Proxy Voting  Guidelines on routine and non-routine
proxy proposals are summarized below.

o    The Fund  votes  with the  recommendation  of the  issuer's  management  on
     routine matters,  including  election of directors  nominated by management
     and ratification of auditors, unless circumstances indicate otherwise.
o    In  general,  the  Fund  opposes   anti-takeover   proposals  and  supports
     elimination of anti-takeover proposals, absent unusual circumstances.
o    The Fund supports  shareholder  proposals to reduce a  super-majority  vote
     requirement,  and opposes management proposals to add a super-majority vote
     requirement.
o     The Fund opposes  proposals
      to  classify  the  board of
      directors.
o     The      Fund      supports
      proposals    to   eliminate
      cumulative voting.
o     The      Fund       opposes
      re-pricing     of     stock
      options.
o     The     Fund      generally
      considers         executive
      compensation      questions
      such as stock  option plans
      and   bonus   plans  to  be
      ordinary           business
      activity.      The     Fund
      analyzes    stock    option
      plans,   paying  particular
      attention      to     their
      dilutive effect.  While the
      Fund   generally   supports
      management  proposals,  the
      Fund   opposes   plans   it
      considers to be excessive.

     The Fund will be required to file new Form N-PX,  with its  complete  proxy
voting  record for the 12 months  ended June 30th,  no later than August 31st of
each year.  The first such filing is due no later than August 31, 2004,  for the
twelve months ended June 30, 2004. Once filed,  the Fund's Form N-PX filing will
be available (i) without charge,  upon request, by calling the Fund toll-free at
1.800.225.5677 and (ii) on the SEC's website at www.sec.gov. -----------

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

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

    Fiscal Year ended 12/31:       Management Fees Paid
                                   to OppenheimerFunds,
                                           Inc.

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

            2001                                 $2,896,294

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

            2002                                 $3,389,414

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

            2003                                 $4,181,296

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


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


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

      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
         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 and
Counsel  to  the   Independent   Trustees   who  assisted  the  Board  in  its
deliberations.  The Fund's Counsel and Counsel to the Independent  Trustees is
independent  of the  Manager  within the  meaning  and intent of the SEC Rules
regarding the independence of counsel.


      After  careful  deliberation,   the  Board,  including  the  Independent
Trustees,  concluded  that it was in the  best  interest  of  shareholders  to
continue the investment  advisory agreement for another year and that the fees
charged there under are fair and  reasonable.  In arriving at a decision,  the
Board did not  single  out any one  factor or group of  factors  as being more
important than other factors,  but considered all factors together.  The Board
judged  the  terms  and  conditions  of  the  investment  advisory  agreement,
including  the  investment  advisory  fee, in light of all of the  surrounding
circumstances.


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.

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


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


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


      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.  When  possible,  the  Manager  tries to  combine
concurrent  orders to purchase  or sell the same  security by more than one of
the accounts managed by the Manager or its affiliates.  The transactions under
those  combined  orders are averaged as to price and  allocated in  accordance
with the purchase or sale orders actually placed for each account.


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

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

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

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

------------------------------------------------------------------------------
  Fiscal Year Ended 12/31:     Total Brokerage Commissions Paid by the Fund1
------------------------------------------------------------------------------
------------------------------------------------------------------------------
            2001                                 $480,160
------------------------------------------------------------------------------
------------------------------------------------------------------------------
            2002                                 $275,409
------------------------------------------------------------------------------
------------------------------------------------------------------------------

            2003                                 $99,9952

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

1. Amounts do not include spreads or concessions on principal  transactions on
a net trade basis.
2. During the fiscal year ended 12/31/03,  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 Fund's classes of shares.  The Distributor  bears the expenses
normally  attributable  to  sales,  including  advertising  and  the  cost  of
printing  and mailing  prospectuses,  other than those  furnished  to existing
shareholders.  The  Distributor is not obligated to sell a specific  number of
shares.

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


-------------------------------------------
Fiscal       Aggregate         Class A
                              Front-End
Year      Front-End Sales   Sales Charges
Ended        Charges on      Retained by

 12/31:    Class A Shares   Distributor1

-------------------------------------------
-------------------------------------------
  2001       $1,391,486       $501,793
-------------------------------------------
-------------------------------------------
  2002       $1,617,689       $560,960
-------------------------------------------
-------------------------------------------

  2003       $1,149,874       $429,092

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

------------------------------------------------------------------------------
Fiscal     Concessions on   Concessions on   Concessions on   Concessions on
Year       Class A Shares   Class B Shares   Class C Shares   Class N Shares
Ended       Advanced by      Advanced by      Advanced by      Advanced by
 12/31:     Distributor1     Distributor1     Distributor1     Distributor1
------------------------------------------------------------------------------
------------------------------------------------------------------------------

  2001        $156,331        $2,403,539        $286,901         $20,4212

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

  2002        $160,349        $2,110,998        $306,867         $85,293

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

  2003        $59,733         $1,109,974        $210,325         $82,084

------------------------------------------------------------------------------
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 B          Class C          Class N
Fiscal       Contingent       Contingent       Contingent       Contingent
Year       Deferred Sales   Deferred Sales   Deferred Sales   Deferred Sales
Ended     Charges Retained Charges Retained Charges Retained Charges Retained
  12/31    By Distributor   By Distributor   By Distributor   By Distributor
------------------------------------------------------------------------------
------------------------------------------------------------------------------
  2001        $26,759          $285,551         $13,163            $45
------------------------------------------------------------------------------
------------------------------------------------------------------------------
  2002        $15,578          $903,519         $37,637          $29,346
------------------------------------------------------------------------------
------------------------------------------------------------------------------

  2003        $37,749          $773,520         $21,673          $49,744

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


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 Trustees1,     cast    in
person at a meeting called for the purpose of voting on that plan.

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

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

      The Board of Trustees  and the  Independent  Trustees  must  approve all
material  amendments to a plan. An amendment to increase materially the amount
of payments to be made under a plan must be  approved by  shareholders  of the
class  affected  by  the  amendment.  Because  Class  B  shares  of  the  Fund
automatically  convert into Class A shares 72 months after purchase,  the Fund
must  obtain  the  approval  of both  Class A and Class B  shareholders  for a
proposed  material  amendment  to the Class A the plan that  would  materially
increase  payments  under the plan.  That approval must be by a "majority" (as
defined in the  Investment  Company  Act) of the shares of each class,  voting
separately by class.

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

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

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

|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.  The Class A service plan permits  reimbursements  to
the  Distributor  at a rate of up to 0.25% of  average  annual  net  assets of
Class A  shares.  The  Board  has set the rate at that  level.  While the plan
permits  the Board to  authorize  payments  to the  Distributor  to  reimburse
itself for services  under the plan,  the Board has not yet done so, except in
the case of the special arrangement described below,  regarding  grandfathered
retirement  accounts.  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.

      With  respect to  purchases  of Class A shares  subject to a  contingent
deferred sales charge by certain  retirement  plans that purchased such shares
prior to March 1, 2001 ("grandfathered  retirement accounts"), the Distributor
currently  intends to pay the  service  fee to  recipients  in advance for the
first year after the  shares are  purchased.  During the first year the shares
are sold, the Distributor  retains the service fee to reimburse itself for the
costs  of   distributing   the  shares.   After  the  first  year  shares  are
outstanding,   the  Distributor  makes  service  fee  payments  to  recipients
quarterly  on those  shares.  The  advance  payment  is based on the net asset
value of shares  sold.  Shares  purchased  by  exchange do not qualify for the
advance  service fee payment.  If Class A shares  purchased  by  grandfathered
retirement  accounts are redeemed  during the first year after their purchase,
the  recipient  of the service fees on those shares will be obligated to repay
the  Distributor a pro rata portion of the advance  payment of the service fee
made on those shares.

      For the fiscal year ended  December 31, 2003 payments  under the Class A
plan totaled  $941,996,  of which $5,385 was retained by the Distributor under
the arrangement described above, regarding grandfathered  retirement accounts,
and  included  $135,196  paid  to an  affiliate  of the  Distributor's  parent
company.  Any  unreimbursed  expenses the  Distributor  incurs with respect to
Class A shares in any fiscal year cannot be  recovered  in  subsequent  years.
The  Distributor  may not use payments  received under the Class A plan to pay
any of its interest expenses,  carrying charges,  or other financial costs, or
allocation of overhead.

|X|   Class B, Class C and Class N Distribution  and Service Plan Fees.  Under
each plan,  distribution  and service  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 are similar to the services  provided under
the Class A service plan, described above.

      Each plan permits 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 Class B, Class C and Class N shares are purchased.  After the
first year Class B, Class C or Class N shares  are  outstanding,  after  their
purchase,  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.  In  cases  where  the
Distributor  is the  broker of record for Class B, Class C and Class N shares,
i.e.  shareholders  without the  services of a broker  directly  invest in the
Fund, the  Distributor  will retain the  asset-based  sales charge and service
fee for Class B, Class C and Class N shares.

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

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

      The  asset-based  sales  charge  on Class B,  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 charge to the Distributor for its services  rendered in
distributing  Class B, Class C and Class N shares.  The  payments  are made to
the Distributor in recognition that the Distributor:
o     pays sales concessions to authorized  brokers and dealers at the time of
         sale and pays service fees as described above,
o     may  finance  payment of sales  concessions  and/or  the  advance of the
         service fee  payment to  recipients  under the plans,  or may provide
         such  financing  from its own  resources or from the  resources of an
         affiliate,

o     employs personnel to support  distribution of Class B, Class C and Class
         N shares,

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.

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

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

  Distribution Fees Paid to the Distributor in the Fiscal Year Ended 12/31/03

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

Class B Plan   $2,169,057     $1,634,1761       $4,796,069           2.43%

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

Class C Plan    $963,615       $249,1382        $1,495,270           1.65%

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

Class N Plan     $76,596       $61,8583          $320,169            1.81%

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

1. Includes $24,287 paid to an affiliate of the Distributor's parent company.
2. Includes $27,704 paid to an affiliate of the Distributor's parent company.
3. Includes $2,318 paid to an affiliate of the Distributor's parent company.

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


Performance of the Fund


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

      The Fund's  illustrations of its performance data in advertisements must
comply with rules of the SEC.  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.


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

      Yields and total  returns  measure  the  performance  of a  hypothetical
         account  in the  Fund  over  various  periods  and do  not  show  the
         performance   of   each   shareholder's   account.   Your   account's
         performance  will  vary  from  the  model  performance  data  if your
         dividends  are received in cash, or you buy or sell shares during the
         period,  or you bought your shares at a different time and price than
         the shares used in the model.
      The Fund's  performance  returns do not  reflect  the effect of taxes on
         dividends and capital gains distributions.
      An  investment  in the  Fund is not  insured  by the  FDIC or any  other
         government agency.
      The principal  value of the Fund's shares,  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 debt
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 SEC,  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 12/31/03

  -----------------------------------------------------------------------------
  -----------------------------------------------------------------------------
  Class of          Standardized Yield                 Dividend Yield
  Shares
  -----------------------------------------------------------------------------
  -----------------------------------------------------------------------------
                 Without           After          Without           After
                  Sales            Sales           Sales            Sales
                  Charge          Charge           Charge          Charge
  -----------------------------------------------------------------------------
  -----------------------------------------------------------------------------

  Class A         3.10%            2.95%           3.25%            3.09%

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

  Class B         2.31%             N/A            2.44%             N/A

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

  Class C         2.34%             N/A            2.48%             N/A

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

  Class N         2.78%             N/A            2.92%             N/A

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

  Class Y         3.58%             N/A            3.72%             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" in the formula below) (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  1.0%
contingent  deferred  sales  charge is deducted  for returns for the  one-year
period.  For Class N shares,  the 1.0%  contingent  deferred  sales  charge is
deducted  for  returns  for the  one-year  period,  and total  returns for the
periods prior to 03/01/01 (the  inception date for Class N shares) is based on
the Fund's  Class A returns,  adjusted  to  reflect  the higher  Class N 12b-1
fees. There is no sales charge on Class Y shares.


         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:
------------------------------------------------------------------------------

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

ERV   l/n - 1  = Average Annual Total
---
               Return
  P


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


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

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

ATVDR- 1 = Average Annual Total Return (After Taxes on Distributions and Redemptions)
---
l/n
  P

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
     consideratio the reinvestment of dividends n and capital gains distribution

The Fund's
   Total
  Returns   s.
  for the
  Periods
   Ended
 12/31/03


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

Class of    Cumulative Total            Average Annual Total Returns
           Returns (10 Years
                   or
           Life-of-Class, if
Shares           Less)

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

                                  1-Year           5-Year           10-Year
                                                     (or              (or
                                               Life-of-Class,   Life-of-Class,
                                                  if Less)         if Less)

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

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

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

Class A1    69.49%    77.95%   0.84%   5.87%   4.33%    5.35%    5.42%   5.93%

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

Class B2    70.30%    70.30%   0.05%   5.05%   4.22%    4.54%    5.47%   5.47%

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

Class C3    54.71%    54.71%   4.18%   5.18%   4.57%    4.57%    5.29%   5.29%

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

Class N4    19.45%    19.45%   4.51%   5.51%   6.47%    6.47%     N/A     N/A

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

Class Y5    39.19%    39.19%   6.35%   6.35%   5.92%    5.92%    6.00%   6.00%

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

1. Inception of Class A:  4/15/88.
2. Inception of Class B: 5/3/93.
3. Inception of Class C:  7/11/95.
4. Inception of Class N: 3/1/01.
5. Inception of Class Y:  4/27/98.


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

  Average Annual Total Returns for Class A Shares (After Sales Charge)
                     For the Periods Ended 12/31/03

--------------------------------------------------------------------------
--------------------------------------------------------------------------
                                 1-Year         5-Year        10-Year
                                                            (or life of
                                                               class)
--------------------------------------------------------------------------
--------------------------------------------------------------------------

After Taxes on Distributions     -0.34%         1.89%          2.79%1

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

After Taxes on                   0.53%          2.12%          2.91%1

Distributions and
Redemption of Fund Shares
--------------------------------------------------------------------------

   1. Inception date of Class A: 4/15/88.


Other Performance  Comparisons.  The Fund compares its performance annually to
that of an  appropriate  broadly-based  market  index in its Annual  Report to
shareholders.  You can obtain that  information  by  contacting  the  Transfer
Agent  at the  addresses  or  telephone  numbers  shown  on the  cover of this
Statement  of   Additional   Information.   The  Fund  may  also  compare  its
performance to that of other  investments,  including  other mutual funds,  or
use rankings of its performance by independent  ranking entities.  Examples of
these performance comparisons are set forth below.

      |X|   Lipper  Rankings.  From  time to time  the Fund  may  publish  the
ranking  of  the  performance  of  its  classes  of  shares  by  Lipper,  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.


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

|X|   Morningstar  Ratings.  From time to time the Fund may  publish  the star
rating of the  performance of its classes of shares by  Morningstar,  Inc., an
independent mutual fund monitoring service.  Morningstar rates mutual funds in
their  specialized  market sector.  The Fund is rated among  intermediate-term
bond funds.
------------------------------------------------------------------------------


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


Morningstar   proprietary   star  ratings   reflect   historical   risk-adjusted
Oppenheimer  Limited Term Municipal  Fund total  investment  return.  For each f
Morningstar  calculates a Mornings  Risk-Adjusted Return measure that acund with
at least a three-year history,  performance  (including the effects otar Rating(TM)
based on a Morningstar fees), placing more emphasis on downwcounts for variation
in a fund's monthly performance. The top 10% of funds in f sales charges, loads,
and redemption 22.5% receive 4 stars, the next 35% rard variations and rewarding
consistent  stars,  and the bottom 10% receive 1 each category  receive 5 stars,
the next  fraction of one fund within this  scaleceive  3 stars,  the next 22.5%
receive  2 slight  variations  in the  distributionstar.  (Each  share  class is
counted as a Rating for a fund is derived from e and rated separately, which may
cause figures  associated with its three  percentages.) The Overall  Morningstar
Morningstar  Rating metrics.  a weighted  average of the performance -, five-and
ten-year (if applicable)

|X| Performance Rankings and Comparison by Other Entities and Publications. From
time to time the F sales  literature  performance  inform and other  periodicals
such as The Neund may include in its  advertisements  and  Barron's,  or similar
publications.  ation about the Fund cited in  newspapers  quotations  from other
sources,  inw York Times,  The Wall Street  Journal,  performance  of the Fund's
classes of sThat information may include  performance the performance of various
market  indicluding  Lipper and Morningstar.  The performance  rankings or other
benchmhares  may be compared in  publications  to statistical  services.  ces or
other investments, and averages, arks prepared by recognized mutual fund


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

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

     From time to time the Fund may hers.  literature the total return performan
that  includes  shares of the Fund  andinclude in its  advertisements  and sales
account may be part of an  illustrationce of a hypothetical  investment  account
presentation.  The account  performanc other Oppenheimer funds. The combined the
Fund and the total return perform of an asset allocation model or similar in the
account.  Additionally,  from tie may combine total return  performance of sales
literature may include, for ance of other Oppenheimer funds included statistical
data or other  informatiome  to time,  the Fund's  advertisements  and  economic
conditions. That may include, illustrative or comparative purposes,

o    information  about the  performan  about  general  or  specific  market and
     markets or segments of those for example,
o    information  about the  perfornce  of  certain  securities  or  commodities
     countries or regions, markets,
o    the  earnings of  companies  includmance  of the  economies  of  particular
     sectors, securities markets,
o    the  availability  of  differented  in segments of  particular  industries,
     securities, countries or regions,
o    information  relating to the gro types of  securities  or  offerings of the
     United States or other co
o    comparisons  of  various  markss  national  or gross  domestic  product  of
     performance,  risk, or other cuntries or regions,  et sectors or indices to
     demonstrate about your account haracteristics of the Fund.

How to Buy Shares

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

AccountLink.  When shares are  purchased be at least $50 and  shareholders  must
Builder Plan (described  below) can be through  AccountLink,  each purchase must
established  prior to  November  1, 2002  invest at least  $500  before an Asset
purchases.  Shares will be purchased  onestablished  on a new account.  Accounts
Distributor is instructed to initiate will remain at $25 for additional transfer
to buy the shares.  Dividends the regular  business day the with the proceeds of
ACH transfers on the  Automated  Clearing  House  ("ACH")  Federal Funds for the
purchase throughwill begin to accrue on shares purchased New York Stock Exchange
("the Exchangethe  business day the Fund receives P.M., but may close earlier on
certain the ACH system before the close of The a business day after the close of
the "). The Exchange  normally closes at 4:00 and dividends will begin to accrue
on days.  If  Federal  Funds are  received  on  proceeds  of ACH  transfers  are
normallyExchange,  the shares will be purchased the transfers are initiated.  If
the prthe next regular  business day. The received on a timely basis, the Distri
received  by the Fund three days  after  purchase  order.  The  Distributor  and
thoceeds of the ACH transfer are not delays in purchasing shares resulting butor
reserves the right to cancel the e Fund are not responsible for any

Reduced Sales Charges. As discussed infrom delays in ACH transmissions. rate may
be  obtained  for  Class A share  Letters  of  Intent  because  of the econo the
Prospectus, a reduced sales charge expenses realized by the Distributor, s under
Right of  Accumulation  and No sales  charge is imposed in certain mies of sales
efforts and  reduction  in Appendix C to this  Statement  of  Additidealers  and
brokers  making  such  sales.  or  dealer  or  broker  incurs  little  or nother
circumstances described in onal Information because the Distributor

|X| Right of Accumulation. To o selling expenses. that apply to larger purchases
of Clas together: qualify for the lower sales charge rates

o     Class A and Class B shares you ps A shares, you and your spouse can add
            (including IRAs and 403(b)
            for trust or custodial accurchase for your individual accounts
            minors,                    plans), or for your joint accounts, or
o     Current purchases of Class A andounts on behalf of your children who are
            Oppenheimer funds to reduc
            current purchases of Class Class B shares of the Fund and other

o    Class A and Class B shares of Ope the sales  charge  rate that  applies  to
     subject  to  an  initial  or  c A  shares,  and  reduce  the  sales  charge
     rapenheimer  funds  you  previously  purchased  shares,  provided  that you
     ontingent  deferred  sales  charge to  Oppenheimer  funds.  te for  current
     purchases of Class A still hold your investment in one of the
A  fiduciary  can  count  all  shares  fiduciary  account  (including  one or mo
employer)  that has multiple  accounts.  purchased for a trust,  estate or other
current  offering price, of the shares re employee benefit plans of the same own
to the  value of  current  purchases  The  Distributor  will add the  value,  at
applies.  The reduced sales charge  willyou  previously  purchased and currently
must  request it when you buy shares.  to  determine  the sales charge rate that
apply only to current purchases. You

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



Oppenheimer AMT-Free Municipals

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

Oppenheimer AMT-Free New York Municipals  Oppenheimer Main Street Fund
Oppenheimer Bond Fund                     Oppenheimer Main Street Opportunity Fund
Oppenheimer California Municipal Fund     Oppenheimer Main Street Small Cap Fund
Oppenheimer Capital Appreciation Fund     Oppenheimer Multiple Strategies Fund
Oppenheimer Capital Preservation Fund     Oppenheimer New Jersey Municipal Fund
Oppenheimer Capital Income Fund           Oppenheimer Pennsylvania Municipal Fund
                                          Oppenheimer   Principal  Protected  Main
Oppenheimer Champion Income Fund          Street Fund
                                          Oppenheimer   Principal  Protected  Main
Oppenheimer Convertible Securities Fund   Street Fund II
Oppenheimer Developing Markets Fund       Oppenheimer Quest Balanced Value Fund
                                          Oppenheimer  Quest  Capital  Value Fund,
Oppenheimer Disciplined Allocation Fund   Inc.
                                          Oppenheimer  Quest  International  Value
Oppenheimer Discovery Fund                Fund, Inc.
Oppenheimer Emerging Growth Fund          Oppenheimer Quest Opportunity Value Fund
Oppenheimer Emerging Technologies Fund    Oppenheimer Quest Value Fund, Inc.
Oppenheimer Enterprise Fund               Oppenheimer Real Asset Fund
Oppenheimer Equity Fund, Inc.             Oppenheimer Real Estate Fund
                                          Oppenheimer      Rochester      National
Oppenheimer Global Fund                   Municipals
Oppenheimer Global Opportunities Fund     Oppenheimer Senior Floating Rate Fund
Oppenheimer Gold & Special Minerals Fund  Oppenheimer Small Cap Value Fund
Oppenheimer Growth Fund                   Oppenheimer Strategic Income Fund
Oppenheimer High Yield Fund               Oppenheimer Total Return Bond Fund
Oppenheimer International Bond Fund       Oppenheimer U.S. Government Trust
Oppenheimer International Growth Fund     Oppenheimer Value Fund
Oppenheimer  International  Small Company
Fund                                      Limited-Term New York Municipal Fund
Oppenheimer Limited-Term Government Fund  Rochester Fund Municipals
Oppenheimer MidCap Fund
And the following money market funds:

Oppenheimer Cash Reserves                 Centennial Government Trust
Oppenheimer Money Market Fund, Inc.       Centennial Money Market Trust
Centennial America Fund, L. P.            Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust    Centennial Tax Exempt Trust

      There is an initial sales charge on the purchase of Class A shares of
each of the Oppenheimer funds described above except the money market funds.
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 ("Letter"), if you purchase Class
A shares or Class A and Class B shares of the Fund and other Oppenheimer
funds during a 13-month period, you can reduce the sales charge rate that
applies to your purchases of Class A shares. The total amount of your
intended purchases of both Class A and Class B shares will determine the
reduced sales charge rate for the Class A shares purchased during that
period. You can include purchases made up to 90 days before the date of the
Letter. Letters do not consider Class C or Class N shares you purchase or may
have purchased.

     A Letter 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 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 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.  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.

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

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

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


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

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

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

      3. If, at the end of the 13-month
Letter period the total purchases
pursuant to the Letter are less than the
intended purchase amount specified in
the Letter, the investor must remit to
the Distributor an amount equal to the
difference between the dollar amount of
sales charges actually paid and the
amount of sales charges which would have
been paid if the total amount purchased
had been made at a single time. That
sales charge adjustment will apply to
any shares redeemed prior to the
completion of the Letter. If the
difference in sales charges is not paid
within twenty days after a request from
the Distributor or the dealer, the
Distributor will, within sixty days of
the expiration of the Letter, redeem the
number of escrowed shares necessary to
realize such difference in sales
charges. Full and fractional shares
remaining after such redemption will be
released from escrow. If a request is
received to redeem escrowed shares prior
to the payment of such additional sales
charge, the sales charge will be
withheld from the redemption proceeds.

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

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

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

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


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

      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.

      OppenheimerFunds has entered into
arrangements with certain record keepers
whereby the Transfer Agent compensates
the record keeper for its record keeping
and account servicing functions that it
performs on behalf of the participant
level accounts of a retirement plan.
While such compensation may act to
reduce the record keeping fees charged
by the retirement plan's record keeper,
that compensation arrangement may be
terminated at any time, potentially
affecting the record keeping fees
charged by the retirement plan's record
keeper.

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

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

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

      The Distributor will not accept
any order in the amount of $250,000 or
more for Class B shares or $1 million or
more for Class C shares on behalf of a
single investor (not including dealer
"street name" or omnibus accounts). That
is because generally it will be more
advantageous for that investor to
purchase Class A shares of the Fund.

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

      |X|   Class B Conversion. Under
current interpretations of applicable
federal income tax law by the Internal
Revenue Service, the conversion of Class
B shares to Class A shares 72 months
after purchase is not treated as a
taxable event for the shareholder. If
those laws or the IRS interpretation of
those laws should change, the automatic
conversion feature may be suspended. In
that event, no further conversions of
Class B shares would occur while that
suspension remained in effect. Although
Class B shares could then be exchanged
for Class A shares on the basis of
relative net asset value of the two
classes, without the imposition of a
sales charge or fee, such exchange could
constitute a taxable event for the
shareholder, and absent such exchange,
Class B shares might continue to be
subject to the asset-based sales charge
for longer than six years.


      |X|   Availability of Class N
Shares. In addition to the description
of the types of retirement plans which
may purchase Class N shares contained in
the prospectus, Class N shares also are
offered to the following:
o     to all rollover IRAs (including
            SEP IRAs and SIMPLE IRAs),
o     to all rollover contributions made
            to Individual 401(k) plans,
            Profit-Sharing Plans and
            Money Purchase Pension Plans,
o     to all direct rollovers from
            OppenheimerFunds-sponsored
            Pinnacle and Ascender
            retirement plans,
o     to all trustee-to-trustee IRA
            transfers,
o     to all 90-24 type 403(b) transfers,
o     to Group Retirement Plans (as
            defined in Appendix 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:
         purchases of Class N shares in
            amounts of $500,000 or more
            by a retirement plan that
            pays for the purchase with
            the redemption proceeds of
            Class A shares of one or
            more Oppenheimer funds
            (other than rollovers from
            an
            OppenheimerFunds-sponsored
            Pinnacle or Ascender 401(k)
            plan to any IRA invested in
            the Oppenheimer funds),
         purchases of Class N shares in
            amounts of $500,000 or more
            by a retirement plan that
            pays for the purchase with
            the redemption proceeds of
            Class C shares of one or
            more Oppenheimer funds held
            by the plan for more than
            one year (other than
            rollovers from an
            OppenheimerFunds-sponsored
            Pinnacle or Ascender 401(k)
            plan to any IRA invested in
            the Oppenheimer funds), and
         on purchases of Class N shares
            by an
            OppenheimerFunds-sponsored
            Pinnacle or Ascender 401(k)
            plan made with the
            redemption proceeds of Class
            A shares of one or more
            Oppenheimer funds.

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

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

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

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

Account Fees. As stated in the
Prospectus, a $12 annual fee is assessed
on any account valued at less than $500.
This fee will not be assessed on the
following accounts:
o     Accounts that have balances below
         $500 due to the automatic
         conversion of shares from Class
         B to Class A shares;
o     Accounts with an active Asset
         Builder Plan, payroll deduction
         plan or a military allotment
         plan;
o     OppenheimerFunds-sponsored group
         retirement accounts that are
         making continuing purchases;
o     Certain accounts held by
         broker-dealers through the
         National Securities Clearing
         Corporation; and
o     Accounts that fall below the $500
         threshold due solely to market
         fluctuations within the
         12-month period preceding the
         date the fee is deducted.

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


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

Dealers other than Exchange members may conduct trading in certain securities on
days on which the Exchange is closed (including  weekends and holidays) or after
4:00 P.M. on a regular  business  day.  Because the Fund's net asset values will
not be  calculated  on those days,  the Fund's net asset values per share may be
significantly affected on such days when shareholders may not purchase or redeem
shares.  Additionally,  trading  on  European  and  Asian  stock  exchanges  and
over-the-counter markets normally is completed before the close of the Exchange.

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


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


o     Equity securities with readily
available market quotes traded on a U.S.
securities exchange or on Nasdaq(R)are
valued as follows:

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

            (1)         at the last sale
               price on the principal
               exchange on which it is
               traded, as reported by
               such exchange at its
               trading session ending at
               or most recently prior to
               the time fixed for
               valuation of securities,
               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 by a portfolio pricing
service using a methodology acceptable
or reliable to the Fund or obtained by
the Manager by averaging the mean
between the "bid' and "asked" prices
from two active market makers in the
security on the basis of reasonable
inquiry.
o     The following securities are
valued the price determined by a pricing
service using a methodology acceptable
to the Fund:

(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 397 days or less when
               issued that have a
               remaining maturity of 60
               days or less, and

(2)   debt instruments held by a money
               market fund that have a
               remaining maturity of 397
               days or less.
o     Securities (including restricted
securities) not having readily-available
market quotations are valued at fair
value determined under the Board's
procedures.


     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  generally  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.  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  averaging  the means  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 United Missouri Bank (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 bank. 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, and 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 as 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 and Class N contingent deferred sales
charge will be followed in determining
the order in which shares are
transferred.

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

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

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


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


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

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

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

      The Fund cannot guarantee receipt
of a payment on the date requested. The
Fund reserves the right to amend,
suspend or discontinue offering these
plans at any time without prior notice.
Because of the sales charge assessed on
Class A share purchases, shareholders
should not make regular additional Class
A share purchases while participating in
an Automatic Withdrawal Plan. Class B,
Class C and Class N shareholders should
not establish automatic withdrawal
plans, because of the potential
imposition of the contingent deferred
sales charge on such withdrawals (except
where the Class B, Class C or Class N
contingent deferred sales charge is
waived as described in Appendix 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 $50.
Instructions should be provided on the
OppenheimerFunds Application or
signature-guaranteed instructions.
Exchanges made under these plans are
subject to the restrictions that apply
to exchanges as set forth in "How to
Exchange Shares" in the Prospectus and
below in this Statement of Additional
Information.

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


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


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

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


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

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

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


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

How to Exchange Shares

As stated in the Prospectus,  shares of a particular class of Oppenheimer  funds
having  more than one class of shares  may be  exchanged  only for shares of the
same class of other Oppenheimer  funds.  Shares of Oppenheimer funds that have a
single class  without a class  designation  are deemed "Class A" shares for this
purpose.  You can obtain a current list showing  which funds offer which classes
of shares by calling the Distributor.

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

   The following funds only offer Class
   A shares:
Centennial America Fund, L.P.              Centennial New York Tax Exempt Trust
   Centennial California Tax Exempt Trust    Centennial Tax Exempt Trust
   Centennial Government Trust               Oppenheimer Money Market Fund,
                                             Inc.
   Centennial Money Market Trust

   The following funds do not offer Class N shares:
   Oppenheimer AMT-Free Municipals            Oppenheimer Pennsylvania Municipal
                                              Fund

   Oppenheimer AMT-Free New York              Oppenheimer Rochester National
   Municipals                                 Municipals
   Oppenheimer California Municipal Fund      Limited Term New York Municipal Fund
   Oppenheimer Limited Term Municipal Fund    Oppenheimer Senior Floating Rate

                                              Fund
                               Oppenheimer    Rochester Fund Municipals
                               New Jersey
                               Municipal
                               Fund

   The following funds do not offer Class Y shares:

   Oppenheimer AMT-Free Municipals          Oppenheimer Limited Term Municipal Fund
   Oppenheimer AMT-Free New York Municipals Oppenheimer Multiple Strategies Fund
   Oppenheimer California Municipal Fund    Oppenheimer New Jersey Municipal Fund
   Oppenheimer Capital Income Fund          Oppenheimer Pennsylvania Municipal Fund
   Oppenheimer Cash Reserves                Oppenheimer Principal Protected Main
                                            Street Fund
   Oppenheimer Champion Income Fund         Oppenheimer Principal Protected Main
                                            Street Fund II

   Oppenheimer Convertible Securities Fund  Oppenheimer Quest Capital Value Fund,
                                            Inc.

   Oppenheimer Disciplined Allocation Fund  Oppenheimer Quest International Value
                                            Fund, Inc.
   Oppenheimer Developing Markets Fund      Oppenheimer Rochester National Municipals
   Oppenheimer Gold & Special Minerals Fund Oppenheimer Senior Floating Rate Fund
   Oppenheimer International Bond Fund      Oppenheimer Small Cap Value Fund
   Oppenheimer International Growth Fund    Oppenheimer Total Return Bond Fund
   Oppenheimer International Small Company  Limited Term New York Municipal Fund
   Fund


o     Class Y shares of Oppenheimer Real Asset Fund may not be exchanged for
      shares of any other fund.
o     Class B, Class C and Class N shares of Oppenheimer Cash Reserves are
      generally available only by exchange from the same class of shares of
      other Oppenheimer funds or through OppenheimerFunds-sponsored 401(k)
      plans.
o     Class M shares of Oppenheimer Convertible Securities Fund may be
      exchanged only for Class A shares of other Oppenheimer funds. They may
      not be acquired by exchange of shares of any class of any other
      Oppenheimer funds except Class A shares of Oppenheimer Money Market
      Fund or Oppenheimer Cash Reserves acquired by exchange of Class M
      shares.
o     Class X shares of Limited Term New York Municipal Fund may be exchanged
      only for Class B shares of other Oppenheimer funds and no exchanges may
      be made to Class X shares.
o     Shares of Oppenheimer Capital Preservation Fund may not be exchanged
      for shares of Oppenheimer Money Market Fund, Inc., Oppenheimer Cash
      Reserves or Oppenheimer Limited-Term Government Fund. Only participants
      in certain retirement plans may purchase shares of Oppenheimer Capital
      Preservation Fund, and only those participants may exchange shares of
      other Oppenheimer funds for shares of Oppenheimer Capital Preservation
      Fund.
   o  Class A shares of Oppenheimer funds may be exchanged at net asset value
      for shares of any money market fund offered by the Distributor. Shares
      of any money market fund purchased without a sales charge may be
      exchanged for shares of Oppenheimer funds offered with a sales charge
      upon payment of the sales charge. They may also be used to purchase
      shares of Oppenheimer funds subject to an early withdrawal charge or
      contingent deferred sales charge.
o     Shares of Oppenheimer Money Market Fund, Inc. purchased with the
      redemption proceeds of shares of other mutual funds (other than funds
      managed by the Manager or its subsidiaries) redeemed within the 30 days
      prior to that purchase may subsequently be exchanged for shares of
      other Oppenheimer funds without being subject to an initial sales
      charge or contingent deferred sales charge. To qualify for that
      privilege, the investor or the investor's dealer must notify the
      Distributor of eligibility for this privilege at the time the shares of
      Oppenheimer Money Market Fund, Inc. are purchased. If requested, they
      must supply proof of entitlement to this privilege.
o     Shares of the Fund acquired by reinvestment of dividends or
      distributions from any of the other Oppenheimer funds or from any unit
      investment trust for which reinvestment arrangements have been made
      with the Distributor may be exchanged at net asset value for shares of
      any of the Oppenheimer funds.

o     Shares of Oppenheimer Principal Protected Main Street Fund may be
      exchanged at net asset value for shares of any of the Oppenheimer
      funds. However, shareholders are not permitted to exchange shares of
      other Oppenheimer funds for shares of Oppenheimer Principal Protected
      Main Street Fund until after the expiration of the warranty period
      (8/5/2010).
o     Shares of Oppenheimer Principal Protected Main Street Fund II may be
      exchanged at net asset value for shares of any of the Oppenheimer
      funds. However, shareholders are not permitted to exchange shares of
      other Oppenheimer funds for shares of Oppenheimer Principal Protected
      Main Street Fund II until after the expiration of the warranty period
      (3/3/2011).


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

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

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

o     When Class A shares of Rochester National Municipals and Rochester Fund
Municipals acquired by exchange of Class A shares of any Oppenheimer fund
purchased subject to a Class A contingent deferred sales charge are redeemed
within 24 months of the beginning of the calendar month of the initial
purchase of the exchanged Class A shares, the Class A contingent deferred
sales charge is imposed on the redeemed shares.

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

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

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

o     With respect to Class C shares, the Class C contingent deferred sales
charge is imposed on Class C shares acquired by exchange if they are redeemed
within 12 months of the initial purchase of the exchanged Class C shares.

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

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

      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.

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

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


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


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

Dividends, Capital Gains and Taxes

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

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

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

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

      Qualification as a Regulated Investment Company. The Fund has elected
to be taxed as a regulated investment company under Subchapter M of the
Internal Revenue Code of 1986, as amended. As a regulated investment company,
the Fund is not subject to federal income tax on the portion of its net
investment income (that is, taxable interest, dividends, and other taxable
ordinary income, net of expenses) and capital gain net income (that is, the
excess of net long-term capital gains over net short-term capital losses)
that it distributes to shareholders. That qualification enables the Fund to
"pass through" its income and realized capital gains to shareholders without
having to pay tax on them. This avoids a "double tax" on that income and
capital gains, since shareholders normally will be taxed on the dividends and
capital gains they receive from the Fund (unless their Fund shares are held
in a retirement account or the shareholder is otherwise exempt from tax).

      The Internal Revenue Code contains a number of complex tests relating
to qualification that the Fund might not meet in a particular year. If it did
not qualify as a regulated investment company, the Fund would be treated for
tax purposes as an ordinary corporation and would receive no tax deduction
for payments made to shareholders.

      To qualify as a regulated investment company, the Fund must distribute
at least 90% of its investment company taxable income (in brief, net
investment income and the excess of net short-term capital gain over net
long-term capital loss) for the taxable year. The Fund must also satisfy
certain other requirements of the Internal Revenue Code, some of which are
described below. Distributions by the Fund made during the taxable year or,
under specified circumstances, within 12 months after the close of the
taxable year, will be considered distributions of income and gains for the
taxable year and will therefore count toward satisfaction of the
above-mentioned requirement.

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

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


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

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

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


      The Fund may either retain or distribute to shareholders its net
capital gain for each taxable year. The Fund currently intends to distribute
any such amounts. If net long term capital gains are distributed and
designated as a capital gain distribution, it will be taxable to shareholders
as a long-term capital gain and will be properly identified in reports sent
to shareholders in January of each year. Such treatment will apply no matter
how long the shareholder has held his or her shares or whether that gain was
recognized by the Fund before the shareholder acquired his or her shares.

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

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


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

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

      The Fund will be required in certain cases to withhold 28% of ordinary
income dividends, capital gains distributions and the proceeds of the
redemption of shares, paid to any shareholder (1) who has failed to provide a
correct taxpayer identification number or to properly certify that number
-------
when required, (2) who is subject to backup withholding for failure to report
the receipt of interest or dividend income properly, or (3) who has failed to
certify to the Fund that the shareholder is not subject to backup withholding
or is an "exempt recipient" (such as a corporation). All income and any tax
withheld by the Fund is remitted by the Fund to the U.S. Treasury and is
identified in reports mailed to shareholders in January of each year.

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

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


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

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


      If the ordinary income dividends from the Fund are effectively
                                                     ---
connected with the conduct of a U.S. trade or business, then the foreign
person may claim an exemption from the U.S. tax described above provided the
Fund obtains a properly completed and signed Certificate of Foreign Status.
If the foreign person fails to provide a certification of his/her foreign
status, the Fund will be required to withhold U.S. tax at a rate of 28% on
ordinary income dividends, capital gains distributions and the proceeds of
the redemption of shares, paid to any foreign person. All income and any tax
withheld (in this situation) by the Fund is remitted by the Fund to the U.S.
Treasury and is identified in reports mailed to shareholders in January of
each year.

      The tax consequences to foreign persons entitled to claim the benefits
of an applicable tax treaty may be different from those described herein.
Foreign shareholders are urged to consult their own tax advisors or the U.S.
Internal Revenue Service with respect to the particular tax consequences to
them of an investment in the Fund, including the applicability of the U.S.
withholding taxes described above.


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

Additional Information About the Fund

The Distributor. The Fund's shares are sold through dealers, brokers and
other financial institutions that have a sales agreement with
OppenheimerFunds Distributor, Inc., a subsidiary of the Manager that acts as
the Fund's Distributor. The Distributor 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. J.P. Morgan Chase Bank is the custodian of the Fund's assets.
The custodian's responsibilities include safeguarding and controlling the
Fund's portfolio securities and handling the delivery of such securities to
and from the Fund. It is the practice of the Fund to deal with the custodian
in a manner uninfluenced by any banking relationship the custodian may have
with the Manager and its affiliates. The Fund's cash balances with the
custodian in excess of $100,000 are not protected by federal deposit
insurance. Those uninsured balances at times may be substantial.

Independent Auditors. 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. Audit and non-audit
services provided to the Fund must be pre-approved the Audit Committee.
Non-audit services provided by Deloitte & Touche LLP to the Manager and
certain related companies must also be pre-approved by the Audit Committee.

OPPENHEIMER BOND FUND

INDEPENDENT AUDITORS' REPORT
-------------------------------------------------------------------------------
--------------------------------------------------------------------------------
 TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER BOND FUND:

     We have audited the  accompanying  statement of assets and  liabilities  of
Oppenheimer Bond Fund, a series of Oppenheimer  Integrity  Funds,  including the
statement of investments,  as of December 31, 2003, 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, 2003, 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, 2003,  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
 February 12, 2004

OPPENHEIMER BOND FUND

STATEMENT OF INVESTMENTS  DECEMBER 31, 2003
-------------------------------------------------------------------------------
                                                          PRINCIPAL   MARKET
VALUE
                                                             AMOUNT     SEE
NOTE 1
-----------------------------------------------------------------------------------
 ASSET-BACKED SECURITIES--23.1%

 AQ Finance NIM Trust, Home Equity Collateralized
 Mtg. Obligations, Series 2002-1, Cl. Note,
 9.50%, 6/25/32 1                                        $   53,087    $
53,087
-----------------------------------------------------------------------------------
 Bank One Auto Securitization Trust, Automobile
 Receivables, Series 2003-1, Cl. A2, 1.29%, 8/21/06       3,990,000
3,989,074
-----------------------------------------------------------------------------------
 BMW Vehicle Owner Trust, Automobile Loan
 Certificates, Series 2003-A, Cl. A2,
 1.45%, 11/25/05 1                                        6,045,141
6,054,963
-----------------------------------------------------------------------------------
 Capital Auto Receivables Asset Trust, Automobile
 Mtg.-Backed Nts., Series 2002-4, Cl. A2B,
 1.74%, 1/17/05 1                                         1,638,579
1,641,098
-----------------------------------------------------------------------------------
 Caterpillar Financial Asset Trust, Equipment Loan
 Pass-Through Certificates, Series 2003-A, Cl. A2,
 1.25%, 10/25/05                                          3,120,000
3,121,270
-----------------------------------------------------------------------------------
 Centex Home Equity Co. LLC, Home Equity Loan
 Asset-Backed Certificates:
 Series 2003-B, Cl. AF1, 1.64%, 2/25/18 1                 1,471,840
1,471,452
 Series 2003-C, Cl. AF1, 2.14%, 7/25/18                   4,266,695
4,276,609
-----------------------------------------------------------------------------------
 Chase Funding Mortgage Loan Asset-Backed
 Certificates, Home Equity Mtg. Obligations:
 Series 2003-3, Cl. 1A1, 1.199%, 8/25/17 2                2,289,211
2,289,497
 Series 2003-4, Cl. 1A1, 1.24%, 9/25/17 2                 5,035,453
5,036,693
-----------------------------------------------------------------------------------
 Chase Manhattan Auto Owner Trust, Automobile
 Loan Pass-Through Certificates:
 Series 2003-A, Cl. A2, 1.26%, 1/16/06 1                  1,970,000
1,971,292
 Series 2003-B, Cl. A2, 1.287%, 3/15/06                   2,430,000
2,430,828
-----------------------------------------------------------------------------------
 CitiFinancial Mortgage Securities, Inc., Home
 Equity Collateralized Mtg. Obligations:
 Series 2002-1, Cl. AF1, 2.474%, 9/25/32                  1,961,466
1,966,313
 Series 2003-2, Cl. AF1, 1.219%, 5/25/33 1,2              2,339,347
2,339,248
 Series 2003-3, Cl. AF1, 1.261%, 8/25/33 1,2              3,252,197
3,252,272
-----------------------------------------------------------------------------------
 DaimlerChrysler Auto Trust, Automobile Loan
 Pass-Through Certificates:
 Series 2002-B, Cl. A2, 2.20%, 4/6/05                       759,563
760,817
 Series 2003-A, Cl. A2, 1.52%, 12/8/05                    6,920,000
6,932,525
 Series 2003-B, Cl. A2, 1.61%, 7/8/06                     7,480,000
7,423,152
-----------------------------------------------------------------------------------
 Ford Credit Auto Owner Trust, Automobile Loan
 Pass-Through Certificates, Series 2002-D, Cl.
 A2A, 2.10%, 3/15/05                                      2,040,669
2,045,740
-----------------------------------------------------------------------------------
 Harley-Davidson Motorcycle Trust, Motorcycle
 Receivable Nts.:
 Series 2002-2, Cl. A1, 1.91%, 4/16/07                    2,813,382
2,823,004
 Series 2003-3, Cl. A1, 1.50%, 1/15/08                    6,128,608
6,139,132
-----------------------------------------------------------------------------------
 Honda Auto Receivables Owner Trust, Automobile
 Receivables Obligations:
 Series 2002-3, Cl. A2, 2.26%, 12/18/04                     463,097
463,628
 Series 2002-4, Cl. A2, 1.66%, 6/15/05                    1,837,397
1,840,560
 Series 2003-2, Cl. A2, 1.34%, 12/21/05                   5,646,000
5,651,754
 Series 2003-3, Cl. A2, 1.52%, 4/21/06                    7,690,000
7,702,616
 Series 2003-4, Cl. A2, 1.58%, 7/17/06                    6,460,000
6,470,505
-----------------------------------------------------------------------------------
 Household Automotive Trust, Automobile Loan Certificates:
 Series 2002-2, Cl. A2, 2.15%, 12/19/05                     744,567
745,924
 Series 2003-2, Cl. A2, 1.56%, 12/18/06                   3,270,000
3,274,386
-----------------------------------------------------------------------------------
 Lease Investment Flight Trust, Collateralized
 Aviation Obligations, Series 1A, Cl. D2,
 8%, 7/15/31 1                                            3,022,949
45,344
-----------------------------------------------------------------------------------
 Litigation Settlement Monetized Fee Trust,
 Asset-Backed Certificates, Series 2001-1A, Cl. A1,
 8.33%, 4/25/31 1                                         2,472,112
2,435,803


                                                          PRINCIPAL   MARKET
VALUE
                                                             AMOUNT     SEE
NOTE 1
-----------------------------------------------------------------------------------
 ASSET-BACKED SECURITIES Continued

 M&I Auto Loan Trust, Automobile Loan Certificates:
 Series 2002-1, Cl. A2, 1.95%, 7/20/05                  $   148,891  $
149,045
 Series 2002-1, Cl. A3, 2.49%, 10/22/07                   4,920,000
4,962,738
 Series 2003-1, Cl. A2, 1.60%, 7/20/06                    5,490,000
5,492,108
-----------------------------------------------------------------------------------
 MMCA Auto Lease Trust, Auto Retail Installment
 Contracts, Series 2002-A, Cl. A2, 1.29%, 5/16/05 2,3     1,123,769
1,124,606
-----------------------------------------------------------------------------------
 MSF Funding LLC, Collateralized Mtg. Obligations,
 Series 2000-1, Cl. C, 8.491%, 7/25/07 1,2                  401,919
60,288
-----------------------------------------------------------------------------------
 NC Finance Trust, Collateralized Mtg. Obligations,
 Series 1999-I, Cl. ECFD, 8.75%, 12/25/28 1               1,791,755
519,108
-----------------------------------------------------------------------------------
 Nissan Auto Lease Trust, Auto Lease Obligations:
 Series 2002-A, Cl. A2, 1.86%, 11/15/04 1                 2,217,485
2,219,579
 Series 2003-A, Cl. A2, 1.69%, 12/15/05                   4,000,000
4,011,082
-----------------------------------------------------------------------------------
 Nissan Auto Receivables Owner Trust, Automobile
 Receivable Nts., Series 2003-B, Cl. A2, 1.20%, 11/15/05  7,540,000
7,542,947
-----------------------------------------------------------------------------------
 Salomon Smith Barney Auto Loan Trust, Asset-Backed
 Auto Loan Obligations, Series 2002-1, Cl. A2,
 1.83%, 9/15/05 1                                         2,071,720
2,076,055
-----------------------------------------------------------------------------------
 Tobacco Settlement Authority, Asset-Backed Securities,
 Series 2001-A, 6.79%, 6/1/10                             1,330,000
1,347,676
-----------------------------------------------------------------------------------
 Toyota Auto Receivables Owner Trust, Automobile
 Mtg.-Backed Obligations:
 Series 2002-B, Cl. A3, 3.76%, 6/15/06                    1,906,482
1,931,995
 Series 2003-A, Cl. A2, 1.28%, 8/15/05                    7,093,973
7,100,439
 Series 2003-B, Cl. A2, 1.43%, 2/15/06                    4,800,000
4,802,484
-----------------------------------------------------------------------------------
 USAA Auto Owner Trust, Automobile Loan Asset-Backed Nts.:
 Series 2002-1, Cl. A3, 2.41%, 10/16/06                   2,786,136
2,806,155
 Series 2003-1, Cl. A2, 1.22%, 4/17/06                    4,500,000
4,501,717
-----------------------------------------------------------------------------------
 Volkswagen Auto Lease Trust, Automobile Lease
 Asset-Backed Securities, Series 2002-A, Cl. A2,
 1.77%, 2/20/05                                           2,954,186
2,959,191
-----------------------------------------------------------------------------------
 Volkswagen Auto Loan Enhanced Trust, Automobile
 Loan Receivables:
 Series 2003-1, Cl. A2, 1.11%, 12/20/05                   3,150,000
3,148,831
 Series 2003-2, Cl. A2, 1.55%, 6/20/06                    3,720,000
3,726,004
-----------------------------------------------------------------------------------
 Whole Auto Loan Trust, Automobile Loan Receivables:
 Series 2002-1, Cl. A2, 1.88%, 6/15/05                    7,186,330
7,205,882
 Series 2003-1, Cl. A2A, 1.40%, 4/15/06                   7,130,000
7,136,197

--------------
 Total Asset-Backed Securities (Cost $173,186,974)
169,472,713

-----------------------------------------------------------------------------------
 MORTGAGE-BACKED OBLIGATIONS--41.7%
-----------------------------------------------------------------------------------
 GOVERNMENT AGENCY--38.5%
-----------------------------------------------------------------------------------
 FHLMC/FNMA/SPONSORED--38.3%
 Federal Home Loan Mortgage Corp.:
 5%, 1/1/34 4                                             4,581,000
4,522,308
 7%, 9/1/33-11/1/33                                       9,832,093
10,427,780
 8%, 4/1/16                                               2,119,793
2,275,303
 9%, 3/1/17-5/1/25                                          594,976
662,834
 12.50%, 4/1/14                                               3,562
4,085
 13.50%, 11/1/10                                              6,791
7,797
-----------------------------------------------------------------------------------
 Federal Home Loan Mortgage Corp., Gtd. Mtg.
 Pass-Through Participation Certificates, Series 151,
 Cl. F, 9%, 5/15/21                                         118,510
118,710


STATEMENT OF INVESTMENTS  CONTINUED
-------------------------------------------------------------------------------
                                                          PRINCIPAL   MARKET
VALUE
                                                             AMOUNT     SEE
NOTE 1
-----------------------------------------------------------------------------------

 FHLMC/FNMA/SPONSORED Continued
 Federal Home Loan Mortgage Corp., Gtd. Real Estate
 Mtg. Investment Conduit Multiclass Pass-Through
 Certificates:
 Series 2500, Cl. FD, 1.62%, 3/15/32 2                 $  1,698,814   $
1,687,731
 Series 2526, Cl. FE, 1.52%, 6/15/29 2                    1,955,383
1,949,822
 Series 2551, Cl. FD, 1.52%, 1/15/33 2                    1,694,293
1,701,180
-----------------------------------------------------------------------------------
 Federal Home Loan Mortgage Corp., Interest-Only
 Stripped Mtg.-Backed Security:
 Series 176, Cl. IO, (0.11)%, 6/1/26 5                    2,401,211
401,346
 Series 177, Cl. B, (2.489)%, 7/1/26 5                    4,025,899
710,549
 Series 183, Cl. IO, 3.34%, 4/1/27 5                      3,882,983
661,236
 Series 184, Cl. IO, 0.119%, 12/1/26 5                    3,814,176
642,496
 Series 206, Cl. IO, (20.375)%, 12/15/29 5                1,608,875
291,006
-----------------------------------------------------------------------------------
 Federal Home Loan Mortgage Corp., Structured Pass-
 Through Securities, Collateralized Mtg. Obligations:
 Series H006, Cl. A1, 1.724%, 4/15/08                     1,117,886
1,117,017
 Series T-42, Cl. A2, 5.50%, 2/25/42                        754,999
767,952
-----------------------------------------------------------------------------------
 Federal National Mortgage Assn.:
 5%, 1/1/34 4                                            17,613,000
17,431,375
 5.50%, 1/14/34 4                                        25,757,000
26,095,061
 6.50%, 1/25/34 4                                        75,378,000
78,840,715
 7%, 1/1/09-11/1/33                                       5,773,872
6,124,697
 7%, 7/1/32-1/25/34 4                                   107,078,811
113,403,779
 7.50%, 2/1/08-3/1/08                                        45,254
48,060
 8.50%, 7/1/32                                              642,245
693,569
-----------------------------------------------------------------------------------
 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                           96,783
101,912
 Trust 2002-77, Cl. WF, 1.52%, 12/18/32 2                 2,938,340
2,947,481
-----------------------------------------------------------------------------------
 Federal National Mortgage Assn., Gtd. Mtg.
 Pass-Through Certificates, 8%, 8/1/17                       42,370
45,633
-----------------------------------------------------------------------------------
 Federal National Mortgage Assn., Gtd. Real Estate Mtg.
 Investment Conduit Pass-Through Certificates, Trust
 2003-81, Cl. PA, 5%, 2/25/12                             1,464,826
1,500,345
-----------------------------------------------------------------------------------
 Federal National Mortgage Assn., Gtd. Real Estate Mtg.
 Investment Conduit Pass-Through Certificates
 Interest-Only Stripped Mtg.-Backed Security:
 Trust 2002-47, Cl. NS, 24.442%, 4/25/32 5                5,686,487
583,812
 Trust 2002-51, Cl. S, 24.442%, 8/25/32 5                 5,221,423
531,139
-----------------------------------------------------------------------------------
 Federal National Mortgage Assn., Interest-Only
 Stripped Mtg.-Backed Security:
 Trust 222, Cl. 2, (2.144)%, 6/1/23 5                     5,057,342
949,832
 Trust 240, Cl. 2, (4.525)%, 9/1/23 5                     7,993,109
1,477,763
 Trust 252, Cl. 2, (6.48)%, 11/1/23 5                     5,589,587
1,120,601
 Trust 273, Cl. 2, (0.977)%, 7/1/26 5                     1,738,603
293,535
 Trust 303, Cl. IO, (17.835)%, 11/1/29 5                    660,587
122,601
 Trust 2002-52, Cl. SD, 6.90%, 9/25/32 5                  7,145,215
655,603

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

280,916,665

                                                          PRINCIPAL   MARKET
VALUE
                                                             AMOUNT     SEE
NOTE 1
-----------------------------------------------------------------------------------

 GNMA/GUARANTEED--0.2%
 Government National Mortgage Assn.:
 4.75%, 7/20/25-7/20/27                                   $  74,010  $
75,785
 7%, 7/15/09                                                 42,498
45,611
 8%, 6/15/05-10/15/06                                       126,924
132,995
 8.50%, 8/15/17-12/15/17                                    711,584
789,837
 9%, 2/15/09-6/15/09                                         30,500
33,523
 10%, 11/15/09                                               28,421
31,295
 10.50%, 12/15/17-5/15/21                                    77,359
87,778
 11%, 10/20/19                                              108,432
122,634
 12%, 5/15/14
762            879

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

1,320,337

-----------------------------------------------------------------------------------
 PRIVATE--3.2%
-----------------------------------------------------------------------------------
 COMMERCIAL--1.9%
 Asset Securitization Corp., Commercial Mtg.
 Pass-Through Certificates:
 Series 1996-D2, Cl. A3, 7.515%, 2/14/29 2
127            134
 Series 1996-MD6, Cl. A3, 7.361%, 11/13/29 2                800,000
901,582
-----------------------------------------------------------------------------------
 Asset Securitization Corp., Interest-Only Stripped
 Mtg.-Backed Security Collateralized Mtg. Obligations,
 Series 1997-D4, Cl. PS1, 8.347%, 4/14/29 5              48,836,513
2,214,775
-----------------------------------------------------------------------------------
 Capital Lease Funding Securitization LP, Interest-Only
 Corporate-Backed Pass-Through Certificates, Series
 1997-CTL1, 9.268%, 6/22/24 3,5                          11,223,749
424,321
-----------------------------------------------------------------------------------
 Commercial Mortgage Acceptance Corp., Commercial Mtg.
 Obligations, Series 1996-C1, Cl. D, 7.699%,
 12/25/20 1,2                                               236,181
236,789
-----------------------------------------------------------------------------------
 Commercial Mortgage Acceptance Corp., Interest-Only
 Stripped Mtg.- Backed Security, Series 1996-C1, Cl.
 X-2, (33.333)%, 12/25/20 1,5                             3,874,342
1,211
-----------------------------------------------------------------------------------
 DLJ Commercial Mortgage Corp., Commercial Mtg.
 Pass-Through Certificates,
 Series 1999-STF1, Cl. B6, 7/5/08 1,6                    21,426,669
21,427
-----------------------------------------------------------------------------------
 DLJ Mortgage Acceptance Corp., Commercial Mtg.
 Obligations, Series 1996-CF1, Cl. A3,
 8.033%, 3/13/28 2                                        2,000,000
2,152,815
-----------------------------------------------------------------------------------
 J.P. Morgan Commercial Mortgage Finance Corp.,
 Commercial Mtg. Obligations, Series 2000-C9,
 Cl. A2, 7.77%, 10/15/32                                  5,000,000
5,859,437
-----------------------------------------------------------------------------------
 Lehman Brothers Commercial Conduit Mortgage Trust,
 Interest-Only Stripped Mtg.-Backed Security, Series
 1998-C1, Cl. IO, 10.431%, 2/18/28 5                     14,843,344
525,950
-----------------------------------------------------------------------------------
 Lehman Structured Securities Corp., Collateralized Mtg.
 Obligations, Series 2002-GE1, Cl. A, 2.514%, 7/26/24 1     409,830
390,329
-----------------------------------------------------------------------------------
 Salomon Brothers Mortgage Securities VII, Inc.,
 Interest-Only Commercial Mtg. Pass-Through
 Certificates, Series 1999-C1, Cl. X,
 10.241%, 5/18/32 5                                     268,759,911
1,266,316

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

13,995,086

-----------------------------------------------------------------------------------
 OTHER--0.3%
 CIT Equipment Collateral, Equipment Receivable-Backed
 Nts., Series 2003-EF1, Cl. A2, 1.49%, 12/20/05           1,900,000
1,900,923
-----------------------------------------------------------------------------------
 Salomon Brothers Mortgage Securities VI, Inc.,
 Interest-Only Stripped Mtg.-Backed Security,
 Series 1987-3, Cl. B, (21.587)%, 10/23/17 5                 33,453
8,554
-----------------------------------------------------------------------------------
 Salomon Brothers Mortgage Securities VI, Inc.,
 Principal-Only Stripped Mtg.-Backed Security, Series
 1987-3, Cl. A, 2.521%, 10/23/17 7                           49,510
45,483

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

1,954,960

STATEMENT OF INVESTMENTS  CONTINUED
-------------------------------------------------------------------------------

                                                          PRINCIPAL   MARKET
VALUE
                                                             AMOUNT     SEE
NOTE 1
-----------------------------------------------------------------------------------

 RESIDENTIAL--1.0%
 ARC Net Interest Margin Trust, Collateralized Mtg.
 Obligations, Series 2001-6A, Cl. A, 7.25%, 10/27/31 1   $    28,158   $
26,593
-----------------------------------------------------------------------------------
 Salomon Brothers Mortgage Securities VII, Inc.,
 Commercial Mtg. Pass-Through Certificates, Series
 1996-B, Cl. 1, 6.865%, 4/25/26 1,2                          340,699
296,195
-----------------------------------------------------------------------------------
 Structured Asset Securities Corp., Collateralized Mtg.
 Obligations Pass-Through Certificates, Series 2002-AL1,
 Cl. B2, 3.45%, 2/25/32                                    3,002,277
2,708,557
-----------------------------------------------------------------------------------
 Washington Mutual Mortgage Securities Corp.,
 Collateralized Mtg. Obligations Pass-Through
 Certificates, Series 2003-AR7, Cl. A1,
 1.507%, 8/25/33 2                                         4,107,008
4,110,122

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

7,141,467

--------------
 Total Mortgage-Backed Obligations (Cost $302,588,390)
305,328,515

-----------------------------------------------------------------------------------
 U.S. GOVERNMENT OBLIGATIONS--26.2%
 Federal Home Loan Bank Unsec. Bonds:
 2.875%, 12/15/06                                         19,320,000
19,472,203
 4.875%, 11/15/13                                          1,800,000
1,823,002
-----------------------------------------------------------------------------------
 Federal Home Loan Mortgage Corp. Unsec. Nts.,
 4.50%, 1/15/13                                            4,020,000
4,007,052
-----------------------------------------------------------------------------------
 Federal National Mortgage Assn. Unsec. Nts.:
 4.25%, 7/15/07                                            8,600,000
8,989,098
 5.25%, 6/15/06                                           15,000,000
16,055,160
 5.50%, 2/15/06                                            8,375,000
8,970,329
 6.375%, 6/15/09                                          20,400,000
23,095,248
-----------------------------------------------------------------------------------
 Freddie Mac Unsec. Nts., 6.875%, 9/15/10                  7,600,000
8,838,884
-----------------------------------------------------------------------------------
 Tennessee Valley Authority Bonds:
 5.375%, 11/13/08                                          2,590,000
2,797,089
 7.125%, 5/1/30                                            1,754,000
2,110,985
-----------------------------------------------------------------------------------
 U.S. Treasury Bonds:
 4.25%, 8/15/13                                           10,447,000
10,463,329
 5.375%, 2/15/31                                           4,842,000
5,051,005
 5.50%, 8/15/28 8                                         25,259,000
26,317,731
 6.125%, 11/15/27                                         13,752,000
15,508,612
 6.25%, 5/15/30                                            4,189,000
4,835,350
 8.875%, 8/15/17                                           6,664,000
9,439,976
 STRIPS, 2.99%, 2/15/10 9                                  2,490,000
1,982,234
 STRIPS, 3.42%, 2/15/11 9                                 10,959,000
8,242,395
 STRIPS, 4.96%, 2/15/16 9                                  2,721,000
1,500,637
 STRIPS, 5.52%, 11/15/26 9                                 7,170,000
2,040,797
-----------------------------------------------------------------------------------
 U.S. Treasury Nts.:
 3%, 11/15/07                                             6,200,000
6,255,223
 3.25%, 12/15/08                                            609,000
613,330
 6.50%, 2/15/10                                           3,000,000
3,487,032

--------------
 Total U.S. Government Obligations (Cost $192,936,591)
191,896,701

-----------------------------------------------------------------------------------
 FOREIGN GOVERNMENT OBLIGATIONS--0.4%
 United Mexican States Nts., 7.50%, 1/14/12
 (Cost $2,393,099)                                         2,370,000
2,679,285


                                                          PRINCIPAL   MARKET
VALUE
                                                             AMOUNT     SEE
NOTE 1
-----------------------------------------------------------------------------------

 CORPORATE BONDS AND NOTES--30.7%
-----------------------------------------------------------------------------------
 CONSUMER DISCRETIONARY--7.7%
-----------------------------------------------------------------------------------
 AUTO COMPONENTS--0.5%
 Delphi Corp., 6.55% Nts., 6/15/06                      $ 3,145,000  $
3,376,623
-----------------------------------------------------------------------------------
 AUTOMOBILES--2.7%
 American Honda Finance Corp., 3.85% Nts., 11/6/08          945,000
952,586
-----------------------------------------------------------------------------------
 DaimlerChrysler NA Holding Corp., 6.40% Nts., 5/15/06    3,765,000
4,036,065
-----------------------------------------------------------------------------------
 Ford Motor Co., 8.90% Unsec. Unsub. Debs., 1/15/32       1,090,000
1,224,988
-----------------------------------------------------------------------------------
 General Motors Acceptance Corp., 6.875% Unsec. Unsub.
 Nts., 8/28/12                                            1,505,000
1,621,773
-----------------------------------------------------------------------------------
 General Motors Corp., 8.375% Sr. Unsec. Debs., 7/15/33   4,980,000
5,798,229
-----------------------------------------------------------------------------------
 Hertz Corp. (The), 7.625% Sr. Nts., 6/1/12               5,900,000
6,401,494

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

20,035,135

-----------------------------------------------------------------------------------
 HOUSEHOLD DURABLES--0.8%
 Beazer Homes USA, Inc., 8.625% Sr. Unsec. Nts., 5/15/11  1,685,000
1,861,925
-----------------------------------------------------------------------------------
 D.R. Horton, Inc., 9.375% Sr. Unsec. Sub. Nts., 3/15/11  1,555,000
1,772,700
-----------------------------------------------------------------------------------
 Pulte Homes, Inc., 8.375% Sr. Nts., 8/15/04                725,000
745,135
-----------------------------------------------------------------------------------
 Toll Corp., 8.25% Sr. Sub. Nts., 12/1/11                 1,685,000
1,868,244

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

6,248,004

-----------------------------------------------------------------------------------
 MEDIA--3.1%
 British Sky Broadcasting Group plc, 8.20% Sr. Unsec.
 Nts., 7/15/09                                            1,550,000
1,847,809
-----------------------------------------------------------------------------------
 Liberty Media Corp., 3.50% Nts., 9/25/06                 1,810,000
1,820,451
-----------------------------------------------------------------------------------
 News America Holdings, Inc., 7.75% Sr. Unsec.
 Debs., 12/1/45                                           2,575,000
3,055,289
-----------------------------------------------------------------------------------
 TCI Communications, Inc., 9.80%
 Sr. Unsec. Debs., 2/1/12                                 4,960,000
6,479,645
-----------------------------------------------------------------------------------
 Time Warner Cos., Inc., 9.125% Debs., 1/15/13            3,080,000
3,920,711
-----------------------------------------------------------------------------------
 Time Warner Entertainment Co. LP:
 8.375% Sr. Debs., 3/15/23                                  567,000
704,790
 10.15% Sr. Nts., 5/1/12                                  1,037,000
1,386,385
-----------------------------------------------------------------------------------
 Walt Disney Co. (The), 6.75% Sr. Nts., 3/30/06           3,130,000
3,406,110

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

22,621,190

-----------------------------------------------------------------------------------
 MULTILINE RETAIL--0.3%
 May Department Stores Co., 10.625% Debs., 11/1/10          405,000
542,324
-----------------------------------------------------------------------------------
 Sears Roebuck Acceptance Corp., 3.07% Nts.,
 Series VII, 2/25/04 2                                    1,660,000
1,662,862

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

2,205,186

-----------------------------------------------------------------------------------
 SPECIALTY RETAIL--0.3%
 Gap, Inc. (The), 6.90% Nts., 9/15/07                     1,775,000
1,968,031
-----------------------------------------------------------------------------------
 CONSUMER STAPLES--1.3%
-----------------------------------------------------------------------------------
 FOOD & STAPLES RETAILING--1.3%
 Kroger Co. (The), 7.80% Sr. Nts., 8/15/07                4,645,000
5,304,242
-----------------------------------------------------------------------------------
 Real Time Data Co., 13% Disc. Nts., 5/31/09 1,6,10,11
476,601             --

STATEMENT OF INVESTMENTS  CONTINUED
--------------------------------------------------------------------------------
                                                          PRINCIPAL   MARKET
VALUE
                                                             AMOUNT     SEE
NOTE 1
-----------------------------------------------------------------------------------


 FOOD & STAPLES RETAILING Continued
 Safeway, Inc.:
 3.80% Sr. Unsec. Nts., 8/15/05                         $   850,000  $
868,226
 4.80% Sr. Unsec. Nts., 7/16/07                           3,490,000
3,625,311

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

9,797,779

-----------------------------------------------------------------------------------
 HOUSEHOLD PRODUCTS--0.0%
 Styling Technology Corp., 10.875% Sr. Unsec. Sub.
 Nts., 7/1/08 1,6,10                                        145,000
   --
-----------------------------------------------------------------------------------
 ENERGY--0.5%
-----------------------------------------------------------------------------------
 ENERGY EQUIPMENT & SERVICES--0.0%
 Ocean Rig Norway AS, 10.25% Sr. Sec. Nts., 6/1/08          200,000
189,000
-----------------------------------------------------------------------------------
 OIL & GAS--0.5%
 Petroleos Mexicanos, 9.50% Sr. Sub. Nts., 9/15/27        1,570,000
1,860,450
-----------------------------------------------------------------------------------
 PF Export Receivables Master Trust, 3.748% Sr. Nts.,
 Series B, 6/1/13 3                                       1,700,000
1,658,053

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

3,518,503

-----------------------------------------------------------------------------------
 FINANCIALS--8.4%
-----------------------------------------------------------------------------------
 CAPITAL MARKETS--0.5%
 Credit Suisse First Boston, Inc. (USA), 6.125%
 Nts., 11/15/11                                           3,575,000
3,898,330
-----------------------------------------------------------------------------------
 COMMERCIAL BANKS--1.0%
 Dime Capital Trust I, 9.33% Capital Securities,
 Series A, 5/6/27                                         2,990,000
3,664,078
-----------------------------------------------------------------------------------
 Household Finance Corp., 7% Nts., 5/15/12                2,875,000
3,283,851

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

6,947,929

-----------------------------------------------------------------------------------
 DIVERSIFIED FINANCIAL SERVICES--1.9%
 CIT Group, Inc., 7.75% Sr. Unsec. Unsub. Nts., 4/2/12    3,205,000
3,792,454
-----------------------------------------------------------------------------------
 Citigroup, Inc., 6.625% Unsec. Sub. Nts., 6/15/32        1,790,000
1,945,549
-----------------------------------------------------------------------------------
 Franklin Resources, Inc., 3.70% Nts., 4/15/08            1,500,000
1,493,322
-----------------------------------------------------------------------------------
 Merrill Lynch & Co., Inc., 3.375% Nts.,
 Series B, 9/14/07                                        2,190,000
2,220,204
-----------------------------------------------------------------------------------
 Morgan Stanley, 6.60% Nts., 4/1/12                       3,580,000
4,004,724

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

13,456,253

-----------------------------------------------------------------------------------
 INSURANCE--3.8%
 AXA, 8.60% Unsec. Sub. Nts., 12/15/30                    2,730,000
3,453,570
-----------------------------------------------------------------------------------
 Farmers Insurance Exchange, 8.625% Nts., 5/1/24 3        1,500,000
1,572,092
-----------------------------------------------------------------------------------
 Hartford Financial Services Group, Inc. (The),
 2.375% Nts., 6/1/06                                      1,275,000
1,269,350
-----------------------------------------------------------------------------------
 John Hancock Global Funding II:
 5% Nts., 7/27/07 3                                       3,650,000
3,880,647
 7.90% Nts., 7/2/10 3                                     2,415,000
2,881,501
-----------------------------------------------------------------------------------
 Nationwide Financial Services, Inc., 5.90% Nts., 7/1/12  2,985,000
3,120,623
-----------------------------------------------------------------------------------
 Prudential Holdings LLC, 8.695% Bonds, Series C,
 12/18/23 3                                               4,820,000
5,967,213
-----------------------------------------------------------------------------------
 Prudential Insurance Co. of America, 8.30% Nts.,
 7/1/25 3                                                 4,680,000
5,740,689

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

27,885,685

                                                          PRINCIPAL   MARKET
VALUE
                                                             AMOUNT     SEE
NOTE 1
-----------------------------------------------------------------------------------

 REAL ESTATE--1.2%
 EOP Operating LP:
 6.763% Sr. Unsec. Nts., 6/15/07                        $   560,000  $
620,717
 7.75% Unsec. Nts., 11/15/07                              3,363,000
3,858,488
-----------------------------------------------------------------------------------
 Shopping Center Associates, 6.75% Sr. Unsec. Nts.,
 1/15/04 3                                                  700,000
700,920
-----------------------------------------------------------------------------------
 Vornado Realty LP, 5.625% Sr. Unsec. Unsub. Nts.,
 6/15/07                                                  3,500,000
3,739,684

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

8,919,809

-----------------------------------------------------------------------------------
 HEALTH CARE--1.4%
-----------------------------------------------------------------------------------
 HEALTH CARE PROVIDERS & SERVICES--0.9%
 Aetna, Inc., 7.375% Sr. Unsec. Nts., 3/1/06              1,395,000
1,535,555
-----------------------------------------------------------------------------------
 Cardinal Health, Inc., 4.45% Nts., 6/30/05               2,980,000
3,093,055
-----------------------------------------------------------------------------------
 Health Net, Inc., 8.375% Sr. Unsec. Unsub. Nts.,
 4/15/11                                                  1,710,000
2,057,576

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

6,686,186

-----------------------------------------------------------------------------------
 PHARMACEUTICALS--0.5%
 Wyeth, 5.875% Nts., 3/15/04                              3,750,000
3,783,945
-----------------------------------------------------------------------------------
 INDUSTRIALS--3.3%
-----------------------------------------------------------------------------------
 AEROSPACE & DEFENSE--1.0%
 Boeing Capital Corp., 7.375% Sr. Nts., 9/27/10           3,452,000
3,973,293
-----------------------------------------------------------------------------------
 Northrop Grumman Corp., 7.125% Sr. Nts., 2/15/11         2,270,000
2,629,187
-----------------------------------------------------------------------------------
 Raytheon Co., 6.50% Unsec. Nts., 7/15/05                   830,000
884,835

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

7,487,315

-----------------------------------------------------------------------------------
 COMMERCIAL SERVICES & SUPPLIES--0.7%
 Allied Waste North America, Inc., 10% Sr. Unsec. Sub.
 Nts., Series B, 8/1/09                                   1,510,000
1,638,350
-----------------------------------------------------------------------------------
 Hydrochem Industrial Services, Inc., 10.375% Sr. Sub.
 Nts., 8/1/07 1                                             150,000
143,625
-----------------------------------------------------------------------------------
 Protection One, Inc./Protection One Alarm Monitoring,
 Inc., 7.375% Sr. Unsec. Nts., 8/15/05 1                    100,000
92,500
-----------------------------------------------------------------------------------
 Safety-Kleen Corp.,
 9.25% Sr. Unsec. Nts., 5/15/09 1,6,10                      500,000
25,000
-----------------------------------------------------------------------------------
 Waste Management, Inc.:
 7% Sr. Nts., 7/15/28                                       700,000
755,710
 7.375% Sr. Unsub. Nts., 8/1/10                           1,890,000
2,186,849

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

4,842,034

-----------------------------------------------------------------------------------
 INDUSTRIAL CONGLOMERATES--1.3%
 General Electric Capital Corp., 6.75% Nts.,
 Series A, 3/15/32                                          800,000
888,641
-----------------------------------------------------------------------------------
 Hutchison Whampoa International Ltd., 7.45% Sr. Bonds,
 11/24/33 3                                               1,765,000
1,845,050
-----------------------------------------------------------------------------------
 Tyco International Group SA, 6.75% Sr. Unsub.
 Nts., 2/15/11                                            5,900,000
6,475,250

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

9,208,941

-----------------------------------------------------------------------------------
 MARINE--0.0%
 Navigator Gas Transport plc, 10.50% First Priority
 Ship Mtg. Nts., 6/30/07 1,6,10                             300,000
127,500
-----------------------------------------------------------------------------------
 ROAD & RAIL--0.3%
 CSX Corp., 6.25% Unsec. Nts., 10/15/08                   2,175,000
2,386,138

STATEMENT OF INVESTMENTS  CONTINUED
-------------------------------------------------------------------------------

                                                          PRINCIPAL   MARKET
VALUE
                                                             AMOUNT     SEE
NOTE 1
-----------------------------------------------------------------------------------

 INFORMATION TECHNOLOGY--0.0%
-----------------------------------------------------------------------------------
 COMMUNICATIONS EQUIPMENT--0.0%
 Orion Network Systems, Inc., 12.50% Sr. Disc. Nts.,
 1/15/07 1,6                                           $    200,000  $
105,500
-----------------------------------------------------------------------------------
 MATERIALS--0.9%
-----------------------------------------------------------------------------------
 CHEMICALS--0.0%
 Morton International, Inc., 9.65% Credit Sensitive
 Nts., 6/1/20                                                85,000
113,267
-----------------------------------------------------------------------------------
 PAPER & FOREST PRODUCTS--0.9%
 MeadWestvaco Corp., 2.75% Nts., 12/1/05                  2,865,000
2,842,089
-----------------------------------------------------------------------------------
 Weyerhaeuser Co., 5.50% Unsec. Unsub. Nts., 3/15/05      3,190,000
3,321,932

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

6,164,021

-----------------------------------------------------------------------------------
 TELECOMMUNICATION SERVICES--3.1%
-----------------------------------------------------------------------------------
 DIVERSIFIED TELECOMMUNICATION SERVICES--2.6%
 British Telecommunications plc, 7.875% Nts., 12/15/05    2,740,000
3,021,168
-----------------------------------------------------------------------------------
 Citizens Communications Co., 9.25% Sr. Nts., 5/15/11     1,960,000
2,321,022
-----------------------------------------------------------------------------------
 Deutsche Telekom International Finance BV, 8.50%
 Unsub. Nts., 6/15/10                                     2,800,000
3,390,722
-----------------------------------------------------------------------------------
 France Telecom SA:
 8.45% Sr. Unsec. Nts., 3/1/06                            1,675,000
1,872,084
 9.75% Sr. Unsec. Nts., 3/1/31 2                          1,270,000
1,693,215
-----------------------------------------------------------------------------------
 Sprint Capital Corp., 8.75% Nts., 3/15/32                3,825,000
4,534,583
-----------------------------------------------------------------------------------
 Telefonos de Mexico SA, 8.25% Sr. Unsec. Nts., 1/26/06   1,700,000
1,882,886

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

18,715,680

-----------------------------------------------------------------------------------
 WIRELESS TELECOMMUNICATION SERVICES--0.5%
 AT&T Wireless Services, Inc., 7.50% Sr. Unsec.
 Nts., 5/1/07                                             2,745,000
3,079,950
-----------------------------------------------------------------------------------
 Rogers Wireless Communications, Inc., 9.625% Sr. Sec.
 Nts., 5/1/11                                               621,000
745,200

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

3,825,150

-----------------------------------------------------------------------------------
 UTILITIES--4.1%
-----------------------------------------------------------------------------------
 ELECTRIC UTILITIES--3.1%
 CenterPoint Energy, Inc., 5.875% Nts., 6/1/08 3          2,655,000
2,768,528
-----------------------------------------------------------------------------------
 Dominion Resources, Inc., 8.125% Sr. Unsub. Nts.,
 6/15/10                                                  3,175,000
3,814,467
-----------------------------------------------------------------------------------
 DTE Energy Co., 6.375% Sr. Nts., 4/15/33                 2,270,000
2,232,186
-----------------------------------------------------------------------------------
 MidAmerican Energy Holdings Co., 5.875% Sr. Nts.,
 10/1/12                                                  3,975,000
4,175,030
-----------------------------------------------------------------------------------
 Niagara Mohawk Power Corp., 5.375% Sr. Unsec.
 Nts., 10/1/04                                            1,210,000
1,243,285
-----------------------------------------------------------------------------------
 Progress Energy, Inc., 6.55% Sr. Unsec. Nts., 3/1/04     4,020,000
4,050,178
-----------------------------------------------------------------------------------
 PSEG Energy Holdings, 7.75% Unsec. Nts., 4/16/07         1,810,000
1,929,913
-----------------------------------------------------------------------------------
 South Carolina Electric & Gas Co., 9% Bonds, 7/15/06       500,000
576,241
-----------------------------------------------------------------------------------
 TECO Energy, Inc., 10.50% Sr. Unsec. Nts., 12/1/07       1,795,000
2,104,638

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

22,894,466


                                                          PRINCIPAL   MARKET
VALUE
                                                             AMOUNT     SEE
NOTE 1
-----------------------------------------------------------------------------------

 GAS UTILITIES--1.0%
 Kinder Morgan, Inc., 6.50% Sr. Unsec. Nts., 9/1/12     $ 1,880,000  $
2,078,054
-----------------------------------------------------------------------------------
 NiSource Finance Corp., 7.875% Sr. Unsec. Nts.,
 11/15/10                                                 4,230,000
5,037,977

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

7,116,031

--------------
 Total Corporate Bonds and Notes (Cost $211,893,833)
224,523,631


                                                             SHARES
-----------------------------------------------------------------------------------
 COMMON STOCKS--0.0%
 Chesapeake Energy Corp.                                        181
2,458
-----------------------------------------------------------------------------------
 Geotek Communications, Inc., Series B, Escrow Shares 1,10,12    25
      --

--------------
 Total Common Stocks (Cost $109)
2,458

                                                              UNITS
-----------------------------------------------------------------------------------
 RIGHTS, WARRANTS AND CERTIFICATES--0.0%
 Chesapeake Energy Corp. Wts., Exp. 9/1/04 10
534             60
-----------------------------------------------------------------------------------
 Concentric Network Corp. Wts., Exp. 12/15/07 1,10
50             --
-----------------------------------------------------------------------------------
 e.spire Communications, Inc. Wts., Exp. 11/1/05 1,10
300              3
-----------------------------------------------------------------------------------
 HF Holdings, Inc. Wts., Exp. 9/27/09 1,10
1,063            143
-----------------------------------------------------------------------------------
 ICG Communications, Inc. Wts., Exp. 9/15/05 1,10
1,980             20
-----------------------------------------------------------------------------------
 Long Distance International, Inc. Wts., Exp. 4/13/08 1,10      150
     --
-----------------------------------------------------------------------------------
 Loral Space & Communications Ltd. Wts., Exp. 1/15/07 1,10
200              2
-----------------------------------------------------------------------------------
 Pathmark Stores, Inc. Wts., Exp. 9/19/10 10                  2,028
1,906
-----------------------------------------------------------------------------------
 Real Time Data Co. Wts., Exp. 5/31/04 1,10
121,440             --

--------------
 Total Rights, Warrants and Certificates (Cost $26,229)
2,134

                                                          PRINCIPAL
                                                             AMOUNT
-----------------------------------------------------------------------------------
 STRUCTURED NOTES--7.0%
 Deutsche Bank AG, COUNTS Corp. Sec. Credit Linked
 Nts., Series 2003-1, 2.89%, 1/7/05 1,2                $ 14,500,000
14,294,100
-----------------------------------------------------------------------------------
 JPMorgan Chase Bank, TRAC-X NA High Yield T2 Credit
 Default Swap Bonds, 6.05%, 3/25/09 3                    21,960,000
22,591,350
-----------------------------------------------------------------------------------
 UBS AG, High Grade Credit Linked Nts., 2.814%,
 12/10/04 1,2                                            14,500,000
14,626,866

--------------
 Total Structured Notes (Cost $50,960,000)
51,512,316

-----------------------------------------------------------------------------------
 JOINT REPURCHASE AGREEMENTS--3.4%
 Undivided interest of 22.45% in joint repurchase agreement (Principal
 Amount/Market Value $109,556,000, with a maturity value of $109,560,869) with
 Banc One Capital Markets, Inc., 0.80%, dated 12/31/03, to be repurchased at
 $24,600,093 on 1/2/04, collateralized by U.S. Treasury Bonds, 4.25%,
 11/30/13, with a value of $111,861,618
 (Cost $24,599,000)                                      24,599,000
24,599,000

-----------------------------------------------------------------------------------
 TOTAL INVESTMENTS, AT VALUE (COST $958,584,225)              132.5%
970,016,753
-----------------------------------------------------------------------------------
 LIABILITIES IN EXCESS OF OTHER ASSETS                        (32.5)
(237,746,757)

--------------------------
 NET ASSETS                                                   100.0%
$732,269,996

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

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 the current interest rate for a variable or increasing rate
security.
3. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities
have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $51,154,970 or 6.99% of the Fund's net
assets as of December 31, 2003.
4. When-issued security to be delivered and settled after December 31, 2003.
See
Note 1 of Notes to Financial Statements.
5. 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. These securities amount to $12,882,646 or 1.76% of the Fund's net
assets
as of December 31, 2003.
6. Issue is in default. See Note 1 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. Securities with an aggregate market value of $4,063,469 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 6 of Notes to Financial Statements.
9. Zero coupon bond reflects effective yield on the date of purchase.
10. Non-income producing security.
11. Interest or dividend is paid-in-kind.
12. Received as the result of issuer reorganization. Currently has minimal
market value.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

                           24 | OPPENHEIMER BOND FUND

STATEMENT OF ASSETS AND LIABILITIES  DECEMBER 31, 2003
-------------------------------------------------------------------------------
--------------------------------------------------------------------------------
 ASSETS
 Investments, at value (cost $958,584,225)--see accompanying
 statement (including securities loaned of approximately
 $124,585,000)                                                   $
970,016,753
--------------------------------------------------------------------------------
 Collateral for securities loaned
126,958,792
--------------------------------------------------------------------------------
 Receivables and other assets:
 Investments sold on a when-issued basis
9,203,663
 Interest, dividends and principal paydowns
7,355,413
 Shares of beneficial interest sold
1,009,252
 Futures margins
71,449
 Swap contracts
14,305
 Other
5,458

---------------
 Total assets
1,114,635,085

--------------------------------------------------------------------------------
 LIABILITIES
 Bank overdraft
3,046,871
--------------------------------------------------------------------------------
 Return of collateral for securities loaned
126,958,792
--------------------------------------------------------------------------------
 Payables and other liabilities:
 Investments purchased (including $248,930,616 purchased on a
 when-issued basis)
249,641,250
 Shares of beneficial interest redeemed
1,991,155
 Distribution and service plan fees
430,077
 Transfer and shareholder servicing agent fees
159,053
 Shareholder reports
101,579
 Trustees' compensation
4,197
 Other
32,115

---------------
 Total liabilities
382,365,089


--------------------------------------------------------------------------------
 NET ASSETS                                                      $
732,269,996

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

--------------------------------------------------------------------------------
 COMPOSITION OF NET ASSETS
 Par value of shares of beneficial interest                      $
70,562
--------------------------------------------------------------------------------
 Additional paid-in capital
734,333,540
--------------------------------------------------------------------------------
 Accumulated net investment loss
(153,625)
--------------------------------------------------------------------------------
 Accumulated net realized loss on investments and foreign
 currency transactions
(14,134,735)
--------------------------------------------------------------------------------
 Net unrealized appreciation on investments
12,154,254

---------------
 NET ASSETS                                                      $
732,269,996

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

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 $382,966,195 and 36,897,323 shares of beneficial interest
 outstanding)
$10.38
 Maximum offering price per share (net asset value plus sales charge
 of 4.75% of offering price)
$10.90
--------------------------------------------------------------------------------
 Class B Shares:
 Net asset value, redemption price (excludes applicable contingent
 deferred sales charge) and offering price per share (based on net
 assets of $197,774,328 and 19,063,533 shares of beneficial interest
 outstanding)
$10.37
--------------------------------------------------------------------------------
 Class C Shares:
 Net asset value, redemption price (excludes applicable contingent
 deferred sales charge) and offering price per share (based on net
 assets of $90,582,741 and 8,722,042 shares of beneficial interest
 outstanding)
$10.39
--------------------------------------------------------------------------------
 Class N Shares:
 Net asset value, redemption price (excludes applicable contingent
 deferred sales charge) and offering price per share (based on net
 assets of $17,731,759 and 1,709,112 shares of beneficial interest
 outstanding)
$10.37
--------------------------------------------------------------------------------
 Class Y Shares:
 Net asset value, redemption price and offering price per share (based
 on net assets of $43,214,973 and 4,170,188 shares of beneficial
 interest outstanding)
$10.36

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

STATEMENT OF OPERATIONS  FOR THE YEAR ENDED DECEMBER 31, 2003
-------------------------------------------------------------------------------

--------------------------------------------------------------------------------
 INVESTMENT INCOME
 Interest                                                          $32,372,128
--------------------------------------------------------------------------------
 Fee income                                                          1,125,212
--------------------------------------------------------------------------------
 Portfolio lending fees                                                 60,075
--------------------------------------------------------------------------------
 Dividends                                                               8,864

-------------
 Total investment income                                            33,566,279

--------------------------------------------------------------------------------
 EXPENSES
 Management fees                                                     4,181,296
--------------------------------------------------------------------------------
 Distribution and service plan fees:
 Class A                                                               941,996
 Class B                                                             2,169,057
 Class C                                                               963,615
 Class N                                                                76,596
--------------------------------------------------------------------------------
 Transfer and shareholder servicing agent fees:
 Class A                                                               955,209
 Class B                                                               586,876
 Class C                                                               231,884
 Class N                                                                62,032
 Class Y                                                                12,308
--------------------------------------------------------------------------------
 Shareholder reports                                                   225,850
--------------------------------------------------------------------------------
 Custodian fees and expenses                                            36,708
--------------------------------------------------------------------------------
 Trustees' compensation                                                 18,358
--------------------------------------------------------------------------------
 Other                                                                  46,506

-------------
 Total expenses                                                     10,508,291
 Less reduction to custodian expenses
(8,690)
 Less voluntary waiver of transfer and shareholder servicing
 agent fees--Class A
(7,315)
 Less voluntary waiver of transfer and shareholder servicing
 agent fees--Class B
(3,615)
 Less voluntary waiver of transfer and shareholder servicing
 agent fees--Class C
(1,065)
 Less voluntary waiver of transfer and shareholder servicing
 agent fees--Class N
(9,907)

-------------
 Net expenses                                                       10,477,699

--------------------------------------------------------------------------------
 NET INVESTMENT INCOME                                              23,088,580

--------------------------------------------------------------------------------
 REALIZED AND UNREALIZED GAIN (LOSS)
 Net realized gain (loss) on:
 Investments                                                        21,289,204
 Closing of futures contracts                                          866,933
 Foreign currency transactions
(27,850)

-------------
 Net realized gain                                                  22,128,287
--------------------------------------------------------------------------------
 Net change in unrealized appreciation (depreciation) on:
 Investments
(6,819,806)
 Futures contracts                                                   1,968,156

-------------
 Net change in unrealized appreciation
(4,851,650)

--------------------------------------------------------------------------------
 NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS              $40,365,217

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


 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

STATEMENTS OF CHANGES IN NET ASSETS
-------------------------------------------------------------------------------
 YEAR ENDED DECEMBER 31,                                        2003
2002
-----------------------------------------------------------------------------------
 OPERATIONS

 Net investment income                                  $ 23,088,580  $
30,464,992
-----------------------------------------------------------------------------------
 Net realized gain (loss)                                 22,128,287
(7,612,737)
-----------------------------------------------------------------------------------
 Net change in unrealized appreciation                    (4,851,650)
34,687,515

---------------------------
 Net increase in net assets resulting from operations     40,365,217
57,539,770

-----------------------------------------------------------------------------------
 DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
 Dividends from net investment income:
 Class A                                                 (12,883,312)
(17,305,847)
 Class B                                                  (5,633,516)
(8,774,067)
 Class C                                                  (2,529,340)
(3,484,678)
 Class N                                                    (458,521)
(336,619)
 Class Y                                                  (1,457,612)
(566,370)

-----------------------------------------------------------------------------------
 BENEFICIAL INTEREST TRANSACTIONS
 Net increase (decrease) in net assets resulting from
 beneficial interest transactions:
 Class A                                                  17,502,933
62,352,666
 Class B                                                 (24,959,463)
47,304,042
 Class C                                                  (2,398,431)
30,141,408
 Class N                                                   6,099,045
8,695,344
 Class Y                                                  17,894,037
19,741,029

-----------------------------------------------------------------------------------
 NET ASSETS
 Total increase                                           31,541,037
195,306,678
-----------------------------------------------------------------------------------
 Beginning of period                                     700,728,959
505,422,281

---------------------------
 End of period [including accumulated net investment
 income (loss) of $(153,625) and $19,856, respectively] $732,269,996
$700,728,959

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

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 and voting privileges with respect to the Fund in general and
exclusive
 voting rights on matters that affect that class alone. Earnings, net assets
and
 net asset value per share may differ by minor amounts due to each class
having
 its own expenses directly attributable to 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. Securities traded on NASDAQ are valued based on the
closing
 price provided by NASDAQ 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. Securities whose values have been
 materially affected by what the Manager identifies as a significant event
 occurring before the Fund's assets are valued but after the close of their
 respective foreign exchanges will be fair valued. Fair value is determined in
 good faith using consistently applied procedures under the supervision of the
 Board of Trustees. Short-term "money market type" debt securities with
 remaining maturities of sixty days or less are valued at amortized cost
(which
 approximates market value).

--------------------------------------------------------------------------------
 STRUCTURED NOTES. The Fund invests in index-linked structured notes whose
 principal and/or interest depend on the performance of an underlying index.
The
 structured notes are leveraged, which increases the volatility of each note's
 market value relative to the change in the underlying index. Fluctuations in
 value of these securities are recorded as unrealized gains and losses in the
 accompanying financial statements. The Fund records a realized gain or loss
 when a structured note is sold or matures. As of December 31, 2003, the
market
 value of these securities comprised 7.0% of the Fund's net assets, and
resulted
 in unrealized gains of $552,325.

--------------------------------------------------------------------------------
 SECURITIES 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 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 executes such purchases while remaining substantially fully
 invested. As of December 31, 2003, the Fund had entered into net when issued
 commitments of $239,726,953.
    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 Fund records the
 incremental difference between the forward purchase and sale of each forward
 roll as fee income or realized gain (loss) on investments.
    Risks 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, market fluctuations and 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, 2003, securities with an
 aggregate market value of $279,427, representing 0.04% of the Fund's net
 assets, were in default.

NOTES TO FINANCIAL STATEMENTS  CONTINUED
-------------------------------------------------------------------------------
--------------------------------------------------------------------------------
 1. SIGNIFICANT ACCOUNTING POLICIES Continued
 FOREIGN CURRENCY TRANSLATION. The Fund's accounting records 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.

--------------------------------------------------------------------------------
 JOINT REPURCHASE AGREEMENTS. Pursuant to an Exemptive Order issued by the
 Securities and Exchange Commission, the Fund, along with other affiliated
funds
 advised by the Manager, may transfer uninvested cash balances into joint
 trading accounts on a daily basis. Secured by U.S. government securities,
these
 balances are invested in one or more repurchase agreements. Securities
pledged
 as collateral for repurchase agreements are held by a custodian bank until
the
 agreements mature. Each agreement requires that the market value of the
 collateral be sufficient to cover payments of interest and principal. In the
 event of default by the other party to the agreement, retention of the
 collateral may be subject to legal proceedings.

--------------------------------------------------------------------------------
 ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other
than
 those attributable to a specific class), gains and losses are allocated on a
 daily basis 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 comply with provisions of the Internal
 Revenue Code applicable to regulated investment companies and to distribute
 substantially all of its investment company taxable income, including any net
 realized gain on investments not offset by capital loss carryforwards, if
any,
 to shareholders, therefore, no federal income or excise tax provision is
 required.
    The tax components of capital shown in the table below represent
 distribution requirements the Fund must satisfy under the income tax
 regulations, losses the Fund may be able to offset against income and gains
 realized in future years and unrealized appreciation or depreciation of
 securities and other investments for federal income tax purposes.

                                                           NET UNREALIZED
                                                             APPRECIATION
                                                         BASED ON COST OF
                                                           SECURITIES AND
       UNDISTRIBUTED  UNDISTRIBUTED       ACCUMULATED   OTHER INVESTMENTS
       NET INVESTMENT     LONG-TERM              LOSS  FOR FEDERAL INCOME
       INCOME                  GAIN  CARRYFORWARD 1,2        TAX PURPOSES
       ------------------------------------------------------------------
       $--                      $--       $12,872,589         $10,892,107

1. As of December 31, 2003, the Fund had $12,872,589 of net capital loss
carryforwards available to offset future realized capital gains, if any, and
thereby reduce future taxable gain distributions. As of December 31, 2003,
details of the capital loss carryforwards were as follows:

                              EXPIRING
                              ----------------------
                              2008       $ 4,642,447
                              2010         8,230,142
                                         -----------
                              Total      $12,872,589
                                         ===========


 2. During the fiscal year December 31, 2003, the Fund utilized $21,308,857 of
 capital loss carryforward to offset capital gains realized in that fiscal
year.
 During the fiscal year December 31, 2002, the Fund did not utilize any
capital
 loss carryforwards.

 Net investment income (loss) and net realized gain (loss) may differ for
 financial statement and 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 net realized gain was recorded by the Fund. Accordingly,
 the following amounts have been reclassified for December 31, 2003. Net
assets
 of the Fund were unaffected by the reclassifications.

                                      REDUCTION TO             INCREASE TO
                                       ACCUMULATED         ACCUMULATED NET
               INCREASE TO          NET INVESTMENT           REALIZED LOSS
               PAID-IN CAPITAL              INCOME          ON INVESTMENTS
               -----------------------------------------------------------
               $1,790,099                 $299,760              $1,490,339

 The tax character of distributions paid during the years ended December 31,
 2003 and December 31, 2002 was as follows:

                                          YEAR ENDED            YEAR ENDED
                                   DECEMBER 31, 2003     DECEMBER 31, 2002
               -----------------------------------------------------------
               Distributions paid from:
               Ordinary income           $22,962,301           $30,467,581

 The aggregate cost of securities and other investments and the composition of
 unrealized appreciation and depreciation of securities and other investments
 for federal income tax purposes as of December 31, 2003 are noted below. The
 primary difference between book and tax appreciation or depreciation of
 securities and other investments, if applicable, is attributable to the tax
 deferral of losses or tax realization of financial statement unrealized gain
or
 loss.

                 Federal tax cost of securities             $  959,138,951
                 Federal tax cost of other investments         185,187,703
                                                            --------------
                 Total federal tax cost                     $1,144,326,654
                                                            ==============

                 Gross unrealized appreciation              $   21,173,879
                 Gross unrealized depreciation                 (10,281,772)
                                                            --------------
                 Net unrealized appreciation                $   10,892,107
                                                            ==============


NOTES TO FINANCIAL STATEMENTS  CONTINUED
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
 1. SIGNIFICANT ACCOUNTING POLICIES Continued
 TRUSTEES' COMPENSATION. The Board of Trustees has adopted a deferred
 compensation plan for independent trustees that enables trustees to elect to
 defer receipt of all or a portion of the annual compensation they are
entitled
 to receive from the Fund. Under the plan, deferred amounts are treated as
 though equal dollar amounts had been invested in shares of the Fund or are
 invested in other Oppenheimer funds selected by the Trustee. Deferral of
 trustees' fees under the plan will not affect the net assets of the Fund, and
 will not materially affect the Fund's assets, liabilities or net investment
 income per share. Amounts will be deferred until distributed in accordance to
 the Plan.

--------------------------------------------------------------------------------
 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. Income distributions, if any, are
 declared daily and paid monthly. Capital gain distributions, if any, are
 declared and paid annually.

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

--------------------------------------------------------------------------------
 EXPENSE OFFSET ARRANGEMENT. The reduction of custodian fees, if applicable,
 represents earnings on cash balances maintained by the Fund.

--------------------------------------------------------------------------------
 SECURITY TRANSACTIONS. Security transactions are recorded on the trade date.
 Realized gains and losses on securities sold are determined on the basis of
 identified cost.

--------------------------------------------------------------------------------
 OTHER. The preparation of financial statements in conformity with accounting
 principles generally accepted in the United States of America requires
 management to make estimates and assumptions that affect the reported amounts
 of assets and liabilities and disclosure of contingent assets and liabilities
 at the date of the financial statements and the reported amounts of income
and
 expenses during the reporting period. Actual results could differ from those
 estimates.


--------------------------------------------------------------------------------
 2. SHARES OF BENEFICIAL INTEREST
 The Fund has authorized an unlimited number of $0.001 par value shares of
 beneficial interest of each class. Transactions in shares of beneficial
 interest were as follows:

                         YEAR ENDED DECEMBER 31, 2003   YEAR ENDED DECEMBER
31, 2002
                                SHARES         AMOUNT          SHARES
AMOUNT
------------------------------------------------------------------------------------
 CLASS A

 Sold                       17,721,848  $ 181,436,083     19,523,565   $
190,912,803
 Dividends and/or
 distributions reinvested    1,002,817     10,309,580      1,332,946
13,008,001
 Redeemed                  (16,990,568)  (174,242,730)   (14,464,664)
(141,568,138)

---------------------------------------------------------
 Net increase                1,734,097  $  17,502,933      6,391,847   $
62,352,666

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

                        YEAR ENDED DECEMBER 31, 2003  YEAR ENDED DECEMBER 31,
2002
                                SHARES        AMOUNT         SHARES
AMOUNT
-----------------------------------------------------------------------------------
 CLASS B

 Sold                        6,543,598  $ 66,993,404     11,531,204
$112,485,723
 Dividends and/or
 distributions reinvested      416,679     4,280,170        627,150
6,115,604
 Redeemed                   (9,390,171)  (96,233,037)    (7,311,701)
(71,297,285)

-------------------------------------------------------
 Net increase (decrease)    (2,429,894) $(24,959,463)     4,846,653   $
47,304,042

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

-----------------------------------------------------------------------------------
 CLASS C
 Sold                        4,137,840  $ 42,416,735      6,200,611   $
60,525,606
 Dividends and/or
 distributions reinvested      188,926     1,943,214        248,419
2,427,454
 Redeemed                   (4,556,213)  (46,758,380)    (3,353,754)
(32,811,652)

-------------------------------------------------------
 Net increase (decrease)      (229,447) $ (2,398,431)     3,095,276   $
30,141,408

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

-----------------------------------------------------------------------------------
 CLASS N
 Sold                        1,180,184  $ 12,109,063      1,312,556   $
12,804,206
 Dividends and/or
 distributions reinvested       43,725       449,358         33,325
325,615
 Redeemed                     (630,145)   (6,459,376)      (454,081)
(4,434,477)

-------------------------------------------------------
 Net increase                  593,764  $  6,099,045        891,800   $
8,695,344

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

-----------------------------------------------------------------------------------
 CLASS Y
 Sold                        2,667,388  $ 27,169,896      3,708,804   $
36,157,404
 Dividends and/or
 distributions reinvested       22,711       233,571          3,715
36,236
 Redeemed                     (926,456)   (9,509,430)    (1,724,443)
(16,452,611)

-------------------------------------------------------
 Net increase                1,763,643  $ 17,894,037      1,988,076   $
19,741,029

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

--------------------------------------------------------------------------------
 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, 2003, were
 $944,210,054 and $918,468,399, respectively.


--------------------------------------------------------------------------------
 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 at
 annual rate of 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.

--------------------------------------------------------------------------------
 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 a per account fee. For the year ended December 31, 2003, the
Fund
 paid $1,730,004 to OFS for services to the Fund.


NOTES TO FINANCIAL STATEMENTS  CONTINUED
-------------------------------------------------------------------------------
--------------------------------------------------------------------------------
 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
    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 fees in the event that the per
 account fee does not equal or exceed the applicable minimum fees. OFS may
 voluntarily waive the minimum fees.
    OFS has voluntarily agreed to limit transfer and shareholder servicing
agent
 fees up to an annual rate of 0.35% of average annual net assets for all
 classes. This undertaking may be amended or withdrawn at any time.

--------------------------------------------------------------------------------
 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 compensate the Distributor for its services in connection with
 distribution of these shares and servicing accounts. Under the plans, the
Fund
 pays the Distributor an annual asset-based sales charge of 0.75% per year on
 Class B shares and on Class C shares and 0.25% per year on Class N shares.
The
 Distributor also receives a service fee of 0.25% per year under each plan. If
 either the Class B, Class C or Class N plan is terminated by the Fund, or by
 the shareholders of a class, the Board of Trustees and its independent
trustees
 must determine whether the Distributor shall be entitled to payment from the
 Fund of all or a portion of the service fee and/or the asset-based sales
charge
 in respect to shares sold prior to the effective date of such termination.
The
 Distributor's aggregate uncompensated expenses under the plan at December 31,
 2003 for Class B, Class C and Class N shares was $4,796,069, $1,495,270 and
 $320,169, respectively. Fees incurred by the Fund under the plans are
detailed
 in the Statement of Operations.

--------------------------------------------------------------------------------
 SALES CHARGES. Front-end sales charges and contingent deferred sales charges
 (CDSC) do not represent expenses of the Fund. They are deducted from the
 proceeds of sales of fund shares prior to investment or from redemption
 proceeds prior to remittance, as applicable. The sales charges retained by
the
 Distributor from the sale of shares and the CDSC retained by the Distributor
on
 the redemption of shares is shown in the table below for the period
indicated.

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

 December 31, 2003    $429,092       $37,749      $773,520
$21,673       $49,744

--------------------------------------------------------------------------------
 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 to settle specific purchases or sales of
securities
 denominated in a foreign currency and for protection from adverse exchange
rate
 fluctuation. 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 prevailing foreign currency exchange rates.
 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 transaction. Contracts closed or settled with the same broker are
 recorded as net realized gain or loss. Such realized gains and losses are
 reported with all other foreign currency gains and losses in the Statement of
 Operations.
    As of December 31, 2003, the Fund had no outstanding foreign currency
contracts.


--------------------------------------------------------------------------------
 6. FUTURES CONTRACTS
 A futures contract is a commitment to buy or sell a specific amount of a
 commodity or financial instrument at a negotiated price on a stipulated
future
 date. 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 protection from 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 as a hedge against increases in
 interest rates and decreases in market value of portfolio securities. The
Fund
 may also purchase futures 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 has expired.
    Cash held by the broker to cover initial margin requirements on open
futures
 contracts is noted in the Statement of Assets and Liabilities. 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. The
net
 change in unrealized appreciation and depreciation is reported on the
Statement
 of Operations.
    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.

NOTES TO FINANCIAL STATEMENTS  CONTINUED
-------------------------------------------------------------------------------
--------------------------------------------------------------------------------
 6. FUTURES CONTRACTS Continued
 As of December 31, 2003, the Fund had outstanding futures contracts as
follows:


UNREALIZED
                               EXPIRATION   NUMBER OF    VALUATION AS OF
APPRECIATION
 CONTRACT DESCRIPTION               DATES   CONTRACTS  DECEMBER 31, 2003
(DEPRECIATION)
-----------------------------------------------------------------------------------------
 CONTRACTS TO PURCHASE

 U.S. Treasury Nts., 10 yr.       3/22/04         688        $77,238,750
$1,152,014

-----------

 CONTRACTS TO SELL
 U.S. Long Bonds                  3/22/04          31
3,388,688         (39,554)
 U.S. Treasury Nts., 2 yr.        3/30/04         331
70,849,516        (271,461)
 U.S. Treasury Nts., 5 yr.        3/22/04         302
33,710,750        (133,578)

-----------


(444,593)

-----------

$  707,421

===========

--------------------------------------------------------------------------------
 7. TOTAL RETURN SWAP CONTRACTS
 The Fund may enter into a total return swap transaction to maintain a total
 return on a particular investment, or portion of its portfolio, or for other
 non-speculative purposes. Because the principal amount is not exchanged, it
 represents neither an asset nor a liability to either counterparty, and is
 referred to as notional. The Fund records an increase or decrease to interest
 income, in the amount due to or owed by the Fund at termination or
settlement.
 Total return swaps are subject to risks (if the counterparty fails to meet
its
 obligations).

 As of December 31, 2003, the Fund had entered into the following total return
 swap agreements:

                                    PAID BY        RECEIVED BY
 SWAP           NOTIONAL        THE FUND AT        THE FUND AT
TERMINATION    UNREALIZED
 COUNTERPARTY     AMOUNT  DECEMBER 31, 2003  DECEMBER 31, 2003         DATE
APPRECIATION
-----------------------------------------------------------------------------------------

                                                Value of total
                                                     return of
                                                        Lehman
 Deutsche Bank                   One-Month            Brothers
 AG          $15,634,000        LIBOR Flat           CMBS Index
6/30/04       $14,305


--------------------------------------------------------------------------------
 8. ILLIQUID OR RESTRICTED SECURITIES
 As of December 31, 2003, investments in securities included issues that are
 illiquid or restricted. Restricted securities are 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, 2003
was

$54,527,392, which represents 7.45% of the Fund's net assets, of which zero is
 considered restricted. Information concerning restricted securities is as
 follows:

                                      ACQUISITION                VALUATION AS
OF    UNREALIZED
 SECURITY                                   DATES     COST     DECEMBER 31,
2003  DEPRECIATION
----------------------------------------------------------------------------------------------

 STOCKS AND/OR WARRANTS
 Geotek Communications, Inc., Series B,
 Escrow Shares                            1/14/01   $  100
$--      $   100
 Real Time Data Co. Wts., Exp. 5/31/04    6/30/99    1,214
--        1,214

--------------------------------------------------------------------------------
 9. SECURITIES LENDING
 The Fund lends portfolio securities from time to time in order to earn
 additional income. In return, the Fund receives collateral in the form of US
 Treasury obligations or cash, against the loaned securities and maintains
 collateral in an amount not less than 100% of the market value of the loaned
 securities during the period of the loan. The market value of the loaned
 securities is determined at the close of business of the funds and any
 additional required collateral is delivered to the Fund on the next business
 day. If the borrower defaults on its obligation to return the securities
loaned
 because of insolvency or other reasons, the Fund could experience delays and
 cost in recovering the securities loaned or in gaining access to the
 collateral. Cash collateral is invested in cash equivalents. As of December
31,
 2003, the Fund had on loan securities valued at approximately $124,585,000.
 Cash of $126,958,792 was received as collateral for the loans, and has been
 invested in approved instruments.

--------------------------------------------------------------------------------
 10. BORROWING AND LENDING ARRANGEMENTS
 The Fund entered into an "interfund borrowing and lending arrangement" with
 other funds in the Oppenheimer funds complex, to allow funds to borrow for
 liquidity purposes. The arrangement was initiated pursuant to exemptive
relief
 granted by the Securities and Exchange Commission (the SEC) to allow these
 affiliated funds to lend money to, and borrow money from, each other, in an
 attempt to reduce borrowing costs below those of bank loan facilities. The
 SEC's order requires the Fund's Board of Trustees to adopt operating policies
 and procedures to administer interfund borrowing and lending. Under the
 arrangement the Fund may lend money to other Oppenheimer funds and may borrow
 from other Oppenheimer funds at a rate set by the Fund's Board of Trustees,
 based upon a recommendation by the Manager. The Fund's borrowings, if any,
are
 subject to asset coverage requirements under the Investment Company Act and
the provisions of the SEC order and other applicable regulations. If the Fund
 borrows money, there is a risk that the loan could be called on one day's
 notice, in which case the Fund might have to borrow from a bank at higher
rates if a loan were not available from another Oppenheimer fund. If the Fund
lends money to another fund, it will be subject to the risk that the other
fund might not repay the loan in a timely manner, or at all.
    The Fund had no interfund borrowings or loans outstanding during the year
 ended or at December 31, 2003.

FEDERAL INCOME TAX INFORMATION  UNAUDITED
-------------------------------------------------------------------------------
--------------------------------------------------------------------------------
 In early 2004, if applicable, shareholders of record received information
 regarding all dividends and distributions paid to them by the Fund during
 calendar year 2003. Regulations of the U.S. Treasury Department require the
 Fund to report this information to the Internal Revenue Service.
    None of the dividends paid by the Fund during the year ended December 31,
 2003 are eligible for the corporate dividend-received deduction.
    The foregoing information is presented to assist shareholders in reporting
 distributions received from the Fund to the Internal Revenue Service. Because
 of the complexity of the federal regulations which may affect your individual
 tax return and the many variations in state and local tax regulations, we
 recommend that you consult your tax advisor for specific guidance.

PORTFOLIO PROXY VOTING
POLICIES AND PROCEDURES  UNAUDITED
-------------------------------------------------------------------------------
--------------------------------------------------------------------------------
 The Fund has adopted Portfolio Proxy Voting Policies and Procedures under
which
 the Fund votes proxies relating to securities ("portfolio proxies") held by
the
 Fund. A description of the Fund's Portfolio Proxy Voting Policies and
 Procedures is available (i) without charge, upon request, by calling the Fund
 toll-free at 1.800.225.5677, (ii) on the Fund's website at
 www.oppenheimerfunds.com, and (iii) on the SEC's website at www.sec.gov. In
 addition, the Fund will be required to file new Form N-PX, with its complete
 proxy voting record for the 12 months ended June 30th, no later than August
 31st of each year. The first such filing is due no later than August 31,
2004,
 for the twelve months ended June 30, 2004. Once filed, the Fund's Form N-PX
 filing will be available (i) without charge, upon request, by calling the
Fund
 toll-free at 1.800.225.5677, and (ii) on the SEC's website at www.sec.gov.

                                  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 RATINGS: BONDS AND PREFERRED STOCK ISSUER RATINGS

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

C:  Bonds and preferred stock 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.


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.


PRIME RATING SYSTEM (SHORT-TERM RATINGS - TAXABLE DEBT)
These ratings are opinions of the ability of issuers to honor senior
financial obligations and contracts. Such obligations generally have an
original maturity not exceeding one year, unless explicitly noted.


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

LONG-TERM ISSUE CREDIT RATINGS

Issue credit ratings are based in varying degrees, on the following
considerations:
o     Likelihood of payment-capacity and willingness of the obligor to meet
      its financial commitment on an obligation in accordance with the terms
      of the obligation;
o     Nature of and provisions of the obligation; and
o     Protection afforded by, and relative position of, the obligation in the
      event of bankruptcy, reorganization, or other arrangement under the
      laws of bankruptcy and other laws affecting creditors' rights.
   The issue ratings definitions are expressed in terms of default risk. As
such, they pertain to senior obligations of an entity. Junior obligations are
typically rated lower than senior obligations, to reflect the lower priority
in bankruptcy, as noted above.

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

A: An  obligation  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:  An  obligation  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

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

CCC: An obligation  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: An obligation 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: An obligation 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.

c: The `c' subscript is used to provide additional information to investors
that the bank may terminate its obligation to purchase tendered bonds if the
long-term credit rating of the issuer is below an investment-grade level
and/or the issuer's bonds are deemed taxable.

p: The letter `p' indicates that the rating is provisional. A provisional
rating assumes the successful completion of the project financed by the debt
being rated and indicates that payment of debt service requirements is
largely or entirely dependent upon the successful, timely completion of the
project. This rating, however, while addressing credit quality subsequent to
completion of the project, makes no comment on the likelihood of or the risk
of default upon failure of such completion. The investor should exercise his
own judgment with respect to such likelihood and risk.

Continuance of the ratings is contingent upon Standard & Poor's receipt of an
executed copy of the escrow agreement or closing documentation confirming
investments and cash flows.

r: The `r' highlights derivative, hybrid, and certain other obligations that
Standard & Poor's believes may experience high volatility or high variability
in expected returns as a result of noncredit risks. Examples of such
obligations are securities with principal or interest return indexed to
equities, commodities, or currencies; certain swaps and options; and
interest-only and principal-only mortgage securities. The absence of an `r'
symbol should not be taken as an indication that an obligation will exhibit
no volatility or variability in total return.

N.R. Not rated.

Debt obligations of issuers outside the United States and its territories are
rated on the same basis as domestic corporate and municipal issues. The
ratings measure the creditworthiness of the obligor but do not take into
account currency exchange and related uncertainties.

Bond Investment Quality Standards

Under present commercial bank regulations issued by the Comptroller of the
Currency, bonds rated in the top four categories (`AAA', `AA', `A', `BBB',
commonly known as investment-grade ratings) generally are regarded as
eligible for bank investment. Also, the laws of various states governing
legal investments impose certain rating or other standards for obligations
eligible for investment by savings banks, trust companies, insurance
companies, and fiduciaries in general

SHORT-TERM ISSUE CREDIT RATINGS
Short-term ratings are generally assigned to those obligations considered
short-term in the relevant market. In the U.S., for example, that means
obligations with an original maturity of no more than 365 days-including
commercial paper.

A-1: A short-term obligation 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 obligation 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 obligation 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 obligation 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 obligation 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 obligation 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.

NOTES:
A Standard & Poor's note rating reflects the liquidity factors and market
access risks unique to notes. Notes due in three years or less will likely
receive a note rating. Notes maturing beyond three years will most likely
receive a long-term debt rating. The following criteria will be used in
making that assessment:
o     Amortization schedule-the larger the final maturity relative to other
      maturities, the more likely it will
      be treated as a note; and
o     Source of payment-the more dependent the issue is on the market for its
      refinancing, the more likely
      it will be treated as a note.

SP-1: Strong capacity to pay principal and interest. An issue with a very
strong capacity to pay debt service is given a (+) designation.

SP-2: Satisfactory capacity to pay principal and interest, with some
vulnerability to adverse financial and economic changes over the term of the
notes.

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

Fitch, Inc.
International credit ratings assess the capacity to meet foreign currency or
local currency commitments. Both "foreign currency" and "local currency"
ratings are internationally comparable assessments. The local currency rating
measures the probability of payment within the relevant sovereign state's
currency and jurisdiction and therefore, unlike the foreign currency rating,
does not take account of the possibility of foreign exchange controls
limiting transfer into foreign currency.

INTERNATIONAL LONG-TERM CREDIT RATINGS
The following ratings scale applies to foreign currency and local currency
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

The following ratings scale applies to foreign currency and local currency
ratings. A short-term rating has a time horizon of less than 12 months for
most obligations, or up to three years for U.S. public finance securities,
and thus places greater emphasis on the liquidity necessary to meet financial
commitments in a timely manner.


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

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

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

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

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

D: Default. Denotes actual or imminent payment default.

                                  Appendix B

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


Aerospace & Defense                  Household Durables
Air Freight & Couriers               Household Products
Airlines                             Industrial Conglomerates
Auto Components                      Insurance
Automobiles                          Internet & Catalog Retail
Beverages                            Internet Software & Services
Biotechnology                        IT Services
Building Products                    Leisure Equipment & Products
Capital Markets                      Machinery
Chemicals                            Marine
Commercial Banks                     Media
Commercial Services & Supplies       Metals & Mining
Communications Equipment             Multiline Retail
Computers & Peripherals              Multi-Utilities
Construction & Engineering           Office Electronics
Construction Materials               Oil & Gas
Consumer Finance                     Paper & Forest Products
Containers & Packaging               Personal Products
Distributors                         Pharmaceuticals
Diversified Financial Services       Real Estate
Diversified Telecommunication        Road & Rail
Services
Electric Utilities                   Semiconductors and Semiconductor

                                     Equipment

Electrical Equipment                 Software
Electronic Equipment & Instruments   Specialty Retail
Energy Equipment & Services          Textiles, Apparel & Luxury Goods
Food & Staples Retailing             Thrifts & Mortgage Finance
Food Products                        Tobacco
Gas Utilities                        Trading Companies & Distributors
Health Care Equipment & Supplies     Transportation Infrastructure
Health Care Providers & Services     Water Utilities
Hotels Restaurants & Leisure         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).
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.

   Waivers of Class B, Class C and Class N Sales Charges of Oppenheimer Funds
--------------------------------------------------------------------------------

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

A. Waivers for Redemptions in Certain Cases.

The Class B, Class C and Class N contingent deferred sales charges will be
waived for redemptions of shares in the following cases:
|_|   Shares redeemed involuntarily, as described in "Shareholder Account
         Rules and Policies," in the applicable Prospectus.
|_|   Redemptions from accounts other than Retirement Plans following the
         death or disability of the last surviving shareholder. The death or
         disability must have occurred after the account was established, and
         for disability you must provide evidence of a determination of
         disability by the Social Security Administration.
|_|   The contingent deferred sales charges are generally not waived
         following the death or disability of a grantor or trustee for a
         trust account. The contingent deferred sales charges will only be
         waived in the limited case of the death of the trustee of a grantor
         trust or revocable living trust for which the trustee is also the
         sole beneficiary. The death or disability must have occurred after
         the account was established, and for disability you must provide
         evidence of a determination of disability by the Social Security
         Administration.
|_|   Distributions from accounts for which the broker-dealer of record has
         entered into a special agreement with the Distributor allowing this
         waiver.
|_|   Redemptions of Class B shares held by Retirement Plans whose records
         are maintained on a daily valuation basis by Merrill Lynch or an
         independent record keeper under a contract with Merrill Lynch.
|_|   Redemptions of Class C shares of Oppenheimer U.S. Government Trust from
         accounts of clients of financial institutions that have entered into
         a special arrangement with the Distributor for this purpose.

|_|   Redemptions requested in writing by a Retirement Plan sponsor of Class
         C shares of an Oppenheimer fund in amounts of $1,000,000 or more and
         made more than 12 months after the Retirement Plan's first purchase
         of Class C shares, if the redemption proceeds are invested in Class
         N shares of one or more Oppenheimer funds.

|_|   Distributions8 from Retirement Plans or other employee benefit plans
         for any of the following purposes:
         1) Following the death or disability (as defined in the Internal
            Revenue Code) of the participant or beneficiary. The death or
            disability must occur after the participant's account was
            established in an Oppenheimer fund.
         2) To return excess contributions made to a participant's account.
         3) To return contributions made due to a mistake of fact.
         4) To make hardship withdrawals, as defined in the plan.9
         5) To make distributions required under a Qualified Domestic
            Relations Order or, in the case of an IRA, a divorce or
            separation agreement described in Section 71(b) of the Internal
            Revenue Code.
         6) To meet the minimum distribution requirements of the Internal
            Revenue Code.
         7) To make "substantially equal periodic payments" as described in
            Section 72(t) of the Internal Revenue Code.
         8) For loans to participants or beneficiaries.10
         9) On account of the participant's separation from service.11
         10)      Participant-directed redemptions to purchase shares of a
            mutual fund (other than a fund managed by the Manager or a
            subsidiary of the Manager) offered as an investment option in a
            Retirement Plan if the plan has made special arrangements with
            the Distributor.
         11)      Distributions made on account of a plan termination or
            "in-service" distributions, if the redemption proceeds are rolled
            over directly to an OppenheimerFunds-sponsored IRA.
         12)      For distributions from a participant's account under an
            Automatic Withdrawal Plan after the participant reaches age 59 1/2,
            as long as the aggregate value of the distributions does not
            exceed 10% of the account's value, adjusted annually.
         13)      Redemptions of Class B shares under an Automatic Withdrawal
            Plan for an account other than a Retirement Plan, if the
            aggregate value of the redeemed shares does not exceed 10% of the
            account's value, adjusted annually.
         14)      For distributions from 401(k) plans sponsored by
            broker-dealers that have entered into a special arrangement with
            the Distributor allowing this waiver.
|_|   Redemptions of Class B shares or Class C shares under an Automatic
         Withdrawal Plan from an account other than a Retirement Plan if the
         aggregate value of the redeemed shares does not exceed 10% of the
         account's value annually.

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

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

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

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

   Oppenheimer Quest Value Fund, Inc.           Oppenheimer Small Cap Value
   Fund
   Oppenheimer Quest Balanced Value Fund        Oppenheimer Quest
   International Value Fund, Inc.

   Oppenheimer Quest Opportunity Value Fund

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

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

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

A. Reductions or Waivers of Class A Sales Charges.

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

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

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

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

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

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

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

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

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

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

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

      A shareholder's account will be credited with the amount of any
contingent deferred sales charge paid on the redemption of any Class A, Class
B or Class C shares of the Oppenheimer fund described in this section if the
proceeds are invested in the same Class of shares in that fund or another
Oppenheimer fund within 90 days after redemption.

        Special Sales Charge Arrangements for Shareholders of Certain
          Oppenheimer Funds Who Were Shareholders of Connecticut Mutual
                            Investment Accounts, Inc.
---------------------------------------------------------------------------

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

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

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

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

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

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

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

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

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

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

   Special Reduced Sales Charge for Former Shareholders of Advance America
                                    Funds, Inc.
------------------------------------------------------------------------------


Shareholders of Oppenheimer AMT-Free Municipals, Oppenheimer U.S. Government
Trust, Oppenheimer Strategic Income Fund and Oppenheimer Capital Income Fund
who acquired (and still hold) shares of those funds as a result of the
reorganization of series of Advance America Funds, Inc. into those
Oppenheimer funds on October 18, 1991, and who held shares of Advance America
Funds, Inc. on March 30, 1990, may purchase Class A shares of those four
Oppenheimer funds at a maximum sales charge rate of 4.50%.


      Sales Charge Waivers on Purchases of Class M Shares of Oppenheimer
                            Convertible Securities Fund
------------------------------------------------------------------------------

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

Oppenheimer Bond Fund

Internet Website:
      www.oppenheimerfunds.com
      ------------------------

Investment Advisor

      OppenheimerFunds, Inc.
      Two World Financial Center
      225 Liberty Street, 11th Floor
      New York, New York 10281-1008


Distributor

      OppenheimerFunds Distributor, Inc.
      Two World Financial Center
      225 Liberty Street, 11th Floor
      New York, New York 10281-1008


Transfer Agent
      OppenheimerFunds Services

      P.O. Box 5270
      Denver, Colorado 80217
      1.800.CALL OPP(225.5677)


Custodian Bank
      JPMorgan Chase Bank
      4 Chase Metro Tech Center
      Brooklyn, New York, 11245

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

Counsel to the Funds
      Myer, Swanson, Adams & Wolf, P.C.
      1600 Broadway
      Denver, Colorado 80202

Counsel to the Independent Trustees

      Mayer, Brown, Rowe & Maw LLP
      1675 Broadway
      New York, New York 10019
1234
PX285.0204

                          OPPENHEIMER INTEGRITY FUNDS

                                   FORM N-1A

                                     PART C

                               OTHER INFORMATION

Item 23.    Exhibits
--------------------

(a)   (i) Amended  and  Restated  Declaration  of Trust,  dated April 12,  2001:
      Previously  filed  with  Registrant's  Post-Effective  Amendment  No.  39,
      4/25/01 and incorporated herein by reference.

(b)   Registrant's  By-Laws as amended through  10/24/00:  Previously filed with
      Registrant's  Post-Effective  Amendment No. 38, 2/12/01,  and incorporated
      herein by reference.

(c)   (i)   Specimen  Class A  Share  Certificate  for  Oppenheimer  Bond  Fund:
      Previously  filed  with  Registrant's  Post-Effective  Amendment  No.  40,
      4/26/02, and incorporated herein by reference.

      (ii)  Specimen  Class B  Share  Certificate  for  Oppenheimer  Bond  Fund:
      Previously  filed  with  Registrant's  Post-Effective  Amendment  No.  40,
      4/26/02, and incorporated herein by reference.

      (iii) Specimen  Class C  Share  Certificate  for  Oppenheimer  Bond  Fund:
      Previously  filed  with  Registrant's  Post-Effective  Amendment  No.  40,
      4/26/02, and incorporated herein by reference.

      (iv)  Specimen  Class N  Share  Certificate  for  Oppenheimer  Bond  Fund:
      Previously  filed  with  Registrant's  Post-Effective  Amendment  No.  40,
      4/26/02, and incorporated herein by reference.

      (v)   Specimen  Class Y  Share  Certificate  for  Oppenheimer  Bond  Fund:
      Previously  filed  with  Registrant's  Post-Effective  Amendment  No.  40,
      4/26/02, and incorporated herein by reference.

(d)   (i)   Investment  Advisory  Agreement dated 7/10/95 for  Oppenheimer  Bond
      Fund:  Previously  filed with  Registrant's  Post-Effective  Amendment No.
      25, 7/10/95, and incorporated herein by reference.


      (ii)  Amendment  to  Investment   Advisory  Agreement  dated  2/26/02  for
      Oppenheimer Bond Fund:  Previously filed with Registrant's  Post-Effective
      Amendment No. 41, 2/25/03, and incorporated herein by reference.


(e)   (i)   General  Distributor's  Agreement dated 10/13/92:  Previously  filed
      with Registrant's  Post-Effective  Amendment No. 17, 2/26/93,  and refiled
      pursuant to Item 102 of Regulation  S-T with  Registrant's  Post-Effective
      Amendment No. 23, 4/28/95, and incorporated herein by reference.

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

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

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

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

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

(f)   Form of Deferred  Compensation Plan for Disinterested  Trustees/Directors:
      Previously   filed   with   Post-Effective   Amendment   No.   40  to  the
      Registration   Statement  of   Oppenheimer   High  Yield  Fund  (Reg.  No.
      2-62076), 10/27/98, and incorporated herein by reference.


(g)   (i) Global  Custody  Agreement  dated August 16, 2002  between  Registrant
      and JP Morgan Chase Bank:  Previously filed with Post-Effective  Amendment
      No. 9 to the  Registration  Statement of  Oppenheimer  International  Bond
      Fund (Reg. No. 33-58383), 11/21/02, and incorporated herein by reference.

      (ii)  Amendment  dated  October  2, 2003 to the Global  Custody  Agreement
      dated August 16, 2002:  Previously filed with Pre-Effective  Amendment No.
      1 to the Registration  Statement of Oppenheimer  Principal Protected Trust
      II (Reg. 333-108093), 11/6/03, and incorporated herein by reference.
.
 (h)  Not applicable.


(i)   Opinion  and  Consent of Counsel  dated  2/11/91:  Incorporated  herein by
      reference to  Registrant's  Rule 24f-2 Notice filed on 2/19/91 and refiled
      pursuant to Item 102 of Regulation  S-T with  Registrant's  Post-Effective
      Amendment No. 23, 4/28/95, and incorporated herein by reference.

(j)   Independent Auditor's Consent: Filed herewith.

(k)   Not applicable.

(l)   Not applicable.


(m)   (i)   Amended and Restated  Service Plan and  Agreement for Class A shares
      dated  4/23/02:   Previously   filed  with   Registrant's   Post-Effective
      Amendment No. 41, 2/25/03, and incorporated herein by reference.


      (ii)  Amended and Restated  Distribution  and Service  Plan and  Agreement
      for Class B shares of  Oppenheimer  Bond Fund  dated  2/24/98:  Previously
      filed with  Post-Effective  Amendment No. 34 to Registrant's  Registration
      Statement, 2/24/99, and incorporated herein by reference.

(iii) Amended and  Restated  Distribution  and Service  Plan and  Agreement  for
      Class C Shares of Oppenheimer  Bond Fund dated 2/24/98:  Previously  filed
      with  Post-Effective   Amendment  No.  34  to  Registrant's   Registration
      Statement, 2/24/99, and incorporated herein by reference.


(iv)  Distribution  and  Service  Plan and  Agreement  for Class N shares  dated
      10/24/00:  Previously  filed with  Registrant's  Post-Effective  Amendment
      No. 41, 2/25/03, and incorporated herein by reference.

(n)   Oppenheimer  Funds  Multiple  Class Plan under Rule 18f-3 updated  through
10/22/03:   Previously  filed  with  Post-Effective  Amendment  No.  11  to  the
Registration  Statement  of  Oppenheimer  Senior  Floating  Rate Fund (Reg.  No.
333-82579), 11/17/03, and incorporated herein by reference.

(o)    Powers  of  Attorney  dated  10/9/03  for  all   Trustees/Directors   and
Officers:   Previously  filed  with   Pre-Effective   Amendment  No.  1  to  the
Registration  Statement of Oppenheimer  Principal  Protected  Trust II (Reg. No.
333-108093), 11/6/03, and incorporated herein by reference.

(p)   Amended and  Restated  Code of Ethics of the  Oppenheimer  Funds dated May
15,  2002 under Rule 17j-1 of the  Investment  Company  Act of 1940:  Previously
filed with  Post-Effective  Amendment  No. 29 to the  Registration  Statement of
Oppenheimer  Discovery  Fund  (Reg.  No.  33-371),  11/21/02,  and  incorporated
herein by reference.


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

None.

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

Reference is made to the  provisions  of Article Seven of  Registrant's  Amended
and Restated  Declaration  of Trust filed as Exhibit 23(a) to this  Registration
Statement, and incorporated herein by reference.

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

Item 26. - Business and Other Connections of the Investment Adviser
-------------------------------------------------------------------

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

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

---------------------------------------------------------------------------------
Name and Current Position
with OppenheimerFunds, Inc.    Other Business and Connections During the Past
                               Two Years
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Timothy L. Abbuhl,             None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Robert Agan,                   Vice President of OppenheimerFunds Distributor,
Vice President                 Inc. and Centennial Asset Management
                               Corporation; Senior Vice President of
                               Shareholders Services, Inc.

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Erik Anderson,                 None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Janette Aprilante,             Secretary of OppenheimerFunds Distributor, Inc.,
Vice President & Secretary     Centennial Asset Management Corporation,

                               Oppenheimer Partnership Holdings, Inc.,
                               Oppenheimer Real Asset Management, Inc.,
                               Shareholder Financial Services, Inc.,
                               Shareholder Services, Inc., HarbourView Asset
                               Management Corporation, OFI Private Investments,
                               Inc., OFI Institutional Asset Management, Inc.
                               and OppenheimerFunds Legacy Program; Assistant
                               Secretary of OFI Trust Company.

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Hany S. Ayad,                  None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Robert Baker,                  None
Assistant Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
John Michael Banta,            None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Joanne Bardell,                None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Lerae A. Barela,               None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Kevin Baum,                    None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Jeff Baumgartner,              None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Connie Bechtolt,               None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Robert Behal                   Assistant Secretary of HarbourView Asset
Assistant Vice President       Management Corporation.

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Kathleen Beichert,             Vice President of OppenheimerFunds Distributor,
Vice President                 Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Gerald Bellamy,                Assistant Vice President of OFI Institutional
Assistant Vice President       Asset Management, Inc.

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Erik S. Berg,                  None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Victoria Best,                 Vice President of OFI Institutional Asset
Vice President                 Management, Inc.

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Rajeev Bhaman,                 None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Craig Billings,                Formerly President of Lorac Technologies, Inc.
Assistant Vice President       (June 1997-July 2001).
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Mark Binning,                  None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Robert J. Bishop,              Treasurer of OppenheimerFunds, Inc. and
Vice President                 Centennial Asset Management Corporation.

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

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

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
John R. Blomfield,             None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Chad Boll,                     None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Antulio N. Bomfim,             A senior economist with the Federal Reserve
Vice President                 Board (June 1992-October 2003).

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Robert Bonomo,                 None
Senior Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Michelle Borre Massick,        None
Vice President

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

Jennifer Bosco,                None
Assistant Vice President

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

John Boydell,                  None
Assistant Vice President

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

Michael Bromberg,              None
Assistant Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Lowell Scott Brooks,           Vice President of OppenheimerFunds Distributor,
Vice President                 Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Joan Brunelle,                 None
Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Richard Buckmaster,            None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Paul Burke,                    None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Mark Burns,                    None
Assistant Vice President

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

Bruce Burroughs,               None
Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Claudia Calich,                None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Jeoffrey Caan,
Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Debra Casey,                   None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Brett Clark,                   None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
H.C. Digby Clements,           None
Vice   President:    Rochester
Division
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Peter V. Cocuzza,              None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Susan Cornwell,                Vice President of Centennial Asset Management
Vice President                 Corporation, Shareholder Financial Services,
                               Inc. and Shareholder Services, Inc.

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

Scott Cottier,                 None
Vice   President:    Rochester
Division

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Laura Coulston,                None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Julie C. Cusker,               None
Assistant Vice President:
Rochester Division
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
George Curry,                  None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

John Damian,                   None
Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
John M. Davis,                 Assistant Vice President of OppenheimerFunds
Assistant Vice President       Distributor, Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Ruggero de'Rossi,              Vice President of HarbourView Asset Management
Senior Vice President          Corporation.

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Craig P. Dinsell,              None
Executive Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Randall C. Dishmon,            None
Assistant Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Rebecca K. Dolan               None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Steven D. Dombrower,           Senior Vice President of OFI Private
Vice President                 Investments, Inc.; Vice President of

                               OppenheimerFunds Distributor, Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Thomas Doyle,                  None
Assistant Vice President

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

Bruce C. Dunbar,               None
Senior Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Richard Edmiston,              None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Daniel R. Engstrom,            None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
James Robert Erven             Formerly an Assistant Vice President/Senior
Assistant Vice President       Trader with Morgan Stanley Investment Management
                               (1999-April 2002).
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
George R. Evans,               None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Edward N. Everett,             None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Kathy Faber,                   None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
David Falicia,                 None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Scott T. Farrar,               Vice President of OFI Private Investments, Inc.
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Emmanuel Ferreira,             Formerly a portfolio manager with Lashire
Vice President                 Investments (July 1999-December 2002).
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Ronald H. Fielding,            Vice President of OppenheimerFunds Distributor,
Chairman: Rochester Division   Inc.; Director of ICI Mutual Insurance Company;
                               Governor of St. John's College; Chairman of the
                               Board of Directors of International Museum of
                               Photography at George Eastman House.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Brian Finley,                  None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

John E. Forrest,               Senior Vice President of OppenheimerFunds
Senior Vice President          Distributor, Inc.

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

Jordan Hayes Foster,           Vice President of OFI Institutional Asset
Vice President                 Management, Inc.

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
P. Lyman Foster,               Senior Vice President of OppenheimerFunds
Senior Vice President          Distributor, Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
David Foxhoven,                Assistant Vice President of OppenheimerFunds
Assistant Vice President       Legacy Program.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Colleen M. Franca,             None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Richard Frank,                 None
Vice   President:    Rochester
Division

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

Dominic Freud,                 Formerly, a Partner and European Equity
Vice President                 Portfolio manager at SLS Management (January
                               2002-February 2003) prior to which he was head
                               of the European equities desk and managing
                               director at SG Cowen (May 1994-January 2002).

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

Dan Gagliardo,                 None
Assistant Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Hazem Gamal,                   None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Dan P. Gangemi,                None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Subrata Ghose,                 None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Charles W. Gilbert,            None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Alan C. Gilston,               None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Jill E. Glazerman,             None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Mike Goldverg,                 None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Bejamin J. Gord,               Vice President of HarbourView Asset Management
Vice President                 Corporation and of OFI Institutional Asset
                               Management, Inc. Formerly Executive Director
                               with Miller Anderson Sherrerd, a division of
                               Morgan Stanley Investment Management. (April
                               1992-March 2002).

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Laura Granger,                 None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Robert B. Grill,               None
Senior Vice President

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

Robert Gwynn,                  None
Vice   President:    Rochester
                                    Division

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Robert Haley,                  None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Marilyn Hall,                  None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Ping Han,                      None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Kelly Haney,                   None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Steve Hauenstein,              None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Thomas B. Hayes,               None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Michael Henry,                 None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Catherine Heron,               None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Dennis Hess,                   None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Dorothy F. Hirshman,           None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Daniel Hoelscher,              None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Edward Hrybenko,               Vice President of OppenheimerFunds Distributor,
Vice President                 Inc.

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Scott T. Huebl,                Assistant Vice President of OppenheimerFunds
Vice President                 Legacy Program.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Margaret Hui,                  None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

John Huttlin,                  Senior Vice President (Director of the
Vice President                 International Division) of OFI Institutional
                               Asset Management, Inc.

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
James G. Hyland,               None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Steve P. Ilnitzki,             None
Senior Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Bridget Ireland,               None
Vice President

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

Kathleen T. Ives,              Vice President and Assistant Secretary of
Vice  President  and Assistant OppenheimerFunds Distributor, Inc. and
Secretary                      Shareholder Services, Inc.; Assistant Secretary
                               of Centennial Asset Management Corporation,
                               OppenheimerFunds Legacy Program and Shareholder
                               Financial Services, Inc.

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

William Jaume,                 Senior Vice President of HarbourView Asset
Vice President                 Management Corporation and OFI Institutional
                               Asset Management, Inc.; Director of OFI Trust
                               Company.

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Frank V. Jennings,             None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
John Jennings,                 None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
John Michael Johnson,          Formerly Vice President, Senior
Assistant Vice President       Analyst/Portfolio Manager at Aladdin Capital
                               Holdings Inc. (February 2001-May 2002).
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Charles Kandilis,              Formerly managing director of Kandilis Capital
Assistant Vice President       Management (September 1993-August 2002).

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

Jennifer E. Kane,              None
Assistant Vice President

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

Lynn O. Keeshan,               Assistant Treasurer of OppenheimerFunds Legacy
Senior Vice President          Program

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Thomas W. Keffer,              None
Senior Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Cristina J. Keller,            Vice President of OppenheimerFunds Distributor,
Vice President                 Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Michael Keogh,                 Vice President of OppenheimerFunds Distributor,
Vice President                 Inc.

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Walter G. Konops,              None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
James Kourkoulakos,            None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Brian Kramer,                  None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Lisa Lamentino,                None
Vice President

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

Tracey Lange,                  Vice President of OppenheimerFunds Distributor,
Vice President                 Inc.

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

John Latino,                   Formerly a Senior Trader/Portfolio Engineer at
Assistant Vice President       Jacobs Levy Equity Management (June 1996-August
                               2002).

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

Kristina Lawrence,             None
Assistant Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Guy E. Leaf,                   Formerly a Vice President of Merrill Lynch
Vice President                 (January 2000-September 2001).
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Christopher M. Leavy,          None
Senior Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Dina C. Lee,                   Assistant Secretary of OppenheimerFunds Legacy
Assistant   Vice  President  & Program.
Assistant Counsel

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

Dana Lehrer,                   Assistant Secretary of Oppenheimer Legacy Program
Assistant Vice President

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

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

                               Services, Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Michael S. Levine,             None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Gang Li,                       None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Shanquan Li,                   None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Mitchell J. Lindauer,          None
Vice   President  &  Assistant
General Counsel
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Bill Linden,                   None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Malissa B. Lischin,            Assistant Vice President of OppenheimerFunds
Assistant Vice President       Distributor, Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
David P. Lolli,                None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Daniel G. Loughran             None
Vice   President:    Rochester
Division
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Patricia Lovett,               Vice President of Shareholder Financial
Vice President                 Services, Inc. and Senior Vice President of
                               Shareholder Services, Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Dongyan Ma,                    Formerly an Assistant Vice President with
Assistant Vice President       Standish Mellon Asset Management (October
                               2001-October 2003).

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Steve Macchia,                 None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Michael Magee,                 Vice President of OppenheimerFunds Distributor,
Vice President                 Inc.

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

Jerry Mandzij,                 None
Assistant Vice President

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

Angelo G. Manioudakis          Senior Vice President of HarbourView Asset
Senior Vice President          Management Corporation and of OFI Institutional
                               Asset Management, Inc. Formerly Executive

                               Director and portfolio manager for Miller,
                               Anderson & Sherrerd, a division of Morgan
                               Stanley Investment Management (August 1993-April
                               2002).
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

LuAnn Mascia,                  Vice President of OppenheimerFunds Distributor,
Vice President                 Inc.

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

Susan Mattisinko,              Assistant Secretary of HarbourView Asset
Vice President                 Management Corporation, OppenheimerFunds Legacy
                               Program, OFI Private Investments, Inc. and OFI
                               Institutional Asset Management, Inc. Formerly an
                               Associate at Sidley Austin Brown and Wood LLP
                               (1995 - October 2003).

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Elizabeth McCormack,           Assistant Secretary of HarbourView Asset
Assistant Vice President       Management Corporation.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Joseph McGovern,               None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Charles L. McKenzie,           As of May 2003: Chief Executive Officer,
Senior Vice President          President, Senior Managing Director and Director
                               of HarbourView Asset Management Corporation and
                               OFI Institutional Asset Management, Inc.;
                               President, Chairman and Director of Trinity
                               Investment Management Corporation

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Andrew J. Mika,                None
Senior Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Joy Milan,                     None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Denis R. Molleur,              None
Vice    President   &   Senior
Counsel
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Nikolaos D. Monoyios,          None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Charles Moon,                  Vice President of HarbourView Asset Management
Vice President                 Corporation and of OFI Institutional Asset
                               Management, Inc. Formerly an Executive Director
                               and Portfolio Manager with Miller Anderson &
                               Sherrerd, a division of Morgan Stanley
                               Investment Management (June 1999-March 2002).

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

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

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

Kevin Murray,                  None
Assistant Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Thomas J. Murray,              None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Kenneth Nadler,                None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Christina Nasta,               Vice President of OppenheimerFunds Distributor,
Vice President                 Inc.

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

Annabel Neilon,                None
Assistant Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Richard Nichols,               None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Barbara Niederbrach,           None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
William Norman,                None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

John O'Hare,                   Formerly Executive Vice President and Portfolio
Vice President                 Manager (June 2000 - August 2003) and Portfolio
                               Manager and Senior Vice President (August 1997 -
                               June 2000) at Geneva Capital Management, Ltd.

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Frank J. Pavlak,               None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
David P. Pellegrino,           None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Allison C. Pells,              None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Susan Pergament,               None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Brian Petersen,                None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
James F. Phillips,             None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Gary Pilc,                     None
Assistant Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Peter E. Pisapia,              Formerly, Associate Counsel at SunAmerica Asset
Assistant   Vice  President  & Management Corp. (December 2000-December 2002).
Assistant Counsel
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Jeaneen Pisarra,               None
Assistant Vice President

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

Raghaw Prasad,                 None
Assistant Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Jane C. Putnam,                None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Michael E. Quinn,              None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Julie S. Radtke,               None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Norma J. Rapini,               None
Assistant Vice President:
Rochester Division
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Brian N. Reid,                 Formerly an Assistant Vice President with Eaton
Assistant Vice President       Vance Management (January 2000-January 2002).
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Marc Reinganum,                Formerly (until August 2002) Vaughn Rauscher
Vice President                 Chair in Financial Investments and Director,
                               Finance Institute of Southern Methodist
                               University, Texas.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Jill Reiter,                   None
Assistant Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Kristina Richardson,           None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Claire Ring,                   None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
David Robertson,               Senior Vice President of OppenheimerFunds
Senior Vice President          Distributor, Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Rob Robis,                     None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Antoinette Rodriguez,          None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Stacey Roode,                  Formerly, Assistant Vice President of Human
Vice President                 Resources of OFI (200-July 2002)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Jeffrey S. Rosen,              None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Stacy Roth,                    None
Vice President

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

Andrew Ruotolo,                Vice Chairman, Treasurer, Chief Financial
Executive   Vice    President, Officer and Management Director of Oppenheimer
Chief  Financial  Officer  and Acquisition Corp.; President and Director of
Director                       Shareholder Services, Inc. and Shareholder
                               Financial Services, Inc.; Director of Trinity
                               Investment Management Corporation; Chairman of
                               the Board, Chief Executive Officer, President
                               and Director of OFI Trust Company.

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

Kim Russomanno,                None
Assistant Vice President

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

Rohit Sah,                     None
Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Valerie Sanders,               None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Karen Sandler,                 None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Tricia Scarlata,               Formerly, Marketing Manager of OppenheimerFunds,
Assistant Vice President       Inc. (April 2001-August 2002).

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Rudi Schadt,                   Formerly a consultant for Arthur Andersen
Vice President                 (August 2001-February 2002); director, senior
                               quantitative analyst at Brinson Partners
                               (September 2000,April 2001).
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Jill Schmitt,                  None
Assistant Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Ellen P. Schoenfeld,           None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Maria Schulte,                 None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Scott A. Schwegel,             None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Allan P. Sedmak                None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

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

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Martha A. Shapiro,             None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Navin Sharma,                  Formerly, Manager at BNP Paribas Cooper Neff
Vice President                 Advisors (May 2001-April 2002).
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Steven J. Sheerin,             None
Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Bonnie Sherman,                None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
David C. Sitgreaves,           None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Edward James Sivigny           Formerly a Director for ABN Amro Securities
Assistant Vice President       (July 2001-July 2002).
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Enrique H. Smith,              None
Assistant Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Louis Sortino,                 None
Assistant Vice President:
Rochester Division
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Keith J. Spencer,              None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Marco Antonio Spinar,          Formerly, Director of Business Operations at AOL
Assistant Vice President       Time Warner, AOL Time Warner Book Group (June
                               2000-December 2001).
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Richard A. Stein,              None
Vice   President:    Rochester
Division
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Arthur P. Steinmetz,           Senior Vice President of HarbourView Asset
Senior Vice President          Management Corporation.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Jennifer Stevens,              None
Assistant Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Gregory J. Stitt,              None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
John P. Stoma,                 Senior Vice President of OppenheimerFunds
Senior Vice President          Distributor, Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Wayne Strauss,                 None
Assistant Vice President:
Rochester Division
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Michael Stricker,              Vice President of Shareholder Services, Inc.
Vice President

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

Deborah A. Sullivan,           Since December 2001, Secretary of OFI Trust
Assistant Vice President,      Company.
Assistant Counsel

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Mary Sullivan,                 None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Michael Sussman,               Vice President of OppenheimerFunds Distributor,
Vice President                 Inc.

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Susan B. Switzer,              None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Martin Telles,                 Senior Vice President of OppenheimerFunds
Senior Vice President          Distributor, Inc.

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

Paul Temple,                   Formerly a Vice President of Merrill Lynch
Vice President                 (October 2001-January 2002).

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Vincent Toner,                 None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Eamon Tubridy,                 None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Keith Tucker,                  None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
James F. Turner,               Formerly portfolio manager for Technology
Vice President                 Crossover Ventures (May 2000-March 2001).
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Tane Tyler,                    Formerly Vice President and Assistant General
Vice  President  and Associate Counsel at INVESCO Funds Group, Inc. (September
Counsel                        1991 - December 2003)

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Cameron Ullyat,                None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Angela Utaro,                  None
Assistant Vice President:
Rochester Division
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Mark S. Vandehey,              Vice President of OppenheimerFunds Distributor,
Vice President                 Inc., Centennial Asset Management Corporation
                               and Shareholder Services, Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Maureen Van Norstrand,         None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Rene Vecka,                    None
Assistant Vice President,
Rochester Division

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Vincent Vermette,              Assistant Vice President of OppenheimerFunds
Assistant Vice President       Distributor, Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Phillip F. Vottiero,           None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Lisa Walsh,                    None
Assistant Vice President

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

Patricia Walters,              None
Assistant Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Teresa M. Ward,                Vice President of OppenheimerFunds Distributor,
Vice President                 Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Jerry A. Webman,               Senior Vice President of HarbourView Asset
Senior Vice President          Management Corporation.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Christopher D. Weiler,         None
Vice   President:    Rochester
Division

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

Barry D. Weiss,                Vice President of HarbourView Asset Management
Vice President                 Corporation

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Melissa Lynn Weiss,            Formerly an Associate at Hoguet Newman & Regal,
Vice President                 LLP (January 1998-May 2002).
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Christine Wells,               None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Joseph J. Welsh,               Vice President of HarbourView Asset Management
Vice President                 Corporation.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Diederick Wermolder,           Director of OppenheimerFunds International Ltd.;
Vice President                 Senior Vice President (Managing Director of the
                               International Division) of OFI Institutional
                               Asset Management, Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Catherine M. White,            Assistant Vice President of OppenheimerFunds
Assistant Vice President       Distributor, Inc.; member of the American

                               Society of Pension Actuaries (ASPA) since 1995.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Annabel Whiting,
Assistant Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
William L. Wilby,              Formerly Senior Vice President of HarbourView
Senior Vice President          Asset Management Corporation (May 1999-July
                               2002).
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Donna M. Winn,                 President, Chief Executive Officer and Director
Senior Vice President          of OFI Private Investments, Inc.; Director and
                               President of OppenheimerFunds Legacy Program;
                               Senior Vice President of OppenheimerFunds
                               Distributor, Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Kenneth Winston,               None
Senior Vice President

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

Philip Witkower,               Senior Vice President of OppenheimerFunds
Senior Vice President          Distributor, Inc.

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Brian W. Wixted,               Treasurer of HarbourView Asset Management
Senior Vice President and      Corporation; OppenheimerFunds International
Treasurer                      Ltd., Oppenheimer Partnership Holdings, Inc.,

                               Oppenheimer Real Asset Management, Inc.,
                               Shareholder Services, Inc., Shareholder
                               Financial Services, Inc., OFI Private
                               Investments, Inc., OFI Institutional Asset
                               Management, Inc. and OppenheimerFunds Legacy
                               Program; Treasurer and Chief Financial Officer
                               of OFI Trust Company; Assistant Treasurer of
                               Oppenheimer Acquisition Corp.

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

Carol Wolf,                    Senior Vice President of HarbourView Asset
Senior Vice President          Management Corporation; serves on the Board of

                               the Colorado Ballet.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Kurt Wolfgruber,               Director of Tremont Advisers, Inc. (as of
Executive   Vice    President, January 2002), HarbourView Asset Management
Chief  Investment  Officer and Corporation and OFI Institutional Asset
Director                       Management, Inc. (as of January 2003)

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Caleb C. Wong,                 None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Edward C. Yoensky,             None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Jill Zachman,                  None
Vice   President:    Rochester
Division
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Lucy Zachman,                  None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

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

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Neal A. Zamore,                None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Mark D. Zavanelli,             None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Alex Zhou,                     None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Arthur J. Zimmer,              Senior Vice President (since April 1999) of
Senior Vice President          HarbourView Asset Management Corporation.
---------------------------------------------------------------------------------

The Oppenheimer Funds include the following:

Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust

Limited Term New York Municipal Fund (Rochester Portfolio Series)
Oppenheimer AMT-Free Municipals
Oppenheimer AMT-Free New York Municipals
Oppenheimer Bond Fund (a series of Oppenheimer Integrity Funds)
Oppenheimer California Municipal Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Capital Income Fund
Oppenheimer Capital Preservation Fund
Oppenheimer Cash Reserves
Oppenheimer Champion Income Fund
Oppenheimer Convertible Securities Fund (Bond Fund Series)
Oppenheimer Developing Markets Fund
Oppenheimer Discovery Fund
Oppenheimer Emerging Growth Fund
Oppenheimer Emerging Technologies Fund
Oppenheimer Enterprise Fund
Oppenheimer Equity Fund, Inc.
Oppenheimer Global Fund
Oppenheimer Global Opportunities Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer High Yield Fund
Oppenheimer International Bond Fund
Oppenheimer International Growth Fund
Oppenheimer   International   Large-Cap  Core  Fund  (a  series  of  Oppenheimer
International Large-
    Cap Core Trust)

Oppenheimer International Small Company Fund

Oppenheimer  International  Value  Fund (a series of  Oppenheimer  International
Value Trust)
Oppenheimer Limited-Term Government Fund
Oppenheimer  Limited  Term  Municipal  Fund (a series of  Oppenheimer  Municipal
Fund)
Oppenheimer Main Street Fund (a series of Oppenheimer Main Street Funds, Inc.)
Oppenheimer Main Street Opportunity Fund
Oppenheimer Main Street Small Cap Fund
Oppenheimer MidCap Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Multi Cap Value Fund
Oppenheimer Multiple Strategies Fund
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Municipal Trust (3 series):

     Oppenheimer New Jersey Municipal Fund
     Oppenheimer Pennsylvania Municipal Fund
     Oppenheimer Rochester National Municipals

Oppenheimer  Principal  Protected  Main  Street  Fund (a series  of  Oppenheimer
Principal
     Protected Trust)
Oppenheimer Principal Protected Main Street Fund II (a series of Oppenheimer
     Principal Protected Trust II)

Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Quest For Value Funds (3 series)
     Oppenheimer Quest Balanced Value Fund
     Oppenheimer Quest Opportunity Value Fund
     Oppenheimer Small Cap Value Fund

Oppenheimer Quest International Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Real Asset Fund
Oppenheimer Real Estate Fund
Oppenheimer Senior Floating Rate Fund
Oppenheimer Series Fund, Inc. (2 series):

     Oppenheimer Disciplined Allocation Fund
     Oppenheimer Value Fund

Oppenheimer Strategic Income Fund
Oppenheimer Total Return Bond Fund
Oppenheimer Tremont Core Diversified Hedge Fund
Oppenheimer Tremont Market Neutral Fund LLC
Oppenheimer Tremont Market Neutral Hedge Fund
Oppenheimer Tremont Opportunity Fund LLC
Oppenheimer U.S. Government Trust
Oppenheimer Variable Account Funds (11 series):
     Oppenheimer Aggressive Growth Fund/VA
     Oppenheimer Bond Fund/VA
     Oppenheimer Capital Appreciation Fund/VA
     Oppenheimer Global Securities Fund/VA
     Oppenheimer High Income Fund/VA
     Oppenheimer Main Street Fund/VA
     Oppenheimer Main Street Small Cap Fund/VA
     Oppenheimer Money Fund/VA
     Oppenheimer Multiple Strategies Fund/VA
     Oppenheimer Strategic Bond Fund/VA
     Oppenheimer Value Fund/VA

Panorama Series Fund, Inc. (4 series):
     Growth Portfolio
     Government Securities Portfolio
     Oppenheimer International Growth Fund/VA
     Total Return Portfolio
Rochester Fund Municipals

The  address  of the  Oppenheimer  funds  listed  above,  Shareholder  Financial
Services,   Inc.,  Shareholder  Services,   Inc.,   OppenheimerFunds   Services,
Centennial Asset Management Corporation,  Centennial Capital Corp.,  Oppenheimer
Real Asset Management,  Inc. and  OppenheimerFunds  Legacy Program is 6803 South
Tucson Way, Centennial, Colorado 80112-3924.


The  address of  OppenheimerFunds,  Inc.,  OppenheimerFunds  Distributor,  Inc.,
HarbourView  Asset Management  Corporation,  Oppenheimer  Partnership  Holdings,
Inc.,  Oppenheimer  Acquisition  Corp.,  OFI  Private  Investments,   Inc.,  OFI
Institutional  Asset  Management,  Inc. and Oppenheimer Trust Company is 2 World
Financial  Center,   225  Liberty  Street,   11th  Floor,  New  York,  New  York
10281-1008.


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

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

The address of Trinity  Investment  Management  Corporation  is 301 North Spring
Street, Bellefonte, Pennsylvania 16823.


Item 27. Principal Underwriter
------------------------------

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

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

---------------------------------------------------------------------------------
Name & Principal                Position & Office         Position and Office
Business Address                with Underwriter          with Registrant
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Robert Agan(1)                  Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Janette Aprilante(1)            Secretary                 None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

James Barker                    Vice President            None
2901B N. Lakewood Avenue
Chicago, IL 60657

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Kathleen Beichert(1)            Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Gabriella Bercze(2)             Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Robert J. Bishop(1)             Treasurer                 None

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

Douglas S. Blankenship          Vice President            None
17011 Wood Bark Road
Springs, TX 77379

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Tracey Blinzler(1)              Assistant Vice President  None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

David A Borrelli                Vice President            None
105 Black Calla Ct.
San Ramon, CA 94583

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

Michelle Brennan                Assistant Vice President  None

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
L. Scott Brooks(2)              Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Kevin E. Brosmith               Senior Vice President     None
5 Deer Path
South Natlick, MA 01760

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

Jeffrey W. Bryan                Vice President            None
1048 Malaga Avenue
Coral Gables, FL 33134

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

Susan Burton                    Vice President            None
4127 Towne Green Circle

Addison, TX 75001
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Kathleen Mary Byron             Vice President            None
6 Dahlia Drive
Irvine, CA 92618
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Andrew Chonofsky                Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Robert A. Coli                  Vice President            None
12 White Tail Lane
Bedminster, NJ 07921
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Jeffrey D. Damia(2)             Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
John Davis(2)                   Assistant Vice President  None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Stephen J. Demetrovits(2)       Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Joseph A. DiMauro               Vice President            None
522 Lakeland Avenue
Grosse Pointe, MI 48230

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

Steven Dombrower(2)             Vice President            None

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

George P. Dougherty             Vice President            None
328 Regency Drive
North Wales, PA 19454

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

Cliff H. Dunteman               Vice President            None
N 53 27761 Bantry Road
Sussex, WI 53089-45533

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
John Eiler(2)                   Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Kent M. Elwell                  Vice President            None
35 Crown Terrace
Yardley, PA 19067
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Gregg A. Everett                Vice President            None
4328 Auston Way
Palm Harbor, FL 34685-4017

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

George R. Fahey                 Senior Vice President     None
2 Pheasant Drive
Ringoes, NJ 08551

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

Mark J. Ferro(2)                Senior Vice President     None

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Ronald H. Fielding(3)           Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Patrick W. Flynn (1)            Senior Vice President     None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
John E. Forrest(2)              Senior Vice President     None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
John ("J) Fortuna(2)            Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
P. Lyman Foster(2)              Senior Vice President     None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Lucio Giliberti                 Vice President            None
6 Cyndi Court
Flemington, NJ 08822
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Raquel Granahan(2)              Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Ralph Grant                     Senior Vice President     None
10 Boathouse Close
Mt. Pleasant, SC 29464

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

Clifford W. Heidinger           Vice President            None
111 Ipswich Road
Boxford, MA 01921

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

Phillipe D. Hemery              Vice President            None
5 Duck Pond Lane
Ramsey, NJ 07446

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

Elyse R. Jurman Herman          Vice President            None
3150 Equestrian Drive
Boca Raton, FL 33496

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Wendy G. Hetson                 Vice President            None
4 Craig Street
Jericho, NY 11753
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
William E. Hortz(2)             Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Edward Hrybenko(2)              Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Brian F. Husch(2)               Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Kathleen T. Ives(1)             Vice President &          Assistant Secretary
                                Assistant Secretary

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

Eric K. Johnson(1)              Vice President            None

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Mark D. Johnson                 Vice President            None
15792 Scenic Green Court
Chesterfield, MO 63017
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Christina J. Keller(2)          Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Brian G. Kelly                  Vice President            None
76 Daybreak Road
Southport, CT 06490

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Michael Keogh(2)                Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Lisa Klassen(1)                 Assistant Vice President  None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Richard Klein                   Senior Vice President     None
4820 Fremont Avenue So.
Minneapolis, MN 55409
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Richard Knott(1)                Senior Vice President     None

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Dean Kopperud(2)                Senior Vice President     None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Brent A. Krantz                 Senior Vice President     None
P. O. Box 1313
Seahurst, WA 98062
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

David T. Kuzia                  Vice President            None
19102 Miranda Circle
Omaha, NE 68130

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Tracey Lange(2)                 Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Paul R. LeMire                  Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Evan M. Lereah                  Vice President            None
1468 Catlin Lane
Alexandria, VA 22311

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Malissa Lischin(2)              Assistant Vice President  None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
James V. Loehle                 Vice President            None
30 Wesley Hill Lane
Warwick, NY 10990
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Montana Low                     Vice President            None
1636 N. Wells Street, Apt. 3411
Chicago, IL 60614

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

Craig Lyman                     Vice President            None
7578 Massachusetts Pl
Rancho Cucamonga, CA 91730

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

John J. Lynch                   Vice President            None
6325 Bryan Parkway
Dallas, TX 75214

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Mark Macken                     Vice President            None
462 Lincoln Avenue
Sayville, NY 11782
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Michael Magee(2)                Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Steven C. Manns                 Vice President            None
1627 N. Hermitage Avenue
Chicago, IL 60622

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

Todd A. Marion                  Vice President            None
24 Midland Avenue

Cold Spring Harbor, NY 11724
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
LuAnn Mascia(2)                 Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Theresa-Marie Maynier           Vice President            None
2421 Charlotte Drive
Charlotte, NC 28203
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Anthony P. Mazzariello          Vice President            None
8 Fairway Road
Sewickley, PA 15143

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

Kent C. McGowan                 Vice President            None
9510 190th Place SE
Edmonds, WA 98020

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

Daniel Melehan                  Vice President            None
906 Bridgeport Court
San Marcos, CA 92069

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

Mark Mezzanotte                 Vice President            None
16 Cullen Way
Exeter, NH 03833

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

Robert Moser(1)                 Vice President            None

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

John V. Murphy(2)               Director                  President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Wendy Jean Murray               Vice President            None
32 Carolin Road
Upper Montclair, NJ 07043
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Christina Nasta(2)              Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Kevin P. Neznek(2)              Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Chad V. Noel                    Vice President            None
2408 Eagleridge Drive
Henderson, NV 89014
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Bradford Norford                Vice President            None
2217 Ivan Street #911
Dallas, TX 75201

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

Alan Panzer                     Vice President            None
6755 Ridge Mill Lane
Atlanta, GA 30328

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Brian C. Perkes                 Vice President            None
8734 Shady Shore Drive
Frisco, TX 75034
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Charles K. Pettit               Vice President            None
22 Fall Meadow Drive
Pittsford, NY 14534
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Gazell Pettway, Jr.             Vice President            None
18970 Vogel Farm Trail
Eden Paire, MN 55347

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Elaine Puleo-Carter(2)          Senior Vice President     None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Christopher L. Quinson          Vice President            None
7675 Cayuga Drive
Cincinnati, OH 45243

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

Gary D. Rakan                   Vice President            None
10860 Fairwoods Drive
Fishers, IN 46038

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

Dusting Raring                  Vice President            None
27 Blakemore Drive
Ladera Ranch, CA 92797

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

Michael A. Raso                 Vice President            None
3 Vine Place
Larchmont, NY 10538

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Douglas Rentschler              Vice President            None
677 Middlesex Road
Grosse Pointe Park, MI 48230
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Ruxandra Risko(2)               Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
David R. Robertson(2)           Senior Vice President     None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Kenneth A. Rosenson             Vice President            None
24753 Vantage Pt. Terrace

Malibu, CA 90265
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
James H. Ruff(2)                President & Director      None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
William R. Rylander             Vice President            None
85 Evergreen Road
Vernon, CT 06066
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Thomas Sabow                    Vice President            None
6617 Southcrest Drive
Edina, MN 55435

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

John Saunders                   Vice President            None
911 North Orange Avenue #401
Orlando, FL 32801

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

Jill E. Schmitt (Crockett)(2)   Assistant Vice President  None

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

Thomas Schmitt(2)               Vice President            None

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

Debbie A. Simon                 Vice President            None
1 W. Superior Street, Apt. 4101
Chicago, IL 60610

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

Douglas Bruce Smith             Vice President            None
8927 35th Street W.
University Place, WA 98466

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

Bryan Stein                     Vice President            None
5897 NW 120th Terrace
Coral Springs, FL 33076

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
John Stoma(2)                   Senior Vice President     None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Brian C. Summe                  Vice President            None
2479 Legends Way
Crestview Hills, KY 41017

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Michael Sussman(2)              Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
George T. Sweeney               Senior Vice President     None
5 Smoke House Lane
Hummelstown, PA 17036
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
James Taylor(2)                 Assistant Vice President  None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Martin Telles(2)                Senior Vice President     None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

David G. Thomas                 Vice President            None
16628 Elk Run Court
Leesburg, VA 20176

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

Bryan K.Toma                    Vice President            None
7311 W. 145th Terrace
Overland Park, KS 66223

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Mark Vandehey(1)                Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Vincent Vermete                 Assistant Vice President  None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Kenneth Lediard Ward            Vice President            None
1400 Cottonwood Valley Circle
N.
Irving, TX 75038

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Teresa Ward(1)                  Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Michael J. Weigner              Vice President            None
4905 W. San Nicholas Street
Tampa, FL 33629
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Donn Weise                      Vice President            None
3249 Earlmar Drive
Los Angeles, CA 90064
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Catherine White(2)              Assistant Vice President  None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Thomas Wilson(2)                Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Donna Winn(2)                   Senior Vice President     None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Philip Witkower(2)              Senior Vice President     None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Cary Patrick Wozniak            Vice President            None
18808 Bravata Court
San Diego, CA 92128
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

John Charles Young              Vice President            None
3914 Southwestern
Houston, TX 77005

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

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

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


(1) 6803 South Tucson Way, Centennial, CO 80112-3924
(2) Two World Financial  Center,  225 Liberty Street,  11th Floor,  New York, NY
10281-1008
(3) 350 Linden Oaks, Rochester, NY 14623


(c)   Not applicable.


Item 28. Location of Accounts and Records
-----------------------------------------

The  accounts,   books  and  other  documents   required  to  be  maintained  by
Registrant  pursuant to Section 31(a) of the Investment  Company Act of 1940 and
rules  promulgated  thereunder are in the possession of  OppenheimerFunds,  Inc.
at its offices at 6803 South Tucson Way, Centennial, Colorado 80112-3924.


Item 29. Management Services
----------------------------

Not applicable

Item 30. Undertakings
---------------------

Not applicable.

                                   SIGNATURES


Pursuant  to  the  requirements  of  the  Securities  Act  of  1933  and/or  the
Investment  Company Act of 1940, the Registrant  certifies that it meets all the
requirements for effectiveness of this Registration  Statement  pursuant to Rule
485(b) under the  Securities  Act of 1933 and has duly caused this  Registration
Statement  to be  signed  on its  behalf  by  the  undersigned,  thereunto  duly
authorized,  in the City of New  York  and  State of New York on the 24th day of
February, 2004.


                              OPPENHEIMER INTEGRITY FUNDS

                              By:  /s/ John V. Murphy*
                              -----------------------------------
                              John V. Murphy, President, Principal Executive
                              Officer & Trustee

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

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


/s/ William L. Armstrong*    Chairman of the             February 24, 2004
-----------------------      Board of Trustees
William L. Armstrong


/s/ John V. Murphy*          President, Principal        February 24, 2004
------------------------------                           Executive Officer
John V. Murphy               & Trustee

/s/ Brian W. Wixted*         Treasurer, Principal        February 24, 2004
-------------------------    Financial &
Brian W. Wixted              Accounting Officer

/s/ Robert G. Avis*          Trustee                     February 24, 2004

----------------------
Robert G. Avis


/s/ George C. Bowen*         Trustee                     February 24, 2004

-------------------------
George C. Bowen


/s/ Edward L. Cameron*       Trustee                     February 24, 2004

----------------------------
Edward L. Cameron


/s/ Jon S. Fossel*           Trustee                     February 24, 2004

--------------------
Jon S. Fossel


/s/ Sam Freedman*            Trustee                     February 24, 2004

----------------------
Sam Freedman


/s/ Beverly L. Hamilton*     Trustee                     February 24, 2004

------------------------
Beverly L. Hamilton


/s/ Robert J. Malone*        Trustee                     February 24, 2004

----------------------------
Robert J. Malone


/s/ F. William Marshall, Jr.*                            Trustee  February 24,
2004

------------------------------
F. William Marshall, Jr.



*By: /s/ Robert G. Zack                                  February 24, 2004

-----------------------------------------
Robert G. Zack, Attorney-in-Fact

                          OPPENHEIMER INTEGRITY FUNDS



                        Post-Effective Amendment No. 42


                       Registration Statement No. 2-76547


                                 EXHIBIT INDEX
                                 -------------


Exhibit No.                   Description
------------                  -----------


23(j)       Independent Auditor's Consent.