OPPENHEIMER MULTI-SECTOR INCOME TRUST

POS AMI 1 n2.htm N2 OPPENHEIMER MULTI-SECTOR INCOME TRUST

As Filed with the Securities and Exchange
Commission on February 25, 2005

Registration No. 811-5473

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-2

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

Amendment No. 20 /X/

OPPENHEIMER MULTI-SECTOR INCOME TRUST

(Exact Name of Registrant as Specified in Charter)

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

(Address of Principal Executive Offices)

212-323-0250
-
(Registrant's Telephone Number)

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

(Name and Address of Agent for Service)

FORM N-2

OPPENHEIMER MULTI-SECTOR INCOME TRUST

Cross Reference Sheet

Part A of
Form N-2
Item No. Prospectus Heading

1 *
2 *
3 *
4 *
5 *
6 *
7 *
8 General Description of the Registrant
9 Management
10 Capital Stock, Long-Term Debt, and Other Securities
11 *
12 *
13 See Item 15 of the Statement of Additional Information

Part B of
Form N-2
Item No. Heading In Statement of Additional Information

14 Cover Page
15 Table of Contents
16 *
17 See Item 8 of the Prospectus
18 Management
19 Control Persons and Principal Holders of Securities
20 See Item 9 of the Prospectus
21 Brokerage Allocation and Other Practices
22 See Item 10 of the Prospectus
23 Financial Statements

* Not applicable or negative answer.

55
OPPENHEIMER MULTI-SECTOR INCOME TRUST

PART A

INFORMATION REQUIRED IN A PROSPECTUS

Item 1. Outside Front Cover.

Inapplicable.

Item 2. Inside Front and Outside Back Cover Pages.

Inapplicable.

Item 3. Fee Table and Synopsis

Inapplicable.

Item 4. Financial Highlights.

Inapplicable.

Item 5. Plan of Distribution.

Inapplicable.

Item 6. Selling Shareholders.

Inapplicable.

Item 7. Use of Proceeds.

Inapplicable.

Item 8. General Description of the Registrant.

1. Oppenheimer Multi-Sector Income Trust (the "Fund" or "Registrant") is a
closed-end diversified management investment company organized as a Massachusetts business
trust on February 22, 1988.

At a meeting on February 16, 2005, the Board of Trustees of the Fund approved a
proposal to reorganize the fund with and into Oppenheimer Strategic Income Fund, an
open-end fund. The Board of the Fund also approved a resolution to hold a meeting of
shareholders of the Fund to vote on the reorganization and recommended that shareholders
approve it. OppenheimerFunds, Inc. is the investment adviser to both funds. Both funds have
similar investment strategies and policies and have a common portfolio manager.

If the proposed reorganization is also approved by the Board of Trustees of Strategic
Income Fund at its meeting scheduled for March 1, 2005, a proxy statement, containing more
details about the proposal and the Board's action, will be sent to shareholders of the Fund
asking them to vote on the proposed reorganization.

2., 3., and 4. The Fund's primary investment objective is high current income
consistent with preservation of capital. Its secondary objective is capital appreciation.
In seeking those objectives, under normal market conditions, the Fund will allocate its
assets among seven sectors of the fixed-income securities market to take advantage of
opportunities anticipated by OppenheimerFunds, Inc., the Fund's investment advisor (the
"Manager"), which arise in particular sectors in various economic environments. The
Manager's opinion as to such
opportunities will be based on various factors which may affect the levels of income which
can be obtained from the different sectors, such as (i) the effect of interest rate
changes, on a relative and absolute basis, on yields of securities in the particular
sectors, (ii) the effect of changes in tax laws and other legislation affecting securities
in the various sectors, (iii) changes in the relative values of foreign currencies and (iv)
perceived strengths of the abilities of issuers in the various sectors to repay their
obligations.

The sectors in which the Fund invests are not divided by industry but instead differ
by type of security and issuer and includes U.S. Government, Corporate, International,
Asset-Backed (including Mortgage-Backed), Municipal, Convertible and Money Market sectors.
The Manager believes that investing the Fund's assets in a portfolio comprised of three or
more sectors, as opposed to limiting investments to only one such sector, will enhance the
Fund's ability to achieve high current income consistent with preservation of capital or
seek capital appreciation. The range of yields of the securities in each sector will
differ from securities in the others both on an absolute and a relative basis. It is not
the intention of the Fund to always allocate its assets to the sector with the highest
range of yields as this may not be consistent with preservation of capital. The Manager
will, however, monitor changes in relative yields of securities in the various sectors to
help formulate its decisions on which sectors present attractive investment opportunities
at a particular time.

Historically, the markets for the sectors identified below have tended to behave
somewhat independently and have at times moved in opposite directions. For example, U.S.
government securities (defined below) have generally been affected negatively by concerns
about inflation that might result from increased economic activity. Corporate debt
securities and convertible securities, on the other hand, have generally benefited from
increased economic activity due to the resulting improvement in the credit quality of
corporate issuers which, in turn, has tended to cause a rise in the prices of common stock
underlying convertible securities. The converse has generally been true during periods of
economic decline. Similarly, U.S. government securities can be negatively affected by a
decline in the value of the dollar against foreign currencies, while the non-dollar
denominated securities of foreign issuers held by U.S. investors have generally benefited
from such decline. Investments in short-term money market securities tend to decline less
in value than long-term debt securities in periods of rising interest rates but do not rise
as much in periods of declining rates. At times the difference between yields on municipal
securities and taxable securities does not fully reflect the tax advantage of municipal
securities. At such times investments in municipal securities tend to fare better in value
than taxable investments because the yield differential generally can be expected to
increase again to reflect the tax advantage.

The Manager believes that when financial markets exhibit this lack of correlation, an
active allocation of investments among these seven sectors can permit greater preservation
of capital over the long term than would be obtained by investing permanently in any one
sector. To the extent that active allocation of investments among market sectors by the
Manager is successful in preserving or increasing capital, the Fund's capacity to meet its
primary objective of high current income should be enhanced over the longer term. The
Manager also will utilize certain other investment techniques, including options and
futures, intended to enhance income and reduce market risk.

The Fund can invest in securities in the Corporate, International, Asset-Backed and
Convertible Sectors which are in the lowest rating category of each of Standard & Poor's
Rating Service ("Standard & Poor's") or Moody's Investors Service, Inc. ("Moody's"), or
Fitch, Inc. ("Fitch") or another nationally recognized rating organization, or which are
unrated. The description and characteristics of the lowest rating category are discussed
in the description of the Corporate Sector. In all other sectors, the Fund will not invest
in securities rated lower than those considered investment grade, i.e. "Baa" by Moody's or
"BBB" by Standard & Poor's, or Fitch. See "Investment Sectors in Which the Fund Invests"
and Appendix A (Securities Ratings) to the Statement of Additional Information. Unrated
securities will be of comparable quality to those that are rated, in the opinion of the
Manager. The seven sectors of the fixed-income securities market in which the Fund can
invest are:

- The U.S. Government Sector, consisting of debt obligations of the U.S. government and
its agencies and instrumentalities ("U.S. government securities");

- The Corporate Sector, consisting of non-convertible debt obligations or preferred
stock of U.S. corporate issuers and participation interests in senior, fully-secured
loans made primarily to U.S. companies;

- The International Sector, consisting of debt obligations (which may be denominated in
foreign currencies) of foreign governments and their agencies and instrumentalities,
certain supranational entities and foreign and U.S. companies;

- The Asset-Backed Sector, consisting of undivided fractional interests in pools of
consumer loans and participation interests in pools of residential mortgage loans;

- The Municipal Sector, consisting of debt obligations of states, territories or
possessions of the United States and the District of Columbia or their political
subdivisions, agencies, instrumentalities or authorities;

- The Convertible Sector, consisting of debt obligations and preferred stock of U.S.
corporations which are convertible into common stock; and

- The Money Market Sector, consisting of U.S. dollar-denominated debt obligations
having a maturity of 397 days or less and issued by the U.S. government or its
agencies, certain domestic banks or corporations; or certain foreign governments,
agencies or banks; and repurchase agreements.

Current income, preservation of capital and, secondarily, possible capital
appreciation will be considerations in the allocation of assets among the seven investment
sectors described above. The Manager anticipates that at all times Fund assets will be
spread among three or more sectors. Securities in the first six sectors above have
maturities in excess of 397 days. All securities denominated in foreign currencies will be
considered as part of the International Sector, regardless of maturity. The Fund can also
invest in options and futures related to securities in each of the sectors.

INVESTMENT SECTORS IN WHICH THE FUND INVESTS

The Fund's assets allocated to each of the sectors will be managed in accordance with
the investment policies described above. The Fund's portfolio might not always include all
of the different types of investments described below. The allocation among the different
types of investments the Fund is permitted to invest in will vary over time based on the
Manager's evaluation of economic and market conditions.

The U.S. Government Sector

Assets in this sector will be invested in U.S. government securities, which are
obligations issued by or guaranteed by the United States government or its agencies or
instrumentalities. Certain of these obligations, including U.S. Treasury notes and bonds,
and Federal Housing Administration debentures, are supported by the full faith and credit
of the United States. Certain other U.S. government securities, issued or guaranteed by
federal agencies or government-sponsored enterprises, are not supported by the full faith
and credit of the United States. These latter securities include obligations supported by
the right of the issuer to borrow from the U.S. Treasury, such as obligations of Federal
Home Loan Banks, and obligations supported by the credit of the instrumentality, such as
Federal National Mortgage Association bonds. The Manager will adjust the average maturity
of the investments held in this sector from time to time, depending on its assessment of
relative yields of securities of different maturities and its expectations of future
changes in interest rates. U.S. government securities are considered among the most
creditworthy of fixed-income investments. Because of this, the yields available from U.S.
government securities are generally lower than the yields available from corporate debt
securities. Nevertheless, the values of U.S. government securities (like those of
fixed-income securities generally) will change as interest rates fluctuate.

Zero Coupon Treasury Securities. The Fund can invest in "zero coupon" Treasury
securities which are (a) U.S. Treasury notes and bonds which have been stripped of
their unmatured interest coupons and receipts or (b) certificates representing
interests in such stripped debt obligations and coupons. A zero coupon security pays
no interest to its holder during its life. Accordingly, such securities usually
trade at a deep discount from their face or par value and will be subject to greater
fluctuations of market value in response to changing interest rates than debt
obligations of comparable maturities which make current distribution of interest.
Current federal tax law requires that a holder of a zero coupon security accrue a
portion of the discount at which the security was purchased as income each year even
though the holder receives no interest payment in cash on the security during the
year. The Fund will not invest more than 10% of its total assets at the time of
purchase in zero coupon Treasury securities.

The Corporate Sector

Assets allocated to this sector will be invested in secured or unsecured
non-convertible preferred stock and corporate debt obligations, such as bonds, debentures
and notes. The Fund can also acquire participation interests, as described below.

Ratings. Certain corporate fixed-income securities in which the Fund can invest may
be unrated or in the lower rating categories of recognized rating agencies, i.e., ratings
below "Baa" by Moody's or below "BBB" by Standard & Poor's. Lower-rated securities,
commonly called junk bonds, will involve greater volatility of price and risk of principal
and income (including a greater possibility of default or bankruptcy of the issuer of such
securities) than securities in the higher rating categories. The Fund's investments in
lower-rated securities can not exceed 75% of the Fund's total assets, with no more than 50%
of the Fund's total assets in lower-rated foreign securities (see "The International
Sector," below).

The Fund's ability to increase its investments in high-yield securities will enable
it to seek higher investment return. However, high-yield securities, whether rated or
unrated, could be subject to greater market fluctuations and risks of loss of income and
principal and could have less liquidity than lower yielding, higher-rated fixed-income
securities. Principal risks of high-yield securities include (i) limited liquidity and
secondary market support, (ii) substantial market price volatility resulting from changes
in prevailing interest rates, (iii) subordination of the holder's claims to the prior
claims of banks and other senior lenders in bankruptcy proceedings, (iv) the operation of
mandatory sinking fund or call/redemption provisions during periods of declining interest
rates, whereby the holder might receive redemption proceeds at times when only
lower-yielding portfolio securities are available for investment, (v) the possibility that
earnings of the issuer can be insufficient to meet its debt service, and (vi) the issuer's
low creditworthiness and potential for insolvency during periods of rising interest rates
and economic downturn.

The International Sector

The assets allocated to this sector will be invested in debt obligations (which may
either be denominated in U.S. dollars or in non-U.S. currencies), issued or guaranteed by
foreign corporations, certain supranational entities (described below), and foreign
governments or their agencies or instrumentalities, and in debt obligations issued by U.S.
corporations denominated in non-U.S. currencies. All such securities are referred to as
"foreign securities." The Fund's investments in foreign lower-rated securities can not
exceed 50% of the Fund's total assets. The Fund can invest in any country where the
Manager believes there is a potential to achieve the Fund's investment objectives. The
Fund may not invest more than 15% of its total assets in foreign securities of any one
country.

The percentage of the Fund's assets that will be allocated to this sector will vary
on the relative yields of foreign and U.S. securities, the economies of foreign countries,
the condition of such countries' financial markets, the interest rate climate of such
countries and the relationship of such countries' currencies to the U.S. dollar. These
factors are judged on the basis of fundamental economic criteria (e.g., relative inflation
levels and trends, growth rate forecasts, balance of payments status, and economic
policies) as well as technical and political data. The Fund's portfolio of foreign
securities can include those of a number of foreign countries or, depending upon market
conditions, those of a single country.

The obligations of foreign governmental entities, including supranational entities,
have various kinds of government support, and may or may not be supported by the full faith
and credit of a foreign government. Supranational entities include international
organizations
designated or supported by governmental entities to promote economic reconstruction or
development and international banking institutions and related government agencies.
Examples include the International Bank for Reconstruction and Development (the World
Bank), the European Coal and Steel Community, the Asian Development Bank and the
Inter-American Development Bank. The governmental members, or "stockholders," usually make
initial capital contributions to the supranational entity and in many cases are committed
to make additional capital contributions if the supranational entity is unable to repay its
borrowings. Each supranational entity's lending activities are limited to a percentage of
its total capital (including "callable capital" contributed by members at the entity's
call), reserves and net income. There can be no assurance that foreign governments will be
willing or able to honor their commitments.

Investing in foreign securities involves considerations and possible risks not
typically associated with investing in securities in the U.S. The values of foreign
securities investments will be affected by changes in currency rates or exchange control
regulations or currency blockage, application of foreign tax laws, including withholding
taxes, changes in governmental administration or economic or monetary policy (in the U.S.
or abroad) or changed circumstances in dealings between nations. Costs will be incurred in
connection with conversions between various currencies. Foreign brokerage commissions are
generally higher than commissions in the U.S. and foreign securities markets can be less
liquid, more volatile and less subject to governmental supervision than in the U.S.
Investments in foreign countries could be affected by other factors not generally thought
to be present in the U.S., including expropriation or nationalization, confiscatory
taxation, lack of uniform accounting, auditing, and financial reporting standards
comparable to those applicable to U.S. issuers, and potential difficulties in enforcing
contractual obligations, and could be subject to extended settlement periods. There could
be less information publicly available about foreign issuers than about U.S. issuers.

Because the Fund can purchase securities denominated in foreign currencies, a change
in the value of any such currency against the U.S. dollar will result in a change in the
U.S. dollar value of the Fund's assets and the Fund's income available for distribution.
Because a portion of the Fund's investment income can be received or realized in foreign
currencies, the Fund will be required to compute and distribute its income in U.S. dollars,
and absorb the cost of currency fluctuations. The Fund can engage in foreign currency
exchange transactions for hedging purposes to protect against changes in future exchange
rates.

The values of foreign investments and the investment income derived from them can
also be affected unfavorably by changes in currency exchange control regulations. Although
the Fund will invest only in securities denominated in foreign currencies that at the time
of investment do not have government-imposed restrictions on conversion into U.S. dollars,
there can be no assurance against subsequent imposition of currency controls. In addition,
the values of foreign fixed-income investments will fluctuate in response to changes in
U.S. and foreign interest rates.

Special Risks of Emerging Market Countries. Investments in emerging market countries
can involve further risks in addition to those identified above for investments in foreign
securities. Securities issued by emerging market countries and by companies located in
those countries can be subject to extended settlement periods, whereby the Fund might not
receive principal and/or income on a timely basis and its net asset value could be
affected. There can be a lack of liquidity for emerging market securities; interest rates
and foreign currency exchange
rates could be more volatile; sovereign limitations on foreign investments may be more
likely to be imposed; there can be significant balance of payment deficits; and their
economies and markets can respond in a more volatile manner to economic changes than those
of developed countries.

The Asset-Backed Sector

Asset-Backed Securities. The Fund can invest in securities that represent undivided
fractional interests in pools of consumer loans, similar in structure to the
mortgage-backed securities in which the Fund can invest described below. Payments of
principal and interest are passed through to holders of asset-backed securities and are
typically supported by some form of credit enhancement, such as a letter of credit, surety
bond, limited guarantee by another entity or having a priority to certain of the borrower's
other obligations. The degree of credit enhancement varies and generally applies, until
exhausted, to only a fraction of the asset-backed security's par value. If the credit
enhancement of any asset-backed security held by the Fund has been exhausted, and if any
required payments of principal and interest are not made with respect to the underlying
loans, the Fund can then experience losses or delays in receiving payment and a decrease in
the value of the asset-backed security.

The value of asset-backed securities 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 is exhausted. The risks
of investing in asset-backed securities are ultimately dependent upon payment of the
underlying consumer loans by the individuals, and 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 that shorten the weighted average life of
asset-backed securities and can lower their return in the same manner as described below
for prepayments of a pool of mortgage loans underlying mortgage-backed securities.

Private and U.S. Government Issued Mortgage-Backed Securities and CMOs. The Fund can
invest in securities that represent participation interests in pools of residential
mortgage loans, including collateralized mortgage obligations (CMOs). Some CMOs can
be issued or guaranteed by agencies or instrumentalities of the U.S. government (for
example, Ginnie Maes, Freddie Macs and Fannie Maes). Other CMOs are issued by
private issuers, such as commercial banks, savings and loan institutions, private
mortgage insurance companies, mortgage bankers and other secondary market issuers.
CMOs issued by such private issuers are not issued or guaranteed by the U.S.
government or its agencies and are, therefore, also subject to credit risks. Credit
risk relates to the ability of the issuer or a debt security to make interest or
principal payments on the security as they become due. Securities issued or
guaranteed by the U.S. government are subject to little, if any, credit risk because
they are backed by the "full faith and credit of the U.S. government," which in
general terms means that the U.S. Treasury stands behind the obligation to pay
interest and principal.

The Fund's investments can include securities which represent participation interests
in pools of residential mortgage loans which may be issued or guaranteed by private
issuers or by agencies or instrumentalities of the U.S. government. Such securities
differ from conventional debt securities which provide for periodic payment of
interest in fixed or determinable amounts
(usually semi-annually) with principal payments at maturity or specified call dates.
Mortgage-backed securities provide monthly payments which are, in effect, a
"pass-through" of the monthly interest and principal payments (including any
prepayments) made by the individual borrowers on the pooled mortgage loans.

The yield on mortgage-backed securities is based on the average expected life
of the underlying pool of mortgage loans, which is computed on the basis of the
maturities of the underlying instruments. The actual life of any particular pool
will be shortened by unscheduled or early payments of principal and interest. The
occurrence of prepayments is affected by a wide range of economic, demographic and
social factors and, accordingly, it is not possible to predict accurately the average
life of a particular pool. The yield on such pools is usually computed by using the
historical record of prepayments for that pool, or in the case of newly-issued
mortgages, the prepayment history of similar pools. The actual prepayment experience
of a pool of mortgage loans can cause the yield realized by the Fund to differ from
the yield calculated on the basis of the expected average life of the pool.

The price and yields to maturity of CMOs are, in part, determined by
assumptions about cash-flows from the rate of payments of underlying mortgages.
However, changes in prevailing interest rates can cause the rate of prepayments of
underlying mortgages to change. In general, prepayments on fixed rate mortgage loans
increase during periods of falling interest rates and decrease during periods of
rising interest rates. Faster than expected prepayments of underlying mortgages will
reduce the market value and yield to maturity of issued CMOs. If prepayments of
mortgages underlying a short-term or intermediate-term CMO occur more slowly than
anticipated because of rising interest rates, the CMO effectively can become a
longer-term security. The prices of long-term debt securities generally fluctuate
more widely than those of shorter-term securities in response to changes in interest
rates which, in turn, can result in greater fluctuations in the Fund's share prices.

Prepayments tend to increase during periods of falling interest rates, while
during periods of rising interest rates prepayments will most likely decline. When
prevailing interest rates rise, the value of a pass-through security can decrease as
do other debt securities, but, when prevailing interest rates decline, the value of
pass-through securities is not likely to rise on a comparable basis with other debt
securities because of the pre-payment feature of pass-through securities. The Fund's
reinvestment of scheduled principal payments and unscheduled prepayments it receives
can occur at higher or lower rates than the original investment, thus affecting the
yield of the Fund. Monthly interest payments received by the Fund have a compounding
effect which can increase the yield to shareholders more than debt obligations that
pay interest semi-annually.

Because of those factors, mortgage-backed securities can be less effective than
Treasury bonds of similar maturity at maintaining yields during periods of declining
interest rates. Accelerated prepayments adversely affect yields for pass-through
securities purchased at a premium (i.e., a price in excess of principal amount) and
can involve additional risk of loss of principal because the premium may not have
been fully amortized at the time the obligation is repaid. The opposite is true for
pass-through securities purchased at a discount. The Fund can purchase
mortgage-backed securities at a premium or at a discount.

Some mortgage-backed securities issued or guaranteed by U.S. government agencies or
instrumentalities are backed by the full faith and credit of the U.S. Treasury (e.g.,
direct pass-through certificates of the Government National Mortgage Association); some are
supported by the right of the issuer to borrow from the U.S. government (e.g., obligations
of Federal Home Loan Banks); and some are backed by only the credit of the issuer itself
(e.g., obligations of the Federal National Mortgage Association). Such guarantees do not
extend to the value or yield of the mortgage-backed securities themselves or to the value
of the Fund's shares.

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 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.

Interest Rate Risks. Although U.S. government securities involve little credit risk,
their market values will fluctuate until they mature, depending on prevailing interest
rates. When prevailing interest rates go up, the market value of already issued debt
securities tends to go down. When interest rates go down, the market value of already
issued debt securities tends to go up. The magnitude of those fluctuations generally will
be greater when the average maturity of the Fund's portfolio securities is longer. Certain
of the Fund's investments, such as I/Os, P/Os and mortgage-backed securities such as CMOs,
can be very sensitive to interest rate changes and their values can be quite volatile.

The Fund can invest in "stripped" mortgage-backed securities or CMOs. Stripped
mortgage-backed securities usually have two classes. The classes receive different
proportions of the interest and principal distributions on the pool of mortgage assets that
act as collateral for the security. In certain cases, one class will receive all of the
interest payments (and is known as an "I/O"), while the other class will receive all of the
principal value on maturity (and is known as a "P/O").

The yield to maturity on the class that receives only interest is extremely sensitive
to the rate of payment of the principal on the underlying mortgages. Principal prepayments
increase that sensitivity. Stripped securities that pay "interest only" are therefore
subject to greater price
volatility when interest rates change, and they have the additional risk that if the
underlying mortgages are prepaid, the Fund will lose the anticipated cash flow from the
interest on the prepaid mortgages. That risk is increased when general interest rates
fall, and in times of rapidly falling interest rates, the Fund might receive back less than
its investment.

The value of "principal only" 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.

Stripped securities are generally purchased and sold by institutional investors
through investment banking firms. At present, established trading markets have not yet
developed for these securities. Therefore, some stripped securities could be deemed
"illiquid." If the Fund holds illiquid stripped securities, the amount it can hold will be
subject to the Fund's investment limitations set forth under "Direct Placements and Other
Illiquid Securities."

The Fund can also enter into "forward roll" transactions with banks or other buyers
that provide for future delivery of the mortgage-backed securities in which the Fund can
invest. The Fund would be required to deposit liquid assets of any type, including equity
and debt securities of any grade to its custodian bank in an amount equal to its purchase
payment obligation under the roll.

GNMA Certificates. Certificates of the Government National Mortgage Association
("GNMA Certificates") are mortgage-backed securities which evidence an undivided interest
in a pool or pools of mortgages. The GNMA Certificates that the Fund can purchase are of
the "modified pass-through" type, which entitle the holder to receive timely payment of all
interest and principal payments due on the mortgage pool, net of fees paid to the "issuer"
and GNMA, regardless of whether the mortgagor actually makes the payment.

The National Housing Act authorizes GNMA to guarantee the timely payment of principal
and interest on securities backed by a pool of mortgages insured by the Federal Housing
Administration ("FHA") or guaranteed by the Veterans Administration ("VA"). The GNMA
guarantee is backed by the full faith and credit of the U.S. government. GNMA is also
empowered to borrow without limitation from the U.S. Treasury if necessary to make any
payments required under its guarantee.

The average life of a GNMA Certificate is likely to be substantially shorter than the
original maturity of the mortgages underlying the securities. Prepayments of principal by
mortgagors and mortgage foreclosures will usually result in the return of the greater part
of principal investment long before the maturity of the mortgages in the pool.
Foreclosures impose no risk to principal investment because of the GNMA guarantee, except
to the extent that the Fund has purchased the certificates at a premium in the secondary
market.

FHLMC Securities. The Federal Home Loan Mortgage Corporation ("FHLMC") was created
to promote development of a nationwide secondary market for conventional residential
mortgages. FHLMC issues two types of mortgage pass-through securities ("FHLMC
Certificates"): mortgage participation certificates ("PCS") and guaranteed mortgage
certificates ("GMCs"). PCS resemble GNMA Certificates in that each PC represents a pro
rata share of all
interest and principal payments made and owed on the underlying pool. FHLMC guarantees
timely monthly payment of interest on PCS and the ultimate payment of principal.

GMCs also represent a pro rata interest in a pool of mortgages. However, these
instruments pay interest semi-annually and return principal once a year in guaranteed
minimum payments. The expected average life of these securities is approximately 10
years. The FHLMC guarantee is not backed by the full faith and credit of the United States.

FNMA Securities. The Federal National Mortgage Association ("FNMA") was established
to create a secondary market in mortgages insured by the FHA. FNMA issues guaranteed
mortgage pass-through certificates ("FNMA Certificates"). FNMA Certificates resemble GNMA
Certificates in that each FNMA Certificate represents a pro rata share of all interest and
principal payments made and owed on the underlying pool. FNMA guarantees timely payment of
interest and principal on FNMA Certificates. The FNMA guarantee is not backed by the full
faith and credit of the United States.

The Municipal Sector

The assets of this sector will be invested in obligations issued by or on behalf of
states, territories or possessions of the United States and the District of Columbia or
their political subdivisions, agencies, instrumentalities or authorities (municipal
bonds). At the time of purchase, all securities in this sector will be rated within the
four highest grades assigned by Moody's, Standard & Poor's, Fitch Inc. ("Baa" or better by
Moody's or "BBB" or better by Standard & Poor's), or another nationally recognized rating
organization, or unrated securities which are of comparable quality in the opinion of the
Manager. Any income earned on municipal bonds which the Fund distributes to shareholders
would be treated as taxable income to such shareholders.

The Fund does not expect to invest in municipal bonds for tax-exempt income to
distribute to shareholders, but to take advantage of yield differentials with other debt
securities, which can be reflected in bond prices, and thus reflect potential for capital
appreciation. Because municipal bonds are generally exempt from federal taxation they
normally yield much less than taxable fixed-income securities. At times, however, the
yield differential narrows from its normal range. This can occur, for example, when the
demand for U.S. government securities substantially increases in times of economic stress
or when investors seeking safety are willing to pay more for such securities thereby
reducing the yield. It also can occur when investors perceive a threat to the continuation
of the tax-exempt status of municipal bonds through possible Congressional or State
action. When this happens, investors are not willing to pay as much for municipal bonds,
thereby reducing prices and increasing their yield compared to taxable obligations. If
such situations occur, investments in the Municipal Sector can be more attractive than
other sectors even though such investments continue to offer lower yields than taxable
securities because if the yield differential returns to normal ranges, the value of
municipal bonds relative to taxable fixed-income securities will have increased, i.e.
depreciated less or appreciated more. Such an investment would help the Fund achieve its
objective of capital preservation. It would also help achieve its objective of high income
because the Fund's net asset value per share would be higher than it otherwise would have
been, thereby permitting it to earn additional income on those assets.

Municipal bonds include debt obligations issued to obtain funds for various public
purposes, including the construction of a wide range of public facilities such as airports,
highways, bridges, schools, hospitals, housing, mass transportation, streets, and water and
sewer works. Other public purposes for which municipal bonds can be issued include the
refunding of outstanding obligations, obtaining funds for general operating expenses and
obtaining funds to lend to other public institutions and facilities.

The two principal classifications of municipal bonds are (1) "general obligation" and
(2) "revenue" (or "special tax") bonds. General obligation bonds are secured by the
issuer's pledge of its full faith, credit and unlimited taxing power for the payment of
principal and interest. Revenue or special tax bonds are payable only from the revenues
derived from a particular facility or class of facilities or project or, in a few cases,
from the proceeds of a special excise or other tax but are not supported by the issuer's
power to levy general taxes. There are variations in the security of municipal bonds, both
within a particular classification and between classifications, depending on numerous
factors. The yields of municipal bonds depend on, among other things, general money market
conditions, general conditions of the Municipal Bond market, size of a particular offering,
the maturity of the obligation and rating of the issue, and are generally lower than those
of taxable investments.

The Convertible Sector

Assets allocated to this sector will be invested in securities (bonds, debentures,
corporate notes, preferred stocks and units with warrants attached) which are convertible
into common stock. Common stock received upon conversion can be retained in the Fund's
portfolio to permit orderly disposition or to establish a holding period to avoid possible
adverse federal income tax consequences to the Fund or shareholders.

Convertible securities can provide a potential for current income through interest
and dividend payments and at the same time provide an opportunity for capital appreciation
by virtue of their convertibility into common stock. The rating requirements to which the
Fund is subject when investing in corporate fixed-income securities and foreign securities
(see above) also apply to the Fund's investments in domestic and foreign convertible
securities, respectively.

Convertible securities rank senior to common stock in a corporation's capital
structure and, therefore, can entail less risk than the corporation's common stock. The
value of a convertible security is a function of its "investment value" (its value without
considering its conversion privilege) and its "conversion value" (the security's worth if
it were to be exchanged pursuant to its conversion privilege for the underlying security at
the market value of the underlying security).

To the extent that a convertible security's investment value is greater than its
conversion value, its price will be primarily a reflection of such investment value and its
price will be likely to increase when interest rates fall and decrease when interest rates
rise as with other fixed-income securities (the credit standing of the issuer and other
factors may also have an effect on the convertible security's value). If the conversion
value exceeds the investment value, the price of the convertible security will rise above
its investment value and, in addition, will sell at some
premium over its conversion value, which represents the price investors are willing to pay
for the privilege of purchasing a fixed-income security with a possibility of capital
appreciation due to the conversion privilege. At such times the price of the convertible
security will tend to fluctuate directly with the price of the underlying equity security.
Convertible securities can be purchased by the Fund at varying price levels above their
investment values and/or their conversion values in keeping with the Fund's objectives.

The Money Market Sector

Assets in this sector will be invested in the following U.S. dollar-denominated debt
obligations maturing in 397 days or less:

(1) U.S. government securities: Obligations issued or guaranteed by the U.S.
government or its agencies or instrumentalities.

(2) Bank Obligations: Certificates of deposit, bankers' acceptances, loan
participation agreements, time deposits, and letters of credit if they are
payable in the United States or London, England, and are issued or guaranteed
by a domestic or foreign bank having total assets in excess of $1 billion.

(3) Commercial Paper: Obligations rated "A-1," "A-2" or "A-3" by Standard & Poor's
or Prime-1, Prime-2 or Prime-3 by Moody's or if not rated, issued by a
corporation having an existing debt security rated "A" or better by Standard &
Poor's or "A" or better by Moody's.

(4) Corporate Obligations: Corporate debt obligations (including master demand notes but
not including commercial paper) if they are issued by domestic corporations and
are rated "A" or better by Standard & Poor's or "A" or better by Moody's or
unrated securities which are of comparable quality in the opinion of the
Manager.

(5) Other Obligations: Obligations of the type listed in (1) through (4) above, but
not satisfying the standards set forth therein, if they are (a) subject to
repurchase agreements or (b) guaranteed as to principal and interest by a
domestic or foreign bank having total assets in excess of $1 billion, by a
corporation whose commercial paper can be purchased by the Fund, or by a
foreign government having an existing debt security rated "AA" or "Aa" or
better.

(6) Board-Approved Instruments: Other short-term investments of a type which the
Board determines presents minimal credit risks and which are of "high quality"
as determined by any major rating service or, in the case of an instrument that
is not rated, of comparable quality as determined by the Board.

Bank time deposits can be non-negotiable until expiration and can impose penalties
for early withdrawal. Master demand notes are corporate obligations which permit the
investment of fluctuating amounts by the Fund at varying rates of interest pursuant to
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, and the borrower can
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 generally contemplated that they will be traded,
and there is no secondary market for them, although they are redeemable (and thus
immediately repayable by the borrower) at principal amount, plus accrued interest, at any
time.

The Fund has no limitation on the type of issuer from whom these notes will be
purchased; however, in connection with such purchase and on an ongoing basis, subject to
policies established by the Board of Trustees, 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 bank time deposits and master demand notes are subject to
the investment limitation on securities that are not readily marketable set forth under
"Special Investment Techniques -- Direct Placements and Other Illiquid Securities."

Because the Fund can invest in U.S. dollar-denominated securities of foreign banks
and foreign branches of U.S. banks, the Fund can be subject to additional investment risks
which can include future political and economic developments of the country in which the
bank is located, possible imposition of withholding taxes on interest income payable on the
securities, possible seizure or nationalization of foreign deposits, the possible
establishment of exchange control regulations or the adoption of other governmental
restrictions that might affect the payment of principal and interest on such securities.
Additionally, not all of the U.S. federal and state banking laws and regulations applicable
to domestic banks relating to maintenance of reserves, loan limits and promotion of
financial soundness apply to foreign branches of domestic banks, and none of them apply to
foreign banks.

SPECIAL INVESTMENT TECHNIQUES

In conjunction with the investments in the seven sectors described above, the Fund
can use the following special investment techniques, however, the Fund's portfolio might
not always include all of the different types of investment described below.

Direct Placements and Other Illiquid Securities

The Fund can invest up to 20% of its assets in securities purchased in direct
placements which are subject to statutory or contractual restrictions and delays on resale
(restricted securities). This policy does not limit the acquisition of restricted
securities eligible for resale pursuant to Rule 144A under the Securities Act of 1933 that
are determined to be liquid by the Board of Trustees or the Manager under Board-approved
guidelines. Such guidelines take into account trading activity for such securities and the
availability of reliable pricing information, among other factors. If there is a lack of
trading interest in particular Rule 144A securities, the Fund's holdings of those
securities can be illiquid. Restricted securities may generally be resold only in
privately-negotiated transactions with a limited number of purchasers or in a public
offering registered under the Securities Act of 1933 and are, therefore, unlike securities
which are traded in the open market and can be expected to be sold immediately if the
market demand is adequate. If restricted securities are substantially comparable to
registered securities of the same
issuer which are readily marketable, the Fund can not purchase them unless they are offered
at a discount from the market price of the registered securities. Generally, no restricted
securities will be purchased unless the issuer has agreed to register the securities at its
expense within a specific time period. Adverse conditions in the public securities market
at certain times can preclude a public offering of an issuer's unregistered securities.
There can be undesirable delays in selling restricted securities at prices representing
fair value.

The Fund can invest up to an additional 10% of its assets in securities which,
although not restricted, are not readily marketable. Such securities can include bank time
deposits, master demand notes described in the Money Market Sector and certain puts and
calls which are traded in the over-the-counter markets. The Manager monitors holdings of
illiquid securities on an ongoing basis to determine whether to sell any holdings to
maintain adequate liquidity. Illiquid securities include repurchase agreements maturing in
more than seven days, or certain participation interests other than those with puts
exercisable within seven days.

Repurchase Agreements

Any of the securities permissible for purchase for one of its sectors can be acquired
by the Fund subject to repurchase agreements with commercial banks with total assets in
excess of $1 billion or securities dealers with a net worth in excess of $50 million. In a
repurchase transaction, at the time the Fund acquires a security, it simultaneously resells
it to the vendor and must deliver that security to the vendor on a specific future date.
The repurchase 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.
The majority of these transactions run from day to day, and delivery pursuant to the resale
typically will occur within one to five days of the purchase. The Fund will not enter into
a repurchase transaction of more than seven days. Repurchase agreements are considered
"loans" under the Investment Company Act of 1940 (the "Investment Company Act"),
collateralized by the underlying security. The Fund's repurchase agreements will require
that at all times while the repurchase agreement is in effect, the collateral's value must
equal or exceed the repurchase price to collateralize the loan fully. The Manager will
monitor the collateral daily and, in the event its value declines below the repurchase
price, will immediately demand additional collateral be deposited. If such demand is not
met within one day, the existing collateral will be sold. Additionally, the Manager will
consider the creditworthiness of the vendor. If the vendor fails to pay the agreed-upon
resale price on the delivery date, the Fund's risks in such event can include any decline
in value of the collateral to an amount which is less than 100% of the repurchase price,
any costs of disposing of such collateral, and loss from any delay in foreclosing on the
collateral. There is no limit on the amount of the Fund's assets that can be subject to
repurchase agreements.

Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the
Fund, along with other affiliated entities managed by the Manager, may transfer uninvested
cash balances into one or more joint repurchase 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.

When-Issued and Delayed-Delivery Transactions

The Fund can purchase asset-backed securities, municipal bonds and other debt
securities on a "when-issued" basis, and can purchase or sell such securities on a
"delayed-delivery" basis. "When-issued" or "delayed-delivery" refers to securities whose
terms and indenture are available and for which a market exists, but which are not
available for immediate delivery. Although the Fund will enter into such transactions for
the purpose of acquiring securities for its portfolio for delivery pursuant to option
contracts it has entered into, the Fund can dispose of a commitment prior to settlement.
The Fund does not intend to make such purchases for speculative purposes. When such
transactions are negotiated, the price (which is generally expressed in yield terms) is
fixed at the time the commitment is made, but delivery and payment for the securities take
place at a later date. During the period between commitment by the Fund and settlement, no
payment is made for the securities purchased, and no interest accrues to the Fund from the
transaction until the Fund receives the security at settlement of the trade. Such
securities are subject to market fluctuations; the value at delivery can be less than the
purchase price. The Fund will identify to its custodian, liquid assets on its records as
segregated of any type, including equity and debt securities of any grade at least equal to
the value of purchase commitments until payment is made. Such securities can bear interest
at a lower rate than longer term securities. The commitment to purchase a security for
which payment will be made on a future date can be deemed a separate security and involve a
risk of loss if the value of the security declines prior to the settlement date, which risk
is in addition to the risk of decline of the Fund's other assets.

Hedging

The Fund can purchase and sell futures contracts; enter into forward contracts;
purchase and sell call and put options on securities, futures, indices and foreign
currencies; and enter into interest rate swap agreements. These are referred to as
"Hedging Instruments." 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.

Hedging Instruments can be used to attempt to protect against possible declines in
the market value of the Fund's portfolio from downward trends in securities markets, to
protect the Fund's unrealized gains in the value of its securities which have appreciated,
to facilitate selling securities for investment reasons, to establish a position in the
securities markets as a temporary substitute for purchasing particular securities, or to
reduce the risk of adverse currency fluctuations.

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. Covered calls and puts can also be
written on securities to attempt to increase the Fund's income. The Fund will not use
futures and options on futures for speculation. The hedging instruments the Fund can use
are described below. As of the date of this Registration Statement, the Fund does not
intend to enter into futures, forward contracts and options on futures if after any such
purchase, the sum of margin deposits on futures and premiums paid on futures options would
exceed 5% of the value of the Fund's total assets.

o Futures. The Fund can buy and sell futures contracts that relate to (1) stock
indices (referred to as stock index futures), (2) other securities indices (together with
stock index futures, referred to as financial futures), (3) an individual stock ("single
stock futures"), (4) interest rates (referred to as interest rate futures), (5) foreign
currencies (referred to as forward contracts), or (6) commodities (referred to as commodity
futures.) An interest rate future obligates the seller to deliver and the purchaser to take
a specific type of debt security at a specific future date for a fixed price. That
obligation can be satisfied by actual delivery of the debt security or by entering into an
offsetting contract. A bond index assigns relative values to the bonds included in that
index and is used as a basis for trading long-term bond index futures contracts. Bond
index futures reflect the price movements of bonds included in the index. They differ from
interest rate futures in that settlement is made in cash rather than by delivery; or
settlement can be made by entering into an offsetting contract. A single stock future
obligates the seller to deliver (and the purchaser to take) cash or a specified equity
security to settle the futures transaction. Either party could also enter into an
offsetting contract to close out the position. Single stock futures trade on a very
limited number of exchanges, with contracts typically not fungible among the exchanges.

o Put and Call Options. 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 in "futures,"
above. A call or put can be purchased 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.

If the Fund sells (that is, writes) 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
other types of written calls, the Fund must identify liquid assets to enable it to satisfy
its obligations if the call is exercised. Up to 25% of the Fund's total assets can be
subject to calls.

The Fund can buy puts whether or not it holds the underlying investment in the
portfolio. If the Fund writes a put, the put must be covered by identified liquid assets.
The Fund will not write puts if more than 50% of the Fund's net assets would have to be
identified to cover put options.

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.

o Foreign Currency Options. The Fund can purchase and write puts and calls on foreign
currencies that are traded on a securities or commodities exchange or quoted by major
recognized dealers in such options, for the purpose of protecting against declines in the
dollar value of foreign securities and against increases in the dollar cost of foreign
securities to be acquired. If a rise is anticipated in the dollar value of a foreign
currency in which securities to be acquired are denominated, the increased cost of such
securities can be partially offset by purchasing calls or writing puts on that foreign
currency. If a decline in the dollar value of a
foreign currency is anticipated, the decline in value of portfolio securities denominated
in that currency can be partially offset by writing calls or purchasing puts on that
foreign currency. However, in the event of currency rate fluctuations adverse to the
Fund's position, it would either lose the premium it paid and incur transaction costs, or
purchase or sell the foreign currency at a disadvantageous price.

o Forward Contracts. The Fund can enter into foreign currency exchange contracts
("forward contracts"), which obligate the seller to deliver and the purchaser to take a
specific foreign currency at a specific future date for a fixed price. The Fund can enter
into a forward contract in order to "lock in" the U.S. dollar price of a security
denominated in a foreign currency, or to protect against a possible loss resulting from an
adverse change in the relationship between the U.S. dollar and a foreign currency. There
is a risk that use of forward contracts can reduce the gain that would otherwise result
from a change in the relationship between the U.S. dollar and a foreign currency. Forward
contracts include standardized foreign currency futures contracts which are traded on
exchanges and are subject to procedures and regulations applicable to other futures. The
Fund can also enter into a forward contract to sell a foreign currency denominated in a
currency other than that in which the underlying security is denominated. This is done in
the expectation that there is a greater correlation between the foreign currency of the
forward contract and the foreign currency of the underlying investment than between the
U.S. dollar and the currency of the underlying investment. This technique is referred to
as "cross hedging." The success of cross hedging is dependent on many factors, including
the ability of the Manager to correctly identify and monitor the correlation between
foreign currencies and the U.S. dollar. To the extent that the correlation is not
identical, the Fund can experience losses or gains on both the underlying security and the
cross currency hedge.

The Fund will not speculate in foreign currency exchange contracts. There is no
limitation as to the percentage of the Fund's assets that can be committed to foreign
currency exchange contracts. The Fund does not enter into such forward contracts or
maintain a net exposure in such contracts to the extent that the Fund would be obligated to
deliver an amount of foreign currency in excess of the value of the Fund's assets
denominated in that currency or enter into a cross hedge unless it is denominated in a
currency or currencies that the Manager believes will have price movements that tend to
correlate closely with the currency in which the investment being hedged is denominated.

There are certain risks in writing calls. If a call written by the Fund is
exercised, the Fund foregoes any profit from any increase in the market price above the
call price of the underlying investment on which the call was written. In addition, the
Fund could experience capital losses that might cause previously distributed short-term
capital gains to be re-characterized as non-taxable return of capital to shareholders. In
writing puts, there is the risk that the Fund could be required to buy the underlying
security at a disadvantageous price. The principal risks relating to the use of futures
are: (a) possible imperfect correlation between the prices of the futures and the market
value of the securities in the Fund's portfolio; (b) possible lack of a liquid secondary
market for closing out a futures position; (c) the need for additional skills and
techniques beyond those required for normal portfolio management; and (d) losses on futures
resulting from interest rate movements not anticipated by the Manager.

Interest Rate Swaps and Total Return Swaps. 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 fixed rate payments for
floating rate payments. The Fund enters into swaps only on securities it owns. The Fund
can not enter into swaps with respect to more than 25% of its total assets. Also, the Fund
will identify on its books liquid assets of any type, including equity and debt securities
of any grade, 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.

In addition, the Fund may invest in total return swaps with appropriate
counterparties. In a total return swap, one party pays a rate of interest in exchange for
the total rate of return on another investment. For example, if the Fund wished to invest
in a particular security, it could instead enter into a total return swap and receive the
total return of that security, less the "funding cost," which would be a floating interest
rate payment to the counterparty.

Under a swap agreement, the Fund typically will pay a fee determined by multiplying
the face value of the swap agreement by an agreed-upon interest rate. If the underlying
asset value declines over the term of the swap, the Fund would be required to pay the
dollar value of that decline to the counterparty in addition to its fee payments.

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 receives. 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.

o Derivative Investments. The Fund can invest in a number of different kinds of
"derivative investments." In general, a "derivative investment" is a specially designed
investment whose performance is linked to the performance of another investment or
security, such as an option, future, index, currency or commodity. The Fund can not
purchase or sell physical commodities or commodity contracts; however this does not prevent
the Fund from buying or selling options and futures contracts or from investing in
securities or other instruments backed by physical commodities. In the broadest sense,
derivative investments include exchange-traded options and futures contracts. The risks of
investing in derivative investments include not only the ability of the company issuing the
instrument to pay the amount due on the maturity of the instrument, but also the risk that
the underlying investment or security might not perform the way the Manager expected it to
perform. The performance of derivative investments can also be influenced by interest rate
changes in the U.S. and abroad. All of this can mean that the Fund will realize less
principal and/or income than expected. Certain derivative investments held by the Fund can
trade in the over-the-counter market and can be illiquid. Derivative investments used by
the Fund are used in some cases for hedging purposes and in other cases for "non-hedging"
investment purposes to seek income or total return. In the broadest sense, exchange-traded
options and futures contracts (discussed in "Hedging," above) can be considered "derivative
investments."

The Fund can invest in different types of derivatives, generally known as "Structured
Investments." "Index-linked" or "commodity -linked" notes are debt securities of companies
that call for interest payments and/or payment on the maturity of the note in different
terms than the typical note where the borrower agrees to make fixed interest payments and
to pay a fixed sum on the maturity of the note. Principal and/or interest payments on an
index-linked note depend on the performance of one or more market indices, such as the S&P
500 Index or a weighted index of commodity futures, such as crude oil, gasoline and natural
gas. Further examples of derivative investments the Fund can invest in include "debt
exchangeable for common stock" of an issuer or "equity-linked debt securities" of an
issuer. At maturity, the principal amount of the security is exchanged for common stock of
the issuer or is payable in an amount based on the issuer's common stock price at the time
of maturity. In either case there is a risk that the amount payable at maturity will be
less than the principal amount of the debt.

The Fund can also invest in currency-indexed securities. Typically these are
short-term or intermediate-term debt securities having a value at maturity, and/or interest
rates determined by reference to one or more specified foreign currencies. Certain
currency-indexed securities purchased by the Fund can have a payout factor tied to a
multiple of the movement of the U.S. dollar (or the foreign currency in which the security
is denominated) against the movement in the U.S. dollar, the foreign currency, another
currency, or an index. Such securities can be subject to increased principal risk and
increased volatility than comparable securities without a payout factor in excess of one,
but the Manager believes the increased yield justifies the increased risk.

o Participation Interests. The Fund can acquire interests in loans that are made to
U.S. companies, foreign companies and foreign governments (the "borrower"). They can be
interests in, or assignments of, the loan and are acquired from banks or brokers that have
made the loan or have become members of the lending syndicate. The Fund will not invest,
at the time of investment, more than 5% of its net assets in participation interests of the
same borrower. The Manager has set certain creditworthiness standards for borrowers, and
monitors their creditworthiness. The value of loan participation interests depends
primarily upon the creditworthiness of the borrower, and its ability to pay interest and
principal. Borrowers can have difficulty making payments. If a borrower fails to make
scheduled interest or principal payments, the Fund could experience a decline in the net
asset value of its shares. Some borrowers can have senior securities rated as low as "C"
by Moody's or "D" by Standard & Poor's, but can be deemed acceptable credit risks.
Participation interests are subject to the Fund's limitations on investments in illiquid
securities.

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, if 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, if 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).

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.

The Fund may lend its portfolio securities pursuant to the Securities Lending
Agreement (the "Securities Lending Agreement") with JP Morgan Chase, subject to the
following restrictions as well as applicable laws. The Fund will 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.

Borrowing

From time to time, the Fund can increase its ownership of securities by borrowing up
to 10% of the value of its net assets from banks and investing the borrowed funds (on which
the Fund will pay interest). After any such borrowing, the Fund's total assets, less its
liabilities other than borrowings, must remain equal to at least 300% of all borrowings, as
set forth in the Investment Company Act. Interest on borrowed money is an expense the Fund
would not otherwise incur, so that it can have substantially reduced net investment income
during periods of substantial borrowings. The Fund's ability to borrow money from banks
subject to the 300% asset coverage requirement is a fundamental policy.

The Fund can also borrow to finance repurchases and/or tenders of its shares and can
also borrow for temporary purposes in an amount not exceeding 5% of the value of the Fund's
total assets. Any investment gains made with the proceeds obtained from borrowings in
excess of interest paid on the borrowings will cause the net income per share or the net
asset value per share of the Fund's shares to be greater than would otherwise be the case.
On the other hand, if the investment performance of the securities purchased fails to cover
their cost (including any interest paid on the money borrowed) to the Fund, then the net
income per share or net asset value per share of the Fund's shares will be less than would
otherwise have been the case. This speculative factor is known as "leverage."

Although such borrowings would therefore involve additional risk to the Fund, the
Fund will only borrow if such additional risk of loss of principal is considered by the
Manager to be appropriate in relation to the Fund's primary investment objective of high
current income consistent with preservation of capital. The Manager will make this
determination by examining both the market for securities in which the Fund invests and
interest rates in general to ascertain that the climate is sufficiently stable to warrant
borrowing.

Investment in Other Investment Companies.

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

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

Portfolio Turnover

Because the Fund will actively use trading to benefit from short-term yield
disparities among different issues of fixed-income securities or otherwise to achieve its
investment objective and policies, the Fund can be subject to a greater degree of portfolio
turnover than might be expected from investment companies which invest substantially all of
their assets on a long-term basis. The Fund cannot accurately predict its portfolio
turnover rate, but it is anticipated that its annual turnover rate generally will not
exceed 150% (excluding turnover of securities having a maturity of one year or less).

The Manager will monitor the Fund's tax status under the Internal Revenue Code during
periods in which the Fund's annual turnover rate exceeds 100%. Higher portfolio turnover
results in increased Fund expenses, including brokerage commissions, dealer mark-ups and
other transaction costs on the sale of securities and on the reinvestment in other
securities. To the extent that increased portfolio turnover results in sales of securities
held less than three months, the Fund's ability to qualify as a "regulated investment
company" under the Internal Revenue Code can be affected.

Defensive Strategies

There can be times when, in the Manager's judgment, conditions in the securities
markets would make pursuing the Fund's primary investment strategy inconsistent with the
best interests of its shareholders. At such times, the Fund may employ alternative
strategies primarily seeking to reduce fluctuations in the value of the Fund's assets. In
implementing these defensive strategies, the Fund can invest all or any portion of its
assets in nonconvertible high-grade debt securities, or U.S. government and agency
obligations. The Fund can also hold a portion of its assets in cash or cash equivalents.
It is impossible to predict when, or for how long, alternative strategies will be utilized.

Effects of Interest Rate Changes

During periods of falling interest rates, the values of outstanding long term
fixed-income securities generally rise. Conversely, during periods of rising interest
rates, the values of such securities generally decline. The magnitude of these
fluctuations will generally be greater for securities with longer maturities. If the
Manager's expectation of changes in interest rates or its evaluation of the normal yield
relationships in the fixed-income markets proves to be incorrect, the Fund's income, net
asset value and potential capital gain can be decreased or its potential capital loss can
be increased.

Although changes in the value of the Fund's portfolio securities subsequent to their
acquisition are reflected in the net asset value of the Fund's shares, such changes will
not affect the income received by the Fund from such securities. The dividends paid by the
Fund will increase or decrease in relation to the income received by the Fund from its
investments, which will in any case be reduced by the Fund's expenses before being
distributed to the Fund's shareholders.

INVESTMENT RESTRICTIONS

The Fund has adopted the following investment restrictions, which together with its
investment objectives, are fundamental policies changeable only with the approval of the
holders of a "majority" of the Fund's outstanding voting securities, defined in the
Investment Company Act as the affirmative vote of the lesser of (a) more than 50% of the
outstanding shares of the Fund, or (b) 67% or more of the shares present or represented by
proxy at a meeting if more than 50% of the Fund's outstanding shares are represented at the
meeting in person or by proxy. A policy is not a fundamental policy unless this Prospectus
or the Statement of Additional Information says that it is. The Fund's Board of Trustees
can change non-fundamental policies, unless otherwise stated, without shareholder
approval. Unless it is specifically stated that a percentage restriction applies on an
ongoing basis, it applies only at the time the Fund makes an investment, and 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. Under these restrictions, the Fund will not do any
of the following:

o As to 75% of its total assets, the Fund will not invest in securities of any one
issuer (other than the United States government, its agencies or instrumentalities)
if after any such investment either (a) more than 5% of the Fund's total assets
would be invested in the securities of that issuer, or (b) the Fund would then own
more than 10% of the voting securities of that issuer;

o The Fund will not concentrate investments to the extent of 25% or more of its total
assets in securities of issuers in the same industry; provided that this limitation
shall not apply with respect to investments in U.S. government securities;

o The Fund will not make loans except through (a) the purchase of debt securities in
accordance with its investment objectives and policies; (b) the lending of portfolio
securities as described above; or (c) the acquisition of securities subject to
repurchase agreements;

o The Fund will not borrow money, except in conformity with the restrictions stated
above under "Borrowing";

o The Fund will not pledge, hypothecate, mortgage or otherwise encumber its assets,
except to secure permitted borrowings or for the escrow arrangements contemplated in
connection with the use of Hedging Instruments;

o The Fund will not participate on a joint or joint and several basis in any securities
trading account;

o The Fund will not invest in companies for the purpose of exercising control or
management thereof;

o The Fund will not make short sales of securities or maintain a short position, unless
at all times when a short position is open it owns an equal amount of such
securities or by virtue of ownership of other securities has the right, without
payment of any further consideration, to obtain an equal amount of the securities
sold short ("short sales against the box"). Because changes in federal income tax
laws would not enable the Fund to defer realization of gain or loss for federal
income tax purposes, short sales against the box therefore would not be used by the
Fund;

o The Fund will not invest in (a) real estate, except that it can purchase and sell
securities of companies which deal in real estate or interests therein; (b)
commodities or commodity contracts (except that the Fund can purchase and sell
hedging instruments whether or not they are considered to be a commodity or
commodity contract); or (c) interests in oil, gas or other mineral exploration or
development programs;

o The Fund will not act as an underwriter of securities, except insofar as the Fund
might be deemed to be an underwriter for purposes of the Securities Act of 1933 in
the resale of any securities held for its own portfolio;

o The Fund will not purchase securities on margin, except that the Fund can make margin
deposits in connection with any of the Hedging Instruments it can use; or

o The Fund will not 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 agreements and when-issued arrangements for
portfolio securities transactions and contracts to buy or sell derivatives, hedging
instruments or options or futures.

5. The shares of beneficial interest of the Fund, $.01 par value per share (the
"shares"), are listed and traded on The New York Stock Exchange (the "NYSE"). The
following table sets forth for the shares for the periods indicated: (a) the per share
high sales price on the NYSE, the net asset value per share as of the last day of the
week immediately preceding such day and the premium or discount (expressed as a
percentage of net asset value) represented by the difference between such high sales
price and the corresponding net asset value and (b) the per share low sales price on
the NYSE, the net asset value per share as of the last day of the week immediately
preceding such day and the premium or discount (expressed as a percentage of net asset
value) represented by the difference between such low sales price and the corresponding
net asset value.

Market Price High;(1) Market Price Low;(1)
NAV and Premium/ NAV and Premium/
Ended Discount That Day(2) Discount That Day(2)
-------- ---------------------------- ----------------------------

1/31/03 Market: $7.92 Market: $7.86
NAV: $8.52 NAV: $8.52
Premium//Discount: -7.04% Premium//Discount: -7.75%

4/30/03 Market: $8.15 Market: $7.85
NAV: $8.94 NAV: $8.62
Premium//Discount: -8.81% Premium//Discount: -8.94%

7/31/03 Market: $8.23 Market: $7.94
NAV: $9.12 NAV: $9.06
Premium//Discount: -9.76% Premium//Discount: -12.35%

10/31/03 Market: $8.44 Market: $8.15
NAV: $9.28 NAV: $9.22
Premium//Discount: -9.05% Premium//Discount: -11.62%

1/31/04 Market: $8.81 Market: $8.62
NAV: $9.55 NAV: $9.53
Premium//Discount: -7.76% Premium//Discount: -9.53%

4/30/04 Market: $8.68 Market: $8.12
NAV: $9.47 NAV: $9.37
Premium//Discount:-8.34% Premium//Discount:-13.34%
7/31/04 Market: $8.18 Market: $7.88
NAV: $9.35 NAV: $9.26
Premium//Discount:-12.51% Premium//Discount:-14.90%

10/31/04 Market: $8.52 Market: $8.28
NAV: $9.60 NAV: $9.50
Premium//Discount:-11.25% Premium//Discount:-12.84%

1/31/05 Market: $8.64 Market: $8.54
NAV: $9.58 NAV: $9.71
Premium//Discount:-9.81% Premium//Discount:-12.05%

---------------
1. As reported by the NYSE.
2. The Fund's computation of net asset value (NAV) is as of the close of trading on the
last day of the week immediately preceding the day for which the high and low market price
is reported and the premium or discount (expressed as a percentage of net asset value) is
calculated based on the difference between the high or low market price and the
corresponding net asset value for that day, divided by the net asset value.

The Board of Trustees of the Fund has determined that it could be in the interests of
Fund shareholders for the Fund to take action to attempt to reduce or eliminate a market
value discount from net asset value. To that end, the Fund could, from time to time,
either repurchase shares in the open market or, subject to conditions imposed from time to
time by the Board, make a tender offer for a portion of the Fund's shares at their net
asset value per share. Subject to the Fund's fundamental policy with respect to
borrowings, the Fund could incur debt to finance repurchases and/or tenders. Interest on
any such borrowings will reduce the Fund's net income. In addition, the acquisition of
shares by the Fund will decrease the total assets of the Fund and therefore will have the
effect of increasing the Fund's expense ratio. If the Fund must liquidate portfolio
securities to purchase shares tendered, the Fund could be required to sell portfolio
securities for other than investment purposes and could realize gains and losses.

In addition to open-market share purchases and tender offers, the Board could also
seek shareholder approval to convert the Fund to an open-end investment company if the
Fund's shares trade at a substantial discount. If the Fund's shares have traded on the
NYSE at an average discount from net asset value of more than 10%, determined on the basis
of the discount as of the end of the last trading day in each week during the period of 12
calendar weeks ending October 31 in such year, the Trustees will consider recommending to
shareholders a proposal to convert the Fund to an open-end company. If during a year in
which the Fund's shares trade at the average discount stated, and for the period described,
in the preceding sentence the Fund also receives written requests from the holders of 10%
or more of the Fund's outstanding shares that a proposal to convert to an open end company
be submitted to the Fund's shareholders, within six months the Trustees will submit a
proposal to the Fund's shareholders, to the extent consistent with the Investment Company
Act, to amend the Fund's Declaration of Trust to convert the Fund from a closed-end to an
open-end investment company. If the Fund converted to an open-end investment company, it
would be able continuously to issue and offer its shares for sale, and each share of the
Fund could be tendered to the Fund for redemption at the option of the shareholder, at a
redemption price equal to the current net asset value per share. To meet such redemption
request, the Fund could be required to liquidate portfolio securities. Its shares would no
longer be listed on the NYSE. The Fund cannot predict whether any repurchase of shares
made while the Fund is a closed-end investment company would decrease the discount from net
asset value at which the shares trade. To the extent that any such repurchase decreased
the discount from net asset value to an amount below 10% during the measurement period
described above, the Fund would not be required to submit to shareholders a proposal to
convert the Fund to an open-end investment company.

At a meeting on February 16, 2005, the Board of Trustees of the Fund approved a proposal to
reorganize the Fund with and into Oppenheimer Strategic Income Fund, an open-end fund. The
Board of the Fund also approved a resolution to hold a meeting of shareholders of the Fund
to vote on the reorganization and recommended that shareholders approve it.
OppenheimerFunds, Inc. is the investment adviser to both funds. Both funds have similar
investment strategies and policies and have a common portfolio manager.

Item 9. Management

1(a). The Fund is governed by a Board of Trustees, which is responsible under
Massachusetts law for protecting the interests of shareholders. The Trustees meet
periodically throughout the year to oversee the Fund's activities, review its performance,
and review the actions of the Manager. The Fund is required to hold annual shareholder
meetings for the election of trustees and the ratification of the Fund's independent
registered public accounting firm. The Fund can also hold shareholder meetings from time
to time for other important matters, and shareholders have the right to call a meeting to
remove a Trustee or to take other action described in the Fund's Declaration of Trust.

1(b). The Manager, a Colorado corporation with its principal offices at Two
World Financial Center, 225 Liberty Street-11th Floor, New York, New York 10281-1008, acts
as investment advisor for the Fund under an investment advisory agreement (the "Advisory
Agreement") under which it provides ongoing investment advice and conducts the investment
operations of the Fund, including purchases and sales of its portfolio securities, under
the general supervision and control of the Trustees of the Fund. The Manager also acts as
accounting agent for the Fund.

The Manager has operated as an investment advisor since January 1960. The Manager and
its controlled subsidiaries and affiliates managed more than $170 billion in assets as of
December 31, 2004, including other Oppenheimer funds with more than seven million
shareholder accounts. The Manager is located at Two World Financial Center, 225 Liberty
Street-11th Floor, New York, New York 10281-1008. 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.

The Manager provides office space and investment advisory services for the Fund
and pays all compensation of those Trustees and officers of the Fund who are affiliated
persons of the Manager. Under the Advisory Agreement, the Fund pays the Manager an
advisory fee computed and paid weekly at an annual rate of 0.65 of 1% of the net assets of
the Fund at the end of that week. During the fiscal years ended October 31, 2002, 2003 and
2004 the Fund paid management fees to the Manager of $1,583,420, $1,672,345 and 1,788,296
respectively. The Fund incurred approximately $13,813 in expenses for the fiscal year
ended October 31, 2004 for services provided by Shareholder Financial Services, Inc., a
subsidiary of the Manager that acts as transfer agent, shareholder servicing agent and
dividend paying agent for the Fund.

Under the Advisory Agreement, the Fund pays certain of its other costs not paid by
the Manager, including:
(a) brokerage and commission expenses,
(b) federal, state, local and foreign taxes, including issue and transfer taxes, incurred
by or levied on the Fund,
(c) interest charges on borrowings,
(d) the organizational and offering expenses of the Fund, whether or not advanced by the
Manager,
(e) fees and expenses of registering the shares of the Fund under the appropriate federal
securities laws and of qualifying shares of the Fund under applicable state
securities laws,
(f) fees and expenses of listing and maintaining the listings of the Fund's shares on any
national securities exchange,
(g) expenses of printing and distributing reports to shareholders,
(h) costs of shareholder meetings and proxy solicitation,
(i) charges and expenses of the Fund's custodian bank and Registrar, Transfer and
Dividend Disbursing Agent,
(j) compensation of the Fund's Trustees who are not interested persons of the Manager,
(k) legal and auditing expenses,
(l) the cost of certificates representing the Fund's shares,
(m) costs of stationery and supplies, and
(n) insurance premiums.

The Manager has advanced certain of the Fund's organizational and offering expenses,
which were repaid by the Fund. There is no expense limitation provision.

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 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 Transfer Agent, and brokerage and
soft dollar arrangements permissible under Section 28(e) of the Securities
Exchange Act.

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

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

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

1(c). The Portfolio managers of the Fund are Arthur Steinmetz and Caleb Wong.
Mr. Steinmetz is a Vice President of the Fund and a Senior Vice President of the Manager
and Mr. Wong is a Vice President of both the Fund and the Manager. Messrs. Steinmetz and
Wong have been the persons principally responsible for the day-to-day management of the
Trust's portfolio since February 1, 1999. Other members of the Manager's fixed-income
portfolio department, particularly portfolio analysts, traders and other portfolio managers
provide the Fund's portfolio managers with support in managing the Fund's portfolio.

1(d). Inapplicable.

1(e). The JPMorgan Chase Bank, 4 Chase MetroTech Center, Brooklyn, New York,
11245 acts as the custodian bank for the Fund's assets held in the United States. The
Manager and its affiliates have banking relationships with the custodian bank. The Manager
has represented to the Fund that its banking relationships with the custodian bank have
been and will continue to be unrelated to and unaffected by the relationship between the
Fund and the custodian bank. It will be the practice of the Fund to deal with the
custodian bank in a manner uninfluenced by any banking relationship the custodian bank may
have with the Manager and its affiliates. Rules adopted under the Investment Company Act
permit the Fund to maintain its securities and cash in the custody of certain eligible
banks and securities depositories. Pursuant to those Rules, the Fund's portfolio of
securities and cash, when invested in foreign securities, will be held in foreign banks and
securities depositories approved by the Trustees of the Fund in accordance with the rules
of the Securities and Exchange Commission.

Shareholder Financial Services, Inc. ("SFSI"), a subsidiary of the Manager, acts as
primary transfer agent, shareholder servicing agent and dividend paying agent for the
Fund. SFSI is paid an agreed upon fee for each account plus out-of-pocket costs and
expenses. United Missouri Trust Company of New York acts as co-transfer agent and
co-registrar with SFSI to provide such services as SFSI may request. KPMG LLP is the
independent registered public accounting firm of the Fund. They audit the Fund's financial
statements and perform other related audit services. They also act as the independent
registered public accounting firm for the Manager for certain other funds advised by the
Manager and its affiliates.

1(f). See 1(b) above.

1(g). Inapplicable.

2. Inapplicable.

3. None as of February 8, 2005.

Item 10. Capital Stock, Long-Term Debt, and Other Securities.

1. The Fund is authorized to issue an unlimited number of shares of beneficial
interest, $.01 par value. The Fund's shares have no preemptive, conversion, exchange or
redemption rights. Each share has equal voting, dividend, distribution and liquidation
rights. All shares outstanding are, and, when issued, those offered hereby will be, fully
paid and nonassessable. Shareholders are entitled to one vote per share. All voting
rights for the election of Trustees are noncumulative, which means that the holders of more
than 50% of the shares can elect 100% of the Trustees then nominated for election if they
choose to do so and, in such event, the holders of the remaining shares will not be able to
elect any Trustees. Under the rules of the NYSE applicable to listed companies, the Fund
is required to hold an annual meeting of shareholders in each year.

Under Massachusetts law, under certain circumstances shareholders could be held
personally liable for the obligations of the Fund. However, the Declaration of Trust
disclaims shareholder liability for actions or obligations of the Fund and requires that
notice of such disclaimer be given in each agreement, obligation or instrument entered into
or executed by the Fund. The Declaration of Trust provides for indemnification by the Fund
for all losses and expenses of any shareholder held personally liable for obligations of
the Fund. Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which the Fund would be unable to meet
its obligations. The likelihood of such circumstances is remote.

Pursuant to the Trust's Dividend Reinvestment and Cash Purchase Plan (the "Plan"),
all dividends and capital gains distributions ("Distributions") declared by the Trust will
be automatically reinvested in additional full and fractional shares of the Trust
("shares") unless (i) a shareholder elects to receive cash or (ii) shares are held in
nominee name, in which event the nominee should be consulted as to participation in the
Plan. Shareholders that participate in the Plan ("Participants") may, at their option,
make additional cash investments in shares, semi-annually in amounts of at least $100,
through payment to Shareholder Financial Services, Inc., the agent for the Plan (the
"Agent"), and a service fee of $0.75.

Depending upon the circumstances hereinafter described, Plan shares will be acquired
by the Agent for the Participant's account through receipt of newly issued shares or the
purchase of outstanding shares on the open market. If the market price of shares on the
relevant date (normally the payment date) equals or exceeds their net asset value, the
Agent will ask the Trust for payment of the Distribution in additional shares at the
greater of the Trust's net asset value determined as of the date of purchase or 95% of the
then-current market price. If the market price is lower than net asset value, the
Distribution will be paid in cash, which the Agent will use to buy shares on The New York
Stock Exchange (the "NYSE"), or otherwise on the open market to the extent available. If
the market price exceeds the net asset value before the Agent has completed its purchases,
the average purchase price per share paid by the Agent may exceed the net asset value,
resulting in fewer shares being acquired than if the Distribution had been paid in shares
issued by the Trust.

Participants may elect to withdraw from the Plan at any time and thereby receive cash
in lieu of shares by sending appropriate written instructions to the Agent. Elections
received by the Agent will be effective only if received more than ten days prior to the
record date for any Distribution; otherwise, such termination will be effective shortly
after the investment of such
Distribution with respect to any subsequent Distribution. Upon withdrawal from or
termination of the Plan, all shares acquired under the Plan will remain in the
Participant's account unless otherwise requested. For full shares, the Participant may
either: (1) receive without charge a share certificate for such shares; or (2) request the
Agent (after receipt by the Agent of signature guaranteed instructions by all registered
owners) to sell the shares acquired under the Plan and remit the proceeds less any
brokerage commissions and a $2.50 service fee. Fractional shares may either remain in the
Participant's account or be reduced to cash by the Agent at the current market price with
the proceeds remitted to the Participant. Shareholders who have previously withdrawn from
the Plan may rejoin at any time by sending written instructions signed by all registered
owners to the Agent.

There is no direct charge for participation in the Plan; all fees of the Agent are
paid by the Trust. There are no brokerage charges for shares issued directly by the
Trust. However, each Participant will pay a pro rata share of brokerage commissions
incurred with respect to open market purchases of shares to be issued under the Plan.
Participants will receive tax information annually for their personal records and to assist
in federal income tax return preparation. The automatic reinvestment of Distributions does
not relieve Participants of any income tax that may be payable on Distributions.

The Plan may be terminated or amended at any time upon 30 days' prior written notice
to Participants which, with respect to a Plan termination, must precede the record date of
any Distribution by the Trust. Additional information concerning the Plan may be obtained
by shareholders holding shares registered directly in their names by writing the Agent,
Shareholder Financial Services, Inc., P.O. Box 173673, Denver, CO, 80217-3673 or by calling
1.800.647.7374. Shareholders holding shares in nominee name should contact their brokerage
firm or other nominee for more information.

The Fund presently has provisions in its Declaration of Trust and By-Laws (together,
the "Charter Documents") which could have the effect of limiting (i) the ability of other
entities or persons to acquire control of the Fund, (ii) the Fund's freedom to engage in
certain transactions or (iii) the ability of the Fund's Trustees or shareholders to amend
the Charter Documents or effect changes in the Fund's management. Those provisions of the
Charter Documents may be regarded as "anti-takeover" provisions. Specifically, under the
Fund's Declaration of Trust, the affirmative vote of the holders of not less than two
thirds (66-2/3%) of the Fund's shares outstanding and entitled to vote is required to
authorize the consolidation of the Fund with another entity, a merger of the Fund with or
into another entity (except for certain mergers in which the Fund is the successor), a sale
or transfer of all or substantially all of the Fund's assets, the dissolution of the Fund,
the conversion of the Fund to an open-end company and any amendment of the Fund's
Declaration of Trust that would affect any of the other provisions requiring a two-thirds
vote. However, a "majority" shareholder vote, as defined in the Charter Documents, shall
be sufficient to approve any of the foregoing transactions that have been recommended by
two-thirds of the Trustees. Notwithstanding the foregoing, if a corporation, person or
entity is directly, or indirectly through its affiliates, the beneficial owner of more than
5% of the outstanding shares of the Fund, the affirmative vote of 80% (which is higher than
that required under the Investment Company Act) of the outstanding shares of the Fund is
required generally to authorize any of the following transactions or to amend the
provisions of the Declaration of Trust relating to transactions involving: (i) a merger or
consolidation of the Fund with or into any such corporation or entity, (ii) the issuance of
any securities of the Fund to any such corporation, person or entity for cash; (iii) the
sale, lease or exchange of all or any substantial part of the assets of the Fund to any
such corporation, entity or person (except assets having an aggregate market value of less
than $1,000,000); or (iv) the sale, lease or exchange to the Fund, in exchange for
securities of the Fund, of any assets of any such corporation, entity or person (except
assets having an aggregate fair market value of less than $1,000,000). If two-thirds of
the Board of Trustees has approved a memorandum of understanding with such beneficial
owner, however, a majority shareholder vote will be sufficient to approve the foregoing
transactions. Reference is made to the Charter Documents of the Fund, on file with the
Securities and Exchange Commission, for the full text of these provisions.

2. Inapplicable.

3. Inapplicable.

4. The Fund qualified for treatment as, and elected to be, a regulated investment
company ("RIC") under Subchapter M of the Internal Revenue Code for its taxable year ended
October 31, 2004, and intends to continue to qualify as a RIC for each subsequent taxable
year. However, the Fund reserves the right not to qualify under Subchapter M as a RIC in
any year or years.

For each taxable year that the Fund qualifies for treatment as a RIC, the Fund (but
not its shareholders) will not be required to pay federal income tax. Shareholders will
normally have to pay federal income taxes, and any state income taxes, on the dividends and
distributions they receive from the Fund. Such dividends and distributions derived from
net investment income or short-term capital gains are taxable to the shareholder as
ordinary dividend income regardless of whether the shareholder receives such distributions
in additional shares or in cash. Since the Fund's income is expected to be derived
primarily from interest rather than dividends, only a small portion, if any, of such
dividends and distributions is expected to be eligible for the federal dividends-received
deduction available to corporations. The Fund does not anticipate that any portion of its
dividends or distributions will qualify for pass-through treatment as "exempt-interest
dividends" since less than 50% of its assets is permitted to be invested in municipal
obligations.

Long-term or short-term capital gains may be generated by the sale of portfolio
securities and by transactions in options and futures contracts. Distributions of
long-term capital gains, if any, are taxable to shareholders as long-term capital gains
regardless of how long a shareholder has held the Fund's shares and regardless of whether
the distribution is received in additional shares or in cash. For federal income tax
purposes, if a capital gain distribution is received with respect to shares held for six
months or less, any loss on a subsequent sale or exchange of such shares will be treated as
long-term capital loss to the extent of such long-term capital gain distribution. Capital
gains distributions are not eligible for the dividends-received deduction.

Any dividend or capital gains distribution received by a shareholder from an
investment company will have the effect of reducing the net asset value of the
shareholder's stock in that company by the exact amount of the dividend or capital gains
distribution. Furthermore, capital gains distributions and dividends are subject to
federal income taxes. 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.

The tax treatment of listed put and call options written or purchased by the Fund on
debt securities and of future contracts entered into by the Fund will be governed by
Section 1256 of the Internal Revenue Code. Absent a tax election to the contrary, each
such position held by the Fund will be marked-to-market (i.e., treated as if it were closed
out) on the last business day of each taxable year of the Fund, and all gain or loss
associated with transactions in such positions will be treated as 60% long-term capital
gain or loss and 40% short-term capital gain or loss. Positions of the Fund which consist
of at least one debt security and at least one option or futures contract which
substantially diminishes the Fund's risk of loss with respect of such debt security could
be treated as "mixed straddles" which are subject to the straddle rules of Section 1092 of
the Code, the operation of which may cause deferral of losses, adjustments in the holding
periods of debt securities and conversion of short-term capital losses into long-term
capital losses. Certain tax elections exist for mixed straddles which reduce or eliminate
the operation of the straddle rules. The Fund will monitor its transactions in options and
futures contracts and may make certain tax elections in order to mitigate the effect of
these rules and prevent disqualification of the Fund as a regulated investment company
under Subchapter M of the Code. Such tax election may result in an increase in
distribution of ordinary income (relative to long-term capital gains) to shareholders.

The Internal Revenue Code requires that a holder (such as the Fund) of a zero coupon
security accrue a portion of the discount at which the security was purchased as income
each year even though the Fund receives no interest payment in cash on the security during
the year. As an investment company, the Fund must pay out substantially all of its net
investment income each year. Accordingly, the Fund may be required to pay out as an income
distribution each year an amount which is greater than the total amount of cash interest
the Fund actually received. Such distributions will be made from the cash assets of the
Fund or by liquidation of portfolio securities, if necessary. If a distribution of cash
necessitates the liquidation of portfolio securities, the Manager will select which
securities to sell. The Fund may realize a gain or loss from such sales. In the event the
Fund realizes net capital gains from such transactions, its shareholders may receive a
larger capital gain distribution than they would in the absence of such transactions.

It is the Fund's present policy, which may be changed by the Board of Trustees, to
pay monthly dividends to shareholders from net investment income of the Fund. The Fund
intends to distribute all of its net investment income on an annual basis. The Fund will
distribute all of its net realized long-term and short-term capital gains, if any, at least
once per year. The Fund may, but is not required to, make such distributions on a more
frequent basis to the extent permitted by applicable law and regulations. The Fund will
inform shareholders of the amount and nature of income and gains in notices sent to
shareholders.

Under the Internal Revenue Code, by December 31 each year, the Fund must distribute a
specified minimum percentage (currently 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 that year, or else the Fund
must pay an excise tax on amounts not distributed. While it is presently anticipated that
the Fund will meet
those requirements, the Fund's Board and the Manager might determine in a particular year
it would be in the best interests of the Fund not to make such distributions at the
mandated level and to pay the excise tax which would reduce the amount available for
distributions to shareholders. If the Fund pays a dividend in January which was declared
in the previous December to shareholders of record on a date in December, then such
dividend or distribution will be treated for tax purposes as being paid in December and
will be taxable to shareholders as if received in December.

Under the Fund's Dividend Reinvestment Plan (the "Plan"), all of the Fund's dividends
and distributions to shareholders will be reinvested in full and fractional shares. With
respect to distributions made in shares issued by the Fund pursuant to the Plan, the amount
of the distribution for tax purposes is the fair market value of the shares issued on the
reinvestment date. In the case of shares purchased on the open market, a participating
shareholder's tax basis in each share is its cost. In the case of shares issued by the
Fund, the shareholder's tax basis in each share received is its fair market value on the
reinvestment date.

Distributions of investment company taxable income to shareholders who are
nonresident alien individuals or foreign corporations will generally be subject to a 30%
United States withholding tax under provisions of the Internal Revenue Code applicable to
foreign individuals and entities, unless a reduced rate of withholding or a withholding
exemption is provided under an applicable treaty.

Under Section 988 of the Code, foreign currency gain or loss with respect to
foreign currency-denominated debt instruments and other foreign currency-denominated
positions held or entered into by the Fund will be ordinary income or loss. In addition,
foreign currency gain or loss realized with respect to certain foreign currency "hedging"
transactions will be treated as ordinary income or loss.

5. The following information is provided as of February 8, 2005:

(1) (2) (3) (4)
Amount
Amount Held Outstanding
by Registrant Exclusive of
Amount or for its Amount Shown
Title of Class Authorized Account Under (3)
-------------- ---------- ------------- ------------
Shares of Unlimited None 29,229,920
Beneficial
Interest, $.01
par value

Item 11. Defaults and Arrears on Senior Securities.

Inapplicable.

Item 12. Legal Proceedings.

PENDING LITIGATION. A consolidated amended complaint has been filed as putative derivative
and class actions against the Manager, as well as 51 of the Oppenheimer funds (collectively
the "funds") excluding the Fund, 31 present and former Directors or Trustees and 9 present
and former officers of certain of the Funds. This complaint, filed in the U.S. District
Court for the Southern District of New York on January 10, 2005, consolidates into a single
action and amends six individual previously-filed putative derivative and class action
complaints. Like those prior complaints, the complaint alleges that the Manager charged
excessive fees for distribution and other costs, improperly used assets of the funds in the
form of directed brokerage commissions and 12b-1 fees to pay brokers to promote sales of
the funds, and failed to properly disclose the use of fund assets to make those payments in
violation of the Investment Company Act and the Investment Advisers Act of 1940. Also, like
those prior complaints, the complaint further alleges that by permitting and/or
participating in those actions, the Directors/Trustees and the Officers breached their
fiduciary duties to Fund shareholders under the Investment Company Act and at common law.
The complaint seeks unspecified compensatory and punitive damages, rescission of the funds'
investment advisory agreements, an accounting of all fees paid, and an award of attorneys'
fees and litigation expenses.

The Manager believes the claims asserted in these law suits to be without merit, and
intend to defend the suits vigorously. The Manager does not believe that the pending
actions are likely to have a material adverse effect on the Fund or on its ability to
perform the investment advisory agreement with the Fund.

Item 13. Table of Contents of the Statement of Additional Information.

Reference is made to Item 15 of the Statement of Additional Information.

Oppenheimer Multi-Sector Income Trust

6803 South Tucson Way, Centennial, Colorado 80112
1.800.647.7374

Statement of Additional Information dated February 25, 2005

This Statement of Additional Information is not a Prospectus. This document contains
additional information about the Fund and supplements information in the Prospectus. It
should be read together with the Prospectus, and the Registration Statement on Form N-2, of
which the Prospectus and this Statement of Additional Information are a part, can be
inspected and copied at public reference facilities maintained by the Securities and
Exchange Commission (the "SEC") in Washington, D.C. and certain of its regional offices,
and copies of such materials can be obtained at prescribed rates from the Public Reference
Branch, Office of Consumer Affairs and Information Services, SEC, Washington, D.C., 20549.

TABLE OF CONTENTS

Page

Investment Objectives and Policies......................................*
Management..............................................................
Control Persons and Principal Holders of Securities.....................
Investment Advisory and Other Services..................................
Brokerage Allocation and Other Practices................................
Tax Status .............................................................
Financial Statements....................................................

-----------------
*See Prospectus

PART B

INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION

Item 14. Cover Page.

Reference is made to the preceding page.

Item 15. Table of Contents.

Reference is made to the preceding page and to Items 16 through 23 of the
Statement of Additional Information set forth below.

Item 16. General Information and History.

Inapplicable.

Item 17. Investment Objectives and Policies.

Reference is made to Item 8 of the Prospectus.

Item 18. Management.

1., 2., 5., 6., 7., 8., and 10. The Board of Trustees does not have an executive or
investment committee. 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 Fund holds annual meetings of its shareholders
and may hold shareholder meetings from time to time on important matters, and shareholders
have the right to call a meeting to remove a Trustee or to take other action described in
the Fund's Declaration of Trust.

The Board of Trustees has an Audit Committee, a Regulatory & Oversight Committee, a
Governance Committee and a Proxy Committee. The Audit Committee is comprised solely of
Independent Trustees. The members of the Audit Committee are Joel Motley (Chairman), Mary
F. Miller, Edward V. Regan and Kenneth Randall. The Audit Committee held 6 meetings during
the Fund's fiscal year ended October 31, 2004. The Audit Committee provides the Board with
recommendations regarding the selection of the Fund's independent auditor. The Audit
Committee also reviews the scope and results of audits and the audit fees charged, reviews
reports from the Fund's independent auditor concerning the Fund's internal accounting
procedures and controls and reviews reports of the Manager's internal auditor, among other
duties as set forth in the Committee's charter.

The members of the Regulatory & Oversight Committee are Robert Galli (Chairman), Joel
Motley, and Phillip Griffiths. The Regulatory & Oversight Committee held 6 meetings during
the Fund's fiscal year ended October 31, 2004. The Regulatory & Oversight Committee
evaluates and reports to the Board on the Fund's contractual arrangements, including the
Investment Advisory and Distribution Agreements, transfer, shareholder service agreements
and custodian agreements as well as the policies and procedures adopted by the Fund to
comply with the Investment Company Act and other applicable law, among other duties as set
forth in the Committee's charter.

The members of the Governance Committee are Philip Griffiths (Chairman), Kenneth
Randall and Russell S. Reynolds. The Governance Committee held 6 meetings during the
Fund's fiscal year ended October 31, 2004. The Governance Committee reviews the Fund's
governance guidelines, the adequacy of the Fund's Codes of Ethics, and develops
qualification criteria for Board members consistent with the Fund's governance guidelines,
among other duties set forth in the Committee's charter. Should the Board determine that a
vacancy exists or is likely to exist on the Board, the Governance Committee of the Board
shall consider any candidates for Board membership recommended by the shareholders of the
Fund. Any shareholders wishing to submit a nominee for election to the Board may do so by
mailing their submission to the offices of OppenheimerFunds, Inc., Two World Financial
Center, 225 Liberty Street - 11th Floor, New York, NY 10281-1008, to the attention of the
Chair of the Governance Committee. The Committee may also consider candidates proposed by
any Board member(s), executive search firm, or other person or entity as may be permitted
by the Committee's charter, the Board I Governance Guidelines, or other Board I policy.
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 for
Board membership (both interested and disinterested) to recommend to the Board and/or
shareholders and may identify candidates other than those submitted by shareholders. The
Committee may, but need not, consider the advice and recommendation of the Manager and its
affiliates in selecting nominees.

The members of the Proxy Committee are Edward Regan (Chairman), Russell Reynolds and
John Murphy. The Proxy Committee held 1 meeting during the Fund's fiscal year ended
October 31, 2004. The Proxy Committee provides the Board with recommendations for proxy
voting and monitors proxy voting by the Fund.

Except Mr. Murphy, each of the Trustees is an "Independent Trustee," as defined in
the Investment Company Act. Mr. Murphy is an "Interested Trustee," because he is
affiliated with the Manager by virtue of his positions as an officer and director of the
Manager, and as a shareholder of its parent company

The Fund's Trustees and officers, their positions held with the Fund, length of
service in such position(s) and principal occupations and business affiliations during the
past five years are listed in the chart below. The information for each Trustee also
includes the dollar range of shares of beneficially owned in the Fund and the aggregate
dollar range of shares beneficially owned in all registered investment companies in the
Oppenheimer funds family that are overseen by the Trustee ("Supervised Funds"). All of the
Trustees except Mr. Fink and Mr. Murphy are also Trustees or Directors of each of the
following publicly offered Oppenheimer funds (referred to as "Board I Funds"): Mr. Murphy
is a Trustee/Director of the Funds indicated with an asterisk and Mr. Fink and Mr. Murphy
are both Trustees/Directors of the Funds indicated with two asterisks.

Oppenheimer Global Opportunities
Oppenheimer AMT-Free Municipals Fund**
Oppenheimer AMT-Free New York Oppenheimer Gold & Special Minerals
Municipals** Fund**
Oppenheimer Balanced Fund Oppenheimer Growth Fund**
Oppenheimer California Municipal Fund** Oppenheimer International Growth Fund
Oppenheimer International Small
Oppenheimer Capital Appreciation Fund** Company Fund
Oppenheimer Developing Markets Fund Oppenheimer Money Market Fund, Inc.**
Oppenheimer Multi-Sector Income
Oppenheimer Discovery Fund** Trust**
Oppenheimer Multi- State Municipal
Oppenheimer Emerging Growth Fund* Trust
Oppenheimer Emerging Technologies Fund* Oppenheimer Series Fund, Inc.**
Oppenheimer Enterprise Fund Oppenheimer U.S. Government Trust*
Oppenheimer Global Fund

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

|X| Affiliated Transactions and Material Business Relationships. Mr. Reynolds
has reported he has a controlling interest in The Directorship Group, Inc. ("The
Directorship Search Group"), a director recruiting firm that provided consulting
services to Massachusetts Mutual Life Insurance Company (which controls the
Manager) for fees of $137,500 for the calendar year ended December 31, 2002. Mr.
Reynolds reported that The Directorship Search Group did not provide consulting
services to Massachusetts Mutual Life Insurance Company during the calendar year
ended December 31, 2003 and 2004, and does not expect to provide any such
services in the calendar year ending December 31, 2005.

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

The address of each Trustee in the chart below is 6803 South Tucson Way,
Centennial, CO 80112-3924. The Trustees are divided into three classes. The
Trustees in each class are elected for a three year term, and each shall hold
office for that term or until his or her resignation, retirement, death or
removal. Ms. Mary Miller was elected to the Board I funds effective August 13,
2004 and did not hold shares of the Board I fund during the calendar year ended
December 31, 2004. Mr. Matthew Fink was elected to the Board I funds effective
January 1, 2005 and did not hold shares of Board I funds during the calendar
year ended December 31, 2004.

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,

2004

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

Clayton K. Of Counsel (since June 1993) Hogan & None Over
Yeutter, Chairman Hartson (a law firm); a director (since $100,000
of the Board of 2002) of Danielson Holding Corp.
Trustees since Formerly a director of Weyerhaeuser
2003, Corp. (1999-April 2004), Caterpillar,
Trustee since 1991 Inc. (1993-December 2002), ConAgra Foods
Age: 74 (1993-2001), Texas Instruments
(1993-2001) and FMC Corporation
(1993-2001). Oversees 25 portfolios in
the OppenheimerFunds complex.

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

Matthew P. Fink Director (since October 1991) of ICI None None
Trustee since 2005 Education Foundation. Formerly President
Age: 64 of the Investment Company Institute
(October 1991-October 2004), Director of
ICI Mutual Insurance Company (October
1991-October 2004). Oversees 11
portfolios in the OppenheimerFunds
complex.

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

Robert G. Galli, A trustee or director of other None Over
Trustee since 1993 Oppenheimer funds. Oversees 35 $100,000
Age: 71 portfolios in the OppenheimerFunds

complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Phillip A. A director (since 1991) of the Institute None Over
Griffiths, for Advanced Study, Princeton, N.J., a $100,000

Trustee, since 1999 director (since 2001) of GSI Lumonics, a
Age: 66 trustee (since 1983) of Woodward

Academy, a Senior Advisor (since 2001)
of The Andrew W. Mellon Foundation. A
member of: the National Academy of
Sciences (since 1979), American Academy
of Arts and Sciences (since 1995),
American Philosophical Society (since
1996) and Council on Foreign Relations
(since 2002). Formerly a director of
Bankers Trust New York Corporation
(1994-1999). Oversees 25 portfolios in
the OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

Mary F. Miller, Formerly a Senior Vice President and None None
Trustee since 2004 General Auditor, American Express
Age: 62 Company (July 1998-February 2003).
Member of Trustees of the American
Symphony Orchestra (October 1998 to
present). Oversees 25 portfolios in the
OppenheimerFunds complex.

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

Joel W. Motley, Director (since 2002) Columbia Equity None Over
Trustee since 2002 Financial Corp. (privately-held $100,000
Age: 52 financial adviser); Managing Director
(since 2002) Carmona Motley, Inc.
(privately-held financial adviser);
Formerly he held the following
positions: Managing Director (January
1998-December 2001),. Oversees 25
portfolios in the OppenheimerFunds
complex.

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

Kenneth A. A director of Dominion Resources, Inc. None Over
Randall, Trustee (electric utility holding company); $100,000
since 1988 formerly a director of Prime Retail,
Age: 77 Inc. (real estate investment trust) and
Dominion Energy, Inc. (electric power
and oil & gas producer), President and
Chief Executive Officer of The
Conference Board, Inc. (international
economic and business research) and a
director of Lumbermens Mutual Casualty
Company, American Motorists Insurance
Company and American Manufacturers
Mutual Insurance Company. Oversees 25
portfolios in the OppenheimerFunds
complex.

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

Edward V. Regan, President, Baruch College, CUNY; a None Over
Trustee since 1993 director of RBAsset (real estate $100,000
Age: 74 manager); a director of OffitBank;
formerly Trustee, Financial Accounting
Foundation (FASB and GASB), Senior
Fellow of Jerome Levy Economics
Institute, Bard College, Chairman of
Municipal Assistance Corporation for the
City of New York, New York State
Comptroller and Trustee of New York
State and Local Retirement Fund.
Oversees 25 investment companies in the
OppenheimerFunds complex.

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

Russell S. Chairman (since 1993) of The None Over
Reynolds, Jr., Directorship Search Group, Inc. $100,000
Trustee since 1989 (corporate governance consulting and
Age: 72 executive recruiting); a life trustee of

International House (non-profit
educational organization), and a trustee
(since 1996) of the Greenwich Historical
Society. Oversees 25 portfolios in the
OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

The address of Mr. Murphy in the chart below is Two World Financial Center,
225 Liberty Street-11th Floor, New York, NY 10281-1008. Mr. Murphy has been
elected as a Class A trustee and serves a three year term or until his
resignation, retirement, death or removal.

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

2004

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

John V. Murphy, Chairman, Chief Executive Officer and None Over
President and director (since June 2001) and President $100,000
Trustee, (since September 2000) of the Manager;
Trustee since 2001 President and a director or trustee of
Age: 55 other Oppenheimer funds; President and a
director (since July 2001) of
Oppenheimer Acquisition Corp. (the
Manager's parent holding company) and of
Oppenheimer Partnership Holdings, Inc.
(a holding company subsidiary of the
Manager); a director (since November
2001) of OppenheimerFunds Distributor,
Inc. (a subsidiary of the Manager);
Chairman and a director (since July
2001) of Shareholder Services, Inc. and
of Shareholder Financial Services, Inc.
(transfer agent subsidiaries of the
Manager); President and a director
(since July 2001) of OppenheimerFunds
Legacy Program (a charitable trust
program established by the Manager); a
director of the following investment
advisory subsidiaries of the Manager:
OFI Institutional Asset Management,
Inc., Centennial Asset Management
Corporation, Trinity Investment
Management Corporation and Tremont
Capital Management, Inc. (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.; Executive Vice
President (since February 1997) of
Massachusetts Mutual Life Insurance
Company (the Manager's parent company);
a director (since June 1995) of DLB
Acquisition Corporation (a holding
company that owns the shares of Babson
Capital Management LLC); a member of the
Investment Company Institute's Board of
Governors (elected to serve from October
3, 2003 through September 30, 2006).
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. Oversees 62
portfolios as Trustee/Director and 21
additional portfolios as Officer in the
OppenheimerFunds complex.

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

The address of the officers in the chart below is as follows: for Messrs. Gillespie,
Miao, Steinmetz, Wong, Zack, and Ms. Bloomberg, Two World Financial Center, 225 Liberty
Street-11th Floor, New York, NY 10281-1008, for Messrs. Petersen, Vandehey, Vottiero and
Wixted and Ms. Ives, 6803 South Tucson Way, Centennial, CO 80112-3924. Each officer serves
for an indefinite term or until his or her earlier resignation, retirement, death or
removal. Messrs. Petersen, Steinmetz , Vottiero, Wixted, Gillespie, Miao, Vandehey and
Zack, and Mses. Bloomberg and Ives and respectively hold the same offices with one or more
of the other Board I Funds as with the Fund.

-------------------------------------------------------------------------------------
Officers of the Fund
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Name, Principal Occupation(s) During Past 5 Years
Position(s) Held with
Fund, Length of
Service,
Age
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Arthur P. Steinmetz, Senior Vice President of the Manager (since March 1993) and
Vice President and of HarbourView Asset Management Corporation (since March
Portfolio Manager 2000); an officer of 6 portfolios in the OppenheimerFunds
since 1999 complex.

Age: 46

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

Caleb Wong, Vice Vice President (since June 1999) of the Manager; worked in
President and fixed-income quantitative research and risk management for
Portfolio Manager the Manager (since July 1996); an officer of 1 portfolio in
since 1999 the OppenheimerFunds complex; formerly Assistant Vice
Age: 39 President of the Adviser (January 1997 - June 1999).

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

Brian W. Wixted, Senior Vice President and Treasurer (since March 1999) of
Treasurer since 1999 the Manager; Treasurer of HarbourView Asset Management
Age: 45 Corporation, Shareholder Financial Services, Inc.,
Shareholder Services, Inc., Oppenheimer Real Asset
Management Corporation, and Oppenheimer Partnership
Holdings, Inc. (since March 1999), of OFI Private
Investments, Inc. (since March 2000), of OppenheimerFunds
International Ltd. and OppenheimerFunds plc (since May
2000), of OFI Institutional Asset Management, Inc. (since
November 2000), and of OppenheimerFunds Legacy Program (a
Colorado non-profit corporation) (since June 2003);
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. Formerly Assistant Treasurer
of Centennial Asset Management Corporation (March
1999-October 2003) and OppenheimerFunds Legacy Program
(April 2000-June 2003). An officer of 83 portfolios in the
OppenheimerFunds complex.

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

Mark S. Vandehey, Senior Vice President and Chief Compliance Officer (since
Vice President and March 2004) of the Manager; Vice President (since June
Chief Compliance 1983) of OppenheimerFunds Distributor, Inc., Centennial
Officer since 2004 Asset Management Corporation and Shareholder Services, Inc.
Age: 54 Formerly (until February 2004) Vice President and Director
of Internal Audit of the Manager. An officer of 83
portfolios in the Oppenheimer funds complex.

Assistant Treasurer 2002. Formerly Vice President/Corporate Accounting of the
since 2002 Manager (July 1999-March 2002). An officer of 83 portfolios
Age: 41 in the OppenheimerFunds complex.

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

Brian Petersen, Assistant Vice President of the Manager since August 2002;
Assistant Treasurer formerly Manager/Financial Product Accounting (November
since 2004 1998-July 2002) of the Manager. An officer of 83 portfolios
Age: 34 in the OppenheimerFunds complex.

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

Robert G. Zack, Executive Vice President (since January 2004) and General
Secretary since 2001 Counsel (since February 2002) of the Manager; General
Age: 56 Counsel and a director (since November 2001) of the
Distributor; General Counsel (since November 2001) of
Centennial Asset Management Corporation; Senior Vice
President and General Counsel (since November 2001) of
HarbourView Asset Management Corporation; Secretary and
General Counsel (since November 2001) of Oppenheimer
Acquisition Corp.; Assistant Secretary and a director
(since October 1997) of OppenheimerFunds International Ltd.
and OppenheimerFunds plc; Vice President and a director
(since November 2001) of Oppenheimer Partnership Holdings,
Inc.; a director (since November 2001) of Oppenheimer Real
Asset Management, Inc.; Senior Vice President, General
Counsel and a director (since November 2001) of Shareholder
Financial Services, Inc., Shareholder Services, Inc., OFI
Private Investments, Inc. and OFI Trust Company; Vice
President (since November 2001) of OppenheimerFunds Legacy
Program; Senior Vice President and General Counsel (since
November 2001) of OFI Institutional Asset Management, Inc.;
a director (since June 2003) of OppenheimerFunds (Asia)
Limited. 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); and
OppenheimerFunds International Ltd. (October 1997-November
2001). An officer of 83 portfolios in the OppenheimerFunds
complex.

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

Kathleen T. Ives, Vice President (since June 1998) and Senior Counsel and
Assistant Secretary Assistant Secretary (since October 2003) of the Manager;
since 2001 Vice President (since 1999) and Assistant Secretary (since
Age: 39 October 2003) of the Distributor; Assistant Secretary
(since October 2003) of Centennial Asset Management
Corporation; Vice President and Assistant Secretary (since
1999) of Shareholder Services, Inc.; Assistant Secretary
(since December 2001) of OppenheimerFunds Legacy Program
and of Shareholder Financial Services, Inc.. Formerly an
Assistant Counsel (August 1994-October 2003). An officer of
83 portfolios in the OppenheimerFunds complex.

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

Lisa I. Bloomberg, Vice President and Associate Counsel of the Manager since
Assistant Secretary May 2004; formerly First Vice President and Associate
since 2004 General Counsel of UBS Financial Services Inc. (formerly,
Age: 36 PaineWebber Incorporated) (May 1999 - April 2004) prior to
which she was an Associate at Skaden, Arps, Slate, Meagher
& Flom, LLP (September 1996 - April 1999). An officer of 83
portfolios in the OppenheimerFunds complex.

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

Phillip S. Gillespie, Senior Vice President and Deputy General Counsel of the
Assistant Secretary Manager since September 2004. Formerly Mr. Gillespie held
since 2004 the following positions at Merrill Lynch Investment
Age: 40 Management: First Vice President (2001-September 2004);
Director (from 2000) and Vice President (1998-2000). An
officer of 83 portfolios in the OppenheimerFunds complex.

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

Wayne Miao, Assistant Vice President and Assistant Counsel of the
Assistant Secretary Manager since June 2004. Formerly an Associate with Sidley
since 2004 Austin Brown & Wood LLP (September 1999 - May 2004). An
Age: 31 officer of 83 portfolios in the OppenheimerFunds complex.

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

3., 4., 9., 11., and 12. Inapplicable.

13. See Prospectus, Item 9.1(b).

14. The officers of the Fund and one of the Trustees of the Fund
(Mr. Murphy) who are affiliated with the Manager receive no salary or fee from the Fund.
The remaining Trustees of the Fund received the compensation shown below from the Fund with
respect to the Fund's fiscal year ended October 31, 2004. The compensation from all 25 of
the Board I Funds (including the Fund) represents compensation received for serving as a
director, trustee or member of a committee (if applicable) of the boards of those funds
during the calendar year ended December 31, 2004.

-------------------------------------------------------------------------------------
Trustee Name and Aggregate Retirement Estimated Total
Compensation
From All
Annual Oppenheimer
Benefits Retirement Funds For Which

Other Fund Accrued as Benefits to be Individual
Position(s) Compensation Part of Fund Paid upon Serves As
(as applicable) From Fund1 Expenses 2 Retirement2 Trustee/Director(9)

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

Clayton K. Yeutter $1,3193 $3,244 $61,306 $173,700

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

Robert G. Galli $982 $1,935 $80,9234 $237,3125

Regulatory &
Oversight Committee
Chairman
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

Phillip Griffiths $1,0796 $1,037 $23,309 $142,092
Governance Committee
Chairman and

Regulatory &
Oversight Committee
Member
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

Matthew Fink8 $0 $0 $0 $0

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

Mary F. Miller8 $62 $0 $0 $8,532
Audit Committee Member

-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Joel W. Motley

Audit Committee
Chairman and
Regulatory & $1,1457 $430 $14,530 $150,760
Oversight Committee
Member

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

Kenneth A. Randall $1,019 $0 $79,622 $134,080

Audit Committee
Member and Governance
Committee Member
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

Edward V. Regan $903 $2,290 $59,353 $118,788
Proxy Committee
Chairman and Audit
Committee Member

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

Russell S. Reynolds, $812 $2,026 $60,720 $106,792
Jr.
Proxy Committee
Member and
Governance Committee
Member

-------------------------------------------------------------------------------------
Edward V. Regan

Proxy Committee Chairman and Audit Committee ChairmanMr. Spiro retired as a
Board I Trustee effective October 31, 2004. Mr. Spiro received $487 compensation
from the Fund and $64,080 of total compensation for the calendar year 2004 from
all of the Oppenheimer funds for which he served as a trustee.

1. Aggregate compensation from the Fund includes fees and deferred
compensation, if any, for a Trustee.

2. Estimated Annual Retirement Benefits to be Paid Upon Retirement is based on
a straight life payment plan election with the assumption that a Trustee
will retire at the age of 75 and is eligible (after 7 years of service) to
receive retirement plan benefits as described below under "Retirement Plan
for Trustees."

3. Includes $330 deferred by Mr. Yeutter under the Deferred Compensation Plan
described below.

4. Includes $36,990 estimated to be paid to Mr. Galli for serving as a trustee
or director of 10 other Oppenheimer funds that are not Board I Funds.

5. Includes $108,000 paid to Mr. Galli for serving as trustee or director of
10 other Oppenheimer funds that are not Board I Funds.

6. Includes $1,079 deferred by Mr. Griffiths under the Deferred Compensation
Plan described below.

7. Includes $458 deferred by Mr. Motley under the Deferred Compensation Plan
described below.

8. Mary Miller was appointed as a trustee of the fund effective August 13,
2004. Mr. Fink was appointed as of January 1, 2005. 9. Total

Compensation paid out to trustees for the calendar year 2004.

The Fund has adopted a retirement plan that provides for payment to a
retired Trustee of up to 80% of the average compensation paid during that
Trustee's five years of service in which the highest compensation was received.
A Trustee must serve in that capacity for any of the Board I Funds for at least
15 years to be eligible for the maximum payment. Each Trustee's retirement
benefits will depend on the amount of the Trustee's future compensation and
length of service.

Deferred Compensation Plan for Trustees. The Board of Trustees has adopted a
Deferred Compensation Plan for disinterested trustees that enables them to elect
to defer receipt of all or a portion of the annual fees they are entitled to
receive from the Fund. Under the plan, the compensation deferred by a Trustee is
periodically adjusted as though an equivalent amount had been invested in shares
of one or more Oppenheimer funds selected by the Trustee. The amount paid to the
Trustee under the plan will be determined based upon the performance of the
selected funds. Deferral of Trustees' fees under the plan will not materially
affect the Fund's assets, liabilities or net income per share. The plan will not
obligate the Fund to retain the services of any Trustee or to pay any particular
level of compensation to any Trustee. Pursuant to an Order issued by the
Securities and Exchange Commission, the Fund may invest in the funds selected by
the Trustee under the plan without shareholder approval for the limited purpose
of determining the value of the Trustee's deferred fee account.

15. Code of Ethics.

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

The Code of Ethics is an exhibit to the Fund's registration statement filed with
the Securities and Exchange Commission and can be reviewed and copied at the
SEC's Public Reference Room in Washington, D.C. You can obtain information about
the hours of operation of the Public Reference Room by calling the SEC at
1.202.942.8090. The Code of Ethics can also be viewed as part of the Fund's
registration statement on the SEC's EDGAR database at the SEC's Internet 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.

16. 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 the
Manager where a Manager directly-controlled affiliate managers of
administers the assets of a pension plan of the 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 is required to file 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 Fund's Form N-PX filing is available (i) without charge, upon request,
by calling the Fund toll-free at 1.800.525-7048 and (ii) on the SEC's website at
www.sec.gov.

Item 19. Control Persons and Principal Holders of Securities.

1.
Inapplicable.

2. As of February 8, 2005 (unless another date is indicated below), the only
persons who owned of record or were known by the Fund to own beneficially
5% or more of the outstanding shares of the Fund were:

Charles Schwab & Co., Inc., 101 Montgomery St. San Francisco, CA 94104,
which owned 3,833,194.000 shares (13.1% of the then outstanding shares); and

UBS Financial Services, 1000 Harbor Boulevard, Weehawken, NJ 07087, which
owned 2,002,555.000 shares (6.9% of the then outstanding shares); and

A G Edwards, 1 N Jefferson, Saint Louis, MO, 63131, which owned
1,618,602.000_ shares (5.5% of the then outstanding shares); and

JP Morgan Chase, 270 Park Ave., New York, NY 100171, which owned
1,503,548.000 shares (5.1% of the then outstanding shares); and

First Clearing LLC, Riverfront Plaza, 901 E. Byrd St., Richmond VA
23219-4052, which owned $2,094,763.000 shares (7.1% of the then outstanding
shares); and

NFS LLC, 200 Liberty St., 1 World Financial Center, New York, NY
10281-5503, which owned $1,552,604.000 shares (5.3% of the then outstanding
shares.)

SIT Investment Associates, Inc., 4600 Norwest Center, 90 South Seventh
Street, Minneapolis, MN 55402 which owned 2,871,300 shares as of February 18,
2005, (9.82% of the then outstanding shares).

Karpus Management, Inc., 14 Tobey Village Office Park, Pittsford, NY 14534
which owned 1,551,530 shares as of February 9, 2005, (5.31% of the then
outstanding shares).

3. As of February 8, 2005, the Trustees and officers of the Fund, as a group
owned of record or beneficially less than 1% of each class of shares of the
Fund. The foregoing statement does not reflect ownership of shares of the
Fund held of record by an employee benefit plan for employees of the
Manager, other than the shares beneficially owned under the plan by the
officers of the Fund listed above. In addition, each Independent Trustee,
and his or her family members, do not own securities of either the Manager
of the Board I Funds or any person directly or indirectly controlling,
controlled by or under common control with the Manager.

Item 20. Investment Advisory and Other Services.

Reference is made to Item 9 of the Prospectus.

Item 21. Brokerage Allocation and Other Practices.

1 and 2. During the fiscal years ended October 31, 2002, 2003 and 2004, the
Fund paid approximately $87,859, $81,882 and $40,593 respectively, in brokerage
commissions. The Fund will not effect portfolio transactions through any broker
(i) which is an affiliated person of the Fund, (ii) which is an affiliated
person of such affiliated person or (iii) an affiliated person of which is an
affiliated person of the Fund or its Manager. There is no principal underwriter
of shares of the Fund. As most purchases of portfolio securities made by the
Fund are principal transactions at net prices, the Fund incurs little or no
brokerage costs. The Fund deals directly with the selling or purchasing
principal or market maker without incurring charges for the services of a broker
on its behalf unless it is determined that a better price or execution may be
obtained by using the services of a broker. Purchases of portfolio securities
from underwriters include a commission or concession paid by the issuer to the
underwriter, and purchases from dealers include a spread between the bid and
asked price. Transactions in foreign securities markets generally involve the
payment of fixed brokerage commissions, which are usually higher than those in
the United States. The Fund seeks to obtain prompt execution of orders at the
most favorable net price.

3. The advisory agreement between the Fund and the Manager (the "Advisory
Agreement") contains provisions relating to the selection of brokers,
dealers and futures commission merchants (collectively referred to as
"brokers") for the Fund's portfolio transactions. The Manager is authorized
by the Advisory Agreement to employ brokers as may, in its best judgment
based on all relevant factors, implement the policy of the Fund to obtain,
at reasonable expense, the "best execution" (prompt and reliable execution
at the most favorable price obtainable) of such transactions. The Manager
need not seek competitive bidding but is expected to minimize the
commissions paid to the extent consistent with the interests and policies
of the Fund. The Fund will not effect portfolio transactions through
affiliates of the Manager.

Certain other investment companies advised by the Manager and its
affiliates have investment objectives and policies similar to those of the Fund.
If possible, concurrent orders to purchase or sell the same security by more
than one of the accounts managed by the Manager or its affiliates are combined.
The transactions effected pursuant to such combined orders are averaged as to
price and allocated in accordance with the purchase or sale orders actually
placed for each account. If transactions on behalf of more than one fund during
the same period increase the demand for securities being purchased or the supply
of securities being sold, there may be an adverse effect on price or quantity.
When the Fund engages in an option transaction, ordinarily the same broker will
be used for the purchase or sale of the option and any transactions in the
security to which the option relates.

Under the Advisory Agreement, if brokers are used for portfolio
transactions, the Manager may select brokers for their execution and/or research
services. Information received by the Manager for those other accounts may or
may not be useful to the Fund. The commissions paid to such dealers may be
higher than another qualified dealer would have charged if a good faith
determination is made by the Manager that the commission is reasonable in
relation to the services provided.

Such research, which may be provided by a broker through a third party,
includes information on particular companies and industries as well as market,
economic or institutional activity areas. It serves to broaden the scope and
supplement the research activities of the Manager, to make available additional
views for consideration and comparisons, and to enable the Manager to obtain
market information for the valuation of securities held in the Fund's portfolio
or being considered for purchase.

4. During the fiscal year ended October 31, 2004, $7,709 was paid to brokers
as commissions in return for research services. There were no commissions
paid to brokers for research services during the fiscal year ended October
31, 2002 and October 31, 2003.

5. Inapplicable.

Item 22. Tax Status.

Reference is made to Item 10 of the Prospectus.

Item 23. Financial Statements at fiscal year-end October 31,

2004.

Appendix A

RATINGS DEFINITIONS
-------------------

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

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

LONG-TERM (TAXABLE) BOND RATINGS

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

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

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

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

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

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

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

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

C: Bonds rated "C" are the lowest class of rated bonds and can be regarded as
having extremely poor prospects of ever attaining any real investment standing.
Moody's applies numerical modifiers 1, 2, and 3 in each generic rating
classification from "Aa" through "Caa." The modifier "1" indicates that the
obligation ranks in the higher end of its generic rating category; the modifier
"2" indicates a mid-range ranking; and the modifier "3" indicates a ranking in
the lower end of that generic rating category. Advanced refunded issues that are
secured by certain assets are identified with a # symbol.

SHORT-TERM RATINGS - TAXABLE DEBT

These ratings apply to the ability of issuers to honor senior debt obligations
having an original maturity not exceeding one year:

Prime-1: Issuer has a superior ability for repayment of senior short-term debt
obligations.

Prime-2: Issuer has a strong ability for repayment of senior short-term debt
obligations. Earnings trends and coverage ratios, while sound, may be more
subject to variation. Capitalization characteristics, while appropriate, may be
more affected by external conditions. Ample alternate liquidity is maintained.

Prime-3: Issuer has an acceptable ability for repayment of senior short-term
obligations. The effect of industry characteristics and market compositions may
be more pronounced. Variability in earnings and profitability may result in
changes in the level of debt protection measurements and may require relatively
high financial leverage. Adequate alternate liquidity is maintained.

Not Prime: Issuer does not fall within any Prime rating category.

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

LONG-TERM ISSUE CREDIT RATINGS

AAA: Bonds rated "AAA" have the highest rating assigned by Standard &
Poor's. The obligor's capacity to meet its financial commitment on the
obligation is extremely strong.

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

A: Bonds rated "A" are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher-rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.

BBB: Bonds rated "BBB" exhibit adequate protection parameters. However, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity of the obligor to meet its financial commitment on the
obligation.

BB, B, CCC, CC, and C Obligations rated `BB', `B', `CCC', `CC', and `C' are
regarded as having significant speculative characteristics. `BB' indicates the
least degree of speculation and `C' the highest. While such obligations will
likely have some quality and protective characteristics, these may be outweighed
by large uncertainties or major exposures to adverse conditions.

BB: Bonds rated "BB" are less vulnerable to nonpayment than other speculative
issues. However, they face major ongoing uncertainties or exposure to adverse
business, financial, or economic conditions which could lead to the obligor's
inadequate capacity to meet its financial commitment on the obligation.

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

CCC: Bonds rated "CCC" are currently vulnerable to nonpayment, and are dependent
upon favorable business, financial, and economic conditions for the obligor to
meet its financial commitment on the obligation. In the event of adverse
business, financial, or economic conditions, the obligor is not likely to have
the capacity to meet its financial commitment on the obligation.

CC: Bonds rated "CC" are currently highly vulnerable to nonpayment.

C: Subordinated debt or preferred stock obligations rated "C" are currently
highly vulnerable to nonpayment. The "C" rating may be used to cover a situation
where a bankruptcy petition has been filed or similar action taken, but payments
on this obligation are being continued. A "C" also will be assigned to a
preferred stock issue in arrears on dividends or sinking fund payments, but that
is currently paying.

D: Bonds rated "D" are in payment default. The "D" rating category is used when
payments on an obligation are not made on the date due even if the applicable
grace period has not expired, unless Standard & Poor's believes that such
payments will be made during such grace period. The "D" rating also will be used
upon the filing of a bankruptcy petition or the taking of a similar action if
payments on an obligation are jeopardized.

The ratings from "AA" to "CCC" may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within the major rating categories. The
"r" symbol is attached to the ratings of instruments with significant noncredit
risks.

SHORT-TERM ISSUE CREDIT RATINGS

A-1: A short-term bond rated "A-1" is rated in the highest category by Standard
& Poor's. The obligor's capacity to meet its financial commitment on the
obligation is strong. Within this category, certain obligations are designated
with a plus sign (+). This indicates that the obligor's capacity to meet its
financial commitment on these obligations is extremely strong.

A-2: A short-term bond rated "A-2" is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations in
higher rating categories. However, the obligor's capacity to meet its financial
commitment on the obligation is satisfactory.

A-3: A short-term bond rated "A-3" exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.

B: A short-term bond rated "B" is regarded as having significant speculative
characteristics. The obligor currently has the capacity to meet its financial
commitment on the obligation; however, it faces major ongoing uncertainties
which could lead to the obligor's inadequate capacity to meet its financial
commitment on the obligation.

C: A short-term bond rated "C" is currently vulnerable to nonpayment and is
dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation.

D: A short-term bond rated "D" is in payment default. The "D" rating category is
used when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes
that such payments will be made during such grace period. The "D" rating also
will be used upon the filing of a bankruptcy petition or the taking of a similar
action if payments on an obligation are jeopardized.

Fitch, Inc.

INTERNATIONAL LONG-TERM CREDIT RATINGS

Investment Grade:

AAA: Highest Credit Quality. "AAA" ratings denote the lowest expectation of
credit risk. They are assigned only in the case of exceptionally strong capacity
for timely payment of financial commitments. This capacity is highly unlikely to
be adversely affected by foreseeable events.

AA: Very High Credit Quality. "AA" ratings denote a very low expectation of
credit risk. They indicate a very strong capacity for timely payment of
financial commitments. This capacity is not significantly vulnerable to
foreseeable events.

A: High Credit Quality. "A" ratings denote a low expectation of credit risk. The
capacity for timely payment of financial commitments is considered strong. This
capacity may, nevertheless, be more vulnerable to changes in circumstances or in
economic conditions than is the case for higher ratings.

BBB: Good Credit Quality. "BBB" ratings indicate that there is currently a low
expectation of credit risk. The capacity for timely payment of financial
commitments is considered adequate, but adverse changes in circumstances and in
economic conditions are more likely to impair this capacity. This is the lowest
investment-grade category.

Speculative Grade:

BB: Speculative. "BB" ratings indicate that there is a possibility of credit
risk developing, particularly as the result of adverse economic change over
time. However, business or financial alternatives may be available to allow
financial commitments to be met. Securities rated in this category are not
investment grade.

B: Highly Speculative. "B" ratings indicate that significant credit risk is
present, but a limited margin of safety remains. Financial commitments are
currently being met. However, capacity for continued payment is contingent upon
a sustained, favorable business and economic environment.

CCC, CC C: High Default Risk. Default is a real possibility. Capacity for
meeting financial commitments is solely reliant upon sustained, favorable
business or economic developments. A "CC" rating indicates that default of some
kind appears probable. "C" ratings signal imminent default.

DDD, DD, and D: Default. The ratings of obligations in this category are based
on their prospects for achieving partial or full recovery in a reorganization or
liquidation of the obligor. While expected recovery values are highly
speculative and cannot be estimated with any precision, the following serve as
general guidelines. "DDD" obligations have the highest potential for recovery,
around 90%-100% of outstanding amounts and accrued interest. "DD" indicates
potential recoveries in the range of 50%-90%, and "D" the lowest recovery
potential, i.e., below 50%.

Entities rated in this category have defaulted on some or all of their
obligations. Entities rated "DDD" have the highest prospect for resumption of
performance or continued operation with or without a formal reorganization
process. Entities rated "DD" and "D" are generally undergoing a formal
reorganization or liquidation process; those rated "DD" are likely to satisfy a
higher portion of their outstanding obligations, while entities rated "D" have a
poor prospect for repaying all obligations.

Plus (+) and minus (-) signs may be appended to a rating symbol to denote
relative status within the major rating categories. Plus and minus signs are not
added to the "AAA" category or to categories below "CCC," nor to short-term
ratings other than "F1" (see below).

INTERNATIONAL SHORT-TERM CREDIT RATINGS

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

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

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

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

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

D: Default. Denotes actual or imminent payment default.

PART C

OTHER INFORMATION

Item 24. Financial Statements and Exhibits.

1. Financial Statements at fiscal year-end October 31, 2004

(a) Statement of Investments - (See Part B, Statement of Additional
Information): Filed herewith.

(b) Statement of Assets and Liabilities - (See Part B, Statement of
Additional Information): Filed herewith.

(d) Statements of Changes in Net Assets - (See Part B, Statement of
Additional Information): Filed herewith.

(e) Financial Highlights - (See Part B, Statement of Additional
Information): Filed herewith.

(f) Notes to Financial Statements - (See Part B, Statement of Additional
Information): Filed herewith.

2. Exhibits:

(a) (1) Declaration of Trust of Registrant: Filed with Registrant's
Registration Statement, 2/2/88, refiled with Registrant's Amendment
No. 8, 2/27/95, and incorporated herein by reference.

(2) Amendment No. 1 dated as of March 10, 1988 to Declaration of
Trust of Registrant: Filed with Amendment No. 2 to Registrant's
Registration Statement, 3/24/88, refiled with Registrant's
Amendment No. 8, 2/27/95, pursuant to Item 102 of Regulation S-T,
and incorporated herein by reference.

(3) Amendment No. 2 dated November 6, 1989 to Declaration of Trust of
Registrant: Filed with Registrant's Post-Effective Amendment No.
8, 2/27/95, and incorporated herein by reference.

(4) Amendment No. 3 dated as of July 16, 2002 to Declaration of Trust
of Registrant: Filed with Registrant's Post-Effective Amendment
No. 18, 2/28/03, and incorporated herein by reference.

(b) By-Laws of Registrant (amended by-laws): Filed with Registrant's
Post-Effective Amendment No. 17, 2/28/02, and incorporated herein by
reference.

(d) Specimen certificate for shares of Beneficial Interest, $.01 par
value: Filed with Registrant's Post-Effective Amendment No. 17,
2/28/02, and incorporated herein by reference.

(e) Inapplicable

(f) Inapplicable

(g) Investment Advisory Agreement with Oppenheimer Management Corporation
dated January 1, 2005 Filed herewith

(h) Form of Underwriting Agreement: Filed with Amendment No. 2 to
Registrant's Registration Statement, 3/24/88, refiled with
Registrant's Post-Effective Amendment No. 8, 2/27/95, pursuant to Item
102 of Regulation S-T, and incorporated herein by reference.

(i) (1) Amended and Reinstated Retirement Plan for Non-Interested Trustees
or Directors dated 8/9/01: Previously filed with Post-Effective
Amendment No. 34 to the Registration Statement of Oppenheimer Gold
& Special Minerals Fund (Reg. No. 2-82590), 10/25/01, and
incorporated herein by reference.

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

(j) (1) 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.

(2) 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.

(k) Accounting Service Agreement previously filed with Registrant's
Amendment No. 9 under the Investment Company Act of 1940, 2/29/96, and
incorporated herein by reference.

(l) Inapplicable

(m) Inapplicable

(n) Independent Auditor's Report and Consent; Filed herewith.

(o) Inapplicable

(p) Inapplicable

(q) Inapplicable

Item 25. Marketing Arrangements.

Inapplicable.

Item 26. Other Expenses of Issuance and Distribution.

Inapplicable.

Item 27. Persons Controlled by or under Common Control.

None.

Item 28. Number of Holders of Securities.

(1)
(2)
Number of Record Holders

Title of Class at February 8, 2005

-------------- ------------------------ Shares of Beneficial Interest,

2,144 $.01 par value

Item 29. Indemnification.

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

The Registrant hereby undertakes that it will apply the indemnification
provision of its By-laws in a manner consistent with Release 11330 of the
Securities and Exchange Commission under the Investment
-------------------------------------------------------------------------------------
Company Act of 1940, so long as the interpretation therein of Sections 17(h) and
17(i) of the Investment Company Act remains in effect.

Registrant, in conjunction with the Registrant's Trustees, and other
registered management investment companies managed by the Manager, generally
maintains insurance on behalf of any person who is or was a Trustee, officer,
employee, or agent of Registrant. However, in no event will Registrant pay that
portion of the premium, if any, for insurance to indemnify any such person for
any act for which Registrant itself is not permitted to indemnify him.

Item 30. Business and Other Connections of Investment Manager

(a) OppenheimerFunds, Inc. is the investment advisor of the Registrant; it and
certain subsidiaries and affiliates act in the same capacity to other registered
investment companies as described in Parts A and B hereof and listed in Item
30(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 Other his/her own account
Business and or in the capacity of Connections director, officer, During
the employee, partner or Past Two trustee. Years

Name and Current
Position with
OppenheimerFunds, Inc.
-------------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Lizbeth Aaron-DiGiovanni Formerly Vice President (April 2000) and First
Vice President Vice President (2003-July 2004) of Citigroup
Global Markets Inc.

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

Timothy L. Abbuhl, None
Vice President

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

Robert Agan, Vice President of OppenheimerFunds Distributor,
Vice President Inc., Shareholder Financial Services, Inc., OFI
Private Investments, Inc. and Centennial Asset
Management Corporation; Senior Vice President of
Shareholders Services, Inc.

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

Carl Algermissen, Formerly Associate Counsel and Legal Compliance
Assistant Vice President & Officer at Great West-Life & Annuity Insurance
Associate Counsel Co. (February 2004-October 2004); previously
with INVESCO Funds Group, Inc. (June
1993-December 2003), most recently as Senior
Staff Attorney.

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

Michael Amato, None
Assistant Vice President

Tracey Beck Apostolopoulos, Assistant Vice President of OppenheimerFunds
Assistant Vice President Distributor, Inc.

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

Janette Aprilante, Secretary (since December 2001) of:
Vice President & Secretary OppenheimerFunds Distributor, Inc., Centennial
Asset Management Corporation, Oppenheimer
Partnership Holdings, Inc., Oppenheimer Real
Asset Management, Inc., Shareholder Financial
Services, Inc., Shareholder Services, Inc. and
OppenheimerFunds Legacy Program. Secretary
(since June 2003) of: HarbourView Asset
Management Corporation, OFI Private Investments,
Inc. and OFI Institutional Asset Management,
Inc. Assistant Secretary (since December 2001)
of OFI Trust Company.

Robert Baker, None
Assistant Vice President

Lalit K. Behal Assistant Secretary of HarbourView Asset
Assistant Vice President Management Corporation.

Erik S. Berg, None
Assistant Vice President

Craig Billings, None
Assistant Vice President

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

Mark Binning, None
Assistant Vice President

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

Robert J. Bishop, Treasurer (since October 2003) of
Vice President OppenheimerFunds Distributor, Inc. and
Centennial Asset Management Corporation.

Lisa I. Bloomberg, Formerly First Vice President and Associate
Vice President & Associate General Counsel of UBS Financial Services Inc.
Counsel (May 1999-May 2004).

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

Veronika Boesch None
Assistant Vice President

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

Chad Boll, None
Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Antulio N. Bomfim, A senior economist with the Federal Reserve
Vice President Board (June 1992-October 2003).
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

John C. Bonnell, Formerly a Portfolio Manager at Strong Financial
Vice President Corporation (May 1999-May 2004).

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

Michelle Borre Massick, None
Vice President

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

John Boydell, None
Assistant Vice President

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

Michael Bromberg, None
Assistant Vice President

Geoffrey Caan, Formerly Vice President of ABN AMRO NA, Inc.
Vice President (June 2002-August 2003).

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

Catherine Carroll, None
Assistant Vice President

Lisa Chaffee, None
Assistant Vice President

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

Charles Chibnik, None
Assistant Vice President

Inc. and OppenheimerFunds Legacy Program; Senior
Vice President of Shareholder Services, Inc.

Lauren Coulston, None
Assistant Vice President

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

George Curry, None.
Vice President

John M. Davis, Assistant Vice President of OppenheimerFunds
Assistant Vice President Distributor, Inc.

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

Brian Dvorak, None
Assistant Vice President

James Robert Erven None
Assistant Vice President

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

George R. Evans, None
Senior Vice President and
Director of International
Equities

David Falicia, Assistant Secretary (as of July 2004) of
Assistant Vice President HarbourView Asset Management Corporation.

Thomas Farrell, None
Assistant 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,
Senior Vice President; Inc.; Director of ICI Mutual Insurance Company;
Chairman of the Rochester Governor of St. John's College; Chairman of the
Division Board of Directors of International Museum of

Photography at George Eastman House.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Bradley G. Finkle None
Vice President

David Foxhoven, Assistant Vice President of OppenheimerFunds
Vice President Legacy Program.

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

Dominic Freud, Formerly, a Partner and European Equity
Vice President Portfolio manager at SLS Management (January
2002-February 2003).

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

Seth Gelman, None
Vice President

Phillip S. Gillespie Formerly, First Vice President at Merrill Lynch
Senior Vice President Investment Management (2001-September 2004)

Bejamin J. Gord, Vice President of HarbourView Asset Management
Vice President Corporation and of OFI Institutional Asset
Management, Inc.

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

Joseph Higgins, Vice President of OFI Institutional Asset
Vice President Management, Inc.

Edward Hrybenko, Vice President of OppenheimerFunds Distributor,
Vice President Inc.

Margaret Hui, None
Assistant Vice President

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

John Huttlin, Senior Vice President (Director of the
Vice President International Division) (since January 2004) of
OFI Institutional Asset Management, Inc.;
Director (since June 2003) of OppenheimerFunds
(Asia) Limited

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

Corry E. Hyer None
Assistant Vice President

Steve P. Ilnitzki, Vice President of OppenheimerFunds Distributor,
Senior Vice President Inc.

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

Kelly Bridget Ireland, Vice President (since January 2004) of
Vice President OppenheimerFunds Distributor Inc. Formerly,
Director of INVESCO Distributors Inc. (April
2000-December 2003).

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

Kathleen T. Ives, Vice President and Assistant Secretary of
Vice President, Senior OppenheimerFunds Distributor, Inc. and
Counsel and Assistant Shareholder Services, Inc.; Assistant Secretary
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, None
Assistant Vice President

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

Charles Kandilis, None
Vice President

Lynn O. Keeshan, Assistant Treasurer of OppenheimerFunds Legacy
Senior Vice President Program

Martin S. Korn, None
Senior Vice President

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

Dimitrios Kourkoulakos, None
Vice President

Paul Kunz, None
Assistant Vice President

John W. Land, Formerly Human Resources Manager at Goldman
Assistant Vice President Sachs (October 2000-July 2004).

John Latino, None
Assistant Vice President

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

Kristina Lawrence, Formerly Assistant Vice President of
Vice President OppenheimerFunds, Inc. (November 2002-March
2004).

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

Guy E. Leaf, None
Vice President

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

Gayle Leavitt, None
Assistant Vice President

Dina C. Lee, Formerly (until December 2003) Assistant
Assistant Vice President & Secretary of OppenheimerFunds Legacy Program.
Assistant Counsel

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

Randy Legg, Formerly an associate with Dechert LLP
Assistant Vice President & (September 1998-January 2004).
Assistant Counsel

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Laura Leitzinger, Senior Vice President of Shareholder Services,
Vice President Inc.; Vice President of Shareholder Financial
Services, Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Justin Leverenz, Formerly, a research/technology analyst at
Vice President Goldman Sachs, Taiwan (May 2002-May 2004)

Daniel Lifshey None
Assistant 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
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Mark Madden, Formerly a Managing Director, Global Emerging
Vice President Markets Team at Pioneer Investments (November
2000-August 2004).

Kathleen Mandzij, Formerly Marketing Manager - Sales Force
Assistant Vice President Marketing (March 2003-June 2004) of
OppenheimerFunds, Inc.

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

Jerry Mandzij, None
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 (as of January 2004) of
Vice President & Associate HarbourView Asset Management Corporation,
Counsel 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, Vice President and Assistant Secretary of
Vice President HarbourView Asset Management Corporation.

Charles L. McKenzie, Chairman of the Board and Director of OFI Trust
Senior Vice President Company; Chief Executive Officer, 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
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Lucienne Mercogliano None
Assistant Vice President

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

Wayne Miao, Formerly an Associate with Sidley Austin Brown &
Assistant Vice President and Wood LLP (September 1999 - May 2004).
Assistant Counsel

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

Andrew J. Mika, None
Senior Vice President

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

Nikolaos D. Monoyios, None
Senior Vice President

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

Charles Moon, Vice President of HarbourView Asset Management
Vice President Corporation and of OFI Institutional Asset

Management, Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

John Murphy, President and Director of Oppenheimer
Chairman, President, Chief Acquisition Corp. and Oppenheimer Partnership
Executive Officer & Director Holdings, Inc. Director of Centennial Asset
Management Corporation, OppenheimerFunds
Distributor, Inc.; Chairman Director of
Shareholder Services, Inc. and Shareholder
Financial Services, Inc.; President and Director
f OppenheimerFunds Legacy Program; Director of
OFI Institutional Asset Management, Inc.,
Trinity Investment Management Corporation,
Tremont Capital Management, Inc., HarbourView
Asset Management Corporation, OFI Private
Investments, Inc.; President and Director of
Oppenheimer Real Asset Management, Inc.;
Executive Vice President of Massachusetts Mutual
Life Insurance Company; Director of DLB
Acquisition Corporation; a member of the
Investment Company Institute's Board of
Governors.

Jesper Nergaard, None
Assistant Vice President

Matthew O'Donnell, None
Assistant Vice President

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

John O'Hare, Formerly Executive Vice President and Portfolio
Vice President Manager (June 2000 - August 2003) at Geneva
Capital Management, Ltd.

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

Lerae A. Palumbo, None
Assistant Vice President

Robert H. Pemble, None
Assistant Vice President

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

Lori L. Penna, None
Assistant Vice President

Marmeline Petion-Midy,
Assistant Vice President

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

David Pfeffer, Senior Vice President of HarbourView Asset
Senior Vice President and Management Corporation since February 2004.
Chief Financial Officer Formerly, Director and Chief Financial Officer
at Citigroup Asset Management (February
2000-February 2004).

Scott Phillips,
Vice President

Jason Pizzorusso, None
Assistant Vice President

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

David Poiesz, Formerly a Senior Portfolio Manager at Merrill
Senior Vice President, Head Lynch (October 2002-May 2004). Founding partner
of Growth Equity Investments of RiverRock, a hedge fund product (April
1999-July 2001).

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

Jeffrey Portney, None
Assistant Vice President

David Preuss, None
Assistant Vice President

Brian N. Reid, None
Assistant Vice President

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

Stacey Roode, None
Vice President

Kim Russomanno, None
Assistant Vice President

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

Timothy Ryan, Formerly a research analyst in the large
Vice President equities group at Credit Suisse Asset Management
(August 2001-June 2004)

Rudi Schadt, None
Assistant Vice President

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

Nava Sharma, None
Vice President

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

Edward James Sivigny None
Assistant Vice President

Keith J. Spencer, None
Senior Vice President

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

Marco Antonio Spinar, None
Assistant Vice President

Deborah A. Sullivan, Secretary of OFI Trust Company.
Assistant Vice President &
Assistant Counsel

Brian C. Szilagyi, Manager of Compliance at Berger Financial Group
Assistant Vice President LLC (May 2001-March 2003); Director of Financial
Reporting and Compliance at First Data
Corporation (April 2003-June 2004).

Paul Temple, None
Vice President

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

Jeaneen Terrio, None
Assistant Vice President

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

Angela Uttaro, None
Assistant Vice President:
Rochester Division

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

Mark S. Vandehey, Vice President of OppenheimerFunds Distributor,
Senior Vice President and Inc., Centennial Asset Management Corporation
Chief Compliance Officer and Shareholder Services, Inc. Formerly (until
March 2004) Vice President of OppenheimerFunds,
Inc.

Rene Vecka, Formerly Vice President of Shareholder Services,
Assistant Vice President, Inc. (September 2000-July 2003).
Rochester Division

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

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

Lisa Walsh, None
Assistant Vice President

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

Patricia Walters, None
Assistant Vice President

Adam Weiner, None
Assistant Vice President

Melissa Lynn Weiss, None
Vice President

Diederick Wermolder, Director of OppenheimerFunds International Ltd.
Senior Vice President and OppenheimerFunds plc; Senior Vice President
(Managing Director of the International
Division) of OFI Institutional Asset Management,
Inc.; Director of OppenheimerFunds (Asia)
Limited.

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
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, None
Assistant Vice President

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

William L. Wilby, None
Senior Vice President and
Senior Investment Officer,
Director of Equities

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

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.

Oppenheimer Real Asset Management, Inc.,
Shareholder Services, Inc., Shareholder
Financial Services, Inc., OFI Private
Investments, Inc., OFI Institutional Asset
Management, Inc., OppenheimerFunds plc 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 Capital Management, Inc.,
Executive Vice President, HarbourView Asset Management Corporation and OFI
Chief Investment Officer and Institutional Asset Management, Inc. (since June
Director 2003)

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.; Director and
Assistant Secretary of OppenheimerFunds plc;
Secretary and General Counsel of Oppenheimer
Acquisition Corp.; Director and Assistant
Secretary of OppenheimerFunds International
Ltd.; Director of Oppenheimer Real Asset
Management, Inc. and OppenheimerFunds (Asia)
Limited); Vice President of OppenheimerFunds
Legacy Program.

The Oppenheimer Funds include the following:

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)
OFI Tremont Core Strategies Hedge Fund
OFI Tremont Market Neutral Hedge Fund
Oppenheimer AMT-Free Municipals
Oppenheimer AMT-Free New York Municipals
Oppenheimer Balanced Fund
Oppenheimer Bond Fund (a series of Oppenheimer Integrity Funds)
Oppenheimer California Municipal Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Capital Income 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 California Municipal Fund
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-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 Principal Protected Main Street Fund III (a series of Oppenheimer
Principal Protected Trust III)
Oppenheimer Principal Protected Main Street Fund IV (a series of Oppenheimer
Principal Protected Trust IV)

Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Quest For Value Funds (3 series)
Oppenheimer Quest Balanced 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 Select Value 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 Market Neutral Fund, LLC
Oppenheimer Tremont Opportunity Fund, LLC
Oppenheimer U.S. Government Trust
Oppenheimer Variable Account Funds (11 series):
Oppenheimer Aggressive Growth Fund/VA
Oppenheimer Balanced 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 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 Two 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 31. Location of Accounts and Records.

All accounts, books and other documents, required to be maintained by the Registrant under
Section 31(a) of the Investment Company Act of 1940 and the Rule thereunder are maintained
by OppenheimerFunds, Inc. at its offices at 6803 South Tucson Way, Centennial, Colorado
80112.

Item 32. Management Services.

The Registrant is not a party to any management-related service contract not discussed in
Part A or Part B of this Registration Statement.

Item 33. Undertakings.

1. The Registrant undertakes to suspend the offering of the shares covered hereby until it
amends its prospectus if (1) subsequent to the effective date of this Registration
Statement, its net asset value per share declines more than 10 percent from its net asset
value per share as of the effective date of this Registration Statement, or (2) its net
asset value increases to an amount greater than its net proceeds as stated in the
prospectus.

2. Inapplicable

3. Inapplicable

4. Inapplicable

5. Inapplicable

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and/or the Investment Company
Act of 1940, the Registrant 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 25th day of February 2005.

Oppenheimer Multi-Sector Income Trust

By: /s/ John V. Murphy*

John V. Murphy, President,
Principal Executive Officer

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/ Clayton K. Yeutter* Chairman of the

--------------------------- Board of Trustees February 25,2005
Clayton K. Yeutter

/s/ John V. Murphy* President, Principal

-------------------------- Executive Officer February 25, 2005
John V. Murphy & Trustee

/s/ Brian W. Wixted* Treasurer, Principal February 25, 2005
------------------------- Financial and
Brian W. Wixted Accounting Officer

/s/ Robert G. Galli* Trustee February 25, 2005

-----------------------
Robert G. Galli

/s/ Phillip A. Griffiths* Trustee February 25, 2005

---------------------------
Phillip A. Griffiths

/s/ Joel W. Motley* Trustee February 25, 2005

------------------------
Joel W. Motley

/s/ Kenneth A. Randall* Trustee February 25, 2005

----------------------------
Kenneth A. Randall

/s/ Edward V. Regan* Trustee February 25, 2005

-------------------------
Edward V. Regan

/s/ Russell S. Reynolds, Jr.* Trustee February 25, 2005

---------------------------------
Russell S. Reynolds, Jr.

/s/ Matthew Fink Trustee February 25, 2005
---------------------------------
Matthew Fink

/s/ Mary F. Miller Trustee February 25, 2005
---------------------------------
Mary F. Miller

*By: /s/Phillip Gillespie

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

Phillip Gillespie, Attorney-in-Fact

OPPENHEIMER MULTI-SECTOR INCOME TRUST
Registration No. 811-5473

Index to Exhibits

Exhibit No. Description
----------- -----------

24. Financial Statements

24. (g) Amended and Restated Investment Advisory Agreement

24. (n) Independent Auditors' Report and Consent

24. (o) Power of Attorney